AVN.L Regulatory News (AVN)

16 Apr 2007 08:00

Avanti Communications Group Plc16 April 2007 16 April 2007 AVANTI COMMUNICATIONS GROUP PLC ("Avanti Communications" or the "Company") Admission of the Company's shares to trading on AIM Avanti Communications (AIM: AVN.L), the UK provider of satellite communicationsservices, announces that the Company's shares have today been admitted totrading on AIM. The Avanti Communications Group currently provides satellite telecommunicationsservices in Europe using leased satellite capacity. In December 2008, it expectsto take delivery for launch of its own satellite, HYLAS. HYLAS uses uniquetechnologies to provide highly flexible and cost effective satellite capacity.In the future, Avanti Communications intends to sell wholesale HYLAS capacity totelecommunications and media network operators. The Board believes that theEuropean broadcast and fixed satellite services market is a very attractivemarket given its high barriers to entry, high demand for capacity and,currently, the highest average prices in the world. Key Strengths (see below for further detail) • A flexible and efficient satellite system; • Low cost advantage; • A large and growing market; • Significant barriers to entry; • Experienced management team; and • Strategic relationships. David Williams, Chief Executive of Avanti Communications, said: "Following the demerger from Avanti Screenmedia, we are delighted that AvantiCommunications shares have this morning been admitted to AIM. Obtaining aseparate listing gives us an improved profile from which to build our wholesalesatellite services and expand our customer base. As satellite spectrum is afinite resource and market demand is high, we expect these factors to providesignificant advantages as we continue to build a large and valuable business." Enquiries Avanti Communications Group plc 020 7749 1600David Williams, Chief Executivewww.avanti-communications.com Hoare Govett 020 7678 8000Justin Jones, Hugo Fisher, Sean Wegerhoff College Hill 020 7457 2020Sara Musgrave, Corinna Dorward This announcement should be read in conjunction with the Admission Documentdated 16 March 2007 issued by Avanti Communications. Copies of the AvantiCommunications Admission document will be available free of charge during normalbusiness hours on any day (except Saturdays, Sundays and public holidays) at theoffices of Avanti Communications for a period of one month from today. Investors should read the Admission Document and not rely solely upon theinformation summarised below. This announcement, which has been prepared by and is the sole responsibility ofAvanti Communications, has been issued by Avanti Communications. This announcement has been approved by Hoare Govett Limited ("Hoare Govett"), 250Bishopsgate, London EC2M 4AA, solely for the purposes of section 21 of theFinancial Services and Markets Act 2000. Hoare Govett is acting for Avanti Communications and no one else in connectionwith the Admission and will not be responsible to any other person for providingthe protections afforded to clients of Hoare Govett nor for providing advice inrelation to the Admission. This document includes statements that are, or are deemed to be, " forward-looking statements". These forward-looking statements can be identified by theuse of forward-looking terminology, including the terms "believes", "estimates","plans", "anticipates", "targets", "aims", "continues", "projects","assumes", "expects", "intends", "may", "will", "would", or "should", or in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. Theyappear in a number of places throughout this announcement and include statementsregarding Avanti Communications' intentions, beliefs or current expectationsconcerning, among other things, Avanti Communications' result of operations,financial condition, liquidity, prospects, growth, strategies and sectors inwhich Avanti Communications operates. By their nature, forward- lookingstatements involve risk and uncertainty because they relate to future events andcircumstances. A number of factors could cause actual results and developmentsto differ materially from those expressed or implied by the forward-lookingstatements, including without limitation conditions in the markets, marketposition of Avanti Communications, earnings, financial position, cash flows,return on capital, anticipated investments and capital expenditures, changingbusiness or other market conditions and general economic conditions. These andother factors would adversely affect the outcome and financial effects of theplans and events described herein. Forward-looking statements contained in thisannouncement based on past trends or activities should not be taken as arepresentation that such trends or activities will continue in the future. This announcement does not comprise an admission document relating to AvantiCommunications and does not constitute an offer or invitation to purchase orsubscribe for any securities of Avanti Communications and should not be reliedon in connection with any decision to purchase or subscribe for any suchsecurities. This announcement does not constitute a recommendation regarding thesecurities of Avanti Communications. Additional material information is includedin the Admission Document dated 16 March 2007 issued by Avanti Communications. The distribution of this announcement in certain jurisdictions may be restrictedby law, and persons into whose possession this announcement comes should informthemselves about, and observe, any such restrictions. Any failure to comply withthese jurisdictions may constitute a violation of the laws of any suchjurisdiction. INFORMATION ON AVANTI COMMUNICATIONS GROUP INTRODUCTION Avanti Communications Group plc is a new company formed for the purposes of thedemerger of the satellite networks business carried on by Avanti ScreenmediaGroup plc ("Avanti Screenmedia"). The proposal to effect the Demerger wasannounced on 13 December 2006 following the recognition by the board of AvantiScreenmedia that its screenmedia and satellite networks businesses are verydifferent in terms of their activities, cash flow profiles and scale. The Avanti Communications Group currently provides satellite telecommunicationsservices in Europe using leased satellite capacity and has authorisation to use3.6GHz of spectrum at Ku and Ka band at the orbital position 33.5degreesW. InDecember 2008, it expects to take delivery for launch of its own satellite,HYLAS. HYLAS uses unique technologies to provide highly flexible and costeffective satellite capacity. As satellite spectrum is a finite resource andmarket demand is high, the Board expects these factors to give AvantiCommunications significant advantages in building a large and valuable business.In the future, Avanti Communications intends to sell wholesale HYLAS capacity totelecommunications and media network operators. The Company will have its head office in London. HISTORY AND DEVELOPMENT The original business of Avanti Screenmedia was established in 1996 by DavidBestwick to develop applications for satellite technology, initially providingconsulting services to companies and government agencies in the space industry.In 2000, the Group began collaborating with Active Media Capital Limited ("AMC"), a satellite services business formed by David Williams, on a firstgeneration satellite internet project for the DTI called "Rural Internet Access". In 2002, Amba Broadband Limited, a subsidiary of AMC, was acquired by theGroup and David Williams became Avanti Screenmedia's chief executive.Screenmedia proved to be a suitable application for its satellite technology andAvanti Screenmedia began providing business television services to retailbusinesses, offering alternative media advertising and marketing services.Following the acquisition of Translucis Holdings Limited and its strong organicgrowth, Avanti Screenmedia listed on AIM in July 2004. In September 2005, the Office of Communications ("Ofcom") awarded the AvantiCommunications Group the Satellite Licence. In November 2005, Avanti Screenmedia announced that it had been awarded acontract by ESA, worth €34 million (approximately £23.2 million),(SM1) whichwould cover approximately half of the construction costs of HYLAS. Thisgovernment funding was complemented by an equity fund raising of £25 millionlater that month which provided the initial capital to satisfy the fundingcommitments under the ESA contract and begin construction of HYLAS. The fundingfor the design and construction of HYLAS has been completed and constructionstarted in December 2005. Avanti Communications is currently finalising thenecessary funding for the launch and insurance cover for HYLAS. The Boardexpects these remaining costs to be debt financed and is considering term sheetsfrom two major international banks. The Avanti Communications Group entered into contracts in June 2006 worth up to£25 million to provide HYLAS network services and satellite capacity totelecommunications capacity trading customers. Of this revenue, approximately£18 million represents options on two transponders on HYLAS which the customersmay choose to exercise during 2007, approximately £5 million of design feeswhich were paid in June 2006 with the balance of £2 million due over the life ofthe satellite. In the current year, the Avanti Communications Group has made further progressin securing contracts for broadband services. HYLAS HYLAS uses an advanced communications payload. The design incorporates: • eight Ka band spot beams which provide high power bi-directional capacity suitable for high data telecommunications and HDTV; and • a single Ku band European beam suitable for traditional video distribution and data multicast services. HYLAS can dynamically allocate power between different beams. The Board believesthis will enable Avanti Communications to maximise the value of HYLAS byadapting to changing market considerations through to 2025. Traditionally,satellites have fixed beam designs, however, HYLAS will also be capable ofadapting while in orbit to use a wide range of different frequencies, making itcapable of being used effectively in many different orbital positions, therebyenhancing its value to the business. HYLAS is relatively inexpensive because itsflexible payload allows it to extract 40 x 36 Mhz transponder equivalents from alaunch mass of just 2.5 tonnes. HYLAS will have a warranted design life of 15 years. The beam coverage of HYLAS includes Western Europe and parts of Eastern Europe. PRODUCTS AND SERVICES The Avanti Communications Group provides HYLAS capacity, satellitetelecommunications services and consulting services. Wholesale Capacity The Avanti Communications Group sells transponder leases to large wholesalecustomers, principally telecommunication and media network operators.Transponder leases are for terms of up to 15 years and may be subdivided intosmaller units of capacity. Managed Satellite Telecommunications Services The Avanti Communications Group currently provides managed satellitetelecommunications services including broadband internet access, corporate datanetworks and video contribution services. It operates a DVB-RCS hub and uplinkand has a transponder lease on an existing satellite. The services providedinclude corporate data networks, broadband internet access and outside broadcastuplinking. Avanti Communications is developing this business on the basis thatit will become significantly more profitable once HYLAS is launched and thetraffic is transferred onto HYLAS. Broadband The Avanti Communications Group provides broadband internet access in packageswhich are variable by maximum bandwidth, degree of sharing of bandwidth andprice. It sells its broadband services either through resellers or directly tocustomers. Corporate data networks Corporate data networks provide companies with secure and dedicatedcommunication links across a large population of users and are rapidly becominga key service provided by the global satellite market. Satellite services arecapable of providing a wide range of data rates and service qualities, andapplications include secure communications, database management, videodistribution, EPOS data collection and disaster recovery. Video contribution services The Avanti Communications Group has identified several opportunities for theprovision of video contribution services, typically with customers providingoutside broadcasting services which need to use the Avanti CommunicationsGroup's technology and capacity to return video to television broadcastingstudios. Consulting The Avanti Communications Group has an established consulting business whichprovides technology study and development services to governments and Europeanagencies. The consulting business is currently engaged in a number of contractsexploring new applications for satellite technology including navigation anddisaster monitoring. Such studies have previously resulted in the development ofnew operational technology, for example, the screenmedia technology and HYLAS.The Board hopes to repeat this success in the future with other satelliteprojects. MARKETS The Board believes that the European broadcast and fixed satellite servicesmarket is a very attractive market given its high barriers to entry, high demandfor capacity and, currently, the highest average prices in the world. Macroeconomic market factors Barriers to entry Satellite spectrum is a finite, highly regulated resource. There are rigorousand transparent processes in place whereby satellite operators must showcompliance with ITU guidelines in seeking or maintaining licences which areadministrated by national agencies such as Ofcom. Following a period of industryconsolidation, there is currently a limited number of other broadcast or fixedsatellite services operator groups active in Europe. Demand European demand for satellite capacity is high by global standards. In 2005,average satellite capacity utilisation in Europe was 71 per cent. andEuroconsult consider utilisation will rise to 100 per cent.1 by 2015. Totaldemand for European transponders is forecast to rise by 27 per cent. from 888 in2006 to 1,128 in 2015, creating significant growth opportunities for operators.However, the satellite market has considerable barriers to entry which willfavour existing operators such as Avanti Communications. Furthermore, the Board believes that the high demand for satellite capacityalready being experienced by European suppliers will be further increased by thegrowth of both satellite TV in Eastern Europe and HDTV. HDTV is a technicalstandard which provides higher picture quality and consumes up to ten times moresatellite capacity than standard digital television. The HDTV market is germinalin Europe compared to the US: the US has approximately 2,000 HDTV channelscompared to approximately 36 in Europe. Therefore, the Board believes that thereis considerable room for expansion of HDTV channels in Europe. 1Source: "Euroconsult, World Satellite Communications & Broadcasting MarketsSurvey, Ten Year Outlook, 2006". Pricing Scarcity of satellite capacity means that the market price of such capacity ishigh and is expected to remain so in the long term. The average price pertransponder in Europe in 2005 was €2.5 million per annum and prices areconsiderably higher in hotspots. The Board believes that in these hotspots thereis both very little unused spectrum still available and that it is not possible to launch many new satellites into these positions to servethe large existing customer bases. Furthermore, the Board believes that inEurope, DTH television growth will crowd out other satellite applications from established satellite positions.Accordingly, Avanti Communications intends to focus on selling wholesale capacity totelecommunication and media service providers in Europe who seek newavailability of capacity at more competitive prices. Specific market factors The Board believes that the specific markets in which the Avanti CommunicationsGroup currently operates will offer strong opportunities once HYLAS has beenlaunched. Broadband services The European Commission and ESA have undertaken large scale studies to estimatethe market opportunity for satellite broadband in Europe with the specificobjective of stimulating solutions to the problem of rural underprovisioning.The European Commission estimates that even by 2013, approximately 4.7 millionpotential subscribers (including 1.3 million businesses) will not be able toreceive broadband through landlines and that satellite is the only viablealternative. The Strand Study2, conducted by the DTI in 2004, was a large scale market studyto investigate the demand for satellite broadband services in Europe. Baselineestimates generated by the Strand Study show the total available market coveredby the HYLAS beams is expected to sustain 3.8 million satellite broadbandsubscribers. The Board believes that this gives the Avanti Communications Groupa significant target market which is currently almost entirely unserved. 2Source: the Strand Definition Phase: Report on WP1200: Assess Demand, 2005. Corporate data networks The corporate data networks market was the fastest growing sector of thesatellite market in 2005 and is forecast to grow in Western Europe by 209 percent. by 20153. In addition, business continuity services are key strategicconcerns for most large organisations, processes and systems in place to dealwith emergencies, natural disasters or terrorist situations. The Board believesthat the market for these products is large and likely to continue to grow. 3 Source: "Euroconsult, World Satellite Communications & Broadcasting MarketsSurvey, Ten Year Outlook, 2006". Video contribution Video contribution services account for approximately 15 per cent. of globaltransponder capacity which breaks down into two categories: "occasional use" and"channel and distribution". The number of permanent feeds carried by satellitegrew by 12 per cent. globally in 2005, with Europe being the second fastestgrowing market. It is expected that rapid growth in the EU accession countriesis likely to lead to high demand for additional capacity particularly in view ofthe globalisation of news services, the increasing reliance by TV upon livesporting events, an increase in channel numbers and the development of mobilebroadcasting. COMPETITION The Board believes that consolidation amongst existing satellite operators hasreduced competition and that the tightening satellite supply side in Europeoffers the Avanti Communications Group strong growth opportunities. In Europe, there are a limited number of broadcast and fixed satellite servicesoperators with significant coverage and commercial activities and they providemainly Ku band services rather than Ka band. These operators include Intelsat,SES Global, Eutelsat, Telenor, Hispasat, Hellasat and Spacecom while competingin managed services are companies such as Satlynx, Arqiva, HNS and Gilat. KEY STRENGTHS The Board believes that the Avanti Communications Group's key strengths are asfollows: A flexible and efficient satellite system HYLAS is the first system in Europe to use a large number of Ka bandtransponders. As a result of recent improvements in enabling technologies, theuse of frequencies in the Ka band significantly improves the efficiency of thesatellite's power, enabling HYLAS to deliver the capacity of a large satellitefrom a small, relatively inexpensive satellite. HYLAS will have eight highlyflexible Ka band beams and one Ku band beam enabling it to adapt to differentmarket requirements after launch. Low cost advantage HYLAS is a relatively low cost satellite as a result of its innovative designfeatures, particularly power efficiencies, together with the research anddevelopment contribution received from ESA. The Board expects that therelatively low annual "in orbit" capital cost will enable the AvantiCommunications Group to compete successfully on price in this market. A large and growing market The European market shows signs of declining capacity despite rising demand, forexample, utilisation rates of 78 per cent. in 2005 and projected 100 per cent.utilisation by 20121. Applications, requiring large volumes of additionalbandwidth, are growing significantly such as new digital TV channels and theconversion of some channels to HDTV. 1Source: "Euroconsult, World Satellite Communications & Broadcasting MarketsSurvey, Ten Year Outlook, 2006". Significant barriers to entry The Board believes that the scarcity of satellite spectrum in Europe is asignificant barrier to entry and that there are no unallocated Ku band licencesin commercially viable positions, thereby preventing the entry of newcompetitors. HYLAS is based principally on its use of Ka band. Experienced management team The Avanti Communications Group's management team has initiated and progressedthe HYLAS project in less than five years. The team has been strengthened by therecruitment of additional and experienced expertise in commercial management,sales, procurement and engineering. Strategic relationships The Board believes that the Avanti Communications Group has a number of keyrelationships which have provided significant benefit to the business over anumber of years. In particular, ESA and the DTI (through the British NationalSpace Agency) have provided a combination of funding and technical credibility. STRATEGY The Avanti Communications Group intends to sell wholesale HYLAS capacity totelecommunication and media network operators in Europe. This strategic plan hastwo distinct phases: (a) The first phase, which will continue during the construction phase of HYLAS,is the provision of its services via leased satellite capacity and ownedinfrastructure. In addition, it has a product suite which currently providesservices to approximately 1,500 customers and it intends to grow this businessaggressively following the launch of HYLAS. (b) The second phase is the provision of its services via HYLAS and thereforeAvanti Communications intends to build a large base of customers which it canmigrate onto HYLAS. Furthermore, the strategy will be expanded to focus onselling wholesale bandwidth and managed services using its DVB-RCS hubs toresellers and service providers. The Board believes that, given the supply and demand characteristics of themarket, Avanti Communications is likely to experience growing customer demandand can envisage the need for launches of additional satellites in the future. THE BOARD Brief biographies of the Directors and Proposed Directors of AvantiCommunications are set out below. The Proposed Directors have all agreed to actas directors of the Company with effect from the date of Admission. Theinformation required to be disclosed pursuant to Schedule Two paragraph (g) tothe AIM Rules was included in the Admission Document dated 16 March 2007 issuedby Avanti Communications and there have been no changes since that date. Avanti Communications is conducting a search for a finance director and ishopeful of making an appointment soon. Whilst this process is ongoing anexperienced interim finance director has been appointed. Directors and Proposed Directors John Brackenbury, aged 71 - Non-executive Chairman (proposed) Mr Brackenbury joined the board of Avanti Screenmedia in May 2004. MrBrackenbury is a leading industrialist with over 40 years experience in theleisure and retail sector. He spent a number of years with InternationalDistiller and Vintners Limited and was a founder director of Happy Eater Limitedand a major shareholder in that business for 16 years before becoming Chairmanof Pubmistress Limited, the holding company of the Pubmaster Group, at itsformation in 1991. Pubmaster was sold to Punch Taverns plc for £1.2 billion in2003. David Williams, aged 37 - Chief Executive Mr Williams joined the board of Avanti Screenmedia in May 2004 as ChiefExecutive (following the merger of his company, Amba Broadband Limited, withAvanti Screenmedia) in May 2002. Mr Williams founded the business of AvantiScreenmedia in partnership with David Bestwick. Prior to 2000, he was aninvestment banker, specialising in media and telecommunications finance at ChaseManhattan and CIBC. Mr Williams was voted Entrepreneur of the Year at the QuotedCompany Awards in 2006 and is a member of the British Government's SpaceAdvisory Council. David Bestwick, aged 41 - Technical Director Mr Bestwick founded the business now carried on by Avanti Communications in 1996and joined the board of Avanti Screenmedia in May 2004. Mr Bestwick graduatedfrom the University of Leicester in 1987 with a BSc in Physics withAstrophysics. Following three years at Marconi Research Centre (MRC), MrBestwick joined VEGA Group PLC in 1990 where he worked on a wide range ofsatellite applications projects. Mr Bestwick is responsible for all newtechnology and project developments and also for the consulting business. Michael Desmond, aged 48 - Non-executive Director (proposed) Mr Desmond joined the board of Avanti Screenmedia in November 2005. Mr Desmondwas, until October 2005, chief executive officer of ITV Broadcasting Limited,responsible for 80 per cent. of the turnover of the largest commercialtelevision company in Europe. Mr Desmond spent almost his entire career to datewith ITV plc and its precursor, Granada plc. Richard Vos, aged 61 - Non-executive Director (proposed) Mr Vos joined the board of Avanti Screenmedia in September 2006. Atelecommunications and satellite professional with wide internationalexperience, Mr Vos has gained experience over 36 years working in the industry.He is currently chairman of SatCom Group Holdings plc, non-executive director ofNSSC Operations Limited and a member of the UK Government's Space AdvisoryCouncil and chairman of their Telecommunications and Navigation Advisory Board.Formerly chairman of Inmedia Communications Limited, Mr Vos also participated inthe privatisation of Inmarsat Ventures PLC in 1999. Mr Vos was previously head of satellite investments for British Telecommunications plc andserved as governor for the UK and Ireland on the board of INTELSAT. Alan Foster, aged 71 - Non-executive Director (proposed) Mr Foster joined the board of Avanti Screenmedia in May 2004. Mr Foster was asenior partner of de Zoete & Bevan for over 20 years and, on the creation of BZWAsset Management, he was appointed its deputy chairman. This company was theforerunner of Barclays Global Investors, the subsidiary of Barclays Bank PLC. William Wyatt, aged 38 - Non-executive Director (proposed) Mr Wyatt joined the board of Avanti Screenmedia in November 2005. Mr Wyattworked for Close Brothers Corporate Finance before joining Caledonia InvestmentsPLC in 1998 as project manager for Sterling Industries. He transferred to theinvestment team in 2000 as an investment executive and was appointed anassociate director in 2002 and an executive director in April 2005. CURRENT TRADING, TRENDS AND PROSPECTS On 16 March 2007, Avanti Screenmedia announced its interim results for the sixmonths ended 31 December 2006. The announcement included the following commentsby the chairman on Avanti Communications: "Our Communications business continues to develop and, as such, we have investedheavily in the management of our satellite procurement contract during theperiod. While we were able to generate a sale in connection with HYLAS capacityat the end of June 2006, future revenues from HYLAS will only be taken toprofits after the launch of the satellite. We are therefore now seeking to builda large order book of revenue through the sale of long term transponder leases.The current consultancy and satellite network services sales activities aregrowing with significant contract wins announced during the period. However, asrevenues are taken over the life of the contract, little of this income has beenrecognised during this half year." "In Communications, we are finding early demand for HYLAS capacity is strong andthe launch of our network services products into the market has been wellreceived. We believe the value of our strategic assets created will bedemonstrated as the team builds the order book of revenue." The Board remains confident of the future prospects of the Avanti CommunicationsGroup. DIVIDEND POLICY The declaration and payment by Avanti Communications of any future dividends onthe ordinary shares and the amount will depend on the results of the AvantiCommunications Group's operations, its financial condition, cash requirements,future prospects, profits available for distribution and other factors deemed tobe relevant at the time. However, in view of Avanti Communications early stageof development, the Board does not envisage that the Company will pay dividendsuntil after the launch of HYLAS and intend to re-invest surplus funds in thedevelopment of Avanti Communications' business. CORPORATE GOVERNANCE The Directors recognise the value and importance of high standards of corporategovernance and intend, given the Company's size and the constitution of theBoard, to comply with the main provisions of the Combined Code. The Company alsoproposes to follow the recommendations on corporate governance of the QuotedCompanies Alliance for companies with shares traded on AIM. With effect from Admission, the Board has established an audit committee and aremuneration committee with formally delegated responsibilities. The remuneration committee will be chaired by Alan Foster. Its other memberswill be William Wyatt and John Brackenbury. The remuneration committee willreview the performance of the executive directors and make recommendations tothe Board on matters relating to their remuneration and terms of employment. Theremuneration committee will also make recommendations to the Board on proposalsfor the granting of share options and other equity incentives pursuant to anyshare option scheme or equity incentive scheme in operation from time to time.The remuneration and terms and conditions of appointment of the non-executivedirectors of the Company will be set by the Board. The audit committee will be chaired by William Wyatt. Its other members will beJohn Brackenbury and Richard Vos. The audit committee will have primaryresponsibility for monitoring the quality of internal controls and ensuring thatthe financial performance of the Company is properly measured and reported on.It will receive and review reports from the Company's management and auditorsrelating to the interim and annual accounts and the accounting and internalcontrol systems in use throughout Avanti Communications. The audit committeewill meet at least twice a year and will have unrestricted access to theCompany's auditors. As the Board is small, there will not be a separate nominations committee andrecommendations for appointments to the Board will be considered by the Board asa whole after due evaluation. The Board intends to comply, and procurecompliance with, Rule 21 of the AIM Rules relating to dealings by directors andother applicable employees in the Company's securities and, to this end, theCompany has adopted an appropriate share dealing code. SHARE OPTION SCHEMES The Board believes that the success of the Avanti Communications Group willdepend to a significant degree on the future performance of the management team.The Board also recognises the importance of ensuring that all employees are wellmotivated and identify closely with the success of Avanti Communications. Accordingly, the Company will establish the Unapproved Scheme and the EMI Scheme(together the "Share Option Schemes") which it believes will give it sufficientflexibility to provide equity based incentives for its employees and directors.At any time the number of shares over which options may be granted under theShare Option Schemes will not exceed 12.5 per cent. of the Company's issuedshare capital. As the unexercised share options previously granted by AvantiScreenmedia to employees of Avanti Communications (as employees of AvantiScreenmedia) will have mostly lapsed on the demerger, the Company intends togrant replacement options under the Share Option Schemes shortly after thedemerger has become effective. The Board intends in due course to make available 12.5 per cent. of the sharecapital of the Company to an employee benefit trust, in order to satisfy therequirement for options granted under the Share Option Schemes. The remunerationcommittee will also consider the adoption of a long term incentive plan for thebenefit of directors and senior managers, in the expectation that any awardsthereunder will be satisfied from the employee benefit trust. GLOSSARY The following glossary of terms applies throughout this document, unless thecontext otherwise requires: "ACIL" Avanti Communications Infrastructure Limited, a company incorporated under the laws of England and Wales, a subsidiary of Avanti Screenmedia prior to the demerger;"Avanti Communications Group" the group of companies consisting of ACIL and its subsidiary undertakings, which carry on the Communications Business, including, following the demerger, the Company;"bandwidth" a measure of spectrum (frequency) use or capacity;"band" a frequency band;"BSS" broadcast satellite services;"Communications Business" the satellite networks business of Avanti Screenmedia and its subsidiaries prior to and following the demerger;"downlink" or "downlink band" the satellite to earth half of a two way telecommunications satellite link. Often used to describe the receive dish end of the link;"DNS" domain name service;"DSL" digital subscriber line;"DTH" direct to home;"DTU" direct to user;"DTV" digital television;"DVB" digital video broadcasting - the European-backed project to harmonise adoption of digital video; "DVB-RCS" digital video broadcasting - return channel satellite;"EPOS" electronic point of sale;"ESA" the European Space Agency;"European Commission" or "EC" the executive body of the European Union;"EU" the European Union;"frequency" the number of times that an alternating current goes through its complete cycle in one second of time. One cycle per second is also referred to as one hertz; 1,000 cycles per second, one kilohertz; 1,000,000 cycles per second, one megahertz; and 1,000,000,000 cycles per second, one gigahertz;"FSS" fixed satellite services;"gigahertz" or "GHz" one billion cycles per second. Signals operating above 3 gigahertz are known as microwaves and above 30 GHz they are known as millimetre waves. As one moves above the millimetre waves signals begin to take on the characteristics of light waves;"HDTV" high definition television;"HYLAS" the satellite that the Communications Group has commissioned and is currently under construction;"ISP" internet service provider;"Ka" or "Ka band" the frequency range from 18 to 31 GHz;"Ku" or "Ku band" the frequency band from 10.9 to 17 GHz;"mbps" megabits per second;"Ofcom" the Office of Communications, the UK's communications regulator;"POPs" points of presence;"Satellite Licence" the authorisations to use radio frequencies granted to Avanti Communications Limited, a subsidiary of ACIL, by Ofcom in September 2005 which provide rights to use 3.6GHz of spectrum at Ku and Ka band at the orbital position 33.5degreesW;"spectrum" the range of electromagnetic radio frequencies used in transmission of voice, data and television;"transponder" a combination receiver, frequency converter, and transmitter package, physically part of a communications satellite;"uplink" or "uplink band" the earth station used to transmit signals to a satellite; and "WiFi" wireless fidelity. -------------------------- (SM1)FX rate to be checked Friday This information is provided by RNS The company news service from the London Stock Exchange