Inmarsat

2010 was another strong year of revenue and profit growth for Inmarsat. Importantly however, 2010 also marks a significant milestone for Inmarsat as a publicly listed company – the end of our fifth year as a listed stock. This is important because in 2005, when we listed our shares on the London Stock Exchange, we set a target for ourselves. That target was to take a company which had historically grown revenue at a 2% to 3% rate and accelerate that growth. Initially we targeted a 5% to 6% compound annual growth rate (‘CAGR’) and 18 months later increased that target to 6% to 8% CAGR.

Five years on, we can now proudly report to you that we exceeded our goals significantly. We not only achieved 9% compound annual growth in revenues during this period, but we also achieved 13% growth in EBITDA and 28% growth in pre-tax profit. We also increased our dividend by 7.4% CAGR during this period. This is an impressive achievement for our staff and one for which they should be congratulated. This tremendous result for our shareholders complemented the continued high satisfaction levels of our staff and a dramatic expansion of next generation services for our Distribution Partners and customers. In other words, in achieving this growth, we invested and laid the foundation for further progress.

Of course, we need to continue to look ahead. In mid-2010 we announced a new set of five-year targets for Inmarsat and much more. Again, we’ve set a five-year revenue growth target for our Inmarsat Global MSS revenues of 5% to 7% (CAGR through 2014 with 2009 as the base year). With this growth, on our largely fixed-cost base, we would expect a higher rate of profit growth. In addition, to underline our confidence in our future, and to highlight the strength of our balance sheet and cash flows, we are recommending a full-year dividend of 22.69 cents (US$). This will bring the total dividend payable for 2010 to 36.69 cents (US$) per share, an increase of 10% on the total dividend paid in 2009. We have also announced that we expect to sustain at least 10% dividend growth for the subsequent two financial years 2011 and 2012.

We have continued our focus of ensuring a healthy financial position for the Group and during 2010 we actively pursued several strategically beneficial financial transactions which have helped our balance sheet and provided competitive debt arrangements for us. Further information on these are referred to in the CFO section on page 19.

Our healthy financial position has been supported again by good results for last year. Group EBITDA for 2010 increased by 17% over 2009. Our EBITDA margin has increased to 59% for 2010 compared with 57% for 2009, helped by the inclusion of revenue from our Cooperation Agreement with LightSquared which started to be received in August 2010.

Total Group revenues for 2010 increased by 12.9% compared with 2009. For our two operating segments Inmarsat Global reported a 10% increase in revenues to US$764.1m with Stratos up by 11.3% to US$716.8m. After eliminating intercompany sales of US$309.3m, total Group revenues were US$1,171.6m. We maintained tight control of our costs during the year, with total Group net operating costs for 2010 increasing by only 7%, with the increase principally related to Segovia which wasn’t part of the Group in 2009.

Our strategy remains focused on providing services to meet mission critical needs where other networks generally don’t go – on land, at sea and in the air. Our commitment to safety services at sea and in the air also remains, with significant work occurring to take our Global Maritime Distress and Safety System (‘GMDSS’) and aero safety to the next generation platforms, ensuring the availability of these services beyond 2020.

We continued to support critical humanitarian and emergency activities during the year. In the earthquake disaster in Haiti, our terminals were deployed through organisations we support charitably, such as Télécoms Sans Frontières and the ITU’s Framework for Cooperation in Emergencies programme, together with numerous aid and other NGO bodies. In the floods in Pakistan and Australia and in countless other situations, we were there with our distribution partners providing vital support and monitoring system performance and capacity 24x7. As in previous years, we have had another year of the highly reliable performance that our customers have come to expect from us with an overall satellite and network availability of 99.99%.

This has been another highly successful year and our work has been recognised by a number of independent bodies. A highlight in June 2010 was the recognition of our engineering expertise with the award of Britain’s most prestigious prize for innovation. The 41st Royal Academy of Engineering MacRobert Award was presented to four of our senior managers in the business: Eugene Jilg, Franco Carnevale, Alan Howell and Marcus Vilaça. The award recognised the pioneering development of the Inmarsat-4 satellites and the Broadband Global Area Network (‘BGAN’) family of services. In the UK publication ‘Management Today’, Inmarsat was cited as ‘Best Telecoms Company’ in its prestigious Britain’s Most Admired Companies Awards. Other notable awards included being voted for the second consecutive year by Samena as the ‘Best Satellite Service Provider of the Year’ in recognition of our leadership and excellence in the telecoms sectors of South Asia, the Middle East and North Africa.

We have continued our work with industry and government on the future growth of the UK space industry. The Right Honourable David Willetts, MP, Minister of State for Science and Universities, visited our offices in November 2010 to present a new government report highlighting the growing strength of the UK space sector entitled ‘Size and Health of the UK Space Industry’. The report shows that the British space industry has grown by nearly 8% through the recession and is now worth over £7.5bn to the economy and that against the backdrop of difficult economic conditions, the space industry has maintained its momentum, as it recorded an average growth significantly ahead of the national GDP growth of 0.3%.