Aventus Group Annual Report 2009

FY2009 Annual Report · Aventus Group
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Avanti Communications Group plc 

74 Rivington Street
London EC2A 3AY

Tel: +44 (0)20 7749 1600
www.avantiplc.com

Avanti Communications Group plc
Annual Report & Accounts 2009

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We sell wholesale satellite broadband
to service providers.

Chairman
John Brackenbury CBE

Chief  Executive
David Williams

Group Finance 
Director
Nigel Fox

“With the launch of HYLAS we hope and expect that Avanti will become one of the 
World’s most exciting telecommunications businesses – a pioneer, a market leader 
and a British national champion”

“ Chairman’s Statement, page 8

“Satellite manufacture has proceeded smoothly, the launch has been de-risked and our 
market opportunity conﬁ rmed with impressive sales growth”

“ Chief  Executive’s Report, page 10

“With the wise counsel of  a very experienced board, we made the right decisions to 
protect and enhance our balance sheet through the credit crunch: securing debt ﬁ nance 
early in the project, keeping our cash in safe custody and hedging currency and interest 
rate risks effectively”

“ Finance and Operating Review, page 15

CONTENTS

HIGHLIGHTS 

BUSINESS PROFILE

YEAR IN REVIEW

Chairman’s statement

Chief  Executive’s report

Finance and operating review

GOVERNANCE

Board of  Directors

Employees 

Corporate social responsibility

Directors’ report

Corporate governance report 

FINANCIAL STATEMENTS

Independent auditors’ report 

Consolidated income statement

Consolidated balance sheet

Company balance sheet

Cash ﬂ ow statements

Statements of  changes in equity

Notes to the ﬁ nancial statements

SHAREHOLDER INFORMATION

Notice of  Annual General Meeting

Ofﬁ cers and professional advisers

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OFFICERS AND PROFESSIONAL ADVISERS

Bankers
HSBC Bank Plc
70 Pall Mall
London
SW1Y 5EZ

Solicitors
Osborne Clark
2 Temple Black East
Temple Quay
Bristol
BS1 6EG

Registered Auditors
PricewaterhouseCoopers LLP
1 Embankment Place
London 
WC2N 6RHT

Directors
F E J G Brackenbury CBE
Chairman

D J Williams
Chief Executive

D J Bestwick
Chief Technology Ofﬁ cer

N A D Fox 
Group Finance Director

M J O’Connor
Chief Operating Ofﬁ cer

D A Foster 
Non-Executive Director

W P Wyatt 
Non-Executive Director

C R Vos
Non-Executive Director

I C Taylor MBE, MP
Non-Executive Director

Secretary
N A D Fox

Registered Ofﬁ ce
74 Rivington Street
London
EC2A 3AY

Company Number
6133927

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Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

01

HIGHLIGHTS

+35.8%

Revenue

£1.8m

Proﬁ t/(loss)
before tax and
exceptionals 

‘09

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ARIANESPACE LAUNCHER

HYLAS – A Truly European Story
HYLAS, Avanti’s ﬁ rst satellite, will be launched in 
2010 through the collaboration of the private sector, 
the European Space Agency (ESA) and the British 
National Space Centre (BNSC). 

Avanti – Fully Funded
A successful placing of 14 million new ordinary shares 
was completed in June 2009, raising £31.5 million. 
This was augmented by a ¤12.5 million contribution 
from ESA. The new funds will support the upgrade 
of the launch service provider to Arianespace.

Arianespace – Reducing Launch Risk
Avanti has now contracted Arianespace to launch HYLAS 
from French Guiana in Q2 of 2010. Arianespace is the 
most reliable commercial launch agency in the world.

Success in Scotland
Avanti has completed the ﬁ rst phase of the Scotland 
Broadband Reach Project, connecting over 2000 
business and residential customers in “broadband 
notspots” to the internet with satellite broadband 
services using interim capacity which will be upgraded 
to HYLAS. The contract has been extended to address 
more homes and businesses without access to 
terrestrial broadband.

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02

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

HYLAS

Latest Technology

Strong Partners

Avanti’s ﬁ rst satellite will provide 
superfast broadband to businesses 
and consumers around Europe. The 
ﬁ rst Ka band broadband satellite ever 
launched in Europe, HYLAS uses 
technology which for the ﬁ rst time 
means that satellite can deliver speeds 
of 10Mb per second at the same 
prices as terrestrial broadband. Similar 
technology has recently been launched 
and commercially proven in the USA.

Spotbeam technology operating at 
higher frequencies and re-using power 
and spectrum creates our compelling 
service and cost advantages. It 
provides a timely solution to some 
of the problems identiﬁ ed by the UK 
government’s Digital Britain project.

The technology was developed 
and built for Avanti by EADS 
Astrium in partnership with the British 
Government’s British National Space 
Centre and the European Space Agency 
and will launch with Arianespace –
a strong European partnership. 
Key operational tasks have been 
outsourced to Inmarsat and BT.

Satellit

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Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

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04

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

Superf

a

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Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

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Huge Market

Strong Distribution

Government Support

Internet users are demanding 
higher speeds than can be 
provided ubiquitously by terrestrial 
technologies. HYLAS can provide 
10Mb services to anyone within 
its European beam coverages. We 
estimate that 70 million homes in 
Europe cannot receive a high quality 
2Mb-plus broadband service through 
terrestrial networks.

The demand for satellite broadband 
is evidenced in Avanti’s success in 
signing 51 service providers to sell 
the services in 13 countries in Europe. 
Pre-sales commitments are already 
over 13% of ﬁ rst year capacity. Larger 
telecoms companies are now adopting 
our service in order to fulﬁ l their own 
universal service obligations.

The British Government had great 
foresight in funding early stage 
development for HYLAS, and we 
hope to repay this faith by delivering 
valuable solutions to the Digital Britain 
problems. When HYLAS launches, no 
family or business in Britain needs to 
be without low cost broadband. But all 
over Europe, governments are turning 
to satellite to accelerate the deployment 
of universal broadband service and this 
makes it easier for Avanti to aggregate 
demand and ﬁ ll the satellite quickly.

ast

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06

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

Little Competition 

Next Generation

Future Plans

The satellite operator market is 
concentrated with high barriers 
to entry. Recent market conditions 
and high industry leverage have 
further restricted investment. As a 
result there is very little competition. 
Only one other Ka band satellite is 
planned for Europe, and along with 
HYLAS could serve a small fraction 
of the market of 70 million.

HYLAS will greatly exceed consumer 
expectations with a 10Mb service 
available everywhere. This is a strong 
competitive advantage even in some 
urban areas. Consumer “throughput”
or data volumes downloaded is doubling 
year on year. With the industry moving 
to charging based on Mb downloaded, 
we expect a strong ARPU and revenue 
trend for the entire telecoms industry. 

The demand and supply characteristics 
are as strongly favourable to Avanti, 
or even better in other regions 
of the world. Avanti has secured 
large amounts of spectrum to 
enable it to launch many satellites 
with almost global coverage. We 
will launch more satellites, and 
become a large global business.

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Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

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08

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

CHAIRMAN’S STATEMENT

The procurement of one of the most complex and 
innovative commercial satellite systems ever built has 
progressed well, with the system expected to operate 
at the top end of technical performance expectations

(cid:115)(cid:0)

(cid:115)(cid:0)

(cid:115)(cid:0)

(cid:115)(cid:0)

(cid:115)(cid:0)

Revenue
£8.0 million 
(2008: £5.9 million)

Proﬁ t before tax
£1.8 million 
(2008: loss £1.4 million)

Proﬁ t after tax
£1.0 million 
(2008: loss £1.0 million)

Closing cash and cash 
equivalents balance 
£24.6 million 
(2008: £35.2 million)

Cash and cash equivalents 
was £55.9 million, 
following receipt of equity 
proceeds on 3 July 2009

I have great pleasure in presenting Avanti 
Communications Group plc’s results for 
the year ended 30 June 2009. We have 
signiﬁ cantly exceeded expectations through 
the exercise of cost discipline, prudent 
ﬁ nancial risk management, and the sale of 
services on our interim satellite capacity.

We are now in our launch year, the year 
in which potential begins to turn into 
proﬁ t and cash. During 2008 we made 
important progress in procurement, 
ﬁ nance and sales. The procurement of 
one of the most complex and innovative 
commercial satellite systems ever built 
has progressed well, with the system 
expected to operate at the top end of 
technical performance expectations. With 
the support of the British government, 
ESA and our very strong shareholder 
base we took the opportunity to de-risk 
our project with the purchase of a launch 
from Arianespace, the world’s most 
reliable launch service provider. 

During the year, our market grew 
strongly. Terrestrial broadband telecoms 
technologies continue to exclude very 
large populations around the world. There 
is now consensus that some 70m homes 
in Europe will not be able to access 

SCOTTISH REACH PROJECT

The Scottish Government funded a project to deliver broadband services 
to the “notspots” across the country, including the most remote Highland 
and Island communities. A capital budget of  £3.3m was made available 
to support the project and, following an international tender, Avanti was 
chosen as the primary supplier. With over 2000 installations completed, 
the project achieved a rural broadband penetration on a level par with the 
Scotland wide broadband penetration of  53% (Jan 2009), demonstrating 
that satellite is the solution for rural populations.

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Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

09

KEY MILESTONES 2009

Presentation of maiden proﬁt  
before tax of £1.8m resulting from  
strong operating result and hedging

Strong progress in creating a 
distribution network with 51 service 
providers now committed around Europe 
plus a substantial new business pipeline

Successful and timely completion 
of rural broadband project with the 
Scottish Government

Compelling evidence of the  
growing importance of broadband 
to governments and consumers 

Completion of a £31.5m equity 
placing, plus ESA €12.5m contribution 
to ﬁnance launch service change 

Satellite on target for launch from 
French Guiana in Q2 2010

terrestrial broadband at speeds of 2Mb 
or more and consumers are demanding 
ever faster service. HYLAS will be the ﬁrst 
superfast broadband satellite to launch 
in Europe and would be full with just 
300,000 users so we have a vast yet 
lightly competed market to exploit.

During the year our market has grown 
and as a result, the decision of Avanti 
three years ago to make a pioneering 
investment in Ka band satellites is widely 
regarded as farsighted. We have an 
excellent management team and an 
impressive shareholder list and so I am 
conﬁdent that we can continue to lead 
in a large and growing global market. 

With the launch of HYLAS we hope and 
expect that Avanti will become one of the 
world’s most exciting telecommunications 
businesses – a pioneer, a market leader 
and a British national champion.

John Brackenbury CBE 
Chaiman   

The telecoms industry 
has begun to understand  
Avanti’s foresight in moving 
into Ka band satellites

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10

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

CHIEF EXECUTIVE’S REPORT

Avanti’s business model remains simple. We sell 
broadband to service providers at a quality and price 
which confers signiﬁ cant competitive advantages.

I am pleased to report results for the year 
which exceed expectations. Our interim 
service has sold well, and we have been 
able to use this activity to prepare our 
business operations systems for full scale 
roll out as soon as HYLAS launches in 
the second quarter of 2010. Also, with 
the wise counsel of a very experienced 
board, we made the right decisions to 
protect and enhance our balance sheet 
through the credit crunch: securing debt 
ﬁ nance early in the project, keeping our 
cash in safe custody and hedging currency 
and interest rate risks effectively. The 
successful development of our business 
model and the expansion of our market 
then enabled us to win the support of 
existing shareholders and an impressive 
array of new institutions in raising ﬁ nance 
to improve the quality and reliability of our 
launch service, thereby removing the last 
signiﬁ cant technology risk from our project.

Business Overview
Avanti’s business model remains simple.
We own and operate a satellite called 
HYLAS. This satellite will be the ﬁ rst “Ka 
band” superfast broadband satellite launched 
outside America and one of the most 
advanced payloads ever built. It will deliver 
high speed broadband at very competitive 
prices around Western and Eastern Europe. 
We will provide broadband at speeds up 
to 10Mb (with the return path by satellite 
at up to 5Mb). The customer uses a small 
satellite dish, typically between 45cm 
and 78cms, and a small satellite modem 
connected to the PC or server. Ka band 
satellite technology is new, although the ﬁ rst 
generation has been proven both technically 
and commercially in the USA. The technology 
enables us to use higher frequency bands 
with multiple spot beams meaning that we 
can transmit at higher speeds and serve 
many more subscribers per satellite than was 
previously possible. 

CELLULAR BACKHAUL

Mobile phone companies are struggling to get enough “backhaul” 
capacity to base stations to cope with the growth in data usage. 
Avanti solves the problem with rapidly deployed and low cost 10Mb 
installations. The ﬁ rst was done this year.

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Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

11

We sell to telecoms service providers, 
who are obliged to make minimum initial 
commitment to service volumes. They 
then sell to end users within their deﬁned 
territories in the expectation of building 
a large subscriber base and increasing 
their bandwidth purchases from us. We 
provide to these service providers a 
managed broadband service (not just raw 
bandwidth) along with all of the software 
systems, marketing support and training 
they need to deliver service. We call these 
service providers VNOs (Virtual Network 
Operators). Our VNOs need to make no 
initial capex investment since we manage 
the satellite and own and operate all 
associated ground control and network 
communications infrastructure, with the 
sole exception of the end user customers’ 
satellite dish and modem. 

In addition to regular consumer and 
business customers, our broadband  

product has begun to ﬁnd new markets  
this year. We currently have services running 
providing “backhaul” for mobile phone 
base stations (i.e. carrying user trafﬁc from 
a rural base station back to the network 
centre), providing telemetry for wind 
farms and providing outside broadcasting 
transmissions for television companies. 
The product is the same, it’s all broadband 
to Avanti, but the applications which 
customers ﬁnd for our very high speed  
low cost services are deﬁnitely growing.

This was our second full year offering 
satellite broadband services on our 
rented capacity, and during the year we 
rapidly completed Europe’s largest ever 
rural broadband project, for the Scottish 
Government. The success was veriﬁed  
by the award of a second contract from 
that customer. The service we provide to 
those and other current customers will  
be upgraded when HYLAS launches. 

We completed Europe’s largest 
ever rural broadband project 
for the Scottish Government, 
on time and on budget

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12

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

CHIEF EXECUTIVE’S REPORT
continued

Universal broadband service is now regarded as 
critical national infrastructure in most countries

The activity has had three beneﬁts 
to our business:

1.  We have demonstrated the role of 
satellite in solving the digital divide 
and raised its proﬁle. This has been 
important and timely in the context of 
government exercises like Digital Britain.

2.  We have a proven market and our 
ability to access it, using the early 
service to recruit 48 service providers 
in 12 countries in Europe. 

3.  We have learned the lessons of 

operational deployment in volume. 
We have ﬁeld tested all of the back 
ofﬁce software systems which we 
have developed to manage customer 
activation, support and billing and have 
completed detailed process manuals 
to guide both our staff and our VNOs 
in their management of the products. 
This means that when HYLAS launches, 
execution of the ramp up in business 
should be smooth. 

The market demand for broadband in 
general and the competitive dynamic has 
evolved signiﬁcantly since the beginning 
of our project. It is now overwhelmingly 
clear that:

1.  Competing technologies leave very 
large populations unserved for 
reasons of technical and economic 
limitation. It is widely held that:

a.  Copper ADSL networks leave 
populations of between 10% 
and 40% without adequate 
broadband all over the world. 

b. 

Fibre optic cable networks to the 
home are not economically viable 
in large parts of the world, leaving 
at least 40% of the population 
unserved even in densely 
populated countries like the UK.

c.  3G/4G networks, whilst providing 
excellent mobile data, cannot 
be used for ﬁxed broadband 
substitution because they have 
insufﬁcient capacity and spectrum 
available to cope with the high 
volumes of  data (especially 
video) now demanded by 
consumers at home. 

d.  Wi-ﬁ and Wi-Max technology 
suffering from a combination 
of line of sight, quality of 
service, base station density 
and infrastructure cost efﬁciency 

Competing technologies 
leave very large populations 
unserved for reasons of 
technical and economic 
limitation

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Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

13

There is consensus in government and telecoms circles 
that Ka band satellites have a major role to play 

issues and has not made  
a signiﬁcant impact on any 
major European markets.

2.  Universal broadband service is 

now regarded as critical national 
infrastructure in most countries of 
the world and governments are acting 
to accelerate its achievement.

3.  There remains very little competition 
to Avanti. Only one other dedicated 
Ka band satellite is planned for 
Europe, launching a year after HYLAS. 
In aggregate the two satellites can 
serve probably at most only 1 million 
2Mb services, in a market which has 
potential demand for 70 million. 

There is now broad consensus in 
government and telecoms circles that 
Ka band satellites have a major role to  
play in the patchwork of  varying 
technologies which will provide universal 
high speed broadband. We are conﬁdent 
therefore of our future market opportunity.

We have made great strides this year in 
building our distribution channels. We now 
have 51 VNOs signed in thirteen countries 
(Scotland, Ireland, England, France, Spain, 

Germany, Poland, Czech Republic, Italy, 
Serbia, Hungary, Albania and Macedonia). 

These VNOs commitments range from 
£100,000 to £9,000,000 and from 3 to 
15 years. For the ﬁrst year of service we 
have more than 13% of HYLAS capacity 
pre-sold and hope to top 20% by the 
day of launch. These VNOs of course all 
expect to build their own subscriber bases 
rapidly and to return to Avanti to buy more 
capacity. Based on Avanti’s experiment 
of offering service on rented capacity, it 
is clear that a small specialised VNO can 
sell and install at least 2,000 subscribers 
per annum per country (especially with 
EU funding assistance). HYLAS will be 
full with around 200,000 – 300,000 end 
user customers, depending on the mix of 
service levels sold by the VNOs (0.5Mb 
to 10Mb). We therefore have enough 
VNOs already to be conﬁdent that we 
can achieve our plan to ﬁll HYLAS quickly 
and are currently signing one or two new 
VNOs per month. We are also now making 
progress with larger telecoms companies 
who are typically adopting satellite 
broadband as a product for the ﬁrst time 
to address their own universal service 
obligations and therefore the average order 
size is likely to increase. 

SATELLITE LAUNCH

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30/9/09   13:15:41

 
 
 
 
 
 
 
14

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

CHIEF EXECUTIVE’S REPORT
continued

We remain on schedule to launch within the 
previously announced window of April to June 2010

Manufacture of the satellite is proceeding 
well, and we remain on schedule to 
launch within the previously announced 
window of April to June 2010. During 
the year we raised £31.5m in an equity 
placing plus ¤12.5m contribution from 
the British Government via the European 
Space Agency to fund the upgrade of our 
Launch Service to Arianespace, the most 
reliable launch service available. Moving to 
Arianespace was expensive, but has given 
greater comfort and certainty to investors, 
customers and our government partners. 
We have thus removed the last major 
technology risk, and can now focus our 
energies on maximising the price and pace 
at which we sell out HYLAS capacity. 

Outlook
We now have full conﬁdence in the 
imminent delivery of a fully operational 
satellite into orbit. Our fortunes now rest 
on our ability to sell out HYLAS quickly and 
at the best yield. The distribution channels 
we have established should enable us to 
achieve this. But we are also now ﬁnding 
that the larger traditional telecoms service 
providers are beginning to adopt our 
product in volume and also new application 
markets are opening up. The sales pipeline 
is strong, and should be given a further 
boost by the Digital Britain project in the 
UK and the increasing activity of projects 
in Europe funded by European Commission 
budgets. We are highly conﬁdent that 
HYLAS will sell out quickly, and are 
therefore busy working on two new projects 
to increase our capacity. An investment 
bank has been retained to help us to 
close ﬁnancing which has been offered by 
government sponsors. The success of this 
effort is not yet deﬁnitive but we hope to 
report positively on this soon. 

David Williams
Chief Executive

We are highly conﬁdent that 
HYLAS will sell out quickly, 
and are busy working on two 
new projects to increase our 
capacity

AV2412 - AR09 front AW03.indd   14

30/9/09   13:15:41

FINANCE AND OPERATING REVIEW

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

15

The year produced a proﬁ t before tax of £1.8 million 
(2008: loss £1.4 million)

Basis of reporting
The Group ﬁ nancial statements in this report 
have been prepared in accordance with 
International Financial Reporting Standards 
(IFRS) and the associated International 
Financial Reporting Interpretation Council 
(IFRIC) interpretations each as adopted for 
use in the EU. 

We have implemented the following 
standards in these ﬁ nancial statements.

IFRIC 11, “IFRS 2 – Group and treasury 
share transactions”, provides guidance 
on whether share based transactions 
involving treasury shares or involving 
group entities (for example, options over 
a parent’s shares) should be accounted 
for as equity-settled or cash-settled share 
based payment transactions in the stand 
alone accounts of the parent and group 
companies. This interpretation does not 
have an impact on the group’s ﬁ nancial 
statements. The company’s accounting 
policy for share based compensation 
arrangements is already in compliance 
with the interpretation.

Accounting policies
The Group has reviewed its accounting 
policies in accordance with IAS 8 ‘Accounting 
Policies, Changes in Accounting Estimates 
and Errors’ and determined that they are 
appropriate for the Group.

Operating performance
Revenue increased by 36% to 
£8.0 million (2008: £5.9 million). 
Costs of sale increased mainly due to 
additional costs incurred as a result of 
the delay in the delivery of HYLAS. These 
costs are offset by the liquidated damages 
which are reported separately under other 
operating income. As a result gross margins 
were 38% (2008: 68%) and a gross 
proﬁ t of £3m (2008: £4 million). Losses 
from operations fell by 25% to £1.4 million 
(2008: loss £1.9 million) helped by foreign 
exchange gains on hedging of receivables 
and revenues and the receipt of £1.4 million 
of liquidated damages from Astrium due to 
the late contractual delivery of HYLAS. 

Loss from operations before taxation 

Depreciation and other non-cash movements

Change in working capital and provisions

Net capital expenditure

Operating cashﬂ ow

Net interest received/ﬁ nancing exchange gains

Free cashﬂ ows

Movements in funding

Increase/(decrease)in net funds

30 June 2009 
£’000

30 June 2008
£’000

(1,386)

337

(10,297)

(2,850)

(14,196)

3,381

(10,815)

189

(10,626)

(1,858)

1,341

(2,152)

(7,543)

(10,212)

1,555

(8,657)

33,950

25,293

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30/9/09   13:15:42

 
 
 
 
 
 
 
16

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

FINANCE AND OPERATING REVIEW
continued

Total shareholders’ equity has increased to  
£64.5 million from £32.7 million

Further foreign exchange gains arising 
from hedging of the Satellite and launcher 
procurement meant that the year produced 
a proﬁt before tax of £1.8 million (2008: 
loss £1.4 million)

Earnings per share
Basic earnings per share rose to 3.78 pence 
per share (2008: 3.60 pence loss per 
share). Note 9 to the ﬁnancial statements 
provide details of these calculations. 

Other operating income
The company received liquidated damages 
from Astrium for the late delivery of 
HYLAS which accrue on a daily basis 
until November. These damages are 
recognised through the income statement 
to compensate for additional costs incurred 
as a result of this late delivery.

Financing, cash ﬂow and treasury
With the wise counsel of a very experienced 
board, we made the right decisions to 
protect and enhance our balance sheet 
through the credit crunch: securing debt 
ﬁnance early in the project, keeping our 
cash in safe custody and hedging currency 
and interest rate risks effectively.

Taxation
The tax charge of £0.75 million (2008: 
credit £0.36 million) represents an effective 
rate of 41.8% (2008: 26.6%). The change 
in the effective tax rate reﬂects the tax 
treatment of exchange gains and losses 
on derivatives, together with the potential 
permanent delay in the tax reliefs of the 
share based payments charge in relation to 
the long term incentives plan. 

The group currently generates all its taxable 
results in the UK. Note 8 to the ﬁnancial 
statements provide details of the tax charge.

In June 2009 the company completed a 
placing of 14 million shares, over which 
pre-emption rights had been previously 
waived at the Annual General Meeting. 
These shares were formally allotted on 
29 June and admitted for trading on AIM 
on July 3rd. The placing was at 225p 
netting £30.3 million after expenses.

The total proceeds from this placing were 
received on 3 July 2009. £20m of the 
proceeds of this placing in conjunction 
with a further €12.5 million ESA grant will 
fund the additional costs of the change 

VALLE D’AOSTA DAM

Avanti provides the critical link for hydro-electric power above the Central 
Quirico in Courmayeur, Italy. Nestling at the foot of  Mont Blanc, the satellite 
service provides two-way telemetry control of  the electricity generation plant 
and also visual conﬁrmation of  water levels through a live television picture 
fed to a web page. The satellite installation in this remote area was completed 
and is managed by one of  Avanti’s Italian partners – CO.NA.Installer.

AV2412 - AR09 front AW03.indd   16

30/9/09   13:15:42

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

17

The HYLAS satellite will have its transmission powered  
by solar power, producing lower carbon emissions

of launcher from SpaceX Falcon 9 to an 
Arianespace launcher. The balance of the 
proceeds will provide additional working 
capital support.

Until HYLAS revenues are recognised, both 
operating and capital cash ﬂows will be 
dominated by milestone payments which 
may cause volatility in the Group cash ﬂows. 

The Group has signiﬁcant US dollar and 
Euro currency exposures. The Group’s 
policy is to hedge all currency transaction 
exposures at the time of entering into a 
contractual commitment. To date the Euro 
receivables have formed a natural hedge 
against euro payables to Astrium for HYLAS. 
US dollar payables have been hedged using 
options and forward contracts. The group 
has chosen not to adopt hedge accounting 
during the current or previous year.

Balance Sheet
The Group Balance sheet is signiﬁcantly 
changed from last year. Total shareholders’ 
equity has increased to £64.5 million 
from £32.7 million primarily as a result 
of a placing during June 2009. The long 
term debt continues to increase as the 
quarterly interest is rolled into the principal 
in the pre-launch period and now stands 
at £42.6 million. Some of the debt 
covenants were renegotiated during June 
in conjunction with the equity placing, the 
switch to Arianespace and the delay in the 
launch window to 1 April 2010 through 
30 June 2010.

Environmental factors
The activities of Avanti are judged to have 
a low environmental impact and are not 
expected to give rise to any signiﬁcant 
inherent environmental risks over the next 
twelve months. Avanti’s HYLAS satellite 
will have its transmission powered by solar 
power. It therefore produces lower carbon 
emissions per customer than other forms of 
terrestrial telecommunications.

Risks
The key development risks of the satellite 
have now been retired and we are currently 
in the ﬁnal stages of assembly and testing 
before the satellite is shipped to the launch 
site. With the switch to an Arianespace 
launcher we have further reduced our 
launch risk given the ongoing successful 
heritage of this launch services provider. 
The launch window is set for 1 April to 
30 June 2010.

Critical accounting policies
Details of our critical accounting policies are 
in Note 1 to the consolidated Annual Report. 

Nigel Fox
Group Finance Director

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30/9/09   13:15:42

 
 
 
 
 
 
 
18

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

BOARD OF DIRECTORS

John Brackenbury CBE*+
Chairman
John was founder Chairman of Pubmaster 
which was sold in 2003 to Punch Taverns. 
He is a leading industrialist with over 40 
years experience in the drinks and leisure 
sector. He is also President of Business 
in Sport and Leisure Limited, a Non-
Executive Director of Isle of Capri Casinos 
Ltd and a Director of Springboard UK.

Nigel Fox 
Finance Director and Secretary
Nigel is a Chartered Accountant and has 
held various senior ﬁ nance roles before 
joining Avanti Communications in 2007, 
including chief ﬁ nancial ofﬁ cer of Climax 
Group; group ﬁ nancial controller at ARC 
International; ﬁ nance director of Ruberoid 
Building Products, and group ﬁ nancial 
controller of Ruberoid Plc.

Matthew O’Connor
Chief Operating Ofﬁ cer
Matthew joined Avanti in 2005 having 
worked in the telecommunications industry 
for 20 years initially for BT where he held 
a number of sales and marketing roles 
within the UK and International Divisions.

He joined Telewest in 1996 as a Director 
of its Business Division, where he was part 
of the team that grew the business from 
a £30m regional business to a £300m 
turnover national operation in 6 years. He 
went on to be Managing Director of the 
Wholesale Division with customers that 
included T-Mobile, 3, Cable and Wireless, 
NTL, and many telecoms re-sellers.

David Williams 
Chief  Executive
David is a co–founder of the Company. 
Prior to this he spent ten years working 
in the City ﬁ nancing telecommunications 
projects.

David Bestwick
Chief Technology Ofﬁ cer
David is a co-founder of the Company. 
David graduated from the University of 
Leicester in 1987 with a BSc in Physics 
with Astrophysics. Following three years 
at Marconi Research Centre (MRC), he 
joined VEGA Group PLC in 1990 where 
he worked on a wide range of satellite 
applications projects.

AV2412 - AR09 front AW03.indd   18

30/9/09   13:15:43

 
Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

19

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Richard Vos*
Non Executive
Richard is a telecommunications and 
satellite professional, with international 
experience, gained over 40 years working 
in the industry.

His previous positions included 
Chairman of Inmedia Communications 
Ltd. and of Inmarsat Ventures PLC and 
Head of Satellite Investments for British 
Telecommunications plc (BT), serving 
as Governor for the UK and Ireland on 
the Board of INTELSAT and as 
Chairman of the Board.

Ian Taylor 
Non Executive
Ian is MP for Esher and Walton,
entering Parliament in 1987. 

He was Minister for Science and 
Technology at the Department of Trade 
and Industry (1994-97). He now chairs 
the Conservative Party’s Policy Task-force 
on Science, Technology, Engineering
and Mathematics.

Prior to entering Parliament, Ian had 18 
years experience of providing corporate 
ﬁ nance and management advice to 
companies in the UK, France and USA.

William Wyatt*+
Non Executive
Will joined Caledonia Investments plc
in 1998 and was elected to the board
in 2005. He also serves as non-executive 
director on the boards of  Melrose 
Resources plc, TGE Marine AG, Bristow 
Group Inc and Terrace Hill plc.

Alan Foster+
Non Executive
Alan was a senior partner of de Zoete & 
Bevan for over twenty years and, on the 
creation of BZW Asset Management, he 
was appointed Deputy Chairman. This 
company was the forerunner of Barclays 
Global Investors.

*  Audit committee
+ 

 Remuneration committee

AV2412 - AR09 front AW03.indd   19

30/9/09   13:15:44

 
 
 
 
 
 
 
20

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

EMPLOYEES

Drawing expertise from 
across the globe

CORPORATE SOCIAL RESPONSIBILITY

“SOS Children’s is  
very glad to have been 
partnered with Avanti 
Communications for 
the last 2 years. The 
company’s support of our 
work is both committed 
and wide-ranging.”

Avanti staff make regular contributions through their payroll and 
challenge themselves to 10ks and marathons to raise additional 
sponsorship, donating to tangible projects that really need the 
support. Avanti’s expertise in the communications industry 
has further assisted a children’s village, through a satellite 
installation and the provision of broadband.

The company’s proactive attitude to charitable giving 
is reﬂected by David Williams’ energy and enthusiasm 
for SOS Children since the beginning.

Caroline Baker 
Corporate Liaison & Challenges Coordinator

AV2412 - AR09 front AW03.indd   20

30/9/09   13:15:47

DIRECTORS’ REPORT

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

21

The directors have pleasure in submitting their annual report 
together with the audited ﬁnancial statements for the year ended 
30 June 2009.

Directors’ share interests
The following Directors held interests in the share capital of 
the Company:

Principal activities and review of the business
The principal activity of the Company is the provision of satellite 
broadband internet services. 

Business review and key performance indicators
The information that fulﬁls the requirements of the business 
review can be found in the ﬁnance and operating review on pages 
15 to 17, which are incorporated in this report by reference. 

Results and dividends
The results for the year ended 30 June 2009 are shown on page 
26. No equity dividend was paid in the year ended 30 June 2009 
(2008: £nil). No ﬁnal dividend is proposed at the year end 
(2008: £nil). The proﬁt for the year transferred to reserves was 
£1,049,000 (2008: loss of £994,000).

Research and development
The Group continues to invest in new services and technology 
through its research and development programs which can lead 
to proﬁtable exploitation of Avanti’s satellite capacity. These 
include pure research into new products as well as developing 
those services which have been demonstrated to have a proﬁtable 
business case.

Directors
The directors who served during the year were as follows:

F E J G Brackenbury CBE
D J Williams
D J Bestwick
N A D Fox
M J O’Connor 
D A Foster
C R Vos
W P Wyatt
I C Taylor MBE, MP

(appointed 2nd February 2009)

Fully paid Ordinary Shares  
of 1p each

30 June 2009

30 June 2008

1,541,655

1,051,158

1,619,306

1,101,052

70,254

124,673

426,891

339,639

11,200

6,300

6,030

50,611

65,000

407,891

304,639

11,200

2,885

6,030

D J Williams

D J Bestwick

N A D Fox

M O’Connor

F E J G Brackenbury CBE

D A Foster

W P Wyatt

IC Taylor MBE, MP

C R Vos

At 16 September, the Company had been notiﬁed, pursuant to the 
Financial Services Authority’s Disclosure & Transparency Rules, 
of the following notiﬁable voting rights in the Company’s issued 
ordinary share capital.

Caledonia Investments plc

London

9,473,956 21.1%

Directors & Related and EBT

–

6,062,615 13.5%

M & G Investment 
Management Ltd.

London

5,300,000 11.8%

Avenue Capital Group

New York

3,354,412

8.0%

Kaupthing Bank  
Luxembourg S.A.

Luxembourg 1,699,000

3.8%

J.P. Morgan Asset Management 
U.K. Limited

London

1,510,389

3.4%

In addition, 2.1 million shares are held under LTIP. Dividend and 
voting rights have been waived.

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22

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

DIRECTORS’ REPORT
continued

Policy and practice on payment of creditors
The Group’s policy and practice on payment of creditors is:

(cid:115)(cid:0)

(cid:115)(cid:0)

(cid:115)(cid:0)

To pay all suppliers within the time limit agreed at the start 
of business with that supplier;

To ensure that suppliers are aware of the terms of payment; 
and

To pay in accordance with the contractual and other legal 
obligations whenever it is satisﬁed that the supplier has 
provided goods and services in accordance with the agreed 
terms and conditions.

At 30 June 2009, the Group’s trade creditor days were 53 days 
(2008: 133 days).

At 30 June 2009, the Company did not have any trade creditors.

Directors’ and Ofﬁcers’ liability insurance
Avanti Communications Group plc maintains appropriate 
insurance to cover Directors’ and Ofﬁcers’ liability for itself and its 
subsidiaries. At the date upon this report was approved and for 
the year to 30 June 2009, the Company provided an indemnity in 
respect of all of the Company’s Directors.

Auditors
PricewaterhouseCoopers LLP (‘PwC’) were re-elected as auditors 
during the year and have indicated their willingness to continue 
as auditors; accordingly a resolution to reappoint them will be 
proposed at the forthcoming AGM in accordance with Section 
489 of the Companies Act 2006.

Directors’ responsibilities
The directors are responsible for preparing the Annual Report 
and the ﬁnancial statements in accordance with applicable law 
and regulations.

Company law requires the directors to prepare ﬁnancial 
statements for each ﬁnancial year. Under that law the directors 
have elected to prepare the group and parent company ﬁnancial 
statements in accordance with International Financial Reporting 
Standards (IFRSs) as adopted by the European Union. In 
preparing these ﬁnancial statements, the directors have also 
elected to comply with IFRSs, issued by the International 
Accounting Standards Board (IASB). Under company law the 
directors must not approve the ﬁnancial statements unless they 
are satisﬁed that they give a true and fair view of the state of 
affairs of the group and the company and of the proﬁt or loss of 
the group for that period. In preparing these ﬁnancial statements, 
the directors are required to:

(cid:115)(cid:0)

(cid:115)(cid:0)

(cid:115)(cid:0)

(cid:115)(cid:0)

 select suitable accounting policies and then apply them 
consistently;

make judgements and accounting estimates that are 
reasonable and prudent;

state whether applicable IFRSs as adopted by the European 
Union and IFRSs issued by IASB have been followed, subject 
to any material departures disclosed and explained in the 
ﬁnancial statements;

prepare the ﬁnancial statements on the going concern basis 
unless it is inappropriate to presume that the company will 
continue in business.

The directors are responsible for keeping adequate accounting 
records that are sufﬁcient to show and explain the company’s 
transactions and disclose with reasonable accuracy at any time 
the ﬁnancial position of the company and the group and enable 
them to ensure that the ﬁnancial statements comply with the 
Companies Act 2006. They are also responsible for safeguarding 
the assets of the company and the group and hence for taking 
reasonable steps for the prevention and detection of fraud and 
other irregularities.

The directors are responsible for the maintenance and integrity 
of the company’s website. Legislation in the United Kingdom 
governing the preparation and dissemination of ﬁnancial 
statements may differ from legislation in other jurisdictions.

In the case of each director in ofﬁce at the date the directors’ 
report is approved:

(a)  so far as the directors are aware, there is no relevant audit 
information of which the company’s auditors are unaware; 
and

(b)  they have taken all the steps that they ought to have 

taken as directors in order to make themselves aware of 
any relevant audit information and to establish that the 
company’s auditors are aware of that information.

Approved by the Board of Directors and signed on behalf of the Board

Nigel Fox
Secretary and Group Finance Director

London

24 September 2009

AV2412 - AR09 front AW03.indd   22

30/9/09   13:15:47

CORPORATE GOVERNANCE REPORT 

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

23

The Group is quoted on AIM. Although the rules of AIM do  
not require the Company to comply with the Combined Code 
2006 on Corporate Governance (‘the Code’) the Company fully 
supports the principles set out in the Code and will seek to comply 
wherever practical, given both the size and resources available to 
the Company. Details are provided below of how the Company 
applies those parts of the Code which it believes to be appropriate.

The board
The Company has appointed non-executive directors to bring 
an independent view to the board and to provide a balance to 
the executive directors. The board of directors comprises four 
executive directors and ﬁve non-executive directors one of 
whom is the chairman. Despite the fact that some of the 
non-executive directors have share options, the board considers 
that each of the non-executive directors is independent. The 
board meets at least six times per year and receives a board 
pack comprising individual reports from each of the executive 
directors and members of the senior management team, 
together with any other material deemed necessary for the 
board to discharge its duties. The board has responsibility for 
formulating, reviewing and approving the Group’s strategy, 
budgets, major items of expenditure and acquisitions.

Board committees
The Board has established three committees: audit, remuneration 
and nominations, all having written terms of delegated 
responsibilities. Each is chaired by a different non-executive 
director. A copy of each committee’s terms of reference can be 
found at the Avanti website: www.avantiplc.com

Audit committee
The audit committee consists of W Wyatt, J Brackenbury and  
R Vos and is chaired by W Wyatt. It meets at least twice a year 
and is responsible for ensuring that the appropriate ﬁnancial 
reporting procedures are properly maintained and reported on  
and for meeting the auditors and reviewing their reports relating 
to the Group’s accounts and internal control systems. The 
committee also receives all internal operational review reports.

Remuneration committee
The remuneration committee consists of A Foster, J Brackenbury, 
and W Wyatt and is chaired by A Foster. It meets at least twice 
a year and is responsible for reviewing the performance of the 
executive directors and other senior executives and for determining 
appropriate levels of remuneration. 

Nominations committee
The nominations committee consists of W Wyatt, J Brackenbury 
and A Foster and is chaired by J Brackenbury. It meets as and when 
necessary and is responsible for nominating candidates for 
appointment as Directors to the Board, bearing in mind the need  
for a broad representation of skills across the Board.

Shareholder relations
The Company meets with institutional shareholders and analysts 
as appropriate and uses its website to encourage communication 
with private, existing and prospective shareholders. Avanti 
Communications Group plc welcomes feedback from investors 
about its published reports and website. Please address 
your feedback to our investor relations team at Redleaf 
Communications Limited by email info@redleafpr.com or in writing 
to Redleaf Communications Limited, 9-13 St Andrews Street, 
London EC4A 3AF.

Internal control and risk management
The Group operates a system of internal control and continues to 
develop and review that system in accordance with the guidance 
published by the Institute of Chartered Accountants in England and 
Wales. The internal control system is designed to manage rather 
than eliminate the risk of failure to achieve business objectives. 
The board is responsible for the system of internal control and for 
reviewing its effectiveness. It can only provide reasonable, but not 
absolute, assurance against material misstatement or loss.

The board operates a formal process of risk assessment and 
reporting. Each major business unit carries out formal risk 
assessments annually and regularly updates those during the 
year. Reports on the assessments and related mitigation actions  
of all signiﬁcant risks are provided to the board.

The Group does not have an internal audit function due to the  
small size of the Company’s administrative function, the high level 
of director review and authorisation of transactions. 

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24

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

CORPORATE GOVERNANCE REPORT
continued

However, the Company undertakes a programme of operational 
reviews designed to visit all major businesses on a regular basis. 
The ﬁnance director is responsible for that programme and its 
reporting to the audit committee.

The board recognises that an essential part of its responsibility 
is the effective safeguarding of assets, the proper recognition of 
liabilities and the accurate reporting of results. The Group has a 
comprehensive system for regular reporting to the board. This 
includes an annual planning and budgeting system with budgets 
approved by the board. 

The ﬁnancial reporting system compares against budget and prior 
year and reconsiders its ﬁnancial year forecast on a monthly basis. 
The board has established a formal policy of authorisation setting 
out matters which require its expressed approval and certain 
authorities delegated to the executive directors.

In compliance with AIM rules the Company has established a 
policy and share dealing code relating to dealing in the Company’s 
shares by directors, employees and connected persons.

The Company maintains appropriate insurance cover in  
respect of legal actions against directors as well as against 
material loss or claims against the Group, and reviews the 
adequacy of cover regularly.

There were no notiﬁable environmental impacts at any Avanti 
Communications Group site during the ﬁnancial year.

AV2412 - AR09 front AW03.indd   24

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Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

25

INDEPENDENT AUDITORS’ REPORT  
to the members of  Avanti Communications Group plc 

We have audited the group and parent 
company ﬁnancial statements (the 
‘‘ﬁnancial statements’’) of Avanti 
Communications Group plc for the year 
ended 30 June 2009 which comprise 
the Consolidated income statement, the 
Consolidated balance sheet, the Company 
balance sheet, the Cash ﬂow statements 
and the Statements of changes in equity 
and the related notes. The ﬁnancial 
reporting framework that has been applied 
in their preparation is applicable law and 
International Financial Reporting Standards 
(IFRSs) as adopted by the European 
Union and, as regards the parent 
company ﬁnancial statements, as applied 
in accordance with the provisions of the 
Companies Act 2006.

Respective responsibilities of 
directors and auditors
As explained more fully in the Directors’ 
Responsibilities Statement set out on page 
22, the directors are responsible for the 
preparation of the ﬁnancial statements 
and for being satisﬁed that they give a true 
and fair view. Our responsibility is to audit 
the ﬁnancial statements in accordance 
with applicable law and International 
Standards on Auditing (UK and Ireland). 
Those standards require us to comply with 
the Auditing Practices Board’s Ethical 
Standards for Auditors.

This report, including the opinions, has been 
prepared for and only for the company’s 
members as a body in accordance with 
Sections 495 and 496 of the Companies 
Act 2006 and for no other purpose. We 
do not, in giving these opinions, accept or 
assume responsibility for any other purpose 
or to any other person to whom this report 
is shown or into whose hands it may come 
save where expressly agreed by our prior 
consent in writing.

Scope of the audit of the 
ﬁnancial statements
An audit involves obtaining evidence 
about the amounts and disclosures 
in the ﬁnancial statements sufﬁcient 
to give reasonable assurance that the 
ﬁnancial statements are free from material 
misstatement, whether caused by fraud 
or error. This includes an assessment 
of: whether the accounting policies are 
appropriate to the group’s and parent 
company’s circumstances and have been 
consistently applied and adequately 
disclosed; the reasonableness of 
signiﬁcant accounting estimates made by 
the directors; and the overall presentation 
of the ﬁnancial statements.

Opinion on ﬁnancial statements 
In our opinion: 

(cid:115)(cid:0)

(cid:115)(cid:0)

(cid:115)(cid:0)

(cid:115)(cid:0)

the ﬁnancial statements give a true 
and fair view of the state of the 
group’s and of the parent company’s 
affairs as at 30 June 2009 and of the 
group’s proﬁt and group’s and parent 
company’s cash ﬂows for the year 
then ended;

the group ﬁnancial statements have 
been properly prepared in accordance 
with IFRSs as adopted by the 
European Union; 

the parent company ﬁnancial 
statements have been properly 
prepared in accordance with IFRSs 
as adopted by the European Union 
and as applied in accordance with 
the provisions of the Companies 
Act 2006; and

the ﬁnancial statements have been 
prepared in accordance with the 
requirements of the Companies 
Act 2006. 

Opinion on other matter prescribed 
by the Companies Act 2006
In our opinion the information given in 
the Directors’ Report for the ﬁnancial year 
for which the ﬁnancial statements are 
prepared is consistent with the ﬁnancial 
statements.

Matters on which we are required 
to report by exception
We have nothing to report in respect 
of the following matters where the 
Companies Act 2006 requires us to report 
to you if, in our opinion: 

(cid:115)(cid:0)

(cid:115)(cid:0)

(cid:115)(cid:0)

(cid:115)(cid:0)

adequate accounting records 
have not been kept by the parent 
company, or returns adequate for our 
audit have not been received from 
branches not visited by us; or 

the parent company ﬁnancial 
statements are not in agreement with 
the accounting records and returns; 
or 

certain disclosures of directors’ 
remuneration speciﬁed by law are not 
made; or

we have not received all the 
information and explanations we 
require for our audit.

J. Booker (Senior Statutory Auditor)
for and on behalf of 
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory 
Auditors

London

24 September 2009

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30/9/09   13:14:08

 
 
 
 
 
 
 
26

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

CONSOLIDATED INCOME STATEMENT
year ended 30 June 2009

Revenue

Cost of sales

Gross Proﬁt

Operating expenses

Other operating income

Loss from operations

Financing exchange gain and movement in derivative fair value

Finance income

Finance expense

Net ﬁnancing income

Proﬁt/(Loss) before tax

Income tax (expense)/credit

Proﬁt/(Loss) for the year

Attributable to:

Equity holders of the parent

Basic earnings/(loss)per share (pence)

Diluted earnings per share (pence)

The notes on pages 31 to 55 form part of the ﬁnancial statements.

Year ended 
30 June 2009 
£’000

Year ended 
30 June 2008 
£’000

Notes

2

3

6

7

7

7

7

8

9

9

8,041

(5,068)

2,973

(7,086)

2,727

(1,386)

2,932

417

(162)

3,187

1,801

(752)

1,049

1,049

3.78p

3.39p

5,921

(1,918)

4,003

(6,450)

589

(1,858)

119

585

(201)

503

(1,355)

361

(994)

(994)

(3.60)p

–

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Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

27

CONSOLIDATED BALANCE SHEET
as at 30 June 2009

Notes

30 June 2009 
£’000

30 June 2008 
£’000

11

12

17

15

31

16

18

19

20

21

19

20

21

23

24

24

51,534

21

5

51,560

352

31,500

14,584

24,615

71,051

122,611

39,647

95

1,037

40,779

249

–

8,656

35,241

44,146

84,925

12,164

13,743

30

402

86

545

12,596

14,374

2,899

63

42,574

45,536

58,132

417

34,041

30,021

64,479

122,611

1,365

129

36,322

37,816

52,190

277

3,858

28,600

32,735

84,925

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ASSETS

Non-current assets

Property, plant and equipment

Intangible assets

Deferred tax assets

Total non-current assets

Current Assets

Inventories

Unpaid share capital

Trade and other receivables

Cash and cash equivalents

Total current assets

Total assets

LIABILITIES AND EQUITY

Current liabilities

Trade and other payables

Provisions for other liabilities

Interest bearing liabilities

Total current liabilities

Non-current liabilities

Trade and other payables

Provisions for other liabilities

Loans and other borrowings

Total non-current liabilities

Total liabilities

Equity

Share capital

Share premium

Retained earnings and other reserves

Total shareholders’ equity

Total liabilities and equity

Approved on behalf of the Board of Directors

Nigel Fox
Finance Director 

24 September 2009

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28

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

COMPANY BALANCE SHEET
as at 30 June 2009

ASSETS

Non-current assets

Deferred tax assets

Investments

Total non-current assets

Current Assets

Trade and other receivables

Unpaid share capital

Total current assets

Total assets

LIABILITIES AND EQUITY

Current liabilities

Trade and other payables

Total current liabilities

Total liabilities

Equity

Share capital

Share premium

Retained earnings and other reserves

Total shareholders’ equity

Total liabilities and equity

Approved on behalf of the Board of Directors

Nigel Fox
Finance Director

24 September 2009

Notes

30 June 2009 
£’000

30 June 2008 
£’000

17

13

16

31

19

23

24

24

102

289

391

7,638

31,500

39,138

39,529

5,073

5,073

5,073

449

34,041

(34)

34,456

39,529

88

289

377

5,530

–

5,530

5.907

1,886

1,886

1,886

309

3,858

(146)

4,021

5,907

AV2412 - AR09 back AW03.indd   28

30/9/09   13:14:08

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

29

CASH FLOW STATEMENTS
for the year ended 30 June 2009

Group

Company

Year ended 
30 June 2009 
£’000

Year ended 
30 June 2008 
£’000

Year ended 
30 June 2009 
£’000

Year ended 
30 June 2008 
£’000

Notes

Cash ﬂow from operating activities

Loss from operations before taxation

Net foreign exchange gain

Depreciation of property, plant  
and equipment

Depreciation of intangible assets

Write off of ﬁxed assets

Provision for impairment  
of trade receivables

Onerous lease provision

Share based payments expense

Movement in working capital

(Increase) in inventories

(Increase) in trade and other receivables

(Decrease)/increase in trade 
and other payables

Cash used by operations

Interest received

Interest paid

Net cash used by operating activities

Cash ﬂows from investing activities

Payments for property, plant  
and equipment

Net cash used in investing activities

Cash ﬂows from ﬁnancing activities

Proceeds from borrowings

Repayment of borrowings

Debt issue cost paid

Proceeds from share issue

Share issue costs

Proceeds from ﬁnance leases

Finance lease paid

Net cash received from 
ﬁnancing activities

(1,386)

(1,183)

(1,858)

(589)

3

3

3

16

20

25

768

51

–

172

(123)

652

648

96

31

188

215

871

(1,049)

(398)

(102)

(5,626)

(4,569)

(11,346)

951

(162)

(10,557)

(2,850)

(2,850)

–

(21)

–

–

–

802

(592)

189

(218)

(1,936)

(117)

(2,669)

1,736

(201)

(1,134)

(7,543)

(7,543)

32,000

(390)

(988)

4,000

(122)

–

(550)

33,950

Effects of exchange rate on the balances 
of cash and cash equivalents

Net increase/(decrease) in cash 
and cash equivalents

Cash and cash equivalents at the 
beginning of the ﬁnancial year

Cash and cash equivalents at the 
end of the ﬁnancial year

2,592

20

(10,626)

25,293

35,241

9,948

18

24,615

35,241

(285)

(425)

–

–

–

–

–

–

155

(130)

–

(1,882)

2,012

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

71

(354)

–

(5,291)

1,767

(3,878)

–

–

(3,878)

–

–

–

–

–

4,000

(122)

–

3,878

–

–

–

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30

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

STATEMENT OF CHANGES IN EQUITY
year ended 30 June 2009

Group

2008

At 1 July 2007

Loss for the year

Issue of share capital

EBT Treasury shares

Premium on shares issued

Share based payments

Tax credit taken directly to reserves

At 30 June 2008

2009

At 1 July 2008

Proﬁt for the year

Issue of share capital

Share based payments

Tax expense taken directly to reserves

At 30 June 2009

Company

2008

At 1 July 2007

Loss for the year

Issue of share capital

Issue of shares to EBT

Premium on shares issued

Share based payments

Tax credit taken directly to reserves

At 30 June 2008

2009

At 1 July 2008

Loss for the year

Issue of share capital

Share based payments

Tax expense taken directly to reserves

At 30 June 2009

Share
capital
£’000

Share
 premium
£’000

Retained 
earnings
£’000

28,431

(994)

–

–

–

871

292

–

–

–

–

3,858

–

–

3,858

28,600

3,858

–

30,183

–

–

28,600

1,049

–

652

(280)

Total
reserves
£’000

28,688

(994)

52

(32)

3,858

871

292

32,735

32,735

1,049

30,323

652

(280)

257

–

52

(32)

–

–

–

277

277

–

140

–

–

417

34,041

30,021

64,479

Share
capital
£’000

Share
 premium
£’000

Retained 
earnings
£’000

Total
reserves
£’000

257

–

20

32

–

–

–

–

–

–

–

3,858

–

–

–

(239)

–

–

–

71

22

257

(239)

20

32

3,858

71

22

309

3,858

(146)

4,021

309

–

140

–

–

449

3,858

–

30,183

–

–

34,041

(146)

(14)

–

154

(28)

(34)

4,021

(14)

30,323

154

(28)

34,456

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Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

31

NOTES TO THE ACCOUNTS 
year ended 30 June 2009

1. Accounting Policies
Statement of compliance
The Group ﬁnancial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the 
EU issued by the International Accounting Standards Board (IASB) and with those parts of the Companies Act 2006 applicable to 
companies preparing their accounts under IFRS.

The principal accounting policies applied in the preparation of these ﬁnancial statements are set out below. These policies have been 
consistently applied to all the years presented, unless otherwise stated.

Basis of preparation
The ﬁnancial statements have been prepared on the historical cost basis, with the exception of share based payments and ﬁnancial 
derivatives, which are incorporated using fair value. 

The Company has elected to take the exemption under section 408 of the Companies Act 2006 to not present the parent company 
income statement.

New standards applied during the year ended 30 June 2009
IFRIC 11, ‘IFRS 2 – Group and treasury share transactions’, provides guidance on whether share based transactions involving treasury 
shares or involving group entities (for example, options over a parent’s shares) should be accounted for as equity-settled or cash-settled 
share based payment transactions in the stand alone accounts of the parent and group companies. This interpretation does not have an 
impact on the group’s ﬁnancial statements. The company’s accounting policy for share based compensation arrangements is already in 
compliance with the interpretation.

New standards and interpretations not applied
During the year ended 30 June 2009, the International Accounting Standards Board (‘IASB’) and the International Financial Reporting 
Committee (‘IFRIC’) have issued the following standards and interpretations with an effective date after the date of these ﬁnancial statements.

International Financial Reporting Standards
IFRS 2 (amendment) ‘Share based payments’ (effective 1 January 2009)

IFRS 8 ‘Operating segments’ (effective 1 January 2009). IFRS 8 replaces IAS 14 ‘Segment reporting’, and requires a ‘management 
approach’ under which segment information is presented on the same basis as that used for internal reporting purposes. The expected 
impact is still being assessed in detail.

International Accounting Standards
IAS 1 (revised) ‘Presentation of ﬁnancial statements’ (effective 1 January 2009)

IAS 23 (amendment) ‘Borrowing costs’ (effective 1 January 2009)

IAS 39 (amendment) ‘Financial instruments: Recognition and measurement’ (effective 1 January 2009)

IAS 36 (amendment) ‘Impairment of assets’ (effective 1 January 2009)

IAS 19 (amendment) ‘Employee beneﬁts’ (effective 1 January 2009)

IAS 32 (amendment) ‘Financial instruments: presentation’ (effective 1 January 2009)

IFRS 3 (revised) ‘Business combinations’ (effective 1 July 2009)

The directors do not anticipate that the adoption of any of these standards and interpretations will have a signiﬁcant impact on the 
group’s or company’s ﬁnancial statements.

Critical accounting estimates and management judgement
The presentation of ﬁnancial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires 
management to exercise its judgement in the process of applying the Group’s accounting policies.

The estimates and assumptions that have a signiﬁcant risk of causing a material adjustment to the carrying amounts of assets and 
liabilities within the next ﬁnancial year are addressed below.

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32

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

NOTES TO THE ACCOUNTS 
continued

1. Accounting Policies 
(a) Income taxes
The Group’s income tax balance is the sum of the total current and deferred tax balances. The calculation of this, and of the Group’s 
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. 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.

(b) Revenue recognition
The group uses the percentage-of-completion method in accounting for its consultancy and space projects. Use of the percentage-of-
completion method requires the group to estimate the services performed to date as a proportion of the total services to be performed. 
Refer to the consultancy and space projects note below.

Going concern 
The accounts have been prepared on a going concern basis which assumes that the Group will continue in operational existence for the 
foreseeable future.

Basis of consolidation
Where the company has the power, either directly or indirectly, to govern the ﬁnancial and operating policies of another entity or business 
so as to obtain beneﬁts from its activities, it is classiﬁed as a subsidiary. The ﬁnancial statements present the results of the company and 
its subsidiaries, including the Employee Beneﬁt Trust (“the group”) as if they formed a single entity. Intercompany transactions, balances, 
income and expenses are therefore eliminated in full. The results of subsidiaries acquired during the year are included in the consolidated 
income statement from the date of acquisition.

There are no minority interest in the net assets of the Group, and no goodwill arising on acquisition of subsidiaries.

The ﬁnancial statements of subsidiaries are prepared for the same reporting year as the parent company using consistent  
accounting policies.

Revenue recognition
Revenue is recognised to the extent that it is probable that the economic beneﬁts will ﬂow to the group and the revenue can be reliably measured. 

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and 
services provided in the normal course of business net of discounts, VAT, returns and other similar allowances.

Consultancy and space contracts
Consultancy revenues are derived from consultancy contracts. New consultancy projects are now connected with the exploitation of  
our satellite assets.

Where the outcome of a contract can be estimated reliably, revenues are recognised by reference to the stage of completion of the 
contract activity at the balance sheet date. The contracts are broken down into key milestones and work packages which are all judged 
individually on a percentage of completion basis in order to ascertain the completeness of an overall project. By its nature these projects 
require a certain element of judgement by management. Contract costs are recognised as an expense in the period they are incurred.

Accrued income represents the difference between amounts invoiced and revenues recognised on a percentage of completion basis.

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Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

33

Network services
Revenue is earned by selling broadband services and bandwidth to customers over a 12 to 24 month period. Revenues also include 
sales of customer premises equipment recognised upon installation. All services are priced and invoiced on a monthly basis and revenue 
is recognised in the period in which the services are provided.

Where a customer pays a fee for exclusive rights or options over the satellite capacity, revenue is only recognised at the end of the 
period of exclusivity. If the fee is credited against the ﬁnal capacity sale, the fee is recognised over the period of the capacity term. 

Leased assets
Assets acquired under hire purchase or ﬁnance lease are capitalised in the balance sheet. Those held under hire purchase and ﬁnance 
lease contracts are depreciated over their estimated useful lives. The interest element of these obligations is charged to the proﬁt and 
loss account over the relevant period. The capital element of the future payments is treated as a liability.

Operating lease payments are recognised as an expense on a straight-line basis over the lease term. 

Interest income and expense
Borrowing costs incurred for the construction of the HYLAS satellite asset are capitalised during the period of time that is required to 
complete and prepare the asset for its intended use, in accordance with IAS 23 ‘Borrowing Costs’. Other borrowing costs are expensed 
in the Income Statement.

Interest income on cash deposits is recognised on an effective interest rate methodology, taking into account the principal amounts 
outstanding and the interest rates applicable.

Foreign currency
Transactions entered into by the group entities in a currency other than the currency of the primary economic environment in which 
it operates (the “functional currency”) are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets 
and liabilities are translated at the rate ruling at the balance sheet date. Exchange differences arising on the retranslation of unsettled 
monetary assets and liabilities are similarly recognised immediately in the income statement.

The presentational currency of the Group is sterling. The functional and presentational currency of the parent and all its subsidiaries is sterling.

Pension schemes
The employees have the option to establish their own pension scheme to which the Group will match employee contributions up to 
a maximum amount. There is no on-going liability to the Group beyond the period that the contributions are made. The cost of such 
contributions are charged to the income statement when incurred.

Share based payments
The group operates a number of equity-settled, share based compensation plans. The fair value of these employee share option 
plans, representing employee services received in exchange for the grant of the options, is calculated using an option-pricing model. In 
accordance with IFRS 2 “Share based payment”, the resulting cost is charged to the income statement over the vesting period of the 
options. The amount of the charge is adjusted to reﬂect expected and actual levels of options vesting.

Current tax
The charge for taxation is based on taxable proﬁts for the year. Taxable proﬁts differ from proﬁt as reported in the income statement 
because it excludes items of income and expenses that are taxable or deductible in other years and it further excludes items that are 
never taxable or deductible. 

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities based on 
tax rates that have been enacted or substantially enacted by the balance sheet date.

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34

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

NOTES TO THE ACCOUNTS 
continued

1. Accounting Policies 
Deferred tax
Deferred tax is recognised on differences between the carrying amount of assets and liabilities in the ﬁnancial statements and the 
corresponding tax bases used in the computation of taxable proﬁt, and is accounted for using the balance sheet liability method. 
Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally recognised for 
all deductible temporary differences to the extent that it is probable that taxable proﬁts will be available against which those deductible 
temporary difference can be utilised.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer 
probable that sufﬁcient taxable proﬁts will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or 
the asset realised, based on tax rates that have been enacted or substantially enacted by the balance sheet date. The measurement of 
the deferred tax liabilities and assets reﬂects the tax consequences that would follow from the manner in which the Group expects, at the 
reporting date, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when the group has a legally enforceable right to offset current tax assets and liabilities and the 
deferred tax assets and liabilities relate to taxes levied by the same taxation authority on either the same taxable group company; or different 
group entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liability 
simultaneously, in each future period in which signiﬁcant amounts of deferred tax assets or liabilities are expected to be settled or recovered.

Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is 
provided so as to write off the cost or valuation of assets, other than assets under construction, over their estimated useful lives using 
the straight-line method.

Motor vehicles 

25% per annum 

Plant and machinery   

25% per annum

Network assets 

20-25% per annum   

Leasehold improvements 

25% per annum

Fixtures and ﬁttings  25% per annum 

Satellite in construction 

Nil

The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes 
in estimate accounted for on a prospective basis. The gain or loss arising on the disposal of assets is charged to the proﬁt and loss 
account and is calculated as the difference between the disposal proceeds and the carrying amount of the assets.

Assets held under ﬁnance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, 
the term of the relevant lease.

Satellite in construction relate to costs directly attributable to the construction of the HYLAS satellite. These assets will be transferred 
to a space asset category and depreciated over the life of the satellites once they become operational and placed into service. No 
depreciation has been charged on these assets. 

Research and development costs in relation to the HYLAS satellite are capitalised if they meet the conditions set out in IAS 38 
‘Intangible Assets’ which are that development costs are only capitalised once a business case has been demonstrated as to the 
technical feasibility and commercial viability. Capitalised development costs are amortised over the expected useful life of the asset.

Where the conditions are not met the costs are expensed through the income statement.

Intangible assets
Intangible assets are stated at cost less accumulated amortisation and any accumulated impairment losses. Amortisation is provided so 
as to write off the cost or valuation of assets, other than assets under construction, over their estimated useful lives using the straight-
line method.

Computer software 25% per annum. 

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Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

35

The estimated useful lives, residual values and amortisation method are reviewed at each year end, with the effect of any changes 
in estimate accounted for on a prospective basis. The gain or loss arising on the disposal of assets is charged to the proﬁt and loss 
account and is calculated as the difference between the disposal proceeds and the carrying amount of the assets. 

European Space Agency (ESA) funding
ESA funding relating to property, plant and equipment are included in non-current liabilities as deferred income and are credited to the 
income statement on a straight line basis over the expected lives of the related assets.

Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises all costs of purchase, cost of conversion and other 
costs incurred in bringing the inventories to their present location and condition. 

Net realisable value is based on estimated selling price less any further costs expected to be incurred to completion and disposal.

Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of directly attributable issue costs.

Trade receivables
Trade receivables are measured at initial recognition at fair value and are subsequently measured at amortised cost using the effective 
interest rate method where the time value of money is material. Appropriate allowances for estimating irrecoverable amounts are 
recognised in the Income Statement where there is evidence that the asset is impaired. This impairment would be recognised within 
operating expenses.

Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise of cash on hand and demand deposits, and other short term highly liquid 
investments that are readily convertible into known amounts of cash and are subject to an insigniﬁcant risk of change in value. For the 
purpose of the consolidated cash ﬂow statement, cash and cash equivalents are stated net of outstanding bank overdrafts.

Provisions
Provisions are recognised when the Group has a legal or constructive obligation to transfer economic beneﬁts arising from past events 
and the amount of the obligation can be estimated reliably. Provisions are not recognised unless the outﬂow of economic beneﬁts to 
settle the obligation is more likely than not to occur.

Borrowings
Interest-bearing bank loans and overdrafts are measured initially at fair value, net of transaction costs incurred. Borrowings are 
subsequently stated at amortised cost; any difference between the proceeds and the redemption value is recognised in the income 
statement over the period of the borrowings using the effective interest method.

Borrowings are classiﬁed as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 
12 months after the balance sheet date.

Trade payables
Trade payables are initially measured at fair value, and are subsequently measured at amortised cost.

Financial instruments and hedging activities
Financial assets and ﬁnancial liabilities are recognised on the Group’s balance sheet when the Group becomes a party to the contractual 
provisions of the instrument.

The group uses derivative ﬁnancial instruments mainly to reduce exposure to foreign exchange risks. The group does not hold or issue 
derivative ﬁnancial instruments for trading purposes. Derivatives are recognised at fair value on the date a contract is entered into and 
are subsequently re-measured at their fair value.

Hedge accounting is currently not applied. Changes in fair value of derivative ﬁnancial instruments are recognised in the income 
statement as they arise.

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36

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

NOTES TO THE ACCOUNTS 
continued

2. Revenue
Revenue represents net invoiced sales of services provided and goods sold, net of value added tax of £8.041,000 (2008: £5,921,000). 
The company derived £2,597,000 (2008: £1,570,000) of its turnover from European countries outside the United Kingdom, and 
£5,444,000 (2008: £4,351,000) from the United Kingdom.

3. Operating expenses
Costs are presented by the nature of the expense to the Group and include the following:

Depreciation of property, plant and equipment

Depreciation of intangible assets

Loss on disposal of ﬁxed assets

Research and development costs written off as incurred

Operating lease expenses

– Minimum lease payments

– Sublease payments

– Onerous lease provision

4. Auditors’ remuneration

Fees payable to company’s auditor for the audit of parent company and consolidated 
ﬁnancial statements.

Fees payable to the company’s auditor for other non audit services:

– The audit of company’s subsidiaries pursuant to legislation

– Other services pursuant to legislation

– Tax services

30 June 2009 
£’000

30 June 2008 
£’000

768

51

–

2

384

(50)

(122)

648

96

31

4

320

(50)

215

30 June 2009 
£’000

30 June 2008 
£’000

43

16

6

11

76

45

16

4

17

82

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Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

37

5. Employee beneﬁt costs
The average number of employees, including the Directors, during the year ended 30 June 2009 was 68 (30 June 2008: 49).  
The aggregate remuneration of all employees comprised:

Wages and salaries

Social security costs

Pension costs

Share based payment expense

Less: costs capitalised as satellite in construction

The remuneration of key management personnel and directors are disclosed in note 29. 

6. Other operating income

Exchange gain on trade receivables and payable balances

Liquidated damages received

30 June 2009 
£’000

30 June 2008 
£’000

4,091

438

113

652

5,294

(1,550)

3,744

3,383

343

340

871

4,937

(1,405)

3,532

30 June 2009 
£’000

30 June 2008 
£’000

1,355

1,372

2,727

589

–

589

Liquidated damages have been received from Astrium due to the late delivery of HYLAS. These damages accrue daily and will continue 
until November 2009. These damages compensate for the additional costs incurred as a result of the late delivery of the satellite. 

7. Net ﬁnance income

Finance income

Fair value gain on derivatives

Financing exchange gain

Interest income on bank deposits

Finance expense

Interest expense on borrowings and loans

Finance lease expense

Net ﬁnance income

30 June 2009 
£’000

30 June 2008 
£’000

340

2,592

2,932

417

3,349

(109)

(53)

(162)

3,187

119

–

119

585

704

(130)

(71)

(201)

503

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38

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

NOTES TO THE ACCOUNTS 
continued

8. Income tax expense

Current tax

Current tax

Total current tax

Deferred tax

Origination and reversal of temporary differences

Adjustment in respect of prior periods

Impact of change in UK tax rate

Total income tax expense/(credit)

30 June 2009 
£’000

30 June 2008 
£’000

–

–

587

165

–

752

–

–

(404)

25

18

(361)

The tax on the group’s proﬁt before tax differs from the theoretical amount that would arise using the weighted average tax rate 
applicable to proﬁts of the consolidated entities as follows:

Proﬁt/(Loss) before tax

Tax charge/(credit) at the corporate tax rate of 28% (2008: 29.5%)

Difference in overseas tax rates

Tax effect of non-deductible expenses

Previously unrecognised tax losses

Adjustment in respect of prior periods

Impact of change in UK tax rate

Income tax expense/(credit)

9. Earnings/(Loss) per share

Basic earnings/(loss) per share

Diluted earnings per share

30 June 2009 
£’000

30 June 2008 
£’000

1,801

504

(5)

88

–

165

–

752

(1,355)

(400)

–

49

(53)

25

18

(361)

30 June 2009 
pence

30 June 2008 
pence

3.78

3.39

(3.60)

–

The calculation of basic and diluted earnings/(loss) per share is based on the earnings attributable to ordinary shareholders divided by 
the weighted average number of shares in issue during the year. 

There is no comparative balance for 30 June 2008 because there was no dilution to the basic earnings per share calculation required as 
any adjustments would have been anti-dilutive.

Proﬁt/(loss) for the year attributable to equity holders of the parent company

1,049

(994)

Weighted average number of ordinary shares for the purpose of basic earnings per share

27,787,491

27,587,955

Weighted average number of ordinary shares for the purpose of diluted earnings per share

30,960,421

–

30 June 2009 
£’000

30 June 2008 
£’000

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Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

39

10. Proﬁt of the parent company
As permitted by Section 408 of the Companies Act 2006, the proﬁt and loss account of the parent Company is not presented as part of 
these accounts. The parent company’s loss after tax for the year ended 30 June 2009 amounted to £14,000 (2008: £239,000 loss).

11. Property, plant and equipment

Leasehold 
Improvements 
£’000

Network 
Assets 
£’000

Fixtures and 
ﬁttings 
£’000

Plant and 
Machinery 
£’000

Satellite in 
Construction 
£’000

Motor 
vehicles 
£’000

Group 
Total 
£’000

Cost

Balance at: 1 July 2007

226

2,601

Additions

Disposals

8

–

594

(25)

Balance at 1 July 2008

234

3,170

Additions

Disposals

16

–

151

–

Balance at 30 June 2009

250

3,321

Depreciation

Balance at: 1 July 2007

Charge for the year

Disposals

73

57

–

665

516

(15)

Balance at: 1 July 2008

130

1,166

Charge for the year

Disposals

51

–

643

–

Balance at 30 June 2009

181

1,809

Net book value 
Balance at 30 June 2009

Balance at 30 June 2008

69

104

1,512

2,004

450

50

(90)

410

108

(3)

515

306

75

(69)

312

53

–

365

150

98

112

–

–

112

–

(112)

17,656

19,785

–

37,441

12,271

–

–

–

–

–

21,045

20,437

(115)

41,367

112

12,658

–

(115)

–

49,712

112

53,910

112

–

–

112

–

(112)

–

–

–

–

–

–

–

–

–

–

–

–

–

–

21

–

21

1,156

648

(84)

1,720

768

(112)

2,376

49,712

37,441

91

51,534

–

39,647

At 30 June 2009 the Group held assets under ﬁnance lease agreements with a net book value of £747,000 (2008: £1,078,000). 
Depreciation of £331,000 (2008: £331,000) has been provided on these assets. 

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40

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

NOTES TO THE ACCOUNTS 
continued

12. Intangible assets

Cost

Balance at: 1 July 2007

Additions

Disposals

Balance at 1 July 2008

Additions

Disposals

Balance at 30 June 2009

Depreciation

Balance at: 1 July 2007

Charge for the year

Disposals

Balance at: 1 July 2008

Charge for the year

Disposals

Balance at 30 June 2009

Net book value 
Balance at 30 June 2009

Balance at 30 June 2008

Computer 
Software 
£’000

374

44

–

418

3

(26)

395

227

96

–

323

51

–

374

21

95

13. Investments
Company
The company is a public limited company domiciled and incorporated in England and Wales.

Shares in subsidiary undertakings

Beginning of the year

Capital contribution

End of year

30 June 2009 
£’000

30 June 2008 
£’000

289

–

289

257

32

289

In June 2008, the Company contributed £32,136 (3,213,562 shares at £0.01 each) to the Avanti Employee Beneﬁt Trust established 
in July 2007. 

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Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

41

14. Subsidiaries
As at the end of the year the group and company held the following investments in subsidiary companies:

Name of subsidiary

Avanti Communications Limited

Avanti Space Limited

Avanti Space 2 Limited

Avanti Space 3 Limited

Avanti Launch Services Limited

Avanti Broadband Limited

Avanti Broadband (Ire) Limited *

Avanti (NI) Limited *

Avanti Communications Infrastructure Company Limited

Avanti Caledonian Broadband Limited

Avanti Employee Beneﬁt Trust

Nature of business

Telecommunication consultancy

Satellite services

Satellite services

Satellite services

Management services

Satellite broadband business

Satellite broadband business

Satellite broadband business

Holding company

Scottish satellite business

Employee beneﬁt trust

All the above entities were incorporated in England & Wales, except for Avanti Launch Services Limited which was incorporated in the 
Isle of Man. The company holds 100% ownership interest and voting power in all the above entities. 

* These entities were incorporated during the 2009 ﬁnancial year.

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42

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

NOTES TO THE ACCOUNTS 
continued

15. Inventories

Group

Finished goods

30 June 2009 
£’000

30 June 2008 
£’000

352

249

The cost of inventories recognised as an expense during the period was £1,705,000 (2008: £720,000).

16. Trade and other receivables

Group

Company

30 June 2009 
£’000

30 June 2008 
£’000

30 June 2009 
£’000

30 June 2008 
£’000

5,389

(16)

5,373

7,484

1,375

–

347

5

245

(188)

57

7,508

872

–

119

100

14,584

8,656

–

–

–

–

–

7,291

347

–

7,638

–

–

–

–

–

5,411

119

–

5,530

Trade receivables

Less provision for impairment of trade receivables

Net trade receivables

Accrued income

Prepayments

Amounts due from group companies

Derivative asset

Other receivables

For discussion of credit risk, refer to Note 22(b).

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Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

43

17. Deferred taxation
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current 
tax liabilities and when the deferred income taxes relate to the same ﬁscal authority. The offset amounts are as follows:

The gross movement on the deferred income tax account is as follows:

Non-current

Deferred tax assets

Deferred tax liabilities

Balance at 1 July

Income tax (expense)/credit

Tax credited directly to equity

Balance at 30 June

Group

30 June 2009

Tax assets

Provisions and deferred income

Share based payment

Unused tax losses

Total tax assets

Tax liabilities

Derivative ﬁnancial asset

Property, plant and equipment

Total tax liabilities

Net deferred tax asset/(liability)

Group

Company

30 June 2009 
£’000

30 June 2008 
£’000

30 June 2009 
£’000

30 June 2008 
£’000

3,617

(3,612)

5

1,037

(752)

(280)

5

2,775

(1,738)

1,037

384

361

292

1,037

102

–

102

88

42

(28)

102

Opening 
balance 
£’000

Charged 
to the P&L 
£’000

Charged 
to equity 
£’000

446

535

1,794

2,775

(33)

(1,705)

(1,738)

1,037

371

(145)

896

1,122

33

(1,907)

(1,874)

(752)

–

(280)

–

(280)

–

–

–

(280)

121

(33)

88

–

66

22

88

Closing 
balance 
£’000

817

110

2,690

3,617

–

(3,612)

(3,612)

5

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44

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

NOTES TO THE ACCOUNTS 
continued

17. Deferred taxation continued
Group

30 June 2008

Tax assets

Provisions and deferred income

Share based payment

Unused tax losses

Total tax assets

Tax liabilities

Derivative ﬁnancial asset

Property, plant and equipment

Total tax liabilities

Net deferred tax asset/(liability)

Company

30 June 2009

Tax assets

Share based payment

Unused tax losses

Total tax assets

Company

30 June 2008

Tax assets

Share based payment

Unused tax losses

Total tax assets

Opening 
balance 
£’000

Charged 
to the P&L 
£’000

Charged 
to equity 
£’000

Closing 
balance 
£’000

–

–

823

823

–

(439)

(439)

384

446

243

971

1,660

(33)

(1,266)

(1,299)

361

–

292

–

292

–

–

–

292

446

535

1,794

2,775

(33)

(1,705)

(1,738)

1,037

Opening 
balance 
£’000

Charged 
to the P&L 
£’000

Charged 
to equity 
£’000

Closing 
balance 
£’000

42

46

88

9

33

42

(28)

–

(28)

23

79

102

Opening 
balance 
£’000

Charged 
to the P&L 
£’000

Charged 
to equity 
£’000

Closing 
balance 
£’000

–

–

–

20

46

66

22

–

22

42

46

88

At 30 June 2009, none of the deferred tax asset of £.3.6m (2008: £2.8m) is expected to be recovered in the next 12 months.  
At 30 June 2009, none of the deferred tax liability of £3.6m (2008: £1.7m) is expected to be settled in the next 12 months. 

AV2412 - AR09 back AW03.indd   44

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Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

45

18. Cash and cash equivalents
For the purpose of the cash ﬂow statement, cash and cash equivalents include cash in hand and at banks net of outstanding overdrafts. 
Cash and cash equivalents at the end of the ﬁnancial year as shown in the cash ﬂow statement can be reconciled to the related items in 
the balance sheet as follows:

Group

Cash and bank balances

Short term deposits

Net cash and cash equivalents

19. Trade and other payables

Current

Trade payables

Social security and other taxes

Other payables

Amounts due to group companies

Derivative liability

Accruals

Non-current

Deferred income

20. Provisions for other liabilities
Group

Onerous lease provision

Balance at 1 July 2008

Used during the year

Balance at 30 June 2009

30 June 2009 
£’000

30 June 2008 
£’000

2,376

22,239

24,615

1,050

34,191

35,241

Group

Company

30 June 2009 
£’000

30 June 2008 
£’000

30 June 2009 
£’000

30 June 2008 
£’000

5,416

132

630

–

795

5,191

12,164

7,169

99

1,672

–

–

4,803

13,743

–

–

–

3,092

795

1,186

5,073

–

–

–

1,886

–

–

1,886

2,899

1,365

–

–

Current 
£’000

Non-current 
£’000

86

(56)

30

129

(66)

63

Total 
£’000

215

(122)

93

The onerous lease provision has been recognised as a result of the unfavourable lease agreement in relation to the Hoxton Square 
premises which is currently above market value. The provision is expected to be utilised in the next four years.

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46

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

NOTES TO THE ACCOUNTS 
continued

21. Loans and other borrowings
Group

30 June 2009

Secured at amortised cost

Bank loans

Bank overdrafts

Other loans

Finance lease liabilities (i)

Current

Non-current

30 June 2009 
£’000

30 June 2008 
£’000

30 June 2009 
£’000

30 June 2008 
£’000

–

–

–

402

402

–

–

21

524

545

42,093

36,172

–

–

481

42,574

–

–

150

36,322

(i)  Finance lease obligations are secured by retention of title to the related assets. The borrowings are on ﬁxed interest rate debt with 

repayment periods not exceeding 5 years.

The company entered into a Senior Finance Term Facility Agreement on 29 July 2007 of £32 million. This money was raised for the sole 
purpose of funding the HYLAS satellite. The loan bears interest at LIBOR plus a margin. The debt (including interest) is not repayable 
until its maturity in 2014. In accordance with IAS 23 – Borrowing Costs, qualifying borrowing costs have been capitalised as part of the 
cost to HYLAS, recognised as Satellite in Construction in Note 11.

AV2412 - AR09 back AW03.indd   46

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Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

47

22. Financial instruments and risk management
The Group is subject to the risks arising from adverse movements in interest rates and foreign currency. The Group uses a variety of 
derivative ﬁnancial instruments to manage these risks. The managing of these risks, along with the day-to-day managing of treasury 
activities is performed by the Finance team.

All ﬁnancial instruments have been measured at amortised cost, except for derivative assets recognised as fair value through the income 
statement. As such ﬁnancial assets being cash and cash equivalents and trade and other receivables are classiﬁed as ‘Loans and Receivables’ 
and ﬁnancial liabilities being trade and other payables and interest bearing liabilities have been classiﬁed as ‘Other Financial Liabilities’. 

a) Market risk
i) Foreign exchange risk management
The Group’s presentation currency is pounds sterling although some transactions are executed in non-sterling currencies, including 
Euros and US Dollars. The transactional amounts realised or settled are therefore subject to the effect of movements in these currencies 
against the pound. It is the Group’s policy to manage the exposures arising using currency options. Hedge accounting is not sought for 
these transactions. 

Financial instruments by currency

30 June 2009

30 June 2008

GBP 
£’000

Euro 
£’000

USD 
£’000

Total 
£’000

GBP 
£’000

Euro 
£’000

USD 
£’000

Total 
£’000

22,718

34,103

56,821

1,380

7,279

8,659

517

24,615

30,788

4

4,449

35,241

4,699

46,081

1,383

5,216

70,696

32,171

7,263

7,267

10

8,656

4,459

43,897

Financial assets

Cash and short term deposits

Trade and other receivables

Financial liabilities

Trade and other payables

(4,377)

(5,290)

(1,939)

(11,606)

(6,407)

(7,129)

(1,572)

(15,108)

Interest bearing liabilities

(42,977)

–

–

(42,977)

(36,867)

–

–

(36,867)

(47,354)

(5,290)

(1,939)

(54,583)

(43,274)

(7,129)

(1,572)

(51,975)

Net ﬁnancial position

9,467

3,369

3,277

16,113

(11,103)

138

2,887

(8,078)

At 30 June 2009, if the Euro had weakened/strengthened against the sterling by 5% with all other variables held constant, post 
tax proﬁt would have worsened by £127,000 or improved by £116,000 (2008: post tax loss would have improved by £5,000 
or decreased by £5,000).

At 30 June 2009, if the US Dollar had weakened/strengthened against the sterling by 5% with all other variables held constant,  
post tax proﬁt would have worsened by £44,000 or improved by £49,000 (2008: post tax loss would have increased by £109,000 
or decreased by £99,000).

ii) Cash ﬂow 
The Group only borrows in pounds sterling at ﬂoating rates of interest and does not seek to mitigate the effect of adverse 
movements in interest rates.

Cash and deposits earn interest at ﬂoating rates based on banks’ short term treasury deposit rates. Short-term trade and other 
receivables are interest free. 

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48

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

NOTES TO THE ACCOUNTS 
continued

22. Financial instruments and risk management continued
b) Credit risk management
The Group’s principal ﬁnancial assets are cash and short term deposits and trade and other receivables. The Group has no signiﬁcant 
concentrations of credit risk, with the exception of the receivable from Spacex of £4.6 million. Cash and cash equivalents are deposited 
with high-credit quality ﬁnancial institutions with a minimum rating of A+ and trade receivables are principally from well established 
corporations. The credit quality of major customers is assessed before trading commences taking into account its ﬁnancial position, past 
experience and other factors. 

The ageing of trade receivables which have not been impaired was as follows:

Not past due
£’000

1-30 days
£’000

31-60 days
£’000

60+ days
£’000

30 June 2009

30 June 2008

4,619

6

704

1

36

–

14

50

Total
£’000

5,373

57

Movements in the provision for impairment of trade receivables are as follows:

At 1 July 2008

Allowances made in the period

Amounts used and reversal of unused amounts

Bad debts written off

At 30 June 2009

30 June 2009 
£’000

30 June 2008 
£’000

188

27

(11)

(188)

16

–

–

188

–

188

The provision of £16,267 (2008: £188,000) have been raised against gross trade receivables of £5,389,000 (2008: £245,000).

c) Liquidity risk management
The Group has a fully drawn debt facility which provides adequate liquidity.

The following table analyses the Group’s ﬁnancial liabilities into relevant maturity groupings based on the expected undiscounted cash ﬂows.

Within 1 
year 
£’000

1 to 2 
years 
£’000

2 to 5 
years 
£’000

Over 5 
years 
£’000

Contractual 
amount 
£’000

Carrying 
amount 
£’000

30 June 2009

Bank loans

Other loans

Finance leases

30 June 2008

Bank loans

Other loans

Finance leases

–

–

455

–

22

563

–

–

518

–

–

156

–

–

–

–

–

–

92,888

92,888

42,093

–

–

–

–

–

–

99,453

99,453

36,172

–

–

22

719

21

674

The bank loan contractual amount is based on principal plus interest repayable on maturity in 2014. The interest repayable has been 
based on the average LIBOR for the 2008 and 2009 ﬁnancial years plus 10.5% margin.

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Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

49

d) Fair value of ﬁnancial instruments
The directors consider the carrying value of all ﬁnancial assets and liabilities to be approximate to their fair values.

e) Capital risk management 
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide 
returns for shareholders and beneﬁts for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

The capital structure of the Group consists of debt, which includes the borrowings disclosed in Note 20, cash and cash equivalents 
(note 17) and equity attributable to equity holders of the parent (Note 22 and 23), comprising ordinary share capital, share premium, 
other reserves and retained earnings.

23. Share capital – issued and fully paid

30 June 2009

At 1 July 2008

Shares issued but not fully paid

Less transaction costs

At June 2009

Number of 
shares 
’000

Group Ordinary 
shares 
£’000

30,922

14,000

–

44,922

277

140

–

417

Company 
Ordinary
shares 
£’000

Group and 
Company
Share Premium 
£’000

309

140

–

449

3,858

31,360

(1,177)

34,041

On 29 June 2009, the Group issued 14,000,000 shares at £2.25 per share.  The shares issued were fully paid on 3 July 2009.

The total authorised number of ordinary shares is 100 million shares (2008: 40 million) at £0.01 each.

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50

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

NOTES TO THE ACCOUNTS 
continued

24. Reserves
Group

2008

At 1 July 2007

Loss for the year

Premium on shares issued

Share based payments

Tax expense taken directly to reserves

At 30 June 2008

2009

At 1 July 2008

Proﬁt for the year

Premium on shares issued

Share based payments

Tax credit taken directly to reserves

At 30 June 2009

Company

2008

At 1 July 2007

Loss for the year

Premium on shares issued

Share based payments

Tax credit taken directly to reserves

At 30 June 2008

2009

At 1 July 2008

Loss for the year

Premium on shares issued

Share based payments

Tax credit taken directly to reserves

At 30 June 2009

Share
premium 
£’000

Retained 
earnings 
£’000

Total
reserves 
£’000

–

–

3,858

–

–

28,431

(994)

–

871

292

28,431

(994)

3,858

871

292

3,858

28,600

32,458

3,858

–

30,183

–

–

28,600

1,049

–

652 

(280)

32,458

1,049

30,183

652 

(280)

34,041

30,021

64,062

Share
premium 
£’000

Retained 
earnings 
£’000

Total
reserves 
£’000

–

–

3,858

–

–

–

(239)

–

71

22

3,858

(146)

3,858

–

30,183

–

–

34,041

(146)

(14)

–

154

(28)

(34)

–

(239)

3,858

71

22

3,712

3,712

(14)

30,183

154

(28)

34,007

The share premium account, representing the premium on allotment of shares, is not available for distribution.

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Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

51

25. Share based payments
The fair value recognised over the vesting period of share options and award granted 2009 was £652,000 (2008: £871,000).  
All share based payment plans are equity settled and details of these plans are set out below.

The Company has established three share option schemes: The Avanti Communications Group plc approved Enterprise Management 
Incentives Scheme (EMI), the Avanti Communications Group plc Unapproved Share Option Plan and a Long Term Incentive Plan (LTIP). 
The 2009 charges and weighted average fair value for each of the plans above were as follows:

2009 charge

Weighted average fair value

To date all options have been granted with a strike price of 1 pence.

EMI

£150,000

£2.04

Unapproved 
plan

£127,000

£1.76

LTIP

£375,000

£0.67

In July 2007 an Employee Beneﬁt Trust (EBT) was established. The EBT is managed by Bedell Trustees in Jersey. The results of the EBT 
have been consolidated into the Group’s results.

The options granted under each scheme are as follows:

Outstanding at 
start of year

Granted 
during year

Forfeited 
in year

Exercised during 
the year

Outstanding at 
end of year

EMI

Number of options

Weighted average share price

Unapproved scheme

Number of options

Weighted average share price

LTIP

Number of options

Weighted average share price

344,932

£2.23

107,863

£1.86

2,551,743

£1.45

–

–

50,000

£1.86

–

–

(4,000)

£1.82

–

–

–

–

(1,427)

£2.50

(50,000)

£1.86

(39,325)

£1.78

339,505

£2.23

107,863

£1.86

2,512,418

£1.44

24,138 of the EMI options were exercisable from 30 June 2009. No Unapproved Scheme or LTIP options were exercisable at 30 June 2009. 

The exercise price of options outstanding at 30 June 2009 was £0.01 and the weighted average remaining contractual life was 4.7 years.

Each model has slightly different exercise criteria and therefore separate valuation models were used.

EMI Scheme
The EMI scheme was used to issue options to staff on 24 July 2007 at an exercise price of 1p. The new options are issued for 10 
years with 25% vesting at the end of years 3, 4, 5 and 6. Those staff who had previously held unvested options in the former parent 
company at the time of the de-merger were given a shorter vesting period for these new options. There are no performance criteria 
associated with these options and are exercisable as long as the option holder remains an employee of the Company.

The weighted average inputs to the Black-Scholes model are as follows:

Share price at date of Grant 
Weighted average exercise price 
Expected volatility 
Expected Life 
Risk free rate 
Expected dividend yield 

£2.16
£0.01
35%
4 years
5.5%
1% 

Expected volatility was determined by calculating the actual volatility of the Group’s share price since ﬂotation. The expected life used 
in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and 
behavioural considerations.

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52

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

NOTES TO THE ACCOUNTS 
continued

25. Share based payments continued
Unapproved Scheme
The unapproved scheme was established during 2007. The options are issued for 10 years with 25% vesting at the end of years 3, 4, 
5 and 6 (with the exception of one former employee who had the ability to exercise in April 2009). There are no performance criteria 
associated with these options and are exercisable as long as the option holder remains with the Company. 

The weighted average inputs to the Black-Scholes model are as follows:

Share price at date of Grant 
Weighted average exercise price 
Expected volatility 
Expected Life 
Risk free rate 
Expected dividend yield 

£1.86
£0.01
35%
4 years
5.5%
1%

Expected volatility was determined by calculating the actual volatility of the Group’s share price since ﬂotation. The expected life used 
in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and 
behavioural considerations.

Long Term Incentive Plan
The LTIP has been established by the Company with approval from the Remuneration Committee to reward and incentivise the Executive 
Directors and senior managers of the Company.

The LTIP allocations are in separate funds within the EBT and are subject to a discretionary Trust. The shares are subject to automatic 
revocation if certain criteria (set out below) are not met and continue to be revocable for the entire Trust period.

The allocations into the LTIP vary for each executive. The total allocation to each executive is split into three separate tranches:

i) The Core Tranche
This element of the grant becomes exercisable in 7 equal instalments. The ﬁrst instalment was exercisable on grant and the second on 
30 June 2008. The remaining 5 are yearly thereafter. 

ii) The Exceptional Achievement Tranche
This element of the grant is only exercisable if the Market Value of a Share exceeds £5 for a consecutive period of six months before 
30 June 2010. 

iii) The Extraordinary Achievement Tranche
This element of the grant is only exercisable if the Market Value of a Share exceeds £10 for a consecutive period of six months before 
30 June 2013. 

Number of options:

Executive Directors

Senior managers

Core

Exceptional

Extraordinary

Total

1,053,722

139,238

1,192,960

610,125

69,445

679,570

609,768

69,445

679,213

2,273,615

278,128

2,551,743

The Core Tranche has been modelled using the Black-Scholes model while the Exceptional and Extraordinary Tranches have been 
modelled using the Monte-Carlo model, allowing for the market-based performance conditions.

The weighted average inputs to both models are as follows:

Share price at date of Grant 
Weighted average exercise price 
Expected volatility 
Expected Life 
Risk free rate 
Expected dividend yield 

£1.45
£0.01
35%
5 years
5.5%
1%

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Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

53

Expected volatility was determined by calculating the actual volatility of the Group’s share price since ﬂotation and also taking into 
account historic volatility of other companies within the same sector who have been listed for longer periods. The expected life used 
in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and 
behavioural considerations.

26. Obligations under ﬁnance leases
Leasing arrangements
Finance leases relate to capital equipment with lease terms of 5 years. The Group has the option to purchase the equipment for a 
nominal value at the conclusion of the lease agreement. The Group’s obligations under ﬁnance leases are secured by the lessor’s title to 
the leased assets.

Finance lease liabilities

Minimum lease payments

Present value of lease payments

30 June 2009 
£’000

30 June 2008 
£’000

30 June 2009 
£’000

30 June 2008 
£’000

No later than one year

Later than 1 year no later than 5 years

Less future ﬁnance charge

Present value of minimum lease payments

455

518

973

(90)

883

563

156

719

(45)

674

402

481

883

–

883

524

150

674

–

674

Included in the ﬁnancial statements as:

Current borrowings

Non-current borrowings

Present value of minimum lease payments

30 June 2009 
£’000

30 June 2008 
£’000

402

481

883

524

150

674

27. Obligations under operating leases
The Group’s future aggregate minimum lease payments under non-cancellable operating leases are as follows:

No later than 1 year

Within 1 to 5 years

After 5 years

30 June 2009

30 June 2008

Land & 
buildings 
£’000

345

954

1,125

2,424

Other 
£’000

–

–

–

–

Land & 
buildings 
£’000

358

1,337

1,389

3,084

Other 
£’000

8

–

–

8

Operating lease commitments principally relate to leased ofﬁce space of the Group’s head ofﬁce located at 74 Rivington Street, London. 

The total of future sub-lease payments expected to be received under non-cancellable sub leases at 30 June 2009 is £150,000 over 3 
years (as at 30 June 2008: £200,000 over 4 years). 

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54

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

NOTES TO THE ACCOUNTS 
continued

28. Capital commitments
At 30 June 2009, Avanti Space Limited had contracted for satellite expenditure totalling £66.4m.  Part of the total price, amounting to 
€15.5 million, is due to be paid directly from the European Space Agency (ESA) to the satellite contractor, Astrium EADS Limited and 
€12.5 to Arianespace thereby reducing the commitment due directly from the Group.

29. Related party transactions and directors’ emoluments
Transactions with Directors – Group
Details of the Directors’ remuneration are set out below in aggregate for each of the categories speciﬁed in the Companies Act 2006.

Salaries and other short term employee beneﬁts

LTIP contribution

Post employment beneﬁts

30 June 2009

30 June 2008

741

572

43

1,356

733

–

634

1,367

Pension contributions amounting to £43,000 (2008: £634,000) were made into personal pension schemes in respect of four  
(2008: three) of the Directors.

During the year ended 30 June 2009, one Director exercised 39,325 shares of their LTIP entitlement. The shares were exercised at  
1 pence/share. The aggregate gain on the share exercise was £70,000 (2008: nil).

The amount of assets receivable by the Directors under the LTIP scheme at 30 June 2009 were £6.3 million (2008: £6.4 million).

The emoluments of the highest paid Director were £468,000 (2008: £602,000), made up of:

Salaries and other short term beneﬁts

Bonus

LTIP contribution

Post employment beneﬁts (current year)

Current year recurring emoluments

Pension contributions in relation to prior year

Total emoluments

30 June 2009

30 June 2008

236

 –

212

20

468

–

468

215

30

–

165

410

192

602

The amount of assets receivable by the highest paid Director under the LTIP scheme at 30 June 2009 were £3.0 million (2008: £3.0 million).

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Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

55

Transactions with Directors and key management personnel - Group and company
Details of the remuneration of Directors and key management personnel are set out below in aggregate for each of the categories 
speciﬁed in IAS 24 “Related Party Disclosures”.

Salaries and other short term employee beneﬁts

LTIP contribution

Post employment beneﬁts

Share based payments

Group

Company

30 June 2009

30 June 2008

30 June 2009

30 June 2008

1,051

572

115

429

2,167

1,151

–

683

751

2,585

264

254

–

32

550

293

–

188

44

525

Other related party transactions
Subsidiaries
Intra-group transactions are eliminated on consolidation and are not reported in the group accounts. Transactions between the company 
and its Management fee charged to:

Avanti Communications Limited (‘ACL’)

Avanti Broadband Limited (‘ABL’)

Avanti Space Limited (‘ASL’)

Avanti (NI) Limited

Avanti Caledonian Broadband Limited

30 June 2009

30 June 2008

610

1,158

719

186

1,091

3,764

556

332

1,200

–

–

2,088

30. Contingent liabilities 
The group’s bankers have provided guarantees totalling £7 million to certain customers in the event of a failure to operationally deploy 
the HYLAS satellite. The group has arranged launch and in-orbit insurance on HYLAS.

31. Post balance sheet event
The Group received £31,500,000 on 3 July 2009 in payment for the 14,000,000 shares issued on 29 June 2009. 

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56

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the Annual General Meeting of 
the Company for 2009 will be held on 27 October 2009 
at 10.00 am at 74 Rivington Street, London EC2A 3AY, for 
the following purposes:

(a) 

the allotment of equity securities in connection with 
an invitation or offer of equity securities to the holders 
of ordinary shares in the capital of the Company 
(excluding any shares held by the Company as 
treasury shares (as deﬁned in section 724(5) of the 
Act)) on a ﬁxed record date in proportion (as nearly 
as practicable) to their respective holdings of such 
shares or in accordance with the rights attached to 
such shares (but subject to such exclusions or other 
arrangements as the directors may deem necessary or 
expedient in relation to fractional entitlements or as a 
result of legal or practical problems under the laws of, 
or the requirements of any regulatory body or any stock 
exchange in any territory or otherwise howsoever); 

(b) 

the allotment of equity securities pursuant to the 
exercise of any options granted by the Company at the 
date of this resolution; and

(c) 

the allotment, otherwise than pursuant to paragraph 
(a) above, of equity securities up to an aggregate 
nominal value equal to £60,000, and unless previously 
renewed, revoked, varied or extended, this power shall 
expire on the earlier of the date falling 15 months 
after the date of the passing of this resolution and the 
conclusion of the next annual general meeting of the 
Company except that the Company may at any time 
before such expiry make an offer or agreement which 
would or might require relevant securities to be allotted 
after such expiry and the directors may allot relevant 
securities in pursuance of such an offer or agreement 
as if this power had not expired.

By Order of the Board

Nigel Fox
Secretary

Registered ofﬁce: 
74 Rivington Street, London EC2A 3AY 

Registered number: 
6133927

24 September 2009

Ordinary business

1. 

To receive the accounts for the year ended 30 June 2009, 
together with the reports of the Directors and Auditors therein.

2. 

To elect Matthew O’Connor as a Director of the Company.

3. 

To re-elect David Bestwick as a Director of the Company.

4. 

To re-elect Richard Vos as a Director of the Company.

5. 

To re-elect PricewaterhouseCoopers LLP as auditors  
to the Company.

Special business

6. 

That the Directors are generally and unconditionally 
authorised pursuant to section 551 of the Companies Act 
2006 (The “Act”) (in substitution for all or such existing 
authorities which are hereby revoked) to allot shares in the 
Company, and grant rights to subscribe for or to convert any 
security into shares of the Company (such shares, and rights 
to subscribe for or to convert any security into shares of the 
Company being “relevant securities”) at such times and to 
such persons, on such terms and in such manner as they 
think ﬁt, up to an aggregate nominal amount of £60,000, 
such authority to expire on 28th February 2011 or at the 
conclusion of the Annual General Meeting next following 
the date on which this resolution is passed (whichever is 
earlier), save that the Company may before such expiry 
make any offer or agreement which would or might require 
relevant securities to be allotted after such expiry and the 
Directors may allot relevant securities in pursuance of such 
offer or agreement as if that authority had not expired.

Special resolutions

7. 

That, in substitution for any equivalent authorities and 
powers granted to the directors prior to the passing of this 
resolution, the directors be and they are hereby empowered 
pursuant to section 570(1) of the Act to allot equity 
securities (as deﬁned in section 560 of the Act) of the 
Company wholly for cash pursuant to the authority of the 
directors conferred by resolution 6 above, and/or where such 
an allotment constitutes an allotment of equity securities by 
virtue of section 560(2) of the Act, as if section 561(1) 
of the Act did not apply to such allotment provided that the 
power conferred by this resolution shall be limited to:

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NOTES TO NOTICE OF ANNUAL GENERAL MEETING

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

57

1. Proxies
A member who is entitled to attend, speak and vote at the 
Annual General Meeting may appoint a proxy to attend, speak 
and vote instead of him. A proxy need not be a member of the 
Company but must attend the meeting in order to represent 
you. A member may appoint more than one proxy provided each 
proxy is appointed to exercise rights attached to different shares 
(so a member must have more than one share to be able to 
appoint more than one proxy). A Form of Proxy accompanies this 
document. The notes to the Form of Proxy include instructions 
on how to appoint the Chairman of the Annual General Meeting 
or another person as a proxy and how to appoint a proxy 
electronically. To be valid the Form of Proxy must reach the 
Company’s registrar, Neville Registrars at Neville House,  
18 Laurel Lane, Halesowen, West Midlands B63 3DA by  
at least 48 hours before the Annual General Meeting. 

2. Documents on display
The following documents are available for inspection at the 
registered ofﬁce of the Company during the usual business hours 
on any weekday (Saturday, Sunday or public holidays excluded) 
from the date of this notice until the conclusion of the Annual 
General Meeting and will also be available for inspection at the 
place of the Annual General Meeting from 9:30 a.m. on the day 
of the Annual General Meeting until its conclusion:

(a) 

copies of the executive directors’ service contracts with the 
Company and any of its subsidiary undertakings and letters 
of appointment of the non-executive directors; and

(b) 

the Register of Directors’ Interests in the share capital  
of the Company.

3. Right to attend and vote
The Company, pursuant to Regulation 41 of the Uncertiﬁcated 
Securities Regulations 2001, speciﬁes that only those 
shareholders registered in the register of members of the 
Company at 10.00 a.m. on 23 October 2009 (or, if the Annual 
General Meeting is adjourned, 2 working days before the time 
ﬁxed for the adjourned Annual General Meeting) shall be entitled 
to attend and vote at the Annual General Meeting in respect of 
the number of shares registered in their name at that time. In 
each case, changes to the register of members after such time 
shall be disregarded in determining the rights of any person to 
attend or vote at the Annual General Meeting.

4. Please note that communications regarding the matters set out in 
this Notice of Annual General Meeting will not be accepted in electronic 
form, other than as speciﬁed in the accompanying Form of Proxy.

5. In order to facilitate voting by corporate representatives at 
the Annual General Meeting, arrangements will be put in place at 
the Annual General Meeting so that (a) if a corporate shareholder 
has appointed the chairman of the Annual General Meeting as 
its corporate representative to vote on a poll in accordance with 
the directions of all of the other corporate representatives for 
that shareholder at the Annual General Meeting, then on a poll 
those corporate representatives will give voting directions to 
the chairman and the chairman will vote (or withhold a vote) 
as corporate representative in accordance with those directions; 
and (b) if more than one corporate representative for the same 
corporate shareholder attends the Annual General Meeting but 
the corporate shareholder has not appointed the chairman of 
the Annual General Meeting as its corporate representative, a 
designated corporate representative will be nominated, from 
those corporate representatives who attend, who will vote on 
a poll and the other corporate representatives will give voting 
directions to that designated corporate representative. Corporate 
shareholders are referred to the guidance issued by the Institute of 
Chartered Secretaries and Administrators on proxies and corporate 
representatives (www.icsa.org.uk) for further details of this 
procedure. The guidance includes a sample form of appointment 
letter if the chairman is being appointed as described in (a) above.

Introduction
After his opening remarks, the Chairman will explain in the detail 
the procedures for the conduct of the meeting, particularly for 
asking questions. The resolutions which are set out in the Notice 
of Meeting will then be put to the meeting.

How to ask questions
At the meeting, shareholders will be given the opportunity to ask 
questions. Please explain the nature of your question and give 
your name and address. 

You may be asked to wait until called upon to speak. Please 
remember to state your name before asking your question.

Time
The doors will open at 9.30 am and the meeting will start promptly 
at 10.00 am.

Cameras, tape recorders etc.
No cameras, video recorders, tape recorders or mobile phones will 
be allowed into the meeting.

Registration
To ensure your entrance to the meeting is dealt with promptly, 
please bring your attendance card with you and register at the 
registration desk inside the building.

Shareholder information
If you have any questions concerning your shareholding, please 
speak to Avanti Communications Group plc staff.

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58

Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

NOTES TO NOTICE OF ANNUAL GENERAL MEETING
continued

Important
If you have questions about the meeting, or if you need any assistance, please telephone Georgina Campbell-Harris at Avanti 
Communications Group plc on 0207 749 1600 during normal working hours.

Analysis of Shareholders

Range of holdings
Less than 10,001
10,001-20,000
20,001-50,000
50,001-100,000
100,001-150,000
150,000-300,000
301,000-500,000
500,001-1,000,000
1,000,001 + 

Financial Calendar
27 October 2009 
Annual General Meeting

Number 
of shares

Number 
of shareholders

2,105,942
727,475
1,744,991
 2,074,367
 1,321,108
 3,570,647
5,471,487
4,247,372
23,658,676
44,922,065

956
49
56
27
11
15
13
 6
 6
1,139

February 2010 
Interim results for the six months ended 31 December 2009

September 2010 
Preliminary results for the year ended 30 June 2010

Shareholder information
Annual General Meeting
The Annual General Meeting will be held at 74 Rivington Street, London, EC2A 3AY.

Details of the resolutions to be proposed at the Annual General Meeting are contained in the Notice of Annual General Meeting on page 56.

Dividend
The Directors have not recommended the payment of a dividend for the year ended 30 June 2009.

Listing
Ordinary shares of Avanti Communications Group plc are traded on AIM.

The share price is available from the Avanti website at www.avantiplc.com and in The Financial Times and The Times.

Registrars
All administrative enquiries relating to shareholdings should be directed to The Registrar, Neville Registrars Limited, Neville House,  
18 Laurel Lane, Halesowen, West Midlands B63 3DA.

Avanti’s services
Information about Avanti’s services can be found at www.avantiplc.com

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Avanti Communications Group plc
Annual Report and Accounts for the year ending 30 June 2009

59

FORM OF PROXY 
for Avanti Communications Group plc
(incorporated and registered in England and Wales under number 6133927) (the ‘Company’)

For use by holders of ordinary shares of 1p each in the Company (the ‘Shareholders’) at the annual general meeting of the Company 
to be held at 74 Rivington Street, London EC2A 3AY at 10.00 am on 27 October 2009 (the ‘AGM’). Please read the Notice of AGM 
and associated notes.

I/We*

of

being Shareholder(s)* entitled to attend and vote at meetings of Shareholders, hereby appoint the Chairman of the AGM †

as my/our proxy to attend, speak and vote for me/us and on my/our behalf at the AGM and at any adjournment thereof in relation to 
the resolutions speciﬁed in the notice of the AGM dated 22 September 2009 (the “Resolutions”) and any other business (including 
adjournments and amendments to the Resolutions) which may properly come before the AGM or any adjournment thereof.

† If it is desired to appoint some other person to be your proxy: 
(i) 
(ii) 
(iii) 

delete ‘the Chairman of the AGM’;
initial the alteration; and 
insert the full name, title and address of the person you wish to appoint as your proxy IN BLOCK CAPITALS.

* Delete as appropriate.

Please indicate with an ‘X’ in the appropriate space how you wish your proxy to vote on the Resolutions set out in the Notice.

Ordinary Resolutions

For

Against

Vote 
withheld 
(note 2)

Discretionary 
(note 2)

1

2

3

4

5

6

To receive the accounts for the year ended 30 June 2009,  
together with the reports of the Directors and Auditors therein.

To elect Matthew O’Connor as a Director of the Company.

To re-elect David Bestwick as a Director of the Company. 

To re-elect Richard Vos as a Director of the Company.

To re-elect PricewaterhouseCoopers LLP as auditors to the Company.

To authorise the directors to allot relevant securities.

Special Resolutions

7

To disapply the statutory pre-emption rights in certain circumstances.

Number of shares: 

Class of shares:

This proxy appointment is one of a multiple proxy appointment (Note 4)

Dates: 

Signed: 

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1. 

2. 

3. 

4. 

Only holders of ordinary shares of 1p each in the capital of the Company are 
entitled to attend, speak and vote at the AGM and may appoint one or more 
proxies to attend, speak and vote instead of them. 

Please indicate by inserting an “X” in the appropriate box how you wish your 
vote to be cast on the Resolutions. If you mark the box “vote withheld” it will 
mean that your proxy will abstain from voting and, accordingly, your vote will 
not be counted either for or against the relevant resolution. If you mark the box 
“discretionary” or fail to select any of the given options, the proxy can vote as he 
or she chooses or can decide not to vote at all.

If the proxy is being appointed for less than your full entitlement, please indicate 
above your signature the number and class of shares in relation to which that 
person is authorised to act as your proxy. If left blank, your proxy will be deemed 
to be authorised in respect of your full entitlement.

A member may appoint more than one proxy provided each proxy is appointed 
to exercise rights attached to different shares (so a member must have more 
than one share to be able to appoint more than one proxy). A separate form of 
proxy must be deposited for each proxy appointed. Further copies of this form 
may be obtained by contacting Neville Registrars Limited between 9.00am and 
5.00pm (London time) Monday to Friday on 0121 585 1131 from within the 
UK or +44 121 585 1131 if calling from outside the UK or you may photocopy 
this form. If you appoint multiple proxies, please indicate above your signature the 
number and class of shares in relation to which the person named on this form is 
authorised to act as your proxy. Please also indicate by ticking the box provided if 
the proxy instruction is one of multiple instructions being given. All forms must be 
signed and returned to Neville Registrars Limited, Neville House, 18 Laurel Lane, 
Halesowen, West Midlands B63 3DA together in the same envelope. Where 
multiple proxies are appointed, failure to specify the number of shares to which 
this proxy appointment relates, or specifying a number which exceeds the number 
held by the member when totalled with the number speciﬁed on other proxy 
appointments by the same member, will render all appointments invalid.

5. 

To be valid, this form of proxy together with any power of attorney or other 

authority under which it is signed or a notarially certiﬁed copy of such power or 
authority must reach the Company’s registrars, Neville Registrars Limited, Neville 
House, 18 Laurel Lane, Halesowen, West Midlands B63 3DA by no later than 48 
hours before the time of the AGM (or if the AGM is adjourned, 48 hours before 
the time ﬁxed for the adjourned AGM). 

6. 

7. 

8. 

The appointment of a proxy will not preclude a member from attending the 
AGM and voting in person but if he or she does so this proxy appointment will 
terminate automatically.

In the case of a company, this form of proxy must be executed under the 
common seal or signed on its behalf by an ofﬁcer or attorney of the company.

In the case of joint holders, the proxy appointment of the most senior holder will 
be accepted to the exclusion of any appointments by the other joint holders. For 
this purpose, seniority is determined by the order in which the names are stated 
in the register of members of the Company in respect of the joint holding.

9. 

Any alterations made to this form of proxy should be initialled.

10. 

A member wishing to change his or her proxy instructions should submit a new 
proxy appointment using the methods set out in note 4 above. A member who 
requires another form of proxy should contact Neville Registrars Limited, Neville 
House, 18 Laurel Lane, Halesowen, West Midlands B63 3DA. The time limits for 
proxy appointments in note 5 also apply to changes to proxy instructions. Any 
change to proxy instructions received after that time will be disregarded. If a 
member submits more than one valid proxy appointment, the appointment 
received last before the time limit in note 3 will take precedence.

11. 

A member wishing to revoke his or her proxy appointment should do so by 
sending a notice to that effect to the Company’s registrars to the address set out 
in note 5. The revocation notice must be received by the Company’s registrars by 
the time limit set out in note 5. Subject to note 6, any revocation notice received 
after this time will not have effect.

12. 

Please note that communications regarding the matters set out in this form of 
proxy will not be accepted in electronic form.

Third Fold

Please 
afﬁx 
stamp 
here

F

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Neville Registrars
Neville House
18 Laurel Lane
Halesowen
West Midlands
B63 3DA

Second Fold

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We sell wholesale satellite broadband
to service providers.

Chairman
John Brackenbury CBE

Chief  Executive
David Williams

Group Finance 
Director
Nigel Fox

“With the launch of HYLAS we hope and expect that Avanti will become one of the 
World’s most exciting telecommunications businesses – a pioneer, a market leader 
and a British national champion”

“ Chairman’s Statement, page 8

“Satellite manufacture has proceeded smoothly, the launch has been de-risked and our 
market opportunity conﬁ rmed with impressive sales growth”

“ Chief  Executive’s Report, page 10

“With the wise counsel of  a very experienced board, we made the right decisions to 
protect and enhance our balance sheet through the credit crunch: securing debt ﬁ nance 
early in the project, keeping our cash in safe custody and hedging currency and interest 
rate risks effectively”

“ Finance and Operating Review, page 15

CONTENTS

HIGHLIGHTS 

BUSINESS PROFILE

YEAR IN REVIEW

Chairman’s statement

Chief  Executive’s report

Finance and operating review

GOVERNANCE

Board of  Directors

Employees 

Corporate social responsibility

Directors’ report

Corporate governance report 

FINANCIAL STATEMENTS

Independent auditors’ report 

Consolidated income statement

Consolidated balance sheet

Company balance sheet

Cash ﬂ ow statements

Statements of  changes in equity

Notes to the ﬁ nancial statements

SHAREHOLDER INFORMATION

Notice of  Annual General Meeting

Ofﬁ cers and professional advisers

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OFFICERS AND PROFESSIONAL ADVISERS

Bankers
HSBC Bank Plc
70 Pall Mall
London
SW1Y 5EZ

Solicitors
Osborne Clark
2 Temple Black East
Temple Quay
Bristol
BS1 6EG

Registered Auditors
PricewaterhouseCoopers LLP
1 Embankment Place
London 
WC2N 6RHT

Directors
F E J G Brackenbury CBE
Chairman

D J Williams
Chief Executive

D J Bestwick
Chief Technology Ofﬁ cer

N A D Fox 
Group Finance Director

M J O’Connor
Chief Operating Ofﬁ cer

D A Foster 
Non-Executive Director

W P Wyatt 
Non-Executive Director

C R Vos
Non-Executive Director

I C Taylor MBE, MP
Non-Executive Director

Secretary
N A D Fox

Registered Ofﬁ ce
74 Rivington Street
London
EC2A 3AY

Company Number
6133927

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Avanti Communications Group plc 

74 Rivington Street
London EC2A 3AY

Tel: +44 (0)20 7749 1600
www.avantiplc.com

Avanti Communications Group plc
Annual Report & Accounts 2009

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