CONNECT BIDCO LIMITED
ANNUAL REPORT AND ACCOUNTS 2022
(Registered in England & Wales as ISAT Connect Bidco Limited, registered number FC037358)
CONNECTING THE
WORLD FOR GOOD
CONTENTS
Financial REPORT
78 Consolidated income statement
78 Consolidated statement of comprehensive income
79 Consolidated balance sheet
80 Consolidated statement of changes in equity
81 Consolidated cash flow statement
82 Notes to the financial statements
125 Company balance sheet
126 Company statement of changes in equity
126 Notes to the company financial statements
127 Independent auditor’s report to the members
of Connect Bidco Limited
135 Appendix 1: Alternative performance measures
136 Glossary
Strategic Report
06 An evolving network
08 Our strategy
10 Business model
12 Chief executive’s strategic review
14 Key performance indicators
Our solutions and services
16 Maritime case study
18 Global Government case study
20 Inmarsat Government case study
22 Aviation case study
24 Enterprise case study
26 2022 performance review
28 Risk management
38 Stakeholder engagement
41 Section 172 statement
44 Sustainability in practice
46 Environmental performance and strategy
50 Taskforce on climate-related financial disclosures (TCFD)
governance Report
58 Reporting in accordance with
our corporate governance policy
59 Governance and leadership
67 Board of Directors
71 Report of the Directors’
75 Directors’ responsibilities statement
02 Connect Bidco Ltd Annual Report 2022
CHANGE
COMMITTED TO POSITIVE
STRATEGIC
REPORT
strategic GOVERNANCE FINANCIAL
Global Xpress (Ka-band¹)
ELERA (L-band³)
European Aviation Network³
8
3
14
18
GX8
GX3
I-3 F3
I-4 F3
9
4
15
19
GX9
GX4
I-3 F5
ALPHASAT I-4 F4
1
12
5
16
10a
GX1
I-3 F1
11
EAN (S-band)
GX5
I-4 F1
GX10a2
21 I-6 F14
2
13
17
7
10b
GX2
I-3 F2
I-4 F2
GX7
GX10b2
22 I-6 F25
An evolving network
The strength of Inmarsat’s financial performance and its investment in
innovation means we deliver award-winning operational, safety and mission-
critical connectivity services to organisations, governments and individuals
around the world.
12
13
8
18
2
22
3
06 Connect Bidco Ltd Annual Report 2022
Notes:
(1) Broadband services are provided via our Ka-band satellites
(2) Highly Elliptical Orbit (HEO)
(3) Narrowband services are provided via our L-band
and EAN satellites
(4) Operational in Q3 2023. GX6a Ka-band payload hosted
on I-6 F1
(5) Operational in Q1 2024. GX6b Ka-band payload hosted
on I-6 F2
NB Satellite positions are indicative and for illustrative
purposes only
Satellite
GX7
GX8
GX9
GX10a
GX10b
Launched by the
end of 2025
14
9
5
19
11
4
1
17
21
15
7
16
10B
10A
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Connect Bidco Ltd Annual Report 2022
strategic GOVERNANCE FINANCIAL
strategic
FINANCIAL
Strategic priorities: A clear strategy for success
GROWTH STRATEGY
TO BUILD A LEADERSHIP
UNDERPINNED BY OUR PURPOSE, CULTURE AND CAPABILITIES
CUSTOMER
FOCUS
MARKET
FOCUS
Our Strategy
Inmarsat is a leading satellite operator focused on global mobility.
We are the only global operator fully
focused on broadband and narrowband
mobility and government services. We
have unique global networks solely
designed and optimised for mobile satcom
services rather than fixed or consumer
applications.
Our strong financial performance
reinforces our strategy and achievement
of our goals and returns on investments.
Centred around our market and customer
focus, we have defined four main strategic
pillars. Our strategy guides our decisions
and enables us to generate sustainable
value and create growth for the benefit of
all our stakeholders.
MAINTAIN AND GROW
THE CORE BUSINESS
We are focused on our core markets
and have built up leading positions. The
revenue opportunities in our core markets
are material at a projected revenue Total
Addressable Market of c. $9.2bn and are
growing at high single digit numbers, due
to an increased demand for connectivity
and digital applications. We enable our
customers to deliver productivity gains
and to serve new ecosystems including
Internet of Things (IoT) that requires
reliable connectivity services. Growing
and maintaining our position in our core
markets offers further strong growth
opportunities.
EXTEND INTO NEAR
ADJACENT MARKETS
Our market positions allow us to also serve
adjacent markets. This helps us to leverage
our deep sector expertise and to bring
value added propositions to new customer
segments in mobility. The adjacent markets
MAINTAIN & GROW THE CORE BUSINESS
We are committed to maintain and grow our core
business to retain our leadership positions.
SHARPEN CUSTOMER & DISTRIBUTION FOCUS
We understand our customers’ needs and proactively adapt
to serve them through an experienced distribution network.
EXTEND INTO NEAR ADJACENT MARKETS
We will pursue growth in identified near adjacent
markets, where we can win and build future business.
DRIVE INNOVATION & DIFFERENTIATION
We will relentlessly innovate and differentiate our
offering to deliver distinctive customer benefits.
PURPOSE DRIVEN
Our purpose, vision and brand reflect our ambition
of clear differentiation and relevance in the
changing market.
CULTURAL EVOLUTION
A culture of empowerment and accountability, agile,
capable, inclusive and commercially focused, with
a strong commitment to execution excellence.
08 Connect Bidco Ltd Annual Report 2022
POSITION IN OUR CORE MARKETS
ENTERPRISE
Grow L-band Internet of Things business and sustain legacy
narrowband business.
GLOBAL GOVERNMENT
Establish clear satcom leadership opportunities and deliver
growth in all major international defence markets.
INMARSAT GOVERNMENT
Maintain and extend existing business to deliver growth and maintain a
leadership position.
AVIATION
Grow InFlight Connectivity (IFC) business and continue to service Business
General Aviation (BGA) and Airline and Operational Services (AOS) customers.
MARITIME
Grow Fleet Xpress (FX) and expand into adjacent markets.
create new opportunities for us to deliver
further profitable growth.
DRIVE INNOVATION AND
DIFFERENTIATION
Inmarsat’s unique satellite operations
with narrowband (L-band) and broadband
(Ka-band) services with global coverage
differentiates Inmarsat from our
competitors. We have a proven track
record of innovation underpinned by our
world leading technology capabilities. Our
distinctive proposition allows us to bring
value to our customers.
SHARPEN CUSTOMER AND
DISTRIBUTION FOCUS
We work closely in partnership with world-
leading customers. We understand our
customers’ needs, and how we can help
them deliver value. We have a balanced
model of direct and indirect distribution.
Our experienced distribution channel and
partnerships provide extensive market
access, supporting our global service
proposition.
TECHNOLOGY LEADERSHIP
Our world class leading capabilities enable us to
drive the technological evolution and disrupt the
sector with break-through innovation.
OUR STRATEGIC
PILLARS ARE
UNDERPINNED
BY THREE CORE
CAPABILITIES:
The first is technology leadership.
Inmarsat has a proud heritage in
this area and world-class people
who make our innovation possible.
We have world-class GEO satellites
operating in L-band, S-band and Ka-
band. And our ORCHESTRA network
will further advance our position as
a leading satellite operator.
Secondly, we are purpose driven
with a clear vision and brand that
reflects our ambition. Our purpose
and values guide our decisions and
how we do business. Our purpose is
to enable the connected world by
placing the customer at the centre
of everything we do.
Thirdly, our high performance
culture supports us to execute
our strategy and deliver our
growth targets. Our employees are
empowered and accountable to
make decisions with a key focus on
our customers.
Our goal is to be a
fast growing, market
leading provider of
connectivity and
services in global
mobility.
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strategic GOVERNANCE FINANCIAL
strategic
FINANCIAL
Business Model
Our purpose of providing “connectivity for good” builds on our strong commitment
to serving as a positive force in the world.
GAINING COMPETITIVE ADVANTAGE THROUGH
OUR CORPORATE RESPONSIBILITY AND OUR PEOPLE
ELERA (L-band)
Our resilient L-band networks, currently through our Inmarsat-3
and Inmarsat-4 satellite constellations, will continue to
support the evolving mobile communications requirements
in our key customer segments. It is recognised as the world’s
most reliable global satellite communications infrastructure
delivering vital connectivity services to millions worldwide.
Dual payload
Our Inmarsat-6 satellites, the second (I-6 F2) of which was
launched in February 2023, comprise a dual payload (L-band
and Ka-band). I-6 F1 is due to enter commercial service later
this year. This will support the reorientation of our L-band
capabilities towards new growth opportunities, as well as
providing additional capacity to our existing GX network.
Global Xpress (GX) (Ka-band)
GX, is the world’s first globally available bandwidth satellite
network with five Inmarsat-5 satellites currently in orbit. It is the
world’s first global, mobile, high bandwidth network, designed
to support our customers’ high bandwidth connectivity
requirements. A further five GX payloads will launch into GEO
orbit by the end of 2025.
S-band
The integrated S-band satellite and air-to-ground network, the
EAN, is a compelling and unique proposition for commercial
aviation customers in Europe.
ORCHESTRA
ORCHESTRA is the development of a unified network, utilising
the existing and evolving ELERA and GX layers, and seamlessly
integrating future terrestrial mesh and LEO layers. ORCHESTRA is
a true network of networks.
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 priorities.
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:
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DELIVERING VALUE FOR
OUR STAKEHOLDERS
We are committed to creating and delivering
sustained value for all our stakeholders.
Shareholders and lenders
We aim to drive profitable growth to help
deliver value for our shareholders and lenders.
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 providing safety services,
particularly to mariners and the aviation
industry and our long-term support of the
charity Télécoms Sans Frontières.
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 the multiple devices they use
for their business needs.
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 customer-focused business segments.
OUR VALUE CHAIN
Our business model delivers sustainable
value for all our stakeholders.
Our revenue streams
Our business units, Maritime, Government, Aviation
and Enterprise, interfaces with our partners and
customers and drive the Group’s revenue.
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strategic GOVERNANCE FINANCIAL
strategic
FINANCIAL
2022 was another financially strong year
for Inmarsat. We saw full-year revenue
increase by 9.0%, EBITDA grew even faster
at 15.0% (see appendix 1), and underlying
free cash flow was $254.7m (see glossary),
ahead of our internal plan. In addition,
we saw our employee engagement score
continue to increase, took an industry
leader position on the crucial issue of
space sustainability, agreed science-
based net zero targets, continued with the
largest satellite development programme
in our history with six payloads under
construction, and much more. All in all, it
was a year where we delivered improved
financial results and made progress on our
major programmes.
Financial highlights
Revenue for 2022 was $1,474.1m and
underlying EBITDA reached $857.0m (see
glossary), both representing our best
performance in the last five years. These
excellent results were achieved despite
a challenging environment, including
high inflation, recession in parts of the
world, the ongoing Covid-19 lockdown in
China, and Russia’s unprecedented war
on Ukraine. I want to thank our customers,
partners, and employees for their support
in achieving such a strong result. It is
deeply appreciated.
Three of four of our business units
delivered growth in 2022. Aviation grew
the fastest – at 37.0% - as the travel sector
continued its post-pandemic rebound.
All three Aviation segments (in-flight
connectivity, business aviation and cockpit
services) grew for the year. Competition in
this market segment is intense - Inmarsat
though remains well positioned with global
coverage, increasing network capacity and
reputation of providing certainty to our
customers.
Maritime, our largest business, rebounded
from an earlier downturn and has now
delivered its second year of consecutive
growth. We continue to have a robust
backlog of vessels waiting for the
installation of our Fleet Xpress broadband
service. Demand for connectivity continues
to grow as reliable internet access for crew
members becomes a competitive hiring
advantage for maritime companies.
Our Government business performed
extremely well, with 2022 revenues up by
7.4%. Our Inmarsat Government business
ended the year up slightly despite a slow
first three quarters. Our non-U.S. Global
Government business had its best year
ever with revenues up 14.9%. Demand
remains strong in this market segment,
where Inmarsat is a long-standing, trusted
partner.
Our Enterprise business struggled in 2022
with significant component shortages,
impacting availability of both satellite
phones and IoT terminals. While the
business returned to growth in the fourth
quarter, we see continued risk related to
component availability. We are working
on initiatives to pivot our focus further
to IoT opportunities. While this work is
well underway, it will take time to deliver
meaningful results.
For 2023, we expect another year of
growth, in-line with the market. EBITDA
should grow as well, although slightly
slower than revenue as we invest in future
opportunities and relieve staffing pressure
in some areas. That said, we will continue
to manage costs given the continuing
macro-economic challenges and robust
market competition.
Viasat transaction
The planned acquisition of Inmarsat by
Viasat has continued to move forward. The
UK Competition and Markets Authority
(CMA) has now provisionally cleared the
transaction and we are working on the
remaining regulatory clearances which will
allow us to move forward to closure of the
transaction in 2023.
Future direction
Our focus is on becoming the leading
intelligent multi-network communications
company.
To achieve this goal, we are continuing to
progress with our ORCHESTRA network,
which remains as compelling today as
when we announced it more than a year
ago. ORCHESTRA will combine GEO, HEO
and LEO; Ka and L-bands; and terrestrial
5G and LTE into a single seamless network
designed to ensure that we are able to
provide customers with the best network
capabilities to meet their needs at the right
time, place and cost.
The 5G mesh component of ORCHESTRA
has completed proof-of concept trials in
Singapore; availability of coastal LTE is
expected around the middle of 2023 and
early LEO testing has taken place. We have
more new GEO satellites in the pipeline
than in any point in Inmarsat’s history. The
LEO element of ORCHESTRA is expected in
the next few years, and our plan remains
to implement the LEO dimension through
either partnering or by building. As we
expand our network, adding more capacity,
plus that purchased from third parties, our
plan is to add intelligence and ensure that
we can orchestrate connectivity across
different technologies, frequencies and
orbits to provide seamless services to
our customers. We have started this work
through the use of Inmarsat’s intelligent
Chief Executive’s strategic review
2022 was another financially strong year for Inmarsat.
12
Connect Bidco Ltd Annual Report 2022
software defined wide area network (SD-
WAN) technology, which is currently under
development.
As we proceed down this path, we will
also further leverage Inmarsat’s brand
and reputation for quality and exceptional
reliability, which help differentiate us from
others. After all, Inmarsat’s roots are in
saving lives and ensuring that when the
SOS button is pushed on the ship’s bridge,
the alert goes out. It just works; it is certain.
We are continuing to invest in 2023. We
launched I-6 F2 in February 2023 and we
are preparing for the launches of GX7,
GX8 and GX9 in 2024 and 2025, with each
of these next generation GX satellites
delivering about twice the total capacity
of the entire current GX network. GX10A
and GX10B are also scheduled to come
in 2024, placed in highly elliptical orbits
(HEO) to give current and new customers
unprecedented coverage in the high north
and across the important Arctic region.
Investments in ground stations have
been significant, and in order to maintain
pace with the new spacecraft, these
installations are happening at a record
rate, faster than ever before.
Employee engagement
Our focus is to protect and nurture the
powerful parts of our culture, including a
strong sense of purpose, collaboration,
intellectual curiosity and technical
excellence, while strengthening customer
focus, levels of accountability and
increasing the pace of our execution.
During 2022 our engagement scores
also increased driven by our progressive
people practices and the strength in our
communication and engagement with our
people. We are particularly proud that we
were able to support our employees with
the increased cost of living by awarding an
off cycle pay increase (totalling 3% of total
base pay) with higher increases awarded to
employees at more junior grades.
Sustainability
During the year, we were the first satellite
communications company to have our
near-term science-based targets validated
by the Science Based Targets initiative
(SBTi). It is our ambition to be net zero
by 2050, and we have approved and
submitted long-term net zero targets to
the SBTi for validation. This effort reflects
our continued commitment to play a
leading role in addressing the impact of
climate change through monitoring our
own impact, that of our supply chain and
adapting to the challenges climate change
may bring in the future.
During 2023, we will continue to remain
focused on sustainable development in
space to address the issue of space debris,
orbital congestion and protection of the
Earth’s atmosphere through supporting
and encouraging the introduction of robust
and enforceable regulation.
Operating model
To maintain the strong momentum we
have built in the past two years, we cannot
stand still. We need to seize opportunities
to accelerate our progress and drive
performance. To address this , we have
made changes to our operating model.
First, we created a Prioritisation and
Portfolio Management function to ensure
we optimise our resources and simplify
work across the business. The terminal
development team now forms part of our
Technology business group where terminal
strategy and speed of implementation will
be core to how they work. Finally,
+9.0%
2050
Full-year revenue growth
Net zero approved target
IN SUMMARY
we combined the Commercial Product
Management and the Enterprise Business
Unit to create a new Commercial and
Digital Solutions team responsible
for growing digital-focused strategic
partnerships, developing a satellite to
mobile business and maintaining the
Enterprise core land business.
Inmarsat’s purpose
I would like to close on a note about
Inmarsat’s purpose.
Our roots are in saving lives, in serving
people when their need is the greatest.
Today, the connectivity that we provide
remains a force for good in the world.
We make our planet safer and more
sustainable. We bring people together to
solve problems. We improve productivity
and efficiency by connecting things
everywhere.
Our purpose, of providing “connectivity for
good” builds on our strong commitment
to serving as a positive force in the world.
This purpose inspires me every day, and for
our employees too.
We remain dedicated to our purpose - and
the trust others place in us as a result. So
even as it feels like an ever less certain
place, you can be sure we will continue to
connect the world, wherever, whenever it
matters, for certain.
I am proud of our achievements in 2022
and look forward to the 2023 opportunities
it brings us.
Rajeev Suri
CEO
20 March 2023
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strategic GOVERNANCE FINANCIAL
FINANCIAL KPIs
Revenue
Revenue is total Group revenue generated from operations.
Refer to p26 for the 2022 performance review.
Key Performance Indicators
Measuring success against our key strategic priorities.
Why it is important
Revenue growth validates our business model, by demonstrating
our ability to develop our customer base and increase ARPU
across our product portfolio.
Link to risks and remuneration
The achievement of this KPI depends on the successful execution of all our
strategic priorities and careful management of our risks. Incentive plans
include revenue as one of the financial performance metrics, so it will be
measured as a basis for incentive plan payments.
EBITDA
EBITDA is total Group profit before net financing costs,
taxation, depreciation and amortisation, gains/losses on
disposals of assets, impairment losses and share of profit of
associates.
Refer to p26 for the 2022 performance review and Appendix
1 for alternative performance measures descriptions and
reconciliations.
Why it is important
EBITDA is a commonly used industry term to help our
shareholders understand contributions made by our solutions
and services. It reflects how the effect of growing revenues
and cost management deliver value to our shareholders.
Link to risks and remuneration
The achievement of this KPI depends on successful execution of all our
strategic priorities and careful management of our risks. Incentive plans
include financial metrics and Group results as performance metrics, so
this KPI will contribute to determining incentive plan payments.
2022
$849.5m
2021
$738.9m
2020 $698.5m
$849.5m
Cash CAPEX
Cash capital expenditure is the cash flow relating to tangible
and intangible asset additions; it includes capitalised labour
costs and excludes capitalised interest.
Refer to p26 for the 2022 performance review and Appendix
1 for alternative performance measures descriptions and
reconciliations.
Why it is important
Cash capital expenditure drives innovation and differentiation
through continued investment in growth and development of
our network and infrastructure, as well as our investment in
the future technologies of the business.
Link to risks and remuneration
The achievement of this KPI depends on the successful execution of all our
strategic priorities and careful management of our risks. Incentive plans
include financial metrics and Group results as performance metrics, so
this KPI will contribute to determining incentive plan payments.
2022
$316.0m
2021
$356.3m
2020 $287.9m
$316.0m
Strategy:
Strategy:
Strategy:
2022
$1,474.1m
2021
$1,352.4m
2020 $1,272.1m
$1,474.1m
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NON-FINANCIAL KPIs
Network availability
Ongoing investment in our space and ground infrastructure
ensures that customers are supported by an overall 99.9%
availability in each of our GX and L-band networks. We meet
the maritime safety requirements set by the International
Maritime Organization for safety of our L-band services.
Why it is important
Ensuring our network is available and reliable is essential in
providing the required quality of service to our customers. This
reliability is critical for safety at sea and aviation cockpit services.
Link to risks and remuneration
The risks for this KPI are set out in the principal risks section of this report.
This KPI is included within bonus objectives for relevant staff.
Emissions
We track our emissions to check they are in line with the
Paris Agreement on Climate Change and to prevent the worst
effects of catastrophic climate change by limiting average
global temperature increases to well below two degrees
Celsius. In 2022, the Board approved long-term net zero
science-based targets for the Group which are being validated
by the Science Based Targets initiative.
Why it is important
Unless urgent action is taken to limit global temperatures
to 1.5º above pre-industrial levels, climate change presents
significant and systemic risks.
Link to risks and remuneration
The achievement of this KPI is linked to our corporate responsibility
to reduce global greenhouse gas emissions and avoid the worst
effects of climate change. This KPI is included within bonus objectives
for relevant staff.
2022
88,133 tCO2e
2021
92,911 tCO2e
2020 78,632 tCO2e
88,133 TCO2E
Employee engagement
Employee engagement describes an employee’s level of
commitment and enthusiasm to their work and their company.
We measure employee engagement through our Peakon
survey which helps us identify areas where we are performing
well and those that need to be improved.
Why it is important
It is important as higher levels of employee engagement have
been proven to positively impact business performance.
Link to risks and remuneration
The achievement of high levels of employee engagement will contribute to
our drive for a high-performance organisation and therefore underpins the
delivery of all our strategic priorities. Many of our risks are affected if we
do not have engaged staff.
2022
99.9%
2021
99.9%
2020 99.9%
99.9% availability
STRATEGIC PRIORITIES
Maintain and grow
the core business
Extend into near adjacent
markets
Drive innovation and
differentiation of our
services
Sharpen customer
and distribution focus
Strategy:
Strategy:
2022
8.1
2021
7.9
2020 8.1
8.1/10
Strategy:
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strategic GOVERNANCE FINANCIAL
strategic
FINANCIAL
OUR SOLUTIONS AND SERVICES: MARITIME CASE STUDY
Golden Energy Offshore owns and
operates a fleet of modern support
vessels providing offshore services to
the oil, gas and renewables industries.
As a long-term Inmarsat customer, Golden
Energy Offshore is also a longstanding
user of our VSAT services. Typically,
offshore vessel operators deploy separate
LTE and VSAT solutions, using LTE when in
range of onshore networks, rigs or wind
farms and relying on crew to switch to
satellite connectivity when beyond the
reach of 4G.
With a focus on minimising its
environmental footprint, Golden Energy
Offshore sees performance analysis as
a crucial tool in facilitating its Green
Operations goals. The company requires
sufficient bandwidth to collect, analyse
and transfer significant volumes of vessel
and machinery performance data. It
also needs the capacity to support other
data-intensive activities, such as video
conferencing, and facilitate remote vessel
inspections as well as remote equipment
servicing for customers. Crew welfare
is another vital consideration, with a
fast and reliable internet connection a
necessity for onboard personnel.
However, costs can become difficult
to manage and switch-overs can
compromise signal strength and cause
service interruptions. Against this
background, Golden Energy Offshore
opted to build on its relationship with
Inmarsat, implementing our Fleet LTE
solution on board three of its vessels,
with all three installations carried out
during scheduled port calls.
Bringing together three distinct
services, Fleet LTE, Fleet Xpress and
FleetBroadband, to produce a an
integrated results service, Fleet LTE
demonstrates the same principle behind
the forthcoming Inmarsat ORCHESTRA
network. By unlocking the power of
Fleet Data, Fleet LTE helps shipowners
to make informed decisions to optimise
efficiency, reduce fuel consumption
and minimise emissions, while the Fleet
Secure service offers resilient cyber
security.
According to Per Ivar Fagervoll, Chief
Executive Officer, Golden Energy Offshore,
Fleet LTE meets all of the company’s
requirements. “By maximising network
capacity and minimising latency while
reducing connectivity costs, the solution
has given us a significant competitive
edge. Crucially, it supports vessel
performance analysis, allowing us to make
data-driven decisions to improve efficiency
and sustainability across our fleet.”
Supporting the ships’ owners and operators with the right data at
the right time is key to helping manage operational efficiencies and
ultimately, operate more sustainably.
operations
greener
16
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16
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DATA-DRIVEN
DECISIONS TO
IMPROVE EFFICIENCY
AND SUSTAINABILITY
17
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strategic GOVERNANCE FINANCIAL
The worrying increase of wildfires
across the globe has also led to
widespread radio and cell tower failures
and power outages. These disruptions
to emergency communications are a
public safety threat, with Command and
Control centres unable to communicate
with firefighters, ambulance staff
and police officers – resulting in a
devastating community impact and
loss of life.
Governments require their Push-
To-Talk (PTT) radio users to be fully
interoperable with all other radio users
in times of disaster, which means
crisis-proof communications using
their existing equipment. Inmarsat’s
satellite communications give first
responder teams the secure and reliable
connectivity to public safety networks
they need, whenever disaster strikes.
Our Vehicle as a Network (VAAN)
solution, which provides always-on
connectivity in vehicles, command
centres and at ground zero, is currently
being rolled out across over 700 Fire
Rescue New South Wales (FRNSW)
and State Emergency Services (NSW
SES) vehicles in Australia. The Hypha
Group has been awarded the contract
to supply the Fire & Rescue service
with satellite equipment and airtime
to facilitate firefighters with critical
communications, anywhere, over the
next three to five years.
Each vehicle will be equipped with a
Cobham SATCOM Explorer terminal,
which operates over our 99.9%
reliable ELERA satellite network, to
enable crews to constantly stay in
touch during a major emergency.
The FRNSW’s ‘Connected Firefighter’
programme will ensure access to best-
in-class communications technology
by upgrading ageing hardware and
delivering innovative technology to
keep crew connected now and well
into the future. Advancement of this
cutting-edge technology is part of
an investment by the New South
Wales Government in response to
the recommendations made after
the deadly Black Summer bushfires
of 2019-2020.
OUR SOLUTIONS AND SERVICES: GLOBAL GOVERNMENT CASE STUDY
CONNECTIVITY
LIFE-SAVING
Working with emergency services to enable critical
communications when it’s needed the most.
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VEHICLES WILL BE
EQUIPPED WITH A
TERMINAL, WHICH
OPERATES OVER OUR
99.9% RELIABLE
ELERA NETWORK
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strategic GOVERNANCE FINANCIAL
In an effort to continue to strengthen
the United States’ global leadership in
space and aeronautics, the National
Aeronautics and Space Administration
(NASA) is leading the way with innovative
work and through the advancement of
transformational space technologies –
with the help of Inmarsat Government.
NASA is investing in critical
technologies that will increase reliable
communications capabilities and
transform its mission technology.
This effort envisions systematically
migrating near-Earth missions from
communications and navigation
services provided by government-
owned networks to commercial
networks. NASA sees next generation
space-based communications networks
as mission-essential services for future
human and robotic missions.
In April 2022, Inmarsat Government
announced its new partnership with
NASA on its Communications Services
Project (CSP), which stands as validation
of the approach towards more broadly
leveraging commercial capabilities
for mission critical requirements.
Working together we will demonstrate
a variety of space-based applications,
enabled by Inmarsat’s ELERA worldwide
L-band network, which will include
capabilities for Launch Support, Launch
and Operations Phase (LEOP), Low Data
Rate Routine Missions and Contingency
Mission Operations communications.
For Launch Support, our InRange
capability provides rapid, responsive
and cost-effective launch support from
space, removing the need to construct
and maintain costly distributed ground-
based telemetry infrastructure.
For Space Relay, our InCommand solution
will deliver a highly efficient, cost-
effective and time-critical space-based
solution for any low Earth orbit (LEO)
satellite by removing the dependency on
costly distributed ground infrastructure.
It is designed to provide near real-time
24/7 connection to our GEO satellite
and ground infrastructure, supporting
command and control and telemetry of
LEO spacecraft in space relay for rapid
tasking.
OUR SOLUTIONS AND SERVICES: INMARSAT GOVERNMENT CASE STUDY
HUMANITY
FURTHERING
Helping NASA transform its mission technology
with rapid support from space.
20 Connect Bidco Ltd Annual Report 2022
20 Connect Bidco Ltd Annual Report 2022
Image source: ©NASA 2022
IMPROVED
CONNECTIVITY
FOR A BETTER
WORLD
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strategic GOVERNANCE FINANCIAL
In the on-going race to decarbonise,
airlines are seeking solutions that not
only improve Air Traffic Management
(ATM) efficiencies but also, ultimately,
generate less CO2. Inmarsat and the
European Space Agency’s (ESA) ground-
breaking Iris programme does just that.
Powered by our award-winning
SwiftBroadband-Safety (SB-S)
connectivity platform, Iris enables new
ATM functionalities such as trajectory-
based operations that pinpoint
aircraft in four dimensions (latitude,
longitude, altitude and time). Through
real-time collaboration between
pilots, air traffic controllers and airline
operation centres, via secure, high-
bandwidth data links, airlines can
avoid holding patterns, calculate the
shortest available routes and optimum
altitudes, and benefit from continuous
climb and descent pathways. In turn,
this minimises delays, saves fuel and
reduces the environmental impact
for airlines, while also improving
airspace usage to ease congestion
and accommodate future growth. The
additional datalink capacity provided by
SB-S also supports a host of powerful
onboard digital applications, such as AI
flight profile optimisers and real-time
weather applications that will further
the fuel and CO2 savings.
In 2022, we announced one of Europe’s
leading airlines, easyJet, as Iris’ first
airline partner. With the support of Air
Navigation Service Providers, easyJet
will evaluate Iris’ transformative
capabilities on up to 11 Airbus A320neos,
which are planned to begin flying with
the service in 2023.
The Iris programme is the culmination
of years of development by Inmarsat,
ESA, and more than 30 partners. Iris
supports easyJet’s commitment to
achieve net zero carbon emissions by
2050 as part of the UN-backed ‘Race to
Zero’ campaign, with an interim target
for easyjet of a 35% carbon emissions
intensity reduction by 2035 (versus 2019).
OUR SOLUTIONS AND SERVICES: AVIATION CASE STUDY
NET ZERO
DESTINATION
A winning partnership and ground-breaking solution
to support easyJet on their journey to net zero.
22 Connect Bidco Ltd Annual Report 2022
22 Connect Bidco Ltd Annual Report 2022
REDUCTION OF
35% CO2 INTENSITY
IMPROVEMENT
BY 2035
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strategic GOVERNANCE FINANCIAL
We continue to play a vital role in
mitigating the long-term effects of
climate change and building resilience
to support communities in the face of
natural disasters.
In the Pacific Islands, for instance,
reliable access to real-time, data-driven
climate and weather information enables
highly accurate short-term weather
forecasts to advance understanding
of how climate change is reshaping
weather patterns globally, while giving
local populations the information they
need to improve their cyclone, drought
and flood resilience.
Utilising our ultra-reliable Internet
of Things (IoT) solution, BGAN M2M,
the National Institute of Water and
Atmospheric Research (NIWA) supported
Tonga Meteorological Service (TMS)
to install a network of reliable, robust,
automated weather and sea level
monitoring stations. These can maintain
consistent connectivity, even in the most
extreme circumstances, including the
tsunami triggered by the eruption of the
Hunga Tonga–Hunga Ha’apai volcano in
the Tongan archipelago in January 2022.
Although one weather station was lost
to the tsunami’s waves, the rest survived
and continued to send data from some of
the region’s most remote islands.
The value of satellite connectivity was
further highlighted when the undersea
communications cable Tonga relies on
for its phone and internet connection
was severed during the eruption.
However, it was possible to provide
TMS with one of our devices at a local
monitoring station to connect to the
internet, so that they could access data
from their network of automatic weather
and sea-level stations. In the immediate
aftermath of the event, Tonga’s National
Emergency Management Office was
also able to use the data from these
stations to assess the impact of the
eruption on the northern Tongan islands
and to support the provision of weather
information for initial flyovers of tsunami
and ash-impacted islands.
monitoring
ENHANCED environmental
Equipping communities with the tools and data to monitor,
respond to and prepare for the worst.
OUR SOLUTIONS AND SERVICES: ENTERPRISE CASE STUDY
24 Connect Bidco Ltd Annual Report 2022
24 Connect Bidco Ltd Annual Report 2022
RELIABLE MONITORING
DURING THE MOST
EXTREME WEATHER
CONDITIONS
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strategic GOVERNANCE FINANCIAL
REVENUE
A second year of strong
revenue.
Total revenue for the year-ended
December 31, 2022 increased by $121.7m
(9.0%), to $1,474.1m from $1,352.4m
for the corresponding period in 2021
reflecting a second year of strong
revenue.
“Total revenue for
the year-ended
December 31, 2022
increased by $121.7m
(9.0%), to $1,474.1m
from $1,352.4m for
the corresponding
period in 2021
reflecting a second
year of strong
revenue.”
MARITIME
Revenue returns to growth.
Maritime has returned to growth with
revenue increasing by 1.9% to $515.5m.
This increase reflects continued strong
growth of Fleet Xpress (“FX”) exceeding
the decline of FleetBroadband (“FB”),
legacy product price increases, and
higher terminal sales. FX vessels
increased by 15% (11,800 to 13,600),
FX average revenue per unit (“ARPU”)
increased by 1% ($1,850 to $1,870),
following higher retail mix and increased
value-added services. FB vessels
decreased by 15% (22,200 to 18,900)
as customers migrated to FX and other
third party Very Small Aperture Terminals
(“VSAT”) services. FB ARPU declined 7%
($605 to $560) as migrations remained
skewed to the higher value customers.
GOVERNMENT
Another year of revenue
growth.
Revenue increased by 7.4% to $526.9m.
Inmarsat Government revenue increased
by 4.3% to $364.6m following material
contract wins and renewals, and
additional hardware sales, partially offset
by continued reduced op tempo. Outside
the US, revenue increased by 14.9% to
$162.3m, with higher hardware sales,
growth in GX connections, and increased
managed and lease services.
2022 Performance review
A second year of strong revenue, EBITDA, and positive free cash flow
+9.0%
+1.9%
+7.4%
REVENUE INCREASES FOR THE YEAR-ENDED 31 DECEMBER 2022
26 Connect Bidco Ltd Annual Report 2022
AVIATION
Strong market recovery
continues in core business
and IFC.
Revenue increased by 37.0% to $310.8m
reflecting ongoing recovery in the
aviation market. Core Aviation revenue,
comprising Business Aviation (“BGA”)
and Aircraft Operations and Safety
services (“AOS”) were 37.2% ($66.1m)
higher than the corresponding period
in 2021, following strong growth in both
activity and the number of JX aircraft
following strong market growth, and
lower distributor incentives. The number
of installed JetConneX (“JX”) aircraft
increased by 19% (1,118 to 1,331). In Flight
Connectivity (“IFC”) revenue continued to
improve with revenue increasing 36.1%
($17.8m) reflecting more aircraft returning
to service and increased passenger
usage. The number of IFC installed
aircraft increased by 8% (853 to 919).
ENTERPRISE
Performance impacted by
supply chain challenges.
Revenue decreased by 7.9% to $106.4m,
driven by constrained satellite phone
handset sales following global supply
chain issues which are beginning to
alleviate, lower lease requirements of
one customer, and continued market
pressure on the legacy product base,
partially offset by higher airtime from
strong historical handset sales.
+37.0%
-7.9%
EBITDA
EBITDA for the year-ended
December 31, 2022 increased
by $110.6m (15.0%), to $849.5m
as compared to $738.9m for the
corresponding period in 2021.
This reflected strong revenue
growth, partially offset by higher
costs in support of revenue
growth, inflationary increases,
and additional professional fees in
relation to the Viasat transaction.
PROFIT FOR THE YEAR
Profit for the year-ended
December 31, 2022 is $105.2m as
compared to a loss of $152.9m
for the corresponding period in
2021. This reflected higher EBITDA
and lower tax charges following a
$175m deferred tax charge in the
prior year relating to revaluation of
the UK deferred tax liability from
19% to 25%, partially offset by
higher net financing costs.
CASH CAPEX
Cash capital expenditure for the
year-ended December 31, 2022
decreased by $40.3m to $316.0m
as compared to $356.3m for the
corresponding period in 2021.
This was driven mainly by the
timing of contractual payments on
major infrastructure investments,
including the successful I-6 F2
launch in Q1 2023.
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strategic GOVERNANCE FINANCIAL
strategic
FINANCIAL
OUR RISK MANAGEMENT
FRAMEWORK
Effective risk management is
fundamental to our ability to meet both
our short-term and longer-term strategic
objectives. 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 bought together
under an overarching risk management
policy. This policy, together with the risk
management framework have been
implemented to focus risk management
on business objectives and the
mitigation of the largest risks.
Risk management
Identify Risks
Assess Risks
Review and
Re-evaluate
Monitor
Risk
Management
Framework
Manage Risks
28 Connect Bidco Ltd Annual Report 2022
Risk appetite
Inmarsat faces a broad range of risks
reflecting the business environment in
which it operates. The risks arising from
our business environment and operating
model can be significant. Successful
financial performance for the business is
achieved by managing these risks through
intelligent decision-making and an
effective control environment to mitigate
risk. The company’s risk appetite is set
by the Board and governs the amount
of acceptable risk within which we
operate. Our Group risk appetite is further
disaggregated by principal risk and takes
into consideration the acceptable level
of risk across strategic, operational,
financial, commercial, regulatory and
technological risks faced by the business.
Our general risk appetite is a balanced
one that allows taking measured risk
as the company pursues its strategic
objectives, whilst aiming to manage
and minimise risk in its operations.
We recognise that it is not possible or
necessarily desirable to eliminate all of
the risks inherent in our activities.
Horizon scanning and
emerging risks
In order to promote sustainable success,
the business continues to analyse
the risks likely to emerge in the short,
medium and longer term that may
impact the delivery of our strategy. To
provide a view over the medium to longer
term, a horizon scanning approach is
required. This looks at future complexity,
challenges assumptions and review
options for future business planning.
Our approach to undertaking horizon
scanning is based on conducting both
reviews of thought leadership and also
through obtaining the views of key
business stakeholders. The Executive
Management team then reviews and
discusses the horizon risks to form a view
as to whether any of these should be
considered in the Principal Risk process
or additional actions should be factored
into strategic planning for the business.
Our risk management
structure
The Board has overall responsibility for
the Group’s system of risk management
and internal control and for reviewing
its effectiveness. The Board is supported
by the Audit Committee, the Executive
Management team and the Central Risk
Committee. The business operates a
process of continuous identification and
review of business risks.
The main business areas are responsible
for preparing and maintaining risk
registers and operating risk management
processes for their areas of responsibility.
Risk registers and the risk processes
are undertaken in accordance with a
consistent risk management methodology,
toolkit and process. The Central Risk
Committee has continued to facilitate the
evaluation of the principal risks facing the
business.
Roles and responsibilities:
The Board
Responsible for risk management and internal control.
Annually reviews the risks and risk management processes and policy and risk appetite policy to ensure that they meet their
requirements.
Audit Committee
Executive Management team
Central Risk Committee
Reviews the effectiveness of
internal control.
Monitors risk exposure.
Approves risk management
polices, process and tools.
Approves quarterly risk reports
and ensures mitigation steps are
actioned.
Reviews quarterly risk reports
and ensures mitigation steps are
actioned.
Supported by Senior Director Risk & Crisis Management
Business Leads
Responsible for the identification, assessment and implementation of mitigation activities for internal and external risks that
may impact the ability of their business area to meet company objectives.
29
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strategic GOVERNANCE FINANCIAL
strategic
FINANCIAL
PRINCIPAL RISKS AND UNCERTAINTIES
The Group faces a number of risks and uncertainties that may
adversely affect our business, operations, liquidity, financial
position or future performance, not all of which are wholly
within our control. Although many of the risks and uncertainties
influencing our performance are externally driven and likely
to affect the performance of businesses generally, others are
particular to our operations in mobile satellite services. A full
summary of our principal risks is shown in the following pages.
PRINCIPAL RISKS
Throughout 2022 the Principal Risks were reviewed and
discussed by the Executive Management team and the Central
Risk Committee. The risk profile changed over the course
of the year with a number of risks being removed from the
register, others redefined and new ones added. The risk grid
below summarises where the current risks sit in our principal
risk matrix as at 31 December 2022, showing any change over
the year 2021 to 2022.
<$10m
$10m-$25m
$25m-$50m
$50m-$200m
>$200m
>88%
50%-88%
33%-49%
10&-32%
<10%
% Net probability
Net Impact
D
C
B
A
A+
5
4
3
2
1
04
13
12
14
05
01
02
06
11
03
10
07
08
09
THE FOLLOWING SYMBOLS REPRESENT CHANGES IN RISK
PROFILE 2022 OVER 2021
Increase
Unchanged
Decrease
New
The Central Risk Committee continually reviews and
monitors the risks and uncertainties which could have a
material effect on the Group’s results. Several changes were
made to the 2022 risk profile over 2021. The main differences
are explained below:
— The risk ‘Major Supplier / Channel Partner Failure’ has been
split into its component parts with risk associated with
suppliers and channel partners shown separately.
— The risk ‘Mergers & Acquisitions’ has been refocussed to
the Viasat deal.
— The previous separate risks on ‘Competition and Market’
have been combined to a single risk.
— The risks relating to ‘Business Model’ and ‘Business
Optimisation’ have been removed from the Principal Risk
register. The former reflecting the stabilisation of the
operating model following changes announced in 2021 and
the later being subsumed into the other strategic risks.
The Group’s risks, and the factors which mitigate them, are set
out in more detail on the following pages.
RISK
2022 OVER 2021 TREND
STRATEGIC
04
Adverse Geopolitical & Economic Factors
10
Failure of the Viasat Transaction
13
Environmental, Social & Governance
OPERATIONAL
09
Major Security or Cyber Event
12
Failure to Attract & Retain Talent
14
Major Operational Failure
FINANCIAL
05
Key Supply Chain Dependency
08
Access to Long-term Funding
COMMERCIAL
01
Competition & Market Activity
02
Sector Consolidation
06
Reliance on Key Channel Partners
LEGAL/REGULATORY
11
Compliance Breach
TECHNOLOGY
03
Spectrum Access
07
Failure to Innovate
RISK MANAGEMENT continued
30 Connect Bidco Ltd Annual Report 2022
ADVERSE GEOPOLITICAL &
MACRO-ECONOMIC FACTORS
MITIGATION OWNER: Chief Executive Officer
Risk Level:
Medium
What is the Risk?
How we manage it
Risk Movement:
— Further deterioration of the political
environment causes broad economic
disruption and dislocation that could
impede our ability to access key growth
markets, impacting revenue growth.
— Our ability to deliver continued business
performance could be significantly
affected by the individual or aggregate
impact of an increasingly complex set of
macroeconomic factors, such as rising
inflation, $:£ exchange rate fluctuations
and recessionary pressures all of which
may combine to generate difficult and
unpredictable headwinds.
— Strong relationships with in-country
partners across the globe that help to
navigate uncertainty.
— In-house experts who understand and
manage sanctions compliance.
— Continuous review and adaptation of
our strategy in reaction to developing
political or economic situations.
— Emerging new risks arising from
political decisions that could impact our
business are assessed for mitigation.
Link to Strategy:
FAILURE OF THE VIASAT TRANSACTION
MITIGATION OWNER: Chief Financial Officer
Risk Level:
Medium
What is the Risk?
How we manage it
Risk Movement:
— If the Viasat transaction fails then
there is a risk that we will be delayed
in developing strategic options that
will allow us to compete in the rapidly
evolving market place.
— Use of specialist third party advisors to
advise on the deal.
— Internal teams working on Regulatory
Approvals with Regulators worldwide to
obtain clearance.
Link to Strategy:
ENVIRONMENTAL,
SOCIAL & GOVERNANCE
MITIGATION OWNER: Chief Corporate Affairs Officer
Risk Level:
Medium
What is the Risk?
How we manage it
Risk Movement:
— Failure to run our business in a
sustainable way by assessing the
environmental impact of our operations,
which may result in damage to our
corporate reputation or key stakeholder
confidence.
— We have an Environmental Steering
Group that sets the business
environmental roadmap.
— Net Zero science- based targets have
been approved by the Board and
validated by the Science Based Target
initiative.
— Working with suppliers to reduce their
Scope 3 emissions.
— New Land Earth Stations to use 100%
renewable electric.
— Decarbonising our future buildings by
committing to BREEAM certification.
— Formal and externally assured approach
for reporting on carbon emissions and
energy.
Link to Strategy:
StrateGIC
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strategic GOVERNANCE FINANCIAL
strategic
FINANCIAL
32 Connect Bidco Ltd Annual Report 2021
MAJOR SECURITY OR CYBER EVENT
MITIGATION OWNER: Chief Operating Officer
Risk Level:
Medium
What is the Risk?
How we manage it
Risk Movement:
— Failure to secure satellites, networks,
information, data, systems, processes
and services from a major security
or cyber event which could impact
business objectives, services to
customers, performance and reputation.
— Policies, guidelines and standards
consistent with a positive security
culture.
— Continuous Information Security
improvement programme.
— In depth, state-of the art counter
measures and monitoring.
— Dedicated 24/7 Cyber Security
Operations centre.
— Maturity assessment against the NIST
framework.
— Maintaining accreditations including ISO
27001 and Cyber Essentials Plus.
— Broad cyber security awareness
programme, including mandatory
training.
— Information Security assessments over
third parties and internal projects.
Link to Strategy:
FAILURE TO ATTRACT & RETAIN TALENT
MITIGATION OWNER: Chief People Officer
Risk Level:
Low
What is the Risk?
How we manage it
Risk Movement:
— Failure to invest in the key skills required
to maintain competitive advantage
in the current business environment,
could result in insufficient capacity
or capability to deliver the core
business plans and establish effective
organisational structures.
— A People strategy that identifies key
employees, skills and skills gaps.
— Succession plans for critical roles.
— Development plans for employees with
growth potential.
— Resource planning for each business
unit and function on an annual basis.
— Investment in training and development.
— Recruitment strategies to support the
business with required competencies.
— Employee engagement survey.
— Diversity & Inclusion survey.
Link to Strategy:
Operational
32 Connect Bidco Ltd Annual Report 2022
MAJOR OPERATIONAL FAILURE
MITIGATION OWNER: Chief Operating Officer
Risk Level:
Low
What is the Risk?
How we manage it
Risk Movement:
— If there is a major operational failure
affecting our satellites, launches or IT
Networks then our reputation or delivery
capability may be heavily compromised,
with material business impact in the
near and long term.
— Infrastructure and satellites are
designed, built and maintained with a
level of redundancy and resilience.
— Space asset operation is in line with
manufacturer instructions and industry
best practices.
— Protection against space weather and
debris enhanced through participation
in industry and international bodies.
— Having a distributed teams, sites and
infrastructure.
— Operation of a broad regional service
and global partner network to mitigate
localised disruptions.
— Business Continuity and IT Disaster
Recovery arrangements are in place.
Link to Strategy:
TREND 2021 - 2022
Increase
Unchanged
Decrease
New
STRATEGIC PRIORITIES
Maintain and
grow the core
business
Extend into
near adjacent
markets
Drive innovation
and differentiation
of our services
Sharpen customer
and distribution
focus
Operational
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strategic GOVERNANCE FINANCIAL
strategic
FINANCIAL
SUPPLY CHAIN DEPENDENCY
MITIGATION OWNER: Chief Financial Officer
Risk Level:
Medium
What is the Risk?
How we manage it
Risk Movement:
— Supply Chain disruption and our reliance
on key partners may impact our ability
to procure required to either upgrade
existing customer’s technology or
activate new customer accounts
resulting in dissatisfied customers and
restricted our revenue growth.
— A Supplier Relationship Management
framework is in place.
— Contractual options with multiple
launch vehicle providers are maintained.
— Continuously looking to widen the scope
and number of terminal manufacturers.
— Ensuring competition, wherever
possible, to avoid technical or capability
lock-in with any particular supplier.
— Advanced placing of orders for 2023 to
give suppliers best chance of on-time
delivery.
Link to Strategy:
ACCESS TO LONG TERM FUNDING
MITIGATION OWNER: Chief Financial Officer
Risk Level:
Medium
What is the Risk?
How we manage it
Risk Movement:
— Unavailability of working capital and
long-term funding necessary to fund the
business model could impede our ability
to continue to invest for future growth.
— RCF in place for $700m until December
2024.
— Mix of bank and bond debt with no
material repayments due until the
$2.075bn Senior Note in 2026 and Term
Loan of $1.711bn.
— Capped and Fixed rate facilities for the
long-term debt and Senior Notes.
— Natural long term currency hedges are
in place to ensure that the majority of
revenues, costs, capital expenditure and
debt funding are USD denominated.
— Working to proactively minimise interest
expense.
— Positive Credit Agency ratings allows
the company to seek new funding if
required.
Link to Strategy:
Financial
34 Connect Bidco Ltd Annual Report 2022
TREND 2021 - 2022
Increase
Unchanged
Decrease
New
STRATEGIC PRIORITIES
Maintain and
grow the core
business
Extend into
near adjacent
markets
Drive innovation
and differentiation
of our services
Sharpen customer
and distribution
focus
COMPETITION AND MARKET ACTIVITY
MITIGATION OWNER: Chief Commercial and Digital Officer
Risk Level:
High
What is the Risk?
How we manage it
Risk Movement:
— Rapid, well-funded and widely
publicised growth of new Low Earth
Orbit or Middle Earth Orbit satellite
operators and/or technologies may
disrupt and cannibalise our market,
driving a rapid deterioration in our
relative competitiveness and hence
growth prospects.
— ELERA and ORCHESTRA work is underway
to enhance our services.
— Proactively supporting satellite
operators in forums, where appropriate,
to defend broader satellite interests
from use by terrestrial operators.
— Investment in market intelligence
to understand longer term pricing
dynamics, and prepare our response in
advance.
— Reinforcing our market focus and
customer intimacy through our Business
Units.
— Continuously looking to increase our
operational agility by mobilising our
network capacity to leverage cost/bit
capabilities.
Link to Strategy:
SECTOR CONSOLIDATION
MITIGATION OWNER: Chief Strategy Officer
Risk Level:
High
What is the Risk?
How we manage it
Risk Movement:
— Further sector consolidation (vertical
or horizontal) produces stronger
competitors. This could enable
competitors to offer more compelling
solutions forcing existing customers
to leave Inmarsat and new would-be
customers to opt for the competitor’s
solutions resulting in loss of revenue/
market share.
— Developing commercial strategies
to retain customers in response to
changes in the marketplace.
— Developing new product capabilities
or revised commercial offers to satisfy
customer requirements.
— Broadening of our market presence
beyond pure connectivity to capture
new value-added services to include
empowered connectivity capabilities,
managed services and related
activities, and digital capabilities and
partnerships.
Link to Strategy:
Commercial
35
Connect Bidco Ltd Annual Report 2022
strategic GOVERNANCE FINANCIAL
strategic
FINANCIAL
Commercial
RELIANCE ON KEY CHANNEL
PARTNERS
MITIGATION OWNER: Chief Commercial and Digital Officer
Risk Level:
Medium
What is the Risk?
How we manage it
Risk Movement:
— We have a reliance on a number of key
channel partners which exposes us to
risks associated with the misalignment
of objectives between Inmarsat and the
partner, or the financial or reputational
failure of a supplier, which could impact
the necessary distribution capability
needed to grow our market share.
— Reviewing our channel partner
community in response to changing
market dynamics.
— Working dynamically with existing
partners to grow their revenues.
— Promoting fair play in our distribution
channels.
— Obtaining in-country market access for
our distribution channel in advance,
where possible, to make licensing
requirements as straightforward as
possible for our partners.
Link to Strategy:
LEGAL REGULATORY
COMPLIANCE BREACH
MITIGATION OWNER: Chief Corporate Affairs Officer
Risk Level:
Low
What is the Risk?
How we manage it
Risk Movement:
— If there is a major compliance failure,
emergent regulatory constraint or
non-compliance with government
performance specifications, we may
face penalties and reputational damage,
including exclusion from government
bids that affects business plans
resulting in increased costs or a market
or sector being closed to Inmarsat.
— Compliance horizon scanning operates
to maintain awareness of new
legislation.
— Introduction of new policies and training
into the business when required.
— External advisors and in-house experts
advise the business and help mitigate
compliance risks.
— Compliance teams are involved from the
outset of any relevant new projects to
ensure compliance risk is managed.
— Compliance programmes and training
in place for anti-bribery and corruption,
export controls, sanctions, conflicts of
interest and whistleblowing.
— We operate a Gifts & Hospitality
Register process which is reviewed by
Compliance.
— Compliance policies and processes are
maintained and updated regularly.
Link to Strategy:
36 Connect Bidco Ltd Annual Report 2022
TECHNOLOGY
SPECTRUM ACCESS
MITIGATION OWNER: Chief Technology Officer
Risk Level:
Medium
What is the Risk?
How we manage it
Risk Movement:
— Failure to maintain adequate
spectrum access (orbital slots, orbital
planes, frequency licenses) that
are coordinated for our current and
planned requirements could result in
loss of competitive advantage, ability
to offer service to customers and loss
of revenue opportunities.
— Working with in-country partners/ regulators
to secure licenses and market access to allow
our services to operate in key countries.
— Engaging with and supporting regulators to
defend our licences against 5G demands.
— Working with regulators globally through ITU
forums.
— Proactively making ITU filings for orbital slots
through several national administrations
for our ongoing spectrum and orbital slot
requirements.
— Working closely with regulators to source
network licenses in the market and
secure licenses early wherever possible to
grandfather spectrum.
— Regularly improving the efficiency of our
spectrum usage through innovation and
system enhancements.
— Updating regulators and governments about
the socio-economic contribution of our
mobile satellite services.
Link to Strategy:
FAILURE TO INNOVATE
MITIGATION OWNER: Chief Technology Officer
Risk Level:
Medium
What is the Risk?
How we manage it
Risk Movement:
— Failure to innovate/develop or delays
in delivery of new technologies, secure
sufficient capacity in market/sector
prioritized locations, introduce new
products and services, or develop new
propositions could make Inmarsat
uncompetitive, unattractive to
customers which results in missed
revenue opportunities.
— We have an existing broad portfolio of
products and services that address
customer requirements and opportunities in
several markets.
— A Technology Roadmap has been developed
to guide options for future network
capabilities and to address customer
requirements.
— We have introduced new services with
common technologies and develop more
competitive pricing strategies.
— ELERA (L-band) development is underway
including next generation terminal activities.
— By monitoring technology, competitor
and market developments and adapting
accordingly.
— Regularly making improvements to the
efficiency of our spectrum usage through
innovation and system enhancement.
— Maximising spectrum opportunities where
possible.
— Business Units provide pipeline assessment
to allow future capacity usage assessments
to be performed.
— We prioritise investment to focus on new
requirements.
Link to Strategy:
37
Connect Bidco Ltd Annual Report 2022
strategic GOVERNANCE FINANCIAL
strategic
FINANCIAL
Stakeholder
What matters to them
How we engage
at Board level
How we engage
across the company
How we delivered
Employees
— Opportunities to reach
full potential.
— Open and honest
environment.
— Diverse and inclusive
workplace.
— Health, safety and
wellbeing.
— Fair pay and reward.
— The CEO conducts skip
level meetings across
the organisation as a
whole and takes part in
a monthly Q&A session
and provides feedback
at Board meetings.
— Culture, talent
development and
people strategy are
discussed at Board
meetings.
— The Remuneration
Committee reviews
workforce policies and
practices and makes
recommendations to
the Board.
— The Board considers our
employee engagement
survey results and
steps taken to address
feedback.
— CEO leads quarterly all
staff meetings, with
significant time spent
on open dialogue and
Q&A and structured
to have a timezone
that works for AsiaPac
employees as well
as a separate global
meeting.
— Comprehensive internal
communications plan
supporting regular
two-way information
exchange and
engagement with
employees across
multiple channels on
strategic direction
and progress, Viasat
transaction, culture and
values and wellbeing.
— Executive level regular
engagement with
formal staff bodies (UK,
Netherlands, Australia)
and our Global
Workforce Advisory
Panel (GWAP) global
representative group.
— Our employee
engagement score
increased by 0.2 to
8.1/10 in Dec 2022.
— We issued an out of
cycle salary increase
to address the cost of
inflation in response
to feedback and input
from our employees and
representative groups.
— Continued focus on
Diversity, Equity and
Inclusion and launched
a new parent and carers
network.
— Continued delivery
of broad portfolio
of learning and
development
opportunities, building
professional and
leadership capability,
and in 2022 specific
focus on building
commercial capability
through our new sales
excellence programme.
— Refreshed our core peer
to peer recognition
programme – our ‘Spot
Beams’ – enhancing
value and supporting
retention.
This section provides some insight into how the Board
engages with our stakeholders to understand what matters
to them and further inform the Board’s decision making and
the actions taken as a consequence. You can read more in
our formal Section 172 Statement on pages 41 to 42, which
sets out our approach to Section 172 and on page 43 which
provides examples of decisions taken by the Board, including
how stakeholder views and inputs have been considered in its
decision making.
STAKEHOLDER ENGAGEMENT
We are focused on driving long-term sustainable performance for the benefit of our
customers, shareholders, and wider stakeholders.
38 Connect Bidco Ltd Annual Report 2022
Stakeholder
What matters to them
How we engage
at Board level
How we engage
across the company
How we delivered
Partners and
Customers
— Connectivity when it
matters most.
— Global network
coverage with service
levels that can be relied
upon.
— Leading, easy-to-use
products and services
that meet customer
needs.
— Dependable customer
service around the
clock.
— Innovation, staying in
tune with customer
needs and investing in
the future.
— An executive level
“customer board”,
is mobilised to fully
understand customer
insights and take
action, both on central
roadmap or process
improvements.
— The CEO meets both
partners and customers
frequently both at
formal dedicated
conferences and more
regular dedicated
sessions to gather
feedback and share
plans.
— Performance to our
agreed SLA levels is
tracked, reported, and
acted on.
— The Board are
debriefed on customer
satisfaction results
and contribute to a
company wide plan for
customer experience.
— Our engagement
with partners directly
shapes our strategy and
business plan.
— Launched a new
customer insights
function to ensure
customer needs
are reflected in all
offers and customer
experiences.
— Invested in a new
central customer
experience function
to review and design
all key touchpoints
and execute a
strategic improvement
programme.
— Ran customer research
programmes to gauge
needs and perceptions.
— Negative feedback
gathered through
surveys is acted upon
with follow-up contact.
— Audited and reviewed
customer experiences
from the feedback
gathered and plan
improvements centrally.
— Our customer
Satisfaction score
increased from 73%
in 2021 to 76% in
2022, compared to
a 75% target, with
improvements seen
across 10 out of 12
questions we ask them.
— We achieved our
targets for customer
satisfaction and are on
track for our 2023 plan.
— Our own market
perception research
showed leading
results for factors such
as network quality,
industry leadership,
customer support and
product range.
— Sustained network
investment has
taken place with
the introduction of
Inmarsat-6 F1 to our
constellation, providing
improved speed and
reliability.
— We aligned our culture
around our customers,
introducing ‘Customer’
as a company
value, with training,
measurement, design,
and a Customer
Experience roadmap.
Shareholders
and Lenders
(our investors)
— Strategy and business
model.
— Financial performance.
— Reputation.
— ESG performance.
— Leadership.
— Financial Risk
Management.
— Board and Audit
Committee
recommends and
approves the Annual
Report and Accounts
and the quarterly
results.
— The CEO has regular
dialogue with
shareholders to respond
to enquiries.
— The CFO holds quarterly
financial results
meetings with our debt
investors.
— 9% full year revenue
growth and 15% EBITDA
growth.
— Carbon reduction
targets validated,
and net zero targets
approved for validation
by the SBTi.
— Received lender
consent to amend the
Credit Agreement to
transition from LIBOR to
new market reference
rates of SOFRA and
SONIA.
39
Connect Bidco Ltd Annual Report 2022
strategic GOVERNANCE FINANCIAL
strategic
FINANCIAL
Stakeholder
What matters to them
How we engage
at Board level
How we engage
across the company
How we delivered
Suppliers and
Contractors
— Fair engagement and
payment to terms.
— Projects that succeed
which can be used as
case studies to win new
business.
— Responsible end-to-end
supply chain.
— Commercial
performance and
supplier relationships
are discussed at Board
meetings.
— Regular meetings with
our suppliers through
the supplier relationship
management (SRM)
programme and by
project managers
across the business
to ensure both parties
deliver.
— VP Global Procurement
is responsible for the
implementation and
delivery of progress
on sustainability in our
supply chain.
— Majority of suppliers
paid to time in line with
external benchmarks.
— SRM programme
enhanced to bring
extra focus on delivery,
quality, agile and
closure.
— New procurement
sustainability strategy
implemented with top
strategic suppliers to
deliver climate targets.
Local
Communities
— Operational impact and
disruption.
— Economic contribution.
— Protection of the
environment.
— Environmental matters
are regularly considered
by the Board.
— Our people volunteer,
when safe to do
so, through our
volunteering
programme, working to
improve our community
and environment.
— STEM partnership
continues to remain
important.
— Matched employee
donations to Disasters
Emergency Committee
and the International
Red Cross for the crisis
in Ukraine.
— Continued our 20+ year
support of Télécoms
Sans Frontières with
monetary and hardware
support.
— 40 days volunteered by
staff across our global
companies to a variety
of charities.
STAKEHOLDER ENGAGEMENT Continued
40 Connect Bidco Ltd Annual Report 2022
As a Guernsey incorporated entity, we are not required to make a
section 172 statement however, we have chosen to do so in line
with best practice and our Corporate Governance Policy.
Section 172 of the Companies Act 2006 requires the Directors
to take into consideration the interests of stakeholders in their
decision making and is central to the formulation and execution
of our strategy and is critical in achieving our long-term
sustainable success. The needs of our different stakeholders
as well as the consequences of any decision in the long-term
are well considered by the Directors. It is not always possible to
provide positive outcomes for all stakeholders and the Directors
sometimes have to make decisions based on the competing
priorities of stakeholders. Our stakeholder engagement
processes enable our Directors to understand what matters
to stakeholders, carefully consider all the relevant factors and
select the course of action that best leads to the high standards
of business conduct and long-term success. The principles
underpinning Section 172 are not something that is only
considered at Board level, they are part of our culture and are
embedded in all that we do as a company. The differing interests
of stakeholders are considered in the business decisions we
make across the company, at all levels, and are reinforced by
our Board. In performing their duties during 2022, the Directors
have had regard to the matters set out in Section 172(1) of the
Companies Act 2006. We’ve outlined below, through cross
reference, where the Board has considered the Section 172
matters throughout this Annual Report.
section 172 Statement
Connect Bidco Limited is a Guernsey incorporated entity with a registered
establishment in England and Wales.
SECTION 172 MATTERS
(a) The likely consequences of any decision in the long-term
Our strategy
p8
Business model
p10
2022 performance review
p26
(b) The interests of the company’s employees
2022 performance review
p26
Our people
p72
Diversity, equity and inclusion
p73
Employee engagement
p72
(c) The need to foster the company’s business relationships
with suppliers, customers and others
Responsible payment practices
p40
2022 performance review
p26
Sustainability in practice
p44
Business model
p10
(d) The impact of the company’s operations on the community
and the environment
Our purpose
p13
Sustainability in practice
p44
Environmental performance and strategy
p46
Task Force on Climate-related Financial Disclosures
p50
(e) The desirability of the company maintaining a reputation
for high standards of business
Our strategy
p8
Our purpose
p13
(f) The need to act fairly between members of the company
Stakeholder engagement
p38
41
Connect Bidco Ltd Annual Report 2022
strategic GOVERNANCE FINANCIAL
strategic
FINANCIAL
s172 Statement continued
PRINCIPAL DECISIONS IN 2022
Some of the principal decisions taken by the Board in the year
are detailed on page 43. Our approach below sets out how the
Board is supported in carefully considering all the relevant
factors that lead to its selection of the best course of action
to ensure the long-term success of the company.
Board
Information
Board papers requiring decisions
include a table setting out s 172
factors and relevant information
relating to them.
Stakeholder engagement activities are
recorded, and detail included in board
papers where applicable.
Training on Directors’ duties is provided
to ensure awareness of the Board’s
responsibilities.
Board Strategic
Discussion
Board
Discussion
Section 172 factors are considered in
the Board’s discussions on strategy,
including how they underpin long-term
value creation and the implications for
business resilience.
The Chairman ensures decision making
is sufficiently informed by s 172 factors.
Engagement and dialogue with
stakeholders.
The Group’s culture ensures that there
is proper consideration of the potential
impacts on decisions.
The Board ensures there is sufficient
detail in relation to the quality of the
information presented and receives
assurance where appropriate.
Follow up actions with Board oversight.
42 Connect Bidco Ltd Annual Report 2022
Examples of decisions taken by the Board and how stakeholder views and inputs, as well as other s172 considerations,
have been considered in its decision making are set out below:
Off-cycle salary increase to all employees
Setting net zero targets
Context: The Board approved an out of cycle salary increase to all
employees following a review of market trends to help support
employees with the increased cost of living effective 1 October
2022. An additional average of 3% of total base pay was awarded,
with a focus on awarding a higher increase to those people on
lower grades.
There was an average of 6% permanent salary increase across
the company in 2022 and this will be reviewed again in early
2023 as part of the normal salary review process effective 1 July.
Context: The Board supports the UK Government’s net zero
commitment and takes its responsibility for setting the
climate change and ESG strategy of the company seriously.
Following the validation of our near-term science-based
targets during 2022, the Board approved the setting of the
company’s long-term net zero targets which are to reduce
emissions by 90% based on a 2019 baseline and 10%
neutralisation of residual emissions from 2050.
Consideration of s172 impacts by the Board in its decision making
Consideration of s172 impacts by the Board in its decision making
Employees: We rely on the know-how, creativity and
entrepreneurial spirit of all our employees and recognise we need
the best teams to be engaged and to collaborate to achieve our
purpose together. The Board considered our employees would
feel more engaged, appreciated and part of an inclusive culture
and this would be for the benefit of the company in the long-term.
Employee feedback was positive – supported by employee
engagement scores increasing compared to the prior year.
Investors: The Board considered climate risk in the context of
investment risk and the correlation between disclosure and
capital allocation and reached the decision there would be
financial gains both in terms of the cost of capital and return
on capital employed.
Investors: The Board carefully considered the need to deliver
value for investors and customers. Recognising our employees
have the skills, competences, and experience to deliver our
business objectives and create value and the value of making this
adjustment to maintain employee support.
Employees: The Board considered that the long-term net
zero targets, by adopting strong environmental values, would
attract and retain employees and encourage employee
engagement on sustainability generally.
Customers: An engaged workforce would deliver an improved
customer experience and create further opportunities
together to increase revenues.
Suppliers: Sustainable procurement is a key focus area for us
to achieve both our near-term science-based targets and our
long-term net zero targets due to most of our emissions sitting
in the purchased products and services category of Scope 3. We
will continue to engage with our suppliers to understand more
about their processes, improve the credibility of our data and work
collaboratively to achieve our net zero target by 2050.
Outcome and impact on the long-term sustainable success
of the company: The benefits to the off cycle pay increase
can contribute to higher productivity and entrepreneurial
spirit, improved employee engagement and a better customer
engagement and experience. This in turn would deliver benefits
to our investors.
Outcome and impact on the long-term sustainable success
of the company: The impact of the Company’s clear and
defined pathway to reduce emissions and help prevent the
worst impacts of climate change can future proof the business
now and going forwards and improve the environment. These
considerations were pivotal to the Board’s decision.
KEY STAKEHOLDER GROUPS CONSIDERED
Employees
Investors (shareholders and lenders)
Partners and Customers
Suppliers and Contractors
Local Communities
43
Connect Bidco Ltd Annual Report 2022
strategic GOVERNANCE FINANCIAL
strategic
FINANCIAL
SUSTAINABILITY in practice
As an organisation founded to deliver life-saving satellite communication services,
having a responsibility for people and planet are fundamental to our business.
As an organisation founded to deliver life-
saving satellite communication services,
having a responsibility for people and the
planet are fundamental to our business.
By meeting our social and environmental
responsibilities, we aim to create value
for our stakeholders. These include
employees, customers, investors,
partners, local communities and more.
By considering carefully comments from
both internal and external stakeholders,
we can focus on the sustainability issues
that matter most.
OUR JOURNEY TO NET ZERO
Climate change is one of our greatest
challenges and for all organisations
generally. We recognise the urgency
and severity of the threat posed by
climate change and we aim to be
a leading advocate in the satellite
communications industry with our
ambitious commitments. In 2022,
our near-term science-based targets
were validated by the Science Based
Targets initiative (SBTi). These targets
commit Inmarsat to reducing Scope 1
and 2 emissions by 64% and Scope 3
emissions by 28% from a 2019 baseline,
by 2030.
Building on this foundation, we have now
submitted a long-term science-based
target to the SBTi for verification. This net
zero target would require us to reduce
Scope 1, 2 and 3 emissions by 90% by
2050, only offsetting the remaining 10%
to reach net zero. Reaching this ambitious
goal will depend on significant emissions
reduction programmes across every
part of our business, and especially in
our Supply Chain, as can be seen in the
diagram below.
NET ZERO BY 2050: HOW EMISSION REDUCTIONS IN EACH SECTOR CONTRIBUTE
“We recognise the
urgent threat of
climate change
and we want to be
a leading advocate
in our industry
by driving down
emissions of
greenhouse gases
and preparing our
business to thrive in
a net zero economy.”
KEY
Scope 1&2: Fuels and Electricity consumed
in operations
FERA: Fuel and Energy related activities
Waste
Upstream Leased Assets: e.g., the build,
transport and launch of our launch
vehicles
Upstream Transport & Distribution: e.g,
movement of our products to sites or
customers
Products Supplier Engagement
Purchased Goods & Services and Capital
Goods
Product Life Cycle Analysis
Employee Commuting
Business Travel Flights
Business Travel Hotels
Business Travel Aviation Innovation
Long Term Business as Usual
Long Term SBT
Near Term SBT
Emissions
Year
19
21
23
25
27
29
31
33
35
37
39
41
43
45
47
49
20K
40K
60K
80K
100K
120K
140K
160K
44 Connect Bidco Ltd Annual Report 2022
TOP CHALLENGES
As we work towards achieving these targets, we must find solutions to key challenges. These key challenges are:
1. Supply chain emissions
Since we do not control our supply chain,
we cannot develop solutions alone and
need markets and companies to play
their role instead. For example, we need
satellites and user terminals in order to
provide airtime services. We must therefore
work with our supply chain to find zero-
carbon ways to manufacture and deliver
these assets.
Despite these challenges, we are committed to
reaching our near and long-term emissions reductions
targets. Even if some challenges do not yet have a
solution, we are working to lay the groundwork for
future success.
We are also working to enable our stakeholders to
reduce their greenhouse gas emissions. In 2022, we
published two thought leadership reports that showed
how satellites can help to reduce emissions on earth.
Independent researchers studied three industry sectors
- transport and logistics, agriculture, forestry and
other land use and energy systems which account for
approximately 60% of global emissions. The research
found that if these industries universally adopted satellite
technologies to help improve operational efficiency, it
could yield CO2 savings of 5.5 billion tonnes a year based
on current technologies. This is equivalent to one-sixth
of total emissions reductions estimated as necessary to
keep the global temperature rise below 1.5°C by 2030, or
one-third of the reduction necessary to keep temperature
rises below 2°C. The reports can be found via the
following links:
1. https://www.inmarsat.com/en/news/latest-news/
corporate/2022/net-zero-10-years-early-full-
adoption-space-tech-new-modelling.html
2. https://www.inmarsat.com/en/insights/
corporate/2022/space-sustainability.html
2. Process emissions
There are currently no alternatives to
carbon-intensive launch processes
for satellites, although we will look to
offset emissions through carbon offset
arrangements.
3. Offsets
It is possible that we will not be able to
reach our long-term target through
emissions reductions alone. To achieve net
zero in the long-term, high-quality carbon
removal technologies will need to be
available in the market.
strategic GOVERNANCE FINANCIAL
45
Connect Bidco Ltd Annual Report 2022
ENVIRONMENTAL
PERFORMANCE AND
STRATEGY
The satellite launch industry is reviewing
how it becomes more accountable for
carbon generation through innovative
new satellite launch techniques. We
recognise the impact of our products
and services on climate change and are
working to review how we can reduce
our environmental impacts and our
carbon footprint. We will work together
with our industry partners such as
product manufacturers and launch
providers to see how we can improve
techniques for our future launches and
reduce the footprint of our products.
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 visitor travel. We
have provided further details of our
objectives for how we manage our
environmental activities with our ESG
report which can be found on our
website. The following information
summarises our emissions performance
over the year. Our reporting covers the
relevant Scope 1, 2 & 3 categories as
per the Greenhouse Gas Protocol. In
2022, our ambitious science-based
target covering our Scope 1, 2 and 3
was approved and we have continually
made progress against this target since
submission.
Greenhouse gas (GHG) emissions
This section has been prepared in
accordance with our regulatory obligation
to report greenhouse gas (GHG) emissions
pursuant to The Companies (Directors’
Report) and Limited Liability Partnerships
(Energy and Carbon Report) Regulations
2018 which implement the government’s
policy on Streamlined Energy and Carbon
Reporting.
The table on page 48 shows our
greenhouse gas emissions for the
years ended 31 December 2019 to
2022. Our emissions have been verified
to a limited level of assurance by an
external third party according to the ISO
14064-3 standard to ensure continuous
improvement of our GHG reporting. This
verification statement can be found on
our website and within our ESG Report
2022.
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 Intelligence, part of
Accenture, and has been converted into
CO2 equivalents using the UK Government
2022 Conversion Factors for company
Reporting and the International Energy
Agency international electricity conversion
factors in order to calculate emissions from
corresponding activity data.
We quantify and report our
organisational GHG emissions in
alignment with the World Resources
Institute’s Greenhouse Gas Protocol
Corporate Accounting and Reporting
Standard and in alignment with the
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
Environmental performance and strategy
The satellite launch industry is reviewing how it becomes more accountable for
carbon generation through innovative new satellite launch techniques.
IN SUMMARY: OUR PERFORMANCE
4%
Increase
>
in scope 1 and 2 emissions since 2021
>
1%
Decrease
in emissions intensity since 2021
25%
of electricity
now from renewable sources
46 Connect Bidco Ltd Annual Report 2022
decisions that Inmarsat has made. When
quantifying emissions using the market-
based method, 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. For the
location-based method, we used average
emissions factors for the country in which
the reported operations take place.
The table on page 48 shows our total
emissions for the year ended 31 December
2022 using the two different Scope 2
accounting methodologies.
Performance
We operate in 37 locations with a
combined workforce of approximately
1,800 staff. We set science-based
targets covering our Scope 1, 2, and 3
emissions in 2021 for the period to 2030.
We submitted these for validation by the
Science Based Target initiative in early
January 2022 and received validation
in October 2022. This year again, we are
pleased to be able to report on our full
Scope 1, 2 and 3 emissions in line with
the Greenhouse Gas Protocol.
In 2022, our Scope 1 and 2 emissions
have increased by 4% since 2021 (using
the market-based Scope 2 accountancy
method). Our Scope 1 and 2 emissions
intensity has decreased by 1% from 5.84
(2021) to 5.80 (2022) tCO2e/FTE (using
the market-based Scope 2 accounting
approach). Details on our energy efficiency
initiatives can be found on page 49.
We have seen a 37% increase in our
stationary fuel emissions, primarily due
to an increase in gas consumption at
our London site. Overall, the amount of
electricity from renewable sources has
increased from 24% to 25% in 2022, with
the Houston, U.S. site increasing from 6%
to 100% renewable energy.
We saw a 6% decrease in our Scope 3
emissions from 2021. In the period there
was an increase in inflation adjusted
spend on purchased goods and services
and an increase in business travel due
to Covid-related travel restrictions being
lifted. There were reductions in emissions
as a result of decreased spend on capital
goods, and in upstream leased assets
due to the absence of satellite launches
in the period. We also saw a lower level
of product sales and therefore the
emissions related to our products such as
procurement, logistics, product energy use
and disposal of products decreased from
previous years.
To meet our requirements under the
Streamlined Energy and Carbon Reporting
obligations, our emissions, included in
the table on page 48, that relate to the UK
equal 716 tCO2e Scope 1 and 1,513 tCO2e
Scope 2 (location-based). During the
reporting period our measured Scope 1
and 2 emissions (location-based) totalled
10,977 tCO2e. Our measured Scope 3
emissions totalled 78,257 tCO2e.
“We recognise the
impact of our products
and services on
climate change and
are working to review
how we can reduce
our environmental
impacts and our
carbon footprint.”
strategic GOVERNANCE FINANCIAL
47
Connect Bidco Ltd Annual Report 2022
Greenhouse gas emissions (tCO2e)
2022
2021
2020
2019
Scope 1
Combustion of fuel and operation of facilities (Scope 1)
902
696
868
1528
Scope 2 (location-based) Electricity, heat, steam and cooling purchased for our own use
10,075
10,515
11,381
12,759
Scope 2 (market-based)
Electricity, heat, steam and cooling purchased for our own use
8,974
8,839
7,452
7,953
Total Scope 1 and 2 emissions (location-based)
10,997
11,211
12,249
14,288
Total Scope 1 and 2 emissions (market-based)
9,876
9,535
8,320
9,481
Emissions intensity tCO2e per full-time equivalent (‘FTE’) employee (location-based)
6.4
6.9
6.5
7.7
Emissions intensity tCO2e per full-time equivalent (‘FTE’) employee (market-based)
5.8
5.8
4.4
5.1
Scope 3
Purchased goods and services¹
62,612
61,306
57,302
98,906
Capital Goods¹
7,178
12,148
5,694
13,561
Fuel-and-energy-related activities
2,047
3,589
2,623
3,119
Upstream Transportation and Distribution2
163
176
1,670
2,038
Business travel
3,667
504
1,790
10,660
Waste
2
14
16
78
Water
8
7
27
21
Employee Commuting (incl. homeworking)3
1,308
1,255
997
1536
Upstream Leased Asset
-
1,677
-
2,433
Use of sold goods
142
209
191
117
End of Life treatment of products
1,130
2,492
3
5
Total Scope 3 emissions
78,257
83,376
70,312
132,474
Gross Scope 1, 2 and 3 (location-based)
89,234
94,587
82,561
146,761
Gross Scope 1, 2 and 3 (market-based)
88,133
92,911
78,632
141,955
¹ Purchased goods and services for 2021 were restated (2021 reported figure: 67,984 tCO2e) and capital goods for 2021 were restated (2021 reported
figure: 13,105 tCO2e) to account for an error in accounting for the crediting of included spend found during the 2022 verification. We are undertaking a
programme to engage with suppliers and improve data quality by moving away from spend based emissions factors where possible.
² Upstream transport and distribution for 2021 was restated (2021 reported figure: 39,226 tCO2e) to account for an error overestimating the tonne-
kilometres of air freight. We are undertaking a programme to engage with suppliers and receive data that requires less manual manipulation.
³ Employee commuting (incl. homeworking) for 2021 was restated (2021 reported figure: 2,216 tCO2e) to account for an error over inflating the footprint of
homeworkers. In 2022, the data quality has improved, with a greater ability to recognise hybrid working in the estimation.
Environmental performance and strategy continued
IN SUMMARY: OUR BUILDINGS
100%
Renewable
London (UK)
100%
Renewable
Rotterdam
(The Netherlands)
100%
Renewable
Den Haag
(The Netherlands)
99.7%
Renewable
Alesund (Norway)
76%
Renewable
St John’s (Canada)
100%
Renewable
Houston (U.S.)
48 Connect Bidco Ltd Annual Report 2022
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,
we continue to include our Land
Earth Stations within our Scope 1
and 2 boundary. Our network ground
infrastructure whilst operated by a third
party, meet the criteria under the GHG
Protocol of operational control and
therefore we have chosen to include
them within our 2022 reporting for
completeness and transparency. Our
methodology of emissions from locations
with fewer than 15 staff on-site remains
the same as these are still reasonably
estimated as immaterial and are thus
excluded from our GHG disclosure.
However, whenever data was provided
by sites we included them, even if they
fall outside our materiality threshold.
Our Scope 1 and 2 emissions for all
significant sites and Scope 3 emissions
from all sites have been included in our
calculations. GHG sources that constitute
our operational boundary for the 2021
reporting period are:
— 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 and
heat consumption for our own use.
— Scope 3: Purchased goods & services,
capital goods, fuel and energy
related activities (FERA), upstream
transportation & distribution,
waste, business travel, employee
commuting, upstream leased assets
(related to launch vehicles), use of
sold goods and end of life emissions.
A further description of each of
these categories can be found in the
ESG Report, available on our website.
In some cases, where data is missing,
values have been estimated using either
extrapolation of available data or data from
the previous year as a proxy.
Energy efficiency
Our London office is on a 100%
renewable energy contract. In 2024 we
will be moving our London Headquarters
from City Road to 50 Finsbury Square.
At the new London Headquarters,
will continue to source our electricity
from 100% renewable sources and
are looking at making upgrades in the
following key areas:
— The removal of gas and diesel usage.
— Utilising AI BMS to smartly manage
building operations to save energy
and water.
— BREEAM Certification.
— SmartApps to assist building
management and operations.
In addition to our London headquarters,
the following offices are currently on
renewable energy contracts:
— Rotterdam (The Netherlands) 100%
renewable.
— Den Haag (The Netherlands) 100%
renewable.
— Alesund (Norway) 99.7% renewable.
— St John’s (Canada) 76% renewable.
— Houston (U.S.) 100% renewable.
We are assessing whether it is possible
to purchase our electricity from 100%
renewable sources at our offices in
Indonesia and Australia.
“In 2024 we will be
moving our London
Headquarters from
City Road to 50
Finsbury Square.
At the new London
Headquarters, will
continue to source
our electricity from
100% renewable
sources.”
Energy
consumption
(MWh)
2022
2021
2020
2019
UK
Rest of
world
Total
UK
Rest of
world
Total
UK
Rest of
world
Total
UK
Rest of
world
Total
Electricity
7,822
23,729
31,550
7,043
27,353
34,396
6,945
26,500
33,445
7,632
27,426
35,058
Fuels
3,770
814
4,584
2,313
931
3,244
3,168
939
4,107
3,235
3,046
6,282
During the year, our total fuel and electricity consumption totalled 36,134 MWh, of which 32% was consumed in the UK. The
split between fuel and electricity consumption is displayed above.
Further information on our energy efficiency initiatives is detailed in our ESG Report, which can be found on our website.
49
Connect Bidco Ltd Annual Report 2022
strategic GOVERNANCE FINANCIAL
strategic
FINANCIAL
TCDF Recommended
disclosures
Our disclosure
Progress to date
Board oversight of
climate-related risks and
opportunities.
— The Board has ultimate responsibility for
climate-related risks and opportunities.
— Climate and ESG risk is designated a
principal risk.
— The Board considers climate risks as part of
its overall risk review processes of ESG.
— In 2022, the Board approved our long-term
science-based target and this has been
submitted for validation to the SBTi.
— The Board approved our roadmap for
reaching our near-term science-based target
in 2021 for the period to 2030.
Management role in
assessing and managing
climate-related risks and
opportunities.
— The CEO is board sponsor for environmental,
social and governance (ESG).
— The Chief Corporate Affairs Officer (CCAO)
has operational responsibility for climate
related issues.
— The CCAO is a member of the Executive
Management team and chairs the
Environmental Steering Group meeting on a
quarterly basis.
— The Central Risk Committee meets quarterly
and also reviews our climate risks.
— During 2022, the Environmental Steering
Group and Central Risk Committee each met
four times, reviewing our TCFD analysis and
ESG risk register and assigning risk owners
to the top risks.
— Bonus payments linked to our climate
strategy for certain senior leaders, including
our CEO and CCAO.
— Our CEO spoke publicly about climate risk
and opportunity on publication of our 2022
reports Space Sustainability and What on
Earth is the Value of Space? Links to these
reports can be found on page 45.
In 2021, we began an in-depth review to align our business
processes with the recommendations of the Taskforce on
Climate-Related Financial Disclosures (TCFD). We identified
risks and conducted preliminary qualitative scenario analysis.
Since then, we commenced integration of climate-related risk
into risk management, governance structures and routines.
In 2022, we submitted near and long-term science-based
targets to the SBTi for verification, progressed climate-related
risk management and started work on activities to realise
these goals. Our near-term targets were validated in October
2022.
This disclosure is in line with the TCFD recommendations and
updated guidance. Further information can be found in our
2022 CDP Climate Change Response as well as our 2022 ESG
Report available on our website.
Taskforce on Climate-related
Financial Disclosures (TCFD)
Given the urgent threat posed by climate change, the Board and Executive
Management of Inmarsat are committed to decarbonising our business,
addressing climate-related risk, and capturing opportunities to realise our goals.
50 Connect Bidco Ltd Annual Report 2022
TCDF Recommended
disclosures
Our disclosure
Progress to date
Climate-related risks and
opportunities identified
over the short, medium
and long term.
Our top climate-related risks and opportunities
are:
Physical Risks
— Asset damage – long term (2036-2050).
— Service disruption – medium term (2024-2035).
— Energy – medium term (2024-2035).
Transition Risks
— Changing customer preferences –
short to medium term (2021-2035).
Opportunities
— Renewables and onsite generation –
short term (2021-2024).
— Green financing – medium term (2024-2035).
— Products and markets –
medium term (2024-2035).
— After initial identification in 2021, we
reconfirmed these to be the most material
risks and opportunities in 2022.
— Next, we plan deeper dive risk modelling, as
well as embedding climate risk into business
strategy and operations.
— We will continue to explore transition planning.
— Our first carbon-neutral launch took place in
February 2023.
Impact of climate-related
risks and opportunities
on the business, strategy,
and financial planning.
— All risks and opportunities have been
assessed for impact on our business.
— The impact of each climate-related risk and
opportunity, along with mitigating controls
is described in the 2022 ESG Report, found
on our website.
— Next, we will further integrate climate risk
and opportunities into our business and
long-term strategy planning to mitigate and
adapt to long-term impacts of transition to a
low-carbon economy.
— We will also review emerging requirements
around transition plans.
Resilience of strategy
taking into consideration
different climate-related
scenarios, including a
2°C or lower scenario.
— Preliminary scenario analysis undertaken
using three plausible climate scenarios
including alignment to 1.5°C. For more
information see page 55 of this Strategic
Report.
— We study risks and opportunities across
three timeframes: short term (2021-2024),
medium term (2024 – 2035) and long term
(2036- 2050).
— Physical risks such as extreme weather
events will have the greatest impact on
Inmarsat’s operations.
— Rising average temperature may lead to
increased energy consumption to regulate
and cool our assets.
— Renewable energy generation will support
our resilience to future energy price shocks
across all our markets.
— More findings can be found in our 2022 ESG
Report.
Processes for identifying
and assessing climate-
related risks.
— Preliminary qualitative scenario analysis was
used to assess these risks.
— These risks are included in the ESG risk
register and reported in our TCFD disclosure.
— Climate and ESG is a designated principal
risk for Inmarsat so is included in our
principal risk profile.
— Our Senior Director responsible for risk and
external climate risk specialists identified
and assessed material climate-related risks
in 2021, then reassessed in 2022 to ensure
they remain the same.
51
Connect Bidco Ltd Annual Report 2022
strategic GOVERNANCE FINANCIAL
Connect Bidco Ltd Annual Report 2022
strategic
FINANCIAL
TCFD CONTINUED
TCDF Recommended
disclosures
Our disclosure
Progress to date
Describe processes
for managing climate-
related risks.
— Each risk is assigned to an owner who is
responsible for mitigation and reporting to
the Central Risk Committee.
— As we embed climate risk into our business, we
launched our supplier sustainability strategy in
2022 to help address Scope 3 emissions.
— Accountability for suppliers lies with the VP of
Global Procurement.
Processes for identifying,
assessing and managing
climate-related risks are
integrated into overall
risk management.
— ESG, which encompasses climate risk, has
been named a Principal Risk in Inmarsat’s
Principal Risk Profile. Our Corporate
Governance Policy requires that the Board
oversee principal risks and ESG matters.
— In 2022, we continued to embed climate
risk and opportunities into our business
and long-term strategy planning to mitigate
and adapt to impacts of transition to a low-
carbon economy.
Metrics used to assess
climate-related risks
and opportunities in line
with strategy and risk
management process.
— Our priority has been to set science-based
targets. We have approved and validated
near-term targets and a long-term target
submitted for verification.
— We will next turn our attention to setting
metrics and targets for assessing climate-
related risks and opportunities.
— In 2021, we gained Board approval for
our roadmap to achieving our near-term
science-based targets.
— We aim to formalise climate risk and
opportunity metrics which will support our
efforts to manage our risks as well as our
science-based targets.
Scope 1, Scope 2 and,
if appropriate, Scope 3
greenhouse gas (GHG)
emissions and related
risks.
— Using the Greenhouse Gas Protocol, we
measure, report and verify our Scope 1, 2 and
3 emissions.
Our 2022 emissions were as follows:
— Scope 1: 902 tonnes.
— Scope 2: 9,876 tonnes.
— Scope 3: 78,257 tonnes.
— Our near-term science-based target requires
us to reduce Scope 1 and 2 emissions by 64%
by 2030 and Scope 3 emissions by 28% from a
2019 baseline.
— The roadmap to achieving this has been
approved by the Board and includes
procurement policies and more sustainable
satellite builds.
— Our long-term target commits us to reducing
Scopes 1, 2 and 3 emissions by 90% by 2050.
Targets used to manage
climate-related risks
and opportunities and
performance against
targets.
— Science Based Targets, both near and
long-term to underpin our decarbonisation
efforts.
— New supplier sustainability strategy
requiring strategic suppliers to set
decarbonisation targets to support Scope 3
emissions reductions.
— Our near-term science-based targets (Scopes
1, 2 and 3) were verified by the Science Based
Target initiative (SBTi) in 2022.
— Our long-term science-based targets were
submitted to the SBTi for verification.
— New supplier sustainability strategy was
developed and rolled out.
52 Connect Bidco Ltd Annual Report 2022
Risk
Impact
Mitigating Controls
PHYSICAL RISKS
Asset damage
Long term
(2036-2050)
Given our global presence, Inmarsat is potentially
exposed to extreme weather events. This could lead
to damage and loss of infrastructure and sites.
We review locations and proposed locations of our
sites and networks to determine those that could
face physical risks, especially sea level rise, floods
and storms.
Service disruption
Medium term
(2024-2035)
Extreme weather events like heatwaves could lead
to operational disruption to our business, even
shutdowns and service disruption to customers.
We continue to review, update and monitor our
Business Continuity Plan to increase the resilience
of our operations. We also enhance the resilience
of our services by testing against real-life climate
scenarios or simulations.
Energy
Medium term
(2024-2035)
As global temperatures rise, our cooling needs
could lead to increased energy consumption.
Conversely, extreme cold would require additional
heating.
Increased energy usage would impact costs and
our energy footprint. It could also jeopardise
achievement of our science-based targets.
We are working to switch our offices to electricity
from renewable sources. In addition, we are
investigating the feasibility of increased use of
Building Management Systems (BMS), such as the
one at our site in Canada.
GOVERNANCE
The Board of Inmarsat is ultimately responsible for overseeing all
risks and opportunities related to climate change. Our principal
risks now include climate change and ESG and our Corporate
Governance Policy requires that the Board retains oversight for
all ESG matters. In 2022, the Board approved the setting of our
long-term science-based target. The roadmap to achieving our
near-term science-based targets by 2030 was approved in 2021.
The CEO is Board sponsor for climate and ESG matters. Day-to-day
responsibilities for climate and ESG matters are delegated to the
Chief Corporate Affairs Officer (CCAO) and Company Secretary. A
member of the Executive Management team, the CCAO chairs the
Environmental Steering Group and reports to the Board on climate-
related matters. The CCAO also chairs the Central Risk Committee,
which reviews all outputs from our ESG risk profile, and reports the
financial impact of ESG and climate related risk to the Board on a
quarterly basis.
With these two management groups responsible for
decarbonisation and climate-related risk, a broad range of
senior leaders are now informed, involved and accountable for
managing climate-related risks and opportunities.
Increasingly, we link decarbonisation and climate risk
management to remuneration. We have already done so for
a number of senior leaders, including our CCAO, and are now
extending this to apply to all roles in relevant departments,
such as our procurement function.
STRATEGY
We have identified and assessed the top climate-related risks
and opportunities over short, medium and long term. With the
initial exercise completed in 2021, these risks and opportunities
were reconfirmed in 2022 and are integrated into annual
strategic and financial planning. This helps us understand the
potential impact of climate-related risks and opportunities
to our business, as well as the necessary action to mitigate
risks and realise opportunities. The most significant risks and
opportunities are outlined below.
53
Connect Bidco Ltd Annual Report 2022
strategic GOVERNANCE FINANCIAL
strategic
FINANCIAL
TRANSITION RISKS
Changing Customer
Preferences
Short- to medium-
term (2021-2035)
As customer expectations increase, we could lose
market share if competitors have stronger climate
and ESG credentials.
In addition to using the latest technologies and
keeping our product portfolio relevant, we ensure
that our sustainability credentials continue to
increase. For example, our new long-term science-
based target (subject to SBTi validation) aims to
reduce our Scope 1, 2 and 3 emissions by 90% by
2050. Continuously improving our performance
means that we qualify as customers update their
tender requirements.
Our recent reports on Space Sustainability and
“Can Space Help Save the Planet” also demonstrate
thought leadership to customers. Links to these
reports can be found on page 45.
OPPORTUNITIES
Products and
Markets
Medium-term
(2024-2035)
Inmarsat could potentially access new markets and
revenue, e.g. our satellite-based communications
solutions help aviation businesses enhance
fuel efficiency. As weather patterns change,
seafarers and airlines will require more advanced
connectivity for optimal route planning.
To ensure our product offering remains relevant to
our customers, we invest in product development
and review market opportunities, e.g. IoT. This
opportunity is exciting and expected to grow in the
medium to long-term.
Renewable
Energy (& Onsite
Generation)
Short-term (2021-
2024)
Improving energy efficiency and moving to
renewables across our sites will support our
science-based targets. Our growing energy
resilience due to onsite generation will reduce
exposure to grid outages and pricing volatility.
We aim to buy renewable at more sites globally.
Currently we rely 100% on renewable energy in London
(UK), Alesund (Norway), The Hague (the Netherlands),
Rotterdam (the Netherlands) and Houston (U.S.). Our
sites in St John’s (Canada), Washington DC (U.S.), Seattle
(U.S.) and Sydney (Australia) also source some energy
from renewable sources.
Green Financing
Medium-term
(2024-2035)
Access to lower cost of capital or debt with
preferential interest on green financial instruments
could result from our sustainability performance
and emissions reduction.
We aim to enhance our ESG ratings and benefit from
potential future lenders.
TCFD CONTINUED
54 Connect Bidco Ltd Annual Report 2022
SCENARIO ANALYSIS
To assess the resilience of our business to these material risks
under uncertain climate futures, we undertook high-level
scenario analysis using scenarios from the Bank of England’s
Climate Biennial Exploratory Scenario (CBES). This is based on a
subset of the Network for Greening the Financial System (NGFS)
climate scenarios. The three scenarios we used include:
1. Early policy action: Smooth transition; aligned to 1.5°C.
Impact: Higher transition risks and physical risks.
2. Late policy action: Disruptive transition; aligned to well-
below 2°C (1.6°-2°C). Impact: Significant transition risk and
higher physical risk.
3. No policy action: Business as usual; aligned to above 3°C
(3.1°-4°C). Impact: limited transition risks and significant
physical risks.
These scenarios test the resilience of our strategy to
transition risks presented by rapid global decarbonisation,
as well as physical risks from global warming. We studied the
risks over three timeframes: short term (2021-2024), medium
term (2024–2035) and long term (2036–2050).
Top-line findings for each of the three scenarios were as
follows:
— Early policy action: This scenario would allow us to
maximise climate-related opportunities earlier. It would
also see only a gradual increase in both transition and
physical risk.
— Late policy action: Under this scenario, recognition of
opportunities would be delayed. Transition risks would be
delayed but subsequently see a more dramatic increase,
while the increase in physical risks would also likely be
more severe.
— No policy action: Opportunities would be limited or lost.
Transition risks would be minimal due to lack of a market
or legal response. By contrast, physical risks are at the
highest severity impacting business continuity.
Our next priorities are to deepen our scenario analysis
work and continue to embed climate-related risks and
opportunities into our business and long-term strategy.
We will also assess the effectiveness of current processes
and mitigating controls. Lastly, we will build an action plan
that brings together our TCFD work and decarbonisation as
groundwork for a future transition plan.
RISK MANAGEMENT
All climate-related risks in this TCFD disclosure were identified
and assessed using Inmarsat’s risk framework. These risks
are listed in the ESG risk register and are monitored by the
Environmental Steering Group. The Central Risk Committee
reviews all risk registers as well as the principal risks on our
principal risk profile. Since climate and ESG are among our 15
principal risks, the Board receives regular updates on climate-
related risks.
METRICS AND TARGETS
The targets and metrics we use ensure that we are driving
progress towards our commitments. Our near-term science-
based target commits us to reducing Scope 1 and 2 emissions
by 64% by 2030 and Scope 3 emissions by 28% from a 2019
baseline. Subject to SBTi verification, we have also set a long-
term science-based target to reach net zero by 2050. Our GHG
emissions are calculated using the Greenhouse Gas Protocol
and are reported on page 48 of this Strategic Report.
Our next priority is to develop key metrics to report our
progress in managing the climate-related risks and realising
opportunities described in this disclosure, while improving the
resilience of our business and our operations.
By order of the Board
Alison Horrocks FCIS
Company Secretary
20 March 2023
55
Connect Bidco Ltd Annual Report 2022
strategic GOVERNANCE FINANCIAL
strategic
FINANCIAL
GOVERNANCE
REPORT
strategic GOVERNANCE FINANCIAL
Reporting in accordance with
our Corporate Governance Policy
This index shows where key content can be found in this report, which our stakeholders
can use to evaluate how we have applied our Corporate Governance Policy.
PURPOSE AND BOARD LEADERSHIP
The Board determines the long-term strategy of the Group.
Our business model and our strategic framework embeds our
vision, purpose, values and priorities to ensure stakeholder
interests are met.
Our strategy
p8
Business model
p10
Key performance indicators
p14
Stakeholder engagement
p38
Section 172 statement
p41
BOARD COMPOSITION
The Board comprises the Chairman, the CEO and nine
Non-Executive Directors. The composition of the Board is
determined by an investment agreement. It is considered
to be in the best interests of the Group for the Executive
Management team and shareholders to be represented at
meetings.
Board committees
p62
Board attendance
p64
Board biographies
p67
DIRECTOR RESPONSIBILITIES
The Board receives regular reports on business, financial
performance, employee and partner engagement as well as key
business risks. The Board also receives updates on activities
and decisions of its Committees.
How the Board operates
p59
Role of the Board
p59
Key roles and responsibilities
p65
OPPORTUNITIES AND RISKS
The Board seeks out opportunity while managing risk. The
Central Risk Committee and the Executive Management team
ensure risks are identified and managed appropriately. Risk is
reviewed regularly by the Audit Committee and Board.
Risk management
p28
Principal risks
p30
Sustainability in practice
p44
Taskforce on Climate-related Financial Disclosures
p50
STAKEHOLDER RELATIONSHIPS AND
ENGAGEMENT
Our strategic priorities and values reflect how we deliver our
vision. The table set out in our section 172 statement of page
41 to 43 sets out some of the engagement that takes place
with key stakeholders.
Our strategy
p8
Business model
p10
Stakeholder engagement
p38
Section 172 statement
p41
The Board considers that the company has complied fully
with its Corporate Governance Policy throughout the year.
58 Connect Bidco Ltd Annual Report 2022
Governance and leadership
Corporate governance statement.
Connect Bidco Limited is a Guernsey incorporated entity with a
registered establishment in England and Wales. As a Guernsey
incorporated entity, we are not required to make a corporate
governance statement however, we have chosen to do so in
line with best practice and our Corporate Governance Policy.
The Board of Connect Bidco Limited is pleased to present
its Corporate Governance Statement for the period to 31
December 2022. This statement includes a review of how
corporate governance acts as the foundation for our corporate
activity and is embedded in our business and the decisions
we make. The Board is committed to the creation of long-
term sustainable value for the benefit of our shareholders,
employees and wider stakeholders.
The company is committed to the highest standards of
governance and during the year continued to follow the
Corporate Governance Policy it adopted in 2021. Our Corporate
Governance Policy is a combination of both the Wates
Principles for Large Private Companies and our own pre-existing
governance frameworks which provide detailed governance
principles reserved for the Board and its subsidiary boards.
These matters are strictly reserved to ensure the Directors and
subsidiary directors can demonstrate sound and competent
execution of their statutory duties (including oversight of
the management of relationships and engagement with
stakeholders on their behalf) in accordance with applicable
legislation.
The Board has deemed the Corporate Governance Policy
appropriate to use instead of the Wates Principles as it reflects
the ownership structure and utilises the pre-existing and
overarching corporate governance frameworks that were
operational during the time Inmarsat was a listed business in
2019 on the London Stock Exchange. The Board considers these
frameworks and delegations to be effective to enable the Board
to discharge their statutory and fiduciary duties appropriately.
The Corporate Governance Policy created a framework to
capture key corporate governance protocols, subsidiary
governance protocols and a principal decision process, as
set out in the section 172 statement on pages 41 to 43 of the
Strategic Report.
HOW THE BOARD OPERATES
To ensure effective governance, the Board has structured its
governance framework as noted on page 62. The Board has
established Committees to assist it in exercising its authority.
The permanent Committees of the Board are the Audit and
Remuneration Committees. Each Committee has Terms of
Reference under which authority is delegated to it by the Board.
The company has established a Board with a balance of
skills, backgrounds, experience and knowledge required
to compliment the promotion of the long-term success
of the company and to identify the impacts of the Board’s
decisions on its stakeholders, and where relevant, the likely
consequences of those decisions in the long-term. Individual
directors have sufficient capacity to make a valuable
contribution that is aligned to the company’s activities (details
of the skills and experience are set out on pages 67 to 70 of this
Governance Report).
The Directors are mindful of corporate governance and
demonstrate an understanding of their accountability and
statutory responsibilities. The Board understands its primary
duties under the Companies (Guernsey) Law 2008 and broader
regulatory responsibilities, e.g., General Data Protection
Regulations, Anti-Money Laundering, Corporate Criminal
Offence regulations. Group-wide governance policies are in
place to support these primary duties and broader regulatory
requirements.
ROLE OF THE BOARD
The Board is ultimately responsible for organising and
directing the affairs of the company in a manner most likely
to promote the success of the company for the benefit of its
investors and other stakeholders whilst complying with legal
and regulatory frameworks. 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 for:
— The long-term success of the company, having regard for
the interests of all stakeholders.
— Ensuring the effectiveness and reporting on our system of
governance, including retaining oversight of its delegated
responsibilities.
— 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
(CEO) 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
59
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strategic GOVERNANCE FINANCIAL
to a designated level of authorisation and to report to the
Board for guidance, support and approval on other matters
which require Board input. The members of the Executive
Management team are listed on page 63 and their biographies
can be found on our website at www.inmarsat.com/en/about/
who-we-are/leadership-team-and-board.
The Board has overall responsibility for the Group’s system of
risk management and internal control and for reviewing its
effectiveness. The Board is supported by the Audit Committee,
Executive Management and the Central Risk Committee in
delivering on this responsibility.
In accordance with the Corporate Governance Policy, principal
decisions are delegated through the CEO to the Executive
Management team. In making its decisions, the Executive
Management team is required to consider the outcome of any
stakeholder impact assessment that has been undertaken
to support it making any principal decision (some examples
of the principal decisions made by the Board during the
reporting period are set out on page 43 of the Strategic
Report). The CEO reports back to the Board as part of the wider
risk management and internal controls of the Group, allowing
the Board to demonstrate its oversight of the delegated
responsibilities.
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.
— Acquisitions, divestments and M&A activity.
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, the Chief Executive and the 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.
During 2022, post the Covid-19 pandemic, the Board
transitioned its scheduled meetings from virtual to in person,
enabling still though the opportunity to attend virtually if
required by individual Directors.
Governance and leadership continued
60 Connect Bidco Ltd Annual Report 2022
In 2022 the Board focused its attention on the following key areas:
Strategy review and development:
Special business:
— Discussed and approved the Group strategy, strategic
objectives and received regular updates on the
operational performance for the Group’s key business
areas.
— Received reports on technology and innovation and
related industry developments and approved our future
L-band strategy.
— Received detailed competitive assessments of traditional
and disruptor technology companies.
— Received regular updates on the Viasat acquisition.
— Considered significant contract discussions regarding the
Ligado Co-Operation Agreement.
Ensuring appropriate financial and operational management:
Implementing governance and ethics and monitoring risk:
— 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.
— Discussed and approved the 2023 budget.
— Discussed the Group’s capital structure and approved an
amendment to the Credit Agreement.
— Assessed the risks faced by the Group and received updates
on internal controls.
— Reviewed regular reports on compliance matters (such as
any anti-bribery and corruption updates) from the Company
Secretary.
— Received reports from the Board Committee Chairmen.
— Reviewed the Directors’ Conflicts of Interest procedures.
— Approved the quarterly Risk Report and the annual Risk
Policy.
— Received a presentation on Cyber and IT Security including
an analysis of risks, regulatory requirements and strategy.
— Reviewed and approved long-term net zero targets for
submission to the Science Based Target initiative (SBTi) for
independent verification.
— Reviewed and approved the Tax Strategy and Treasury Policy.
Workplace reviews:
— Received regular and detailed updates from the CEO
and Chief People Officer on employee engagement and
retention.
— Discussed and approved out of cycle salary increases.
— Noted and approved the Remuneration Committee’s
activities regarding annual bonus payments and salary
increases.
KEY STAKEHOLDER GROUPS CONSIDERED
Employees
Investors
Partners and Customers
Suppliers and Contractors
Local Communities
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CONNECT BIDCO LIMITED
Chairman
Andrew Sukawaty
CONNECT BIDCO LIMITED
11 Directors
The Chairman, CEO and
nine Non-Executive
Directors.
AUDIT
COMMITTEE
Chairman
Max Fowinkel
REMUNERATION
COMMITTEE
Chairman
Salim Nathoo
EXECUTIVE
MANAGEMENT TEAM
Chairman
Rajeev Suri
Governance and leadership continued
Key objectives:
Oversight and review of financial and
operations, risk management, audit and
internal control issues.
Key objectives:
Responsible for the overall conduct of
the business; setting strategy and a
positive culture.
Key objectives:
Oversight and review of changes to the
Executive Management team. Remuneration,
bonus and share plan issues across the business.
THE BOARD AND ITS COMMITTEES
CONNECT BIDCO
LIMITED BOARD
Chief Executive
Rajeev Suri
62 Connect Bidco Ltd Annual Report 2022
Audit Committee
In 2022 the Audit Committee focused its attention on the
following key areas:
— Confirmed to the Board that the 2021 Annual Report and
Accounts is fair, balanced and understandable.
— Reviewed and endorse, prior to submission to the Board
the Management Discussion and Analysis quarterly results
papers for release to the debt investor community.
— Reviewed and approve internal reports, and findings and
recommendations arising from the reports.
— Agreed external annual audit plans and authorise the
auditor’s remuneration.
— Reviewed key accounting judgements relating to specific
transactions such as Ligado and the recent amendment to
the Co-Operation Agreement and the outcome of the HMRC
launch cost case.
Remuneration Committee
In 2022 the Remuneration Committee focused its attention on
the following key areas:
— Executive Management team remuneration arrangements.
— Approved 2021 bonus payments and 2022 annual bonus
and LTIP performance targets for the company and
discussed 2022 bonus payments and 2023 incentive
targets with these approved in early 2023.
— Reviewed succession plans for the Executive Management
team.
— Discussed incentives in the context of the Viasat
acquisition.
— Approved the out of cycle salary increase for all staff with
a focus on more junior staff receiving a higher percentage
increase.
NON-EXECUTIVE DIRECTORS
The diverse experience and backgrounds of the Non-Executive
Directors ensures that they can provide a strong debate and
constructively challenge management both in relation to the
development of strategy and review of the Group’s operational
and financial performance.
EXECUTIVE MANAGEMENT TEAM
The Chief Executive chairs the Executive Management team
which meets on a monthly basis with additional meetings as
required. 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. The Executive Management
team comprises:
Rajeev Suri Chief Executive Officer
Tony Bates Chief Financial Officer
Jat Brainch Chief Commercial and Digital Officer
Natasha Dillon Chief People Officer
Barry French Chief Marketing and Communications Officer
Fredrik Gustavsson Chief Strategy Officer
Peter Hadinger Chief Technology Officer
Alison Horrocks Chief Corporate Affairs Officer
Todd McDonell President, Global Government Business Unit
Susan Miller CEO, Inmarsat Government Inc.
Ben Palmer OBE President, Maritime Business Unit
Jason Smith Chief Operations Officer
Niels Steenstrup President, Aviation Business Unit
More information on the Executive Management team can be
found on the company website at www.inmarsat.com/en/
about/who-we-are/leadership-team-and-board
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Governance and leadership continued
GOVERNANCE AND CONDUCT
OF BOARD MEETINGS
Our Board meets as often as necessary to effectively
conduct its business. During 2022, the Board met six times.
Unscheduled supplementary meetings are called as and when
necessary. 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 additional insight into internal talent and informs
any management succession discussions. In instances where
a Director is unable to attend Board or Committee meetings,
any comments which he 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. The CEO also provides
briefings to the shareholders of Connect Topco Limited to
respond to queries they may have.
Meeting attendance
The attendance of the Directors at the scheduled Board, Audit
Committee and Remuneration Committee meetings held in
2022 is shown in the table below. The Directors noted below
served on the Board during 2022. Where their tenure started
or ended during the period, the numbers reflect only those
meetings they were eligible to attend. Occasionally, Directors
were unable to attend meetings due to prior commitments.
Number of scheduled Board meetings
held and meeting attendance in 2022
Board
% Attendance
Audit
Percentage
Attendance
Remuneration
% Attendance
Andrew Sukawaty (Chairman)
6/6
100%
–
–
2/2
100%
Rajeev Suri
6/6
100%
–
–
–
–
Max Fowinkel
6/6
100%
4/4
100%
–
–
Eric Hargrave¹
6/6
100%
4/4
100%
1/1
100%
Rtd General C. Robert Kehler
6/6
100%
–
–
2/2
100%
Pascal Keutgens
4/6
66%
4/4
100%
2/2
100%
Ashvin Malkani2
1/4
25%
–
–
1/1
100%
Christoph Müeller
6/6
100%
–
–
–
–
Salim Nathoo
6/6
100%
–
–
2/2
100%
René Obermann
5/6
83%
–
–
2/2
100%
Andrew Sillitoe3
1/5
20%
–
–
–
–
Inaki Echave4
2/2
100%
–
–
–
–
Gonzague de Lhoneux5
1/1
100%
–
–
–
–
¹ Eric Hargrave took responsibility for attending the Remuneration Committee after Ashvin Malkani resigned
² Ashvin Malkani resigned on 6 October 2022 Inaki Echave was appointed on 6 October 2022
³ Andrew Sillitoe resigned on 9 December 2022
⁴ Inaki Echave was appointed on 6 October 2022
5 Gonzague de Lhoneux was appointed on 9 December 2022
64 Connect Bidco Ltd Annual Report 2022
KEY ROLES AND RESPONSIBILITIES
As at the date of this report, our Board comprised the Chairman,
the CEO, two Independent Non-Executive Directors and seven
Non-Executive Directors. There is clear division between
Executive and Non-Executive responsibilities which ensures
accountability and oversight. The roles of Chairman and CEO are
separately held and their responsibilities are well defined, set out
in writing and regularly reviewed by the Board.
The Executive Management team meets monthly to attend to the
ongoing management of the Group. Any significant operational
and market matters are communicated to the Non-Executive
Directors on a timely basis outside of Board meetings. The Board
is supported by the Company Secretary, to whom all Directors
have access for advice and corporate governance services.
Andrew Sukawaty
Rajeev Suri
The Chairman
The Chief Executive Officer
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.
— Setting the agenda, style and tone of Board discussions.
— Ensuring Directors receive accurate, timely and clear
information.
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 the wellbeing of staff is a focal point for the
company and encouraging a strong DE&I culture.
— Ensuring we meet the milestones for our key programmes
with a priority to focus on our customers, target revenue
growth and deliver enhanced returns to shareholders.
— Chairing the Executive Management team.
— Mr Suri is the Board sponsor for environmental and social
governance, community investment, and other corporate
social responsibility matters, as well as having overall
responsibility for Health and Safety. He is a sponsor for
the company’s Ethnic Diversity network.
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Alison Horrocks
Non-Executive Directors
The Company Secretary
The role of the Non-Executive Directors is, amongst other
things:
— Promote high standards of integrity and corporate
governance and uphold the cultural tone of the company.
— Constructively challenge and assist in the development
of strategy.
— Monitor the delivery of the strategy by the Executive
Management team within the risk framework set
by the Board.
— Serve on the Committees of the Board.
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.
— By organising induction and training programmes.
Governance and leadership continued
66 Connect Bidco Ltd Annual Report 2022
Board Of Directors
BOARD COMPOSITION
Independent Non-Executive Directors
Non-Executive Directors
Executive Director
Executive Director (1)
Non-Executive Directors (8)
Independent Non-Executive Directors (2)
BOARD NATIONALITY
German
American
British
Spanish
Belgian
Singaporean
Canadian
American (2)
Belgian (1)
British (2)
Singaporean (1)
German (3)
Canadian (1)
Spanish (1)
BOARD OF DIRECTORS
Andrew Sukawaty
The Chairman
Appointed
10 December 2019
— Remuneration Committee
Member
Background and relevant experience
Andy was the Chairman of Inmarsat plc at the time it
was acquired in December 2019 and was previously its
Executive Chairman and CEO. He is a founding partner of
Corten Capital Advisers UK LLP, Chairman of Hg Capital
USA, Independent Director of Hg Capital LLC and a Non-
Executive Director at RELX plc. Previously, Andy was the
Senior Independent Director of Sky plc, Chairman of Ziggo
N.V., Xyratex Technologies and Telenet and also Deputy
Chairman of O2 plc. He has also previously served as an
advisor to Apax Partners and Warburg Pincus and had
previously been Chief Executive Officer and President of
Sprint PCS, a NYSE listed global national wireless carrier
and Chief Executive Officer of NTL Limited. Andy has
previously held various management positions with U.S.
West and AT&T and been a Non-Executive Director on
various listed companies. Andy holds a BBA and MBA from
the Universities of Wisconsin and Minnesota respectively.
Andy is a member of the Remuneration Committee.
Rajeev Suri
CEO
Appointed
1 March 2021
Background and relevant experience
Rajeev was appointed as Inmarsat’s Chief Executive Officer
on 1 March 2021. He joined Inmarsat from Nokia, where he
served as President and Chief Executive Officer from 2014
to 2020. From 2009 to 2014 Rajeev was Chief Executive
Officer of Nokia Siemens Networks (a merged Joint venture
company of Nokia and Siemens’ Networks businesses).
During his tenure as CEO, he transformed Nokia into a top
two telecommunications infrastructure company from a
distant fourth, led the consolidation of the sector from ten
to three major players, and positioned Nokia as a broad
portfolio leader in a world connected by 5G. Under his
leadership, Nokia acquired the networks businesses of
Siemens, Motorola, Panasonic, Alcatel-Lucent, including
the famed Bell Labs, successfully expanded into enterprise
vertical markets, created the world’s leading stand-alone
telecom software business and more than quadrupled the
annual recurring revenue patent licensing business. During
this time, revenues more than doubled to EUR 25Bn and the
company’s profits grew from breakeven to EUR 2.5Bn.
In March 2022 Rajeev was appointed Chairman of
the Global Satellite Operators Association. He is also
a Commissioner of the United Nations Broadband
Commission. He was Co-Chairman of the digitalisation
taskforce for the B20 and a member of various digital and
healthcare committees at the World Economic Forum.
Rajeev was a member of the Chinese Premier’s Global
CEO Council from 2014 to 2020, and a recipient of China’s
Marco Polo award. Rajeev is an engineering graduate in
Electronics and Communications and has been awarded an
Honorary Doctorate by Manipal University, India.
Rajeev is also a Board Director at Stryker, a medical
technology company and Singtel, Asia’s leading
communications group.
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Board Of Directors continued
NON-EXECUTIVE DIRECTORS
Max Fowinkel
Appointed
10 December 2019
— Audit Committee Chairman
Background and relevant experience
Max joined Warburg Pincus in London in 2007 before moving to the Berlin office in 2019. Max is a
Director on the boards of Community Fibre, Infoniqa and MAX (fka Leumi Card). He was involved in
Warburg Pincus’ investments in T-Mobile Netherlands, Diagnostic Excellence Network, IONOS by 1&1,
McMakler, HYP, inexio, IPAN, Network International, Accelya, easycash, MACH, Evenex, Blue Yonder
and United Internet. Prior to joining Warburg Pincus, he worked at McKinsey & Company. Max holds
a degree in Mechanical Engineering and Business Administration from Technische Universität Berlin
and an MBA from Harvard Business School.
Salim Nathoo
Appointed
10 December 2019
— Remuneration Committee Chairman
Background and relevant experience
Salim is a Partner in the Tech & Telco team of Apax Partners and is based in London. Salim is also
a member of the Investment Committees for the Apax Buyout Funds, Apax Digital Fund and Apax
Global Alpha. Salim joined Apax Partners in 1999 specialising in the Tech & Telecom space. He
has both led and participated in a number of key deals including ThoughtWorks, Candela, EVRY,
GlobalLogic, iGATE, Orange Switzerland, Sophos, SMART Technologies, Weather Investments, Tim
Hellas, Promethean and Mobifon. Prior to joining Apax Partners, Salim was an Engagement Manager
with McKinsey & Company where he specialised in advising clients in the telecom sector.
Eric Hargrave
Appointed
10 December 2019
— Audit Committee Member
— Remuneration Committee Member
Background and relevant experience
Eric joined Ontario Teachers’ in 2009 and has two decades of principal investing, investment
banking and accounting experience. He is responsible for origination, execution, and management
of direct investments in the technology, media and telecom sectors across Europe. Prior to joining
Ontario Teachers, Eric worked in investment banking at RBC Capital Markets, as well as the M&A
advisory group at Ernst & Young. Earlier in his career, Eric also worked as a financial auditor at both
Ernst & Young and BDO Dunwoody.
Pascal Keutgens
Appointed
28 October 2019
— Audit Committee Member
— Remuneration Committee Member
Background and relevant experience
Pascal focuses on the healthcare and consumer sectors for Canada Pension Plan (‘CPP’). He is also
responsible for investments in France and the Benelux. Prior to joining CPP Investments, Pascal
was a Partner at Bregal Freshstream, where he was responsible for their Private Equity activities in
France and the Benelux region. Previously Pascal was a Partner at Doughty Hanson, where he spent
13 years focusing on mid- market buyouts across Europe. Pascal trained as an accountant at PWC.
Iñaki Echave
Appointed
6 October 2022
Background and relevant experience
Iñaki co-leads Ontario Teachers’ EMEA Private Capital team from the London office. Iñaki is a
Senior Managing Director with over 20 years of international experience and a specific focus in the
technology and financial sectors. He has held several senior positions in private equity, as Managing
Director of Blackstone Private Equity in London, Canada Pension Plan Investment Board (CPPIB) Direct
Investments in Europe and Director of BHL (UK) Holdings. Previously, Iñaki was a partner at Magnum
Capital and Ventura EP and has worked for 3i, JP Morgan Partners and Bain & Co. Iñaki has an MBA
from INSEAD in France and a double degree in business and law from ICADE in Spain.
Gonzague de Lhoneux
Appointed
9 December 2022
Background and relevant experience
Gonzague is a Principal in the Tech & Telco team and is based in London. Gonzague has participated
in key deals, including T-Mobile Netherlands, Inmarsat, Lutech, Fractal Analytics, ThoughtWorks and
Unilabs. He joined Apax Partners in 2013. Prior to that he was a member of Credit Suisse’s Healthcare
Investment Banking team in London, where he worked on various M&A and financing transactions.
Gonzague holds an MBA with Distinction from INSEAD and a Masters in European Management from
ESCP Europe.
68 Connect Bidco Ltd Annual Report 2022
René Obermann
Appointed
10 December 2019
— Remuneration Committee Member
Background and relevant experience
René is based in Berlin and is Co-Head of Warburg Pincus’ European activities and Head of Warburg
Pincus Deutschland GmbH. Serving as Vice- Chairman of 1&1 Ionos Holding SE, the leading European
web hosting provider, in which Warburg Pincus funds are also invested. In April 2020 René became
Chairman of the Board of Directors at Airbus SE, where he previously served as Non-Executive Director.
He has also been a member of various company boards including E.On, Spotify and Telenor.
Prior to joining Warburg Pincus as an investment partner in 2015, René was CEO of Ziggo BV in the
Netherlands (2014) and prior to this he was CEO of Deutsche Telekom AG from 2006-2013. He joined
the Group as Managing Director of T-Mobile Germany in 1998 and was promoted to run its mobile
division T-Mobile International between 2002 and 2006. Between 2007 and 2013 he also served as
Vice President of Bitkom, Germany’s IT industry association.
René began his career as a student at the University of Münster in 1986 when he founded a
distribution company for telecommunication services and equipment which was acquired by
Hutchison Whampoa in 1991. He remained there as Managing Partner and served as its CEO between
1993 and 1998. Under his leadership the company became one of the first virtual mobile network
operators in Germany.
INDEPENDENT NON-EXECUTIVE DIRECTORS
General C Robert Kehler (Rtd)
Appointed
14 February 2020
— Remuneration Committee Member
Background and relevant experience
General Kehler served on the Inmarsat plc Board for 6 years as a Non-Executive Director until the
company was acquired in December 2019. General Kehler retired from the U.S. Air Force at the end
of 2013 with over 38 years’ service. Over his career, he served in a variety of important operational
and staff assignments, and successfully led large organisations with global responsibilities. In his
final two major command assignments he oversaw a global network of satellite command and
control, communications, missile warning and launch facilities, and was directly responsible to
the Secretary of Defense and President of the U.S. for the plans and operations of all U.S. forces
conducting strategic deterrence, space, and cyberspace operations. General Kehler is a Non-
Executive Director of MAXAR Technologies and AerSale, Inc and until January 2021 was a Trustee of
the Mitre Corporation. The governor of the Commonwealth of Virginia recently appointed him to the
board of directors of the Virginia Commercial Space Flight Authority.
Christoph Müeller
Appointed
14 February 2020
Background and relevant experience
Christoph has over 25 years’ experience in the aviation, logistic and tourism industry. He was the
Chief Digital and Innovation Officer of Emirates Group and former Chief Executive Officer of Sabena,
Hapag-Lloyd, Malaysia Airlines and Aer Lingus where he repositioned the loss making company as
a service airline to compete with low budget alternatives. He was Chairman of Swissport and is also
an Independent Non-Executive Director of Cathay Pacific plc in Hong Kong, and Westjet in Canada.
COMPANY SECRETARY
Alison Horrocks
Appointed
10 December 2019
Background and relevant experience
Alison is Chief Corporate Affairs Officer and is responsible for Group wide risk management,
compliance and corporate governance. She acts as Company Secretary to the Board and its
Committees. She is a member of the Executive Management team and until early 2023 Chairman
of the Trustee company for the Inmarsat UK pension plans. Alison manages legal and regulatory, as
well as our regional teams covering India, China, Russia and Turkey. Alison joined Inmarsat in 1999
and previously was Group Company Secretary of International Public Relations plc, a worldwide
public relations company, for 11 years.
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70
Connect Bidco Ltd Annual Report 2022
Report of the Directors
For the year ended 31 December 2022.
The Governance Report set out on pages 58 to 70 is incorporated
by reference into this report and accordingly should be read
as part of this report. As permitted by legislation, some of the
matters required to be included in the Directors’ Report have
instead been included in the Strategic Report on pages 6 to 55 as
the Board considers them of strategic importance. Specifically,
these are:
2022 performance review
p26
Future business developments
(throughout the Strategic Report)
Principal risks and uncertainties facing the
Group, which are set out in the Strategic Report
p30
How we have engaged our people and stakeholders
p38
Section 172 statement
p41
Information on the Group’s greenhouse gas
(GHG) emissions
p48
Taskforce on Climate-related Financial
Disclosures (TCFD)
p50
2022 PERFORMANCE
The 2022 performance review is provided in the Strategic Report,
reflecting a second year of strong revenue, EBITDA, and positive
free cash flow. Maritime has returned to growth, Government
experienced another year of revenue and earnings growth,
there was strong market recovery in core Aviation business
and IFC, and Enterprise partially offset this growth following
supply chain challenges. EBITDA increased by $110.6m (15.0%),
reflecting strong revenue growth and is partially offset by higher
costs in support of revenue growth, inflationary increases, and
additional professional fees in relation to the Viasat transaction.
Cash capital expenditure decreased by $40.3m driven mainly
by the timing of contractual payments on major infrastructure
investments, including the successful I-6 F2 launch in Q1 2023.
RESPONSIBILITY STATEMENT
The Responsibility Statement made by the Board regarding the
preparation of the financial statements is set out on page 75.
BUSINESS REVIEW, STRATEGIC REPORT
AND FUTURE DEVELOPMENTS
A description of the company’s business model, strategy, and
factors likely to affect the Group’s future developments are
incorporated into this Report by reference. They are set out in
the Strategic Report on pages 10 to 44.
POST-BALANCE SHEET EVENTS
Details of the post-balance sheet events are given in note 35
of the financial statements.
CHANGE IN ACCOUNTING POLICIES
During 2022, the Group adopted amendments to IFRS 3, IAS
16, IAS 37, and Annual Improvements 2018-2020, which has
no quantitative impact to the financial statements, however
additional qualitative disclosures have been included within
note 2. No other changes to the Group’s accounting policies
have occurring during the current period.
RESULTS AND DIVIDENDS
A 2022 financial review is provided in the Strategic Report,
along with the results for the year being shown in the
Consolidated Income Statement on page 78.
No dividends were declared during the year.
DIRECTORS
A full list of the individuals who were Directors of the company
during the financial year ended 31 December 2022 is set out
on page 67 to 70.
INDEMNITIES AND INSURANCE
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.
The Directors’ Report for the year ended 31 December 2022 comprises
pages 71 to 75 of this report, together with sections of the Annual Report
incorporated by reference.
71
Connect Bidco Ltd Annual Report 2022
strategic GOVERNANCE FINANCIAL
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 that the Director would recuse himself from the
discussion to avoid any such perception of a conflict. 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 Chairman and
Company Secretary. Directors have a continuing duty to notify
any changes to their conflicts of interest and to their external
Board commitments to the Chairman and Company Secretary
and any changes are noted in the conflicts register.
BRANCHES
The Group has activities operated through many jurisdictions.
GOING CONCERN
In order to confirm that the business should adopt the
going concern basis in preparing the consolidated financial
statements for 2022, the Board and Management have
considered compliance with banking covenants, ability to
generate future profits and positive cash flows, business risks
and the pending acquisition by Viasat Inc. The Group has a
robust and resilient business model, positive free cash flow
generation, and is compliant with all banking covenants.
As at 31 December 2022, the Group has $1,042.9m of liquid
resources (Cash: $233.8m, short-term deposits: $109.1m,
undrawn RCF: $700.0m) and a continued expectation that
the Group will generate positive free cash flow and reduce
leverage over the medium to long term. During 2021 the
Connect Topco shareholders accepted an offer from Viasat
Inc. to purchase the Group for approximately $7.3bn (refer
to note 35). The agreement has been approved by both
the Inmarsat and Viasat Board of Directors, and Viasat
shareholders. The going concern assessment has been
performed using the Inmarsat Group’s financial performance
and position.
The Board and Management have also considered a number
of possible scenarios and their impact on future revenues,
EBITDA and liquidity. Under all scenarios there continues to be
sufficient headroom to the Financial Performance Covenant
under the debt agreements. The Group has assessed the
future compliance through most recently approved budget,
which has considered the maturity profile of the existing debt
facilities and the $700 million undrawn revolving credit facility
as discussed in note 20.
After considering current financial projections and facilities
available and after making enquiries, the Directors have
a reasonable expectation that the Group has adequate
resources to continue in operational existence for the
foreseeable future. Consequently, the Group continues
to adopt the going concern basis in preparing the 2022
consolidated financial statements.
2022 ESG REPORT
Inmarsat has always understood the importance of wider
corporate responsibility and ensuring we act in an ethical
manner, taking account of our responsibilities – socially and
environmentally. We have refreshed our view of our non-
financial risks through conducting an ESG assessment.
We also continue to disclose our Corporate Social
Responsibility (CSR) activities in accordance with the Global
Reporting Initiative (GRI). We have produced a stand alone GRI
Report which includes the results of our 2022 ESG assessment
and how we have continued to create value and monitor
progress against each of our material topics. Our GRI Report
can be found on our Inmarsat.com website.
OUR PEOPLE
2022 was a year of strong business growth momentum and
sustained internal transformation with continued focus on
strategic alignment, operating model effectiveness and
cultural evolution. This, alongside the refining our ways of
working and ongoing comprehensive communications and
engagement resulted in an improvement of our engagement
score from 7.9 to 8.1/10 and a fall in voluntary attrition from
10.5% in January 2022 to 7.8% in December 2022.
Strategic alignment
Importantly, we rolled out a new strategic plan to the
business, supported by a comprehensive communications
and engagement to help frame our work throughout the year,
ensure strategic alignment and drive growth. This was well
received and will be further evolved for 2023.
Viasat transaction
One of the key challenges for the year from a people
perspective was leading our employees through uncertainty
regarding the Viasat transaction as the regulatory process
progressed across the globe. This required an extensive
communications and engagement plan to keep people
informed and engaged, including an introduction to Viasat
via an All Staff meeting with Mark Dankberg, Executive
Chairman at Viasat.
Report of the Directors continued
72
Connect Bidco Ltd Annual Report 2022
Wellbeing
2022 saw the introduction of a number of new wellbeing
initiatives across all four wellbeing pillars (financial, social,
mental and physical) including the launch of the new global
Employee Assistance Programme, our ‘March in April’
philanthropic physical fitness campaign which raised money for
charities in support of Ukraine and a range of wellbeing tools and
resources shared via a monthly newsletter. We also increased
the focus on giving back in response to employee sentiment, by
setting up a donation matching scheme to support nominated
charities (Disasters Emergency Committee and the International
Red Cross) to support those in need in Ukraine.
Our working environment
Finally, working environments are becoming increasingly
important for employees and are an important factor in
encouraging people back into the physical workspace. 2022
saw significant progress in fitting out our new headquarters
building in London, to create a state of the art, BREEAM
standard building, which will become our new London
headquarters in 2024.
Environmental, Health and Safety Management
The Group is committed and continues to aim to maintain
the highest environmental, wellbeing, health and safety
management standards for its employees, customers, visitors,
contractors and anyone affected by its business activities.
This is reflected in the latest Environmental, Health and Safety
policy statement of intent and its arrangements. During
2022, we remained focused on improving and developing the
environmental, health and safety management system and
reviewing existing arrangements. Rajeev Suri, our CEO, is the
Director designated for health and safety matters at the Board
level with employees having roles and responsibilities whose
objectives are to ensure that environmental, health and safety
are managed across the company.
We apply a range of tools to improve environmental, health
and safety, bringing together different interventions to
achieve impact. We influence and engage stakeholders,
create knowledge and awareness of health and safety risks,
and encourage behaviour change through assessments and
direct interventions including inspections and investigations.
We promote a broad variety of transparent and maturing
wellbeing programmes, including fitness challenges, flexible
working, nutrition, and occupational health checks. We
understand that good mental and physical health contributes
to better decision-making, greater productivity, and higher
levels of employee satisfaction.
Our aim continues to encourage strong leadership in
championing the importance of meeting our moral, legal, and
other requirements for good environmental, health and safety
management in the workplace and to raise awareness throughout.
Internal transformation
We continued to transform by improving and simplifying
key processes and ways of working, and increased our focus
on becoming a more commercial and customer focused
organsation, including delivering our sales excellence
development programme for front line sales people, and
adding ‘customer’ to our company values.
Evolving the way we work
2022 was a year of cultural evolution as we returned to the
office and started refining our ways of working, retaining
flexibility and introducing new flexible working practices. This
enabled us to continue to encourage work-life balance and
ensure Inmarsat is considered by employees as a great place
to work whilst also driving business performance.
Reward and recognition
In response to inflationary pressure we implemented an off-
cycle salary increase in October 2022 to help our employees
with the increased cost of living. In addition, we increased
our focus on recognition, enhancing our SpotBeam employee
recognition programme (resulting in almost 1,000 SpotBeam
awards being made throughout the year) and rolling out a
Recognition Toolkit to our people managers.
Learning and development
We continued to support our people to fulfil their potential via
the provision of a broad portfolio of learning and development
opportunities, building professional and leadership capability
(e.g. MBAs, 360 feedback at Senior leader level that was
extended out to all people managers), and a specific focus
on building commercial capability through our new Sales
Excellence programme. In addition, we continued to offer
extensive employee development, including our ‘Drive YOUR
Career’ toolkit and a broad online learning offer via our digital
hub called Nebula.
Communications and engagement
Throughout the year there was ongoing focus on
communications and engagement to retain and engage
our people, including the introduction of a new CEO skip
level programme targeting employees below the Executive
Management level to foster open dialogue, as well as regular,
open and honest communications on strategic priorities and
progress, culture and values and wellbeing. We also continued
to transform our employees’ digital experience with the
implementation of a new intranet as the central plank of a
portfolio of digital communications channels and tools.
Diversity Equity & Inclusion (DE&I)
We continued our DE&I journey with a review of the strategy,
delivery of another employee survey, the introduction of
our parent and carers and military networks and roll out of
inclusive leadership training.
73
Connect Bidco Ltd Annual Report 2022
strategic GOVERNANCE FINANCIAL
Report of the Directors continued
Principal risks and uncertainties
Details of principal risks and uncertainties are provided on
pages 30 to 27.
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. Refer notes 6, 13 & 14 of the
consolidated financial statements respectively.
Political donations
During the period, no political donations were made (2021:
$nil). It remains the policy of the company not to make
political donations or incur political expenditure.
Disclosure of information to auditor
As far as each of the Directors is aware, there is no relevant
audit information of which the company’s auditors are
unaware and the Directors have taken all the steps that ought
to have been taken to make themselves aware of any relevant
audit information and to establish that the company’s auditors
are aware of that information.
Deloitte LLP, having expressed their willingness to act, were
appointed auditors of the company.
By order of the Board
Alison Horrocks FCIS
Company Secretary
20 March 2023
OUR VALUES
Customer
Respect
Excellence
Accountability
74
Connect Bidco Ltd Annual Report 2022
Directors’ responsibilities statement
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable
law and regulations.
The Companies (Guernsey) Law 2008 requires the Directors
to prepare financial statements for each financial year.
Under that law the directors are required to prepare the
Group financial statements in accordance with international
accounting standards in conformity with the requirements
of the Companies (Guernsey) Law 2008. The financial
statements also comply with International Financial
Reporting Standards (IFRSs) as issued by the IASB. The
Directors 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 Group and Company and of the
profit or loss of the Group and 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 judgments 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.
— Prepare the financial statements.
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.
— 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.
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 corporate website. Legislation in the United
Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other
jurisdictions.
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.
— 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
Rajeev Suri
CEO
20 March 2023
75
Connect Bidco Ltd Annual Report 2022
strategic GOVERNANCE FINANCIAL
financial
REPORT
GOVERNANCE
strategic
FINANCIAL
($ in millions)
Note
2022
2021
Revenue
5
1,474.1
1,352.4
Employee benefit costs
7
(311.2)
(303.9)
Network and satellite operations costs
(178.9)
(158.4)
Impairment of financial assets1
17.9
(2.1)
Other operating costs
(196.0)
(179.8)
Own work capitalised
43.6
30.7
Total net operating costs
(624.6)
(613.5)
EBITDA
849.5
738.9
Depreciation and amortisation
(600.8)
(632.5)
Loss on disposal of assets
(4.1)
(7.6)
Impairment of assets
(0.5)
0.3
Share of profit of associates
16
7.2
5.1
Operating profit
6
251.3
104.2
Financing income
75.4
32.0
Financing costs
(190.8)
(194.9)
Fair value changes in financial assets and liabilities
-
76.4
Net financing costs
9
(115.4)
(86.5)
Profit before tax
135.9
17.7
Taxation charge
10
(30.7)
(170.6)
Profit / (loss) for the year
105.2
(152.9)
Attributable to:
Equity holders
104.6
(153.6)
Non-controlling interest2
0.6
0.7
1 $30.0m was received from Ligado in Q4 2022 which released a $15.3m (51%) impairment on the existing receivable owing (refer note 4(a)).
2 Non-controlling interest relates to the Group’s 51% shareholding in Inmarsat Solutions ehf.
The accompanying notes are an integral part of the financial statements.
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2022
($ in millions)
Note
2022
2021
Profit / (loss) for the year
105.2
(152.9)
Other comprehensive income
Items that may be reclassified subsequently to the Income Statement:
Foreign exchange translation differences
(0.1)
(0.3)
Loss on cash flow hedges on foreign exchange forward contracts
26
-
(0.7)
Net gain accumulated in hedge reserve on interest rate caps
26
79.1
10.6
Tax charged directly to equity
10
(21.3)
-
Items that will not be reclassified subsequently to the Income Statement:
Re-measurement of pension assets and liabilities
28
3.8
(1.5)
Tax (charged) / credited directly to equity
10
(1.1)
0.3
Other comprehensive gain for the year, net of tax
60.4
8.4
Total comprehensive income / (loss) for the year, net of tax
165.6
(144.5)
Attributable to:
Equity holders
165.0
(145.2)
Non-controlling interest1
0.6
0.7
1 Non-controlling interest relates to the Group’s 51% shareholding in Inmarsat Solutions ehf.
The accompanying notes are an integral part of the financial statements.
Consolidated Income Statement
For the year ended 31 December 2022
78
Connect Bidco Ltd Annual Report 2022
($ in millions)
Note
As at 31
December 2022
As at 31
December 2021
Assets
Non-current assets
Property, plant and equipment
13
3,258.7
3,300.2
Intangible assets
14
2,757.5
2,907.3
Right of use assets
15
26.4
33.3
Investments
16
28.4
24.9
Lease receivable
0.4
0.4
Other receivables
18
1,122.2
752.3
Derivative financial instruments
31
38.0
5.8
Deferred tax asset
23
34.6
33.7
7,266.2
7,057.9
Current assets
Cash and cash equivalents
17
233.8
364.0
Short-term deposits
17
109.1
30.0
Trade and other receivables
18
304.9
262.7
Lease receivable
1.3
2.6
Inventories
19
57.2
36.6
Current tax assets
23
3.1
0.4
Derivative financial instruments
31
45.0
-
754.4
696.3
Total assets
8,020.6
7,754.2
Liabilities
Current liabilities
Borrowings
20
17.5
17.5
Trade and other payables
21
1,354.4
1,271.6
Provisions
22
3.6
4.7
Current tax liabilities
23
176.6
174.8
Derivative financial instruments
31
-
1.8
Lease obligations
15
9.9
11.7
1,562.0
1,482.1
Non-current liabilities
Borrowings
20
3,630.8
3,619.1
Other payables
21
12.8
18.1
Provisions
22
3.7
7.0
Deferred tax liabilities
23
808.8
780.4
Lease obligations
15
23.9
33.8
4,480.0
4,458.4
Total liabilities
6,042.0
5,940.5
Net assets
1,978.6
1,813.7
Shareholders’ equity
Ordinary shares
25
2,361.5
2,361.5
Hedge and other reserves
61.4
3.7
Retained earnings
(445.1)
(552.4)
Equity attributable to shareholders
1,977.8
1,812.8
Non-controlling interest1
0.8
0.9
Total equity
1,978.6
1,813.7
1 Non-controlling interest relates to the Group’s 51% shareholding in Inmarsat Solutions ehf.
The accompanying notes are an integral part of the financial statements.
The consolidated financial statements of the Group were approved by the Board of Directors on 20 March 2023 and were signed
on its behalf by:
Rajeev Suri
CEO
Consolidated Balance Sheet
As at 31 December 2022
79
Connect Bidco Ltd Annual Report 2022
strategic GOVERNANCE FINANCIAL
($ in millions)
Share
capital
Hedge
reserve
Other
reserves
Retained
earnings
NCI1
Total
As at 1 January 2021
2,361.5
(6.2)
-
(397.6)
0.9
1,958.6
Dividend declared
-
-
-
-
(0.7)
(0.7)
Gain on cash flow hedges capitalised to tangible assets
-
0.3
-
-
-
0.3
Comprehensive Income:
(Loss) / profit for the year
-
-
-
(153.6)
0.7
(152.9)
OCI – before tax
-
9.9
(0.3)
(1.5)
-
8.1
OCI – tax
-
-
-
0.3
-
0.3
As at 31 December 2021
2,361.5
4.0
(0.3)
(552.4)
0.9
1,813.7
As at 1 January 2022
2,361.5
4.0
(0.3)
(552.4)
0.9
1,813.7
Dividend declared
-
-
-
-
(0.7)
(0.7)
Comprehensive Income:
Profit for the year
-
-
-
104.6
0.6
105.2
OCI – before tax
-
79.1
(0.1)
3.8
-
82.8
OCI – tax
-
(21.3)
-
(1.1)
-
(22.4)
As at 31 December 2022
2,361.5
61.8
(0.4)
(445.1)
0.8
1,978.6
1 Non-controlling interest relates to the Group’s 51% shareholding in Inmarsat Solutions ehf.
The accompanying notes are an integral part of the financial statements.
Consolidated Statement of Changes in Equity
As at 31 December 2022
80 Connect Bidco Ltd Annual Report 2022
($ in millions)
Note
2022
2021
Cash flow from operating activities
Cash generated from operations
24
843.5
800.8
Interest received
3.0
1.1
Tax paid
(23.6)
(16.0)
Net cash flow from operating activities
822.9
785.9
Cash flow from investing activities
Purchase of property, plant and equipment
(204.0)
(287.9)
Additions to intangible assets
(77.4)
(40.4)
Own work capitalised
(34.6)
(28.0)
Net Investment in short-term deposits
(79.1)
658.0
Issue of intergroup borrowings
(299.3)
(719.8)
Net cash used in investing activities
(694.4)
(418.1)
Cash flow from financing activities
Dividends paid relating to NCI1
(0.7)
(1.1)
Dividends from associates
-
3.3
Repayment of borrowings
(17.5)
(17.5)
Interest paid
(230.2)
(224.1)
Debt financing arrangement fees
-
(1.7)
Cash payments for the principal portion of lease obligations
(10.5)
(11.4)
Other financing activities
(1.8)
(2.2)
Net cash used in financing activities
(260.7)
(254.7)
Net (decrease) / increase in cash and cash equivalents
(132.2)
113.1
Cash and cash equivalents
At beginning of the year
364.0
250.4
Net (decrease) / increase in cash and cash equivalents
(132.2)
113.1
Exchange gain on cash and cash equivalents
2.0
0.5
At end of the year
233.8
364.0
Comprising:
Cash at bank and in hand
192.1
94.0
Short-term deposits with original maturity less than 3 months
41.7
270.0
Cash and cash equivalents
233.8
364.0
Net cash and cash equivalents at end of year
17
233.8
364.0
1 Non-controlling interest relates to the Group’s 51% shareholding in Inmarsat Solutions ehf.
The accompanying notes are an integral part of the financial statements.
Consolidated Cash Flow Statement
For the year ended 31 December 2022
81
Connect Bidco Ltd Annual Report 2022
strategic GOVERNANCE FINANCIAL
Notes to the Financial Statements
For the year ended 31 December 2022
1. GENERAL INFORMATION
Connect Bidco Limited (the ‘company’
or, together with its subsidiaries, the
‘Group’) is a private company limited
by shares incorporated in Guernsey.
The address of its registered office is
Redwood House, St Julian’s Avenue, St
Peter Port, GY1 1WA, Guernsey.
The ultimate controlling party of the
company is Connect Topco Limited
which is an entity based in Guernsey.
The smallest and largest group into
which the results of the company are
consolidated is headed by Connect
Topco Limited.
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
The financial statements have
been prepared in accordance with
international accounting standards in
conformity with the requirements of
the Companies (Guernsey) Law, 2008
and International Financial Reporting
Standards (“IFRS”) as issued by the
International Accounting Standards
Board. 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
In order to confirm that the business
should adopt the going concern
basis in preparing the consolidated
financial statements for 2022, the Board
and Management have considered
compliance with banking covenants,
ability to generate future profits and
positive cash flows, business risks
and the pending acquisition by Viasat.
The Group has a robust and resilient
business model, positive free cash flow
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 during
2022 which have no material impact
include amendments to IFRS 3 Business
Combinations; amendments to IAS
16 Property, Plant and Equipment;
amendments to IAS 37 Provisions,
Contingent Liabilities and Contingent
Assets; and Annual Improvements 2018-
2020.
New and amended accounting
standards that have been issued but
are not yet effective and have not been
adopted by the Group are provided
below. All are effective for years
beginning on or after 1 January 2024 and
none will have a material impact on the
Group.
— IFRS 17 Insurance Contracts
— Amendments to IAS 1 Presentation of
Financial Statements: Classification
of Liabilities as Current or Non-
current and Classification of
Liabilities as Current or Non-current
- Deferral of Effective Date
— Amendments to IAS 1 Presentation
of Financial Statements and IFRS
Practice Statement 2 Disclosure of
Accounting policies.
— Amendments to IAS 8 Accounting
policies, Changes in Accounting
Estimates and Errors: Definition of
Accounting Estimates.
— Amendments to IAS 12 Income Taxes:
Deferred Tax related to Assets and
Liabilities arising from a Single
Transaction.
generation, and is compliant with all
banking covenants.
As at 31 December 2022, the Group has
$1,042.9m of liquid resources (Cash:
$233.8m, short-term deposits: $109.1m,
undrawn RCF: $700.0m) and a continued
expectation that the Group will generate
positive free cash flow and reduce
leverage over the medium to long term.
On 8 November 2021 the Connect Topco
shareholders accepted an offer from
Viasat Inc. to purchase the Group for
approximately $7.3bn (refer to note 35).
The agreement has been approved by
both the Inmarsat and Viasat Board of
Directors, and Viasat shareholders. The
going concern assessment has been
performed using the Group financial
performance and position.
The Board and Management have
also considered a number of possible
scenarios and their impact on future
revenues, EBITDA and liquidity. Under
all scenarios there continues to be
sufficient headroom to the Financial
Performance Covenant under the debt
agreements. The Group has assessed
the future compliance through most
recently approved budget, which has
considered the maturity profile of the
existing debt facilities and the $700
million undrawn revolving credit facility
as discussed in note 20.
After considering current financial
projections and facilities available and
after making enquiries, the Directors
have a reasonable expectation that
the Group have adequate resources to
continue in operational existence for
the foreseeable future. Consequently,
the Group continues to adopt the going
concern basis in preparing the 2022
consolidated financial statements.
Further discussion of the Groups
business activities, together with factors
likely to affect its future development,
performance and position are set out in
the Strategic and Directors’ Reports.
Basis of accounting
The consolidated financial statements
are presented in U.S. Dollars, which is
the functional currency of the company
and most of the Group’s subsidiaries.
82 Connect Bidco Ltd Annual Report 2022
— Amendments to IFRS 16 Leases: Lease
Liability in a Sale and Leaseback.
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
year 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.
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 U.S. Dollar. This is as the
majority of operational transactions
and financing are denominated in U.S.
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
year 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 U.S. 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.
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. Revenue is only
recognised when it is probable that the
entity will collect the consideration to
which it will be entitled in exchange for
the goods or services to be transferred
to the customer.
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, 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.
83
Connect Bidco Ltd Annual Report 2022
strategic GOVERNANCE FINANCIAL
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 the good
or service on its own; or together with
other readily available resources and
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 standalone
selling price relative to the total of all
performance obligations’ standalone
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 intergroup lending, funds
invested in short-term deposits, and
interest on the net defined benefit and
post-employment asset/liability.
Financing costs comprise interest
payable on borrowings including
the Senior Notes and Term Loan,
amortisation of deferred financing
costs, and interest on lease liabilities.
Finance charges are recognised in
the income statement at the effective
interest rate.
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
Notes to the Financial Statements continued
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.
Short-term deposits
Short-term deposits, measured at fair
value, comprises deposits held with
banks, money market funds and other
short-term, highly liquid investments
with an original maturity of four to
twelve months.
Intergroup lending
Intergroup lending includes interest-
bearing loans with other entities which
are 100% owned by the ultimate parent
company. This is initially recognised at
fair value which equates to the proceeds
provided, net of direct transaction
and arrangement costs. They are
subsequently measured at amortised
cost. Finance income is charged to the
income statement over the term of the
borrowing using the effective interest
rate method.
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
84 Connect Bidco Ltd Annual Report 2022
bank loans, 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.
Senior notes and term loan
The Group has issued Senior Notes
and a Term Loan 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 deposits.
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.
Hedge Accounting
The Group designates certain
derivatives as hedging instruments in
respect of foreign currency risk and
interest rate risk in fair value hedges,
cash flow hedges, or hedges of net
investments in foreign operations.
Hedges of foreign exchange risk on firm
commitments are accounted for as cash
flow hedges.
At the inception of the hedge
relationship, the Group documents
the relationship between the hedging
instrument and the hedged item, along
with its risk management objectives
and its strategy for undertaking various
hedge transactions. Furthermore, at
the inception of the hedge and on an
ongoing basis, the Group documents
whether the hedging instrument is
effective in offsetting changes in fair
values or cash flows of the hedged item
attributable to the hedged risk, which is
when the hedging relationship meets all
the hedge effectiveness criteria.
The Group designates only the intrinsic
value of option contracts as a hedged
item, i.e. excluding the time value of the
option. The changes in the fair value
of the aligned time value of the option
are recognised in other comprehensive
income and accumulated in the cost of
hedging reserve. If the hedged item is
transaction-related, the time value is
reclassified to profit or loss when the
hedged item affects profit or loss. If the
hedged item is time period related, then
the amount accumulated in the cost of
hedging reserve is reclassified to profit
or loss on a rational basis – the Group
applies straight-line amortisation. Those
reclassified amounts are recognised
in profit or loss in the same line as the
hedged item.
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. The Group has
previously hedged certain foreign
currency milestone payments for the
construction of the I-6 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.
IFRS 9 requires the Group to value
and account for foreign currency
basis. Changes in the fair value of
currency basis are recognised as a
separate component of equity in other
comprehensive income.
The value of a hedging derivative is
classified as non-current asset or
liability if the cash flows are due to be
received in greater than twelve months,
and as a current asset or liability if the
cash flows are due to be received in less
than 12 months.
IBOR Reform
The Group applies the Interest
Rate Benchmark Reform – Phase 2
Amendments to IFRS 9, IAS 39 and IFRS 7
issued in August 2020 (‘Phase 2 relief’).
These amendments modify (provide
relief to) specific hedge accounting
requirements to allow hedge accounting
to continue for affected hedges during
the period of uncertainty before the
hedged items or hedging instruments
are amended as a result of the interest
rate benchmark reform.
In relation to borrowing, the IFRS
85
Connect Bidco Ltd Annual Report 2022
strategic GOVERNANCE FINANCIAL
Notes to the Financial Statements continued
reliefs mean the Group can update its
effective interest rate for the change
to the new risk-free rate without
recognising an immediate gain or
loss. For hedge accounting, the reliefs
mean existing hedge accounting will
not terminate and updates to hedge
documentation relating to IBOR reform
will not result in a de-designation
event for existing hedge relationships.
Hedge ineffectiveness will continue to
be recorded in the income statement.
In order to qualify for the relief the
Group will ensure that transition is
economically equivalent to the previous
LIBOR basis.
All Financial instruments with a
reference rate linked to LIBOR are
exposed to IBOR reform, meaning
the Group has a material exposure to
changes in the USD IBOR benchmark.
At 31 December 2022 the Group has
a term loan of $1.70bn (2021: $1.72bn)
and interest rate caps with a notional
amount of $1.66bn (2021: $1.66bn),
which are indexed to USD LIBOR. The
interest rate caps are designated in a
cash flow hedge relationship hedging
the USD LIBOR term loan.
In assessing whether the hedges are
expected to be highly effective on a
forward-looking basis, the Group has
assumed that the USD LIBOR interest rate
on which the cash flows of its interest rate
caps and its hedged floating rate loan are
not altered by IBOR reform.
Due to the upcoming cessation of LIBOR
as a reference rate, the Group obtained the
necessary lender consent to transition the
credit agreement governing its term loan
and revolving credit facility from LIBOR to
Term SOFR. This change will be effective
after USD LIBOR ceases to be available
on 30 June 2023. The Group will use the
ISDA Fallbacks Protocol to transition the
interest rate hedges applicable to the term
loan from USD LIBOR to Compound SOFR,
also effective 30 June 2023, with this part
of the transition process expected to be
completed in Q1 2023. The Group does
not anticipate material changes to existing
systems and processes and the primary
impact of the change will arise as a result
of differences between LIBOR and SOFR,
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.
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
and between Compound and Term
SOFR rates.
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.
Cash based LTIP is an executive
remuneration scheme for members of
senior management, which runs over
three years. The scheme awards are
accrued in the financial statements for
the duration of the award. The accrual
is based on the values assessed for
the applicable schemes, taking into
account the duration of the individual
scheme, and by comparing the Group’s
performance against the criteria
used to award payments. These are
recognised as the present value of the
benefit obligation. Where the Group’s
performance does not meet the criteria
for the LTIP to be awarded, no accruals
are recognised.
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.
86 Connect Bidco Ltd Annual Report 2022
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.
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. The associated
liability is stated at its net present
value and included within borrowings.
Depreciation on space segment assets
is recognised over the life of the
satellites from the date they become
operational and are placed into service.
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 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.
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 is
accounted for prospectively. The Group
also reviews the residual values and
depreciation methods on an annual
basis.
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.
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strategic GOVERNANCE FINANCIAL
Notes to the Financial Statements continued
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.
Goodwill
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.
Research and development costs
Research costs related to internally
generated intangibles are expensed
in the year 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
at least annually for impairment.
Impairment losses in respect of
goodwill are not reversed.
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.
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).
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.
Leases for which the Group is a lessor
are classified as finance or operating
leases. Whenever the terms of the lease
transfer substantially all the risks and
rewards of ownership to the lessee,
the contract is classified as a finance
lease. All other leases are classified as
operating leases.
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. As lessor for finance leases,
the Group recognises lease receivables
at the amount of the Group’s net
investment in the leases. Finance lease
income is allocated to accounting
periods so as to reflect a constant
periodic rate of return on the Group’s
88 Connect Bidco Ltd Annual Report 2022
net investment outstanding in respect
of the leases.
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.
— 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.
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 year 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 year 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 year. More detail on IFRS and APMs
can be found on page 135.
3. FINANCIAL RISK
MANAGEMENT
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 31). The Group does
not hold or issue derivative financial
instruments for speculative or trading
purposes.
(a) Market risk
(i) Foreign exchange risk
The functional currency of the company
and its principal subsidiaries is the
U.S. Dollar. All of the Group’s long-term
borrowings are denominated in U.S.
89
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strategic GOVERNANCE FINANCIAL
Notes to the Financial Statements continued
Dollars, the majority of its revenue is
earned in U.S. Dollars and the majority
of capital expenditure is denominated
in U.S. Dollars, which are therefore
not subject to risks associated with
fluctuating foreign currency rates of
exchange.
However, the Group operates
internationally, resulting in 3% (2021: 4%)
and 32% (2021: 29%) of total revenue
and total expenditure, respectively,
being denominated in currencies other
than the U.S. Dollar. 28% (2021: 30%)
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.
For the year ended 31 December 2022,
a hypothetical 10% increase in the
U.S. Dollar/Sterling year-end exchange
rate (U.S.$1.21/£1.00 to U.S.$1.33/£1.00)
would have decreased the 2022 profit
before tax and equity by approximately
$1.0m (2021: $3.3m). 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.
(iii) Inflation risk
The Group faces inflationary risks which
cause an increase in costs across
the business. The Group has partially
mitigated this risk through tight cost
control, and targeted price increases.
(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 the interest
rate risk arises from its long-term
borrowings specifically a Term Loan
and Senior Notes 2026. Borrowings
issued at variable rates expose the
Group to cash flow interest rate risk.
Borrowings related to Senior Notes
due 2026 are charged at a fixed rate.
As at 31 December 2022 the Group had
drawn down $1.70bn (2021 $1.72bn)
on the Term Loan which is repayable
in quarterly instalments over 7 years.
The credit agreement will mature
in 2026. Drawings under this credit
agreement incur interest at a variable
rate of LIBOR +3.5% (2021: +3.5%). The
Group has entered into interest rate cap
arrangements to hedge the variable
interest rates on the Term Loan. The
cap provides protection of USD LIBOR
up to 2% and covers 98% of the total
nominal amount of the Term Loan. As
at 31 December 2022 a hypothetical
1% increase in interest rate would have
decreased the 2022 profit before tax
and equity by $37.0m (2021: $36.5m).
Management believes that a 1%
sensitivity rate provides a reasonable
basis upon which to assess expected
changes in variable interest rates, given
Senior Notes are charged at a fixed rate
and the Term Loan is supported by an
interest rate cap arrangement, therefore
materially mitigating interest rate risk.
(c) Credit risk
Credit risk refers to the risk that
a counterparty will default on its
contractual obligations resulting in
financial loss to the Group. A debt will
be deemed uncollectable and therefore
written off based on one or more of the
following criteria:
— Insolvency (formal or just ceased
trading).
— Debtor cannot be located.
— Debt uneconomical to pursue.
For any write-offs, a standard procedure
is followed with authorisations obtained
in-line with the Group’s framework.
Financial instruments that potentially
subject the Group to a concentration
of credit risk consist of cash and cash
equivalents, short-term deposits,
trade receivables, other receivables,
accrued income and derivative financial
instruments. The credit risk on liquid
funds (cash and cash equivalents and
short-term deposits) and derivative
financial instruments is limited because
the counterparties are highly rated
financial institutions. The maximum
exposure to credit risk as at 31
December is:
($ in millions)
Note
2022
2021
Cash and cash
equivalents
17
233.8
364.0
Short-term
deposits
17
109.1
30.0
Trade receivables,
other receivables
and accrued
income
18
262.3
239.6
Intergroup lending
18
1,118.8
749.1
Total credit
risk exposure
1,724.0 1,382.7
The Group’s average age of trade
receivables as at 31 December 2022 was
approximately 56 days (2021: 55 days).
At 31 December 2022, $260.2m (2021:
$236.3m) 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 decreased to $14.7m
(excluding Ligado Networks - refer
note 4a) as at 31 December 2022 (2021:
$17.9m).
For 2022, the Group had one customer
with revenue of 10% ($154.1m) of the
Group’s total revenue, with none of
the remaining customers comprising
greater than 10% of the Group’s total
revenue (2021: no customer).
As a result of the pension scheme buy-out
(note 28) the Group is no longer exposed
to credit risk associated with the insurer.
90 Connect Bidco Ltd Annual Report 2022
(d) Liquidity risk
The Group is exposed to liquidity
risk with respect to its contractual
obligations and financial liabilities.
Prudent liquidity risk management
implies maintaining sufficient cash and
short-term deposits and the availability
of funding through an adequate amount
of committed credit facilities.
The Group manages liquidity risk by
continuously monitoring forecast and
actual cash flows and matching the
maturity profiles of financial assets and
liabilities. The available liquidity of the
Group as at 31 December is:
($ in millions)
Note
2022
2021
Cash and cash
equivalents
17
233.8
364.0
Short-term
deposits
17
109.1
30.0
Available
but undrawn
borrowing
facilities1
20
700.0
700.0
Total available
liquidity
1,042.9 1,094.0
1 Relates to the Senior Revolving Credit Facility
(see note 20).
The Directors currently believe the
Group’s liquidity position is more than
sufficient to meet its needs for the
foreseeable future.
4. CRITICAL ACCOUNTING
JUDGEMENTS AND KEY
SOURCES OF ESTIMATION
UNCERTAINTY
In applying the Group’s accounting
policies, which are described in note
2, the directors are required to make
judgements (other than those involving
estimations) that have a significant
impact on the amounts recognised and
to make estimates and assumptions
about the carrying amounts of assets and
liabilities that are not readily apparent
from other sources. The estimates and
associated assumptions are based on
historical experience and other factors
that are considered to be relevant. Actual
results may differ from these estimates.
The estimates and underlying
assumptions are reviewed on an
ongoing basis. Revisions to accounting
estimates are recognised in the year
in which the estimate is revised if the
revision affects only that period, or in
the period of the revision and future
periods if the revision affects both
current and future periods.
Key sources of estimation
uncertainty
The key assumptions concerning
the future, and other key sources of
estimation uncertainty at the reporting
year that may have a significant risk
of causing a material adjustment to
the carrying amounts of assets and
liabilities within the next financial year,
are discussed below.
(a) Revenue in respect of Ligado
Networks
In December 2007, Inmarsat and Ligado
Networks LLP (formerly LightSquared
LP and LightSquared Inc.), and Ligado
Networks (Canada) Inc. (formerly
Skyterra (Canada) Inc.) entered into a
100 year Cooperation Agreement for
the efficient use of L-band spectrum
over North America. The Cooperation
Agreement has been modified a
number of times, and this has been
assessed against IFRS 15 as to whether
the modification is treated as a new
contract or an amendment to an earlier
contract. Amendment 5 & 6, signed
in 2020, provided a $700m payment
from Ligado which reduced all future
quarterly payments by 60% and
deferred Q2 2020 to Q4 2022 quarterly
payments as well as all previously
deferred amounts to 1 January 2023,
at which date a payment of $395m,
including interest, falls due. Additionally,
there is a call option available until 15
October 2025 for Ligado to buy out all
remaining payment obligations to 2107
for a cash payment ranging between
$825m - $968m.
Amendment 7 was signed on
23 December 2022 and Ligado
subsequently paid Inmarsat $30.0m.
This is a payment on the $395m due 1
January 2023 and provides a deferral
of the remaining $365m due, to 1 April
2023. After interest, $373m will be
payable from Ligado on 1 April 2023.
Amendment 7 provides no further
amendment to existing obligations and
Ligado has retained spectrum rights
during this period.
Given the level of uncertainty around the
collection of future monies, the Group
ceased to apply the IFRS 15 five-step
model from Q2 2020 to Amendments
5 & 6. Based on the continued
level of uncertainty, no change to
this assessment has arisen from
Amendment 7 and no revenue has been
recognised in relation to spectrum and
deferrals. The $30m receipt has been
applied against the existing receivable.
At 31 December 2022, deferred
income of $906.1m (2021: $906.5m)
was recorded on the balance sheet.
$206.1m (2021: $206.5m) represents
services not yet performed relating to
issues including interference resolution
for which payment has already been
received from Ligado. $0.4m of costs
were incurred in relation to interference
resolution in 2022 and a corresponding
amount of revenue was released (2021:
nil). $700m (2021: $700m) represents
the upfront payment received pursuant
to Amendment 5 & 6.
At 31 December 2022 a $3.9m (2021:
$17.2m) receivable relating to deferrals,
net of ECL provision, and a $0.4m (2021:
$2.0m) interest receivable, net of ECL
provision, is recorded on the balance
sheet . A 51% impairment has been
recognised in order to comply with
IFRS 9 and align with our conclusion
that uncertainty remains around
the collection of future monies. The
reduction in receivable is directly linked
to the $30.0m received from Ligado in
accordance with Amendment 7. If Ligado
failed to make remaining payments as
they fall due, this default would release
Inmarsat from its remaining obligations,
which would trigger the recognition in
the income statement of the remaining
deferred income resulting in a net gain
to the Group.
91
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strategic GOVERNANCE FINANCIAL
Notes to the Financial Statements continued
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.
Critical judgements in applying the
Group’s accounting policies
The following are the critical
judgements, apart from those involving
estimations (which are presented
separately above), that the directors
have made in the process of applying
the Group’s accounting policies and
that have the most significant effect
on the amounts recognised in financial
statements:
(b) Capitalisation of space segment
assets and associated borrowing costs
The net book value of space segment
assets is currently $1,450.4m (2021:
$1,703.6m). There have been additions
of $0.7m in the year (2021: $28.5m) and
transfers from assets in the course of
construction of $10.0m (2021: $10.8m).
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.
— Whether an asset is deemed to be
substantially complete and as a
result capitalisation of borrowing
costs should cease.
(c) 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
92 Connect Bidco Ltd Annual Report 2022
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strategic GOVERNANCE FINANCIAL
Notes to the Financial Statements continued
5. SEGMENTAL INFORMATION
The Group have identified the provision of global mobile satellite communications services to customers around the world as
the only operating segment. The Board of Directors review the Group’s financial reporting on a consolidated basis and approves
those proposals for the allocation of the Group’s resources and have therefore been identified as the chief operating decision
maker. The Group’s revenue is categorised by four business units, namely:
— Maritime: focusing on worldwide commercial maritime services including safety services;
— Government: focusing on military and other government services to the U.S. and other international governments;
— Aviation: focusing on commercial aviation, business and general aviation; and providing operational and safety services to
support both of these segments; and
— Enterprise: focusing on worldwide land-based Internet of Things, lease, broadband, and voice segments.
These four business units are supported by ‘Central Services’ which includes satellite operations, technology, corporate
functions, backbone infrastructure, and any income that is not directly attributable to a business unit, such as Ligado.
Segment results 2022
($ in millions)
Maritime Government
Aviation Enterprise
Central
Services
Total
Revenue
515.5
526.9
310.8
106.4
14.1
1,473.7
Ligado revenue
-
-
-
-
0.4
0.4
Total revenue
515.5
526.9
310.8
106.4
14.5
1,474.1
Cash capital expenditure
316.0
Financing costs capitalised in the cost of qualifying assets
76.0
Cash flow timing1
19.8
Total capital expenditure
411.8
1 Cash flow timing represents the difference between accrued capex and the actual cash flows.
Segment results 2021
($ in millions)
Maritime Government
Aviation Enterprise
Central
Services
Total
Revenue
506.1
490.7
226.9
115.5
13.2
1,352.4
Ligado revenue
-
-
-
-
-
-
Total revenue
506.1
490.7
226.9
115.5
13.2
1,352.4
Cash capital expenditure
356.3
Financing costs capitalised in the cost of qualifying assets
66.6
Cash flow timing1
4.7
Total capital expenditure
427.6
1 Cash flow timing represents the difference between accrued capex and the actual cash flows.
94 Connect Bidco Ltd Annual Report 2022
Timing of revenue recognition
($ in millions)
2022
2021
At a point in time
95.6
72.5
Over time
1,378.5
1,279.9
Total
1,474.1
1,352.4
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.
2022
2021
($ in millions)
Revenue
Non-current
segment assets
Revenue
Non-current
segment assets
United Kingdom
64.9
4,719.6
48.7
4378.7
Rest of Europe
405.9
216.3
375.5
247.4
United States
600.2
98.2
531.6
80.0
Rest of North America
45.0
43.5
40.4
53.2
Asia and Pacific
253.9
111.0
248.9
99.3
Rest of the world
104.2
61.7
107.3
38.0
Unallocated1
-
1,943.3
-
2,121.8
1,474.1
7,193.6
1,352.4
7,018.4
1 Unallocated items relate to satellites which are in orbit.
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)
As at 31 December
2022
As at 31 December
2021
Within one year
496.0
418.0
Between two to four years
609.9
442.1
Five years and greater
282.5
286.5
1,388.4
1,146.6
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.
95
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strategic GOVERNANCE FINANCIAL
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)
Note
2022
2021
Depreciation of property, plant and equipment
13
347.6
367.8
Amortisation of intangible assets
14
243.9
253.6
Depreciation of right-of-use assets
15
9.3
11.1
Viasat transaction costs1
22.8
11.1
Loss on disposal of assets
4.1
7.6
Impairment2
0.5
(0.3)
IT support
39.0
37.8
Cost of inventories recognised as an expense
88.5
75.5
Write downs of inventories recognised as an expense
19
6.8
4.0
Research costs expensed
16.9
18.6
1 Viasat transaction costs primarily relate to professional fees supporting the Viasat acquisition.
2 Relates to the impairment of $0.5m of intangible assets (2021: $0.6m impairment of tangible assets, offset by reversal of prior impairment of a financial
asset of $0.9m).
Remuneration payable to the Group’s auditor, Deloitte LLP and its associates in the year:
($ in millions)
2022
2021
Audit fees:
Annual audit of the company
0.1
0.1
Annual audit of subsidiary companies
1.3
1.1
Total audit fees
1.4
1.2
Audit-related assurance services1
0.6
1.7
Total audit and audit-related fees
2.0
2.9
Other services
0.1
0.1
Total non-audit fees
0.1
0.1
Total auditor’s remuneration
2.1
3.0
1 Fees paid for audit-related assurance services relate to additional assurance over historical Group financial information, in support of the Viasat
acquisition.
7. EMPLOYEE BENEFIT COSTS
($ in millions)
Note
2022
2021
Wages and salaries
266.5
261.3
Social security costs
30.1
29.1
Defined contribution pension plan costs
13.8
12.9
Defined benefit pension plan costs1
28
0.6
0.6
Post-employment benefits costs1
28
0.2
-
Total employee benefit costs
311.2
303.9
1 Defined benefit pension plan costs and post-employment benefits costs includes current service costs (see note 28).
Notes to the Financial Statements continued
96 Connect Bidco Ltd Annual Report 2022
Employee Numbers
The average monthly number of employees (including the Executive Director) employed is as follows:
By activity:
2022
2021
Operations
856
777
Sales and marketing
342
378
Development & engineering
221
245
Administration
379
370
1,798
1,770
By business unit:
2022
2021
Maritime
84
129
Government
232
213
Enterprise
51
63
Aviation
66
73
Central Services
1,365
1,292
1,798
1,770
The employee headcount numbers presented above refer to permanent full time and part time employees and exclude
contractors and temporary staff.
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)
2022
2021
Short-term benefits
4.3
5.1
4.3
5.1
In the current year, no Director has been a member of the Group’s defined contribution pension plan.
97
Connect Bidco Ltd Annual Report 2022
strategic GOVERNANCE FINANCIAL
Notes to the Financial Statements continued
9. NET FINANCING COSTS
($ in millions)
2022
2021
Bank interest receivable and other interest
(5.6)
(2.8)
Intergroup loan interest receivable
(69.8)
(29.2)
Total financing income
(75.4)
(32.0)
Interest on Senior Notes and credit facilities
228.7
222.1
Amortisation of term loan gain1
12.1
10.5
Amortisation of debt issue costs
20.0
18.7
Interest on lease obligations
1.6
2.0
Other interest
4.4
8.2
Finance costs
266.8
261.5
Less: Amounts capitalised in the cost of qualifying assets
(76.0)
(66.6)
Financing costs excluding derivative adjustments
190.8
194.9
Fair value changes in financial assets and liabilities1
-
(76.4)
Net financing costs
115.4
86.5
1 Fair value changes in financial assets in liabilities in 2021 relates to an IFRS 9 related gain on repricing the term loan (refer note 20). This gain is
amortised over the remaining life of the loan.
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 7.1% (2021: 7.5%).
10. TAXATION
The tax charge for the year recognised in the income statement:
($ in millions)
2022
2021
Current tax charge:
Current year
35.4
19.3
Adjustments in respect of prior periods
(9.8)
5.8
Total current tax charge
25.6
25.1
Deferred tax charge:
Origination and reversal of temporary differences
(8.4)
(20.2)
Adjustments due to changes in corporation tax rates
0.3
175.0
Adjustments in respect of prior periods
13.2
(9.3)
Total deferred tax charge
5.1
145.5
Total taxation charge
30.7
170.6
98 Connect Bidco Ltd Annual Report 2022
The table below explains the differences between the expected tax expense, being the Group’s profit multiplied by the UK tax
rate, and the Group’s total tax expense. The UK rate is used on the basis that this is our principal operating jurisdiction.
The effective tax rate is 22.6% (2021: 963.8%) and is reconciled below:
($ in millions)
2022
2021
Profit before tax
135.9
17.7
Income tax at 19.0%
25.8
3.4
Differences in overseas tax rates
1.8
3.3
Adjustments in respect of prior periods
3.4
(3.5)
Adjustments due to change in the corporation tax rate
0.3
175.0
Impact of UK patent box regime
(2.2)
(5.7)
Impact of current temporary difference not recognised
-
0.3
Other non-deductible expenses/non-taxable income
1.6
(2.2)
Total taxation charge
30.7
170.6
Tax credited directly to other comprehensive income:
($ in millions)
2022
2021
Deferred tax in re-measurement of derivatives
(21.3)
-
Deferred tax on re-measurement of pension assets and liabilities
(1.1)
0.3
Total tax (charged) / credited directly to other comprehensive income
(22.4)
0.3
On 3 March 2021 the UK Government announced their intention to increase the headline rate of tax from 19% to 25% from April
2023 which was enacted during 2021. The UK deferred tax has been uplifted on the basis that 25% is the enacted rate at 31
December 2022.
The Group is aware of the upcoming introduction in the UK of the OECD’s Anti-Global Base Erosion Rules, which addresses
the tax challenges of the digitalisation of the economy by imposing a minimum effective tax rate of 15% on multinational
enterprises. Based on the published legislative framework, the Group has assessed the potential tax impact of these new rules
and concluded that it will not have a material impact on the financial statements when the rules become effective (expected in
2024). We continue to monitor developments.
11. NET FOREIGN EXCHANGE GAIN
($ in millions)
Note
2022
2021
Pension and post-retirement liability
28
1.7
0.3
Other operating costs
7.2
1.5
Total foreign exchange gain
8.9
1.8
12. DIVIDENDS
During 2022 the Board did not declare an interim or final dividend (2021: nil). During 2022 no dividends were paid to company
shareholders (2021: nil).
99
Connect Bidco Ltd Annual Report 2022
strategic GOVERNANCE FINANCIAL
Notes to the Financial Statements continued
13. PROPERTY, PLANT AND EQUIPMENT
($ in millions)
Freehold land
and buildings
Services
equipment,
fixtures and
fittings
Space segment
Assets in the
course
of construction
Total
Cost:
As at 1 January 2021
12.7
390.0
2,201.9
1,025.9
3,630.5
Additions
-
28.6
28.5
308.3
365.4
Disposals
-
(41.0)
(0.4)
(0.2)
(41.6)
Transfers
-
3.1
-
14.5
17.6
Transfer from assets in the course of construction
-
35.8
10.8
(46.6)
-
As at 31 December 2021
12.7
416.5
2,240.8
1,301.9
3,971.9
Additions
-
13.8
0.5
302.8
317.1
Disposals
-
(64.7)
(0.6)
-
(65.3)
Transfers
-
-
(0.3)
-
(0.3)
Transfers from assets in the course of construction
-
41.2
10.0
(51.2)
-
As at 31 December 2022
12.7
406.8
2,250.4
1,553.5
4,223.4
Accumulated Depreciation:
As at 1 January 2021
(0.3)
(71.7)
(260.3)
-
(332.3)
Charge for the year
(0.3)
(90.2)
(277.3)
-
(367.8)
Disposals
-
30.0
0.4
-
30.4
Transfers
-
(2.0)
-
-
(2.0)
As at 31 December 2021
(0.6)
(133.9)
(537.2)
-
(671.7)
Charge for the year
(0.3)
(83.7)
(263.6)
-
(347.6)
Disposals
-
54.0
0.6
-
54.6
As at 31 December 2022
(0.9)
(163.6)
(800.2)
-
(964.7)
Net book value at 31 December 2021
12.1
282.6
1,703.6
1,301.9
3,300.2
Net book value at 31 December 2022
11.8
243.2
1,450.2
1,553.5
3,258.7
Depreciation of property, plant and equipment is charged using the straight-line method over the estimated useful lives, as follows:
Space segment assets:
Satellites
13–15 years
Other space segment, including ground infrastructure
5–12 years
Fixtures and fittings, and services-related equipment
3–15 years
Buildings
50 years
Freehold land is not depreciated. At 31 December 2022, the Group was carrying certain freehold land and buildings with a net
book value of $11.8m (2021: $12.1m). Had they been revalued on a market basis, their carrying amount at 31 December 2022
would have been $12.7m (2021: $12.7m). Market valuation is based on the Directors’ best estimates.
In 2022, 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 2022 were
$2.6m (2021: $3.7m).
Within the services equipment, fixtures and fittings class of property, plant and equipment the Group has $139.5m (2021:
$153.8m) of net book value related to leased equipment, this includes additions for the year of $47.1m (2021: $47.7m) and
depreciation charge of $51.9m (2021: $51.1m).
100 Connect Bidco Ltd Annual Report 2022
14. INTANGIBLE ASSETS
($ in millions)
Goodwill
Trademarks
Software
Terminal
development
and network
access costs
Customer
relationships
Other
Total
Cost:
As at 1 January 2021
868.4
160.5
334.4
59.6
1,654.2
293.1
3,370.2
Additions
-
-
33.9
15.3
1.5
12.6
63.3
Disposals
-
-
(24.0)
(1.4)
-
-
(25.4)
Impairments
-
-
(0.1)
-
-
-
(0.1)
Transfers
-
-
(10.3)
-
-
(7.3)
(17.6)
As at 31 December 2021
868.4
160.5
333.9
73.5
1,655.7
298.4
3,390.4
Additions
-
-
58.3
8.0
-
28.4
94.7
Disposals
-
-
(26.2)
(4.5)
-
-
(30.7)
Impairments
-
-
(0.5)
-
-
-
(0.5)
Transfers
-
-
-
0.3
-
-
0.3
As at 31 December 2022
868.4
160.5
365.5
77.3
1,655.7
326.8
3,454.2
Accumulated Amortisation:
As at 1 January 2021
-
(6.9)
(51.5)
(21.4)
(148.9)
(25.8)
(254.5)
Charge for the year
-
(6.4)
(69.0)
(20.8)
(138.1)
(19.3)
(253.6)
Disposals
-
-
22.1
1.4
-
-
23.5
Impairment losses
-
-
(0.5)
-
-
-
(0.5)
Transfers
-
-
-
-
-
2.0
2.0
As at 31 December 2021
-
(13.3)
(98.9)
(40.8)
(287.0)
(43.1)
(483.1)
Charge for the year
-
(6.4)
(65.4)
(14.7)
(137.9)
(19.5)
(243.9)
Disposals
-
-
26.0
4.3
-
-
30.3
As at 31 December 2022
-
(19.7)
(138.3)
(51.2)
(424.9)
(62.6)
(696.7)
Net book value at 31 December 2021
868.4
147.2
235.0
32.7
1,368.7
255.3
2,907.3
Net book value at 31 December 2022
868.4
140.8
227.2
26.1
1,230.8
264.2
2,757.5
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 twenty 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 three to ten years.
Customer relationships acquired in connection with acquisitions are being amortised over the expected period of benefit of between
twelve and fourteen 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. 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 31 December 2022, the Group has no indefinite useful life intangible assets, other than Goodwill.
Government grants received in 2022 were $7.4m (2021: $4.7m). The grants have been deducted from the cost of the relevant asset to
arrive at the carrying amount.
101
Connect Bidco Ltd Annual Report 2022
strategic GOVERNANCE FINANCIAL
Notes to the Financial Statements continued
Annual impairment review: Goodwill
Impairment reviews of goodwill are performed at the level of the Group’s cash-generating units (‘CGUs’). The Group as a whole is
the single CGU, as goodwill is monitored at the operating segment level.
The recoverable amount of the CGU has been determined based on fair value less cost to sell, with reference to the recent
Viasat acquisition offer of approximately $7.3bn which includes cash and equity (share price valued as at 5 November 2021).
Further information on the Viasat acquisition can be found in note 35.
15. LEASES
Right of Use Assets
The right-of-use assets for the Group’s property and vehicle leases are presented in the table below:
($ in millions)
Property
Vehicles
Total
Net carrying amount:
As at 1 January 2021
40.9
0.5
41.4
Additions
2.2
0.3
2.5
Changes in terms
0.3
0.2
0.5
Charge for the year
(10.8)
(0.3)
(11.1)
As at 31 December 2021
32.6
0.7
33.3
Additions
2.3
0.1
2.4
Charge for the year
(9.1)
(0.2)
(9.3)
As at 31 December 2022
25.8
0.6
26.4
Six property leases and four vehicle leases expired in the current year. 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 was $0.1m (2021: $0.1m) for the year. As at 31 December 2022,
the Group is committed to $0.1m (2021: $0.1m) of short-term leases and low-value assets.
In the year, the Group received $nil (2021: $0.1m) in relation to income from the subleasing of right-of-use assets.
102 Connect Bidco Ltd Annual Report 2022
Lease liabilities
Lease liabilities are calculated at the present value of the lease payments that are not paid at the commencement date. The
Group’s lease liabilities as of 31 December 2022 comprise existing contracts as well as contracts entered into during the
financial year 2022.
The average lease term of the Group’s property and vehicle leases is 3.7 and 2.0 years respectively (2021: 3.3 and 2.6
respectively). The undiscounted maturity profile of the Group’s leases is shown in the table below.
As at 31 December 2022
($ in millions)
Property
Vehicles
Total
Within one year
10.8
0.2
11.0
Between two to five years
22.4
0.3
22.7
Greater than five years
2.6
-
2.6
35.8
0.5
36.3
As at 31 December 2021
($ in millions)
Property
Vehicles
Total
Within one year
12.2
0.2
12.4
Between two to five years
31.3
0.4
31.7
Greater than five years
6.0
-
6.0
49.5
0.6
50.1
For the year ended 31 December 2022, the weighted average discount rate applied was 4.4% (2021: 4.0%). 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 year was $10.5m (2021: $11.4m) with lease obligations denominated in
various currencies. Total lease interest paid was $1.6m (2021: $2.0m).
The Group does not face a significant liquidity risk with regard to its lease liabilities. The Group’s obligations are secured by the
lessors’ title to the leased assets for such leases.
16. INVESTMENTS
($ in millions)
As at 31 December 2022
As at 31 December 2021
Interest in associates
27.3
23.8
Other investments
1.1
1.1
Total investments
28.4
24.9
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 investment in Actility S.A. and is accounted for as fair value through profit and loss.
Cash dividends received from the associates for the year ended 31 December 2022 total $3.7m (2021: $3.4m). The Group’s
aggregate share of its associates’ profits from continuing operations for the year is $7.2m (2021: $5.1m) and has been recognised
in the income statement.
103
Connect Bidco Ltd Annual Report 2022
strategic GOVERNANCE FINANCIAL
Notes to the Financial Statements continued
17. CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash in hand, deposits held on call with banks, other short-term highly liquid investments
with original maturities of three months or less.
($ in millions)
As at 31 December 2022
As at 31 December 2021
Cash at bank and in hand
192.1
94.0
Short-term deposits with original maturity less than 3 months
41.7
270.0
Total Cash and cash equivalents
233.8
364.0
Short-term deposits
At 31 December 2022, the Group has $109.1m of cash held in short-term deposits with an original maturity of between four and
twelve months (2021: $30.0m).
18. TRADE AND OTHER RECEIVABLES
($ in millions)
As at 31 December 2022
As at 31 December 2021
Current:
Trade receivables and contract assets
227.9
204.9
Other receivables
21.1
19.2
Accrued income
9.9
12.3
Prepayments
46.0
26.3
Total trade and other receivables
304.9
262.7
Non-current:
Intergroup lending, gross of capitalised interest
1,118.8
749.1
Other receivables
3.4
3.2
Total other receivables
1,122.2
752.3
Intergroup lending
As at 31 December 2022, a $1,019.1m intergroup loan (2021: $719.8m) was issued to Connect Midco Limited, 100% owned by
the ultimate parent of the company. This was issued in support of the distribution to shareholders which was declared by the
ultimate parent of the company, including the $299.3m drawn during 2022. The loan is charged at 3-month Libor +5.05% and is
repayable on 23 February 2024.
.
Expected credit loss
The Group applies the simplified approach under IFRS 9 for the impairment of receivables and contract assets. A provisioning
matrix based on internal debtor credit ratings has been used in order to calculate the lifetime loss allowances for each
grouping.
Debtors have been grouped based on ageing and each debtor’s internal credit rating. This rating is a measure from A to E (with E
being the highest risk of default) and considers the debtors financial strength, history and magnitude of past defaults, personal
credit history with the Group and the associated level of sovereign and market risk. The information used in assigning ratings
is both historical and forward looking as regular contact with debtors is maintained to understand if there is any additional risk
forecast. Specific allowances are made to reflect any additional risk identified.
The table below presents the lifetime expected credit losses for trade receivables within each debtor category. No loss
allowance has been recognised for other receivables and accrued income.
104 Connect Bidco Ltd Annual Report 2022
2022
($ in millions)
Internal rating A Internal rating B Internal rating C Internal rating D/E
Total
Carrying value of trade receivables (gross)1
20.8
193.5
66.8
12.2 293.3
Lifetime ECL
-
2.1
6.6
0.1
8.8
Specific allowances
-
0.4
5.6
4.5
10.5
Group loss allowance
-
2.5
12.2
4.6
19.3
1 This is presented gross of credit note allowances of $46.1m.
2021
($ in millions)
Internal rating A Internal rating B Internal rating C Internal rating D/E
Total
Carrying value of trade receivables (gross)1
18.1
161.6
61.9
41.1 282.7
Lifetime ECL
0.3
3.1
6.0
0.4
9.8
Specific allowances
-
-
8.1
19.8
27.9
Group loss allowance
0.3
3.1
14.1
20.2
37.7
1 This is presented gross of credit note allowances of $40.5m.
The Group’s trade and other receivables are stated after impairments. Movements during the year in the Group loss allowance
were as follows:
($ in millions)
2022
2021
As at 1 January
37.7
36.5
Charged in the year
7.6
13.4
Utilised in the year
(0.8)
(2.3)
Released in the year
(9.9)
(9.9)
Ligado release in the year
(15.3)
-
As at 31 December1
19.3
37.7
1 The maturity of the Group’s provision for uncollectable trade receivables for the period ended 31 December 2022 is $0.9m current, $0.9m between one
and 30 days overdue, $3.1m between 31 and 120 days overdue and $14.4m over 120 days overdue (2021: $0.8m current, $0.0m between one and 30 days
overdue, $6.5m between 31 and 120 days overdue and $30.4m over 120 days overdue).
19. INVENTORIES
($ in millions)
As at 31 December 2022
As at 31 December 2021
Finished goods
55.7
35.7
Work in progress
1.5
0.9
Total inventories
57.2
36.6
The Group’s inventories are stated after allowances for obsolescence. Movements in the allowance during the year were as
follows:
($ in millions)
2022
2021
As at 1 January
20.2
16.2
Charged to the allowance in respect of the current year
8.7
4.4
Released in the year
(1.9)
(0.4)
As at 31 December
27.0
20.2
105
Connect Bidco Ltd Annual Report 2022
strategic GOVERNANCE FINANCIAL
Notes to the Financial Statements continued
20. NET BORROWINGS
As at 31 December 2022
As at 31 December 2021
($ in millions)
Amount
Unamortised
term loan
gain
Deferred
finance
costs
Net balance
Amount
Unamortised
term loan
gain
Deferred
finance
costs
Net balance
Current:
Term loan
17.5
-
-
17.5
17.5
-
-
17.5
Total current borrowings
17.5
-
-
17.5
17.5
-
-
17.5
Non-current:
Senior Notes due 2026
2,075.0
-
(9.1)
2,065.9
2,075.0
-
(11.6)
2,063.4
Term loan
1,684.4
(53.8)
(65.7)
1,564.9
1,701.9
(65.9)
(80.3)
1,555.7
Total non-current borrowings
3,759.4
(53.8)
(74.8)
3,630.8
3,776.9
(65.9)
(91.9)
3,619.1
Total borrowings
3,776.9
(53.8)
(74.8)
3,648.3
3,794.4
(65.9)
(91.9)
3,636.6
Cash and cash equivalents
(233.8)
-
-
(233.8)
(364.0)
-
-
(364.0)
Short-term deposits
(109.1)
-
-
(109.1)
(30.0)
-
-
(30.0)
Net borrowings
3,434.0
(53.8)
(74.8)
3,305.4
3,400.4
(65.9)
(91.9)
3,242.6
Senior revolving credit facility
On 12 December 2019, the Group signed a new five-year $700m revolving credit facility (‘Senior Revolving Credit Facility’).
Advances in U.S. dollar under the facility bear interest at a rate equal to the applicable USD LIBOR, plus a margin of between
3.0% and 3.5% determined by reference to the ratio of Senior Secured First Lien Net Leverage. At 31 December 2022, there
were no drawings under the Senior Revolving Credit Facility. In line with the IBOR interest rate benchmark reform, the Senior
Revolving Credit Facility will shift its reference rate to Term SOFR from 30 June 2023 (refer note 2).
Senior Notes due 2026
On 7 October 2019, the Group issued $2.075bn of 6.75% Secured Senior Notes due 1 October 2026. The aggregate gross
proceeds were $2.055bn, net of $19.7m issuance discount. The fair value of Secured Senior Notes is provided in note 31. Accrued
interest of $35.0m (2021: $35.0m) are recognized as Other accruals within Trade and Other Payables, see note 21.
Term loan
On 12 December 2019, the Group entered into a $1.75bn Term Facility with Barclays Bank PLC acting as administrative and
collateral agent. As at 31 December 2022 the Group had drawn down $1.70bn which is repayable in quarterly instalments over
7 years (the credit agreement will mature in 2026). On 25 January 2021, the term loan was repriced from USD Libor +4.5% to
USD Libor +3.5%. This reduction of 1% on the margin resulted in the Group recognising a gain through the income statement of
$76.4m. The carrying value of the term loan was reduced by a similar value and is offset by amortisation, charged over the life
of the loan. In line with the IBOR interest rate benchmark reform, the Term Loan Facility will shift its reference rate to Term SOFR
from 30 June 2023 (refer note 2). The fair value of the term loan is provided in note 31. Accrued interest of $0.5m (2021: $0.2m)
are recognized as Other accruals within Trade and Other Payables, see note 21.
Effective interest rate
The effective interest rates at the balance sheet dates were as follows:
Effective interest rate %
2022
2021
Senior Notes due 2026
7.0%
7.0%
Term Loan
5.8%
4.9%
106 Connect Bidco Ltd Annual Report 2022
Reconciliation of movements in liabilities to cash flows arising from financing activities:
($ in millions)
As at 1
January
2022
Cashflows1
Transfers2
Deferred
finance costs &
term loan gain
Interest
expenses
Foreign
exchange
Lease
adjustments
Other
adjustments
As at 31
December
2022
Short-term borrowings
17.5
(17.5)
17.5
-
-
-
-
-
17.5
Long-term borrowings
3,619.1
(228.7)
(17.5)
29.2
228.7
-
-
-
3,630.8
Lease liabilities
45.5
(12.0)
-
-
-
(3.0)
2.4
0.9
33.8
Total liabilities from
financing activities
3,682.1
(258.2)
-
29.2
228.7
(3.0)
2.4
0.9
3,682.1
($ in millions)
As at 1
January
2021 Cashflows1
Transfers2
Deferred
finance
costs & term
loan gain
Interest
expenses
Foreign
exchange
Lease
adjustments
Other
adjustments
As at 31
December
2021
Short-term borrowings
17.5
(17.5)
17.5
-
-
-
-
-
17.5
Long-term borrowings
3,688.9
(222.1)
(17.5)
(52.3)
222.1
-
-
-
3,619.1
Lease liabilities
54.6
(13.4)
-
-
-
(0.6)
3.0
1.9
45.5
Total liabilities from
financing activities
3,761.0 (253.0)
-
(52.3)
222.1
(0.6)
3.0
1.9
3,682.1
1 Cashflows relate to repayment of borrowings, interest paid, and cash payments for the principal portion of lease obligations.
2 Transfers comprise debt maturing from long-term to short-term borrowings.
21. TRADE AND OTHER PAYABLES
($ in millions)
Note
As at 31 December 2022
As at 31 December 2021
Current:
Trade payables
155.1
107.4
Other taxation and social security payables
4.6
5.6
Other creditors
7.6
2.8
Other accruals
149.8
137.8
Deferred income1
1,037.3
1,018.0
Total trade and other payables
1,354.4
1,271.6
Non-current:
Other payables
2.0
1.8
Defined benefit pension and post employment liability
28
10.8
16.3
Total other payables
12.8
18.1
1 The deferred income balance includes $906.1m (2021: $906.5m) relating to payments received from Ligado Networks (refer note 4).
The Directors consider the carrying value of trade and other payables to approximate to their fair value.
Deferred income
Deferred income represents obligations to transfer goods or services to a customer for which the entity has received
consideration and is therefore considered a contract liability. The Group has recognised the following movements in deferred
income throughout the year:
($ in millions)
2022
2021
As at 1 January
1,018.0
1,001.1
Contract liability raised in the year
421.9
524.9
Contract liability utilised in the year
(402.6)
(508.0)
As at 31 December
1,037.3
1,018.0
107
Connect Bidco Ltd Annual Report 2022
strategic GOVERNANCE FINANCIAL
Notes to the Financial Statements continued
22. PROVISIONS
Movements in the Group’s provisions were as follows:
($ in millions)
Restructuring
Contract
Obligation
Asset
retirement
Deferred
salary
Other
Total
As at 1 January 2022
2.0
6.7
1.0
0.9
1.1
11.7
Charged in respect of year
2.3
-
0.1
-
-
2.4
Utilised in year
(1.9)
(3.3)
-
(0.1)
-
(5.3)
Reversal in the year
-
(1.2)
-
-
(0.3)
(1.5)
As at 31 December 2022
2.4
2.2
1.1
0.8
0.8
7.3
Non-current
-
1.2
1.1
0.8
0.6
3.7
Current
2.4
1.0
-
-
0.2
3.6
2.4
2.2
1.1
0.8
0.8
7.3
A. Restructuring
The restructuring provision relates to organisational restructuring and employee severance. The provision is calculated based
on the estimated costs from the terms of relevant employee contracts. The remaining provision is expected to be utilised within
1 year.
B. Contract Obligation
Contract obligation provisions relate to various contracts within the Aviation business unit, which are expected to result in
an outflow of economic benefit as a result of the contract terms. The provisions are calculated using various best estimate
methods including weighted probability of a range of potential outcome. The costs do not include future operating costs.
C. Asset retirement
Asset retirement obligations relate to the expected costs of removing equipment from occupied premises. This is based on
contractual obligations set out in the occupation agreements and is calculated using the best estimate of the cost to remove
equipment at the end of the term. The costs are expected to be utilised within 2 - 5 years.
D. Deferred Salary
Deferred salary payments are regulatory provisions arising from staff located in Italy and the United Arab Emirates, where the
amounts are paid upon the termination of the employment relationship. The provision is calculated based on the estimated
costs from the terms of relevant employee contracts.
23. CURRENT AND DEFERRED TAXATION
The current tax asset of $3.1m and the current tax liability of $176.6m (2021: $0.4m and $174.8m) represent the tax receivable
and payable in respect of current and prior periods, less amounts paid.
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities (prior to the offsetting of balances within the same jurisdiction as permitted by IAS-12) for the
year are shown below:
108 Connect Bidco Ltd Annual Report 2022
As at 31 December 2022
As at 31 December 2021
($ in millions)
Assets
Liabilities
Net
Assets
Liabilities
Net
Property, plant and equipment and intangible assets
(0.6)
911.3
910.7
(2.2)
885.5
883.3
Provisions
(10.8)
-
(10.8)
(7.9)
-
(7.9)
Other1
(82.9)
-
(82.9)
(64.6)
-
(64.6)
Tax losses
(64.1)
-
(64.1)
(64.1)
-
(64.1)
Hedge reserve on interest rate caps
-
21.3
21.3
-
-
-
Net deferred tax liabilities
(158.4)
932.6
774.2
(138.8)
885.5
746.7
1 Other relates to pensions and corporate interest restrictions.
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)
As at 31 December 2022
As at 31 December 2021
Deferred tax assets
(34.6)
(33.7)
Deferred tax liabilities
808.8
780.4
Net deferred tax liabilities
774.2
746.7
Movement in temporary differences during the year:
($ in millions)
As at 1
January 2022
Recognised
in income
Recognised in other
comprehensive income
As at 31
December 2022
Property, plant and equipment and intangible assets
883.3
27.4
-
910.7
Provisions
(7.9)
(2.9)
-
(10.8)
Other1
(64.6)
(19.4)
1.1
(82.9)
Tax losses
(64.1)
-
-
(64.1)
Hedge reserve on interest rate caps
-
-
21.3
21.3
Total
746.7
5.1
22.4
774.2
($ in millions)
As at 1
January 2021
Recognised in
income
Recognised in other
comprehensive income
As at 31
December 2021
Property, plant and equipment and intangible assets
699.1
184.2
-
883.3
Provisions
(8.1)
0.2
-
(7.9)
Other1
(46.5)
(17.8)
(0.3)
(64.6)
Tax losses
(43.0)
(21.1)
-
(64.1)
Total
601.5
145.5
(0.3)
746.7
1 Other relates to pensions and corporate interest restrictions.
Total unrecognised deferred tax assets:
($ in millions)
As at 31 December 2022
As at 31 December 2021
Unrecognised income tax losses
-
-
Unrecognised capital losses
(60.5)
(63.8)
Total
(60.5)
(63.8)
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.
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
(2021: $nil), resulting in a deferred tax liability of $nil (2021: $nil).
The unrecognised gross temporary difference in respect of the investments in associates is $2.7m (2021: $2.3m), resulting in an
unrecognised deferred tax liability of $0.8m (2021: $0.7m).
109
Connect Bidco Ltd Annual Report 2022
strategic GOVERNANCE FINANCIAL
Notes to the Financial Statements continued
24. RECONCILIATION OF CASH GENERATED FROM OPERATIONS
Reconciliation of profit / (loss) for the year to cash generated from operations:
($ in millions)
2022
2021
Profit / (loss) for the year
105.2
(152.9)
Adjustments for:
Taxation charge
30.7
170.6
Financing costs
190.8
194.9
Financing income
(75.4)
(32.0)
Fair value changes in financial assets and liabilities
-
(76.4)
Operating profit
251.3
104.2
Depreciation and amortisation
600.8
632.5
Loss on disposal of assets
4.1
7.6
Impairment of assets
0.5
(0.3)
Share of profit of associates
(7.2)
(5.1)
EBITDA
849.5
738.9
Dividends received from associates
3.7
-
Non-cash foreign exchange movements
(7.4)
2.1
Changes in net working capital:
Decrease in restricted cash1
-
6.9
(Increase) / decrease in trade and other receivables
(41.6)
16.3
(Increase) / decrease in inventories
(20.6)
0.3
Increase in trade and other payables
64.3
45.8
Decrease in provisions
(4.4)
(9.5)
Cash generated from operations
843.5
800.8
1 Restricted cash related to cash held in escrow from the Speedcast asset acquisition. This asset acquisition was finalised during 2021 and the cash held
in escrow was released.
25. SHARE CAPITAL
($ in millions)
As at 31 December 2022
As at 31 December 2021
Authorised:
2,361,467,197 ordinary shares of $1 each
2,361.5
2,361.5
Allotted, issued and fully paid:
2,361,467,197 ordinary shares of $1 each
2,361.5
2,361.5
During 2022, no new shares were authorised, allotted, or issued (2021: nil).
110 Connect Bidco Ltd Annual Report 2022
26. RESERVES
Reserves relate to fair value movements in the Group’s interest rate cap which provides interest protection on the variable
Term Loan borrowing (refer note 20). IFRS 9 requires the separate valuation for foreign currency basis, where the changes in
the fair value of currency basis are recognised as a separate component of equity, being the cost of hedging reserve, in other
comprehensive income.
Gains and losses relating to the effective portion of hedges are recognised in other comprehensive income and accumulated in
the cost of hedging reserve. When a hedged item is recognised in the income statement the cumulative deferred gain or loss
accumulated in other comprehensive income and the cost of hedging reserve is reclassified to the income statement. When
a hedged item is recognised as a non-financial asset or liability in the balance sheet the accumulated gain or loss is removed
from the cost of hedging reserve and included directly in the initial cost of the asset or liability.
The cost of hedging reserve includes the effects of the following:
— Changes in fair value of the time value of option when only the intrinsic value of the option is designated as the hedging
instrument;
— Changes in fair value of the forward element of a forward contract; and
— Changes in fair value of the foreign currency basis spread of a financial instrument when the foreign currency basis spread of
a financial instrument is excluded from the designation of that financial instrument as the hedging instrument (consistent
with the Group’s accounting policy to recognise non-designated component of foreign currency derivative in equity).
Cashflow hedge reserve
($ in millions)
Cost of hedging
reserve
Intrinsic value
of options
Foreign currency
forwards
Total hedge
reserves
As at 1 January 2021
(6.6)
-
0.4
(6.2)
Add: change in fair value of hedging instrument recognised in OCI
-
0.1
-
0.1
Add: costs of hedging deferred and recognised in OCI in respect of
the time value of options
8.5
-
-
8.5
Less: reclassified from OCI to profit or loss in respect of the time
value of options
2.0
-
-
2.0
Less: gain on foreign currency basis on cash flow hedges capitalised
to tangible assets
-
-
0.3
0.3
Less: reclassified from OCI to profit or loss from the cash flow hedge
reserve
-
-
(0.7)
(0.7)
As at 31 December 2021
3.9
0.1
-
4.0
Add: change in fair value of hedging instrument recognised in OCI
-
91.8
-
91.8
Add: costs of hedging deferred and recognised in OCI in respect of
the time value of options
(6.3)
-
-
(6.3)
Less: reclassified from OCI to profit or loss in respect of the time
value of options
2.0
-
-
2.0
Less: reclassified from OCI to profit or loss from the cash flow hedge
reserve
-
(8.4)
-
(8.4)
Less: deferred tax on change in fair value of hedging instrument
recognised in OCI
-
(21.3)
-
(21.3)
As at 31 December 2022
(0.4)
62.2
-
61.8
Hedge ineffectiveness for 2022 was $0.1m (2021: less than $0.1m) (refer note 31). The positive increase in the net derivative
reserve position for 2022 is driven by increases in the USD LIBOR rate over 2022 (4% at 31 December 2022) compared to the
fixed interest rate cap rate of 2%, deriving a material benefit to the Group.
111
Connect Bidco Ltd Annual Report 2022
strategic GOVERNANCE FINANCIAL
Notes to the Financial Statements continued
27. EMPLOYEE LONG-TERM INCENTIVE PLAN
Cash Long-Term Incentive Plan (LTIP)
The cash LTIP is a senior management (excluding Executive management) remuneration scheme which runs over three years,
starting in 2020. A new LTIP is granted each year with a performance period from 1 January to 31 December. The performance
conditions attached to the scheme are based on revenue growth over the three-year period and the aggregate free cash flow
over a three-year period with both having a 50% weighting. The maximum pay out under the scheme is 150% of salary.
The total cash LTIP charge for the year is $4.3m (2021: $2.6m), comprising of the 2020, 2021 and 2022 LTIP, bringing the
accumulated cash LTIP provision to $8.8m (2021: $4.5m).
Based on Group performance against the objectives, the 2020 LTIP will vest at 82.7% of pay-out ($3.4m) and will be paid to
participants during Q1 2023.
2022 LTIP:
($ in millions)
Weighting
Threshold
Target
Maximum
Objective
Revenue
50%
1,648.0
1,782.0
1,916.0
Free cash flow
50%
1,100.0
1,200.0
1,300.0
100%
2021 LTIP :
($ in millions)
Weighting
Threshold
Target
Maximum
Objective
Revenue
50%
1,475.0
1,595.0
1,714.0
Free cash flow
50%
960.0
1,060.0
1,160.0
100%
2020 LTIP :
($ in millions)
Weighting
Threshold
Target
Maximum
Objective
Revenue
50%
1,456.0
1,574.0
1,692.0
Free cash flow
50%
723.0
773.0
823.0
100%
Employee Participation Units (EPU)
The employee participation unit scheme provides 100 participation units to all permanent employees each year, beginning
in 2020. This continues until an exit-event, such as the Viasat acquisition. The value of these units is based on a fixed amount
of share capital issued in Connect Sub-Topco Limited, held in ownership by Connect Topco Limited, the ultimate parent of the
Group. The total EPU credit for the year was $0.4m, resulting in a year-end provision of $2.1m (2021: $2.5m).
28. 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 Germany and Indonesia which remain active. The Group’s previous
principal defined benefit pension plan was the Inmarsat Global defined benefits scheme, which was a UK funded scheme. This
scheme underwent a ‘buy-in’ during 2020 and has since undergone a buy-out during 2022 which is explained below.
112 Connect Bidco Ltd Annual Report 2022
During October 2020, the Trustee of the Inmarsat Global defined benefits scheme entered into a bulk annuity insurance
contract with Aviva Life & Pensions UK Limited (Aviva), a UK insurance company authorised by the Prudential Regulation
Authority and regulated by the Financial Conduct Authority in respect of the liabilities of the scheme. This is known as a ‘buy-in’.
Under this policy Aviva undertakes, via the Plan, to pay the Plan’s benefit obligations as they fall due. The Trustee retain the
legal obligation for the benefits provided under the scheme. During 2022 the scheme underwent a buy-out, whereby the legal
obligation for the benefits provided under the scheme moved to Aviva. As at 31 December 2022 the value of the defined benefit
obligation and corresponding buy-in insurance asset are nil. No further obligations for the Group or Trustee exist under the
Inmarsat Global defined benefits scheme.
The Group held the liability obligations under the Inmarsat Global defined benefit plan during 2022 up until buy-out. The
disclosures below show the change in these liability obligations and final settlement of the obligations at buy-out. This has
been valued using the projected unit credit method with the valuation undertaken by professionally qualified and independent
actuaries as at 31 December 2022. 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 buy-out, are set out below.
There are no guaranteed minimum pension (GMP) benefits held under the scheme.
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 +1%.
There have been no pension plan amendments, curtailments or settlements since the previous year end, other than the buy-
out disclosure above. Schemes denominated in local currencies are subject to fluctuations in the exchange rate between U.S.
Dollars and local currencies.
The principal actuarial assumptions used to calculate the Group’s pension and post-employment benefits liabilities under IAS
19 are:
Weighted average actuarial assumptions:
As at 31 December 2022
As at 31 December 2021
Discount rate
5.2%
1.8%
Future salary increases
7.0%
5.2%
Medical cost trend
3.3%
3.3%
Future pension increases1
-
3.3%
1 Nil in 2022 due to buy-out of the Inmarsat Global defined benefit pension scheme.
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:
Life expectancy
2022
2021
Mortality assumptions - male
88.5
88.4
Mortality assumptions - female
89.7
89.6
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 2022, 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, mortality and
healthcare cost trend rates. The sensitivity analysis below is for the Group’s principal post-employment benefits scheme 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. No sensitivities are relevant for the Inmarsat Global defined benefit
pension scheme following the buy-out in 2022.
113
Connect Bidco Ltd Annual Report 2022
strategic GOVERNANCE FINANCIAL
Notes to the Financial Statements continued
Inmarsat Global post-retirement healthcare benefit scheme:
($ in millions)
Impact on benefit obligation
increase / (decrease)
Impact on service cost
increase / (decrease)
Change in assumption:
Increase in discount factor of 0.5%
(0.6)
-
Increase in inflation of 0.5%
0.6
-
Increase in medical price inflation trend rate of 1%
1.4
0.1
Decrease in medical price inflation trend rate of 1%
(1.1)
(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)
As at 31
December 2022
As at 31
December 2021
Present value of funded defined benefit obligations (pension)
-
(124.1)
Present value of unfunded defined benefit obligations (pension)
(0.2)
(0.2)
Present value of unfunded defined benefit obligations (post-employment benefits)
(10.6)
(16.1)
Fair value of defined benefit assets
-
124.1
Net defined benefit liability recognised in the Balance Sheet
(10.8)
(16.3)
The above net liability is recognised in the balance sheet as follows:
($ in millions)
Note
As at 31
December 2022
As at 31
December 2021
Defined benefit pension and post-employment liability
21
(10.8)
(16.3)
Analysis of the movement in the present value of the defined benefit obligations is as follows:
($ in millions)
Defined benefit pension plan
Post-employment benefits
As at 1 January 2022
124.3
16.1
Current service cost
-
0.2
Interest cost
2.0
0.2
Remeasurement gain / (loss):
Actuarial gain from changes in financial assumptions
(43.7)
(5.6)
Experience adjustment
-
1.8
Benefits paid
(0.7)
(0.4)
Foreign exchange gain
(13.3)
(1.7)
Defined benefit pension buy-out
(68.4)
-
As at 31 December 2022
0.2
10.6
114 Connect Bidco Ltd Annual Report 2022
Analysis of the movement in the fair value of the assets of the defined benefit pension plans is as follows:
($ in millions)
2022
2021
As at 1 January
124.1
141.3
Interest income
2.0
1.9
Remeasurement (loss) / gain:
(Loss) / return on plan assets (excluding interest amounts)
(43.7)
2.6
Contributions by employer
-
(2.6)
Benefits paid
(0.1)
(2.1)
Expenses paid (included in service cost)
(0.6)
(0.6)
Foreign exchange loss
(13.3)
(1.4)
Defined benefit pension buy-out
(68.4)
(15.0)
As at 31 December
-
124.1
Amounts recognised in the income statement in respect of the plans are as follows:
2022
2021
($ in millions)
Defined benefit
pension plan
Post-employment
benefits
Defined benefit
pension plan
Post-employment
benefits
Current service cost
0.6
0.2
0.6
0.2
Past service gain
-
-
-
(0.2)
Net interest expense
-
0.2
(0.1)
0.3
Foreign exchange gain
-
(1.7)
-
(0.3)
0.6
(1.3)
0.5
-
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).
115
Connect Bidco Ltd Annual Report 2022
strategic GOVERNANCE FINANCIAL
Notes to the Financial Statements continued
Amounts recognised in the statement of comprehensive income in respect of the plans are as follows:
2022
2021
($ in millions)
Defined
benefit
pension plan
Post
-employment
benefits
Defined
benefit
pension plan
Post
-employment
benefits
Actuarial gain from changes in financial assumptions
(43.7)
(5.6)
3.0
0.3
Actuarial gain arising from changes in experience adjustment
-
1.8
-
0.8
Loss / (return) on plan assets (excluding interest amounts)
43.7
-
(2.6)
-
Remeasurement of the net defined benefit liability
-
(3.8)
0.4
1.1
The assets held in respect of the Group’s defined benefit schemes were as follows:
As at 31 December 2022
As at 31 December 2021
Value ($ in
millions)
Percentage of
total plan assets
Value ($ in
millions)
Percentage of total
plan assets
Cash
-
-
-
-
Assets held by insurance company
-
-
124.1
100.0%
Other
-
-
-
-
Fair value of scheme assets
-
-
124.1
100.0%
Previously the Plan’s main asset was the buy-in policy with Aviva, the value of which was set equal to the corresponding value of
the IAS-19 liability it covers. Following buy-out, this asset is released.
The duration of the defined benefit liabilities within the Inmarsat Global defined benefit plan is approximately 20 years. Given
the buy-out of this plan, a split by member is not provided. 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 (at 31 December 2017) was 56 years and 69
years, respectively.
Given the buy-out in 2022, the estimated contributions expected to be paid into the Inmarsat Global defined benefit pension
plan during 2023 are $nil. In 2022 actual contributions under this plan were $nil (2021: $2.6m).
29. 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.
During the year the Group received $37.2m (2021: $31.6m) revenue from various agreements deriving revenue from leased
equipment. The income relates predominantly to maritime antenna leases, as well as other onboard vessel equipment which is
required for customers to connect to the Group’s satellite network.
Customers must be deemed to be creditworthy under the Group’s credit policy before any equipment is leased. Should any
customer terminate its relationship with the Group, then onboard leased assets are required to be returned as these remain
property of the Group. In the event of damage, or the non-return of equipment, the Group will invoice the customer for the value
of the equipment. Collection of this debt falls under the Group’s credit policy.
116 Connect Bidco Ltd Annual Report 2022
The following table summarises the future minimum lease payments:
($ in millions)
As at 31
December 2022
As at 31
December 2021
Within one year
40.9
37.2
Between two to five years
52.8
56.9
93.7
94.1
30. CAPITAL RISK MANAGEMENT
The following table summarises the capital of the Group:
($ in millions)
As at 31
December 2022
As at 31
December 2021
As per balance sheet
Cash and cash equivalents
(233.8)
(364.0)
Short-term deposits greater than three months
(109.1)
(30.0)
Borrowings1
3,648.3
3,636.6
Net borrowings
3,305.4
3,242.6
Equity attributable to shareholders of the parent
1,977.8
1,812.8
Capital
5,283.2
5,055.4
1 This excludes lease obligations of $33.8m (2021: $45.5m).
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 regularly monitors movements in cash and borrowings, as well as total available liquidity. The Group’s liquidity is
disclosed in note 3(d).
31. 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 Group
has in place a risk management programme that seeks to limit adverse effects on the financial performance of the Group by
monitoring foreign exchange exposures and proposing a strategy to manage this exposure to the CFO for approval on an annual
basis, and using interest rate caps as required to minimise the exposure arising from floating rate debt.
The Board of Directors of the Group 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 a policy and procedures manual that
sets out specific guidelines for managing foreign exchange risk, interest rate risk and credit 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.
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.
117
Connect Bidco Ltd Annual Report 2022
strategic GOVERNANCE FINANCIAL
Notes to the Financial Statements continued
Financial instruments by category
The following table sets out the categorisation of financial assets and liabilities under IFRS 9:
As at 31 December 2022
As at 31 December 2021
($ in millions)
Amortised
cost
Derivatives
used for
hedging
Total
Amortised
cost
Derivatives
used for
hedging
Total
Assets as per balance sheet
Trade receivables and other1
262.3
-
262.3
239.6
-
239.6
Cash and cash equivalents
233.8
-
233.8
364.0
-
364.0
Short-term deposits
109.1
-
109.1
30.0
-
30.0
Intergroup lending, gross of capitalised interest
1,118.8
-
1,118.8
749.1
-
749.1
Derivative financial instruments
-
83.0
83.0
-
5.8
5.8
1,724.0
83.0
1,807.0
1,382.7
5.8
1,388.5
1 Consists of trade receivables, other receivables and accrued income (see note 18).
As at 31 December 2022
As at 31 December 2021
($ in millions)
Amortised
cost
Total
Amortised
cost
Derivatives
used for
hedging
Total
Liabilities as per balance sheet
Borrowings
3,648.3
3,648.3
3,636.6
-
3,636.6
Trade payables and other1
314.5
314.5
249.8
-
249.8
Lease liabilities
33.8
33.8
45.5
-
45.5
Derivative financial instruments
-
-
-
1.8
1.8
3,996.6
3,996.6
3,931.9
1.8
3,933.7
1 Consists of trade payables, other payables, accruals and excludes pension liabilities and other taxation and social security payables (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.
As at 31 December 2022
($ in millions)
Less than
1 year
Between 1
and 2 years
Between 2
and 5 years
Over
5 years
Total
Borrowings1
294.9
295.2
4,266.3
-
4,856.4
Trade payables and other2
312.5
0.1
0.2
1.7
314.5
607.4
295.3
4,266.5
1.7
5,170.9
As at 31 December 2021
($ in millions)
Less than
1 year
Between 1
and 2 years
Between 2
and 5 years
Over
5 years
Total
Borrowings1
235.6
234.7
4,402.8
-
4,873.1
Trade payables and other2
248.0
0.1
0.2
1.5
249.8
Derivative financial instruments
1.8
-
-
-
1.8
485.4
234.8
4,403.0
1.5
5,124.7
1 Includes interest obligations on the Senior Notes due 2026 and Term Loan.
2 Consists of trade payables, other payables, accruals and excludes pension liabilities and other taxation and social security payables (see note 21).
118 Connect Bidco Ltd Annual Report 2022
Fair values of derivative financial instruments
The Group’s derivative financial instruments consist of interest rate caps. Forward foreign currency contracts have previously
been held by the Group, however are nil at year end (2021: nil) and were designated as cash flow hedges. The Group generally
does not hedge foreign currency transactions, however where there is a material contract with a foreign currency exposure, a
specific hedge to match the specific risk will be evaluated. Previously, certain foreign currency milestone payments to Airbus
for the construction of the I-6 satellites were hedged.
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 under the hedge accounting rules of IFRS 9.
Under hedge accounting, the change in fair value initially goes through other comprehensive income. At the point hedge
accounting is discontinued, i.e. when the hedging instrument expires, is terminated or no longer qualifies for hedge accounting,
the amounts sitting in other comprehensive income at that time remain in equity until the forecast transaction occurs. When
the forecast transaction is no longer expected to occur, the amounts that were reported in equity are immediately reclassified
to profit or loss. Where hedge accounting does not apply, the change in fair value is included in net financing costs in the
income statement.
The fair value of the interest rate cap is based on the forward interest rate curve at each reporting date and is 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, i.e. 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.
The value of a hedging derivative is classified as non-current asset or liability if the cash flows are due to be received in greater
than twelve months, and as a current asset or liability if the cash flows are due to be received in less than 12 months.
The fair values at the balance sheet date were:
($ in millions)
As at 31
December 2022
As at 31
December 2021
Financial liabilities:
Interest rate cap - current
-
1.8
Total derivative financial liabilities
-
1.8
Financial assets:
Interest rate cap - current
45.0
-
Interest rate cap - non-current
38.0
5.8
Total derivative financial assets
83.0
5.8
Interest rate cap
The Group has entered into interest rate cap arrangements to hedge the variable interest rates on the Term Loan. The cap
provides protection of where USD LIBOR is above 2% and is designated as cashflow hedges. The total nominal amount of the
interest rate cap arrangement is $1.7bn, hedging 98% of the term loan balance. In line with the IBOR interest rate benchmark
reform, the interest rate cap will adopt the ISDA Fallbacks Protocol and shift its reference rate to Compound SOFR from 30 June
2023 (refer note 2).
Hedge ineffectiveness can arise from changes in the creditworthiness of counterparties hedged with and the credit risk of the
Group, along with the ability of the Group to refinance the debt and make changes to the economic terms of the hedged loan,
resulting in mismatches. The hedge ineffectiveness for 2022 was $0.1m (2021: less than $0.1m).
119
Connect Bidco Ltd Annual Report 2022
strategic GOVERNANCE FINANCIAL
Notes to the Financial Statements continued
Non-derivative financial assets and financial liabilities
Non-derivative financial assets consist of cash at bank, short-term investments, trade receivables, intergroup loan, other
receivables, and accrued income.
Non-derivative financial liabilities consist of borrowings, trade payables, lease liabilities, other payables, and accruals.
Fair value of non-derivative financial assets and financial liabilities
With the exception of the Senior Notes and Term loan, the fair values of all non-derivative financial instruments approximate
to the carrying value in the balance sheet. The fair value of Senior Notes & Term Loan 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, lease liabilities, and deferred
consideration approximate their carrying values (see notes 18 and 21 respectively);
— The Senior Notes due 2026 are reflected in the balance sheet net of unamortised arrangement costs of $9.1m (2021: $11.6m)
(see note 20). The fair values of the Senior Notes due 2026 are based on the market price of the bonds and are reflected in
the next table;
— The Term loan is reflected in the balance sheet net of unamortised arrangement costs and IFRS 9 related gain from repricing (refer
note 20) of $128.6m (2021: $157.8m) and the fair value is based on the net present value discounted at LIBOR +3.5%; and
— The Intergroup loan fair value is reflected in the balance sheet net of unamortised arrangement costs of nil. The fair value is
based on the net present value discounted at Libor +5.05%.
As at 31 December 2022
As at 31 December 2021
($ in millions)
Carrying
amount
Fair value
amount
Carrying
amount
Fair value
amount
Senior Notes due 2026
2,065.9
1,942.2
2,063.4
2,182.6
Term Loan
1,582.4
1,760.2
1,573.2
1,737.4
Intergroup lending
1,107.4
1,225.7
745.2
804.7
32. CAPITAL AND PURCHASE COMMITMENTS
($ in millions)
Total
Less than 1 year
Between 2 and 5 years
Over 5 years
Purchase commitments
44.9
33.2
7.0
4.7
Lease commitments
405.3
-
78.4
326.9
Capital commitments
454.5
369.0
85.5
-
Total commitments
904.7
402.2
170.9
331.6
Capital commitments primarily represent commitments in respect of the Group’s I-6 and GX 7/8/9 satellite programs. Lease
and purchase commitments mainly comprise the commitment for development of Arctic capabilities for GX in partnership with
Space Norway and a property lease in relation to the Group’s London Headquarters.
120 Connect Bidco Ltd Annual Report 2022
121
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strategic GOVERNANCE FINANCIAL
33. 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 2022, the Group had $25.0m of
contingent liabilities in relation to employee retention compensation. This will be payable on successful completion of the
Viasat acquisition and is subject to employees being retained for a set retention period, post-acquisition. (2021: $nil).
34. RELATED PARTY TRANSACTIONS
In the normal course of operations, the Group engages in transactions with its equity-accounted associates (Navarino UK and
JSAT Mobile), parent companies (being Connect Midco Limited, Connect Sub-Topco Limited, and Connect Topco Limited), and
the ultimate shareholders (being the ‘Consortium’: Apax Partners LLP, Warburg Pincus LLC, Canada Pension Plan Investment
Board, Ontario Teachers’ Pension Plan Board and Pretzel Logic BV).
Transactions with equity-accounted associates represent sales of airtime and equipment and are measured at the amounts
exchanged. Group revenue from Navarino UK and JSAT Mobile for the 2022 financial year is $43.4m and $24.6m respectively
(2021: $39.3m and $17.3m, respectively). The amount receivable from Navarino UK and JSAT Mobile at 31 December 2022 is $9.9m
and $3.4m, respectively (2021: $9.3m and $2.0m, respectively).
Transactions with the parent companies relate to $nil of intercompany management charges (2021: $0.2m) and $1,118.8m
intergroup loan, gross of capitalised interest. Other than the intergroup loan, no amount remain outstanding (2021: $nil).
Transactions with the Consortium, related to expenses, for the 2022 financial year is $nil (2021: $0.2m). No amount remains
outstanding.
Transactions with the Executive and Non-executives, relating to remuneration earned in the normal course of operations, is
provided in note 8.
35. EVENTS AFTER BALANCE SHEET DATE
Viasat acquisition
On 8 November 2021 Viasat Inc and Inmarsat announced a definitive agreement under which Viasat will acquire Inmarsat ina
transaction then valued at $7.3bn, comprised of $850m in cash (reduced to $551m, post prior distribution to shareholders)
approximately 46.36 million shares of Viasat common stock valued at $3.1bn based on the closing price on Friday November 5,
2021, and the assumption of $3.4 billion of net debt. The agreement has been approved by both the Inmarsat and Viasat Board
of Directors, and Viasat shareholders. We currently expect the deal to close in the second half of 2023, assuming all regulatory
approvals are obtained.
HMRC Launch Cost Case
The Group’s 1999 claim for a tax deduction for satellite launch costs was heard at the Court of Appeal which ruled in favour of
HMRC in July 2022. The Group subsequently appealed directly to the Court of Appeal which was heard and rejected on 5 January
2023. This is treated as a non-adjusting post balance sheet date event per IAS 10. The Group has provided fully for the expected
cost of c. $128m, comprising current and deferred tax ($100m) and interest ($28m). Given the affected tax computations span
over 20 years, the exact amount of tax and interest has yet to be agreed with HMRC. To manage ongoing late payment interest,
during Q1 2023 the Group has paid £57.2m Income tax ($69.1m) and £17.4m interest ($20.9m) resulting in a foreign exchange gain
of c.$32.0m.
Notes to the Financial Statements continued
36. GROUP ENTITIES
At 31 December 2022, the company had investments in the following subsidiaries and associates:
Entity name
Principal activity
Country of incorporation
/ registered address Ownership
Inmarsat Group Holdings Limited (formerly Inmarsat plc)
Holding company
England and Wales/A
100%
Connect Finco SARL
Finance company
Luxembourg/AI
100%
Connect U.S. Finco LLC
Finance company
United States/D
100%
Inmarsat Holdings Limited
Holding company
England and Wales/A
100%
Inmarsat Group Limited
Holding company
England and Wales/A
100%
Inmarsat Finance Limited
Finance company
England and Wales/A
100%
Inmarsat Investments Limited
Holding company
England and Wales/A
100%
Inmarsat Ventures SE
Operating company
Luxembourg/AI
100%
Inmarsat Global Limited
Satellite telecommunications
England and Wales/A
100%
ISAT Global Xpress OOO
Dormant
Russian Federation/X
100%
Inmarsat Brasil Eireli
Dormant
Brazil/H
100%
Inmarsat Leasing (Two) Limited
Satellite leasing
England and Wales/A
100%
Inmarsat New Zealand Limited
Operating company
New Zealand/U
100%
Inmarsat Services Limited
Operating company
England and Wales/A
100%
PT ISAT
Operating company
Indonesia/Q
100%
Inmarsat Communications Company LLC
Operating company
UAE/AC
49%
Inmarsat Group Holdings Inc.
Operating company
United States/C
100%
ISAT U.S. Inc.
Operating company
United States/C
100%
Inmarsat Government Inc.
Operating company
United States/D
100%
Stratos Government Services Inc.
Operating company
United States/D
100%
Inmarsat Commercial Services Inc.
Operating company
United States/D
100%
Inmarsat Solutions (U.S.) Inc.
Operating company
United States/D
100%
Inmarsat Inc.
Holding company
United States/D
100%
Europasat Limited
Operating company
England and Wales/A
100%
Inmarsat Employment Company Limited
Employment company
Jersey/T
100%
Inmarsat Trustee Company Limited
Dormant
England and Wales/A
100%
Inmarsat Finance III Limited
Operating company
England and Wales/A
100%
Inmarsat Solutions Limited
Holding company
England and Wales/A
100%
Inmarsat Solutions (Canada) Inc.
Operating company
Canada/B
100%
Inmarsat Holdings (Cyprus) Limited
Holding company
Cyprus/K
100%
Inmarsat Germany (GmBH)
Operating company
Germany/L
100%
Inmarsat Global Japan KK
Holding company
Japan/S
100%
Inmarsat Investments BV
Holding company
The Netherlands/V
100%
Inmarsat Solutions B.V.
Operating company
The Netherlands/V
100%
Inmarsat Solutions SA (PTY) Limited
Operating company
South Africa/Z
100%
Inmarsat Spain S.A.
Operating company
Spain/AA
100%
Inmarsat Hong Kong Limited
Operating company
Hong Kong/N
100%
Inmarsat Hellas Satellite Services SA
Satellite telecommunications
Greece/M
100%
Inmarsat Navigation Ventures Limited
Operating company
England and Wales/A
100%
Inmarsat SA
Operating company
Switzerland/AB
100%
Inmarsat Solutions Global Limited
Operating company
England and Wales/A
100%
Inmarsat Solutions AS
Operating company
Norway/W
100%
Inmarsat Solutions Pte. Limited
Operating company
Singapore/Y
100%
122 Connect Bidco Ltd Annual Report 2022
Entity name
Principal activity
Country of incorporation
/ registered address Ownership
Inmarsat Solutions ehf.
Operating company
Iceland/O
51%
Inmarsat Australia Pty Limited
Operating company
Australia/F
100%
Inmarsat KK
Operating company
Japan/S
100%
Inmarsat Solutions (Shanghai) Co. Limited
Operating company
China/J
100%
Inmarsat India Private Limited
Operating company
India/P
100%
Inmarsat Licences (Canada) Inc.
Holding company
Canada/B
100%
Flysurfer Colombia S.A.S.
Operating company
Columbia/I
100%
Inmarsat New Ventures Limited
Holding company
England and Wales/A
100%
Flysurfer-Ecuador S.A.
Operating company
Ecuador/AE
100%
Inmarsat Satellite Services S.R.L.
Operating company
Romania/AF
100%
Inmarsat BH d.o.o.
Operating company Bosnia and Herzegovina/AG
100%
Inmarsat Solutions doo Beograd
Operating company
Serbia/AH
100%
Inmarsat DOOEL Skopje
Operating company
Macedonia/E
100%
Inmarsat Maritime Ventures Limited
Operating company
England and Wales/A
100%
Inmarsat Turkey Telekomünikasyon Limited Şirketi
Operating company
Turkey/R
100%
Navarino UK Limited
Associate
England and Wales/AD
49%
JSAT Mobile Communications Inc.
Associate
Japan/G
26.67%
Registered address key:
Key
Registered Address
A
99 City Road, London EC1Y 1AX, United Kingdom
B
34 Glencoe Drive, Box 5754, Donovan’s Bus. Park, Mount Pearl Newfoundland A1N 4S8, Canada
C
874 Walker Road, Suite C, City of Dover DE 19904, United States
D
251 Little Falls Drive, Wilmington DE 19808, United States
E
Str. Risto Ravanovski no 13a, Skopje, Republic of Macedonia, Macedonia, the former Yugoslav Republic of Macedonia
F
Mills Oakley, Level 7, 151 Clarence Street, Sydney NSW 2000, Australia
G
Nisso Building #22 8F, Azabudai1-11-10, Minato-ku, Tokyo 106-0041, Japan
H
Av. Brig Faria Lima, 3400 – Cj. 151 – 15.º andar, parte C 04538-132 , São Paulo, Brazil
I
Cra. 7 No. 71-52 Tower B 9th Floor, Bogota, DC, Colombia 110231
J
11F, Tower B, Central Towers, No.567, Lan Gao Road, Putuo District, Shanghai, 200333, China
K
1, Lampousas, Nicosia, 1095, Cyprus
L
Willy-Brandt, 23, 20457, Hamburg, Germany
M
280 Kifisias Avenue, Halandri, 152 32, Greece
N
Unit 4217- Metroplaza, Tower 1, 223 Hing Fong Road, Kwai Fong, N.T, Hong Kong, Hong Kong
O
Hlíðarsmára 10, 201 Kópavogi, Iceland
P
P-24, Green Park Extension, New Delhi, 110016, India
Q
Panbil Residence 1st – 2nd Floor, Jl. Ahmad Yani, Muka Kuning – Batam – 29433, Indonesia
R
Maltepe Mah. Eski Çırpıcı , Yolu Sk. Parima , Blok No:8 İç kapı , 14 Zeytinburnu, İstanbul, Turkey
S
Level 25 Ark Hills Sengokuyama Mori Tower, 1-9-10, Roppongi, Minato-ku, Tokyo, 106-0032, Japan
T
44 Esplanade, St. Helier, Jersey JE4 9WG, Jersey
U
24 Unity Drive North, North Harbour, Auckland, New Zealand
V
Loire 158-160, 2491 AL, The Hague, Netherlands
W
NMK – Borgundveien 340, 6009 Ålesund, Norway
X
Bld. 5, 13 Kasatkina Street, 129301, Moscow, Russian Federation
Y
11 Lorong 3 Toa Payoh , #01-31, Jackson Square, 319579, Singapore
123
Connect Bidco Ltd Annual Report 2022
strategic GOVERNANCE FINANCIAL
Notes to the Financial Statements continued
Key
Registered Address
Z
Deloitte Place, The Woodlands, 20 Woodlands Drive, Woodmead, Sandton, Johannesburg, Gauteng, 2052, South Africa
AA
Príncipe de Vergara 73, 28006, Madrid, Spain
AB
Avenue Gratta-Paille 2, c/o MAZARS SA, World Trade Center, 1018, Lausanne, Switzerland
AC
Festival Tower - Unit 2303, P.O. Box 27313, Dubai Festival City, Dubai, United Arab Emirates
AD
Camburgh House, 27 New Dover Road, Canterbury, Kent CT1 3DN, United Kingdom
AE
Republica de El Salvador N35-146 y Suecia, Edif. Prisma Norte, Piso 11, Quito, C.P. 170505, Ecuador
AF
22 Tudor Vladimirescu Blv., Building Green Gate Office, Bucharest, 5th Floor 573Campus07, Sector, Bucharest, Romania
AG
Street Skenderpasina 1, Sarajevo, Bosnia and Herzegovina
AH
GTC Avenue 19, 38-40 Vladimira Popovica Street, New Belgrade, Servia, 11070, Serbia
AI
6, rue Engene Ruppert, L-2453, Luxembourg
124 Connect Bidco Ltd Annual Report 2022
($ in millions)
As at 31
December 2022
As at 31
December 2021
Assets
Non-current assets
Investments1
3,370.1
3,370.1
Other receivables2
2,242.4
2,344.6
Deferred tax asset
5.1
23.4
5,617.6
5,738.1
Current assets
Cash and cash equivalents
-
-
Trade and other receivables2
81.7
60.6
Income tax assets
22.0
16.8
103.7
77.4
Total assets
5,721.3
5,815.5
Liabilities
Current liabilities
Trade and other payables
36.4
39.3
36.4
39.3
Non-current liabilities
Borrowings3
3,655.6
3,642.1
3,655.6
3,642.1
Total liabilities
3,692.0
3,681.4
Net assets
2,029.3
2,134.1
Shareholders’ equity
Ordinary shares
2,361.5
2,361.5
Retained earnings
(332.2)
(227.4)
Total equity
2,029.3
2,134.1
1 Investments includes $3,335.3m investment in Inmarsat Group Holdings Limited (2021: $3,335.3m) and $34.8m investment in Connect Finco Sarl (2021:
$34.8m).
2 Other receivables comprise $2,232.4m loan owing from Inmarsat Group companies (2021: $2,344.6m). Trade and other receivables include $9.9m
current portion of loan owing from Inmarsat Group companies (2021: $9.9m), $33.1m of current intercompany loan interest accrued (2021: $18.7m),
$5.4m of capitalised loan issue costs (2021: $8.2m), $39m owing from Inmarsat Group companies (2021: $18.5m), and $4.2m other receivables (2021:
$5.3m).
3 Borrowings comprise of $3,730.4m (2021: $3,734.1m) of loan owing to Inmarsat Group companies, offset by $74.7m (2021: $91.9m) of capitalised loan
issue costs.
The company reported a loss for the financial year ended 31 December 2022 of $104.8m (2021: loss of $51.6m).
The financial statements of the company, registered number 661877, were approved by the Board of Directors on 20 March 2023
and signed on its behalf by
Rajeev Suri
CEO
Company balance sheet
As at 31 December 2022
125
Connect Bidco Ltd Annual Report 2022
strategic GOVERNANCE FINANCIAL
($ in millions)
Ordinary shares
Retained earnings
Total
As at 1 January 2021
2,361.5
(175.8)
2,185.7
Loss for the year
-
(51.6)
(51.6)
As at 31 December 2021
2,361.5
(227.4)
2,134.1
Loss for the year
-
(104.8)
(104.8)
As at 31 December 2022
2,361.5
(332.2)
2,029.3
Company statement of changes in equity
For the year ended 31 December 2022
Notes to the Company
Financial Statements
For the year ended 31 December 2022
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, and financial
instruments. Where required, equivalent
disclosures have been given in the Group
accounts of Connect Bidco Limited.
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.
Investments in subsidiaries are carried
at cost less accumulated impairment
losses in the company’s balance sheet.
On disposal of investments in subsidiaries
the difference between disposal
proceeds and the carrying amounts of
the investments are recognised in profit
or loss.
The company was incorporated on 15
March 2019.
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
statements.
c) Income statement
Under Section 244 (5) of the Companies
(Guernsey) Law 2008, the company
is not required to prepare individual
accounts. However, The Directors are
mindful of corporate governance and
seek to demonstrate understanding
of their accountability and statutory
responsibilities, including application
of duties under applicable local
legislation. Therefore, a company
only Balance Sheet and Statement of
Changes in Equity have been presented.
The loss for the year ended 31 December
2022 was $104.8m (2021: loss of
$51.6m).
Auditor’s remuneration
During the year, the company paid its
external auditor less than $0.1m (2021:
$0.1m) for statutory audit services.
Employee costs and Directors’
remuneration
The average monthly number of people
employed during the year was nil (2021
was nil). Total staff costs for 2022
were $nil (2021 was $nil). Full details
of Directors’ remuneration are given in
notes 8 & 27.
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
All shares are fully paid. Total shares
issued (at $1.00 each) and fully paid is
2,361,467,197 (2021: 2,361,467,197 at $1.00
each).
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
company in relation to intercompany
balances are $1,156.6m loan & accrued
interest due from Group companies
(2021: $1,624.1m), $14.7m other amounts
due from Group companies (2021:
$18.5m), and $3,730m (2021: $3,734m)
loan & interest due to Group companies,
all of 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.
126 Connect Bidco Ltd Annual Report 2022
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF CONNECT BIDCO LIMITED
Report on the audit of the financial statements
1. Opinion
In our opinion:
— The financial statements of Connect Bidco Limited (the ‘company’) and its subsidiaries (the ‘group’) give a true and fair view
of the state of the group’s and of the company’s affairs as at 31 December 2022 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 issued by the International Accounting Standards Board (IASB)];
— The 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 (Guernsey) Law, 2008.
We have audited the financial statements which comprise:
— The consolidated income statement;
— The consolidated statement of comprehensive income;
— The consolidated and company balance sheets;
— The consolidated and company statement of changes in equity;
— The consolidated cash flow statement; and
— The related notes 1 to 36 to the consolidated financial statements and notes a to d of the company financial statements
The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law
and IFRSs as issued by the IASB. The financial reporting framework that has been applied in the preparation of the company
financial statements is applicable law and United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure
Framework” (United Kingdom Generally Accepted Accounting Practice).
2. 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 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
entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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strategic GOVERNANCE FINANCIAL
3. Summary of our audit approach
Key audit matters
The key audit matter that we identified in the current year was:
— Accounting for capital expenditure on assets under construction
Materiality
The materiality that we used for the group financial statements was $24.7m which was
determined on the basis of 3% of EBITDA.
Scoping
We have performed audit procedures for components which represent 100% of net assets,
revenue and EBITDA.
Significant changes
in our approach
There have been no significant changes to the approach of our audit compared to the prior year.
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the group’s and company’s ability to continue to adopt the going concern basis
of accounting included:
— Agreeing the level of committed, undrawn facilities of $700 million to the signed facility agreement and evaluating the other
financing facilities in place including the repayment terms and covenants in place;
— Assessing the historical accuracy of forecasts prepared by the directors;
— Testing the clerical accuracy of the model used to prepare the forecasts;
— Recalculating the EBITDA headroom within the forecasts for covenant compliance and assessing the sensitivities run by the
directors on the EBITDA headroom;
— Assessing the significant cash outflows in the going concern period; and
— Assessing the appropriateness of going concern disclosures in the financial statements including the directors’
considerations of the Viasat acquisition.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the group’s and company’s ability to continue as a going concern for a
period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF CONNECT BIDCO LIMITED continued
128 Connect Bidco Ltd Annual Report 2022
5. 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.
5.1. Accounting for capital expenditure on assets under construction
Key audit matter description
The group capitalises internal costs (“charge to capital”) (2022: $43.6m, 2021: $30.7m), external
costs (e.g. satellite construction milestones) (2022: $316m, 2021: $303m) and certain qualifying
borrowing costs in respect of capital projects (2022: $76m, 2021: $66.6m), most notably relating
to major satellite programmes and associated infrastructure.
The directors are required to assess these assets for impairment. Given this balance is made up
of a large number of projects, the nature of the satellite technology and the continued reduced
appetite for funding capital projects in the economic environment, there is a high level of
judgement as to whether these assets should be impaired.
We identified a key audit matter relating to the risk over the valuation of these assets. The
accounting policy in relation to assets under construction (“AUC”) is in note 2, with additional
disclosure on the AUC in note 13.
How the scope of our
audit responded to the
key audit matter
Our procedures in relation to this key audit matter involved the following:
— Obtaining an understanding of, and testing, relevant controls over the additions to AUC and
the annual impairment review process;
— Discussing material capital projects within the year with the respective project managers in
order to understand the nature of the costs capitalised, inquiring as to the reasons for any
significant deviations from budget, corroborating the movements in the year to supporting
evidence and assessing the indicators of impairment;
— Agreeing a sample of capitalised expenditure, including internally capitalised costs, to
supporting evidence and assessed whether it is appropriate to capitalise the expenditure in
accordance with IAS 16;
— Testing the integrity of AUC ageing reports and comparing the profile of capitalised
expenditure during the period to previous periods, in order to identify projects that may be at
risk of being abandoned.
Key observations
We have concluded that the directors have accounted for capital expenditure appropriately
during the year.
129
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strategic GOVERNANCE FINANCIAL
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF CONNECT BIDCO LIMITED continued
6. Our application of materiality
6.1. 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
Company financial statements
Materiality
$24.7m (2021: $21.8m)
$23.5m (2021: $20.7m)
Basis for determining
materiality
We determined materiality using 2.9% of
EBITDA (2021: 3.0%).
We determined company materiality based on
1.2% of net assets but capped materiality at
95% of group materiality. Our final materiality
constituted 1.1% (2021: 1.0%) of net assets.
Rationale for the
benchmark applied
We considered it appropriate to use EBITDA
as this is the key area of investor interest.
We considered net assets to be the most
appropriate benchmark given the primary purpose
of the company is a holding company.
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected
misstatements exceed the materiality for the financial statements as a whole.
Group financial statements
Company financial statements
Performance materiality
70% (2021: 70%) of group materiality
70% (2021: 70%) of company materiality
Basis and rationale for
determining performance
materiality
In determining performance materiality, we considered the following factors:
a. The control environment, including the continued improvements made which allowed us to
retain our controls reliance across various business processes;
b. The continued low level of uncorrected misstatements in the prior year and current
$849.5M
EBITDA
$849.5m – EBITDA
$24.7m – Group materiality
$24.7M
Group materiality
$24.7m – Group materiality
$11.0m – $23.5m – Component
materiality range
$1.1m – Audit Committee
reporting threshold
IN SUMMARY
130 Connect Bidco Ltd Annual Report 2022
6.3. Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of $1.1m (2021: $1.1m), 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.
7. An overview of the scope of our audit
7.1. Identification and scoping of components
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 focussed our group audit scope primarily
on the audit work performed in the following locations:
— London, United Kingdom; and
— St John’s, Canada
We determined there to be two components in the group, as follows:
— The core Inmarsat business unit headquartered in London
— The U.S. Government business
The U.S. Government business is considered to be a separate component as it has a separate financial control environment. The core
Inmarsat business was subject to a full scope audit, whilst specified audit procedures were carried out on the U.S. Government business due
to its relative financial significance. Our audit work was executed at levels of materiality applicable to each individual component, which were
between $11.0m and $23.5m (2021: $11.0m and $21.6m). Our audit scoping coverage for key balances is summarised in the charts below.
revenue
80% – Full audit scope
20% – Specified audit procedures
EBITDA
94% – Full audit scope
6% – Specified audit procedures
NET ASSETS
91% – Full audit scope
9% – Specified audit procedures
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strategic GOVERNANCE FINANCIAL
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF CONNECT BIDCO LIMITED continued
7.2. Our consideration of the control environment
With the involvement of our IT specialist, we obtained an understanding of the IT environment and the relevant general IT
controls, and in some instances, we tested the relevant general IT controls.
We obtained an understanding of, and tested relevant controls within the revenue, capex, trade receivables, expenditure and
trade payables business process cycles. We were able to rely on the controls associated with these business processes for the
core Inmarsat business unit headquartered in London.
7.3 Working with other auditors
The component auditor for the U.S. Government business was Deloitte Canada. For this component, we involved the component
audit partner and manager in our team briefing, discussed their risk assessment and reviewed their audit file. In addition,
we had ongoing calls throughout the year with them, we attended a close meeting call with the management of the U.S.
Government business, our component audit team, and senior members of the UK group team.
7.4 Our consideration of climate-related risks
In planning our audit, we have considered the potential impact of climate change on the group’s business and its financial
statements.
The group continue to development their assessment of climate related risks and have disclosed in the strategic report that
climate change is now a principal risk for the group. The group has assessed that there is currently no material impact arising
from climate change on the judgements and estimates that have been made in the preparation of the financial statements.
We have performed our own assessment of the potential impact of climate change on the group’s financial statements and
did identify any reasonably possible risks of material misstatement. Our procedures also included reading disclosures included
in the strategic report to consider whether they are materially consistent with the financial statements and our knowledge
obtained in the audit.
8. Other information
The other information comprises the information included in the annual report other than the financial statements and our
auditor’s report thereon. The directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance
conclusion thereon.
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 course of 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 this
gives rise to a material misstatement in the financial statements themselves. 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.
We have nothing to report in this regard.
9. 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 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 company or to cease operations, or have no realistic
alternative but to do so.
132 Connect Bidco Ltd Annual Report 2022
10. 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.
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.
11. Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to
which our procedures are capable of detecting irregularities, including fraud is detailed below.
11.1. 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, we considered the following:
— The nature of the industry and sector, control environment and business performance including the design of the group’s
remuneration policies, key drivers for directors’ remuneration, bonus levels and performance targets;
— Results of our enquiries of management, the directors and the audit committee about their own identification and
assessment of the risks of irregularities, including those that are specific to the group’s sector;
— Any matters we identified having obtained and reviewed the group’s documentation of their 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;
— The internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;
— The matters discussed among the audit engagement team including the component audit team and relevant internal
specialists, including tax and IT regarding how and where fraud might occur in the financial statements and any potential
indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for
fraud and identified the greatest potential for fraud in the following area: accounting for capital expenditure on assets under
construction. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the
risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the group operates in, focusing on provisions
of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial
statements. The key laws and regulations we considered in this context included the Companies (Guernsey) Law, 2008, and
relevant tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements
but compliance with which may be fundamental to the group’s ability to operate or to avoid a material penalty. These included
data protection requirements, U.S. Government regulations and telecom regulations.
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strategic GOVERNANCE FINANCIAL
11.2. Audit response to risks identified
As a result of performing the above, we identified accounting for capital expenditure on assets under construction as a key
audit matter related to the potential risk of fraud. The key audit matters section of our report explains the matter in more detail
and also describes the specific procedures we performed in response to that key audit matter.
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
provisions of relevant laws and regulations described as having a direct effect on the financial statements;
— 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
— 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 the component audit teams, and remained alert to any indications of fraud or non-compliance
with laws and regulations throughout the audit.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
12. Matters on which we are required to report by exception
12.1. Adequacy of explanations received and accounting records
Under the Companies (Guernsey) Law, 2008 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
— Proper accounting records have not been kept by the company; or
— The financial statements are not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
13. Use of our report
This report is made solely to the company’s members, as a body, in accordance with Section 262 of the Companies (Guernsey)
Law, 2008. 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.
David Sweeney CA
For and on behalf of Deloitte LLP
Recognised Auditor
London, United Kingdom
20th March 2023
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF CONNECT BIDCO LIMITED continued
134 Connect Bidco Ltd Annual Report 2022
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. 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
Description and reconciliation
1. EBITDA
EBITDA is defined as profit for the period 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
revenue and cost management deliver value for our shareholders. This measure has been
reconciled to both operating profit and profit after tax on the face of the income statement.
2. 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. Cash capital expenditure
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.
Appendix 1: Alternative performance measures
For the year ended 31 December 2022
135
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strategic GOVERNANCE FINANCIAL
glossary
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 for one of our
services at the year end. It includes the average number of certain handheld terminals
active on a daily basis during the final month of a year 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.
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 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.
Cash capital expenditure (‘Capex’)
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 for one of our services at the year end.
CAGR
The Compound Annual Growth Rate measures average annual growth over a period
of time.
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 Connect Bidco Limited, the
holding company of the Inmarsat Group.
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.
EAN
Our European Aviation Network (‘EAN’) comprises an integrated satellite and
complementary ground component (‘CGC’).
EBITDA
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 on the face of the income statement.
ELERA
ELERA is the name of Inmarsat’s L-band network and represents all of the satellites
and infrastructure around L-band and the future vision for the network.
FleetBroadband (‘FB’)
A 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 FB as a 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’).
136 Connect Bidco Ltd Annual Report 2022
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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. Global Xpress 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 approved by the International Maritime Organization
(‘IMO’) to provide these services.
The Group
The Group refers to Connect Bidco Limited 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 such as the
IsatPhone 2.
Global Workforce Advisory Panel (‘GWAP’)
In compliance with regulations recommended by the Financial Reporting Council
within the UK Corporate Governance Code, Inmarsat has 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.
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.
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’)
Inmarsat-7 (‘I-7’)
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.
Jet ConneX (‘JX’)
Jet ConneX is Inmarsat’s GX-based product for the business and general aviation
market.
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-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 Inmarsat-6 satellites.
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strategic GOVERNANCE FINANCIAL
Low-Earth orbit (LEO)
Low-Earth orbit (often known as LEO) encompasses Earth-centered orbits with an
altitude of 2,000 km (1,200 mi) or less.
Ligado networks
A Cooperation Agreement between Inmarsat and Ligado Networks (formerly
LightSquared LP, Skyterra (Canada) Inc. and LightSquared Inc.) for the use of L-band
spectrum in North America.
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.
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.
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.
ORCHESTRA
Inmarsat’s newly announced dynamic mesh-network that will be a configuration
of ELERA (L-band) and Global Xpress (Ka band) networks with terrestrial 5G and
targeted Low-Earth orbit (LEO) capacity.
OCI
Other comprehensive income.
SAS
Satellite Access Stations that receive the satellite signal and transfer 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 the principle 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.
Underlying EBITDA and free cash flow
EBIDTA and free cash flow after adjusting for costs associated with the Viasat
acquisition, 2019 Public to Private and transaction, and cash received from Ligado in
2020.
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.
glossary continued
138 Connect Bidco Ltd Annual Report 2022
CONNECT BIDCO LIMITED
ANNUAL REPORT AND ACCOUNTS 2022
(Registered in England & Wales as ISAT Connect Bidco Limited, registered number FC037358)