Avanti Communications says annual revenues will miss forecasts

10th Jul 2013 14:35

Satellite operator Avanti Communications Group said annual revenues were below market consensus due timing of certain contracts. The company expects revenue to be £10m below analysts' expectations for the year ended June 30th, according to a trading update on Wednesday. Based on a company-collated consensus estimate of £31m, this implies a result of £21m, Jefferies International said.Several major contracts in Africa that were expected to close before the end of the period are now due to be completed in the next financial year, Avanti explained.However, the group said sales were otherwise encouraging, with particular success in signing contracts with major telecoms and media companies including Vodafone, Technicolor and CNN. Avanti also won contracts with VSAT service companies including Speedcast, TTcomm and Bentley Walker.During the year the HYLAS 2 satellite was 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. "The average HYLAS-2 customer was invoiced for three months rather than the expected six. We estimate that this contributed £3.0m-£4.0m of the £10m shortfall," Jefferies said.New backlog added in the year averaged £7.0m per month, below Avanti's previously guidance of £11 per month, due to the contract slippages and focus on framework contracts with large customers. Avanti ended the year with a cash balance of £38m and gross debt of £205m.Chief Executive, David Williams, said: "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."Avanti is confident of delivering previously-guided revenue targets of £60m in full year 2014 and £90m in full-year 2015. Jefferies said it believes "some prudent re-basing of forecasts would be sensible until a track record of revenue delivery is firmly established".The broker recommended a 'buy' rating and a target price of 640p.Shares plummeted 35.56% to 159p at 15:00 on Wednesday.RD