Memorandum 62
Submisison from Avanti-Screenmedia
BACKGROUND
1. Avanti-Screenmedia has been involved
in the downstream applications of satellite communications since
the company's creation in 1996. Avanti is a public company listed
on the Alternative Investment Market of the London Stock Exchange.
It employs approximately 120 staff, had a turnover to June 2006
of £12 million and made profits in excess of £3 million.
From a starting capital of £2,500, the company is now valued
in excess of £76 million.
2. Avanti owes much of success to a long
and productive relationship with the European Space Agency's ARTES
Programme, as supported by the British National Space Centre.
THE BENEFITS
OF THE
ESA ARTES PROGRAMME
3. Avanti first began working with ARTES
in 1998, successfully obtaining funding to support the ABARIS
project to deliver multimedia content to consumers via satellite.
At this time the company had less than 15 employees. The project
allowed Avanti to develop the key technologies and techniques
which later enables it to build its current "screenmedia"
business which delivers bespoke multimedia and TV channels to
retailers, shopping malls and bars. The screenmedia service now
employs approximately 90 staff and forms the core of Avanti's
current business. The revenues flowing to government through staff
income tax and corporation tax amount to more than x time the
original investment from BNSC/ESA.
4. On this and several other projects, Avanti
has gained a reputation for utilising small amounts of ARTES funding,
matched by Avanti's own R&D funds, to build strong, sustainable
businesses. ARTES has been found to be far superior to participation
in the EC's Framework Programmes as it is more responsive and
targeted more closely towards the market's needs.
5. Avanti's most recent activity associated
with the ARTES programme is the HYLAS project. HYLAS is a highly
innovative communications satellite which will employ a series
of new payload technologies developed by Astrium with support
from the BNSC and ESA. HYLAS will be the first satellite of its
kind in Europe to offer broadband and HDTV services, helping to
solve the Digital Divide problem in rural Europe and providing
broadcast capacity to support High Definition TV programming to
complement limited terrestrial digital TV spectrum.
6. The HYLAS project is a unique initiative
which combines ARTES funding with a large private investment from
Avanti's shareholders. The ARTES funding covers half of the costs
of the research and development activities on the payload, while
Avanti's investment will pay for the satellite platform, the launch
and insurance.
7. Whilst €35 million is being provided
through ARTES over four years, Avanti's investment, which was
raised through a combination of new equity and debt, totals some
€70 million. Thus, HYLAS is a unique example of the use of
government funding de-risking an innovative project to the extent
that private sector funding can be brought to bear. The net effect
of this combination of public and private financing has been to
reduce the development lifecycle for new satellite technologies
from eight years or more down to four. This improvement in innovation
"productivity" has enabled Avanti to leapfrog other
satellite operators and bring new services to market in advance
of other European operators.
8. The success of this model was possible
only because of the unique combination of complementary expertise
found in the UK:
— An advanced satellite manufacturer
in the form of Astrium UK.
— An entrepreneurial satellite operator—Avanti.
— The world's premier market for satellite
finance in the City of London.
— A world leading insurance market,
also based in the City.
9. Avanti is convinced that the ARTES Programme,
as operated by ESA with BNSC support, provides enormous opportunities
for businesses to benefit from this combination of skills, experience
and expertise found in the UK. We therefore recommend that the
ARTES programme should form a centrepiece of UK investment in
ESA with a long-term budget in excess of €40 million per
annum, which would provide a platform for a number of initiatives
similar to HYLAS.
CONCLUSION
10. ARTES has proved to be an extremely
useful and productive tool for stimulating R&D in satellite
technologies, generating investment from outside of the space
industry and leveraging government R&D funds to achieve demonstrable
commercial returns. We firmly believe that a reinvigorated UK
participation in the programme will continue to bring exceptional
returns for UK industry and provide further significant opportunities
for exports in space products and services.
11. Avanti would be pleased to provide oral
evidence to the Committee regarding our experiences with the ARTES
programme.
October 2006
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