Avanti Communications' (AVN) slow progress towards profitability took another positive step in the year to June. The company rents out capacity to mobile and broadband providers in Africa, Europe and the Middle East, and its distribution platform is now largely complete. Signing up the largest telecoms operators, Avanti is now expected to generate positive cash flow as customer numbers grow.
Around 90 new contracts with new and existing customers were secured during the year, and the company expects to deliver further enhancements with the launch of its HYLAS 4 and HYLAS 3 satellites scheduled for 2017. New contract wins included signal distributor SENTECH in South Africa as well as Tanzania Telecoms Company. Investment totalling $1.2bn (£779m) will give the company the ability to meet the considerable latent demand, and the next two years bring the potential to generate cash profits of over $500m.
Crucially, the company has a largely fixed cost base, so increasing revenue will drop through to the bottom line. Even so, net debt at June was up from $322m to $406m, while cash dwindled from $195m to $122m.
Analysts at Cenkos are forecasting pre-tax losses of $55.4m and loss per share of 38.6p for the coming year.
| AVANTI COMMUNICATIONS (AVN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 215p | MARKET VALUE: | £313m | |
| TOUCH: | 213-215p | 12-MONTH HIGH: | 325p | LOW: 170p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 211¢ | NET DEBT: | 133% | |
| Year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 5.5 | -12.7 | -12.1 | nil |
| 2012 | 12.5 | -16.0 | -14.9 | nil |
| ($m) | (¢) | (¢) | ||
| 2013 | 32.1 | -58.9 | -44.5 | nil |
| 2014 | 65.6 | -87.7 | -81.2 | nil |
| 2015 | 85.2 | -73.3 | -61.5 | nil |
| % change | +30 | - | - | - |
Ex-div:- Payment:- £=$1.541 | ||||
