Inmarsat Regulatory News (ISAT)

Press release

Inmarsat plc Reports Interim Results 2013

London, UK: 2 August 2013. Inmarsat plc (LSE: ISAT.L), the leading provider of global mobile satellite communications services, today provided the following information for the six months ended 30 June 2013.

Inmarsat plc - Highlights

·; Adjusted total revenues $635.2m up 1% (2012: $629.6m)

·; Adjusted EBITDA $327.2m (2012: $332.1m)

·; Profit before tax $185.5m (2012: $222.8m)

·; Adjusted profit before tax $183.5m up 6% (2012: $173.5m)

·; Interim dividend of 17.79 cents (US$), up 5%

·; Strong subscriber growth: FleetBroadband, XpressLink, SwiftBroadband

·; Total active terminals up 10%

·; Alphasat satellite successfully launched

Inmarsat Group Limited - Second Quarter Highlights

·; Inmarsat Global MSS revenues $195.9m up 3.7% (2012: $188.9m)

·; Inmarsat Solutions revenues $195.1m (2012: $205.4m)

·; Total EBITDA $174.0m (2012: $176.0m)

Rupert Pearce, Inmarsat's Chief Executive Officer, said, "During the second quarter, subscriber growth for key MSS services and the take-up of package-based maritime services contributed to a solid performance for Inmarsat Global MSS revenues. As a result we are now on track to achieve the top of our two-year target range for wholesale MSS revenue growth. Within our Inmarsat Solutions business, while the contracting environment for our US Government business remains challenging, the revenue results for our other business units have remained positive and, with tight cost control across the group, we are satisfied with the overall results for the quarter.

We are also pleased with the successful launch and early stage deployment of our Alphasat satellite. Alphasat enhances the capacity, power and coverage of our network for the EMEA region, provides for in-orbit network redundancy and extends the life our Inmarsat-4 network. Alphasat materially improves the risk profile and sustainability of our L-band operations."

Inmarsat plc

Inmarsat Global

Maritime

Growth in our maritime data revenues was driven by increased take-up and usage of our FleetBroadband service and by pricing and service package changes primarily implemented in May 2012 and March 2013. During the first half we added 4,140 FleetBroadband subscribers of which 2,216 were added during the second quarter. We are continuing to see strong take-up of FleetBroadband pricing packages, thereby driving further ARPU growth and increasing maritime revenue visibility.

Land mobile

In the land mobile sector, we saw strong growth in voice services offset by a decline in data revenues due to on-going troop withdrawals from Afghanistan. We estimate that global events including Afghanistan contributed $3.7m more revenue in the first half of 2012 when compared to the first half of 2013. We continue to grow our BGAN subscriber base and, during the second quarter, we saw growth in land mobile data revenues quarter on quarter. Growth in land mobile voice revenues was driven by our IsatPhone Pro handheld service.

Aviation and Leasing

The increase in aviation revenue was driven by strong growth in revenues from our SwiftBroadband service, offset by a decline in Swift 64 revenues due to lower usage by certain government customers, including usage related to reduced activity in Afghanistan. Growth in SwiftBroadband revenues was driven by take-up in business aviation and for commercial in-flight passenger connectivity services. The decrease in leasing revenue was due to a reduction in revenue from certain government aviation and maritime contracts.

Inmarsat Solutions

The decrease in Inmarsat MSS revenue at the Inmarsat Solutions level was driven primarily by a combination of lower leasing revenue and by lower BGAN revenue arising from Afghanistan year-over-year. As Inmarsat Solutions has a disproportionately higher share of both our leasing and BGAN business, the lower revenues from these business lines gave rise to an overall decrease in Inmarsat MSS revenues reported by Inmarsat Solutions, even though MSS revenues grew at the wholesale level.

The decline in Broadband and Other MSS revenue was primarily due to a reduction in revenue from the managed network services segment of our US Government business unit. This decrease was primarily a result of contract renewals at lower rates and non-renewals and follows the implementation of US Government defence spending reductions. The decline was partially offset by growth in VSAT revenues as a result of further take-up of our XpressLink service. At the end of the quarter we had an installed base of 1,301 ships using our VSAT service, including 525 ships using XpressLink.

Outlook

As a result of the MSS revenue growth reported in the year to date, driven by our key MSS services, FleetBroadband, SwiftBroadband, BGAN and IsatPhone Pro, we are now on track to achieve the top of our two-year target range for Inmarsat Global MSS revenue growth.

Our Global Xpress programme is proceeding well and we are encouraged by the very positive commercial dialogue developing with potential customers and distributors. While our technical progress has remained in line with plan, we are currently waiting for the outcome of an investigation into the failure of a Proton launch vehicle in early July. While it is too early to determine any schedule impact of the failure, there is a risk of a short delay to the launch of the first Inmarsat-5 satellite, and therefore, to the start of GX services.

As disclosed at the time of our first quarter Interim Management Statement in May, the outlook for our Inmarsat Solutions business has significantly deteriorated in relation to the retail revenues of our US Government business unit. As a result of US defence spending cuts, we have seen a significant loss of revenue and decline in operating margins and expect further contract losses before the end of the year and in 2014. The impact on overall results for our Inmarsat Solutions business may be partially offset by a more positive outlook for other business units, in particular by Commercial Maritime, where XpressLink sales have remained strong.

Our 2013 expectations for capital expenditure on a cash basis remain unchanged. However, while a launch delay to the first Inmarsat-5 satellite could result in an outward phasing of certain capital expenditure payments, it should not result in any material increase in the total programme costs.

Dividend

Inmarsat remains committed to growing a sustainable dividend to shareholders. Taking into account the stable cash flows from our Inmarsat Global business and our confidence in future returns from our Global Xpress programme, we believe a 5% increase in the dividend is both sustainable and appropriate to the period of transition to the start of Global Xpress commercial operations.

Liquidity

At 30 June 2013, the Inmarsat plc group had net borrowings of $1,696m, made up of cash and cash equivalents of $216m and total borrowings of $1,912m. Including cash and available but undrawn borrowing facilities, the group had total available liquidity of $1,193m. We remain fully-funded as to all our capital needs for the foreseeable future.

Our Financial Reports

While Inmarsat plc is the ultimate parent company of our group, our subsidiary Inmarsat Group Limited is required by the terms of our Senior Notes to report consolidated financial results on a quarterly basis. A copy of the full financial report for Inmarsat Group Limited for the second quarter ended 30 June 2013 can be accessed via the investor relations section of our website.

Other Information

Inmarsat management will host an interim results conference call at 14.00hrs BST (UK) time, 09.00hrs EST (US) on Friday 2 August. To access the call please dial +44 (0)20 3427 1905 and quote conference id 9834847. The call will also be available via a live webcast accessible through our website. A replay of the call will be available for one week after the event. To access the recording please dial +44 (0)20 3427 0598 and enter access code 9834847#.

Forward-looking Statements

Certain statements in this announcement constitute "forward-looking statements". These forward-looking statements involve risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from those projected in the forward-looking statements. These factors include: general economic and business conditions; changes in technology; timing or delay in signing, commencement, implementation and performance or programmes, or the delivery of products or services under them; structural change in the satellite industry; relationships with customers; competition; and ability to attract personnel. You are cautioned not to rely on these forward-looking statements, which speak only as of the date of this announcement. We undertake no obligation to update or revise any forward-looking statement to reflect any change in our expectations or any change in events, conditions or circumstances.

INMARSAT PLC

CONDENSED CONSOLIDATED INTERIM FINANCIAL RESULTS

For the half year ended 30 June 2013

(unaudited)

Forward-Looking Statements

This document contains forward-looking statements. These forward-looking statements include all matters that are not historical facts. Statements containing the words "believe", "expect", "intend", "may", "estimate" or, in each case, their negative and words of similar meaning are forward-looking.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that the Group's actual financial condition, results of operations and cash flows, and the development of the industry in which we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this document. In addition, even if the Group's financial condition, results of operations and cash flows, and the development of the industry in which we operate are consistent with the forward-looking statements in this document, those results or developments may not be indicative of results or developments in subsequent periods. Important facts that could cause the Group's actual results of operations, financial condition or cash flows, or the development of the industry in which we operate, to differ from current expectations include those risk factors disclosed in the Group's Annual Report for the year ended 31 December 2012, which can be accessed via our website at www.inmarsat.com.

As a consequence, the Group's future financial condition, results of operations and cash flows, as well as the development of the industry in which we operate, may differ from those expressed in any forward-looking statements made by us or on the Group's behalf.

Non-IFRS Measures

In addition to International Financial Reporting Standards ("IFRS") measures, we use a number of non-IFRS measures in order to provide readers with a better understanding of the underlying performance of our business, and to improve comparability of our results for the periods concerned. Where such non-IFRS measures are given, this is clearly indicated and the comparable IFRS measure is also given.

Net Borrowings

Net borrowings is defined as total borrowings less cash at bank and in hand less short-term deposits with an original maturity of less than three months. We use net borrowings as a part of our internal debt analysis. We believe that net borrowings is a useful measure as it indicates the level of borrowings after taking account of the financial assets within our business that could be utilised to pay down the outstanding borrowings. In addition the net borrowings balance provides an indication of the net borrowings on which we are required to pay interest.

Free Cash Flow

We define free cash flow ("FCF") as cash generated from operations less capital expenditure (including own work capitalised), net interest and cash tax payments. Other companies may define FCF differently and, as a result, our measure of FCF may not be directly comparable to the FCF of other companies.

FCF is a supplemental measure of our performance and liquidity under IFRS that is not required by, or presented in accordance with IFRS. Furthermore, FCF is not a measurement of our performance or liquidity under IFRS and should not be considered as an alternative to profit for the period and operating profit as a measure of our performance and net cash generated from operating activities as a measure of our liquidity, or any other performance measures derived in accordance with IFRS.

We believe FCF is an important financial measure for use in evaluating our financial performance and liquidity and that it provides supplemental information to our statement of cash flows.

EBITDA

We define EBITDA as profit before interest, taxation, depreciation and amortisation, loss on disposal of assets, impairment losses and share of profit of associates. Other companies may define EBITDA differently and, as a result, our measure of EBITDA may not be directly comparable to the EBITDA of other companies.

EBITDA and the related ratios are supplemental measures of our performance and liquidity under IFRS that are not required by, or presented in accordance with IFRS. Furthermore, EBITDA is not a measurement of our financial performance under IFRS and should not be considered as an alternative to profit for the period, operating profit or any other performance measures derived in accordance with IFRS.

We believe EBITDA, among other measures, facilitates operating performance comparisons from period to period and management decision-making. It also facilitates operating performance comparisons from company to company. EBITDA eliminates potential differences caused by variations in capital structures (affecting interest expense), tax positions (such as the impact on periods or companies of changes in effective tax rates or net operating losses) and the age and book depreciation and amortisation of tangible and intangible assets (affecting relative depreciation and amortisation expense). We also present EBITDA because we believe it is frequently used by securities analysts, investors and other interested parties in evaluating similar companies, the vast majority of which present EBITDA when reporting their results.

TABLE OF CONTENTS

Responsibility Statement

The Directors confirm to the best of their knowledge that:

(a) the condensed set of unaudited financial statements has been prepared in accordance with IAS 34, 'Interim Financial Reporting';

(b) the interim management report includes a fair review of the information required by Disclosure and Transparency Rule ("DTR") 4.2.7R, being an indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year; and

(c) the interim management report includes a fair review of the information required by DTR 4.2.8R, being the disclosure of related parties' transactions and changes therein.

The Directors of Inmarsat plc are listed on our website at www.inmarsat.com.

By order of the Board,

Rupert Pearce

Chief Executive Officer

2 August 2013

Rick Medlock

Chief Financial Officer

2 August 2013

Operating and Financial Review

The following is a discussion of the unaudited consolidated results of operations and financial condition of Inmarsat plc (the "Company" or together with its subsidiaries, the "Group") for the half year ended 30 June 2013. You should read the following discussion together with the whole of this document including the historical consolidated financial results and the notes. The consolidated financial results were prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union.

Inmarsat is the leading provider of global mobile satellite communications services ("MSS"), providing data and voice connectivity to end-users worldwide, with over 30 years of experience in designing, launching and operating an L-band satellite-based network. With an in-orbit fleet of 10 owned and operated geostationary satellites, our Inmarsat Global business provides a comprehensive portfolio of wholesale global mobile satellite communications services for use on land, at sea and in the air. These include voice and broadband data services, which support safety communications, as well as standard office applications such as email, internet, secure VPN access and video conferencing. Our Inmarsat Solutions business, comprising our direct and indirect distribution business, offers a broad portfolio of remote telecommunications solutions to end-user customers, offering services over the mobile and fixed satellite systems of a number of global and regional satellite system operators, predominantly the Inmarsat satellite system, and through owned and operated microwave and satellite telecommunications facilities.

In addition to our established L-band satellite services business, we are implementing our Global Xpress ("GX") programme, a US$1.2 billion investment project. GX will offer seamless global coverage and deliver Ka-band satellite services with broadband speeds of up to 50 Mbps for users in the government, maritime, energy, enterprise and aviation sectors. GX services will be supported by a constellation of three Ka-band satellites, the Inmarsat-5 satellites, being built by Boeing Space and Intelligence Systems ("Boeing").

The Group's revenues for the half year ended 30 June 2013 were US$640.3m (2012: US$684.2m), EBITDA was US$329.2m (2012: US$381.4m) and operating profit was US$212.9m (2012: US$259.4m). The results of the Group's operations are reported in US Dollars as the majority of our revenues and borrowings are denominated in US Dollars.

Our GX programme remains on budget and we expect the first satellite to be ready for launch before the end of 2013. The first satellite (Inmarsat-5 F1) is now fully assembled, has passed mechanical tests and is undergoing Thermal Vacuum testing at the Boeing facilities in El Segundo, California. Once completed, the satellite will be ready for shipment to the launch site. The Inmarsat-5 F2 and F3 satellites are currently being integrated, and are expected to be delivered in early and mid-2014, allowing for a launch programme to complete global coverage by the end of 2014.

Inmarsat has a contract with International Launch Services ("ILS") for the launch of the three Inmarsat-5 satellites using the Proton launch vehicle. On 2 July 2013, a Proton launch vehicle failed shortly after lift-off, resulting in the loss of three Glonass navigation satellites. The cause of the failure will be assessed by a joint process known as the Failure Review Oversight Board and a report of its findings is expected to be completed by mid-August. While it is too early to determine any schedule impact of the failure, there is a risk of a short delay to the launch of the first Inmarsat-5 satellite and, therefore to the start of GX services. However, given that the satellite manufacturing and delivery schedule remains on track, a delay to the first Inmarsat-5 satellite launch will not necessarily mean an equivalent delay to the second and third launches and therefore to the completion of global coverage.

The ground network for GX services is also being deployed around the world; the Inmarsat-5 F1 ground stations have been completed and passed final testing in Fucino (Italy) and Nemea (Greece). The ground stations for Inmarsat-5 F2 are also completed, and undergoing final testing in North America (Lino Lakes in the US and Winnipeg in Canada), while preliminary work for the Inmarsat-5 F3 Pacific ocean region ground stations is underway. The modulation, encoding and network management, based on iDirect's established access technology, is also progressing satisfactorily, and is expected to be ready to meet the launch schedule for the first round of integrated live verification and demonstration testing.

Terminal development contracts have been awarded to several established manufacturers, and cover target markets and applications, including maritime (Cobham, Intellian, JRC), aviation (Honeywell) and a wide array of land terminals both fixed and portable, large and small, for applications in varying environments (Paradigm, Cobham, L-3, Skyware).

In the half year ended 30 June 2013, we announced the appointment of Imtech Marine, NSSL Global Limited and E-3 Systems as further Value-Added Resellers of GX services to the maritime market, making eight in total. In the government field, in addition to the Boeing strategic partnership, discussions with potential further resellers are reaching an advanced stage, while progress is being made towards the first enterprise and energy market partners. In the commercial aviation sector, the distribution network has been established, with GoGo and OnAir awarded distribution rights in the commercial air transport market, while Honeywell has been granted exclusive rights for business aviation.

On 25 July 2013, our Alphasat satellite was successfully launched on an Arianespace 5 ECA launch vehicle from the Kourou space port in French Guiana. Following thelaunch, the satellite was acquired by our satellite control centre in London at 21.47 BST and since that time has been undergoing the early stages of in-orbit deployment. At this time the deployment is proceeding in line with expectations and the solar panels have been successfully deployed. The satellite will undergo in-orbit testing for 5 weeks before being moved to an operational orbit at 25E degrees; we expect commercial operations to begin in the fourth quarter. Alphasat will enhance our Inmarsat-4 network and provide resilience to the risk of a satellite failure. With Alphasat deployed we will have in-orbit redundancy, meaning a failure of either Alphasat or any one Inmarsat-4 satellite would not affect our ability to continue to offer global coverage in L-band via the remaining satellites.

The Alphasat satellite is capable of providing our services across the complete 41 MHz of L-band mobile satellite spectrum available over the EMEA region. This capability provides greater flexibility in spectrum utilisation compared to the current Inmarsat-4 satellite for the EMEA region which is limited to providing service across 27 MHz of the L-band. In addition, we expect Alphasat's advanced digital processor capability and optimised antenna coverage will allow up to 50% more capacity for our services as compared to an Inmarsat-4 satellite. Alphasat was built by EADS Astrium Satellites with a design life of 15 years and incorporates the Alphabus platform which was developed in a project sponsored by the European Space Agency and CNES. Inmarsat's investment in Alphasat was financed by a loan from the European Investment Bank.

During the period, we announced the following new services and developments aimed at broadening our customer base and increasing revenues from our existing users:

·; On 25 February 2013, we announced L-TAC, a new L-band service, which will deliver an interoperable satellite capability for use with existing UHF tactical radios for approved government customers;

·; On 18 March 2013, we announced the extension of our strategic relationship with Intellian Technologies, who have designed three new antennas to support our FleetBroadband service;

·; On 27 March 2013, we announced the first BGAN machine-to-machine ("M2M") terminal to receive Hazardous Locations Accreditation. The Hughes BGAN terminal has been certified for operation in hazardous locations where explosive gaseous atmospheres may potentially be present;

·; On 4 April 2013, we announced that a new BGAN high data rate ("HDR") streaming terminal is being developed and is scheduled for commercial launch in the third quarter of 2013. It will be the first terminal capable of accessing Inmarsat's new HDR service, which will offer media organisations and broadcasters significantly increased streaming rates; and

·; On 24 April 2013, we announced that the Hughes 9502 BGAN M2M terminal with integrated antenna had been fully "Type Approved" by Inmarsat and that commercial shipments have begun.

In addition, on 25 January 2013, we announced the appointment of Galaxy1 Communications as a Distribution Partner for our BGAN M2M service.

During April 2013, we de-orbited our Inmarsat-2 F1 satellite. The satellite was the first of Inmarsat's second generation and its longest serving. Launched in 1990, with a design life of 10 years, it provided a reliable service for more than 22 years. The satellite carried lease traffic, the bulk of which has been migrated onto other satellites. We have one Inmarsat-2 satellite remaining in service.

On 5 March 2013, we announced that Nordic Tankers A/S, a leading owner and operator of chemical tankers, will migrate its vessels from an existing VSAT service to Xpresslink, our hybrid Ku/L-band maritime service.

On 9 May 2013, we announced the extension of our microwave services in the Gulf of Mexico through the introduction of a new stabilised microwave service, designed to expand the reach of our existing Gulf of Mexico service to locations further offshore.

In addition, take-up of our FleetBroadband Unlimited service continued during the half year and we announced that Beltship Management Limited and Swire Pacific Offshore had deployed the service across over 70 vessels.

In April 2012, we agreed to amend our Cooperation Agreement with LightSquared and suspend all payments under the agreement until April 2014. As a result LightSquared has no payment obligations under the Cooperation Agreement until April 2014. We continue to recognise some limited amounts under the Cooperation Agreement as we incur certain costs in maintaining our readiness to perform obligations under the agreement. As at 30 June 2013, we had deferred income in relation to the Cooperation Agreement of US$259.8m recorded on our balance sheet.

The table below sets out the contribution of our Cooperation Agreementwith LightSquared to our profit for the periods indicated:

On 8 May 2013, we acquired the shares of TC Communications Pty Ltd ("TC Comms") of Australia. The operations of TC Comms have been integrated within our Inmarsat Solutions business and provide a particular focus on supporting our expanding Global Government and Enterprise business units.

As in previous periods, the commentary within this report is based on our two operating segments: Inmarsat Global and Inmarsat Solutions. In addition, a breakdown of total revenue by business unit has been provided, which shows operations by vertical market segment.

Our four market-facing business units are:

·; Inmarsat Commercial Maritime, focusing on worldwide commercial maritime opportunities;

·; Inmarsat Government, focusing on US Government opportunities, both military and civil;

·; Inmarsat Global Government, focusing on worldwide (i.e. non-US) civil and military government opportunities; and

·; Inmarsat Enterprise, focusing on worldwide energy, industry, media, carriers, commercial aviation and M2M opportunities.

A final dividend of 27.45 cents (US$) per ordinary share (total dividend US$122.8m) for the 2012 financial year as recommended by the Directors was approved at the Annual General Meeting and paid to shareholders on 24 May 2013.

The Board intends to declare and pay an interim dividend for the 2013 financial year of 17.79 cents (US$) per ordinary share on 25 October 2013 to ordinary shareholders on the share register at the close of business on 4 October 2013. Dividend payments will be made in Pounds Sterling based on the exchange rate prevailing in the London market four business days prior to payment. This dividend has not been recognised as a liability as at 30 June 2013.

The results are the consolidated results of operations and financial condition of Inmarsat plc for the half year ended 30 June 2013. We report two operating segments, Inmarsat Global and Inmarsat Solutions.

The table below sets out the results of the Group for the periods indicated:

Revenues

Total Group revenues for the half year ended 30 June 2013 decreased by 6.4% compared with the half year ended 30 June 2012. However, underlying revenues (excluding LightSquared) increased by US$5.6m, or 0.9%. The table below sets out the components, by segment, of the Group's total revenue for each of the periods indicated:

Net operating costs

Total Group net operating costs for the half year ended 30 June 2013 increased by 2.7% compared with the half year ended 30 June 2012. The table below sets out the components, by segment, of the Group's net operating costs for each of the periods indicated:

EBITDA

Group EBITDA for the half year ended 30 June 2013 decreased by 13.7% compared with the half year ended 30 June 2012; this was primarily as a result of decreased revenue from our Cooperation Agreement with LightSquared. As a consequence, EBITDA margin has decreased to 51.4% for the half year ended 30 June 2013, compared with 55.7% for the half year ended 30 June 2012. Below is a reconciliation of profit for the period to EBITDA for each of the periods indicated:

Depreciation and amortisation

The decrease in depreciation and amortisation of US$14.2m for the half year ended 30 June 2013 primarily relates to a US$13.4m depreciation adjustment in the Inmarsat Solutions segment to correct the prior period carrying values of certain assets relating to the former Stratos business.

Impairment losses

During the half year ended 30 June 2013 impairment losses of US$9.4m were recognised (half year ended 30 June 2012: US$nil). In the half year ended 30 June 2013 a correction was made to depreciation relating to prior periods in the Inmarsat Solutions segment, which resulted in the carrying value of the Stratos cash-generating unit ("CGU") being increased above the estimated recoverable amount of the Stratos CGU at 31 December 2012. A further impairment charge has therefore been recognised based on the revised carrying amount of the CGU at 31 December 2012, above and beyond the impairment charge recognised in the year ending on that date. There is no impact on reported profit for the year in prior periods due to the offsetting depreciation adjustment and related goodwill impairment.

Operating profit

As a result of the factors discussed above, operating profit for the half year ended 30 June 2013 was US$212.9m, a decrease of US$46.5m, or 17.9%, compared with the half year ended 30 June 2012.

Interest

Net interest payable for the half year ended 30 June 2013 was US$27.4m, a decrease of US$9.2m, or 25%, compared with the half year ended 30 June 2012.

Interest payable for the half year ended 30 June 2013was US$29.3m, a decrease of US$8.4m, or 22%, compared with the half year ended 30 June 2012. The decreaseis predominantly due to US$38.7m of interest that was capitalised in the half year ended 30 June 2013 that was attributable to the construction of our Alphasat and Inmarsat-5 satellites and associated ground infrastructure, compared with US$24.4m capitalised in the half year ended 30 June 2012. The decrease was partially offset by increased interest following the April 2012 issue of additional Senior Notes due 2017 and further drawdowns of our Ex-Im Bank Facility.

Interest receivable for the half year ended 30 June 2013 was US$1.9m compared with US$1.1m in the half year ended 30 June 2012. The increase in the half year ended 30 June 2013 is primarily due to US$0.8m of amortisation on the net premium on the Senior Notes due 2017, following the April 2012 issue of the additional Senior Notes (half year ended 30 June 2012: US$0.1m).

Profit before tax

Profit before tax for the half year ended 30 June 2013 was US$185.5m, a decrease of US$37.3m, or 16.7%, compared with the half year ended 30 June 2012. The reduction is due to decreased revenues from our Cooperation Agreement with LightSquared.

Income tax expense

The tax charge for the half year ended 30 June 2013 was US$60.2m, an increase of US$12.2m, or 25%, compared with the half year ended 30 June 2012. The increase in the tax charge was largely driven by a provision of US$7.8m for the potential tax liability in relation to the financing of a leasing transaction in respect of the Inmarsat-4 satellites (as discussed in note 11). In addition to this provision, there are additional one-off prior year adjustments giving rise to a tax charge of US$4.2m, together with a charge of US$2.8m relating to a correction to depreciation in the Inmarsat Solutions segment, which resulted from the additional non-deductible impairment charge. This increase was partially offset by the underlying decrease in profits for the half year ended 30 June 2013. For the half year ended 30 June 2012, the reported tax charge included a tax credit of US$2.6m on the revaluation of UK deferred tax liabilities as a result of the change in the UK rate of corporation tax from 26% in 2011 to 24% with effect from 1 April 2012, and a prior year adjustment for the half year ended 30 June 2012 which resulted in a one-off tax credit of US$5.0m.

The effective tax rate for the half year ended 30 June 2013 was 32.5% compared with 21.5% for the half year ended 30 June 2012. If the effects of the above adjustments are removed, the effective tax rate for the half year ended 30 June 2013 was 24.5% compared with 25.0% for the half year ended 30 June 2012. The decrease in the adjusted effective tax rate is predominantly due to the reduction in the UK main rate of corporation tax from 24% to 23%. While this did not become effective until 1 April 2013, this has the effect of lowering the average UK statutory tax rate for 2013, and therefore the rate upon which the half year ended 30 June 2013 tax charge is based, to 23.25%. For the half year ended 30 June 2012 the rate upon which the tax charge was based was 24.5%. For the half year ended 30 June 2013, the effect of this rate reduction is partially offset by unrecognised current year non-UK losses totalling US$3.4m (half year ended 30 June 2012: US$0.6m).

Profit for the period

As a result of the factors discussed above, profit for the half year ended 30 June 2013 was US$125.3m, a decrease of US$49.5m, or 28%, compared with the half year ended 30 June 2012.

Earnings per share

For the half year ended 30 June 2013, basic and diluted earnings per share for profit attributable to the equity holders of the Company were 28 cents (US$) and 28 cents (US$), respectively, compared with 38 cents (US$) and 38 cents (US$), respectively for the half year ended 30 June 2012.

The half year ended 30 June 2013 basic and diluted earnings per share adjusted to exclude the after-tax effect of the LightSquared contribution, were 28 cents (US$) and 27 cents (US$), respectively, compared with 30 cents (US$) and 30 cents (US$), respectively for the half year ended 30 June 2012.

Revenues

During the half year ended 30 June 2013, although revenues from Inmarsat Global were US$403.9m, a decrease of US$37.3m, or 8.5%, compared with the half year ended 30 June 2012, MSS revenues increased by US$13.6m, or 3.7%, period-on-period. The decrease in total revenue in the half year ended 30 June 2013 is primarily due to the reduction in revenues recognised in relation to our Cooperation Agreement with LightSquared.

MSS revenue growth was primarily driven by increased activations and usage of our FleetBroadband and SwiftBroadband services and by the effect of price initiatives for maritime data services. We continue to see encouraging growth in our land mobile IsatPhone Pro service. As in recent periods, growth in our land mobile sector has been partly offset by the continued expected decline in revenues from our BGAN and GAN services due to troop withdrawals from Afghanistan. In addition, we experienced a continued and expected decline in maritime voice revenues due to the impact of product mix changes and, more generally, we have experienced a decline in revenues from older services such as Inmarsat B, Mini M, Fleet, GAN and Swift 64, period-on-period, as users continue to migrate to newer services. The results also reflect the expected termination of certain lease business in 2012.

The table below sets out the components of Inmarsat Global's revenue for each of the periods indicated:

Total active terminal numbers as at 30 June 2013 increased by 10.3%, compared with 30 June 2012. The table below sets out the active terminals by sector for each of the periods indicated:

(a) Active terminals is the number of subscribers or terminals that have been used to access commercial services (except certain handheld terminals) at any time during the preceding twelve-month period and registered at 30 June. Active terminals also include the average number of certain handheld terminals active on a daily basis during the final month of the period. Active terminals exclude terminals (Inmarsat D+, IsatM2M, IsatData Pro and BGAN M2M) used to access our M2M services. At 30 June 2013, we had 236,667 (2012: 221,099) M2M terminals.

The growth of active terminals in the maritime sector is primarily due to take-up of our FleetBroadband service, where we have seen active terminal numbers grow by 26% period-over-period. This growth has been partially offset by the expected decline in active terminals of older services such as Inmarsat B and Fleet, where users have been migrating to our FleetBroadband service. The growth of active terminals in the land mobile sector is predominantly due to our IsatPhone Pro service. In the aviation sector, we have seen growth in SwiftBroadband active terminals of 43%, period-over-period, partially offset by the decline in our other older aviation services.

Maritime Sector. During the half year ended 30 June 2013, revenues from the maritime sector were US$215.3m, an increase of US$14.4m, or 7.2%, compared with the half year ended 30 June 2012.

Revenues from data services in the maritime sector during the half year ended 30 June 2013 were US$178.6m, an increase of US$19.1m, or 12.0%, compared with the half year ended 30 June 2012. Growth in our maritime data revenues was primarily driven by pricing and service package changes implemented in May 2012 and March 2013 and increased take-up and usage of our FleetBroadband terminals. During the half year ended 30 June 2013, we added 4,140 FleetBroadband subscribers, taking total active terminals to 37,943. Despite the overall revenue growth reported, customer migration to FleetBroadband from older services continues to be a constraint on our rate of revenue growth as the price of FleetBroadband services is typically lower than the price of equivalent services on the terminals being replaced. In addition, we continue to believe that the current economic environment for the shipping industry is impacting revenues in the maritime sector.

Revenues from voice services in the maritime sector during the half year ended 30 June 2013 were US$36.7m, a decrease of US$4.7m, or 11.4%, compared with the half year ended 30 June 2012. We have continued to see voice revenues being negatively impacted by product mix changes as users transition from our older services to our FleetBroadband service, where the price of voice services is lower, and also by the substitution effect of voice usage moving to email and Voice Over IP, which we record as data revenues.

Land Mobile Sector. During the half year ended 30 June 2013, revenues from the land mobile sector were US$65.9m, a decrease of US$0.3m, or 0.5%, compared with the half year ended 30 June 2012.

Revenues from data services in the land mobile sector during the half year ended 30 June 2013 were US$56.4m, a decrease of US$4.3m, or 7.1%, compared with the half year ended 30 June 2012. The decline in revenues is primarily due to troop withdrawals from Afghanistan. We estimate that global events including Afghanistan in the half year ended 30 June 2012 contributed US$3.7m more revenue period-over-period, compared with the half year ended 30 June 2013. Although we continue to see growth in BGAN usage from new subscribers, this growth is unable to fully offset the impact of reduced revenues from Afghanistan.

Revenues from voice services in the land mobile sector during the half year ended 30 June 2013 were US$9.5m, an increase of US$4.0m, or 73%, compared with the half year ended 30 June 2012. The increase is due to growth in revenues from our IsatPhone Pro service. We ended the half year with approximately 90,000 active subscribers, compared with approximately 65,000 at 30 June 2012. The increase in our installed subscriber base is driving overall traffic growth and is the primary contributor to our voice revenue growth. In addition, our IsatPhone Pro revenues also benefited from pricing and package changes implemented in June 2012.

Aviation Sector. During the half year ended 30 June 2013, revenues from the aviation sector were US$55.9m, an increase of US$6.5m, or 13.2%, compared with the half year ended 30 June 2012. We have seen strong growth in revenues from our SwiftBroadband service, period-over-period in both the business jet and air transport segments. However, this increase has been partially offset by a decline in Swift 64 revenues, due to a reduction in usage by certain government customers, including usage related to reduced activity in Afghanistan.

Leasing.  During the half year ended 30 June 2013, revenues from leasing were US$43.4m, a decrease of US$7.0m, or 13.9%, compared with the half year ended 30 June 2012. The decrease was expected and is predominantly due to the termination of certain government aviation and maritime contracts.

Other income.  Other income for the half year ended 30 June 2013 was US$23.4m, a decrease of US$50.9m or 69%, compared with the half year ended 30 June 2012. The decrease is due to lower revenues from LightSquared (US$5.1m during the half year ended 30 June 2013, compared with US$54.6m for the half year ended 30 June 2012). In addition, we recorded lower revenue relating to the sale of terminals and accessories (predominantly in relation to IsatPhone Pro) of US$12.5m during the half year ended 30 June 2013, compared with US$14.8m in the same period in 2012.

Net operating costs

Net operating costs in the half year ended 30 June 2013 increased by 1.2% compared with the half year ended 30 June 2012. Included within net operating costs for the half year ended 30 June 2013 are net costs in relation to our Global Xpress programme totalling US$9.8m (half year ended 30 June 2012: US$6.9m) and costs in relation to our Cooperation Agreement with LightSquared of US$3.1m (half year ended 30 June 2012: US$5.3m).

The table below sets out the components of Inmarsat Global's net operating costs for each of the periods indicated:

Impact of hedged foreign exchange rate. The functional currency of the Group's principal subsidiaries is US Dollars. Approximately 50% of Inmarsat Global's costs are denominated in Pounds Sterling. Net operating costs in the half year ended 30 June 2013 have been impacted by an unfavourable movement in Inmarsat Global's hedged rate of exchange from US$1.48/£1.00 in 2012 to US$1.57/£1.00 in 2013. The movement in the hedged rate of exchange in the half year ended 30 June 2013 resulted in an increase in comparative costs of approximately US$3.7m. We recently completed hedging arrangements for our anticipated sterling costs in 2014. As a result, we now expect our hedged rate of exchange for 2014 to be US$1.54/£1.00.

Employee benefit costs. Employee benefit costs increased by US$8.9m,or 17.9%, in the half year ended 30 June 2013compared with the half year ended 30 June 2012. The increase is due primarily to additional staff costs due to an increase in total full-time equivalent headcount (597 at 30 June 2013 compared with 568 at 30 June 2012), primarily to support our Global Xpress programme and within our business units. In addition, there was an unfavourable movement in the Group's hedged rate of exchange.

Network and satellite operations costs. Network and satellite operations costs for the half year ended 30 June 2013 decreased by US$1.5m, or 7.3%, compared with the half year ended 30 June 2012, primarily due to lower in-orbit insurance costs following the annual contract renewal in August 2012.

Other operating costs. Other operating costs for the half year ended 30 June 2013 decreased by US$4.5m, or 8.7%, compared with the half year ended 30 June 2012. In the half year ended 30 June 2013 we recorded a foreign exchange gain of US$2.3m, compared with a foreign exchange loss of US$1.7m in the half year ended 30 June 2012. In addition, there was a decrease in costs incurred in respect of our LightSquared Cooperation Agreement and reduced direct cost of sales as a result of lower IsatPhone Pro terminal sales in the half year ended 30 June 2013, compared with the half year ended 30 June 2012.

Own work capitalised. Own work capitalised for the half year ended 30 June 2013 increased by US$1.5m, or 16.5%, compared with the half year ended 30 June 2012, due to an increase in work capitalised in relation to our Global Xpress programme.

Operating profit

The decrease in operating profit for the half year ended 30 June 2013 of US$38.3m, compared with the half year ended 30 June 2012, is primarily a result of decreased revenues from our Cooperation Agreement with LightSquared, partially offset by higher MSS revenues period-on-period.

On 8 May 2013, Inmarsat Solutions Limited completed the acquisition of TC Comms. The results of TC Comms for the period from 9 May 2013 to 30 June 2013 are included in the consolidated results of Inmarsat Solutions Limited; they do not have a material impact.

Revenues

During the half year ended 30 June 2013, revenues from Inmarsat Solutions decreased by US$11.6m, or 2.9%, compared with the half year ended 30 June 2012. We are continuing to see pressure on US Government contract renewals as a result of recent measures implemented by the US Government, including federal budget sequestration which took effect in the first quarter of 2013 and has mandated reductions of over 5% in US Government defence spending over the next two years. While the US Government has not stipulated which programmes or contracts will be affected by sequestration, there has been an immediate change in the contracting environment for our US Government business unit. We have experienced a significant reduction in revenue and margins due to a highly competitive contracting environment and sequestration is likely to result in fewer new contracting opportunities as programmes are cancelled, de-scoped or delayed.

The table below sets out the components of Inmarsat Solutions' revenues for each of the periods indicated:

Inmarsat MSS. Revenues derived from Inmarsat MSS for the half year ended 30 June 2013 decreased by US$5.5m, or 2.8%, compared with the half year ended 30 June 2012. The decrease in Inmarsat MSS revenue at the Inmarsat Solutions level was driven primarily by a combination of lower leasing revenue, lower land sector revenue from Afghanistan and other world events and lower aviation revenue from the US Government, partially offset by non-recurring revenue recognised during the half year ended 30 June 2013 of US$4.6m in connection with the unused portion of a pre-paid capacity contract. As Inmarsat Solutions has a disproportionately higher share of both our leasing and BGAN business, the negative impact of these factors contributed to an overall decrease in revenue, even though Inmarsat Solutions benefited from strong growth in maritime revenues and other factors that contributed to an overall increase in MSS revenues at the wholesale level.

For the half year ended 30 June 2013, Inmarsat Solutions' share of Inmarsat Global's MSS revenues was 36%, compared with the 39% share for the half year ended 30 June 2012.

Broadband and Other MSS. Broadband and Other MSS revenues primarily consist of sales of VSAT and microwave services, mobile terminal and equipment sales, rental and repairs and revenues from our US Government business relating to the provision of secure IP managed solutions and services to US Government agencies. It also includes an element of revenues from our Commercial Maritime business unit relating to the provision of VSAT maritime communications services, including our XpressLink service, to the shipping, offshore energy and fishing markets. Other revenues included in this category include mobile telecommunications services sourced on a wholesale basis from other MSS providers, network services provided to certain distributors and other engineering services.

Revenues from Broadband and Other MSS during the half year ended 30 June 2013 decreased by US$6.1m, or 3.1%, compared with the half year ended 30 June 2012. The decrease is due primarily to a reduction in revenue from IP managed solutions in our US Government business unit as a result of contract renewals at lower prices and non-renewals. There were also decreases in equipment sales. These decreases were partially offset by increased Commercial Maritime business unit revenues as a result of growth in the number of ships serviced with XpressLink, as well as from growth in other business units.

Net operating costs

Net operating costs in the half year ended 30 June 2013 increased by US$1.6m, or 0.5%, compared with the half year ended 30 June 2012, primarily as a result of increased costs of goods and services in our US Government and Commercial Maritime business units, partially offset by lower operating costs in our US Government business as a result of a workforce reduction implemented to help offset the revenue and margin pressure in this business.

The table below sets out the components of net operating costs and shows the allocation of costs to the Group's cost categories for each of the periods indicated:

(a) There has been a change in the allocation of the costs included in cost of goods and services versus operating expenses in the half year ended 30 June 2013, whereby all employee costs and network infrastructure operating costs are now included in operating costs instead of costs of goods and services. The comparative figures for the half year ended 30 June 2012 included in the table above have been restated to reflect this change.

(b) Includes the cost of airtime from satellite operators, including intercompany purchases from Inmarsat Global.

Cost of goods and services. Cost of goods and services includes variable expenses such as the cost of airtime and satellite capacity purchased from satellite operators (predominantly from Inmarsat Global), cost of equipment, materials and services related to our repair and service activity.

Cost of goods and services during the half year ended 30 June 2013 increased by US$3.8m, or 1.5%, compared with the half year ended 30 June 2012. The increase is predominantly due to increased costs in our Commercial Maritime business unit as a result of increased revenue and changes in product mix to include more VSAT business and in our US Government business unit as a result of increased space segment cost for IP managed solutions and changes in product mix to include more equipment sales. 

Operating costs. Operating costs during the half year ended 30 June 2013 decreased by US$2.2m, or 2.5%, compared with the half year ended 30 June 2012. The decrease is primarily due to a workforce reduction in our US Government business and a decrease in other operating costs, partially offset by increased employee benefit costs related to an increased number of employees in other parts of the business.

Operating (loss)/profit

In the half year ended 30 June 2013, Inmarsat Solutions recorded an operating loss of US$0.3m, compared with an operating profit of US$7.6m for the half year ended 30 June 2012. The decrease in operating profit was due to decreased EBITDA and an increase in impairment losses, partially offset by a decrease in depreciation and amortisation. The EBITDA reduction was due primarily to reduced revenue and a decreased contribution from our US Government business as a result of combined lower revenues and an increase in the cost of goods and services. In the half year ended 30 June 2013, a US$13.4m correction was made to depreciation which resulted in lower depreciation and an increase in the carrying value of the Stratos CGU. A further impairment charge has therefore been recognised based on the revised carrying amount of the CGU at 31 December 2012, above and beyond the impairment charge recognised in the year ending on that date. There is no impact on reported profit for the year in prior periods due to the offsetting depreciation adjustment and related goodwill impairment.

Gross margin consists of revenues less direct cost of goods and services. Gross margin and gross margin percentage for the half year ended 30 June 2013 have decreased by US$15.4m and 2.9%, respectively, compared with the half year ended 30 June 2012. These decreases are a result of a reduction in revenue and reduced gross margin percentages in our US Government and Commercial Maritime business units as a result of customer renewals at lower prices, the newer revenues being at lower margins and changes in product mix to include more equipment sales.

Commentary on the Inmarsat Global and Inmarsat Solutions segmental results has been included within the respective sections of this report above. In addition, the table below shows the Group's total revenue split by business unit for each of the periods indicated:

Commercial Maritime. Commercial Maritime revenues for the half year ended 30 June 2013 increased by US$12.4m, or 5.0%, compared with the half year ended 30 June 2012. The increase is due to growth in our FleetBroadband service and price initiatives implemented in May 2012 and March 2013, partially offset by a reduction in revenues from older Commercial Maritime services due primarily to the migration to FleetBroadband. There was also an increase in Commercial Maritime VSAT revenue due to take-up of our XpressLink service. These increases have been partially offset by lower equipment sales.

US Government. US Government revenues for the half year ended 30 June 2013 decreased by US$19.9m, or 11.2%, compared with the half year ended 30 June 2012. This decrease is primarily due to lower revenue from IP managed solutions resulting from the non-renewal of certain contracts and the renewal of other contracts at lower prices. There is also lower leasing revenue and lower BGAN and Swift 64 revenues as a result of troop withdrawals from Afghanistan, partially offset by non-recurring revenue recognised during the half year ended 30 June 2013 of US$4.6m in connection with the unused portion of a pre-paid capacity contract. As previously mentioned, we are continuing to see pressure on US Government contract renewals as a result of recent measures implemented by the US Government, including federal budget sequestration which took effect in the first quarter of 2013 and has mandated reductions of over 5% in US Government defence spending over the next two years.

Global Government. Global Government revenues for the half year ended 30 June 2013 increased by US$1.9m, or 3.2%, compared with the half year ended 30 June 2012. The increase is primarily due to increased equipment sales and increased BGAN usage relating to events in Sub-Saharan Africa in the half year ended 30 June 2013, partially offset by decreases in leasing and GAN revenues.

Enterprise. Enterprise revenues for the half year ended 30 June 2013 increased by US$12.1m, or 9.0%, compared with the half year ended 30 June 2012. This was driven by increased aviation revenues as a result of growth in both the business jet and commercial air transport business, increased GSPS airtime revenues as a result of growth in the number of IsatPhone Pro terminals activated and increased engineering revenue in the energy market. These increases have been partially offset by lower equipment sales.

At 30 June 2013, the Group had cash and cash equivalents of US$216.1m and available but undrawn borrowing facilities of US$976.8m under our Senior Credit Facility and Ex-Im Bank Facility. We believe our liquidity position is more than sufficient to meet the Group's needs for the foreseeable future. In addition, we remain well-positioned to access the capital markets when needed, to meet new financing needs or to improve our liquidity or change the mix of our liquidity sources.

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 our borrowing facilities and debt securities.

The Group's net borrowings (gross of deferred finance costs) are presented below:

The table below shows the condensed consolidated interim cash flow for the Group for the half year ended 30 June 2013 and 2012:

The decrease in net cash generated from operating activities in the half year ended 30 June 2013, compared with the half year ended 30 June 2012, of US$81.0m relates to decreased EBITDA in the half year ended 30 June 2013 and movements in working capital, partially offset by reduced cash tax paid.

Net cash used in investing activities excluding capital expenditure, in the half year ended 30 June 2013 decreased by US$10.5m compared with the half year ended 30 June 2012. In the half year ended 30 June 2013 we paid US$1.1m of deferred consideration in relation to previous acquisitions (half year ended 30 June 2012: US$5.4m) and paid US$1.5m (half year ended 30 June 2012: US$7.7m) in relation to other investing activities.

Capital expenditure, including own work capitalised, increased by US$25.2m in the half year ended 30 June 2013, compared with the half year ended 30 June 2012, primarily due to expenditure on our Global Xpress and Alphasat programmes.

During the half year ended 30 June 2013 the Company paid dividends of US$120.0m, compared with US$109.6m in the half year ended 30 June 2012.

Net cash used in financing activities, excluding the payment of dividends, in the half year ended 30 June 2013 was US$2.4m, compared with net cash from financing activities, excluding the payment of dividends of US$199.1m in the half year ended 30 June 2012. During the half year ended 30 June 2013, we repaid US$25.7m of our EIB Facility, paid US$49.5m of interest and incurred US$2.6m arrangement costs of financing. In addition, we drew down US$75.6m on the Ex-Im Bank Facility.

During the half year ended 30 June 2012, we received gross issuance proceeds of US$212.0m on the April 2012 issue of additional Senior Notes due 2017, we drew down US$70.0m of our Ex-Im Bank Facility and received US$3.2m from the issue of ordinary shares in connection with certain staff incentive programmes. In addition, we paid cash interest of US$48.2m, repaid US$25.7m of our EIB Facility, paid arrangement costs of financing of US$6.1m and paid US$5.9m to repurchase our own shares.

In the half year ended 30 June 2013, we had negative free cash flow of US$41.7m, compared with positive free cash flow of US$65.8m in the half year ended 30 June 2013. The decrease is primarily due to a reduction in cash generated from operations and increased capital expenditures, partially offset by reduced cash tax paid.

The table below shows the condensed consolidated Group balance sheet as at 30 June 2013:

The increase in the Group's non-current assets of US$223.7m is due primarily to an increase in property, plant and equipment due to additions in the half year ended 30 June 2013 predominantly as a result of our Global Xpress and Alphasat programmes.

The decrease in current assets of US$137.0m is due predominantly to a decrease in cash and cash equivalents from US$332.1m at 31 December 2012 to US$216.1m at 30 June 2013. In addition, trade and other receivables decreased by US$16.1m to US$273.9m at 30 June 2013.

The decrease in current liabilities of US$4.3m is due to a decrease in trade and other payables of US$18.4m to US$545.3m at 30 June 2013 and a decrease in current derivative liabilities of US$3.6m to US$7.8m at 30 June 2013. The decrease has been partially offset by an increase in current income tax liabilities of US$18.2m to US$50.9m at 30 June 2013. 

The increase in non-current liabilities of US$83.9m relates primarily to an increase in non-current borrowings of US$58.2m to US$1,827.2m at 30 June 2013. Non-current borrowings increased primarily due to US$75.6m being drawn down on the Ex-Im Bank Facility, partially offset by the repayment of US$25.7m of our EIB Facility. In addition, deferred income tax liabilities increased by US$27.3m to US$168.6m at 30 June 2013.

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 macroeconomic and likely to affect the performance of businesses generally, others are particular to our operations in mobile satellite services.

Our principal risks and uncertainties are discussed below; however this summary is not intended to be an exhaustive analysis of all risks and uncertainties affecting our business. Some risks and uncertainties may be unknown to us and other risks and uncertainties, currently regarded as immaterial, could turn out to be material. All of them have the potential to impact our business, operations, liquidity, financial position or future performance adversely.

Satellites

Our satellites are subject to significant operational risks at launch or while in orbit which, if they were to occur, could adversely affect our revenues, profitability and liquidity. Although we currently maintain in-orbit insurance for our Inmarsat-4 satellite fleet (including Alphasat) and have obtained launch insurance for our Inmarsat-5 satellites, this may be insufficient to cover all losses if we had a satellite failure. Even if our insurance cover was sufficient, delays in building and launching a replacement satellite could adversely affect our revenues, profitability and liquidity.

Distribution

We continue to rely in part on other third party distribution partners and service providers to sell our services to end-users and they determine the prices end-users pay. There is a risk that our distribution partners or service providers could fail to distribute our services effectively, or fail to offer services at prices which are competitive. In addition, the loss of any key distribution partners could materially affect our routes to market, reduce customer choice or represent a significant bad debt risk.

Spectrum

We rely on radio spectrum to provide our services. This has historically been allocated by the International Telecommunications Union without charge, and usage is coordinated with other satellite operators in our spectrum band. In the future, we may not be successful in coordinating our satellite operations under applicable international regulations and procedures or in obtaining sufficient spectrum or orbital resources necessary for our operations.

Development of hybrid networks, including ATC

Proposed ATC services in North America or other countries may result in increased competition for the right to use L-band spectrum, and such competition may make it difficult for us to obtain or retain the spectrum resources we require for our existing and future services. We cannot be certain that the development of hybrid networks, including ATC, in North America or other countries will not result in harmful interference to our operations. If we are unable to prevent or mitigate against such interference it could have an effect on our operations, revenues, profitability and liquidity.

LightSquared Cooperation Agreement

Our Cooperation Agreement with LightSquared may present us with operational and financial risks. If fully implemented, the Cooperation Agreement will ultimately result in a reduction in available L-band spectrum for Inmarsat services over North America and the need for our L-band services to coexist in North America with ATC services in adjacent frequencies. Whilst we believe that we can continue to operate our services over North America with minimal impact to our users, following the launch of ATC services, there is a risk that our L-band services may be congested, interrupted and/or interfered with, which could have an adverse affect on our future L-band service performance in North America.

Regulation

Our business is subject to regulation and we face increasing regulation with respect to the transmission of our satellite signals. The provision of our mobile satellite communication services in some countries could cause us to incur additional costs, could expose us to fines and could limit our ability to provide services.

Next generation services and satellites

We are currently implementing a major investment programme, Global Xpress ("GX"), which includes the deployment of a global network of three Ka-band satellites. This programme, which includes satellites, ground network, terminals and related services, may be subject to delays and/or material cost overruns. There can be no assurance that the development of new satellites, ground networks, or terminals and/or the introduction of new services will proceed according to anticipated schedules or cost estimates, or that the level of demand for the new services will justify the cost of setting up and providing such new services. A delay in the completion of such networks and/or services and/or the launch or deployment or operation of such satellites and/or new services, or increases in the associated costs, could have a material adverse effect on our revenue, profitability and liquidity.

Competition

Although Inmarsat is a market leader in MSS, the global communications industry is highly competitive. We face competition today from a number of communications technologies in the various target sectors for our services. It is likely that we will continue to face increasing competition from other network operators in some or all of our target sectors in the future, particularly from existing mobile satellite network operators. In addition, communications providers who operate private networks using VSAT or hybrid systems also continue to target MSS users. Technological innovation in VSAT, together with increased C-band, Ku-band and Ka-band coverage and commoditisation, have increased, and we believe will continue to increase, the competitiveness of VSAT and hybrid systems in some traditional MSS sectors, including maritime and aviation sectors. Furthermore, the gradual extension of terrestrial wireline and wireless communications networks to areas not currently served by them may reduce demand for some of our land mobile services in those areas. We believe that our investment in GX will position us favourably to compete with alternate technology providers and reduce the impact of such competition on our L-band MSS business.

Related party transactions

There have been no material changes in the related party transactions described on page 98 and 99 of the 2012 Inmarsat plc Annual Report and Accounts.

We have separately announced today a strategic partnership with RigNet, Inc. ("RigNet") (NASDAQ: RNET), a leading global provider of managed remote telecommunications solutions to the oil and gas industry, to offer GX services to the energy sector. Under the terms of the agreement, RigNet will become a GX distribution partner and enter into a four-year GX capacity pre-purchase agreement. In connection with the agreement, we will sell our retail energy business to RigNet for a total cash consideration of US$25m. The transaction is expected to close in early 2014. For more information see our separate press release dated 1 August 2013.

Subsequent to 30 June 2013, other than the events discussed above, there have been no other material events which would affect the information reflected in the condensed consolidated financial results of the Group.

Inmarsat plc

99 City Road

London EC1Y 1AX

By order of the Board,

Rupert Pearce Rick Medlock

Chief Executive Officer Chief Financial Officer

2 August 2013 2 August 2013

INMARSAT PLC

CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT

For the half year ended 30 June 2013 (unaudited)

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

For the half year ended 30 June 2013 (unaudited)

INMARSAT PLC

CONDENSED CONSOLIDATED INTERIM BALANCE SHEET

At 30 June 2013

INMARSAT PLC

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

 For the half year ended 30 June 2013

(a) The other reserve relates to ordinary shares held by the employee share trust.

INMARSAT PLC

CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENT

 For the half year ended 30 June 2013 (unaudited)

1. General Information

The principal activity of Inmarsat plc and its subsidiaries (together, the "Group") is the provision of mobile satellite communications services ("MSS").

The Group's financial results are not subject to significant seasonal trends.

These consolidated interim financial results were approved by the Board of Directors for issue on 2 August 2013.

The financial information for the year ended 31 December 2012 does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. A copy of the statutory accounts for the year has been delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified, did not draw attention to any matters by way of emphasis without qualifying their report, and did not contain a statement under Section 498(2) or 498(3) of the Companies Act 2006.

2. Principal accounting policies

Basis of preparation

The unaudited consolidated interim financial results for the half year ended 30 June 2013 have been prepared using International Financial Reporting Standards ("IFRS") as adopted by the European Union and in accordance with International Accounting Standards ("IAS") 34, 'Interim Financial Reporting'. This announcement does not contain sufficient information to comply with all of the disclosure requirements of IFRS.

These unaudited condensed consolidated interim financial statements should be read in conjunction with the Group's most recent annual consolidated financial statements, which are for the year ended 31 December 2012, and which are available on our website at www.inmarsat.com. Except as described below, the unaudited condensed consolidated interim financial statements are based upon accounting policies and methods consistent with those in the Group's 2012 annual consolidated financial statements prepared under IFRS, set out on pages 61 to 99. Operating results for the half year ended 30 June 2013 are not necessarily indicative of the results that may be expected for the year ending 31 December 2013. The consolidated balance sheet as at 31 December 2012 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by IFRS for complete financial statements.

Taxes are accrued based on management's estimated annual effective income tax rate applied to the Group's interim pre-tax income. In addition, the following standards and interpretations, issued by the IASB and the International Financial Reporting Interpretations Committee ("IFRIC"), are effective for the first time in the current financial year and have been adopted by the Group with no significant impact on its consolidated results or financial position:

o IFRS 13 - Fair Value Measurement (effective for financial years beginning on or after 1 January 2013);

o IAS 1 (as amended) - Presentation of Financial Statements - Amendments to revise the way other comprehensive income is presented (effective for financial years beginning on or after 1 July 2012);

o IAS 19 (as amended) - Employee Benefits - Amended standard resulting from the Post-Employment Benefits and Termination Benefits projects (effective for financial years beginning on or after 1 January 2013);

o IAS 27- Consolidated and Separate Financial Statements - Reissued as IAS 27 Separate Financial Statements (as amended in 2011) (effective for financial years beginning on or after 1 January 2013);

o IAS 28 - Investments in Associates - Reissued as IAS 28 Investments in Associates and Joint Ventures (as amended in 2011) (effective for financial years beginning on or after 1 January 2013);

o IFRIC 20 - Stripping Costs in the Production Phase of a Surface Mine (effective for financial years beginning on or after 1 January 2013); and

o Amendments resulting from the 'Annual Improvements 2009-2011 cycle' paper issued in May 2012 (effective for financial years beginning on or after 1 January 2013).

The Group has a robust and resilient business model, strong free cash flow generation and is compliant with all covenants. As a consequence and despite the continuing uncertain economic climate, the Directors believe that the Company and the Group are well placed to manage their business risks successfully. After considering current financial projections and facilities available and after making enquiries, the Directors have a reasonable expectation that the Company and the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, Inmarsat plc continues to adopt the going concern basis in preparing the consolidated financial statements.

The functional currency of the Company and all of the Group's subsidiaries and the presentation currency is the US Dollar, as the majority of operational transactions and borrowings are denominated in US Dollars.

Basis of accounting

The preparation of the condensed consolidated interim financial statements in conformity with IFRS requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the balance sheet dates and the reported amounts of revenue and expenses during the reported period. Although these estimates are based on management's best estimate of the amount, event or actions, these results ultimately may differ from those estimates.

In particular, the calculation of the Group's tax balances and of its potential liabilities or assets necessarily involves a degree of estimation and judgement in respect of certain items whose tax treatment cannot be finally determined until resolution has been reached with the relevant tax authority, or, as appropriate, through a formal legal process. The amounts recognised or disclosed are derived from the Group's best estimation and judgement. However, the inherent uncertainty regarding the outcome of these means eventual realisation could differ from the accounting estimates and therefore impact the Group's results and cash flows.

Accounting policies adopted in preparing these condensed consolidated interim financial statements have been selected in accordance with IFRS.

3. Segment information

IFRS 8, 'Operating Segments', requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Operating Decision Maker ("CODM") to allocate resources and assess performance. The CODM is the Chief Executive Officer who is responsible for assessing the performance of the individual segments.

Information reported to the CODM for the purposes of resource allocation and assessment of segment performance is specifically focused on the individual performance of each of the divisions within the Group, namely Inmarsat Global and Inmarsat Solutions.

The Group's reportable segments are therefore as follows:

·; Inmarsat Global - principally the supply of wholesale airtime, equipment and services to distribution partners and other wholesale partners of mobile satellite communications by the Inmarsat Global business, including entering into spectrum coordination agreements. The segment also includes income from technical support to other operators, the provision of conference facilities and leasing surplus office space to external organisations, all of which are not material on a standalone basis and in aggregate;

·; Inmarsat Solutions - the supply of advanced mobile and fixed-site remote telecommunications services, the provision of customised turnkey remote telecommunications solutions, value-added services, equipment and engineering services to service providers and end-users; and

·; 'Unallocated' - includes Group borrowings and the related interest expense, cash and cash equivalents and current and deferred tax balances, which are not allocated to each segment.

The accounting policies of the reportable segments are the same as the Group's accounting policies described in note 2. Segment profit represents the profit earned by each segment without allocation of investment revenue, finance costs and income tax expense.

Segment information:

(a) Includes TC Communications Pty Ltd ("TC Comms") from 8 May 2013.

(b) Capital expenditure stated using accruals basis.

(a) Includes NewWave Broadband Limited from 13 January 2012.

(b) Capital expenditure stated using accruals basis.

4. Net interest payable

5. Income tax expense

6. Net borrowings

These balances are shown net of unamortised deferred finance costs, which have been allocated as follows: