TIDMAVN
RNS Number : 9820I
Avanti Communications Group Plc
10 July 2013
Avanti Communications Group plc
Year-end trading update
London - 10 July 2013. Avanti Communications Group plc (AIM:
AVN, "Avanti" or "the Company"), the satellite operator, has
published today a trading update for the year ending 30 June
2013.
-- Revenues below market consensus as a result of timing movements of certain contracts
-- Positive outlook from recent contract wins with GBP42m in order book for FYE June 2014
-- Contract wins with major telecoms and media companies including Vodafone, Technicolor, CNN
-- Accelerating success with the leading satellite service
providers with new contracts with Speedcast, TTCom and Bentley
Walker amongst others
-- Company was operating cashflow positive in June
Revenue guidance for the period included the value of several
major contracts in Africa that were expected to close before 30
June 2013 but which are now expected to be completed in the next
financial year. At the same time, since the period end, the revenue
due from a contract which was signed during the financial year is
no longer assured. As a result, revenues for the financial year
ended 30 June 2013 are likely to be up to GBP10m below previous
market consensus.
Sales progress was otherwise encouraging, with particular
success in signing contracts with major telecoms and media
companies including Vodafone, Technicolor and CNN. We are also
pleased that the highest quality specialist VSAT service companies
are also choosing Avanti, with major new contracts in the year with
Speedcast, TTcomm and Bentley Walker amongst others.
During the year the HYLAS 2 satellite launched. Some customers
started service later in the second half than expected and the
average HYLAS 2 customer was invoiced for three months during the
financial period.
Avanti is succeeding in application areas where customers value
the quality and flexibility of its systems and Avanti has key
advantages. As a result this year we made major progress in turning
pilots into long term
contracts in strategically important areas. Recent milestones include:
-- The world's first fully operational and commercial Ka band 3G
cellular backhaul service, on HYLAS 1. A second backhaul contract
is in planning and two further networks are at pilot stage;
-- Several contracts to provide our Satellite News Gathering
service in Africa, Middle East and Europe;
-- Exclusive pan-European contract for video distribution;
-- An exclusive contract for consumer broadband provision with a Eurostox50 customer;
-- Several contracts via service providers or directly to build
networks for government customers in Europe, as well as Africa and
Middle East; and
-- Avanti has also seen a benefit from the reduction in defence
spending as service providers supplying the sector seek more
flexible and cheaper solutions. Several service providers
flourished with us in this market and some regional beams are
almost full.
We have learned that the easiest way to progress with approvals
from major multinational companies is to sign framework agreements
under which purchase orders can then be made. Whilst these do not
add to backlog initially, they circumvent lengthy approval
processes and we found that orders were produced rapidly under
them, and thus should make a significant contribution to revenues
in 2014. 40 new contracts were signed in total in the second half.
Total customers now number 96.
Our KPI reporting has not generated clarity, so in direct
response to the question we are asked most often by shareholders,
we will now report our backlog, (i.e. order book), for each of the
next three years. Backlog for these three periods currently stands
at:
FYE June 2014: GBP42m
FYE June 2015: GBP46m
FYE June 2016: GBP40m
We expect orders under framework contracts (not included in
backlog), new contracts and possible renewals (of contracts
expiring between 2014 and 2016) to increase these numbers. We note
that new backlog added in the year fell below our target at an
average of GBP7m per month due to the contract slippages and focus
on framework contracts with large customers.
In June we achieved our objective to become cash flow positive
at the operating level.
Operational performance of our networks continues to be
outstanding. We delivered a 12 month Service Level Agreement
performance across the fleet exceeding 99.9%.
Avanti's spectrum filing for HYLAS 2 at 31.0 East has completed
the final stage in the standard ITU registration process and been
recorded in the ITU's Master Register. Avanti is secure in its
rights to use spectrum and is protected from harmful interference
from other satellites.
Avanti remains conservatively financed, with a very long term
repayment profile on its debts and remains in full compliance with
all covenants. We ended the year with a cash balance of GBP38m and
gross debt of GBP205m.
David Williams, Chief Executive, commented:
"We designed our fleet with an emphasis on quality and
flexibility. As a result, our products have competitive advantages
which enable us to win good business with strong customers, albeit
later than hoped. The progress we have made this year in selling to
large multinational companies in applications like cellular
backhaul, video distribution and government networks have shown
that Avanti can create World firsts with its superior technology
and this points the way to filling our fleet."
John Brackenbury, Chairman, Commented
"We are only a few months in to billing on HYLAS 2, and it is
clear that we are winning significant business with good customers.
We have also won important business on HYLAS 1 as a result of
technical advantages. Whilst forecasting the precise timing of
revenue trajectory in this emerging business has been difficult, I
am confident that the outlook for filling our fleet is strong.
---ENDS---
For further information please contact:
Avanti Communications Group Plc Tel: +44 (0) 20 7749 1600
David Williams, Chief Executive
Nigel Fox, Finance Director
Cenkos Securities plc Tel: +44 (0) 20 7397 8900
Max Hartley (Nomad)/Julian Morse
Jefferies Hoare Govett Tel: +44 (0) 20 7029 8000
Neil Collingridge/John Fishley
College Hill Tel: +44 (0) 20 7457 2020
Adrian Duffield/Kay Larsen
About Avanti
-- Avanti sells satellite data communications services to
telecoms companies which use them to supply residential, enterprise
and institutional users.
-- Avanti's first satellite called HYLAS 1, launched on November
26th 2010 and was the first superfast broadband satellite launched
for Europe.
-- Avanti's second satellite, called HYLAS 2, launched on August
2nd 2012. It extended Avanti's coverage to Africa, Caucasia and the
Middle East.
-- Avanti's third satellite HYLAS 3, to be launched in
partnership with ESA in 2015, will provide further capacity in the
EMEA region.
-- 83% of Avanti's fleet capacity addresses the emerging telecommunications markets of Africa,
Caucasia and the Middle East.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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