Grant of Options

09 March 2012

Alternative Networks plc

("Alternative Networks" or the "Company")

Grant of options in accordance with existing share-based incentive awards

Pursuant to the long-term incentive plan adopted on 24 February 2010, known as the Value Creation Plan ("VCP"), the Company has today granted a number of nil cost share options to the executive directors of the Company under the VCP, as set out further below.

Background

The VCP scheme is a 3 year plan with three annual measurement dates, 31 December 2010, 2011 and 2012. After each measurement date and subject to performance in the measurement period, the participants receive a grant of nil cost options in respect of the awards originally granted to them when the VCP was adopted. These nil cost options can only be exercised after 31 December 2012.

The number of nil cost options to be granted under the VCP is calculated by reference to the growth in the shareholder value of the Company between the measurement dates. The shareholder value increase is calculated in terms of the average market capitalisation over a 30 day period prior to the measurement date. The base level was set at an initial 125 pence share price. The calculation of the increase includes dividends paid as a reflection of total absolute shareholder return. Each year there is a threshold of 5% increase in market capitalisation before any value accrues to the VCP participants.

The number of shares to be issued pursuant to the VCP is restricted to a maximum, such that in aggregate the participants will be issued no more than 10 per cent of the issued share capital of the Company as enlarged by the issue of those same shares.

The Company's share price has increased by 94% over the last two years, at the same time as increasing adjusted EBITDA by 60%, and this strong performance is reflected in the grant of nil cost options announced today.

Grant of nil cost share options

The nil cost options granted in respect of the measurement date to 31 December 2010 are:

James Murray 326,935

Edward Spurrier 762,849

Ben Marnham 544,893

Jim Sewell 544,893

The nil cost options granted in respect of the measurement date to 31 December 2011 are:

James Murray 282,137

Edward Spurrier 658,321

Ben Marnham 470,229

Jim Sewell 470,229

Potential dilution

The Company had previously allotted to the Alternative Networks Employee Benefit Trust a total of 2,000,000 ordinary shares, over which participants have been granted interests which are available to be used for the satisfaction of these awards subject to the share price achieving certain targets. These shares form part of the above 10% maximum dilution limit.

If newly-issued shares are used to satisfy the exercise of the above nil cost options, then on the basis that these become exercisable at 31 December 2012, a further 2,060,486 shares would need to be issued on such exercise after that date.

The Company has shareholder authority within certain parameters to make on market purchases of up to 4,436,085 shares, at the Board's discretion before 29 March 2013.

Following the 31 December 2012 measurement date, the participants may be entitled to the grant of further nil cost options based on performance of the Company over the preceding year. Full details of any such grant will be made following completion of the relevant period.

Corporation tax impact

When these share options are exercised, there will be a corporation tax deduction available to the Company. Dependant on the share price at the point of exercise, this tax deduction is likely to be significant, as it will be based on the amount of gains taxable as income in the hands of the participants. To date, the Company has only recognised in its financial statements a deferred tax asset based on the accounting charge to the income statement in respect of the original share awards. The eventual tax deduction is likely to be materially higher. This is expected to significantly and favourably impact cash flow in the year ended 30 September 2013.

Enquiries:

Investec 0207 597 5970

Patrick Robb

Pelham Bell Pottinger 0207 861 3112 

Archie Berens