Avanti Communications Share Discussion Threads

[parvez] 10/10/2012 08:17

does anyone know if SC is shorting this stock?

[volvo] 10/10/2012 08:10

Watch and learn.


Defence & Security

Ka-band is revolutionising the delivery of high-speed operational and welfare services for the defence and homeland security sectors. Ka-band offers significant cost savings without compromising on data throughput or security. The flexibility and resilience of Avanti's satellites puts us at the forefront of providing this service. A number of our service providers are already providing welfare services, and we also completed trials in a number of more advanced application areas during the year.

[volvo] 10/10/2012 08:08

miti only time will tell. Got another 10k at 299p for the SIPP.........thats my lot now........JUST WAIT NOW UNTIL 2016!

[scientologyweirdo] 10/10/2012 08:07

hmm thought so

funny how one little 'code word' or phrase like 'back end loaded' can cause such a reaction

[miti 1000] 10/10/2012 08:07

lol volvo, making a fool of yourself again ?

[verymaryhinge] 10/10/2012 08:04

choppy open for sure..

[gorvachof] 10/10/2012 08:03

No time to look at results properly this morning so only glanced at round up, but any quick explanation why revenue only £12m and not £17m?

Edit;
Superg
Debt is £175m @ 5..5% over 7 years right?
So annualised £36m plus cost of sales and what about including depreciation charge on H2?

[billytkid2] 10/10/2012 07:59

I think medium term the story strengthens but this is Avanti.....the shares will be down 5%+ today. Well that is my guess anyway.

[rogerbridge] 10/10/2012 07:57

This seeems positive to me and will add to my SIPP.

[extrader] 10/10/2012 07:52

Hi all,

Key for me is tghat the dispute with Luxembourg has been fully resolved in AVN's favour - I think the II's will like this....and may now start to front-purchase in anticipation of a full listing.

As to delayed uptake, this is mitigated by (a) increased capacity and (b) possible defence contracts (which are likely to be for immediate delivery ;-

[billytkid2] 10/10/2012 07:49

Jefferies:

Key Takeaway
FY12 revenues and other operating income (£15.0m) below guidance
(£17.8m). Mgmt attributes this to more conservative accounting treatment
although underlying growth run-rate for recurring revenues is also below our
forecasts. We expect consensus revenue forecasts to be reduced by c.£15m in
FY13e and 14e. Positives are extra capacity on HYLAS-2, backlog development
in-line with guidance and HYLAS-2 has now entered service.
Revenues below guidance. Avanti reports FY12 revenues and other operating income
of £15.0m (revenues £12.46m, other operating income £2.56m). At the last trading update
(11 July), Avanti guided to revenues and other operating income for y/e 30 June of £17m.
Avanti says it has adopted an "increasingly conservative accounting treatment". Certain
contracts entitle it to invoice upfront for work carried out in the preparation phase of new
contracts. Avanti says it has met the conditions that entitle it to invoice customers for this
work and that cash has been collected. Previously Avanti envisaged recording such revenues
as they were invoiced. The company has now elected to spread them over the lifetime of
the respective contracts. Avanti tells us that the accounting change explains the full £2.8m
difference between reported revenue and other operating income and July guidance. When
the balance sheet notes are available, we expect to see this income reflected in deferred
revenues. The large other operating income balance of £2.6m in FY12 (up from £0.6m in
FY11) relates to a dispute with a former supplier settled in Avanti's favour. At the level of ongoing
revenues, Avanti reported £7.3m in the second half (JEFe: £11.9m), against £5.1m in
1H. We understand from management that the pricing floor of £1,250/MHz/month remains
intact. That suggests capacity utilisation on HYLAS-1 grew less than we forecast in 2H.
Growth in backlog remains at required run rate. Backlog as at 9 October stands
at £268m, from £246m at 30 June and £181m at 31 Dec 2011. In 2H12, we estimate that
Avanti added an average of £12m to the backlog per month, calculated as the difference
between the backlog at the two dates, plus the revenue recognised in that period (£7.3m
in 2H12). This is above the required run rate of £11m in monthly contract sales required to
meet utilisation guidance. Pipeline is now at £552m, up £50m since 30 June.
EBITDA loss partly reflects heavier investment in sales and marketing. FY12
EBITDA came in at a loss of £(5.3)m, lower than our forecast of positive £0.2m. SG&A was
notably higher than we envisaged: £14.0m in FY12 vs. JEFe £12.2m. We understand that
a significant proportion of the new staff hires in the period were made in the sales and
marketing function ahead of the HYLAS-2 launch. We understand that the second half also
experienced some launch costs related to HYLAS-2 which were expensed.
Outlook and forecasts. There is limited outlook commentary in today's statement
beyond the commitment to fill capacity on the two existing satellites in 2016. We noted
above that the run-rate of recurring revenue growth reported in 2H FY12 was weaker than
we had forecast. Against this backdrop, we believe that consensus revenue forecasts are
likely to come down. Our initial assessment is that consensus revenue forecasts may fall by c.
£15m in FY13 and FY14. In part this reflects the new revenue accounting treatment. However,
investors thinking back to the £17m FY12 revenue target (excluding other operating income)
which was in Avanti's guidance statements at Feb 1H results and the 14 May IMS may elect
to trim utilisation growth assumptions as well, in our view. Another area of careful scrutiny at
this morning's analyst meeting (9.30am) will be cost forecasts, given the above-expectation
increase in 2H FY12 and the sensitivities associated with Avanti's high operating leverage.
We will re-evaluate our own forecasts after the analyst meeting.

[greengiant] 10/10/2012 07:48

VMH,

Yes it will. My point here is that with the backlog being more backend weighted, the risk profile increases. By its nature, revenues in the intervening period has to be lower.

Like I said, long term holder but slightly disappointed with results. Revenue's under where expected and losses slightly higher. I can't see the market liking it. Which isn't a problem for me, because I have held all the way up and all the way down after SC's bear attack.

gg

[nugacity] 10/10/2012 07:45

"Whilst backlog is strong, it is a little more back-ended than expected as customers have typically committed to five year contracts with bandwidth usage which sharply escalates during the later period of the contract. Thus they lock in availability whilst minimising risks as they build their business. The benefit of 18 months selling on both satellites now gives the Board more empirical data with which to plan future activity, and the Company has used this data to offer conservative guidance to the market. "

Customers look to be committing much more money in year 4 than year 1 .... they must be starting up from pretty well from scratch.... what else would you expect?
With luck they have underestimated demand and their own demand will be brought forward more than they expected .... and hence so will ours.

The great news is all looks well operationally and we have have more capacity for longer than we expected .... sales are on target .... hardly bad news is it?

[verymaryhinge] 10/10/2012 07:39

a 25% increase in capacity, will neccesssarily, take longer to fill surely ?

[greengiant] 10/10/2012 07:37

Volvo,

As a very long term holder, this also reads as a profit warning to me. They are only looking to be full in 2016 which is another 4 years, add on the 18 months they have been selling capacity means that they have overshot all their targets for full capacity.

The 26% extra is nice, however, these satellites were meant to be filled by 2015 by the company's own estimates. Does increase risk slightly, but still looks undervalued. However, I would expect a drop today on these results.

gg

[johncsimpson] 10/10/2012 07:36

Yup SG.

added: Those who don't understand these last two posts please look back to posts 396 - 400.

[volvo] 10/10/2012 07:34

Not many negatives there.

Commenting, John Brackenbury, CBE, Avanti Chairman said:

"This has been a year of very strong growth for Avanti. The momentum of launching our second satellite in as many years to expand coverage to a total of 53 countries has created very significant demand. This is now evidenced in our contract backlog which grew by 57% in the year. Within the emerging markets that Avanti serves our flexible and resilient technology is winning business from customers who urgently need reliable, high quality communications.

"The formal launch of service today on HYLAS 2 over Africa and the Middle East gives us access to markets showing high economic and structural growth in demand for telecoms services. We look forward to the continued development of Avanti with growing confidence."

[volvo] 10/10/2012 07:32

...........profit warning lol, just deferred.

Did you miss that Hylas2 is fully operational with 26pc more capacity than expected.

Or the order book is up 150pc.

Nope confident with my holding here.

These satelites will be cash cows for years.

[superg1] 10/10/2012 07:27

Now you know John

At least £45m costs coming for 2013 (£175m loan payments start Dec 12).

Costs prob H2 weighted so more likely over £50m.

[johncsimpson] 10/10/2012 07:23

This is how AVN finished last night:

[liarspoker] 10/10/2012 07:15

Benjamin Grahamm Lecture #3:



Benjamin Graham was Warren Buffett's teacher and mentor.

Mandatory reading on other words ( as are the rest of the lectures ).

[scientologyweirdo] 10/10/2012 07:15

Is this a profit warning ?

"Although the phasing of Backlog is more back-ended than expected, existing satellites are expected to be full at current run rate in 2016"

[lavagrouch] 09/10/2012 22:31

Sidam - post 10794 - interesting & well considered, thank you.

[rathlindri] 09/10/2012 21:02

Rogk, you called it exactly right for today...here's hoping your forecast for tomorrow is equally accurate :-)