Avanti Communications Share Discussion Threads

[bigkahunaburger] 05/2/2015 11:04

Avanti Communications

No surprise in H1 15 & successful capital increase for Hylas 4

05/02/2015

KEY HIGHLIGHTS

Avanti has just published H1 15 results perfectly in line with expectations. We do, on the other hand, see two positives in this publication : 1/ operationally, the group confirms growth would accelerate strongly in H2 thanks to ramp-up of new contracts and 2/ financially as management announces a successful capital increase as it reassures on the main risk for the group, short term financing, as long-term prospects remain very promising. We do think the stock should react positively today and stick to our Buy rating on the share (450p TP) which offers over 100% upside!

H1 15 in line : Sales come out at 31.1 M$, perfectly in line with the 31 M$ expected. The slight decrease in backlog (410 M$ vs 420 M$ at end Q1) stems from the negative currency impact (30% of backlog is in Euro) and is not representative of operating performance. EBTIDA, at -3.5 M$, is also perfectly in line with expectations.

2015 outlook positive : If H1 growth did slowdown (+24% vs +104% in 2014), management clearly stated that it was expecting it to rebound as soon as Q3 thanks to the ramp-up of new contracts, already signed. We therefore do not see any reason to substantially change our FY estimates (85 M$ in sales). Moreover, management reiterated its long-term objective to reach 500 M$ of EBITDA on all 4 of its satellites, an amount which is well above our 350 M$ estimate for 2022 !!!

Successful capital increase : Most importantly, Avanti announced it has successfully completed a capital increase of 91.5 M$ (28.8 M new shares at 2.1 £/share, or 5% discount vs yesterday share price). This operation was done with its current shareholders and well oversubscribed. It allows Avanti to complete the financing of its Hylas 4 satellite. Even if this operation brings a dilution of 25% in the number of shares, we see it as a clear positive for Avanti as it reassures on the main risk for the group, short term financing and liquidity issue. The only concern that now remains is the speed to fill the satellites and we see that, even with much more cautious assumptions than management, there is a lot of upside on the share !

Eric BEAUDET

Equity Analyst – IT Hardware & Satellites
Natixis

[2350220] 05/2/2015 10:55

Sorry for being a bit dim on this point guys,
but does this mean that even though the share price might be 250p or 280p or whatever, we'll still be able to purchase new shares at 210p?

I assume that I must be wrong, as that would be an instant profit for nothing.

John

[philo124] 05/2/2015 08:54

It's the $500m EBITDA marker that's caught the eye.

[anusol] 05/2/2015 08:37

Market seems to like the RNS though

[phillis] 05/2/2015 08:05

thats why the Instis are putting more money in.....

[anusol] 05/2/2015 07:39

Income might be growing, but EBITDA loss and cash burn appear to be growing too.....

[bulltradept] 05/2/2015 07:32

RNS Number : 0959E

Avanti Communications Group Plc

05 February 2015

5 February 2015

AVANTI COMMUNICATIONS GROUP PLC

Capital Raising of GBP60.6m to secure full financing for the HYLAS 4 satellite

Avanti Communications Group plc ("Avanti" or "the Group"), a leading provider of satellite data communications services in Europe, the Middle East and Africa, today announces a Capital Raising subject to shareholder approval by way of the issue of 28,866,720 New Ordinary Shares with new and existing institutional investors at 210p per New Ordinary Share to raise approximately GBP60.2m (net of expenses).

The Capital Raising, in combination with the Avanti's ability to issue up to a further $125m under its existing bond indenture (on the basis that the additional bonds do not exceed a ratio of 1.25:1 to the Capital Raising), fully funds the cost of the construction and launch of HYLAS 4 and takes the Group through to the point where it is expected to be free cash flow positive. The Directors expect that this will consolidate Avanti's first mover advantage across EMEA, therefore increasing the future cash generation potential of the Group.

The Capital Raising will raise approximately GBP60.2m (net of expenses) through the issue of the New Ordinary Shares at the Issue Price of 210p, which represents a discount of 5.7 per cent. to the closing middle market price of 222.75p per Existing Ordinary Share on 4 February 2015. The New Ordinary Shares will represent approximately 20.4 per cent. of the Group's issued ordinary share capital immediately following Admission. Application will be made to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on AIM ("Admission"). It is expected that Admission will become effective and that dealings in the New Ordinary Shares will commence on AIM at 8.00 a.m. on 24 February 2015.

The Capital Raising is conditional, inter alia, upon the Group obtaining approval from its Shareholders to grant the Directors authority to allot the New Ordinary Shares and to disapply statutory pre-emption rights which would otherwise apply to the allotment of the New Ordinary Shares. The Capital Raising is also conditional upon Admission.

Definitions used in this announcement have the same meaning as those used in the circular which will be posted to Shareholders today and will be available on the Group's website www.avantiplc.com.

[gekks] 05/2/2015 07:13

Looks good to me !

[jadeticl3] 04/2/2015 17:55

Is Inmarsat correct in the above statement? Will their system be capable of supplying the world or will their licence limit where they can sell their space?

[jeffian] 04/2/2015 16:43

So, what will tomorrow bring?

[bobbie121] 02/2/2015 21:07

Inmarsat launched second satelite today and say they will have the first high speed global mobile broadband network in the world. Times business today.

[jadeticl3] 02/2/2015 17:14

If the need is there, and the quality is exceptional, and the price is good, why is it taking longer to fill the availability? Has Management answered this satisfactorily?

[jeffian] 02/2/2015 17:00

"A major question is Q2 revenues, unless H1 is well north of $31m there will have been no q on q growth."

Indeed, sidam, that was rather my point. All this talk of "backlog" etc is all very well but with several sats now operating up there, my only real focus is on revenues and whether they're selling the capacity. As Paul Walsh said in his Chairman's statement - "We are building a business that can potentially generate over $700 million in revenues and over $500 million EBITDA annually if the current fleet is filled." Well go on, then, Paul!

[sidam] 02/2/2015 15:40

Jeffian

We know Q1 revenues were $15.5m (announce in November), which basically implied that last year had exceptional revenues of $10m in Q4.

A major question is Q2 revenues, unless H1 is well north of $31m there will have been no q on q growth.

The big problem is that management have changed tack and will now only talk to 'registered analysts', which in reality means that are cutting out anyone who wants to do their own research. In my view, that is a real step backwards. I still hold. but fewer than I did.

[sg31] 02/2/2015 14:39

Lets hope they've under promised and over deliver.

[jeffian] 02/2/2015 14:17

From the 'Outlook' statement in the 2014 Final Results -

"Outlook

Whilst revenue growth this year was strong, there were delays to projects from the first half that slipped into the second half of the year, and some large up front elements of both revenues and costs were therefore taken in the second half. As we grow, we expect the susceptibility of the business to the effects of one-off set up costs and our dependence on a small number of large contracts will diminish.

The size of the customers we have been signing, and the scale of the deployments they are planning, gives us confidence that utilisation will continue to grow towards our long term target during the coming year. Revenues for the first quarter are expected to be around the average of the last year, with new contracts driving into growth in subsequent quarters."

[jadeticl3] 02/2/2015 13:56

Where did you get this quote jeffian?

[jeffian] 02/2/2015 13:28

"Revenues for the first quarter are expected to be around the average of the last year, with new contracts driving into growth in subsequent quarters."

Well, we'll find out on Thursday!