ENABLING
CONNECTIVITY
ANNUAL REPORT AND ACCOUNTS 2018
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Our investor proposition
(cid:36) differentiated mar(cid:78)et position and diversified (cid:74)rowth portfolio
Compelling market
opportunity
Highly differentiated
proposition
Long-standing
market presence
Diversified growth
portfolio
› (cid:54)pecialised in mo(cid:69)ility
› (cid:48)ar(cid:78)et(cid:16)leadin(cid:74)
capa(cid:69)ilities
› (cid:55)wo complementary
(cid:74)lo(cid:69)al networ(cid:78)s
› (cid:42)lo(cid:69)al spectr(cid:88)m assets
› (cid:55)echnolo(cid:74)y leadership
(cid:54)i(cid:74)nificant f(cid:88)t(cid:88)re (cid:74)rowth
in demand for data (cid:67)on
the move’
Can only (cid:69)e served (cid:69)y
satellite connectivity
Mobility markets
MARITIME
GOVERNMENT
AVIATION
ENTERPRISE
More about our performance in the CEO’s review Page 9
› 3(cid:28) year trac(cid:78) record
in attractive (cid:74)rowth
mar(cid:78)ets
› (cid:47)on(cid:74) term c(cid:88)stomer
relationships(cid:15) with hi(cid:74)h
switchin(cid:74) costs
› (cid:56)nrivalled (cid:74)lo(cid:69)al
distri(cid:69)(cid:88)tion networ(cid:78)
› (cid:42)lo(cid:69)al presence ena(cid:69)les
meanin(cid:74)f(cid:88)l moderation
in infrastr(cid:88)ct(cid:88)re cape(cid:91)
after 2020
Base case
› (cid:47)(cid:16)(cid:69)and (cid:69)ased services
› (cid:42)(cid:59) services in
inc(cid:88)m(cid:69)ency mar(cid:78)ets
› (cid:44)n(cid:16)Fli(cid:74)ht Connectivity
Incremental options
› (cid:42)overnment strate(cid:74)ic
deals and optempo
› (cid:54)pectr(cid:88)m
› (cid:39)i(cid:74)ital services
› (cid:44)nternet of (cid:55)hin(cid:74)s
› China and (cid:44)ndia
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) (cid:44)ntrod(cid:88)ction
01
ENABLING CONNECTIVITY
Contents
Strategic Report
Key Performance Indicators
IFC Our investor proposition
Group at a glance
2
How we keep our customers connected
4
Chairman’s statement
6
9
Chief Executive’s strategic review
13 Market trends
14 Our strategy
16 Our business model
18
20 Business overview – Maritime
24 Business overview – Government
28 Business overview – Aviation
32 Business overview – Enterprise
36 Business overview – Central services
38 Chief Financial Officer’s review
42 Corporate social responsibility
49 Our people
52 Risk management
53 Principal risks and uncertainties
59 Viability statement
Governance
60 Chairman’s introduction
61 Governance at work
62 Board of Directors
65 Executive management team
80 Relations with shareholders
81 Directors’ remuneration report
102 Report of the Directors
106 Directors’ responsibilities statement
Financial Statements
107 Financial statements index
108 Independent Auditor’s report
116 Consolidated income statement
117 Consolidated statement
of comprehensive income
118 Consolidated balance sheet
119 Consolidated statement
of changes in equity
120 Consolidated cash flow statement
121 Notes to the consolidated
financial statements
162 Company financial statements
164 Notes to the Company
financial statements
166 Glossary
168 Additional information
(cid:36)nywhere in the world(cid:15) (cid:44)nmarsat
connects c(cid:88)stomers to a (cid:69)etter f(cid:88)t(cid:88)re(cid:17)
(cid:43)owever (cid:69)i(cid:74) the challen(cid:74)e(cid:15) on land(cid:15)
in the air or at sea(cid:15) (cid:44)nmarsat will
(cid:69)e there(cid:17) (cid:44)nmarsat wants to t(cid:88)rn its
c(cid:88)stomers’ (cid:69)i(cid:74)(cid:74)est challen(cid:74)es into
their (cid:74)reatest opport(cid:88)nities
Revenue
$1,465.2m
(cid:14)(cid:24)(cid:17)3(cid:8)
EBITDA1
$770.1m
(cid:14)(cid:23)(cid:17)2(cid:8)
Cash CAPEX1
$590.7m
3(cid:17)8(cid:8) lower
Profit after tax
$125.0m
(cid:11)32(cid:17)(cid:23)(cid:12)(cid:8)
1 (cid:55)hese represent alternative performance meas(cid:88)res (cid:11)(cid:67)(cid:36)(cid:51)(cid:48)s’(cid:12)(cid:17)
(cid:51)lease refer to note 2 in the financial statements
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Strategic Report | Group at a glance
Inmarsat plc | Annual Report and Accounts 2018
Group at a glance
Enabling connectivity across our chosen end markets
Our four business units provide unrivalled global, mobile
connectivity to our customers in our chosen end markets.
Maritime
Government
Aviation
Enterprise
Inmarsat offers the most reliable
and resilient communications
solutions to the maritime
industry. From the largest
commercial fleets to coastal
vessels, our services are based
on our long track record of
managing global networks
and consequently, a unique
understanding of the challenges
of living and working in a
maritime environment.
Our secure, globally available
services and products are
helping to drive an evolution in:
› Vessel performance
and efficiency
› Safety management
and monitoring
› Crew welfare
Inmarsat remains a key partner
to many governments around
the world. We aim to augment
a government’s existing
communications network and
ensure that, wherever they need
to be, our secure, reliable and
powerful mobile satellite
networks are always available.
Our mission-critical voice,
video and data communications
solutions help governments
on land, at sea and in the
air to:
› Maintain their security
› Ensure public safety
› Deliver remote health,
education and other crucial
services in regions where
terrestrial networks are
not able to reach
Inmarsat provides cabin
connectivity to the Business
and General Aviation (‘BGA’)
sectors and the Commercial
Aviation sector, through
In-Flight Connectivity.
Furthermore, our connectivity
products in the Safety and
Operational Services sector
ensure safe and secure
communications between the
cockpit and air traffic control.
Our unique position in the
Aviation market is supported by:
› Benefits of owner economics
› Long track record serving
the Aviation industry
› Continual innovation and
product development in
this sector
Inmarsat provides a
wide portfolio of global
voice, broadband data,
Machine2Machine (‘M2M’)
and value-added services.
We see exciting growth
opportunities in the medium-
term from emerging new
Internet of Things (‘IoT’)
markets in sectors such as
mining, smart cities, smart
agriculture, logistics and
transportation.
Inmarsat has the ability to:
› Extend the range of
terrestrial networks and
narrow the digital divide
› Enhance resiliency
and redundancy
› Provide capabilities such
as broadcast services and
precision navigation services
Maritime business overview
Page 20
Government business overview
Page 24
Aviation business overview
Page 28
Enterprise business overview
Page 32
REVENUE
EBITDA
Maritime
$552.8m*
Government $381.0m*
$256.1m*
Aviation
$130.0m*
Enterprise
42%
29%
19%
10%
$1,319.9m
Maritime
$429.0m*
Government $270.2m*
$131.9m*
Aviation
$82.3m*
Enterprise
47%
30%
14%
9%
$913.4m
* Numbers exclude the impact of central services
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
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03
(cid:36)n (cid:88)nrivalled
portfolio
Through our best in class networks we
help o(cid:88)r c(cid:88)stomers to comm(cid:88)nicate where
terrestrial telecom networ(cid:78)s lac(cid:78) relia(cid:69)ility
or covera(cid:74)e(cid:30) on land(cid:15) at sea or in the air
1,800+
Employees with
a culture focused
on innovation
and performance
excellence
39
Our office presence
in countries around
the world
13
Geostationary satellites
owned and operated
10
Satellite Access
Stations strategically
located worldwide
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Inmarsat satellites in geostationary orbit
66
135135°°EE
1111
33
180180°°
135135°°WW
9090°°EE
1010
11
44
77
55
4545°°EE
00°°
4545°°WW
1212
22
9090°°WW
88
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Global Xpress –
a global, high
bandwidth
satellite network
The European
Aviation Network –
a unique asset
GX, based on our four
Inmarsat-5 satellites
currently in orbit, is
a global, mobile, high
bandwidth network.
The GX network will be
further augmented by new,
low-cost technologies in
the future, including GX5,
which is planned for
launch in 2019.
The integrated S-band
satellite and air-to-ground
network, the EAN, will be
a compelling and unique
proposition for commercial
aviation customers in
Europe, compared to other
satellite-only offerings.
The network delivers higher
capacity, wider coverage,
superior cost per bit, faster
speeds and lower latency,
with smaller and lighter
equipment which can be
installed quickly, more cost
effectively and with less
fuel drag.
High-performance
mobility-designed
L-band satellites –
supported by secure
networks and
technology
Our L-band networks,
through eight Inmarsat-3 and
Inmarsat-4 satellites, have
helped Inmarsat to establish
and develop a loyal customer
and distribution base over
time. The Inmarsat-6
satellites comprise two dual
payload (L-band and
Ka-band) satellites due to be
launched at the start of the
next decade. This will
ensure the reorientation of
our L-band capabilities
towards new growth
opportunities uniquely
addressable by a cutting edge
global network, with a small,
low-cost, highly reliable
and agile device to deliver
our services to end users.
04
04
(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) (cid:43)ow we (cid:78)eep o(cid:88)r c(cid:88)stomers connected
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
How we keep our
customers connected
O(cid:88)r satellites power (cid:74)lo(cid:69)al connectivity with
voice and hi(cid:74)h(cid:16)speed data comm(cid:88)nication
wherever it is needed
Communications satellites
Satellites are self-contained
communications systems with the
ability to receive and retransmit
signals from and back to Earth,
through the use of integrated
receivers and transmitters
of signals (transponders).
Strategically
located satellite
access stations
Ground stations –
also known as satellite
access stations (‘SAS’)
– act as traffic gateways,
directing the satellite
signal to terrestrial
networks such as the
internet or the terrestrial
telephone network and
back again.
Continuous global coverage
In geostationary orbit,
three satellites can provide
continuous global coverage
(excluding the poles)
1.5 billion km
travelled by a satellite during its lifetime
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
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05
05
On land, at sea or in the air
O(cid:88)r services are accessed (cid:88)sin(cid:74) a variety
of devices(cid:15) from hand(cid:16)held satellite phones
and remote site fi(cid:91)ed installations(cid:15) to vessel(cid:15)
vehic(cid:88)lar and air(cid:69)orne mo(cid:69)ile terminals(cid:15)
offerin(cid:74) different performance options
to s(cid:88)it o(cid:88)r c(cid:88)stomers’ needs(cid:17)
Ensuring networks
are available and
meeting demand
24/7
The Network Operations
Centre (‘NOC’) at our HQ
in London is responsible
for the co-ordination
of all network activities,
constantly monitoring
the ground network
to ensure our services
are available.
Our sophisticated
technology enables the
NOC team to increase
capacity in any part of
the world – for example,
in the event of a natural
disaster when demand from
emergency responders and
media users in a particular
region increases.
24/7
Network availability
From streaming
must-watch movies,
to mission-critical
communications
Satellite communications will
continue to play a critical part in
supporting a connected society.
The major growth area in the
industry will continue to be
mobility connectivity, with
significant expected growth in
the use of data on the move and
in remote areas in the future.
50 billion
Connected devices by 2020
(Source: Cisco)
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(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) Chairman’s statement
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
Chairman’s statement
Contin(cid:88)in(cid:74) to deliver
(cid:44)nmarsat contin(cid:88)ed to perform well operationally
and financially in 2018(cid:15) however(cid:15) headwinds in
the sector (cid:74)enerally and challen(cid:74)es in o(cid:88)r
(cid:48)aritime end mar(cid:78)et contin(cid:88)e to cast a shadow
over si(cid:74)nificant (cid:74)rowth in the (cid:36)viation and
(cid:42)overnment (cid:69)(cid:88)siness sectors(cid:17) (cid:55)his has certainly
affected o(cid:88)r share price performance(cid:17) (cid:43)owever(cid:15)
the (cid:48)ana(cid:74)ement and (cid:37)oard (cid:69)elieve that the
si(cid:74)nificant investments made over the last
five years will contin(cid:88)e to positively develop(cid:15)
and th(cid:88)s enhance(cid:15) the (cid:42)ro(cid:88)p’s f(cid:88)t(cid:88)re financial
performance and(cid:15) conse(cid:84)(cid:88)ently(cid:15) ret(cid:88)rns to
o(cid:88)r shareholders
ANDREW SUKAWATY
CHAIRMAN
Financial performance on track –
revenue growth of 5%
(cid:53)even(cid:88)e (cid:74)rowth was (cid:88)p (cid:24)(cid:8) year on year (cid:11)(cid:67)yoy’(cid:12)
while (cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) was (cid:88)p (cid:23)(cid:8) yoy(cid:17) (cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) mar(cid:74)ins
were steady at aro(cid:88)nd (cid:24)3(cid:8) however profit after
ta(cid:91) was down 32(cid:8) yoy(cid:17) Cape(cid:91) red(cid:88)ced (cid:69)y (cid:23)(cid:8)(cid:17)
(cid:40)(cid:51)(cid:54) was 2(cid:26) cents per share(cid:17) (cid:54)i(cid:74)nificantly(cid:15)
reven(cid:88)e from o(cid:88)r new (cid:42)lo(cid:69)al (cid:59)press constellation
rose (cid:69)y 8(cid:24)(cid:8) to over (cid:7)2(cid:24)0m(cid:15) which (cid:69)odes well for
the e(cid:91)pectations that came with this investment
and is on trac(cid:78) for o(cid:88)r ann(cid:88)al reven(cid:88)e (cid:74)rowth
tar(cid:74)et of (cid:7)(cid:24)00m (cid:69)y the end of 2020(cid:17)
Global Xpress (GX) constellation
proving to be growth catalyst
(cid:58)ith the si(cid:74)nificant yoy reven(cid:88)e (cid:74)rowth
from (cid:42)(cid:59)(cid:15) s(cid:88)pported (cid:69)y contri(cid:69)(cid:88)tions
from (cid:42)overnment(cid:15) (cid:48)aritime and o(cid:88)r (cid:36)viation
sectors(cid:15) the (cid:42)(cid:59) pro(cid:74)ramme is seein(cid:74) si(cid:74)nificant
acceptance across a (cid:69)road and diversified
(cid:74)ro(cid:88)p of c(cid:88)stomers(cid:17) (cid:58)ith a world leadin(cid:74)
position and a head start over other
commercial satellite players in this rapidly
emer(cid:74)in(cid:74) (cid:74)lo(cid:69)al mo(cid:69)ile (cid:69)road(cid:69)and satellite
opport(cid:88)nity(cid:15) (cid:44)nmarsat is well positioned to (cid:69)e
a leader in these mar(cid:78)ets as they (cid:74)row(cid:17) O(cid:88)r
investment thesis was and is that (cid:69)road(cid:69)and
demand in (cid:36)viation(cid:15) (cid:42)overnment and (cid:48)aritime
in (cid:74)eo(cid:74)raphic areas where terrestrial networ(cid:78)s
cannot f(cid:88)nction(cid:15) will contin(cid:88)e to offer s(cid:88)perior
profita(cid:69)le (cid:74)rowth opport(cid:88)nities for (cid:44)nmarsat(cid:17)
(cid:40)arly indications are (cid:69)e(cid:74)innin(cid:74) to validate
this thesis(cid:17)
Disappointing share price
performance – dividend
reduction and other factors
Fo(cid:88)r developments have clearly p(cid:88)t ne(cid:74)ative
press(cid:88)re on o(cid:88)r share price in 2018(cid:17) Firstly(cid:15)
we anno(cid:88)nced a si(cid:74)nificant red(cid:88)ction in o(cid:88)r
dividend with o(cid:88)r 201(cid:26) (cid:53)es(cid:88)lts anno(cid:88)ncement(cid:17)
(cid:58)e did this responsi(cid:69)ly(cid:15) to mana(cid:74)e o(cid:88)r (cid:69)alance
sheet in li(cid:74)ht of ris(cid:78)s to cash (cid:74)eneration comin(cid:74)
in the f(cid:88)t(cid:88)re from o(cid:88)r (cid:56)(cid:54) (cid:47)i(cid:74)ado contract
and other pro(cid:74)rammes which were in process(cid:17)
(cid:44)n addition(cid:15) we needed to accommodate the
on(cid:74)oin(cid:74) capital investment re(cid:84)(cid:88)irements
of the (cid:69)(cid:88)siness(cid:15) driven (cid:69)y o(cid:88)r (cid:42)lo(cid:69)al (cid:59)press
(cid:74)rowth(cid:17) (cid:58)e also wanted to ens(cid:88)re that o(cid:88)r
shareholders contin(cid:88)ed to (cid:69)e appropriately
rewarded thro(cid:88)(cid:74)h a sta(cid:69)le(cid:15) al(cid:69)eit red(cid:88)ced(cid:15)
level of ann(cid:88)al dividend payments(cid:17)
(cid:54)econdly(cid:15) o(cid:88)r (cid:48)aritime (cid:69)(cid:88)siness contin(cid:88)es
to see press(cid:88)re d(cid:88)e to the on(cid:74)oin(cid:74) recession
in the commercial shippin(cid:74) ind(cid:88)stry(cid:15) as well
as increased competition in the mid(cid:16)mar(cid:78)et
se(cid:74)ment(cid:15) where we have (cid:69)y and lar(cid:74)e maintained
mar(cid:78)et share in recent years(cid:15) (cid:43)owever(cid:15) these
dynamics have ne(cid:74)atively affected pricin(cid:74)
and cash flow overall(cid:17)
Inmarsat plc | Annual Report and Accounts 2018
Strategic Report | Chairman’s statement
07
Thirdly, investors are concerned about the
overall telecoms sector, due to regulatory,
technological and competitive risks, as well as
continued significant investment in infrastructure,
combined with a slowing growth profile across
the sector.
to build its market share and invests to support
this, it must also demonstrate to shareholders
that the investment will pay off. We understand
this and intend to begin demonstrating the
financial performance to investors as the
various segments stabilise and bed in.
Within the telecoms sector, some concerns
remain about overcapacity in the global
commercial satellite sub-sector, particularly in
structurally challenged services, including fixed
video and telecoms. While these are markets in
which Inmarsat does not generally operate, as
we are focused on mobility services, our share
price tends to track those of the fixed operators,
which are directly impacted by these market forces.
Fourthly, our Global Xpress constellation
remains at an early stage of development,
as Rupert outlines in detail in his review. Therefore,
while significant investment has been made,
particularly in the newly emerging IFC segment
in Commercial Aviation, Inmarsat needs to
demonstrate to shareholders its potential for
profitability and cashflow generation, as our
position in the market develops over time.
Proposed takeover offer
from EchoStar rejected
As a publicly listed company, Inmarsat
is open and committed to exploring
opportunities to create value for shareholders.
When approached by EchoStar during the
course of 2018, we responsibly considered
their conditional proposal in light of Inmarsat’s
stand-alone risk adjusted prospects and
concluded it was not in the interests of our
shareholders. We believe that the commercial
satellite sector is likely to see consolidation
in the future and management and the Board
remain open to consider strategic options
which would enhance our shareholder returns.
Aviation growth accelerating
and opportunity is significant,
but profit opportunity needs
to be demonstrated
Inmarsat continues to build a significant
order book for installations of both Global
Xpress and with growing interest in our new
European Aviation network. Installations
are occurring at an accelerating pace.
This is happening in Commercial Aviation,
Government Aviation and in the Business
Jets markets. We believe that we have a market
leading service to deliver Wi-Fi on aircraft
globally. However, since this is a market for
a new improved service, investors are rightly
questioning its future potential to generate
profits and cash flow. While Inmarsat continues
This year we had an external assessment
of Board performance conducted by an
independent third party. See page 73 in the
report on Corporate Governance for more
detail. Overall the conclusion was that the
Board continues to operate effectively and
appropriately and challenges management to
ensure thorough debate and consideration on
issues of significance. Areas for improvement
are shown in the Corporate Governance Report.
Significant remuneration policy
changes proposed in light of 2018
shareholder vote
On the back of both the dividend reduction and
the share price decline, we received a second
negative vote on our Annual Remuneration
Report. As a result, we consulted with
shareholders during the course of 2018 and in
early 2019 to determine their specific concerns
and to address them. As a direct result of these
consultations, we are proposing a set of significant
changes to update our remuneration policy
and take on board comments from shareholders.
In addition, we have recognised the ability of the
Board, through the Remuneration Committee,
to exercise its discretion to ensure that the
payout outcomes are in line with shareholder
experience. Details of these changes are
contained in the Remuneration Report on
page 81.
As Remuneration norms and standards change
in the future, we will endeavour to make regular
changes to meet investors’ needs, as well as
the needs of the Company to motivate and
retain top quality talent.
Board evolution and
performance assessment
Inmarsat continues to evolve our Board
membership to maintain a capable diverse
Group that contributes to our strategic thinking,
maintains high standards in our reporting
integrity, meets governance standards and
challenges management regularly and
appropriately. We are delighted to welcome
Tracy Clarke as a new director in 2019. Tracy’s
biography is included on page 63 and the criteria
used for her selection on page 73. We welcome
her global management experience, working
in emerging markets, plus her previous Board
experience and Remuneration Committee
knowledge which will enhance our capabilities
as a Board.
Board evolution is an ongoing process.
Guidelines have changed during the course
of 2018. One area of change is in the tenure
of Chairs for UK listed companies. Inmarsat is
aware of this and during the course of 2019 will
engage, through the Nominations Committee,
to determine the optimal way to address
this for the Company.
We would also like to pay our respects
to a former Director, Kathleen Flaherty,
who sadly passed away this past year.
Our core values
We ARE Inmarsat – with a core set of values that guide and shape
the way we work, behave and respect each other:
Accountability
We take ownership, get
results and deliver on our
promises to our customers
and each other.
Respect
We collaborate,
embrace diversity and
value differences.
Excellence
We create bold solutions
for our customers.
Quality is at the heart
of everything we do.
GovernanceFinancial StatementsStrategic Report 08
Strategic Report | Chairman’s statement
Inmarsat plc | Annual Report and Accounts 2018
The Board is humbly proud of what Inmarsat
offers as a commercial business, as well as
the public service it provides to countless
users in time of need.
I would like to thank our staff for their
considerable hard work and commitment to
supporting Inmarsat’s business. We cannot
do this alone and our distributors, customers,
manufacturers and wider ecosystem all play
a significant role in our combined success.
Thank you too to our shareholders, many
of whom have been so since our IPO in 2005.
We thank you for your ongoing support of
our business.
ANDREW SUKAWATY
CHAIRMAN
18 March 2019
Chairman’s statement
continued
Board oversight of management’s
Company culture development
Inmarsat’s culture has been driven from the
beginning of our creation, to serve the world by
delivering highly reliable communications day
in and day out, because our customers depend
on us, often for their lives. This is a commitment
that is embedded in our culture and is shown on
the previous page in the values of Accountability,
Respect and Excellence. Beyond this management
has engaged in numerous programmes to
ensure we are both in a good place to work
and responsible corporate citizens in the
ever-changing social environment in which
we operate. This shows itself in our employees
training programmes and in our diversity and
development programmes. We have active
networks for women in Inmarsat and a LGBT
group. We have recently launched our Global
Advisory Workforce Panel in response to the
FCA workforce/Board engagement regulations.
In addition we work closely with Télécoms
Sans Frontières (‘TSF’) and International
Telecommunication Union (‘ITU’)/UN agencies
to support humanitarian aid at the time of
disasters globally. Management continues to
improve and evolve the way we efficiently and
responsibly operate as our business moves
forward. The Board will remain engaged in an
oversight capacity to ensure this continues.
Thank you for our 40th year
Throughout our heritage, as we enter our
40th year, we have served those in need
of critically important communications,
often where there is no other means available.
This remains a very strong purpose for us
now and in the future. Through our maritime
safety systems recognised by the International
Maritime Organization (‘IMO’) and our close
work with the International Mobile Satellite
Organization (‘IMSO’) and in aviation, the
International Civil Aviation Organisation (‘ICAO’),
to the ongoing support we give to TSF for their
work in responding to disaster relief and the
work they do in disaster areas, our commitment
remains to public service alongside our
commercial activities.
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
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RUPERT PEARCE
CHIEF EXECUTIVE OFFICER
5.3%
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$251m
Global Xpress revenue
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Strategic Report | Chief Executive’s strategic review
Inmarsat plc | Annual Report and Accounts 2018
Chief Executive’s strategic review
continued
Continued development of
our future technology roadmap
Inmarsat’s technology leadership position
has been built over a period of 40 years
through our ability to maintain and develop
our global networks as differentiated
offerings with capabilities that keep us
highly competitive in a dynamic market
environment. We continued to develop
this position in 2018.
In L-band, in collaboration with our
manufacturing partner, we made further
progress in our preparation for the launch
and entry into commercial service of the
first two satellites in our Inmarsat-6 fleet at
the start of the next decade, timed to launch
as the first two satellites in our Inmarsat-4
fleet approach the end of their design lives.
The transition from our Inmarsat-4 fleet to
our new Inmarsat-6 fleet in the 2021-22
time frame will not only materially extend the
life expectancy of our legacy L-band services
but will also deliver a significant network
capacity and service capability upgrade to
support both the launch of new and differentiated
L-band services as well as future revenue and
demand growth, as we continue to support
our customers’ connectivity requirements.
With this development of our core L-band
network, we expect to leap-frog the competitive
offerings that are due to arrive in the coming
years, but which we believe will offer lower
levels of service performance compared to
the inherent capabilities of our Inmarsat-6
satellites. This puts us in a position to deliver
the fastest, highest capacity, most agile and
best-value services to the lowest cost and
smallest form factor terminals by the start of
the next decade. This will help us to maintain
a solid platform for the continued relevance
of L-band services over the medium and
long term.
2018 also saw us finalise our long-term
technology roadmap in the fast-growing
area of mobile broadband. This is particularly
important for the future prospects of the
business, given the significant expected
growth in demand from our customers for
broadband connectivity services on the move.
The development of our Global Xpress
broadband satellite network is taking place
over three phases, as we go from design and
initial infrastructure investment, to market
capture, and then into long-term growth.
During the first phase, from 2010 to 2017,
the first four GX satellites were designed, built,
launched and deployed, creating the world’s
first seamless global high throughput satellite
constellation, within-orbit redundancy.
The second phase, completed last year, focused
on global commercial service introduction of
an array of different GX services into each of
our key target markets (maritime, government,
aviation and enterprise) and initial revenue
generation. In 2018, GX-generated airtime
and related revenue was over $250m, up 85%
from 2017, highlighting the value and growth
that GX already is delivering for our business.
We remain on track to achieve our target of
an annual run rate of $500m of GX revenues
by the end of 2020, five years after global
commercial service introduction.
In this second phase, we also started to prepare
for the future development of the GX network,
to meet burgeoning customer demand and to
continue to build market share in our chosen
markets, with follow-on capacity designed
and procured with a fifth GX satellite and two
Ka-band secondary payloads on our first two
Inmarsat-6 satellites. Importantly, each of
these follow-on GX capabilities is targeted
and regional in coverage, focused on areas
of greatest customer demand and brings
significant capacity and capability augmentation,
at much lower cost per bit compared to the
first phase of the GX network creation.
By the end of 2018, we had started the third
phase in our GX network strategy, as we now
look to further augment our GX network
through new, agile, lower cost technologies.
In the coming years, this next generation
GX programme will ensure we have the pace,
agility and continuous innovation to ensure
we can react to market demand or new
competitive pressures in much shorter time
periods and in a highly efficient manner,
adopting disruptive new technologies on a
› Aviation was a key growth driver, delivering
over 40% revenue growth during the year.
Our installed base of aircraft which will use
our services for IFC more than doubled,
of which over 100 aircraft have now entered
commercial service, using GX Aviation to
provide passenger connectivity services.
We also signed a landmark agreement with
Panasonic Avionics which, over the medium
to long-term, is expected to be a game-
changing agreement for both businesses
in this fast-growing sector. Combined, our
GX and EAN Aviation IFC services now have
around 1,580 aircraft under contract, as well
as an additional 450 aircraft for which either
existing customers have an option to install
further aircraft or where new customers have
committed to GX hardware with third party
suppliers. Our Core Aviation business also
delivered another strong performance,
supported by product enhancements and
upgrades, as well as increased customer
usage
› Our Enterprise business performed well
to optimise the revenue generation of our
legacy products, growth from which is being
constrained by expanding cellular network
coverage. However, the major long-term
growth opportunity for Enterprise is in those
Industrial Internet of Things (‘IIoT’) sectors
where satellite services have a material
role to play, with 2018 being a year in which
we achieved important traction in the
development of managed service offerings,
with several trials and ‘proof-of-concept’
projects completed, ensuring that we are
confident of scaling this business in 2019
These performances helped to drive
consistent top line and bottom line growth
in 2018, reflecting the strength of our
diversified growth portfolio, with a solid
foundation of a specialisation in satellite
mobility services, market incumbency,
differentiated capabilities and
technology leadership.
Our solid operational
progress supported
the Group in delivering
revenue growth of over
5% for the year
Inmarsat plc | Annual Report and Accounts 2018
Strategic Report | Chief Executive’s strategic review
11
This landmark agreement is clear evidence
of Inmarsat delivering on its strategy and it
strengthens our conviction that, building
upon the success of the global GX network,
aviation will be a significant growth driver
of our overall business.
We look forward to working closely with
Panasonic as we develop our relationship
with them and accelerate our respective
innovation roadmaps. This will ensure
that we continue to provide airlines and
passengers with the world’s leading
IFC experience.
Landmark
collaboration
agreement
with Panasonic
During the year, we entered a strategic
collaboration agreement with Panasonic
Avionics Corporation (‘Panasonic’) in
Commercial Aviation, for an initial ten-year
period. The agreement combines our
complementary market leading services
to offer broadband in-flight connectivity
(‘IFC’) paired with high-value solutions
and services to customers in commercial
aviation. The agreement enables airlines,
aircraft manufacturers and passengers
to benefit from the combined expertise
of two companies that have been at the
forefront of technology and innovation
for nearly four decades.
rolling basis to deliver very high relative returns
on investment through low cost procurements
and high satellite fill factors. With a lower
absolute cost and much higher capacity that
can be deployed with exceptional precision,
these satellites will ensure that we can
meaningfully moderate our annual
infrastructure capex while still meeting rapid
growth in customer bandwidth demand.
Ultimately, this will enable us to be a leader
in usable cost per bit delivered into space.
2018 saw us make good progress in developing
this next generation of GX, with initial scoping
and design work completed. Discussions
continue with a number of potential
manufacturing partners about delivering
this technology, and we will provide more
details about our plans in this area in 2019.
Inmarsat’s diversified growth
portfolio ensures we remain
well positioned for the future
Supported by this technology leadership
position, as well as our solid foundation of
incumbency and differentiated capabilities,
Inmarsat continues to manage a diverse
growth portfolio of businesses and products
that are, in aggregate, expected to deliver
growth, with the portfolio mix expected
to continue to evolve as individual markets
fluctuate over the medium term. This diversified
growth portfolio, with a focused set of attractive
end markets that offer scale and growth
potential, and where we lead with sustainable
differentiation, will remain a key strength for
Inmarsat going forward.
Consequently, we aim to continue delivering
consistent growth in Maritime, Government,
Aviation and Enterprise from our long-established
L-band services, with higher growth to
come from the delivery of new GX services
to customers in these markets. Furthermore,
we expect to generate significant growth from
our delivery of broadband services to the
fast-growing and substantial IFC segment in
commercial aviation. Our progress in each of
these areas was evidenced by our performance
in 2018, as this report sets out in detail later
on in the individual business unit updates.
Ian Dawkins,SVP Global
Network Operations at PAC
and CEO of ITC Global, and
Phil Balaam, President,
Inmarsat Aviation celebrate
the collaboration agreement
GovernanceFinancial StatementsStrategic Report 12
Strategic Report | Chief Executive’s strategic review
Inmarsat plc | Annual Report and Accounts 2018
Chief Executive’s strategic review
continued
Our revenue growth
was again supported by
a focus on operational
leverage through a
carefully controlled
cost base and an
infrastructure capital
investment programme
that is expected to
meaningfully moderate
from the start of the
next decade
Based on our future delivery against these
strategic objectives, we remain confident
in the growth outlook for Inmarsat, based
on the positive market outlook in mobile
satellite communications and our
strong position within it.
Building on the strong operational momentum
achieved in recent years, evidenced by
our market share gains in different segments
across our Business Units in 2018, our priorities
are to deliver further revenue growth from
material new GX revenue streams. Our L-band
business will remain resilient over the medium
to long-term, given its differentiated
characteristics, with future growth expected
to be generated from the emergence of new
market opportunities and next generation
safety services across our chosen end markets.
We continue to target mid-single digit
percentage revenue growth* on average
over the next five years, from 2018 to 2022,
with EBITDA* and free cash flow generation*
expected to steadily improve as a result of
the combined impact of this growing revenue
base, an improved revenue mix, tightly
managed overhead costs, completion of
the I-6 satellite programme and the impact
of new technologies. These last two elements
will drive a meaningful moderation in our
annual infrastructure capex from the start
of the next decade.
Finally, I would like to thank our employees
for their on-going hard work and efforts
to drive the business forward, as well as our
partners, customers, shareholders and
other major stakeholders for their continued
support during 2018.
RUPERT PEARCE
CHIEF EXECUTIVE OFFICER
18 March 2019
We also have a number of incremental growth
opportunities available over the medium
to long term. These include delivering major
strategic projects for Government customers,
growing dedicated regional businesses in
hitherto untapped geographies, leveraging
our digital services capabilities and increasing
our presence in IIoT.
Our growth profile remains supported
by our established market presence, our
differentiated capabilities, our technology
leadership, our specialisation in delivering
satellite mobility services and our
market-leading distribution channel.
A consistent and clear
strategic direction
Inmarsat therefore remains well positioned
to access the significant market opportunity
created by continued growth in the use of
data at sea, in the air and across remote areas.
This will be supported by a consistent,
and unchanged, strategic ambition to be an
‘enabler for the connected world’, more details
of which can be found on the following pages.
Anywhere in the world, Inmarsat connects
customers to a better future, and our strategy
continues to be based on the following priorities:
› Capturing the maximum number
of high speed broadband platforms
› Positioning our L-band services for
new growth
› Establishing our digital platform
and business
› Creating a high-performance
organisation and
› Transforming our operating environment
*Excluding Ligado Networks
Inmarsat plc | Annual Report and Accounts 2018
Strategic Report | Market trends
13
Market trends
The satellite communications
industry continues to be
driven by several major
market trends, which
are expected to impact
Inmarsat and other satellite
operators in the future
Demand outlook: continued
requirement for satellite connectivity
Customer requirements for broadband satellite
connectivity are expected to continue to grow,
particularly for mobility-based applications,
at sea, on land and in the air. In addition,
a growing range of applications is emerging,
predominantly in the area of ‘Industrial Internet
of Things’ (‘IIoT’), to drive demand for lower
bandwidth connectivity services.
The growing demand for broadband satellite
connectivity will be driven by data-rich
applications and an increase in the number of
connected devices. This is creating significant
growth opportunities in the area of mobility,
where satellite connectivity is often the only
solution, given the absence of terrestrial
network coverage.
In Maritime, the growth potential of
broadband services, referred to as VSAT,
remains strong across all market segments,
including merchant shipping, leisure, fishing
and off-shore. These segments are serviced by
operators and distributors of broadband satellite
connectivity, particularly in the relatively high
frequency Ka-band, which Inmarsat operates in,
and Ku-band spectrum bands. Euroconsult
estimates that over 50% of maritime VSAT
capacity demand will be for Ka-band services
by 2023, outpacing Ku-band satellite
capacity demand, and growing at a CAGR of
35% between 2017 and 2027. The increasing
demand for broadband connectivity in Maritime
is driven by a commercial requirement for
value-added data services to help improve
a vessel’s operating environment, as well as a
need for higher bandwidth to service a vessel’s
crew, as they access basic applications in
their everyday lives, like internet access and
‘Voice-over-Internet Protocol’ video calls.
Government spend on satellite
communications, particularly for secure,
high-bandwidth connectivity to and from
airborne and seaborne platforms is also
expected to grow significantly in the future.
Government customers are augmenting
their proprietary military communications
systems with fungible commercial satellite
capabilities as they face increasing
requirements to support applications such
as communications on-the-move (‘COTM’)
and Airborne Intelligence, Surveillance and
Reconnaissance (‘AISR’), which drive demand
for ubiquitous, consistent coverage, and
high performance global satellite services.
In Aviation, cabin connectivity, both in the
Business and Commercial Aviation segments,
is seeing rapid adoption by airlines and an
increasing usage by passengers, as airlines
are starting to explore the opportunities
and advantages of the connected aircraft.
Passenger demand as well as connected
aircraft services will drive future bandwidth
requirements per aircraft and lead to a
continued increase in the number of aircraft
using connectivity services.
Aside from broadband, there is also expected to
be growth in L-band satellite services in certain
niche segments, particularly in the area of IIoT.
Euroconsult is forecasting the number of active
satellite IoT devices to increase from 3.5 million
in 2017 to nearly 11 million by 2026. L-band
offers differentiated utility for applications in
this area, which requires small form factors and
high resilience capabilities. The development of
small and lower cost satellite IoT terminals in the
future will unlock demand for this connectivity
and enable new user applications in this exciting,
emerging growth market over the long term.
Supply outlook: rapidly
evolving dynamics
From a supply perspective, much of the swathes
of capacity that were previously expected
to come on-line in the coming years, mainly
focused on land-based communication services
such as consumer broadband in rural areas or
GSM backhaul, remains highly uncertain and
at a minimum will likely see substantial delays
compared to initially targeted service dates.
In particular for new broadband NGSO
constellation projects significant hurdles
remain, including:
› Gaining key regulatory clearances
› Organising spectrum coordination
with regulators and other operators
› Achieving Global market access
through distribution partnerships
› Nurturing on-going relationships with
key commercial launch partners
› Building relationships with key suppliers
to develop terminals and equipment
› Significant investment required,
particularly on ground infrastructure
› Addressing issues of space debris and
de-orbiting requirements
While all global LEO and MEO constellations
would be covering the oceans, most of them
are built for land based applications and not
configured for mobility which will leave them
with large amounts of their capacity stranded
in areas of low demand and ultimately make
them uncompetitive with future GEO satellites
in terms of capacity cost and capacity
available in demand hot spots.
This will lead to a situation where, despite
potential significant new capacity supply
coming in the market, global mobility markets
will require substantial amounts of new targeted,
mobility-based, capacity to service a number
of significant future hotspots of demand,
in particular for customers in the In-Flight
Connectivity segment in Commercial Aviation.
Implications for satellite operators
These dynamics bring challenges and
opportunities for satellite operators, which will
constantly need to innovate, evolve and adapt,
to support efforts in capturing market share in
high growth segments, particularly mobility.
Satellite operators are changing their business
models to move from selling pure capacity
to marketing solutions and services. With a
prospect of global aggregate overcapacity and
partial capacity shortage in demand hotspots,
future satellites are also being increasingly
developed with flexible payloads, enabling
coverage in areas with highest demand rather
than wasting supply over low-demand regions.
The increasing role of satellite in the wider
connectivity landscape should create
more opportunities for satellite operators.
For mobility markets in particular, Inmarsat
is extremely well positioned to capture
a large part of the future growth given our:
› Dedicated focus on mobility satcom markets
› Established global market presence
across all key mobility markets
› Differentiated capabilities in end-to-end
network management services to
our customers
networks
› Technology leadership with best-in-class
› Valuable global spectrum assets
› Market-leading distribution channels
GovernanceFinancial StatementsStrategic Report 14
Strategic Report | Our strategy
Inmarsat plc | Annual Report and Accounts 2018
Our strategy
Enabling the connected world
Our strategy remains
focused on delivering on
our purpose of ‘enabling
the connected world’
by meeting the remote
and mobile connectivity
requirements of our
customers, reliably,
securely and globally
Our strategy is founded on our continued
drive to pioneer innovation in mobile satellite
communications services, to ensure we deliver
higher data rates to increasingly smaller and
lighter mobile terminals. Our seamless global
coverage and market-leading consistency
in network reliability remains attractive
to commercial and government users,
whose operations require mission and
business critical communications support.
Looking ahead, inherent in our purpose is
an ambition to develop from being a mobile
satellite communications operator to
becoming a powerful, proactive digital enabler
operating diversified networks and platforms
across which we deliver highly-integrated,
value-added digital solutions and services to
our target markets and customers. By focusing
on becoming an ‘enabler for the connected
world’, we will be at the forefront of supporting
our customers, as their requirements for
higher levels of secure and reliable bandwidth,
on a global basis, continues in the future.
Our strategic vision
OUR PURPOSE
OUR STRATEGIC
PRIORITIES
1
Capture the
maximum number
of broadband
platforms
5
Transform
our operating
environment
2
Reposition
L-band for
new growth
Enabling
the connected
world
4
Create a high
performance
organisation
3
Establish
our Digital
Platform and
Business
We will achieve our
strategic priorities by
Defining connectivity
at sea
Defining the connected
aircraft
Solving our customers’
hardest connectivity
challenges
Becoming the leading IoT
connectivity partner
Inmarsat plc | Annual Report and Accounts 2018
Strategic Report | Our strategy
15
1
Capture the
maximum number
of broadband
platforms
STRATEGIC PRIORITIES
› Maintain a market-leading position in our mid-market
merchant maritime heartland with Fleet Xpress (‘FX’)
› Expand GX into high-end maritime VSAT markets
› Maintain our BGA heartland position with JetConneX (‘JX’)
› Become the leading player in global IFC, with GX and EAN
› Become the leading provider of Comsatcoms
and MilSatComs to government
› Establish a strong position in the energy satcoms market
› Manage the future trajectory of legacy L-band services
› Drive Fleet One into new scaled maritime markets
› Extend Fleetbroadband (‘FB’) into GMDSS compliance
› Drive SwiftBroadband-Safety into new high-growth
aviation markets
› Become the leading satellite player in global IoT markets
PROGRESS IN 2018 – KEY HIGHLIGHTS
› GX generated revenue of $250.9m in 2018
(2017: $135.9m)
› FX installed on over 5,375 vessels at end of 2018
(2017: 2,600)
› JX installed on 428 aircraft in 2018 (2017: 165),
generating revenue of $22.0m (2017: $4.4m)
› Around 1,580 aircraft under signed contract for IFC
services with GX, including 452 aircraft installed with GX
and EAN terminals of which over 100 are in service on GX
› Growth of U.S. Government business supported by
contract with Boeing, as exclusive provider of GX
milsatcoms to U.S. Government
› L-band connectivity continues to contribute
a significant portion of Inmarsat’s revenue base
› Fleet One now installed on over 4,000+ vessels
(2017: 3,000+)
› FB now GMDSS compliant
› Launch of SwiftBroadband-Safety
› Further development of M2M initiatives around
IoT opportunities
› Digitise and virtualise our networks and service offerings
› Launch a variety of digital products
› Establish our end-to-end digital services platform
› Develop compelling tools and value adds on our platform
› Grow a Global Certified Application Partner ecosystem
› Innovate around digital business models and partnerships
› Establish a position around big data, information and AI
› Recently established Product Group made progress
in driving digitisation and digital product development
› Product delivery priorities embedded in each part
of the business
› On-going development of a long-term product
and digital roadmap
› Product portfolio optimised to ensure focused
investment in key areas
› Develop strategic resourcing plans to enable access
to the requisite skills
› Attract and retain the best people via a compelling
employee value proposition
› Deliver excellence on talent management, career
development and performance management
› Align reward and recognition to support high-performance
› Invigorate and embed our culture and values
› Deliver best-in-class satellite and network operations
› Implement enabling, light-touch core processes
› Support with modern, work-aligned IT systems
› Deliver best-in-class service delivery, assurance and support
› Align our global locations with our growth potential
› Manage-out legacy proactively to intensify focus
of resources on growth
› Enhance project management capability
› Continue our investment in modern, agile and collaborative
working environments
› Strategic resourcing plans rolled out for each part
of the business
› Employee value proposition launched
› Talent management and career development
programmes launched
› New reward and recognition processes designed
and implemented
› Significant progress made in embedding a refreshed
culture and values across the organisation
› 99.9% service availability continued to be delivered
by our L-band networks
› Further progress in scaling GX services whilst
enhancing stability
› On-going efforts to optimise operating footprint,
assure service resilience and reduce legacy
systems & services
› 24/7 cyber operations further improved
› Continued development of ‘One IT’ programme,
driving technology efficiency across the organisation
2
Re-position
L-band for
new growth
3
Establish our
digital platform
and business
4
Create a high-
performance
organisation
5
Transform
our operating
environment
Measuring our progress
We measure progress towards our strategic vision using both financial and non-financial key
performance indicators and robust risk management. These measures help us maintain a regular
check against major milestones within each of our strategic priorities allowing us to flex and adjust
as required to improve delivery and execution.
Key performance indicators
Page 18
Our principal risks and uncertainties
Page 53
GovernanceFinancial StatementsStrategic Report 16
Strategic Report | Our business model
Inmarsat plc | Annual Report and Accounts 2018
Our business model
Placing our customers at the centre
of everything we do
Gaining competitive advantage through
our corporate responsibility and our people
Our competitive advantage comes from our networks, our innovative
technology, the expertise of our people and the strength and breadth
of our partnership ecosystem
Market leading networks
Supported by:
L-BAND
Our resilient L-band networks, based on our lnmarsat-3 and lnmarsat-4
satellite constellations, will continue to support the evolving mobile
communications requirements in our key customer segments.
Our new Inmarsat-6 satellites will support our growth ambitions.
DUAL PAYLOAD
The Inmarsat-6 satellites comprise two dual payload (L-band and
Ka-band) satellites due to be launched at the start of the next decade.
This will ensure the reorientation of our L-band capabilities towards
new growth opportunities, as well as providing additional capacity
to the existing GX network.
KA-BAND
Global Xpress (‘GX’), based on our 4 Inmarsat-5 satellites currently
in orbit, is the world’s first global, mobile, high bandwidth network,
designed to support our customers’ high bandwidth connectivity
requirements. GX5 is planned for launch in 2019.
OUR TECHNOLOGY
We continue to invest in innovation to deliver market-winning
solutions to our customers and differentiate our propositions.
BEST-IN-CLASS PARTNER ECOSYSTEM
Our relationships with our partners, from suppliers to distributors,
help us to strengthen our service offering.
HIGHLY SKILLED WORKFORCE
Our people have the skills, competencies and experience to deliver
our business objectives and create value. Our culture and values
are focused on innovation and performance excellence.
OUR FINANCIAL RESOURCES
We use our balance sheet to support the organic and inorganic
investment needed to deliver our strategic imperatives.
S-BAND
The integrated S-band satellite and air-to-ground network, the EAN,
will be a compelling and unique proposition for commercial aviation
customers in Europe.
Corporate social responsibility
Page 42
Our people
Page 49
Inmarsat plc | Annual Report and Accounts 2018
Strategic Report | Our business model
17
Our value chain
+
Delivering value
for our stakeholders
By operating global satellite networks and fully
optimised ground infrastructure networks, supported
by market-leading distribution partnerships, we provide
our customers with global coverage to any device
We are committed to
creating and delivering
sustained value for all
our stakeholders
Our products, services and solutions enable our customers to operate safely,
securely and efficiently and to deliver innovative communications services
to their users across our four customer-focused business segments.
Shareholders and bondholders
We aim to drive profitable growth to
help deliver value for our shareholders
and bondholders.
Maritime
D E V ELOPERS
Enterprise
Aviation
CUSTOMERS
P
A
R
T
N
E
R
S
S
R
E
LI
P
SUP
Business overview
Page 20
Government
Our revenue streams
Our four business units, Maritime, Government, Aviation and Enterprise,
are our interfaces with our customers and drive the Group’s revenue.
Customers and partners
We focus on the key drivers of value
for our partners and customers such
as security, reliability and seamless
delivery with global coverage
and mobility.
Employees
We have a strong culture, underpinned
by our values and our commitment
to diversity, and we are focused on
our employees’ career development,
making internal promotions
where possible.
Communities
We are proud of our public service
ethos and the part we play in ensuring
the safety of the public and particularly
the maritime community.
GovernanceFinancial StatementsStrategic Report 18
(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) (cid:46)ey (cid:51)erformance (cid:44)ndicators
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
Key Performance Indicators
(cid:48)eas(cid:88)rin(cid:74) s(cid:88)ccess a(cid:74)ainst o(cid:88)r (cid:78)ey strate(cid:74)ic priorities
Financial KPIs
REVENUE
(cid:55)otal (cid:42)ro(cid:88)p reven(cid:88)e (cid:74)enerated
from operations incl(cid:88)din(cid:74)
(cid:47)i(cid:74)ado (cid:49)etwor(cid:78)s(cid:17)
Why it is important
(cid:53)even(cid:88)e (cid:74)rowth validates o(cid:88)r
(cid:69)(cid:88)siness model(cid:15) (cid:69)y demonstratin(cid:74)
o(cid:88)r a(cid:69)ility to develop o(cid:88)r c(cid:88)stomer
(cid:69)ase and increase (cid:36)(cid:53)(cid:51)(cid:56) across
o(cid:88)r prod(cid:88)ct portfolio(cid:17)
1 2
$1,465.2m
(cid:24)(cid:17)3(cid:8)
2018
2017*
2016*
$1,465.2m
$1,391.7m
$1,314.1m
Link to risks and remuneration
(cid:55)he achievement of this (cid:46)(cid:51)(cid:44)
depends on s(cid:88)ccessf(cid:88)l e(cid:91)ec(cid:88)tion
of all o(cid:88)r strate(cid:74)ic priorities and
minimisation of the ma(cid:77)ority of
o(cid:88)r ris(cid:78)s(cid:17) (cid:44)ncentive plans incl(cid:88)de
reven(cid:88)e as a performance metric so
this will (cid:69)e meas(cid:88)red to determine
incentive plan payments(cid:17)
CASH CAPEX
Cash capital e(cid:91)pendit(cid:88)re is
the cash flow relatin(cid:74) to tan(cid:74)i(cid:69)le
and intan(cid:74)i(cid:69)le asset additions(cid:30)
it incl(cid:88)des capitalised la(cid:69)o(cid:88)r costs
and e(cid:91)cl(cid:88)des capitalised interest(cid:17)
Why it is important
Cash cape(cid:91) indicates o(cid:88)r contin(cid:88)ed
investment in (cid:74)rowth and development
of o(cid:88)r networ(cid:78) and infrastr(cid:88)ct(cid:88)re(cid:15)
as well as o(cid:88)r investment in the f(cid:88)t(cid:88)re
technolo(cid:74)ies of the (cid:69)(cid:88)siness(cid:17)
1 2 3 5
$590.7m
3(cid:17)8(cid:8)
2018
2017*
2016*
$590.7m
$614.1m
$419.8m
Link to risks and remuneration
(cid:55)he achievement of this (cid:46)(cid:51)(cid:44)
depends on s(cid:88)ccessf(cid:88)l e(cid:91)ec(cid:88)tion
of o(cid:88)r strate(cid:74)ic priorities and
caref(cid:88)l mana(cid:74)ement of ris(cid:78)s(cid:17)
(cid:44)ncentive plans incl(cid:88)de financial
metrics as performance metrics so
this (cid:46)(cid:51)(cid:44) will contri(cid:69)(cid:88)te to determinin(cid:74)
incentive plan payments(cid:17)
EBITDA
(cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) is total (cid:42)ro(cid:88)p profit (cid:69)efore
net financin(cid:74) costs(cid:15) ta(cid:91)ation(cid:15)
depreciation and amortisation(cid:15)
(cid:74)ains(cid:18)losses on disposal of assets(cid:15)
impairment losses and share of
profit of associates(cid:17)
Why it is important
(cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) is a commonly (cid:88)sed ind(cid:88)stry
term to help o(cid:88)r shareholders
(cid:88)nderstand contri(cid:69)(cid:88)tions made
(cid:69)y o(cid:88)r (cid:69)(cid:88)siness (cid:88)nits(cid:17) (cid:44)t reflects
how the effect of (cid:74)rowin(cid:74) reven(cid:88)es
and cost mana(cid:74)ement deliver
val(cid:88)e for o(cid:88)r shareholders(cid:17)
1 2 3 5
$770.1m
(cid:23)(cid:17)2(cid:8)
2018
2017*
2016*
$770.1m
$739.3m
$785.6m
Link to risks and remuneration
(cid:55)he achievement of this (cid:46)(cid:51)(cid:44) depends
on s(cid:88)ccessf(cid:88)l e(cid:91)ec(cid:88)tion of o(cid:88)r
strate(cid:74)ic priorities and minimisation
of all o(cid:88)r principal ris(cid:78)s(cid:17) (cid:44)ncentive
plans incl(cid:88)de (cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) as one of
the financial performance metrics
so it will (cid:69)e meas(cid:88)red as a (cid:69)asis
for incentive plan payments(cid:17)
GX REVENUE
(cid:53)even(cid:88)e (cid:74)enerated from the sale
of airtime and other related services
on the (cid:42)lo(cid:69)al (cid:59)press networ(cid:78)(cid:17)
Why it is important
(cid:42)rowth in (cid:42)(cid:59) reven(cid:88)e demonstrates
o(cid:88)r a(cid:69)ility to transition o(cid:88)r
c(cid:88)stomer (cid:69)ase and attract new
c(cid:88)stomers to a hi(cid:74)her (cid:69)andwidth(cid:15)
hi(cid:74)her val(cid:88)e platform(cid:15) there(cid:69)y
ens(cid:88)rin(cid:74) we develop o(cid:88)r c(cid:88)stomer
relationships and deliver val(cid:88)e for o(cid:88)r
shareholders(cid:17) (cid:58)e have previo(cid:88)sly
declared a tar(cid:74)et of (cid:7)(cid:24)00m of (cid:42)(cid:59)
reven(cid:88)es (cid:69)y the end of 2020(cid:17)
1 3 5
$250.9m
8(cid:23)(cid:17)6(cid:8)
2018
2017*
$135.9m
2016*
$76.9m
$250.9m
Link to risks and remuneration
(cid:55)he achievement of this (cid:46)(cid:51)(cid:44)
depends on s(cid:88)ccessf(cid:88)l e(cid:91)ec(cid:88)tion
of o(cid:88)r strate(cid:74)ic priorities and
minimisation partic(cid:88)larly of
certain ris(cid:78)s(cid:17) (cid:44)ncentive plans
incl(cid:88)de (cid:42)(cid:59) reven(cid:88)e and delivery
either incorporated within the
overall reven(cid:88)e tar(cid:74)et or within
the performance share plan
strate(cid:74)ic o(cid:69)(cid:77)ective metric(cid:17)
ADJUSTED EPS
(cid:36)d(cid:77)(cid:88)sted (cid:42)ro(cid:88)p profit after ta(cid:91)
attri(cid:69)(cid:88)ta(cid:69)le to e(cid:84)(cid:88)ity holders of the
Company divided (cid:69)y the wei(cid:74)hted
avera(cid:74)e n(cid:88)m(cid:69)er of shares in iss(cid:88)e
(cid:11)e(cid:91)cl(cid:88)din(cid:74) shares held (cid:69)y the
employee tr(cid:88)st(cid:12)(cid:17)
Why it is important
(cid:42)rowth in ad(cid:77)(cid:88)sted (cid:40)(cid:51)(cid:54) is a meas(cid:88)re
of o(cid:88)r a(cid:69)ility to deliver profita(cid:69)le
(cid:74)rowth (cid:69)y increasin(cid:74) o(cid:88)r reven(cid:88)e
and deliverin(cid:74) cost efficiencies
across the (cid:42)ro(cid:88)p(cid:15) there(cid:69)y deliverin(cid:74)
val(cid:88)e for o(cid:88)r shareholders(cid:17)
1 2 5
$0.32 per share 23(cid:17)8(cid:8)
2018
2017*
2016*
$0.32
$0.42
$0.63
Link to risks and remuneration
(cid:55)he achievement of this (cid:46)(cid:51)(cid:44) depends
on s(cid:88)ccessf(cid:88)l e(cid:91)ec(cid:88)tion of o(cid:88)r
strate(cid:74)ic priorities and minimisation
of the ma(cid:77)ority of o(cid:88)r principal ris(cid:78)s(cid:17)
(cid:44)ncentive plans incl(cid:88)de financial
metrics as performance metrics so
this (cid:46)(cid:51)(cid:44) will contri(cid:69)(cid:88)te to determinin(cid:74)
incentive plan payments(cid:17)
(cid:13)(cid:53)estated for (cid:44)F(cid:53)(cid:54) 1(cid:24)
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) (cid:46)ey (cid:51)erformance (cid:44)ndicators
19
Non-financial KPIs
NETWORK AVAILABILITY
On(cid:74)oin(cid:74) investment in o(cid:88)r space
and (cid:74)ro(cid:88)nd infrastr(cid:88)ct(cid:88)re ens(cid:88)res
that c(cid:88)stomers are s(cid:88)pported
(cid:69)y an overall (cid:28)(cid:28)(cid:17)(cid:28)(cid:8) availa(cid:69)ility in
each of o(cid:88)r (cid:42)(cid:59) and (cid:47)(cid:16)(cid:69)and networ(cid:78)s(cid:17)
(cid:58)e meet the (cid:42)(cid:48)(cid:39)(cid:54)(cid:54) re(cid:84)(cid:88)irements
set (cid:69)y the (cid:44)nternational (cid:48)aritime
Or(cid:74)ani(cid:93)ation for safety services(cid:17)
Why it is important
(cid:40)ns(cid:88)rin(cid:74) o(cid:88)r networ(cid:78) is availa(cid:69)le
and relia(cid:69)le is essential in providin(cid:74)
the re(cid:84)(cid:88)ired (cid:84)(cid:88)ality of service
to o(cid:88)r c(cid:88)stomers(cid:17) (cid:55)his relia(cid:69)ility
is critical for safety at sea and
aviation coc(cid:78)pit services(cid:17)
1 2 5
99.9%
2018
2017
2016
99.9%
99.9%
99.9%
Link to risks and remuneration
(cid:55)he ris(cid:78)s for this (cid:46)(cid:51)(cid:44) are specifically
n(cid:88)m(cid:69)ers (cid:23)(cid:15) (cid:24) and 10(cid:17) (cid:44)ncentive plans
have this (cid:46)(cid:51)(cid:44) indirectly lin(cid:78)ed to
all the financial metrics as witho(cid:88)t
this (cid:46)(cid:51)(cid:44) meetin(cid:74) the re(cid:84)(cid:88)ired
relia(cid:69)ility levels(cid:15) o(cid:88)r financial
tar(cid:74)ets can (cid:69)e affected(cid:17)
EMPLOYEE TURNOVER
(cid:57)ol(cid:88)ntary employee t(cid:88)rnover
is calc(cid:88)lated as the n(cid:88)m(cid:69)er
of vol(cid:88)ntary leavers in a year
(cid:11)permanent employees(cid:12) divided
(cid:69)y the avera(cid:74)e headco(cid:88)nt
d(cid:88)rin(cid:74) the year(cid:17)
Why it is important
(cid:54)ome level of t(cid:88)rnover is healthy
to ena(cid:69)le a refresh of o(cid:88)r s(cid:78)ills (cid:69)ase
and create new opport(cid:88)nities for
o(cid:88)r people to pro(cid:74)ress(cid:17) (cid:43)owever(cid:15)
(cid:78)eepin(cid:74) it at a reasona(cid:69)le level is
important to s(cid:88)stain en(cid:74)a(cid:74)ement(cid:15)
retain (cid:78)ey s(cid:78)ills and (cid:78)nowled(cid:74)e
and avoid (cid:88)nnecessary disr(cid:88)ption
and recr(cid:88)itment costs(cid:17)
4
12.6%
2018
2017
2016
12.6%
9.7%
8.4%
Link to risks and remuneration
(cid:55)he ris(cid:78) for this (cid:46)(cid:51)(cid:44) is specifically
n(cid:88)m(cid:69)er 13(cid:15) however employee
performance affects m(cid:88)ltiple
other ris(cid:78)s(cid:17) One of o(cid:88)r priority
areas is a foc(cid:88)s on (cid:44)nmarsat as
a hi(cid:74)h(cid:16)performin(cid:74) Company
and this will (cid:69)e part of individ(cid:88)al
incentive o(cid:69)(cid:77)ectives as well
as part of the (cid:47)(cid:55)(cid:44)(cid:51) o(cid:69)(cid:77)ectives
for the C(cid:40)O and his team(cid:17)
EMISSIONS
(cid:58)e set an interim tar(cid:74)et to
red(cid:88)ce (cid:54)cope 1 and 2 emissions
(cid:11)mar(cid:78)et (cid:69)ased(cid:12) (cid:69)y 20(cid:8) (cid:69)y 2018
compared to 2016(cid:17) (cid:58)e are c(cid:88)rrently
(cid:88)nder(cid:74)oin(cid:74) a (cid:54)cope 3 screenin(cid:74)
e(cid:91)ercise with the aim to set a
science(cid:16)(cid:69)ased emissions
red(cid:88)ction tar(cid:74)et(cid:17)
Why it is important
(cid:36)ltho(cid:88)(cid:74)h the direct activities of
the (cid:42)ro(cid:88)p are (cid:77)(cid:88)d(cid:74)ed to have a low
environmental impact(cid:15) we (cid:88)nderstand
that(cid:15) (cid:88)nless (cid:88)r(cid:74)ent action is ta(cid:78)en
to limit (cid:74)lo(cid:69)al temperat(cid:88)res to 2C
(cid:11)3(cid:24)(cid:17)6F(cid:12) a(cid:69)ove pre(cid:16)ind(cid:88)strial levels(cid:15)
climate chan(cid:74)e presents si(cid:74)nificant
and systemic ris(cid:78)s(cid:17)
4 5
EMPLOYEE ENGAGEMENT
(cid:40)mployee en(cid:74)a(cid:74)ement descri(cid:69)es
an employee’s level of commitment
and enth(cid:88)siasm to their wor(cid:78) and
their company(cid:17)
Why it is important
(cid:44)t is important as hi(cid:74)her levels
of employee en(cid:74)a(cid:74)ement have
(cid:69)een proven to positively impact
(cid:69)(cid:88)siness performance(cid:17)
4
8,605tCO2e
2(cid:26)(cid:8)†
2018
2017*
2016*
8,605 tCO2e
9,857 tCO2e
11,724 tCO2e
Link to risks and remuneration
(cid:55)he achievement of this (cid:46)(cid:51)(cid:44) is
lin(cid:78)ed to o(cid:88)r corporate responsi(cid:69)ility
to red(cid:88)ce (cid:74)lo(cid:69)al (cid:74)reenho(cid:88)se (cid:74)as
emissions and avoid the worst
effects of climate chan(cid:74)e(cid:17) (cid:55)his (cid:46)(cid:51)(cid:44)
is incl(cid:88)ded within (cid:69)on(cid:88)s o(cid:69)(cid:77)ectives
for relevant staff(cid:17)
(cid:114)(cid:36)(cid:69)sol(cid:88)te (cid:54)cope 1 and 2 emissions
7.6/10
2018
2017
2016
0.0
7.6
7.4
Link to risks and remuneration
(cid:55)he achievement of hi(cid:74)h levels
of employee en(cid:74)a(cid:74)ement will
contri(cid:69)(cid:88)te to o(cid:88)r drive for a
hi(cid:74)h(cid:16)performance or(cid:74)anisation
and therefore (cid:88)nderpins the
delivery of all o(cid:88)r strate(cid:74)ic priorities(cid:17)
(cid:48)any of o(cid:88)r ris(cid:78)s are affected
if we do not have en(cid:74)a(cid:74)ed staff(cid:17)
(cid:55)here are specific o(cid:69)(cid:77)ectives in
short and lon(cid:74)(cid:16)term incentive
plans to meas(cid:88)re this (cid:46)(cid:51)(cid:44)(cid:17)
O(cid:88)r (cid:46)(cid:51)(cid:44)s are f(cid:88)ndamentally connected with o(cid:88)r (cid:78)ey strate(cid:74)ic priorities(cid:15) and therefore
help (cid:88)s to meas(cid:88)re o(cid:88)r s(cid:88)ccess in deliverin(cid:74) these priorities(cid:17)
1
Capt(cid:88)re the
ma(cid:91)im(cid:88)m n(cid:88)m(cid:69)er
of (cid:69)road(cid:69)and
platforms
2
Reposition
(cid:47)(cid:16)(cid:69)and for
new (cid:74)rowth
3
4
5
(cid:40)sta(cid:69)lish o(cid:88)r
di(cid:74)ital platform
and (cid:69)(cid:88)siness
Create a
hi(cid:74)h(cid:16)performin(cid:74)
or(cid:74)anisation
(cid:55)ransform
o(cid:88)r operatin(cid:74)
environment
Our strategy
Page 14
Our principal risks and uncertainties
Page 53
Remuneration report
Page 81
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20
(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) (cid:37)(cid:88)siness overview
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
Business overview
MARITIME
CONNECTIVITY
AT EVERY STAGE
From shipping vessel to shopping basket,
we’re helping revolutionise the maritime
ecosystem
Digitalisation remains the key driver
of satellite connectivity in Maritime
Customers are using data services and
digital platforms to drive the efficiency
of their operating environments and
to deliver internet-based applications
for their crew.
Discover more at
inmarsat.com
The adoption of Fleet Xpress
The adoption of Fleet Xpress
“The adoption of Fleet Xpress
across the globe indicates
across the globe indicates
across the globe indicates
that it has become the key
that it has become the key
that it has become the key
platform for converting
platform for converting
platform for converting
industry talk into action
industry talk into action
industry talk into action
on digitalisation”
on digitalisation”
on digitalisation”
Ronald Spithout
Ronald Spithout
President
Inmarsat Maritime
Inmarsat Maritime
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) (cid:37)(cid:88)siness overview
21
S
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The VSAT market remains the key
growth opportunity for Inmarsat
Increasing customer demand for higher
bandwidth is driving the fast-growing
VSAT market, which is being driven
by vessels migrating from the mature
mid-market as well as new builds.
50,000 vessels
In the VSAT market by 2023
(Source: Euroconsult)
Fleet Xpress now has 25%
share of the VSAT market
Inmarsat’s GX-based VSAT product,
Fleet Xpress, which uniquely has
our L-band product, FleetBroadband
integrated seamlessly within it, now has
a 25% market share in VSAT.
Discover more at
inmarsat.com
22
(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) (cid:37)(cid:88)siness overview
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
Business overview
MARITIME
Market overview and
Inmarsat’s position
(cid:39)i(cid:74)italisation remains the (cid:78)ey driver of (cid:48)aritime
satellite connectivity(cid:15) with an increasin(cid:74) (cid:88)se of
commercial applications(cid:15) for e(cid:91)ample real(cid:16)time
en(cid:74)ine monitorin(cid:74)(cid:15) ena(cid:69)lin(cid:74) a more efficient
operatin(cid:74) environment for ship owners and fleet
mana(cid:74)ers(cid:17) (cid:55)hese c(cid:88)stomers are also levera(cid:74)in(cid:74)
(cid:69)andwidth to deliver internet applications
for crew(cid:15) incl(cid:88)din(cid:74) entertainment streamin(cid:74)
and social media platforms(cid:17)
(cid:55)his increasin(cid:74) c(cid:88)stomer demand for
hi(cid:74)her (cid:69)andwidth is drivin(cid:74) the fast(cid:16)(cid:74)rowin(cid:74)
(cid:57)(cid:54)(cid:36)(cid:55) mar(cid:78)et(cid:15) which is e(cid:91)pected to increase
si(cid:74)nificantly from c(cid:17) 2(cid:24)(cid:15)000 vessels today
to over (cid:24)0(cid:15)000 vessels (cid:69)y the end of 20231(cid:17)
(cid:55)he vast ma(cid:77)ority of this mar(cid:78)et (cid:74)rowth is
e(cid:91)pected to (cid:69)e driven (cid:69)y vessels mi(cid:74)ratin(cid:74)
from the mat(cid:88)re mid(cid:16)mar(cid:78)et(cid:15) as well as new
ships comin(cid:74) to mar(cid:78)et with linefit(cid:16)installed
(cid:57)(cid:54)(cid:36)(cid:55) terminals(cid:17)
(cid:44)n 2016(cid:15) we la(cid:88)nched o(cid:88)r(cid:15) now(cid:15) mar(cid:78)et(cid:16)leadin(cid:74)
(cid:42)(cid:59)(cid:16)(cid:69)ased (cid:57)(cid:54)(cid:36)(cid:55) prod(cid:88)ct(cid:15) Fleet (cid:59)press (cid:11)(cid:67)F(cid:59)’(cid:12)(cid:15)
which (cid:88)ni(cid:84)(cid:88)ely has o(cid:88)r (cid:47)(cid:16)(cid:69)and prod(cid:88)ct(cid:15)
Fleet(cid:37)road(cid:69)and (cid:11)(cid:67)F(cid:37)’(cid:12) inte(cid:74)rated seamlessly
within it(cid:17) (cid:44)n 2018(cid:15) F(cid:59) (cid:74)arnered c(cid:17) (cid:24)0(cid:8) of all
new (cid:57)(cid:54)(cid:36)(cid:55) installations (cid:74)lo(cid:69)ally1(cid:17) (cid:55)his s(cid:88)ccess
has ens(cid:88)red that(cid:15) over the last 3 years(cid:15)
o(cid:88)r installed (cid:57)(cid:54)(cid:36)(cid:55) vessel (cid:69)ase has more than
do(cid:88)(cid:69)led to c(cid:17) 6(cid:15)200 vessels(cid:15) e(cid:84)(cid:88)atin(cid:74) to a c(cid:17)
2(cid:24)(cid:8) mar(cid:78)et share of the entire (cid:57)(cid:54)(cid:36)(cid:55) mar(cid:78)et1
(cid:11)2016(cid:29) c(cid:17) 3(cid:15)000 vessels(cid:15) c(cid:17) 1(cid:24)(cid:8) mar(cid:78)et share2(cid:12)(cid:17)
(cid:36) si(cid:74)nificant portion of the vessels movin(cid:74)
to (cid:57)(cid:54)(cid:36)(cid:55) are mi(cid:74)ratin(cid:74) from the mid(cid:16)mar(cid:78)et(cid:15)
which c(cid:88)rrently stands at c(cid:17) (cid:23)(cid:24)(cid:15)000 vessels
(cid:69)(cid:88)t is e(cid:91)pected to decline to c(cid:17) 2(cid:24)(cid:15)000 vessels
(cid:69)y 2023(cid:15) almost entirely as a res(cid:88)lt of this
mi(cid:74)ration(cid:17) (cid:55)his is a mar(cid:78)et where we have
historically held s(cid:88)(cid:69)stantial mar(cid:78)et share
thro(cid:88)(cid:74)h F(cid:37)(cid:15) which we aim to contin(cid:88)e to
protect (cid:74)oin(cid:74) forward(cid:17) O(cid:88)r inc(cid:88)m(cid:69)ency(cid:15)
com(cid:69)ined with o(cid:88)r mar(cid:78)et(cid:16)leadin(cid:74) (cid:57)(cid:54)(cid:36)(cid:55) offer(cid:15)
positions (cid:88)s well for s(cid:88)stained mar(cid:78)et share
(cid:74)rowth in the ind(cid:88)stry(cid:17)
(cid:36)s part of this e(cid:91)pected transition(cid:15) in 2018
we saw a net red(cid:88)ction of 3(cid:15)(cid:26)3(cid:28) vessels in F(cid:37)(cid:15)
o(cid:88)r leadin(cid:74) and lon(cid:74)(cid:16)esta(cid:69)lished mid(cid:16)mar(cid:78)et
prod(cid:88)ct(cid:17) (cid:55)he most material driver of this
red(cid:88)ction was c(cid:88)stomers movin(cid:74) to (cid:57)(cid:54)(cid:36)(cid:55)
offerin(cid:74)s(cid:15) incl(cid:88)din(cid:74) 1(cid:15)(cid:24)8(cid:24) vessels mi(cid:74)ratin(cid:74) to
o(cid:88)r F(cid:59) prod(cid:88)ct(cid:17) (cid:55)his is estimated to represent
over (cid:24)0(cid:8) of o(cid:88)r F(cid:37) c(cid:88)stomers movin(cid:74) to (cid:57)(cid:54)(cid:36)(cid:55)(cid:15)
with the remainder (cid:69)ein(cid:74) c(cid:88)stomers that
moved to competitor (cid:57)(cid:54)(cid:36)(cid:55) offerin(cid:74)s(cid:17)
(cid:47)(cid:16)(cid:69)and competition remains limited(cid:17) (cid:58)e are
hi(cid:74)hly confident that(cid:15) over time(cid:15) we will contin(cid:88)e
to (cid:74)row o(cid:88)r mar(cid:78)et share in the hi(cid:74)hly val(cid:88)a(cid:69)le
and fast(cid:16)(cid:74)rowin(cid:74) (cid:57)(cid:54)(cid:36)(cid:55) mar(cid:78)et se(cid:74)ment(cid:15) (cid:69)oth
thro(cid:88)(cid:74)h the mi(cid:74)ration of a hi(cid:74)h proportion
of o(cid:88)r e(cid:91)istin(cid:74) F(cid:37) c(cid:88)stomers to F(cid:59)(cid:15) as well as
thro(cid:88)(cid:74)h winnin(cid:74) a hi(cid:74)h proportion of new
c(cid:88)stomers in the form of line(cid:16)fit new vessel
installations or the transition of e(cid:91)istin(cid:74) vessels
from third party (cid:57)(cid:54)(cid:36)(cid:55) networ(cid:78)s to (cid:42)(cid:59)(cid:17) (cid:58)e
c(cid:88)rrently have over (cid:24)(cid:15)000 committed vessels
on F(cid:59) from o(cid:88)r (cid:55)a(cid:78)e(cid:16)or(cid:16)(cid:51)ay partners(cid:17)
(cid:44)n (cid:69)oth F(cid:37) and F(cid:59)(cid:15) we have introd(cid:88)ced enhanced
prod(cid:88)ct offerin(cid:74)s (cid:11)for e(cid:91)ample Crew (cid:59)press(cid:15)
o(cid:88)r new crew(cid:16)foc(cid:88)sed(cid:15) F(cid:59)(cid:16)(cid:69)ased(cid:15) prod(cid:88)ct(cid:12)(cid:15)
tar(cid:74)eted price incentives and new sales and
mar(cid:78)etin(cid:74) strate(cid:74)ies with favo(cid:88)ra(cid:69)le initial
mar(cid:78)et reaction(cid:17) (cid:58)hilst these actions will ens(cid:88)re
we contin(cid:88)e to retain and(cid:18)or capt(cid:88)re mar(cid:78)et
share(cid:15) (cid:57)(cid:54)(cid:36)(cid:55) (cid:36)(cid:53)(cid:51)(cid:56) will contin(cid:88)e to red(cid:88)ce for
some time as o(cid:88)r distri(cid:69)(cid:88)tion channel provides
a (cid:74)reater proportion of new (cid:57)(cid:54)(cid:36)(cid:55) reven(cid:88)es at
wholesale rather than retail pricin(cid:74)(cid:17) (cid:43)owever(cid:15)
over the medi(cid:88)m to lon(cid:74) term(cid:15) the mi(cid:74)ration to
F(cid:59) is e(cid:91)pected to have a (cid:69)eneficial impact on
(cid:48)aritime’s overall (cid:36)(cid:53)(cid:51)(cid:56)(cid:15) driven (cid:69)y c(cid:88)stomer
transition to hi(cid:74)her val(cid:88)e data pac(cid:78)a(cid:74)es(cid:17)
Revenue
$552.8m
(cid:11)2(cid:17)6(cid:8)(cid:12)
EBITDA
$429.0m
(cid:11)(cid:23)(cid:17)0(cid:8)(cid:12)
Maritime Business Results
(cid:53)even(cid:88)e
(cid:39)irect costs
Gross margin
(cid:44)ndirect costs
EBITDA
(cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) mar(cid:74)in (cid:8)
Cash cape(cid:91)
Business Unit Operating Cash Flow
PRODUCT PERFORMANCE
Fleet(cid:37)road(cid:69)and (cid:11)(cid:67)F(cid:37)’(cid:12)
(cid:57)(cid:54)(cid:36)(cid:55) (cid:11)(cid:59)(cid:47) and F(cid:59)(cid:12)
Fleet One
(cid:40)(cid:84)(cid:88)ipment sales
(cid:47)e(cid:74)acy prod(cid:88)cts
Year ended 31 December
2018
$m
552.8
(85.2)
467.6
(38.6)
429.0
77.6%
(54.4)
374.6
201(cid:26)
(cid:11)restated(cid:12)
(cid:7)m
(cid:24)6(cid:26)(cid:17)3
(cid:11)8(cid:23)(cid:17)0(cid:12)
(cid:23)83(cid:17)3
(cid:11)36(cid:17)3(cid:12)
(cid:23)(cid:23)(cid:26)(cid:17)0
(cid:26)8(cid:17)8(cid:8)
(cid:11)(cid:23)(cid:24)(cid:17)(cid:28)(cid:12)
(cid:23)01(cid:17)1
Chan(cid:74)e
(cid:11)2(cid:17)6(cid:8)(cid:12)
(cid:11)1(cid:17)(cid:23)(cid:8)(cid:12)
(cid:11)3(cid:17)2(cid:8)(cid:12)
(cid:11)6(cid:17)3(cid:8)(cid:12)
(cid:11)(cid:23)(cid:17)0(cid:8)(cid:12)
–
(cid:11)18(cid:17)(cid:24)(cid:8)(cid:12)
(cid:11)6(cid:17)6(cid:8)(cid:12)
Revenue
Number of vessels
2018
$m
311.6
151.4
7.6
20.1
62.1
201(cid:26)
(cid:7)m
2018
201(cid:26)
3(cid:23)(cid:28)(cid:17)2
32,366
36(cid:15)10(cid:24)
12(cid:23)(cid:17)(cid:23)
(cid:24)(cid:17)0
13(cid:17)(cid:28)
(cid:26)(cid:23)(cid:17)8
6,219
4,072
n/a
n/a
(cid:23)(cid:15)332
3(cid:15)083
n(cid:18)a
n(cid:18)a
Average Revenue
per User (‘ARPU’)
per month
2018
$
756
201(cid:26)
(cid:7)
(cid:26)80
2,391
2(cid:15)88(cid:24)
100
n/a
n/a
100
n(cid:18)a
n(cid:18)a
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) (cid:37)(cid:88)siness overview
23
(cid:58)e delivered
consistent do(cid:88)(cid:69)le(cid:16)di(cid:74)it
(cid:74)rowth in reven(cid:88)es
and mar(cid:78)et share
in the fast(cid:16)(cid:74)rowin(cid:74)
VSAT segment
F(cid:37) reven(cid:88)es fell (cid:69)y 10(cid:17)8(cid:8) in 2018(cid:15) incl(cid:88)din(cid:74)
1(cid:24)(cid:17)(cid:23)(cid:8) in (cid:52)(cid:23)(cid:15) with an ann(cid:88)al F(cid:37) vessel decline
of 3(cid:15)(cid:26)3(cid:28) vessels(cid:17) (cid:55)he vast ma(cid:77)ority of the F(cid:37)
vessels lost over the year moved to (cid:57)(cid:54)(cid:36)(cid:55)(cid:15)
with over (cid:24)0(cid:8) of these mi(cid:74)rations estimated
to have traded (cid:88)p to F(cid:59)(cid:15) with the remainder
(cid:74)oin(cid:74) to competitor (cid:57)(cid:54)(cid:36)(cid:55) offerin(cid:74)s(cid:17) (cid:47)(cid:16)(cid:69)and
competition remained limited(cid:15) while there was
also some impact from scrappa(cid:74)e on F(cid:37) vessel
losses (cid:69)(cid:88)t these were (cid:69)roadly offset (cid:69)y the
n(cid:88)m(cid:69)er of F(cid:37) installations on new (cid:69)(cid:88)ilds d(cid:88)rin(cid:74)
the year(cid:17) F(cid:37) (cid:36)(cid:53)(cid:51)(cid:56) declined (cid:69)y 3(cid:17)1(cid:8) to (cid:7)(cid:26)(cid:24)6
per month in 2018(cid:15) reflectin(cid:74) the mi(cid:74)ration
to (cid:57)(cid:54)(cid:36)(cid:55) (cid:69)ein(cid:74) wei(cid:74)hted towards hi(cid:74)her (cid:88)sa(cid:74)e(cid:15)
hi(cid:74)her (cid:36)(cid:53)(cid:51)(cid:56) c(cid:88)stomers(cid:17) Fleet One airtime
and e(cid:84)(cid:88)ipment reven(cid:88)e increased (cid:69)y
(cid:24)2(cid:17)0(cid:8) to (cid:7)(cid:26)(cid:17)6m(cid:17)
(cid:40)(cid:84)(cid:88)ipment reven(cid:88)e(cid:15) to help drive mar(cid:78)et share
and win new c(cid:88)stomers(cid:15) increased (cid:69)y (cid:7)6(cid:17)2m
to (cid:7)20(cid:17)1m(cid:17) O(cid:88)r other(cid:15) mainly low mar(cid:74)in and
le(cid:74)acy prod(cid:88)cts declined (cid:69)y (cid:7)12(cid:17)(cid:26)m(cid:15) or 1(cid:26)(cid:17)0(cid:8)(cid:15)
to (cid:7)62(cid:17)1m(cid:17)
2018 Results
(cid:48)aritime reven(cid:88)e declined (cid:69)y (cid:7)1(cid:23)(cid:17)(cid:24)m(cid:15) with
f(cid:88)rther stron(cid:74) (cid:74)rowth from (cid:57)(cid:54)(cid:36)(cid:55) prod(cid:88)cts(cid:15)
incl(cid:88)din(cid:74) F(cid:59)(cid:15) (cid:11)(cid:7)2(cid:26)(cid:17)0m(cid:12)(cid:15) hi(cid:74)her terminal sales
(cid:11)(cid:7)6(cid:17)1m(cid:12)(cid:15) and modest (cid:74)rowth from Fleet One
(cid:11)(cid:7)2(cid:17)6m(cid:12)(cid:15) offset (cid:69)y lower reven(cid:88)e from F(cid:37)
(cid:11)(cid:7)3(cid:26)(cid:17)(cid:24)m(cid:15) of which (cid:7)1(cid:28)m(cid:15) or c(cid:17) (cid:24)0(cid:8)(cid:15) related
to vessel mi(cid:74)rations to F(cid:59)(cid:12) and other mainly
le(cid:74)acy prod(cid:88)cts (cid:11)(cid:7)12(cid:17)(cid:26)m(cid:12)(cid:17)
(cid:39)irect costs increased (cid:69)y (cid:7)1(cid:17)2m in 2018(cid:15) mainly
reflectin(cid:74) increased terminal sales and hi(cid:74)her
provisions a(cid:74)ainst possi(cid:69)le f(cid:88)t(cid:88)re (cid:69)ad de(cid:69)ts(cid:15)
which more than offset leased capacity cost
savin(cid:74)s from the mi(cid:74)ration of (cid:59)(cid:47) vessels to F(cid:59)(cid:17)
(cid:44)ndirect costs increased (cid:69)y (cid:7)2(cid:17)3m(cid:15) mainly
d(cid:88)e to timin(cid:74) of mar(cid:78)etin(cid:74) spend for the
(cid:57)olvo Ocean (cid:53)ace(cid:15) which finished in (cid:45)(cid:88)ne 2018(cid:17)
(cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) declined (cid:69)y (cid:7)18(cid:17)0m(cid:17) (cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) mar(cid:74)in
decreased to (cid:26)(cid:26)(cid:17)6(cid:8) in the year(cid:17)
(cid:48)aritime cape(cid:91) increased (cid:69)y (cid:7)8(cid:17)(cid:24)m to (cid:7)(cid:24)(cid:23)(cid:17)(cid:23)m
d(cid:88)rin(cid:74) the year(cid:15) reflectin(cid:74) a hi(cid:74)her level of
c(cid:88)stomer installations in F(cid:59) and (cid:59)(cid:47) mi(cid:74)rations(cid:17)
(cid:55)here was consistent stron(cid:74) (cid:74)rowth in (cid:57)(cid:54)(cid:36)(cid:55)
d(cid:88)rin(cid:74) 2018(cid:15) with 21(cid:17)(cid:26)(cid:8) reven(cid:88)e (cid:74)rowth in
the year(cid:17) (cid:36)t the end of 2018(cid:15) there were 6(cid:15)21(cid:28)
installed (cid:57)(cid:54)(cid:36)(cid:55) vessels (cid:11)(cid:24)(cid:15)3(cid:26)(cid:24) of which were F(cid:59)
vessels(cid:12) with the installation (cid:69)ac(cid:78)lo(cid:74) remainin(cid:74)
at c(cid:17) 6(cid:24)0 vessels(cid:17) (cid:55)he (cid:57)(cid:54)(cid:36)(cid:55) vessel (cid:69)ase installed
(cid:69)y o(cid:88)r distri(cid:69)(cid:88)tion partners was 30(cid:8) of
installed vessels(cid:15) from 1(cid:23)(cid:8) at the end of 201(cid:26)(cid:17)
F(cid:59) installations remain in the ran(cid:74)e of o(cid:88)r
anticipated (cid:84)(cid:88)arterly installation r(cid:88)n rate (cid:74)oin(cid:74)
forward(cid:17) (cid:55)he proportion of new c(cid:88)stomer F(cid:59)
installations remained hi(cid:74)h at c(cid:17) 1(cid:28)(cid:8) d(cid:88)rin(cid:74)
the year(cid:17) (cid:55)he (cid:59)(cid:47) mi(cid:74)ration pro(cid:74)ramme is
on trac(cid:78) for completion (cid:69)y the end of 201(cid:28)(cid:17)
(cid:55)he vast ma(cid:77)ority of
the F(cid:37) vessels lost over
the year moved to (cid:57)(cid:54)(cid:36)(cid:55)(cid:15)
with over (cid:24)0(cid:8) of these
mi(cid:74)ratin(cid:74) to F(cid:59)
1 (cid:54)o(cid:88)rce(cid:29) (cid:40)(cid:88)cons(cid:88)lt(cid:17) (cid:48)ar(cid:78)et si(cid:93)e estimates incl(cid:88)de commercial maritime(cid:15) offshore ener(cid:74)y(cid:15) passen(cid:74)er ships and s(cid:88)per yachts
2 (cid:54)o(cid:88)rce(cid:29) Clar(cid:78)sons(cid:17) (cid:48)ar(cid:78)et si(cid:93)e estimates incl(cid:88)de commercial maritime(cid:15) offshore ener(cid:74)y(cid:15) passen(cid:74)er ships and s(cid:88)per yachts
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(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) (cid:37)(cid:88)siness overview
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
Business overview
GOVERNMENT
MISSION
CRITICAL
From forecasting weather patterns,
to co-ordinating aid relief after
the storm
Continued growth expected in
Governments’ use of commercial
satellite connectivity
Mobility communications in the Government
segment will be driven by growing customer
demand and by certain customers looking
to augment their proprietary systems with
commercial satellite communications.
Discover more at
inmarsat.com
Inmarsat remains a trusted partner
of major global governments
We are becoming more embedded
in customer platforms in the U.S.
and will continue to diversify and
internationalise outside the U.S.
7% growth
In retail revenue for global Government
and Military commercial satellite
communications, to 2027 (Source: NSR)
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) (cid:37)(cid:88)siness overview
25
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Access to reliable and
“Access to reliable and
resilient connectivity is
connectivity is
connectivity is
connectivity is
essential for our customers,
essential for our customers,
essential for our customers,
essential for our customers,
enabling the constant
enabling the constant
enabling the constant
transmission of data
transmission of data to
transmission of data
optimise operations”
optimise operations”
optimise operations”
Susan Miller
Susan Miller
President and CEO
President and CEO
Inmarsat Government, Inc.
Inmarsat Government, Inc.
Inmarsat Government, Inc.
Todd McDonell
Todd McDonell
President
President
Inmarsat Global
Inmarsat Global
Government
Government
26
(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) (cid:37)(cid:88)siness overview
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
F(cid:88)rther mar(cid:78)et share
(cid:74)ains and incremental
penetration in the (cid:56)(cid:17)(cid:54)(cid:17)(cid:15)
while reven(cid:88)es remain
ro(cid:69)(cid:88)st in other mar(cid:78)ets
Business overview
GOVERNMENT
2018 results
(cid:44)n 2018(cid:15) (cid:42)overnment reven(cid:88)e increased (cid:69)y
(cid:7)1(cid:23)(cid:17)3m(cid:15) 3(cid:17)(cid:28)(cid:8)(cid:15) to (cid:7)381(cid:17)0m(cid:17) (cid:55)his performance
was driven in partic(cid:88)lar (cid:69)y o(cid:88)r (cid:56)(cid:17)(cid:54)(cid:17) (cid:42)overnment
(cid:69)(cid:88)siness(cid:15) which delivered reven(cid:88)e (cid:74)rowth
of 6(cid:17)(cid:23)(cid:8) in 2018(cid:15) s(cid:88)pported (cid:69)y several new
(cid:69)(cid:88)siness wins in the year(cid:17) (cid:55)here was f(cid:88)rther
pro(cid:74)ress in the (cid:37)oein(cid:74) (cid:55)a(cid:78)e(cid:16)or(cid:16)(cid:51)ay contract(cid:15)
with a f(cid:88)rther material increase in (cid:88)nderlyin(cid:74)
reven(cid:88)es in the year(cid:17) O(cid:88)r performance in the
(cid:56)(cid:17)(cid:54)(cid:17) was f(cid:88)rther (cid:69)olstered in the last (cid:84)(cid:88)arter
of the year (cid:69)y new leases and increased
(cid:74)overnment e(cid:91)pendit(cid:88)re (cid:88)nder lon(cid:74) term
c(cid:88)stomer contracts(cid:17)
O(cid:88)tside the (cid:56)(cid:17)(cid:54)(cid:17)(cid:15) reven(cid:88)es were 1(cid:17)1(cid:8) lower
in the year(cid:17) (cid:58)e finished the year relatively
well(cid:15) with reven(cid:88)es (cid:88)p 1(cid:17)3(cid:8) in (cid:52)(cid:23)(cid:15) driven
(cid:69)y increased prod(cid:88)ct (cid:88)sa(cid:74)e across
a n(cid:88)m(cid:69)er of c(cid:88)stomers(cid:17)
(cid:39)irect costs increased (cid:69)y (cid:7)12(cid:17)(cid:24)m in 2018(cid:15)
mainly d(cid:88)e to reven(cid:88)e (cid:74)rowth and mi(cid:91)(cid:17)
(cid:44)ndirect costs were red(cid:88)ced (cid:69)y (cid:7)3(cid:17)2m in
the year(cid:15) d(cid:88)e to lower employee costs
and other cost savin(cid:74)s(cid:17)
(cid:48)ainly as a res(cid:88)lt of hi(cid:74)her reven(cid:88)e(cid:15)
(cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) increased (cid:69)y (cid:7)(cid:24)(cid:17)0m in 2018(cid:15) (cid:69)(cid:88)t
(cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) mar(cid:74)in for the year decreased to
(cid:26)0(cid:17)(cid:28)(cid:8) (cid:11)(cid:26)2(cid:17)3(cid:8)(cid:12)(cid:15) driven (cid:69)y reven(cid:88)e mi(cid:91)(cid:17)
Market overview and
Inmarsat’s position
(cid:53)etail reven(cid:88)e in (cid:74)lo(cid:69)al (cid:42)overnment and
(cid:48)ilitary commercial satellite comm(cid:88)nications
is e(cid:91)pected to (cid:74)row (cid:69)y c(cid:17) (cid:26)(cid:8) per ann(cid:88)m(cid:15)
from 201(cid:26) to 202(cid:26) (cid:11)so(cid:88)rce(cid:29) (cid:49)(cid:54)(cid:53)(cid:12)(cid:15) despite
a competitive and price sensitive mar(cid:78)et
environment(cid:15) driven (cid:69)y f(cid:88)rther increases in
the provision of services for c(cid:88)stomers on the
move(cid:17) (cid:55)his rise in mo(cid:69)ility comm(cid:88)nications
will contin(cid:88)e to (cid:69)e f(cid:88)elled (cid:69)y c(cid:88)stomer demand
for services over (cid:69)road(cid:69)and and (cid:47)(cid:16)(cid:69)and
networ(cid:78)s and (cid:69)y some c(cid:88)stomers f(cid:88)rther
a(cid:88)(cid:74)mentin(cid:74) their military comm(cid:88)nications
systems with commercial satellite capa(cid:69)ilities(cid:17)
Conse(cid:84)(cid:88)ently(cid:15) there is a si(cid:74)nificant opport(cid:88)nity
for satellite operators with the appropriate
level of capa(cid:69)ilities and covera(cid:74)e to (cid:69)ecome
inte(cid:74)rated within proprietary networ(cid:78)s of certain
(cid:78)ey (cid:74)overnment c(cid:88)stomers(cid:17) For a n(cid:88)m(cid:69)er
of years(cid:15) (cid:44)nmarsat has (cid:69)een at the forefront
of this dynamic(cid:15) evidenced (cid:69)y o(cid:88)r (cid:42)overnment
(cid:69)(cid:88)siness (cid:74)rowin(cid:74) its reven(cid:88)e (cid:69)ase (cid:69)y c(cid:17) 33(cid:8)
since 201(cid:24)(cid:17)
(cid:55)his (cid:74)rowth has primarily (cid:69)een driven (cid:69)y
o(cid:88)r (cid:56)(cid:17)(cid:54)(cid:17) (cid:42)overnment (cid:69)(cid:88)siness(cid:15) where we are
(cid:69)ecomin(cid:74) more em(cid:69)edded in a n(cid:88)m(cid:69)er of
si(cid:74)nificant c(cid:88)stomer platforms(cid:17) (cid:55)his will help
to s(cid:88)pport a sta(cid:69)le lon(cid:74)(cid:16)term (cid:74)rowth profile(cid:15)
with incremental reven(cid:88)e (cid:69)ein(cid:74) (cid:74)enerated
from increased c(cid:88)stomer (cid:88)sa(cid:74)e thro(cid:88)(cid:74)h
o(cid:88)r service delivery aro(cid:88)nd event(cid:16)driven
activities and via a hi(cid:74)her n(cid:88)m(cid:69)er of installed
terminals for c(cid:88)stomers(cid:17) O(cid:88)tside the (cid:56)(cid:17)(cid:54)(cid:17)(cid:15)
we have contin(cid:88)ed to see(cid:78) to diversify and
internationalise o(cid:88)r prod(cid:88)ct portfolio
and mar(cid:78)et presence(cid:17)
Revenue
$381.0m
(cid:14)3(cid:17)(cid:28)(cid:8)
EBITDA
$270.2m
(cid:14)1(cid:17)(cid:28)(cid:8)
Government Business Results
(cid:53)even(cid:88)e
(cid:39)irect costs
Gross margin
(cid:44)ndirect costs
EBITDA
(cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) mar(cid:74)in (cid:8)
Cash cape(cid:91)
Business Unit Operating Cash Flow
Year ended 31 December
2018
$m
381.0
(66.9)
314.1
(43.9)
270.2
70.9%
(5.0)
265.2
201(cid:26)
(cid:7)m
366(cid:17)(cid:26)
(cid:11)(cid:24)(cid:23)(cid:17)(cid:23)(cid:12)
312(cid:17)3
(cid:11)(cid:23)(cid:26)(cid:17)1(cid:12)
26(cid:24)(cid:17)2
(cid:26)2(cid:17)3(cid:8)
(cid:11)(cid:28)(cid:17)(cid:28)(cid:12)
2(cid:24)(cid:24)(cid:17)3
Chan(cid:74)e
3(cid:17)(cid:28)(cid:8)
(cid:11)23(cid:17)0(cid:8)(cid:12)
0(cid:17)6(cid:8)
6(cid:17)8(cid:8)
1(cid:17)(cid:28)(cid:8)
–
(cid:23)(cid:28)(cid:17)(cid:24)(cid:8)
3(cid:17)(cid:28)(cid:8)
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) (cid:37)(cid:88)siness overview
27
Supporting the Spanish
Navy in a critical
humanitarian mission
(cid:55)he (cid:36)(cid:17)O(cid:17)(cid:53)(cid:17) Canta(cid:69)ria(cid:15) a military s(cid:88)pply
vessel(cid:15) which is part of the (cid:54)panish (cid:49)avy’s
fleet(cid:15) recently led the s(cid:88)ccessf(cid:88)l delivery
of (cid:67)Operation (cid:54)ophia’(cid:15) which entailed
the resc(cid:88)e of lar(cid:74)e n(cid:88)m(cid:69)ers of mi(cid:74)rants
stranded in the (cid:48)editerranean (cid:54)ea(cid:17)
(cid:42)(cid:59) connectivity(cid:15) provided to the Canta(cid:69)ria
thro(cid:88)(cid:74)h (cid:44)nmarsat’s partner(cid:15) (cid:54)atlin(cid:78) (cid:54)pain(cid:15)
ena(cid:69)led the vessel to receive real(cid:16)time
sit(cid:88)ational information re(cid:74)ardin(cid:74) the
presence of a n(cid:88)m(cid:69)er of mi(cid:74)rant vessels(cid:17)
(cid:55)he Canta(cid:69)ria was then a(cid:69)le to immediately
and acc(cid:88)rately set co(cid:88)rse to the (cid:93)ones
where the ships were located and then
(cid:88)ltimately resc(cid:88)e the stranded mi(cid:74)rants(cid:17)
(cid:58)e ena(cid:69)led
the vessel to receive
real(cid:16)time sit(cid:88)ational
information re(cid:74)ardin(cid:74)
the presence of a
n(cid:88)m(cid:69)er of mi(cid:74)rant
vessels
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(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) (cid:37)(cid:88)siness overview
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
Business overview
AVIATION
THE
CONNECTED
AIRCRAFT
From cockpit to cabin, the
future of high-speed In-Flight
Connectivity is here
In-Flight Connectivity will be a game-
changer for satellite communications
in Aviation
Around 23,000 commercial aircraft
are expected to be connected by 2027,
by when the penetration of IFC solutions
in commercial aviation is expected to
be over 60% (Source: Euroconsult).
Discover more at
inmarsat.com
(cid:107) (cid:42)(cid:59) (cid:36)viation for (cid:44)n(cid:16)Fli(cid:74)ht
Connectivity is startin(cid:74) to
emer(cid:74)e as an important
(cid:74)rowth driver for o(cid:88)r (cid:69)(cid:88)siness(cid:121)
(cid:51)hilip (cid:37)alaam
(cid:51)resident
(cid:44)nmarsat (cid:36)viation
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) (cid:37)(cid:88)siness overview
29
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Growth in Business and General
Aviation will be driven by more
aircraft in service and higher
bandwidth per aircraft
The number of connected aircraft in this
segment is expected to grow by 5% CAGR
to 35,000 by 2027 (Source: Euroconsult).
40.9%
Increase in Inmarsat’s Aviation
revenue in 2018
Safety and Operational Services
will be supported by a new generation
of services to the cockpit
Wholesale revenues in this segment
are expected to grow by a factor of
4.5x to $900m by 2027 (Source: NSR).
Discover more at
inmarsat.com
30
(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) (cid:37)(cid:88)siness overview
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
Business overview
AVIATION
Market overview and
Inmarsat’s position
(cid:44)n (cid:36)viation we operate in three mar(cid:78)et
se(cid:74)ments (cid:113) (cid:44)n(cid:16)Fli(cid:74)ht Connectivity (cid:11)(cid:67)(cid:44)FC’(cid:12)(cid:15)
(cid:37)(cid:88)siness and (cid:42)eneral (cid:36)viation (cid:11)(cid:67)(cid:37)(cid:42)(cid:36)’(cid:12) and
(cid:54)afety and Operational (cid:54)ervices (cid:11)(cid:67)(cid:54)O(cid:54)’(cid:12)(cid:17)
(cid:44)FC is predicted to (cid:69)ecome the lar(cid:74)est
(cid:74)lo(cid:69)al aviation se(cid:74)ment for mo(cid:69)ile satellite
comm(cid:88)nications in the f(cid:88)t(cid:88)re(cid:15) with aro(cid:88)nd
23(cid:15)000 commercial aircraft e(cid:91)pected to (cid:69)e
connected (cid:69)y 202(cid:26)(cid:15) (cid:88)p from (cid:26)(cid:15)(cid:23)00 in 201(cid:26)(cid:15)
(cid:69)y when the penetration of (cid:44)FC sol(cid:88)tions in
commercial aviation is e(cid:91)pected to (cid:69)e over
60(cid:8)(cid:15) from 30(cid:8) in 201(cid:26) (cid:11)so(cid:88)rce(cid:29) (cid:40)(cid:88)rocons(cid:88)lt(cid:12)(cid:17)
(cid:58)ith the (cid:74)lo(cid:69)al (cid:44)FC mar(cid:78)et in the midst of a
hi(cid:74)hly competitive mar(cid:78)et capt(cid:88)re phase(cid:15)
(cid:44)nmarsat has (cid:74)ained si(cid:74)nificant positive
moment(cid:88)m in (cid:69)(cid:88)ildin(cid:74) a mar(cid:78)et position(cid:15)
winnin(cid:74) new contracted c(cid:88)stomers(cid:15) helpin(cid:74)
to install those c(cid:88)stomers with (cid:44)FC systems
and (cid:69)rin(cid:74)in(cid:74) those c(cid:88)stomers into service(cid:17)
O(cid:88)r strate(cid:74)ic colla(cid:69)oration a(cid:74)reement with
(cid:51)anasonic (cid:36)vionics Corporation (cid:11)(cid:67)(cid:51)anasonic’(cid:12)
is e(cid:91)pected to help f(cid:88)rther cement a (cid:74)lo(cid:69)al
leadership position for (cid:44)nmarsat in (cid:44)FC over
the lon(cid:74)er term(cid:17)
(cid:42)rowth in the (cid:37)(cid:42)(cid:36) mar(cid:78)et will (cid:69)e driven (cid:69)y
(cid:74)rowin(cid:74) (cid:69)andwidth re(cid:84)(cid:88)irements per aircraft
and the contin(cid:88)ed increase in aircraft (cid:88)sin(cid:74)
connectivity services(cid:15) with the n(cid:88)m(cid:69)er of
connected (cid:69)(cid:88)siness aircraft e(cid:91)pected to (cid:74)row
(cid:69)y (cid:24)(cid:8) C(cid:36)(cid:42)(cid:53)(cid:15) (cid:69)etween 201(cid:26) to 202(cid:26)(cid:15) from
21(cid:15)600 to 3(cid:24)(cid:15)000 aircraft(cid:17) (cid:58)ith a lon(cid:74)(cid:16)standin(cid:74)(cid:15)
leadin(cid:74)(cid:15) position in this se(cid:74)ment(cid:15) (cid:44)nmarsat
has a si(cid:93)ea(cid:69)le c(cid:88)stomer (cid:69)ase and diverse
distri(cid:69)(cid:88)tion networ(cid:78) on which to (cid:69)(cid:88)ild(cid:17)
(cid:55)his fo(cid:88)ndation ena(cid:69)les (cid:44)nmarsat to capt(cid:88)re
mar(cid:78)et share(cid:15) thro(cid:88)(cid:74)h the on(cid:16)(cid:74)oin(cid:74) mar(cid:78)et
penetration of o(cid:88)r hi(cid:74)h (cid:69)andwidth prod(cid:88)ct(cid:15)
(cid:45)et Conne(cid:59)(cid:17)
(cid:58)ith more commercial aircraft e(cid:91)pected
to enter service and the arrival of a new
(cid:74)eneration of services to the coc(cid:78)pit(cid:15) as well as
the opport(cid:88)nity to s(cid:88)pport the deployment of
real(cid:16)time (cid:67)connected aircraft’ (cid:44)(cid:44)o(cid:55) applications(cid:15)
the (cid:54)O(cid:54) mar(cid:78)et is also e(cid:91)pected to (cid:74)row stron(cid:74)ly
over the comin(cid:74) years(cid:17) (cid:58)holesale reven(cid:88)es
in this sector are e(cid:91)pected to (cid:74)row from (cid:7)200m
in 201(cid:26) to (cid:7)(cid:28)00m (cid:69)y 202(cid:26) (cid:11)(cid:54)o(cid:88)rce(cid:29) (cid:49)(cid:54)(cid:53)(cid:12)(cid:17)
(cid:44)nmarsat is already a leader in this mar(cid:78)et and
we e(cid:91)pect to stren(cid:74)then o(cid:88)r mar(cid:78)et position
f(cid:88)rther thro(cid:88)(cid:74)h new prod(cid:88)cts and services(cid:17)
2018 results
(cid:36)viation delivered another e(cid:91)cellent performance(cid:15)
with reven(cid:88)e (cid:74)rowth of (cid:7)(cid:26)(cid:23)(cid:17)3m(cid:15) (cid:23)0(cid:17)(cid:28)(cid:8)(cid:15) to
(cid:7)2(cid:24)6(cid:17)1m in 2018(cid:15) driven (cid:69)y contin(cid:88)in(cid:74) stron(cid:74)
(cid:74)rowth in o(cid:88)r Core (cid:69)(cid:88)siness and reven(cid:88)es in
o(cid:88)r (cid:44)FC services more than do(cid:88)(cid:69)lin(cid:74)(cid:17)
(cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) conse(cid:84)(cid:88)ently increased (cid:69)y (cid:7)28(cid:17)0m
or 26(cid:17)(cid:28)(cid:8)(cid:15) to (cid:7)131(cid:17)(cid:28)m in 2018 with (cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36)
mar(cid:74)in of (cid:24)1(cid:17)(cid:24)(cid:8) for the year (cid:11)201(cid:26)(cid:29) (cid:24)(cid:26)(cid:17)2(cid:8)(cid:12)(cid:17)
Cash flow from (cid:36)viation has also improved
materially with the impact of (cid:69)oth hi(cid:74)her
reven(cid:88)es and lower cape(cid:91) to(cid:74)ether drivin(cid:74)
an improvement of (cid:7)13(cid:26)(cid:17)0m in the year(cid:17)
(cid:36)viation (cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) and cash flow mar(cid:74)ins(cid:15)
which have (cid:69)een impacted (cid:69)y o(cid:88)r efforts to
(cid:69)(cid:88)ild a stron(cid:74) mar(cid:78)et position in the rapidly
(cid:74)rowin(cid:74) and hi(cid:74)h potential (cid:44)FC mar(cid:78)et(cid:15) are
now recoverin(cid:74)(cid:17) (cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) mar(cid:74)ins in (cid:36)viation
fell from over 60(cid:8) in 2016(cid:15) to (cid:24)1(cid:8) in 2018
(cid:69)(cid:88)t we remain confident that these mar(cid:74)ins
will (cid:74)rad(cid:88)ally ret(cid:88)rn to at least their 2016
mar(cid:74)in levels over the ne(cid:91)t three years(cid:17)
Revenue
$256.1m
(cid:14)(cid:23)0(cid:17)(cid:28)(cid:8)
EBITDA
$131.9m
(cid:14)26(cid:17)(cid:28)(cid:8)
Aviation Business Results
(cid:53)even(cid:88)e
(cid:39)irect costs
Gross margin
(cid:44)ndirect costs
EBITDA
(cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) mar(cid:74)in (cid:8)
Cash cape(cid:91)
Business Unit Operating Cash Flow
CORE/IFC – FULL YEAR
(cid:53)even(cid:88)e
(cid:39)irect costs
Gross margin
(cid:44)ndirect costs
EBITDA
(cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) mar(cid:74)in (cid:8)
Cash cape(cid:91)
Business Unit Operating Cash Flow
Year ended 31 December
2018
$m
256.1
(56.3)
199.8
(67.9)
131.9
51.5%
(34.8)
97.1
201(cid:26)
(cid:11)restated(cid:12)
(cid:7)m
181(cid:17)8
(cid:11)12(cid:17)3(cid:12)
16(cid:28)(cid:17)(cid:24)
(cid:11)6(cid:24)(cid:17)6(cid:12)
103(cid:17)(cid:28)
(cid:24)(cid:26)(cid:17)2(cid:8)
(cid:11)1(cid:23)3(cid:17)8(cid:12)
(cid:11)3(cid:28)(cid:17)(cid:28)(cid:12)
Year ended 31 December
Core
IFC
2018
$m
201(cid:26)
(cid:11)restated(cid:12)
(cid:7)m
154.8
132(cid:17)(cid:24)
2018
$m
101.3
(1.2)
(cid:11)1(cid:17)0(cid:12)
(55.1)
Chan(cid:74)e
(cid:23)0(cid:17)(cid:28)(cid:8)
(cid:11)3(cid:24)(cid:26)(cid:17)(cid:26)(cid:8)(cid:12)
1(cid:26)(cid:17)(cid:28)(cid:8)
(cid:11)3(cid:17)(cid:24)(cid:8)(cid:12)
26(cid:17)(cid:28)(cid:8)
–
(cid:26)(cid:24)(cid:17)8(cid:8)
3(cid:23)3(cid:17)(cid:23)(cid:8)
201(cid:26)
(cid:11)restated(cid:12)
(cid:7)m
(cid:23)(cid:28)(cid:17)3
(cid:11)11(cid:17)3(cid:12)
38(cid:17)0
153.6
(10.2)
143.4
131(cid:17)(cid:24)
46.2
(cid:11)(cid:28)(cid:17)8(cid:12)
(57.7)
(cid:11)(cid:24)(cid:24)(cid:17)8(cid:12)
121(cid:17)(cid:26)
(11.5)
(cid:11)1(cid:26)(cid:17)8(cid:12)
(cid:28)2(cid:17)6(cid:8) (cid:28)1(cid:17)8(cid:8)
n(cid:18)a
n(cid:18)a
–
–
(34.8)
(cid:11)1(cid:23)3(cid:17)8(cid:12)
143.4
121(cid:17)(cid:26)
(46.3)
(cid:11)161(cid:17)6(cid:12)
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) (cid:37)(cid:88)siness overview
31
O(cid:88)r (cid:69)(cid:88)siness in (cid:44)n(cid:16)Fli(cid:74)ht Connectivity
was driven (cid:69)y a (cid:74)rowin(cid:74) aircraft (cid:69)ac(cid:78)lo(cid:74)
and stron(cid:74)er mar(cid:78)et position
Core Aviation business
O(cid:88)r Core (cid:36)viation (cid:69)(cid:88)siness comprises
(cid:54)wift(cid:37)road(cid:69)and and (cid:45)etConne(cid:59) for (cid:37)(cid:42)(cid:36)(cid:15)
Classic (cid:36)ero and (cid:54)wift(cid:37)road(cid:69)and(cid:16)(cid:54)afety for
(cid:54)O(cid:54) and le(cid:74)acy prod(cid:88)cts(cid:17) (cid:55)here was stron(cid:74)
(cid:74)rowth across these (cid:69)(cid:88)sinesses d(cid:88)rin(cid:74) the year(cid:15)
with reven(cid:88)e (cid:88)p (cid:69)y (cid:7)22(cid:17)3m(cid:15) or 16(cid:17)8(cid:8)(cid:15)
to (cid:7)1(cid:24)(cid:23)(cid:17)8m(cid:17)
(cid:37)y the end of 2018(cid:15) (cid:23)28 aircraft were installed
with (cid:45)etConne(cid:59)(cid:15) o(cid:88)r (cid:42)(cid:59)(cid:16)(cid:69)ased prod(cid:88)ct for (cid:37)(cid:42)(cid:36)(cid:15)
(cid:88)p from 16(cid:24) at the end of 201(cid:26)(cid:17) (cid:45)etConne(cid:59) (cid:74)rew
airtime reven(cid:88)e to (cid:7)22(cid:17)0m in 2018(cid:15) (cid:88)p from
(cid:7)(cid:23)(cid:17)(cid:23)m in 201(cid:26)(cid:17)
(cid:54)wift(cid:37)road(cid:69)and reven(cid:88)es (cid:74)rew (cid:7)2(cid:17)1m(cid:15) or 2(cid:17)8(cid:8)(cid:15)
in the year to (cid:7)(cid:26)(cid:26)(cid:17)(cid:23)m(cid:15) driven (cid:69)y hi(cid:74)her (cid:88)sa(cid:74)e(cid:15)
partic(cid:88)larly d(cid:88)rin(cid:74) the first nine months of
the year(cid:17)
(cid:44)n (cid:54)O(cid:54)(cid:15) Classic (cid:36)ero delivered reven(cid:88)e (cid:74)rowth
of (cid:7)(cid:23)(cid:17)0m(cid:15) or (cid:28)(cid:17)6(cid:8)(cid:15) to (cid:7)(cid:23)(cid:24)(cid:17)8m(cid:15) reflectin(cid:74) more
aircraft (cid:88)sin(cid:74) the prod(cid:88)ct(cid:17)
(cid:39)irect costs in o(cid:88)r Core (cid:69)(cid:88)siness remained
fairly immaterial at (cid:7)1(cid:17)2m in 2018(cid:15) whilst indirect
costs increased sli(cid:74)htly to (cid:7)10(cid:17)2m in the year(cid:17)
(cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) and (cid:37)(cid:88)siness (cid:56)nit Operatin(cid:74) Cash Flow
for the Core (cid:36)viation (cid:69)(cid:88)siness conse(cid:84)(cid:88)ently
(cid:69)oth (cid:74)rew (cid:69)y (cid:7)21(cid:17)(cid:26)m to (cid:7)1(cid:23)3(cid:17)(cid:23)m in the year(cid:17)
IFC
(cid:44)FC reven(cid:88)es(cid:15) comprisin(cid:74) o(cid:88)r (cid:42)(cid:59) (cid:36)viation
services for (cid:44)FC and o(cid:88)r (cid:47)(cid:16)(cid:69)and(cid:16)(cid:69)ased (cid:44)FC
services for commercial aviation(cid:15) to(cid:74)ether
(cid:74)rew (cid:69)y (cid:7)(cid:24)2(cid:17)0m to (cid:7)101(cid:17)3m in 2018(cid:15) incl(cid:88)din(cid:74)
the first (cid:42)(cid:59)(cid:16)(cid:74)enerated (cid:44)FC airtime reven(cid:88)e
of (cid:7)(cid:26)(cid:17)1m(cid:17)
(cid:58)e have c(cid:17) 1(cid:15)(cid:24)80 aircraft (cid:88)nder si(cid:74)ned
contracts for o(cid:88)r (cid:42)(cid:59) and (cid:40)(cid:36)(cid:49) (cid:44)FC services(cid:17)
(cid:55)here are c(cid:17) (cid:23)(cid:24)0 f(cid:88)rther aircraft for which
either e(cid:91)istin(cid:74) c(cid:88)stomers have an option to
install f(cid:88)rther aircraft or where new c(cid:88)stomers
have committed to (cid:42)(cid:59) hardware with third
party s(cid:88)ppliers(cid:17) (cid:58)e contin(cid:88)e to p(cid:88)rs(cid:88)e
o(cid:88)r rollin(cid:74) new (cid:69)(cid:88)siness pipeline of aro(cid:88)nd
3(cid:15)000 aircraft(cid:17) (cid:36) n(cid:88)m(cid:69)er of c(cid:88)stomers si(cid:74)ned
contracts for (cid:42)(cid:59) (cid:36)viation in 2018 and some
c(cid:88)stomers e(cid:91)panded their initial aircraft
and fleet mandates for o(cid:88)r (cid:44)FC services(cid:17)
(cid:44)n(cid:16)Fli(cid:74)ht
Connectivity reven(cid:88)es
more than do(cid:88)(cid:69)led
to (cid:7)101m(cid:15) incl(cid:88)din(cid:74)
the first (cid:42)(cid:59) (cid:44)FC airtime
reven(cid:88)es of (cid:7)(cid:26)m
SwiftBroadband-Safety:
the next generation of safety
and operational services
(cid:54)wift(cid:37)road(cid:69)and(cid:16)(cid:54)afety (cid:11)(cid:67)(cid:54)(cid:37)(cid:16)(cid:54)’(cid:12)(cid:15)
(cid:88)tilisin(cid:74) o(cid:88)r (cid:47)(cid:16)(cid:69)and networ(cid:78)(cid:15) is (cid:44)nmarsat’s
new (cid:74)lo(cid:69)al safety service in (cid:36)viation(cid:17)
(cid:55)he service ena(cid:69)les the e(cid:91)chan(cid:74)e of
detailed real(cid:16)time information (cid:69)etween
an aircraft and the (cid:74)ro(cid:88)nd(cid:15) (cid:88)nloc(cid:78)in(cid:74)
new levels of intelli(cid:74)ence to help
drive decision(cid:16)ma(cid:78)in(cid:74) and optimise
fleet performance(cid:17)
(cid:55)he (cid:78)ey advanta(cid:74)e of the prod(cid:88)ct
for airlines is that it drives operational
efficiencies thro(cid:88)(cid:74)h f(cid:88)el savin(cid:74)s(cid:15)
(cid:69)etter asset (cid:88)tilisation(cid:15) the potential to
increase capacity and ass(cid:88)red safety(cid:17)
For the ind(cid:88)stry(cid:15) (cid:54)(cid:37)(cid:16)(cid:54) ena(cid:69)les (cid:74)lo(cid:69)al
air traffic mana(cid:74)ement modernisation
and a(cid:88)tomation to deal with ever
more con(cid:74)ested s(cid:78)ies(cid:17)
(cid:39)(cid:88)rin(cid:74) the year(cid:15) (cid:44)nmarsat and (cid:51)anasonic
(cid:36)vionics Corporation (cid:11)(cid:67)(cid:51)anasonic’(cid:12) entered
into a strate(cid:74)ic colla(cid:69)oration a(cid:74)reement in
Commercial (cid:36)viation(cid:15) which will accelerate o(cid:88)r
drive to esta(cid:69)lish a (cid:74)lo(cid:69)al leadership position in
(cid:44)FC(cid:17) (cid:44)nmarsat will (cid:69)ecome (cid:51)anasonic’s e(cid:91)cl(cid:88)sive
lon(cid:74)(cid:16)term provider of (cid:46)a(cid:16)(cid:69)and (cid:44)FC capacity(cid:15)
thro(cid:88)(cid:74)h (cid:42)(cid:59)(cid:15) and will have access to (cid:51)anasonic’s
downstream (cid:44)F(cid:40) presence and capa(cid:69)ility(cid:17)
(cid:36)t the end of 2018(cid:15) there were (cid:23)(cid:24)2 aircraft
installed with (cid:44)nmarsat (cid:42)(cid:59) and (cid:40)(cid:36)(cid:49) e(cid:84)(cid:88)ipment
across a n(cid:88)m(cid:69)er of c(cid:88)stomers(cid:15) incl(cid:88)din(cid:74) over
100 (cid:42)(cid:59) connected aircraft now in commercial
service(cid:17) (cid:58)e e(cid:91)pect the rate of installation
to f(cid:88)rther increase over the comin(cid:74) (cid:84)(cid:88)arters(cid:17)
(cid:51)reparations are well advanced for the
service roll(cid:16)o(cid:88)t of the (cid:40)(cid:88)ropean (cid:36)viation
(cid:49)etwor(cid:78)(cid:15) which is e(cid:91)pected to ta(cid:78)e place
d(cid:88)rin(cid:74) (cid:43)1 201(cid:28)(cid:15) followin(cid:74) a (cid:67)soft la(cid:88)nch’
with o(cid:88)r c(cid:88)stomer in (cid:48)arch 201(cid:28)(cid:17)
(cid:44)FC direct costs increased to (cid:7)(cid:24)(cid:24)(cid:17)1m
(cid:11)201(cid:26)(cid:29) (cid:7)11(cid:17)3m(cid:12)(cid:15) d(cid:88)e to additional short
term (cid:42)(cid:59) e(cid:84)(cid:88)ipment sales and contract(cid:88)al
start(cid:16)(cid:88)p costs(cid:17) (cid:44)ndirect costs in (cid:44)FC increased
to (cid:7)(cid:24)(cid:26)(cid:17)(cid:26)m (cid:11)201(cid:26)(cid:29) (cid:7)(cid:24)(cid:24)(cid:17)8m(cid:12)(cid:15) mainly reflectin(cid:74)
an increase in service delivery headco(cid:88)nt
(cid:69)(cid:88)t also lower mar(cid:78)etin(cid:74) e(cid:91)pendit(cid:88)re(cid:17) Cash
cape(cid:91) in (cid:44)FC decreased (cid:69)y (cid:7)10(cid:28)(cid:17)0m to (cid:7)3(cid:23)(cid:17)8m(cid:15)
reflectin(cid:74) investment in the (cid:54)(cid:16)(cid:69)and satellite
in the first half of 201(cid:26) and lower investment
in (cid:42)(cid:59) on(cid:69)oard e(cid:84)(cid:88)ipment in 2018(cid:17) (cid:44)FC (cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36)
improved (cid:69)y (cid:7)6(cid:17)3m to (cid:7)(cid:11)11(cid:17)(cid:24)(cid:12)m(cid:17) (cid:44)FC Operatin(cid:74)
Cash Flow improved si(cid:74)nificantly red(cid:88)cin(cid:74)
the level of start(cid:16)(cid:88)p investment (cid:69)y (cid:7)11(cid:24)(cid:17)3m
to (cid:7)(cid:23)6(cid:17)3m(cid:17)
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(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) (cid:37)(cid:88)siness overview
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
Business overview
ENTERPRISE
Industrial Internet of Things
(‘IIoT’) is a significant opportunity
for satellite operators
In the IIoT market, satellite connectivity
will directly serve end users or augment
cellular technology in doing so.
Discover more at
inmarsat.com
We are focused on delivering
end-to-end solutions for a
small number of IIoT markets
Mining, agriculture and fisheries,
transportation and the global supply
chain are key potential growth areas
for our solutions and services.
7.6%
Growth in our Machine to Machine
revenues in 2018
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) (cid:37)(cid:88)siness overview
33
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OPTIMISING
OPERATIONS
From field to fork – we’re connecting
the physical world to the digital world,
wherever the location
(cid:107) (cid:58)e are re(cid:16)ali(cid:74)nin(cid:74) o(cid:88)r
(cid:40)nterprise (cid:69)(cid:88)siness (cid:88)nit
to ens(cid:88)re we are placed
to capt(cid:88)re the ma(cid:77)or
lon(cid:74) term (cid:74)rowth
opport(cid:88)nity in (cid:44)(cid:44)o(cid:55)(cid:121)
(cid:51)a(cid:88)l (cid:42)(cid:88)donis
(cid:51)resident
(cid:44)nmarsat (cid:40)nterprise
We continue to seek to stabilise and
optimise our legacy product base
Despite increasing competitive pressure
from terrestrial coverage, we aim to stabilise
our legacy product base and re-orientate
them towards back-up, emergency and
event-driven usage.
Discover more at
inmarsat.com
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(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) (cid:37)(cid:88)siness overview
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
Business overview
ENTERPRISE
Market overview and
Inmarsat’s position
(cid:55)he ma(cid:77)or lon(cid:74)(cid:16)term (cid:74)rowth opport(cid:88)nity
for (cid:40)nterprise is in the emer(cid:74)in(cid:74) (cid:44)nd(cid:88)strial
(cid:44)nternet of (cid:55)hin(cid:74)s (cid:11)(cid:67)(cid:44)(cid:44)o(cid:55)’(cid:12) mar(cid:78)et(cid:15) where
satellite connectivity will directly serve end
(cid:88)sers or a(cid:88)(cid:74)ment cell(cid:88)lar technolo(cid:74)y in
doin(cid:74) so(cid:17) (cid:55)o capt(cid:88)re this (cid:74)rowth opport(cid:88)nity(cid:15)
we are re(cid:16)ali(cid:74)nin(cid:74) o(cid:88)r (cid:40)nterprise (cid:69)(cid:88)siness
to deliver connectivity as a service(cid:15) foc(cid:88)sed
on deliverin(cid:74) end(cid:16)to(cid:16)end sol(cid:88)tions to a small
n(cid:88)m(cid:69)er of tar(cid:74)eted (cid:54)atellite (cid:44)(cid:44)o(cid:55) mar(cid:78)ets(cid:15)
incl(cid:88)din(cid:74) minin(cid:74) (cid:11)where (cid:54)atellite (cid:44)(cid:44)o(cid:55) can for
e(cid:91)ample lead to material improvements in
safety(cid:12)(cid:15) a(cid:74)ric(cid:88)lt(cid:88)re and fisheries(cid:15) transportation
and the (cid:74)lo(cid:69)al s(cid:88)pply chain(cid:17) (cid:36) n(cid:88)m(cid:69)er of these
services are at an early trial sta(cid:74)e with (cid:69)l(cid:88)e
chip corporations(cid:15) as we (cid:69)(cid:88)ild a s(cid:88)staina(cid:69)le
(cid:44)(cid:44)o(cid:55) platform for the lon(cid:74) term(cid:17)
(cid:58)hile there is limited f(cid:88)t(cid:88)re (cid:74)rowth potential
for o(cid:88)r le(cid:74)acy prod(cid:88)cts(cid:15) d(cid:88)e to increasin(cid:74)
terrestrial networ(cid:78) covera(cid:74)e which places
o(cid:88)r le(cid:74)acy mar(cid:78)ets in sec(cid:88)lar decline(cid:15) we
will contin(cid:88)e to see(cid:78) to optimise the reven(cid:88)e
(cid:74)eneration of o(cid:88)r le(cid:74)acy prod(cid:88)cts(cid:15) s(cid:88)ch as
(cid:37)road(cid:69)and (cid:42)lo(cid:69)al (cid:36)rea (cid:49)etwor(cid:78) (cid:11)(cid:67)(cid:37)(cid:42)(cid:36)(cid:49)’(cid:12)
and satellite phones(cid:17) (cid:58)hile these prod(cid:88)cts
will contin(cid:88)e to decline over time(cid:15) we will
re(cid:16)orientate these prod(cid:88)cts towards (cid:69)ac(cid:78)(cid:16)(cid:88)p(cid:15)
emer(cid:74)ency and event(cid:16)driven (cid:88)sa(cid:74)e(cid:17)
2018 results
(cid:40)nterprise reven(cid:88)es declined (cid:69)y (cid:7)2(cid:17)6m or
2(cid:17)0(cid:8) in the year(cid:15) as a res(cid:88)lt of the on(cid:16)(cid:74)oin(cid:74)
mar(cid:78)et press(cid:88)re on o(cid:88)r le(cid:74)acy prod(cid:88)ct
(cid:69)ase o(cid:88)tlined a(cid:69)ove(cid:17)
(cid:55)his mar(cid:78)et press(cid:88)re(cid:15) as well as a challen(cid:74)in(cid:74)
(cid:52)3 201(cid:26) comparator(cid:15) impacted (cid:37)(cid:42)(cid:36)(cid:49) d(cid:88)rin(cid:74)
the year(cid:15) when reven(cid:88)es fell (cid:69)y (cid:7)2(cid:17)(cid:24)m or
(cid:28)(cid:17)0(cid:8)(cid:15) to (cid:7)2(cid:24)(cid:17)3m(cid:17)
(cid:54)atellite phone reven(cid:88)e increased (cid:69)y (cid:7)(cid:28)(cid:17)2m(cid:15)
or 30(cid:17)0(cid:8)(cid:15) to (cid:7)3(cid:28)(cid:17)(cid:28)m in 2018(cid:15) driven principally
(cid:69)y several si(cid:93)ea(cid:69)le handset orders d(cid:88)rin(cid:74)
the year(cid:17)
Fi(cid:91)ed(cid:16)to(cid:16)mo(cid:69)ile reven(cid:88)es declined (cid:69)y (cid:7)(cid:24)(cid:17)8m
to (cid:7)10(cid:17)(cid:28)m(cid:15) reflectin(cid:74) contin(cid:88)ed mi(cid:74)ration to
(cid:57)oice(cid:16)over(cid:16)(cid:44)(cid:51)(cid:17)
(cid:48)achine to (cid:48)achine (cid:11)(cid:67)(cid:48)2(cid:48)’(cid:12) reven(cid:88)e increased
(cid:69)y (cid:7)1(cid:17)(cid:23)m(cid:15) or (cid:26)(cid:17)6(cid:8)(cid:15) to (cid:7)1(cid:28)(cid:17)8m in 2018(cid:15) driven
(cid:69)y on(cid:16)(cid:74)oin(cid:74) demand for (cid:48)2(cid:48) in commercial
applications(cid:17) (cid:58)e made contin(cid:88)ed pro(cid:74)ress
in developin(cid:74) a n(cid:88)m(cid:69)er of proof(cid:16)of(cid:16)concept
initiatives in (cid:44)(cid:44)o(cid:55) d(cid:88)rin(cid:74) the year(cid:17)
(cid:53)even(cid:88)e from other services within (cid:40)nterprise
fell (cid:69)y (cid:7)(cid:23)(cid:17)(cid:28)m to (cid:7)3(cid:23)(cid:17)1m in 2018(cid:17) (cid:55)hese services
incl(cid:88)de leasin(cid:74) contracts of (cid:7)13(cid:17)(cid:24)m and F(cid:37)
for ener(cid:74)y c(cid:88)stomers of (cid:7)(cid:24)(cid:17)(cid:24)m for the year(cid:17)
From (cid:52)1 201(cid:28)(cid:15) o(cid:88)r F(cid:37) ener(cid:74)y (cid:69)(cid:88)siness in
(cid:40)nterprise will (cid:69)e transitioned into (cid:48)aritime
and(cid:15) conse(cid:84)(cid:88)ently(cid:15) related reven(cid:88)es of
c(cid:17) (cid:7)(cid:24)m pa will (cid:69)e reported in the (cid:48)aritime
(cid:37)(cid:88)siness (cid:56)nit (cid:74)oin(cid:74) forward(cid:17)
(cid:36)r(cid:69)itration proceedin(cid:74)s contin(cid:88)e for (cid:44)nmarsat’s
(cid:42)(cid:59) (cid:55)a(cid:78)e(cid:16)or(cid:16)(cid:51)ay contract with (cid:53)i(cid:74)(cid:49)et(cid:17)
(cid:44)n (cid:39)ecem(cid:69)er 2018(cid:15) the (cid:44)nternational Centre
for (cid:39)isp(cid:88)te (cid:53)esol(cid:88)tion’s ar(cid:69)itration tri(cid:69)(cid:88)nal
iss(cid:88)ed a r(cid:88)lin(cid:74) in favo(cid:88)r of (cid:44)nmarsat to concl(cid:88)de
(cid:51)hase 1 of the ar(cid:69)itration proceedin(cid:74)s(cid:17)
(cid:55)he tri(cid:69)(cid:88)nal’s r(cid:88)lin(cid:74) fo(cid:88)nd that a (cid:55)a(cid:78)e(cid:16)or(cid:16)(cid:51)ay
o(cid:69)li(cid:74)ation (cid:88)nder the ori(cid:74)inal 201(cid:23) contract had
commenced and conse(cid:84)(cid:88)ently (cid:53)i(cid:74)(cid:49)et owed
(cid:44)nmarsat (cid:7)(cid:24)0(cid:17)8m pl(cid:88)s interest(cid:15) s(cid:88)(cid:69)(cid:77)ect to any
offset from (cid:53)i(cid:74)(cid:49)et’s co(cid:88)nterclaims in (cid:51)hase 2(cid:15)
which are e(cid:91)pected to (cid:69)e ad(cid:77)(cid:88)dicated (cid:88)pon
d(cid:88)rin(cid:74) the second half of 201(cid:28)(cid:17)
(cid:39)irect costs increased (cid:69)y (cid:7)2(cid:17)8m to (cid:7)26(cid:17)2m
in 2018(cid:15) d(cid:88)e to a hi(cid:74)her proportion of lower
(cid:74)ross mar(cid:74)in satellite phone handsets sold in
the period(cid:17) (cid:44)ndirect costs increased (cid:69)y (cid:7)(cid:23)(cid:17)2m
to (cid:7)21(cid:17)(cid:24)m in 2018(cid:15) mainly as a res(cid:88)lt of le(cid:74)al
costs associated with the (cid:53)i(cid:74)(cid:49)et ar(cid:69)itration(cid:17)
(cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) was conse(cid:84)(cid:88)ently (cid:7)(cid:28)(cid:17)6m lower in 2018(cid:15)
with (cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) mar(cid:74)in declinin(cid:74) to 62(cid:17)(cid:26)(cid:8)(cid:17)
C(cid:88)stomer and
prod(cid:88)ct fo(cid:88)ndations to
penetrate the emer(cid:74)in(cid:74)
(cid:74)lo(cid:69)al satellite (cid:67)(cid:44)nd(cid:88)strial
(cid:44)nternet(cid:16)of(cid:16)(cid:55)hin(cid:74)s’
opport(cid:88)nity (cid:69)(cid:88)ildin(cid:74)
steadily
Revenue
$130.0m
(cid:11)2(cid:17)0(cid:8)(cid:12)
EBITDA
$82.3m
(cid:11)10(cid:17)(cid:23)(cid:8)(cid:12)
Enterprise Business Results
(cid:53)even(cid:88)e
(cid:39)irect costs
Gross margin
(cid:44)ndirect costs
EBITDA
(cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) mar(cid:74)in (cid:8)
Cash cape(cid:91)
Business Unit Operating Cash Flow
Year ended 31 December
2018
$m
130.0
(26.2)
103.8
(21.5)
82.3
201(cid:26)
(cid:7)m
132(cid:17)6
(cid:11)23(cid:17)(cid:23)(cid:12)
10(cid:28)(cid:17)2
(cid:11)1(cid:26)(cid:17)3(cid:12)
(cid:28)1(cid:17)(cid:28)
63.3%
6(cid:28)(cid:17)3(cid:8)
–
82.3
–
(cid:28)1(cid:17)(cid:28)
Chan(cid:74)e
(cid:11)2(cid:17)0(cid:8)(cid:12)
(cid:11)12(cid:17)0(cid:8)(cid:12)
(cid:11)(cid:23)(cid:17)(cid:28)(cid:8)(cid:12)
(cid:11)2(cid:23)(cid:17)3(cid:8)(cid:12)
(cid:11)10(cid:17)(cid:23)(cid:8)(cid:12)
–
–
(cid:11)10(cid:17)(cid:23)(cid:8)(cid:12)
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) (cid:37)(cid:88)siness overview
35
Delivering reliable
connectivity to the
aquaculture sector
(cid:36)(cid:84)(cid:88)ac(cid:88)lt(cid:88)re is one of the
fastest(cid:16)(cid:74)rowin(cid:74) food ind(cid:88)stries in
the world(cid:15) d(cid:88)e to a steady increase
in cons(cid:88)mer demand for fish and the
contin(cid:88)in(cid:74) depletion of wild fish stoc(cid:78)s(cid:17)
Fish farmers are constantly loo(cid:78)in(cid:74)
for innovative ways to accelerate the
(cid:74)rowth of their stoc(cid:78)s(cid:15) which can (cid:69)e
achieved (cid:69)y ens(cid:88)rin(cid:74) that sea ca(cid:74)es(cid:15)
(cid:11)lar(cid:74)e nets attached to floatin(cid:74)
platforms anchored off(cid:16)shore(cid:12)(cid:15)
have the optimal level of o(cid:91)y(cid:74)en(cid:17)
O(cid:59)(cid:61)O(cid:15) a leadin(cid:74) Chilean specialist
in o(cid:91)y(cid:74)en sol(cid:88)tions for the salmon
farmin(cid:74) ind(cid:88)stry(cid:15) developed specialist
technolo(cid:74)y to monitor the level
of o(cid:91)y(cid:74)en in the water in sea ca(cid:74)es
and distri(cid:69)(cid:88)te additional o(cid:91)y(cid:74)en(cid:15)
if s(cid:88)(cid:69)se(cid:84)(cid:88)ently re(cid:84)(cid:88)ired(cid:17) (cid:43)owever(cid:15)
as the ca(cid:74)es are often many miles
away from the shore(cid:15) it was critical
that the o(cid:91)y(cid:74)enation e(cid:84)(cid:88)ipment
co(cid:88)ld (cid:69)e operated and controlled
remotely(cid:15) ma(cid:78)in(cid:74) constant
connectivity essential(cid:17)
Ori(cid:74)inally(cid:15) O(cid:59)(cid:61)O e(cid:84)(cid:88)ipped the
platforms with (cid:46)(cid:88)(cid:16)(cid:69)and satellite
technolo(cid:74)y(cid:17) (cid:43)owever(cid:15) constant
movement of the platforms(cid:15)
d(cid:88)e to ocean swells(cid:15) res(cid:88)lted in the
weather(cid:16)s(cid:88)scepti(cid:69)le (cid:46)(cid:88)(cid:16)(cid:69)and
antennas losin(cid:74) connectivity(cid:17)
(cid:55)he s(cid:88)(cid:69)se(cid:84)(cid:88)ent constant re(cid:16)ali(cid:74)nment
of the platforms too(cid:78) (cid:88)p m(cid:88)ch time
and was very costly(cid:17)
The Inmarsat-based solution
O(cid:59)(cid:61)O then en(cid:74)a(cid:74)ed (cid:55)esacom(cid:15)
a specialist in deployin(cid:74) inte(cid:74)rated
comm(cid:88)nication networ(cid:78)s in remote
environments(cid:15) to develop a sol(cid:88)tion
that was (cid:69)ased on (cid:44)nmarsat’s
(cid:74)lo(cid:69)al (cid:47)(cid:16)(cid:69)and satellite networ(cid:78)(cid:15)
accessed thro(cid:88)(cid:74)h a (cid:43)(cid:88)(cid:74)hes (cid:48)2(cid:48)
inte(cid:74)rated terminal(cid:17)
(cid:58)ith (cid:28)(cid:28)(cid:17)(cid:28)(cid:8) availa(cid:69)ility(cid:15) the (cid:44)nmarsat(cid:16)
(cid:69)ased sol(cid:88)tion delivered constant
connectivity and relia(cid:69)le transmission
of data from the floatin(cid:74) platforms to
the company’s monitorin(cid:74) centre(cid:17)
(cid:55)his sol(cid:88)tion ens(cid:88)red that the o(cid:91)y(cid:74)en
distri(cid:69)(cid:88)tion system co(cid:88)ld (cid:69)e effectively
monitored remotely(cid:15) re(cid:74)ardless
of conditions(cid:15) (cid:69)y ena(cid:69)lin(cid:74) constant
and relia(cid:69)le comm(cid:88)nication (cid:69)etween
the control room and the o(cid:91)y(cid:74)en
(cid:74)eneration e(cid:84)(cid:88)ipment(cid:15) to ens(cid:88)re f(cid:88)ll
a(cid:88)tomation of the delivery of o(cid:91)y(cid:74)en
at its floatin(cid:74) platforms(cid:17)
(cid:37)y ens(cid:88)rin(cid:74) an optimal level of
o(cid:91)y(cid:74)en was present in the ca(cid:74)es at
all times(cid:15) there(cid:69)y speedin(cid:74) (cid:88)p the
fish c(cid:88)ltivation process(cid:15) O(cid:59)(cid:61)O co(cid:88)ld
red(cid:88)ce costs and improve prod(cid:88)ctivity(cid:15)
ens(cid:88)rin(cid:74) the provision of the very
(cid:69)est service to its clients(cid:17)
(cid:55)he (cid:44)nmarsat(cid:16)
(cid:69)ased sol(cid:88)tion delivered
constant connectivity and
relia(cid:69)le transmission of
data from the floatin(cid:74)
platforms to the company’s
monitorin(cid:74) centre
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36
(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) (cid:37)(cid:88)siness overview
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
ENABLING
CONNECTIVITY
From managing and operating our
networks to helping the business deliver
its strategic priorities, Central Services
is there to ensure we serve our
customers’ needs 24/7
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) (cid:37)(cid:88)siness overview
37
Business overview
CENTRAL SERVICES
O(cid:88)r Central (cid:54)ervices team is responsi(cid:69)le
for mana(cid:74)in(cid:74) and operatin(cid:74) o(cid:88)r satellite
and (cid:74)ro(cid:88)nd networ(cid:78)s and s(cid:88)pportin(cid:74) the
(cid:69)(cid:88)siness to deliver its strate(cid:74)ic priorities(cid:17)
Technology
O(cid:88)r Central (cid:55)echnolo(cid:74)y Office mana(cid:74)es
and operates o(cid:88)r (cid:74)lo(cid:69)al satellite and (cid:74)ro(cid:88)nd
infrastr(cid:88)ct(cid:88)re(cid:15) and mana(cid:74)es the desi(cid:74)n(cid:15)
(cid:69)(cid:88)ild and la(cid:88)nch of o(cid:88)r new satellite networ(cid:78)s(cid:17)
O(cid:88)r (cid:47)(cid:16)(cid:69)and satellite networ(cid:78)s(cid:15) thro(cid:88)(cid:74)h o(cid:88)r
(cid:44)nmarsat(cid:16)3 and (cid:44)nmarsat(cid:16)(cid:23) satellites(cid:15) have
helped (cid:44)nmarsat to esta(cid:69)lish and develop a
loyal c(cid:88)stomer and distri(cid:69)(cid:88)tion (cid:69)ase over time(cid:17)
O(cid:88)r avera(cid:74)e (cid:47)(cid:16)(cid:69)and networ(cid:78) availa(cid:69)ility remains
at (cid:28)(cid:28)(cid:17)(cid:28) per cent(cid:15) with this relia(cid:69)ility remainin(cid:74)
attractive to (cid:74)overnment and commercial (cid:88)sers
whose operations re(cid:84)(cid:88)ire mission and (cid:69)(cid:88)siness
critical comm(cid:88)nications s(cid:88)pport(cid:17)
(cid:55)he (cid:44)nmarsat(cid:16)6 satellites comprise two d(cid:88)al
payload (cid:11)(cid:47)(cid:16)(cid:69)and and (cid:46)a(cid:16)(cid:69)and(cid:12) satellites
to (cid:69)e la(cid:88)nched at the start of the ne(cid:91)t decade(cid:17)
(cid:55)his will ens(cid:88)re the reorientation of o(cid:88)r (cid:47)(cid:16)(cid:69)and
capa(cid:69)ilities towards new (cid:74)rowth opport(cid:88)nities
(cid:88)ni(cid:84)(cid:88)ely addressa(cid:69)le (cid:69)y a c(cid:88)ttin(cid:74) ed(cid:74)e (cid:74)lo(cid:69)al
networ(cid:78)(cid:15) with a small(cid:15) low(cid:16)cost(cid:15) hi(cid:74)hly relia(cid:69)le
and a(cid:74)ile device to deliver o(cid:88)r services to
end (cid:88)sers(cid:17)
(cid:55)he (cid:42)(cid:59) networ(cid:78)(cid:15) (cid:69)ased on o(cid:88)r fo(cid:88)r (cid:44)nmarsat(cid:16)(cid:24)
satellites in (cid:46)a(cid:16)(cid:69)and(cid:15) is f(cid:88)lly operational and
has (cid:69)een reven(cid:88)e (cid:74)eneratin(cid:74) since 2016(cid:15) with
(cid:42)(cid:59)(cid:16)(cid:24) to (cid:69)e la(cid:88)nched in 201(cid:28)(cid:17) (cid:58)ith f(cid:88)ll (cid:74)lo(cid:69)al
covera(cid:74)e esta(cid:69)lished(cid:15) o(cid:88)r f(cid:88)t(cid:88)re strate(cid:74)y for (cid:42)(cid:59)
is to a(cid:88)(cid:74)ment o(cid:88)r networ(cid:78) with new(cid:15) low(cid:16)cost
technolo(cid:74)ies which will provide additional
capacity (cid:69)y addin(cid:74) hi(cid:74)hly(cid:16)tar(cid:74)eted density(cid:17)
(cid:55)his new satellite technolo(cid:74)y will (cid:69)e a(cid:69)le to deliver
a si(cid:74)nificant step(cid:16)(cid:88)p in thro(cid:88)(cid:74)hp(cid:88)t and capacity
into (cid:78)ey re(cid:74)ions of hi(cid:74)h demand at low cost(cid:17)
Operations
O(cid:88)r or(cid:74)anisational infrastr(cid:88)ct(cid:88)re is mana(cid:74)ed
and operated (cid:69)y o(cid:88)r Central Operations Office(cid:15)
with s(cid:88)pport from o(cid:88)r f(cid:88)nctional teams in
Finance(cid:15) (cid:43)(cid:53)(cid:15) (cid:48)ar(cid:78)etin(cid:74)(cid:15) (cid:47)e(cid:74)al(cid:15) (cid:53)e(cid:74)(cid:88)latory(cid:15)
Compliance(cid:15) (cid:53)is(cid:78) and (cid:42)overnance(cid:17)
(cid:58)e contin(cid:88)e to drive (cid:69)est practice and
innovation to drive o(cid:88)t cost and comple(cid:91)ity
across o(cid:88)r or(cid:74)anisation(cid:15) to (cid:69)ecome more a(cid:74)ile
and to (cid:69)ecome easier for partners(cid:15) c(cid:88)stomers
and s(cid:88)ppliers to do (cid:69)(cid:88)siness with(cid:17)
Product Group
(cid:44)n 201(cid:26)(cid:15) we esta(cid:69)lished a Central (cid:51)rod(cid:88)ct (cid:42)ro(cid:88)p
to drive end(cid:16)to(cid:16)end prod(cid:88)ct development
and mana(cid:74)ement across the (cid:42)ro(cid:88)p(cid:15) (cid:69)rin(cid:74)in(cid:74)
to(cid:74)ether all prod(cid:88)ct(cid:16)related activities (cid:88)nder
one roof(cid:15) with the addition of a nascent di(cid:74)ital
services team(cid:17) (cid:55)his will provide more foc(cid:88)s and
a(cid:74)ility in o(cid:88)r prod(cid:88)ct and service innovation(cid:15)
development and life cycle mana(cid:74)ement(cid:15)
(cid:69)oth di(cid:74)ital and non(cid:16)di(cid:74)ital(cid:17)
(cid:55)he (cid:51)rod(cid:88)ct (cid:42)ro(cid:88)p will wor(cid:78) as a catalyst
(cid:69)etween the (cid:69)(cid:88)siness (cid:88)nits and the central
f(cid:88)nctions(cid:15) foc(cid:88)sin(cid:74) on the strate(cid:74)ic and
commercial val(cid:88)e of these services(cid:15) as well
as drivin(cid:74) a m(cid:88)lti(cid:16)disciplinary approach to
(cid:69)(cid:88)ildin(cid:74) them(cid:17)
2018 results for Central Services
(cid:53)even(cid:88)e and (cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) from (cid:47)i(cid:74)ado increased
(cid:69)y (cid:7)1(cid:17)(cid:28)m and (cid:7)3(cid:17)8m(cid:15) respectively(cid:15) in line with
o(cid:88)r co(cid:16)operation a(cid:74)reement with (cid:47)i(cid:74)ado(cid:17)
(cid:55)his a(cid:74)reement stip(cid:88)lates that payments
from (cid:47)i(cid:74)ado to (cid:44)nmarsat will pa(cid:88)se in 201(cid:28)
(cid:11)(cid:88)nless (cid:47)i(cid:74)ado o(cid:69)tains its FCC licence d(cid:88)rin(cid:74)
201(cid:28)(cid:15) in which event payments will res(cid:88)me
thereafter(cid:12) and then res(cid:88)me from the
(cid:69)e(cid:74)innin(cid:74) of 2020 at c(cid:17) (cid:7)136m per ann(cid:88)m(cid:15)
(cid:74)rowin(cid:74) thereafter at 3(cid:8) compo(cid:88)nd over
the ne(cid:91)t 8(cid:28) years(cid:17)
(cid:36)ny payments not made in 201(cid:28) (cid:11)(cid:88)p to
(cid:7)132(cid:17)3m in a(cid:74)(cid:74)re(cid:74)ate(cid:12)(cid:15) to(cid:74)ether with prior
payments deferred (cid:69)etween 2016 and 2018
(cid:11)appro(cid:91)imately (cid:7)3(cid:24)m in a(cid:74)(cid:74)re(cid:74)ate(cid:12) will
(cid:69)ecome d(cid:88)e for payment (cid:69)y (cid:47)i(cid:74)ado with
interest from their ori(cid:74)inal date of payment
no later than 30 (cid:45)(cid:88)ne 2021(cid:17)
(cid:47)i(cid:74)ado contin(cid:88)es in its efforts to o(cid:69)tain its
licence from the Federal Comm(cid:88)nications
Commission (cid:11)(cid:67)FCC’(cid:12)(cid:15) with the timin(cid:74) and
conse(cid:84)(cid:88)ent impact on (cid:44)nmarsat of any
s(cid:88)ch decision remainin(cid:74) (cid:88)ncertain(cid:17)
Central (cid:54)ervices direct costs increased
(cid:69)y (cid:7)3(cid:17)8m in the year mainly d(cid:88)e to hi(cid:74)her
inventory provisions(cid:17)
(cid:44)ndirect costs in Central (cid:54)ervices fell
(cid:69)y (cid:7)2(cid:26)(cid:17)2m(cid:15) mainly reflectin(cid:74) the (cid:7)1(cid:28)(cid:17)(cid:28)m
restr(cid:88)ct(cid:88)rin(cid:74) char(cid:74)e in (cid:52)(cid:23) 201(cid:26)(cid:15) the impact
of the implementation of (cid:44)F(cid:53)(cid:54) 16 which
moved lease costs into depreciation d(cid:88)rin(cid:74)
the year (cid:11)(cid:7)12(cid:17)8m(cid:12)(cid:15) lower operatin(cid:74) costs
and adverse c(cid:88)rrency movements of (cid:7)8(cid:17)(cid:26)m(cid:17)
Central (cid:54)ervices cape(cid:91) increased (cid:69)y
(cid:7)82(cid:17)0m to (cid:7)(cid:23)(cid:28)6(cid:17)(cid:24)m(cid:15) d(cid:88)e to the timin(cid:74)
of e(cid:91)pendit(cid:88)re on ma(cid:77)or infrastr(cid:88)ct(cid:88)re
pro(cid:74)rammes(cid:15) incl(cid:88)din(cid:74) the (cid:24)th (cid:42)(cid:59) satellite
and the (cid:44)(cid:16)6 satellite infrastr(cid:88)ct(cid:88)re(cid:17)
Central (cid:54)ervices(cid:17)
Revenue related to Ligado Networks
$130.7m
(cid:14)1(cid:17)(cid:24)(cid:8)
EBITDA
$(143.3)m
(cid:14)1(cid:24)(cid:17)1(cid:8)
Central services results
Revenue
(cid:47)i(cid:74)ado (cid:49)etwor(cid:78)s
Other
Total Revenue
(cid:39)irect costs
Gross Margin
(cid:44)ndirect costs
EBITDA
Cash cape(cid:91)
Business Unit Operating Cash Flow
Year ended 31 December
2018
$m
201(cid:26)
(cid:11)restated(cid:12)
(cid:7)m
130.7
14.6
145.3
(20.4)
124.9
(268.2)
(143.3)
(496.5)
(639.8)
128(cid:17)8
1(cid:23)(cid:17)(cid:24)
1(cid:23)3(cid:17)3
(cid:11)16(cid:17)6(cid:12)
126(cid:17)(cid:26)
(cid:11)2(cid:28)(cid:24)(cid:17)(cid:23)(cid:12)
(cid:11)168(cid:17)(cid:26)(cid:12)
(cid:11)(cid:23)1(cid:23)(cid:17)(cid:24)(cid:12)
(cid:11)(cid:24)83(cid:17)2(cid:12)
Chan(cid:74)e
1(cid:17)(cid:24)(cid:8)
0(cid:17)(cid:26)(cid:8)
1(cid:17)(cid:23)(cid:8)
(cid:11)22(cid:17)(cid:28)(cid:8)(cid:12)
(cid:11)1(cid:17)(cid:23)(cid:8)(cid:12)
(cid:28)(cid:17)2(cid:8)
1(cid:24)(cid:17)1(cid:8)
(cid:11)1(cid:28)(cid:17)8(cid:8)(cid:12)
(cid:11)(cid:28)(cid:17)(cid:26)(cid:8)(cid:12)
S
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38
(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) Chief Financial Officer’s review
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
Chief Financial Officer’s review
Consistent reven(cid:88)e and (cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) (cid:74)rowth
(cid:44)nmarsat prod(cid:88)ced another
year of reven(cid:88)e (cid:74)rowth in
2018(cid:15) helpin(cid:74) (cid:88)s to deliver
solid (cid:74)rowth in (cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36)(cid:15)
driven (cid:69)y the stren(cid:74)th of
o(cid:88)r diversified (cid:74)rowth
portfolio and contin(cid:88)ed
operational delivery
TONY BATES
CHIEF FINANCIAL OFFICER
Highlights
Group Results
5.3%
Increase in Group revenue
4.2%
Increase in EBITDA
› (cid:39)il(cid:88)ted (cid:40)(cid:51)(cid:54) of 2(cid:26) cents
› (cid:49)et de(cid:69)t to (cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) of 2(cid:17)8(cid:91)
› Over (cid:7)1(cid:69)n of li(cid:84)(cid:88)idity
Revenue
(cid:54)atellite services
(cid:47)i(cid:74)ado reven(cid:88)e
Total revenue
(cid:39)irect costs
Gross margin
(cid:44)ndirect costs
EBITDA
(cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) mar(cid:74)in (cid:8)
Cash capex
Full Year
2017
(restated)
$m
1(cid:15)262(cid:17)(cid:28)
128(cid:17)8
1,391.7
2018
$m
1(cid:15)33(cid:23)(cid:17)(cid:24)
130(cid:17)(cid:26)
1,465.2
Change
(cid:24)(cid:17)(cid:26)(cid:8)
1(cid:17)(cid:24)(cid:8)
5.3%
(cid:11)2(cid:24)(cid:24)(cid:17)0(cid:12)
(cid:11)1(cid:28)0(cid:17)(cid:26)(cid:12)
(cid:11)33(cid:17)(cid:26)(cid:8)(cid:12)
1,210.2
1,201.0
(cid:11)(cid:23)(cid:23)0(cid:17)1(cid:12)
770.1
(cid:24)2(cid:17)6(cid:8)
590.7
(cid:11)(cid:23)61(cid:17)(cid:26)(cid:12)
739.3
(cid:24)3(cid:17)1(cid:8)
614.1
0.8%
(cid:23)(cid:17)(cid:26)(cid:8)
4.2%
3.8%
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) Chief Financial Officer’s review
39
Group Results
(cid:42)ro(cid:88)p reven(cid:88)es increased in 2018 (cid:69)y
(cid:7)(cid:26)3(cid:17)(cid:24)m(cid:15) mainly driven (cid:69)y do(cid:88)(cid:69)le(cid:16)di(cid:74)it
(cid:74)rowth in (cid:36)viation(cid:15) as well as another stron(cid:74)
(cid:42)overnment performance(cid:17) (cid:42)(cid:59)(cid:16)(cid:74)enerated
airtime and related reven(cid:88)es1 were (cid:7)2(cid:24)0(cid:17)(cid:28)m
for the year(cid:15) (cid:88)p from (cid:7)13(cid:24)(cid:17)(cid:28)m in 201(cid:26)(cid:17)
(cid:39)irect costs increased (cid:69)y (cid:7)6(cid:23)(cid:17)3m in the year(cid:15)
mainly reflectin(cid:74) increased low mar(cid:74)in
e(cid:84)(cid:88)ipment sales(cid:15) partic(cid:88)larly in (cid:36)viation(cid:15)
and hi(cid:74)her provisions a(cid:74)ainst possi(cid:69)le
f(cid:88)t(cid:88)re (cid:69)ad de(cid:69)ts(cid:17)
(cid:44)ndirect costs fell (cid:69)y (cid:7)21(cid:17)6m(cid:15) mainly reflectin(cid:74)
the (cid:7)1(cid:28)(cid:17)(cid:28)m restr(cid:88)ct(cid:88)rin(cid:74) char(cid:74)e in (cid:52)(cid:23) 201(cid:26)
which was not repeated in 2018(cid:17) (cid:36)n adverse
impact from c(cid:88)rrency movements was offset
(cid:69)y the impact of implementation of (cid:44)F(cid:53)(cid:54) 16(cid:15)
which moved lease costs into depreciation(cid:17)
(cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) was conse(cid:84)(cid:88)ently (cid:7)30(cid:17)8m hi(cid:74)her
in 2018(cid:17) (cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) mar(cid:74)in fell sli(cid:74)htly to (cid:24)2(cid:17)6(cid:8)(cid:15)
from (cid:24)3(cid:17)1(cid:8) in 201(cid:26)(cid:17)
(cid:42)ro(cid:88)p reven(cid:88)es and (cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) e(cid:91)cl(cid:88)din(cid:74) (cid:47)i(cid:74)ado
increased (cid:69)y (cid:7)(cid:26)1(cid:17)6m to (cid:7)1(cid:15)33(cid:23)(cid:17)(cid:24)m and (cid:7)2(cid:26)(cid:17)0m
to (cid:7)63(cid:28)(cid:17)(cid:24)m respectively(cid:17) (cid:47)i(cid:74)ado contri(cid:69)(cid:88)ted
reven(cid:88)es of (cid:7)130(cid:17)(cid:26)m (cid:11)201(cid:26)(cid:29) (cid:7)128(cid:17)8m(cid:12) and
(cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) of (cid:7)130(cid:17)6m (cid:11)201(cid:26)(cid:29) (cid:7)126(cid:17)8m(cid:12) for the year(cid:17)
Cash cape(cid:91) levels contin(cid:88)e to reflect the c(cid:88)rrent
ma(cid:77)or infrastr(cid:88)ct(cid:88)re pro(cid:77)ects(cid:15) partic(cid:88)larly
the (cid:42)(cid:59)(cid:16)(cid:24) and (cid:44)(cid:16)6 satellite infrastr(cid:88)ct(cid:88)res(cid:17)2
Depreciation and amortisation
(‘D&A’) & other costs
(cid:39)(cid:9)(cid:36) increased (cid:69)y (cid:7)(cid:24)6(cid:17)(cid:24)m in 2018(cid:15) mainly d(cid:88)e
to the (cid:44)(cid:16)(cid:24) F(cid:23) and (cid:54)(cid:16)(cid:69)and satellites comin(cid:74) into
commercial service in (cid:52)(cid:23) 201(cid:26)(cid:17) (cid:55)he increase
in other costs is attri(cid:69)(cid:88)ta(cid:69)le to fi(cid:91)ed asset
impairments totallin(cid:74) (cid:7)1(cid:23)(cid:17)(cid:24)m for the year(cid:17)
Net financing cost
(cid:49)et financin(cid:74) costs for the year increased (cid:69)y
(cid:7)30(cid:17)(cid:23)m(cid:15) driven mainly (cid:69)y the increase in the
(cid:88)nrealised conversion lia(cid:69)ility on the 2023
Converti(cid:69)le (cid:37)ond of (cid:7)23(cid:17)2m(cid:17) Financin(cid:74) costs
e(cid:91)cl(cid:88)din(cid:74) derivative ad(cid:77)(cid:88)stments remained
relatively flat for the year at (cid:7)10(cid:24)(cid:17)8m(cid:17)
Taxation
(cid:55)he total ta(cid:91) char(cid:74)e for the year decreased
(cid:69)y (cid:7)(cid:24)(cid:17)(cid:28)m to (cid:7)(cid:23)2(cid:17)(cid:28)m mainly reflectin(cid:74) lower
stat(cid:88)tory profit (cid:69)efore ta(cid:91)(cid:17)
(cid:55)he (cid:88)nderlyin(cid:74) effective ta(cid:91) rate for the year
(cid:11)after removin(cid:74) the impact of the (cid:88)nrealised
conversion lia(cid:69)ility of the converti(cid:69)le (cid:69)onds
and reassessment of prior year estimates(cid:12)
was 18(cid:17)1(cid:8) (cid:11)201(cid:26)(cid:29) 1(cid:24)(cid:17)(cid:26)(cid:8)(cid:12)(cid:15) driven primarily (cid:69)y the
non(cid:16)rec(cid:88)rrin(cid:74) item of chan(cid:74)es to provisions
in respect of on(cid:74)oin(cid:74) en(cid:84)(cid:88)iries with a n(cid:88)m(cid:69)er
of ta(cid:91) a(cid:88)thorities(cid:15) as well as a red(cid:88)ction in
(cid:56)(cid:46) patent (cid:69)o(cid:91) relief (cid:69)ein(cid:74) availa(cid:69)le in 2018
and on(cid:74)oin(cid:74) chan(cid:74)es in the relative levels
of profita(cid:69)ility in (cid:77)(cid:88)risdictions where the
stat(cid:88)tory ta(cid:91) rate is different to the (cid:56)(cid:46)(cid:17)
(cid:55)he effective ta(cid:91) rate for 2018 of 2(cid:24)(cid:17)(cid:24)(cid:8)
(cid:11)201(cid:26)(cid:29) 20(cid:17)(cid:28)(cid:8)(cid:12) is hi(cid:74)her than the (cid:56)(cid:46) stat(cid:88)tory
rate of 1(cid:28)(cid:8) (cid:11)201(cid:26)(cid:29) 1(cid:28)(cid:17)2(cid:24)(cid:8)(cid:12) reflectin(cid:74) all of
the iss(cid:88)es noted a(cid:69)ove(cid:17)
From time to time(cid:15) the (cid:42)ro(cid:88)p may (cid:69)e involved
in disp(cid:88)tes in relation to on(cid:74)oin(cid:74) ta(cid:91) matters
where a ta(cid:91) a(cid:88)thority adopts a different
interpretation to o(cid:88)r own(cid:17) (cid:55)he (cid:42)ro(cid:88)p maintains
ta(cid:91) provisions in respect of on(cid:74)oin(cid:74) en(cid:84)(cid:88)iries
with ta(cid:91) a(cid:88)thorities(cid:17) (cid:44)n the event that all s(cid:88)ch
en(cid:84)(cid:88)iries were settled entirely in favo(cid:88)r of
the a(cid:88)thorities(cid:15) the (cid:42)ro(cid:88)p wo(cid:88)ld inc(cid:88)r a cash
ta(cid:91) o(cid:88)tflow of c(cid:17) (cid:7)110m(cid:15) e(cid:91)cl(cid:88)din(cid:74) interest(cid:15)
d(cid:88)rin(cid:74) 201(cid:28)(cid:17) (cid:55)he (cid:84)(cid:88)ant(cid:88)m and timin(cid:74) of this
cost remains (cid:88)ncertain (cid:69)(cid:88)t it is s(cid:88)(cid:69)stantially
provided for and the en(cid:84)(cid:88)iries remain on(cid:74)oin(cid:74)
at this time(cid:17) (cid:55)he (cid:42)ro(cid:88)p anticipates an initial
concl(cid:88)sion in respect of the most si(cid:74)nificant
en(cid:84)(cid:88)iry in 201(cid:28)(cid:17)
Profit after tax (‘PAT’)
(cid:36)d(cid:77)(cid:88)sted (cid:51)(cid:36)(cid:55)(cid:15) which e(cid:91)cl(cid:88)des the impact of
the (cid:88)nrealised conversion lia(cid:69)ility(cid:15) decreased
(cid:69)y (cid:7)(cid:23)(cid:24)(cid:17)2m(cid:17) (cid:55)his reflects chan(cid:74)es in (cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36)(cid:15)
depreciation(cid:15) financin(cid:74) costs and ta(cid:91)ation
noted a(cid:69)ove(cid:17)
(cid:54)tat(cid:88)tory (cid:51)(cid:36)(cid:55) saw a lar(cid:74)er decrease of (cid:7)60(cid:17)0m
for the year compared to (cid:36)d(cid:77)(cid:88)sted (cid:51)(cid:36)(cid:55)(cid:15) d(cid:88)e to
an increase in the (cid:88)nrealised conversion lia(cid:69)ility
on the 2023 Converti(cid:69)le (cid:37)ond disc(cid:88)ssed a(cid:69)ove(cid:17)
Reconciliation of EBITDA to Profit after tax
($ in millions)
EBITDA
(cid:39)epreciation and amortisation
Other
Operating profit
(cid:49)et financin(cid:74) income(cid:18)(cid:11)costs(cid:12)
(cid:55)a(cid:91)ation char(cid:74)e
Profit after tax
(cid:36)dd(cid:69)ac(cid:78) of chan(cid:74)e in fair val(cid:88)e of derivative (cid:11)2023 converti(cid:69)le (cid:69)ond(cid:12)
(cid:36)dd(cid:69)ac(cid:78) restr(cid:88)ct(cid:88)rin(cid:74) char(cid:74)e after ta(cid:91)
Adjusted profit after tax
Full Year
2017
(restated)
$m
739.3
(cid:11)(cid:23)11(cid:17)8(cid:12)
Change
4.2%
(cid:11)13(cid:17)(cid:26)(cid:8)(cid:12)
(cid:11)3(cid:17)3(cid:12)
(cid:11)2(cid:28)(cid:26)(cid:17)0(cid:8)(cid:12)
324.2
(cid:11)(cid:28)0(cid:17)(cid:23)(cid:12)
(cid:11)(cid:23)8(cid:17)8(cid:12)
(11.0%)
(cid:11)33(cid:17)6(cid:8)(cid:12)
12(cid:17)1(cid:8)
185.0
(32.4%)
(cid:11)(cid:26)(cid:17)(cid:26)(cid:12)
16(cid:17)1
(cid:11)(cid:23)01(cid:17)3(cid:8)(cid:12)
–
2018
$m
770.1
(cid:11)(cid:23)68(cid:17)3(cid:12)
(cid:11)13(cid:17)1(cid:12)
288.7
(cid:11)120(cid:17)8(cid:12)
(cid:11)(cid:23)2(cid:17)(cid:28)(cid:12)
125.0
23(cid:17)2
–
148.2
193.4
(23.4%)
(cid:44)nfrastr(cid:88)ct(cid:88)re cape(cid:91) is
e(cid:91)pected to meanin(cid:74)f(cid:88)lly
moderate after 2020
1 (cid:42)(cid:59) reven(cid:88)es restated for (cid:44)F(cid:53)(cid:54) 1(cid:24) (cid:11)impactin(cid:74) 201(cid:26) fi(cid:74)(cid:88)res
only(cid:12) and to incl(cid:88)de Fleet (cid:59)press terminal reven(cid:88)es(cid:15)
which were not previo(cid:88)sly incl(cid:88)ded
2 Cash cape(cid:91) in 201(cid:26)(cid:15) restated for (cid:44)F(cid:53)(cid:54) 1(cid:24)(cid:15) was (cid:7)1(cid:24)(cid:17)(cid:23)m
hi(cid:74)her than previo(cid:88)sly stated(cid:15) d(cid:88)e to the reclassification
of installation costs from cash (cid:74)enerated from operations
to cash (cid:88)sed in investin(cid:74) activities
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40
(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) Chief Financial Officer’s review
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
Chief Financial Officer’s review
contin(cid:88)ed
Group Balance Sheet
(cid:55)he increase in the (cid:42)ro(cid:88)p’s non(cid:16)c(cid:88)rrent
assets of (cid:7)1(cid:28)(cid:28)(cid:17)0m is lar(cid:74)ely d(cid:88)e to o(cid:88)r on(cid:74)oin(cid:74)
investment in new technolo(cid:74)y and infrastr(cid:88)ct(cid:88)re(cid:15)
incl(cid:88)din(cid:74) (cid:42)(cid:59) and (cid:44)(cid:16)6 constellation(cid:15) less the
depreciation of e(cid:91)istin(cid:74) assets in service(cid:17)
(cid:55)he net decrease in c(cid:88)rrent assets of (cid:7)16(cid:23)(cid:17)(cid:24)m
has (cid:69)een driven mainly (cid:69)y the decrease in short
term deposits which have (cid:69)een (cid:88)sed to f(cid:88)nd
additional capital investment in the (cid:69)(cid:88)siness(cid:17)
(cid:55)he decrease in c(cid:88)rrent lia(cid:69)ilities of (cid:7)(cid:24)0(cid:17)1m
is lar(cid:74)ely attri(cid:69)(cid:88)ta(cid:69)le to the decrease in trade
and other paya(cid:69)les of (cid:7)8(cid:28)(cid:17)0m to (cid:7)(cid:24)(cid:23)(cid:24)(cid:17)(cid:23)m(cid:17)
(cid:55)his was mainly d(cid:88)e to the timin(cid:74) of the
settlement of trade paya(cid:69)les aro(cid:88)nd the
year end(cid:17)
(cid:49)on(cid:16)c(cid:88)rrent lia(cid:69)ilities decreased (cid:69)y (cid:7)1(cid:23)(cid:17)1m
to (cid:7)2(cid:15)826(cid:17)(cid:26)m(cid:17) (cid:55)his was primarily driven (cid:69)y
a decrease in non(cid:16)c(cid:88)rrent (cid:69)orrowin(cid:74)s of
(cid:7)(cid:28)(cid:26)(cid:17)6m d(cid:88)e to a portion of the (cid:40)(cid:91)(cid:16)(cid:44)m (cid:69)an(cid:78)
facilities (cid:69)ecomin(cid:74) d(cid:88)e within one year
and conse(cid:84)(cid:88)ently (cid:69)ein(cid:74) reclassified to
c(cid:88)rrent lia(cid:69)ilities(cid:17)
Cash Flow
(cid:49)et cash flow improved (cid:69)y (cid:7)(cid:28)1(cid:17)2m(cid:15) with the
impact of lower cash dividends (cid:11)(cid:7)132(cid:17)8m(cid:12)
more than offsettin(cid:74) a (cid:7)30(cid:17)(cid:26)m decrease in
free cash flow(cid:17) (cid:55)he red(cid:88)ction in free cash flow
was mainly driven (cid:69)y an increase in wor(cid:78)in(cid:74)
capital which more than offset hi(cid:74)her
(cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) of (cid:7)30(cid:17)8m(cid:15) lower capital e(cid:91)pendit(cid:88)re
of (cid:7)23(cid:17)(cid:23)m and lower ta(cid:91) paid of (cid:7)22(cid:17)1m(cid:17)
Over 2018(cid:15) the amo(cid:88)nt of cash invested in
wor(cid:78)in(cid:74) capital increased (cid:69)y (cid:7)61(cid:17)6m(cid:15) driven
primarily (cid:69)y increased receiva(cid:69)les(cid:15) inventories
and trade paya(cid:69)les(cid:17) (cid:53)eceiva(cid:69)les increased
(cid:69)y (cid:7)(cid:24)6(cid:17)1m reflectin(cid:74) hi(cid:74)her reven(cid:88)es and the
impact of to(cid:88)(cid:74)her mar(cid:78)et conditions on certain
c(cid:88)stomers and a new (cid:69)illin(cid:74) system(cid:15) (cid:69)oth of
which adversely impacted the pace of c(cid:88)stomer
collections(cid:17) (cid:44)nventories increased (cid:69)y (cid:7)16(cid:17)8m(cid:15)
reflectin(cid:74) a hi(cid:74)her level of terminal e(cid:84)(cid:88)ipment
held in stoc(cid:78)(cid:17) (cid:44)n contrast(cid:15) in 201(cid:26)(cid:15) (cid:7)30(cid:17)(cid:26)m was
released from wor(cid:78)in(cid:74) capital mainly reflectin(cid:74)
the timin(cid:74) of s(cid:88)pplier payments which more
than offset increased receiva(cid:69)les(cid:17)
Cash capital e(cid:91)pendit(cid:88)re fell (cid:69)y (cid:7)23(cid:17)(cid:23)m(cid:15) driven
mainly (cid:69)y the timin(cid:74) of ma(cid:77)or infrastr(cid:88)ct(cid:88)re
investment(cid:15) partic(cid:88)larly the (cid:42)(cid:59)(cid:24) and (cid:44)(cid:16)6
satellites(cid:17) (cid:54)(cid:88)ccess(cid:16)(cid:69)ased cape(cid:91) was (cid:7)31(cid:17)6m
lower(cid:15) mainly reflectin(cid:74) lower levels of (cid:42)(cid:59)
installations in (cid:36)viation(cid:17) Other cape(cid:91) has
remained consistent with the prior year as
hi(cid:74)her investments in (cid:44)(cid:55) were offset (cid:69)y
lower capitalised prod(cid:88)ct and service
development e(cid:91)pendit(cid:88)re(cid:17)
Group Balance Sheet
(cid:49)on(cid:16)c(cid:88)rrent assets
C(cid:88)rrent assets
Total assets
C(cid:88)rrent lia(cid:69)ilities
(cid:49)on(cid:16)c(cid:88)rrent lia(cid:69)ilities
Total liabilities
Net assets
Cash Flow
EBITDA
(cid:49)on(cid:16)cash items
Chan(cid:74)e in wor(cid:78)in(cid:74) capital
Cash generated from operations
Cash Capital e(cid:91)pendit(cid:88)re
(cid:49)et interest paid
(cid:55)a(cid:91) received(cid:18)(cid:11)paid(cid:12)
Free cash flow
(cid:39)ividends paid to shareholders
Other movements
Net cash flow
(cid:44)ncrease(cid:18)(cid:11)decrease(cid:12) to cash reclassified from short(cid:16)term deposits
(cid:53)epayment of (cid:69)orrowin(cid:74)s
Net increase/(decrease) in cash and cash equivalents
Cash flow o(cid:88)tlined in this ta(cid:69)le is non(cid:16)stat(cid:88)tory
Liquidity and net borrowings
Cash and cash equivalents
(cid:36)t (cid:69)e(cid:74)innin(cid:74) of the period
(cid:49)et increase(cid:18)(cid:11)decrease(cid:12) in cash and cash e(cid:84)(cid:88)ivalents
Forei(cid:74)n e(cid:91)chan(cid:74)e ad(cid:77)(cid:88)stment
Sub-total (net of bank overdrafts)
Short term deposits
(cid:36)t (cid:69)e(cid:74)innin(cid:74) of the period
(cid:49)et (cid:11)decrease(cid:12)(cid:18)increase in short term deposits
Sub-total
Total cash, cash equivalents and short term deposits
Opening net borrowings1
(cid:49)et cash flow
(cid:49)on(cid:16)cash movements2
Closing net borrowings1
At 31 December
2018
$m
(cid:23)(cid:15)332(cid:17)0
(cid:26)0(cid:24)(cid:17)(cid:26)
2017
(restated)
$m
(cid:23)(cid:15)133(cid:17)0
8(cid:26)0(cid:17)2
5,027.7
5,003.2
(cid:11)86(cid:23)(cid:17)2(cid:12)
(cid:11)(cid:28)1(cid:23)(cid:17)3(cid:12)
(cid:11)2(cid:15)826(cid:17)(cid:26)(cid:12)
(cid:11)2(cid:15)8(cid:23)0(cid:17)8(cid:12)
(3,690.9)
(3,755.1)
1,336.8
1,248.1
Full Year
2018
$m
770.1
(cid:23)(cid:17)(cid:28)
(cid:11)61(cid:17)6(cid:12)
713.4
(cid:11)(cid:24)(cid:28)0(cid:17)(cid:26)(cid:12)
(cid:11)11(cid:23)(cid:17)(cid:24)(cid:12)
2(cid:17)3
10.5
(cid:11)(cid:26)0(cid:17)1(cid:12)
(cid:11)13(cid:17)(cid:28)(cid:12)
(73.5)
1(cid:28)6(cid:17)3
(cid:11)12(cid:26)(cid:17)1(cid:12)
(4.3)
Full Year
2018
$m
1(cid:23)(cid:23)(cid:17)6
(cid:11)(cid:23)(cid:17)3(cid:12)
2(cid:17)(cid:28)
143.2
3(cid:23)2(cid:17)0
(cid:11)1(cid:28)6(cid:17)3(cid:12)
145.7
288.9
2017
(restated)
$m
739.3
1(cid:28)(cid:17)8
30(cid:17)(cid:26)
789.8
(cid:11)61(cid:23)(cid:17)1(cid:12)
(cid:11)11(cid:23)(cid:17)(cid:26)(cid:12)
(cid:11)1(cid:28)(cid:17)8(cid:12)
41.2
(cid:11)202(cid:17)(cid:28)(cid:12)
(cid:11)3(cid:17)0(cid:12)
(164.7)
(cid:24)3(cid:17)0
(cid:11)3(cid:17)(cid:24)(cid:12)
(115.2)
2017
(restated)
$m
261(cid:17)(cid:24)
(cid:11)11(cid:24)(cid:17)2(cid:12)
(cid:11)1(cid:17)(cid:26)(cid:12)
144.6
3(cid:28)(cid:24)(cid:17)0
(cid:11)(cid:24)3(cid:17)0(cid:12)
342.0
486.6
2,078.6
1,894.8
(cid:26)3(cid:17)(cid:24)
2(cid:23)(cid:17)6
16(cid:23)(cid:17)(cid:26)
1(cid:28)(cid:17)1
2,176.7
2,078.6
1 (cid:49)et (cid:69)orrowin(cid:74)s incl(cid:88)des the converti(cid:69)le (cid:69)ond(cid:15) total (cid:69)orrowin(cid:74)s less cash and cash e(cid:84)(cid:88)ivalents and short(cid:16)term investments(cid:17)
(cid:37)orrowin(cid:74)s e(cid:91)cl(cid:88)de accr(cid:88)ed interest and any derivative lia(cid:69)ilities
2 (cid:49)on(cid:16)cash movements relate primarily to the amortisation of deferred financin(cid:74) costs and the accretion of the principal amo(cid:88)nt
of the converti(cid:69)le (cid:69)ond
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) Chief Financial Officer’s review
41
Capital Expenditure
(cid:48)a(cid:77)or infrastr(cid:88)ct(cid:88)re pro(cid:77)ects1
(cid:54)(cid:88)ccess(cid:16)(cid:69)ased cape(cid:91)2
Other cape(cid:91)3
Cash flow timin(cid:74)4
Total cash capital expenditure
Full Year
2018
$m
333(cid:17)(cid:24)
80(cid:17)(cid:23)
11(cid:24)(cid:17)3
61(cid:17)(cid:24)
590.7
2017
(restated)
$m
(cid:23)23(cid:17)(cid:24)
112(cid:17)0
11(cid:24)(cid:17)2
(cid:11)36(cid:17)6(cid:12)
614.1
(cid:67)(cid:48)a(cid:77)or infrastr(cid:88)ct(cid:88)re pro(cid:77)ects’ cape(cid:91) consists of satellite desi(cid:74)n(cid:15) (cid:69)(cid:88)ild and la(cid:88)nch costs and (cid:74)ro(cid:88)nd networ(cid:78) infrastr(cid:88)ct(cid:88)re costs
1
2 (cid:67)(cid:54)(cid:88)ccess(cid:16)(cid:69)ased cape(cid:91)’ consists of capital e(cid:84)(cid:88)ipment installed on ships(cid:15) aircraft and other c(cid:88)stomer platforms
3
(cid:23) (cid:107)Cash flow timin(cid:74)(cid:121) represents the difference (cid:69)etween accr(cid:88)ed cape(cid:91) and the act(cid:88)al cash flows
(cid:67)Other cape(cid:91)’ investment primarily incl(cid:88)des infrastr(cid:88)ct(cid:88)re maintenance(cid:15) (cid:44)(cid:55) and capitalised prod(cid:88)ct and service development costs
(cid:55)he cash flow timin(cid:74) ad(cid:77)(cid:88)stment shows
the difference (cid:69)etween fi(cid:91)ed asset additions
as reported in the (cid:69)alance sheet and the
(cid:88)nderlyin(cid:74) cash dis(cid:69)(cid:88)rsements(cid:17) (cid:55)he movement
(cid:69)etween years shown a(cid:69)ove was driven mainly
(cid:69)y the timin(cid:74) of contract(cid:88)al payments on
the (cid:44)(cid:16)6 and (cid:42)(cid:59)(cid:16)(cid:24) satellite pro(cid:74)rammes(cid:17)
(cid:49)et interest paid was lar(cid:74)ely (cid:88)nchan(cid:74)ed at
(cid:7)11(cid:23)(cid:17)(cid:24)m in 2018 with the impact of sli(cid:74)htly
hi(cid:74)her net de(cid:69)t (cid:69)ein(cid:74) offset (cid:69)y hi(cid:74)her ret(cid:88)rns
from invested cash (cid:69)alances(cid:17)
(cid:55)he cash ta(cid:91) inflow in the year of (cid:7)2(cid:17)3m
(cid:11)201(cid:26)(cid:29) (cid:7)1(cid:28)(cid:17)8m o(cid:88)tflow(cid:12) reflects a red(cid:88)ction
in (cid:56)(cid:46) ta(cid:91)a(cid:69)le profits followin(cid:74) new research
and development allowances and overseas
ta(cid:91) prepayments now (cid:69)ein(cid:74) ref(cid:88)nded(cid:17)
Group Liquidity and
Net Borrowings
Closin(cid:74) (cid:49)et (cid:37)orrowin(cid:74)s increased (cid:69)y (cid:7)(cid:28)8(cid:17)1m
to (cid:7)2(cid:15)1(cid:26)6(cid:17)(cid:26)m(cid:15) mainly d(cid:88)e to short(cid:16)term deposits
(cid:69)ein(cid:74) (cid:88)sed to f(cid:88)nd additional capital investment
in the (cid:69)(cid:88)siness(cid:17)
(cid:36)t 31 (cid:39)ecem(cid:69)er 2018(cid:15) the (cid:42)ro(cid:88)p had over (cid:7)1(cid:69)n
in availa(cid:69)le li(cid:84)(cid:88)idity(cid:15) incl(cid:88)din(cid:74) cash and cash
e(cid:84)(cid:88)ivalents of (cid:7)1(cid:23)3(cid:17)2m(cid:15) short term deposits of
(cid:7)1(cid:23)(cid:24)(cid:17)(cid:26)m and availa(cid:69)le (cid:69)(cid:88)t (cid:88)ndrawn committed
(cid:69)orrowin(cid:74) facilities of (cid:7)(cid:26)(cid:24)0m (cid:88)nder a (cid:54)enior
(cid:53)evolvin(cid:74) Credit Facility(cid:17)
Future Guidance
(cid:55)he (cid:37)oard remains confident a(cid:69)o(cid:88)t the
f(cid:88)t(cid:88)re prospects and o(cid:88)tloo(cid:78) for the (cid:42)ro(cid:88)p(cid:15)
and provide the followin(cid:74) (cid:74)(cid:88)idance(cid:29)
› (cid:36) tar(cid:74)et of mid(cid:16)sin(cid:74)le di(cid:74)it percenta(cid:74)e
reven(cid:88)e (cid:74)rowth on avera(cid:74)e over the five
year period(cid:15) 2018 to 2022(cid:15) with (cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36)
and free cash flow (cid:74)eneration improvin(cid:74)
steadily(cid:13) (cid:11)(cid:88)nchan(cid:74)ed(cid:12)
› 201(cid:28) reven(cid:88)e(cid:15) e(cid:91) (cid:47)i(cid:74)ado(cid:15) of (cid:7)1(cid:15)300m
to (cid:7)1(cid:15)(cid:23)00m (cid:11)new(cid:12)
› (cid:36)nn(cid:88)al (cid:42)(cid:59) reven(cid:88)es at a r(cid:88)n rate of
(cid:7)(cid:24)00m (cid:69)y the end of 2020 (cid:11)(cid:88)nchan(cid:74)ed(cid:12)
› Cape(cid:91) of (cid:7)(cid:24)00m to (cid:7)600m per ann(cid:88)m
for 201(cid:28) and 2020 (cid:11)(cid:88)nchan(cid:74)ed(cid:12)
› Cape(cid:91) is e(cid:91)pected to meanin(cid:74)f(cid:88)lly moderate
thereafter 2020(cid:15) fallin(cid:74) initially to within a
ran(cid:74)e of (cid:7)(cid:23)(cid:24)0m to (cid:7)(cid:24)(cid:24)0m in 2021 (cid:11)(cid:88)pdated(cid:12)
› (cid:49)et (cid:39)e(cid:69)t(cid:13)(cid:13)(cid:29) (cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) to normally remain
(cid:69)elow 3(cid:17)(cid:24)(cid:91) (cid:11)(cid:88)nchan(cid:74)ed(cid:12)
(cid:55)he (cid:42)ro(cid:88)p mana(cid:74)es a diverse (cid:74)rowth portfolio
of (cid:69)(cid:88)sinesses and prod(cid:88)cts that in a(cid:74)(cid:74)re(cid:74)ate
are e(cid:91)pected to deliver the (cid:74)(cid:88)idance a(cid:69)ove(cid:15)
with the portfolio mi(cid:91) e(cid:91)pected to contin(cid:88)e
to evolve as individ(cid:88)al mar(cid:78)ets develop
over the medi(cid:88)m term(cid:17)
(cid:55)he diversity of o(cid:88)r (cid:69)(cid:88)siness(cid:15) with a foc(cid:88)sed
and attractive set of core end mar(cid:78)ets that offer
scale and (cid:74)rowth potential(cid:15) and where we lead
with s(cid:88)staina(cid:69)le differentiation(cid:15) will remain
a (cid:78)ey stren(cid:74)th for (cid:44)nmarsat (cid:74)oin(cid:74) forward(cid:17)
Dividends
(cid:44)n (cid:48)arch 2018(cid:15) the dividend was red(cid:88)ced
to an ann(cid:88)al rate of 20 cents per share(cid:15) with
an e(cid:91)pectation that the ann(cid:88)al dividend will
remain at these levels (cid:88)ntil the cash flow of
the (cid:69)(cid:88)siness re(cid:69)(cid:88)ilds s(cid:88)fficiently to ma(cid:78)e an
increase appropriate(cid:17) (cid:36) 2018 final dividend of
12 cents per share will therefore (cid:69)e proposed to
shareholders in line with the 201(cid:26) final dividend(cid:17)
(cid:44)nmarsat will contin(cid:88)e to provide shareholders
with the option of a scrip dividend alternative for
dividend payments(cid:15) and will review this approach
on a re(cid:74)(cid:88)lar (cid:69)asis(cid:17) (cid:36)t the interim sta(cid:74)e(cid:15) the scrip
option was ta(cid:78)en (cid:88)p (cid:69)y shareholders holdin(cid:74)
a total of 8(cid:23)(cid:15)(cid:28)22(cid:15)(cid:24)(cid:24)6 shares (cid:11)18(cid:17)(cid:23)(cid:8) of the then
iss(cid:88)ed share capital(cid:12) with an iss(cid:88)e val(cid:88)e of (cid:7)6(cid:17)8m(cid:17)
(cid:55)hese shares were iss(cid:88)ed on 1(cid:28) Octo(cid:69)er 2018(cid:17)
(cid:44)nmarsat plc now has (cid:23)63(cid:15)(cid:23)80(cid:15)8(cid:28)(cid:26) shares
in iss(cid:88)e(cid:17) (cid:55)he dividend is to (cid:69)e paid on 30 (cid:48)ay 201(cid:28)
to ordinary shareholders on the share re(cid:74)ister
at the close of (cid:69)(cid:88)siness on 23 (cid:36)pril 201(cid:28)(cid:17)
(cid:54)hareholders will (cid:69)e as(cid:78)ed to approve the
final dividend payment at the (cid:36)nn(cid:88)al (cid:42)eneral
(cid:48)eetin(cid:74) on 1 (cid:48)ay 201(cid:28)(cid:17) (cid:39)ividend payments
are made in (cid:51)o(cid:88)nds (cid:54)terlin(cid:74) or in shares (cid:88)sin(cid:74)
an e(cid:91)chan(cid:74)e rate derived from the (cid:58)(cid:48)(cid:53)e(cid:88)ters
(cid:42)(cid:37)(cid:51)(cid:18)(cid:56)(cid:54)(cid:39) (cid:28)am fi(cid:91) (cid:11)(cid:47)ondon time(cid:12) fo(cid:88)r (cid:69)(cid:88)siness
days prior to the date of anno(cid:88)ncement of
the scrip reference price(cid:17) (cid:55)he 2018 final dividend
is not recorded as a lia(cid:69)ility in the financial
statements at 31 (cid:39)ecem(cid:69)er 2018(cid:17)
TONY BATES
CHIEF FINANCIAL OFFICER
18 (cid:48)arch 201(cid:28)
(cid:13) (cid:40)(cid:91)cl(cid:88)din(cid:74) any impact of on(cid:74)oin(cid:74) e(cid:91)ceptional ta(cid:91) matter disc(cid:88)ssed on pa(cid:74)e 3(cid:28)
(cid:13)(cid:13) (cid:56)nder (cid:44)nmarsat’s levera(cid:74)e policy(cid:15) noted here(cid:15) (cid:67)(cid:49)et (cid:39)e(cid:69)t’ is defined as total e(cid:91)ternal de(cid:69)t net of cash and cash e(cid:84)(cid:88)ivalents
and short(cid:16)term deposits as reported in note 20(cid:17) (cid:47)ease lia(cid:69)ilities are not incl(cid:88)ded in levera(cid:74)e calc(cid:88)lations
S
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42
Strategic Report | Corporate social responsibility
Inmarsat plc | Annual Report and Accounts 2018
Corporate social responsibility
Delivering a positive impact
Corporate responsibility
is a key enabler for our
business, supporting
sustainable long-term
performance by managing
non-financial risks that
can impact reputation
and shareholder value
Ensuring we act in an ethical manner, taking
account of our responsibilities – socially and
environmentally – is important in the way we
operate and interact with our stakeholders,
including investors, employees, suppliers
and business partners. This way of working
contributes to how we create value for all
stakeholders. More information on our Corporate
Social Responsibility (‘CSR’) activities can be
found on our website. Our heritage in supporting
safety of life at sea and enabling connectivity
where there would otherwise be none, is something
we have provided for 40 years and we are proud of
how we therefore contribute to a global society.
This section of the Annual Report is prepared in
accordance with the Companies, Partnerships
and Groups (Accounts and Non-Financial
Reporting) Regulations 2016. We have
included information on new developments
and performance and discussed the impact of
our activity relating to environmental, employee
and social matters. CSR is embedded into our
governance structure. The Board provides
oversight on activity and delegates these
responsibilities to the Chief Executive Officer
(who has an ESG objective within his annual
objectives) who cascades these duties within
the Executive Management Team. The Board is
updated where there are any issues which need
to be reported on CSR. We are also committed
to improving transparency in these areas and,
as a result, respond annually to the RobecoSAM
Corporate Sustainability Assessment.
Materiality
Our 2017 Annual Report and Accounts (published
in 2018) reported on topics recognised by our
stakeholders as having a significant impact on
our business in respect of economic, social and
environmental (ESG) issues. This was the first
time we reported on ESG matters in line with the
Global Reporting Initiative (GRI) standards and
we are pleased this year to build on this.
Material topics reported by stakeholders as
important to them in 2018 were cyber security,
access to services and customer privacy.
2018 Materiality results
HIGH
1
2
2
3
4
5
8
7
9
16
11
6
9
10
17
19
15
12
14
18
Top 3
Cyber
security
Customer
privacy
Access to
worldwide
services
l
s
r
e
d
o
h
e
r
a
h
s
o
t
e
c
n
a
v
e
e
R
l
LOW
Relevance to ICT industry
HIGH
1 Cyber security
2 Customer privacy
3 Access to worldwide services
4 Anti-bribery and corruption
5 Customer climate change adaptation
6 Supplier screening on social issues
7 Customer energy efficiency
8 Training and investing in people
Equal opportunities, diversity
9
and outreach activities
Inmarsat emissions target
10 Environmental impact of satellite launches
11
12 Environmental impact of space debris
13 Waste in operations
14 Charitable giving
15 Use of raw materials including precious metals
16 Procuring renewable energy
17 Engaging with suppliers to reduce emissions
18 Energy efficiency of operations
19 Public policy & political contributions
The Company recognises the importance of
electronic information, systems and network
security (cyber security) and security updates are
included as Board agenda items several times a
year. We have a dedicated cyber security team
whose primary role is to safeguard the Company
to meet its legal and regulatory obligations,
maintain business continuity and limit damage
to business interests. In recognition of the work
undertaken throughout 2018 we achieved ISO
27001 accreditation at the end of 2018. There
were no material cyber security incidents during
the year. There were no leaks, theft or losses of
customer data. We were in compliance with the
new GDPR requirements applicable from May 2018,
with our policies and processes implemented
and tested. We have continued to invest in our
controls and review our current policies.
In 2018, we continued our engagement with
our external and internal stakeholders including
employees, customers, suppliers and shareholders.
We held stakeholder interviews and sent out
surveys to understand the level of stakeholder
concern regarding a wide range of sustainability
issues. We then assessed the relative importance
of the issues identified by our stakeholders to
the ICT industry by conducting analysis of key
sustainability topics reported by companies
in the DJSI (Dow Jones Sustainability Indices)
World Index. The results are shown on the
matrix above and have informed the content
included within this report. In 2019, we will
continue to engage with stakeholders, internally
and externally, to prioritise sustainability
issues and help us better manage our impact.
We have utilised the GRI framework again to
structure our disclosures. Our GRI Content Index
can be found on the CSR section of our website.
There have been no significant restatements
or changes in the reporting boundary since
the previous reporting year.
We will continue to engage with our
stakeholders on an ongoing basis.
Inmarsat plc | Annual Report and Accounts 2018
Strategic Report | Corporate social responsibility
43
Code of conduct, anti-corruption and
anti-bribery and corporate tax evasion
Our Code of Ethics requires Directors, officers,
employees and contractors to conduct business
with the highest standards of personal and
professional integrity. A copy of our Code of
Ethics is published on our website.
We comply with local laws where we operate and,
in 2018, we have received no fines or penalties
associated with non-compliance to any law relating
to the environment, human rights violations,
labour standards, anti-corruption or related
to claims of tax evasion.
Across our Group we ensure our employees
comply with the UK Bribery Act and the U.S.
Foreign and Corrupt Practices Act. A summary
of our anti-bribery and anti-corruption
policy can be found on our website. As part
of our commitment to preventing bribery and
establishing a culture that does not tolerate
corruption wherever and in whatever form it takes,
we ask our employees and contractors to confirm
annually that they understand the restrictions
outlined in the policy and the implications for
breaching the policy for the business and them
as individuals. Our anti-bribery policy operates
in line with current legislation. The policy also
incorporates guidelines on dealing with gifts and
accepting and giving hospitality. Our latest training
module on this subject was issued to employees
in February 2018.
We have policies in place dealing with ethics,
fraud, the use of inside information and
whistleblowing. These policies are fully endorsed
and supported by the Board which has ultimate
oversight. They are captured together in the
Group legal compliance review which is circulated
once a year for completion and accessed through
the online training platform Nebula reaching
our global employees.
We have a worldwide anonymous telephone
service for employees to use if they have any
concerns. No calls were received by the external
provider in 2018. There is also an email address
for use by employees which is publicised on our
intranet and in our policy documents.
In addition, our internal audit team complete
regular anti-corruption and anti-bribery risk
assessments as part of the ongoing internal
audit programme. All third parties that are
in contact with Inmarsat during the course of
any business matter, are also assessed for risks
related to corruption through visual compliance
and due diligence checks. We have detailed
clauses in our contracts with agents, suppliers
and partners regarding the need to adhere
to anti-bribery requirements.
Internal Audit has its annual plan in conducting
reviews of business operations, financial and
internal controls, IT and cyber security, and legal
and regulatory compliance. Through these reviews
Internal Audit assessed the key risks, including risks
related to bribery and corruption, and mitigation
activities undertaken by management, and
reported its findings to the Audit Committee.
In 2018 Internal Audit had not identified, or
reported, or been aware of any incidences of
corruption. Moreover, no legal cases relating to
corruption have been brought against Inmarsat
or its employees during the reporting period.
No employees have been dismissed or disciplined
for corruption activity and no business partners
have had their contracts terminated or not
renewed due to violations related to corruption
in the reporting period.
The Company has invested significant time and
resources, working closely with an expert external
organisation, to review its processes to ensure
compliance with the recent new legislation
regarding corporate tax evasion, combining
the review with an updated assessment of its
anti-bribery and corruption processes. The work
has highlighted where improvements can be made
to existing business processes and practices.
Human rights
We are committed to respecting the human rights
of employees, customers, suppliers, business
partners and the wider communities in which we
operate. We could affect our people’s rights if our
employment standards fall short, or workers in
our supply chain through buying practices are not
treated in accordance with local requirements.
Inmarsat has had no incidents of non-compliances
with labour standards or of human rights violations
(including those relating to child labour or forced
labour) within the reporting period.
During 2019 we will be launching an overarching
human rights policy and embedding it into
our business.
Wellbeing and health and safety
The Inmarsat plc Board receives an annual
update on the wellbeing and the health and
safety activities across the Group. Rupert
Pearce, CEO, has been identified as having
responsibility for wellbeing and the health and
safety issues within the Group and one of his
2018 objectives related to Health and Safety
overview across the Group and the monitoring
and performance of ESG requirements. We have
a dedicated Health and Safety Manager who is
located in our London headquarters and our
subsidiary operations have identified managers
responsible for health and safety.
Our collective focus on employee wellbeing and
the health and safety of employees and those
who work on, or visit, our sites is a contributory
factor to the success of our organisation. Our
culture, with a safety focus, and our employees
demand high standards for all aspects of health
and safety. This is supported both by our mandated
Health and Safety Policy and the principles
contained within our Code of Ethics for employees.
We promote wellbeing through a wide variety
of programmes, including exercise and fitness
promotion, flexible working, nutrition and
occupational health checks. We know that
good mental and physical health contributes
to better decision making, greater productivity
and higher levels of employee satisfaction.
We run campaigns to encourage employees
to take responsibility for their health problems,
such as heart disease, diabetes and cancer.
Our goal is to encourage strong leadership
in championing the importance of a
common-sense approach to health and safety
in the workplace. We recognise the need to
provide a safe working environment for our
employees, contractors and any visitors.
Health and Safety does not work in isolation
from how we operate across our business.
This year, new and improved processes were
introduced to improve our ways of working.
We had 23 (2017: 27) accidents or near
misses reported, and again we had no fatalities.
During the year we undertook the
following activities:
› Carried out Construction Design and
Management compliance and audit
assessments in relation to the refurbishment
of our London headquarters
› A global gap analysis was carried out to
compare current conditions and practices
in order to identify gaps and areas in need of
improvement. Opportunities for improvement
have already begun and will continue as part
of our 2019 framework
› We reviewed our fire strategy at our London
office with a view to continue this approach
into 2019 for all sites
› Risk assessments continue to be a key focus
of our business for different activities and
legislative requirements
› Mental health and first aid training and
awareness was once again arranged and
was well received across our global offices
› The annual Wellbeing Week, with a focus
on maintaining a healthy eating lifestyle
for employees, continued to be supported
by offices in all our key hubs
GovernanceFinancial StatementsStrategic Report 44
(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) Corporate social responsi(cid:69)ility
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
Corporate social responsibility
contin(cid:88)ed
› (cid:58)e contin(cid:88)ed to drive improvements
in operatin(cid:74) in a safe operatin(cid:74) c(cid:88)lt(cid:88)re
› (cid:58)e em(cid:69)edded processes in o(cid:88)r corporate
systems for capt(cid:88)rin(cid:74) staff(cid:15) contractors or
interns (cid:74)lo(cid:69)ally who may have a disa(cid:69)ility
or mo(cid:69)ility impairment to (cid:69)e compliant
with the (cid:40)(cid:84)(cid:88)ality (cid:36)ct 2010
(cid:58)e introd(cid:88)ced an on(cid:16)line tool for staff to lo(cid:74)
incidents(cid:17) (cid:55)his will allow (cid:88)s to capt(cid:88)re data
to monitor trends and implement corrective
action where necessary(cid:17) (cid:55)his is partic(cid:88)larly
(cid:88)sef(cid:88)l for o(cid:88)r field en(cid:74)ineers and those wor(cid:78)in(cid:74)
in shipyards for installations and we have seen
it (cid:69)ein(cid:74) (cid:88)sed across m(cid:88)ltiple (cid:74)ro(cid:88)p offices(cid:17)
(cid:44)n 2018(cid:15) we participated in several (cid:56)(cid:46) local
(cid:74)overnment(cid:16)led meetin(cid:74)s with emer(cid:74)ency
service representatives to identify and assess
ris(cid:78)s that may ca(cid:88)se an emer(cid:74)ency for o(cid:88)r
(cid:69)(cid:88)siness and how to respond(cid:17) (cid:36)reas covered
incl(cid:88)ded floodin(cid:74)(cid:15) pandemic fl(cid:88)(cid:15) (cid:88)tility fail(cid:88)res
and terrorist attac(cid:78)s(cid:17)
(cid:36)s part of o(cid:88)r (cid:69)(cid:88)siness of operatin(cid:74) a (cid:74)lo(cid:69)al
satellite networ(cid:78)(cid:15) we operate a n(cid:88)m(cid:69)er of
satellite access stations(cid:15) (cid:57)(cid:54)(cid:36)(cid:55) and telemetry
and trac(cid:78)in(cid:74) facilities where there are satellite
dishes which (cid:74)enerate radiation(cid:17) (cid:36)ccess to
these sites is restricted and there are re(cid:74)(cid:88)lar
health and safety chec(cid:78)s to ens(cid:88)re that they
are in protected areas away from access
(cid:69)y the (cid:74)eneral p(cid:88)(cid:69)lic(cid:17) (cid:51)ersonnel who wor(cid:78)
at these sites are provided with relevant
trainin(cid:74) as to health and safety iss(cid:88)es(cid:17)
(cid:36)n additional area of ens(cid:88)rin(cid:74) we monitor
effectively the safety of o(cid:88)r satellite operations
is that we have adopted the hi(cid:74)hest ind(cid:88)stry
standards in terms of space de(cid:69)ris miti(cid:74)ation(cid:17)
(cid:55)his incl(cid:88)des end(cid:16)of(cid:16)life (cid:74)raveyard manoe(cid:88)vre
plans for the disposal of satellites when
they reach the end of their commercial life(cid:17)
(cid:58)e operate o(cid:88)r satellites in (cid:74)eosynchrono(cid:88)s
or(cid:69)it which is appro(cid:91)imately 36(cid:15)000(cid:78)m
(cid:11)22(cid:15)(cid:24)00 miles(cid:12) a(cid:69)ove the (cid:40)arth(cid:17) (cid:55)his or(cid:69)it has
si(cid:74)nificantly less de(cid:69)ris than at low earth or(cid:69)it
which is appro(cid:91)imately (cid:26)00(cid:78)m a(cid:69)ove the (cid:40)arth
and where several (cid:48)(cid:54)(cid:54) operators have their
satellite constellations(cid:17) (cid:58)e are also a fo(cid:88)ndin(cid:74)
mem(cid:69)er of the (cid:54)pace (cid:39)ata (cid:36)ssociation
(cid:11)(cid:67)(cid:54)(cid:39)(cid:36)’(cid:12)(cid:17) (cid:36)lon(cid:74) with (cid:44)ntelsat(cid:15) (cid:54)(cid:40)(cid:54) and (cid:40)(cid:88)telsat
we aim to improve the satellite safety of fli(cid:74)ht
and ma(cid:78)e operations in space safer and
more relia(cid:69)le(cid:17)
Our technology
(cid:58)e have identified technolo(cid:74)y as one of the
(cid:78)ey reso(cid:88)rces s(cid:88)pportin(cid:74) o(cid:88)r (cid:69)(cid:88)siness model(cid:17)
(cid:58)hile investment in innovation is clearly important(cid:15)
havin(cid:74) talented and e(cid:91)perienced teams who
(cid:88)nderstand how technolo(cid:74)y and innovation can
wor(cid:78) to(cid:74)ether is essential(cid:17) O(cid:88)r teams monitor
Volvo Ocean Race
(cid:44)nmarsat contin(cid:88)ed its partnership with
the (cid:57)olvo Ocean (cid:53)ace(cid:15) providin(cid:74) safety(cid:15)
comm(cid:88)nications and advanced (cid:69)roadcastin(cid:74)
services to the whole fleet(cid:17) (cid:55)he 201(cid:26)(cid:113)18
edition had s(cid:88)staina(cid:69)ility at its heart(cid:17) (cid:55)he
team (cid:67)(cid:55)(cid:88)rn the (cid:55)ide on (cid:51)lastic’ formed part of
the (cid:56)(cid:49) (cid:40)nvironment’s (cid:67)Clean (cid:54)eas’ Campai(cid:74)n(cid:15)
which aims to (cid:69)etter (cid:88)nderstand the iss(cid:88)e
of plastic poll(cid:88)tion in o(cid:88)r oceans and inspire
the millions of race fans to ta(cid:78)e action a(cid:74)ainst
sin(cid:74)le(cid:16)(cid:88)se plastic in their day(cid:16)to(cid:16)day lives(cid:17)
what happens in the macro environment and
see how this affects f(cid:88)t(cid:88)re innovation so we
prod(cid:88)ce services o(cid:88)r c(cid:88)stomers want to (cid:88)se in
a way which ta(cid:78)es into acco(cid:88)nt how we can wor(cid:78)
with o(cid:88)r satellite man(cid:88)fact(cid:88)rers to ens(cid:88)re their
processes are as environmentally friendly as
possi(cid:69)le and also how o(cid:88)r la(cid:88)nch providers are
also respondin(cid:74) to this(cid:17) (cid:54)pace(cid:59)(cid:15) with whom we
have had a s(cid:88)ccessf(cid:88)l la(cid:88)nch(cid:15) is an e(cid:91)ample of
a la(cid:88)nch provider which re(cid:88)ses some of its la(cid:88)nch
vehicles and we (cid:69)elieve there will (cid:69)e a foc(cid:88)s
on (cid:74)reener technolo(cid:74)y to (cid:69)e adopted more
(cid:69)y all connected with the satellite ind(cid:88)stry
(cid:74)oin(cid:74) forwards(cid:17)
Our partners
O(cid:88)r partners are critical to o(cid:88)r (cid:69)(cid:88)siness s(cid:88)ccess
and s(cid:88)pplement o(cid:88)r own capa(cid:69)ilities(cid:17) (cid:58)e rely
on their e(cid:91)perience to s(cid:88)pport o(cid:88)r (cid:69)(cid:88)siness
o(cid:69)(cid:77)ectives and stren(cid:74)then o(cid:88)r service offerin(cid:74)
and therefore(cid:15) we aspire to ne(cid:74)otiate deals that
allow o(cid:88)r partners to ma(cid:78)e a fair ret(cid:88)rn whilst
maintainin(cid:74) cost certainty and competitive
mar(cid:78)et deals(cid:17)
(cid:55)he roll(cid:16)o(cid:88)t of (cid:44)nmarsat’s (cid:54)treamline (cid:51)ro(cid:74)ramme
for c(cid:88)stomers has contin(cid:88)ed thro(cid:88)(cid:74)ho(cid:88)t 2018(cid:17)
(cid:55)he (cid:54)treamline (cid:51)ro(cid:74)ramme encompasses
(cid:88)pdated terms and conditions and a(cid:74)reements
for o(cid:88)r c(cid:88)stomers which can (cid:69)e accessed
thro(cid:88)(cid:74)h the (cid:67)(cid:48)y (cid:44)nmarsat’ partner portal which
contains pricin(cid:74) and prod(cid:88)ct information as well(cid:17)
(cid:48)any of o(cid:88)r (cid:78)ey c(cid:88)stomers have transitioned
to this new way of wor(cid:78)in(cid:74)(cid:17) (cid:36)dditionally(cid:15) all new
prod(cid:88)cts are availa(cid:69)le via this partner portal
and all new c(cid:88)stomers are (cid:88)sin(cid:74) the (cid:54)treamline
(cid:51)ro(cid:74)ramme as standard(cid:17) (cid:55)his roll(cid:16)o(cid:88)t will
contin(cid:88)e into 201(cid:28)(cid:17)
O(cid:88)r (cid:51)roc(cid:88)rement team has delivered a
n(cid:88)m(cid:69)er of ma(cid:77)or corporate deals d(cid:88)rin(cid:74) 2018(cid:15)
savin(cid:74) (cid:88)s over (cid:7)(cid:23)6m (cid:113) hi(cid:74)hli(cid:74)hts incl(cid:88)de the
award of (cid:42)(cid:59)(cid:24) contracts (cid:11)(cid:74)ro(cid:88)nd infrastr(cid:88)ct(cid:88)re(cid:15)
antennas(cid:15) site preparation ready for the
la(cid:88)nch of o(cid:88)r fifth (cid:42)(cid:59) satellite(cid:12) and so(cid:88)rcin(cid:74)
a comple(cid:91) m(cid:88)lti(cid:16)vendor landscape to ena(cid:69)le
a ma(cid:77)or (cid:44)(cid:55) transformation pro(cid:74)ramme
(cid:11)One (cid:44)(cid:55)(cid:12) that will overha(cid:88)l o(cid:88)r internal service
delivery capa(cid:69)ilities(cid:17) (cid:58)e contin(cid:88)e to lead the
rationalisation of the vendor (cid:69)ase (cid:69)y reviewin(cid:74)
different ways of (cid:69)(cid:88)yin(cid:74)(cid:17) (cid:36)doptin(cid:74) a different
strate(cid:74)y on le(cid:74)acy iss(cid:88)es(cid:15) s(cid:88)ch as s(cid:88)pportin(cid:74)
prod(cid:88)cts (cid:88)sin(cid:74) alternative s(cid:88)ppliers(cid:15) has helped
(cid:88)s remove cost for o(cid:88)r sta(cid:78)eholders to spend
on more val(cid:88)e added prod(cid:88)cts and services(cid:17)
(cid:44)n addition we contin(cid:88)e to ne(cid:74)otiate appropriate
terms of payment with o(cid:88)r vendors res(cid:88)ltin(cid:74) in
paid on time invoices and wor(cid:78)in(cid:74) capital (cid:69)enefits(cid:17)
Inmarsat plc | Annual Report and Accounts 2018
Strategic Report | Corporate social responsibility
45
Other notable events were the nomination,
for the first time, for a Chartered Institute of
Purchasing and Supply Management Award,
which is known for recognising excellent
performance in the UK, and the appointment
of a new VP for Global Procurement, moving
us forward on the next steps of our continuous
improvement programme.
As part of our ongoing programme of vendor due
diligence we worked with a third party agency
to review our entire vendor base to undertake
a risk review including credit, compliance and
other business risk areas. This analysis will be
used to identify and mitigate risk in our supply
chain and the supply chains of our vendors.
The simplification of our Procure to Pay (‘P2P’)
function was further supported by a number
of enhancements to our core finance system.
The Procurement Portal went live in early 2018,
enabling a new, easier, more compliant way to
buy across Inmarsat, ensuring employees are
guided to the preferred and approved vendors
we want them to use to ensure we make effective
buying decisions. A P2P Kaizen event took
place in Q3 2018, focused on improvements for
working with our vendors. This, in conjunction
with, the expansion of Purchasing Cards will allow
the business to acquire the goods and services
it needs using the most cost-effective methods.
Our Modern Slavery Statement can be accessed
on our website. An assessment of our vendors
identified that the majority are located in very
low risk areas. Inmarsat remains focused on
the vendor due diligence it undertakes and
highlights anything that doesn’t ‘feel right’
with the existing vendors we use. We also have
clear guidelines on how we work with agents
and government organisations.
During 2019 we will be reviewing and publishing
a new supplier code of conduct to hold suppliers
to account for standards of ethical behaviour,
environmental awareness, health and safety
and other relevant working practises.
Meeting our public responsibility
Our website provides considerable information
about how we connect with organisations,
individuals and our different partners to extend
the reach of our services to support those who
may need assistance either for humanitarian
needs or charitable endeavours. You can find
out more online at inmarsat.com and review
case studies and updates in our CSR section.
As we enter our 40th year, we are very proud
of our heritage for saving lives across the
world through our connectivity capabilities.
UN Sustainable Development Goals
Inmarsat fully supports the objectives of
the UN Sustainable Development Goals.
We support various humanitarian and
charitable organisations with either free
airtime or support for hardware, and work
with organisations in many developing parts
of the world. Our heritage of saving lives at
sea and our ability to connect people in areas
where there is little or no infrastructure, reflects
how our work touches directly or indirectly
our support of the UN Goals. We will continue
to identify ways we can work through our own
staff, our partners and wider ecosystem to
develop our support of these Goals further.
Maritime Safety Services
Maritime Safety is firmly embedded into the
DNA of Inmarsat, with us continuing to be proud
providers of the Global Maritime Distress and
Safety Systems (‘GMDSS’). Inmarsat has been
the sole satellite provider responsible for the safe
keeping of our 1.6 million global seafarers around
the world. We continue to be the only satellite
communications provider currently providing
the recognised services approved by the
International Maritime Organisation (‘IMO’).
Although we have a long and successful
history in providing these emergency services,
we do not stand still. We are continually pushing
regulatory and technical advances to ensure
we provide new, innovative and functional safety
services and continue to look forward with our
long-term investment into Safety Of Life At Sea.
In 2018 we achieved unprecedented full IMO
recognition for our latest GMDSS technology
‘Fleet Safety’. Fleet Safety is already being
applauded as playing a pivotal role in modernising
the GMDSS service. This new offering from
Inmarsat, due to be commercially released in 2019,
has already won two awards in 2018. The judging
| TheGlobalGoals@trollback.com | +1.212.529.1010
Developed in collaboration with
For queries on usage, contact: dpicampaigns@un.org
panel for The Safety4Sea Technology Award
acknowledged Fleet Safety as ‘a significant
technological breakthrough’, recognising that
the system will improve the safety of mariners
and vessels worldwide. At the prestigious Safety
at Sea Awards 2018, the Terminal was named
‘Best Safety Service of the Year’.
We have not only further enhanced
maritime safety technology for the seafarer,
but we have also created a new service for the
Maritime Rescue Coordination Centres (‘RCC’)
called ‘RescueNET’. This free service enables
Search and Rescue (‘SAR’) authorities to
co-ordinate and communicate with vessels
in distress and other SAR authorities quicker
and easier than ever before. RescueNET is
currently being used by 21 countries around
the world, ensuring that no matter what waters
a vessel sails in, there is an Inmarsat associated
RCC waiting to assist if disaster was to strike.
This new service is already saving lives including
a rescue by RCC New Zealand of three men in a
15 foot wooden boat missing in Kiribati (Marshall
Islands), approximately 2,800 nautical miles
northeast of New Zealand.
Our dedicated Maritime Safety Team not
only ensure the smooth running of our GMDSS
service, but also provided training in 2018 to
a varied audience, including an annual three
day seminar to the World Maritime University,
Search and Rescue capacity building within
three African countries and educational talks
to national authorities and schools. We work
closely with IMSO, who oversees our GMDSS
performance. During 2018, we transitioned our
safety services from our older Inmarsat-3
satellites to the Inmarsat-4 satellites and are
preparing for our next generation Inmarsat-6
satellites currently being built to provide
safety services into the future.
GovernanceFinancial StatementsStrategic Report 46
(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) Corporate social responsi(cid:69)ility
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
Corporate social responsibility
contin(cid:88)ed
Charitable Partnerships
(cid:58)e contin(cid:88)ed to s(cid:88)pport the telecomm(cid:88)nications
relief aid or(cid:74)anisation(cid:15) (cid:55)(cid:184)l(cid:184)coms (cid:54)ans Fronti(cid:185)res
(cid:11)(cid:67)(cid:55)(cid:54)F’(cid:12) who cele(cid:69)rated 20 years of savin(cid:74) lives
in (cid:48)ay 2018(cid:17) (cid:58)e contri(cid:69)(cid:88)ted in 2018 a (cid:7)260(cid:78)
cash donation to (cid:55)(cid:54)F and (cid:7)100(cid:78) in free airtime
to a partner in connection with (cid:55)(cid:54)F’s airtime
(cid:88)sa(cid:74)e(cid:17) (cid:58)e also paid (cid:7)11(cid:24)(cid:78) to the (cid:58)orld (cid:48)aritime
(cid:56)niversity as part of o(cid:88)r s(cid:88)pport for the
ed(cid:88)cation of maritime specialists and we also
provide visitin(cid:74) spea(cid:78)ers to provide ed(cid:88)cation
(cid:88)pdates as well as one of o(cid:88)r employees sittin(cid:74)
as a (cid:37)oard mem(cid:69)er to provide e(cid:91)pert s(cid:88)pport(cid:17)
(cid:58)e s(cid:88)pport (cid:55)eam (cid:53)(cid:88)(cid:69)icon (cid:56)(cid:46) (cid:11)(cid:67)(cid:55)(cid:53)(cid:56)(cid:46)’(cid:12)
(cid:11)see (cid:69)elow(cid:12) with charita(cid:69)le donations of (cid:7)8(cid:28)(cid:78)(cid:17)
(cid:55)hese three payments are o(cid:88)r most si(cid:74)nificant
charita(cid:69)le payments(cid:17) (cid:55)he total charita(cid:69)le
donations amo(cid:88)nt paid in 2018 was appro(cid:91)imately
(cid:7)(cid:23)16(cid:78)(cid:17) (cid:55)his amo(cid:88)nt e(cid:91)cl(cid:88)des the free airtime and
terminals we offer to m(cid:88)ltiple charities as we
s(cid:88)pport their endeavo(cid:88)rs thro(cid:88)(cid:74)ho(cid:88)t the year(cid:17)
O(cid:88)r core charita(cid:69)le s(cid:88)pport remains on the
wor(cid:78) carried o(cid:88)t (cid:69)y (cid:55)(cid:54)F(cid:17) (cid:55)(cid:54)F r(cid:88)ns pro(cid:74)rammes
on disaster relief and preparedness(cid:15) trainin(cid:74)
for other relief or(cid:74)anisations and re(cid:74)ional
and national disaster response a(cid:74)encies
a(cid:69)o(cid:88)t the availa(cid:69)le capa(cid:69)ilities for emer(cid:74)ency
telecomm(cid:88)nications(cid:17) (cid:55)hey have adapted
well to wor(cid:78)in(cid:74) with o(cid:88)r latest technolo(cid:74)y(cid:15)
Inmarsat reinforces
commitment to maritime
safety at Our Ocean 2018
O(cid:88)r Ocean (cid:74)athers representatives from
co(cid:88)ntries aro(cid:88)nd the world to infl(cid:88)ence
concrete and actiona(cid:69)le commitments
to preserve the oceans’ health(cid:17) (cid:55)he 2018
priorities incl(cid:88)de(cid:29) com(cid:69)attin(cid:74) maritime
crimes(cid:30) promotin(cid:74) maritime safety and
sec(cid:88)rity(cid:30) innovations in s(cid:88)rveillance and
monitorin(cid:74)(cid:30) and sharin(cid:74)(cid:16)mechanisms
to improve maritime safety(cid:17) (cid:58)e contin(cid:88)e
to contri(cid:69)(cid:88)te to the tar(cid:74)ets set (cid:69)y
O(cid:88)r Ocean (cid:69)y improvin(cid:74) the vessel
monitorin(cid:74) system (cid:11)(cid:67)(cid:57)(cid:48)(cid:54)’(cid:12) technolo(cid:74)y
for trac(cid:78)in(cid:74) and re(cid:74)(cid:88)latory enforcement
in the fishery ind(cid:88)stry(cid:15) and the wor(cid:78) we
are (cid:88)nderta(cid:78)in(cid:74) with the (cid:44)(cid:48)O to modernise
the (cid:42)lo(cid:69)al (cid:48)aritime (cid:39)istress and
(cid:54)afety (cid:54)ystem(cid:17)
$260k
Donated to relief aid organisation
Télécoms Sans Frontières
(cid:42)lo(cid:69)al (cid:59)press(cid:15) and find it is very (cid:69)eneficial
to allow many of the victims they meet to
connect with their families and friends more
easily (cid:88)sin(cid:74) their own phones(cid:17) O(cid:88)r technolo(cid:74)y
chan(cid:74)es therefore have a (cid:69)eneficial impact
on the way (cid:55)(cid:54)F is a(cid:69)le to respond to s(cid:88)pport
those who are displaced(cid:17) (cid:58)e have also
contin(cid:88)ed o(cid:88)r s(cid:88)pport for the (cid:44)nternational
(cid:55)elecomm(cid:88)nications (cid:56)nion (cid:11)(cid:67)(cid:44)(cid:55)(cid:56)’(cid:12)(cid:17)
(cid:44)n 2018(cid:15) we contin(cid:88)ed to stren(cid:74)then o(cid:88)r
s(cid:88)pport for (cid:55)eam (cid:53)(cid:88)(cid:69)icon (cid:56)(cid:46) which (cid:88)nites the
s(cid:78)ills and e(cid:91)periences of military veterans with
first responders to rapidly deploy emer(cid:74)ency
response teams worldwide(cid:17) (cid:54)ome (cid:24)0 individ(cid:88)als
from across the (cid:44)nmarsat (cid:69)(cid:88)siness are now
trained as (cid:55)eam (cid:53)(cid:88)(cid:69)icon (cid:67)(cid:42)reyshirts’(cid:15) which
means they have completed trainin(cid:74) co(cid:88)rses
to (cid:69)e a(cid:69)le to s(cid:88)pport the charity(cid:17) (cid:58)e s(cid:88)pported
deployments in the (cid:56)(cid:46)(cid:15) (cid:44)ndonesia(cid:15) (cid:49)epal and
(cid:43)aiti (cid:69)y providin(cid:74) reso(cid:88)rces(cid:15) comm(cid:88)nications
e(cid:84)(cid:88)ipment and airtime(cid:17) O(cid:88)r staff are enco(cid:88)ra(cid:74)ed
to (cid:74)et involved d(cid:88)rin(cid:74) Company time s(cid:88)pported
(cid:69)y the Company vol(cid:88)nteerin(cid:74) pro(cid:74)ramme(cid:17)
O(cid:88)r C(cid:40)O(cid:15) (cid:53)(cid:88)pert (cid:51)earce serves as
Commissioner to the (cid:37)road(cid:69)and Commission
for (cid:39)i(cid:74)ital (cid:39)evelopment(cid:17) (cid:44)t was set (cid:88)p (cid:69)y the
(cid:44)(cid:55)(cid:56) and (cid:56)(cid:49)(cid:40)(cid:54)CO with the aim of (cid:69)oostin(cid:74)
the importance of (cid:69)road(cid:69)and on the
international policy a(cid:74)enda and e(cid:91)pandin(cid:74)
(cid:69)road(cid:69)and access to accelerate pro(cid:74)ress
towards national and international development
tar(cid:74)ets(cid:15) as proposed (cid:69)y the (cid:56)(cid:49)(cid:17) (cid:43)e is also
a mem(cid:69)er of the (cid:37)road(cid:69)and Commission’s
(cid:58)or(cid:78)in(cid:74) (cid:42)ro(cid:88)ps on (cid:39)i(cid:74)ital (cid:40)ntreprene(cid:88)rship(cid:15)
(cid:57)(cid:88)lnera(cid:69)le Co(cid:88)ntries and (cid:39)i(cid:74)ital (cid:43)ealth
(cid:58)or(cid:78)in(cid:74) (cid:42)ro(cid:88)p(cid:17) (cid:58)e have also committed
to the (cid:58)or(cid:78)in(cid:74) (cid:42)ro(cid:88)p on (cid:37)road(cid:69)and for (cid:36)ll(cid:29)
(cid:36) (cid:67)(cid:39)i(cid:74)ital (cid:44)nfrastr(cid:88)ct(cid:88)re (cid:48)oonshot’ for (cid:36)frica(cid:17)
(cid:55)hese types of activities contri(cid:69)(cid:88)te to o(cid:88)r
s(cid:88)pport of the (cid:56)(cid:49) (cid:54)(cid:88)staina(cid:69)ility (cid:42)oals
mentioned earlier(cid:17)
O(cid:88)r (cid:56)niversal (cid:54)ervice O(cid:69)li(cid:74)ations see(cid:78)
to s(cid:88)pport the (cid:88)se of o(cid:88)r services(cid:15) normally
payphones(cid:15) in r(cid:88)ral villa(cid:74)es in remote re(cid:74)ions
of the world(cid:15) where terrestrial voice services
are poor or non(cid:16)e(cid:91)istent(cid:17)
O(cid:88)r (cid:74)lo(cid:69)al offices s(cid:88)pport local ca(cid:88)ses at a
corporate and employee level and we enco(cid:88)ra(cid:74)e
staff to (cid:74)et involved in local comm(cid:88)nity initiatives(cid:17)
(cid:40)mployees across o(cid:88)r offices are enco(cid:88)ra(cid:74)ed
to s(cid:88)pport individ(cid:88)al charities of their choice(cid:15)
and for employees in o(cid:88)r principal (cid:56)(cid:46) office(cid:15)
this is enco(cid:88)ra(cid:74)ed thro(cid:88)(cid:74)h the (cid:56)(cid:46) (cid:42)overnment’s
ta(cid:91) approved contri(cid:69)(cid:88)tions scheme(cid:17) (cid:39)(cid:88)rin(cid:74)
2018(cid:15) one of o(cid:88)r employees(cid:15) wor(cid:78)in(cid:74) with
a small team(cid:15) has mo(cid:69)ilised o(cid:88)r wor(cid:78)force to
s(cid:88)pport him to raise f(cid:88)ndin(cid:74) for (cid:55)(cid:53)(cid:56)(cid:46) raisin(cid:74)
tens of tho(cid:88)sands of po(cid:88)nds in the process(cid:17)
International Partnership Programmes
(cid:44)n 2018(cid:15) we implemented three ma(cid:77)or international
development pro(cid:74)rammes(cid:15) each of which is
s(cid:88)pported (cid:69)y the (cid:56)(cid:46) (cid:54)pace (cid:36)(cid:74)ency’s (cid:44)nternational
(cid:51)artnership (cid:51)ro(cid:74)ramme (cid:11)(cid:67)(cid:44)(cid:51)(cid:51)’(cid:12)(cid:17) (cid:55)he (cid:44)(cid:51)(cid:51) is a f(cid:88)nd
that s(cid:88)pports international development o(cid:69)(cid:77)ectives
ali(cid:74)ned to the (cid:54)(cid:88)staina(cid:69)le (cid:39)evelopment (cid:42)oals
(cid:11)(cid:67)(cid:54)(cid:39)(cid:42)’(cid:12)(cid:17) (cid:44)t (cid:88)ses the (cid:88)ni(cid:84)(cid:88)e advanta(cid:74)es of space
(cid:69)ased systems to provide service and data to
disadvanta(cid:74)ed pop(cid:88)lations(cid:17) (cid:36)ll of the pro(cid:77)ects m(cid:88)st
meet defined (cid:54)(cid:39)(cid:42) am(cid:69)itions and demonstrate that
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) Corporate social responsi(cid:69)ility
47
the pro(cid:77)ect is the most effective way of meetin(cid:74)
the international development o(cid:69)(cid:77)ective(cid:17)
› Indonesia fisheries: (cid:40)nhancin(cid:74) the safety(cid:15)
prod(cid:88)ctivity and food sec(cid:88)rity of (cid:44)ndonesian
fishers and their comm(cid:88)nities (cid:69)y desi(cid:74)nin(cid:74) and
implementin(cid:74) innovative sol(cid:88)tions for smart
satellite technolo(cid:74)y to promote incl(cid:88)sive and
s(cid:88)staina(cid:69)le fishin(cid:74) practices in (cid:44)ndonesia
› Philippines: (cid:53)ed(cid:88)cin(cid:74) the impact of nat(cid:88)ral
disasters (cid:69)y prepositionin(cid:74) powerf(cid:88)l (cid:69)(cid:88)t
easily deploya(cid:69)le e(cid:84)(cid:88)ipment(cid:15) s(cid:88)pported (cid:69)y
effective trainin(cid:74) to permit the operation
of disaster response comm(cid:88)nications
› Nigeria eHealth: (cid:53)aisin(cid:74) the standard of
(cid:49)i(cid:74)erian healthcare o(cid:88)tcomes (cid:69)y e(cid:91)tendin(cid:74)
the reach of (cid:69)asic medical services into remote
areas of the co(cid:88)ntry(cid:15) deliverin(cid:74) professional
trainin(cid:74)(cid:15) data collection and disease monitorin(cid:74)
in areas with poor comm(cid:88)nications thro(cid:88)(cid:74)h
the application of satellite connectivity
(cid:58)e have (cid:69)een very pro(cid:88)d to (cid:69)e involved with
these pro(cid:74)rammes where we can see a direct
impact of the val(cid:88)e satellite connectivity
can (cid:69)rin(cid:74) to comm(cid:88)nities(cid:17)
Environment
(cid:44)n 2018 (cid:44)nmarsat achieved a C(cid:39)(cid:51) score
of (cid:37) (cid:11)201(cid:26)(cid:29) (cid:37)(cid:12)(cid:15) maintainin(cid:74) o(cid:88)r performance
and demonstratin(cid:74) that we are mana(cid:74)in(cid:74)
o(cid:88)r environmental impact(cid:15) as well as
climate chan(cid:74)e related (cid:69)(cid:88)siness ris(cid:78)s
and opport(cid:88)nities(cid:17)
(cid:36)ltho(cid:88)(cid:74)h the direct activities of the (cid:42)ro(cid:88)p
are (cid:77)(cid:88)d(cid:74)ed to have a low environmental impact(cid:15)
we (cid:88)nderstand that (cid:88)nless (cid:88)r(cid:74)ent action is ta(cid:78)en
to limit (cid:74)lo(cid:69)al temperat(cid:88)res to 2C (cid:11)3(cid:24)(cid:17)6F(cid:12) a(cid:69)ove
pre(cid:16)ind(cid:88)strial levels(cid:15) climate chan(cid:74)e presents
si(cid:74)nificant and systemic ris(cid:78)s(cid:17) (cid:58)e s(cid:88)pport
the recommendations of the (cid:55)as(cid:78) Force on
Climate(cid:16)(cid:53)elated Financial (cid:39)isclos(cid:88)res (cid:11)(cid:67)(cid:55)CF(cid:39)’(cid:12)
and will loo(cid:78) to contin(cid:88)e to develop transparent
reportin(cid:74) aro(cid:88)nd climate(cid:16)related ris(cid:78)s and
opport(cid:88)nities for o(cid:88)r (cid:69)(cid:88)siness(cid:17)
(cid:58)ithin o(cid:88)r ann(cid:88)al C(cid:39)(cid:51) response we provide
details on (cid:44)nmarsat’s s(cid:88)(cid:69)stantive re(cid:74)(cid:88)latory(cid:15)
physical and rep(cid:88)tational ris(cid:78)s and
opport(cid:88)nities relatin(cid:74) to climate chan(cid:74)e(cid:17)
For e(cid:91)ample(cid:15) risin(cid:74) sea levels as a res(cid:88)lt of
climate chan(cid:74)e co(cid:88)ld impact o(cid:88)r satellite
access stations which are located at strate(cid:74)ic
points aro(cid:88)nd the world and act as traffic
(cid:74)ateways connectin(cid:74) c(cid:88)stomers (cid:88)sin(cid:74) the
(cid:44)nmarsat satellites to terrestrial networ(cid:78)s(cid:17)
(cid:55)o mana(cid:74)e this ris(cid:78)(cid:15) we have esta(cid:69)lished
site selection d(cid:88)e dili(cid:74)ence processes
which incorporate climatic (cid:74)eo(cid:74)raphical
considerations(cid:17) O(cid:88)r 2018 C(cid:39)(cid:51) response is
availa(cid:69)le on o(cid:88)r corporate we(cid:69)site(cid:17) (cid:47)oo(cid:78)in(cid:74)
(cid:69)eyond o(cid:88)r direct climate impact(cid:15) we have
noted that o(cid:88)r sta(cid:78)eholders identified
that wor(cid:78)in(cid:74) with s(cid:88)ppliers and c(cid:88)stomers
to red(cid:88)ce emissions in o(cid:88)r val(cid:88)e chain
sho(cid:88)ld (cid:69)e a priority for (cid:44)nmarsat(cid:17)
(cid:36)s a res(cid:88)lt(cid:15) we are c(cid:88)rrently wor(cid:78)in(cid:74) with o(cid:88)r
s(cid:88)staina(cid:69)ility partner(cid:15) Car(cid:69)on Credentials(cid:15)
to (cid:84)(cid:88)antify emissions from o(cid:88)r indirect (cid:11)(cid:54)cope 3(cid:12)
activities with the am(cid:69)ition of en(cid:74)a(cid:74)in(cid:74) with
o(cid:88)r partners to set meanin(cid:74)f(cid:88)l emissions
red(cid:88)ctions tar(cid:74)ets(cid:17) (cid:55)his wor(cid:78) feeds into o(cid:88)r
on(cid:74)oin(cid:74) pro(cid:74)ramme to set a science(cid:16)(cid:69)ased
emission red(cid:88)ction tar(cid:74)et in line with the (cid:56)(cid:46)’s
commitment (cid:88)nder the (cid:56)(cid:49) (cid:51)aris (cid:36)(cid:74)reement(cid:17)
(cid:58)e have appro(cid:91)imately 1(cid:15)800 staff in 3(cid:28)
locations aro(cid:88)nd the world(cid:17) Of those offices(cid:15)
wareho(cid:88)ses and satellite access stations(cid:15)
over 80(cid:8) operate from ei(cid:74)ht locations(cid:17)
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Team Rubicon
case study
(cid:44)nmarsat first (cid:69)ecame (cid:55)eam (cid:53)(cid:88)(cid:69)icon
(cid:56)(cid:46)’s satellite comm(cid:88)nications partner
in 201(cid:24)(cid:17) (cid:54)ince then we have (cid:69)een
providin(cid:74) connectivity for (cid:55)eam
(cid:53)(cid:88)(cid:69)icon’s emer(cid:74)ency relief efforts
and lon(cid:74)(cid:16)term reconstr(cid:88)ction
pro(cid:77)ects(cid:17) (cid:58)e also have (cid:24)0 (cid:44)nmarsat
staff trained as (cid:42)reyshirts vol(cid:88)nteers(cid:17)
(cid:55)he (cid:49)ational (cid:55)hree (cid:51)ea(cid:78)s Challen(cid:74)e
was made (cid:88)p of a team from
(cid:44)nmarsat(cid:15) o(cid:88)r partner (cid:54)pectra
and (cid:55)eam (cid:53)(cid:88)(cid:69)icon (cid:56)(cid:46)(cid:17)
48
(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) Corporate social responsi(cid:69)ility
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
Corporate social responsibility
contin(cid:88)ed
O(cid:88)r environmental principles are to(cid:29)
› (cid:51)rovide first(cid:16)class ener(cid:74)y and environmental
mana(cid:74)ement practices
› Comply with all relevant (cid:74)lo(cid:69)al environmental
le(cid:74)islation and re(cid:74)(cid:88)latory controls
› (cid:44)dentify si(cid:74)nificant environmental and social
impacts and esta(cid:69)lish o(cid:69)(cid:77)ectives and tar(cid:74)ets
for improvement
› (cid:44)n o(cid:88)r main (cid:56)(cid:46) site(cid:15) recycle a minim(cid:88)m of (cid:28)0(cid:8)
of (cid:74)enerated waste and to constantly review
the opport(cid:88)nity to (cid:88)se recycled prod(cid:88)cts
› (cid:36)ctively enco(cid:88)ra(cid:74)e the conservation of
ener(cid:74)y(cid:15) water and nat(cid:88)ral reso(cid:88)rces thro(cid:88)(cid:74)h
the increased efficiency and introd(cid:88)ction
of new and modern technolo(cid:74)y
› (cid:40)nco(cid:88)ra(cid:74)e all employees to (cid:69)e proactive
in their daily activities (cid:69)y separatin(cid:74) their
waste into dry and wet waste receptacles
› (cid:40)ns(cid:88)re that printer cartrid(cid:74)es are recycled
› (cid:54)witch off li(cid:74)hts(cid:15) comp(cid:88)ters(cid:15) phone char(cid:74)ers
and any other electrical items when not in (cid:88)se
› (cid:53)ed(cid:88)ce (cid:69)(cid:88)siness travel and (cid:88)sin(cid:74) more
site(cid:16)(cid:69)ased technolo(cid:74)y s(cid:88)ch as video and
a(cid:88)dio conferencin(cid:74) and
› (cid:53)eplace inefficient (cid:69)(cid:88)ildin(cid:74) li(cid:74)htin(cid:74) with
(cid:47)(cid:40)(cid:39) technolo(cid:74)y
(cid:58)e contin(cid:88)e to monitor o(cid:88)r ener(cid:74)y cons(cid:88)mption
and comply with o(cid:88)r social and le(cid:74)al responsi(cid:69)ilities
in terms of car(cid:69)on emissions(cid:17) (cid:51)lease see o(cid:88)r
s(cid:88)mmary of car(cid:69)on emissions within the (cid:53)eport
of the (cid:39)irectors on pa(cid:74)e 102(cid:17)
(cid:58)e set an interim tar(cid:74)et to red(cid:88)ce a(cid:69)sol(cid:88)te
(cid:54)cope 1 and 2 emissions (cid:69)y 20(cid:8) compared
to 2016(cid:17) (cid:58)e have achieved this tar(cid:74)et with
o(cid:88)r a(cid:69)sol(cid:88)te (cid:54)cope 1 and 2 emissions havin(cid:74)
decreased (cid:69)y 2(cid:26)(cid:8) since 2016 (cid:11)(cid:88)sin(cid:74) the
mar(cid:78)et(cid:16)(cid:69)ased (cid:54)cope 2 acco(cid:88)ntancy method(cid:12)(cid:17)
(cid:55)his decrease in emissions is a res(cid:88)lt of
o(cid:88)r switch to a renewa(cid:69)le electricity s(cid:88)pply
at o(cid:88)r (cid:47)ondon head(cid:84)(cid:88)arters(cid:15) o(cid:88)r lar(cid:74)est
electricity(cid:16)cons(cid:88)min(cid:74) site(cid:15) and a n(cid:88)m(cid:69)er
of ener(cid:74)y(cid:16)savin(cid:74) initiatives rolled o(cid:88)t across
the (cid:42)ro(cid:88)p(cid:17)
(cid:36)ll new office (cid:69)(cid:88)ilds(cid:15) s(cid:88)ch as in (cid:54)t (cid:45)ohns
(cid:11)Canada and (cid:37)atam (cid:11)(cid:44)ndonesia(cid:12)(cid:15) are desi(cid:74)ned
with ener(cid:74)y efficiency in mind(cid:17) (cid:58)e contin(cid:88)e
to improve operations to ens(cid:88)re they consider
occ(cid:88)pational (cid:88)sa(cid:74)e(cid:15) incl(cid:88)din(cid:74) the efficient
r(cid:88)nnin(cid:74) of servers at o(cid:88)r data centres(cid:17) (cid:36)cross
the (cid:74)ro(cid:88)p (cid:47)(cid:40)(cid:39) li(cid:74)htin(cid:74) has (cid:69)een installed where
appropriate(cid:17) (cid:57)ideo conferencin(cid:74) and other
colla(cid:69)oration tools allowin(cid:74) vis(cid:88)al connectivity
are (cid:69)ein(cid:74) (cid:88)sed to red(cid:88)ce the dependency
on air transport and are a pop(cid:88)lar means of
comm(cid:88)nication with staff wor(cid:78)in(cid:74) in different
locations and across different time (cid:93)ones(cid:17)
(cid:36)t o(cid:88)r head(cid:84)(cid:88)arters in (cid:47)ondon we are c(cid:88)rrently
(cid:88)nderta(cid:78)in(cid:74) a si(cid:74)nificant ref(cid:88)r(cid:69)ishment pro(cid:77)ect
that will help red(cid:88)ce ener(cid:74)y cons(cid:88)mption at this
principal site(cid:17) (cid:58)e are in the process of replacin(cid:74)
the ener(cid:74)y(cid:16)intensive chillers on(cid:16)site with new
environmentally friendly machines which prod(cid:88)ce
less car(cid:69)on emissions per (cid:88)nit of (cid:74)as inp(cid:88)t and
operate 20(cid:8) more efficiently(cid:17) (cid:55)he ref(cid:88)r(cid:69)ishment
will also offer a fresher(cid:15) more colla(cid:69)orative wor(cid:78)
place for o(cid:88)r people and visitors(cid:17) (cid:58)ith a(cid:69)o(cid:88)t
(cid:26)0(cid:8) of the wor(cid:78) completed at the end of 2018(cid:15)
we are already seein(cid:74) the (cid:69)enefits of an improved
wor(cid:78) environment where colla(cid:69)oration areas
are well (cid:88)sed(cid:17)
Commercial waste and water
(cid:44)n the (cid:47)ondon office and at o(cid:88)r ma(cid:77)or sites(cid:15)
we contin(cid:88)e a pro(cid:74)ressive approach to waste
mana(cid:74)ement(cid:17) (cid:53)ecyclin(cid:74) is mana(cid:74)ed locally in
the lar(cid:74)er sites with the separation of plastics(cid:15)
paper and non(cid:16)recycla(cid:69)le materials(cid:17) (cid:44)n the
head office in (cid:47)ondon(cid:15) which is the sin(cid:74)le lar(cid:74)est
office for the (cid:42)ro(cid:88)p(cid:15) 100(cid:8) of waste is diverted
from landfill and this policy has (cid:69)een in place
since 200(cid:28)(cid:17) (cid:58)e separate o(cid:88)r waste into fo(cid:88)r
streams(cid:29) recycla(cid:69)le(cid:15) non(cid:16)recycla(cid:69)le(cid:15) (cid:74)lass
and confidential waste(cid:17) Confidential waste
is shredded and p(cid:88)lped to (cid:69)e re(cid:88)sed in paper
prod(cid:88)cts(cid:17) (cid:44)n 2018(cid:15) o(cid:88)r total waste from
the (cid:47)ondon head office increased (cid:69)y 11(cid:8)(cid:17)
(cid:58)e contin(cid:88)e to wor(cid:78) with o(cid:88)r (cid:47)ondon office
caterers to red(cid:88)ce o(cid:88)r impact on the environment
and(cid:15) for e(cid:91)ample(cid:15) coo(cid:78)in(cid:74) oils are now collected
and converted to s(cid:88)staina(cid:69)le (cid:69)iof(cid:88)els(cid:17)
O(cid:88)r water (cid:88)se(cid:15) in o(cid:88)r (cid:47)ondon office(cid:15) in 2018
was do(cid:88)(cid:69)le the (cid:88)sa(cid:74)e in 201(cid:26)(cid:17) (cid:55)his is somethin(cid:74)
we are contin(cid:88)ally monitorin(cid:74) and improvin(cid:74)
d(cid:88)rin(cid:74) o(cid:88)r ref(cid:88)r(cid:69)ishment(cid:17)
(cid:39)(cid:88)rin(cid:74) the year we replaced and (cid:88)p(cid:74)raded o(cid:88)r
instant water (cid:69)oilers and water fo(cid:88)ntain machines
to improve water efficiency and (cid:84)(cid:88)ality(cid:17)
(cid:58)e contin(cid:88)e
to monitor o(cid:88)r ener(cid:74)y
cons(cid:88)mption and comply
with o(cid:88)r social and le(cid:74)al
responsi(cid:69)ilities in terms
of car(cid:69)on emissions
Enabling environmental
sustainability across
the value chain
(cid:55)hro(cid:88)(cid:74)h o(cid:88)r services(cid:15) we can help red(cid:88)ce
car(cid:69)on emissions and increase resiliency in
other sectors(cid:17) For e(cid:91)ample(cid:15) the a(cid:74)ric(cid:88)lt(cid:88)re
sector is faced with a m(cid:88)ltit(cid:88)de of challen(cid:74)es(cid:15)
tas(cid:78)ed with increasin(cid:74) the amo(cid:88)nt it prod(cid:88)ces
while red(cid:88)cin(cid:74) its impact on the environment(cid:17)
(cid:36) st(cid:88)dy (cid:88)nderta(cid:78)en (cid:69)y (cid:44)nmarsat shows
that a(cid:74)ric(cid:88)lt(cid:88)re or(cid:74)anisations are adoptin(cid:74)
(cid:44)nd(cid:88)strial (cid:44)nternet of (cid:55)hin(cid:74)s (cid:11)(cid:67)(cid:44)(cid:44)o(cid:55)’(cid:12) to
help them achieve these (cid:74)oals(cid:17) (cid:43)owever(cid:15)
witho(cid:88)t the ri(cid:74)ht connectivity networ(cid:78)s(cid:15)
(cid:44)(cid:44)o(cid:55) deployments won’t deliver the
improvements in s(cid:88)staina(cid:69)ility they are
capa(cid:69)le of(cid:17) (cid:55)he (cid:74)lo(cid:69)al nat(cid:88)re of the a(cid:74)ric(cid:88)lt(cid:88)re
sector means that or(cid:74)anisations need relia(cid:69)le
connectivity to (cid:74)ather critical data from
every area of their operations and analyse
it in real(cid:16)time(cid:17) (cid:58)ith (cid:74)lo(cid:69)al and relia(cid:69)le covera(cid:74)e(cid:15)
o(cid:88)r satellite comm(cid:88)nications offer the levels
of connectivity or(cid:74)anisations need to
ma(cid:78)e (cid:44)(cid:44)o(cid:55) a s(cid:88)ccess(cid:17)
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) O(cid:88)r people
49
Our people
O(cid:88)r people are (cid:69)ehind every aspect
of o(cid:88)r strate(cid:74)y
(cid:58)e (cid:69)elieve passionately
that (cid:44)nmarsat is a (cid:88)ni(cid:84)(cid:88)e
or(cid:74)anisation to (cid:69)e part
of and the (cid:74)reat people
who wor(cid:78) here are the
fo(cid:88)ndation on which
it is (cid:69)(cid:88)ilt
(cid:54)(cid:88)pportin(cid:74) o(cid:88)r drive to create a hi(cid:74)h
performance or(cid:74)anisation is a (cid:78)ey pillar of
o(cid:88)r company strate(cid:74)y and 2018 saw f(cid:88)rther
acceleration and pro(cid:74)ress in the delivery of
o(cid:88)r am(cid:69)itio(cid:88)s (cid:51)eople (cid:54)trate(cid:74)y across all
areas of the employee e(cid:91)perience(cid:17)
Central to o(cid:88)r wor(cid:78) this past year has (cid:69)een
o(cid:88)r foc(cid:88)s on creatin(cid:74) the ri(cid:74)ht c(cid:88)lt(cid:88)re and
val(cid:88)es(cid:16)centric environment where o(cid:88)r
employees can thrive and drive the (cid:69)(cid:88)siness
forward(cid:17) (cid:36)lon(cid:74)side this we have (cid:69)(cid:88)ilt and
stren(cid:74)thened leadership capa(cid:69)ility(cid:15) foc(cid:88)sed
on mana(cid:74)in(cid:74) for performance across o(cid:88)r
(cid:74)lo(cid:69)al wor(cid:78)force(cid:15) created and comm(cid:88)nicated
a compellin(cid:74) employee val(cid:88)e proposition(cid:15)
la(cid:88)nched o(cid:88)r diversity and incl(cid:88)sion strate(cid:74)y(cid:17)
(cid:58)e also contin(cid:88)ed to (cid:69)(cid:88)ild an effective
or(cid:74)anisation (cid:69)y ens(cid:88)rin(cid:74) o(cid:88)r mar(cid:78)et facin(cid:74)
(cid:69)(cid:88)sinesses have the ri(cid:74)ht capa(cid:69)ility and
str(cid:88)ct(cid:88)re to s(cid:88)stain o(cid:88)r f(cid:88)t(cid:88)re (cid:74)rowth(cid:17)
Culture and values
Creatin(cid:74) an en(cid:74)a(cid:74)in(cid:74) and inspirin(cid:74) place
to wor(cid:78) remains at the heart of o(cid:88)r people
philosophy and this year we have (cid:69)een wor(cid:78)in(cid:74)
to drive an internal c(cid:88)lt(cid:88)ral transformation(cid:17)
(cid:55)he (cid:43)i(cid:74)h (cid:51)erformance C(cid:88)lt(cid:88)re pro(cid:74)ramme(cid:15)
which la(cid:88)nched with senior leaders at
the end of 201(cid:26)(cid:15) has now reached aro(cid:88)nd
(cid:28)0(cid:8) of o(cid:88)r (cid:74)lo(cid:69)al employee wor(cid:78)force(cid:15) via a
two(cid:16)day immersive wor(cid:78)shop delivered lar(cid:74)ely
(cid:69)y (cid:44)nmarsat facilitators(cid:17) O(cid:88)r 2018 foc(cid:88)s saw (cid:88)s
start to actively shape o(cid:88)r c(cid:88)lt(cid:88)re (cid:69)y ali(cid:74)nin(cid:74) o(cid:88)r
employees aro(cid:88)nd (cid:78)ey (cid:69)ehavio(cid:88)ral concepts
that resonated with everyone and introd(cid:88)ced a
shared lan(cid:74)(cid:88)a(cid:74)e and (cid:88)nderstandin(cid:74) of how we
want to wor(cid:78) to(cid:74)ether(cid:17) (cid:44)n 201(cid:28) the foc(cid:88)s moves
to em(cid:69)eddin(cid:74) these concepts across (cid:74)lo(cid:69)al
offices co(cid:88)ntries and (cid:26)0 nationalities and applyin(cid:74)
the c(cid:88)lt(cid:88)re tools to enhance (cid:69)(cid:88)siness practices(cid:17)
(cid:55)his c(cid:88)lt(cid:88)ral ali(cid:74)nment is startin(cid:74) to shape
a common approach to how we wor(cid:78) to(cid:74)ether
and deliver for o(cid:88)r c(cid:88)stomers(cid:17) (cid:26)1(cid:8) of respondents
to o(cid:88)r recent c(cid:88)lt(cid:88)re impact s(cid:88)rvey said they
colla(cid:69)orate more as a team with hi(cid:74)her levels
of tr(cid:88)st and 83(cid:8) (cid:69)elieve the c(cid:88)lt(cid:88)re process
will ma(cid:78)e o(cid:88)r company more s(cid:88)ccessf(cid:88)l(cid:17)
(cid:40)arly indication shows that we are startin(cid:74)
to colla(cid:69)orate (cid:69)etter across departments
and o(cid:88)r vision and strate(cid:74)y are (cid:69)etter
(cid:88)nderstood than previo(cid:88)sly(cid:17)
(cid:55)he pro(cid:74)ramme is also intrinsically ali(cid:74)ned with
and (cid:88)nderpins o(cid:88)r new val(cid:88)es of (cid:36)cco(cid:88)nta(cid:69)ility(cid:15)
(cid:53)espect and (cid:40)(cid:91)cellence(cid:17) (cid:47)istenin(cid:74) and
(cid:88)nderstandin(cid:74) what mattered to o(cid:88)r people
res(cid:88)lted in these val(cid:88)es (cid:113) val(cid:88)es that p(cid:88)t the
c(cid:88)stomer at the heart of what we do(cid:15) and loo(cid:78)
to the collective power of o(cid:88)r people to deliver
pioneerin(cid:74) sol(cid:88)tions to meet their needs(cid:17)
(cid:36)n innovative (cid:67)colla(cid:69)oration caf(cid:184)’ wor(cid:78)shop
ran across the (cid:74)lo(cid:69)e to immerse the or(cid:74)anisation
in (cid:88)nderstandin(cid:74) what they mean for (cid:88)s(cid:17) (cid:36)n
internal comm(cid:88)nications s(cid:88)rvey showed that
over three (cid:84)(cid:88)arters of o(cid:88)r people have a (cid:74)ood
(cid:88)nderstandin(cid:74) of these new val(cid:88)es(cid:17) (cid:55)his c(cid:88)lt(cid:88)ral
foc(cid:88)s has helped (cid:88)s (cid:69)(cid:88)ild the ri(cid:74)ht internal
environment and (cid:69)ehavio(cid:88)rs that will (cid:88)nderpin
o(cid:88)r f(cid:88)t(cid:88)re (cid:74)rowth as a company(cid:17)
Strengthening leadership
(cid:47)eaders are pivotal to shapin(cid:74) c(cid:88)lt(cid:88)re and to
drivin(cid:74) employee performance(cid:15) reven(cid:88)e (cid:74)rowth
and (cid:88)ltimately o(cid:88)r (cid:69)(cid:88)siness s(cid:88)ccess(cid:17) (cid:36)t the heart
of (cid:44)nmarsat’s people strate(cid:74)y lies o(cid:88)r am(cid:69)ition
to attract and develop world class leaders and
s(cid:88)pport them in their careers at (cid:44)nmarsat(cid:17) (cid:44)n 2018
we have made (cid:74)reat strides in stren(cid:74)thenin(cid:74)
o(cid:88)r leadership capa(cid:69)ility in a n(cid:88)m(cid:69)er of ways(cid:17)
Firstly(cid:15) o(cid:88)r foc(cid:88)s on senior level leadership
has seen a talent review of o(cid:88)r senior level
pop(cid:88)lation to inform s(cid:88)ccession plannin(cid:74)
and active mana(cid:74)ement of o(cid:88)r talent pipeline(cid:17)
(cid:44)n a relatively small(cid:15) hi(cid:74)hly specialised ind(cid:88)stry
sector(cid:15) this is increasin(cid:74)ly important to ens(cid:88)re
o(cid:88)r f(cid:88)t(cid:88)re s(cid:78)ills and capa(cid:69)ility needs are met(cid:17)
(cid:44)nsi(cid:74)ht from o(cid:88)r talent review has informed
the active pro(cid:74)ramme of tailored development
for o(cid:88)r senior leaders(cid:17) (cid:51)artnerin(cid:74) with C(cid:36)(cid:54)(cid:54)
(cid:37)(cid:88)siness (cid:54)chool(cid:15) we have delivered a commercial
c(cid:88)rric(cid:88)l(cid:88)m(cid:15) (cid:69)(cid:88)ildin(cid:74) s(cid:78)ills across a (cid:69)road spectr(cid:88)m
of areas(cid:17) (cid:58)e have also partnered with (cid:43)enley
and Cranfield to deliver an (cid:40)(cid:91)ec(cid:88)tive (cid:48)(cid:37)(cid:36)
pro(cid:74)ramme and c(cid:88)rrently have 1(cid:23) employees
enrolled in the pro(cid:74)ramme(cid:17)
(cid:58)e have also made a si(cid:74)nificant improvement in
the (cid:74)ender diversity of o(cid:88)r (cid:40)(cid:91)ec(cid:88)tive team(cid:15) (cid:88)p to
31(cid:8) from 2(cid:24)(cid:8) in 201(cid:26)(cid:17) (cid:44)n an ind(cid:88)stry challen(cid:74)ed
(cid:69)y the pipeline of female talent(cid:15) it is important
that we made chan(cid:74)es at the hi(cid:74)hest level in
the or(cid:74)anisation(cid:17) (cid:55)his incl(cid:88)des s(cid:88)pportin(cid:74) o(cid:88)r
female talent to pro(cid:74)ress(cid:15) which has also (cid:69)een
an area of foc(cid:88)s(cid:15) and a partnership with (cid:53)(cid:36)(cid:39)(cid:36)
has delivered (cid:40)(cid:91)ec(cid:88)tive (cid:51)resence development
for (cid:69)oth senior and mid(cid:16)level female leaders(cid:17)
(cid:13) (cid:55)he (cid:67)(cid:74)rowth’ score in o(cid:88)r (cid:51)eople (cid:51)(cid:88)lse en(cid:74)a(cid:74)ement s(cid:88)rvey indicates how people feel a(cid:69)o(cid:88)t trainin(cid:74) and development opport(cid:88)nities
(cid:55)he initiatives set in train this year will form the
fo(cid:88)ndation of o(cid:88)r approach for the years to come(cid:17)
Learning and development
(cid:36)lon(cid:74)side developin(cid:74) o(cid:88)r senior leaders(cid:15)
ens(cid:88)rin(cid:74) we lead and mana(cid:74)e for performance
across every level of the or(cid:74)anisation is critically
important too(cid:17) (cid:55)his year we have contin(cid:88)ed to
stren(cid:74)then o(cid:88)r (cid:69)road learnin(cid:74) and development
offerin(cid:74)(cid:15) and this has (cid:69)een reflected in the
(cid:74)rowth score(cid:13) improvement from (cid:26)(cid:17)0 to (cid:26)(cid:17)(cid:23)
in o(cid:88)r (cid:51)eople (cid:51)(cid:88)lse en(cid:74)a(cid:74)ement s(cid:88)rvey
over the co(cid:88)rse of 2018(cid:17)
(cid:48)ana(cid:74)in(cid:74) for performance is (cid:88)nderpinned
(cid:69)y o(cid:88)r (cid:67)(cid:37)e (cid:60)o(cid:88)r (cid:37)est’ development
conversation(cid:16)led approach and 2018 has
(cid:69)een its first f(cid:88)ll cycle(cid:17) (cid:55)ailored we(cid:69)inars and
’(cid:28)0 min(cid:88)te learnin(cid:74) wor(cid:78)o(cid:88)ts’ have s(cid:88)pported
all o(cid:88)r employees to (cid:69)(cid:88)ild their s(cid:78)ills and
capa(cid:69)ilities in leadin(cid:74) and participatin(cid:74) in (cid:74)reat
performance conversations(cid:17) O(cid:88)r wor(cid:78)shops
have not (cid:69)een constrained to this foc(cid:88)s area(cid:15)
(cid:69)(cid:88)t also covered a (cid:69)road ran(cid:74)e of leadership
and mana(cid:74)ement topics and are provin(cid:74)
pop(cid:88)lar with (cid:24)(cid:24) sessions and a total of 322
employees completin(cid:74) one in 2018(cid:17)
(cid:55)o s(cid:88)pport and em(cid:69)ed the (cid:67)(cid:37)e (cid:60)o(cid:88)r (cid:37)est’
cycle we have also inte(cid:74)rated o(cid:88)r talent and
reward processes(cid:15) to (cid:88)nderpin more holistic
conversations a(cid:69)o(cid:88)t performance(cid:15) talent
potential(cid:15) development and reward(cid:17)
(cid:39)evelopin(cid:74) mentorin(cid:74) capa(cid:69)ility has (cid:69)een
a priority(cid:15) and over the co(cid:88)rse of 2018 we
have rolled o(cid:88)t a new mentorin(cid:74) pro(cid:74)ramme(cid:15)
s(cid:88)pported (cid:69)y a comprehensive tool(cid:78)it(cid:17) (cid:58)e
now have forty trained mentors who are a(cid:69)le
to s(cid:88)pport collea(cid:74)(cid:88)es across the (cid:69)(cid:88)siness(cid:17)
O(cid:88)r (cid:47)earnin(cid:74) h(cid:88)(cid:69) (cid:113) o(cid:88)r foc(cid:88)s area for all
online learnin(cid:74) (cid:113) contin(cid:88)es to e(cid:91)tend its reach
and has seen a 66(cid:17)(cid:24)(cid:8) increase in (cid:88)sa(cid:74)e across
the year(cid:15) with over 1(cid:15)300 (cid:88)sers across the system
accessin(cid:74) a total of appro(cid:91)imately (cid:26)(cid:24)0 different
e(cid:16)learnin(cid:74) co(cid:88)rses and pro(cid:74)rammes(cid:17)
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50
(cid:54)trate(cid:74)ic (cid:53)eport (cid:95) O(cid:88)r people
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
Our people
contin(cid:88)ed
(cid:58)e have also made technical online trainin(cid:74)
availa(cid:69)le to o(cid:88)r en(cid:74)ineerin(cid:74) and technical
people(cid:15) (cid:88)sin(cid:74) online platforms that provide a
ran(cid:74)e of relevant and (cid:88)p to date s(cid:78)ills trainin(cid:74)(cid:17)
Launching our people promise
(cid:39)eliverin(cid:74) an en(cid:74)a(cid:74)in(cid:74) employee e(cid:91)perience
remains at the heart of the (cid:51)eople (cid:54)trate(cid:74)y
and o(cid:88)r principle meas(cid:88)re of s(cid:88)ccess is the
overall employee en(cid:74)a(cid:74)ement score(cid:15) trac(cid:78)ed
in the si(cid:91)(cid:16)monthly (cid:51)eople (cid:51)(cid:88)lse s(cid:88)rvey(cid:17)
O(cid:88)r final s(cid:88)rvey of 2018 showed a si(cid:74)nificant
improvement this year from (cid:26)(cid:17)(cid:23)(cid:18)10 to (cid:26)(cid:17)6(cid:18)10(cid:17)
(cid:55)his is validation of wor(cid:78) across all pillars of
o(cid:88)r (cid:51)eople (cid:54)trate(cid:74)y and is endorsement
of its direction and am(cid:69)ition(cid:17)
(cid:56)nderpinnin(cid:74) the employee e(cid:91)perience is a
clear artic(cid:88)lation of (cid:67)what’s in it for me’ or the
employee val(cid:88)e proposition(cid:17) (cid:44)n (cid:48)ay we were
pro(cid:88)d to la(cid:88)nch o(cid:88)r (cid:67)(cid:51)eople (cid:51)romise’ that set
o(cid:88)t o(cid:88)r commitment to o(cid:88)r employees in terms
of how we intend to en(cid:74)a(cid:74)e(cid:15) develop(cid:15) reward and
reco(cid:74)nise them in their wor(cid:78)in(cid:74) life at (cid:44)nmarsat(cid:17)
O(cid:88)r (cid:51)eople (cid:51)romise was (cid:69)(cid:88)ilt on rich insi(cid:74)ht and
feed(cid:69)ac(cid:78) from o(cid:88)r employees(cid:15) (cid:74)athered from
a series of nine (cid:74)lo(cid:69)al wor(cid:78)shops(cid:15) competitor
review and other feed(cid:69)ac(cid:78) ro(cid:88)tes(cid:17)
(cid:44)nsi(cid:74)ht from this wor(cid:78) has driven a n(cid:88)m(cid:69)er
of initiatives(cid:17) (cid:53)eco(cid:74)nisin(cid:74) o(cid:88)r people’s passion
for ma(cid:78)in(cid:74) a difference(cid:15) we have la(cid:88)nched a new
vol(cid:88)nteerin(cid:74) policy that enco(cid:88)ra(cid:74)es employees
to s(cid:88)pport their local comm(cid:88)nities(cid:15) alon(cid:74)side
o(cid:88)r contin(cid:88)ed s(cid:88)pport of employees’ trainin(cid:74)
as (cid:55)eam (cid:53)(cid:88)(cid:69)icon (cid:42)reyshirts(cid:17) (cid:58)e have seen a
steady ta(cid:78)e (cid:88)p of staff ta(cid:78)in(cid:74) vol(cid:88)nteerin(cid:74) days
in 2018 to s(cid:88)pport ca(cid:88)ses s(cid:88)ch as homeless
charities and (cid:49)orway’s (cid:53)ednin(cid:74)ssel(cid:78)apet
life(cid:69)oat service(cid:17)
(cid:58)e’ve ali(cid:74)ned and improved o(cid:88)r reco(cid:74)nition
approach to reflect o(cid:88)r new val(cid:88)es(cid:15) incl(cid:88)din(cid:74)
o(cid:88)r peer nominated (cid:67)(cid:54)pot (cid:37)eam (cid:36)wards’ that
offer employees the chance to reco(cid:74)nise
e(cid:91)ceptional val(cid:88)es(cid:16)led (cid:69)ehavio(cid:88)rs and
achievements of their collea(cid:74)(cid:88)es across
the Company(cid:17) (cid:44)n 2018 we have seen over
3(cid:24)0 s(cid:88)ch award nominations(cid:17)
(cid:58)e have contin(cid:88)ed o(cid:88)r wor(cid:78) to advance o(cid:88)r
internal comm(cid:88)nications(cid:15) from improvin(cid:74) o(cid:88)r
cascade and storytellin(cid:74) a(cid:69)o(cid:88)t o(cid:88)r p(cid:88)rpose and
strate(cid:74)y(cid:15) increasin(cid:74) visi(cid:69)ility of o(cid:88)r (cid:40)(cid:91)ec(cid:88)tive
(cid:48)ana(cid:74)ement (cid:55)eam(cid:15) and enco(cid:88)ra(cid:74)in(cid:74) more
two(cid:16)way comm(cid:88)nications(cid:17) O(cid:88)r first internal
comm(cid:88)nications s(cid:88)rvey showed a (cid:74)ro(cid:88)p
internal comm(cid:88)nications inde(cid:91) score of 63(cid:8)(cid:17)
(cid:58)e are also la(cid:88)nchin(cid:74) a (cid:42)lo(cid:69)al (cid:58)or(cid:78)force
(cid:36)dvisory (cid:51)anel (cid:11)(cid:67)(cid:42)(cid:58)(cid:36)(cid:51)’(cid:12) providin(cid:74) a direct
cond(cid:88)it and effective dialo(cid:74)(cid:88)e (cid:69)etween the
wor(cid:78)force(cid:15) the (cid:40)(cid:91)ec(cid:88)tive (cid:48)ana(cid:74)ement (cid:55)eam
and the (cid:37)oard(cid:15) in line with re(cid:84)(cid:88)irements o(cid:88)tlined
in the recently (cid:88)pdated Financial (cid:53)eportin(cid:74)
Co(cid:88)ncil’s (cid:56)(cid:46) Corporate (cid:42)overnance Code(cid:17)
(cid:42)(cid:58)(cid:36)(cid:51) will capt(cid:88)re the views of employees on
proposals and iss(cid:88)es which affect o(cid:88)r people(cid:15)
reco(cid:74)nisin(cid:74) (cid:69)arriers and ena(cid:69)lers and helpin(cid:74)
to address them(cid:17) (cid:42)(cid:58)(cid:36)(cid:51) will promote a c(cid:88)lt(cid:88)re
of colla(cid:69)oration and hi(cid:74)h performance(cid:15)
and cons(cid:88)lt on and provide advice(cid:15) s(cid:88)pport
and feed(cid:69)ac(cid:78) d(cid:88)rin(cid:74) the implementation
of pro(cid:74)rammes and policies(cid:17) (cid:48)ost meetin(cid:74)s
of (cid:42)(cid:58)(cid:36)(cid:51) will (cid:69)e held virt(cid:88)ally d(cid:88)e to the (cid:74)lo(cid:69)al
nat(cid:88)re of the (cid:69)(cid:88)siness (cid:69)(cid:88)t there will (cid:69)e an ann(cid:88)al
meetin(cid:74) with the (cid:40)(cid:91)ec(cid:88)tive (cid:48)ana(cid:74)ement (cid:55)eam
and (cid:37)oard in (cid:47)ondon(cid:17) (cid:42)(cid:58)(cid:36)(cid:51) held its first meetin(cid:74)
in Fe(cid:69)r(cid:88)ary 201(cid:28)(cid:17) O(cid:88)r (cid:56)(cid:46) (cid:54)taff For(cid:88)m and
(cid:49)etherlands (cid:58)or(cid:78)s Co(cid:88)ncil contin(cid:88)e to act
as formal staff cons(cid:88)ltation (cid:69)odies and will
Gender parity
in the workplace
(cid:55)he (cid:37)oard has (cid:88)ltimate oversi(cid:74)ht of
the development of the people and c(cid:88)lt(cid:88)re
pro(cid:74)ramme to contri(cid:69)(cid:88)te to a s(cid:88)staina(cid:69)le
(cid:69)(cid:88)siness and ens(cid:88)re this is dele(cid:74)ated to
the C(cid:40)O and his mana(cid:74)ement team to deliver
thro(cid:88)(cid:74)ho(cid:88)t the Company(cid:17) (cid:51)ip (cid:48)cCrostie(cid:15)
one of the (cid:49)on(cid:16)e(cid:91)ec(cid:88)tive (cid:39)irectors(cid:15) too(cid:78)
part in the Company’s first panel disc(cid:88)ssion
on (cid:74)ender parity in the wor(cid:78)place which
demonstrated o(cid:88)r commitment to (cid:69)ein(cid:74)
an incl(cid:88)sive or(cid:74)anisation for o(cid:88)r (cid:74)lo(cid:69)al
employees(cid:17) (cid:51)ip said she (cid:107)hopes to s(cid:88)pport
mana(cid:74)ement to inspire the ne(cid:91)t (cid:74)eneration
of leaders at (cid:44)nmarsat (cid:69)y ens(cid:88)rin(cid:74) there is
a level playin(cid:74) field for everyone(cid:121)(cid:17)
wor(cid:78) colla(cid:69)oratively with the (cid:42)(cid:58)(cid:36)(cid:51)(cid:17) (cid:44)n total 12(cid:24)
employees in the (cid:49)etherlands and (cid:36)(cid:88)stralia are
covered (cid:69)y collective (cid:69)ar(cid:74)ainin(cid:74) a(cid:74)reements(cid:17)
(cid:58)e are also committed to s(cid:88)pportin(cid:74) o(cid:88)r people
with fle(cid:91)i(cid:69)le wor(cid:78)in(cid:74) policies that ena(cid:69)le them
to (cid:69)alance their wor(cid:78)in(cid:74) and personal lives(cid:17)
(cid:55)his is (cid:78)ey to attractin(cid:74) and retainin(cid:74) talent(cid:15)
and we contin(cid:88)e to champion this approach(cid:17)
(cid:44)n reco(cid:74)nition of o(cid:88)r efforts to ma(cid:78)e (cid:44)nmarsat
a (cid:74)reat place to wor(cid:78)(cid:15) we were pro(cid:88)d that o(cid:88)r
(cid:54)t (cid:45)ohn’s office (cid:49)ewfo(cid:88)ndland(cid:15) was ran(cid:78)ed
one of (cid:36)tlantic Canada’s top employers for the
second year r(cid:88)nnin(cid:74)(cid:17) (cid:55)he award reflects o(cid:88)r
commitment to employee en(cid:74)a(cid:74)ement and
the colla(cid:69)orative and positive c(cid:88)lt(cid:88)re that
we have contin(cid:88)ed to (cid:69)(cid:88)ild in the office(cid:17)
Diversity
(cid:53)(cid:88)pert (cid:51)earce(cid:15) o(cid:88)r C(cid:40)O(cid:15) (cid:69)elieves we do not
(cid:77)(cid:88)st want diversity (cid:113) we need it(cid:17) (cid:36)s di(cid:74)italisation
and (cid:74)lo(cid:69)alisation contin(cid:88)e to transform the
world(cid:15) every aspect of o(cid:88)r lives (cid:69)ecomes more
connected(cid:17) (cid:58)e are immensely pro(cid:88)d of o(cid:88)r diverse
ma(cid:78)e (cid:88)p as a m(cid:88)lti(cid:16)national(cid:15) m(cid:88)lti(cid:16)ethnic
or(cid:74)anisation(cid:17) (cid:58)e (cid:69)elieve that the (cid:69)readth and
richness of s(cid:78)ills(cid:15) contri(cid:69)(cid:88)tion and viewpoints is
central to o(cid:88)r s(cid:88)ccess(cid:17) Creatin(cid:74) an environment
that is incl(cid:88)sive and diverse(cid:15) where everyone
can (cid:69)e themselves is central to o(cid:88)r three(cid:16)year
diversity and incl(cid:88)sion strate(cid:74)y that la(cid:88)nched
in 2018(cid:17) (cid:55)he strate(cid:74)y to(cid:88)ches every aspect
of the employee life cycle from attraction(cid:15)
recr(cid:88)itment to development and retention(cid:17)
(cid:37)rin(cid:74)in(cid:74) e(cid:91)ternal perspectives into o(cid:88)r plannin(cid:74)
has (cid:69)een critical and we have partnered with
(cid:54)tonewall and the (cid:37)(cid:88)siness (cid:39)iversity For(cid:88)m as
we have developed o(cid:88)r strate(cid:74)y(cid:15) to ens(cid:88)re it is
ro(cid:69)(cid:88)st and ali(cid:74)ned to (cid:69)est ind(cid:88)stry practice(cid:17)
(cid:58)e want to foster the richness of ideas(cid:15) tho(cid:88)(cid:74)hts(cid:15)
opinions(cid:15) perspectives(cid:15) (cid:69)ac(cid:78)(cid:74)ro(cid:88)nds and
e(cid:91)periences to create val(cid:88)e(cid:17) O(cid:88)r initial foc(cid:88)s has
(cid:69)een on (cid:74)ender diversity(cid:15) from o(cid:88)r (cid:40)arly (cid:60)ears’
(cid:51)ro(cid:74)rammes and how we foster and n(cid:88)rt(cid:88)re
interest in (cid:54)(cid:55)(cid:40)(cid:48) s(cid:88)(cid:69)(cid:77)ects in the ne(cid:91)t (cid:74)eneration(cid:15)
to improvin(cid:74) o(cid:88)r (cid:74)ender mi(cid:91) at the most senior
levels as evidenced thro(cid:88)(cid:74)h o(cid:88)r achievement
of the recommended (cid:43)ampton (cid:36)le(cid:91)ander
tar(cid:74)et for o(cid:88)r (cid:40)(cid:91)ec(cid:88)tive (cid:48)ana(cid:74)ement (cid:55)eam(cid:17)
(cid:58)e also s(cid:88)pport and ena(cid:69)le o(cid:88)r internal female
talent to flo(cid:88)rish thro(cid:88)(cid:74)h the (cid:53)(cid:36)(cid:39)(cid:36) pro(cid:74)ramme
for female mid and senior level leaders(cid:17)
(cid:44)n addition(cid:15) we now have an active (cid:58)omen’s
employee networ(cid:78)(cid:15) sponsored (cid:69)y an (cid:40)(cid:91)ec(cid:88)tive
(cid:48)ana(cid:74)ement (cid:55)eam mem(cid:69)er(cid:15) and its role is
to actively champion and s(cid:88)pport female
collea(cid:74)(cid:88)es across the company(cid:17)
(cid:55)he (cid:74)ender split across the (cid:42)ro(cid:88)p (cid:11)e(cid:91)cl(cid:88)din(cid:74)
contin(cid:74)ency wor(cid:78)ers(cid:12) is ill(cid:88)strated in the
followin(cid:74) ta(cid:69)le(cid:17)
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
51
2018
201(cid:26)
Male
Female
Male
Female
with 201(cid:26)(cid:15) reflectin(cid:74) the pro(cid:74)ress we
have made in female representation
in the last 12 months(cid:17)
(cid:39)iversity
of plc (cid:37)oard
83%
17% 83(cid:8)
1(cid:26)(cid:8)
(cid:39)iversity
of (cid:40)(cid:91)ec(cid:88)tive
Management Team 69%
31% (cid:26)(cid:24)(cid:8)
2(cid:24)(cid:8)
(cid:39)iversity of
senior mana(cid:74)ers
(cid:39)iversity of all
other employees
(cid:11)e(cid:91)cl(cid:88)din(cid:74)
contin(cid:74)ency
wor(cid:78)ers(cid:12)
71%
29%
81(cid:8)
1(cid:28)(cid:8)
70%
30%
(cid:26)1(cid:8)
2(cid:28)(cid:8)
(cid:58)e’re pleased to say that in 2018 we have
seen pro(cid:74)ress in o(cid:88)r (cid:74)ender diversity(cid:15) most
nota(cid:69)ly in the (cid:40)(cid:91)ec(cid:88)tive (cid:48)ana(cid:74)ement (cid:55)eam
and (cid:54)enior (cid:48)ana(cid:74)er pop(cid:88)lations(cid:17)
O(cid:88)r diversity and incl(cid:88)sion strate(cid:74)y e(cid:91)tends
(cid:69)eyond (cid:77)(cid:88)st (cid:74)ender(cid:15) and in addition to the
women’s employee networ(cid:78)(cid:15) we have also
la(cid:88)nched a f(cid:88)rther networ(cid:78) for (cid:47)es(cid:69)ian (cid:42)ay
(cid:37)i(cid:16)se(cid:91)(cid:88)al (cid:55)rans(cid:74)ender pl(cid:88)s other (cid:74)ro(cid:88)ps that
identify across the (cid:47)(cid:42)(cid:37)(cid:55) spectr(cid:88)m(cid:17) (cid:55)his networ(cid:78)(cid:15)
has an (cid:40)(cid:91)ec(cid:88)tive (cid:54)ponsor(cid:17) (cid:58)e have also
introd(cid:88)ced an ally framewor(cid:78) and en(cid:74)a(cid:74)ed with
the (cid:56)(cid:46) st(cid:88)dent pop(cid:88)lation a(cid:69)o(cid:88)t (cid:47)(cid:42)(cid:37)(cid:55) incl(cid:88)sion(cid:17)
(cid:55)his year we as(cid:78)ed o(cid:88)r people in o(cid:88)r
en(cid:74)a(cid:74)ement s(cid:88)rvey a(cid:69)o(cid:88)t their views on o(cid:88)r
e(cid:84)(cid:88)ality in the wor(cid:78)place and we are pro(cid:88)d to
report that this (cid:84)(cid:88)estion scored 8(cid:17)2 o(cid:88)t of 10(cid:17)
(cid:55)o (cid:88)nderstand more ro(cid:69)(cid:88)stly what o(cid:88)r diversity
foc(cid:88)s sho(cid:88)ld (cid:69)e(cid:15) we have cond(cid:88)cted a diversity
and incl(cid:88)sion s(cid:88)rvey to (cid:74)ive (cid:88)s a (cid:69)aseline
(cid:88)nderstandin(cid:74) of how we are doin(cid:74) and to
inform and s(cid:88)pport activity (cid:74)oin(cid:74) forwards(cid:17)
Gender pay
(cid:58)e have p(cid:88)(cid:69)lished o(cid:88)r second (cid:56)(cid:46) (cid:42)ender
(cid:51)ay (cid:42)ap report(cid:15) showin(cid:74) data as of 6 (cid:36)pril 2018(cid:17)
(cid:36)s in 201(cid:26)(cid:15) the 2018 report provides data on
o(cid:88)r entire (cid:56)(cid:46) wor(cid:78)force(cid:15) as well as for employees
employed (cid:69)y (cid:44)nmarsat (cid:42)lo(cid:69)al (cid:47)td(cid:15) the one (cid:56)(cid:46)
entity we operate with more than 2(cid:24)0 employees(cid:17)
(cid:44)n (cid:36)pril 2018 we had (cid:26)(cid:28)2 employees in the (cid:56)(cid:46)(cid:15) (cid:26)1(cid:8) of
whom are men and 2(cid:28)(cid:8) are women(cid:17) (cid:55)he overall (cid:74)ap
in earnin(cid:74)s is 21(cid:17)(cid:28)(cid:8) (cid:11)mean(cid:12) and 22(cid:17)8(cid:8) (cid:11)median(cid:12)
(cid:11)201(cid:26)(cid:29) 2(cid:23)(cid:17)(cid:24)(cid:8) (cid:11)mean(cid:12) and 2(cid:23)(cid:17)(cid:23)(cid:8) (cid:11)median(cid:12)(cid:12)(cid:17)
(cid:36)s many other or(cid:74)anisations(cid:15) partic(cid:88)larly those
in the technolo(cid:74)y ind(cid:88)stry(cid:15) (cid:44)nmarsat’s (cid:74)ender
pay (cid:74)ap also reflects the challen(cid:74)es we have in
recr(cid:88)itin(cid:74) e(cid:84)(cid:88)al n(cid:88)m(cid:69)ers of men and women
to all parts of o(cid:88)r (cid:69)(cid:88)siness(cid:15) especially in the
technical(cid:18)en(cid:74)ineerin(cid:74) and sales areas(cid:15) which
tend to (cid:69)e more hi(cid:74)hly paid in the (cid:56)(cid:46) mar(cid:78)et(cid:17)
(cid:58)e are pleased to report that o(cid:88)r (cid:74)ender pay
(cid:74)ap n(cid:88)m(cid:69)ers have red(cid:88)ced in 2018 compared
(cid:58)e (cid:78)now that a red(cid:88)ction in o(cid:88)r (cid:74)ender
pay (cid:74)ap will only res(cid:88)lt from a holistic
com(cid:69)ination of (cid:78)ey interventions and o(cid:88)r
diversity and incl(cid:88)sion strate(cid:74)y sets o(cid:88)r
approach to achieve this(cid:17) (cid:44)n 2018 we saw
the start of (cid:78)ey initiatives to s(cid:88)pport (cid:74)ender
parity in the (cid:69)roadest sense possi(cid:69)le(cid:15)
incl(cid:88)din(cid:74) pay(cid:17) (cid:44)n 201(cid:28) we will (cid:69)e improvin(cid:74) a
n(cid:88)m(cid:69)er of policies to s(cid:88)pport women across
the employee life cycle(cid:15) introd(cid:88)cin(cid:74) (cid:69)lind
C(cid:57)s and contin(cid:88)in(cid:74) to raise awareness and
ed(cid:88)cate o(cid:88)r employees on this topic(cid:17)
Early years’ programmes
(cid:58)ith a (cid:74)rowin(cid:74) (cid:54)(cid:55)(cid:40)(cid:48) s(cid:78)ills shorta(cid:74)e and o(cid:88)r desire
for o(cid:88)r wor(cid:78)force to (cid:69)e diverse and incl(cid:88)sive(cid:15)
2018 has seen the development of a holistic
approach to fosterin(cid:74) and developin(cid:74) the f(cid:88)t(cid:88)re
pipeline of (cid:54)(cid:55)(cid:40)(cid:48) and other talent that we need(cid:17)
(cid:58)e have esta(cid:69)lished an early years’ fo(cid:88)ndation
pro(cid:74)ramme that encompasses three (cid:78)ey areas(cid:17)
Firstly ed(cid:88)cational en(cid:74)a(cid:74)ement that manifests in
(cid:44)nsi(cid:74)ht days(cid:15) secondly (cid:74)rad(cid:88)ate pro(cid:74)rammes that
incl(cid:88)de placements and s(cid:88)mmer internships and
finally apprenticeships in a variety of fields incl(cid:88)din(cid:74)
en(cid:74)ineerin(cid:74)(cid:15) sales(cid:15) (cid:43)(cid:53) and (cid:48)ar(cid:78)etin(cid:74) that we
are f(cid:88)ndin(cid:74) thro(cid:88)(cid:74)h the apprenticeship levy(cid:17)
(cid:36)s a res(cid:88)lt of o(cid:88)r new entry level pro(cid:74)rammes
aro(cid:88)nd 30 yo(cid:88)n(cid:74) people have e(cid:91)perienced
o(cid:88)r (cid:69)(cid:88)siness this year(cid:15) risin(cid:74) to 80 with one wee(cid:78)
wor(cid:78) e(cid:91)perience placements(cid:17) (cid:36)ll have e(cid:91)perienced
a str(cid:88)ct(cid:88)red pro(cid:74)ramme while with (cid:88)s ena(cid:69)lin(cid:74)
them to (cid:74)ain (cid:78)nowled(cid:74)e and s(cid:78)ills and for (cid:88)s
to (cid:69)enefit from their s(cid:78)ills and talents(cid:17)
O(cid:88)r (cid:55)echnolo(cid:74)y and (cid:40)n(cid:74)ineerin(cid:74) (cid:42)rad(cid:88)ate
(cid:51)ro(cid:74)ramme is a two(cid:16)year rotational scheme
with a mission to (cid:74)row individ(cid:88)als to have a solid
(cid:88)nderstandin(cid:74) of o(cid:88)r or(cid:74)anisation(cid:15) developin(cid:74)
stron(cid:74) fo(cid:88)ndations to ena(cid:69)le them to (cid:69)ecome
(cid:54)(cid:88)(cid:69)(cid:77)ect (cid:48)atter (cid:40)(cid:91)perts or f(cid:88)t(cid:88)re leaders(cid:17) (cid:58)e
have also r(cid:88)n a (cid:74)rad(cid:88)ate pro(cid:74)ramme for
(cid:74)rad(cid:88)ates (cid:77)oinin(cid:74) o(cid:88)r (cid:54)ales teams(cid:17)
(cid:58)e are (cid:69)(cid:88)ildin(cid:74) relationships with a (cid:74)rowin(cid:74)
n(cid:88)m(cid:69)er of primary and secondary schools(cid:15)
colle(cid:74)es and (cid:88)niform (cid:74)ro(cid:88)ps and over 1(cid:24)0
yo(cid:88)n(cid:74) people (cid:69)enefited from spendin(cid:74) an
insi(cid:74)ht day at o(cid:88)r (cid:47)ondon head(cid:84)(cid:88)arters(cid:17)
(cid:55)hese days provide opport(cid:88)nities for yo(cid:88)n(cid:74)
people to (cid:88)nderstand more a(cid:69)o(cid:88)t the ind(cid:88)stry
and specifically the wor(cid:78) that we do(cid:15) and to
meet and tal(cid:78) to o(cid:88)r employees(cid:17) (cid:44)n addition(cid:15)
and perhaps more f(cid:88)ndamentally(cid:15) they (cid:74)et to (cid:69)e
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an interest to wor(cid:78) in a (cid:54)(cid:55)(cid:40)(cid:48) related career(cid:17)
+150
Young people benefited from
spending an insight day at our
London headquarters.
Once a(cid:74)ain this year we have invested in partnerin(cid:74)
with City and (cid:44)slin(cid:74)ton Colle(cid:74)e to r(cid:88)n an en(cid:74)a(cid:74)in(cid:74)
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a n(cid:88)m(cid:69)er of these st(cid:88)dents(cid:15) after completin(cid:74) the
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and raisin(cid:74) money for yo(cid:88)n(cid:74) careers in (cid:47)ewisham(cid:17)
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to inspire them a(cid:69)o(cid:88)t (cid:54)(cid:55)(cid:40)(cid:48) careers and the
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initiatives(cid:15) over (cid:24)0 (cid:44)nmarsat staff were involved
in some way in vol(cid:88)nteerin(cid:74) with yo(cid:88)n(cid:74) people(cid:17)
O(cid:88)r we(cid:69)site contains more information on the areas
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initiative started (cid:69)y the (cid:56)nited (cid:49)ations in 1(cid:28)(cid:28)(cid:28)(cid:17)
Delivering HR excellence
(cid:48)(cid:88)ch pro(cid:74)ress has (cid:69)een made this year on
improvin(cid:74) the (cid:84)(cid:88)ality of (cid:43)(cid:53) service delivery(cid:15)
incl(cid:88)din(cid:74) chan(cid:74)in(cid:74) o(cid:88)r operatin(cid:74) model and
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ALISON HORROCKS
CHIEF CORPORATE AFFAIRS OFFICER
AND COMPANY SECRETARY
18 (cid:48)arch 201(cid:28)
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52
Strategic Report | Risk management
Inmarsat plc | Annual Report and Accounts 2018
Risk management
Reducing risks to the execution of our strategy
Effective risk management
is fundamental to our
ability to meet both our
short-term and longer-term
strategic objectives
Risk framework
Risk comes hand-in-hand with business
opportunity. Risk is not something that
should be driven out of the business but
rather something to be identified, intelligently
assessed and managed. The aim is not to
eliminate all risks, but to foster a culture
supportive of effective risk management by
encouraging appropriate risk-taking to achieve
our objectives. The Group’s approach to risk
is brought together in an overarching risk
management policy. This policy, together
with the risk management process for risk
assessment and mitigation, have been
implemented to focus risk management on
strategic and business objectives, mitigation
of the largest risks, and to comply with
and support the ISO 27001 standard and
accreditation. The policy sets out our risk
appetite as well as roles and responsibilities.
The Board believes that the behaviour of
individuals across the business is key to
underpinning an effective risk management
culture. Across the Group, use of our Inmarsat
Values is helping promote the right set of
values to support effective risk management.
As required by the policy, management applies
the risk process to identify, quantify, assess,
mitigate and report significant risks within the
business, and to report to the Board on how
those risks are being managed. Risks are initially
identified, assessed and described together
with mitigation actions for each business
unit and area in individual risk reports which
are reviewed and discussed with the relevant
Executive Management Team member.
On a quarterly basis, the risks and mitigation
plan progress are formally reviewed by senior
management on a Central Risk Committee
represented by each component part of
the business. These risks are assessed and
consolidated in a systematic way to identify
the Group’s principal risks and the result is
a Group risk report. This quarterly Group risk
report is further discussed and reviewed
by the Audit Committee and the Board,
which has overall responsibility for the risk
management framework. Whilst the focus
in on the principal risks, the Central Risk
Committee and business areas also
identify and mitigate secondary risks
at each meeting.
With risk assessments completed across
the Group by the end of 2017, the focus
in 2018 has been on progressing and
completing risk mitigation actions.
The individual risk reports are assessed by
the Central Risk Committee. All the reports
represent a robust description of the
Group’s risk profile with targeted mitigation
actions to reduce the risks. Due to the risk
assessments focusing on strategic objectives,
the new process contributes to and supports
our achievement of strategic goals.
Our objectives-based risk workshops and
risk workshops on information assets,
using the same process, are important
components of Inmarsat’s project to
obtain ISO 27001 certification.
Risk management process
risk culture and principles
INMARSAT PLC BOARD
› Defines the risk governance framework,
› Sets overall risk strategy and policy
› Approves risk levels
› Responsible for an effective system
› Approves risk decisions that are
beyond delegated authorities
of internal controls
AUDIT COMMITTEE
› Reviews the risk management
framework and the effectiveness of
internal controls, risk management
systems and major risk initiatives
› Reviews the internal audit
programme and reports
EXECUTIVE MANAGEMENT BOARD
› Reviews the risk management
framework and the effectiveness
of internal controls, risk management
systems and major risk initiatives
across the Group
› The Executive Risk Committee assesses
the risks for the whole Group
CENTRAL RISK COMMITTEE
› Reviews the risk profile against risk appetite and makes recommendations
to management in relation to risk profile, strategy and key controls
› Reviews the sustainability of risk methodologies, metrics and policies
› Assesses major risk-related projects
BUSINESS OPERATIONS
› Implement mitigation strategies
Inmarsat plc | Annual Report and Accounts 2018
Strategic Report | Risk management
53
The Board regularly, and as part of the year
end process, reviews the Group’s principal risks
and the actions being taken to mitigate those
risks. As part of the Long Range Business Plan
and the risk management process, the Board
will determine the level of risk carried and the
extent of mitigating activity required to deliver
an acceptable level of risk. The Board defines
the risk governance framework and sets the
overall risk strategy and the Audit Committee
reviews the risk management framework and the
effectiveness of internal controls particularly
with regard to financial controls. This includes
reviewing the internal audit programme and
related reports to ensure that all key mitigating
controls are being periodically reviewed
and where issues are identified that they
are being addressed on a timely basis.
Assurance on broader risk controls is provided
by a combination of internal management
information, internal audits, external audits
and Board oversight. There is also an externally
supported whistleblowing facility.
The management of risk is embedded in
our everyday business activities and culture,
with all our employees and contractors
having an important role to play. The diligence
applied by our workforce to consider risk is
reflected in business cases which are submitted
for approval by management and the Board.
Ongoing projects have risks reported on
a regular basis.
Principal risks and uncertainties
Principal risks
The Group faces a number of risks that may
adversely affect our strategic and business
objectives, operations, liquidity, financial
position, reputation or future performance,
not all of which are wholly within our control
or known to us. Some such risks may currently
be regarded as immaterial and could turn
out to be material. Some risks are external
so we can only reduce the potential impact,
while other risks can be mitigated by reducing
both probability and impact. We accept
that risk is an inherent part of doing business.
We manage the risks based on a balance of
risk and reward determined through careful
assessment of both the potential probability
and impact as well as risk appetite. Risk appetite
is considered as part of the compilation of
business cases, annual business plan and
budget and long range business plan.
There will be a balance of risk and opportunity
considered as we take our investment decisions.
We consider reputational as well as financial
impact, recognising the value attributable to
our brand. The Group faces a number of ongoing
operational risks including damage to satellites
and ground network operations, litigation,
credit and foreign exchange risk and the risks
associated with dealing with tax authorities in
multiple jurisdictions. The importance of these
risks will vary over time and will be kept under
constant review. Although many of the risks
influencing our performance are macroeconomic
and likely to affect the performance of
businesses generally, others are specific
to our operations in mobile satellite
communications services.
In accordance with the provisions of the UK
Corporate Governance Code 2014, the Board
has taken into consideration the principal risks
in the context of determining whether to adopt
the going concern basis of accounting and
when assessing the prospects of the Company
for the purpose of preparing the Viability
Statement which can be found on page 59.
The Going Concern statement is provided
on page 103 in the Directors’ Report.
Our principal risks are discussed on the
next few pages and are as summarised in the
Preliminary Results Statement distributed on
7 March 2019. These have been subject to robust
assessment and review. This summary, however,
is not intended to be an exhaustive analysis of
all risks and uncertainties affecting our business
and are not listed in any order of priority.
In identifying the principal risks we have
disclosed those risks that we currently consider
to be the most significant to the Group at the
date of this Annual Report. The principal risks
have been updated compared to last year.
A new Risk Workshop with the Executive team
has resulted in an updated list of principal risks
that better describe our risk profile. While the
risk list has changed, the risk profile has not
changed materially. The risk trend for each
principal risk as compared to a year ago has
been assessed as either stable, increasing or
reducing in size, measured in both net impact and
net probability. The principal risks are identified
over the next few pages and we have indicated
against each risk how it principally relates to
our strategic objectives, noting that all risks
will impact the strategy to some extent.
We show against each risk how it links to our strategy (see page 14) and the movement of each risk during the year.
Strategic priorities
1
Capture the
maximum number
of broadband
platforms
2
Reposition
L-band for
new growth
3
4
5
Establish our
digital platform
and business
Create a
high-performing
organisation
Transform
our operating
environment
Movement
Increased
No change
Decreased
Risk
Background and impact
Mitigation
Movement
1. Event leads
to sharp reduction
of air traffic
Link to strategy:
1
› There has been a few events like this in the
last twenty years, e.g. 9/11, SARS, the ash cloud.
Similar events in the future could reduce air traffic
volumes sharply, which could in turn impact our
business. Our customers may ask us to cancel
or halt ongoing contracts and it could be
difficult to sign new contracts.
› We build a broad business portfolio and ensure
the company is financially robust and resilient
to any sudden sharp downturn in any one of
our markets.
› We will take all possible actions to continue
to deliver on existing contracts, to the extent
agreed with our customers.
GovernanceFinancial StatementsStrategic Report 54
Strategic Report | Risk management
Inmarsat plc | Annual Report and Accounts 2018
Risk management
continued
Risk
Background and impact
Mitigation
Movement
2. Geo-political risk,
political uncertainty
including Brexit
impact
Link to strategy:
1 2 3 4 5
3. Competition –
technology disruption,
new entrants and
different business
plans
Link to strategy:
1 2 3
› Downturns in the economy of a country and/or
the world economy, trade wars, as well as very low
or very high oil prices could all have large effects
on world trade and consequently impact our
business and strategy.
› Armed conflicts, including war in space could also
have an impact, locally and globally. We may suffer
a terrorist attack or a natural disaster on one of
our ground network or office locations.
› We do a large amount of business with governments
across the globe. Political uncertainty with policy
changes, decisions and sanctions could impact
our business.
› We could fail to comply with applicable international
legislation and international reporting requirements.
› Our staff and their families may suffer a local
epidemic or global pandemic.
› Brexit negotiations outcomes including a no-deal exit
could have some impact.
› This risk has increased in 2018 because of uncertainties
in trade and Brexit negotiation outcomes.
› We may fail to optimally assess our market,
technological changes, customer requirements,
capacity needs and competitors’ strategy and
therefore fail to exploit market opportunities.
› We may fail to effectively address the significant
changes going on in the industry, e.g. price and
capacity, plus a greater focus on digital enablement.
› We may develop next generation broadband
services that will not meet these market opportunities
or fail to meet customer requirements or capacity
needs, or these developments could have delays
or cost overruns impacting on our market position,
revenue or returns on investment.
› Competitors and new entrants may launch
disruptive technology, or new business plans with,
for example, connectivity at very low prices or for free.
Our competitors may consolidate which may impact
our competitive position.
› We may fail to roll out new services including
migrating existing customers, which could be
due to upgrade costs, or our developments
could have delays or cost overruns.
› Our competitors may provide better products
to the market and at more competitive prices.
› We ensure the Company is financially robust
and resilient to economic downturns and operating
a diversified portfolio supports our resiliency.
› We continuously review and adapt our strategy in
reaction to developing political or economic situations.
› We assess and manage new risks such as changes
in government, epidemics, natural disasters, etc.
that potentially could impact our people and business.
› Inmarsat’s Brexit committee analyses the impact of
the UK Brexit including no-deal scenarios and deploys
strategies to minimise possible impact.
› The United Kingdom leaving the European Union is not
expected to have a significant financial impact on the
Group as the majority of revenue, capital expenditure and
long-term borrowings are based outside of Continental
Europe and are denominated in US Dollars reducing
our exposure to a weakening Sterling.
› We monitor technology, competitor and
market developments.
› We develop a broad portfolio of products and services
to address customer requirements and opportunities
in several markets. This makes us more resilient to
adverse developments.
› We rely on a close relationship between our
customer-facing BUs, our operations team who deal
directly with operating new products and services
and the engineering and product teams.
› We have well-established relationships with partners
and signed significant strategic alliance agreements.
We work closely with our partners to ensure our services,
technology and capacity can meet the demand from our
existing and new customers. We invest in new satellites
to meet customer capacity demands. We adapt our
product and services portfolio to address technological
developments. We seek to identify new customers and
to migrate existing customers who would benefit from
our new services.
› We have professional, experienced teams who
focus on large scale programmes and we develop close
relationships with third parties we use to deliver them.
› We critically review our detailed business cases before we
proceed and regularly assess our progress against the
original business cases. We thoroughly review and approve
major development of new services or technology. All
significant product and service developments are subject
to approval and regular programme reviews to identify
critical issues, changes, delivery delays and resolutions,
and projected cost against budget. We are able to
prioritise investment activity to focus on new requirements
if this is felt appropriate. We seek to identify and improve
the functionality in existing products.
› Inmarsat has formed a new division which concentrates
on product life cycle management and the innovation
and development of new differentiating products and
services. This Product Group brings together all product
development activities to ensure a clear focus on
identifying and delivering an effective product strategy.
Inmarsat plc | Annual Report and Accounts 2018
Strategic Report | Risk management
55
Risk
Background and impact
Mitigation
Movement
3. Competition –
technology disruption,
new entrants and
different business
plans continued
Link to strategy:
1 2 3
› We may fail to develop competitive technology
and product roadmaps, competitive pricing,
to differentiate ourselves, to obtain applicable
licences or fail to deliver on or have delays in
our contracts. Products may become obsolete.
We may fail to enable or incentivise our distribution
partners enough so they choose to sell our
competitors’ products instead.
› The risk has increased since a year ago due
to increased competition and fast moving
technological developments.
4. Not enough
network capacity
Link to strategy:
1 2
› We may fail to keep up with the developing
business needs of our existing and new customers.
We may fail to optimally assess our market,
technological changes, customer requirements
and competitors’ strategy, so we have not enough
capacity to meet the demands. We may not be
able to meet capacity needs for various reasons
such as network or satellite issues, or technological
difficulties which would impact our ability to
generate revenues.
5. Major operational
failure
Link to strategy:
1 2 3 5
› We face risks when our satellites are in orbit.
Our satellites, our control of them or our network
may fail technically or be sabotaged. Our network
may not be able to cope with the demand from users.
Elements of our ground network may fail or be
damaged, which may affect our ability to provide
services to our partners and customers.
› Our network may suffer a cyberattack that
damages our service offering and reputation.
› If our service is interrupted, it may cause physical
and financial damage with possible legal and
financial consequences for our business.
› The risk has decreased since a year ago because
of strengthened resilience in our satellites and
ground network.
› We establish the necessary focused sales and
marketing capability to effectively deliver good
business opportunities for Inmarsat and its partners.
We focus on digital offerings as an additional
value add to customers. We are reviewing market
opportunities, for example IoT and Big Data, to create
new business streams. We are investing in digital
services and in differentiated platform and service
offerings designed to provide both additional
value to our customers and enhance our
customer relationships.
› We improve the robustness and resilience of our
systems and processes by systematic continuous
work to improve and document existing processes. Our
systems need to be agile to be able to respond to any
changing needs and having open network systems
enables this agility by us and our wider partners.
› We liaise closely with third parties across our
ecosystem to review requirements and then plan
our delivery against these.
› Internal approval processes include assessment
of available network capacity to serve specific
customer needs.
› Business units provide pipeline assessment to allow
future capacity assessments to be performed. The
capacity requirements are compared to the current
infrastructure and any predicted unmet demand is used
to specify future infrastructure needs. Our systems
need to be agile to be able to respond to any changing
needs and having open network systems enables this
agility by us and our wider partners.
› GX5, a new Ka-band broadband satellite, is planned to be
launched Q4 2019 and will provide additional capacity
over Europe and the Middle East. This will be followed by
Inmarsat-6 F1 and F2 that will provide additional L-band
and Ka-band capacity in the early 2020’s.
› In certain geographies, we are able to acquire 3rd
party capacity to augment our own networks in a
seamless manner.
› We build in a high degree of redundancy in our satellites,
constellations and ground network, providing a high
level of protection against single points of failure. All
customer-facing systems are monitored continuously
by sophisticated systems and highly skilled staff who
are equipped to respond to operational emergencies.
› We buy insurance to compensate for the financial
loss in the event a satellite or ground network element
is damaged or lost.
› We have disaster recovery plans for satellite and
network operations which are regularly tested to
ensure contingency plans work.
› We are focused on ensuring our systems operate with
a high degree of cyber security protection which is
covered below in a separate risk.
› We are careful in avoiding taking on consequential
damages in our contracts.
GovernanceFinancial StatementsStrategic Report 56
Strategic Report | Risk management
Inmarsat plc | Annual Report and Accounts 2018
Risk management
continued
Risk
Background and impact
Mitigation
Movement
6. Satellite
launch failure
Link to strategy:
1 2
7. Protectionism
affects our business
operations
Link to strategy:
1 2 3 4 5
8. Security risk
Link to strategy:
1 2 3 4 5
› We face risks when we launch our satellites.
There are only a few satellite launch companies
and if they encounter problems, our launch risk
may increase.
› The risk has increased since there were no satellite
launches in 2018 but in 2019 we plan to launch
our GX5 satellite.
› Growing protectionism including policy changes,
sanctions and trade wars could impact our business,
including our supply chain and our ability to carry
out installations. We provide our services to many
government organisations around the world which
may have conflicting requirements, and our revenue
may be affected by governments’ reduction in
spending and their other political priorities. With
rising protectionism, we must especially maintain
our ability to do business with governments
worldwide via relationships with them.
› This risk has increased due to global political
changes occuring.
› We may suffer damage to satellites, networks,
information/data, systems, processes and our
services to customers as a result of malicious
or flawed code, unauthorised access, service
denial ransom/coercion, or security compromise.
There is also a significant risk of aggregated
minor risks having an impact on service delivery.
Data or IP could be stolen. This could also
have consequential impact on our reputation,
business plans and operations, and future
revenue from risk averse customers/markets.
› The risk is reduced by the continued successful
cooperation between our space engineering team,
satellite manufacturers and launch companies.
› We deploy an experienced team to prepare
for satellite launches.
› We buy insurance to compensate for the financial
loss in the event a satellite launch failure.
› We continuously review and adapt our strategy
in reaction to developing political or economic
situations. We assess and manage new risks from
political decisions including protectionism that
potentially could impact our business.
› Inmarsat Government operates with a proxy board
to allow it to manage its business in accordance
with U.S. requirements and compete effectively
for U.S. Government business.
› We maintain industry-standard security measures,
and have increased our investment in state-of-the-art
cyber countermeasures and enhanced cyber security
operations to improve detection and response to
incidences. We achieved ISO 27001 Certification
in Q4 2018 and we have now initiated a continuous
improvement programme, the progress of which will
be independently assessed. We have completed
risk assessments on information assets across the
Group, and as a consequence, we are deploying
appropriate controls.
› Through the OneIT project we are building a modern
computer infrastructure that enhances protection
of critical assets and data. We have ensured our
processes are compliant with the GDPR legislation.
› We have improved our incident response capability.
We have disaster recovery and business continuity
plans for important elements of our networks;
and these contingency plans are tested regularly.
Inmarsat plc | Annual Report and Accounts 2018
Strategic Report | Risk management
57
Risk
Background and impact
Mitigation
Movement
9. Loss of or
failed customer
or supplier
Link to strategy:
1 2 3
10. Spectrum,
orbital slots and
market access risk
Link to strategy:
1 2
› We rely on our distribution channel for part of
our revenue and they might not sell our services
effectively or competitively. We have critical
GX and FX contracts which require careful
management to ensure successful execution.
We may not meet customer needs with some
declining legacy products.
› We provide our services to many government
organisations around the world which may have
conflicting requirements, and our revenue may be
affected by governments’ reduction in spending
and their other political priorities. We may lose
customers due to poor quality service delivery
or operations, or fail to keep up with the business
needs of our customers. We may fail to roll out new
services including migrating existing customers.
› A competitor may buy a critical supplier or partner.
Partners may merge or grow and as a result
outcompete smaller partners. Partners may prefer
selling our competitors’ services due to better
terms and conditions.
› We rely on a limited number of third party suppliers
and partners in the production of our satellites,
launch providers’ systems, terminals and products
and we may have limited control over availability,
quality and delivery of these goods. A satellite
manufacturer or a supplier to the satellite
manufacturer, may fail or have serious damage to
a production facility that delays the delivery of our
satellite. A satellite launch provider may additionally
have a launch failure which affects the timing of our
planned launches. A competitor may buy a critical
supplier or partner. A critical supplier may fail
financially or one of their systems may fail.
› Relying on some critical customers may increase
our financial exposure if they fail to make payments
for our services.
› We build strong relationships with all our partners
and provide them with excellent services to sell in
their markets. We encourage sharing of information
and developing ideas through direct meetings with
our partners and through our regional and global
conferences. We continuously review and refine our
pricing, overall offering and terms with our partners.
› We monitor market and partner developments and
adjust our strategy to mitigate negative developments
as well as to explore opportunities.
› We continue to improve the reliability of our
satellites and services which are critical to our end
users. We have simplified our standard contracts and
pricing in order to make it easier to do business with us.
We promote fair play in our distribution channel and
will not promote customer churn. We introduce new
services with common technologies and develop
more competitive pricing strategies. We continue
to broaden our customer base through sales
strategies and new service offerings.
› We work closely with our suppliers to review programme
plans, delivery quality and timing to ensure that they
meet our requirements. We have a highly experienced
quality assurance team at satellite manufacturing
sites to check design and production activities and
also at launch sites ahead of our satellite launches.
› The Group Procurement department’s reviews and
actions reduce the risk, for example exploring dual
sourcing and assessing suppliers’ quality, technical
know-how and financial viability.
› We can operate in an agile way to seek new satellite
launch providers if required, as we did to secure
an alternative provider for the delayed S-band
satellite launch in 2017.
› We have an effective credit management process
in place, assessing the credit risk of new and
existing customers.
› We rely on radio spectrum, which has historically
been allocated without charge, to provide our services.
We must agree how it is used in coordination with
other satellite operators and need to coordinate
its ongoing availability. We may not be able to
coordinate usage in the future and/or may be
charged for the spectrum which could affect our
ability to provide services. Channel consolidation
may drive down prices and ARPU.
› We require orbital slots to place our satellites
in the correct position to provide adequate
coverage and deliver our services. We may not
be able to obtain adequate orbital slots or we
may miss deadlines to bring orbital slots into use.
› Given the nature of the satellite business it is
important to have access to all areas of the globe
and provide coverage world-wide. This requires
licensing from multiple national authorities. We
may not be able to gain these licences for various
reasons. Market access may not be allowed in
certain countries which restricts our services
being offered. We may lose licences after they
have been obtained due to non-compliance
or legal challenges.
› We regularly improve the efficiency of our spectrum
usage through innovation and system enhancement.
We also educate and inform regulators and governments
as to the unique socio-economic contribution of
our mobile satellite services. We work on various
World Radio Conference preparatory groups to brief
them on the ongoing need for our frequency allocations.
› We proactively make ITU filings for orbital slots through
several national administrations in order to create
opportunities to meet our short and long-term
spectrum and orbital slot requirements.
› We negotiate with other companies on orbital slots
and the ability to achieve better spectrum usage
and allocation.
› We obtain in-country market access for our
distribution channel as far as possible and make
any licensing requirements as straightforward
as possible for our partners.
› We engage with and support regulators to defend
our licences.
GovernanceFinancial StatementsStrategic Report 58
Strategic Report | Risk management
Inmarsat plc | Annual Report and Accounts 2018
Risk management
continued
Risk
Background and impact
Mitigation
Movement
11. Financing risk
Link to strategy:
1 2 3 5
12. Currency risk
Link to strategy:
3 5
13. Loss of people
and key skills
Link to strategy:
1 2 3 4 5
› The company finances the business through
operating cash flow and capital market instruments.
Our ability to finance the business in the medium
term could be affected by the closure of capital
markets, by failing to materially deliver on our
business plans and strategy, or by downturns in the
economy of a country and/or the world economy.
› We have never experienced closed capital markets.
› Downturns in the economy of a country and/or world
economy, armed conflicts and trade restrictions
could impact currency exchange rates and our
business and strategy. We have costs in GBP, so a
significant change in GBP value could impact our
business. Some USD rate changes may only have
translational effects in our accounts and results.
› We may fail to hire skilled people or adequately
improve skills to maintain and grow our business,
deliver our strategy and complete programmes and
projects. We may lose highly technical and specialist
employees who have very specific skill sets that are
vital to the business. We may lose knowledge with
employees and consultants who leave the company.
Brexit negotiations outcomes could impact EU
citizens working in London and UK citizens in Europe.
We may lose employee engagement and motivation.
Our employees may suffer injury from terrorist
attacks or natural disasters in our locations.
› We ensure the Company is financially robust and
resilient to economic downturns. The Board has
defined and approved a robust financial policy.
› We continuously review and adapt our business focus in
reaction to developing political or economic situations.
Our strengthened forecasting process informs our
business focus.
› We document and improve our internal processes.
› We maintain an ongoing informed dialogue with the
investment community.
› We carefully manage and monitor our cash flows, budget
and plans and are prepared to make adjustments in case
of large currency exchange rates. We are prepared to
hedge large contracts and cash flows.
› We implement our People strategy where we identify
key employees, skills and skills gaps to manage human
resources effectively and enable delivery of the Company’s
strategy. We invest in training and development for our
employees and develop and implement recruitment
strategies to ensure we have people with the skills the
Company needs. Our employee value proposition
focuses on career development, training and reward to
ensure we have an engaged and motivated workforce.
› Inmarsat’s Brexit committee analyses the impact of
the UK Brexit including no-deal scenarios and deploys
strategies to minimise possible impact.
There are other risks that are either secondary to the Principal risks described above or risks of a long-term nature. These risks include but are not limited to:
› Ethical and compliance risks
› Failed delivery of internal programmes or projects
› Patent infringement
› Restrictions on terminal use because of physical, psychological or social reasons
› Environmental damage from our operations
› Risks from climate change
Inmarsat plc | Annual Report and Accounts 2018
Strategic Report | Risk management
59
Viability statement
In accordance with provision C.2.2 of
the UK Corporate Governance Code 2014,
the Directors have assessed the viability of
the Group over a three-year period, taking
into account the Group’s current position
and the potential impact of the principal
risks documented on pages 52 to 58
of the Annual Report.
Assessment period
The Directors have determined that a
three year period to 31 December 2021 is an
appropriate period over which to provide its
viability statement. This is the key period of
focus within the Group’s strategic planning
process and it reflects the period over
which the Group has reasonable visibility
of both customer contracts and product
development programmes.
Assessment process
The Long Range Business Plan (‘the Plan’,
or ‘LRBP’), which is updated annually, formed
the basis for the viability assessment. The Plan,
as a matter of routine, takes account of ‘business
as usual risks’ including slower revenue growth,
increased operating costs, higher working
capital requirements and adverse outcomes
to disputed items. In completing the viability
assessment, the Plan was tested against a
number of severe but plausible principal risk
scenarios. The scenarios were determined
by considering which of the principal risks to
the business outlined previously contribute
significantly to the longer term viability of the
Company. The following risks were deemed as
having the potential to threaten the operational
viability of the group:
› Event leads to sharp reduction of
air traffic: We modelled the impact
of materially lower Aviation passenger
connectivity growth rates than expected
› Geo-political risk, political uncertainty
including Brexit impact: We modelled
the loss of government revenue due to
geo-political events outside the control
of the Company
› Competition – technology disruption,
new entrants and different business plans:
We modelled the impact of materially
lower growth rates than expected
› Major operational failure: We modelled
the separate impact of a catastrophic
failure to a satellite in each of our I-4,
I-5 or GX5 constellations
› Protectionism: We modelled the impact of
materially lower growth rates than expected
› Security risk: We modelled the impact of
aggressive cyber-attacks that penetrate
our networks and/or key systems
› Loss of failed customer: We modelled
the impact of the loss of a key customer
› Spectrum, Orbital slots and Market
access risk: We modelled the impact of
our inability to retain appropriate licenses
and market access to deliver services to
our key markets
Each scenario was tested and the financial
impact estimated based upon a combination
of internal estimates and data available
from external sources. Mitigation strategies
were identified and costed in conjunction
with internal experts to calculate the net likely
financial impact of each scenario in both
isolation and if they were to occur concurrently.
The Audit Committee reviewed and discussed
the process undertaken by management.
Conclusion
Based on this assessment, the Directors
confirm that they have a reasonable
expectation that the Company will be
able to continue in operation and meet its
liabilities as they fall due over the period
to 31 December 2021.
In reaching this conclusion, the Directors
noted that the Group is exposed to particularly
high levels of risk when a satellite is launched
although this risk is routinely mitigated
through launch insurance, for which there
is a well-developed market. Once satellites
have been successfully placed into orbit,
the experience of the last 35 years is that
failures are rare, which is due in part to the
high levels of redundancy that are routinely
built into the satellites and ground network.
Looking beyond the risks associated with the
satellites and our network the geographical
and sector diversification of the Group’s
operations helps reduce the risk of a loss
that might endanger the viability of the Group.
GovernanceFinancial StatementsStrategic Report 60
(cid:42)overnance (cid:95) Chairman’s introd(cid:88)ction
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
Chairman’s introduction
to Governance
(cid:39)(cid:88)rin(cid:74) 2018 there were no chan(cid:74)es in (cid:37)oard
mem(cid:69)ership(cid:17) (cid:44)n (cid:45)an(cid:88)ary 201(cid:28)(cid:15) we were deli(cid:74)hted
to anno(cid:88)nce the appointment of an additional
female (cid:49)on(cid:16)(cid:40)(cid:91)ec(cid:88)tive (cid:39)irector(cid:15) (cid:55)racy Clar(cid:78)e(cid:15)
who (cid:77)oined the (cid:37)oard on 1 Fe(cid:69)r(cid:88)ary(cid:17) (cid:48)ore is
provided on this appointment and the proposed
re(cid:16)election of all e(cid:91)istin(cid:74) (cid:39)irectors in the
(cid:49)ominations Committee (cid:53)eport on pa(cid:74)e (cid:26)2(cid:17)
(cid:36)s Chairman (cid:44) am a(cid:69)le to call on a (cid:69)road
and diverse ran(cid:74)e of s(cid:78)ills and e(cid:91)perience
from all my (cid:39)irectors(cid:17) (cid:55)he (cid:69)lend of e(cid:91)perience(cid:15)
nationalities and ran(cid:74)e of c(cid:88)lt(cid:88)ral e(cid:91)perience
within the (cid:37)oard is val(cid:88)a(cid:69)le to (cid:88)s as we f(cid:88)lfil
o(cid:88)r d(cid:88)ties(cid:17) (cid:55)he diversity already on o(cid:88)r (cid:37)oard
allows (cid:88)s to (cid:69)e c(cid:88)lt(cid:88)rally aware and respond
where there are areas which need (cid:74)reater foc(cid:88)s(cid:17)
(cid:54)(cid:88)ccession plannin(cid:74) for the (cid:49)on(cid:16)(cid:40)(cid:91)ec(cid:88)tive
(cid:39)irectors remains a (cid:78)ey foc(cid:88)s for the
(cid:49)ominations Committee and the (cid:37)oard(cid:17)
(cid:58)e will review the si(cid:93)e and composition of the
(cid:37)oard over 201(cid:28)(cid:17) (cid:55)he (cid:37)oard will consider this
year the recommendations in the F(cid:53)C’s report
a(cid:69)o(cid:88)t Chair s(cid:88)ccession plannin(cid:74) and start
the process for this search(cid:17)
(cid:58)e hope the information in this (cid:53)eport
will help yo(cid:88) to (cid:88)nderstand how yo(cid:88)r (cid:37)oard
r(cid:88)ns the Company(cid:15) mana(cid:74)es ris(cid:78)s(cid:15) monitors
internal controls(cid:15) and how decisions ta(cid:78)en
over the year have (cid:69)een made(cid:17)
ANDREW SUKAWATY
CHAIRMAN
18 (cid:48)arch 201(cid:28)
(cid:58)e are committed
to the hi(cid:74)hest standards
of (cid:74)overnance set
at the (cid:37)oard level and
implemented thro(cid:88)(cid:74)ho(cid:88)t
the Company
(cid:55)he (cid:37)oard approves the (cid:42)ro(cid:88)p’s (cid:74)overnance
framewor(cid:78) with the (cid:37)oard Committees
contri(cid:69)(cid:88)tin(cid:74) their specialist foc(cid:88)s to (cid:78)ey
areas s(cid:88)ch as financial reportin(cid:74)(cid:15)
rem(cid:88)neration policy(cid:15) internal controls
and ris(cid:78) mana(cid:74)ement(cid:17)
O(cid:88)r (cid:74)overnance framewor(cid:78) reflects
the re(cid:84)(cid:88)irements of the (cid:56)(cid:46) Corporate
(cid:42)overnance Code (cid:11)(cid:67)the Code’(cid:12) and the
(cid:47)ar(cid:74)e and (cid:48)edi(cid:88)m(cid:16)si(cid:93)ed Companies and
(cid:42)ro(cid:88)ps (cid:11)(cid:36)cco(cid:88)nts and (cid:53)eport(cid:12) (cid:11)(cid:36)mendment(cid:12)
(cid:53)e(cid:74)(cid:88)lations 2013 (cid:11)(cid:67)the (cid:53)e(cid:74)(cid:88)lations’(cid:12)(cid:17)
(cid:55)he Financial (cid:53)eportin(cid:74) Co(cid:88)ncil’s (cid:11)(cid:67)F(cid:53)C’(cid:12)
2018 (cid:56)(cid:46) Corporate (cid:42)overnance Code p(cid:88)ts
the relationships (cid:69)etween companies(cid:15)
shareholders and sta(cid:78)eholders at the heart
of lon(cid:74)(cid:16)term s(cid:88)staina(cid:69)le (cid:74)rowth(cid:17) (cid:55)he (cid:37)oard
reco(cid:74)nises how the ri(cid:74)ht corporate c(cid:88)lt(cid:88)re
(cid:88)nderpins how a company creates and s(cid:88)stains
val(cid:88)e over the lon(cid:74)er term(cid:15) which is a (cid:78)ey
element of maintainin(cid:74) a rep(cid:88)tation for hi(cid:74)h
standards of (cid:69)(cid:88)siness cond(cid:88)ct(cid:17)
(cid:44)n 2018(cid:15) we en(cid:74)a(cid:74)ed with o(cid:88)r investors(cid:15)
c(cid:88)stomers and s(cid:88)ppliers on a wide ran(cid:74)e
of s(cid:88)staina(cid:69)ility iss(cid:88)es for a second time(cid:17)
(cid:55)his e(cid:91)ercise provides insi(cid:74)ht into o(cid:88)r relevant
(cid:69)(cid:88)siness impacts and their effect on o(cid:88)r
a(cid:69)ility to (cid:74)enerate and preserve val(cid:88)e over
the lon(cid:74)er term(cid:17) (cid:58)e (cid:69)elieve o(cid:88)r contin(cid:88)ed
en(cid:74)a(cid:74)ement in this way will foster a deeper
more relevant disclos(cid:88)re on (cid:78)ey iss(cid:88)es affectin(cid:74)
o(cid:88)r (cid:69)(cid:88)sinesses’ s(cid:88)staina(cid:69)le prospects whilst
red(cid:88)cin(cid:74) less val(cid:88)e(cid:16)relevant disclos(cid:88)res(cid:17)
(cid:48)ore information on the 2018 materiality
assessment can (cid:69)e fo(cid:88)nd on pa(cid:74)e (cid:23)2(cid:17)
(cid:36)s we loo(cid:78) forward to the year ahead(cid:15) we will
contin(cid:88)e this policy of deeper en(cid:74)a(cid:74)ement
with all sta(cid:78)eholders to ens(cid:88)re we (cid:88)nderstand
and reco(cid:74)nise the needs of o(cid:88)r shareholders
and sta(cid:78)eholders(cid:17)
ANDREW SUKAWATY
CHAIRMAN
(cid:36)s Chairman (cid:44) am
a(cid:69)le to call on a (cid:69)road
and diverse ran(cid:74)e of
s(cid:78)ills and e(cid:91)perience
from all my (cid:39)irectors
Inmarsat plc | Annual Report and Accounts 2018
Governance | Governance at work
61
Governance
at work
This section of the
Annual Report summarises
how we manage the
Company to meet the
needs of the business
and our stakeholder
responsibilities
The Board is committed to the highest
standards of governance and it does this
whilst being responsible for the overall
conduct of the Group’s business and by
providing leadership and guidance.
Board activities in 2018
› Reviewed the Group’s strategy in relation to technology capabilities; approved investment in
future ground networks to support new satellites being built and investments in key operating
systems to improve billing and IT infrastructure to benefit customers and employees
› Discussed the Group’s capital structure and took the decision to reduce the dividend payment
› Discussed the conditional proposal from EchoStar to reach a decision on how to respond
› Discussed the Nomination Committee’s recommendations for re-election of existing
Directors and the appointment of an additional Director
› Received feedback from the extensive engagement programmes with major shareholders
regarding their response to the dividend reduction, share price performance and
remuneration consultation
For more information please see Role of the Board on page 68
Leadership
Accountability
In this section
This section provides an overview of the Board
and how it and its Committees work together.
Details of the type of activity considered by the
Board and also some of the core responsibilities
for certain Directors are also explained. As part
of the external Board evaluation process, the
Directors are asked to consider a wide range
of discussion areas and there are comments
from the review within this Report.
Why this is important
It is important to have strong leadership from
the Board as a whole to support the Executive
Directors and management in their day-to-day
running of the business. The Board supports an
open and transparent culture which is endorsed
by the Executive Directors and the Executive
Management Team.
See pages 67 to 71
In this section
The work of the Audit Committee extends
and expands as the number of new auditing
and governance requirements grows.
Why this is important
Two of our Board Committees have
responsibility for oversight of our telecoms
regulatory requirements and audit reporting.
These are significant areas of focus for our
business and it is important for stakeholders
to know that this is recognised at the highest
level in the Company. It is critical to know that
there is a process of accountability running
throughout the Company with good processes
in place and defined levels of responsibility.
See pages 75 to 79
Effectiveness
Remuneration
In this section
In the Report from the Nominations Committee
Chairman, we reflect on the elements of how
the Board is made up, how we plan to ensure
success in the future and how we make sure on an
annual basis that we are being held accountable
to each other as Board members and also to
our stakeholders.
Why this is important
Having an effective and contributing diverse
Board, with the right skills, experience and
willingness to contribute to the Company’s culture,
is very important to our success as a company
and therefore to our stakeholders. It is incumbent
on the Board to make sure that it is diligent in its
succession planning – at Board level and also
contributing to what happens at the Executive
Management Team level and understanding
succession planning generally.
In this section
This section of the governance report provides
a review of what remuneration has been paid to
Executive Directors in 2018 and what is intended to
be paid in 2019 (called the implementation report)
and how we have structured a new Remuneration
Policy following extensive shareholder
consultation. Shareholders are asked to vote at
the AGM annually on the implementation report,
and in 2019, on a new Remuneration Policy.
Why this is important
Our Remuneration Committee carries the
responsibility to deliver a clear articulation
of our Remuneration Policy and consider this
in the context of the pay arrangements for all our
employees. It is important for stakeholders to
understand how remuneration is determined and
that the appropriate links between remuneration,
strategy, risk and our KPIs are made.
See pages 72 to 74
See pages 81 to 101
GovernanceFinancial StatementsStrategic Report 62
(cid:42)overnance (cid:95) (cid:37)oard of (cid:39)irectors
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
Board of Directors
(cid:55)he ri(cid:74)ht (cid:69)alance of s(cid:78)ills
BOARD COMPOSITION
(cid:40)(cid:91)ec(cid:88)tive(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)2
(cid:49)on(cid:16)e(cid:91)ec(cid:88)tive (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)11
BOARD TENURE
0(cid:113)3 years (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)3
(cid:23)(cid:113)8 years (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)7
(cid:28)(cid:14) years (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)3
BOARD MEMBERS BY GENDER
Male (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)10
Female (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)3
BOARD NATIONALITY
UK (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)6
(cid:56)(cid:17)(cid:54)(cid:17) (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)4
Mali (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)1
(cid:49)ew (cid:61)ealand (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)1
(cid:49)etherlands (cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)(cid:17)1
BOARD EXPERIENCE
Regulatory
Developing economies
Corporate finance
Manufacturing
Government
Cyber security
Telecommunications
Tax
Technology
Mergers and Acquisitions
Financial management
Digital
1
2
1. ANDREW SUKAWATY
CHAIRMAN
Dates of appointments
Chairman(cid:15) (cid:45)an(cid:88)ary 201(cid:24)(cid:30)
(cid:40)(cid:91)ec(cid:88)tive Chairman(cid:15) (cid:45)an(cid:88)ary 2012 (cid:113) (cid:39)ecem(cid:69)er 201(cid:23)(cid:30)
(cid:40)(cid:91)ec(cid:88)tive Chairman and C(cid:40)O(cid:15) (cid:48)arch 200(cid:23) (cid:113)
(cid:39)ecem(cid:69)er 2011(cid:30)
Chairman (cid:39)ecem(cid:69)er 2003
Background and relevant experience
(cid:36)ndy was the (cid:54)enior (cid:44)ndependent (cid:39)irector of (cid:54)(cid:78)y (cid:51)(cid:47)C
(cid:88)ntil his resi(cid:74)nation in Octo(cid:69)er 2018(cid:17) (cid:43)e was previo(cid:88)sly
Chairman of (cid:61)i(cid:74)(cid:74)o (cid:49)(cid:17)(cid:57)(cid:17)(cid:15) (cid:59)yrate(cid:91) (cid:55)echnolo(cid:74)ies and
(cid:55)elenet and also (cid:39)ep(cid:88)ty Chairman of O2 (cid:51)(cid:47)C(cid:17) (cid:43)e has
also (cid:69)een an advisor to (cid:36)pa(cid:91) (cid:51)artners and (cid:58)ar(cid:69)(cid:88)r(cid:74)
(cid:51)inc(cid:88)s(cid:17) (cid:43)e has previo(cid:88)sly (cid:69)een Chief (cid:40)(cid:91)ec(cid:88)tive Officer
and (cid:51)resident of (cid:54)print (cid:51)C(cid:54)(cid:15) a (cid:49)(cid:60)(cid:54)(cid:40) listed (cid:74)lo(cid:69)al
national wireless carrier and Chief (cid:40)(cid:91)ec(cid:88)tive Officer
of (cid:49)(cid:55)(cid:47) (cid:47)imited(cid:17) (cid:43)e has also held vario(cid:88)s mana(cid:74)ement
positions with (cid:56)(cid:54) (cid:58)est and (cid:36)(cid:55)(cid:9)(cid:55) and (cid:69)een a
(cid:49)on(cid:16)(cid:40)(cid:91)ec(cid:88)tive director on vario(cid:88)s listed companies(cid:17)
(cid:36)ndy holds a (cid:37)(cid:37)(cid:36) and (cid:48)(cid:37)(cid:36) respectively from the
(cid:56)niversity of (cid:58)isconsin and (cid:48)innesota(cid:17)
External appointments
(cid:39)irector of (cid:53)(cid:40)(cid:47)(cid:59) plc(cid:30)
Chairman of (cid:43)(cid:74) Capital (cid:56)(cid:54)(cid:36)(cid:17)
2. RUPERT PEARCE
C(cid:43)(cid:44)(cid:40)F (cid:40)(cid:59)(cid:40)C(cid:56)(cid:55)(cid:44)(cid:57)(cid:40) OFF(cid:44)C(cid:40)(cid:53)
Dates of appointments
(cid:40)(cid:91)ec(cid:88)tive (cid:39)irector(cid:15) (cid:45)(cid:88)ly 2011(cid:30)
Chief (cid:40)(cid:91)ec(cid:88)tive Officer(cid:15) (cid:45)an(cid:88)ary 2012
Background and relevant experience
(cid:53)(cid:88)pert has (cid:69)een (cid:44)nmarsat’s Chief (cid:40)(cid:91)ec(cid:88)tive Officer
since (cid:45)an(cid:88)ary 2012(cid:17) (cid:43)e (cid:77)oined (cid:44)nmarsat in (cid:45)an(cid:88)ary
200(cid:24) and (cid:69)etween then and 2011(cid:15) he was (cid:42)eneral
Co(cid:88)nsel and (cid:54)enior (cid:57)ice (cid:51)resident(cid:15) (cid:44)nmarsat
(cid:40)nterprises(cid:17) (cid:51)revio(cid:88)sly(cid:15) (cid:53)(cid:88)pert was a partner
in (cid:36)tlas (cid:57)ent(cid:88)re(cid:15) a leadin(cid:74) transatlantic vent(cid:88)re
capital investment (cid:69)o(cid:88)ti(cid:84)(cid:88)e(cid:15) specialisin(cid:74) in the (cid:44)(cid:55)(cid:15)
comm(cid:88)nications and (cid:69)iotech sectors(cid:17) (cid:37)efore (cid:36)tlas
(cid:57)ent(cid:88)re(cid:15) he was also a partner at the international
law firm (cid:47)in(cid:78)laters(cid:15) specialisin(cid:74) in corporate finance(cid:15)
mer(cid:74)ers (cid:9) ac(cid:84)(cid:88)isitions and private e(cid:84)(cid:88)ity transactions(cid:17)
(cid:53)(cid:88)pert received an (cid:48)(cid:36) (cid:11)First Class(cid:12) in (cid:48)odern
(cid:43)istory from O(cid:91)ford (cid:56)niversity and won the 1(cid:28)(cid:28)(cid:24)
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
(cid:42)overnance (cid:95) (cid:37)oard of (cid:39)irectors
63
COMMITTEE MEMBERSHIP
Nominations Committee
(cid:55)elecoms (cid:53)e(cid:74)(cid:88)latory Committee
(cid:36)(cid:88)dit Committee
(cid:53)em(cid:88)neration Committee
(cid:39)enotes Chairman
3
4
5
6
7
8
F(cid:88)ll(cid:69)ri(cid:74)ht Fellowship in (cid:56)(cid:17)(cid:54)(cid:17) sec(cid:88)rities law(cid:15) st(cid:88)dyin(cid:74)
at the (cid:42)eor(cid:74)etown (cid:47)aw Center(cid:17) (cid:43)e has (cid:69)een a visitin(cid:74)
fellow of the (cid:44)mperial Colle(cid:74)e (cid:37)(cid:88)siness (cid:54)chool(cid:15)
(cid:47)ondon lect(cid:88)rin(cid:74) on the school’s (cid:40)ntreprene(cid:88)rship
pro(cid:74)ramme(cid:15) and is the co(cid:16)a(cid:88)thor of (cid:67)(cid:53)aisin(cid:74)
(cid:57)ent(cid:88)re Capital’ (cid:11)(cid:58)iley(cid:12)(cid:17)
External appointments
(cid:48)em(cid:69)er of the (cid:37)oard of (cid:39)irectors of the
(cid:40)(cid:48)(cid:40)(cid:36) (cid:54)atellite Operators (cid:36)ssociation (cid:11)(cid:67)(cid:40)(cid:54)O(cid:36)’(cid:12)(cid:30)
Commissioner on the (cid:37)road(cid:69)and Commission
for (cid:39)i(cid:74)ital (cid:39)evelopment(cid:30) (cid:48)em(cid:69)er of the (cid:54)teerin(cid:74)
Committee of the (cid:54)mart (cid:36)frica (cid:44)nitiative(cid:17)
3. TONY BATES
C(cid:43)(cid:44)(cid:40)F F(cid:44)(cid:49)(cid:36)(cid:49)C(cid:44)(cid:36)(cid:47) OFF(cid:44)C(cid:40)(cid:53)
Dates of appointments
(cid:40)(cid:91)ec(cid:88)tive (cid:39)irector and Chief Financial Officer(cid:15)
(cid:45)(cid:88)ne 201(cid:23)
Background and relevant experience
(cid:55)ony previo(cid:88)sly held the roles of (cid:42)ro(cid:88)p CFO of
(cid:60)ell (cid:42)ro(cid:88)p (cid:51)lc (cid:11)hi(cid:69)(cid:88) (cid:51)lc(cid:12)(cid:15) (cid:42)ro(cid:88)p CFO and then COO
of Colt (cid:42)ro(cid:88)p (cid:54)(cid:17)(cid:36)(cid:17) and (cid:42)ro(cid:88)p Finance (cid:39)irector at
(cid:40)(cid:48)(cid:44) plc(cid:17) (cid:55)ony holds a First Class (cid:43)ono(cid:88)rs de(cid:74)ree
in (cid:48)ana(cid:74)ement (cid:54)ciences from the (cid:56)niversity
of (cid:48)anchester(cid:17) (cid:43)e is a Fellow of the (cid:44)nstit(cid:88)te of
Chartered (cid:36)cco(cid:88)ntants in (cid:40)n(cid:74)land and (cid:58)ales(cid:17)
External appointments
(cid:49)one(cid:17)
4. SIMON BAX
(cid:44)(cid:49)(cid:39)(cid:40)(cid:51)(cid:40)(cid:49)(cid:39)(cid:40)(cid:49)(cid:55) (cid:49)O(cid:49)(cid:16)(cid:40)(cid:59)(cid:40)C(cid:56)(cid:55)(cid:44)(cid:57)(cid:40) (cid:39)(cid:44)(cid:53)(cid:40)C(cid:55)O(cid:53)
Date of appointment
(cid:45)(cid:88)ne 2013
Background and relevant experience
(cid:54)imon (cid:37)a(cid:91) was(cid:15) from 2008 (cid:113) 2013(cid:15) the Fo(cid:88)nder and
C(cid:40)O of (cid:40)ncompass (cid:39)i(cid:74)ital (cid:48)edia (cid:44)nc(cid:15) which provides
technical services to (cid:69)roadcasters(cid:15) ca(cid:69)le networ(cid:78)s
and (cid:74)overnment a(cid:74)encies(cid:17) (cid:43)e previo(cid:88)sly served as
CFO and (cid:40)(cid:91)ec(cid:88)tive (cid:57)ice (cid:51)resident of (cid:51)i(cid:91)ar (cid:36)nimation
and CFO and (cid:51)resident of (cid:54)t(cid:88)dio Operations of
Fo(cid:91) Filmed (cid:40)ntertainment(cid:17) (cid:48)r (cid:37)a(cid:91) holds an hono(cid:88)rs
de(cid:74)ree in (cid:43)istory from Cam(cid:69)rid(cid:74)e (cid:56)niversity and is
a chartered acco(cid:88)ntant(cid:17)
External appointments
Chairman of (cid:36)rchant (cid:47)imited(cid:30) (cid:49)on(cid:16)e(cid:91)ec(cid:88)tive director
and Chairman of the (cid:36)(cid:88)dit Committee of Channel (cid:23)(cid:17)
5. SIR BRYAN CARSBERG
(cid:49)O(cid:49) (cid:44)(cid:49)(cid:39)(cid:40)(cid:51)(cid:40)(cid:49)(cid:39)(cid:40)(cid:49)(cid:55) (cid:49)O(cid:49)(cid:16)(cid:40)(cid:59)(cid:40)C(cid:56)(cid:55)(cid:44)(cid:57)(cid:40) (cid:39)(cid:44)(cid:53)(cid:40)C(cid:55)O(cid:53)
Date of appointment
(cid:45)(cid:88)ne 200(cid:24)
Background and relevant experience
(cid:54)ir (cid:37)ryan is a Chartered (cid:36)cco(cid:88)ntant(cid:17) (cid:43)e served ei(cid:74)ht
years as (cid:39)irector (cid:42)eneral of the (cid:55)elecomm(cid:88)nications
(cid:11)head of Oftel(cid:12)(cid:15) and then served as (cid:39)irector (cid:42)eneral of
Fair (cid:55)radin(cid:74) and (cid:54)ecretary (cid:42)eneral of the (cid:44)nternational
(cid:36)cco(cid:88)ntin(cid:74) (cid:54)tandards (cid:37)oard(cid:17) (cid:43)e was previo(cid:88)sly
Chairman of the Co(cid:88)ncil of (cid:47)o(cid:88)(cid:74)h(cid:69)oro(cid:88)(cid:74)h (cid:56)niversity(cid:15)
a non(cid:16)e(cid:91)ec(cid:88)tive director of Ca(cid:69)le and (cid:58)ireless
Comm(cid:88)nications plc and (cid:53)(cid:48) plc(cid:30) and a non(cid:16)e(cid:91)ec(cid:88)tive
Chairman of (cid:48)(cid:47)(cid:47) (cid:55)elecom (cid:47)imited(cid:17) (cid:43)e was (cid:78)ni(cid:74)hted
in (cid:45)an(cid:88)ary 1(cid:28)8(cid:28)(cid:17) (cid:54)ir (cid:37)ryan is an (cid:43)onorary Fellow of
the (cid:44)nstit(cid:88)te of (cid:36)ct(cid:88)aries and holds an (cid:48)(cid:54)c (cid:11)(cid:40)con(cid:12)
from the (cid:56)niversity of (cid:47)ondon(cid:17)
7. WARREN FINEGOLD
(cid:44)(cid:49)(cid:39)(cid:40)(cid:51)(cid:40)(cid:49)(cid:39)(cid:40)(cid:49)(cid:55) (cid:49)O(cid:49)(cid:16)(cid:40)(cid:59)(cid:40)C(cid:56)(cid:55)(cid:44)(cid:57)(cid:40) (cid:39)(cid:44)(cid:53)(cid:40)C(cid:55)O(cid:53)
Date of appointment
(cid:36)(cid:88)(cid:74)(cid:88)st 201(cid:26)
Background and relevant experience
(cid:58)arren was previo(cid:88)sly a mem(cid:69)er of the (cid:57)odafone
(cid:42)ro(cid:88)p (cid:40)(cid:91)ec(cid:88)tive Committee for over 10 years(cid:15) and for
most of that time he was (cid:42)ro(cid:88)p (cid:54)trate(cid:74)y and (cid:37)(cid:88)siness
(cid:39)evelopment (cid:39)irector(cid:17) (cid:37)efore that(cid:15) (cid:58)arren was a
(cid:48)ana(cid:74)in(cid:74) (cid:39)irector of (cid:56)(cid:37)(cid:54) (cid:44)nvestment (cid:37)an(cid:78) where
he was (cid:43)ead of the (cid:55)echnolo(cid:74)y (cid:55)eam in (cid:40)(cid:88)rope(cid:30)
previo(cid:88)sly he was an (cid:40)(cid:91)ec(cid:88)tive (cid:39)irector at (cid:42)oldman
(cid:54)achs (cid:44)nternational in (cid:49)ew (cid:60)or(cid:78) and (cid:47)ondon foc(cid:88)sin(cid:74)
on mer(cid:74)ers and ac(cid:84)(cid:88)isitions and raisin(cid:74) capital(cid:17)
(cid:58)arren holds an (cid:48)(cid:36) in (cid:51)hilosophy(cid:15) (cid:51)olitics and
(cid:40)conomics from O(cid:91)ford (cid:56)niversity and a (cid:48)aster’s
de(cid:74)ree in (cid:37)(cid:88)siness (cid:36)dministration from
(cid:47)ondon (cid:37)(cid:88)siness (cid:54)chool(cid:17)
External appointments
(cid:54)enior (cid:44)ndependent (cid:39)irector of (cid:36)vast plc(cid:17)
External appointments
(cid:49)on(cid:16)e(cid:91)ec(cid:88)tive director of (cid:36)ct(cid:88)al (cid:40)(cid:91)perience plc(cid:17)
8. GENERAL C. ROBERT KEHLER (RTD)
(cid:44)(cid:49)(cid:39)(cid:40)(cid:51)(cid:40)(cid:49)(cid:39)(cid:40)(cid:49)(cid:55) (cid:49)O(cid:49)(cid:16)(cid:40)(cid:59)(cid:40)C(cid:56)(cid:55)(cid:44)(cid:57)(cid:40) (cid:39)(cid:44)(cid:53)(cid:40)C(cid:55)O(cid:53)
6. TRACY CLARKE
(cid:44)(cid:49)(cid:39)(cid:40)(cid:51)(cid:40)(cid:49)(cid:39)(cid:40)(cid:49)(cid:55) (cid:49)O(cid:49)(cid:16)(cid:40)(cid:59)(cid:40)C(cid:56)(cid:55)(cid:44)(cid:57)(cid:40) (cid:39)(cid:44)(cid:53)(cid:40)C(cid:55)O(cid:53)
Date of appointment
1 Fe(cid:69)r(cid:88)ary 201(cid:28)
Background and relevant experience
(cid:55)racy has over 30 years’ e(cid:91)perience in a ran(cid:74)e of
international roles at (cid:54)tandard Chartered (cid:37)an(cid:78) (cid:51)(cid:47)C(cid:15)
and is c(cid:88)rrently (cid:53)e(cid:74)ional C(cid:40)O(cid:15) (cid:40)(cid:88)rope and (cid:36)mericas
and C(cid:40)O(cid:15) (cid:51)rivate (cid:37)an(cid:78)(cid:17) (cid:43)er previo(cid:88)s senior roles
at (cid:54)tandard Chartered (cid:37)an(cid:78) incl(cid:88)de (cid:42)ro(cid:88)p (cid:43)ead
Corporate (cid:36)ffairs(cid:15) (cid:42)ro(cid:88)p (cid:43)ead (cid:43)(cid:88)man (cid:53)eso(cid:88)rces(cid:15)
and (cid:39)irector(cid:15) (cid:47)e(cid:74)al and Compliance(cid:17) (cid:55)racy has
previo(cid:88)sly held (cid:49)on(cid:16)(cid:40)(cid:91)ec(cid:88)tive (cid:39)irector positions
at (cid:54)(cid:78)y plc and ea(cid:74)a plc(cid:17)
External appointments
(cid:37)oard mem(cid:69)er at (cid:55)heCity(cid:56)(cid:46) and (cid:49)on(cid:16)(cid:40)(cid:91)ec(cid:88)tive
(cid:39)irector at (cid:40)n(cid:74)land (cid:49)et(cid:69)all(cid:17)
Date of appointment
(cid:48)ay 201(cid:23)
Background and relevant experience
(cid:42)eneral (cid:46)ehler retired from the (cid:56)(cid:17)(cid:54)(cid:17) (cid:36)ir Force in
(cid:45)an(cid:88)ary 201(cid:23) with over 38 years of service(cid:17) (cid:43)e oversaw
a (cid:74)lo(cid:69)al networ(cid:78) of satellite command and control(cid:15)
comm(cid:88)nications(cid:15) missile warnin(cid:74) and la(cid:88)nch facilities(cid:15)
and ens(cid:88)red the com(cid:69)at readiness of (cid:36)merica’s
intercontinental (cid:69)allistic missile force(cid:17) Over his career(cid:15)
he served in a variety of important operational and
staff assi(cid:74)nments(cid:15) and s(cid:88)ccessf(cid:88)lly led lar(cid:74)e
or(cid:74)anisations with (cid:74)lo(cid:69)al responsi(cid:69)ilities(cid:17)
External appointments
(cid:49)on(cid:16)e(cid:91)ec(cid:88)tive director of (cid:48)(cid:36)(cid:59)(cid:36)(cid:53) (cid:55)echnolo(cid:74)ies(cid:30)
(cid:55)r(cid:88)stee of the (cid:48)itre Corporation(cid:30) (cid:39)irector of (cid:48)onocle
(cid:36)c(cid:84)(cid:88)isition Corporation(cid:30) (cid:36)cts as (cid:54)pecial (cid:36)dvisor
to two (cid:56)(cid:17)(cid:54)(cid:17) or(cid:74)anisations(cid:17)
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64
(cid:42)overnance (cid:95) (cid:37)oard of (cid:39)irectors
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
Board of Directors
contin(cid:88)ed
COMMITTEE MEMBERSHIP
Nominations Committee
(cid:55)elecoms (cid:53)e(cid:74)(cid:88)latory Committee
(cid:36)(cid:88)dit Committee
(cid:53)em(cid:88)neration Committee
(cid:39)enotes Chairman
9
10
11
12
13
14
9. PHILLIPA McCROSTIE
(cid:44)(cid:49)(cid:39)(cid:40)(cid:51)(cid:40)(cid:49)(cid:39)(cid:40)(cid:49)(cid:55) (cid:49)O(cid:49)(cid:16)(cid:40)(cid:59)(cid:40)C(cid:56)(cid:55)(cid:44)(cid:57)(cid:40) (cid:39)(cid:44)(cid:53)(cid:40)C(cid:55)O(cid:53)
Date of appointment
(cid:54)eptem(cid:69)er 2016
Background and relevant experience
(cid:51)hillipa (cid:11)(cid:67)(cid:51)ip’(cid:12) was a mem(cid:69)er of (cid:40)(cid:60)’s (cid:42)lo(cid:69)al (cid:40)(cid:91)ec(cid:88)tive
(cid:37)oard for ei(cid:74)ht years (cid:88)ntil her retirement in (cid:45)(cid:88)ne 2016(cid:17)
(cid:51)ip was also (cid:42)lo(cid:69)al (cid:43)ead of Corporate Finance(cid:17) (cid:54)he
transformed Corporate Finance into a (cid:69)(cid:88)siness with
reven(cid:88)es e(cid:91)ceedin(cid:74) (cid:7)3(cid:69)n d(cid:88)rin(cid:74) the (cid:74)lo(cid:69)al recession(cid:17)
(cid:43)er responsi(cid:69)ilities incl(cid:88)ded (cid:51)(cid:9)(cid:47)(cid:15) strate(cid:74)y(cid:15) investment(cid:15)
people development and ris(cid:78)(cid:17) (cid:51)ip led the ac(cid:84)(cid:88)isition
and inte(cid:74)ration of (cid:51)arthenon(cid:15) a (cid:74)lo(cid:69)al strate(cid:74)y
cons(cid:88)ltin(cid:74) (cid:69)(cid:88)siness(cid:17) (cid:51)ip has deep e(cid:91)perience of
international (cid:48)(cid:9)(cid:36) and ta(cid:91) and is a (cid:84)(cid:88)alified lawyer(cid:17)
External appointments
(cid:49)on(cid:16)(cid:40)(cid:91)ec(cid:88)tive director and mem(cid:69)er of the
(cid:49)omination Committee and (cid:36)(cid:88)dit Committee of
(cid:48)ar(cid:78)s and (cid:54)pencer (cid:42)ro(cid:88)p plc(cid:30) (cid:48)em(cid:69)er of the (cid:37)oard
of (cid:51)eterson (cid:44)nstit(cid:88)te of (cid:44)nternational (cid:40)conomics and
Chair of its (cid:36)(cid:88)dit Committee(cid:30) (cid:54)enior advisor to (cid:40)(cid:60)’s
(cid:42)lo(cid:69)al (cid:40)(cid:91)ec(cid:88)tive and a re(cid:74)(cid:88)lar contri(cid:69)(cid:88)tor on (cid:69)(cid:88)siness
iss(cid:88)es to C(cid:49)(cid:37)C(cid:15) C(cid:49)(cid:49)(cid:15) (cid:37)loom(cid:69)er(cid:74) and (cid:53)e(cid:88)ters(cid:17)
11. DR ABE PELED
SENIOR INDEPENDENT
(cid:49)O(cid:49)(cid:16)(cid:40)(cid:59)(cid:40)C(cid:56)(cid:55)(cid:44)(cid:57)(cid:40) (cid:39)(cid:44)(cid:53)(cid:40)C(cid:55)O(cid:53)
Date of appointment
(cid:45)(cid:88)ne 2013
Background and relevant experience
(cid:36)(cid:69)e was Chief (cid:40)(cid:91)ec(cid:88)tive Officer of (cid:49)(cid:39)(cid:54) (cid:42)ro(cid:88)p plc from
1(cid:28)(cid:28)(cid:24) (cid:113) 2012(cid:15) a di(cid:74)ital pay(cid:16)(cid:55)(cid:57) technolo(cid:74)y company(cid:15)
and served as Chairman and Chief (cid:40)(cid:91)ec(cid:88)tive Officer
from 200(cid:23) (cid:113) 2012(cid:17) (cid:43)e was (cid:54)enior (cid:57)ice (cid:51)resident
of Cisco from (cid:36)(cid:88)(cid:74)(cid:88)st 2012 (cid:113) (cid:45)an(cid:88)ary 201(cid:23) and has
previo(cid:88)s senior mana(cid:74)ement e(cid:91)perience with (cid:44)(cid:37)(cid:48) and
(cid:40)lron(cid:17) (cid:36)(cid:69)e has a (cid:37)(cid:54)c and (cid:48)(cid:54)c in (cid:40)lectrical (cid:40)n(cid:74)ineerin(cid:74)
and a (cid:51)h(cid:39) in (cid:39)i(cid:74)ital (cid:54)i(cid:74)nal (cid:51)rocessin(cid:74)(cid:17) (cid:44)n (cid:48)arch 2013(cid:15)
(cid:39)r(cid:17) (cid:51)eled is a (cid:47)ife Fellow of (cid:44)(cid:40)(cid:40)(cid:40)(cid:15) and was awarded the
(cid:47)ifetime (cid:36)chievement (cid:36)ward (cid:69)y (cid:39)i(cid:74)ital (cid:55)(cid:57) (cid:40)(cid:88)rope(cid:17)
External appointments
(cid:51)artner of Cy(cid:69)erClo(cid:88)d (cid:57)ent(cid:88)res(cid:30) (cid:54)enior advisor
on technolo(cid:74)y (cid:69)(cid:88)sinesses to (cid:51)ermira(cid:30) Chairman
of (cid:55)eam(cid:57)iewer (cid:42)m(cid:69)(cid:43)(cid:30) Chairman of (cid:54)ynamedia (cid:47)td(cid:17)
12. ROBERT RUIJTER
(cid:44)(cid:49)(cid:39)(cid:40)(cid:51)(cid:40)(cid:49)(cid:39)(cid:40)(cid:49)(cid:55) (cid:49)O(cid:49)(cid:16)(cid:40)(cid:59)(cid:40)C(cid:56)(cid:55)(cid:44)(cid:57)(cid:40) (cid:39)(cid:44)(cid:53)(cid:40)C(cid:55)O(cid:53)
10. AMBASSADOR JANICE OBUCHOWSKI
(cid:44)(cid:49)(cid:39)(cid:40)(cid:51)(cid:40)(cid:49)(cid:39)(cid:40)(cid:49)(cid:55) (cid:49)O(cid:49)(cid:16)(cid:40)(cid:59)(cid:40)C(cid:56)(cid:55)(cid:44)(cid:57)(cid:40) (cid:39)(cid:44)(cid:53)(cid:40)C(cid:55)O(cid:53)
Date of appointment
Fe(cid:69)r(cid:88)ary 201(cid:24)
Date of appointment
(cid:48)ay 200(cid:28)
Background and relevant experience
(cid:45)anice held several senior positions (cid:69)oth in the
(cid:56)(cid:54) (cid:74)overnment and in the private sector(cid:17) (cid:54)he was
formerly (cid:43)ead of (cid:39)ele(cid:74)ation and (cid:56)(cid:54) (cid:36)m(cid:69)assador
to the (cid:58)orld (cid:53)adiocomm(cid:88)nication Conference(cid:15)
(cid:36)ssistant (cid:54)ecretary for (cid:49)ational (cid:55)elecomm(cid:88)nications
and (cid:44)nformation (cid:36)dministration (cid:11)(cid:67)(cid:49)(cid:55)(cid:44)(cid:36)’(cid:12) at the (cid:56)(cid:17)(cid:54)(cid:17)
(cid:39)epartment of Commerce and (cid:54)enior (cid:36)dvisor to the
Chairman at the Federal Comm(cid:88)nications Commission
(cid:11)(cid:67)FCC’(cid:12)(cid:17) (cid:40)arlier in her career she also led international
(cid:74)overnment affairs for (cid:49)(cid:60)(cid:49)(cid:40)(cid:59) (cid:11)now (cid:57)eri(cid:93)on(cid:12) and
practised private sector antitr(cid:88)st law(cid:17)
External appointments
(cid:51)resident of Freedom (cid:55)echnolo(cid:74)ies (cid:44)nc(cid:17)(cid:30)
(cid:49)on(cid:16)(cid:40)(cid:91)ec(cid:88)tive director of C(cid:54)(cid:42) (cid:54)ystems(cid:15) (cid:44)nc(cid:17)
Background and relevant experience
(cid:53)o(cid:69) served as Chief Financial Officer of (cid:57)(cid:49)(cid:56) (cid:49)(cid:17)(cid:57)(cid:17)(cid:15)
a p(cid:88)(cid:69)licly listed mar(cid:78)etin(cid:74) and p(cid:88)(cid:69)lishin(cid:74) company
(cid:11)now the (cid:49)ielsen company(cid:12) (cid:69)etween 200(cid:23) and 200(cid:26)(cid:17)
(cid:43)e previo(cid:88)sly served as the Chief Finance Officer of
(cid:46)(cid:47)(cid:48) (cid:53)oyal (cid:39)(cid:88)tch (cid:36)irlines from 2001 (cid:88)ntil its mer(cid:74)er
with (cid:36)ir France in 200(cid:23)(cid:15) and as Chief Finance Officer of
(cid:36)(cid:54)(cid:48) (cid:44)nternational (cid:49)(cid:17)(cid:57)(cid:17) a p(cid:88)(cid:69)licly listed man(cid:88)fact(cid:88)rer
of electronic components(cid:17) (cid:53)o(cid:69) is a Certified (cid:51)(cid:88)(cid:69)lic
(cid:36)cco(cid:88)ntant in the (cid:56)nited (cid:54)tates and in (cid:55)he
(cid:49)etherlands and a mem(cid:69)er of the (cid:36)C(cid:55) in the (cid:56)(cid:46)(cid:17)
External appointments
(cid:48)em(cid:69)er of the (cid:54)(cid:88)pervisory (cid:37)oard and chair of
the a(cid:88)dit committee at (cid:58)avin (cid:49)(cid:17)(cid:57)(cid:17)(cid:30) (cid:49)on(cid:16)(cid:40)(cid:91)ec(cid:88)tive
director and chair of the a(cid:88)dit committee at (cid:44)nter(cid:91)ion
(cid:49)(cid:17)(cid:57)(cid:17) (cid:11)(cid:49)(cid:60)(cid:54)(cid:40)(cid:12)(cid:30) (cid:48)em(cid:69)er of the (cid:54)(cid:88)pervisory (cid:37)oard
of (cid:49)(cid:49) (cid:42)ro(cid:88)p (cid:49)(cid:17)(cid:57)(cid:17)(cid:30) (cid:48)em(cid:69)er of the Contin(cid:88)ity
Fo(cid:88)ndation of (cid:36)(cid:54)(cid:48)(cid:44) (cid:49)(cid:57)(cid:17)
13. DR HAMADOUN TOURÉ
(cid:44)(cid:49)(cid:39)(cid:40)(cid:51)(cid:40)(cid:49)(cid:39)(cid:40)(cid:49)(cid:55) (cid:49)O(cid:49)(cid:16)(cid:40)(cid:59)(cid:40)C(cid:56)(cid:55)(cid:44)(cid:57)(cid:40) (cid:39)(cid:44)(cid:53)(cid:40)C(cid:55)O(cid:53)
Date of appointment
(cid:48)arch 201(cid:24)
Background and relevant experience
(cid:43)amado(cid:88)n was (cid:54)ecretary (cid:42)eneral of the (cid:44)nternational
(cid:55)elecomm(cid:88)nication (cid:56)nion (cid:11)(cid:67)(cid:44)(cid:55)(cid:56)’(cid:12)(cid:15) the specialised
information and comm(cid:88)nication technolo(cid:74)ies a(cid:74)ency of
the (cid:56)nited (cid:49)ations from 200(cid:26) (cid:113) 201(cid:23)(cid:17) (cid:43)e was a mem(cid:69)er
of the (cid:56)(cid:49) Chief (cid:40)(cid:91)ec(cid:88)tive (cid:37)oard and served as Chairman
of the (cid:56)(cid:49) (cid:44)C(cid:55) (cid:49)etwor(cid:78)(cid:17) (cid:43)e was the fo(cid:88)ndin(cid:74) mem(cid:69)er of
the (cid:37)road(cid:69)and Commission for (cid:39)i(cid:74)ital (cid:39)evelopment and
served as co(cid:16)vice chair (cid:88)ntil his retirement from (cid:44)(cid:55)(cid:56)(cid:17) (cid:43)e
was a mem(cid:69)er of the (cid:36)dvisory (cid:37)oard of the (cid:44)nternational
(cid:48)(cid:88)ltilateral (cid:51)artnership (cid:36)(cid:74)ainst Cy(cid:69)er (cid:55)hreats (cid:11)(cid:67)(cid:44)(cid:48)(cid:51)(cid:36)C(cid:55)’(cid:12)
(cid:88)ntil (cid:39)ec 201(cid:23)(cid:17) (cid:43)e has also had a distin(cid:74)(cid:88)ished career in
the satellite ind(cid:88)stry(cid:17) (cid:43)amado(cid:88)n holds a (cid:48)aster’s (cid:39)e(cid:74)ree
in (cid:40)lectrical (cid:40)n(cid:74)ineerin(cid:74) from the (cid:55)elecomm(cid:88)nications
(cid:44)nstit(cid:88)te of (cid:54)t(cid:17) (cid:51)eters(cid:69)(cid:88)r(cid:74) (cid:11)(cid:53)(cid:88)ssian Federation(cid:12) and a (cid:51)h(cid:39)
in (cid:40)lectrical (cid:40)n(cid:74)ineerin(cid:74) from the (cid:56)niversity of (cid:44)nformatics
and (cid:55)elecoms of (cid:48)oscow (cid:11)(cid:53)(cid:88)ssian Federation(cid:12)(cid:17)
External appointments
Fo(cid:88)ndin(cid:74) (cid:40)(cid:91)ec(cid:88)tive (cid:39)irector of (cid:54)mart (cid:36)frica
(cid:11)(cid:45)an(cid:88)ary 2016 (cid:113) (cid:48)arch 201(cid:28)(cid:12)(cid:30) (cid:48)em(cid:69)er of the (cid:37)oard
for (cid:54)(cid:88)staina(cid:69)le (cid:39)evelopment (cid:42)oals Center for (cid:36)frica
(cid:69)y the (cid:56)nited (cid:49)ations(cid:30) (cid:43)e was a non(cid:16)e(cid:91)ec(cid:88)tive (cid:37)oard
(cid:48)em(cid:69)er(cid:15) (cid:55)(cid:40)(cid:47)(cid:46)O(cid:48) (cid:54)o(cid:88)th (cid:36)frica from (cid:45)an(cid:88)ary 2016
(cid:113) (cid:36)(cid:88)(cid:74)(cid:88)st 2018(cid:17) Chairman (cid:51)(cid:48)(cid:51) on Cy(cid:69)er (cid:54)ec(cid:88)rity and
Cy(cid:69)er (cid:51)eace at the (cid:58)orld Federation of (cid:54)cientists
(cid:11)(cid:67)(cid:58)F(cid:54)’(cid:12)(cid:15) (cid:48)em(cid:69)er of the (cid:54)wedish (cid:53)oyal (cid:36)cademy of
(cid:54)cience (cid:11)(cid:67)(cid:44)(cid:57)(cid:36)’(cid:12)(cid:17)
14. ALISON HORROCKS
C(cid:43)(cid:44)(cid:40)F CO(cid:53)(cid:51)O(cid:53)(cid:36)(cid:55)(cid:40) (cid:36)FF(cid:36)(cid:44)(cid:53)(cid:54) OFF(cid:44)C(cid:40)(cid:53)
AND COMPANY SECRETARY
Date of appointment
Fe(cid:69)r(cid:88)ary 1(cid:28)(cid:28)(cid:28)
Background and relevant experience
(cid:36)lison (cid:77)oined (cid:44)nmarsat in 1(cid:28)(cid:28)(cid:28) and is responsi(cid:69)le for ris(cid:78)(cid:15)
compliance and corporate (cid:74)overnance across the
Company(cid:17) (cid:54)he acts as Company (cid:54)ecretary to the (cid:37)oard
and its Committees(cid:17) (cid:54)he is a mem(cid:69)er of the (cid:40)(cid:91)ec(cid:88)tive
(cid:48)ana(cid:74)ement (cid:55)eam and Chairman of the (cid:55)r(cid:88)stee Company
for the (cid:44)nmarsat (cid:56)(cid:46) pension plans(cid:17) (cid:36)lison mana(cid:74)es o(cid:88)r
operations in (cid:44)ndia and China and also the corporate
mar(cid:78)etin(cid:74) team(cid:17) (cid:54)he was (cid:42)ro(cid:88)p Company (cid:54)ecretary
of (cid:44)nternational (cid:51)(cid:88)(cid:69)lic (cid:53)elations plc(cid:15) a worldwide
p(cid:88)(cid:69)lic relations company(cid:15) for 11 years prior to
(cid:77)oinin(cid:74) (cid:44)nmarsat(cid:17) (cid:36)lison is a Fellow of the Chartered
(cid:54)ecretaries and (cid:36)dministrators(cid:17)
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
(cid:42)overnance (cid:95) (cid:40)(cid:91)ec(cid:88)tive mana(cid:74)ement team
65
Executive management team
(cid:54)(cid:88)pportin(cid:74) the development of (cid:44)nmarsat as a hi(cid:74)h(cid:16)performin(cid:74) company
and a foc(cid:88)s on c(cid:88)lt(cid:88)re are (cid:78)ey elements of this team’s responsi(cid:69)ilities
1
2
3
4
5
6
1. RUPERT PEARCE
C(cid:43)(cid:44)(cid:40)F (cid:40)(cid:59)(cid:40)C(cid:56)(cid:55)(cid:44)(cid:57)(cid:40) OFF(cid:44)C(cid:40)(cid:53)
(cid:39)etails shown previo(cid:88)sly on pa(cid:74)e 62
2. PHILIP BALAAM
(cid:51)(cid:53)(cid:40)(cid:54)(cid:44)(cid:39)(cid:40)(cid:49)(cid:55)(cid:15) (cid:36)(cid:57)(cid:44)(cid:36)(cid:55)(cid:44)O(cid:49)
Tenure
3 years
Responsibilities
(cid:51)hil is responsi(cid:69)le for deliverin(cid:74) the (cid:36)viation
(cid:37)(cid:88)siness (cid:56)nit’s (cid:69)(cid:88)siness plan in line with
its (cid:74)rowth strate(cid:74)y(cid:17) (cid:55)his incl(cid:88)des sec(cid:88)re
coc(cid:78)pit comm(cid:88)nications(cid:15) (cid:69)(cid:88)siness aviation
and commercial airline ca(cid:69)in connectivity(cid:17)
Previous roles include
(cid:44)nmarsat Chief (cid:54)trate(cid:74)y Officer (cid:11)2016 (cid:113) 201(cid:26)(cid:12)(cid:30)
(cid:36)siasat (cid:57)(cid:51)(cid:15) (cid:54)trate(cid:74)y(cid:15) (cid:37)(cid:88)siness development
and (cid:54)ales (cid:11)2011 (cid:113) 2016(cid:12)(cid:30) (cid:36)rianespace (cid:54)ales
(cid:39)irector and vario(cid:88)s roles (cid:11)1(cid:28)(cid:28)8 (cid:113) 2011(cid:12)(cid:17)
3. TONY BATES
C(cid:43)(cid:44)(cid:40)F F(cid:44)(cid:49)(cid:36)(cid:49)C(cid:44)(cid:36)(cid:47) OFF(cid:44)C(cid:40)(cid:53)
(cid:39)etails shown previo(cid:88)sly on pa(cid:74)e 63
4. TRUDY COOKE
GROUP GENERAL COUNSEL
Tenure
(cid:33)1 year
6. PAUL GUDONIS
(cid:51)(cid:53)(cid:40)(cid:54)(cid:44)(cid:39)(cid:40)(cid:49)(cid:55)(cid:15) (cid:40)(cid:49)(cid:55)(cid:40)(cid:53)(cid:51)(cid:53)(cid:44)(cid:54)(cid:40)
Tenure
12 years
Responsibilities
(cid:51)a(cid:88)l leads the (cid:44)nmarsat (cid:40)nterprise (cid:37)(cid:88)siness (cid:56)nit(cid:15)
which is responsi(cid:69)le for land(cid:16)(cid:69)ased sectors incl(cid:88)din(cid:74)
a(cid:74)ric(cid:88)lt(cid:88)re(cid:15) aid and (cid:49)(cid:42)Os(cid:15) ener(cid:74)y(cid:15) minin(cid:74)(cid:15) media(cid:15)
and transport and lo(cid:74)istics(cid:17) (cid:54)ince he started in his
role in 2016(cid:15) (cid:51)a(cid:88)l has moved the foc(cid:88)s of the (cid:37)(cid:88)siness
(cid:56)nit towards deliverin(cid:74) transformational (cid:69)(cid:88)siness
o(cid:88)tcomes thro(cid:88)(cid:74)h mana(cid:74)ed services and the
(cid:44)nd(cid:88)strial (cid:44)nternet of (cid:55)hin(cid:74)s (cid:11)(cid:67)(cid:44)(cid:44)o(cid:55)’(cid:12)(cid:17) (cid:58)ith over 10 years
of e(cid:91)perience in (cid:44)nmarsat(cid:15) (cid:51)a(cid:88)l is re(cid:74)(cid:88)larly invited
to comment on ind(cid:88)stry news and to spea(cid:78) at events(cid:15)
and is viewed as a tho(cid:88)(cid:74)ht(cid:16)leader for the (cid:74)lo(cid:69)al
application of (cid:44)nd(cid:88)strial (cid:44)o(cid:55) technolo(cid:74)y(cid:17)
Previous roles include
(cid:44)nmarsat (cid:48)aritime (cid:11)2012 (cid:113) 201(cid:24)(cid:12)(cid:15) (cid:44)nmarsat (cid:42)lo(cid:69)al
(cid:36)cco(cid:88)nt (cid:48)ana(cid:74)er (cid:11)200(cid:26) (cid:113) 2012(cid:12)(cid:15) (cid:37)ritish (cid:36)rmy
(cid:11)1(cid:28)(cid:28)(cid:26) (cid:113) 200(cid:26)(cid:12)(cid:17)
Responsibilities
(cid:55)r(cid:88)dy (cid:69)rin(cid:74)s e(cid:91)tensive international le(cid:74)al(cid:15) (cid:48)(cid:9)(cid:36) and
mana(cid:74)ement e(cid:91)perience(cid:17) (cid:54)he has wor(cid:78)ed for over
20 years(cid:15) first as a corporate lawyer and then more
recently as the Chief Operatin(cid:74) Officer and mem(cid:69)er
of the (cid:40)(cid:91)ec(cid:88)tive (cid:37)oard at a leadin(cid:74) international
private e(cid:84)(cid:88)ity investment firm in (cid:47)ondon(cid:17)
(cid:55)r(cid:88)dy is responsi(cid:69)le for mana(cid:74)in(cid:74) (cid:44)nmarsat’s
(cid:47)e(cid:74)al and (cid:53)e(cid:74)(cid:88)latory ris(cid:78)s and for providin(cid:74) (cid:47)e(cid:74)al(cid:15)
(cid:53)e(cid:74)(cid:88)latory and (cid:54)trate(cid:74)ic services to the Company(cid:17)
Previous roles include
(cid:55)erra Firma(cid:15) vario(cid:88)s roles incl(cid:88)din(cid:74) Chief Operatin(cid:74)
Officer and (cid:42)ro(cid:88)p (cid:42)eneral Co(cid:88)nsel (cid:11)200(cid:23) (cid:113) 2018(cid:12)(cid:15)
(cid:47)ovells (cid:11)2000 (cid:113) 200(cid:23)(cid:12)(cid:15) Os(cid:69)orne Clar(cid:78)e (cid:11)1(cid:28)(cid:28)(cid:24) (cid:113) 2000(cid:12)
5. NATASHA DILLON
C(cid:43)(cid:44)(cid:40)F (cid:51)(cid:40)O(cid:51)(cid:47)(cid:40) OFF(cid:44)C(cid:40)(cid:53)
Tenure
2 years
Responsibilities
(cid:49)atasha is responsi(cid:69)le for creatin(cid:74) and implementin(cid:74)
(cid:44)nmarsat’s people strate(cid:74)y(cid:15) incl(cid:88)din(cid:74) developin(cid:74)
e(cid:91)cellent leadership(cid:15) (cid:69)(cid:88)ildin(cid:74) an effective and
capa(cid:69)le or(cid:74)anisation(cid:15) deliverin(cid:74) a compellin(cid:74)
employee val(cid:88)e proposition for o(cid:88)r people
and drivin(cid:74) stron(cid:74) performance(cid:17)
Previous roles include
(cid:46)orn Ferry (cid:43)ay (cid:42)ro(cid:88)p(cid:15) (cid:54)enior Client (cid:51)artner
(cid:11)201(cid:24) (cid:113) 2016(cid:12)(cid:30) (cid:43)ay (cid:42)ro(cid:88)p(cid:15) (cid:36)ssociate (cid:39)irector
(cid:11)2012 (cid:113) 201(cid:24)(cid:12)(cid:30) (cid:40)rnst and (cid:60)o(cid:88)n(cid:74)(cid:15) (cid:54)enior (cid:48)ana(cid:74)er(cid:18)
(cid:48)ana(cid:74)er (cid:11)2010 (cid:113) 2012(cid:12)(cid:30) (cid:37)(cid:51)(cid:15) vario(cid:88)s commercial
and (cid:43)(cid:53) roles (cid:11)1(cid:28)(cid:28)(cid:26) (cid:113) 200(cid:28)(cid:12)(cid:17)
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66
(cid:42)overnance (cid:95) (cid:40)(cid:91)ec(cid:88)tive mana(cid:74)ement team
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
Executive management team
contin(cid:88)ed
7
8
9
10
11
12
12. RONALD SPITHOUT
(cid:51)(cid:53)(cid:40)(cid:54)(cid:44)(cid:39)(cid:40)(cid:49)(cid:55)(cid:15) (cid:48)(cid:36)(cid:53)(cid:44)(cid:55)(cid:44)(cid:48)(cid:40)
Tenure
(cid:26) years
Responsibilities
(cid:54)ince the end of 201(cid:23)(cid:15) (cid:53)onald has (cid:69)een responsi(cid:69)le
for (cid:44)nmarsat’s (cid:48)aritime (cid:37)(cid:88)siness and its (cid:74)lo(cid:69)al
commercial strate(cid:74)y and e(cid:91)ec(cid:88)tion in (cid:48)erchant
(cid:48)arine(cid:15) Offshore (cid:40)ner(cid:74)y(cid:15) Fishin(cid:74)(cid:15) (cid:51)assen(cid:74)ers
and (cid:47)eis(cid:88)re mar(cid:78)ets(cid:17) (cid:37)ased on a strate(cid:74)y of
c(cid:88)stomer intimacy and channel en(cid:74)a(cid:74)ement
the (cid:48)aritime (cid:37)(cid:88)siness (cid:56)nit is effectively drivin(cid:74)
themes of (cid:67)(cid:39)i(cid:74)italisation at (cid:54)ea’ and (cid:67)the Connected
(cid:57)essel’ to deliver lon(cid:74)(cid:16)term s(cid:88)staina(cid:69)le (cid:74)rowth
for (cid:44)nmarsat in the sector(cid:17)
Previous roles include
(cid:44)nmarsat(cid:15) (cid:51)resident (cid:40)nterprise (cid:37)(cid:88)siness (cid:11)2012 (cid:113) 210(cid:23)(cid:12)(cid:30)
(cid:54)tratos (cid:42)lo(cid:69)al(cid:15) (cid:54)enior (cid:57)ice (cid:51)resident (cid:42)lo(cid:69)al
(cid:48)ar(cid:78)etin(cid:74) and (cid:54)ales (cid:11)2006 (cid:113) 2011(cid:12)(cid:17)
(cid:55)en(cid:88)re denotes time with (cid:44)nmarsat and does not incl(cid:88)de
service with companies ac(cid:84)(cid:88)ired (cid:69)y (cid:44)nmarsat(cid:17)
7. PETER HADINGER
C(cid:43)(cid:44)(cid:40)F (cid:55)(cid:40)C(cid:43)(cid:49)O(cid:47)O(cid:42)(cid:60) OFF(cid:44)C(cid:40)(cid:53)
Tenure
8 years
Responsibilities
(cid:51)eter (cid:69)ecame C(cid:55)O in 2018(cid:17) (cid:43)e leads the en(cid:74)ineerin(cid:74)
teams responsi(cid:69)le for deliverin(cid:74) (cid:44)nmarsat’s f(cid:88)t(cid:88)re
satellites(cid:15) networ(cid:78) infrastr(cid:88)ct(cid:88)re(cid:15) terminal technolo(cid:74)ies
and spectr(cid:88)m reso(cid:88)rces(cid:17) C(cid:55)O delivers the differentiated
and relia(cid:69)le (cid:74)lo(cid:69)al comm(cid:88)nications capa(cid:69)ilities
that ma(cid:78)e a difference in the lives of o(cid:88)r c(cid:88)stomers
and ens(cid:88)re that (cid:44)nmarsat remains a leader in
ena(cid:69)lin(cid:74) the connected world(cid:17)
Previous roles include
(cid:44)nmarsat(cid:15) (cid:51)resident (cid:56)(cid:17)(cid:54)(cid:17) (cid:42)overnment (cid:37)(cid:88)siness
(cid:56)nit (cid:11)2013 (cid:113) 2018(cid:12)(cid:30) (cid:44)nmarsat(cid:15) (cid:57)(cid:51) (cid:42)(cid:59) (cid:42)overnment
(cid:11)2011 (cid:113) 2013(cid:12)(cid:30) (cid:55)(cid:53)(cid:58) (cid:49)orthrop (cid:42)r(cid:88)mman (cid:54)pace(cid:15)
(cid:47)eadership roles in (cid:40)n(cid:74)ineerin(cid:74) and (cid:37)(cid:88)siness
(cid:39)evelopment (cid:11)1(cid:28)81 (cid:113) 2011(cid:12)(cid:17)
8. ALISON HORROCKS
C(cid:43)(cid:44)(cid:40)F CO(cid:53)(cid:51)O(cid:53)(cid:36)(cid:55)(cid:40) (cid:36)FF(cid:36)(cid:44)(cid:53)(cid:54) OFF(cid:44)C(cid:40)(cid:53)
AND COMPANY SECRETARY
(cid:39)etails shown previo(cid:88)sly on pa(cid:74)e 6(cid:23)
9. TODD McDONELL
(cid:51)(cid:53)(cid:40)(cid:54)(cid:44)(cid:39)(cid:40)(cid:49)(cid:55)(cid:15) (cid:42)(cid:47)O(cid:37)(cid:36)(cid:47) (cid:42)O(cid:57)(cid:40)(cid:53)(cid:49)(cid:48)(cid:40)(cid:49)(cid:55)
Tenure
6 years
Responsibilities
(cid:55)odd (cid:69)ecame president in 2018 and is responsi(cid:69)le
for leadin(cid:74) and drivin(cid:74) (cid:44)nmarsat’s (cid:74)overnment
(cid:69)(cid:88)siness in all re(cid:74)ions of the world o(cid:88)tside of
the (cid:56)(cid:54)(cid:36)(cid:17) (cid:55)his incl(cid:88)des developin(cid:74) strate(cid:74)ies that
deliver (cid:74)reater operational capa(cid:69)ility to (cid:74)overnments
and providin(cid:74) holistic sol(cid:88)tions that meet
(cid:74)overnment telecomm(cid:88)nications re(cid:84)(cid:88)irements(cid:17)
Previous roles include
(cid:44)nmarsat(cid:15) (cid:57)(cid:51) (cid:42)lo(cid:69)al (cid:42)overnment (cid:54)ol(cid:88)tions 2013 (cid:113) 2018(cid:30)
(cid:55)C Comm(cid:88)nications(cid:15) C(cid:40)O 2003 (cid:113) 2013(cid:17)
10. SUSAN MILLER
PRESIDENT AND CEO –
(cid:44)(cid:49)(cid:48)(cid:36)(cid:53)(cid:54)(cid:36)(cid:55) (cid:42)O(cid:57)(cid:40)(cid:53)(cid:49)(cid:48)(cid:40)(cid:49)(cid:55)(cid:15) (cid:44)(cid:49)C(cid:17)
Tenure
(cid:24) years
Responsibilities
(cid:54)(cid:88)san is responsi(cid:69)le for(cid:29) definin(cid:74) and implementin(cid:74) the
overall strate(cid:74)y of e(cid:91)pandin(cid:74) (cid:44)nmarsat’s leadership
position across (cid:56)(cid:17)(cid:54)(cid:17) defense(cid:15) intelli(cid:74)ence(cid:15) homeland
sec(cid:88)rity and civilian or(cid:74)ani(cid:93)ations(cid:17) (cid:39)eliverin(cid:74)
innovative c(cid:88)stomi(cid:93)ed(cid:15) sec(cid:88)re comm(cid:88)nication
capa(cid:69)ilities to land(cid:15) maritime and aero (cid:88)sers(cid:15)
meetin(cid:74) mission(cid:16)critical connectivity needs aro(cid:88)nd
the world(cid:17) (cid:55)heir (cid:69)(cid:88)siness mana(cid:74)es a ro(cid:69)(cid:88)st partnership
pro(cid:74)ramme that incl(cid:88)des wor(cid:78)in(cid:74) with (cid:69)est(cid:16)of(cid:16)(cid:69)reed
channel partners to deliver (cid:44)nmarsat’s relia(cid:69)le
satellite comm(cid:88)nication services and sol(cid:88)tions
to (cid:56)(cid:17)(cid:54)(cid:17) (cid:74)overnment end (cid:88)sers worldwide(cid:17)
Previous roles include
(cid:48)(cid:55)(cid:49) (cid:54)atellite Comm(cid:88)nications(cid:15) (cid:40)(cid:91)ec(cid:88)tive (cid:57)(cid:51)(cid:15)
(cid:54)trate(cid:74)y and Corporate (cid:39)evelopment (cid:11)2012(cid:16)2013(cid:12)(cid:30)
(cid:54)pacenet (cid:44)nte(cid:74)rated (cid:42)overnment (cid:54)ol(cid:88)tions(cid:15) (cid:44)nc(cid:17)(cid:15)
C(cid:40)O (cid:11)200(cid:28) (cid:113) 2012(cid:12)(cid:30) (cid:54)(cid:78)y(cid:55)erra(cid:15) (cid:44)nc(cid:17)(cid:15) (cid:54)enior (cid:57)(cid:51)(cid:15)
(cid:54)atellite (cid:54)ervices (cid:11)200(cid:26) (cid:113) 200(cid:28)(cid:12)(cid:30) (cid:44)ntelsat (cid:42)eneral
Corp(cid:17)(cid:15) (cid:51)resident and Chairman of the (cid:37)oard
(cid:11)2002 (cid:113) 2006(cid:12)(cid:17)
11. JASON SMITH
C(cid:43)(cid:44)(cid:40)F O(cid:51)(cid:40)(cid:53)(cid:36)(cid:55)(cid:44)O(cid:49)(cid:54) OFF(cid:44)C(cid:40)(cid:53)
Tenure
2 years
Responsibilities
(cid:45)ason is responsi(cid:69)le for (cid:44)nmarsat’s (cid:74)lo(cid:69)al operations
and service delivery(cid:15) incl(cid:88)din(cid:74) the satellite fleet and
(cid:74)ro(cid:88)nd networ(cid:78)(cid:15) (cid:69)(cid:88)siness and (cid:44)(cid:55) systems(cid:15) (cid:69)(cid:88)siness
transformation pro(cid:74)rammes(cid:15) (cid:74)lo(cid:69)al service delivery
and distri(cid:69)(cid:88)tion(cid:15) ass(cid:88)rin(cid:74) the (cid:84)(cid:88)ality of service
and c(cid:88)stomer e(cid:91)perience e(cid:91)cellence(cid:17)
Previous roles include
(cid:53)olls(cid:16)(cid:53)oyce(cid:29) (cid:51)resident (cid:49)(cid:88)clear(cid:18)COO (cid:49)(cid:88)clear(cid:18)
(cid:51)resident (cid:54)(cid:88)(cid:69)marines (cid:11)200(cid:28) (cid:113) 201(cid:24)(cid:12)(cid:30) (cid:36)(cid:58)(cid:40)(cid:29)
(cid:39)ep(cid:88)ty (cid:48)ana(cid:74)in(cid:74) (cid:39)irector(cid:18)(cid:51)ro(cid:74)ramme and
(cid:37)(cid:88)siness (cid:48)ana(cid:74)ement (cid:39)irector (cid:11)2000 (cid:113) 200(cid:28)(cid:12)(cid:17)
Inmarsat plc | Annual Report and Accounts 2018
Governance | Leadership
67
Leadership
Overall summary statement
on governance
The Company is committed to the highest
standards of governance. The Directors consider
that the Company has, throughout the year,
complied with the provisions of the 2018 UK
Corporate Governance Code save as noted below.
During 2018, Andrew Sukawaty was Chairman.
He did not meet the independence criteria
on appointment as he had previously been
an Executive Director. Although the Code
recommends that the Chairman is independent
on appointment, the Board unanimously
believes that his wide experience means that
he remains extremely well qualified to lead the
Company as its Chairman and has the skills and
experience to ensure that the Board continues
to function effectively. Andrew Sukawaty has
also been in post beyond the advisory nine years
due to the time served as executive Chairman.
With the recent FRC guidelines regarding the
recommendation that Chairs should retire after
nine years, during 2019, the Board and the
Nominations Committee will start the process
to seek a new Chair. To support succession
planning the Board supports his continued
service as Chairman. Our Senior Independent
Director, Dr Abe Peled, was appointed to this
position in November 2015 and plays a key role
within the Company on any matters which may
be raised of a governance nature. Last year,
we advised shareholders that Sir Bryan, due to
his tenure is no longer considered independent,
however the Board recommends him too for
re-election. Sir Bryan remains valuable to
support the Company’s strategic objectives.
The Board recognises the recommended
term within the Code and will transition the
longer-serving Directors. We added a new
Director to the Board in 2019 which means
that out of the now 10 Non-Executive Directors
(excluding the Chairman), only one is classed as
non-independent by the Board. A copy of the
UK Corporate Governance Code can be found at
frc.co.uk.
How the Board operates
To ensure effective governance, the Board has
structured its governance framework as set
out below.
The Board has established Committees to
assist it in exercising its authority. The permanent
Committees of the Board are the Audit,
Remuneration, Nominations and Telecoms
Board committees
CHAIRMAN: ANDREW SUKAWATY
Key objectives:
› Leadership, operation and governance of the Board
› Setting the agenda for the Board
INMARSAT PLC BOARD
13 Directors: two Executive Directors, the Chairman, one Non-Independent
Non-Executive Director and nine Independent Non-Executive Directors
Key objectives:
› Responsible for the overall conduct of the business; setting strategy and a positive culture
AUDIT
COMMITTEE
Chairman:
Robert Ruijter
Key objectives:
› Oversight and
review of financial
and operational
risk management,
audit and internal
control issues
REMUNERATION
COMMITTEE
NOMINATIONS
COMMITTEE
TELECOMS REGULATORY
COMMITTEE
CHIEF
EXECUTIVE
Chairman:
Simon Bax
Chairman:
Dr Abe Peled
Key objectives:
› Oversight and review
of remuneration,
bonus and share
plan issues
Key objectives:
› Oversight and review
of Board and senior
management
appointments and
succession planning
Chairman:
Andrew Sukawaty
Key objectives:
› Oversight of
key regulatory
challenges
CEO:
Rupert Pearce
Key objectives:
› Management of
the overall business
› Implementation of
strategy and policy
EXECUTIVE MANAGEMENT TEAM
Chairman: Rupert Pearce
Key objectives:
› To focus on strategy, financial performance, culture, succession planning,
business growth, organisational development and adherence to Group-wide policies
GovernanceFinancial StatementsStrategic Report 68
Governance | Leadership
Inmarsat plc | Annual Report and Accounts 2018
Leadership
continued
Regulatory Committees. Each Committee has
Terms of Reference under which authority is
delegated by the Board. Copies can be found
on our website at inmarsat.com. Reports of the
Committees can be found on pages 72 to 101.
Role of the Board
Our Board is responsible for the overall conduct
of the Inmarsat Group’s (the ‘Group’) business. It is
the primary decision-making body for all material
matters affecting the Group. It provides leadership
and guidance and sets our strategic direction.
Our Board is ultimately accountable to the
shareholders for:
› being responsible for the long-term
success of the Company, having regard
for the interests of all stakeholders
› being responsible for ensuring the
effectiveness and reporting on our
system of governance and
› the performance and proper conduct
of the business and ensuring a positive
culture is supported
Responsibility for developing and implementing
strategy within the Group’s operations and for
day-to-day management of the business is
delegated to the Chief Executive Officer who,
as the head of the Executive Management Team,
cascades this responsibility through the Group.
The CEO is empowered by the Board to handle
all business activities up to a designated level
of authorisation and to report to the Board
for guidance, support and approval on other
matters which require Board input. A list of the
members of the Executive Management Team
is provided on pages 65 and 66.
A formal schedule of matters specifically
reserved for decision or consideration by
the Board as a whole has been agreed by the
Directors. This schedule covers areas such as:
› the Group’s business strategy and
long-term plans
› major capital projects
› significant capital structure changes
› investments and
› acquisitions and divestments
The Board has an annual rolling plan of items for
discussion which is reviewed formally at Board
meetings and adapted regularly to ensure all
matters reserved for the Board, with other items as
appropriate, are discussed. There is an established
procedure for the review of the agenda between
the Chairman, Executive Directors and Company
Secretary in advance of each Board meeting.
At each Board meeting there is a detailed report
on current trading from the Chief Executive
and Chief Financial Officer and detailed papers
are provided on matters where the Board will
be required to make a decision or give approval.
Where appropriate, specific responsibilities are
delegated to Board Committees or to committees
convened for special purposes.
In 2018 we focused our attention on the
following key areas:
Strategy review and development:
› Attended a focused Group strategy day,
in addition to the regularly occuring
strategy discussions with members of the
Executive Management Team and other
senior executives, to consider key strategic
priorities and the market environment
› Discussed and approved the Group strategy
› Received regular strategy and business
development reports from the CEO and other
senior management at each Board meeting
› Reviewed strategic objectives and updates
on the operational performance for the
Group’s key business areas
› Received reports on technology and innovation
and related industry developments
› Reviewed Group risk and cyber security
as part of the discussion on strategy
› Received detailed competitive assessments
of traditional and disruptor technology
companies
› The appointment of a new Group General
Counsel with the overall responsibility of
Group Strategy
Ensuring appropriate financial
and operational management:
› Received and discussed reports from the CEO
on the performance of the Group’s operations
› Received and discussed regular reports
on the Group’s financial performance
› Approved financial announcements
for publication
› Discussed the annual budget and long range
business plan
› Reviewed and approved the changes to the
Company’s dividend policy, recommendations
and payments thereof
› Discussed the Group’s capital structure
and completed a new RCF facility
› Reviewed reports from the Company’s
corporate brokers following meetings with
shareholders and executive management
Implementing governance and ethics
and monitoring risk:
› Assessed the risks faced by the Group
and received updates on internal controls
› Reviewed regular reports on legal and compliance
matters from the Company Secretary
› Received reports from the Board
Committee Chairmen
› Received reports in the implementation
of GDPR
› Held individual Director meetings with
an external evaluator as part of the Board
evaluation process, the outcome of which was
discussed at the January 2019 Board meeting
› Reviewed the Directors’ Conflicts
of Interest procedures
› Discussed the additional focus on s172
reporting and other outputs from the revised
Governance Code and FRC reporting
Workplace reviews:
› Received an annual health and safety report
covering activity across the Group as well as
a report on emissions from the Company’s
largest sites
› Received regular updates from the CEO
about reorganisation and restructuring
activity taking place
› Received a detailed update regarding new
People policies being introduced in the Company
including improved training capabilities
for all employees, succession planning and
identification of high performing individuals
Special business:
› Received multiple presentations on the
aviation business with a specific focus on
In-Flight passenger Connectivity and
associated capex and opex costs
› Spent dedicated time to review the maritime
business to understand the performance
and competitive impacts
› Reviewed the Group’s capital funding structure
› Approved investment in the modernisation
of a multi-year programme to change the
billing and IT capabilities across the Group
Independent Non-Executive Directors
The diverse experience and backgrounds
of the Non-Executive Directors ensures that
they can provide a strong independent element
on the Board, debate and constructively
challenge management both in relation to
the development of strategy and review of the
Group’s operational and financial performance.
Inmarsat plc | Annual Report and Accounts 2018
Governance | Leadership
69
KEY ROLES AND RESPONSIBILITIES
The Chairman –
Andrew Sukawaty
The role of the Chairman is set out
in writing and agreed by the Board.
He is responsible for:
› effective leadership, operation
and governance of the Board
› ensuring the effectiveness
of the Board
› setting the agenda, style and
tone of Board discussions and
› ensuring Directors receive
accurate, timely and clear
information
The Chief Executive Officer –
Rupert Pearce
The role of the Chief Executive is set out
in writing and agreed by the Board. He is
responsible for:
› the development and
implementation of the business
strategy
› the day-to-day management
of Inmarsat’s operations and its
financial results
› recommending the strategic
objectives for the Inmarsat Group,
for debate, challenge and approval
by the Board
› ensuring we meet the milestones
for our key programmes with
a priority to target revenue growth
and deliver enhanced returns
to shareholders and
› chairing the Executive
Management Team
Mr Pearce is the Board sponsor for
environmental and social governance,
community investment, and other
corporate social responsibility matters,
as well as responsibility for Health
and Safety. These elements have
been included as part of his
annual objectives.
The Senior Independent Director –
Dr Abe Peled
The Senior Independent Director
is responsible for:
› acting as a sounding board
for the Chairman
› serving as an intermediary
for the other Directors
› reviewing the Chairman’s
performance with the
Non-Executive Directors
› being available as an alternative
channel to discuss issues or
concerns from our shareholders
where they have been unable
to resolve them through
existing channels for investor
communications and
› convening regular meetings
of the Non-Executive Directors
The Company Secretary –
Alison Horrocks
The Company Secretary acts as
Secretary to the Board and its
Committees and in doing so she:
› assists the Chairman in ensuring
that all Directors have full and
timely access to all relevant
information
› assists the Chairman by organising
induction and training programmes
› assists the Chairman with the
annual Board evaluation procedure
› is responsible for ensuring that
the correct Board procedures are
followed and advises the Board
on governance matters and
› administers the procedure under
which Directors can, where
appropriate, obtain independent
professional advice at the
Company’s expense (no requests
for external professional advice
were received during the year)
To determine their independence, all
Non-Executive Directors are reviewed by
the Nominations Committee annually against
any circumstances relevant to their current
or ongoing independence as set out in
the Code and recommendations are made
to the Board for election or re-election.
Executive Management Team
The Chief Executive chairs the Executive
Management Team which meets on a monthly
basis for generally 1.5/2 days. As part of
its remit, this team focuses on the Group’s
strategy, financial reviews and long range
business planning, the competitive landscape,
strategic updates from all areas of the business,
risk reviews, culture, learning and development
and organisational development. It has regular
executive development days. The Executive
Management Team includes the Executive
Directors, the Business Unit Presidents and
the key functional heads. The names of the
Executive Management team are shown
on pages 65 and 66.
Governance and conduct
of Board meetings
Our Board meets as often as necessary to
effectively conduct its business. During 2018,
the Board met eight times, with one of
those meetings being held over two days in
Washington DC and another held over two days
in The Hague, Netherlands. The meetings in
local offices provide the Board with greater
insight into our local business operations, and
an opportunity for interaction with employees.
This helps the Board develop deeper insights
into the quality of our current senior management
and the potential for succession in the next
generation of managers.
Key management are invited to attend all
Board meetings to present on specific business
issues which will include an operations update
from each of the Business Units and central
services divisions, covering commercial,
technology and operational matters.
Unscheduled supplementary meetings also
take place as and when necessary, for example
the calling of Defence Committee meetings
regarding the conditional proposal from
EchoStar and the need of the Board generally
to be available to provide timely inputs and
decisions. At each regular Board meeting,
the Chief Executive Officer and Chief Financial
Officer provide reports to the Board. The Board
is regularly given exposure to the next layer
of management at the Executive Management
Team level and often to their direct reports.
This is helpful to the Board as it provides it
with additional insight into internal talent and
provides additional inputs when discussing for
GovernanceFinancial StatementsStrategic Report 70
Governance | Leadership
Inmarsat plc | Annual Report and Accounts 2018
Leadership
continued
management succession. Strategy sessions
are attended by several senior executives.
Elements of the business strategy and business
development are reviewed as appropriate
at each Board meeting throughout the year
ensuring that all Directors are kept up to date
with discussions and activities. All Committee
Chairmen report verbally on the proceedings
of their Committees at the next Board meeting.
Meeting proceedings and any unresolved
concerns expressed by any Director are
minuted by the Company Secretary.
In instances where a Director is unable to attend
Board or Committee meetings, any comments
which he or she may have arising out of the
papers to be considered at the meeting are
relayed in advance to the relevant Chairman
or the Company Secretary who would then
report to the Board or Committee thereon.
The Senior Independent Director will convene
meetings with the Non-Executive Directors
at least annually and on an ad-hoc basis as
required to discuss Board balance, monitor
the powers of individual Executive Directors
and raise any issues between themselves
as appropriate. During 2018, these meetings
were held more regularly and also discussed
the FRC reporting guidelines regarding Chair
succession. The Chairman will attend these
meetings but will not be in attendance where
there is discussion about his own performance
or succession.
Indemnification of Directors
Directors’ and Officers’ insurance cover has
been established for all Directors and Officers
to provide cover against their reasonable
actions on behalf of the Company. In accordance
with our Articles of Association and to the extent
permitted by the laws of England and Wales,
Directors, the Company Secretary and certain
employees who serve as directors of subsidiaries
at the Group’s request have been granted
indemnities from the Company in respect of
liabilities incurred as a result of their office.
Neither our indemnity nor the insurance
provides cover in the event that a Director
is proven to have acted dishonestly or
fraudulently. No amount has been paid under
any of these indemnities during the year.
Conflicts of interest
The Company has in place procedures for
managing conflicts of interest and is aware
of any potential conflict through an annual
review of the other commitments of its Directors.
We are satisfied these commitments do not
conflict with their duties as Directors of
Inmarsat. During the year, where there were
agenda items being raised for discussion
which could have the perception of a conflict
of interest for the individual Director, these
were discussed at the relevant Board meeting
and agreed in each case there were no conflicts
of interest identified. The Company’s Articles
of Association contain provisions to allow
the Directors to authorise potential conflicts
of interest so that a Director is not in breach
of his/her duty under company law. As noted
above and as happens in practice, should a
Director become aware that they have an
interest, directly or indirectly, in an existing
or proposed transaction with the Company,
they are required to notify this to the Company
Secretary. Directors have a continuing duty
to notify any changes to their conflicts of
interest and to their external Board commitments
to the Company Secretary and any changes
are noted in the conflicts register.
Board meeting attendance
The attendance of the Directors at the Board
meetings held in 2018 is shown in the below
table. Attendance at Committee meetings is
shown in the relevant Committee reports.
Number of scheduled Board meetings
held and meeting attendance in 2018
Meetings
Percentage
attendance
Andrew Sukawaty (Chairman)
Rupert Pearce
Tony Bates
Simon Bax
Sir Bryan Carsberg
Warren Finegold
General C. Robert Kehler (Rtd)
Phillipa McCrostie
Dr Abe Peled
Janice Obuchowski
Robert Ruijter
Dr Hamadoun Touré1
8/8
8/8
8/8
8/8
8/8
8/8
8/8
8/8
8/8
8/8
8/8
6/8
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
75%
1 Dr Touré missed two Board meetings due to time taken to put
his candidature forward to become President of the country
of Mali. The Chairman gave him permission to miss the
meetings and briefed him regarding the meetings he
had not been able to participate in
Risk management process
An overview of the Group’s framework for
identifying and managing risk, both at an
operational and strategic level, is set out on
pages 52 to 58 in the Strategic Report. The
Board has responsibility for managing risk and
although the Audit Committee has responsibility
for the risk management process the Board
does not delegate overall responsibility for risk
to either the Audit Committee or management.
There has been additional work undertaken
in 2018 on risk processes and assessment and
updates were noted in the changing content
and improved presentations presented
to the Audit Committee and Board.
The Board has annual updates on the
Company’s policies for compliance with the
UK Bribery Act and the U.S. Foreign Corrupt
Practices Act (‘FCPA’) requirements and
health and safety. As part of our commitment
to preventing bribery and establishing a culture
that does not tolerate corruption wherever
and in whatever form it may be encountered, we
have a formal Board-approved anti-corruption
policy and a summary of the anti-bribery policy
is included on our website. We have appropriate
procedures in place to ensure compliance with
current legislation. An independently managed,
confidential whistleblowing helpline (email and
telephone) is available for employees to use.
There was no use of it during 2018. Additionally,
the Board was updated on the Company’s
compliance with the recent legislation
concerning a Corporate Criminal Offence
relating to failure to prevent tax evasion.
The Company recognises the importance of
electronic information, systems and network
security (cyber security) and this is included
as a separate agenda item at least twice a year
and also incorporated in strategy discussions
and other key projects. We are increasingly
required to be compliant with, or align to,
various legal, contractual and regulatory
standards and codes of practice relative to
information security governance and the
preservation of the confidentiality, integrity
and availability of customer or internal
data and services. This is part of a broader
programme supported by a dedicated cyber
security team whose primary role is to safeguard
the Company to meet its legal and regulatory
obligations, maintain business continuity
and limit damage to business interests by
preventing and reducing the occurrence of
security incidents and their impact upon
business operations. In recognition of this
importance, in 2018 we were accredited with
the ISO 27001 certification which requires us
to have an information management security
procedure in place. We also increased our
investments on cyber security during 2018
in terms of resources and on tools.
There has been focus within the Company
during 2018 on the work required to ensure
compliance with the new General Data
Protection Regulation (‘GDPR’) which came
into effect in May 2018. We had tested
procedures in place by the due date.
Inmarsat plc | Annual Report and Accounts 2018
Governance | Leadership
71
Internal controls
The Board acknowledges its responsibility
for establishing and maintaining the Group’s
system of internal controls and it receives
regular reports from management identifying,
evaluating and managing the risks within the
business. The system of internal controls is
designed to manage, rather than eliminate,
the risk of failure to achieve business
objectives and can provide only reasonable
and not absolute assurance against material
misstatement or loss. The Audit Committee
reviews the system of internal controls through
reports received from management, along
with those from both internal and external
auditors. Management continues to focus
on how internal control and risk management
can be further embedded into the operations
of the business and to deal with areas of
improvement which come to management’s
and the Board’s attention.
There is an agreed process for determining
what information is required to be included in
the public disclosure of financial and related
information and other procedures necessary
to enable the Chief Executive Officer and
the Chief Financial Officer to provide their
certifications in relation to publicly disclosed
information. This review is undertaken by the
Chief Financial Officer, Company Secretary,
IR Director and senior finance staff.
The Board and the Audit Committee have
carried out a review of the effectiveness of
the system of internal controls during the year
ended 31 December 2018 and for the period
up to the date of approval of the consolidated
financial statements contained in the Annual
Report. The review covered all material controls,
including financial, operational and compliance
controls and risk management systems.
The Board confirms that the actions it considers
necessary have been, or are being taken to
remedy any significant failings or weaknesses
identified from its review of the system of
internal control. This has involved considering
the matters reported to it and developing
plans and programmes that it considers are
reasonable in the circumstances. The Board also
confirms that it has not been advised of material
weaknesses in the part of the internal control
system that relates to financial reporting.
The key elements of the Group’s system
of internal controls, which have been in place
throughout the year under review and up to
the date of this Report, include:
› Risk management: an overarching risk
management policy is in place which sets out
the tolerance for risk within the Group and
how this is measured across identified macro
and business risks. As required by the policy,
management operates a risk management
process to identify, evaluate and report
significant risks within the business and to
report to the Board on how those risks are
being managed and mitigated. Risks are
highlighted through a number of different
reviews and culminate in a risk register,
monitored by Risk Committees across the
Group, which identify the risk area, the
probability of the risk occurring, the impact
if it does occur and the actions being taken
to manage the risk to the desired level.
All the risk registers are reviewed by senior
management and provided quarterly to the
Board and to the Audit Committee. Details
of the risk process and key risks are shown
on pages 52 to 58 in the Strategic Report.
› Management structure: there is a clearly
defined organisational structure throughout
the Group with established lines of reporting
and delegation of authority based on
job responsibilities and experience. The
delegation policy is regularly updated where
there are changes in business operations.
Within the business, senior management
meetings occur regularly to allow prompt
discussion of relevant business issues.
A process of self-certification is used where
Directors and senior managers are required
to detail and certify controls in operation
to mitigate risk in key process areas. The
Presidents of the Business Units, and now
the Executive Management Team members
responsible for their functional areas, also
confirm every quarter that they are not aware
of any breach of key policies including our
sensitive information policy (which relates
to protection of partner data) and any
anti-bribery activities.
› Financial reporting: monthly management
accounts provide relevant, reliable and
up-to-date financial and non-financial
information to management and the Board.
Analysis is undertaken of differences between
actual results and the annual budget on
a monthly basis. Annual plans, forecasts,
performance targets and long-range business
plans allow management to monitor the key
business and financial activities, and the
progress towards achieving the financial
objectives. The annual budget is approved by
the Board, as is the long-range business plan.
The Group reports half-yearly based on
a standardised reporting process, and in
addition, also reports on a quarterly basis.
› Information systems: information systems
are developed to support the Group’s
long-term objectives and are managed by
professionally staffed teams. Appropriate
policies and procedures are in place
covering all significant areas of the business.
› Contractual commitments: there are
clearly defined policies and procedures
for entering into contractual commitments.
These include detailed requirements that
must be completed prior to submitting
proposals and/or tenders for work, both in
respect of the commercial, control and risk
management aspects of the obligations
being entered into. Business plan approval
and procurement process procedures
also strengthen the review of contractual
commitments before any such commitment
is agreed to.
› Monitoring of controls: the Audit Committee
receives regular reports from the internal
and external auditors and assures itself
that the internal control environment of
the Group is operating effectively. There
are formal policies and procedures in place
to ensure the integrity and accuracy of the
accounting records and to safeguard the
Group’s assets. Significant capital projects
and acquisitions and disposals require Board
approval. There are formal procedures by
which staff can, in confidence, raise concerns
about possible improprieties in financial
and pensions administration and other
matters – often referred to as ‘whistleblowing’
procedures. There is a worldwide anonymous
whistleblowing programme in place and
monthly reports are issued by the external
provider to the Company Secretary and
Head of Internal Audit. No issues were
reported in the year. Where there are any
reports made, arrangements are in place for
proportionate and independent investigation
and appropriate follow-up action with
the results being reported to the Audit
Committee. The annual anti-bribery and
corruption training also highlights the ways
in which an employee can raise an issue in
a confidential way.
Directors’ remuneration
Details of the Company’s remuneration
policy and Directors’ remuneration are
contained in the Directors’ Remuneration
Report on pages 81 to 101.
GovernanceFinancial StatementsStrategic Report 72
(cid:42)overnance (cid:95) (cid:53)eport of the (cid:49)ominations Committee
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
Effectiveness
(cid:53)eport of the (cid:49)ominations Committee
MEMBERS IN 2018
Dr Abe Peled (Chairman)
Andrew Sukawaty
Dr Hamadoun Touré
General C R Kehler (Rtd)1
(cid:54)ched(cid:88)led
meetings
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2(cid:18)2
2(cid:18)2
1(cid:18)1
1 (cid:42)eneral (cid:46)ehler (cid:77)oined the committee
effective (cid:49)ovem(cid:69)er 2018
DR ABE PELED
CHAIRMAN,
NOMINATIONS COMMITTEE
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plannin(cid:74)(cid:15) leadin(cid:74) to
the appointment of an
additional (cid:49)on(cid:16)(cid:40)(cid:91)ec(cid:88)tive
(cid:39)irector in Fe(cid:69)r(cid:88)ary 201(cid:28)
(cid:44)ndependent (cid:49)on(cid:16)(cid:40)(cid:91)ec(cid:88)tive (cid:39)irectors ma(cid:78)e
(cid:88)p a ma(cid:77)ority of mem(cid:69)ers of the Committee(cid:17)
(cid:55)he (cid:49)ominations Committee meets as and
when necessary(cid:15) (cid:74)enerally formally twice
a year(cid:17) (cid:39)r (cid:36)(cid:69)e (cid:51)eled has (cid:69)een Chairman
since (cid:49)ovem(cid:69)er 201(cid:24)(cid:17) Other mem(cid:69)ers of the
Committee are (cid:36)ndrew (cid:54)(cid:88)(cid:78)awaty(cid:15) (cid:39)r (cid:43)amado(cid:88)n
(cid:55)o(cid:88)r(cid:184) and more recently (cid:42)eneral (cid:46)ehler who
(cid:77)oined the Committee in (cid:49)ovem(cid:69)er 2018(cid:17)
(cid:55)he Committee has responsi(cid:69)ility for
nominatin(cid:74) candidates for appointment
as (cid:39)irectors to the (cid:37)oard(cid:15) (cid:69)earin(cid:74) in mind
the need for diversity (cid:11)incl(cid:88)din(cid:74) (cid:74)ender(cid:15)
nationality and e(cid:91)perience(cid:12) and ens(cid:88)rin(cid:74)
a (cid:69)road representation of s(cid:78)ills across the
(cid:37)oard(cid:17) (cid:44)n doin(cid:74) this(cid:15) the Committee (cid:74)ives
f(cid:88)ll consideration to s(cid:88)ccession plannin(cid:74)
and the leadership needs of the Company(cid:17)
(cid:55)he Committee also ma(cid:78)es recommendations
to the (cid:37)oard on the composition of the
(cid:37)oard’s Committees and will review and ma(cid:78)e
recommendations in relation to the str(cid:88)ct(cid:88)re(cid:15)
si(cid:93)e and composition of the (cid:37)oard incl(cid:88)din(cid:74)
the diversity and (cid:69)alance of s(cid:78)ills(cid:15) (cid:78)nowled(cid:74)e
and e(cid:91)perience(cid:15) and the independence of
the (cid:49)on(cid:16)(cid:40)(cid:91)ec(cid:88)tive (cid:39)irectors(cid:15) incl(cid:88)din(cid:74)
the ten(cid:88)re of each (cid:39)irector(cid:17)
(cid:48)ore recently with the recommendations from
the (cid:56)(cid:46) Financial (cid:53)eportin(cid:74) Co(cid:88)ncil re(cid:74)ardin(cid:74)
ten(cid:88)re for Chairs of (cid:56)(cid:46) listed p(cid:88)(cid:69)lic companies(cid:15)
the (cid:37)oard and the Committee will d(cid:88)rin(cid:74)
201(cid:28) start the process to see(cid:78) a new Chair(cid:17)
(cid:48)r (cid:54)(cid:88)(cid:78)awaty(cid:15) the Company’s c(cid:88)rrent Chairman(cid:15)
will not (cid:69)e involved in any decision re(cid:74)ardin(cid:74)
the individ(cid:88)al appointment of a new Chair(cid:15)
(cid:69)(cid:88)t will (cid:69)e as(cid:78)ed to provide his inp(cid:88)ts into the
s(cid:78)ills and capa(cid:69)ilities he (cid:69)elieves relevant to
ens(cid:88)rin(cid:74) a s(cid:88)ccessf(cid:88)l appointment is made(cid:17)
(cid:36)s the timin(cid:74) mat(cid:88)res for anno(cid:88)ncin(cid:74) any
dates for a new appointment(cid:15) we will advise
shareholders(cid:17) (cid:55)he (cid:49)ominations Committee
will also ma(cid:78)e recommendations to the (cid:37)oard
concernin(cid:74) the ann(cid:88)al reappointment (cid:69)y
shareholders of any (cid:49)on(cid:16)(cid:40)(cid:91)ec(cid:88)tive (cid:39)irector
and separately assessin(cid:74) each year whether
(cid:39)irectors contin(cid:88)e to (cid:69)e independent(cid:17) (cid:55)he
Committee also has responsi(cid:69)ility for approvin(cid:74)
any chan(cid:74)es to (cid:40)(cid:91)ec(cid:88)tive (cid:39)irectors and also
senior mana(cid:74)ement appointments(cid:17)
(cid:36)ll c(cid:88)rrently appointed (cid:39)irectors will retire at
the 201(cid:28) (cid:36)(cid:42)(cid:48) and offer themselves for election
or re(cid:16)election as appropriate(cid:17) (cid:48)rs Clar(cid:78)e(cid:15) o(cid:88)r
new (cid:39)irector(cid:15) will (cid:69)e elected at the 201(cid:28) (cid:36)(cid:42)(cid:48)(cid:17)
(cid:36)s noted earlier in the (cid:42)overnance (cid:53)eport(cid:15)
the Committee contin(cid:88)es to (cid:69)elieve that
(cid:54)ir (cid:37)ryan remains an effective and contri(cid:69)(cid:88)tin(cid:74)
(cid:37)oard mem(cid:69)er and are recommendin(cid:74) to
shareholders therefore(cid:15) that he (cid:69)e re(cid:16)elected
as a non(cid:16)independent(cid:15) (cid:49)on(cid:16)(cid:40)(cid:91)ec(cid:88)tive (cid:39)irector(cid:17)
(cid:55)he Committee will review the contin(cid:88)ed
appointment of (cid:39)irectors to the (cid:37)oard on
an ann(cid:88)al (cid:69)asis(cid:17)
Composition
O(cid:88)r (cid:37)oard comprises (cid:39)irectors drawn from a
wide ran(cid:74)e of professional (cid:69)ac(cid:78)(cid:74)ro(cid:88)nds(cid:17) (cid:36)ll o(cid:88)r
(cid:39)irectors (cid:69)rin(cid:74) stron(cid:74) (cid:77)(cid:88)d(cid:74)ement to the (cid:37)oard’s
deli(cid:69)erations and we (cid:69)elieve o(cid:88)r new (cid:39)irector(cid:15)
(cid:55)racy Clar(cid:78)e(cid:15) will also contri(cid:69)(cid:88)te in this way(cid:17)
Over the years(cid:15) we have added new (cid:39)irectors to
the (cid:37)oard ahead of lon(cid:74)er servin(cid:74) ones retirin(cid:74)(cid:17)
(cid:51)rior to (cid:55)racy’s appointment(cid:15) the previo(cid:88)s
appointments were in 2016 and 201(cid:26)(cid:17)
(cid:36)s at (cid:48)arch 201(cid:28)(cid:15) the composition
of the (cid:37)oard is two (cid:40)(cid:91)ec(cid:88)tive (cid:39)irectors(cid:15) 10
(cid:49)on(cid:16)(cid:40)(cid:91)ec(cid:88)tive (cid:39)irectors and a (cid:49)on(cid:16)(cid:40)(cid:91)ec(cid:88)tive
Chairman(cid:17) (cid:58)ith the e(cid:91)ception of (cid:55)racy Clar(cid:78)e(cid:15)
all c(cid:88)rrent (cid:39)irectors served thro(cid:88)(cid:74)ho(cid:88)t the year(cid:17)
(cid:55)he names of the (cid:39)irectors on o(cid:88)r (cid:37)oard(cid:15)
their relevant s(cid:78)ills and e(cid:91)perience are set o(cid:88)t
in their (cid:69)io(cid:74)raphical details and can (cid:69)e
fo(cid:88)nd on pa(cid:74)es 62 to 6(cid:23)(cid:17)
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
(cid:42)overnance (cid:95) (cid:53)eport of the (cid:49)ominations Committee
73
(cid:55)he composition of the (cid:37)oard and its vario(cid:88)s
Committees is re(cid:74)(cid:88)larly reviewed and eval(cid:88)ated
so as to reflect the (cid:69)alance of s(cid:78)ills(cid:15) (cid:78)nowled(cid:74)e(cid:15)
diversity (cid:11)of which (cid:74)ender is one component(cid:12)(cid:15)
e(cid:91)perience and the a(cid:69)ility of (cid:39)irectors to
provide s(cid:88)fficient time to f(cid:88)lfil their (cid:37)oard
responsi(cid:69)ilities(cid:17) (cid:39)(cid:88)rin(cid:74) 2018(cid:15) an additional
mem(cid:69)er was made to (cid:69)oth the (cid:49)ominations
and (cid:53)em(cid:88)neration Committees(cid:17)
(cid:51)rivate (cid:37)an(cid:78)(cid:17) (cid:43)er previo(cid:88)s senior roles
at (cid:54)tandard Chartered (cid:37)an(cid:78) incl(cid:88)de (cid:42)ro(cid:88)p
(cid:43)ead Corporate (cid:36)ffairs(cid:15) (cid:42)ro(cid:88)p (cid:43)ead (cid:43)(cid:88)man
(cid:53)eso(cid:88)rces(cid:15) and (cid:39)irector(cid:15) (cid:47)e(cid:74)al and Compliance(cid:17)
(cid:54)he is an e(cid:91)perienced director on vario(cid:88)s
listed company (cid:69)oards(cid:17) (cid:36)side her si(cid:74)nificant
e(cid:91)perience she also (cid:69)rin(cid:74)s (cid:74)lo(cid:69)al mana(cid:74)ement
e(cid:91)perience as well as wor(cid:78)in(cid:74) in emer(cid:74)in(cid:74)
mar(cid:78)ets(cid:17)
Succession planning
(cid:36)ppointments to the (cid:37)oard are made on merit(cid:15)
a(cid:74)ainst o(cid:69)(cid:77)ective criteria and with d(cid:88)e re(cid:74)ard
to the (cid:69)enefits of diversity on the (cid:37)oard(cid:17) (cid:55)his
process is led (cid:69)y the Chairman of the Committee(cid:15)
with s(cid:88)pport of additional (cid:39)irectors who form
part of the interview and assessment process(cid:15)
which also incl(cid:88)des several mem(cid:69)ers of the
(cid:40)(cid:91)ec(cid:88)tive (cid:48)ana(cid:74)ement (cid:55)eam as part of the
interview process(cid:17) (cid:36)fter eval(cid:88)atin(cid:74) the (cid:69)alance
of s(cid:78)ills(cid:15) (cid:78)nowled(cid:74)e and e(cid:91)perience of each
(cid:39)irector(cid:15) and in addition considerin(cid:74) the
diversity to the (cid:37)oard that a potential (cid:39)irector
will contri(cid:69)(cid:88)te(cid:15) the (cid:49)ominations Committee
Chairman will ma(cid:78)e a recommendation to
the (cid:37)oard(cid:17) (cid:36)n e(cid:91)ternal cons(cid:88)ltancy search
will (cid:69)e (cid:88)sed to identify potential candidates
for a Chair role when the (cid:37)oard has a(cid:74)reed
the (cid:84)(cid:88)alities and e(cid:91)perience re(cid:84)(cid:88)ired for
a new person(cid:17) (cid:55)his process will commence
d(cid:88)rin(cid:74) 201(cid:28)(cid:17)
(cid:44)n appointin(cid:74) (cid:49)on(cid:16)(cid:40)(cid:91)ec(cid:88)tive (cid:39)irectors(cid:15)
the (cid:37)oard’s practice is to (cid:88)se a com(cid:69)ination
of e(cid:91)ternal cons(cid:88)ltants and personal referrals(cid:17)
(cid:55)he appointment of (cid:55)racy Clar(cid:78)e was thro(cid:88)(cid:74)h
a personal referral(cid:17) (cid:58)here there has (cid:69)een
a personal referral(cid:15) we will (cid:74)enerally invite
more participants than (cid:88)s(cid:88)al to (cid:69)e part
of the interview and assessment process(cid:17)
(cid:44)n (cid:55)racy’s process(cid:15) she met the Chairman of
the (cid:49)ominations Committee(cid:15) one (cid:49)(cid:40)(cid:39)(cid:15) (cid:69)oth
(cid:40)(cid:91)ec(cid:88)tive (cid:39)irectors(cid:15) the Chief (cid:51)eople Officer
and Chief Corporate (cid:36)ffairs Officer who is
also the Company (cid:54)ecretary(cid:17) (cid:54)he also met
the (cid:37)oard Chairman a(cid:74)ain(cid:17)
(cid:44)n considerin(cid:74) the s(cid:78)ills re(cid:84)(cid:88)ired for the new
(cid:49)on(cid:16)(cid:40)(cid:91)ec(cid:88)tive (cid:39)irector(cid:15) there was foc(cid:88)s on
see(cid:78)in(cid:74) an individ(cid:88)al who had (cid:69)road corporate(cid:15)
p(cid:88)(cid:69)lic company e(cid:91)perience with recent
e(cid:91)perience too of sittin(cid:74) and ideally chairin(cid:74)
a (cid:53)em(cid:88)neration Committee to (cid:88)nderstand
the increasin(cid:74) demands made in rem(cid:88)neration
plannin(cid:74)(cid:17) (cid:55)racy has over 30 years’ e(cid:91)perience
in a ran(cid:74)e of international roles at (cid:54)tandard
Chartered (cid:37)an(cid:78) (cid:51)(cid:47)C(cid:15) and is c(cid:88)rrently (cid:53)e(cid:74)ional
C(cid:40)O(cid:15) (cid:40)(cid:88)rope and (cid:36)mericas and C(cid:40)O(cid:15)
(cid:55)he Committee(cid:15) when reviewin(cid:74) s(cid:88)ccession
plannin(cid:74)(cid:15) considers diversity in its (cid:69)roadest
sense and ta(cid:78)es this into acco(cid:88)nt in its
recommendations to the (cid:37)oard(cid:17) (cid:44)t ta(cid:78)es into
acco(cid:88)nt the challen(cid:74)es and opport(cid:88)nities
facin(cid:74) the Company(cid:17) (cid:44)n determinin(cid:74) s(cid:88)ccession
plannin(cid:74)(cid:15) diversity(cid:15) incl(cid:88)din(cid:74) (cid:74)ender(cid:15) and
what c(cid:88)lt(cid:88)ral e(cid:91)perience(cid:15) s(cid:78)ills and e(cid:91)pertise
are needed on the (cid:37)oard and from senior
mana(cid:74)ement in the f(cid:88)t(cid:88)re are considered(cid:17)
(cid:42)ender is one element of the considerations
made in appointin(cid:74) senior mana(cid:74)ement
and (cid:37)oard mem(cid:69)ers and as part of (cid:74)eneral
recr(cid:88)itment practices across the (cid:42)ro(cid:88)p(cid:17)
(cid:55)he Committee has iss(cid:88)ed an (cid:88)pdated
(cid:39)iversity (cid:51)olicy which hi(cid:74)hli(cid:74)hts its s(cid:88)pport for
diversity in its (cid:69)roadest sense(cid:15) and an o(cid:69)(cid:77)ective
of achievin(cid:74) 33(cid:8) of senior mana(cid:74)ement roles
held (cid:69)y females (cid:69)y 2020(cid:17) (cid:55)he Committee
(cid:74)ives f(cid:88)ll consideration to s(cid:88)ccession plannin(cid:74)
in the co(cid:88)rse of its wor(cid:78) and receives (cid:88)pdated
mana(cid:74)ement s(cid:88)ccession plans which loo(cid:78)
at s(cid:88)ccession plannin(cid:74) for the (cid:40)(cid:91)ec(cid:88)tive
(cid:48)ana(cid:74)ement (cid:55)eam and identifies the ne(cid:91)t layer
of mana(cid:74)ement (cid:69)elow them who are identified
as those with potential for promotion to senior
mana(cid:74)ement positions(cid:17) (cid:36) detailed disc(cid:88)ssion
of (cid:40)(cid:91)ec(cid:88)tive s(cid:88)ccession plannin(cid:74)(cid:15) incl(cid:88)din(cid:74)
identification of hi(cid:74)h potential employees was
held at the (cid:45)(cid:88)ne 2018 (cid:37)oard meetin(cid:74)(cid:17) (cid:36)s this is
a critical disc(cid:88)ssion(cid:15) not only for disc(cid:88)ssion (cid:69)y
this Committee(cid:15) this presentation incl(cid:88)ded the
f(cid:88)ll (cid:37)oard(cid:17) (cid:55)here will (cid:69)e f(cid:88)t(cid:88)re ann(cid:88)al (cid:88)pdates
to the (cid:37)oard on this (cid:78)ey iss(cid:88)e(cid:15) with additional
s(cid:88)mmaries as needed(cid:17)
Induction and ongoing
professional development
(cid:55)o ens(cid:88)re that each (cid:39)irector receives
appropriate s(cid:88)pport on (cid:77)oinin(cid:74) the (cid:37)oard(cid:15)
they are (cid:74)iven a comprehensive(cid:15) formal and
tailored ind(cid:88)ction pro(cid:74)ramme or(cid:74)anised
thro(cid:88)(cid:74)h the Company (cid:54)ecretary(cid:15) incl(cid:88)din(cid:74)
the provision of (cid:69)ac(cid:78)(cid:74)ro(cid:88)nd material on
the Company and (cid:69)riefin(cid:74)s with each of the
(cid:40)(cid:91)ec(cid:88)tive (cid:48)ana(cid:74)ement (cid:55)eam mem(cid:69)ers(cid:17)
(cid:55)hese meetin(cid:74)s will ens(cid:88)re that the on(cid:16)(cid:69)oardin(cid:74)
process for a new (cid:39)irector provides a view of
each area of the (cid:69)(cid:88)siness with the opport(cid:88)nity
for f(cid:88)rther disc(cid:88)ssion as appropriate(cid:17) (cid:40)ach
(cid:39)irector’s individ(cid:88)al e(cid:91)perience and (cid:69)ac(cid:78)(cid:74)ro(cid:88)nd
is ta(cid:78)en into acco(cid:88)nt in developin(cid:74) a pro(cid:74)ramme
tailored to his or her own re(cid:84)(cid:88)irements(cid:17)
(cid:55)he ind(cid:88)ction pro(cid:74)ramme was reviewed and
(cid:88)pdated in 201(cid:26) for (cid:48)r Fine(cid:74)old and will (cid:69)e
refined for (cid:48)rs Clar(cid:78)e(cid:17) (cid:55)he ind(cid:88)ction process
will r(cid:88)n over a n(cid:88)m(cid:69)er of days to allow
s(cid:88)fficient time for each meetin(cid:74)(cid:17)
For professional on(cid:74)oin(cid:74) development(cid:15)
the (cid:37)oard receives presentations relevant to
the Company’s (cid:69)(cid:88)siness and (cid:88)pdates on any
chan(cid:74)es in le(cid:74)islation which may affect the
Company’s operations(cid:17) (cid:55)he Company (cid:54)ecretary
s(cid:88)pplies all (cid:39)irectors with information on
relevant le(cid:74)al and (cid:69)est practice(cid:17) (cid:39)irectors are
(cid:74)iven the opport(cid:88)nity to as(cid:78) for any separate
trainin(cid:74) and development needs and also ta(cid:78)e
steps to ens(cid:88)re they are ade(cid:84)(cid:88)ately informed
a(cid:69)o(cid:88)t the Company and their responsi(cid:69)ilities
as a (cid:39)irector and attend e(cid:91)ternal (cid:69)riefin(cid:74)s
and receive information (cid:88)pdates(cid:17) (cid:55)he (cid:37)oard is
confident that its mem(cid:69)ers have the (cid:78)nowled(cid:74)e(cid:15)
a(cid:69)ility and e(cid:91)perience to perform the f(cid:88)nctions
re(cid:84)(cid:88)ired of a (cid:39)irector of a listed company(cid:17)
Board evaluation
(cid:44)n 2018(cid:15) the Company (cid:88)ndertoo(cid:78) an e(cid:91)ternal
eval(cid:88)ation(cid:15) facilitated (cid:69)y (cid:39)(cid:88)ncan (cid:53)eed of
Condi(cid:74)n (cid:37)oard Cons(cid:88)ltin(cid:74)(cid:17) (cid:55)his was the third
time (cid:48)r (cid:53)eed had (cid:88)nderta(cid:78)en the e(cid:91)ternal
eval(cid:88)ation as it was felt helpf(cid:88)l to have someone
(cid:88)nderta(cid:78)e the review to (cid:69)(cid:88)ild on the previo(cid:88)s
eval(cid:88)ations(cid:17) (cid:49)either (cid:48)r (cid:53)eed nor Condi(cid:74)n
(cid:37)oard Cons(cid:88)ltin(cid:74) have any other commercial
relationships with (cid:44)nmarsat(cid:17) (cid:55)he 201(cid:26) (cid:37)oard
eval(cid:88)ation was (cid:88)nderta(cid:78)en (cid:69)y the Company
(cid:54)ecretary on (cid:69)ehalf of the Chairman which too(cid:78)
the form of a (cid:84)(cid:88)estionnaire to all (cid:39)irectors and
a meetin(cid:74) (cid:69)etween the Company (cid:54)ecretary
and each of the (cid:39)irectors(cid:17)
For the 2018 review(cid:15) all participants were
sent a disc(cid:88)ssion (cid:74)(cid:88)ide (cid:69)y (cid:48)r (cid:53)eed in advance
of individ(cid:88)al meetin(cid:74)s(cid:17) Formal (cid:67)peer(cid:16)to(cid:16)peer’
(cid:39)irector eval(cid:88)ation was also incl(cid:88)ded in this
process(cid:17) (cid:58)ith the ver(cid:69)al(cid:15) anonymised feed(cid:69)ac(cid:78)
(cid:74)athered as part of the process(cid:15) the Chairman
will (cid:69)e reviewin(cid:74) the performance of the
(cid:39)irectors at the appropriate time(cid:15) as will the
(cid:54)enior (cid:44)ndependent (cid:39)irector (cid:11)(cid:67)(cid:54)(cid:44)(cid:39)’(cid:12) in relation
to the Chairman(cid:17)
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74
(cid:42)overnance (cid:95) (cid:53)eport of the (cid:49)ominations Committee
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
Report of the Nominations Committee
contin(cid:88)ed
(cid:55)he s(cid:88)mmary from the report was that
f(cid:88)ndamentally this remains (cid:113) as noted also
at the last formal e(cid:91)ternal eval(cid:88)ation in
201(cid:24) (cid:113) a f(cid:88)nctional(cid:15) and effective(cid:15) (cid:69)oard
of committed(cid:15) e(cid:91)perienced and perceptive
individ(cid:88)als(cid:17) (cid:44)t still is a relatively diverse (cid:74)ro(cid:88)p(cid:15)
in more than (cid:77)(cid:88)st its (cid:74)ender ma(cid:78)e(cid:16)(cid:88)p and is
a (cid:69)oard with an incl(cid:88)sive(cid:15) respectf(cid:88)l c(cid:88)lt(cid:88)re(cid:17)
(cid:44)nternally(cid:15) stri(cid:78)in(cid:74) and maintainin(cid:74) the ri(cid:74)ht
(cid:69)alance of challen(cid:74)e with s(cid:88)pport is one of
the most important tas(cid:78)s for any chairman
and also for his collea(cid:74)(cid:88)es which has (cid:69)een
(cid:69)alanced well ta(cid:78)in(cid:74) into acco(cid:88)nt some of the
si(cid:74)nificant corporate activities d(cid:88)rin(cid:74) 2018(cid:17)
(cid:55)he (cid:37)oard reported it has (cid:74)ood access to
and inp(cid:88)t from the (cid:69)(cid:88)siness (cid:88)nit and other (cid:78)ey
f(cid:88)nctional heads(cid:17) (cid:55)he (cid:37)oard a(cid:74)reed an action
that an added de(cid:74)ree of foc(cid:88)s on reviewin(cid:74)
pricin(cid:74) evol(cid:88)tion to s(cid:88)pport (cid:69)(cid:88)siness (cid:74)rowth
was important(cid:17) (cid:55)here will (cid:69)e wor(cid:78) which will (cid:69)e
(cid:88)nderta(cid:78)en to comply with the new re(cid:84)(cid:88)irements
on wor(cid:78)force en(cid:74)a(cid:74)ement(cid:15) with the decision
ta(cid:78)en already to have a formal (cid:74)ro(cid:88)p
providin(cid:74) inp(cid:88)ts to the (cid:37)oard and (cid:40)(cid:91)ec(cid:88)tive
(cid:48)ana(cid:74)ement (cid:55)eam(cid:17)
(cid:55)here was some interest to enco(cid:88)ra(cid:74)e e(cid:91)ternal
spea(cid:78)ers to (cid:69)rief the (cid:37)oard from time to time
on e(cid:91)ternal perspectives on ind(cid:88)stry and
competitive matters and this will (cid:69)e considered
for f(cid:88)t(cid:88)re meetin(cid:74)s(cid:17)
(cid:55)he (cid:37)oard sho(cid:88)ld loo(cid:78) to (cid:69)alance the time
it spends on the commercial ena(cid:69)lers of the
delivery of strate(cid:74)y(cid:15) alon(cid:74)side the foc(cid:88)s it
(cid:74)ives to technical or en(cid:74)ineerin(cid:74) matters(cid:15)
new pro(cid:77)ects or initiatives(cid:17) (cid:55)he (cid:37)oard contin(cid:88)es
to val(cid:88)e the early incl(cid:88)sion from e(cid:91)ec(cid:88)tive
mana(cid:74)ement on strate(cid:74)ic plannin(cid:74) (cid:69)efore
any decisions are presented for decision(cid:17)
(cid:55)he (cid:49)(cid:40)(cid:39) sessions will contin(cid:88)e(cid:15) with time
on some occasions for them to review the
Chairman’s performance witho(cid:88)t him (cid:69)ein(cid:74)
present(cid:17) (cid:55)hese sessions were also helpf(cid:88)l
to ens(cid:88)re all the (cid:49)(cid:40)(cid:39)s were (cid:69)riefed on the
sensitive disc(cid:88)ssions on rem(cid:88)neration
iss(cid:88)es in preparation for finalisin(cid:74) a new
(cid:53)em(cid:88)neration (cid:51)olicy(cid:17)
External directorships
(cid:55)he (cid:37)oard (cid:69)elieves(cid:15) in principle(cid:15) in the (cid:69)enefit
of (cid:40)(cid:91)ec(cid:88)tive (cid:39)irectors acceptin(cid:74) non(cid:16)e(cid:91)ec(cid:88)tive
directorships of other companies in order to
widen their s(cid:78)ills and (cid:78)nowled(cid:74)e for the (cid:69)enefit
of the Company(cid:17) (cid:36)ll s(cid:88)ch appointments re(cid:84)(cid:88)ire
the prior approval of the (cid:37)oard and the n(cid:88)m(cid:69)er
of p(cid:88)(cid:69)lic company appointments is (cid:74)enerally
limited to two(cid:17) (cid:55)he n(cid:88)m(cid:69)er of appointments
will (cid:69)e (cid:78)ept (cid:88)nder review in line with corporate
(cid:74)overnance re(cid:84)(cid:88)irements(cid:17) (cid:39)etails of e(cid:91)ternal
appointments for the C(cid:40)O can (cid:69)e fo(cid:88)nd in his
(cid:69)io(cid:74)raphy on pa(cid:74)e 62(cid:17) (cid:55)here were no fees
paid to the C(cid:40)O for these d(cid:88)ties(cid:17)
Appointment and reappointment
(cid:55)he (cid:39)irectors may appoint additional
mem(cid:69)ers to (cid:77)oin the (cid:37)oard d(cid:88)rin(cid:74) the year(cid:17)
(cid:39)irectors appointed in this way will(cid:15) (cid:88)pon the
recommendation of the (cid:37)oard(cid:15) offer themselves
for election (cid:69)y shareholders at the first
(cid:36)nn(cid:88)al (cid:42)eneral (cid:48)eetin(cid:74) (cid:11)(cid:67)(cid:36)(cid:42)(cid:48)’(cid:12) after their
appointment(cid:17) (cid:55)racy Clar(cid:78)e(cid:15) who was appointed
on 1 Fe(cid:69)r(cid:88)ary 201(cid:28) will fall into this cate(cid:74)ory(cid:17)
(cid:55)he reappointment of (cid:39)irectors is s(cid:88)(cid:69)(cid:77)ect to
their on(cid:74)oin(cid:74) commitment to (cid:37)oard activities
and satisfactory performance(cid:17) (cid:36)ll (cid:39)irectors will
stand for re(cid:16)election ann(cid:88)ally in accordance
with the provision of the Code(cid:17) (cid:55)he (cid:49)ominations
Committee confirmed to the (cid:37)oard that the
contri(cid:69)(cid:88)tions made (cid:69)y the (cid:39)irectors offerin(cid:74)
themselves for re(cid:16)election at the 201(cid:28) (cid:36)(cid:42)(cid:48)
contin(cid:88)e to (cid:69)enefit the (cid:37)oard and the Company
sho(cid:88)ld s(cid:88)pport their re(cid:16)election(cid:17) (cid:49)on(cid:16)(cid:40)(cid:91)ec(cid:88)tive
(cid:39)irectors are appointed initially for three years
and all (cid:49)on(cid:16)(cid:40)(cid:91)ec(cid:88)tive (cid:39)irectors may not(cid:15) (cid:88)nless
a(cid:74)reed (cid:69)y the (cid:37)oard(cid:15) remain in office for a period
lon(cid:74)er than si(cid:91) years(cid:15) or two terms in office(cid:15)
whichever is the shorter(cid:17) (cid:58)here there has (cid:69)een
service lon(cid:74)er than si(cid:91) years(cid:15) the Committee has
recommended those (cid:39)irectors alon(cid:74)side other
remainin(cid:74) (cid:39)irectors for re(cid:16)election(cid:17) (cid:36)s noted
earlier in this (cid:53)eport(cid:15) the (cid:37)oard contin(cid:88)es to
s(cid:88)pport the re(cid:16)election of (cid:54)ir (cid:37)ryan Cars(cid:69)er(cid:74)
as a non(cid:16)independent (cid:49)on(cid:16)(cid:40)(cid:91)ec(cid:88)tive (cid:39)irector
at the 201(cid:28) (cid:36)(cid:42)(cid:48)(cid:17)
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
(cid:42)overnance (cid:95) (cid:53)eport of the (cid:55)elecoms (cid:53)e(cid:74)(cid:88)latory Committee
75
Accountability
(cid:53)eport of the (cid:55)elecoms (cid:53)e(cid:74)(cid:88)latory Committee
MEMBERS IN 2018
Andrew Sukawaty
(Chairman)
Sir Bryan Carsberg
Janice Obuchowski
Dr Hamadoun Touré
(cid:54)ched(cid:88)led
meetings
attended
1(cid:18)1
1(cid:18)1
1(cid:18)1
1(cid:18)1
ANDREW SUKAWATY
CHAIRMAN, TELECOMS
REGULATORY COMMITTEE
(cid:55)he foc(cid:88)s for the Committee
was to contri(cid:69)(cid:88)te oversi(cid:74)ht
and (cid:74)(cid:88)idance for the
Company’s activities
across the different (cid:74)lo(cid:69)al
re(cid:74)(cid:88)latory activities with
which we are involved
(cid:55)he (cid:55)elecoms (cid:53)e(cid:74)(cid:88)latory Committee was
created in (cid:48)ay 201(cid:24)(cid:15) specifically to ens(cid:88)re
there was foc(cid:88)s from the (cid:37)oard on this (cid:78)ey
area which affects all parts of the Company’s
(cid:69)(cid:88)siness operations(cid:17) (cid:55)he Committee comprises
a n(cid:88)m(cid:69)er of independent (cid:49)on(cid:16)(cid:40)(cid:91)ec(cid:88)tive
(cid:39)irectors and meets as and when necessary(cid:15)
(cid:74)enerally twice a year(cid:17) (cid:36)ndrew (cid:54)(cid:88)(cid:78)awaty is
Chairman(cid:17) (cid:55)he Committee had one meetin(cid:74)
d(cid:88)rin(cid:74) 2018 where there were detailed (cid:88)pdates
provided on some (cid:78)ey re(cid:74)(cid:88)latory matters(cid:17)
(cid:36)t this meetin(cid:74)(cid:15) the Committee also met the
new (cid:42)ro(cid:88)p (cid:42)eneral Co(cid:88)nsel who wo(cid:88)ld (cid:69)e
responsi(cid:69)le for leadin(cid:74) the re(cid:74)(cid:88)latory team(cid:17)
(cid:55)he (cid:55)elecoms (cid:53)e(cid:74)(cid:88)latory Committee
is a(cid:88)thorised (cid:69)y the (cid:37)oard to(cid:29)
› (cid:53)eview (cid:78)ey re(cid:74)(cid:88)latory challen(cid:74)es facin(cid:74)
the (cid:69)(cid:88)siness of the Company and the
strate(cid:74)y and action plans proposed to
meet s(cid:88)ch challen(cid:74)es
› (cid:39)isc(cid:88)ss the Company’s strate(cid:74)y for ac(cid:84)(cid:88)isition
of spectr(cid:88)m and fre(cid:84)(cid:88)ency ri(cid:74)hts
› Facilitate hi(cid:74)h level en(cid:74)a(cid:74)ement with
(cid:74)overnments(cid:15) re(cid:74)(cid:88)latory (cid:69)odies and
international or(cid:74)anisations as identified
(cid:69)y the Company
› (cid:53)eview (cid:88)pcomin(cid:74) (cid:78)ey re(cid:74)(cid:88)latory meetin(cid:74)s(cid:15)
the proposed a(cid:74)endas and events and the
Company’s plans to cover s(cid:88)ch events
› (cid:54)(cid:88)pport the Company in vario(cid:88)s co(cid:88)ntries
to sec(cid:88)re a(cid:88)thorisations for mar(cid:78)et access
as identified (cid:69)y the Company
› O(cid:69)tain the advice and assistance of any of
the Company’s e(cid:91)ec(cid:88)tives havin(cid:74) partic(cid:88)lar
e(cid:91)pertise in s(cid:88)ch matters and
› (cid:53)eview(cid:15) and advise on(cid:15) the on(cid:74)oin(cid:74)
appropriateness and relevance of the
Company’s re(cid:74)(cid:88)latory policy and strate(cid:74)y
as presented (cid:69)y the Company’s e(cid:91)ec(cid:88)tives
and provide (cid:74)(cid:88)idance on proactive meas(cid:88)res
proposed (cid:69)y the Company to maintain its
leadin(cid:74) position and competitiveness in
the ind(cid:88)stry
One of the (cid:78)ey foc(cid:88)s areas disc(cid:88)ssed at the
meetin(cid:74) in (cid:54)eptem(cid:69)er 2018 was (cid:24)(cid:42) plannin(cid:74)
and (cid:44)nmarsat’s positionin(cid:74) in this (cid:74)lo(cid:69)al
disc(cid:88)ssion(cid:17) (cid:55)he Committee heard how the
re(cid:74)(cid:88)latory policy team was participatin(cid:74) in
re(cid:74)(cid:88)latory reviews in (cid:40)(cid:88)rope(cid:15) the (cid:56)(cid:17)(cid:54)(cid:17) and in
(cid:44)(cid:55)(cid:56) meetin(cid:74)s to e(cid:91)plain how satellite co(cid:88)ld
(cid:69)e part of the sol(cid:88)tion(cid:17)
(cid:36)n (cid:88)pdate on the (cid:54)(cid:16)(cid:69)and (cid:40)(cid:36)(cid:49) re(cid:74)(cid:88)latory
pro(cid:74)ress was also provided which covered deep
dive reviews on the en(cid:74)a(cid:74)ement with re(cid:74)(cid:88)lators(cid:15)
the reportin(cid:74) o(cid:69)li(cid:74)ations to the (cid:40)(cid:88)ropean
Commission(cid:15) an (cid:88)pdate on the le(cid:74)al cases
which had (cid:69)een made a(cid:74)ainst individ(cid:88)al
re(cid:74)(cid:88)lators and the (cid:40)C(cid:15) the pro(cid:74)ress (cid:69)ein(cid:74)
made with c(cid:88)stomers to ta(cid:78)e the (cid:40)(cid:36)(cid:49) service
and(cid:15) d(cid:88)e to (cid:37)re(cid:91)it(cid:15) the action ta(cid:78)en to redomicile
the (cid:44)nmarsat s(cid:88)(cid:69)sidiary which is the licence
holder for the (cid:40)(cid:36)(cid:49)(cid:17)
(cid:55)he Committee received an (cid:88)pdate on the
re(cid:74)(cid:88)latory pro(cid:74)ress in select co(cid:88)ntries (cid:74)lo(cid:69)ally(cid:15)
notin(cid:74) the c(cid:88)rrent framewor(cid:78) in each and
disc(cid:88)ssed the c(cid:88)rrent mar(cid:78)et access plans(cid:17)
(cid:55)he ne(cid:91)t (cid:44)(cid:55)(cid:56) (cid:58)orld (cid:53)adiocomm(cid:88)nication
Conference will (cid:69)e held in (cid:40)(cid:74)ypt d(cid:88)rin(cid:74)
(cid:49)ovem(cid:69)er 201(cid:28)(cid:17) (cid:55)his is one of the si(cid:74)nificant
re(cid:74)(cid:88)latory meetin(cid:74)s where (cid:78)ey re(cid:74)(cid:88)latory
a(cid:74)enda items will (cid:69)e disc(cid:88)ssed(cid:17) (cid:55)he Committee
was (cid:69)riefed on the activities (cid:69)ein(cid:74) cond(cid:88)cted
(cid:69)y the re(cid:74)(cid:88)latory and spectr(cid:88)m mana(cid:74)ement
teams in preparation for the meetin(cid:74)(cid:15) which
incl(cid:88)ded the Company participatin(cid:74) in (cid:44)(cid:55)(cid:56)
wor(cid:78)in(cid:74) parties and C(cid:40)(cid:51)(cid:55) technical (cid:74)ro(cid:88)ps as
well as involvement in some of the national
and re(cid:74)ional preparatory (cid:74)ro(cid:88)ps(cid:17)
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76
(cid:42)overnance (cid:95) (cid:53)eport of the (cid:36)(cid:88)dit Committee
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
Accountability
(cid:53)eport of the (cid:36)(cid:88)dit Committee
MEMBERS IN 2018
Robert Ruijter (Chairman)
Sir Bryan Carsberg1
Janice Obuchowski
Phillipa McCrostie2
Warren Finegold
(cid:54)ched(cid:88)led
meetings
attended
(cid:23)(cid:18)(cid:23)
2(cid:18)2
(cid:23)(cid:18)(cid:23)
3(cid:18)(cid:23)
(cid:23)(cid:18)(cid:23)
1 (cid:54)ir (cid:37)ryan Cars(cid:69)er(cid:74) ceased to (cid:69)e a mem(cid:69)er
in (cid:48)ay 2018 and now attends meetin(cid:74)s
as an o(cid:69)server
2 (cid:51)ip (cid:48)cCrostie was (cid:88)na(cid:69)le to attend
one meetin(cid:74) of the Committee d(cid:88)e
to personal reasons
ROBERT RUIJTER
CHAIRMAN,
AUDIT COMMITTEE
(cid:36)ll mem(cid:69)ers of the (cid:36)(cid:88)dit
Committee are independent
(cid:49)on(cid:16)(cid:40)(cid:91)ec(cid:88)tive (cid:39)irectors and
the ma(cid:77)ority have si(cid:74)nificant(cid:15)
recent and relevant financial
e(cid:91)perience(cid:17) (cid:55)he (cid:37)oard is
confident that the collective
e(cid:91)perience of the (cid:36)(cid:88)dit
Committee mem(cid:69)ers ena(cid:69)les
them(cid:15) as a (cid:74)ro(cid:88)p(cid:15) to act as
an effective Committee
(cid:55)he ta(cid:69)le shows the composition of the
(cid:36)(cid:88)dit Committee and their attendance at
meetin(cid:74)s d(cid:88)rin(cid:74) 2018(cid:17) (cid:53)o(cid:69)ert (cid:53)(cid:88)i(cid:77)ter has
(cid:69)een Chairman since (cid:49)ovem(cid:69)er 201(cid:24)(cid:17)
(cid:36)ll mem(cid:69)ers(cid:15) apart from (cid:45)anice O(cid:69)(cid:88)chows(cid:78)i(cid:15)
are considered financial e(cid:91)perts(cid:17)
(cid:37)y invitation(cid:15) the meetin(cid:74)s of the (cid:36)(cid:88)dit
Committee may (cid:69)e attended (cid:69)y the Chairman(cid:15)
Chief (cid:40)(cid:91)ec(cid:88)tive Officer(cid:15) Chief Financial Officer
and the (cid:43)ead of (cid:44)nternal (cid:36)(cid:88)dit and other
senior finance mem(cid:69)ers(cid:17) (cid:54)ir (cid:37)ryan Cars(cid:69)er(cid:74)
also now attends on invitation d(cid:88)e to his
e(cid:91)pertise in the field(cid:17) (cid:55)he (cid:39)eloitte (cid:47)(cid:47)(cid:51) (cid:11)(cid:67)(cid:39)eloitte’(cid:12)
a(cid:88)dit en(cid:74)a(cid:74)ement partner is present at
all (cid:36)(cid:88)dit Committee meetin(cid:74)s to ens(cid:88)re f(cid:88)ll
comm(cid:88)nication of matters relatin(cid:74) to the a(cid:88)dit(cid:17)
(cid:55)he Chairman of the (cid:36)(cid:88)dit Committee meets
re(cid:74)(cid:88)larly with the internal and e(cid:91)ternal a(cid:88)ditors
and at the end of each (cid:36)(cid:88)dit Committee meetin(cid:74)
there is a short meetin(cid:74) of (cid:77)(cid:88)st the Committee(cid:15)
Company Chairman and a(cid:88)ditors (cid:11)which incl(cid:88)des
the internal a(cid:88)ditor several times d(cid:88)rin(cid:74) the year(cid:12)
for an open disc(cid:88)ssion a(cid:69)o(cid:88)t the a(cid:88)dit process
and relationship with mana(cid:74)ement(cid:17)
(cid:55)he (cid:36)(cid:88)dit Committee has partic(cid:88)lar
responsi(cid:69)ility for(cid:29)
› (cid:48)onitorin(cid:74) the financial reportin(cid:74) process
› (cid:55)he ade(cid:84)(cid:88)acy and effectiveness of
the operation of internal controls and
ris(cid:78) mana(cid:74)ement
› (cid:55)he inte(cid:74)rity of the financial statements(cid:17)
(cid:55)his incl(cid:88)des a review of si(cid:74)nificant iss(cid:88)es
and (cid:77)(cid:88)d(cid:74)ements(cid:15) policies(cid:15) and disclos(cid:88)res
› (cid:46)eepin(cid:74) (cid:88)nder review the scope and res(cid:88)lts
of the a(cid:88)dit and its cost effectiveness
› Consideration of mana(cid:74)ement’s response
to any ma(cid:77)or e(cid:91)ternal or internal a(cid:88)dit
recommendations
› (cid:53)eviewin(cid:74) the ris(cid:78) mana(cid:74)ement process
and reportin(cid:74) thro(cid:88)(cid:74)ho(cid:88)t the year
› (cid:37)ein(cid:74) ass(cid:88)red of the independence
and o(cid:69)(cid:77)ectivity of the internal and
e(cid:91)ternal a(cid:88)ditor and
› (cid:39)(cid:88)rin(cid:74) 2018 there was partic(cid:88)lar foc(cid:88)s
on the new (cid:44)F(cid:53)(cid:54) (cid:28)(cid:15) 1(cid:24) and 16 acco(cid:88)ntin(cid:74)
standards and their implementation
(cid:55)he (cid:37)oard re(cid:84)(cid:88)ested that the Committee
advise whether it (cid:69)elieves the (cid:36)nn(cid:88)al (cid:53)eport
and (cid:36)cco(cid:88)nts(cid:15) ta(cid:78)en as a whole(cid:15) is fair(cid:15)
(cid:69)alanced and (cid:88)nderstanda(cid:69)le and provides
the information necessary for shareholders
to assess the Company’s financial position(cid:15)
performance(cid:15) (cid:69)(cid:88)siness model and strate(cid:74)y(cid:17)
(cid:55)he financial res(cid:88)lts incl(cid:88)de those from (cid:44)nmarsat
(cid:42)overnment (cid:44)nc(cid:17)(cid:15) a pro(cid:91)y company (cid:69)ased in the
(cid:56)(cid:17)(cid:54)(cid:17) which is mana(cid:74)ed (cid:88)nder a (cid:51)ro(cid:91)y arran(cid:74)ement
as re(cid:84)(cid:88)ired (cid:69)y the (cid:56)(cid:17)(cid:54)(cid:17) (cid:42)overnment to ens(cid:88)re
it is ins(cid:88)lated from forei(cid:74)n ownership(cid:15) control
or infl(cid:88)ence(cid:17) (cid:55)his company was ac(cid:84)(cid:88)ired
in 2010 and has (cid:69)een operatin(cid:74) (cid:88)nder the
(cid:51)ro(cid:91)y arran(cid:74)ement since that time(cid:17) (cid:39)eloitte
is a(cid:88)ditor to this company and o(cid:88)r C(cid:40)O attends
their (cid:69)oard meetin(cid:74)s to receive appropriate
(cid:69)riefin(cid:74)s on items he is a(cid:88)thorised to receive(cid:17)
(cid:55)he Committee’s terms of reference to reflect
(cid:69)est practice(cid:15) and can (cid:69)e fo(cid:88)nd on o(cid:88)r we(cid:69)site(cid:17)
(cid:39)etails a(cid:69)o(cid:88)t the Committee’s assessment
are shown at the end of this (cid:53)eport(cid:17)
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
(cid:42)overnance (cid:95) (cid:53)eport of the (cid:36)(cid:88)dit Committee
77
(cid:55)here is a forward a(cid:74)enda (cid:88)sed for the year’s
activities which foc(cid:88)ses on(cid:29)
› (cid:53)eview of the ann(cid:88)al financial statements
and the res(cid:88)lts of the ann(cid:88)al e(cid:91)ternal
a(cid:88)dit and review of the e(cid:91)ternal a(cid:88)ditor’s
(cid:84)(cid:88)arterly and interim review wor(cid:78) and
relevant (cid:84)(cid:88)arterly and interim financial
reportin(cid:74) and the e(cid:91)ternal a(cid:88)dit plan
› (cid:53)eview of the ris(cid:78) mana(cid:74)ement process
and reportin(cid:74)
› Consideration of new acco(cid:88)ntin(cid:74)
standards and (cid:74)overnance chan(cid:74)es
› (cid:53)eview of the preparation of the via(cid:69)ility
statement for (cid:88)se in the 2018 (cid:51)reliminary
(cid:54)tatement and (cid:36)nn(cid:88)al (cid:53)eport and
› (cid:53)eview of internal a(cid:88)dit plans and(cid:15) disc(cid:88)ssin(cid:74)
staffin(cid:74) impact on their wor(cid:78) load(cid:15) findin(cid:74)s
and recommendations
(cid:55)he (cid:36)(cid:88)dit Committee ens(cid:88)res that the
e(cid:91)ternal a(cid:88)dit process and a(cid:88)dit (cid:84)(cid:88)ality
are effective(cid:17) (cid:44)t does this (cid:69)y(cid:29)
› (cid:48)onitorin(cid:74) the en(cid:74)a(cid:74)ement (cid:69)etween
the (cid:36)(cid:88)dit Committee Chairman and the
lead a(cid:88)dit en(cid:74)a(cid:74)ement partner which will
(cid:74)enerally (cid:69)e thro(cid:88)(cid:74)h face(cid:16)to(cid:16)face meetin(cid:74)s
› (cid:48)onitorin(cid:74) the reports which are (cid:69)ro(cid:88)(cid:74)ht
to the Committee (cid:69)y the lead a(cid:88)dit
en(cid:74)a(cid:74)ement partner and other senior
mem(cid:69)ers of the a(cid:88)dit team
› (cid:48)onitorin(cid:74) the (cid:84)(cid:88)ality of the mana(cid:74)ement
responses to a(cid:88)dit (cid:84)(cid:88)eries
› (cid:48)onitorin(cid:74) meetin(cid:74)s held (cid:69)y the C(cid:40)O
and the Chairman with the lead a(cid:88)dit
en(cid:74)a(cid:74)ement partner which are reported
to the (cid:36)(cid:88)dit Chairman and Committee
› (cid:48)onitorin(cid:74) a review of independence and
o(cid:69)(cid:77)ectivity of the a(cid:88)dit firm and also the
(cid:84)(cid:88)ality of the formal a(cid:88)dit report (cid:74)iven
(cid:69)y the (cid:36)(cid:88)ditor to shareholders and
› (cid:54)ee(cid:78)in(cid:74) feed(cid:69)ac(cid:78) from mem(cid:69)ers of the
finance team(cid:15) the Company (cid:54)ecretary
and the (cid:43)ead of (cid:44)nternal (cid:36)(cid:88)dit
(cid:39)(cid:88)rin(cid:74) the reportin(cid:74) year to 31 (cid:39)ecem(cid:69)er 2018(cid:15)
the activities of the (cid:36)(cid:88)dit Committee were to(cid:29)
› Confirm to the (cid:37)oard that the (cid:36)nn(cid:88)al (cid:53)eport and
(cid:36)cco(cid:88)nts is fair(cid:15) (cid:69)alanced and (cid:88)nderstanda(cid:69)le
› (cid:53)eview and endorsement(cid:15) prior to s(cid:88)(cid:69)mission
to the (cid:37)oard(cid:15) the half(cid:16)year and f(cid:88)ll(cid:16)year
financial statements(cid:15) interim mana(cid:74)ement
statements and res(cid:88)lts anno(cid:88)ncements
› (cid:53)eview and approve internal a(cid:88)dit reports(cid:15)
and findin(cid:74)s and recommendations arisin(cid:74)
from the reports
› (cid:53)eview and approve ris(cid:78) mana(cid:74)ement
(cid:88)pdates and the ann(cid:88)al ris(cid:78) mana(cid:74)ement
process
› (cid:36)(cid:74)ree e(cid:91)ternal and internal ann(cid:88)al a(cid:88)dit plans
› (cid:53)eceive (cid:88)pdates on mana(cid:74)ement
responses to a(cid:88)dit recommendations
› Complete a detailed assessment of
the 201(cid:26) (cid:36)(cid:88)dit (cid:40)ffectiveness (cid:88)sin(cid:74) the
F(cid:53)C (cid:74)(cid:88)idance reports for a(cid:88)dit committees
and ethical standards e(cid:91)pected of a(cid:88)ditors
as reference material(cid:17) (cid:55)he assessment
o(cid:88)tcome was that the Committee had
s(cid:88)fficient (cid:78)nowled(cid:74)e a(cid:69)o(cid:88)t its own
responsi(cid:69)ilities and those of the a(cid:88)ditors
› (cid:53)eview (cid:78)ey acco(cid:88)ntin(cid:74) (cid:77)(cid:88)d(cid:74)ements relatin(cid:74)
to specific transactions as well as chan(cid:74)es
to any acco(cid:88)ntin(cid:74) policies affectin(cid:74) the
(cid:42)ro(cid:88)p’s financial position and
› (cid:53)e(cid:74)(cid:88)larly monitor (cid:78)ey pro(cid:74)rammes
across the (cid:42)ro(cid:88)p incl(cid:88)din(cid:74) the plans for
the implementation of a new (cid:69)illin(cid:74) and
acco(cid:88)nts paya(cid:69)le system
(cid:53)eviews (cid:69)y the Committee of a(cid:88)dit plans
and ris(cid:78) reports incl(cid:88)de all (cid:42)ro(cid:88)p operations(cid:17)
(cid:39)etailed ris(cid:78) reportin(cid:74) is (cid:88)sed for all (cid:42)ro(cid:88)p
companies and (cid:69)(cid:88)siness operations(cid:17) One of
o(cid:88)r s(cid:88)(cid:69)sidiary companies(cid:15) (cid:44)nmarsat (cid:42)ro(cid:88)p (cid:47)td(cid:15)
is re(cid:84)(cid:88)ired to prod(cid:88)ce (cid:84)(cid:88)arterly financial
statements(cid:15) as re(cid:84)(cid:88)ired (cid:69)y its loan a(cid:74)reements(cid:30)
the format and content for these are (cid:69)ased on
the (cid:88)ltimate (cid:74)ro(cid:88)p reportin(cid:74) which falls (cid:88)nder
the Committee’s review(cid:17) (cid:55)he (cid:84)(cid:88)arterly review
of the ris(cid:78) reports and the process adopted
to mana(cid:74)e ris(cid:78) is a (cid:78)ey area of foc(cid:88)s for
the Committee(cid:17)
(cid:58)ith several si(cid:74)nificant chan(cid:74)es to (cid:44)F(cid:53)(cid:54)
reportin(cid:74) (cid:69)ein(cid:74) implemented(cid:15) the Committee
received detailed (cid:69)riefin(cid:74)s and (cid:88)pdates from
mana(cid:74)ement re(cid:74)ardin(cid:74) pro(cid:74)ress(cid:17)
(cid:36)(cid:88)dit Committee meetin(cid:74)s (cid:74)enerally ta(cid:78)e
place (cid:77)(cid:88)st prior to a (cid:37)oard meetin(cid:74) to ma(cid:91)imise
effectiveness and time plannin(cid:74) efficiency
of those attendin(cid:74)(cid:17) (cid:55)he Committee’s Chairman
reports to the (cid:37)oard as part of a separate
a(cid:74)enda item on the activity of the Committee
and matters of partic(cid:88)lar relevance to the (cid:37)oard
in the cond(cid:88)ct of their wor(cid:78)(cid:17) (cid:36)ll mem(cid:69)ers of the
(cid:37)oard have access to (cid:36)(cid:88)dit Committee papers
and min(cid:88)tes of meetin(cid:74)s(cid:15) and may(cid:15) on re(cid:84)(cid:88)est
to the Chairman(cid:15) attend the meetin(cid:74)s(cid:17)
(cid:36)s part of the preparation of the financial
statements(cid:15) there is an internal senior team(cid:15)
which incl(cid:88)des the CFO and Company (cid:54)ecretary(cid:15)
which reviews the preparation and content of
the reportin(cid:74) to ens(cid:88)re there is timely disclos(cid:88)re
of financial and other material information
to the (cid:37)oard(cid:17) (cid:55)his preparation provided the
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(cid:36)(cid:88)dit Committee with doc(cid:88)ments which the
Committee reviewed and provided clarity on the
completeness of financial reportin(cid:74) disclos(cid:88)res
prior to their release (cid:69)y the (cid:37)oard(cid:17)
Significant accounting matters
(cid:39)(cid:88)rin(cid:74) 2018(cid:15) the (cid:36)(cid:88)dit Committee considered
the si(cid:74)nificant acco(cid:88)ntin(cid:74) matters descri(cid:69)ed
(cid:69)elow(cid:17) (cid:44)n addressin(cid:74) these iss(cid:88)es the Committee
considered the appropriateness of mana(cid:74)ement’s
acco(cid:88)ntin(cid:74) estimates and (cid:78)ey (cid:77)(cid:88)d(cid:74)ements(cid:15)
o(cid:88)tlined in note (cid:23) to the consolidated financial
statements(cid:17) (cid:55)he Committee disc(cid:88)ssed these
with the e(cid:91)ternal a(cid:88)ditor d(cid:88)rin(cid:74) the year and(cid:15)
where appropriate(cid:15) details of how they have (cid:69)een
addressed are provided in the (cid:44)ndependent
(cid:36)(cid:88)ditors’ (cid:53)eport on pa(cid:74)es 108 to 11(cid:24)(cid:17)
Change in accounting policies
Chan(cid:74)es to acco(cid:88)ntin(cid:74) policies impactin(cid:74)
reven(cid:88)e acco(cid:88)ntin(cid:74)(cid:15) lease acco(cid:88)ntin(cid:74) and
financial instr(cid:88)ments have (cid:69)een adopted
in 2018 in response to the new acco(cid:88)ntin(cid:74)
standards (cid:44)F(cid:53)(cid:54) 1(cid:24)(cid:15) (cid:44)F(cid:53)(cid:54) 16 and (cid:44)F(cid:53)(cid:54) (cid:28)
respectively(cid:17) (cid:44)F(cid:53)(cid:54) 16 has (cid:69)een early adopted
in 2018 as the overall impact on the financial
statements is considered low(cid:17) (cid:36)s part of
the adoption(cid:15) mana(cid:74)ement has o(cid:88)tlined
the (cid:42)ro(cid:88)p’s (cid:88)pdated acco(cid:88)ntin(cid:74) policies
to ali(cid:74)n with each of the standards(cid:17) (cid:53)even(cid:88)e
reco(cid:74)nition(cid:15) installation and (cid:47)i(cid:74)ado reven(cid:88)e
have each had their reco(cid:74)nition policies
(cid:88)pdated and the comparatives ad(cid:77)(cid:88)sted as
permitted (cid:69)y (cid:44)F(cid:53)(cid:54) 1(cid:24)(cid:17) For lease acco(cid:88)ntin(cid:74)(cid:15)
a (cid:67)ri(cid:74)ht to (cid:88)se’ asset was recorded on the
statement of financial position as at 1 (cid:45)an(cid:88)ary
2018 with a correspondin(cid:74) lease lia(cid:69)ility(cid:15)
while chan(cid:74)es in the income statement have
(cid:69)een mainly presentational(cid:17) For financial
instr(cid:88)ments(cid:15) there are no material chan(cid:74)es(cid:17)
F(cid:88)rther details of the ad(cid:77)(cid:88)stments are o(cid:88)tlined
in note 1 to the financial statements(cid:17)
Revenue recognition
(cid:55)he timin(cid:74) of reven(cid:88)e reco(cid:74)nition is a (cid:78)ey
area of (cid:77)(cid:88)d(cid:74)ement(cid:15) especially in the
telecomm(cid:88)nications ind(cid:88)stry(cid:17) (cid:55)he (cid:42)ro(cid:88)p’s
acco(cid:88)ntin(cid:74) policy on reven(cid:88)e reco(cid:74)nition
has (cid:69)een ad(cid:77)(cid:88)sted to accommodate (cid:44)F(cid:53)(cid:54) 1(cid:24)(cid:15)
refer to note 2 for more details(cid:17) (cid:55)he (cid:42)ro(cid:88)p’s
(cid:44)nternal (cid:36)(cid:88)dit team have (cid:78)ept si(cid:74)nificant
reven(cid:88)e systems(cid:15) processes and reco(cid:74)nition
as a foc(cid:88)s area d(cid:88)rin(cid:74) the year and the e(cid:91)ternal
a(cid:88)ditor performed detailed a(cid:88)dit proced(cid:88)res
on reven(cid:88)e reco(cid:74)nition(cid:15) with the findin(cid:74)s of
(cid:69)oth (cid:69)ein(cid:74) reported to the (cid:36)(cid:88)dit Committee(cid:17)
(cid:55)he (cid:36)(cid:88)dit Committee has therefore concl(cid:88)ded
that the (cid:42)ro(cid:88)p’s reven(cid:88)e reco(cid:74)nition policies
contin(cid:88)e to (cid:69)e in line with (cid:44)F(cid:53)(cid:54) re(cid:84)(cid:88)irements(cid:17)
78
(cid:42)overnance (cid:95) (cid:53)eport of the (cid:36)(cid:88)dit Committee
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
Report of the Audit Committee
contin(cid:88)ed
Revenue in respect of the Ligado
networks cooperation agreement
(cid:55)he (cid:36)(cid:88)dit Committee contin(cid:88)es to review
the acco(cid:88)ntin(cid:74) treatment for the reco(cid:74)nition
of reven(cid:88)e and costs in respect of each phase of
the (cid:47)i(cid:74)ado (cid:49)etwor(cid:78)s (cid:11)formerly (cid:47)i(cid:74)ht(cid:54)(cid:84)(cid:88)ared(cid:12)
Cooperation (cid:36)(cid:74)reement(cid:17)
(cid:39)eferred income in respect of (cid:51)hase 1 from
(cid:47)i(cid:74)ado contin(cid:88)es to (cid:69)e carried on the (cid:69)alance
sheet(cid:17) (cid:36)ltho(cid:88)(cid:74)h the cash has (cid:69)een received(cid:15)
the timin(cid:74) of the reco(cid:74)nition of this deferred
income(cid:15) to(cid:74)ether with any related f(cid:88)t(cid:88)re
costs and ta(cid:91)es(cid:15) is dependent (cid:88)pon a n(cid:88)m(cid:69)er
of factors that contin(cid:88)e to (cid:69)e (cid:88)ncertain(cid:17) (cid:55)he
impact of the fore(cid:74)oin(cid:74) on the deferred reven(cid:88)e
(cid:69)alance of (cid:7)206(cid:17)(cid:26)m (cid:11)201(cid:26) restated(cid:29) (cid:7)206(cid:17)8m(cid:12)
carried (cid:69)y the Company in respect of the costs
of implementation of this a(cid:74)reement is still to (cid:69)e
determined(cid:17) (cid:39)(cid:88)rin(cid:74) 2018(cid:15) (cid:44)nmarsat reco(cid:74)nised
(cid:7)0(cid:17)1m (cid:11)201(cid:26)(cid:29) (cid:7)2(cid:17)0m(cid:12) of deferred income(cid:17)
(cid:44)n (cid:48)arch 2016(cid:15) (cid:47)i(cid:74)ado (cid:49)etwor(cid:78)s a(cid:74)reed to
ta(cid:78)e the 30(cid:48)(cid:43)(cid:93) option (cid:11)the (cid:67)30(cid:48)(cid:43)(cid:93) (cid:51)lan’(cid:12)
(cid:88)nder the Cooperation (cid:36)(cid:74)reement (cid:69)etween the
companies(cid:17) (cid:44)n e(cid:91)chan(cid:74)e for the deferral of some
payments from (cid:47)i(cid:74)ado to (cid:44)nmarsat(cid:15) the parties
a(cid:74)reed to delay the transition to the 30(cid:48)(cid:43)(cid:93)
(cid:51)lan(cid:15) with (cid:47)i(cid:74)ado providin(cid:74) (cid:44)nmarsat enhanced
spectr(cid:88)m (cid:88)sa(cid:74)e ri(cid:74)hts for its satellite operations
for a minim(cid:88)m period of two years(cid:17) (cid:58)ith this
in mind(cid:15) (cid:47)i(cid:74)ado made (cid:84)(cid:88)arterly payments to
(cid:44)nmarsat of (cid:7)118(cid:17)(cid:24)m d(cid:88)rin(cid:74) the co(cid:88)rse of 2018
and reco(cid:74)nised reven(cid:88)e of (cid:7)130(cid:17)(cid:26)m(cid:15) increasin(cid:74)
the receiva(cid:69)le in relation to deferrals to (cid:7)3(cid:24)(cid:17)0m
as at 31 (cid:39)ecem(cid:69)er 2018 (cid:11)201(cid:26) restated(cid:29) (cid:7)2(cid:24)(cid:17)0m(cid:12)(cid:17)
(cid:55)he (cid:36)(cid:88)dit Committee has deemed the c(cid:88)rrent
acco(cid:88)ntin(cid:74) treatment of all phases of the
Cooperation (cid:36)(cid:74)reement appropriate(cid:17)
Taxation
(cid:55)he calc(cid:88)lation of some of the (cid:42)ro(cid:88)p’s potential
ta(cid:91) assets and lia(cid:69)ilities involves a de(cid:74)ree of
estimation and (cid:77)(cid:88)d(cid:74)ement in respect of certain
items(cid:15) whose ta(cid:91) treatment cannot (cid:69)e finalised
(cid:88)ntil resol(cid:88)tion has (cid:69)een reached with the relevant
ta(cid:91) a(cid:88)thority(cid:15) or(cid:15) as appropriate(cid:15) thro(cid:88)(cid:74)h a
formal le(cid:74)al process(cid:17) (cid:44)ss(cid:88)es can(cid:15) and often do(cid:15)
ta(cid:78)e a n(cid:88)m(cid:69)er of years to resolve(cid:17)
(cid:55)he (cid:42)ro(cid:88)p’s ta(cid:91) strate(cid:74)y is p(cid:88)(cid:69)lished on the
we(cid:69)site and this is s(cid:88)(cid:69)(cid:77)ect to review (cid:69)y the
(cid:37)oard of (cid:44)nmarsat plc on an ann(cid:88)al (cid:69)asis(cid:17)
(cid:44)nmarsat is committed to(cid:29)
› O(cid:69)servin(cid:74) all applica(cid:69)le laws(cid:15) r(cid:88)les and
re(cid:74)(cid:88)lations in meetin(cid:74) o(cid:88)r ta(cid:91) compliance
and reportin(cid:74) responsi(cid:69)ilities everywhere
we operate
› (cid:36)pplyin(cid:74) dili(cid:74)ent professional care and
(cid:77)(cid:88)d(cid:74)ement to ens(cid:88)re that the ta(cid:91) ris(cid:78) is
mana(cid:74)ed with a hi(cid:74)h de(cid:74)ree of certainty
› (cid:58)or(cid:78)in(cid:74) positively(cid:15) pro(cid:16)actively and
transparently with ta(cid:91) a(cid:88)thorities to
minimise the e(cid:91)tent of disp(cid:88)tes(cid:15) to achieve
early a(cid:74)reement on disp(cid:88)ted iss(cid:88)es when
they arise and achieve certainty wherever
possible and
› (cid:40)ns(cid:88)rin(cid:74) that ta(cid:91) strate(cid:74)y is ali(cid:74)ned with
the wider (cid:69)(cid:88)siness and commercial strate(cid:74)y
From time to time the (cid:42)ro(cid:88)p may (cid:69)e involved
in disp(cid:88)tes in relation to on(cid:74)oin(cid:74) ta(cid:91) matters
where a ta(cid:91) a(cid:88)thority adopts a different
interpretation to o(cid:88)r own(cid:17) (cid:55)he level of
provisionin(cid:74) for these disp(cid:88)tes is an iss(cid:88)e
where mana(cid:74)ement and ta(cid:91) (cid:77)(cid:88)d(cid:74)ement
are important(cid:17)
(cid:55)he Committee addresses these matters thro(cid:88)(cid:74)h
a ran(cid:74)e of reportin(cid:74) from senior mana(cid:74)ement
and (cid:69)y challen(cid:74)in(cid:74) the appropriateness of
mana(cid:74)ement’s views incl(cid:88)din(cid:74) the de(cid:74)ree to
which these are s(cid:88)pported (cid:69)y third party e(cid:91)pert
advice(cid:17) (cid:55)his is an area of hi(cid:74)her a(cid:88)dit ris(cid:78) and
accordin(cid:74)ly(cid:15) the Committee received detailed
ver(cid:69)al and written reports from the e(cid:91)ternal
a(cid:88)ditor on these matters(cid:17) Followin(cid:74) these
proced(cid:88)res(cid:15) the (cid:36)(cid:88)dit Committee deemed
the income ta(cid:91) assets and lia(cid:69)ilities (cid:69)alances
for the year(cid:15) as well as the (cid:42)ro(cid:88)p’s disclos(cid:88)re in
respect of income ta(cid:91)es and related lia(cid:69)ilities(cid:15)
to (cid:69)e appropriate(cid:17)
(cid:58)e ens(cid:88)re that the (cid:42)ro(cid:88)p’s ta(cid:91) ris(cid:78) is mana(cid:74)ed
conservatively and professionally(cid:15) (cid:69)y o(cid:69)servin(cid:74)
laws and meetin(cid:74) o(cid:88)r compliance o(cid:69)li(cid:74)ations
in all territories in which we operate(cid:17) (cid:58)e see(cid:78)
to wor(cid:78) proactively and colla(cid:69)oratively with
o(cid:88)r sta(cid:78)eholders(cid:15) incl(cid:88)din(cid:74) ta(cid:91) a(cid:88)thorities
and collea(cid:74)(cid:88)es within the (cid:69)(cid:88)siness(cid:15) whilst
ens(cid:88)rin(cid:74) that the (cid:42)ro(cid:88)p’s ta(cid:91) strate(cid:74)y is ali(cid:74)ned
with the wider (cid:69)(cid:88)siness and its commercial
strate(cid:74)y of (cid:74)eneratin(cid:74) s(cid:88)staina(cid:69)le val(cid:88)e for
o(cid:88)r shareholders(cid:17) (cid:39)(cid:88)rin(cid:74) 2018(cid:15) we provided
trainin(cid:74) to o(cid:88)r staff on the re(cid:84)(cid:88)irements iss(cid:88)ed
(cid:69)y the (cid:56)(cid:46) (cid:43)(cid:48)(cid:53)C re(cid:74)ardin(cid:74) the fail(cid:88)re to prevent
the criminal facilitation of ta(cid:91) evasion(cid:30) this was
incl(cid:88)ded in o(cid:88)r anti (cid:69)ri(cid:69)ery trainin(cid:74) mod(cid:88)le(cid:17)
Capitalisation of space segment assets
and associated borrowing costs
(cid:54)pace se(cid:74)ment assets comprise satellite
constr(cid:88)ction(cid:15) la(cid:88)nch and other associated
costs(cid:15) incl(cid:88)din(cid:74) (cid:74)ro(cid:88)nd infrastr(cid:88)ct(cid:88)re(cid:17)
(cid:44)n addition(cid:15) (cid:69)orrowin(cid:74) costs attri(cid:69)(cid:88)ta(cid:69)le to
(cid:84)(cid:88)alifyin(cid:74) space se(cid:74)ment assets are added
to the cost of those assets(cid:17) (cid:42)iven the nat(cid:88)re
of the (cid:42)ro(cid:88)p’s (cid:69)(cid:88)siness(cid:15) si(cid:74)nificant capital
e(cid:91)pendit(cid:88)re is inc(cid:88)rred on space se(cid:74)ment
assets(cid:17) (cid:55)he (cid:78)ey (cid:77)(cid:88)d(cid:74)ements involved in the
capitalisation of space se(cid:74)ment assets
and associated (cid:69)orrowin(cid:74)s costs are(cid:29)
› (cid:58)hether the capitalisation criteria
of the (cid:88)nderlyin(cid:74) (cid:44)F(cid:53)(cid:54) have (cid:69)een met
› (cid:36)llocation of an appropriate asset class
and associated (cid:88)sef(cid:88)l economic life
in accordance with (cid:42)ro(cid:88)p policies
› (cid:58)hether an asset is deemed to (cid:69)e
s(cid:88)(cid:69)stantially complete and as a res(cid:88)lt
capitalisation of (cid:69)orrowin(cid:74) costs
sho(cid:88)ld cease and
› (cid:58)hether an asset is ready for (cid:88)se and as a
res(cid:88)lt f(cid:88)rther capitalisation of costs sho(cid:88)ld
cease and depreciation sho(cid:88)ld commence
(cid:55)he e(cid:91)ternal a(cid:88)ditor e(cid:91)amined the capitalisation
of development costs in the year(cid:15) partic(cid:88)larly
in relation to the (cid:42)lo(cid:69)al (cid:59)press and (cid:54)(cid:16)(cid:69)and
satellite pro(cid:74)rammes and reported its control
findin(cid:74)s to the (cid:36)(cid:88)dit Committee(cid:17) (cid:55)he (cid:36)(cid:88)dit
Committee is satisfied that space se(cid:74)ment
assets and associated (cid:69)orrowin(cid:74) costs
have (cid:69)een capitalised correctly in the year(cid:17)
Viability statement
(cid:55)he (cid:36)(cid:88)dit Committee received a detailed
paper from mana(cid:74)ement settin(cid:74) o(cid:88)t (cid:69)oth
the (cid:39)irectors’ o(cid:69)li(cid:74)ation to incl(cid:88)de a via(cid:69)ility
statement in the (cid:36)nn(cid:88)al (cid:53)eport and a
detailed assessment of the (cid:42)ro(cid:88)p’s via(cid:69)ility(cid:17)
(cid:55)he Committee endorsed the selection of
a three(cid:16)year time hori(cid:93)on as a (cid:69)asis for the
statement and reviewed the detailed via(cid:69)ility
assessment incl(cid:88)din(cid:74) the ass(cid:88)mptions that
had (cid:69)een made in cond(cid:88)ctin(cid:74) the assessment(cid:17)
F(cid:88)rther detail on the assessment of via(cid:69)ility
and the via(cid:69)ility statement are set o(cid:88)t on
pa(cid:74)e (cid:24)(cid:28)(cid:17)
Internal audit
(cid:48)onitorin(cid:74) and review of the scope(cid:15) e(cid:91)tent
and effectiveness of the activity of the (cid:44)nternal
(cid:36)(cid:88)dit (cid:39)epartment is an a(cid:74)enda item at each
Committee meetin(cid:74)(cid:17) (cid:36)dditionally(cid:15) the Chairman
of the Committee meets re(cid:74)(cid:88)larly with the
(cid:44)nternal (cid:36)(cid:88)ditor(cid:17)
(cid:44)nternal (cid:36)(cid:88)dit prepares its ann(cid:88)al a(cid:88)dit plan
(cid:69)ased on the principal ris(cid:78)s of the Company
for the Committee to approve(cid:17) (cid:44)nternal (cid:36)(cid:88)dit
cond(cid:88)cts reviews of (cid:69)(cid:88)siness operations(cid:15)
financial and internal controls(cid:15) (cid:44)(cid:55) and cy(cid:69)er
sec(cid:88)rity(cid:15) and le(cid:74)al and re(cid:74)(cid:88)latory compliance(cid:17)
(cid:44)t presents its reports at each meetin(cid:74) coverin(cid:74)
(cid:88)pdates on (cid:44)nternal (cid:36)(cid:88)dit activities(cid:15) res(cid:88)lts
of a(cid:88)dits and follow(cid:16)(cid:88)p actions re(cid:84)(cid:88)ired(cid:17)
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
(cid:42)overnance (cid:95) (cid:53)eport of the (cid:36)(cid:88)dit Committee
79
External auditor
(cid:55)he Financial (cid:53)eportin(cid:74) Co(cid:88)ncil iss(cid:88)ed a (cid:74)(cid:88)ide
for (cid:36)(cid:88)dit Committees to help them eval(cid:88)ate
a(cid:88)ditor effectiveness(cid:17) (cid:55)here are several criteria
incl(cid:88)ded within the report and in 2018 the
Committee completed a detailed assessment
of the 201(cid:26) (cid:36)(cid:88)dit so that (cid:39)eloitte and
mana(cid:74)ement co(cid:88)ld review how any chan(cid:74)es
co(cid:88)ld (cid:69)e made to improve the effectiveness
(cid:74)oin(cid:74) forward(cid:17) (cid:55)he Committee receives inp(cid:88)ts
from different so(cid:88)rces s(cid:88)ch as the (cid:36)(cid:88)ditors
themselves(cid:15) mana(cid:74)ement(cid:15) as well as the inp(cid:88)t
from the mem(cid:69)ers of the Committee which
assisted it to determine that the (cid:36)(cid:88)ditor and its
wor(cid:78) were effective(cid:17) (cid:36)t each of the (cid:36)(cid:88)dit
Committee meetin(cid:74)s(cid:15) the (cid:36)(cid:88)ditor report on any
iss(cid:88)es it perceived related to (cid:84)(cid:88)ality control and
where it tho(cid:88)(cid:74)ht (cid:77)(cid:88)d(cid:74)ements had (cid:69)een applied
(cid:69)y mana(cid:74)ement and if it a(cid:74)reed with these(cid:15)
or offered an alternative view if appropriate(cid:17)
(cid:55)he findin(cid:74)s and reports from the (cid:36)(cid:88)ditor help
the (cid:36)(cid:88)dit Committee ma(cid:78)e assessments a(cid:69)o(cid:88)t
the need to (cid:88)pdate processes or (cid:88)nderta(cid:78)e
f(cid:88)rther review wor(cid:78) on any partic(cid:88)lar iss(cid:88)es(cid:17)
(cid:39)eloitte (cid:47)(cid:47)(cid:51) were reappointed at the 2018 (cid:36)nn(cid:88)al
(cid:42)eneral (cid:48)eetin(cid:74) and will also (cid:69)e p(cid:88)t forward
for reappointment at the 201(cid:28) (cid:36)nn(cid:88)al (cid:42)eneral
(cid:48)eetin(cid:74)(cid:17) (cid:56)nder the (cid:40)(cid:56) directive(cid:15) (cid:39)eloitte are
now capa(cid:69)le of (cid:69)ein(cid:74) reappointed for a f(cid:88)rther
10 years after the retender (cid:11)2016(cid:12)(cid:15) however
shareholder approval will (cid:69)e re(cid:84)(cid:88)ired each year(cid:17)
(cid:36)(cid:88)ditor o(cid:69)(cid:77)ectivity and independence is
safe(cid:74)(cid:88)arded thro(cid:88)(cid:74)h a variety of mechanisms(cid:17)
(cid:55)o ens(cid:88)re the (cid:36)(cid:88)ditor’s independence(cid:15) the
Committee ann(cid:88)ally reviews the Company’s
relationship with (cid:39)eloitte and receives
s(cid:88)mmaries at each (cid:36)(cid:88)dit Committee meetin(cid:74)
from the (cid:36)(cid:88)ditor as to their independence(cid:17) (cid:55)he
Committee concl(cid:88)ded that it contin(cid:88)es to have
an o(cid:69)(cid:77)ective and professional relationship with
(cid:39)eloitte and that there are s(cid:88)fficient controls
and processes in place to ens(cid:88)re the re(cid:84)(cid:88)ired
level of independence(cid:17) (cid:55)he (cid:40)(cid:91)ternal (cid:36)(cid:88)ditor is
re(cid:84)(cid:88)ired to chan(cid:74)e the a(cid:88)dit partner responsi(cid:69)le
for the (cid:42)ro(cid:88)p a(cid:88)dit every five years(cid:17) (cid:44)n 2016(cid:15)
a new a(cid:88)dit partner was identified and too(cid:78) over
as the lead for the 2016 reportin(cid:74) period after
(cid:39)eloitte’s s(cid:88)ccessf(cid:88)l reappointment(cid:17) (cid:39)(cid:88)rin(cid:74)
the year(cid:15) (cid:39)eloitte char(cid:74)ed the (cid:42)ro(cid:88)p (cid:7)1(cid:17)2m
(cid:11)201(cid:26)(cid:29) (cid:7)1(cid:17)2m(cid:12) for a(cid:88)dit and a(cid:88)dit(cid:16)related services(cid:17)
(cid:44)nmarsat’s policy is to adopt a strict (cid:26)0(cid:8) cap
for allowa(cid:69)le non(cid:16)a(cid:88)dit services(cid:17) (cid:55)o ens(cid:88)re the
policy is ade(cid:84)(cid:88)ately controlled(cid:15) we adopt several
processes(cid:15) which were reviewed and confirmed
as (cid:69)ein(cid:74) (cid:88)sed d(cid:88)rin(cid:74) 2018(cid:17) Fees char(cid:74)ed (cid:69)y
(cid:39)eloitte in respect of non(cid:16)a(cid:88)dit services re(cid:84)(cid:88)ire
the prior approval of the (cid:36)(cid:88)dit Committee(cid:15)
e(cid:91)cept where the fee is less than (cid:100)(cid:24)0(cid:15)000(cid:17)
(cid:36)ny commitments a(cid:69)ove this amo(cid:88)nt will re(cid:84)(cid:88)ire
the (cid:36)(cid:88)dit Committee Chairman’s approval(cid:17)
(cid:36) s(cid:88)mmary is availa(cid:69)le to the (cid:36)(cid:88)dit Committee
where amo(cid:88)nts have (cid:69)een committed (cid:69)elow
(cid:100)(cid:24)0(cid:15)000(cid:17) (cid:54)eparate en(cid:74)a(cid:74)ement letters are
si(cid:74)ned (cid:69)y o(cid:88)r CFO for each a(cid:88)dit and non(cid:16)a(cid:88)dit
en(cid:74)a(cid:74)ement with (cid:39)eloitte(cid:17)
(cid:36) (cid:69)rea(cid:78)down of the fees paid to (cid:39)eloitte
d(cid:88)rin(cid:74) the year(cid:15) incl(cid:88)din(cid:74) non(cid:16)a(cid:88)dit services(cid:15)
is set o(cid:88)t in note 6 to the consolidated
financial statements(cid:17)
(cid:44)t is the Company’s practice that it will see(cid:78)
(cid:84)(cid:88)otes from several firms(cid:15) which may incl(cid:88)de
(cid:39)eloitte(cid:15) (cid:69)efore wor(cid:78) on non(cid:16)a(cid:88)dit pro(cid:77)ects is
awarded(cid:17) Contracts are awarded to o(cid:88)r s(cid:88)ppliers
(cid:69)ased on individ(cid:88)al merits(cid:17) (cid:55)he Committee
and the Company’s mana(cid:74)ement are aware
that the level of fees paid to (cid:39)eloitte for
non(cid:16)a(cid:88)dit services compared to a(cid:88)dit services
was si(cid:74)nificantly hi(cid:74)her several years a(cid:74)o d(cid:88)e
to wor(cid:78) (cid:88)nderta(cid:78)en re(cid:74)ardin(cid:74) specialist ta(cid:91)
advice on certain transactions and(cid:15) has wor(cid:78)ed
to ens(cid:88)re that the non(cid:16)a(cid:88)dit fee levels have
red(cid:88)ced or are nil over the last few years as in
201(cid:26) and 2018(cid:17)
(cid:58)e receive advice from other firms for specific
pro(cid:77)ects and other lon(cid:74)(cid:16)term pro(cid:77)ects(cid:17) (cid:58)e have
contin(cid:88)ed to (cid:88)se (cid:51)wC(cid:15) (cid:46)(cid:51)(cid:48)(cid:42) and (cid:40)(cid:60) for vario(cid:88)s
pro(cid:77)ects (cid:113) some are new pro(cid:77)ects and some
have (cid:69)een contin(cid:88)in(cid:74) for several years(cid:17) (cid:58)e also
(cid:88)se different firms to s(cid:88)pport (cid:88)s on (cid:57)(cid:36)(cid:55) and ad
hoc (cid:51)(cid:36)(cid:60)(cid:40) iss(cid:88)es(cid:17)
Fair, balanced and understandable
(cid:58)hen formin(cid:74) its opinion as to whether the
(cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts is fair(cid:15) (cid:69)alanced
and (cid:88)nderstanda(cid:69)le(cid:15) the Committee reflected
on the information it had received and its
disc(cid:88)ssions thro(cid:88)(cid:74)ho(cid:88)t the year(cid:17)
› (cid:36)re the (cid:78)ey messa(cid:74)es in the narrative
reflected in the financial reportin(cid:74)(cid:34)
› (cid:36)re the (cid:46)(cid:51)(cid:44)s disclosed at an appropriate level
(cid:69)ased on the financial reportin(cid:74) and are they
the ri(cid:74)ht ones to (cid:88)se to descri(cid:69)e the (cid:69)(cid:88)siness(cid:34)
Is the report balanced?
› (cid:44)s there a (cid:74)ood level of consistency (cid:69)etween
the narrative reportin(cid:74) in the front and the
financial reportin(cid:74) in the (cid:69)ac(cid:78) of the report(cid:15)
and does the messa(cid:74)in(cid:74) reflected in each
remain consistent when read independently
of each other(cid:34)
› (cid:44)s the (cid:36)nn(cid:88)al (cid:53)eport a doc(cid:88)ment which is
(cid:88)nderstanda(cid:69)le (cid:69)y shareholders(cid:34)
› (cid:36)re the stat(cid:88)tory and ad(cid:77)(cid:88)sted meas(cid:88)res
e(cid:91)plained clearly with appropriate prominence(cid:34)
› (cid:36)re the (cid:78)ey (cid:77)(cid:88)d(cid:74)ements referred to in the
narrative reportin(cid:74) and the si(cid:74)nificant iss(cid:88)es
reported in this (cid:36)(cid:88)dit Committee (cid:53)eport
consistent with the disclos(cid:88)res of (cid:78)ey estimation
(cid:88)ncertainties and critical (cid:77)(cid:88)d(cid:74)ements set
o(cid:88)t in the financial statements(cid:34)
› (cid:43)ow do these compare with the ris(cid:78)s that
(cid:39)eloitte plan to incl(cid:88)de in their a(cid:88)dit report(cid:34)
Is the report understandable?
› (cid:44)s there a clear and (cid:88)nderstanda(cid:69)le
framewor(cid:78) to the report(cid:34)
› (cid:36)re the important messa(cid:74)es hi(cid:74)hli(cid:74)hted
appropriately thro(cid:88)(cid:74)ho(cid:88)t the doc(cid:88)ment(cid:34)
› (cid:44)s the layo(cid:88)t clear with (cid:74)ood lin(cid:78)a(cid:74)e
thro(cid:88)(cid:74)ho(cid:88)t in a manner that reflects
the whole story(cid:34)
Conclusion
Followin(cid:74) its review(cid:15) the Committee was of
the opinion that the 2018 (cid:36)nn(cid:88)al (cid:53)eport and
(cid:36)cco(cid:88)nts is representative of the year and
presents a fair(cid:15) (cid:69)alanced and (cid:88)nderstanda(cid:69)le
overview(cid:15) providin(cid:74) the necessary information
for shareholders to assess the (cid:42)ro(cid:88)p’s position(cid:15)
performance(cid:15) (cid:69)(cid:88)siness model and strate(cid:74)y(cid:17)
(cid:44)n partic(cid:88)lar(cid:15) the Committee considered
the same themes as it had in 201(cid:26)(cid:29)
ROB RUIJTER
CHAIRMAN, AUDIT COMMITTEE
Non-audit services
(cid:55)he Company’s (cid:36)(cid:88)ditor may also (cid:69)e (cid:88)sed
to provide specialist advice where(cid:15) as a res(cid:88)lt
of their position as (cid:36)(cid:88)ditor(cid:15) they either m(cid:88)st(cid:15) or
are (cid:69)est placed to(cid:15) perform the wor(cid:78) in (cid:84)(cid:88)estion(cid:17)
(cid:36) formal policy is in place in relation to the
provision of non(cid:16)a(cid:88)dit services (cid:69)y the (cid:36)(cid:88)ditor
to ens(cid:88)re that there is ade(cid:84)(cid:88)ate protection
of their independence and o(cid:69)(cid:77)ectivity(cid:17)
Is the report fair?
› (cid:44)s the whole story presented and has
any sensitive material (cid:69)een omitted
that sho(cid:88)ld have (cid:69)een incl(cid:88)ded(cid:34)
› (cid:44)s the reportin(cid:74) on the (cid:69)(cid:88)siness se(cid:74)ments
in the narrative reportin(cid:74) consistent with
those (cid:88)sed for the financial reportin(cid:74)
in the financial statements(cid:34)
18 (cid:48)arch 201(cid:28)
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80
(cid:42)overnance (cid:95) (cid:53)elations with (cid:54)hareholders
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
Relations with shareholders
Communicating with the
investment community
(cid:42)iven the importance placed (cid:69)y the Company
in comm(cid:88)nicatin(cid:74) with o(cid:88)r investors(cid:15) we see(cid:78)
to maintain a re(cid:74)(cid:88)lar and open dialo(cid:74)(cid:88)e with
c(cid:88)rrent e(cid:84)(cid:88)ity shareholders(cid:15) potential e(cid:84)(cid:88)ity
investors(cid:15) de(cid:69)t investors and sell side and
credit analysts thro(cid:88)(cid:74)h a comprehensive
investor relations pro(cid:74)ramme(cid:17)
(cid:55)his pro(cid:74)ramme is (cid:69)ased aro(cid:88)nd investor and
analyst presentations (cid:69)y senior mana(cid:74)ement(cid:15)
coverin(cid:74) the f(cid:88)ll year and interim res(cid:88)lts
(cid:11)in person(cid:12)(cid:15) and (cid:84)(cid:88)arterly res(cid:88)lts anno(cid:88)ncements
(cid:11)(cid:69)y we(cid:69)cast and conference call(cid:12)(cid:17) (cid:55)he
shareholder comm(cid:88)nication pro(cid:74)ramme
incorporates the (cid:36)(cid:42)(cid:48)(cid:15) investor roadshow
meetin(cid:74)s(cid:15) investor conference participation
as well as presentations to analysts and
investment (cid:69)an(cid:78)s’ e(cid:84)(cid:88)ity sales teams(cid:17)
(cid:48)ana(cid:74)ement participated in meetin(cid:74)s with
investment comm(cid:88)nities in the (cid:56)(cid:46)(cid:15) the (cid:56)(cid:17)(cid:54)(cid:17)
and in (cid:40)(cid:88)rope in 2018(cid:17)
(cid:55)he (cid:78)ey o(cid:69)(cid:77)ective of the Company’s investor
comm(cid:88)nication pro(cid:74)ramme is to ens(cid:88)re that
the investment comm(cid:88)nity contin(cid:88)es to have
a comprehensive and clear (cid:88)nderstandin(cid:74)
of the vario(cid:88)s dynamics and elements relatin(cid:74)
to (cid:44)nmarsat’s (cid:69)(cid:88)siness(cid:15) mar(cid:78)et environment(cid:15)
strate(cid:74)y(cid:15) operational performance and
f(cid:88)t(cid:88)re o(cid:88)tloo(cid:78)(cid:17)
(cid:55)he (cid:37)oard is aware that instit(cid:88)tional
shareholders and (cid:69)ondholders may (cid:69)e in
more re(cid:74)(cid:88)lar contact with the Company than
other shareholders(cid:15) (cid:69)(cid:88)t care is e(cid:91)ercised to
ens(cid:88)re that any price(cid:16)sensitive information
is released to all shareholders(cid:15) instit(cid:88)tional
and private(cid:15) at the same time in
accordance with the Financial Cond(cid:88)ct
(cid:36)(cid:88)thority re(cid:84)(cid:88)irements(cid:17)
Investor communication channels
(cid:55)he (cid:37)oard is responsi(cid:69)le for ens(cid:88)rin(cid:74)
that a consistent and open dialo(cid:74)(cid:88)e with
shareholders is maintained(cid:15) with the Chief
(cid:40)(cid:91)ec(cid:88)tive Officer(cid:15) Chief Financial Officer and
(cid:43)ead of (cid:44)nvestor (cid:53)elations (cid:69)ein(cid:74) the Company’s
principal representatives with the investment
comm(cid:88)nity(cid:17) F(cid:88)rthermore(cid:15) the Chairman and
(cid:54)enior (cid:44)ndependent (cid:39)irector are availa(cid:69)le
to shareholders if they have concerns which
cannot (cid:69)e raised thro(cid:88)(cid:74)h the normal channels
or if s(cid:88)ch concerns have not (cid:69)een resolved(cid:17)
(cid:44)n total(cid:15) senior mana(cid:74)ement participated
in over 600 meetin(cid:74)s or conference
calls with (cid:69)(cid:88)y side and sell side instit(cid:88)tions
in 2018(cid:15) (cid:69)oth in the e(cid:84)(cid:88)ity and de(cid:69)t mar(cid:78)ets(cid:15)
incl(cid:88)din(cid:74) e(cid:91)istin(cid:74) shareholders and
potential shareholders(cid:17)
(cid:55)he (cid:37)oard o(cid:69)tains feed(cid:69)ac(cid:78) from senior
mana(cid:74)ement as well as from its (cid:77)oint
corporate (cid:69)ro(cid:78)ers(cid:15) (cid:45)(cid:17)(cid:51)(cid:17) (cid:48)or(cid:74)an Ca(cid:93)enove
and Credit (cid:54)(cid:88)isse(cid:15) on the views of
instit(cid:88)tional investors on a non(cid:16)attri(cid:69)(cid:88)ted
and attri(cid:69)(cid:88)ted (cid:69)asis(cid:17) (cid:36)s a matter of ro(cid:88)tine(cid:15)
the (cid:37)oard receives re(cid:74)(cid:88)lar reports on iss(cid:88)es
relatin(cid:74) to share price and tradin(cid:74) activity(cid:15)
and details of movements in instit(cid:88)tional
investor shareholdin(cid:74)s(cid:17) (cid:55)he (cid:37)oard is also
re(cid:74)(cid:88)larly provided with c(cid:88)rrent analyst
opinions and forecasts(cid:17)
(cid:39)(cid:88)rin(cid:74) 2018(cid:15) after the 2018 (cid:36)(cid:42)(cid:48)(cid:15) there have
(cid:69)een three sets of shareholder comm(cid:88)nications
to (cid:78)ey shareholders and pro(cid:91)y a(cid:74)encies as part
of a detailed shareholder cons(cid:88)ltation e(cid:91)ercise
re(cid:74)ardin(cid:74) a new (cid:53)em(cid:88)neration (cid:51)olicy(cid:17) (cid:55)his
has (cid:69)een led (cid:69)y the (cid:53)em(cid:88)neration Committee
Chairman(cid:15) the (cid:37)oard Chairman and the
Company (cid:54)ecretary(cid:17) (cid:55)he en(cid:74)a(cid:74)ement from
those cons(cid:88)lted has (cid:69)een very m(cid:88)ch appreciated(cid:17)
600+
Meetings or conference calls with analysts
and institutions in 2018
2018 Annual Report and 2019 AGM
(cid:55)his a(cid:88)dited 2018 (cid:36)nn(cid:88)al (cid:53)eport will (cid:69)e
made availa(cid:69)le to shareholders and all
res(cid:88)lts are posted on the Company’s we(cid:69)site(cid:15)
as are presentations made in respect of the
company’s financial res(cid:88)lts(cid:17)
(cid:54)hareholders are welcome at the Company’s
(cid:36)(cid:42)(cid:48) where they will have an opport(cid:88)nity to
meet the (cid:37)oard(cid:17) (cid:55)he notice of the (cid:36)(cid:42)(cid:48) is sent
to all shareholders at least 20 wor(cid:78)in(cid:74) days
(cid:69)efore the meetin(cid:74)(cid:17) (cid:55)he Chairmen of the
(cid:36)(cid:88)dit and the (cid:53)em(cid:88)neration Committees(cid:15)
to(cid:74)ether with as many (cid:39)irectors as possi(cid:69)le(cid:15)
will attend the 201(cid:28) (cid:36)(cid:42)(cid:48) and (cid:69)e availa(cid:69)le
to answer shareholders’ (cid:84)(cid:88)estions(cid:17) (cid:57)otin(cid:74)
on all resol(cid:88)tions at the (cid:36)(cid:42)(cid:48) is on a poll(cid:17)
(cid:55)he pro(cid:91)y votes cast(cid:15) incl(cid:88)din(cid:74) details of
votes withheld(cid:15) are disclosed on o(cid:88)r we(cid:69)site
and anno(cid:88)nced to the (cid:56)(cid:46) (cid:47)istin(cid:74) (cid:36)(cid:88)thority
thro(cid:88)(cid:74)h a (cid:53)e(cid:74)(cid:88)latory (cid:44)nformation (cid:54)ervice
immediately after the meetin(cid:74)(cid:17) Facilities
are provided for shareholders to vote
electronically either thro(cid:88)(cid:74)h (cid:40)lectronic
(cid:51)ro(cid:91)y (cid:57)otin(cid:74) or thro(cid:88)(cid:74)h C(cid:53)(cid:40)(cid:54)(cid:55)(cid:17)
Details of our results announcements
for 2019 are shown below:
1 May 2019
(cid:36)(cid:42)(cid:48) and (cid:52)1 201(cid:28) res(cid:88)lts
1 August 2019*
(cid:44)nterim res(cid:88)lts for the half year
to 30 (cid:45)(cid:88)ne 201(cid:28)
7 November 2019*
(cid:52)3 201(cid:28) res(cid:88)lts
(cid:13) (cid:55)hese dates are provisional and may chan(cid:74)e
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
(cid:42)overnance (cid:95) (cid:39)irectors’ (cid:53)em(cid:88)neration (cid:53)eport
81
Directors’ Remuneration Report
In this section
81 Annual Statement from
Committee Chairman
84 2019 Directors’ Remuneration Policy
86 (cid:54)hareholdin(cid:74) (cid:74)(cid:88)idelines
8(cid:26) (cid:51)erformance meas(cid:88)rement selection
8(cid:26) (cid:53)em(cid:88)neration policy for other employees
8(cid:26) (cid:51)ay scenario charts for the C(cid:40)O and CFO
8(cid:26) (cid:36)pproach to recr(cid:88)itment rem(cid:88)neration
88 (cid:40)(cid:91)ec(cid:88)tive (cid:39)irector service contracts
and e(cid:91)it payment policy
8(cid:28) (cid:49)on(cid:16)(cid:40)(cid:91)ec(cid:88)tive (cid:39)irectors
8(cid:28) (cid:40)(cid:91)ternal appointments
8(cid:28) Consideration of shareholder views
90 Annual Report on Remuneration
(cid:28)0 (cid:53)em(cid:88)neration Committee mem(cid:69)ership
in 2018
(cid:28)0 (cid:36)dvisors
(cid:28)0 (cid:54)(cid:88)mmary of shareholder votin(cid:74) at the
201(cid:26) and 2018 (cid:36)(cid:42)(cid:48)s
(cid:28)1 (cid:54)in(cid:74)le fi(cid:74)(cid:88)re of total rem(cid:88)neration
for (cid:40)(cid:91)ec(cid:88)tive (cid:39)irectors (cid:11)a(cid:88)dited(cid:12)
(cid:44)ncentive o(cid:88)tcomes for the year
ended 31 (cid:39)ecem(cid:69)er 2018 (cid:11)a(cid:88)dited(cid:12)
(cid:28)1
(cid:28)(cid:23) (cid:36)dditional disclos(cid:88)re of 201(cid:26)
performance tar(cid:74)ets (cid:11)a(cid:88)dited(cid:12)
(cid:28)(cid:24) (cid:54)cheme interests awarded in 2018 (cid:11)a(cid:88)dited(cid:12)
(cid:28)(cid:24) (cid:51)ension (cid:11)a(cid:88)dited(cid:12)
(cid:28)6 (cid:54)in(cid:74)le fi(cid:74)(cid:88)re of total rem(cid:88)neration for
(cid:49)on(cid:16)(cid:40)(cid:91)ec(cid:88)tive (cid:39)irectors (cid:11)a(cid:88)dited(cid:12)
(cid:28)6 (cid:40)(cid:91)it payments made in the year (cid:11)a(cid:88)dited(cid:12)
(cid:28)6 (cid:51)ayments to past (cid:39)irectors (cid:11)a(cid:88)dited(cid:12)
(cid:28)6 (cid:40)(cid:91)ternal appointments for
(cid:40)(cid:91)ec(cid:88)tive (cid:39)irectors
(cid:36)nn(cid:88)al statement from
the (cid:53)em(cid:88)neration
Committee Chairman(cid:15)
(cid:54)imon (cid:37)a(cid:91)
Dear shareholder
On (cid:69)ehalf of the (cid:37)oard(cid:15) (cid:44) am pleased to
present the (cid:39)irectors’ (cid:53)em(cid:88)neration (cid:53)eport
for the year ended 31 (cid:39)ecem(cid:69)er 2018(cid:17)
(cid:36)t o(cid:88)r 2018 (cid:36)(cid:42)(cid:48) a ma(cid:77)ority of shareholders
voted a(cid:74)ainst the resol(cid:88)tion to approve o(cid:88)r
rem(cid:88)neration report(cid:17) (cid:55)his o(cid:88)tcome followed
a hi(cid:74)h vote a(cid:74)ainst o(cid:88)r rem(cid:88)neration report
in 201(cid:26)(cid:17) (cid:58)e have heard from those cons(cid:88)lted
since the (cid:36)(cid:42)(cid:48) that there was no sin(cid:74)le reason
for the hi(cid:74)h vote a(cid:74)ainst the rem(cid:88)neration
report(cid:15) altho(cid:88)(cid:74)h d(cid:88)rin(cid:74) the e(cid:91)tensive
cons(cid:88)ltation that we have (cid:88)nderta(cid:78)en it is
clear that the overridin(cid:74) iss(cid:88)e has (cid:69)een that
the level of e(cid:91)ec(cid:88)tive pay was felt to (cid:69)e
ins(cid:88)fficiently ali(cid:74)ned to performance and
partic(cid:88)larly share price performance(cid:17)
SIMON BAX
CHAIRMAN,
REMUNERATION
COMMITTEE
(cid:28)6 (cid:44)mplementation of (cid:53)em(cid:88)neration
(cid:51)olicy for 201(cid:28)
(cid:28)8 (cid:49)on(cid:16)(cid:40)(cid:91)ec(cid:88)tive (cid:39)irector fees
(cid:28)8 (cid:55)otal shareholder ret(cid:88)rn
(cid:28)8 C(cid:40)O nine(cid:16)year rem(cid:88)neration history
(cid:11)a(cid:88)dited(cid:12)
(cid:28)(cid:28) (cid:51)ercenta(cid:74)e chan(cid:74)e in C(cid:40)O rem(cid:88)neration
(cid:28)(cid:28) C(cid:40)O pay ratio
(cid:28)(cid:28) (cid:53)elative importance of spend on pay
100 (cid:39)irectors’ shareholdin(cid:74) (cid:11)a(cid:88)dited(cid:12)
100 (cid:39)irectors’ interests in shares in
(cid:44)nmarsat lon(cid:74)(cid:16)term incentive plans
and all(cid:16)employee plans (cid:11)a(cid:88)dited(cid:12)
100 (cid:44)nmarsat (cid:37)on(cid:88)s (cid:54)hare (cid:36)wards (cid:11)a(cid:88)dited(cid:12)
101 (cid:44)nmarsat (cid:51)erformance (cid:54)hare
(cid:36)wards (cid:11)a(cid:88)dited(cid:12)
101 (cid:44)nmarsat (cid:54)haresave (cid:54)cheme
(cid:44)n relation to the policy itself(cid:15) even tho(cid:88)(cid:74)h
(cid:28)0(cid:8) of shareholders s(cid:88)pported the policy in
201(cid:26) we have listened to comments that the
policy for incentive pay is too hi(cid:74)h(cid:15) too foc(cid:88)sed
on the short term and over(cid:16)complicated (cid:69)y
havin(cid:74) two incentive plans (cid:69)oth of which are
deemed to (cid:69)e short term as they meas(cid:88)red
performance over a sin(cid:74)le year(cid:17)
(cid:44)n relation to the application of the policy(cid:15)
investors felt that there was an (cid:88)nhelpf(cid:88)l
d(cid:88)plication of (cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) across the plans(cid:15)
ins(cid:88)fficient disclos(cid:88)re in relation to the strate(cid:74)ic
tar(cid:74)ets in the (cid:51)(cid:54)(cid:36) (cid:11)o(cid:88)r (cid:47)(cid:55)(cid:44)(cid:51)(cid:12) and a feelin(cid:74) that
the performance conditions have not (cid:69)een
s(cid:88)fficiently stretchin(cid:74) to (cid:77)(cid:88)stify the rem(cid:88)neration
levels paid(cid:17) Finally(cid:15) we la(cid:74)(cid:74)ed (cid:69)est practice
(cid:69)y not disclosin(cid:74) the performance tar(cid:74)ets
for the ann(cid:88)al (cid:69)on(cid:88)s and (cid:37)(cid:54)(cid:36) immediately(cid:15)
(cid:69)(cid:88)t a year in arrears(cid:17)
(cid:36)s part of a very comprehensive en(cid:74)a(cid:74)ement
process with a s(cid:88)(cid:69)stantial n(cid:88)m(cid:69)er of investors
and representative (cid:69)odies(cid:15) and havin(cid:74) listened
very caref(cid:88)lly and modified o(cid:88)r thin(cid:78)in(cid:74) as we
have finalised o(cid:88)r plannin(cid:74)(cid:15) we are proposin(cid:74) a
new policy which will (cid:69)rin(cid:74) o(cid:88)r disclos(cid:88)re in line
with the standards e(cid:91)pected (cid:69)y shareholders(cid:17)
(cid:58)e will simplify the incentive plans(cid:15) ens(cid:88)re
stretchin(cid:74) tar(cid:74)ets are (cid:88)sed(cid:15) red(cid:88)ce the overall
rem(cid:88)neration opport(cid:88)nity and improve the
ali(cid:74)nment of lon(cid:74)(cid:16)term and short(cid:16)term
interests (cid:69)etween e(cid:91)ec(cid:88)tives and shareholders(cid:17)
(cid:58)e will (cid:69)rin(cid:74) o(cid:88)r disclos(cid:88)re in line with the
standards e(cid:91)pected (cid:69)y shareholders and provide
information for 2018 performance in this (cid:53)eport(cid:17)
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rem(cid:88)neration for 2018(cid:15) the Committee is (cid:88)sin(cid:74)
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performance in 2018 in lar(cid:74)e part to reco(cid:74)nise
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82
Governance | Directors’ Remuneration Report
Inmarsat plc | Annual Report and Accounts 2018
Remuneration Report
continued
We spent considerable
time engaging with
shareholders to ensure
the new policy and
its implementation
is appropriate
In addition to seeking shareholder approval
for a new remuneration policy and the annual
shareholder vote on the remuneration report,
there is a further resolution to approve an
increase to the individual limit in our long-term
incentive plan, to facilitate a rebalancing of
incentives from short-term to longer-term
performance. I very much hope that the
changes set out in this report and summarised
in my Statement will ensure a positive outcome
at the 2019 AGM on all three resolutions.
Performance in 2018 and
incentive payments to executives
Business performance during 2018
sets the context for how the Committee
has reviewed pay for performance and
assessed achievement against objectives.
During the course of the year, we delivered
consistent profitable revenue growth,
supported by our diversified portfolio,
through a combination of our established
L-band services and our new, higher growth
broadband GX services, particularly in the
In-Flight Connectivity segment in Aviation. This
growth was delivered in spite of an intensifying
competitive environment in the mid-market
in Maritime, which, given the relative weighting
of Maritime in our revenue base, continues to
be an important driver of investor sentiment
and, consequently, our share price.
Our revenue growth of 5% for the year was again
supported by a focus on operational leverage
through a carefully controlled cost base, with
EBITDA growing by 4%, and an infrastructure
capital investment programme that is expected
to meaningfully moderate from the start of
the next decade. These factors will help us to
generate sustained free cash flow over the
medium to long term.
Looking at the specifics of performance from
a remuneration viewpoint, the performance
conditions for the Annual Bonus and BSA
were our Revenue and EBITDA performance
and for the Annual Bonus a small part of the
overall opportunity was based on the individual
performance of the executive directors.
At the start of the year our business plan was
forecasting relatively flat performance against
both Revenue and EBITDA and we were pleased
to deliver year on year growth of 5% and 4%
respectively against both measures. At the same
time there has been strong performance of
the executive directors against the achievement
of the short-term operational milestones on
which their individual performance was based.
For the PSA award granted in 2016, 2018
represented the final year of the three-year
performance measurement period. Performance
conditions were Total Shareholder Return,
EBITDA and Strategic Objectives. Over the three
years to 2018, the Company has made good
progress against its strategic objectives, which
has positioned us well for the future. However,
over the three-year performance period we
fell short of the challenging EBITDA targets
that were set and we experienced a significant
decline in our share price. This meant that whilst
there was partial vesting against the Strategic
Objectives there was no vesting of the portions
of the award measured by reference to EBITDA
or TSR performance.
On the basis of the formula-driven performance
conditions the total remuneration for the
Chief Executive and Chief Financial Officer would
have been £2,347k and £1,899k respectively.
However, recognising the wider performance
factors and in particular the shareholder
experience over the year under review (and the
three-year performance period of the financial
elements of the 2016 PSA) the Committee has
used its discretion to reduce pay for FY18 very
significantly. The pay-out level under the PSA
has been reduced from £150k and £115k for the
CEO and CFO respectively to £75k and £58k.
This was considered appropriate recognising
that, despite good progress against the
Company’s Long Range Business Plan,
against wider business KPIs the performance
had fallen short of the Board’s expectations.
Additionally the Committee reviewed the
pay-out level under the BSA and determined
that the indicative level of vesting was too high
in relation to the improvements in financial
performance over the year and when considering
the share price performance over 2018.
Accordingly, the Committee determined that
the payment should be reduced from £1,008k
and £781k for the CEO and CFO respectively
to £415k and £317k. Overall the level of pay has
been reduced by £593k and £464k for the CEO
and CFO respectively, which ensures that their
pay for FY18 is lower than that received for FY17
(which itself followed a trend of reducing pay
over recent years) on the single figure reported
in the 2017 Annual Report and the 2017 figure
reported in this Annual Report which is adjusted
for the actual share price rather than average.
We believe that this decisive use of discretion
to reduce pay for FY18 is in shareholders’ short
and long-term interests.
Inmarsat plc | Annual Report and Accounts 2018
Governance | Directors’ Remuneration Report
83
If the formula driven payments deliver a result
which is at odds with the wider performance
of the business the Committee will, again,
consider the use of discretion to adjust
the outcome.
Our shareholding guideline will remain at
500% of base salary, which our Chief Executive
comfortably exceeds and our Chief Financial
Officer is building towards. These continue
to be at the upper end of what is the norm and
support the alignment with shareholders.
Further detail on the implementation of our
Policy for 2019 is included on pages 90 to 101.
Corporate Governance Code and
Companies Act reporting changes
We aim to comply with the new UK Corporate
Governance Code during FY19 and, in particular,
are looking at broader stakeholder engagement
carefully. Also, we are reporting early in line with
the new legislative requirements for Directors’
pay, including disclosing our CEO pay ratios
to the rest of the UK workforce in this report.
Summary
I would like to thank shareholders for their
input during the year. We believe that we have
significantly improved our policy and the
way it will be operated. I hope we can count
on shareholders’ support at the 2019 AGM,
where I will be available to respond to any
questions shareholders may have on this
report or in relation to the Committee’s
activities. I continue to be available to meet
and discuss our remuneration arrangements
with shareholders.
SIMON BAX
CHAIRMAN,
REMUNERATION COMMITTEE
18 March 2019
A new remuneration policy for FY19-21
During the year the Committee undertook
a very detailed review of our remuneration
policy to ensure that it addresses shareholder
concerns by providing a stronger link between
reward and performance. We spent considerable
time engaging in extensive discussions with
shareholders during 2018 and early in 2019 to
ensure that the new policy, and its operation are
appropriate going forward. We have adapted
the policy to take on board shareholder
comments through the consultation process
and are appreciative of the constructive and
helpful engagement we received from them
and the proxy agencies.
Under the new policy we have strengthened
the link between pay and performance in the
following ways:
› A material reduction in the level of incentive
pay under the policy and compared to FY18
actual incentive levels
› An increase to the proportionate weighting
to the long-term incentive, for example
from a combined potential opportunity
for the CEO of 310% of salary under the
two short-term plans and 185% of salary
on the PSA, to 200% of salary being based
on short-term performance and 250% of
salary based on long-term performance
› One simpler single annual bonus plan
instead of two
› The annual bonus maximum opportunity
has been reduced materially to 200% for
both Executive Directors, with 50% invested
in shares which must be held for the long term
› There is no duplication of performance
measures in annual bonus and long-term
incentives
› Long-term incentive awards have been
increased to 250% for both Executive Directors
› We have included a formal overriding
discretion to adjust the formulaic outcome
of incentive awards as envisaged by the
Corporate Governance Code
› We have robust clawback and malus
provisions which have been strengthened
This builds on some strong attributes of our
previous policy, especially the very high share
ownership requirements (500% of salary) and
the very low level of pension contributions.
There are further changes to the detail of the
policy, which are summarised on pages 84 to 89.
Implementation of the
remuneration policy in 2019
Our salary review takes place in June with any
changes taking effect from 1 July. Any changes
to salary levels will be no higher than the
workforce average. The Executive Directors
participate in the same pension and benefits
programmes as other employees in the UK
and on the same basis. The employer pension
contribution will remain at circa 3% of salary,
which is equivalent of 12.5% of capped salary.
In addition to making significant changes to
the policy for incentives, we have made several
changes to its operation. In particular we have
increased the weighting to financial performance
measures under the annual bonus and are
focusing on two important business KPIs
that we use to measure underlying financial
performance: Revenue, which will apply to 30%,
and EBITDA, which will apply to 50% of the
bonus. Stretching performance conditions have
been set for each measure, which represent a
significant improvement on the FY18 year-end
numbers (noting that 2018 included contributions
from our co-operation agreement with Ligado
and there is no such contribution in 2019)
and an improvement on prior years’ ranges.
The element based on non-financial measures
and personal performance will be weighted at
a maximum of 20% of the overall bonus.
In addition to setting challenging target ranges,
the Committee has adjusted the sliding scales
for payment so that the pay-outs commence
for performance at 5% below target (not 10%)
and the target level of pay-out is 60% of the
maximum (down from 71.9% as the average
across both of the previous bonus plans). We will
keep under review the target level of pay-out
over the policy period. The maximum annual
bonus opportunity will be 200% of base salary,
with half (after deduction for tax) delivered in
shares, which must be held for the long term.
There will be no overlap between the performance
measures used for the annual bonus and the
PSA awards. Vesting for the PSA will continue
to be based on relative TSR, measured against
the constituents of the FTSE 250 (instead
of FTSE 50-150) excluding investment trusts
(50% of total award), Free Cash Flow (25%)
and the delivery of specific strategic objectives
considered key drivers to our future success
(25%). The PSA award level will now be 250%
of salary, with 25% of the award vesting for
threshold performance. A two-year holding
period will continue to apply to vested PSA
shares, during which time shares may not
be sold except to cover taxes.
GovernanceFinancial StatementsStrategic Report 84
Governance | Directors’ Remuneration Report
Inmarsat plc | Annual Report and Accounts 2018
The Group’s Remuneration Policy is designed to
align directors’ pay with the long-term strategy
and sustainable success of the Group. We take
into account the Group’s overall business
strategy, business performance in the current
year and expectations for future years as
incorporated into our Long Range Business Plan
(‘LRBP’), pay arrangements in the wider Inmarsat
workforce and alignment of remuneration policy
throughout the Group, and the global economic
situation as well as investor views and feedback.
We will consult with shareholders in advance
of major changes to the Remuneration Policy
or where we consider there are material changes
to operation of the Policy. The Committee is
committed to the principle that the Company
should pay at the appropriate level to recruit
and retain executives and incentivise them
to achieve the Company’s business strategy
to create long-term sustained value
for shareholders.
Remuneration Report
continued
2019 Directors’
Remuneration Policy
At our 2018 AGM a majority of shareholders
voted against the resolution to approve our
remuneration report. This means we must seek
shareholder approval for a new remuneration
policy at our May 2019 AGM. As noted in
the Chairman’s Statement we have consulted
extensively with shareholders and this Directors’
Remuneration Policy is put forward for a binding
shareholder vote at the 2019 AGM and will take
effect from the date of the AGM. The changes
we have made to the new remuneration
policy compared to the 2017 policy are
summarised as follows:
› Maximum employer pension contribution
is reduced from 20% of salary to 12.5%
of salary (although current directors will
receive contributions of circa 3% of salary)
› We currently have two bonus schemes
measuring performance over a single year;
the Cash Bonus (up to 125% of salary)
and the Bonus Share Award (BSA) (up to
200% of salary). The total current short term
incentive opportunity is 325% of salary
overall. Instead, maximum annual bonus
opportunity will be significantly reduced
under a single new annual bonus plan
to 200% of salary
› 50% of any bonus earned will be payable in
cash and the remaining 50% will be required
to be invested in shares, after tax. The shares
will be owned beneficially by the executive
at the outset but must be held and not sold
for at least one, two and three years and
then in equivalent one third tranches.
The shares will remain subject to clawback
during the holding period
› There will be flexibility for up to 20% of
annual bonus to be subject to non-financial/
strategic performance measures
(previously 30%) for the Cash Bonus
› The threshold level of bonus payment
will be no more than 25% of maximum.
Previously this was much higher at 35.8%
across both the Cash Bonus and BSA
› The target level for the annual bonus payment
is being removed from the Policy and will
be set annually in line with the business plan.
The target level though will not exceed 60%.
Target payment was previously much
higher across both the previous Cash Bonus
and BSA
› For the PSA there will be policy flexibility
for up to 25% of the award to be subject
to strategic measures (previously 40%).
At a threshold level of performance 25% of
any PSA award may vest under any measure.
Previously the threshold level for a TSR,
EBITDA or Strategic performance condition
was 30%/0%/0%
› Clawback and malus provisions have been
strengthened to add reputational damage
and corporate failure as specified ‘trigger
events’ for clawing back previous payments,
in line with the 2018 UK Corporate Governance
Code (the Code) requirements
› There will be a discretionary override for all
incentive payments to allow the Committee
to adjust the formula driven outturn for
any incentive payment, taking into account
all relevant factors
› We have considered carefully the requirements
in the Code for post cessation of employment
shareholding requirements. The ‘good leaver’
provisions in the annual bonus and PSA will
require that performance is measured over
the full period (not accelerated to cessation
of employment). Holding requirements for
beneficially owned shares for all categories of
leaver under the bonus and PSA will continue
after cessation of employment as well as for
unvested awards retained by good leavers.
On this basis there would continue to
be a significant interest in shares after an
executive has left
Inmarsat plc | Annual Report and Accounts 2018
Governance | Directors’ Remuneration Report
85
The remuneration policy is set out in the table below:
How does this link to strategy
What happens in practice
What amounts can be paid
How do we assess performance
BASIC SALARY
Paying market-competitive
base salaries, commensurate
with the individual’s role,
responsibilities and experience,
allows us to recruit and retain
Executive Directors of the
calibre required to implement
our strategy.
Providing an appropriate
fixed level of pay commensurate
for the role, ensures no over
reliance on variable pay.
BENEFITS IN KIND
We provide cost-effective
benefits which support
the wellbeing of employees
and maximise business
continuity.
PENSION
We provide defined
contribution pension
arrangements, or
cash in lieu of pension.
Salaries are reviewed annually with any
increase generally made in July or following
a material change in responsibilities.
Any increase is determined by a formal
appraisal by the Committee; taking into
account market pay levels; a review of
salaries against companies of similar size,
complexity and type; Group and individual
performance, as well as the remuneration
arrangements operated throughout
the Group, with reference to UK-based
employees in particular for pay
comparison levels.
Provision of death, long-term sickness
and medical and dental insurance cover
(which can include spouse and dependants
cover). Life assurance of four times salary,
paid holiday and medical check-ups
are also provided.
If required, the Company would provide
access to independent financial and
legal advice on a case-by-case basis.
Provision of other reasonable benefits
including in the event of relocation,
temporary accommodation and
other related costs will be considered
on a case-by-case basis.
The Company may make contributions
to its defined contribution pension plan,
similar pension plans as appropriate
to the Executive Director’s nationality
or location, our auto-enrolment pension
scheme and/or make cash payments
in lieu based on a percentage of salary.
Based on Company performance
and individual contribution.
Not applicable.
The maximum annual salary increase
will normally be in line with the average
increase applied to the UK workforce.
However, larger increases may be
awarded in certain circumstances
including, but not limited to, an increase
in scope or responsibility of the role;
to apply salary progression for a
newly appointed Director; where the
Director’s salary has fallen behind
market positioning.
The benefits provided, which may vary
by role and levels of cover provided,
will reflect market practice and the
individual circumstances of the
Executive Directors.
It is not anticipated that the current
cost of benefits (as set out in the
Annual Report on Remuneration)
would increase materially over the
period for which this Policy will apply.
The Committee retains the discretion
to approve a higher cost in exceptional
circumstances (e.g. relocation)
or in circumstances where factors
outside the Company’s control have
changed materially.
Maximum employer contributions
are 12.5% of the basic salary.
Not applicable.
GovernanceFinancial StatementsStrategic Report 86
Governance | Directors’ Remuneration Report
Inmarsat plc | Annual Report and Accounts 2018
Remuneration Report
continued
How does this link to strategy
What happens in practice
What amounts can be paid
How do we assess performance
ANNUAL BONUS
To incentivise the achievement
of annual financial, strategic
and operational goals in line
with Group strategy.
Bonus payment levels are determined
by the Committee annually by reference
to performance against targets set at
the start of the financial year.
The requirement for Executive
Directors to acquire shares
with their bonus provides a
mechanism for alignment with
longer-term performance and
alignment of shareholders’
interests.
The annual bonus is determined by
pre-determined performance conditions.
The Committee has the discretion to adjust
the formulaic bonus outcome where the
outcome is not truly reflective of performance,
delivery of value to shareholders or reward
outcomes more widely within the workforce.
Maximum opportunity:
› 200% of salary for both
the CEO and CFO
Threshold opportunity:
› 25% of maximum
The Target opportunity will be
determined annually.
Bonus is based on achievement
of annual financial and strategic
objectives.
Performance measures and
objectives are selected at
the beginning of the year that
best support the delivery of the
Company’s strategy. The strategic
element will not account for more
than 20% of the total in any year.
For the financial measures a
graduated scale of targets will
be set. In relation to strategic
objectives the structure of the
target will vary based on the
nature of the target set and it will
not always be practicable to set
targets using a graduated scale.
Vesting may therefore take place
in full if specific criteria are met
and judgement may be applied
by the Committee.
Details of the measures and
weightings and performance
against targets for the financial
year under review are provided
in the Annual Report on
Remuneration.
The Committee selects
performance measures and
objectives at the time awards
are granted that best support
the delivery of the Company’s
long-term strategy.
Strategic measures, if included,
will not account for more than
25% of the total award in any year.
Details of the measures, weightings
and targets applicable to an award
are provided prospectively in the
Annual Report on Remuneration
implementation of policy section
for the year ahead.
Maximum opportunity for all Executive
Directors is up to 250% of salary.
Threshold performance is 25%
of maximum.
There is the opportunity for an
exceptional award of up to 300% of
salary which would not be used unless
it was appropriate to do so and fully
explained in the implementation report.
Participation levels set by HMRC or
relevant local laws from time to time.
Not applicable.
The level of requirement and
calculation is set out in the Annual
Report on Remuneration.
Not applicable.
The bonus is paid in cash and the Executive
Directors are required to invest 50% of
the bonus earned (after payment of taxes)
in shares in the Company. One third of the
shares must be held for one, two and three
years. The holding period continues post
cessation of employment.
The Committee may apply malus and claw
back bonuses in circumstances including
(but not limited to) error in calculation,
gross misconduct, fraud, corporate failure,
reputational damage or misstatement.
PERFORMANCE SHARE AWARD (‘PSA’)
The PSA aligns executives’
interests with long-term
performance and shareholder
value creation through
rewarding the delivery of our
longer-term business strategy
with shares in the Company
which are then retained
for a period post vesting.
The performance measures
in the PSA reflect the value
drivers in the LRBP.
We make annual awards of conditional
shares, which vest after a minimum
of three years subject to performance
over a three-year period.
A mandatory two-year holding period
(after sales to meet taxes) applies to
vested awards.
Additional shares in lieu of accrued dividends
over the vesting period are awarded only
on the number of shares that vest.
Unvested awards are subject to adjustment
for malus and clawback, i.e. forfeiture or
reduction in exceptional circumstances
including (but are not limited to) error
in calculation, gross misconduct, fraud,
corporate failure, reputational damage
or misstatement.
EMPLOYEE SHARE PLANS
To encourage share ownership
across all employees as
allowed by HMRC and relevant
local laws.
We operate employee share savings
plans for our global workforce where,
depending on location, savings periods
of between two and three years operate.
We will look at opportunities to offer
other employee share plans in the future.
The Executive Directors must retain at
least 50% of shares acquired from annual
bonus payments and vesting of PSA
awards until the shareholding requirement
of 500% of salary is achieved.
SHAREHOLDING GUIDELINE
To build and retain a holding
of shares in the Company
which increases alignment of
interest between management
and shareholders and the
longer-term performance
of the Company.
Inmarsat plc | Annual Report and Accounts 2018
Governance | Directors’ Remuneration Report
87
Legacy arrangements
Authority is given to the Company to honour any share awards entered
into with the Executive Directors under the 2014 and 2017 Policies.
Details of such outstanding share awards to Executive Directors are
provided in the Annual Report on Remuneration.
Performance measurement selection
Performance measures and objectives are selected that best support
the delivery of the Company’s strategy, both short term and longer term.
Performance targets are stretching, taking into account a range of
reference points including the Group’s annual budget, LRBP, the market in
which the Company operates, the expected performance of competitors in
these same markets, broker forecasts, the market and economic outlook,
and latest internal forecasts. The Committee may adjust and/or set
different performance measures and targets following a corporate event
(such as a change in strategy, a material acquisition and/or divestment of
a Group business) or a significant change in prevailing market conditions
either specific to the Company’s sector or macro-economic events which
causes the Committee to determine that the measures and/or targets
are no longer appropriate and that amendment is required so that the
relevant award achieves its original purpose provided that the new
targets are not materially less difficult to satisfy.
How the Executive Director pay policy aligns
to the remuneration policy for other employees
Inmarsat operates remuneration arrangements to support our
business strategy and attract and retain high-performing individuals.
These principles apply to all employees across the Group, including
the Executive Directors. As a global organisation, we also ensure that
remuneration arrangements, particularly pensions and employee
benefits are appropriate to each local market in which we operate.
The financial metrics and targets for our group-wide bonus plan are
consistent with those which apply to the Executive Directors. The members
of the Group Executive Management Team (senior direct reports to
the CEO) participate in the PSA along with the two Executive Directors.
Some performance measures are different for the Executive Team.
We also operate sales incentive plans for our front-line sales employees, which
have measures and targets appropriate for their roles and accountabilities.
The Executive Directors participate in the same pension and benefits
programmes as other employees in the UK. We do not operate separate
‘executive pension or benefits plans’.
Inmarsat operates a number of all employee share plans, which have
defined rules and are subject to local regulations. Currently these
are the UK Sharesave Scheme, Employee Share Participation Plan
(for U.S. and Canadian employees) and the International Sharesave Scheme.
The Executive Directors are eligible to participate in the plans relevant
to their geography on the same basis as other local employees.
The Committee takes into consideration the remuneration arrangements
for the wider employee population in making its decisions on remuneration
for senior executives. This relates to our philosophy around levels of base
salary, operating bonus plans for all employees, pension entitlement
and provision of benefits also being available across the Group.
The Group consults with its employees on general employment policies
in a range of ways, including formal consultation forums in some countries
where it operates. Our staff are encouraged to provide feedback directly
to their line managers or to the HR team or to a confidential email address
which will receive queries on all issues including anti-bribery.
Pay scenario charts for the CEO and CFO
The following charts illustrate the potential future reward opportunities
for the two current Executive Directors (CEO and CFO), and the potential
split between the different elements of pay under three different
performance scenarios: ‘Minimum’, ‘Target’, and ‘Maximum’. Potential
reward opportunities are based on Inmarsat’s incentive opportunities
for FY19, applied to salaries as at 1 January 2019. The Maximum scenario
includes an additional element to represent 50% share price growth
from the date of grant to vesting but apart from this the projected
values exclude the impact of any share price movement.
PAY SCENARIOS £000
Chief Executive Officer
Maximum
On-target
19%
28%
Minimum
100%
£620
45%
36%
£3,920
45%
27%
£2,219
Fixed pay
PSA
Chief Financial Officer
Annual bonus
PSA with 50% share price growth
Maximum
On-target
19%
28%
Minimum
100%
£512
45%
36%
£3,218
45%
27%
£1,823
Fixed pay
PSA
Annual bonus
PSA with 50% share price growth
Each element of remuneration reflects the following assumptions:
› Minimum: includes fixed remuneration only, i.e. base salary as
at 1 January 2019, taxable benefits (as disclosed for the previous
financial year) and pension
› Target: includes fixed remuneration plus 60% of the maximum
annual bonus opportunity and 50% of the PSA award
› Maximum: includes fixed remuneration and maximum payment
under the annual bonus (200% of salary for both the CEO and CFO)
and PSA (250% of salary for both the CEO and CFO), and includes
the total maximum remuneration assuming 50% share price
growth in PSA awards
Approach to recruitment remuneration
The remuneration package for a new Director will be set within the
terms of the approved Remuneration Policy.
In determining appropriate remuneration arrangements for a newly
recruited Executive Director the Committee will take into consideration
all relevant factors (including but not limited to current remuneration,
the structure of remuneration for other Inmarsat executives, external
market data and the jurisdiction the candidate was recruited from and
may be based in). The Policy enables the Committee to include benefits
such as relocation assistance, housing or schooling expenses, paying
only what is necessary to secure the right candidate and limiting
certain benefits to a specified period where possible.
Annual bonus opportunity will normally reflect the period of service
for the year.
For an internal appointment any incentive plans in respect of an
executive’s prior role will normally be allowed to continue according
to its original terms.
GovernanceFinancial StatementsStrategic Report 88
Governance | Directors’ Remuneration Report
Inmarsat plc | Annual Report and Accounts 2018
Remuneration Report
continued
The Committee may compensate on hiring an external candidate for incentive pay forfeited or benefits foregone on leaving a previous employer.
Replacement cash or share awards would take account of quantum forgone, any performance conditions attached to incentive pay awards, the form in
which they were granted (for example, cash or shares), the time over which they would have vested, the likelihood of meeting any performance conditions
and the share price at the time of buy-out. The Committee may grant Performance Share Awards or Restricted Share Awards if these reflect the terms
of the awards forfeited. The Committee may grant these incentive awards under the provision provided for under Listing Rules (Chapter 9.4.2).
Executive Director service contracts and exit payment policy
Executive Director
Rupert Pearce
Date of service contract
Term of office
Notice period
18 January 2012
Indefinite until termination by either party
Tony Bates
21 February 2014
Indefinite until termination by either party
12 months’ written notice by Company
or Director
12 months’ written notice by Company and
six months’ written notice by the Director
Notice periods will not exceed 12 months and for future appointments the same notice period will apply for both the Company and Director.
The Executive Directors have a clause to allow a payment in lieu of notice to be made. For the Executive Directors, the Company may make such
payments monthly (up to 12 months) and these payments shall be reduced if the executive finds alternative employment.
At the discretion of the Committee a pro-rata bonus may become payable at the normal payment date for the period of active employment with
financial performance targets based on full year performance.
The default treatment for share based awards is that any unvested award will lapse on termination of employment. However, in certain prescribed
circumstances, such as death, injury, ill-health, retirement with the Company’s agreement, redundancy, leaving the Group because the employer
company or business leaves the Group or where the Committee determines otherwise, awards would be eligible to vest subject to the performance
conditions being met over the normal performance period (or a shorter period in exceptional circumstances at the Committee’s discretion) and with
the award being reduced by an amount to reflect the proportion of the performance period not actually served (unless the Committee considers,
in exceptional circumstances, a different treatment is appropriate).
The Company may also pay outplacement, legal and other reasonable relevant costs associated with termination and may settle any claim or
potential claim relating to the termination.
Upon a change of control of the Company, share awards vest in accordance with the Executive Share Plan Rules, based on the extent to which the
Committee determines that the performance conditions have been met and normally scaled back pro rata. For the annual bonus, the Committee
will assess performance against targets at the point of change of control and any resulting bonus will be pro-rated for time and paid thereafter.
Non-Executive Directors
The Non-Executive Director (‘NED’), receives a letter of appointment that summarises the time commitment expected of them and sets out details
of their fees (base fee and Committee membership fee).
Maximum
The maximum annual aggregate
fee for all Group NEDs is set out in the
Company’s Articles of Association.
Element
NED fees
Purpose and link to strategy
Operation
To provide fees reflecting
time commitments and
responsibilities of each
role to enable recruitment
of the right calibre of
NED who can further
the interests of the
Group through their
experience, stewardship
and contribution
to strategy
All NEDs are paid a basic fee at the same level.
The Committee Chairmen and other members of the Board Committees
(currently but not limited to Audit, Remuneration, Nominations and Telecoms
Regulatory Committees) and the Senior Independent Director are paid supplements
to reflect their additional responsibilities and time commitment. Supplements
may also be paid for any new roles or responsibilities that the NEDs may undertake.
The Chairman of the Board is paid a single fee for all his responsibilities.
NED fee levels are reviewed periodically by the Chairman and Executive Directors
with reference to market levels in comparably sized FTSE companies as well as any
increase in the scale, scope or responsibility of the role and a recommendation
is then made to the Board.
The Chairman’s fee is reviewed periodically by the Committee taking into account
time commitment, performance and fee levels at comparator companies and
is then approved by the Board. If any changes are to be made, they are usually
effective in July.
Reasonable expenses incurred by the NEDs in carrying out their duties may
be reimbursed by the Company including (grossed up) any personal tax payable
by the Non-Executive Directors as a result of reimbursement of those expenses.
Healthcare cover is provided for the Chairman, as a continuation of the cover
provided to him previously as an Executive.
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89
NED appointments are initially for three years and unless agreed by the Board, NEDs may not remain in office for a period longer than six years,
or two terms in office, whichever is the shorter unless the Nominations Committee recommends them to the Board to continue in the role past six years.
All NEDs are subject to re-election by shareholders at each AGM.
Non-Executive Directors do not have service contracts but letters of appointment with appointment terminating on:
› A Director choosing to resign voluntarily
› A Director being prohibited from serving by law, bankruptcy or illness
› If the Nominations Committee does not approve the extension of the appointment
› A Director is found guilty of misconduct or
› A Director is not re-elected by the shareholders following retirement at an AGM
Dates of NED appointment letters are as follows:
Name
Simon Bax
Sir Bryan Carsberg
Tracy Clarke
Warren Finegold
General C. Robert Kehler (Rtd)
Phillipa McCrostie
Janice Obuchowski
Dr Abe Peled
Robert Ruijter
Andrew Sukawaty
Dr Hamadoun Touré
Date of appointment letter
Date of appointment
28 May 2013
18 April 2005
18 June 2013
22 June 2005
29 January 2019
1 February 2019
13 March 2017
13 March 2014
1 August 2017
6 May 2014
18 May 2016
1 September 2016
6 May 2009
10 May 2013
5 May 2009
18 June 2013
16 December 2014
1 February 2015
16 September 2014
1 January 2015
16 December 2014
1 March 2015
External appointments
Executive Directors serving as Non-Executive Directors on the Board of other companies are permitted to retain all remuneration and fees earned
from outside directorships subject to a maximum of two external Board appointments. Directors accepting such positions shall take into account any
guidelines for external directorships as contained in the UK Corporate Governance Code, subject at all times to pre-authorisation of the appointment
by the Chairman. NEDs taking additional board positions are asked to speak to the Chairman in advance to ensure no conflict of interest and for the
Chairman to speak to the Senior Independent Director for anything affecting him.
Consideration of shareholder views
The Remuneration Committee Chairman, Company Chairman, Senior Independent Director and Company Secretary engage proactively with
major shareholders and shareholder representatives whenever appropriate. The Committee is always open to feedback from shareholders on its
Remuneration Policy and operation and is committed to consulting shareholders in advance of making changes to Policy and its implementation.
The Committee also considers specific investor remuneration guidelines as well as those of proxy voting agencies.
GovernanceFinancial StatementsStrategic Report 90
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Inmarsat plc | Annual Report and Accounts 2018
Remuneration Report
continued
Annual report on remuneration
The following section provides details of how Inmarsat’s 2017
Remuneration Policy was implemented during the financial year ended
31 December 2018 and how the Committee intends to implement the
new Policy which is subject to shareholder approval at our 2019 AGM.
Remuneration Committee membership in 2018
The Committee consists of independent Non-Executive Directors. We had
five scheduled meetings during the year to discharge our responsibilities.
In 2018, because of the need for preparation and consultation on a new
Policy, we have held multiple additional Committee meetings and conference
calls. Committee membership and attendance at scheduled meetings are
set out in the table below:
Committee members
Simon Bax (Committee Chairman)
Warren Finegold
General C. Robert Kehler (Rtd)
Pip McCrostie
Attendance
5/5
5/5
5/5
1/1
Pip McCrostie was appointed to the Committee in December 2018.
Tracy Clarke who joined the Inmarsat plc Board in February 2019 has
also been appointed to the Committee.
During the year, the Committee operated to a forward agenda which
ensured that items were discussed at the appropriate time during the year.
In addition to regular standing items, following the high level of shareholder
dissent at the AGM the key focus has been on engaging with shareholders
to understand their concerns and designing a new policy to be presented
to shareholders at the 2019 AGM. This has entailed significant work to
design the new policy and its operation for FY19 and discuss this with our
institutional shareholders and shareholder representative bodies.
Advisors
During 2018, the Committee received input from Andrew Sukawaty
(Chairman), Rupert Pearce (CEO), Tony Bates (CFO), Alison Horrocks
(Chief Corporate Affairs Officer and Company Secretary), Natasha Dillon
(Chief People Officer) and Alan Moore (Director of Reward). Dr Abe Peled,
the Senior Independent Director, and Sir Bryan Carsberg also attended
meetings. No member of management is present at a Committee meeting
when their own remuneration arrangements are being discussed.
Korn Ferry was appointed by the Committee as its independent advisor
in June 2018 following a tendering process. Until Korn Ferry’s appointment
the Committee received advice from Mercer Kepler. Both Korn Ferry
and Mercer Kepler reported directly to the Committee Chairman and
are signatories of the Code of Conduct for Remuneration Consultants
(which can be found at remunerationconsultantsgroup.com). Korn Ferry
provides other consulting services on leadership development, but this
is an entirely separate team independent from the team advising the
Committee and the advice to the Committee is therefore considered
independent. Mercer Kepler’s parent, the MMC Group, provides only
unrelated services to the Company in the areas of pension investment
advice and actuarial services to the Trustee to the Inmarsat UK Pension
Plan and Mercer Kepler was therefore also considered independent.
During 2018, Mercer Kepler’s fees were based on time and materials
and in relation to advice to the Committee (excluding VAT and expenses)
totalled £20,814 (2017: £49,520). Korn Ferry’s fees were based on time
and materials and (excluding VAT and expenses) totalled £150,000.
Summary of shareholder voting at the 2017 and 2018 AGM on Remuneration matters
At the 2017 Annual General Meeting (‘AGM’), shareholders were asked to approve the current remuneration policy. At the 2018 AGM shareholders
were asked to approve the FY17 Annual Report on Remuneration. The votes received for the Policy resolution at the 2017 AGM and the Annual Report
on Remuneration at the 2018 AGM and shown below:
For (including discretionary)
Against
Total votes cast (excluding withheld votes)
Votes withheld
2018 AGM: Vote on the 2017
Annual Report on Remuneration
2017 AGM: Vote on the
Directors’ Remuneration Policy
Total number
of votes
141,196,411
198,994,463
340,190,874
22,105
% of
votes cast
41.51%
58.49%
Total number
of votes
291,331,925
30,971,298
322,303,223
% of
votes cast
90.39%
9.61%
n/a
29,263,436
n/a
The vote on the Annual Report on Remuneration was defeated at the 2018 AGM. Accordingly, the Company is required to bring its Directors’
Remuneration Policy to shareholders for approval at its 2019 AGM, a year early. Since the 2018 AGM the Committee has conducted a detailed review
of its current Directors’ Remuneration Policy as well as the implementation of its Policy. This has included extensive consultation with investors and
proxy voting agencies. This exercise has resulted in a new revised policy being brought to shareholders for approval at the 2019 AGM as well as the
revision of certain aspects of policy operation for FY18.
Further details of the changes made and the new policy are set out in the Remuneration Chairman’s Annual Statement and Policy Section of this
Remuneration Report.
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91
Total remuneration paid to Executive Directors (audited)
The table below sets out the total remuneration received by each Executive Director for the year ended 31 December 2018 and the prior year:
Rupert Pearce
£000
2018
(before discretion)
2018
(after discretion)
Basic salary
Taxable benefits1
Pension2
Annual cash bonus3
Bonus Share Award4
Performance Share Award5
Total6
594
2
17
575
1,008
150
2,346
594
2
17
575
415
75
Tony Bates
£000
2018
(before discretion)
2018
(after discretion)
487
2
17
495
781
116
487
2
17
495
317
58
2017
583
3
17
478
492
121
2017
477
3
17
422
381
92
1,679
1,694
1,898
1,377
1,392
1 Taxable benefits: include healthcare
2 Pension: payment made by the Company as cash in lieu of pension (see page 95 for details)
3 Annual cash bonus: cash bonus payments in relation to the financial years ended 31 December 2018 and 2017 (see pages 92 to 94 for details)
4 BSA: Shows the value of the BSA shares in relation to financial performance measured during the financial years ended 31 December 2018 and 2017. Performance targets tested over the relevant
financial year determine the number of BSA shares that will vest on the relevant vesting dates. For 2017, the value is based on the spot share price on the determination date (being 9 March 2018)
of £4.33. The award value has been revised from last year’s report to reflect the actual share price on determination. For 2018, the share price for the award is valued using the average share price
over the last quarter of 2018 of £4.43. The mid-market share price at the date of grant on 9 March 2018 was £4.33
5 PSA: the value at vesting of awards where vesting is determined by performance over the three-year periods ended 31 December 2018 and 31 December 2017. For 2017, the 2015 PSA is valued based
on the spot share price on the vesting and sale date of £3.492. The award value has been revised from last year’s report to reflect the actual share price on vesting, plus additional shares representing
reinvested dividends. For 2018, as the share price on the vesting date is currently unknown, the 2016 PSA is valued using the average share price over the last quarter of 2018 of £4.43
6 The total remuneration figure for FY17 has been restated to reflect the actual value of PSA and BSA awards that vested in respect of FY17 performance (rather than basing this on the closing three month
average share price for FY17). As the share price reduced significantly between the FY17 year end and the actual date of vesting, the total remuneration actually received by executive directors was
significantly lower than the total single figure shown in last year’s Directors’ Remuneration Report by £181,000 and £140,000 for the CEO and CFO respectively
Incentive outcomes for the year ended 31 December 2018 (audited)
Annual cash bonus in respect of 2018 performance
The annual cash bonus was based on the achievement of Group financial targets for 70% of the bonus and individual performance objectives for the
remaining 30%. The financial performance targets (70%) were split as to Group revenue 33% and EBITDA 67%.
Performance against targets and resulting bonus payable is set out below:
Financial performance measure
EBITDA
Revenue
Total
Performance targets
Threshold
($m)
0% of
max payable
673.3
1,293.6
Target
($m)
60% of
max payable
748.1
1,437.3
Weighting
(% of financial
element)
67%
33%
100%
Stretch
($m)
785.5
1,509.2
Actual
performance
($m)
770
1,465
Actual bonus
outcome
(% of financial
element)
83.8%
75.6%
81.1%
The individual performance objectives for the Executive Directors and scoring are set out below:
Rupert Pearce
Objectives
Weighting
Achievements towards objectives/performance targets set at the start of the year
Capture maximum number of broadband
platforms
Reposition L-band for new growth
40%
25%
Establish our digital platform and business
10%
Create high performance organisation
10%
Transform our operating environment
15%
Total score out of 30%
Good progress on Maritime and aviation installation targets
Partial achievement of Maritime targets
Good delivery against Aviation, USG and Enterprise objectives
A miss on Maritime objectives but good progress made on other digital
products with a solid pipeline generated
Objective of delivering new operating model for ABU partially completed
Excellent progress against People objectives
Successful merger of IG and USG business units
Successful delivery of major IT project on Billing systems
and Customer Excellence Programme
Scoring overall
(as a % of maximum)
9% (out of 12%)
5% (out of 7.5%)
1% (out of 3%)
2.5% (out of 3%)
3.5% (out of 4.5%)
21%
GovernanceFinancial StatementsStrategic Report 92
Governance | Directors’ Remuneration Report
Inmarsat plc | Annual Report and Accounts 2018
Remuneration Report
continued
Tony Bates
Objectives
Add value to the bottom line
Transform the Finance operating
environment
Create a high performing
Finance function
Total score out of 30
Weighting
Achievements towards objectives/performance (as % of maximum)
50%
40%
10%
Significant overachievement against Cost Savings targets
Delivered scheduled BTP releases (but at a higher cost than estimated) and Atlas roll-out
Much more robust Long Range Business Plan
Strengthened senior finance team and processes
Scoring overall
14% (out of 15%)
8% (out of 12%)
2.5% (out of 3%)
24.5%
The calculation of cash bonus outcome is set out below:
Financial element
Individual objectives
Total
Executive Director
Rupert Pearce
Tony Bates
Maximum bonus
(% salary)
Actual bonus
(% salary)
Weighting
70%
30%
100%
Actual bonus
outcome
(% of maximum)
81.1%
CEO 70%
CFO 82%
CEO 77.5%
CFO 81.3%
87.5%
37.5%
125%
70.1%
CEO 26.3%
CFO 30.1%
CEO 96.8%
CFO 101.7%
Actual bonus
£
575,266
495,000
Salary
£
594,000
487,000
Actual
2018 bonus
(% of salary)
96.8%
101.7%
BSA in respect of 2018 performance
The number of conditional shares subject to the 2018 BSA award made on 12 March 2018 at a share price of £4.327 that will be confirmed in March 2019
is determined by financial performance during FY18 as set out below. 2018 is the final year in which the Executive Directors will participate in an award
under the BSA.
Performance measure
EBITDA
Revenue
Total
Performance targets
Threshold
($m)
60% of
award vests
673.3
1,293.6
Target
($m)
80% of
award vests
748.1
1,437.3
Weighting
(% of financial
element)
67%
33%
100%
Stretch
($m)
785.5
1,509.2
Actual
performance
($m)
770
1,465
Actual BSA
outcome
(% of element)
before application
of discretion
Actual BSA
outcome following
application of
discretion
91.9%
87.8%
90.5%
37.3% (CEO)
36.7% (CFO
Based on performance, although before discretion 90.5% of the original allocation of shares made in March 2018 would have been confirmed,
after discretion by the Committee, a reduced number will be confirmed in March 2019 and vest in equal tranches in March 2020, 2021 and 2022.
The table below shows the confirmation of the number of shares awarded for the 2018 BSA and an estimate of the value of the shares that will vest.
Executive Director
Rupert Pearce
Tony Bates
Maximum
monetary award
£1,088,910
£843,850
Market value of a
share on award
(9 March 2018)
£4.33
£4.33
Number
of shares
awarded in
March 2018
251,655
195,020
Vesting level
based on
performance
for year ended
31 December 2018
90.5%
90.5%
Value of
shares that
will vest before
application of
discretion*
£1,008,082
£781,213
Value of
shares that will
vest following
application
of discretion*
Confirmed
number of shares
based on vesting
percentage
after discretion
£414,997
£316,961
93,756
71,608
* Value of BSA at the time the number of shares is confirmed is calculated using a rounded share price of £4.43 (three month average to 31 December 2018) as the actual share price will only be known
in March 2019
Inmarsat plc | Annual Report and Accounts 2018
Governance | Directors’ Remuneration Report
93
2016 PSA award in respect of performance over the three years ending 2018
In 2016, the CEO and CFO received awards of conditional shares under the PSA, for which the performance period ended on 31 December 2018
with vesting and performance against the performance conditions as set out below:
Executive Director
Date of grant
Award as
% of salary
Number of shares
subject to Award
(2016)
Market price
of a share at
date of award
Face value at
grant of award
(2016)
Value of
shares on
vesting before
application of
discretion*
Value of
shares
following
application of
discretion*
Number of
shares
Vesting
Vesting date
Rupert Pearce
23 March 2016
Tony Bates
23 March 2016
185%
175%
112,564
87,241
£9.30
£9.30
£1,046,845
£149,473
£74,737
16,884
23 March 2019
£811,341
£115,845
£57,950
13,092
23 March 2019
* Value of the PSA at vesting is calculated using a rounded share price of £4.43 (three month average to 31 December 2018) as the actual share price will only be known in March 2019. The number of shares
vesting will have additional shares in lieu of accrued dividends added to this number
Performance measure
Three-year TSR vs. FTSE 50-150
(excluding investment trusts)
Weighting
(% of maximum)
30%
Performance target
Below median: nil vesting
Median: 30% vesting
Upper quartile: 100% vesting
Actual
performance
Actual vesting
outcome
89 out of 93
0% (out of 30%)
(straight-line vesting applies between median and upper quartile)
Three-year EBITDA growth p.a.
(excluding Ligado)
30%
Less than 5%: 0% vesting
11%: 100% vesting
0.16% p.a.
0% (out of 30%)
Strategic objectives
Total vesting outcome
(straight-line vesting applies between 5% and 11%)
40%
The strategic objectives and performance against them are noted below See below
30%1 (out of 40%)
30%1 of total award
1 The 30% out of 40% assessment for the Strategic Element of the PSA has been reduced by the Committee to 15% out of 40%, after considering the broader performance (financial and TSR) over the
three-year performance period. This results in a total vesting outcome of 15% of the total award
Details of performance against the strategic objectives:
Strategic objectives
Weighting
Achievements towards objectives/performance
Complete successful market entry for
next generation of Inmarsat satellites
40%
1. Successful satellite launch of GX-4
2. Required run rate of GX revenue targets achieved by H2 2018 and on track to achieve
Put in place all key building blocks
of Aviation business case (to support
material revenues forecast for
beyond 2017)
10%
5 year goal of $500m
3. Successful conversion of XL into GX Maritime by H2 2019
4. Successful foray into Energy/resources markets
5. Successful extension into broader Government and milsatcoms markets including
delivery of Boeing Take or Pay agreement
6. Successful extension into selected Enterprise markets
7. Successful extension into global Air Passenger market
1. Deliver S-band satellite on time and to budget for launch no later than H1 2017
2. Deliver ACGC network and on-board equipment for first revenues in 2017
3. Secure spectrum via 25+ MSS licences no later than H2 2017
4. Secure opportunity by 28+ ACGC licences no later than end 2017
5. Secure airline wins/strategic channel/technology partners for future revenue ramp
6. Run rate of European revenues/installations through EAN on track to deliver set targets
Aggressively work to sustain L-band
revenues despite GX migration,
on-going US sequestration and
increasing competition
To maximise the overall net
contribution of Ligado to Inmarsat
Remuneration Committee overall
assessment of performance
30%
1. Level of L-band revenues in 2018 vs. 2015
2. Level of new revenues from key replacement revenue product programmes,
for example : IsatPhone, IsatHub, IDP, SB200, Fleet One, BRM/RFIC productisation and L-TAC
3. Success in key globalisation programmes – through Global Government outreach,
greater focus on India, China market opportunities and channel evolution
20%
To maximise the overall net contribution of Ligado to Inmarsat
Scoring
100%
60%
100%
50%
80%
0%
90%
100%
80%
100%
90%
100%
20%
70%
50%
100%
100%
75% out of 100%
(30% out of 40%)
before application
of discretion
GovernanceFinancial StatementsStrategic Report 94
Governance | Directors’ Remuneration Report
Inmarsat plc | Annual Report and Accounts 2018
Remuneration Report
continued
Additional disclosure of 2017 performance targets (audited)
Annual cash bonus in respect of 2017 performance
Last year, the Company committed to disclose the 2017 bonus financial targets in this year’s Annual Report on Remuneration. The targets and actual
performance against them are set out below. In future the Annual Report on Remuneration will disclose performance targets for the annual bonus
and performance against them for the reporting year just ended.
Performance measure
EBITDA
Revenue
Total
Performance targets for 2017 Financial Year
Weighting
(% of financial
element)
Threshold
($m)
0% of
max payable
Target
($m)
60% of
max payable
67%
33%
100%
620
1,252
730
1,391
Stretch
($m)
803
1,461
Actual
performance
($m)
732
1,400
Actual bonus
outcome
(% of financial
element)
65.1%
61.1%
62.8%
Costs in respect of workforce reduction were not budgeted for at the start of 2017 and therefore not taken into account in target setting but were included
in the EBITDA outturn for calculation of bonus purposes.
The calculation of the cash bonus outcome which was paid in March 2018 is set out below:
Financial element
Individual objectives
Total
Weighting
70%
30%
100%
Actual bonus
outcome
(% of maximum
for each element)
62.8%
CEO 73.3%
CFO 90.0%
CEO 65.7%
CFO 70.7%
Maximum bonus
(% salary)
Actual bonus
(% salary)
87.5%
37.5%
125%
54.95%
CEO 27.49%
CFO 33.75%
CEO 82.5%
CFO 88.7%
Individual objectives and performance against them was disclosed in last year’s Annual Report on Remuneration.
Executive Director
Rupert Pearce
Tony Bates
BSA in respect of 2017 performance
The 2017 BSA targets and actual performance against them are set out below:
Salary
£ in 2017
530,818
477,485
Actual bonus
(% of salary)
Actual bonus
£
82.5%
88.7%
478,000
422,000
Performance measure
EBITDA
Revenue
Total
Performance targets
Threshold
($m)
60% of
max payable
Target
($m)
80% of
max payable
620
1,252
730
1,391
Weighting
(% of financial
element)
67%
33%
100%
Stretch
($m)
803
1,461
Actual
performance
($m)
Actual bonus
outcome
(% of element)
732
1,400
82.6%
80.5%
81.22%
Costs in respect of workforce reduction were not budgeted for at the start of 2017 and therefore not taken into account in target setting but were included
in the EBITDA outturn for calculation of bonus purposes.
Executive Director
Rupert Pearce
Tony Bates
Maximum
monetary award
£1,068,187
£827,890
Market value of a
share on award
(9 March 2017)
£7.62
£7.62
Number
of shares
awarded in
March 2017
140,182
108,647
Vesting level
based on
performance
for year ended
31 December 2017
Confirmed
number of shares
based on vesting
percentage
81%
81%
113,779
88,183
Value of shares
that vested on
9 March 2018
(date of
determination)
at £4.33
£492,663
£381,832
Inmarsat plc | Annual Report and Accounts 2018
Governance | Directors’ Remuneration Report
95
Scheme interests awarded in 2018 (audited)
2018 PSA award in respect of performance over the period 2018 – 2020
In March 2018, the Executive Directors received PSA share awards which will vest on the third anniversary of grant subject to performance over the three
years to 31 December 2020. At vesting, shares can be sold to cover the tax liability due and the balance must be retained for a further period of two years.
Executive Director
Rupert Pearce
Tony Bates
Date of grant
12 March 2018
12 March 2018
Number of shares
subject to Award
251,655
195,020
Market price
of a share at
date of award
Face value at
date of award
Award as
% of salary
Vesting date
£4.33
£4.33
£1,088,910
£843,850
185%
175%
12 March 2021
12 March 2021
Vesting of the awards is determined by the following performance targets:
Performance measure
Three-year TSR vs. FTSE 50-150
(excluding investment trusts)
Weighting
(% of maximum)
30%
Performance target
Below median: nil vesting
Median: 30% vesting
Upper quartile: 100% vesting
Three-year EBITDA growth p.a.
(excluding Ligado)
Strategic objectives
30%
40%
(straight-line vesting applies between median and upper quartile)
Less than 3%: nil vesting
3%: 0% vesting
7%: 100% vesting
(straight-line vesting applies between 3% and 7%)
The strategic objectives are:
› capture the maximum number of broadband platforms for our high-speed GX services
and EAN aviation service
› reposition L-band for new growth by focusing on additional targeted market opportunities
› establish our digital platform and business to drive new services and product innovation
› transform our operating environment to be more efficient in service delivery for customers
and efficiency for all stakeholders
› maximise the overall contribution from an ongoing key strategic contract
› create a high-performance organisation which enhances our employee value proposition
and encourages a high-performance culture
The objectives will be disclosed in detail at the end of the three-year performance period.
They will be reassessed separately for performance against each objective.
In 2017, the Executive Directors received a PSA award for the period 2017 – 2019 which will vest in March 2020 subject to performance conditions being met with
the requirement to retain a net number after tax of the resulting shares for a further two years. The strategic objectives for the 2017 PSA are shown below. The other
performance measures are EBITDA growth and TSR performance. Full details of performance against all measures will be provided in the 2019 Annual Report.
Strategic objectives
40%
The strategic objectives are:
› Global Xpress: complete successful market entry to satellite broadband market through the next
generations of Inmarsat satellites
› Aviation: put in place all key building blocks of the aviation business case (to support material
revenues forecast over the LRBP period)
› L-band: work assiduously to sustain L-band revenues despite L-band migration and both ongoing
tight budgets and strong competition in all markets
› Strategic contract: maximise the overall net contribution of the contract to Inmarsat
The objectives will be disclosed in detail at the end of the three-year performance period.
They will be assessed separately for performance against each objective.
Pension (audited)
The current employer contribution to the pension scheme (subject to the cap of £153,600 for the 2017/18 tax year and £160,200 for the 2018/19 tax year)
is 12.5% of capped salary. The capped salary level increases nominally each year.
Mr Pearce and Mr Bates receive a cash supplement of 12.5% of capped salary. This amount is reduced by the cost to the Company of the employer
national insurance, the effect of which is that the Executive Directors receive an equivalent 11% of capped salary, or approximately 3% of their gross salary.
Executive Director
Rupert Pearce
Tony Bates
Pension value
£17,000 paid in 2018
£17,000 paid in 2018
GovernanceFinancial StatementsStrategic Report 96
Governance | Directors’ Remuneration Report
Inmarsat plc | Annual Report and Accounts 2018
Remuneration Report
continued
Fees paid to Non-Executive Directors (audited)
The table below sets out a single figure for the total remuneration received by each Non-Executive Director for the year ended 31 December 2018
and the prior year:
Andrew Sukawaty2
Simon Bax
Sir Bryan Carsberg
Warren Finegold
General C. Robert Kehler (Rtd)3
Phillipa McCrostie4
Janice Obuchowski
Dr Abe Peled
Robert Ruijter
Dr Hamadoun Touré
Total
Base fee
£000
Additional fees
£000
Taxable benefits
£0001
Total
£000
2018
318.8
55.6
55.6
55.6
111.2
55.6
55.6
55.6
55.6
55.6
2017
312.6
54.5
54.5
23.0
109.1
54.5
54.5
54.5
54.5
54.5
874.8
826.4
2018
0.0
15.3
10.3
11.2
6.5
6.1
11.2
31.0
15.3
11.2
118.1
2017
0.0
15.2
16.7
4.7
5.5
5.5
11.1
30.3
15.2
11.1
115.3
2018
19.1
0.0
0.9
0.0
0.0
1.7
0.0
0.0
0.0
0.0
2017
18.0
0.4
1.1
0.1
0.0
1.9
0.0
0.0
0.0
0.0
2018
337.9
70.9
66.8
66.8
117.7
63.4
66.8
86.6
70.9
66.8
2017
330.6
70.1
72.3
27.7
114.6
62.0
65.6
84.8
69.7
65.6
21.7
21.5
1014.6
963.2
1 The taxable benefits received by the Non-Executive Directors were associated with accommodation costs incurred with attendance at two-day Board meetings. The tax due in respect of these benefits
is settled by the Company. The Company also reimburses the travel costs incurred by the Non-Executive Directors for travel to Board meetings where these do not take place in the country in which
they are domiciled. The figures shown in the table are gross amounts
2 Mr Sukawaty receives healthcare cover
3 The fees for General C. Robert Kehler (Rtd) include a fee of £55,631 as a Non-Executive Director of Inmarsat Inc, a wholly-owned subsidiary in the U.S. and additionally includes a fee for joining
the Nominations Committee in November 2018
4 Mrs McCrostie joined the Remuneration Committee in December 2018 and is entitled to a fee for participating in this Committee
Exit payments to departing Directors made in the year (audited)
There were no exit payments made in 2018.
Payments to past Directors (audited)
No payments were made to past Directors in 2018.
External appointments for Executive Directors
The Executive Directors do not currently hold positions in other companies as Non-Executive Directors. Mr Pearce holds various positions
in organisations affiliated to the satellite industry which are disclosed in his biography on page 62; none are currently fee-paying.
Implementation of remuneration policy for 2019
Base salary
Salaries are typically reviewed annually in July for the Executive Directors and the general workforce. The Committee conducted its 2018 salary review
in July 2018 and approved an increase of 2% for both the CEO and the CFO. This is consistent with the increase across the Executive Management Team
and is below the average salary increase across the Group of 2.4% and across eligible UK employees of 2.7%. Salaries will next be reviewed in July 2019,
which is the same time for the general workforce. The table below shows the Executive Directors’ salaries as at July 2017 and July 2018.
Executive Director
Rupert Pearce
Tony Bates
Salary at
1 July 2017
£588,600
£482,200
% change
2%
2%
Salary at
1 July 2018
£600,400
£491,800
Pension
Pension contribution will be unchanged at approximately £17,000 for each Executive Director.
Annual bonus
The maximum annual bonus opportunity for Executive Directors will be 200% of salary for each of the CEO and CFO. The performance measures
and weightings are set out below.
Measure
EBITDA
Revenue growth
Individual strategic measures
Weighting
50%
30%
20%
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
(cid:42)overnance (cid:95) (cid:39)irectors’ (cid:53)em(cid:88)neration (cid:53)eport
97
(cid:53)even(cid:88)e and (cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36) are si(cid:74)nificant operational (cid:46)(cid:51)(cid:44)s for the (cid:69)(cid:88)siness and stretchin(cid:74) slidin(cid:74) scale tar(cid:74)ets have (cid:69)een set for (cid:69)oth meas(cid:88)res(cid:17)
(cid:55)he individ(cid:88)al o(cid:69)(cid:77)ectives for the C(cid:40)O and CFO will (cid:69)e (cid:69)ased on the followin(cid:74)(cid:29)
Rupert Pearce
Objectives
(cid:48)aritime (cid:74)rowth
(cid:36)viation (cid:74)rowth
(cid:55)echnolo(cid:74)y advancement
(cid:54)trate(cid:74)ic activity
Tony Bates
Objectives
Weighting
Basis for assessment at the year end
30(cid:8)
30(cid:8)
2(cid:24)(cid:8)
1(cid:24)(cid:8)
(cid:48)aritime reven(cid:88)e(cid:15) vessel installations and c(cid:88)stomer retention
(cid:49)(cid:88)m(cid:69)er of aircraft installed and in(cid:16)fli(cid:74)ht connectivity reven(cid:88)e
(cid:39)elivery of (cid:78)ey technolo(cid:74)y pro(cid:77)ects in line with approved (cid:69)(cid:88)siness plans
(cid:48)ana(cid:74)ement of (cid:78)ey strate(cid:74)ic ris(cid:78)s
Weighting
Basis for assessment at the year end
(cid:51)roc(cid:88)rement cost savin(cid:74)s
30(cid:8)
Cost savin(cid:74)s for 201(cid:28) vs(cid:17) previo(cid:88)s years
(cid:40)(cid:91)ec(cid:88)tion of Corporate Financin(cid:74) initiatives 30(cid:8)
(cid:36)chievement of (cid:37)oard a(cid:74)reed corporate financin(cid:74) (cid:74)oals
Commercial architect(cid:88)re rollo(cid:88)t
(cid:58)or(cid:78)in(cid:74) capital improvements
2(cid:24)(cid:8)
1(cid:24)(cid:8)
(cid:54)(cid:88)ccessf(cid:88)l delivery of (cid:78)ey finance systems
(cid:53)ed(cid:88)ction in wor(cid:78)in(cid:74) capital at year end vs(cid:17) 201(cid:28) (cid:69)(cid:88)d(cid:74)et
(cid:24)0(cid:8) of the (cid:69)on(cid:88)s is paid in cash and (cid:24)0(cid:8) will (cid:69)e (cid:88)sed (cid:69)y the (cid:40)(cid:91)ec(cid:88)tive (cid:39)irectors to ac(cid:84)(cid:88)ire shares in the Company that m(cid:88)st (cid:69)e held as to one(cid:16)third for
a f(cid:88)rther one(cid:15) two and three years(cid:17) (cid:55)he shares are owned (cid:69)eneficially (cid:69)(cid:88)t cannot (cid:69)e sold (cid:69)efore the end of the holdin(cid:74) period(cid:30) they will also remain s(cid:88)(cid:69)(cid:77)ect
to claw(cid:69)ac(cid:78)(cid:17)
PSA award
(cid:36) (cid:51)(cid:54)(cid:36) award will (cid:69)e (cid:74)ranted immediately after the (cid:48)ay 201(cid:28) (cid:36)(cid:42)(cid:48) (cid:88)sin(cid:74) the then share price(cid:17) (cid:55)he award will (cid:69)e made in (cid:48)ay 201(cid:28) as it is part of the new
rem(cid:88)neration policy(cid:17) (cid:55)he level of award will (cid:69)e 2(cid:24)0(cid:8) of salary for the C(cid:40)O and CFO(cid:17)
(cid:51)erformance conditions will (cid:69)e meas(cid:88)red over the three years to 31 (cid:39)ecem(cid:69)er 2021 and awards will vest after the anno(cid:88)ncement of res(cid:88)lts for the year
ended 31 (cid:39)ecem(cid:69)er 2021(cid:17) (cid:36) mandatory two(cid:16)year holdin(cid:74) period applies to vested (cid:51)(cid:54)(cid:36) awards(cid:17) (cid:49)o shares may (cid:69)e sold d(cid:88)rin(cid:74) the holdin(cid:74) period e(cid:91)cept
to cover ta(cid:91) lia(cid:69)ilities(cid:17)
(cid:55)he performance conditions are as follows(cid:29)
Performance measure
(cid:55)hree(cid:16)year (cid:55)(cid:54)(cid:53) vs(cid:17) F(cid:55)(cid:54)(cid:40) 2(cid:24)0
(cid:11)e(cid:91)cl(cid:88)din(cid:74) investment tr(cid:88)sts(cid:12)
Weighting
(% of maximum)
(cid:24)0(cid:8)
(cid:36)(cid:74)(cid:74)re(cid:74)ate free cash flow1
2(cid:24)(cid:8)
(cid:54)trate(cid:74)ic O(cid:69)(cid:77)ectives2
2(cid:24)(cid:8) (cid:69)ro(cid:78)en
down (cid:69)elow
Performance target
Below median: nil vestin(cid:74)
Median: 2(cid:24)(cid:8) vestin(cid:74)
Upper quartile: 100(cid:8) vestin(cid:74)
(cid:11)strai(cid:74)ht(cid:16)line vestin(cid:74) applies (cid:69)etween median and (cid:88)pper (cid:84)(cid:88)artile(cid:12)
Less than -$50m: nil vestin(cid:74)
-$50m: 2(cid:24)(cid:8) vestin(cid:74)
$150m: 100(cid:8) vestin(cid:74)
(cid:11)strai(cid:74)ht(cid:16)line vestin(cid:74) applies (cid:69)etween (cid:16)(cid:7)(cid:24)0m and (cid:7)1(cid:24)0m(cid:12)
(cid:48)aritime (cid:74)rowth(cid:29) (cid:39)elivery of a mar(cid:78)et(cid:16)
leadin(cid:74)(cid:15) profita(cid:69)le maritime (cid:69)road(cid:69)and
service and sec(cid:88)rin(cid:74) o(cid:88)r le(cid:74)acy
Fleet(cid:37)road(cid:69)and c(cid:88)stomer (cid:69)ase
(cid:36)viation (cid:74)rowth(cid:29) (cid:39)elivery of a
mar(cid:78)et(cid:16)leadin(cid:74)(cid:15) profita(cid:69)le aviation
(cid:69)road(cid:69)and (cid:69)(cid:88)siness
(cid:44)nfrastr(cid:88)ct(cid:88)re development and
deployment(cid:29) (cid:55)ransformation of
o(cid:88)r (cid:74)lo(cid:69)al networ(cid:78) infrastr(cid:88)ct(cid:88)re
3(cid:24)(cid:8)
(cid:55)he n(cid:88)m(cid:69)er of vessels installed(cid:15) reven(cid:88)e and the (cid:48)aritime (cid:69)(cid:88)siness (cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36)
3(cid:24)(cid:8)
30(cid:8)
(cid:55)he n(cid:88)m(cid:69)er of aircraft installed(cid:15) reven(cid:88)e and (cid:36)viation (cid:37)(cid:56) (cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36)
(cid:54)(cid:88)ccessf(cid:88)l la(cid:88)nch of satellites and development of f(cid:88)t(cid:88)re technolo(cid:74)ies
(cid:44)n line with past practice all financial performance meas(cid:88)res (cid:88)sed for the (cid:51)(cid:54)(cid:36) e(cid:91)cl(cid:88)de the financial contri(cid:69)(cid:88)tion from the contract si(cid:74)ned in 200(cid:26)
with (cid:47)i(cid:74)ado (cid:49)etwor(cid:78)s(cid:17)
1 Free cash flow performance will (cid:69)e disclosed in the financial statements each year(cid:17) (cid:55)he tar(cid:74)et ran(cid:74)e reco(cid:74)nises that we are in an investment phase of o(cid:88)r strate(cid:74)y(cid:15) as already comm(cid:88)nicated to investors
and the mar(cid:78)et(cid:17) (cid:55)ar(cid:74)ets have (cid:69)een set(cid:15) and performance will (cid:69)e meas(cid:88)red(cid:15) e(cid:91)cl(cid:88)din(cid:74) only the o(cid:88)tcome of a lon(cid:74) o(cid:88)tstandin(cid:74) ta(cid:91) matter that is also disclosed separately in the Company’s financial
statements(cid:17) Overall the Committee is satisfied that the ran(cid:74)e is appropriately stretchin(cid:74) in view of the o(cid:88)tloo(cid:78) for the (cid:69)(cid:88)siness
2 (cid:36)side from financial meas(cid:88)res o(cid:88)r lon(cid:74)(cid:16)term strate(cid:74)y means that(cid:15) more so than most other companies(cid:15) we m(cid:88)st ma(cid:78)e (cid:78)ey strate(cid:74)ic decisions for the lon(cid:74)(cid:16)term interests of o(cid:88)r shareholders and all
sta(cid:78)eholders(cid:17) (cid:55)his means we consider that it is important to assess a proportion of (cid:51)(cid:54)(cid:36) awards a(cid:74)ainst the strate(cid:74)ic milestones which contri(cid:69)(cid:88)te towards the achievement of o(cid:88)r lon(cid:74)(cid:16)term (cid:74)oals
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98
Governance | Directors’ Remuneration Report
Inmarsat plc | Annual Report and Accounts 2018
Remuneration Report
continued
Non-Executive Directors’ fees
The current NED fee levels are set out in the table below. Fees were reviewed during the year in the context of market fee levels and time commitment,
and increased by 2% with effect from July 2018.
NED fees as at 31 December 2018
Basic fee
Senior Independent Director (inclusive of any additional Committee fees)
Non-Executive Chairman (inclusive of any additional Committee fees)
Additional Committee fees:
Chairman of the Audit Committee
Chairman of the Remuneration Committee
Chairman of the Nominations Committee
Chairman of the Telecoms Regulatory Committee
Committee membership (per Committee)
Amount
£56,182
£87,190
£322,004
£15,300
£15,300
£10,200
£10,200
£5,610
Fees will next be reviewed in July 2019 and any increases will be for the decision of the Board, excluding the Non-Executive Directors. The Chairman
also receives international healthcare cover (£19,077 in 2018).
Total shareholder return
The following graph shows the Company’s performance over the last ten years, measured by total shareholder return on a holding in the Company’s
shares compared to a hypothetical holding of shares in the FTSE 350 index (excluding investment trusts). The FTSE 350 index has been selected as it
provides a view of our performance against a broad equity market index, and Inmarsat is a constituent of the index.
TOTAL SHAREHOLDER RETURN
400
300
200
100
0
Dec 09
Dec 10
Dec 11
Dec 12
Dec 13
Dec 14
Dec 15
Dec 16
Dec 17
Dec 18
Inmarsat
FTSE 350 xIT
CEO ten-year remuneration history (audited)
The table below details the Chief Executive’s total remuneration and actual variable pay outcomes over the same ten-year period. For the years
2009-2011, the Executive Chairman and Chief Executive (Andrew Sukawaty (‘AS’)) was the same individual reflecting a salary for the combined role.
Rupert Pearce (‘RP’) became Chief Executive on 1 January 2012.
Year ended
31 Dec 2009
31 Dec 2010
31 Dec 2011
31 Dec 2012
31 Dec 2013
31 Dec 2014
31 Dec 2015
31 Dec 2016
31 Dec 2017
31 Dec 2018
Single figure of
total remuneration1
(£000)
Annual bonus outcome
(% of maximum)
BSP/BSA conversion
(% of maximum)
AS
RP
AS
RP
AS
RP
PSP/PSA award vesting
(% of maximum)
AS
RP
2,218
–
98%
–
100%
–
100%
–
3,661
–
100%
–
100%
–
100%
–
2,819
–
84%
–
98%
–
Nil
–
3,8502
1,596
2,5112
1,434
4,4272
2,595
–
–
2,579
2,346
–
91%
–
100%
–
Nil
–
83%
–
73%
–
Nil
–
96%
–
100%
–
54%
–
72%
–
100%
–
50%
–
71%3
–
100%
–
48%
–
1,694
–
65%
–
81%4
–
30%
1,679
77.5%
37.3%5
15%5
1 See page 91 for detail of the single figure of total remuneration for 2018 and 2017
2 We are only required to show the single figure for each year for the Chief Executive. However, because Mr Sukawaty was the highest paid Director as Executive Chairman in 2012, 2013 and 2014,
we have also shown his single figure in this table for information
3 Formulaic bonus outcome prior to application of voluntary reduction
4 BSA payout calculated on a new basis where 80% is paid for target performance
5 Following application of discretion to reduce the level of remuneration paid
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
(cid:42)overnance (cid:95) (cid:39)irectors’ (cid:53)em(cid:88)neration (cid:53)eport
99
Percentage change in CEO remuneration
(cid:55)he data for other employees relates to the avera(cid:74)e pay across staff (cid:69)ased in the (cid:56)(cid:46)(cid:15) which is deemed to (cid:69)e the most appropriate employee (cid:74)ro(cid:88)p(cid:17)
(cid:55)he data is (cid:69)ased on all (cid:44)nmarsat (cid:56)(cid:46) employees(cid:15) incl(cid:88)din(cid:74) (cid:40)(cid:91)ec(cid:88)tive (cid:39)irectors (cid:11)apart from the C(cid:40)O(cid:12) and the senior mana(cid:74)ement team(cid:17)
Change in remuneration from 2017 to 2018
(cid:54)alary1
(cid:55)a(cid:91)a(cid:69)le (cid:69)enefits2
(cid:54)hort(cid:16)term incentives3
CEO
Other UK employees5
2018
£000
594
2.0
990
2017
£000
(cid:24)83
2(cid:17)0
(cid:28)(cid:26)04
% change
% change
1(cid:17)(cid:28)
0(cid:17)0
2(cid:17)1
3(cid:17)0
0(cid:17)0
1(cid:28)(cid:17)6
1 (cid:55)he C(cid:40)O’s salaries shown relate to the avera(cid:74)e salaries paid in respect of each of the financial years
2 (cid:55)a(cid:91)a(cid:69)le (cid:69)enefits incl(cid:88)de healthcare (cid:69)enefits
3 (cid:53)epresents the ann(cid:88)al (cid:69)on(cid:88)s payment for the financial year (cid:77)(cid:88)st ended pl(cid:88)s the val(cid:88)e of (cid:37)(cid:54)(cid:36) shares as set o(cid:88)t in the sin(cid:74)le fi(cid:74)(cid:88)re ta(cid:69)le on pa(cid:74)e (cid:28)1(cid:17) (cid:55)he (cid:37)(cid:54)(cid:36) fi(cid:74)(cid:88)re (cid:88)sed is that after discretion has (cid:69)een applied
(cid:23) (cid:55)he 201(cid:26) fi(cid:74)(cid:88)res are restated for act(cid:88)al share price as shown on pa(cid:74)e (cid:28)1
(cid:24) (cid:55)he n(cid:88)m(cid:69)er of employees is (cid:69)ased on those who were in employment for the whole year
Gender pay
(cid:36) copy of the Company’s report on (cid:42)ender (cid:51)ay is incl(cid:88)ded on o(cid:88)r we(cid:69)site and we have provided some comments in the (cid:53)eso(cid:88)rces and (cid:53)elationships
section of this (cid:36)nn(cid:88)al (cid:53)eport on pa(cid:74)e (cid:24)1(cid:17)
CEO pay ratio
(cid:55)he Companies (cid:11)(cid:48)iscellaneo(cid:88)s (cid:53)eportin(cid:74)(cid:12) (cid:53)e(cid:74)(cid:88)lations 2018 (cid:36)ct re(cid:84)(cid:88)ires all (cid:56)(cid:46) listed firms with more than 2(cid:24)0 employees to p(cid:88)(cid:69)lish(cid:15) as part of their
(cid:39)irectors’ (cid:53)em(cid:88)neration (cid:53)eport(cid:15) the ratio of their C(cid:40)O’s total rem(cid:88)neration to the median (cid:11)(cid:24)0th(cid:12)(cid:15) 2(cid:24)th(cid:15) and (cid:26)(cid:24)th percentile rem(cid:88)neration of their
(cid:56)(cid:46) employees(cid:17)
(cid:55)he ta(cid:69)le (cid:69)elow shows the relevant data for (cid:44)nmarsat’s (cid:56)(cid:46) employees for (cid:69)oth 201(cid:26) and 2018(cid:15) calc(cid:88)lated (cid:88)sin(cid:74) Option (cid:36) as set o(cid:88)t in the le(cid:74)islation(cid:17)
Year
201(cid:26)
2018
Methodology
25th percentile
Median
75th percentile
A
A
(cid:100)(cid:24)1(cid:15)10(cid:26)
(cid:100)(cid:24)1(cid:15)30(cid:26)
(cid:100)(cid:26)6(cid:15)386
(cid:100)(cid:26)(cid:28)(cid:15)828
(cid:100)103(cid:15)(cid:24)8(cid:28)
(cid:100)108(cid:15)(cid:28)(cid:24)(cid:26)
(cid:55)he ta(cid:69)le (cid:69)elow shows the C(cid:40)O sin(cid:74)le total fi(cid:74)(cid:88)re of rem(cid:88)neration for F(cid:60)201(cid:26) and F(cid:60)2018 e(cid:91)pressed as a ratio of the (cid:56)(cid:46) employee val(cid:88)es(cid:17)
Year
201(cid:26)
2018
Method
Option A
Option A
25th Percentile
Pay Ratio
Median
Pay Ratio
75th Percentile
Pay Ratio
33(cid:29)1
33(cid:29)1
22(cid:29)1
21(cid:29)1
16(cid:29)1
1(cid:24)(cid:29)1
(cid:55)he C(cid:40)O pay ratio is hi(cid:74)hly infl(cid:88)enced (cid:69)y the mi(cid:91) of fi(cid:91)ed and performance(cid:16)related compensation(cid:15) (cid:69)oth for employees and for the C(cid:40)O(cid:17) For (cid:44)nmarsat’s
(cid:56)(cid:46) employees(cid:15) the val(cid:88)e of performance(cid:16)related rem(cid:88)neration typically represents less than 1(cid:24)(cid:8) of total rem(cid:88)neration(cid:17) (cid:44)n contrast(cid:15) nearly 66(cid:8) of
the C(cid:40)O (cid:54)in(cid:74)le (cid:55)otal Fi(cid:74)(cid:88)re of (cid:53)em(cid:88)neration is the res(cid:88)lt of performance(cid:16)related pay (cid:11)(cid:69)oth short term and lon(cid:74) term(cid:12)(cid:15) with a lar(cid:74)e percenta(cid:74)e of total
rem(cid:88)neration delivered in (cid:44)nmarsat shares(cid:17)
Relative importance of spend on pay
(cid:55)o assist in (cid:88)nderstandin(cid:74) the relative importance of spend on pay(cid:15) we show (cid:69)elow rem(cid:88)neration for all employees in comparison to distri(cid:69)(cid:88)tions to
shareholders (cid:11)dividends(cid:12) and other si(cid:74)nificant spend(cid:17) Capital e(cid:91)pendit(cid:88)re has (cid:69)een presented as a meas(cid:88)re of si(cid:74)nificant spend as it shows the investment
(cid:69)ein(cid:74) made in the Company’s f(cid:88)t(cid:88)re (cid:74)rowth(cid:17)
RELATIVE IMPORTANCE OF SPEND ON PAY (cid:7)m
Total employee pay
Dividends
Cash capital expenditure
2018
*Restated
2017
$301.4m
$312.9m
$91.9m
$249.8m
$590.7m
$614.1m*
i
S
t
r
a
t
e
g
c
R
e
p
o
r
t
G
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
a
i
l
S
t
a
t
e
m
e
n
t
s
100
(cid:42)overnance (cid:95) (cid:39)irectors’ (cid:53)em(cid:88)neration (cid:53)eport
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
Remuneration Report
contin(cid:88)ed
Directors’ shareholding (audited)
(cid:55)he ta(cid:69)le (cid:69)elow shows the shareholdin(cid:74) of each (cid:39)irector a(cid:74)ainst their respective shareholdin(cid:74) re(cid:84)(cid:88)irement as at 31 (cid:39)ecem(cid:69)er 2018 (cid:69)ased on a share
price of (cid:100)3(cid:17)(cid:26)(cid:28) as at 31 (cid:39)ecem(cid:69)er 2018(cid:29)
(cid:53)(cid:88)pert (cid:51)earce
(cid:55)ony (cid:37)ates
(cid:36)ndrew (cid:54)(cid:88)(cid:78)awaty
(cid:54)imon (cid:37)a(cid:91)
(cid:54)ir (cid:37)ryan Cars(cid:69)er(cid:74)
(cid:58)arren Fine(cid:74)old
(cid:42)eneral C(cid:17) (cid:53)o(cid:69)ert (cid:46)ehler (cid:11)(cid:53)td(cid:12)
(cid:51)hillipa (cid:48)cCrostie
(cid:45)anice O(cid:69)(cid:88)chows(cid:78)i
(cid:39)r (cid:36)(cid:69)e (cid:51)eled5
(cid:53)o(cid:69)ert (cid:53)(cid:88)i(cid:77)ter
(cid:39)r (cid:43)amado(cid:88)n (cid:55)o(cid:88)r(cid:184)
Shares held as
at 31 Dec 2017
Shares held as
at 31 Dec 2018
Unvested
and subject
to deferral1
Unvested
and subject to
performance
conditions2
Shareholding
guideline
(% salary)
Current3
shareholding
(% salary)
Requirement
met?
(cid:28)20(cid:15)623
(cid:28)(cid:28)8(cid:15)(cid:28)86
262(cid:15)2(cid:28)(cid:24)
3(cid:28)1(cid:15)83(cid:26)
(cid:24)(cid:28)(cid:15)682
118(cid:15)060
202(cid:15)61(cid:28)
303(cid:15)66(cid:26)
(cid:24)00(cid:8)
(cid:24)00(cid:8)
63(cid:26)(cid:8)
(cid:28)2(cid:8)
Yes
No4
1(cid:15)1(cid:26)2(cid:15)3(cid:24)2
1(cid:15)1(cid:28)(cid:28)(cid:15)18(cid:23)
23(cid:15)000
16(cid:15)32(cid:26)
30(cid:15)000
3(cid:15)000
2(cid:15)000
(cid:26)(cid:15)000
2(cid:23)(cid:15)000
–
–
23(cid:15)000
16(cid:15)32(cid:26)
30(cid:15)000
3(cid:15)000
2(cid:15)000
1(cid:23)(cid:15)200
33(cid:15)6(cid:24)0
–
–
1 (cid:55)he (cid:88)nvested and s(cid:88)(cid:69)(cid:77)ect to deferral col(cid:88)mn incl(cid:88)des (cid:37)(cid:54)(cid:36) awards confirmed in 2016(cid:15) 201(cid:26) and 2018 and 1(cid:24)(cid:8) of the 2016 (cid:51)(cid:54)(cid:36) as performance has (cid:69)een tested altho(cid:88)(cid:74)h the award has not yet vested(cid:17)
(cid:55)he amo(cid:88)nts which are shown are net of ta(cid:91)(cid:15) th(cid:88)s representin(cid:74) (cid:24)3(cid:8) of the total (cid:88)nvested and s(cid:88)(cid:69)(cid:77)ect to deferral
2 (cid:55)he (cid:88)nvested and s(cid:88)(cid:69)(cid:77)ect to performance conditions col(cid:88)mn incl(cid:88)des (cid:51)(cid:54)(cid:36) awards made in 201(cid:26) and 2018
3 (cid:55)he calc(cid:88)lation at 31 (cid:39)ecem(cid:69)er 2018 is not compara(cid:69)le to last year(cid:15) as (cid:88)nvested and s(cid:88)(cid:69)(cid:77)ect to deferral shares are not incl(cid:88)ded and the fi(cid:74)(cid:88)re incl(cid:88)des (cid:69)eneficially held shares only(cid:17) (cid:55)his e(cid:91)cl(cid:88)des shares
added followin(cid:74) vestin(cid:74) of (cid:37)(cid:54)(cid:36) awards in (cid:48)arch 201(cid:28)(cid:15) where (cid:48)r (cid:51)earce and (cid:48)r (cid:37)ates retained (cid:24)(cid:24)(cid:15)(cid:26)8(cid:28) and (cid:24)0(cid:15)0(cid:28)(cid:24) shares respectively
(cid:23) (cid:48)r (cid:37)ates (cid:77)oined the Company in (cid:45)(cid:88)ne 201(cid:23)(cid:17) (cid:55)he shareholdin(cid:74) (cid:74)(cid:88)ideline of five times salary is to (cid:69)e achieved over a five(cid:16) to seven(cid:16)year period
(cid:24) (cid:55)he 201(cid:26) interest has (cid:69)een restated to show the correct (cid:69)eneficial interest
(cid:39)irectors interests for (cid:48)r (cid:51)earce and (cid:48)r (cid:37)ates have increased followin(cid:74) the vestin(cid:74) of the (cid:37)(cid:54)(cid:36) awards on 8 (cid:48)arch 201(cid:28)(cid:17)
Directors’ interests in shares in Inmarsat long-term incentive plans and all-employee plans (audited)
(cid:55)his information is acc(cid:88)rate as at 31 (cid:39)ecem(cid:69)er 2018(cid:17)
Inmarsat bonus share awards (audited)
(cid:55)he ta(cid:69)le (cid:69)elow shows details of (cid:37)(cid:54)(cid:36) awards where the n(cid:88)m(cid:69)er of shares has (cid:69)een confirmed (cid:69)(cid:88)t which are still to vest with one third vestin(cid:74) each
year over a three(cid:16)year period(cid:17)
Rupert Pearce
(cid:54)hare award confirmed in (cid:48)arch 201(cid:24)
(cid:54)hare award confirmed in (cid:48)arch 2016
(cid:54)hare award confirmed in (cid:48)arch 201(cid:26)
(cid:54)hare award confirmed in (cid:48)arch 2018
Tony Bates
(cid:54)hare award confirmed in (cid:48)arch 201(cid:24)
(cid:54)hare award confirmed in (cid:48)arch 2016
(cid:54)hare award confirmed in (cid:48)arch 201(cid:26)
(cid:54)hare award confirmed in (cid:48)arch 2018
Andrew Sukawaty3
(cid:54)hare award confirmed in (cid:48)arch 201(cid:24)
Share awards
held at
1 January 2018
Awarded
during
the year
Reinvested
dividends
during
the year1
Vested
during
the year
Share awards
held at
31 December 2018
Allocation
price2
2(cid:28)(cid:15)062
82(cid:15)32(cid:23)
11(cid:28)(cid:15)1(cid:23)0
–
–
–
–
2(cid:28)(cid:15)062
–
(cid:100)8(cid:17)(cid:28)1
1(cid:15)(cid:23)8(cid:28)
(cid:23)1(cid:15)160
(cid:23)2(cid:15)6(cid:24)3
(cid:100)(cid:28)(cid:17)30
2(cid:15)8(cid:26)(cid:23)
3(cid:28)(cid:15)(cid:26)12
82(cid:15)302
(cid:100)(cid:26)(cid:17)62
–
113(cid:15)(cid:26)(cid:26)(cid:28)
(cid:23)(cid:15)11(cid:26)
–
11(cid:26)(cid:15)8(cid:28)6
(cid:100)(cid:23)(cid:17)33
1(cid:28)(cid:15)330
62(cid:15)(cid:23)(cid:28)(cid:28)
(cid:28)2(cid:15)338
–
–
–
–
1(cid:28)(cid:15)330
–
(cid:100)8(cid:17)(cid:28)1
1(cid:15)130
31(cid:15)2(cid:24)3
32(cid:15)383
(cid:100)(cid:28)(cid:17)30
2(cid:15)22(cid:26)
30(cid:15)(cid:26)(cid:26)(cid:28)
63(cid:15)(cid:26)86
(cid:100)(cid:26)(cid:17)62
–
88(cid:15)183
3(cid:15)1(cid:28)0
–
(cid:28)1(cid:15)3(cid:26)3
(cid:100)(cid:23)(cid:17)33
(cid:24)0(cid:15)(cid:26)(cid:23)1
–
–
(cid:24)0(cid:15)(cid:26)(cid:23)1
–
(cid:100)8(cid:17)(cid:28)1
Vesting date
F(cid:88)lly vested(cid:29) (cid:48)arch 2018
was the last vestin(cid:74) date
(cid:48)arch 2018
and (cid:48)arch 201(cid:28)
(cid:48)arch 2018(cid:15) (cid:48)arch 201(cid:28)
and (cid:48)arch 2020
(cid:48)arch 201(cid:28)(cid:15) (cid:48)arch 2020
and (cid:48)arch 2021
F(cid:88)lly vested(cid:29) (cid:48)arch 2018
was the last vestin(cid:74) date
(cid:48)arch 2018
and (cid:48)arch 201(cid:28)
(cid:48)arch 2018(cid:15) (cid:48)arch 201(cid:28)
and (cid:48)arch 2020
(cid:48)arch 201(cid:28)(cid:15) (cid:48)arch 2020
and (cid:48)arch 2021
F(cid:88)lly vested(cid:29) (cid:48)arch 2018
was the last vestin(cid:74) date
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
(cid:42)overnance (cid:95) (cid:39)irectors’ (cid:53)em(cid:88)neration (cid:53)eport
101
1 (cid:55)he n(cid:88)m(cid:69)er of shares s(cid:88)(cid:69)(cid:77)ect to the award increases (cid:69)y the n(cid:88)m(cid:69)er of shares that the (cid:40)(cid:91)ec(cid:88)tive (cid:39)irector co(cid:88)ld have p(cid:88)rchased with the val(cid:88)e of dividends they wo(cid:88)ld have received on their award(cid:15)
(cid:69)ased on the share price on the e(cid:91)(cid:16)dividend date
2 (cid:55)he price is that (cid:88)sed to calc(cid:88)late the n(cid:88)m(cid:69)er of shares to (cid:69)e allocated s(cid:88)(cid:69)(cid:77)ect to performance at the (cid:74)rant date and is different to the share price on the date of determination when the shares
are confirmed
3 (cid:48)r (cid:54)(cid:88)(cid:78)awaty(cid:15) as (cid:49)on(cid:16)(cid:40)(cid:91)ec(cid:88)tive Chairman(cid:15) remains entitled to receive the shares when they vest as they were awarded and earned while he was an (cid:40)(cid:91)ec(cid:88)tive (cid:39)irector
For the (cid:37)(cid:54)(cid:36) awards that vested in (cid:48)arch 2018 (cid:11)last third of the 201(cid:24) award(cid:15) second third of the 2016 award and first third of the 201(cid:26) award(cid:12)(cid:15) the (cid:39)irectors
all sold s(cid:88)fficient shares to cover ta(cid:91) and retained the remainin(cid:74) shares(cid:17) (cid:55)he share price on 12 (cid:48)arch 2018 when the sales too(cid:78) place was (cid:100)(cid:23)(cid:17)16(cid:28)2
which is si(cid:74)nificantly lower than the share prices (cid:88)sed at the date of allocation(cid:17)
(cid:48)r (cid:51)earce and (cid:48)r (cid:37)ates’ 2018 (cid:37)(cid:54)(cid:36) awards will (cid:69)e confirmed in (cid:48)arch 201(cid:28) for (cid:28)3(cid:15)(cid:26)(cid:24)6 and (cid:26)1(cid:15)608 shares respectively (cid:69)ased on performance d(cid:88)rin(cid:74) F(cid:60)18
and reflect a red(cid:88)ced n(cid:88)m(cid:69)er of shares followin(cid:74) discretion (cid:69)y the Committee(cid:17) (cid:55)he first vestin(cid:74) will (cid:69)e in (cid:48)arch 2020(cid:15) then in 2021 and 2022(cid:17)
Inmarsat performance share awards (audited)
(cid:55)he ta(cid:69)le (cid:69)elow shows details of o(cid:88)tstandin(cid:74) (cid:51)(cid:54)(cid:36) awards(cid:17)
Rupert Pearce
(cid:36)ward made in 201(cid:24)2
(cid:36)ward made in 20163
(cid:36)ward made in 201(cid:26)
(cid:36)ward made in 2018
Tony Bates
(cid:36)ward made in 201(cid:24)2
(cid:36)ward made in 20163
(cid:36)ward made in 201(cid:26)
(cid:36)ward made in 2018
Share awards
held at
1 January 2018
Awarded
during
the year
Reinvested
dividends
during
the year1
Vested
during
the year
Lapsed
during
the year
Share awards
held at
31 December 2018
111(cid:15)08(cid:28)
112(cid:15)(cid:24)6(cid:23)
1(cid:23)0(cid:17)182
–
–
–
–
2(cid:24)1(cid:15)6(cid:24)(cid:24)
(cid:23)(cid:15)(cid:28)26
38(cid:15)2(cid:24)2
(cid:26)(cid:26)(cid:15)(cid:26)63
–
–
–
–
–
–
–
–
–
8(cid:23)(cid:15)33(cid:26)
8(cid:26)(cid:15)2(cid:23)1
108(cid:15)6(cid:23)(cid:26)
–
–
–
–
1(cid:28)(cid:24)(cid:15)020
3(cid:15)(cid:26)3(cid:28)
2(cid:28)(cid:15)0(cid:23)0
(cid:24)(cid:28)(cid:15)063
–
–
–
–
–
–
–
–
–
–
112(cid:15)(cid:24)6(cid:23)
1(cid:23)0(cid:15)182
2(cid:24)1(cid:15)6(cid:24)(cid:24)
–
8(cid:26)(cid:15)2(cid:23)1
108(cid:15)6(cid:23)(cid:26)
1(cid:28)(cid:24)(cid:15)020
Award
price
(cid:100)(cid:28)(cid:17)3(cid:23)
(cid:100)(cid:28)(cid:17)30
(cid:100)(cid:26)(cid:17)62
(cid:100)(cid:23)(cid:17)33
(cid:100)(cid:28)(cid:17)3(cid:23)
(cid:100)(cid:28)(cid:17)30
(cid:100)(cid:26)(cid:17)62
(cid:100)(cid:23)(cid:17)33
Vesting date
(cid:48)arch 2018
(cid:48)arch 201(cid:28)
(cid:48)arch 2020
(cid:48)arch 2021
(cid:48)arch 2018
(cid:48)arch 201(cid:28)
(cid:48)arch 2020
(cid:48)arch 2021
1 (cid:55)he n(cid:88)m(cid:69)er of shares s(cid:88)(cid:69)(cid:77)ect to the award increases (cid:69)y the n(cid:88)m(cid:69)er of shares that the (cid:40)(cid:91)ec(cid:88)tive (cid:39)irector co(cid:88)ld have p(cid:88)rchased with the val(cid:88)e of dividends they wo(cid:88)ld have received on their award(cid:15)
(cid:69)ased on the share price on the e(cid:91)(cid:16)dividend date
2 30(cid:8) of the 201(cid:24) (cid:51)(cid:54)(cid:51) vested in 2018
3
1(cid:24)(cid:8) of the 2016 (cid:51)(cid:54)(cid:36) will vest in (cid:48)arch 201(cid:28) which is after discretion has (cid:69)een e(cid:91)ercised (cid:69)y the Committee to red(cid:88)ce the overall n(cid:88)m(cid:69)er
Inmarsat sharesave scheme (2018 award) (audited)
(cid:55)he information (cid:69)elow relates to the (cid:56)(cid:46) (cid:54)haresave plan which the (cid:40)(cid:91)ec(cid:88)tive (cid:39)irectors can contri(cid:69)(cid:88)te monthly savin(cid:74)s to over a three(cid:16)year period(cid:17)
Executive Director
(cid:53)(cid:88)pert (cid:51)earce
(cid:55)ony (cid:37)ates
Options held at
1 January 2018
1(cid:15)(cid:24)8(cid:23)
1(cid:15)(cid:23)8(cid:28)
–
1(cid:15)(cid:24)8(cid:23)
1(cid:15)(cid:23)8(cid:28)
–
Granted
during
the year
–
–
(cid:24)(cid:15)(cid:28)82
–
–
(cid:24)(cid:15)(cid:28)82
Lapsed
during
the year
Exercised
during
the year
Options held at
31 December
2018
Option price
per share
Date
from which
exercisable
Expiry date
1(cid:15)(cid:24)8(cid:23)
1(cid:15)(cid:23)8(cid:28)
–
1(cid:15)(cid:24)8(cid:23)
1(cid:15)(cid:23)8(cid:28)
–
–
–
–
–
–
–
–
–
–
–
–
–
(cid:100)(cid:24)(cid:17)68
(cid:100)6(cid:17)02
(cid:100)3(cid:17)01
(cid:100)(cid:24)(cid:17)68
(cid:100)6(cid:17)02
(cid:100)3(cid:17)01
(cid:36)(cid:88)(cid:74)(cid:88)st 201(cid:28)
(cid:45)an(cid:88)ary 2020
(cid:36)(cid:88)(cid:74)(cid:88)st 2020
(cid:45)an(cid:88)ary 2021
(cid:45)(cid:88)ly 2021
(cid:45)an(cid:88)ary 2022
(cid:36)(cid:88)(cid:74)(cid:88)st 201(cid:28)
(cid:45)an(cid:88)ary 2020
(cid:36)(cid:88)(cid:74)(cid:88)st 2020
(cid:45)an(cid:88)ary 2021
(cid:45)(cid:88)ly 2021
(cid:45)an(cid:88)ary 2022
Approval
(cid:55)his report was approved (cid:69)y the (cid:37)oard of (cid:39)irectors on 18 (cid:48)arch 201(cid:28) and si(cid:74)ned on its (cid:69)ehalf (cid:69)y
SIMON BAX
CHAIRMAN, REMUNERATION COMMITTEE
18 (cid:48)arch 201(cid:28)
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102
(cid:42)overnance (cid:95) (cid:53)eport of the directors
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
Report of the directors
For the year ended 31 (cid:39)ecem(cid:69)er 2018
(cid:55)his (cid:53)eport has (cid:69)een
prepared in accordance with
the re(cid:84)(cid:88)irements o(cid:88)tlined
within the Companies
(cid:36)ct 2006 (cid:11)(cid:67)2006 (cid:36)ct’(cid:12)
and (cid:47)istin(cid:74) (cid:53)(cid:88)le (cid:28)(cid:17)8(cid:17)(cid:23)(cid:53)
and forms part of the
mana(cid:74)ement report as
re(cid:84)(cid:88)ired (cid:88)nder (cid:39)isclos(cid:88)re
and (cid:55)ransparency (cid:53)(cid:88)le (cid:23)
Certain information that f(cid:88)lfils the re(cid:84)(cid:88)irements
of the (cid:53)eport of the (cid:39)irectors is incorporated
into the (cid:53)eport (cid:69)y reference and is referred
to (cid:69)elow(cid:17)
(cid:55)he p(cid:88)rpose of this (cid:53)eport is to provide
information to the Company’s shareholders(cid:17)
(cid:55)he (cid:53)eport contains certain forward(cid:16)loo(cid:78)in(cid:74)
statements (cid:69)ased on (cid:78)nowled(cid:74)e and information
availa(cid:69)le at the date of preparation of the
(cid:53)eport(cid:17) (cid:55)hese statements involve (cid:88)ncertainty
since f(cid:88)t(cid:88)re events and circ(cid:88)mstances can
ca(cid:88)se res(cid:88)lts and developments to differ
from those anticipated(cid:17) (cid:49)othin(cid:74) in this (cid:53)eport
sho(cid:88)ld (cid:69)e constr(cid:88)ed as a profit forecast(cid:17)
Responsibility statement
(cid:55)he (cid:53)esponsi(cid:69)ility (cid:54)tatement made (cid:69)y
the (cid:37)oard re(cid:74)ardin(cid:74) the preparation of the
financial statements is set o(cid:88)t on pa(cid:74)e 106(cid:17)
Business review, strategic
report and future developments
(cid:36) description of the Company’s (cid:69)(cid:88)siness model(cid:15)
strate(cid:74)y(cid:15) and factors li(cid:78)ely to affect the (cid:42)ro(cid:88)p’s
f(cid:88)t(cid:88)re developments are incorporated into
this (cid:53)eport (cid:69)y reference(cid:17) (cid:55)hey are set o(cid:88)t in
the (cid:54)trate(cid:74)ic (cid:53)eport on pa(cid:74)es 1 to (cid:24)(cid:28)(cid:17)
Governance report
(cid:56)nder (cid:39)isclos(cid:88)re and (cid:55)ransparency (cid:53)(cid:88)le (cid:26)(cid:15)
a re(cid:84)(cid:88)irement e(cid:91)ists for certain parts of the
(cid:42)overnance (cid:53)eport to (cid:69)e o(cid:88)tlined in the (cid:53)eport
of the (cid:39)irectors(cid:17) (cid:55)his information is laid o(cid:88)t in
the (cid:42)overnance (cid:53)eport on pa(cid:74)es 60 to 106(cid:17)
Post-balance sheet events
(cid:55)here were no s(cid:88)ch events re(cid:84)(cid:88)ired to
(cid:69)e disclosed(cid:17)
Results and dividends
(cid:55)he res(cid:88)lts for the year are shown in the
Consolidated (cid:44)ncome (cid:54)tatement on pa(cid:74)e 116(cid:17)
(cid:36) final dividend of 12 cents (cid:11)(cid:56)(cid:54)(cid:7)(cid:12) will (cid:69)e paid
on 30 (cid:48)ay 201(cid:28) to shareholders on the share
re(cid:74)ister at the close of (cid:69)(cid:88)siness on 23 (cid:36)pril 201(cid:28)(cid:17)
(cid:39)ividend payments are made in (cid:51)o(cid:88)nds (cid:54)terlin(cid:74)
or in shares (cid:88)sin(cid:74) an e(cid:91)chan(cid:74)e rate derived
from the (cid:58)(cid:48)(cid:18)(cid:53)e(cid:88)ters (cid:42)(cid:37)(cid:51)(cid:18)(cid:56)(cid:54)(cid:39) (cid:28)am fi(cid:91)
(cid:11)(cid:47)ondon time(cid:12) fo(cid:88)r (cid:69)(cid:88)siness days prior to the
anno(cid:88)ncement of the scrip reference price(cid:17)
(cid:40)(cid:91)planatory doc(cid:88)mentation in respect of the
operation of the scrip dividend is availa(cid:69)le
on o(cid:88)r we(cid:69)site(cid:17)
Interest capitalisation
(cid:55)he (cid:42)ro(cid:88)p capitalised (cid:7)(cid:23)3(cid:17)(cid:26)m d(cid:88)rin(cid:74) the
period (cid:88)nder review(cid:17) (cid:55)he (cid:7)(cid:23)3(cid:17)(cid:26)m of interest
capitalised in the period has (cid:69)een treated
as f(cid:88)lly ta(cid:91) ded(cid:88)cti(cid:69)le in the (cid:56)(cid:46)(cid:17)
Branches
(cid:55)he (cid:42)ro(cid:88)p has activities operated thro(cid:88)(cid:74)h
many (cid:77)(cid:88)risdictions(cid:17)
Capital structure and rights
attaching to shares
(cid:55)he Company’s ordinary shares of (cid:40)(cid:88)ro 0(cid:17)000(cid:24)
each are listed on the (cid:47)ondon (cid:54)toc(cid:78) (cid:40)(cid:91)chan(cid:74)e
(cid:11)(cid:47)(cid:54)(cid:40)(cid:29) (cid:44)(cid:54)(cid:36)(cid:55)(cid:17)(cid:47)(cid:12)(cid:17) (cid:39)etails of the iss(cid:88)ed share capital
of the Company(cid:15) to(cid:74)ether with movements
in the iss(cid:88)ed share capital d(cid:88)rin(cid:74) the year(cid:15)
can (cid:69)e fo(cid:88)nd in note 2(cid:24) to the consolidated
financial statements(cid:17)
(cid:55)he Company has one class of ordinary share
which carries no ri(cid:74)hts to fi(cid:91)ed income(cid:17) On a poll(cid:15)
each mem(cid:69)er is entitled to one vote for each
share of (cid:40)(cid:88)ro 0(cid:17)000(cid:24) held(cid:17) (cid:36)ll (cid:26)6(cid:15)612 ordinary
shares held (cid:69)y the (cid:44)nmarsat (cid:40)mployee (cid:54)hare
Ownership (cid:55)r(cid:88)st carry votin(cid:74) ri(cid:74)hts(cid:17)
ALISON HORROCKS
CHIEF CORPORATE
AFFAIRS OFFICER AND
COMPANY SECRETARY
Inmarsat plc | Annual Report and Accounts 2018
Governance | Report of the directors
103
There are no specific restrictions on the size
of holding or on the transfer of shares, which are
both governed by the general provisions of the
Articles of Association and prevailing legislation.
The Directors are not aware of any arrangements
between shareholders that may result in
restrictions on the transfer of securities or on
voting rights. No person has any special rights
of control over the Company’s share capital
and all issued shares are fully paid.
Going concern
Despite the continuing rerating of the satellite
sector and increased competitive environment,
coupled with a continuing uncertain economic
outlook particularly regarding Brexit and its
potential impact on the global economy, the
Directors believe that the Group has a resilient
business model and is compliant with all its
financial covenants. In making their assessment
of going concern, the Directors considered the
Board-approved budget, the rolling forecast,
the cash flow forecast and the most recent
five-year long-range business plan. In addition,
the Directors considered the maturity profile
of existing debt facilities, other liabilities as well
as actual and forecast covenant calculations.
Furthermore, the forecasts and covenant
calculations were stress tested by applying a set
of downside scenarios. After making enquiries,
the Directors have a reasonable expectation
that the Group has adequate resources
to continue in operational existence for the
foreseeable future. Accordingly, Inmarsat
continues to adopt the going concern basis in
preparing the consolidated financial statements.
Viability statement
The viability statement containing a broader
assessment by the Board of the Company’s
ongoing viability is set out on page 59.
On-market purchase authority
The Directors’ authorities are determined by
UK legislation and the Articles of Association.
At the 2018 AGM, the Directors were authorised
by shareholders to allot ordinary shares up
to agreed limits and to have the ability to
make market purchases of ordinary shares.
Shareholders are being requested to renew
these authorities at the 2019 AGM.
Indemnities and insurance
Details of the Directors’ and Officers’ liability
insurance and the indemnities provided
to the Directors, Company Secretary and
certain employees where they serve as
directors of subsidiaries at the Group’s
request are provided on page 70 in the
Governance Report.
Employment policies and
employee involvement
Details of the employment policies and employee
involvement are provided in the Our People
section and also in the Governance Report.
Long-term incentive schemes
Details of the long-term incentive schemes
can be found on page 101 of the Directors’
Remuneration Report.
GREENHOUSE GAS EMISSIONS
Greenhouse gas emissions (tCO2e)
Combustion of fuel and operation of facilities (Scope 1)
Electricity, heat, steam and cooling purchased for our own use
(Scope 2: location-based)
Electricity, heat, steam and cooling purchased for our own use
(Scope 2: market-based)
Other indirect emissions (Scope 3)
2018
849
2017
1,048
2016
1,164
11,053
11,014
11,743
7,756
15,117
8,808
21,044
10,559
13,568
Emissions from the consumption of electricity outside the UK and Scope 2 emissions calculated using the market-based approach
using supplier specific emission factors are calculated and reported in tCO2e
METHODOLOGY
Greenhouse gas emissions
(tCO2e)
Total Scope 1 and 2
tCO2e per full-time
equivalent (‘FTE’)
employee
Location-based approach
Market-based approach
2018
11,902
2017
11,918
2016
12,907
2018
8,605
2017
9,712
2016
11,724
6.5
6.9
6.8
4.7
5.7
6.2
The emissions intensity calculation is based on a figure of 1,842 employees in 2018, 1,737 employees in 2017 and 1,900 employees
in 2016. We have restated our total Scope 2 figures for 2017 due to improved data quality and accuracy within Scope 3 emissions
Health and safety
The Group is committed to maintaining high
standards of health and safety for its employees,
customers, visitors, contractors and anyone
affected by its business activities. During 2018,
we continued to work closely with our subsidiary
companies to harmonise health and safety best
practice. Rupert Pearce, our CEO, is the Director
designated for health and safety matters at
Board level. One of the objectives for the CEO
includes how health and safety is managed
across the Company.
Environmental performance
and strategy
We operate in over 39 locations with a
combined workforce of approximately 1,800
staff. Due to our diversity of activities the
Company recognises it has impacts affecting
the local and global environment. However,
it should be noted that the satellite industry
and our own business is low on the scale of
carbon generators. The satellite launch industry
is reviewing how it becomes more accountable
for carbon generation through innovative
new satellite launch techniques and we will
work with these launch providers to see how
we can benefit from improved techniques for
our future launches. We have provided details
of our objectives for how we manage our
environmental activities on pages 47 and 48.
The following information summarises our actual
environmental performance over the year.
Our environmental impacts include the use
of natural resources, the consumption of
energy and water, the production of a variety
of waste, as well as staff and visitors who
travel extensively.
All energy and waste management activities
are controlled by the Business Environment team
which is based in London and are supported by
inputs from colleagues across the Group. The CEO
has an objective to ensure there is an effective
process in place to monitor environmental,
social and governance matters.
Greenhouse gas emissions
This section has been prepared in
accordance with our regulatory obligation
to report greenhouse gas (‘GHG’) emissions
pursuant to Section 7 of the Companies
Act 2006 (Strategic Report and Directors’
Report) Regulations 2013. The table shows
our greenhouse gas emissions for the years
ended 31 December 2016 to 2018. We are
in the process of having our emissions
independently verified to the ISO 14064-3
standard to ensure continuous improvement
of our GHG reporting.
GovernanceFinancial StatementsStrategic Report 104
Governance | Report of the directors
Inmarsat plc | Annual Report and Accounts 2018
Report of the directors
continued
Methodology
We quantify and report our organisational
GHG emissions according to the Greenhouse
Gas Protocol. Consumption data has been
collated by our sustainability consultant,
Carbon Credentials, and has been converted
into CO2 equivalent using the UK Government
2018 Conversion Factors for Company
Reporting and the International Energy
Agency international electricity conversion
factors in order to calculate emissions
from corresponding activity data.
This report has been prepared in accordance
with the GHG Protocol’s Scope 2 Guidance; we
have therefore reported both a location-based
and market-based Scope 2 emissions figure.
The Scope 2 market-based figure reflects
emissions from electricity purchasing decisions
that Inmarsat has made. When quantifying
emissions using the market-based approach
we have used a supplier specific emissions
factor where possible. If these factors were
unavailable, a residual mix emissions factor
was then used, and as a final alternative
the location-based grid emissions factor
was used.
The table on this page shows our total emissions
and our emissions as a metric for the year
ended 31 December 2018 using the two
different Scope 2 accounting methodologies.
Performance
We set an interim target to reduce absolute
Scope 1 and 2 emissions by 20% by year
end 2018 compared to a 2016 baseline.
We achieved a 27% decrease in our emissions
Scope 1 and 2 emissions by since 2016 (using the
market-based Scope 2 accountancy method)
and exceeded our target. We continue to
expand the number of low emissions sources
of electricity across the Group and have
already switched to a renewable electricity
supply at our London Head Office, our largest
electricity-consuming site. Overall, 37% of the
electricity we use is from renewable sources.
Our emissions intensity has decreased by
18% from 5.7 (2017) to 4.7 (2018) tCO2e/FTE
(using the market-based Scope 2 accounting
approach).
We have also chosen to voluntarily disclose
a selection of our Scope 3 emissions, including
water, waste, business travel and WTT electricity
emissions and emissions associated with
the transmission and distribution of electricity.
Our Scope 3 emissions have decreased by
28% between 2017 and 2018. This is largely
due to a decrease in business travel.
TOTAL EMISSIONS 2018 tCO2e
23,722
› Scope 1: Natural gas combustion within
boilers, gas oil combustion within generators,
road fuel combustion within owned and
leased vehicles, and fugitive refrigerants
from air-conditioning equipment
› Scope 2: Purchased electricity consumption
for our own use
› Scope 3: Business travel, water, waste, and
well-to-tank and transmission & distribution
electricity emissions
Assumptions and estimations
In some cases, missing data has been estimated
using either extrapolation of available data
from the reporting period or data from previous
years as a proxy.
Scope 1 ...................................................................................849
Scope 2 (market-based) ............................................7,756
Scope 3 ............................................................................... 15,117
Principal risks and uncertainties
Details of principal risks and uncertainties
are provided on pages 52 to 58.
EMISSIONS INTENSITY – SCOPE 1 AND 2
(MARKET-BASED) tCO2e/FTE
4.7
2018
2017
4.7
5.7
In 2019 we will be working with Carbon
Credentials to assess our full value chain
(Scope 3) emissions with the ambition of
setting a science-based emission reduction
target in line with the UK’s commitment under
the UN Paris Agreement, thereby contributing
to the global effort to prevent the worst
consequences of climate change.
Reporting boundaries and limitations
We consolidate our organisational boundary
according to the operational control approach
and have adopted a materiality threshold
of 5% for GHG reporting purposes. As a result,
emissions from locations with fewer than 15
staff on-site have been reasonably estimated
as immaterial and are thus excluded from our
GHG disclosure. Emissions for all significant
sites have been included in our calculations,
which includes our top five highest consuming
locations: London, Burum (The Netherlands),
Auckland (New Zealand), Paumalu (USA)
and Perth (Australia). The GHG sources that
constitute our operational boundary for
the 2018 reporting period are:
Financial risk management
Details of the financial risk management
objectives and policies of the Group, including
hedging policies and exposure of the entity
to price risk, credit risk, liquidity risk and cash
flow risk are given in notes 3 and 31 to the
consolidated financial statements.
Research and development
The Group continues to invest in new
services and technology necessary to
support its activities through research
and development programmes.
Political donations
During the year, no political donations were
made. It remains the policy of the Company
not to make political donations or incur
political expenditure. The Company will
be reducing the aggregate limits it will seek
approval for from shareholders at its 2019 AGM.
We consider that it is in the best interests of
shareholders for the Company to participate
in public debate and opinion-forming on
matters which affect the Company’s business.
The definition of donation is widely defined
within the context of the Companies Act 2006
and can extend to bodies concerned with
policy review, law reform and the representation
of the business community, including special
interest groups which the company (and its
subsidiaries) might wish to support and the
Company believes it is appropriate to renew
the authority, on lower limits, at the 2019
AGM to avoid any inadvertent infringement
of the Act.
Inmarsat plc | Annual Report and Accounts 2018
Governance | Report of the directors
105
Interests in voting rights
As at 18 March 2019, the Company had
been notified, in accordance with chapter 5
of the Financial Services Authority’s Disclosure
and Transparency Rules, of the following
significant interests:
Percentage of voting rights
over ordinary shares of
€0.0005 each
Shareholder
Lansdowne Partners Limited
Capital Group Companies, Inc.
Aberdeen Asset Managers
Artemis Investment Management
Nomura International plc
Jupiter Asset Management Limited
Openheimer Funds, Inc
Standard Life Investments Ltd
Pictet Asset Management
Allianz SE
11.43%
9.83%
6.30%
5.21%
5.03%
4.91%
4.83%
4.32%
3.13%
2.98%
Voting rights are based on the information
submitted via TR1 forms from shareholders
to the Company, adjusted for the issued
share capital of 463,480,897 as at
18 March 2019.
Rules governing directors’
appointments
Shareholders can appoint or remove Directors
by an ordinary resolution in a general meeting
but specific conditions on vacation of office
apply where a Director becomes prohibited
by law or regulation from holding office;
or where a Director becomes bankrupt,
mentally incapacitated or persistently absent
from Directors’ meetings. Further information
on Directors’ appointments are provided on
pages 72 and 73 of the Governance Report.
Directors’ power
General powers of the Directors are provided
by the Company’s Articles of Association
and the Companies Act 2006 (the ‘Act’).
The powers are subject to limitations imposed
by statute and directions given by special
resolution of the shareholders applicable at
a relevant time. Details of Directors’ powers
are provided on pages 67 to 69 of the
Governance Report.
2019 Annual General Meeting
The Annual General Meeting will be held on
1 May 2019 at 10.00am at 99 City Road,
London EC1Y 1AX. The Notice of Meeting,
which sets out the resolutions to be proposed
at the forthcoming AGM, is contained in
a separate circular and is enclosed with
this Annual Report.
By order of the Board
ALISON HORROCKS FCIS
CHIEF CORPORATE AFFAIRS OFFICER
AND COMPANY SECRETARY
18 March 2019
Directors and their interests
A full list of the individuals who were Directors
of the Company during the financial year ended
31 December 2018 is set out below:
Tony Bates, Simon Bax, Sir Bryan Carsberg,
Warren Finegold, General C. Robert Kehler (Rtd),
Phillipa McCrostie, Rupert Pearce, Dr Abe Peled,
Janice Obuchowski, Robert Ruijter, Andrew
Sukawaty and Dr Hamadoun Touré.
We were delighted to announce the appointment
of Tracy Clarke as an additional Non-Executive
Director effective 1 February 2019.
Details of the interests of each Director and
their connected persons in the Company’s
ordinary shares and share awards held are
set out in full in the Directors’ Remuneration
Report on pages 100 to 101.
Details of the Directors’ conflicts of interest
policy are provided on page 70.
Articles of Association
The Articles of Association can only be amended
by special resolution of the shareholders.
This year we are seeking to amend Article 83
which relates to the overall level of fee paid
to the Non-Executive Directors, details of this
special resolution are contained in the AGM
Notice of Meeting.
Auditor
Each of the Directors has confirmed that:
› so far as the Director is aware, there is
no relevant audit information of which
the Company’s Auditor is unaware and
› the Director has taken all the steps that
he/she ought to have taken as a Director
to make him/herself aware of any relevant
audit information and to establish that
the Company’s Auditor is aware of
that information
This confirmation is given and should be
interpreted in accordance with the provisions
of s418 of the Companies Act 2006.
A resolution to re-appoint Deloitte LLP
as Auditor of the Company and to authorise
the Audit Committee of the Board of Directors
to determine its remuneration will be proposed
at the 2019 AGM.
GovernanceFinancial StatementsStrategic Report 106
Governance | Directors’ responsibilities statement
Inmarsat plc | Annual Report and Accounts 2018
Directors’ responsibilities
statement
The Directors are responsible for preparing
the Annual Report and the financial statements
in accordance with applicable law and regulations.
Company law requires the Directors to prepare
such financial statements for each financial
year. Under that law the Directors are required
to prepare the Group financial statements
in accordance with International Financial
Reporting Standards (‘IFRS’) as adopted by
the European Union and Article 4 of the IAS
Regulation and have also chosen to prepare
the Parent Company financial statements
in accordance with Financial Reporting
Standard 101 Reduced Disclosure Framework.
Under company law the Directors must not
approve the financial statements unless
they are satisfied that they give a true and fair
view of the state of affairs of the Company
and of the profit or loss of the Company for
that period.
In preparing the Parent Company financial
statements, the Directors are required to:
› select suitable accounting policies and
then apply them consistently
› make judgements and accounting
estimates that are reasonable and prudent
› state whether Financial Reporting Standard
101 Reduced Disclosure Framework has been
followed, subject to any material departures
disclosed and explained in the financial
statements and
› prepare the financial statements on the
going concern basis unless it is inappropriate
to presume that the Company will continue
in business
Responsibility statement
We confirm that to the best of our knowledge:
› the financial statements, prepared in
accordance with the relevant financial
reporting framework, give a true and fair
view of the assets, liabilities, financial
position and profit or loss of the Company
and the undertakings included in the
consolidation taken as a whole
› the Strategic Report includes a fair review
of the development and performance
of the business and the position of the
Company and the undertakings included
in the consolidation taken as a whole,
together with a description of the principal
risks and uncertainties that they face and
› the Annual Report and financial statements,
taken as a whole, are fair, balanced and
understandable and provide the information
necessary for shareholders to assess the
Company’s performance, business model
and strategy
By order of the Board
RUPERT PEARCE
DIRECTOR
18 March 2019
In preparing the Group financial statements,
International Accounting Standard 1 requires
that Directors:
› properly select and apply accounting policies
› present information, including accounting
policies, in a manner that provides relevant,
reliable, comparable and understandable
information
› provide additional disclosures when
compliance with the specific requirements
of IFRS are insufficient to enable users
to understand the impact of particular
transactions, other events and conditions
on the entity’s financial position and
financial performance and
› make an assessment of the Company’s
ability to continue as a going concern
The Directors are responsible for keeping
adequate accounting records that are sufficient
to show and explain the Company’s transactions
and disclose with reasonable accuracy at
any time the financial position of the Company
and enable them to ensure that the financial
statements comply with the Companies Act 2006.
They are also responsible for safeguarding the
assets of the Company and hence for taking
reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for the maintenance
and integrity of the corporate and financial
information included on the Company’s website.
Legislation in the United Kingdom governing
the preparation and dissemination of financial
statements may differ from legislation in
other jurisdictions.
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107
FINANCIAL STATEMENTS
THIS REPORT IS SEPARATED INTO THE FOLLOWING SECTIONS TO AID REVIEW:
108 Independent Auditor’s Report to the Members of Inmarsat plc
148 Note 27. Reserves
149 Note 28. Earnings per share
116 Consolidated financial statements
150 Note 29. Pensions and post-employment benefits
116 Consolidated income statement
155 Note 30. Operating lease and other commitments
117 Consolidated statement of comprehensive income
155 Note 31. Capital risk management
118 Consolidated balance sheet
155 Note 32. Financial instruments
119 Consolidated statement of changes in equity
158 Note 33. Capital commitments
120 Consolidated cash flow statement
159 Note 34. Contingent assets and liabilities
159 Note 35. Events after the balance sheet date
121 Notes to the consolidated financial statements
159 Note 36. Related party transactions
121 Note 1. General information
121 Note 2. Principal accounting policies
127 Note 3. Financial risk management
160 Note 37. Principal subsidiary undertakings
162 Company financial statements
128 Note 4. Critical accounting estimates and key judgements
162 Company balance sheet
130 Note 5. Segmental information
132 Note 6. Operating profit
132 Note 7. Employee benefit costs
163 Company statement of changes in equity
164 Notes to the Company financial statements
133 Note 8. Key management compensation
164 Note A) Principal accounting policies
133 Note 9. Net financing costs
134 Note 10. Taxation
164 Note B) Critical accounting estimates and key judgements
164 Note C) Income statement
134 Note 11. Net foreign exchange gain/(loss)
164 Note D) Financial instruments
135 Note 12. Dividends
135 Note 13. Property, plant and equipment
165 Alternative Performance Measures
166 Glossary of terms
168 Additional information
136 Note 14. Intangible assets
137 Note 15. Leases
138 Note 16. Investments
138 Note 17. Cash and cash equivalents
139 Note 18. Trade and other receivables
140 Note 19. Inventories
140 Note 20. Net borrowings
142 Note 21. Trade and other payables
143 Note 22. Provisions
143 Note 23. Current and deferred taxation
145 Note 24. Reconciliation of cash generated from operations
145 Note 25. Share capital
146 Note 26. Employee share options and awards
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INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF INMARSAT PLC
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
OPINION
IN OUR OPINION:
› the financial statements of Inmarsat plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) give a true and fair view of the state of the Group’s and of the
Parent Company’s affairs as at 31 December 2018 and of the Group’s profit for the year then ended;
› the Group financial statements have been properly prepared in accordance with International Financial Reporting Standards (‘IFRSs’) as adopted by the
European Union;
› the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice, including
Financial Reporting Standard 101 ‘Reduced Disclosure Framework’; and
› the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Group financial statements,
Article 4 of the IAS Regulation.
We have audited the financial statements which comprise:
› the consolidated income statement;
› the consolidated statement of comprehensive income;
› the consolidated and parent company balance sheets;
› the consolidated and parent company statements of changes in equity;
› the consolidated cash flow statement; and
› the related notes 1 to 37.
The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and IFRSs as adopted by the
European Union. The financial reporting framework that has been applied in the preparation of the Parent Company financial statements is applicable law and
United Kingdom Accounting Standards, including FRS 101 ‘Reduced Disclosure Framework’ (United Kingdom Generally Accepted Accounting Practice).
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards
are further described in the auditor’s responsibilities for the audit of the financial statements section of our report.
We are independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements
in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We confirm that the non-audit services prohibited by the FRC’s Ethical Standard were not provided to the
Group or the Parent Company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
SUMMARY OF OUR AUDIT APPROACH
Key audit matters
Materiality
Scoping
The key audit matters that we identified in the current year were:
› accounting for capitalised development expenditure;
› accounting for complex revenue contracts; and
› classification and disclosure of the convertible bond.
Within this report, any new key audit matters are identified with ▲ and any key audit matters which are the same as the prior
year identified with ►.
The materiality that we used for the Group financial statements was $16.0m which was determined on the basis of a number
of relevant benchmarks including EBITDA.
We have performed full-scope audit procedures for components which represent 99% of net assets, revenue and profit
before tax.
Significant changes
in our approach
In the current year we have reported on a new key audit matter in respect of classification and disclosure of the convertible
bond following significant fluctuations in market value of the bond in the year.
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CONCLUSIONS RELATING TO GOING CONCERN, PRINCIPAL RISKS AND VIABILITY STATEMENT
We confirm that we have nothing material to
report, add or draw attention to in respect of
these matters.
We confirm that we have nothing material to
report, add or draw attention to in respect of
these matters.
Going concern
We have reviewed the Directors’ statement in note 2 to the financial statements about whether they
considered it appropriate to adopt the going concern basis of accounting in preparing them and their
identification of any material uncertainties to the Group’s and Company’s ability to continue to do so
over a period of at least twelve months from the date of approval of the financial statements.
We considered as part of our risk assessment the nature of the Group, its business model and related
risks including where relevant the impact of Brexit, the requirements of the applicable financial reporting
framework and the system of internal control. We evaluated the Directors’ assessment of the Group’s
ability to continue as a going concern, including challenging the underlying data and key assumptions used
to make the assessment, and evaluated the Directors’ plans for future actions in relation to their going
concern assessment.
We are required to state whether we have anything material to add or draw attention to in relation to that
statement required by Listing Rule 9.8.6R(3) and report if the statement is materially inconsistent with our
knowledge obtained in the audit.
Principal risks and viability statement
Based solely on reading the Directors’ statements and considering whether they were consistent with the
knowledge we obtained in the course of the audit, including the knowledge obtained in the evaluation of
the Directors’ assessment of the Group’s and the Company’s ability to continue as a going concern, we are
required to state whether we have anything material to add or draw attention to in relation to:
› the disclosures on pages 52 to 58 that describe the principal risks and explain how they are being
managed or mitigated
› the Directors’ confirmation on page 53 that they have carried out a robust assessment of the principal
risks facing the Group, including those that would threaten its business model, future performance,
solvency or liquidity or
› the directors’ explanation on page 59 as to how they have assessed the prospects of the Group, over
what period they have done so and why they consider that period to be appropriate, and their statement
as to whether they have a reasonable expectation that the Group will be able to continue in operation
and meet its liabilities as they fall due over the period of their assessment, including any related
disclosures drawing attention to any necessary qualifications or assumptions
We are also required to report whether the Directors’ statement relating to the prospects of the Group
required by Listing Rule 9.8.6R(3) is materially inconsistent with our knowledge obtained in the audit.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period
and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which
had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
In addition to the new key audit matter in respect of classification and disclosure of the convertible bond, we have redefined the key audit matter in respect of
revenue recognition, pinpointing the risk in the current year to accounting for complex contracts. In the prior year the key audit matter was in respect of accuracy,
completeness and occurrence of manual adjustments to airtime revenue.
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF INMARSAT PLC CONTINUED
REVENUE RECOGNITION – ACCOUNTING FOR COMPLEX REVENUE CONTRACTS ▲
Key audit matter
description
Inmarsat has entered into a number of one-off contracts in the year and has generated revenue of $101.3m in respect of in-flight
connectivity contracts. These contracts are complex in nature given there are no standardised terms and conditions and in some
cases these contracts are classified. In addition, a fraud risk has been identified in respect of these complex contracts due to the
level of judgement required.
On entering into new contracts a detailed assessment of the accounting for these under IFRS 15 Revenue from contracts with
customers is prepared by management. Each month manual postings are made to revenue accounts to adjust for items such
as contract assets, contract liabilities or liquidated damages to ensure revenue recognition meets the requirements of IFRS 15.
The accounting policy for the recognition of revenue is set out in note 2 to the financial statements and includes the policies
on the deferral of revenue and multiple-element contracts.
Refer to page 77 where this is included as a significant matter in the Audit Committee report.
In the prior year we had recognised a key audit matter in respect of the accuracy, completeness and occurrence of manual
adjustments to airtime revenue. In view of the low incidence of issues identified in prior periods, this is no longer considered
a key audit matter.
We have evaluated the design and implementation of controls relevant to complex contracts and controls designed to ensure
accounting judgements taken are reasonable.
We have met with management, both from within finance and in the market-facing business to discuss results in each business
unit and as a whole to gain an understanding of significant trends and transactions and to inform our substantive testing.
We have obtained and reviewed signed contracts and contract amendments to identify key terms and areas of accounting
complexity under IFRS 15. Where these are classified contracts we have involved our security cleared specialists to review these
contracts on our behalf with oversight from the Group audit team.
We have obtained and challenged management’s accounting analysis and judgements taken, reviewing these for bias that could
result in material misstatement due to fraud or error. We have done this through consulting our Firm’s technical accounting
specialists on complex judgements and evaluating the substance of the contracts through our knowledge of the business.
How the scope of our
audit responded to
the key audit matter
Key observations
The results of our testing were satisfactory. We had no significant findings to report to the Audit Committee in respect of the
accounting for complex contracts.
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ACCOUNTING FOR CAPITALISED DEVELOPMENT EXPENDITURE ►
Key audit matter
description
The Group capitalised significant internal labour costs, external costs and qualifying borrowing costs in respect of major capital
projects, most notably relating to satellite programmes and associated infrastructure such as the Global Xpress programme,
European Aviation Network and the Inmarsat-6 constellation of satellites.
How the scope of our
audit responded to
the key audit matter
There is a key audit matter, whether due to fraud or error, in respect of valuation and allocation of assets, that costs which do not
meet the criteria for capitalisation in accordance with IAS 16 Property, Plant and Equipment, IAS 38 Intangible Assets and IAS 23
Borrowing Costs are inappropriately recorded on the balance sheet rather than expensed or that costs continue to be held on
the balance sheet despite no longer meeting the relevant capitalisation criteria. The Group’s policy on the capitalisation of assets
is included in note 2 to the financial statements.
As shown in note 13 to the financial statements, property, plant and equipment of $474.6m (2017: $615.0m) was capitalised in
the year, of which $449.6m (2017: $351.6m) relates to assets in the course of construction.
As shown in note 14 to the financial statements, intangible assets of $98.0m (2017: $88.8m) were capitalised in the year.
As disclosed in note 9 to the financial statements, capitalised borrowing costs totalled $43.7m (2017: $40.2m) in the year.
Refer to page 78 where this is included as a significant matter in the Audit Committee report.
We have evaluated the design and implementation of controls in respect of the processes and procedures which govern
the capitalisation of development costs, and tested operating effectiveness of controls in respect of internal labour costs.
We have met the project leaders for the most financially significant capital projects, which account for 92% of current year
capital expenditure, to corroborate the project status, feasibility of completion, impact of Brexit and other geopolitical risks,
and performance against budget, including investigation of any deviations from budget. This process enabled us to focus on
projects we considered to have a higher risk of misstatement.
In addition, we have carried out sample-based testing in relation to each element of capitalised costs including inspecting
supporting evidence for a sample of the costs capitalised, understanding the nature of these costs and considering whether
they meet the capitalisation requirements of IAS 16 and IAS 38.
We reviewed the ageing profile of assets in the course of construction, to determine whether the ongoing technical feasibility
and intended completion of the project could be demonstrated. For a sample of assets which entered service in the period
we inspected supporting evidence to determine whether depreciation was commenced at a time in accordance with IAS 16.
In relation to borrowing costs we obtained the supporting calculations and verified the inputs to the calculation, including testing
a sample of cash payments. Additionally, we tested the mechanical accuracy of the model and reviewed the model to determine
whether the borrowing costs for completed projects are no longer being capitalised and accounting is therefore in line with the
requirements of IAS 23.
Key observations
Our audit testing was completed satisfactorily, and we concur with the judgements management has taken in determining that
capital assets meet the capitalisation criteria of IAS 16, IAS 23 and IAS 38. We did not identify any audit misstatements that
warranted reporting to the Audit Committee.
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF INMARSAT PLC CONTINUED
CLASSIFICATION AND DISCLSOURE OF THE CONVERTIBLE BOND ▲
Key audit matter
description
How the scope of our
audit responded to the
key audit matter
On 9 September 2016, the Group issued $650m of 3.875% convertible bonds due 9 September 2023. This bond is a net settled
instrument which is currently convertible by bondholders into cash and possibly equity depending on the conversion price, which
is linked to the Group’s equity share price. Following a takeover offer during the year, which led to a significant non cash net
financing cost at the half year, we identified a key audit matter in respect of whether the convertible bond is correctly classified
as a non-current liability and whether the disclosures relating to the convertible bond are appropriate.
Under IAS 1 Presentation of Financial Statements a liability is classified as current if the entity does not have an unconditional
right to defer settlement of the liability for at least 12 months after the reporting period. Under the terms of the convertible bond,
the Company is unable to prevent a bondholder from converting. However as the Group’s equity share price remains significantly
below the conversion price of the bonds ($13.41), any bondholder who converts their Convertible Bond, rather than selling it on
the market, would make a material loss. As such this conversion option is not considered substantive.
As shown in note 20 the convertible bond has a debt component with a carrying value of $569.4m (2017: $555.0m) and an
embedded derivative component valued at $148.8m (2017: $125.7m).
The Group’s policy on the accounting for convertible bonds is included in note 2 to the financial statements.
We have evaluated the design and implementation of controls relating to accounting for the convertible bond.
We have performed the following procedures:
› involved our technical accounting specialists to support our review of the convertible bond agreement
› challenged whether the embedded options were substantive through the performance of Black-Scholes analysis of future
share price expectations
› evaluated whether the change of control feature should trigger presentation of the whole instrument as a current liability and
› evaluated the appropriateness of the disclosure of the convertible bond in the financial statements
Key observations
We concur with the treatment of the convertible bond as a non-current liability. We did not identify any audit misstatements
that warranted reporting to the Audit Committee. We note that the Group has put in place an additional control to monitor the
performance of the convertible bond over time and to reflect any changes needed to the accounting in the financial statements.
OUR APPLICATION OF MATERIALITY
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably
knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements
Parent company financial statements
Materiality
$16.0m (2017: $18.0m)
$13.9m (2017: $15.7m)
Basis for determining
materiality
We determined materiality using a range of forecast
benchmarks and this represented 2.5% of EBITDA (2017: 2.5%),
1.3% of revenue (2017: 1.3%) and 7.6% of profit before tax
(2017: 7.6%) adjusted to remove the volatility described above.
EBITDA is reconciled to statutory profit before tax on page 39.
Rationale for the
benchmark applied
We consider the use of a number of benchmarks in determining
materiality to be appropriate since a number of measures
are relevant to the users of the financial statements,
including EBITDA.
Parent Company materiality equates to 3% of net assets,
which has been capped at the highest level of component
materiality (2017: same basis).
The Parent Company exists as a holding company therefore
we have used net assets as the basis for materiality.
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of $800k (2017: $900k), as well as differences below
that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure matters that we identified when
assessing the overall presentation of the financial statements.
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AN OVERVIEW OF THE SCOPE OF OUR AUDIT
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including Group-wide controls, and assessing the risks of material
misstatement at the Group level. Based on that assessment, we focused our Group audit scope primarily on the audit work performed in the following locations:
› London, United Kingdom
› St. John’s, Canada and
› Reston, United States
With the exception of one specific part of the Inmarsat Government business, where we used a component audit team, we performed the Group audit with one
integrated audit team led from London. The supervision of the audit team included the London team visiting the members of the audit team located in St. John’s
and Reston.
We determined there to be three components in the Group, as follows:
› The core Inmarsat business unit headquartered in London with operations also in St. John’s
› The Inmarsat Government retail business in Reston and
› Non-core entities, which include Inmarsat Australia Pty Ltd, based in Sydney, Australia
The Inmarsat Government retail business and non-core entities are considered to be separate components as they had a separate financial control environment
during the year. The core Inmarsat component was subject to a full scope audit, the Inmarsat Government component to an audit of specified account balances
and limited procedures were performed on the non-core component due to its relative financial significance.
The components subject to a full scope audit represent the principal business units and account for 99.8% (2017: 99.8%) of the Group’s net assets, 98.8%
(2017: 99.0%) of the Group’s revenue and 99.9% (2017: 98.8%) of the Group’s profit before tax. They were also selected to provide an appropriate basis for
undertaking audit work to address the risks of material misstatement identified above. Our audit work at the three locations was executed at levels of materiality
which were lower than the Group materiality and ranged from $4.8m to $13.9m (2017: $5.4m to $15.7m).
At the Parent Company level we also tested the consolidation process and carried out analytical procedures to confirm our conclusion that there were no
key audit matters of material misstatement of the aggregated financial information of the remaining components not subject to audit or audit of specified
account balances.
The Senior Statutory Auditor met with Inmarsat Government component management in 2018 and last performed a site visit in 2017. For this component
we involved the component audit partner and manager in our team briefing, discussed their risk assessment and reviewed documentation of the findings
from their work.
OTHER INFORMATION
The Directors are responsible for the other information. The other information comprises the information
included in the annual report, other than the financial statements and our auditor’s report thereon.
We have nothing to report in respect of
these matters
Our opinion on the financial statements does not cover the other information and, except to the extent
otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to
determine whether there is a material misstatement in the financial statements or a material misstatement
of the other information. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
In this context, matters that we are specifically required to report to you as uncorrected material
misstatements of the other information include where we conclude that:
› Fair, balanced and understandable – the statement given by the Directors that they consider the annual
report and financial statements taken as a whole is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group’s position and performance, business
model and strategy, is materially inconsistent with our knowledge obtained in the audit; or
› Audit committee reporting – the section describing the work of the audit committee does not
appropriately address matters communicated by us to the audit committee; or
› Directors’ statement of compliance with the UK Corporate Governance Code – the parts of the
Directors’ statement required under the Listing Rules relating to the Company’s compliance with the UK
Corporate Governance Code containing provisions specified for review by the auditor in accordance
with Listing Rule 9.8.10R(2) do not properly disclose a departure from a relevant provision of the UK
Corporate Governance Code.
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF INMARSAT PLC CONTINUED
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability to continue as a going concern,
disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the
Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
Details of the extent to which the audit was considered capable of detecting irregularities, including fraud are set out below.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
EXTENT TO WHICH THE AUDIT WAS CONSIDERED CAPABLE OF DETECTING IRREGULARITIES,
INCLUDING FRAUD
We identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and then design and perform audit procedures
responsive to those risks, including obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion.
IDENTIFYING AND ASSESSING POTENTIAL RISKS RELATED TO IRREGULARITIES
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our
procedures included the following:
› enquiring of management, internal audit and the audit committee, including obtaining and reviewing supporting documentation, concerning the Group’s
policies and procedures relating to:
– identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance
– detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud and
– the internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations
› discussing among the engagement team, significant component teams and involving relevant internal specialists, including tax, valuations, and IT, regarding
how and where fraud might occur in the financial statements and any potential indicators of fraud. As part of this discussion, we identified potential for fraud in
the following areas: accounting for capitalised development expenditure and accounting for complex contracts.
› obtaining an understanding of the legal and regulatory frameworks that the Group operates in, focusing on those laws and regulations that had a direct effect
on the financial statements or that had a fundamental effect on the operations of the Group. The key laws and regulations we considered in this context
included the UK Companies Act, Listing Rules and tax legislation in the jurisdictions it operates in. In addition, compliance with terms of the Group’s operating
licence were fundamental to the Group’s ability to continue as a going concern.
AUDIT RESPONSE TO RISKS IDENTIFIED
As a result of performing the above, we identified accounting for complex contracts and accounting for capitalised development expenditure as key audit matters.
The key audit matters section of our report explains the matters in more detail and also describes the specific procedures we performed in response to those key
audit matters.
In addition to the above, our procedures to respond to risks identified included the following:
› reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with relevant laws and regulations
discussed above
› enquiring of management, the audit committee and in-house legal counsel concerning actual and potential litigation and claims
› performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud
› reading minutes of meetings of those charged with governance and reviewing internal audit reports and
› in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing
whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant
transactions that are unusual or outside the normal course of business
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members including internal specialists and
significant component audit teams, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
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REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
OPINIONS ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006
In our opinion the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
› the information given in the strategic report and the Directors’ report for the financial year for which the financial statements are prepared is consistent with
the financial statements and
› the strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements
In the light of the knowledge and understanding of the Group and of the Parent Company and their environment obtained in the course of the audit, we have not
identified any material misstatements in the strategic report or the Directors’ report.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
› we have not received all the information and explanations we require for our audit or
› adequate accounting records have not been kept by the Parent Company, or returns adequate for our
audit have not been received from branches not visited by us or
› the Parent Company financial statements are not in agreement with the accounting records and returns
Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of
Directors’ remuneration have not been made or the part of the Directors’ remuneration report to be
audited is not in agreement with the accounting records and returns.
We have nothing to report in respect of
these matters.
We have nothing to report in respect of
these matters.
OTHER MATTERS
AUDITOR TENURE
On recommendation of the audit committee following a successful tender in 2016, we were appointed by the Company at the Annual General Meeting on
5 May 2016 to audit the financial statements for the year ending 31 December 2016 and subsequent financial periods. The period of total uninterrupted
engagement including previous renewals and reappointments of the firm is 13 years, covering the years ending 31 December 2006 to 31 December 2018.
CONSISTENCY OF THE AUDIT REPORT WITH THE ADDITIONAL REPORT TO THE AUDIT COMMITTEE
Our audit opinion is consistent with the additional report to the audit committee we are required to provide in accordance with ISAs (UK).
USE OF OUR REPORT
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body,
for our audit work, for this report, or for the opinions we have formed.
PAUL FRANEK FCA
SENIOR STATUTORY AUDITOR
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
18 March 2019
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Financial Statements | Consolidated financial statements
Financial statements | Consolidated financial statements
Inmarsat plc | Annual Report and Accounts 2018
Inmarsat plc | Annual Report and Accounts 2018
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2018
($ in millions)
Revenues
Employee benefit costs1
Network and satellite operations costs
Impairment of financial assets
Other operating costs
Own work capitalised
Total net operating costs
EBITDA
Depreciation and amortisation
Impairment loss on fixed and intangible assets
Loss on disposal
Share of profit of associates
Operating profit
Financing income
Financing cost
Change in fair value of derivative2
Net financing costs
Profit before tax
Taxation charge
Profit for the year
Attributable to:
Equity holders
Non-controlling interest3
Earnings per share for profit attributable to the equity holders of the Company
(expressed in $ per share)
› Basic
› Diluted
Adjusted earnings per share for profit attributable to the equity holders of the Company
(expressed in $ per share)
› Basic
› Diluted
Note
2018
2017
(restated) 4
1,465.2
(301.4)
(183.3)
(18.1)
(230.0)
37.7
(695.1)
770.1
(468.3)
(14.5)
(2.5)
3.9
288.7
8.2
(105.8)
(23.2)
(120.8)
167.9
(42.9)
125.0
124.2
0.8
0.27
0.27
0.32
0.32
1,391.7
(312.9)
(192.8)
(3.0)
(192.8)
49.1
(652.4)
739.3
(411.8)
–
(7.3)
4.0
324.2
7.8
(105.9)
7.7
(90.4)
233.8
(48.8)
185.0
184.4
0.6
0.41
0.40
0.42
0.42
7
18
6
6
6
16
9
9
9
9
10
28
28
28
28
1 Employee benefit costs for 2017 includes the one-off restructuring charge of $19.9m
2 The change in fair value of derivative relates to the mark-to-market valuation of the conversion liability component of the convertible bonds due 2023
3 Non-controlling interest relates to the Group’s 51% shareholding in Inmarsat Solutions ehf
4 2017 figures have been restated to reflect the adoption of IFRS 15 and the accounting policy change for unallocated launch slots. The Group has also adopted IFRS 16 and IFRS 9 as of 1 January 2018. Please refer to
note 2 of this document for further details
Inmarsat plc | Annual Report and Accounts 2018
Inmarsat plc | Annual Report and Accounts 2018
Financial statements | Consolidated financial statements
Financial Statements | Consolidated financial statements
117
117
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2018
($ in millions)
Profit for the year
Other comprehensive income
Items that may be reclassified subsequently to the Income Statement:
Foreign exchange translation differences
Gains/(losses) on cash flow hedges
Items that will not be reclassified subsequently to the Income Statement:
Re-measurement of the defined benefit and post-employment asset/liability
Tax charged directly to equity
Other comprehensive income net of tax
Total comprehensive income net of tax
Attributable to:
Equity holders
Non-controlling interest
1 Comparatives have been restated as a result of initial application of IFRS 15 and the change in accounting policy for unallocated launch slots discussed in note 2
Note
27
29
10
2018
2017
(restated)1
125.0
185.0
(0.1)
(5.2)
19.7
(3.1)
11.3
136.3
135.5
0.8
–
14.1
12.7
(2.9)
23.9
208.9
208.3
0.6
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Financial Statements | Consolidated financial statements
Financial statements | Consolidated financial statements
Inmarsat plc | Annual Report and Accounts 2018
Inmarsat plc | Annual Report and Accounts 2018
CONSOLIDATED BALANCE SHEET
at 31 December 2018
($ in millions)
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Investments
Right-of-use assets
Other receivables
Deferred tax assets
Derivative financial instruments
Current assets
Cash and cash equivalents
Short-term deposits
Trade and other receivables
Inventories
Current tax assets
Derivative financial instruments
Restricted cash
Total assets
Liabilities
Current liabilities
Borrowings
Trade and other payables
Provisions
Current tax liabilities
Derivative financial instruments
Lease obligations
Non-current liabilities
Borrowings
Other payables
Provisions
Deferred tax liabilities
Derivative financial instruments
Lease obligations
Total liabilities
Net assets
Shareholders’ equity
Ordinary shares
Share premium
Other reserves
Retained earnings
Equity attributable to shareholders
Non-controlling interest
Total equity
Note
2018
2017
(restated) 1
2016
(restated) 1
13
14
16
15
18
23
32
17
18
19
23
32
24
20
21
22
23
32
15
20
21
22
23
32
15
25
3,352.7
800.4
18.8
62.4
35.2
52.5
–
3,255.5
808.1
16.2
–
17.5
35.4
0.3
2,979.9
802.8
13.2
–
5.3
39.3
0.1
4,322.0
4,133.0
3,840.6
143.2
145.7
358.7
50.7
4.6
0.3
2.5
144.9
342.0
331.6
33.9
13.8
1.2
2.8
262.0
395.0
317.9
34.3
8.5
1.7
2.8
705.7
5,027.7
870.2
5,003.2
1,022.2
4,862.8
123.2
545.4
14.3
168.5
2.4
10.4
864.2
125.6
634.4
16.2
130.2
7.9
–
914.3
103.8
537.7
1.9
129.0
5.9
–
778.3
2,342.3
2,439.9
2,448.0
13.9
11.1
249.4
150.4
59.6
2,826.7
3,690.9
1,336.8
0.3
767.8
106.9
461.0
1,336.0
0.8
1,336.8
25.0
9.7
238.4
127.8
–
2,840.8
3,755.1
1,248.1
0.3
745.4
92.0
409.8
1,247.5
0.6
1,248.1
41.5
2.8
208.3
153.5
–
2,854.1
3,632.4
1,230.4
0.3
700.4
61.8
467.3
1,229.8
0.6
1,230.4
1 The Group has adopted IFRS 15 using the fully retrospective method and changed the accounting policy for unallocated launch slots. The 31 December 2016 balance sheet has been provided to show the impact on the
opening position of the prior period
The consolidated financial statements of the Group on pages 116 to 120 were approved by the Board of Directors on 18 March 2019 and were signed on its
behalf by
RUPERT PEARCE
CHIEF EXECUTIVE OFFICER
TONY BATES
CHIEF FINANCIAL OFFICER
Inmarsat plc | Annual Report and Accounts 2018
Inmarsat plc | Annual Report and Accounts 2018
Financial statements | Consolidated financial statements
Financial Statements | Consolidated financial statements
119
119
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2018
Ordinary
share
capital
Share
premium
account
Share
option
reserve
Cash flow
hedge
reserve
Retained
earnings
(restated)5
Non-
controlling
interest2
Other1
Notes
(23.3)
(2.8)
467.5
($ in millions)
Balance at 1 January 2017
Share-based payments3
Dividend declared
Scrip dividend cash reinvestment4
Scrip dividend share issue4
Losses on cash flow hedges capitalised to tangible assets
Comprehensive income:
Profit for the year (restated)
Other comprehensive loss – before tax
Other comprehensive loss – tax
Total comprehensive income for the year
Balance at 31 December 2017
Share-based payments3
Dividend declared
Scrip dividend cash reinvestment4
Scrip dividend share issue4
Losses on cash flow hedges capitalised to tangible assets
Comprehensive income:
Profit for the year
Other comprehensive gain – before tax
Other comprehensive gain – tax
Total comprehensive income for the year
12
12
12
12
12
12
0.3
700.4
–
–
–
–
–
–
–
–
–
–
–
–
45.0
–
–
–
–
–
87.9
14.6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
22.4
–
–
–
–
–
11.3
–
–
–
–
–
–
–
–
(249.8)
(0.6)
(250.4)
Total
1,230.6
12.5
0.6
–
–
–
–
0.6
–
–
0.6
0.6
–
45.0
–
1.5
185.0
26.8
(2.9)
208.9
1,248.1
13.6
(0.6)
(92.5)
–
–
–
22.4
–
8.9
(2.1)
45.0
(45.0)
–
184.4
12.7
(2.9)
194.2
2.3
(91.9)
22.4
(22.4)
–
124.2
0.8
125.0
(0.1)
(0.1)
(2.9)
19.7
(3.1)
140.8
461.0
–
–
0.8
0.8
14.4
(3.1)
136.3
1,336.8
–
–
–
–
1.5
–
14.1
–
14.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
8.9
–
(5.2)
(5.2)
(4.0)
Balance at 31 December 2018
0.3
767.8
113.8
1 The ‘other’ reserve relates to ordinary shares held by the employee share trust debit of $2.4m (2017: $2.4m), the currency reserve debit of $1.1m (2017: $1.3m) and the revaluation reserve of $0.6m (2017: $0.9m)
2 Non-controlling interest (‘NCI’) refers to the Group’s 51% shareholding in Inmarsat Solutions ehf
3 Represents the fair value of share option awards, net of tax, recognised in the year
4 Represents the cash value of the scrip dividend reinvested into the Company
5 Comparatives have been restated as a result of initial application of IFRS 15 and the change in accounting policy for unallocated launch slots discussed in note 2
0.3
745.4
102.5
(7.7)
(2.8)
409.8
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Financial statements | Consolidated financial statements
Inmarsat plc | Annual Report and Accounts 2018
Inmarsat plc | Annual Report and Accounts 2018
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2018
($ in millions)
Cash flow from operating activities
Cash generated from operations
Interest received
Tax received/(paid)
Net cash inflow from operating activities
Cash flow from investing activities
Purchase of property, plant and equipment
Additions to intangible assets
Own work capitalised
Proceeds from short-term deposits1
Repayments of short-term deposits1
Investment in financial asset
Net cash used in investing activities
Cash flow from financing activities
Dividends paid
Repayment of borrowings
Drawdown of borrowings
Interest paid
Arrangement costs of financing
Cash payments for the principal portion of the lease obligations
Other financing activities
Net cash (used in)/generated from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents
At the beginning of the year
Net (decrease)/increase in cash and cash equivalents
Foreign exchange gains/(losses) on cash and cash equivalents
At the end of the year (net of bank overdrafts)
Comprising:
Cash at bank and in hand
Short-term deposits with original maturity of less than three months
Cash and cash equivalents
Bank overdrafts
Net cash and cash equivalents at the end of the year
1 Proceeds from and repayments of short-term deposits are net of interest and have an original maturity of more than 3 months
2 Comparatives have been restated as a result of initial application of IFRS 15 and the change in accounting policy for unallocated launch slots discussed in note 2
Note
24
2018
2017
(restated)2
713.4
6.0
2.3
721.7
789.8
5.5
(19.8)
775.5
(460.3)
(454.3)
(93.0)
(37.4)
459.5
(110.7)
(49.1)
455.1
(263.2)
(402.0)
16
–
(1.1)
(394.4)
(562.1)
(70.1)
(122.2)
–
(120.5)
(4.9)
(12.3)
(1.6)
(331.6)
(4.3)
144.6
(4.3)
2.9
143.2
143.2
–
143.2
–
143.2
(202.9)
(80.8)
78.4
(120.2)
(1.2)
–
(1.9)
(328.6)
(115.2)
261.5
(115.2)
(1.7)
144.6
109.9
35.0
144.9
(0.3)
144.6
15
17
17
20
Inmarsat plc | Annual Report and Accounts 2018
Inmarsat plc | Annual Report and Accounts 2018
Financial statements | Consolidated financial statements
Financial Statements | Consolidated financial statements
121
121
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Inmarsat plc (the ‘Company’ or, together with its subsidiaries, the ‘Group’) is
a company incorporated in the United Kingdom and domiciled in England and
Wales. The address of its registered office is 99 City Road, London EC1Y 1AX,
United Kingdom.
2. PRINCIPAL ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of these financial
statements are set out below. These policies have been applied consistently
to all the years presented unless otherwise stated.
BASIS OF PREPARATION
These financial statements have been prepared in accordance with
International Financial Reporting Standards (‘IFRS’) as adopted by the
European Union, the Companies Act 2006 and Article 4 of the EU IAS
Regulation. The financial statements have been prepared under the historical
cost convention except for certain financial instruments that have been
measured at fair value, as described later in these accounting policies.
GOING CONCERN
The Group has a robust and resilient business model, positive free cash flow
generation and is compliant with all banking covenants. Because of this, the
Directors believe that the Company and the Group are well-placed to manage
its business risks successfully. After considering current financial projections
and facilities available and after making enquiries, the Directors have a
reasonable expectation that the Company and the Group have adequate
resources to continue in operational existence for the foreseeable future.
Accordingly, Inmarsat plc continues to adopt the going concern basis in
preparing the consolidated financial statements.
Further discussion of the Group’s business activities, together with factors likely
to affect its future development, performance and position are set out in the
Strategic Report which encompasses the Chairman’s review, the Chief Executive’s
review, the financial review and the viability statement on pages 1 to 59.
BASIS OF ACCOUNTING
The consolidated financial statements are presented in US Dollars, which is
the functional currency of the Company and most of the Group’s subsidiaries.
The preparation of the consolidated financial statements in conformity with
IFRS requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the balance sheet date and the reported amounts
of revenue and expenses during the year. Although these estimates are based
on management’s best estimate of the amount, event or actions, the actual
results ultimately may differ from these estimates. Further discussion on these
estimates and assumptions are disclosed in note 4.
ACCOUNTING POLICY CHANGES
New and amended accounting standards adopted by the Group
IFRS 15 ‘Revenue from contracts with customers’
The Group has adopted IFRS 15 Revenue from Contract with Customers
(‘revenue standard’) for the year ended 31 December 2018 using the fully
retrospective method.
Two revenue streams were identified as areas requiring Group policy change
to align with IFRS 15. These are installation revenues and revenues from the
Ligado contract.
Installation revenues have previously been recognised in full on completion
of work. Under IFRS 15, installation on equipment owned by the Group is not
considered a distinct performance obligation. The price charged to the
customer is added to the transaction price and is spread over the related
contract period. Similarly installation costs, which were previously expensed
on installation, are now capitalised and depreciated over the contract period.
Revenues relating to Ligado was previously recognised when amounts fell due.
This differs from the treatment under IFRS 15 which requires the full transaction
price to be apportioned over the contract term. This has been calculated using
an output measure. A finance component in relation to deferred payments has
been recognised.
The table below shows the combined impact on Group comprehensive income:
($ in millions)
Revenues
Other operating costs
EBITDA
Depreciation and amortisation
Operating profit
Financing income
Profit before tax
Tax
Profit after tax
Income statement for year ended
31 December 2017
Reported
IFRS 15
adjustment
Restated
1,400.2
(8.5)
1,391.7
(209.1)
731.5
(406.7)
321.5
6.5
229.8
(47.5)
182.3
16.3
7.8
(5.1)
2.7
1.3
4.0
(1.3)
2.7
(192.8)
739.3
(411.8)
324.2
7.8
233.8
(48.8)
185.0
On the balance sheet, property, plant and equipment increased due to
the capitalisation of installation costs. Additionally an increase in trade and
other payables in the form of deferred income was recognised, reflecting
the corresponding delay in the recognition of installation revenue.
The Ligado impact is largely limited to the balance sheet with payments
which were contractually deferred and were previously offset against deferred
revenue now being recognised as receivables.
IFRS 15 has resulted in an increase to property, plant and equipment, trade
and other receivables and trade and other payables of $8.5m, $11.0m and
$29.4m respectively on the 2017 opening balance sheet. This has led to
a decrease in the opening retained earnings of $9.9m.
($ in millions)
Non-current assets
Balance sheet as at 31 December 2017
Reported
IFRS 15
adjustment
Restated
Property, plant and equipment
Deferred income tax asset
3,236.6
35.6
18.9
(0.2)
3,255.5
35.4
Current assets
Trade and other receivables1
Total assets
Current liabilities
319.4
4,959.5
25.0
43.7
344.4
5,003.2
Trade and other payables
584.6
49.8
634.4
Non-current liabilities
Deferred income tax liabilities
Total liabilities
Net assets (Equity)
237.3
3,704.2
1,255.3
1.1
238.4
50.9
3,755.1
(7.2)
1,248.1
1 Trade and other receivables do not include the adjustment for the change in accounting policy relating
to unallocated launch slots
GovernanceFinancial StatementsStrategic Report
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Financial Statements | Consolidated financial statements
Financial statements | Consolidated financial statements
Inmarsat plc | Annual Report and Accounts 2018
Inmarsat plc | Annual Report and Accounts 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
In the cash flow statement, the impact of the accounting policy change
is limited to the reclassification of installation costs from cash generated
from operations into investing activities. The overall movement in cash
remains unchanged.
($ in millions)
Cashflow as at 31 December 2017
Reported
IFRS 15
adjustment
Restated
Cash generated from operations
774.4
15.4
789.8
Net cash inflow from operating
activities
Purchase of property, plant and
equipment
Net cash used in investing activities
Net (decrease)/increase in cash
and cash equivalents
760.1
15.4
775.5
(438.9)
(546.7)
(15.4)
(15.4)
(454.3)
(562.1)
(115.2)
–
(115.2)
In terms of the Group’s financial performance for 2018, EBITDA is $7.5m higher
under IFRS 15 compared to the previous standard, as revenues removed of
$2.5m did not exceed costs removed of $10.0m.
Profit after tax was $4.5m higher driven by the increased EBITDA and finance
income of $2.4m and offset by increased depreciation of $5.4m. Restated
basic and diluted EPS is $0.41 and $0.40 per share.
IFRS 16 ‘Leases’
IFRS 16 ‘Leases,’ as issued by the IASB in January 2016, has been adopted by
the Group on 1 January 2018 in advance of its effective date. The Group has
applied IFRS 16 using the modified retrospective approach. This approach
allows the recognition of the lease liability and asset as at 1 January 2018
with no restatement of prior period financial statements. The Group has also
applied the practical expedient on transition to apply a single discount rate
to a portfolio of leases with reasonably similar characteristics. The Group has
adopted the practical expedients relating to short term and low value assets
which allow these to be expensed through the income statement.
The main impact is around property leases where the Group is the lessee.
The Group also has a number of unrecognised non-cancellable contractual
commitments relating to network service contracts and maintenance
contracts, which have varying terms. These do not constitute identified
assets and do not meet the definition of a lease under IFRS 16. These have
therefore continued to be expensed through the income statement.
The adjustments as at 1 January 2018 to the Group’s Balance Sheet are the
recognition of right-of-use assets and lease liabilities. These are shown in
the table below.
($ in millions)
Non-current assets
Right of use asset
Total assets
Current liabilities
Balance sheet as at 1 January 2018
Reported
IFRS 16
adjustment
Post IFRS 16
adjustment
–
4,959.5
75.7
75.7
75.7
5,035.2
The lease liability of $87.2m has been calculated as at 1 January 2018 using
the present value of the unpaid lease payments over the lease term specific
to each lease, using the incremental borrowing rate as the discount rate.
The liability has been separated between a current ($13.1m) and a non-current
liability ($74.1m). A right of use asset of $75.7m has been created based on
being equal to the lease liability, adjusted by $11.5m of accruals related to
the phasing of lease payments. The weighted average lessee’s incremental
borrowing rate applied to the lease liabilities recognised at the date of initial
application was 3.6%.
In terms of the Group’s financial performance for 2018, EBITDA is $12.8m higher
under IFRS 16 compared to the previous standard (excluding the gain on
revaluation of lease liabilities), as lease costs are removed from operating
costs and used to reduce the liability. Profit before tax is only $0.6m higher
as the right-of-use assets attract depreciation and the unwinding of the
discounted cash flows result in an interest charge.
IFRS 9 ‘Financial Instruments’
IFRS 9 ‘Financial Instruments,’ as issued by the IASB in July 2014, has
been adopted by the Group on the effective date of 1 January 2018. IFRS 9
supersedes the existing accounting guidance in IAS 39 ‘Financial Instruments:
Recognition and Measurement’ and the related interpretations. The standard
was applied using the modified retrospective approach for year ended
31 December 2018 with the exception of hedge accounting. The Group
has not restated prior periods or recognised any adjustments in opening
retained earnings
The new standard covers the accounting treatment of the following three areas:
› classification and measurement of financial assets and liabilities
› impairment of financial assets
› hedge accounting
Classification and measurement of financial assets and liabilities
IFRS 9 requires financial asset classification to be based on contractual cash
flow characteristics and the objective of the Group in holding the financial
asset. The new measurement model results in the reclassification of all financial
assets due to the reduction in classification categories to amortised cost, fair
value through profit and loss and fair value through other comprehensive
income. The changes have not had a quantitative impact on the financial
statements with accounting treatment remaining unchanged.
The table below shows the assessment performed by the Group.
Financial Asset
Trade receivables
Accrued income
Other receivables
Cash and cash
equivalents
IAS 39
Classification
IAS 39
Measurement
IFRS 9
Classification &
measurement
Loans and
receivables
Loans and
receivables
Loans and
receivables
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Fair value
through profit
and loss
Fair value
through profit
and loss
Fair value through
profit and loss
Trade and other payables
584.6
(11.5)
13.1
573.1
13.1
Short-term
deposits
Loans and
receivables
Amortised cost
Amortised cost
Lease obligations
Non-current liabilities
Lease obligations
Total liabilities
Net assets (Equity)
–
–
3,704.2
74.1
75.7
74.1
3,779.9
1,255.3
–
1,255.3
Impairment of financial assets
The IAS 39 ‘incurred loss model’ is replaced by the IFRS 9 forward looking
‘expected credit loss model’. The new model requires either 12-month expected
credit losses (‘ECLs’), or lifetime ECLs to be recognised for all financial assets
at initial recognition, before an impairment event occurs.
The Group has applied the simplified approach under the expected credit loss
model, which leads to lifetime expected credit losses always being recognised.
Under the standard, a provisioning matrix can be used to group financial
assets and calculate the expected credit losses based on these groupings.
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The Group uses a matrix based on ageing and internal credit ratings which are
allocated to all debtors. Refer to note 18 for further details.
There has been no material impact on 2018 or the prior year due to the adoption
of the ECL model.
Hedge Accounting
Given the Group’s limited hedging activities and the lack of benefit to financial
statement users for adopting the hedging requirements of IFRS 9, the Group
has elected not to adopt this until mandatory and has maintained the treatment
under IAS 39.
IFRIC 22 ‘Foreign Currency Transactions and Advance Consideration’
IFRIC 22 is effective from 1 January 2018 and is applied prospectively. The
interpretation clarifies how to account for transactions that involve advance
consideration paid or received in a foreign currency. This has had no impact
on the Group.
Revised accounting policies adopted by the Group
Unallocated launch slots
Following significant investment in future growth combined with rapid changes
in technologies, the Group has refined operational processes to be more agile
and adaptive in order to capture and secure market share. In turn the Group
have reassessed their current accounting policies specifically around the
launch process to ensure these are reflective of the operational changes.
The Group consider the need for a portfolio of launch slots to provide flexibility
to launch satellites as and when they are required. Previously unallocated
launch slots were recorded in prepayments. These have been reclassified to
intangible assets.
As a result, the comparative financial numbers for the year 2017 have been
restated and intangible assets have increased by $19.2m to $808.1m and total
prepayments have decreased by $19.2m to $30.7m. There has been no impact
to total assets.
New and amended accounting standards that have been issued
but are not yet effective and have not been adopted by the Group
IFRIC 23 ‘Uncertainty over Income Tax Treatments’
IFRIC 23 will be effective for periods beginning on or after 1 January 2019.
The interpretation clarifies the application of recognition and measurement
requirements in IAS 12 for uncertain tax positions. Guidance is provided
on a number of areas including whether uncertain tax positions should be
considered separately or together, the appropriate method to reflect
uncertainty, and how to account for changes in facts or circumstances.
When IFRIC 23 is adopted, it can be applied either on a full retrospective basis,
requiring the restatement of the comparative periods presented in the financial
statements, where possible without the use of hindsight or with the cumulative
retrospective impact of IFRIC 23 applied as an adjustment to equity on the
date of adoption. The Group is expected to adopt IFRIC 23 retrospectively
on the 1 January 2019 with the cumulative effect recognised in equity on the
date of adoption.
The Group has assessed the impact that IFRIC 23 will have on the uncertain
tax positions as at 31 December 2018. The material impact of the adoption of
IFRIC 23 is a change in the most appropriate method to reflect the uncertainty
in the uncertain tax positions. The expected adjustment as at 1 January 2019 in
the Group’s Balance Sheet is an increase of $7.5m to the current tax creditor
and an increase of $6.2m to the deferred tax creditor, while opening 2019
retained earnings are expected to decrease by $13.7m.
IFRS 17 ‘Insurance Contracts’
IFRS 17 will be effective for periods beginning on or after 1 January 2021 and
supersedes IFRS 4 ‘Insurance Contracts,’ subject to endorsement by the EU.
Neither standard is applicable to the Group.
Amendments to accounting standards that are effective for
the current period
The following standards have all been endorsed by the EU and are effective
for the current period. The Group has considered all the below amendments
and has determined that these do not have a material impact.
› Amendments to IAS 40: Transfers of Investment Property
› Amendments to IFRS 2: Classification and Measurement of Share-based
Payment Transactions
› Amendments to IFRS 4: Applying IFRS 9 Financial Instruments with IFRS 4
Insurance Contracts
BASIS OF CONSOLIDATION
The consolidated financial statements include the financial statements of
the Company and all its subsidiaries, and incorporate the share of the results
of associates using the equity method of accounting.
The results of subsidiary undertakings established or acquired during the
period are included in the consolidated income statement from the date of
establishment or acquisition of control. The results of subsidiary undertakings
disposed of during the period are included until the date of disposal. Where
necessary, adjustments are made to the financial statements of subsidiaries
to bring the accounting policies used into line with those used by the Group.
All transactions, balances, income and expenses with and between subsidiary
undertakings have been eliminated on consolidation.
Non-controlling interests in the net assets of consolidated subsidiaries,
which consist of the amounts of those interests at the date of the original
business combination and the non-controlling interests’ share of changes
in equity since the date of the combination, are not material to the Group’s
financial statements.
BUSINESS COMBINATIONS
Business combinations are accounted for using the acquisition method.
When the Group acquires a business, it identifies the assets and liabilities
of the acquiree at the date of acquisition and measures them at fair value.
Only separately identifiable intangible assets are recognised. Any assets
or disposal groups held for sale at the acquisition date are measured
at fair value less costs to sell.
Consideration is the fair value at the acquisition date of the assets transferred
and liabilities incurred in acquiring the business and includes the fair
value of any contingent consideration. Changes in fair value of contingent
consideration after the acquisition date are recognised in the income
statement. Acquisition-related costs are expensed as incurred and included
in operating costs.
Goodwill is initially measured at cost as the difference between the fair value
of the consideration for the acquisition and fair value of the net identifiable
assets acquired, including any identifiable intangible assets other than goodwill.
If the assessment of goodwill results in an excess of the fair value of net
assets acquired over the aggregate consideration transferred, then the
gain is recognised in the income statement. After initial recognition, goodwill
is measured at cost less any accumulated impairment losses. For the purpose
of impairment testing, goodwill is allocated to each of the Group’s cash-
generating units (‘CGUs’) that are expected to benefit from the business
combination, irrespective of whether other assets or liabilities of the acquiree
are assigned to those units.
FOREIGN CURRENCY TRANSLATION
The functional currency of the Company and most of the Group’s subsidiaries,
as well as the presentation currency of the Group, is US Dollar. This is as the
majority of operational transactions and financing are denominated in
US Dollars.
Foreign exchange gains and losses resulting from the settlement
of transactions and the translation of monetary assets and liabilities
denominated in foreign currencies at period end exchange rates
are recognised in the income statement line which most appropriately
reflects the nature of the item or transactions.
On consolidation, assets and liabilities of foreign operations are translated
into the Group’s presentation currency at the prevailing spot rate at year end.
The results of foreign operations are translated into US Dollars at the average
rates of exchange for the year. Foreign currency translation differences
resulting from consolidating foreign operations are recognised in other
comprehensive income.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
REVENUE
The Group applies the 5 step-model as required by IFRS 15 in recognising
its revenues. A contract’s transaction price is allocated to each distinct
performance obligation and recognised as revenue when, or as, the
performance obligation is satisfied.
Mobile satellite communications service revenues result from utilisation
charges that are recognised as revenue over the minimum contract period.
The selection of the method to measure progress towards completion
requires judgement and is based on the nature of the products or services to
be provided. Because of control transferring over time, revenue is recognised
based on the extent of progress towards completion of the performance
obligation. Deferred income attributable to mobile satellite communications
services or subscription fees represents the unearned balances remaining
from amounts received from customers pursuant to prepaid contracts.
The Group enters into minimum spend contracts with customers, known as
‘take-or-pay’ contracts, whereby customers agree to purchase a minimum
value of mobile satellite communications services over a fixed period.
Any unused portion of the prepaid contracts or the take-or-pay contracts
(‘breakage’) that is deemed highly probable to occur by the expiry date is
estimated at contract inception and recognised over the contract period
in line with the pattern of actual usage of units by the customer.
Revenue from the sale of prepaid credit is deferred until such time as the
customer uses the airtime and subsequently recognised over time. Breakage
from prepaid credit deferrals which is considered highly probable is estimated
and recognised from contract inception. Mobile satellite communications
service revenues from capacity sold are recognised on a straight-line basis
over the term of the contract concerned, which is typically between one and
12 months, unless another systematic basis is deemed more appropriate.
Revenue from spectrum coordination agreements (such as Ligado Networks),
is recognised at a point in time based on standalone selling prices.
Revenue from service contracts is recognised as the service is provided over
time based on the contract period.
Revenue of terminals and other communication equipment sold are
recognised at the point in time when control is transferred to the customer.
Installation revenues relating to this are also recognised at a point in time.
Revenue from installation of terminals and other communication equipment
owned by Inmarsat and used in the delivery of the service to the customer is
however recognised over the contract term.
The Group offers certain products and services as part of multiple deliverable
arrangements. Consistent with all other contracts, the Group will assess
whether the performance obligations are distinct by considering whether 1) the
customer can benefit from good or service on its own; or together with other
readily available resources 2) the good or service is distinct in the context of
the contract. The transaction price is allocated to each performance obligation
based on its stand-alone selling price relative to the total of all performance
obligations’ stand-alone selling prices under the contract.
The nature of the contracts within the Group may give rise to variable
consideration. This is estimated as the most likely amount based largely on
an assessment of the anticipated performance and all information (historical,
current and forecasted) that is reasonably available and is included in the
transaction price to the extent that it is highly probable that a significant
reversal in the amount of cumulative revenue will not occur.
Where a contract contains a significant financing component, the Group
adjusts the transaction price to a present value where the effect of discounting
is deemed to be material. The Group has adopted the practical expedient
whereby it is not required to adjust the transaction price for the effects of a
significant financing component if, at contract inception, the period between
customer payment and the transfer of goods or services is expected to be
one year or less. For contracts with an overall duration greater than one year,
the practical expedient also applies if the period between performance and
payment for that performance is one year or less.
A contract asset or a contract liability will arise when the performance of
either party exceeds the performance of the other. Contract assets are
rights to consideration in exchange for goods or services that the entity has
transferred to a customer when that right is conditional on something other
than the passage of time. Contract liabilities are obligations to transfer goods
or services to a customer for which the entity has received consideration, or for
which an amount of consideration is due to the customer. These are referred
to as deferred income within the Group.
Contract costs to obtain a contract and fulfil a contract are capitalised and
amortised on a systematic basis, consistent with the pattern of transfer of the
goods or services to which the capitalised cost relates. As a practical expedient,
a cost to obtain contract with a customer will be immediately expensed if it has
an amortisation period of one year or less.
FINANCING INCOME AND FINANCING COST
Financing income comprises interest receivable on funds invested in short-
term deposits.
Financing costs comprise interest payable on borrowings including the
Senior Notes and Convertible Bonds, accretion of the liability component
of the Convertible Bonds, amortisation of deferred financing costs, the unwind
of the discount on deferred satellite liabilities, interest on lease liabilities and
interest on the net defined benefit and post-employment asset/liability.
Finance charges are recognised in the income statement at the effective
interest rate.
The change in fair value of the derivative liability component of the 2023
Convertible Bond is presented within net financing costs in the income
statement. Further details on the accounting for derivative financial
instruments is provided below.
FINANCIAL ASSETS
Trade and other receivables
Trade and other receivables, including prepaid and accrued income, are
initially recognised at fair value and subsequently measured at amortised cost
using the effective interest method. The Group stratifies trade debtors based
on internal credit ratings. The Group calculates the loss allowance for trade
receivables and contract assets based on lifetime expected credit losses
under the IFRS 9 simplified approach.
Cash and cash equivalents
Cash and cash equivalents, measured at fair value, comprises cash balances,
deposits held on call with banks, money market funds and other short-term,
highly liquid investments with an original maturity of three months or less. Bank
overdrafts are shown as current liabilities within borrowings on the balance sheet.
FINANCIAL LIABILITIES AND EQUITY
Equity instruments
An equity instrument is any contract that evidences a residual interest in the
net assets of the Group. Equity instruments issued by the Group are recorded
at the proceeds received, net of direct issue cost.
Trade and other payables
Trade and other payables are initially recognised at fair value and subsequently
measured at amortised cost using the effective interest rate method.
Borrowings
Borrowings, comprising interest-bearing bank loans and overdrafts, are initially
recognised at fair value which equates to the proceeds received, net of direct
transaction and arrangement costs. They are subsequently measured at
amortised cost. Finance charges related to borrowings, including amortisation
of direct transaction costs, are charged to the income statement over the
term of the borrowing using the effective interest rate method.
Borrowings are generally classified as current liabilities unless the Group has
the unconditional right to defer settlement of the liability for at least 12 months
after the balance sheet date, in which case borrowings are classified as
non-current liabilities.
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Convertible Bonds
The Group has issued Convertible Bonds which are net share settled
instruments. Upon conversion the Group will repay the principal in cash
and satisfy the remaining conversion value by issuing ordinary shares of
the Company (if the market value of the Company’s shares at settlement
date exceeds the conversion price). Upon issuance, the embedded options
did not meet the ‘fixed-for-fixed’ criterion under IAS 32. These embedded
options represent non-closely related embedded derivatives that are
bifurcated from the host debt contract and measured at fair value through
profit and loss. The issued instrument has multiple embedded derivatives, all
derivatives that relate to the same risk exposure are assessed and accounted
for as a single compound instrument.
The cash debt component is initially recognised as the present value of the
principal and interest payments using a discount rate for a similar instrument
with the same terms and conditions but without the conversion option. After
initial recognition, it is measured at amortised cost using the effective interest
method with the interest expense recognised in the income statement and
a cash outflow resulting from coupon payments to bond holders.
The derivative liability component is initially assigned the residual amount
after deducting from the fair value of the instrument as a whole, the fair value
of a comparable, non-convertible bond, known as a debt host contract.
The derivative liability is sensitive to changes in the bond price and is marked-
to-market at each reporting date with the increase or decrease recognised
in the income statement.
Senior Notes
The Group has issued Senior Notes that are included within borrowings,
and are initially recognised at fair value which equates to the proceeds
received, net of direct transaction costs and any premium or discount.
These instruments are subsequently measured at amortised cost. Finance
charges, including amortisation of direct transaction costs and any premium
or discount, are recognised in the income statement over the term of the
borrowing at the effective interest rate method.
Net borrowings
Net borrowings consists of total borrowings less cash and cash equivalents
and short-term investments. Borrowings exclude accrued interest and any
derivative financial liabilities.
Derivative financial instruments
In accordance with its treasury policy, the Group does not hold or issue
derivative financial instruments for trading or speculative purposes.
Derivatives are initially recognised at fair value on the date the contract is
entered into and subsequently measured at fair value. The gain or loss on
remeasurement is recognised in the income statement, except where the
derivative is used to hedge against risks such as fluctuations in interest rates
or foreign exchange rates. The accounting policy for hedging follows below.
Cash flow hedges
The effective portion of the gain or loss on the hedging instrument is
recognised in other comprehensive income and accumulated in the cash flow
hedge reserve, while any ineffective portion is recognised immediately in the
income statement within financing costs.
Where there is a material contract with a foreign currency exposure, a specific
hedge to match the specific risk will be evaluated. At present the Group only
hedges certain foreign currency milestone payments to Airbus and Thales for
the construction of the I-6 and GX-5 satellites.
Amounts recognised as other comprehensive income are transferred to profit
or loss when the hedged transaction affects profit or loss, such as when the
hedged financial income or financial expense is recognised, or when a forecast
sale occurs. When the hedged item is the future purchase of a non-financial
asset or non-financial liability, the amount recognised as other comprehensive
income is transferred to the initial carrying amount of the non-financial asset
or liability.
EMPLOYEE BENEFITS
Wages, salaries, social security contributions, accumulating annual leave,
bonuses and non-monetary benefits are accrued in the year in which the
associated services are performed by the employees of the Group.
Termination benefits are payable whenever an employee’s employment
is terminated before the normal retirement date or whenever an employee
accepts voluntary redundancy in exchange for these benefits. The Group
recognises termination benefits when it has demonstrably committed to either
terminate the employment of current employees or to provide termination
benefits, as a result of an offer made to encourage voluntary redundancy.
The Group recognises liabilities relating to defined benefit pension plans
and post-employment benefits in respect of employees. The Group’s net
obligations in respect of defined benefit pension plans and post-employment
benefits are calculated separately for each plan by estimating the amount
of future benefit that employees have earned in return for their service in
the current and prior periods. The estimated future benefit is discounted
to its present value, from which the fair value of any plan assets is deducted
to calculate the plan’s net asset/liability position. The calculations are
performed by qualified actuaries using the projected unit credit method.
All actuarial gains and losses that arise in calculating the present value of the
defined benefit obligation and the fair value of plan assets are immediately
recognised in the statement of comprehensive income.
The Group also operates a number of defined contribution pension schemes.
Pension costs for the defined contribution schemes are charged to the income
statement when the related employee service is rendered.
The Group issues equity-settled share options and awards to employees.
Equity-settled share option awards are measured at fair value of the options
at the date of the grant. The fair value of the options is expensed on a straight-
line basis over the vesting period, based on the Group’s estimate of shares
that will eventually vest and adjusted for the effect of non-market-based
vesting conditions.
TAXATION
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit
differs from net profit as reported in the income statement as it excludes items
of income or expense that are taxable or deductible in other years and items
that are never taxable or deductible. The Group’s liability for current tax is
calculated using tax rates that have been enacted or substantively enacted
by the balance sheet date.
Deferred tax
Deferred tax is provided on temporary differences arising between assets and
liabilities’ tax bases and their carrying amounts (the balance sheet method).
Deferred tax is determined using tax rates (and laws) that have been enacted
or substantively enacted by the balance sheet date and are expected to apply
when the related deferred tax asset is realised or the deferred tax liability
is settled.
Deferred tax assets are recognised to the extent that it is probable that future
taxable profits will be available against which the temporary deductible
differences or tax loss carry forwards can be utilised.
Deferred tax liabilities are provided on all taxable temporary differences except
on those:
› arising from the initial recognition of an asset or liability in a transaction
other than a business combination that at the time of the transaction
affects neither accounting nor taxable profit
› associated with investments in subsidiaries and associates, but only to the
extent that the Group controls the timing of the reversal of the differences
and it is probable that the reversal will not occur in the foreseeable future
Deferred tax assets and liabilities are offset when there is a legally enforceable
right to set them off, when they relate to income taxes levied by the same
taxation authority and if the Group intends to settle its current tax assets
and liabilities on a net basis.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
Uncertain tax positions
The Group’s policy is to comply with all enacted laws in the relevant jurisdictions
in which the Group prepares its tax returns. However, tax legislation, especially
as it applies to corporate taxes, is not always prescriptive and more than
one interpretation of the law may be possible. In addition, tax returns in many
jurisdictions are filed in arrears a year or more after the end of the accounting
period to which they relate. The tax authorities often have a significant
period in which to enquire into these returns after their submission. As a result,
differences in view, or errors in returns, may not come to light until some time
after the initial estimate of tax due is determined. This necessarily leads to
a position of uncertain tax positions.
Depreciation
Depreciation is calculated to write-off the historical cost less residual values,
if any, of fixed assets, except land, on a straight-line basis over the expected
useful lives of the assets concerned. The Group selects its depreciation rates
and residual values carefully and reviews them annually to take into account
any changes in circumstances or expectations. When determining useful lives,
the principal factors considered are the expected rate of technological
developments, expected market requirements for the equipment and the
intensity at which the assets are expected to be used. Any change in useful
lives are accounted for prospectively. The Group also reviews the residual
values and depreciation methods on an annual basis.
Where the Group is aware of significant areas where the law is unclear and
where this has been relied upon in a filing position of a tax return, or, in an area
where different outcomes and interpretations are possible and may lead to a
different result, the Group provides for the uncertain tax position. A provision
is made when, based on the available evidence, the Group considers that it is
probable that further amounts will be payable, or a recoverable tax position
will be reduced, and the adjustment can be reliably estimated. The Group
calculates the uncertain tax position using a single best estimate of the
most likely outcome on a case-by-case basis.
PROPERTY, PLANT AND EQUIPMENT
General
Property, plant and equipment assets are initially recognised at cost and
subsequently treated under the cost model: at cost less accumulated
depreciation and any accumulated impairment losses.
Space segment assets
Space segment assets comprise satellite construction, launch and other
associated costs, including ground infrastructure. Expenditure charged to
space segment projects includes invoiced progress payments, amounts
accrued appropriate to the stage of completion of contract milestones,
external consultancy costs and direct internal costs. Internal costs, comprising
primarily staff costs, are only capitalised when they are directly attributable
to the construction of an asset. Progress payments are determined on
milestones achieved to date together with agreed cost escalation indices.
Deferred satellite payments represent the net present value of future
payments dependent on the future performance of each satellite and are
recognised in space segment assets when the satellite becomes operational.
Depreciation on space segment assets is recognised over the life of the
satellites from the date they become operational and are placed into
service. The associated liability is stated at its net present value and included
within borrowings.
Assets in the course of construction
These assets are carried at cost with no depreciation charged whilst in the
course of construction. The assets will be transferred to space segment assets
and depreciated over the life of the satellites or services once they become
operational and placed into service.
Capitalised borrowing costs
The Group incurs borrowing costs directly attributable to the acquisition,
construction or production of assets that necessarily take a substantial
period of time to get ready for its intended use or sale. Such borrowing costs
are capitalised as part of the cost of the asset. Capitalisation commences when
the Group begins to incur the borrowing costs and related expenditures for the
asset, and when it undertakes the activities that are necessary to prepare the
asset for its intended use or sale. Capitalisation of borrowing costs ceases when
substantially all of the activities necessary to prepare the asset for its intended
use or sale are complete.
Other fixed assets
Other fixed assets are initially recognised at cost and subsequently measured
at cost less accumulated depreciation and any accumulated impairment losses.
Derecognition
An item of property plant or equipment is derecognised upon disposal or when
no future economic benefit is expected from its use or disposal. Any gain or
loss arising on derecognition of the asset, calculated as the difference between
the net disposal proceeds and the carrying amount of the asset, is recognised
in the income statement.
GOVERNMENT GRANTS
Government grants are recognised when there is reasonable assurance
that the grant will be received and all attached conditions will be complied
with. A grant that relates to an expense item is recognised as income on
a systematic basis over the period(s) that the related costs are expensed.
A grant that relates to an asset is deducted from the cost of the relevant
asset, thereby reducing the depreciation charge over the useful life of
the asset.
INTANGIBLE ASSETS
Intangible assets comprise goodwill, trademarks, software, terminal development
and network access costs, spectrum rights, orbital slots, unallocated launch slots
and licences, customer relationships and intellectual property.
Intangible assets acquired separately are initially recognised at cost. Intangible
assets acquired as part of a business combination are initially recognised
at their fair values as determined at acquisition date. After initial recognition,
intangible assets are carried at cost less accumulated amortisation and any
accumulated impairment losses.
Research and development costs
Research costs related to internally generated intangibles are expensed in
the period that the expenditure is incurred.
Development costs are expensed when the costs are incurred unless it meets
criteria for capitalisation under IAS 38. Development costs are only capitalised
if the technical feasibility, availability of appropriate technical, financial
and other resources and commercial viability of developing the asset for
subsequent use or sale have been demonstrated and the costs incurred can be
measured reliably. Capitalised development costs are amortised in the income
statement on a straight-line basis over the period of expected future benefit.
Amortisation
Intangible assets with a finite useful life are amortised on a straight-line
basis over the useful life of the asset. The amortisation period and method
are reviewed on an annual basis. Intangible assets with an indefinite useful
life, such as goodwill, are not amortised but reviewed annually for impairment.
IMPAIRMENT REVIEWS
Goodwill is not amortised, but is tested annually for impairment.
Assets that are subject to depreciation or amortisation are reviewed for
impairment whenever events or changes in circumstances indicate that the
full carrying amount may not be recoverable. Indicators of impairment may
include changes in technology and business performance. An asset is tested
for impairment on an individual basis as far as possible to determine its
recoverable amount. Where this is not possible, assets are grouped and
tested for impairment in a cash generating unit. A cash generating unit is
the smallest identifiable group of assets that generates cash inflows that are
largely independent of the cash inflows from other assets or groups of assets.
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An asset will be impaired if the carrying amount exceeds its recoverable
amount, which is the higher of the fair value less costs to sell the asset and the
value in use. The impairment loss will be recognised in the income statement.
In assessing value in use, estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset.
Subsequent to an impairment loss, if indications exist that an asset’s
recoverable amount might have increased, the recoverable amount will be
reassessed and any impairment reversal recognised in the income statement.
An impairment loss is reversed only to the extent that the asset’s carrying
amount will not exceed the depreciated historical cost (what the carrying
amount would have been had there been no initial impairment loss).
Impairment losses in respect of goodwill are not reversed.
LEASES
Contracts which convey the right to control the use of an identified asset for a
period of time in exchange for consideration are accounted for as leases by the
Group. At the commencement date, the Group, as lessee, recognises a right-
of-use asset and a lease liability. The lease liability is measured at the present
value of the lease payments that are not paid at that date, discounted using
the rate implicit in the lease, unless such a rate is not readily determinable,
in which case the incremental borrowing rate is used. The right-of use asset
comprises the amount of the initial measurement of the lease liability, adjusted
for any lease payments made at or before the commencement date, less any
lease incentives received and any initial direct costs incurred by the Group.
Lease term is determined as the non-cancellable period of a lease adjusted for
any reasonably certain extension or termination option.
After commencement date, the right-of use asset is depreciated on a straight-
line basis to the end of the lease term. The lease liability is accounted for by
reducing the carrying amount to reflect the lease payments made, and
increasing the carrying amount to reflect the interest on the lease liability.
As lessor for operating leases, the Group recognises lease payments as
income. The underlying asset is depreciated on a straight-line basis over its
expected useful life.
NON-CURRENT ASSETS AND DISPOSAL GROUPS HELD FOR SALE
Non-current assets and disposal groups are classified as ‘held for sale’ when their
carrying values will be recovered through a sales transaction rather than through
continued use. This classification is subject to meeting the following criteria:
› management is committed to a plan to sell and the asset is being actively
marketed for sale at a sales price reasonable in relation to its fair value
› the asset is available for immediate sale
› the sale is highly probable to be concluded within 12 months of classification
as held for sale and
› it is unlikely that the plan to sell will be significantly changed or withdrawn
Disposal groups are groups of assets and associated liabilities to be disposed
of together in a single transaction. At the reporting date they are separately
disclosed as current assets and liabilities on the balance sheet.
When non-current assets or disposal groups are classified as held for sale,
depreciation and amortisation will cease and the assets are remeasured
at the lower of their carrying amount and fair value less costs to sell.
Any resulting impairment loss is recognised in the income statement,
except for assets treated under the revaluation model, where the adjustment
would first decrease the revaluation reserve before any excess will be
recognised as an impairment loss in the income statement. Any remainder
in the revaluation reserve will be released to the income statement on
the date of sale.
INVENTORIES
Inventories are stated at the lower of cost (determined by the weighted
average cost method) and net realisable value. Allowances for obsolescence
are recognised in other operating costs when there is objective evidence
that inventory is obsolete.
PROVISIONS
Provisions are recognised when the Group has a present obligation (legal
or constructive) as a result of a past event, it is probable that an outflow
of economic benefits will be required to settle the obligation, and a reliable
estimate can be made of the amount of the obligation.
The expense relating to a provision is recognised in the income statement,
except where the obligation is to dismantle or restore an item of property,
plant or equipment, in which case the amount is capitalised to the cost
of the asset. The capitalised amount is subsequently depreciated to the
income statement over the remaining useful life of the underlying asset.
Provisions are discounted to a present value at initial recognition where
the effect of discounting is deemed to be material. Discounted provisions
will unwind over time using the amortised cost method with finance cost
recognised in the income statement. Provision estimates are revised each
reporting date and adjustments recognised in line with the provision’s initial
recognition (either in the income statement or recognised against the cost
of the asset).
Asset retirement obligations
The fair value of legal obligations associated with the retirement of tangible
property, plant and equipment is recognised in the financial statements in the
period in which the liability is incurred. Upon initial recognition of a liability for
an asset retirement obligation, a corresponding asset retirement cost is added
to the carrying amount of the related asset, which is subsequently amortised
to income over the remaining useful life of the asset. Following the initial
recognition of an asset retirement obligation, the carrying amount of the
liability is increased for the passage of time by applying an interest method
of allocation to the liability with a corresponding accretion cost reflected
in operating expenses.
Revisions to either the timing or the amount of the original estimate
of undiscounted cash flows are recognised each period as an adjustment
to the carrying amount of the asset retirement obligation.
ALTERNATIVE PERFORMANCE MEASURES
In addition to IFRS measures the Group uses a number of Alternative
Performance Measures (‘APMs’) in order to provide readers with a better
understanding of the underlying performance of the business, and to improve
comparability of our results for the period. More detail on IFRS and APMs can
be found on page 165.
3. FINANCIAL RISK MANAGEMENT
BREXIT
The United Kingdom leaving the European Union on 29 March 2019 is not
expected to have a significant financial impact on the Group. The majority of
revenue, capital expenditure and long-term borrowings are denominated in US
Dollars reducing our exposure to a weakening Sterling. Additional costs incurred
from professional fees for legal advice and work permits for employees are
expected to be limited. For information pertaining to the potential operational
impacts to the Group, refer to pages 52 to 58 for the Group’s principal risks.
FINANCIAL RISK FACTORS
The Group’s operations and significant debt financing expose it to a variety
of financial risks that include the effects of changes in debt market prices,
foreign currency exchange rates, credit risks, liquidity risks and interest rates.
The Group has in place a risk management programme that seeks to limit
adverse effects on the financial performance of the Group by using forward
exchange contracts to limit exposure to foreign currency risk and to limit the
impact of fluctuating interest rates by minimising the amount of floating rate
long-term borrowings.
The Board of Directors has delegated to the treasury department the
responsibility for setting and implementing the financial risk management
policies applied by the Group. The treasury department has an operating
manual that sets out specific guidelines for managing foreign exchange risk,
interest rate risk and credit risk (see note 32). The Group does not hold or
issue derivative financial instruments for speculative or trading purposes.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
(A) MARKET RISK
(i) Foreign exchange risk
The functional currency of Inmarsat plc is the US Dollar. Apart from the
deferred satellite liability, all of the Group’s long-term borrowings are
denominated in US Dollars, the majority of its revenue is earned in US Dollars
and the majority of capital expenditure is denominated in US Dollars, which
are therefore not subject to risks associated with fluctuating foreign currency
rates of exchange.
However, the Group operates internationally, resulting in approximately 3% and
16% of total revenue and total expenditure, respectively, being denominated
in currencies other than the US Dollar. Approximately 28% (2017: 27%) of
the Group’s operating costs are denominated in Pounds Sterling. The Group’s
exposure therefore needs to be carefully managed to avoid variability in future
cash flows and earnings caused by volatile foreign exchange rates.
As at 31 December 2018 it is estimated that a hypothetical 10% increase in the
US Dollar/Sterling year-end exchange rate (US$1.27/£1.00 to US$1.4/£1.00)
would have decreased the 2018 profit before tax by approximately $2.6m
(2017: $4.8m). Management believes that a 10% sensitivity rate provides
a reasonable basis upon which to assess expected changes in foreign
exchange rates.
(ii) Price risk
The Group is not exposed to significant equity securities price risk or commodity
price risk.
(B) INTEREST RATE RISK
The Group’s income and operating cash flows are substantially independent
of changes in market interest rates. The Group has interest-bearing assets
such as cash and cash equivalents, short-term deposits, and non-current
other receivables however interest rate risk arises from long-term borrowings.
Borrowings issued at variable rates expose the Group to cash flow interest rate
risk; however, as at 31 December 2018, the Group has no borrowings issued
at variable. The Senior Notes due 2022 and 2024, the Convertible Bonds
due 2023 and the Ex-Im Bank Facilities are all at fixed rates.
(C) CREDIT RISK
Credit risk refers to the risk that a counterparty will default on its contractual
obligations resulting in financial loss to the Group. A debt will be deemed
uncollectable and therefore written off based on one or more of the
following criteria:
› Insolvency (formal or just ceased trading)
› Debtor cannot be located
› Debt uneconomical to pursue
For any write-offs, a standard procedure is followed with authorisations
obtained in-line with the Group’s framework.
Financial instruments that potentially subject the Group to a concentration
of credit risk consist of cash and cash equivalents, short-term deposits,
trade receivables, other receivables, accrued income and derivative financial
instruments. The credit risk on liquid funds (cash and cash equivalents and
short-term deposits) and derivative financial instruments is limited because
the counterparties are highly rated financial institutions.
The maximum exposure to credit risk as at 31 December is:
($ in millions)
Cash and cash equivalents
Short term deposits
Trade receivables, other receivables
and accrued income
Derivative financial instruments
Total credit risk
Note
17
32
32
2018
143.2
145.7
2017
144.9
342.0
337.7
275.3
0.3
1.5
626.9
763.7
The Group’s average age of trade receivables as at 31 December 2018 was
approximately 79 days excluding Ligado and approximately 72 days including
Ligado (2017: 57 days excluding Ligado and 52 days including Ligado).
At 31 December 2018, $257.5m (2017: $170.0m) of trade receivables were
not yet due for payment. No interest is charged on trade receivables until the
receivables become overdue for payment. Thereafter, interest may be charged
at varying rates depending on the terms of the individual agreements.
The Group has credit evaluation, approval and monitoring processes intended
to mitigate potential credit risks, and utilises both internal and third-party
collection processes for overdue accounts. The Group maintains provisions for
potential credit losses that are assessed on an ongoing basis. The provision for
uncollectible trade receivables has increased to $28.4m as at 31 December
2018 (2017: $12.5m).
For 2018, no customer comprised greater than 10% of the Group’s total
revenues (2017: no customer).
(D) LIQUIDITY RISK
The Group is exposed to liquidity risk with respect to its contractual obligations
and financial liabilities. Prudent liquidity risk management implies maintaining
sufficient cash and short-term deposits and the availability of funding through
an adequate amount of committed credit facilities.
The Group manages liquidity risk by continuously monitoring forecast and
actual cash flows and matching the maturity profiles of financial assets
and liabilities.
The available liquidity of the Group as at 31 December is:
($ in millions)
Note
2018
Cash and cash equivalents
Available but undrawn borrowing facilities1
Total available liquidity
17
20
143.2
750.2
893.4
2017
144.9
500.5
645.4
1 Relates to the Senior Revolving Credit Facility (see note 20)
The Directors believe the Group’s liquidity position is more than sufficient to
meet its needs for the foreseeable future.
4. CRITICAL ACCOUNTING ESTIMATES AND
KEY JUDGEMENTS
The preparation of the consolidated financial statements requires
management to make certain estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the balance sheet dates and the reported amounts of revenue
and expenses during the reported period.
ESTIMATES AND ASSUMPTIONS
The estimates and associated assumptions are based on historical experience
and various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making the judgements
about carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates. The following key
estimates have been made:
(A) TAXATION
The calculation of the Group’s uncertain tax provisions involves estimation in
respect of certain items whose tax treatment cannot be finally determined until
resolution has been reached with the relevant tax authority, or, as appropriate,
through a formal legal process. Issues can, and often do, take a number of
years to resolve. The amounts recognised or disclosed are derived from the
Group’s best estimation. However, the inherent uncertainty regarding the
outcome of these means eventual realisation could differ from the accounting
estimates and therefore impact the Group’s results and cash flows.
In the event that all such enquiries were settled entirely in favour of the
authorities, the Group would incur a cash tax outflow of $110m, excluding
interest, during 2019. The quantum and timing of this cost remains uncertain
but it is substantially provided for and the enquiries remain ongoing at this time.
The Group anticipates an initial conclusion in respect of the most significant
enquiry in 2019.
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(B) REVENUE IN RESPECT OF THE LIGADO NETWORKS
COOPERATION AGREEMENT
In December 2007, Inmarsat and Ligado Networks (formerly LightSquared LP,
Skyterra (Canada) Inc. and LightSquared Inc.) entered into a Cooperation
Agreement for the efficient use of L-band spectrum over North America. The
Cooperation Agreement was segregated into phases and designed to enable
and support the deployment of an ATC network by Ligado in North America.
In March 2016, Ligado Networks agreed to take the 30MHz option (the ‘30MHz
Plan’) under Phase 2 of the Cooperation Agreement between the companies.
In exchange for the deferral of some payments from Ligado to Inmarsat, the
parties agreed to delay the transition to the 30MHz Plan, with Ligado providing
Inmarsat enhanced spectrum usage rights for its satellite operations for a
minimum period of two years.
The timing of the revenue recognition and related costs is dependent on when
Ligado receive their FCC licence, which remains uncertain. Key estimates relating
to the determination of the transaction price have been made driven by the
expected contract term and payment profile.
For the year ended 31 December 2018, the Group recognised $130.7m of
revenue with $0.1m operating costs (year ended 31 December 2017: $126.7m
and $2.0m respectively).
JUDGEMENTS
In the process of applying the Group’s accounting policies, the following
judgements have been made, which have the most significant effect on the
amounts recognised in the consolidated financial statements:
(C) REVENUE IN RESPECT OF THE LIGADO NETWORKS
COOPERATION AGREEMENT
At 31 December 2018, deferred income in respect of the Cooperation Agreement
of $206.7m was recorded on the balance sheet. Although the cash has been
received, the timing of the recognition of this deferred income, together with any
related future costs and taxes, is dependent upon when Ligado receive their FCC
licence, which remains uncertain. An accounting judgement has been made in
assuming that there remains a future obligation. During 2018, $0.1m was
recognised in relation to costs incurred on interference.
At 31 December 2018, a receivable of $35.0m has been recorded on the balance
sheet relating to the deferrals. This was previously netted off within the deferred
income, however this has been disclosed separately on the adoption of IFRS 15.
The Group believe that this receivable is recoverable.
(D) CAPITALISATION OF SPACE SEGMENT ASSETS AND
ASSOCIATED BORROWING COSTS
The net book value of space segment assets is currently $2,231.5m (2017:
$2,510.3m). There have been additions of $0.6m in the year (2017: $174.9m).
The key judgements involved in the capitalisation of space segment assets
and associated borrowings costs are:
› whether the capitalisation criteria of the underlying IAS have been met
› whether an asset is ready for use and as a result further capitalisation
of costs should cease and depreciation should commence and
› whether an asset is deemed to be substantially complete and as a result
capitalisation of borrowing costs should cease
(E) PROXY BOARD ARRANGEMENT
The Group has made key judgements in determining the appropriateness
of consolidating Inmarsat Government Inc.
The U.S. Government element of Inmarsat’s Government business unit is
managed through the U.S. trading entity, Inmarsat Government Inc., a wholly-
owned subsidiary of the Group. The business is managed through a Proxy
agreement as required by the U.S. National Industrial Security Program
(‘NISP’). A Proxy agreement is an instrument intended to mitigate the risk of
foreign ownership, control or influence when a foreign person owns, acquires
or merges with a U.S. entity that has a facility security clearance under the
NISP. The Proxy agreement conveys the foreign owner’s voting rights to the
Proxy Holders, comprised of the Proxy board. There are three Proxy holders
who are U.S. citizens cleared and approved by the U.S. Defence Security
Service (‘DSS’).
The Proxy holders have a fiduciary duty, and agree, to perform their role in the
best interests of the Group (including the legitimate economic interest), and
in a manner consistent with the national security interests of the U.S.
The DSS requires Inmarsat Government Inc. to enter into a Proxy agreement
because it is indirectly owned by the Group and it has contracts with the
Department of Defence which contain certain classified information. The Proxy
agreement enables Inmarsat Government Inc. to participate in such contracts
with the U.S. Government despite being owned by a non-U.S. corporation.
Under the Proxy agreement, the Proxy holders have the power to exercise
all privileges of share ownership of Inmarsat Government Inc. In addition, as a
result of the Proxy agreement, certain limitations are placed on the information
which may be shared, and the interaction which may occur, between Inmarsat
Government Inc. and other Group companies.
The Group maintains its involvement in Inmarsat Government Inc.’s activities
through normal business activity and liaison with the Chair of the Proxy Board.
Inmarsat Government Inc.’s commercial and governance activity is included
in the business update provided in regular Executive reports to the Board.
This activity is always subject to the confines of the Proxy regime to ensure
that it meets the requirement that Inmarsat Government Inc. must conduct
its business affairs without direct external control or influence, and the
requirements necessary to protect the U.S. national security interest.
In accordance with IFRS 10 ‘Consolidated financial statements’, an assessment
is required to determine the degree of control or influence the Group exercises
and the form of any control to ensure that the financial statement treatment
is appropriate. On the basis of the Group’s ability to affect the financial and
operating policies of the entity, we have concluded that the Group meets the
requirements of IFRS 10 in respect of control over the entity and, therefore,
consolidates the entity in the Group’s consolidated accounts. There have been
no changes in circumstances which impact any of the key judgements made
by the Group.
(F) PRESENTATION OF CONVERTIBLE BOND
The Group holds the Convertible Bond as a non-current liability on the Balance
Sheet, reflecting the expected redemption date of 9 September 2023. The
bond is convertible from 20 October 2016 meaning a Bondholder could
theoretically convert their holding prior to the due date of 9 September 2023.
In the event that the share price remains significantly below the conversion
price of the bonds ($13.41), any bondholder who converts their Convertible
Bond, rather than selling it on the market, would make a material loss.
Consequently, in practice, the Group does not believe that any material
amounts of the Convertible Bond will be repaid in the next 12 months.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
5. SEGMENTAL INFORMATION
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker to allocate resources
and assess the performance of the Group.
The Group’s operating segments are aligned to five market-facing business units, being:
› Maritime, focusing on worldwide commercial maritime services
› U.S. Government, focusing on U.S. civil and military government services
› Global Government, focusing on worldwide civil and military government services
› Aviation, focusing on commercial, business and general aviation services
› Enterprise, focusing on worldwide energy, industry, media, carriers, and M2M services
Details of these business units are given on pages 20 to 37.
These five business units are supported by ‘Central Services’ which include satellite operations and backbone infrastructure, corporate administrative costs,
and any income that is not directly attributable to a business unit (such as Ligado Networks). The Group has aggregated the U.S. Government and Global
Government operating segments into one reporting segment as the segments have a similar type of customer for the products and services and meet the
criteria for aggregation under IFRS. Therefore, the Group’s reportable segments are Maritime, Government, Aviation, Enterprise, and Central Services.
The accounting policies of the operating segments are the same as the Group’s accounting policies described in note 2. Segment results are assessed by
the Chief Operating Decision Maker at the EBITDA level without the allocation of central costs, depreciation and amortisation, net financing costs and taxation.
2018
Maritime
Government
Aviation
Enterprise
552.8
–
552.8
(123.8)
429.0
381.0
–
381.0
(110.8)
270.2
256.1
–
256.1
(124.2)
131.9
130.0
–
130.0
(47.7)
82.3
Central
Services
14.6
130.7
145.3
(288.6)
(143.3)
SEGMENT RESULTS
($ in millions)
Revenue
Ligado revenue
Total revenue
Net operating costs
EBITDA
Depreciation and amortisation
Other1
Operating profit
Net financing cost
Profit before tax
Taxation
Profit for the year
Cash capital expenditure
54.4
5.0
34.8
–
496.5
Financing costs capitalised in the cost of qualifying assets
Cash flow timing2
Total capital expenditure
($ in millions)
Timing of revenue recognition
At a point in time
Over time
Total
1 Other relates to the share of profit from associates ($3.9m), loss on disposal of assets ($2.5m) and impairment of assets ($14.5m)
2 Cash flow timing represents the difference between accrued capex and the actual cash flows
Total
1,334.5
130.7
1,465.2
(695.1)
770.1
(468.3)
(13.1)
288.7
(120.8)
167.9
(42.9)
125.0
590.7
43.7
(61.5)
572.9
At 31
December
2018
Total
262.4
1,202.8
1,465.2
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2017 (restated)
Maritime
Government
Aviation
Enterprise
567.3
–
567.3
(120.3)
447.0
366.7
–
366.7
(101.5)
265.2
181.8
–
181.8
(77.9)
103.9
132.6
–
132.6
(40.7)
91.9
Central
Services
14.5
128.8
143.3
(312.0)
(168.7)
($ in millions)
Revenue
Ligado revenue
Total revenue
Net operating costs
EBITDA
Depreciation and amortisation
Other1
Operating profit
Net financing cost
Profit before tax
Taxation
Profit for the year
Cash capital expenditure
45.9
9.9
143.8
–
414.5
Financing costs capitalised in the cost of qualifying assets
Cash flow timing2
Total capital expenditure
($ in millions)
Timing of revenue recognition
At a point in time
Over time
Total
Total
1,262.9
128.8
1,391.7
(652.4)
739.3
(411.8)
(3.3)
324.2
(90.4)
233.8
(48.8)
185.0
614.1
40.2
36.6
690.9
At 31 December
2017
Total
227.7
1,164.0
1,391.7
1 Other relates to the share of profit from associates ($4.0m) and loss on disposal of assets ($7.3m)
2 Cash flow timing represents the difference between accrued capex and the actual cash flows
SEGMENTAL ANALYSIS BY GEOGRAPHY
The Group’s operations are located in the geographical regions listed below. Revenues are allocated to countries based on the billing address of the customer.
For wholesale customers, this is the distribution partner who receives the invoice for the service, and for retail customers this is the billing address of the customer
for whom the service is provided. Assets and capital expenditure are allocated based on the physical location of the assets.
($ in millions)
United Kingdom
Rest of Europe
North America
Asia and Pacific
Rest of the world
Unallocated1
1 Unallocated items relate to satellites which are in orbit
2018
2017 (restated)
Non-current
segment
Revenue
assets
Revenue
71.4
444.7
594.0
257.4
97.7
–
1,465.2
1,044.1
1,059.2
121.1
114.3
0.3
1,899.6
4,238.6
78.9
420.2
561.5
246.1
85.0
–
1,391.7
Non-current
segment
assets
860.1
861.9
117.4
116.8
0.1
2,123.2
4,079.5
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
REMAINING PERFORMANCE OBLIGATIONS
The table below shows the remaining revenue to be derived from unsatisfied (or partially unsatisfied) performance obligations under non-cancellable contracts
with customers at the end of the year.
($ in millions)
Within one year
Between two to five years
Greater than five years
At 31 December
2018
Total
509.8
926.0
254.1
1,689.9
All other contracts are for periods of one year or less or are billed based on time incurred. As permitted under IFRS 15, the transaction price allocated to these
unsatisfied contracts is not disclosed. As permitted under the transitional provisions in IFRS 15, the transaction price allocated to partially unsatisfied performance
obligations as of 31 December 2017 is not disclosed.
6. OPERATING PROFIT
Costs are presented by the nature of the expense to the Group. Network and satellite operation costs comprise costs to third parties for network service contracts
and services. A breakdown of employee benefit costs is given in note 7.
Operating profit is stated after charging the following items:
($ in millions)
Depreciation of property, plant and equipment
Amortisation of intangible assets
Depreciation of right-of-use assets
Restructuring costs
Loss on disposal of assets
Impairment1
Operating lease rentals:
Land and buildings
Cost of inventories recognised as an expense
Write downs of inventories recognised as an expense
Research costs expensed
Remuneration payable to the Group’s auditor Deloitte LLP and its associates in the year is analysed below:
($ in millions)
Audit fees:
Annual audit of the Company
Annual audit of subsidiary companies
Total audit fees
Audit-related assurance services2
Total audit and audit-related fees
Other services
Total non-audit fees
Total auditor’s remuneration
1 Relates to $1.2m and $13.3m of tangible and intangible asset impairments respectively
2 Fees paid for audit-related assurance services refer to the half year and quarterly reviews of the Group’s interim financial statements
7. EMPLOYEE BENEFIT COSTS
($ in millions)
Wages and salaries
Social security costs
Share-based payments (including employers’ national insurance contribution)
Defined contribution pension plan costs
Defined benefit pension plan costs1
Post-employment benefits costs1
Restructuring charge
Total employee benefit costs
1 Defined benefit pension plan costs and post-employment benefits costs include current service cost and gain on curtailment for 2017 (see note 29)
Note
2018 2017 (restated)
13
14
15
19
Note
29
29
370.1
86.8
11.4
–
2.5
14.5
–
115.3
2.1
8.9
328.6
83.2
–
19.9
7.3
–
13.8
62.3
5.1
8.0
2018
2017
0.2
0.9
1.1
0.1
1.2
0.3
0.3
1.5
2018
255.5
25.0
8.2
10.9
1.4
0.4
–
301.4
0.2
0.9
1.1
0.1
1.2
–
–
1.2
2017
247.8
20.6
16.2
6.0
2.0
0.4
19.9
312.9
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EMPLOYEE NUMBERS
The average monthly number of employees (including the Executive Directors) employed during the year:
By activity:
Operations
Sales and marketing
Development and engineering
Administration
By segment:
Maritime
Government
Enterprise
Aviation
Central Services
2018
2017
851
334
237
403
825
394
250
385
1,825
1,854
103
184
63
197
1,278
1,825
107
199
65
171
1,312
1,854
The employee headcount numbers presented above refer to permanent full time and part time employees and exclude contractors and temporary staff.
Employee benefit costs of $24.8m (2017: $30.1m) relating to contractors and temporary staff have been included in the cost table above.
8. KEY MANAGEMENT COMPENSATION
The Group’s Executive and Non-Executive Directors are the key management personnel of the business. Details of the total amounts earned during the year are
as follows:
($ in millions)
Short-term benefits
Share-based payments1
1
Includes employers’ national insurance or other social security contributions
2018
4.1
4.4
8.5
2017
3.8
4.8
8.6
The Remuneration report contains full disclosure of Directors’ remuneration on pages 81 to 101. In both the current and prior year, no Director has been a member
of the Group’s defined contribution pension plan.
9. NET FINANCING COSTS
($ in millions)
Bank interest receivable and other interest
Total financing income
Interest on Senior Notes and credit facilities
Interest on Convertible Bonds
Amortisation of debt issue costs
Amortisation of discount on Senior Notes due 2022
Unwinding of discount on deferred satellite liabilities
Net interest on the net defined benefit asset and post-employment liability
Interest on lease obligations
Other interest
Financing costs
Less: Amounts capitalised in the cost of qualifying assets
Financing costs excluding derivative adjustments
Change in fair value of the derivative liability component of the Convertible Bonds1
Net financing cost
1 For further details of the derivative liability component of the Convertible Bonds due 2023 please refer to note 20
2018 2017 (restated)
(8.2)
(8.2)
92.8
38.4
13.2
1.0
0.2
0.3
2.9
0.7
149.5
(43.7)
105.8
23.2
120.8
(7.8)
(7.8)
93.9
37.5
7.9
1.0
0.4
2.0
–
3.4
146.1
(40.2)
105.9
(7.7)
90.4
Borrowing costs capitalised in the cost of qualifying assets during the year are calculated by applying a capitalisation rate to expenditures on such assets.
The average interest capitalisation rate for the year was 7.4% (2017: 8.5%).
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
10. TAXATION
The tax charge for the year recognised in the income statement:
($ in millions)
Current tax:
Current year
Adjustments in respect of prior years
Total current tax
Deferred tax:
Origination and reversal of temporary differences
Adjustments due to reduction in corporation tax rates
Adjustments in respect of prior years
Total deferred tax
Total taxation charge
The effective tax rate is 25.5% (2017: 20.9%) and is reconciled below:
($ in millions)
Profit before tax
Income tax at 19.0% (2017: 19.25%)
Differences in overseas tax rates
Adjustments in respect of prior periods
Adjustments due to reduction in the corporation tax rate
Impact of UK patent box regime
Impact of change in fair value of derivative liability component of Convertible Bond
Other non-deductible expenses/non-taxable income
Total taxation charge
Tax credited directly to equity:
($ in millions)
Deferred tax credit/(charge) on share-based payments
Deferred tax credit/(charge) on pensions
Total tax credited directly to equity
Tax (charged)/credit directly to other comprehensive income:
($ in millions)
Deferred tax (charged)/credit on remeasurement of defined benefit asset and post-employment benefits
Total tax (charged)/credited directly to other comprehensive income
11. NET FOREIGN EXCHANGE (GAIN)/LOSS
($ in millions)
Defined benefit plan and post-employment benefits
Other operating income
Total foreign exchange (gain)/loss
Note
29
2018 2017 (restated)
49.5
1.3
50.8
(14.8)
0.2
6.7
(7.9)
42.9
21.8
(4.5)
17.3
14.6
9.1
7.8
31.5
48.8
2018 2017 (restated)
167.9
31.9
(4.4)
8.0
0.2
(1.7)
4.4
4.5
42.9
2018
1.0
0.3
1.3
2018
(3.1)
(3.1)
2018
0.2
(1.9)
(1.7)
233.8
45.0
(6.3)
3.3
9.1
(3.2)
(1.5)
2.4
48.8
2017
(0.2)
–
(0.2)
2017
(2.3)
(2.3)
2017
1.5
(0.3)
1.2
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12. DIVIDENDS
During 2018, the 2018 interim dividend of $36.9m (8 cents per ordinary share) and the 2017 final dividend of $55.0m (12 cents per ordinary share) were paid to
the Company’s shareholders.
For the 2018 interim dividend, the Group offered a scrip dividend election allowing shareholders to take their cash dividend entitlement in Inmarsat shares.
This option was taken up by shareholders holding approximately 84.9m shares (2017 interim dividend: 63.3m shares), representing 18.4% (2017 interim dividend:
13.9%) of our issued share capital. The scrip amounted to 1,044,660 new shares (2017 interim dividend: 1,617,973 new shares) and 0.23% (2017 interim dividend:
0.35%) of the issued share capital, which represented a $6.8m (2017 interim dividend: $13.7m) cash dividend savings. These shares were issued and made
available for trading on 19 October 2018 (2017 interim dividend: 20 October 2017).
For the 2017 final dividend, the Group offered a scrip dividend election allowing shareholders to take their cash dividend entitlement in Inmarsat shares.
This option was taken up by shareholders holding approximately 129.8m shares, representing 28.3% of our issued share capital. The scrip amounted to 3,015,936
new shares and 0.66% of the issued share capital, which represented a $15.6m cash dividend savings. These shares were issued and made available for trading on
26 May 2018.
During 2017, the 2017 interim dividend of $98.6m (21.62 cents per ordinary share) and the 2016 final dividend of $151.2m (33.37 cents per ordinary share)
were paid to the Company’s shareholders.
The Inmarsat plc Board of Directors intends to recommend a final dividend of 12 cents per ordinary share in respect of the year ended 31 December 2018 to be
paid on 30 May 2019 to ordinary shareholders on the share register at the close of business on 23 April 2019.
($ in cents)
Interim dividend paid per ordinary share
Final dividend per ordinary share
Total dividend per ordinary share
13. PROPERTY, PLANT AND EQUIPMENT
($ in millions)
Cost:
1 January 2017 (restated)
Additions
Disposals
Transfers from assets in the course of construction and reclassifications1
31 December 2017 (restated)
Additions
Disposals
Transfers from assets in the course of construction and reclassifications1
31 December 2018
Accumulated depreciation:
1 January 2017
Charge for the year
Disposals
31 December 2017 (restated)
Charge for the year
Impairment
Disposals
31 December 2018
Net book amount at 31 December 2017
Net book amount at 31 December 2018
2018
8.00
12.00
20.00
2017
21.62
12.00
33.62
Service
equipment,
fixtures and
fittings
(restated) 2
Freehold land
and buildings
Space
segment
Assets in the
course of
construction
20.6
–
–
–
20.6
–
–
–
20.6
(10.5)
(0.5)
–
(11.0)
(0.4)
–
–
359.9
88.5
(226.7)
64.2
285.9
24.4
(84.8)
96.2
321.7
3,652.6
174.9
(99.9)
565.6
4,293.2
0.6
(160.4)
20.9
4,154.3
(289.1)
(60.7)
216.8
(1,615.4)
(267.4)
99.9
(133.0)
(1,782.9)
(69.6)
(300.1)
–
79.3
–
160.2
861.8
351.6
(0.9)
(629.8)
582.7
449.6
(0.4)
(117.1)
914.8
–
–
–
–
–
(1.2)
–
Total
4,894.9
615.0
(327.5)
–
5,182.4
474.6
(245.6)
–
5,411.4
(1,915.0)
(328.6)
316.7
(1,926.9)
(370.1)
(1.2)
239.5
(11.4)
(123.3)
(1,922.8)
(1.2)
(2,058.7)
9.6
9.2
152.9
198.4
2,510.3
2,231.5
582.7
913.6
3,255.5
3,352.7
1 Reclassifications relate to movements between tangible and intangible asset categories throughout the year to align accounting policies across the Group
2. The numbers restated have been discussed in note 2
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
Depreciation of property, plant and equipment is charged using the straight-line method over the estimated useful lives, as follows:
Space segment assets:
Satellites
Other space segment, including ground infrastructure
Fixtures and fittings, and services-related equipment
Buildings
13–15 years
5–12 years
3–15 years
50 years
Freehold land is not depreciated. At 31 December 2018 and 2017, the Group was carrying certain freehold land and buildings with a net book value of $9.2m
(2017: $9.6m). Had they been revalued on a market basis, their carrying amount at 31 December 2018 would have been $32.9m (2017: $30.4m). Market valuation
is based on the Directors’ best estimates.
In 2018 the Group received government grants in relation to the purchase and construction of certain assets. The grants have been deducted from the cost
of the relevant asset to arrive at the carrying amount. Government grants received in 2018 were $2.5m (2017: $5.7m).
14. INTANGIBLE ASSETS
($ in millions)
Cost:
1 January 2017
Additions
Disposals
31 December 2017
Additions
Disposals
Goodwill
Trademarks
Software
781.3
–
–
781.3
–
–
25.5
0.1
–
25.6
–
–
276.3
54.9
(64.2)
267.0
44.8
(12.8)
31 December 2018
781.3
25.6
299.0
(359.2)
–
–
(359.2)
–
–
–
(13.1)
(1.0)
–
(14.1)
(1.0)
–
–
(185.1)
(36.2)
63.9
(157.4)
(39.8)
(6.3)
13.1
Accumulated amortisation:
1 January 2017
Charge for the year
Disposals
31 December 2017
Charge for the year
Impairment
Disposals
31 December 2018
Net book amount at
31 December 2017
Net book amount at
31 December 2018
Terminal
development
and network
access costs
Intellectual
property
Customer
relationships
Other
(restated)
0.7
–
(0.1)
0.6
–
–
0.6
(0.7)
–
0.1
(0.6)
–
–
–
212.6
17.9
(13.8)
216.7
45.4
–
262.1
(116.1)
(12.5)
13.8
(114.8)
(16.4)
–
–
396.1
–
–
396.1
–
–
396.1
(261.0)
(29.1)
–
(290.1)
(25.3)
–
–
61.7
15.9
(3.4)
74.2
7.8
(8.6)
73.4
(16.2)
(4.4)
3.4
(17.2)
(4.3)
(7.0)
2.7
Total
1,754.2
88.8
(81.5)
1,761.5
98.0
(21.4)
1,838.1
(951.4)
(83.2)
81.2
(953.4)
(86.8)
(13.3)
15.8
(359.2)
(15.1)
(190.4)
(0.6)
(131.2)
(315.4)
(25.8)
(1,037.7)
422.1
11.5
109.6
422.1
10.5
108.6
–
–
101.9
106.0
57.0
808.1
130.9
80.7
47.6
800.4
Goodwill represents the excess of consideration paid on an acquisition over the fair value of the identifiable assets, liabilities and contingent liabilities acquired
at the date of acquisition.
Trademarks are being amortised on a straight-line basis over their estimated useful lives, which are between seven and 20 years.
Software includes the Group’s billing system and other internally developed operational systems and purchased software, which are being amortised on a straight-
line basis over its estimated useful life of three to eight years.
The Group capitalises costs associated with the development and enhancement of user terminals and associated network access costs as intangible assets and
amortises these over the estimated sales life of the related services, which range from five to ten years.
Customer relationships acquired in connection with acquisitions are being amortised over the expected period of benefit of between 12 and 14 years, using the
straight-line method.
Other consists of orbital slots, licences, spectrum rights and unallocated launch slots. Orbital slots and licences relate to the Group’s satellite programmes, and
each individual asset is reviewed to determine whether it has a finite or indefinite useful life. Orbital slots are amortised over the useful life of the satellite occupying
them. Amortisation of the GX programme finite life assets commenced when the Inmarsat-5 satellites went operational in December 2015. Unallocated launch
slots are not amortised until allocated to a satellite asset where they are re-classed to Property, Plant and Equipment and depreciated in-line with Group policy
discussed in note 2.
As at December 2018, the Group has no indefinite useful life intangible assets other than Goodwill.
Government grants received in 2018 were $nil (2017: $0.1m).The grants have been deducted from the cost of the relevant asset to arrive at the carrying amount.
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ANNUAL IMPAIRMENT REVIEW: GOODWILL
Impairment reviews of goodwill are performed at the level of the Group’s cash-generating units (‘CGUs’). For the Group, these are considered to be the Maritime,
Enterprise, Aviation, U.S. Government and Global Government business units. The recoverable amount of each CGU has been determined based on value in
use calculations. The key assumptions used by management in these calculations are the cash flow projections, long-term growth rates and discount rates
for each CGU.
The impairment review conducted annually has identified sufficient headroom in the recoverable value of each CGU above their carrying value. A sensitivity
analysis has been undertaken by changing key assumptions used for each CGU. Based on this sensitivity analysis, no reasonably possible change in the
assumptions resulted in the recoverable amount of the CGUs being reduced to their carrying value. We do not anticipate any changes over the next 12 months
that would result in the recoverable amount of the CGUs being reduced to their carrying value.
Key assumptions used to calculate the recoverable amount of the CGUs were as follows:
($ in millions)
Maritime
Enterprise
Aviation
U.S. Government
Global Government
Total Group
Allocated goodwill Pre-tax discount rate Long-term growth rate
215.5
54.8
46.4
50.6
54.8
422.1
8.5%
8.5%
8.5%
8.5%
8.5%
2.0%
2.0%
2.0%
2.0%
2.0%
Cash flow projections
The recoverable amount of each CGU is based on the value in use, which is determined using cash flow projections derived from the most recent financial
budgets and forecasts approved by management covering a five-year period. The short and medium-term cash flows reflect management’s expectations
of future outcomes taking into account past experience, adjusted for anticipated growth from both existing and new business in line with our strategic plans
for each segment of our business. The cash flows also take into consideration our assessment of the potential impact of external economic factors.
Long-term growth rates
A long-term growth rate has been applied to extrapolate the cash flows into perpetuity. The growth rate has been determined using long-term industry growth
rates and management’s conservative expectation of future growth. The long-term growth rates are consistent across each of the CGUs given the similarities in
exposure to economic and competitive conditions.
Discount rates
The discount rates reflect the time value of money and are derived from the Group’s weighted average cost of capital, adjusted for the risk associated with the
CGUs. The risk premium, when compared with the Group discount rate, was consistent across each of the CGUs given the similarities in exposure to economic and
competitive conditions.
15. LEASES
RIGHT OF USE ASSETS
The right-of-use assets for the Group’s property and vehicle leases are presented in the table below.
($ in millions)
Net carrying amount:
1 January 2018
Additions and changes in terms
Impairment
Charge for the year
31 December 2018
Property
Vehicles
Total
75.2
(1.8)
(0.4)
(11.0)
62.0
0.5
0.3
–
(0.4)
0.4
75.7
(1.5)
(0.4)
(11.4)
62.4
One property lease and two vehicle leases expired in the current financial year. The expired contracts were replaced by new leases for identical underlying assets.
In total there were additions to right-of-use assets of $1.8m in 2018. The Group does not hold options to purchase any leased assets for a nominal amount at the
end of the lease term.
The Group expenses short-term leases and low-value assets as incurred which is in accordance with the recognition exemption in IFRS 16. Expenses for short-term leases
and low-value assets were less than $0.1m in 2018. As at 31 December 2018, the Group is committed to less than $0.1m of short-term leases and low-value assets.
The Group received less than $0.1m in relation to income from the subleasing of right-of-use assets.
LEASE LIABILITIES
Lease liabilities are calculated at the present value of the lease payments that are not paid at the commencement date. The Group’s lease liabilities as of
31 December 2018 comprise the transition of existing contracts, as well as contracts entered into during the financial year 2018. The table below presents the
split of these liabilities by category:
($ in millions)
Lease liability non-current
Lease liability current
31 December 2018
Property
Vehicles
59.5
10.1
69.6
0.1
0.3
0.4
Total
59.6
10.4
70.0
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
The average lease term of the Group’s property and vehicle leases is 3.3 and 1.2 years respectively. The maturity profile of the Group’s leases is shown in the
table below.
($ in millions)
Within one year
Between two to five years
Greater than five years
At 31 December 2018
Property
Vehicles
10.1
40.8
18.7
69.6
0.3
0.1
–
0.4
Total
10.4
40.9
18.7
70.0
The table below reconciles the difference between the presentation of operating leases under IAS 17 and IFRS 16 as at 31 December 2017.
($ in millions)
Within one year
Within two to five years
After five years
At 31 December 2017
Lease maturity
under IAS 17
IFRS 16
Differences1
Lease maturity
under IFRS 16
12.7
46.6
29.3
88.6
0.4
(6.7)
4.9
(1.4)
13.1
39.9
34.2
87.2
Other
unrecognised
contractual
commitments2
6.9
40.3
0.4
47.6
IFRS 16 differences are caused by the discounting of cash flows, as well as cash flows for renewal periods being included in lease liability under the new standard
1
2 Other unrecognised contractual commitments relate to the Group’s network service contracts and maintenance contracts, which have varying terms. Under IFRS 16, these do not constitute identified assets and do not
meet the definition of a lease. These contracts continue to be expensed through the income statement
For the year ended 31 December 2018, the weighted average discount rate applied was 3.7%. Interest rates are fixed at the contract date. All leases are on a fixed
repayment basis and no arrangements have been entered into for contingent rental payments.
The total cash flow relating to all lease obligations in 2018 was $12.3m with lease obligations denominated in various currencies. Total lease interest paid was $2.8m.
The Group does not face a significant liquidity risk with regard to its lease liabilities. The Group’s obligations are secured by the lessors’ title to the leased assets for
such leases.
16. INVESTMENTS
($ in millions)
Interest in associates
Other investments
Total investments
At
31 December
2018
At
31 December
2017
17.7
1.1
18.8
15.1
1.1
16.2
Interest in associates represents the Group’s investments which have been treated as associates and have all been accounted for using the equity method of
accounting. Individually, all of the investments in associates are deemed to be immaterial and as a result the associates’ assets, liabilities, revenues and profits
have not been presented.
Other investments represent the Group’s 0.6% investment in Actility S.A. which was made on 5 April 2017 and is accounted for as fair value through profit and loss.
Cash dividends received from the associates for the year ended 31 December 2018 total $1.3m (2017: $2.1m). The Group’s aggregate share of its associates’
profits for the year is $3.9m (2017: $4.0m) and has been recognised in the income statement.
17. CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash in hand, deposits held on call with banks, other short-term highly liquid investments with original maturities of three
months or less, and for the purposes of the cash flow statement also includes bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities
on the balance sheet.
($ in millions)
Cash at bank and in hand
Short-term deposits with original maturity of less than three months
Cash and cash equivalents
At
31 December
2018
At
31 December
2017
143.2
–
143.2
109.9
35
144.9
At 31 December 2018, the Group has $145.7m of cash held in short-term deposits with an original maturity of between three and 12 months (2017: $342.0m).
This amount is presented separately within current assets in the balance sheet.
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Cash and cash equivalents include the following for the purposes of the cash flow statement:
($ in millions)
Cash and cash equivalents
Bank overdrafts
Net cash and cash equivalents
18. TRADE AND OTHER RECEIVABLES
($ in millions)
Current:
Trade receivables
Other receivables
Accrued income
Prepayments
Total trade and other receivables
Non-current:
Prepayments and accrued income
Defined benefit pension asset
Other receivables
Total other receivables
Note
20
At
31 December
2018
At
31 December
2017
143.2
–
143.2
144.9
(0.3)
144.6
At
31 December
2018
At
31 December
2017
(restated)
285.0
222.8
34.9
13.6
25.2
358.7
–
30.9
4.3
35.2
25.4
52.7
30.7
331.6
(0.6)
18.1
–
17.5
The Group applies the simplified approach under IFRS 9 for the impairment of receivables and contract assets. A provisioning matrix based on internal debtor
credit ratings has been used in order to calculate the lifetime loss allowances for each grouping.
Debtors have been grouped based on ageing and each debtor’s internal credit rating. This rating is a measure from A to E (with E being the highest risk of default)
and considers the debtors financial strength, history and magnitude of past defaults, personal credit history with the Group and the associated level of sovereign
and market risk. The information used in assigning ratings is both historical and forward looking as regular contact with debtors is maintained to understand if
there is any additional risk forecast. Specific allowances are made to reflect any additional risk identified.
The table below presents the lifetime expected credit losses for trade receivables within each debtor category. No loss allowance has been recognised for other
receivables and accrued income.
($ in millions)
Internal rating A
Internal rating B
Internal rating C
Internal rating D/E
2018 Total
Carrying value of trade receivables (gross) 1
Lifetime ECL
Specific Allowances
Group Loss Allowance
1 This is presented gross of credit note allowances of $21.2m
66.4
0.7
–
0.7
149.9
3.2
–
3.2
116.6
6.4
16.4
22.8
1.7
1.7
–
1.7
334.6
12.0
16.4
28.4
The Group’s trade and other receivables are stated after impairments. Movements during the year were as follows:
($ in millions)
At 1 January
Charged in the year
Utilised in the year
Released in the year
At 31 December1
2018
12.5
24.5
(2.2)
(6.4)
28.4
2017
13.7
9.7
(4.2)
(6.7)
12.5
1 The maturity of the Group’s provision for uncollectable trade receivables for the year ended 31 December 2018 is $4.2m current, $5.0m between one and 30 days overdue, $8.0m between 31 and 120 days overdue and
$11.2m over 120 days overdue (2017: $0.9m between one and 30 days overdue, $4.8m between 31 and 120 days overdue and $6.8m over 120 days overdue)
The Directors consider the carrying value of trade and other receivables to approximate to their fair value.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
19. INVENTORIES
($ in millions)
Finished goods
Work in progress
Total inventories
The Group’s inventories are stated after allowances for obsolescence. Movements in the allowance during the year were as follows:
At
31 December
2018
At
31 December
2017
50.0
0.7
50.7
33.3
0.6
33.9
At
31 December
2018
At
31 December
2017
11.6
6.2
(2.1)
15.7
12.8
3.9
(5.1)
11.6
($ in millions)
At 1 January
Charged to the allowance in respect of the current year
Released in the year
At 31 December
20. NET BORROWINGS
($ in millions)
Current:
Bank overdrafts
Deferred satellite payments
Ex-Im Bank Facilities
Total current borrowings
Non-current:
Deferred satellite payments
Senior Notes due 2022
– Net issuance discount
Senior Notes due 2024
Ex-Im Bank Facilities
Convertible Bonds due 2023
– Accretion of principal
Total non-current borrowings
Total borrowings
Cash and cash equivalents
Short-term deposits
Net borrowings
At 31 December 2018
At 31 December 2017
Amount
Deferred
financing cost
Net balance
Amount
Deferred
financing cost
Net balance
–
1.0
122.2
123.2
4.4
1,000.0
(3.4)
400.0
386.5
561.6
13.2
2,362.3
2,485.5
(143.2)
(145.6)
–
–
–
–
–
(3.9)
–
(4.2)
(6.5)
(5.4)
–
(20.0)
(20.0)
–
–
–
1.0
122.2
123.2
4.4
996.1
(3.4)
395.8
380.0
556.2
13.2
2,342.3
2,465.5
(143.2)
(145.6)
2,196.7
(20.0)
2,176.7
0.3
3.1
122.2
125.6
5.6
1,000.0
(4.5)
400.0
508.7
549.2
12.4
2,471.4
2,597.0
(144.9)
(342.0)
2,110.1
–
–
–
–
–
(5.1)
–
(4.9)
(14.9)
(6.6)
–
(31.5)
(31.5)
–
–
0.3
3.1
122.2
125.6
5.6
994.9
(4.5)
395.1
493.8
542.6
12.4
2,439.9
2,565.5
(144.9)
(342.0)
(31.5)
2,078.6
EX-IM BANK FACILITIES
The Group has two direct financing agreements with the Export-Import Bank (the ‘Ex-Im Bank Facilities’) of the United States.
The $700.0m facility signed in 2011 was available to be drawn down for four years and is now repayable in equal semi-annual instalments over a further 7.5 years.
This facility will mature in 2023. Drawings under this facility incur interest at a fixed rate of 3.11% for the life of the loan.
The $185.9m facility signed in 2014 was available for two years and is now repayable in equal semi-annual instalments over a further five years and will mature in
2021. Drawings under this facility incur interest at a fixed rate of 1.96% for the life of the loan.
SENIOR NOTES DUE 2022 AND 2024
On 4 June 2014, the Group issued $1.0bn of 4.875% Senior Notes due 15 May 2022. The aggregate gross proceeds were $992.1m, net of $7.9m issuance
discount. On 22 September 2016, the Group issued $400.0m of 6.5% Senior Notes due 1 October 2024.
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SENIOR REVOLVING CREDIT FACILITY
On 16 July 2018, the Group signed a new five-year $750.2m revolving credit facility (‘Senior Revolving Credit Facility’) to replace the previous $500m facility,
on substantially the same terms. Advances under the facility bear interest at a rate equal to the applicable USD LIBOR or, in relation to any loan in euro, EURIBOR,
plus a margin of between 0.7% and 2.0% determined by reference to the ratio of net debt to EBITDA. At 31 December 2018, there were no drawings under the
Senior Revolving Credit Facility.
CONVERTIBLE BONDS
On 9 September 2016, the Group issued $650m of 3.875% Convertible Bonds due 9 September 2023. The bonds are convertible into ordinary shares of the
Company and have a 3.875% pa coupon payable semi-annually and a yield to maturity of 3.681%. The bond is a net share settled instrument, meaning upon
conversion the Group will repay the principal of $650m in cash and satisfy the remaining conversion value in ordinary shares (if the market value of the Company’s
shares at settlement date exceeds the conversion price of $13.41 and the option is exercised by the Bondholder). The Bond is convertible from 20 October 2016
and there is a call option after 2 October 2021 based on conditions set out within the Bond agreement. In the event of a change of control in ownership of the
Group, the conversion price will be adjusted from $13.41 to the undisturbed share price prior to the offer.
Upon issuance, the instrument was bifurcated between a cash debt component and a derivative liability component, being $545.5m and $104.5m respectively.
Issue costs totalled $8.1m.
($ in millions)
Fair value of Convertible Bonds issued
Cost of issue
Net proceeds
Derivative liability component
Debt liability component net of issue costs
At inception
650.0
(8.1)
641.9
(104.5)
537.4
The debt component meets the definition of net borrowings and over the term of the bond will accrete up to the principal value of $650.0m with the cost of that
accretion recognised in net financing costs.
($ in millions)
Debt liability component at date of issue net of issue costs
Cumulative amortisation of debt issue costs to 31 December
Cumulative interest charged to 31 December
Cumulative coupon interest to 31 December
Debt liability component at 31 December
2018
537.4
2.7
87.5
(58.2)
569.4
2017
537.4
1.5
49.1
(33.0)
555.0
The derivative liability represents the value of the conversion rights, call option and other embedded features associated with the instrument and is accounted for
at fair value through profit and loss. It is excluded from net borrowings with the mark-to-market movements recognised in net financing costs as this represents
the movement in fair value of the derivative component of the bond.
($ in millions)
Fair value of debt host liability component at 31 December
Fair value of derivative liability component at 31 December
Fair value of Convertible Bond at 31 December
2018
545.8
148.8
694.6
2017
561.6
125.7
687.3
EFFECTIVE INTEREST RATE
The interest charged for the year is calculated by applying an effective interest rate of 6.8% to the liability component. The total interest charge is split between
the coupon interest charge of $58.2m and accreted interest of $29.3m, with both charges recognised in net financing costs in the income statement. The coupon
interest is paid semi-annually in March and September with the liability recognised in accrued interest (note 20). Similarly, the bonds accrete semi-annually in
March and September with the liability recognised in borrowings.
The Directors consider the carrying value of borrowings, other than the Senior Notes, Convertible Bonds and the Ex-Im Bank 2011 Facility to approximate to their
fair value (see note 31). The effective interest rates at the balance sheet dates were as follows:
Effective interest rate %
Bank overdrafts
Senior Notes due 2022
Senior Notes due 2024
Ex-Im Bank 2011 Facility
Ex-Im Bank 2014 Facility
Deferred satellite payments
Convertible Bonds due 2023
2018
7.5%
5.1%
6.7%
4.4%
3.7%
1.7%
6.8%
2017
6.5%
4.9%
6.5%
3.1%
3.6%
3.0%
6.8%
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
Reconciliation of movements in liabilities to cash flows arising from financing activities:
($ in millions)
Short-term borrowings
Long-term borrowings
Convertible Bond2
Total liabilities from
financing activities
($ in millions)
Short-term borrowings
Long-term borrowings
Convertible Bond2
Total liabilities from
financing activities
At 31
December
2016
Drawdowns
and
repayments
Cash flows
Transfers1
Interest
expense
Arrangement
cost
amortisation
Movement in
Fair Value
Other cash
movements
At
31 December
2017
103.8
1,906.5
674.9
(80.8)
78.4
–
(3.1)
(92.0)
(25.1)
2,685.2
(2.4)
(120.2)
105.1
(105.1)
–
–
3.2
90.7
37.5
131.4
–
6.4
1.1
7.5
–
–
(7.7)
(2.6)
–
–
125.6
1,884.9
680.7
(7.7)
(2.6)
2,691.2
At 31
December
2017
Drawdowns
and
repayments
Cash flows
Transfers1
125.6
1,884.9
680.7
(122.2)
–
–
(3.5)
(87.6)
(25.3)
2,691.2
(122.2)
(116.4)
122.2
(122.2)
–
–
Interest
expense
Arrangement
cost
amortisation
Movement in
Fair Value
Other cash
movements
3.4
87.1
38.4
–
11.3
1.2
–
–
23.2
(2.3)
(0.6)
–
At 31
December
2018
123.2
1,772.9
718.2
128.9
12.5
23.2
(2.9)
2,614.3
1 Transfers comprise debt maturing from long-term to short-term borrowings
2
Includes derivative liability component
21. TRADE AND OTHER PAYABLES
($ in millions)
Current:
Trade payables
Other taxation and social security payables
Other payables
Accruals
Deferred income1
Total trade and other payables
Non-current:
Other payables
Defined benefit pension and post-employment liability
Total other payables
At
31 December
2018
At
31 December
2017
(restated)
134.6
6.3
5.1
95.1
304.3
545.4
2.5
11.4
13.9
210.5
6.2
4.5
117.4
295.8
634.4
7.5
17.5
25.0
1 The deferred income balance includes $206.7m (2017: $206.8m) relating to payments received from Ligado Networks. During the current financial year, $0.1m (2017: $2.0m) of these payments were released to
the income statement
The Directors consider the carrying value of trade and other payables to approximate to their fair value.
DEFERRED INCOME
Deferred income represents obligations to transfer goods or services to a customer for which the entity has received consideration and is therefore considered
a contract liability. The group has recognised the following movements in deferred income throughout the year
($ in millions)
At January
Contract liability raised in the year
Contract liability utilised in the year
At December
2018
295.8
297.8
(289.3)
304.3
2017
285.7
289.6
(279.5)
295.8
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22. PROVISIONS
Movements in the current portion of the Group’s provisions were as follows:
($ in millions)
At 1 January 2017
Charged in respect of current year
Utilised in current year
At 31 December 2017
Charged in respect of current year
Utilised in current year
At 31 December 2018
Current
provisions
Non-current
provisions
1.9
21.8
(7.5)
16.2
10.1
(12.0)
14.3
2.8
6.9
–
9.7
2.0
(0.6)
11.1
Total
4.7
28.7
(7.5)
25.9
12.1
(12.6)
25.4
The Group’s current provisions mainly consist of a $7.4m (2017: nil) contract obligation and a $5.1m (2017: $16.0m) restructuring provision. The associated cash
flows in respect of both provisions outstanding at 31 December 2018 are expected to occur within one year.
23. CURRENT AND DEFERRED TAXATION
The current tax asset of $4.6m and current tax liability of $168.5m (2017: $13.8m and $130.2m, respectively), represent the tax payable in respect of current and
prior periods less amounts paid.
RECOGNISED DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax assets and liabilities (prior to the offsetting of balances within the same jurisdiction as permitted by IAS 12) for the year are shown below:
At 31 December 2018
At 31 December 2017 (restated) 1
($ in millions)
Assets
Liabilities
Property, plant and equipment and intangible assets
Borrowing costs capitalised in the cost of qualifying assets
Other
Pension and post-employment benefits
Share options
Tax losses
Net deferred tax liabilities
(35.1)
–
(9.9)
–
(3.8)
(25.8)
(74.6)
222.8
44.2
0.9
3.6
–
–
271.5
Net
187.7
44.2
(9.0)
3.6
(3.8)
(25.8)
196.9
Assets
Liabilities
(25.8)
–
(11.4)
(0.2)
(1.5)
(20.4)
(59.3)
230.9
27.8
2.5
1.1
–
–
262.3
Net
205.1
27.8
(8.9)
0.9
(1.5)
(20.4)
203.0
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the
deferred income taxes relate to the same fiscal authority.
The value of deferred income tax assets and liabilities included in the net deferred income tax balance is shown below:
($ in millions)
Deferred tax assets
Deferred tax liabilities
Net deferred tax liabilities
1 Comparatives have been restated as a result of initial application of IFRS 15 and the change in accounting policy for unallocated launch slots discussed in note 2
At
31 December
2018
At
31 December
2017 (restated) 1
(52.5)
249.4
196.9
(35.4)
238.4
203.0
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
Movement in temporary differences during the year:
($ in millions)
At
1 January
2018
Recognised
in income
Recognised
in equity
Recognised
in other
comprehensive
income
At
31 December
2018
Property, plant and equipment and intangible assets
205.1
(17.4)
27.8
(8.9)
0.9
(1.5)
(20.4)
203.0
At
1 January
2017
165.7
33.7
(9.2)
(2.0)
(3.8)
(15.4)
169.0
Borrowing costs capitalised in the cost of qualifying assets
Other
Pension and post-employment benefits
Share-based payments
Tax losses
Total
($ in millions)
Property, plant and equipment and intangible assets
Borrowing costs capitalised in the cost of qualifying assets
Other
Pension and post-employment benefits
Share-based payments
Tax losses
Total
Total unprovided deferred tax assets:
($ in millions)
Unused income tax losses
Unused capital losses
Total
16.4
(0.1)
(0.1)
(1.3)
(5.4)
(7.9)
–
–
–
(0.3)
(1.0)
–
(1.3)
–
–
–
3.1
–
–
3.1
187.7
44.2
(9.0)
3.6
(3.8)
(25.8)
196.9
Recognised
in income
Recognised
in equity
Recognised
in other
comprehensive
income
At
31 December
2017 (restated)
39.4
(5.9)
0.3
0.6
2.1
(5.0)
31.5
–
–
–
–
0.2
–
0.2
–
–
–
2.3
–
2.3
205.1
27.8
(8.9)
0.9
(1.5)
(20.4)
203.0
At
31 December
2018
At
31 December
2017
(3.3)
(17.7)
(21.0)
(2.4)
(23.0)
(25.4)
Deferred tax assets are recognised to the extent there is probable utilisation of the underlying temporary difference using existing tax laws and forecasts of future
taxable profits based on Board-approved business plan forecasts.
Unprovided deferred tax assets in respect of unused income tax losses of $13.2m (2017: $9.1m) include $6.9m of losses that will expire if not used within 5 years,
$1.4m of losses that will expire if not used within 20 years and $4.8m of losses with no expiry date. The unused capital losses of $104.1m (2017: $121.0m) have
no expiry date.
Overseas dividends received are largely exempt from UK tax but may be subject to foreign withholding taxes. The unrecognised gross temporary difference in
respect of the unremitted earnings of those overseas subsidiaries affected by such taxes is $nil (2017: $nil), resulting in a deferred tax liability of $nil
(2017: $nil).
The unrecognised gross temporary difference in respect of the investments in associates is $1.7m (2017: $1.4m), resulting in an unrecognised deferred tax liability
of $0.5m (2017: $0.4m).
The Budget announced by the Chancellor on 16 March 2016 included changes to the main rates of corporation tax for UK companies. The standard rate of
corporation tax reduced to 19% with effect from 1 April 2017, and there will be a further reduction to 17% from 1 April 2020. The deferred tax assets and liabilities at
the balance sheet date are calculated taking account of the forecast impact of the reduction of the corporation tax rate from 20% to the substantively enacted
rate of 17%.
On 22 December 2017 the US President signed the Tax Cuts and Jobs Act, which included changes to the Federal tax rate. The Federal tax rate reduced from
35% to 21% with effect from 1 January 2018. The deferred tax assets and liabilities at the balance sheet date are calculated taking account of this reduction of the
Federal tax rate.
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24. RECONCILIATION OF CASH GENERATED FROM OPERATIONS
Reconciliation of profit for the year to cash generated from operations:
($ in millions)
Profit for the year
Adjustments for:
Taxation charge
Financing costs
Financing income
Change in fair value of derivative
Operating profit
Depreciation and amortisation
Impairment loss
Loss on disposal of assets
Share of profit of associates
EBITDA
Dividends received from associates
Non-cash employee benefit costs
Non-cash foreign exchange movements
Changes in net working capital:
Increase in restricted cash1
(Increase)/decrease in trade and other receivables
Decrease/(Increase) in inventories
Increase/(decrease) in trade and other payables
Increase in provisions
Cash generated from operations
2018 2017 (restated)
125.0
185.0
42.9
105.8
(8.2)
23.2
288.7
468.3
14.5
2.5
(3.9)
770.1
1.3
9.8
(6.2)
0.3
(56.1)
(16.8)
10.8
0.2
713.4
48.8
105.9
(7.8)
(7.7)
324.2
411.8
–
7.3
(4.0)
739.3
2.1
16.2
1.5
–
(38.3)
0.4
54.0
14.6
789.8
1 At 31 December 2018, the Group had $2.5m (2017: $2.8m) of restricted cash on the balance sheet, the majority of which are funds held in escrow in relation to the disposal of SkyWave
25. SHARE CAPITAL
($ in millions)
Authorised:
1,166,610,560 ordinary shares of €0.0005 each (2017: 1,166,610,560)
Allotted, issued and fully paid:
462,617,429 ordinary shares of €0.0005 each (2017: 457,659,212)
At
31 December
2018
At
31 December
2017
0.7
0.7
0.3
0.3
0.7
0.7
0.3
0.3
During the year ended 31 December 2018, a total of 897,621 (2017: 1,005,403) ordinary shares of €0.0005 each were allotted and issued by the Company
under its employee share schemes. In addition, 3,015,936 ordinary shares and 1,044,660 ordinary shares (2017: 2,973.025 and 1,617,973) of €0.0005 each
were allotted and issued by the Company as part of the final 2017 and interim 2018 scrip dividend offering respectively. No shares were repurchased during 2018
or 2017.
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Inmarsat plc | Annual Report and Accounts 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
26. EMPLOYEE SHARE OPTIONS AND AWARDS
The Group operates a number of share plans used to award options and shares to Directors and employees as part of their remuneration packages. In 2014,
the Inmarsat plc Executive Share Plan (‘ESP’) was approved by shareholders and replaced the previous Executive Share Plans. Share awards since May 2014
have been made in accordance with the new share plan rules. Under the ESP, the Company can grant Bonus Share Awards (‘BSA’) and Performance Share
Awards (‘PSA’). The costs of these awards are recognised in the income statement (see note 7) based on the fair value of the awards on the grant date. Further
information on how these are calculated can be found on the next page and under ‘Employee benefits’ in the principal accounting policies on page 125.
INMARSAT EMPLOYEES’ SHARE OWNERSHIP PLAN TRUST
Under the legacy Staff Value Participation Plan (the ‘2004 Plan’), shares were transferred to the Inmarsat Employees’ Share Ownership Plan Trust (the ‘Trust’)
(resident in Jersey). These options have now vested and expired, but some remaining shares are still held by the Trust and can be used to satisfy vesting under
other existing share plans.
A summary of all share activity within the Trust as at 31 December 2018, is as follows:
($ in millions)
Balance at 1 January 2018
Exercised
Balance at 31 December 2018
Available at 31 December 2018
Shares
available for
grant
77,276
−
77,276
77,276
BONUS SHARE AWARD
Awards have been made regularly under the BSA to Executive Directors and certain members of senior management. Further information on awards granted
to Directors can be found in the Remuneration report on pages 81–101.
Awards are made in the form of a conditional allocation of shares. The performance conditions attached to the BSA are non-market-based performance
conditions. Any dividends paid by the Company will accrue and be added as additional shares upon vesting.
Under the rules of the BSA, the Remuneration Committee has the discretion to satisfy the awards using cash instead of shares. It is, however, the intention to
generally satisfy the awards using newly-issued shares.
As the BSA provides non-contributory share awards that have an entitlement to dividends and no market-based performance conditions attached, the fair value
of the awards is the value of the grant. This is due to the fact that regardless of the market price at the time the award of shares is made, the total value of shares
to be awarded (excluding shares added in lieu of dividends) will not increase, although may decrease subject to performance conditions not being achieved,
and/or discretion by the Remuneration Committee being exercised.
PERFORMANCE SHARE AWARD
The PSA makes regular annual awards to Executive Directors and certain members of senior management. Further information on awards granted to Directors
can be found in the Remuneration Report. Participants are entitled to receive the value of any dividends that are paid between the date of award and the date
of vesting in the form of additional shares. Any such additional shares are only added to the number of shares which will vest subject to performance conditions
being satisfied.
The PSA shares will not ordinarily be transferred to participants until the third anniversary of the award date. The transfer of shares is dependent upon performance
conditions being satisfied over the three consecutive financial years starting in the financial year the award date falls. The rules of the PSA provide that the
Remuneration Committee has the discretion to satisfy the awards using cash instead of shares. It is, however, the intention to satisfy the awards using newly-
issued shares at the end of the relevant three-year period. Executive Directors are required, for the PSA award made in 2017 onwards, to hold a net number
of shares after deduction of tax for a further two-year period after the expiry of the three-year performance period.
The performance conditions for the Executive Directors for the PSA have been based on the Group’s Total Shareholder Return (‘TSR’) relative to constituents
of the FTSE 50-150 (excluding investment trusts), and on EBITDA growth measured over a three-year period. The vesting schedule is structured so that 30%
of the reward is linked to the performance of TSR for Executive Directors (for any participants below Executive Director level this is linked to revenue growth over
the three-year period of the awards), 30% is linked to EBITDA and 40% is linked to strategic objectives set out prior to the grant date of the scheme. The market-
based performance condition has been incorporated into the fair value. The proposed new Remuneration Policy has new performance measures to be used
for the 2019 PSA awards which will be made to the Executive Directors.
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A Stochastic model has been used to value the TSR element attached to 30% of the Executive Directors’ awards, for all other elements a Black-Scholes model
has been used. The fair values and the assumptions used in the calculation of PSA awards vesting or due to vest in 2019 or after are presented in the table below.
Volatility has been calculated taking account of the historical return index (the share price plus dividends reinvested) over a period commensurate with the
reminder of the performance period at grant.
Grant date
Grant price
Market price at date of grant
Exercise price
Bad leaver rate
Vesting period
Volatility
Fair value per share option (Executive Director level)
Fair value per share option (below Executive Director level)
Performance Share Awards
12 March 2018 22 March 2017 23 March 2016
£4.33
£4.10
nil
12%
3 years
33.1%
£1.64
£4.10
£7.62
£7.63
nil
12%
3 years
28.6%
£4.43
£7.63
£9.30
£9.43
nil
12%
3 years
22.5%
£4.39
£9.43
Both the BSA and PSA share awards expire 10 years after date of grant or such shorter period as the Remuneration Committee may determine before the
grant of an award. For share awards outstanding at the period end the weighted average of the remaining contractual life for the BSA and PSA share awards at
31 December 2018 is 1.6 and 1.5 years, respectively.
UK SHARESAVE SCHEME AND INTERNATIONAL SHARESAVE PLAN
The UK Sharesave Scheme is an approved HM Revenue and Customs scheme. A grant made in May 2018 with an option price of £3.01 (reflecting the maximum
discount permitted of 20%) will mature in July 2021. A grant made in June 2017 with an option price of £6.04 (reflecting the maximum discount permitted
of 20%) will mature in August 2020.
The International Sharesave Plan mirrors the operation of the UK Sharesave Scheme as closely as possible. Participants are given either the opportunity
to receive options in the same way as the UK Sharesave Scheme, or the spread between the share price at the date of exercise and the grant price, delivered
(at the Company’s discretion) in cash or shares. It is the Company’s intention to satisfy the awards using shares, some of which are held by the Trust and some
of which will be newly-issued. A grant made in May 2018 with an option price of £3.01 (reflecting the maximum discount permitted of 20%) will mature in
August 2021. A grant made in June 2017 with an option price of £6.04 (reflecting the maximum discount permitted of 20%) will mature in August 2020.
Options under the UK Sharesave Scheme and International Sharesave Plan expire after a maximum of 3.5 years following the initial savings payments having been
made. The weighted average of the remaining contractual life for the current grant of the UK Sharesave Scheme and International Sharesave Plan at 31 December
2018 is 2.4 and 2.2 years respectively for each plan.
EMPLOYEE STOCK PURCHASE PLAN
The Employee Stock Purchase Plan (‘ESPP’) is for U.S. and Canadian employees to purchase the Company’s stock at a 15% discount using funds accumulated
from monthly contributions. A grant made under the scheme in December 2015 with an option price of £9.22 (reflecting the maximum discount permitted of 15%)
matured in March 2018. A grant made under the scheme in June 2017 with an option price of £7.16 (reflecting the maximum discount permitted of 15%) will mature
in July 2019. A grant made under the scheme in May 2018 with an option price of £3.03 (reflecting the maximum discount permitted of 15%) will mature in June
2020. The weighted average of the remaining contractual life for the ESPP schemes as at 31 December 2018 is 1.4 years.
Options under the UK Sharesave Scheme, International Sharesave Plan and ESPP have been valued with a Black-Scholes model using the following assumptions:
Grant date
Market price at date of grant
Exercise price
Bad leaver rate
Vesting period
Volatility
Dividend yield assumption
Risk-free interest rate
Fair value per option
Sharesave
Scheme
(UK and
International)
30 May 2018
Sharesave
Scheme
(UK and
International)
6 June 2017
Sharesave
Scheme
(UK and
International)
30 June 2016
ESPP
30 May 2018
ESPP
6 June 2017
£3.63
£3.01
3% pa
£8.43
£6.04
3% pa
£8.05
£5.68
3% pa
£3.63
£3.03
3% pa
£8.43
£7.16
3% pa
36 months
36 months
36 months
25 months
25 months
32.7%
6.8%
0.7%
£0.66
27.9%
24.6%
5.1%
0.1%
£1.93
4.5%
0.1%
£1.85
35.7%
6.8%
0.6%
£0.68
32.7%
5.0%
0.1%
£1.61
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
UK SHARE INCENTIVE PLAN
The UK Share Incentive Plan (‘SIP’) has made several awards and is an approved HM Revenue and Customs scheme. The last award was made in 2010 and as
the SIP holding period has passed, the shares can be transferred to participants at any time free of tax.
A summary of share awards activity as at 31 December 2018 is as follows:
Balance at 1 January 2018
Granted/allocated
Forfeited/lapsed
Exercised/sold/transferred
Balance at 31 December 2018
Available at 31 December 2018
Exercise price per share
SIP (UK)
185,941
–
–
BSA
PSA
Total
2,813,188
1,479,323
4,478,452
2,260,801
1,058,347
3,319,148
(311,087)
(423,705)
(734,792)
(27,298)
(748,608)
(149,013)
(924,919)
158,643
4,014,294
1,964,952
6,137,889
158,643
n/a
–
nil
158,643
–
nil
A summary of share option activity as at 31 December 2018 and the weighted average exercise price per award is as follows:
Balance at 1 January 2018
Granted/allocated
Forfeited/lapsed
Exercised
Sharesave (UK)
Weighted
average
exercise price
Sharesave
(International)
Weighted
average
exercise price
905,856
1,824,319
(886,896)
–
£5.86
£3.01
£5.60
–
708,730
1,332,687
(563,125)
–
£5.86
£3.01
£5.83
–
Weighted
average
exercise price
£8.11
£3.09
£7.65
–
ESPP
105,347
202,845
(102,951)
–
Total
1,719,933
3,359,851
(1,552,972)
–
Balance at 31 December 2018
1,843,279
£3.16
1,478,292
£3.30
205,241
£3.38
3,526,812
Exercisable at 31 December 2018
–
–
–
–
–
–
–
27. RESERVES
Cash flow hedge reserve:
($ in millions)
Balance at 1 January
Loss recognised on cash flow hedges:
Forward exchange contracts
Losses on cash flow hedges capitalised to Tangible Assets:
Forward exchange contracts
Balance at 31 December
2018
(7.7)
2017
(23.3)
(5.2)
14.1
8.9
(4.0)
1.5
(7.7)
There are no gains and losses reclassified from equity included within the income statement for the period ended 31 December 2018 (2017: nil). Gains and losses
relating to the effective portion of cash flow hedges are recognised in other comprehensive income and accumulated in the cash flow hedge reserve. When a
hedged item is recognised in the income statement the cumulative deferred gain or loss accumulated in other comprehensive income and the cash flow hedge
reserve is reclassified to the income statement. When a hedged item is recognised as a non-financial asset or liability in the balance sheet the accumulated gain
or loss is removed from the cash flow hedge reserve and included directly in the initial cost of the asset or liability.
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28. EARNINGS PER SHARE
Earnings per share for the year ended 31 December 2018 has been calculated based on profit attributable to equity holders for the year and the weighted average
number of ordinary shares in issue (excluding shares held by the Employee Benefit Trust).
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all potentially dilutive ordinary shares.
These represent share options and awards granted to employees under the employee share plans. The convertible bonds due 2023 could potentially dilute basic
earnings per share in the future, however these shares were not included in the calculation of diluted earnings per share because they were anti-dilutive in the
period, as the contingent conditions associated to the bond had not been met.
($ in millions)
Profit attributable to equity holders of the Company
Profit attributable to equity holders for diluted earnings per share
(millions)
Weighted average number of ordinary shares in issue
Potentially dilutive ordinary shares
Weighted average number of ordinary shares for diluted earnings per share
($ per share)
Basic earnings per share
Diluted earnings per share
2018 2017 (restated)
124.2
124.2
184.4
184.4
2018 2017 (restated)
460.3
7.1
467.4
454.8
5.1
459.9
2018 2017 (restated)
0.27
0.27
0.41
0.40
Adjusted earnings per share
Adjusted earnings per share for the year ended 31 December 2018 has been calculated based on profit attributable to equity holders adjusted for the impact of
the movement in the fair value of the conversion liability component of the 2023 convertible bonds and the post-tax impact of restructuring costs (2017 only).
($ in millions)
Profit attributable to equity holders of the Company
Adjustment for:
(Decrease)/Increase in fair value of conversion of the liability component of 2023 convertible bonds
Restructuring costs (post-tax)
Adjustable profit attributable to equity holders of the Company
(millions)
Weighted average number of ordinary shares in issue
Potentially dilutive ordinary shares
Weighted average number of ordinary shares for diluted earnings per share
($ per share)
Basic earnings per share
Diluted earnings per share
2018 2017 (restated)
124.2
184.4
23.2
–
147.4
(7.7)
16.1
192.8
2018 2017 (restated)
460.3
7.1
467.4
454.8
5.1
459.9
2018 2017 (restated)
0.32
0.32
0.42
0.42
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
29. PENSIONS AND POST-EMPLOYMENT BENEFITS
The Group operates pension schemes in each of its principal locations. The Group’s pension plans are provided through both defined benefit schemes and defined
contribution arrangements.
The Group operates defined benefit pension schemes in the United Kingdom, regulated by the Pensions Regulator, and The Netherlands. The Group’s principal
defined benefit pension plan is the Inmarsat Global scheme, which is a UK funded scheme with assets held in a separate fund administered by a corporate trustee;
the scheme is closed to new employees and the Company closed the defined benefit plan to future accruals during 2018. The trustee is required by law to act in
the interest of the fund and of all relevant stakeholders in the scheme. The trustees of the pension schemes are responsible for the investment policy with regards
to the assets of the fund.
The Group is required to ensure that the plan is fully funded where the future liabilities for benefits are covered by the fund’s assets. The size of the asset that
can be recognised as a result of a pension surplus should not exceed the recoverable amount and is restricted to the asset ceiling per IAS 19.
The Inmarsat Global defined benefit plan was valued using the projected unit credit method with the valuation undertaken by professionally qualified and
independent actuaries as at 31 December 2018. The results of the valuation, which have been updated for any material transactions and material changes in
circumstances (including changes in market prices and interest rates) up to 31 December 2018, are set out below. There are no guaranteed minimum pension
(‘GMP’) benefits held under the scheme and there was therefore no impact to the liability as a result of High Court ruling on 26 October 2018.
There have been no plan amendments, curtailments or settlements since the previous year end that we have been made aware of. The plan closed to future
DB accrual with effect from 1 April 2017, and a curtailment gain (arising from the break in salary link for active members) was reflected in the 2017 year-end
accounting disclosures.
The Group also provides post-employment benefits for some of its employees. The Group’s principal scheme is the Inmarsat Global post-retirement healthcare
benefit scheme, which is the provision of healthcare to retired employees (and their dependants) who were employed before 1 January 1998. Employees who have
10 years of service at the age of 58 and retire are eligible to participate in the post-retirement healthcare benefit plans. Membership of this plan is multinational,
although most staff are currently employed in the UK. The plans are self-funded and there are no plan assets from which the costs are paid. The cost of providing
these benefits is actuarially determined and accrued over the service period of the active employee groups. The Group’s post-retirement medical liability is
capped at CPI plus 1%.
Schemes denominated in local currencies are subject to fluctuations in the exchange rate between US Dollars and local currencies.
The primary risk to which the Inmarsat Global defined benefit plan exposes the Group is the risk arising through a mismatch between the plan’s assets and its
liabilities. This is primarily made up of a number of strategic investment risks. The key strategic investment risks inherent in the current investment strategy
are as follows:
› market risk (the risk that investment returns on assets are lower than assumed in the actuarial valuation, thereby resulting in the funding level being lower
than expected)
› interest rate risk (the risk that the assets do not move in line with the value placed on the liabilities in response to changes in interest rates)
› inflation risk (similar to interest rate risk but concerning inflation)
› credit risk (the risk that payments due to corporate bond investors may not be made)
› active management risk (the risk that active managers underperform the markets in which they invest, resulting in lower-than-expected investment returns) and
› currency risk (the risk that currency market movements adversely impact investment returns)
In addition to the investment-related risks, the plan is also subject to the risk that members live longer than expected, or that the financial assumptions used in
valuing the liabilities are not borne out in practice. This could lead to unexpected contributions from the Group being required to meet the benefit payments due.
The principal actuarial assumptions used to calculate the Group’s pension and post-employment benefits liabilities under IAS 19 are:
Weighted average actuarial assumptions:
Discount rate
Future salary increases
Medical price inflation
Future pension increases
At
31 December
2018
At
31 December
2017
2.9%
2.4%
3.2%
2.9%
2.6%
2.3%
3.2%
2.9%
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Mortality assumptions have been updated to reflect experience and expected changes in life expectancy. The average life expectancy assumptions for the
Company’s pension and post-employment benefits liabilities are as follows:
Male current age 65
Female current age 65
Life
expectancy
2018
Life
expectancy
2017
88.2
89.4
88.8
90.0
Mortality assumptions used are consistent with those recommended by the individual scheme actuaries and reflect the latest available tables, adjusted for the
experience of the Group where appropriate. For the Inmarsat Global defined benefit pension scheme and the Inmarsat Global post-retirement healthcare benefits
for 2018, mortality has been assumed to follow the S2PA tables with -1 year age rating for males and CMI 2017 improvement with a long-term trend of 1.75% pa.
Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, expected salary increase, mortality and healthcare
cost trend rates. The sensitivity analysis below is for the Group’s principal pension and post-employment benefits schemes, and has been determined based
on reasonable possible changes of the assumptions occurring at the end of the reporting period assuming that all other assumptions are held constant.
Inmarsat Global defined benefit scheme:
Change in assumption ($ in millions)
Increase in discount factor of 0.25%
Decrease in discount factor of 0.25%
Increase in inflation of 0.25%
Decrease in inflation of 0.25%
Mortality: -2 years for males and -1 year for females
Inmarsat Global post-retirement healthcare benefit scheme:
Change in assumption ($ in millions)
Increase in discount factor of 0.5%
Increase in inflation of 0.5%
Increase in medical price inflation trend rate of 1%
Decrease in medical price inflation trend rate of 1%
Impact on
benefit
obligation
increase/
(decrease)
Impact on
projected
pension cost
increase/
(decrease)
(4.5)
4.8
4.8
(4.5)
3.1
(0.2)
0.2
0.2
(0.1)
0.1
Impact on
benefit
obligation
increase/
(decrease)
Impact on
service cost
increase/
(decrease)
(0.7)
0.8
1.6
(1.3)
–
–
0.1
–
In reality, there is an expectation of inter-relationships between the assumptions, for example, between discount rate and inflation. The above analysis does not
take the effect of these inter-relationships into account.
Amounts recognised in the balance sheet are:
($ in millions)
Present value of funded defined benefit obligations (pension)
Present value of unfunded defined benefit obligations (pension)
Present value of unfunded defined benefit obligations (post-employment benefits)
Fair value of defined benefit assets
Net defined benefit asset/(liability) recognised in the balance sheet
The above net liability is recognised in the balance sheet as follows:
($ in millions)
Defined benefit pension asset
Defined benefit pension and post-employment liability
At
31 December
2018
At
31 December
2017
(96.3)
(0.5)
(9.9)
126.2
19.5
(126.5)
(0.5)
(15.9)
143.5
0.6
At
31 December
2018
At
31 December
2017
30.9
(11.4)
18.1
(17.5)
Note
18
21
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
Analysis of the movement in the present value of the defined benefit obligations is as follows:
($ in millions)
At 1 January 2017
Current service cost
Past service cost1
Interest cost
Remeasurement gains:
Actuarial gains arising from changes in financial assumptions
Foreign exchange loss
Benefits paid
Contributions by pension participants
At 31 December 2017
Current service cost
Past service cost1
Interest cost
Remeasurement gains:
Actuarial gains arising from changes in demographic assumptions
Actuarial gains arising from changes in financial assumptions
Change in experience adjustment
Foreign exchange loss
Benefits paid
Contributions by pension participants
At 31 December 2018
Analysis of the movement in the fair value of the assets of the defined benefit pension plans is as follows:
($ in millions)
At 1 January
Interest income
Remeasurement gains/(losses):
Experience return on plan asset (excluding interest income)
Actuarial (loss)/gains arising from changes in financial assumptions
Contributions by employer
Contributions by pension participants
Benefits paid
Expenses paid (included in service cost)
Foreign exchange gain/(loss)
At 31 December
Defined benefit
pension plan
Post-
employment
benefits
136.3
1.6
(4.1)
3.6
(2.6)
11.3
(19.5)
0.4
127.0
1.0
–
3.1
(3.8)
(10.0)
(6.4)
(6.0)
(8.3)
0.2
96.8
2018
143.5
3.4
(6.2)
–
0.8
0.2
(8.1)
(0.4)
(7.0)
126.2
16.7
0.4
–
0.5
(3.3)
1.9
(0.3)
–
15.9
0.4
–
0.4
(5.0)
(0.8)
0.1
(0.8)
(0.3)
–
9.9
2017
140.0
3.7
7.2
(0.4)
1.0
0.3
(19.6)
(0.4)
11.7
143.5
1 The Group Defined Benefit Pension Plan closed to further benefit accrual on 31 March 2017 and all former active members have now become deferred members. This curtailment has resulted in a past service credit
and decrease to the defined benefit obligation in 2017
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Amounts recognised in the income statement in respect of the plans are as follows:
($ in millions)
Current service cost
Past service gain
Net interest (income)/expense
Foreign exchange (gain)/loss
2018
2017
Defined
benefit
pension plan
Post-
employment
benefits
Defined
benefit
pension plan
Post-
employment
benefits
1.4
–
(0.3)
1.0
2.1
0.4
–
0.4
(0.8)
–
2.0
(4.1)
(0.1)
(0.4)
(2.6)
0.4
0.0
0.5
1.9
2.8
Current service cost is included within employee benefit costs (note 7). The net financing costs together with foreign exchange gains and losses are included within
interest payable (note 9).
Amounts recognised in the statement of comprehensive income in respect of the plans are as follows:
($ in millions)
Actuarial gains arising from changes in demographic assumptions
Actuarial gains arising from changes in financial assumptions
Actuarial gains arising from changes in experience adjustment
Return on plan asset (excluding interest income)
Remeasurement of the net defined benefit asset and liability
The assets held in respect of the Group’s defined benefit schemes were as follows:
Equities
Cash
Bonds
Other
Fair value of scheme assets
2018
2017
Defined
benefit
pension plan
Post-
employment
benefits
Defined
benefit
pension plan
Post-
employment
benefits
(3.8)
(10.0)
(6.4)
6.2
(14.0)
(5.0)
(0.8)
0.1
–
(5.7)
–
(2.2)
–
(7.2)
(9.4)
–
(3.3)
–
–
(3.3)
At 31 December 2018
At 31 December 2017
Value
($ in millions)
Percentage
of total plan
assets
Value
($ in millions)
Percentage
of total plan
assets
10.3
0.4
87.3
28.2
126.2
8.2%
0.3%
69.2%
22.3%
30.7
1.4
80.9
30.5
143.5
21.4%
1.0%
56.4%
21.2%
All of the Plan assets are invested in pooled investment funds. The majority of these are priced daily, but are not quoted market prices. The exceptions to this are
certain weekly priced funds (UCITS Alternatives Strategies) and monthly priced funds (High Income UK Property, Liquid Alternative Strategies Alternatives and
Multi Asset Credit).
With regards to private debt, the portfolio will be valued on an absolute basis, using the ‘best efforts’ value on a quarterly basis. Therefore, fund investments are
primarily valued based on the market value/capital account statements received from the underlying general partners of the underlying funds. Capital account
statements and unaudited financial statements are distributed approximately 90 days after each quarter. The fund also distributes US GAAP audited financials,
including capital account statements, for each 31 December fiscal year-end around 30 June of the subsequent year.
The actual allocations to each of the investment funds as at 31 December 2018 are shown in the table below. The investment portfolio seeks to mitigate the
investment risks identified above through a combination of asset class diversification, underlying investment manager diversification and the use of currency
hedging where appropriate.
The assets are split into two portfolios: the growth portfolio and the matching portfolio. The assets within the growth portfolio are invested so as to achieve an
appropriate level of growth above that of the Plan’s liabilities, ensuring a sufficiently diversified portfolio of investments provides the Plan with a variety of sources
of return, without unduly exposing the Plan to a single type of risk. The assets within the matching portfolio are invested so as to reduce the level of unrewarded
risk and ensure the portfolio broadly matches changes in the value of the Plan’s liabilities.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
The allocations to each of the investment funds as at 31 December 2018 are as follows:
Fund
Global Fundamental (RAFI) Equity
Global Low Volatility Equity
Global Small Cap Equity
Sustainable Equity
Global Listed Infrastructure Equity
Eurozone Equity
Emerging Markets Equity
Emerging Markets Debt
Global High Yield Bonds
Multi Asset Credit
Absolute Return Fixed Income
Liquid Alternatives Strategies
Mercer UCITS Alternatives Strategies
High Income UK Property
Private Debt
Total Growth Portfolio
UK Credit
Tailored Credit Fund
UK Long Gilt Fund
Inflation Linked Bonds
Nominal LDI Bond Fund
Medium Flexible Enhanced Matching Fixed
Long Flexible Enhanced Matching Fixed
Short Flexible Enhanced Matching Inflation
Short Flexible Enhanced Matching Real
Medium Flexible Enhanced Matching Real
Long Flexible Enhanced Matching Real
Total Matching Portfolio
Total Assets
Legal structure
Mercer QIF CCF
MGI Funds PLC
MGI Funds PLC
MGI Funds PLC
MGI Funds PLC
MGI Funds PLC
MGI Funds PLC
MGI Funds PLC
MGI Funds PLC
Mercer QIF Fund PLC
MGI Funds PLC
Mercer QIF Fund PLC
MGI Funds PLC
Mercer QIF CCF
Mercer Private Investment Partners (Offshore), LP
Mercer PIF Fund PLC
Mercer QIF Fund PLC
MGI Funds PLC
MGI Funds PLC
Mercer PIF Fund plc
Mercer QIF Fund PLC
Mercer QIF Fund PLC
Mercer QIF Fund PLC
Mercer QIF Fund PLC
Mercer QIF Fund PLC
Mercer QIF Fund PLC
Allocation
(%)
1.8
1.0
1.6
1.3
0.5
0.2
2.4
2.0
0.2
1.6
0.8
9.3
1.7
3.0
2.1
29.5
14.2
7.6
6.0
6.9
3.5
6.5
0.7
6.8
5.0
5.1
8.2
70.5
100.0
The investment portfolio seeks to mitigate the investment risks identified above through a combination of asset class diversification, underlying investment
manager diversification and the use of currency hedging where appropriate. The assets are split into two portfolios, the growth portfolio and the matching
portfolio.
The assets within the growth portfolio are invested so as to achieve an appropriate level of growth above that of the plan’s liabilities, ensuring a sufficiently diversified
portfolio of investments provides the plan with a variety of sources of return, without unduly exposing the plan to a single type of risk.
The assets within the matching portfolio are invested so as to minimise the level of unrewarded risk and ensure the portfolio broadly matches changes in the
value of the plan’s liabilities. This is achieved by investing in a range of pooled investment funds as outlined in the table above, with the allocation to each fund
determined by a combination of the following: the nature of the plan’s liability structure, the target level of hedging deemed appropriate to reflect the Trustee’s
risk tolerance and a ‘fair value’ assessment of market levels. Some of these funds achieve their objectives by utilising a range of bond or bond type instruments,
resulting in leveraged exposure which enables the plan to match a greater proportion of its liabilities than would be possible by only holding physical securities.
Instruments utilised within the funds include fixed interest gilts, index-linked gilts, corporate bonds, gilt repos, interest rate swaps, inflation swaps and total
return swaps.
The plan does not hold any direct investments in the Group; however, due to the pooled nature of the investment funds, there may be some indirect investment.
The duration of the defined benefit liabilities within the Inmarsat Global defined benefit plan is approximately 21 years. The defined benefit obligation as at
December 2018 is split as follows:
Active members
0% (following the closure of the plan to future accrual effective 1 April 2017, all former active members have become deferred members)
Deferred members
Pensioner members
81%
19%
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The average age of the deferred and pensioner members at the date of the last statutory funding valuation for the Inmarsat Global defined benefit plan
(31 December 2018) was 56 years and 69 years, respectively.
The estimated contributions expected to be paid into the Inmarsat Global defined benefit pension plan during 2019 are $0.5m. In 2018 actual contributions
under this plan were $nil (2017: $0.2m).
30. OPERATING LEASES
During the year the Group received income from various agreements deriving revenue from leased equipment. These amounts are recorded as revenue on a
straight-line basis over the respective lease terms and represent the majority of the Group’s future aggregate minimum lease payments under non-cancellable
operating leases expected to be received.
($ in millions)
Within one year
Within two to five years
31. CAPITAL RISK MANAGEMENT
The following table summarises the capital of the Group:
($ in millions)
As per balance sheet
Cash and cash equivalents
Short-term deposits greater than three months
Borrowings1
Net borrowings
Equity attributable to shareholders of the parent
Capital
At
31 December
2018
At
31 December
2017
20.0
33.5
53.5
28.7
18.7
47.4
At
31 December
2018
At
31 December
2017 (restated)
(143.2)
(145.7)
2,465.5
2,176.6
1,336.0
3,512.6
(144.9)
(342.0)
2,565.5
2,078.6
1,247.5
3,326.1
1 This excludes the conversion liability on the convertible bond of $148.8m and lease obligations of $71.0m at 31 December 2018
The Group’s objective when managing its capital is to safeguard its ability to continue as a going concern in order to provide returns for shareholders and benefits
for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The Group continually evaluates sources of capital and may
repurchase, refinance, exchange or retire current or future borrowings and/or debt securities from time to time in private or open-market transactions, or by any
other means permitted by the terms and conditions of borrowing facilities and debt securities. Additionally, the Group may adjust the amount of dividends paid
to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Group uses a maximum ratio of net borrowings to EBITDA as an internal planning parameter and in regular forecasting and monitoring activities.
In addition, movements in cash and borrowings as well as total available liquidity are monitored regularly.
The net borrowings to EBITDA ratio for the year ended 31 December 2018 is 2.8 (2017: 2.8). The Group’s liquidity is disclosed in note 3(d). No changes were made
in the Group’s objectives, policies or processes for managing capital during the current or preceding year.
32. FINANCIAL INSTRUMENTS
TREASURY MANAGEMENT AND STRATEGY
The Group’s treasury activities are managed by its treasury department which reports into the Chief Financial Officer. The treasury department operations are
bound by the Board-approved treasury policy and related treasury operating manual. The overriding objective of treasury activities is to manage financial risk.
Key features of treasury management include:
› ensuring that the Group is in a position to fund its obligations in appropriate currencies as they fall due
› maintaining adequate undrawn borrowing facilities and
› maximising return on short-term investments based on counterparty limits and credit ratings
Treasury activities are only transacted with counterparties who are on the approved counterparty list approved by the Board.
The Group’s foreign exchange policy is not to hedge its foreign currency transactions. Where there is a material contract with a foreign currency exposure,
a specific hedge to match the specific risk will be evaluated and must be approved by the Chief Financial Officer prior to any hedge being undertaken.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
FINANCIAL INSTRUMENTS BY CATEGORY
The following table sets out the categorisation of financial assets and liabilities under IFRS 9:
At 31 December 2018
At 31 December 2017
($ in millions)
Assets as per balance sheet
Amortised
cost
Fair value
through profit
and loss
Derivatives
used for
hedging
Trade receivables and other1
337.7
Cash and cash equivalents
Short-term deposits
Derivative financial instruments
–
–
–
–
143.2
145.7
–
337.7
288.9
1 Consists of trade receivables, other receivables and accrued income (see note 18)
–
–
–
0.3
0.3
Amortised
cost
Fair value
through
profit and loss
Derivatives
used for
hedging
275.3
–
–
–
275.3
–
144.9
342.0
–
486.9
–
–
–
1.5
1.5
Total
337.7
143.2
145.7
0.3
626.9
($ in millions)
Liabilities as per balance sheet
Borrowings
Trade payables and other1
Derivative financial instruments
At 31 December 2018
Amortised
cost
Fair value
through
profit and loss
Derivatives
used for
hedging
At 31 December 2017
Fair value
through
profit and loss
Derivatives
used for
hedging
Total Amortised cost
2,465.5
237.2
–
2,702.7
–
–
148.8
148.8
–
–
4.0
4.0
2,465.5
237.2
152.8
2,565.5
328.0
–
2,855.5
2,893.5
–
–
125.7
125.7
–
–
10.0
10.0
Total
275.3
144.9
342.0
1.5
763.7
Total
2,565.5
328.0
135.7
3,029.2
1 Consists of trade payables, other payables and accruals (see note 21)
The table below analyses the Group’s financial liabilities and net-settled derivative financial instruments into relevant maturity groupings based on the remaining
period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances
due within 12 months equal their carrying values as the impact of discounting is not significant.
($ in millions)
Borrowings1
Trade payables and other
Derivative financial instruments
At 31 December 2018
Less than
1 year
Between
1 and 2 years
Between
2 and 5 years
254.4
234.8
2.4
491.6
251.1
1556.2
0.3
1.5
0.6
148.9
Over
5 years
1,001.1
1.5
0.0
Total
3062.8
237.2
152.8
252.9
1,705.7
1,002.6
3,452.8
1
Includes interest obligations on the Senior Notes due 2022 and 2024, Ex-Im Bank Facilities and Convertible Bonds. The interest obligations on those borrowings are at fixed rates for the term of the borrowing
($ in millions)
Borrowings1
Trade payables and other
Derivative financial instruments
At 31 December 2017
Less than
1 year
Between
1 and 2 years
Between
2 and 5 years
260.2
321.3
7.9
589.4
254.4
1,694.0
1.7
1.9
3.5
0.2
258.0
1,697.7
Over
5 years
1,188.5
1.5
125.7
1,315.7
Total
3,397.1
328.0
135.7
3,860.8
1
Includes interest obligations on the Senior Notes due 2022 and 2024, Ex-Im Bank Facilities and Convertible Bonds. The interest obligations on those borrowings are at fixed rates for the term of the borrowing
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FAIR VALUES OF DERIVATIVE FINANCIAL INSTRUMENTS
The Group’s derivative financial instruments consist of forward foreign currency contracts which are primarily designated as cash flow hedges and the conversion
liability component of the convertible bonds due 2023.
Derivative financial instruments are initially measured at fair value (see further below) on the contract date and are re-measured at each reporting date.
The change in the fair value is accounted for differently depending on whether the instrument qualifies for hedge accounting (eg where a forward foreign currency
transaction is designated as a cash flow hedge) or not (eg undesignated cash flow hedges and the conversion liability component of the 2023 convertible bond).
Under hedge accounting, the change in fair value initially goes through other comprehensive income. At the point hedge accounting is discontinued, ie when
the hedging instrument expires, is exercised or no longer qualifies for hedge accounting, the amounts sitting in other comprehensive income are recycled to the
income statement or, where appropriate, capitalised to the balance sheet. Where hedge accounting does not apply, the change in fair value is included in net
financing costs in the income statement.
The fair values at the balance sheet date were:
($ in millions)
Financial assets:
Forward foreign currency contracts – designated cash flow hedges
Forward foreign currency contracts – undesignated
Total derivative financial assets
Current portion of derivative financial assets
Non-current portion of derivative financial assets
Financial liabilities:
Conversion liability component of 2023 Convertible Bond
Forward foreign currency contracts – designated cash flow hedges
Forward foreign currency contracts – undesignated
Total derivative financial liabilities
Current portion of derivative financial liabilities
Non-current portion of derivative financial liabilities
At
31 December
2018
At
31 December
2017
0.3
–
0.3
0.3
–
148.8
3.4
0.6
152.8
2.4
150.4
1.5
–
1.5
1.2
0.3
125.7
9.9
0.1
135.7
7.9
127.8
The full value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedged item is more than 12 months and,
as a current asset or liability if the maturity of the hedged item is less than 12 months.
The fair values of forward foreign exchange contracts are based on the difference between the contract amount at the current forward rate at each period
end and the contract amount at the contract rate, discounted at a variable risk-free rate at the period end. The fair value of the conversion liability component
of the Convertible Bonds due 2023 is determined as the difference between the market value of the Convertible Bond and the fair value of a comparable,
non-convertible bond, known as a debt host contract. Both are classified as level 2 in the fair value hierarchy according to IFRS 13.
The Group has no financial instruments with fair values that are determined by reference to significant unobservable inputs, ie those that would be classified as
level 3 in the fair value hierarchy, nor have there been any transfers of assets or liabilities between levels of the fair value hierarchy. There are no non-recurring
fair value measurements.
FORWARD FOREIGN EXCHANGE
The following tables set out the face value and fair value of forward foreign exchange contracts outstanding for the Group as at 31 December 2018 and 2017:
Outstanding forward foreign exchange contracts (in millions)
Face value
At 31 December 2018
Maturing
within
1 year
Maturing
between
1 and 2 years
Maturing
between
2 and 5 Years
GBP contracts- USD:GBP1 1:0.73
CAD contracts- USD:CAD1 1:1.30
1 Weighted Average Foreign Exchange Rate
£24.0
£20.1
£3.3
£0.6
CAD 12.0
CAD 9.0
CAD 3.0
CAD 0.0
Outstanding forward foreign exchange contracts (in millions)
Face value
At 31 December 2017
Maturing
within
1 year
Maturing
between
1 and 2 years
Maturing
between
2 and 5 Years
GBP contracts- USD:GBP1 1:0.70
CAD contracts- USD:CAD1 1:1.30
1 Weighted Average Foreign Exchange Rate
£105.2
£87.6
£13.7
£3.8
CAD 30.9
CAD 20.1
CAD 7.8
CAD 3.0
Fair value
(US$)
(1.8)
(0.3)
Fair value
(US$)
(9.0)
0.9
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
The Group has entered into contracts to build the I-6 satellite. The Group has entered into forward foreign exchange contracts (for terms equivalent to when
the milestone payments fall due) to hedge the exchange rate risk arising from these anticipated milestone payments, which are designated as cash flow hedges.
As at 31 December 2018, the aggregate amount of losses under forward foreign exchange contracts deferred in the cash flow hedging reserve relating to the
exposure on these payments is $4.0m. The milestone payments will take place at irregular periods throughout each year until 2021, at which time the related
cash flow hedges deferred in equity will be transferred and included in the initial carrying value of the hedged non-financial assets.
Hedge ineffectiveness can arise from changes in both the creditworthiness of counterparties hedged with and the credit risk of the Group. The hedge
ineffectiveness for 2018 was less than $0.1m (2017: nil).
NON-DERIVATIVE FINANCIAL ASSETS AND FINANCIAL LIABILITIES
Non-derivative financial assets consist of cash at bank, short-term investments, trade receivables, other receivables and accrued income.
Non-derivative financial liabilities consist of borrowings, trade payables, other payables and accruals.
FAIR VALUE OF NON-DERIVATIVE FINANCIAL ASSETS AND FINANCIAL LIABILITIES
With the exception of the Senior Notes, the Ex-Im Bank Facilities and the Convertible Bonds, the fair values of all non-derivative financial instruments approximate
to the carrying value in the balance sheet. The fair value of Senior Notes, Ex-Im Bank Facilities and Convertible Bonds are classified as level 2 in the fair value
hierarchy according to IFRS 13.
The following methods and assumptions have been used to determine fair values:
› the fair values of cash at bank, overdrafts and short-term deposits approximate their carrying values because of the short-term maturity of these instruments
(see note 17)
› the fair value of trade and other receivables and payables, accrued income and costs, and deferred consideration approximate their carrying values (see notes
18 and 21 respectively)
› the carrying amount of deferred satellite payments represents the present value of future payments discounted, using an appropriate rate, at the period end.
This carrying amount approximately equals fair value (see note 20)
› the Senior Notes due 2022 are reflected in the balance sheet net of unamortised arrangement costs and net issuance premium of $3.9m and $3.4m,
respectively (see note 20). The fair values of the Senior Notes due 2022 are based on the market price of the bonds and are reflected in the next table
› the Senior Notes due 2024 are reflected in the balance sheet net of unamortised arrangement costs of $4.2m (see note 20). The fair values of the Senior
Notes due 2024 are based on the market price of the bonds and are reflected in the next table
› the Ex-Im Bank Facilities are reflected in the balance sheet net of unamortised arrangement costs of $6.5m (2017: $14.9m). The fair value of the 2011 facility
has been based on the implicit interest rate of the 2014 facility (see note 20) and
› the debt liability component of the Convertible Bonds is reflected in the balance sheet on an amortised cost basis, net of unamortised arrangement costs
of $5.4m (2017: $6.6m) (see note 20). The fair value of the Convertible Bonds is based on the market price of the bonds and is reflected in the table below
($ in millions)
Senior Notes due 2022
Senior Notes due 2024
Ex-Im Bank Facilities
Convertible Bonds due 2023 debt component
1 Gross of unamortised arrangement cost
33. CAPITAL AND PURCHASE COMMITMENTS
At 31 December 2018
At 31 December 2017
Carrying
amount1
1,000.0
400.0
508.7
574.8
Fair value
amount
945.6
382.1
508.9
545.8
Carrying
amount
1,000.0
400.0
630.9
561.6
Fair value
amount
1,000.8
408.1
639.7
566.5
The Group had authorised and contracted but not provided for capital commitments as at 31 December 2018 of $492.5m (2017: $968.0m). These amounts
primarily represent commitments in respect of the Group’s I-6 satellite programmes. The Group has not reported the split between tangible assets and intangible
assets for these capital commitments, as the necessary information is not available and the cost to develop it would be excessive.
In addition, the Group has the following purchase commitments, relating to future obligations to purchase space segment capacity:
($ in millions)
Within one year
Within two to five years
At
31 December
2018
At
31 December
2017
14.0
1.7
15.7
24.7
11.5
36.2
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159
34. CONTINGENT ASSETS AND LIABILITIES
CONTINGENT ASSETS
In respect of the ongoing legal dispute surrounding the provision of services to RigNet, the Phase I ruling by the Centre for Dispute Resolution’s Arbitration tribunal
was in favour of the Group. This concluded that the Group is owed $50.8m by RigNet. This is an interim ruling and RigNet is not required to pay until the tribunal’s
Phase II ruling has taken place towards the end of 2019. This asset has not been recognised during the financial year as its receipt is not virtually certain and the
amount is dependent on the outcome of the Phase II ruling.
CONTINGENT LIABILITIES
In the ordinary course of business, the Group is subject to contingencies pursuant to requirements that it complies with relevant laws, regulations and standards.
Failure to comply could result in restrictions in operations, damages, fines, increased tax, increased cost of compliance, interest charges, reputational damage and
other sanctions. These matters are inherently difficult to quantify.
In cases where the Group has an obligation as a result of a past event existing at the balance sheet date, and it is probable that an outflow of economic resources
will be required to settle the obligation and the amount of the obligation can be reliably estimated, a provision will be recognised based on best estimates and
management judgement.
A contingent liability is disclosed where the existence of the obligation will only be confirmed by future events, or where the amount of the obligation cannot be
measured with reasonable reliability. At 31 December 2018, the Group had no material contingent liabilities.
35. EVENTS AFTER THE BALANCE SHEET DATE
Since the balance sheet date there have been no other significant events which would require disclosure in the 31 December 2018 financial statements.
36. RELATED PARTY TRANSACTIONS
In the normal course of operations the Group engages in transactions with its equity-owned investees Navarino UK and JSAT Mobile Communications Inc.
These transactions represent sales of airtime and equipment and are measured at the amounts exchanged. Group revenue from the related parties for the 2018
financial year was $39.7m and $15.6m, respectively (2017: $38.1m and $16.9m, respectively). The amount receivable from the related parties at 31 December
2018 was $17.2m and $1.7m, respectively (2017: $12.6m and $1.7m, respectively).
Amounts owing to the Executive as at 31 December 2018 is $1.4m (2017: $1.2m) and relates to remuneration earned in the normal course of operations
(see note 8).
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Inmarsat plc | Annual Report and Accounts 2018
Inmarsat plc | Annual Report and Accounts 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
37. PRINCIPAL SUBSIDIARY UNDERTAKINGS
At 31 December 2018, the Company had investments in the following subsidiaries and associates:
Inmarsat Holdings Limited
Inmarsat Group Limited
Inmarsat Finance PLC
Inmarsat Investments Limited
Inmarsat Ventures SE
Inmarsat Global Limited
ISAT Global Xpress OOO
Inmarsat Brasil Eireli
Inmarsat Leasing (Two) Limited
Inmarsat New Zealand Limited
Inmarsat Services Limited
PT ISAT
Inmarsat Communications Company LLC
Inmarsat Group Holdings Inc.
ISAT US Inc.
Inmarsat Government Inc.
Stratos Government Services Inc.
Inmarsat Commercial Services Inc.
Inmarsat Solutions (US) Inc.
Inmarsat Inc.
Inmarsat US Investments Limited
Europasat Limited
Inmarsat Employment Company Limited
Inmarsat Trustee Company Limited
Inmarsat Finance III Limited
Inmarsat Solutions Limited
Inmarsat Solutions (Canada) Inc.
Stratos Holdings (Cyprus) Limited
Inmarsat Germany (GmBH)
Stratos Global Japan KK
Stratos Investments BV
Inmarsat Solutions B.V.
Inmarsat Solutions SA (PTY) Limited
Inmarsat Spain S.A.
Inmarsat Hong Kong Limited
Inmarsat (IP) Company Limited
Inmarsat Hellas Satellite Services SA
Inmarsat Navigation Ventures Limited
Inmarsat Global Xpress Limited
Inmarsat SA
Inmarsat Solutions Global Limited
Inmarsat Solutions AS
Inmarsat Solutions Pte. Limited
Inmarsat Solutions ehf.
Inmarsat Australia Pty Limited
Inmarsat KK
Inmarsat Solutions (Shanghai) Co. Limited
Inmarsat India Private Limited
Inmarsat Licences (Canada) Inc.
Flysurfer Colombia S.A.S.
Flysurfer Peru S.A.C.
Inmarsat New Ventures Limited
Flysurfer-Ecuador S.A.
Inmarsat Satellite Services S.R.L.
Inmarsat BH d.o.o.
Inmarsat Solutions doo Beograd
Inmarsat DOOEL Skopje
Navarino UK Limited
JSAT Mobile Communications Inc.
1 For the list of registered addresses please refer to the next table
Principal activity
Holding company
Holding company
Finance company
Holding company
Operating company
Satellite telecommunications
Operating company
Dormant
Satellite leasing
Operating company
Operating company
Operating company
Operating company
Operating company
Operating company
Operating company
Operating company
Operating company
Operating company
Holding company
Dormant
Operating company
Employment company
Dormant
Operating company
Holding company
Operating company
Holding company
Operating company
Holding company
Holding company
Operating company
Operating company
Operating company
Operating company
Dormant
Satellite telecommunications
Operating company
Operating company
Operating company
Operating company
Operating company
Operating company
Operating company
Operating company
Operating company
Operating company
Operating company
Holding company
Operating company
Operating company
Operating company
Operating company
Operating company
Operating company
Operating company
Operating company
Associate
Associate
Country of incorporation/
registered address key1
England and Wales/A
England and Wales/A
England and Wales/A
England and Wales/A
England and Wales /A
England and Wales/A
Russian Federation/X
Brazil/H
England and Wales/A
New Zealand/U
England and Wales/A
Indonesia/Q
United Arab Emirates/AC
United States/C
United States/C
United States/D
United States/D
United States/D
United States/D
United States/D
England and Wales/A
England and Wales/A
Jersey/T
England and Wales/A
England and Wales/A
England and Wales/A
Canada/B
Cyprus/K
Germany/L
Japan/S
The Netherlands/V
The Netherlands/V
South Africa/Z
Spain/AA
Hong Kong/N
England and Wales/A
Greece/M
England and Wales/A
England and Wales/A
Switzerland/AB
England and Wales/A
Norway/W
Singapore/Y
Iceland/O
Australia/F
Japan/S
China/J
India/P
Canada/B
Columbia/I
Peru/R
England and Wales/A
Ecuador/AE
Romania/AF
Bosnia and Herzegovina/AG
Serbia/AH
Macedonia/E
England and Wales/AD
Japan/G
Interest in
issued ordinary
share capital at
31 December
2018
Interest in issued
ordinary share
capital at
31 December
2017
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
49%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
90%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
51%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
49%
26.67%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
49%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
90%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
51%
100%
100%
100%
100%
100%
100%
100%
–
–
–
–
–
–
49%
26.67%
Inmarsat plc | Annual Report and Accounts 2018
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161
In accordance with s479A of the Companies Act 2006, the following companies are exempt from the requirements relating to the audit of individual accounts for
the year ended 31 December 2018: Inmarsat Trustee Company Limited (03688399), Inmarsat (IP) Company Limited (03930467) and Inmarsat US Investments
Limited (07100989).
REGISTERED ADDRESS KEY
Key
Registered Address
A
B
C
D
E
F
G
H
I
J
K
L
M
N
O
P
Q
R
S
T
U
V
W
X
Y
Z
AA
AB
AC
AD
AE
AF
AG
AH
99 City Road, London EC1Y 1AX, United Kingdom
34 Glencoe Drive, Box 5754, Donovan’s Bus. Park, Mount Pearl Newfoundland A1N 4S8, Canada
874 Walker Road, Suite C, City of Dover DE 19904, United States
251 Little Falls Drive, Wilmington DE 19808, United States
Str. Risto Ravanovski no 13a, Skopje, Republic of Macedonia, Macedonia, the former Yugoslav Republic of
Level 40, Governor Macquarie Tower, 1 Farrer Place, Sydney NSW 2000, Australia
Nisso Building #22 8F, Azabudai1-11-10, Minato-ku, Tokyo 106-0041, Japan
Av Presidente Juscelino Kubitschek 50, Suite 172, Room 7, 17th Floor, São Paulo, CEP 04543-000, Brazil
Cra. 7 No. 71-52 Tower B 9th Floor, Bogota, DC, Colombia 110231
No 20–4 Ronghui Park, Yuhua Road, Area B, Tianzhu Airport Industrial Zone, Shanyi District Beijing, China
1, Lampousas, Nicosia, 1095, Cyprus
Aarberger Strasse 18, 12205, Berlin, Germany
280 Kifisias Avenue, Halandri, 152 32, Greece
19 Floor, Milennium trade Centre, No. 56 Kwai Cheong Road, Kwai Chung, New Territories, Hong Kong
Hlíðarsmára 10, 201 Kópavogi
P-24, Green Park Extension, Delhi. 110016. India
Panbil Residence 1st – 2nd Floor, Jl. Ahmad Yani, Muka Kuning – Batam – 29433, Indonesia
Dentons Gallo Barrios Pickmann SCRL, General Córdova N° 313, Miraflores – Lima 18, Perú
Level 25 Ark Hills Sengokuyama Mori Tower, 1-9-10, Roppongi, Minato-ku, Tokyo, 106-0032, Japan
44 Esplanade, St. Helier, Jersey JE4 9WG, Jersey
Bell Gully, Lvl 22, Vero Centre, 48 Shortland Street, Auckland, 1010, New Zealand
Loire 158-160, 2491 AL, The Hague, Netherlands
NMK – Borgundveien 340, 6009 Ålesund, Norway
Bld. 5, 13 Kasatkina Street, 129301, Moscow, Russian Federation
11 Lorong 3 Toa Payoh , #01-31, Jackson Square, 319579, Singapore
Deloitte Place, The Woodlands, 20 Woodlands Drive, Woodmead, Sandton, Johannesburg, Gauteng, South Africa, 2052
Príncipe de Vergara 73, 28006, Madrid, Spain
Route de Crassier 19, 1262, Eysins, Switzerland
Al Maktoum Street, Al Reem Tower, Suite 402, P.O. Box 27313, Dubai, UAE, United Arab Emirates
Camburgh House, 27 New Dover Road, Canterbury, Kent CT1 3DN, United Kingdom
Republica de El Salvador N35-146 y Suecia, Edif. Prisma Norte, Piso 11, Quito, C.P. 170505, Ecuador
22 Tudor Vladimirescu Biv., Building Green Gate Office, Bucharest, 5th Floor 573Campus07, Sector, Bucharest, Romania
Street Skenderpasina 1, Sarajevo, Bosnia and Herzegovina
GTC Avenue 19, 38-40 Vladimira Popovica Street, New Belgrade, Servia, 11070, Serbia
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Inmarsat plc | Annual Report and Accounts 2018
COMPANY BALANCE SHEET
at 31 December 2018
($ in millions)
Assets
Non-current assets
Investments1
Other receivables2
Deferred tax assets
Current assets
Cash and cash equivalents
Trade and other receivables3
Current tax assets
Restricted cash
Total assets
Liabilities
Current liabilities
Trade and other payables4
Non-current liabilities
Borrowings5
Derivative financial instruments
Total liabilities
Net assets
Shareholders’ equity
Ordinary shares
Share premium
Other reserves
Retained earnings
Total equity
2018
2017
1,561.3
–
0.3
1,111.0
438.0
0.2
1,561.6
1,549.2
5.0
242.2
7.9
–
255.1
1,816.7
46.0
46.0
569.4
148.8
718.2
764.2
1,052.5
0.3
767.8
110.9
173.5
1,052.5
1.8
19.0
10.8
0.4
32.0
1,581.2
44.2
44.2
555.0
125.7
680.7
724.9
856.3
0.3
745.4
99.6
11.0
856.3
Investments consist of a $1,448.8m investment in Inmarsat Holdings Limited (2017: $1,007.8m) and $112.5m of capital contributions to Group companies in respect of share-based payments (2017: $103.2m)
1
2 Other receivables consist of $nil amounts due from Group companies (2017: $438.0m)
3 Trade and other receivables consist of $242.1m amounts due from Group companies (2017: $19.0m)
4 Trade and other payables consists of $1.5m due to shareholders in respect of dividends paid during 2018 (2017: $1.4m), accruals of $11.8m (2017: $11.7m), amounts due to Group companies of $33.1m (2017: $30.2m)
and other payables of $0.1m (2017: 0.9m)
5 Borrowings comprise the Convertible Bonds discussed in note 20 to the consolidated financial statements
The Company reported a profit for the financial year ended 31 December 2018 of $253.3m (2017: $281.4m).
The financial statements of the Company, registered number 4886072, on pages 162 to 163 were approved by the Board of Directors on 18 March 2019 and
signed on its behalf by
RUPERT PEARCE
CHIEF EXECUTIVE OFFICER
TONY BATES
CHIEF FINANCIAL OFFICER
Inmarsat plc | Annual Report and Accounts 2018
Inmarsat plc | Annual Report and Accounts 2018
Financial statements | Company financial statements
Financial Statements | Company financial statements
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163
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2018
($ in millions)
Balance at 1 January 2017
Share-based payments
Dividends declared
Scrip dividend cash reinvestment
Scrip dividend share issue
Profit for the year
Balance at 31 December 2017
Share-based payments
Dividends declared
Scrip dividend cash reinvestment
Scrip dividend share issue
Profit for the year
Balance at 31 December 2018
Ordinary share
capital
Share premium
account
Share option
reserve
0.3
700.4
–
–
–
–
–
0.3
–
–
–
–
–
0.3
–
–
–
45.0
–
745.4
–
–
–
22.4
–
767.8
87.9
14.6
–
–
–
–
102.5
11.3
-
–
–
–
Other
reserve1
(2.9)
–
–
–
–
–
(2.9)
–
–
–
–
–
Retained
earnings
(19.9)
(0.7)
Total
765.8
13.9
(249.8)
(249.8)
45.0
(45.0)
281.4
11.0
1.1
(91.9)
22.4
(22.4)
253.3
173.5
45.0
–
281.4
856.3
12.4
(91.9)
22.4
–
253.3
1,052.5
113.8
(2.9)
1 The ‘other reserve’ relates to ordinary shares held by the employee share trust
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Financial Statements | Company financial statements
Financial statements | Company financial statements
Inmarsat plc | Annual Report and Accounts 2018
Inmarsat plc | Annual Report and Accounts 2018
NOTES TO THE COMPANY FINANCIAL STATEMENTS
for the year ended 31 December 2018
A) PRINCIPAL ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The Company meets the definition of a qualifying entity under FRS 100 ‘Application of Financial Reporting Requirements’ issued by the Financial Reporting Council
(‘FRC’). Accordingly, the Company financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework.
As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available under that standard in relation to presentation of a cash flow
statement, the reconciliation of net cash from operations, capital management, presentation of comparative information in respect of certain assets, standards
not yet effective, impairment of assets and related party transactions, share based payments and financial instruments. Where required, equivalent disclosures
have been given in the Group accounts of Inmarsat plc.
The accounting policies and financial risk management policies and objectives, where relevant to the Company, are consistent with those of the consolidated
Group as set out in notes 2 and 3 to the consolidated financial statements.
B) CRITICAL ACCOUNTING ESTIMATES AND KEY JUDGEMENTS
The critical accounting estimates and key judgements, where relevant to the Company, are consistent with those of the consolidated Group as set out in note 4
to the consolidated financial statement.
C) INCOME STATEMENT
The Company has taken advantage of the exemption available under Section 408 of Companies Act 2006 and has not presented an income statement.
The profit for the year ended 31 December 2018 was $253.3m (2017: $281.4m).
AUDITOR’S REMUNERATION
During the year, the Company paid its external auditor $0.1m for statutory audit services (2017: $0.1m).
EMPLOYEE COSTS AND DIRECTORS’ REMUNERATION
The average monthly number of people employed during the year was two (2017: two). Total staff costs for 2018 were $8.2m (2017: $9.2m). Full details
of Directors’ remuneration and Directors’ share options and share awards are given in the Remuneration report.
FOREIGN CURRENCY TRANSLATION
Accounting for foreign currency transactions of the Company is consistent with that of the Group, which is disclosed in note 2 to the consolidated
financial statements.
SHARE CAPITAL
The share capital of the Company is disclosed in note 25 to the Group’s consolidated financial statements.
D) FINANCIAL INSTRUMENTS
The IFRS 7, ‘Financial Instruments’ disclosures, where relevant to the Company, are consistent with that of the Group as set out in note 31 to the consolidated
financial statements.
The differences between the Group and the Company in relation to intercompany balances are $242.1m (2017: $466.0m) amounts due from Group companies
and $33.1m (2017: $30.2m) amounts due to Group companies, which eliminate on consolidation. The Directors consider the carrying value of the intercompany
balances to approximate to their fair value. The Group has assessed the intercompany receivables under the IFRS 9 expected credit loss model and no
impairment losses have been recognised.
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Financial statements | Company financial statements
Financial Statements | Company financial statements
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165
ALTERNATIVE PERFORMANCE MEASURES
The Directors use Alternative Performance Measures (APMs) to better understand the underlying financial performance of the Group and to provide
comparability of information between reporting periods and business units. The measures are also used in discussions with the investment analyst community
and the credit rating agencies. Given that APMs are not defined by International Financial Reporting Standards they may not be directly comparable with
other companies who use similar measures. APMs used in these financial statements are:
APM
1. EBITDA
2. Adjusted PAT
3. Direct and indirect costs
4. Revenue (ex Ligado)
5. EBITDA (ex Ligado)
6. Cash Capex
7. Adjusted EPS
8. Free Cash Flow
9. Underlying effective tax rate
Description and Reconciliation
EBITDA is defined as profit for the year before net financing costs, taxation, depreciation and amortisation,
gains/losses on disposal of assets, impairment losses and share of profit of associates. EBITDA is a commonly
used industry measure which helps investors to understand the contribution made by each of our business
units. It reflects how the effect of growing revenues and cost management deliver value for our shareholders.
This measure has been reconciled to both operating profit and profit after tax within the CFO report.
Adjusted PAT is defined as Profit after Tax excluding the non-cash impact of the unrealised movement
in the fair value of the conversion liability component of the 2023 convertible bond and the post tax
restructuring charge. This measure allows investors to evaluate PAT after stripping out material
non-operational items. A reconciliation to Profit after tax can be found within the CFO report.
Direct costs are defined as expenses that can be traced directly to the sale of a product or service. Indirect
costs are those costs which are not directly attributable to a sale. This measure is useful to investors because
it allows them to understand the potential development of our cost profile in the future. The sum of direct and
indirect costs incurred in 2018 were $695.1m which equals total net operating costs in the Income Statement.
Revenue (ex Ligado) is defined as Group revenue less Ligado revenue. This measure is useful to investors
because it excludes revenue that is not considered part of our core operations. This has been reconciled
to total revenue within the CFO report.
EBITDA (ex Ligado) is defined as Group EBITDA less Ligado EBITDA. Ligado EBITDA consists of Ligado revenues
less Ligado costs incurred. This measure allows investors to evaluate the EBITDA that is only attributable to our
core operations. Ligado EBITDA for 2018 was $130.6m and comprised of $130.7m revenue and $0.1m. Group
EBITDA was $770.1m. Therefore, EBTDA (Excl. Ligado) was $639.5m.
Cash capital expenditure is the cash flow relating to tangible and intangible asset additions, it includes capitalised
labour costs and excludes capitalised interest. Cash capex indicates our continued investment in the growth
and development of our network and infrastructure as well as our investment in the future technologies of the
business. This has been reconciled to total capital expenditure within note 5.
Adjusted Earnings Per Share is computed as Group Adjusted Profit After Tax attributable to equity holders of
the Company divided by the weighted average number of shares in issue (excluding shares held by the Employee
Trust). Growth in adjusted EPS is a measure of our ability to deliver profitable growth by increasing our revenue
and delivering cost efficiencies across the Group, thereby delivering value for our shareholders. Please refer to
note 28 for the reconciliation of Adjusted EPS to EPS.
Free Cash Flow represents how much cash is available to pay back borrowings, distribute to investors or invest
in the business in future periods. This has been reconciled to the net increase or decrease in cash and cash
equivalents within the CFO report.
The underlying effective tax rate is used to analyse differences from the corporate tax rate which are implicit
to business operations rather than driven by accounting adjustments. For the year, this has been calculated
by taking the tax charge ($42.9m) add prior year adjustments ($8.0m) less revaluation of deferred tax
balances ($0.2m) divided by PBT ($167.9m) adjusted for the impact of the unrealised conversion liability
of the convertible bonds ($23.2m).
10. Business Unit Operating Cash Flow
This is indicative of the cash generated by the relevant business unit for the period in review. It is calculated
by taking EBITDA less cash capex. Both EBITDA and Cash Capex have been defined above and reconciled.
1 2018 APMs include the impact of IFRS 16 and therefore may not be directly comparable
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Financial Statements | Glossary of terms
Financial statements | Glossary of terms
Inmarsat plc | Annual Report and Accounts 2018
Inmarsat plc | Annual Report and Accounts 2018
GLOSSARY OF TERMS
Due to the technical nature of satellite
communications and financial reporting we
use a number of terms and abbreviations in this
Annual Report and Accounts that are widely used
within those industries but are less commonly
used by our broader community of stakeholders.
The principal ones are summarised below.
A
Active terminal
A terminal that has been used to access
commercial services (except certain handheld
terminals) at any time during the preceding
12 months and is registered with one of our
services at the period end. It includes the
average number of certain handheld terminals
active on a daily basis during the final month
of a period and excludes M2M terminals.
Alphasat
A satellite developed with the European Space
Agency and launched in 2013, also known as I-4
F4 in our Inmarsat-4 satellite constellation.
ARPA
Average Revenue Per Aircraft.
ARPU
Average Revenue Per User.
ATC
Ancillary Terrestrial Components provide
communications services from ground
stations either as stand-alone services or
to complement satellite services.
ATG
ATG means the air to ground terrestrial
component of the EAN.
B
Bandwidth
The radio spectrum is divided into different bands
which each cover a section of frequencies that
are usually used for a similar purpose. Bands are
allocated to specific uses at international level
by the ITU and regulated at a national level
by domestic organisations and governments.
BGAN
Broadband Global Area Network is a high-speed
data satellite network using L-band frequency
that spans the globe.
Business and General Aviation (‘BGA’)
Business and General Aviation refers to all
civil aviation operations other than commercial
air transport, covering private jets flying
globally and regionally.
C
G
Cash capital expenditure
Cash capital expenditure is the cash flow
relating to tangible and intangible asset
additions, it includes capitalised labour
costs and excludes capitalised interest.
Commissioned terminal
A terminal that is registered with one
of our services at the period end.
CAGR
The Compound Annual Growth Rate
measures average annual growth over a
period of time and is used in the Executive
Performance Share Award scheme.
[Being edited by front end team]
CGU
A cash-generating unit is the smallest group
of assets that generates cash inflows largely
independently from the other parts of the
business and which represents the lowest
level at which goodwill is monitored within
the business.
The Company
Where we refer to the Company we are
referring to Inmarsat plc, the holding
company of the Inmarsat Group.
D
Defined benefit and defined
contribution schemes
Defined benefit pensions schemes provide
post-employment benefits based on an
employee’s final salary. Defined contribution
pension schemes are schemes into which
Inmarsat makes fixed contributions based
on a percentage of an employee’s salary.
Distribution Partner (‘DP’)
A Distribution Partner is an entity that has
a direct relationship with Inmarsat and re-sells
Inmarsat’s services to an end customer.
E
EAN
Our European Aviation Network (‘EAN’)
comprises an integrated satellite and
complementary ground component (‘CGC’).
F
FleetBroadband (‘FB’)
Our flagship L-band maritime service
providing voice and broadband data
services across the world’s oceans.
Fleet Xpress (‘FX’)
Fleet Xpress is Inmarsat’s GX-based
product for the maritime market using
our Ka-band satellites. The FX Service
includes a FBL-band back-up service.
GAAP
Generally Accepted Accounting Principles
is the standard financial reporting framework
as defined by a body of accounting standards
and other guidance used in a given jurisdiction
(see ‘IFRS’).
Geostationary orbit
A circular geosynchronous orbit directly above
the Earth’s equator. Satellites in geosynchronous
orbit match their orbit to the orbit of the earth
and so remain permanently in the same area
of the sky.
Global Xpress (‘GX’)
Services offered by Inmarsat using Inmarsat’s
Inmarsat-5 satellites and Ka-band frequencies.
GlobalXpress is the first high-speed broadband
satellite network to span the globe, from a single
operator. It uses powerful beams able to reach
small antennas on earth providing digital
connections for aviation, land and maritime use.
GMDSS
Global Maritime Distress and Safety Service
which is a system designed to automate a
vessel’s radio distress alert, eliminating the
need for manual watchkeeping of distress
channels. Inmarsat is the only provider currently
of this Maritime Safety Service and is approved
by the International Maritime Organization (‘IMO’).
The Group
The Group refers to Inmarsat plc and all of its
subsidiaries. We may also use ‘we’ and ‘our’
in reference to the Group, depending on
the context.
GSPS
Global Satellite Phone Services are our
handheld products and services including
IsatPhone Pro and IsatPhone 2.
Global Workforce Advisory Panel (‘GWAP’)
In compliance with new regulations
recommended by the Financial Reporting
Council within the UK Corporate Governance
Code, Inmarsat has created a Global Workforce
Advisory Panel which is made up of workforce
representatives from across the Company
allowing Board members to hear feedback
from the workforce.
I
IAS or IFRS
International Accounting Standards or
International Financial Reporting Standards
are the accounting standards issued by the
International Accounting Standards Board.
IFRS is also used to refer to international
GAAP as a whole.
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Financial statements | Glossary of terms
Financial Statements | Glossary of terms
167
167
Industrial Internet of Things (‘IIoT’)
The Industrial Internet of Things describes the
concept of networked, machine-to-machine,
data-producing elements that are delivering
new levels of insight to businesses across the
global production, transportation, logistics
and supply chain.
In-Flight Connectivity (‘IFC’)
In-Flight Connectivity refers to data
connectivity and data services provided to
commercial airlines, for aircraft passengers
to access the internet, use email, social chat
and messaging, and for airline crew to access
non-critical connected airline operations.
In-Flight Entertainment (‘IFE’)
In-Flight Entertainment refers to digital
entertainment services provided to commercial
airlines, for aircraft passengers to use content
services on seatback or overheads screens,
and increasingly digital services provided over
personal devices such as mobile phones and
tablets, but not connected to data sources
outside the plane.
ICAO
International Civil Aviation Organization.
Inmarsat-3 (‘I-3’), Inmarsat-4 (‘I-4’),
Inmarsat-5 (‘I-5’), Inmarsat-6 (‘I-6’)
The third, fourth, fifth and sixth generations
of Inmarsat satellites. Individual satellites in
each constellation are numbered F1, F2, F3, etc.,
so I-5 F2 refers to the second satellite launched
in the fifth generation of Inmarsat satellites.
Inmarsat gateway
Our platform for GX delivering customer support,
network services and an app store. It also opens
up our networks to innovators through a
developer portal.
ITU
International Telecommunications Union.
J
Jet ConneX (‘JX’)
JetConneX is Inmarsat’s GX-based product
for the business and general aviation market.
K
Ka-band
Downlink frequencies between 18GHz and
22GHz and uplink frequencies between 27GHz
and 31GHz. Often referred to as 20/30GHz.
This is the frequency band used by our GX
satellites, it has higher bandwidth than other
bands allowing more data to be transmitted
over the same satellite capacity.
Ku-band
Downlink frequencies between 10.7GHz and
12.74GHz and uplink frequencies between
13.75GHz and 14.8GHz. Often referred to as
11/14 or 12/14GHz. This is the frequency band
used by a limited number of products and
services that we procure from other satellite
network operators.
L
L-band
Uplink and downlink frequencies between
satellites and mobile users between 1.5GHz
and 1.6GHz. This is the frequency band used
by our Inmarsat-3 and Inmarsat-4 satellites
and also by our planned Inmarsat-6 satellites.
Ligado networks
A Cooperation Agreement between Inmarsat
[Being edited by front end team]
and Ligado Networks (formerly LightSquared LP,
Skyterra (Canada) Inc. and LightSquared Inc.)
for the use of L-band in North America.
M
M2M
Machine-to-machine services and products.
MSS
Mobile Satellite Services.
MBPS
Megabits per second are the units used to
measure data transfer rates in the satellite
communications industry.
N
Network Operations Centre (‘NOC’)
The network operations centre is one or more
locations from which network monitoring and
control, or network management, is exercised
over our satellite network.
Network and satellite operations costs
The costs of operating our ground stations.
O
Own work capitalised
Employee-related costs including salary
and travel costs incurred in bringing property,
plant and equipment into use. Own work
capitalised is capitalised as part of the total
cost of an asset.
S
SAS
Satellite Access Stations that receives the
satellite signal and transfers it via our ground
network to terrestrial systems
Safety and Operational Services (‘SOS’)
Safety and Operational Services refers to
connectivity and related services to ensure
the safety, operational efficiency and
safe navigation of aircraft as well as data
services for critical flight operations
and pilot communications.
SOS
Safety and Operational Services
S-band
A mobile satellite band between 2 and
2.5GHz, which we are using for a high-speed
broadband service under development for
the EU aviation industry. The programme has
an Inmarsat S-band satellite fully integrated
with a ground network. We also use the term
S-band to refer to the S-band programme
in general.
Scope 1, 2 and 3 emissions
Carbon emissions as defined by the
greenhouse gas protocol.
Scope 1: All direct greenhouse gas emissions.
Scope 2: Indirect emissions from
purchased electricity, heat or steam.
Scope 3: Other indirect emissions
including travel.
SwiftBroadband
A global service providing voice and
high-speed data simultaneously through
a single installation on an aircraft.
Télécoms Sans Frontières (‘TSF’)
The telecommunications relief aid organisation
is a core beneficiary of our charitable support.
Terminals
The consumer hardware used to receive and
transmit voice and data from earth across our
satellite network. It includes antenna enabled
hardware such as satellite phones and
onboard antennas.
V
Vessel monitoring system (‘VMS’)
A vessel monitoring system is fitted to fishing
vessels to track and report the location,
course and speed at regular intervals (typically
30 minutes to 1 hour) to fishing regulators.
VMS
Vessel monitoring system.
VSAT
Very Small Aperture Terminals are small
mobile two-way satellite antennas able to
receive and transmit voice and broadband
data to a satellite. VSAT services are typically
charged using a fixed monthly fee.
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Financial (cid:54)tatements (cid:95) (cid:36)dditional information
Financial statements | Additional information
Financial statements | Additional information
ADDITIONAL INFORMATION
ADDITIONAL INFORMATION
(cid:44)nmarsat plc (cid:95) (cid:36)nn(cid:88)al (cid:53)eport and (cid:36)cco(cid:88)nts 2018
Inmarsat plc | Annual Report and Accounts 2018
Inmarsat plc | Annual Report and Accounts 2018
FIVE-YEAR SUMMARY
FIVE-YEAR SUMMARY
($ in millions)
Revenues
($ in millions)
EBITDA
Revenues
EBITDA margin
EBITDA
Profit before tax
EBITDA margin
Profit for year
Profit before tax
Net cash inflow from operating activities
Profit for year
Net cash used in investing activities
Net cash inflow from operating activities
Net cash used in financing activities
Net cash used in investing activities
Total assets
Net cash used in financing activities
Total liabilities
Total assets
Shareholders’ equity
Total liabilities
2018 2017 (restated) 2016 (restated)
20151
20141
1,465.2
1,314.1
1,391.7
2018 2017 (restated) 2016 (restated)
785.6
739.3
770.1
1,314.1
1,391.7
1,465.2
59.8%
53.1%
52.6%
785.6
739.3
770.1
288.4
233.8
167.9
59.8%
53.1%
52.6%
232.6
185.0
125.0
288.4
233.8
167.9
777.8
775.5
721.7
232.6
185.0
125.0
(814.8)
(562.1)
(394.4)
777.8
775.5
721.7
122.1
(328.6)
(331.6)
(814.8)
(562.1)
(394.4)
4,862.8
5,003.2
5,027.7
122.1
(328.6)
(331.6)
(3,632.4)
(3,755.1)
(3,690.9)
4,862.8
5,003.2
5,027.7
1,230.4
1,248.1
1,336.8
(3,632.4)
(3,755.1)
(3,690.9)
1,274.1
20151
726.0
1,274.1
57.0%
726.0
338.0
57.0%
282.0
338.0
705.5
282.0
(460.7)
705.5
(275.2)
(460.7)
4,246.1
(275.2)
(2,996.2)
4,246.1
1,249.9
(2,996.2)
1,285.9
20141
701.0
1,285.9
54.5%
701.0
342.3
54.5%
341.1
342.3
644.8
341.1
(424.4)
644.8
(156.4)
(424.4)
4,091.9
(156.4)
(2,908.8)
4,091.9
1,183.1
(2,908.8)
1 Comparatives not restated for the impact of IFRS 15 and the change in accounting policy for unallocated launch slots discussed in note 2
Shareholders’ equity
1,336.8
1,248.1
1,230.4
1,249.9
1,183.1
1 Comparatives not restated for the impact of IFRS 15 and the change in accounting policy for unallocated launch slots discussed in note 2
FINANCIAL CALENDAR 2019
FINANCIAL CALENDAR 2019
1 May
BROKERS
J.P. Morgan Cazenove
BROKERS
25 Bank Street
J.P. Morgan Cazenove
London E14 5JP
25 Bank Street
Credit Suisse
London E14 5JP
1 Cabot Square
Credit Suisse
London E14 4QJ
1 Cabot Square
London E14 4QJ
18 April
1 May
23 April
18 April
30 May
23 April
August
30 May
October
August
November
October
November
REGISTERED OFFICE
AUDITOR
99 City Road
REGISTERED OFFICE
London EC1Y 1AX
99 City Road
Tel: +44 (0)20 7728 1000
London EC1Y 1AX
Fax: +44 (0)20 7728 1044
Tel: +44 (0)20 7728 1000
www.inmarsat.com
Fax: +44 (0)20 7728 1044
www.inmarsat.com
REGISTERED NUMBER
4886072 England and Wales
REGISTERED NUMBER
Deloitte LLP
AUDITOR
2 New Street Square
Deloitte LLP
London EC4A 3BZ
2 New Street Square
London EC4A 3BZ
SOLICITORS
Clifford Chance LLP
SOLICITORS
10 Upper Bank Street
Clifford Chance LLP
London E14 5JJ
10 Upper Bank Street
London E14 5JJ
4886072 England and Wales
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS
CAUTIONARY STATEMENT REGARDING
Certain statements in this Annual Report constitute ‘forward-looking
FORWARD-LOOKING STATEMENTS
statements’ within the meaning of the U.S. Private Securities Litigation
Certain statements in this Annual Report constitute ‘forward-looking
Reform Act of 1995. These forward-looking statements involve
statements’ within the meaning of the U.S. Private Securities Litigation
risks, uncertainties and other factors that may cause our actual results,
Reform Act of 1995. These forward-looking statements involve
performance or achievements, or industry results, to be materially different
risks, uncertainties and other factors that may cause our actual results,
from those projected in the forward-looking statements. These factors include:
performance or achievements, or industry results, to be materially different
general economic and business conditions; changes in technology; timing
from those projected in the forward-looking statements. These factors include:
or delay in signing, commencement, implementation and performance of
general economic and business conditions; changes in technology; timing
programmes, or the delivery of products or services under them; structural
or delay in signing, commencement, implementation and performance of
change in the satellite industry; relationships with customers; competition;
programmes, or the delivery of products or services under them; structural
and ability to attract personnel. You are cautioned not to rely on these forward-
change in the satellite industry; relationships with customers; competition;
looking statements, which speak only as of the date of this Annual Report.
and ability to attract personnel. You are cautioned not to rely on these forward-
Inmarsat undertakes no obligation to update or revise any forward-looking
looking statements, which speak only as of the date of this Annual Report.
statement to reflect any change in its expectations or any change in events,
Inmarsat undertakes no obligation to update or revise any forward-looking
conditions or circumstances, except where it would be required to do so
statement to reflect any change in its expectations or any change in events,
under applicable law.
conditions or circumstances, except where it would be required to do so
under applicable law.
Annual General Meeting and Q1 2019 results
Ex-dividend date for 2019 final dividend
Annual General Meeting and Q1 2019 results
Record date for 2019 final dividend
Ex-dividend date for 2019 final dividend
2018 final dividend payment date
Record date for 2019 final dividend
2019 interim results
2018 final dividend payment date
2019 interim dividend payment
2019 interim results
Q3 2019 results
2019 interim dividend payment
REGISTRARS
Q3 2019 results
Equiniti Limited
REGISTRARS
PO Box 4630
Equiniti Limited
Aspect House
PO Box 4630
Spencer Road
Aspect House
Lancing
Spencer Road
West Sussex BN99 6DA
Lancing
West Sussex BN99 6DA
(cid:39)esi(cid:74)ned and prod(cid:88)ced (cid:69)y
(cid:51)rinted at (cid:51)(cid:88)reprint (cid:42)ro(cid:88)p(cid:15) (cid:44)(cid:54)O 1(cid:23)001(cid:17)
F(cid:54)C® certified and Car(cid:69)on(cid:49)e(cid:88)tral®(cid:17)
(cid:55)his report is printed on (cid:56)(cid:51)(cid:48) Finesse (cid:54)il(cid:78)
which is F(cid:54)C® certified(cid:15) as well as havin(cid:74) (cid:44)(cid:54)O
1(cid:23)001 (cid:40)(cid:48)(cid:54)(cid:15) (cid:40)(cid:48)(cid:36)(cid:54) and the (cid:40)(cid:88)ropean
(cid:40)co(cid:47)a(cid:69)el(cid:17) (cid:51)rinted in the (cid:56)(cid:46) (cid:69)y (cid:51)(cid:88)reprint
(cid:88)sin(cid:74) its p(cid:88)reprint® environmental
printin(cid:74) technolo(cid:74)y(cid:15) and ve(cid:74)eta(cid:69)le in(cid:78)s
were (cid:88)sed thro(cid:88)(cid:74)ho(cid:88)t(cid:17) (cid:51)(cid:88)reprint is
a Car(cid:69)on(cid:49)e(cid:88)tral® company(cid:17)
(cid:37)oth man(cid:88)fact(cid:88)rin(cid:74) mill and the printer
are re(cid:74)istered to the (cid:40)nvironmental
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are Forest (cid:54)tewardship Co(cid:88)ncil® (cid:11)F(cid:54)C(cid:12)
chain(cid:16)of(cid:16)c(cid:88)stody certified(cid:17)
IN THE
SPOTLIGHT
OUR RECENT
AWARDS
Inmarsat GX Aviation
wins ‘Connectivity
Enablement’ at Inflight
Middle East Awards
February 2019
Fleet Safety wins
Safety4Sea
Technology Award
October 2018
Inmarsat and TSF
win Corporate
Engagement Award
June 2018
SMART4SEA
Personality Award
presented to Inmarsat
SVP Peter Broadhurst
January 2019
European Aviation
Network wins German
Innovation Award
June 2018
Inmarsat recognised as one
of Atlantic Canada’s Top
Employers two years running
January 2019 & 2018
SwiftBroadband-Safety
wins prestigious 2018
Jane’s ATC Award
March 2018
Inmarsat CPO Natasha
Dillon wins 2018 HRO
Today Award
November 2018
Inmarsat’s L-TAC service
wins ‘Top Government
Mobility Satcom
Innovation’ award
March 2018
Inmarsat wins
Best Safety Service
of the Year Award
October 2018
Inmarsat GX Aviation
wins ‘Connectivity
Enablement’ at Inflight
Middle East Awards
January 2018
inmarsat.com
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Inmarsat plc
99 City Road
London
EC1Y 1AX
United Kingdom
inmarsat.com