Satellite operator Avanti (AVN) has sunk deeper into the red, yet management predicts material revenues from its HYLAS 2 satellite during the second half, and nearly two-thirds of broker sales forecasts of £68m for the 2013/2014 financial year are already in the bag. That will bring profits another step closer and the shares rocketed over 10 per cent in response.
Indeed, HYLAS 2, launched in August and aimed at the Middle East and Africa, is fully operational and all pre-sales customers were live and billed by mid-January. Five big telecoms companies have signed up, too, and over half its capacity has been sold. Along with HYLAS 1, its European satellite, Avanti has been adding £11m to its order backlog every month which puts firm orders at £290m, including over £40m for 2014, and keeps Avanti on course to fill up HYLAS 1 and 2 by 2016.
HYLAS 3 is currently being built and should be delivered in less than three years time. Avanti's sales team are already drumming up business across Africa. For now, though, operating losses continue to grow, more than doubling to £14.7m in the latest six-month period. A doubling in satellite depreciation to over £9m, an extra £3m on staff costs and an additional £1.2m of finance charges did the damage.
Broker Cenkos Securities expects Avanti to post full-year pre-tax losses of £20m, up a third on the prior year, before making an adjusted pre-tax profit of £5.4m in 2014, giving adjusted EPS of 4.8p.
AVANTI COMMUNICATIONS (AVN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 278p | MARKET VALUE: | £311m | |
| TOUCH: | 273-278p | 12-MONTH HIGH: | 445p | Low: 210p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 227p | NET DEBT: | 56% | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 5.13 | -6.61 | -6.36 | nil |
| 2012 | 8.63 | -15.94 | -12.85 | nil |
| % change | +68 | - | - | - |
