12 Feb 2014 07:00
Avanti Communications Group plc
Interim Results Announcement
London - 12 February 2014. Avanti Communications Group plc (AIM: AVN, "Avanti" or "the Company"), the satellite operator, has published today its unaudited interim results for the six months ended 31 December 2013.
Key developments
• Revenues up 81%
• 40 new contracts in the period of which 14 are increased order sizes
• Continuing sales momentum with high quality global telco and media customers
• Artemis satellite acquisition completed, spectrum transferred and marketing of service commenced
• $370m bond placed on competitive terms to re-finance and extend maturities
Financial highlights
• Revenues increased by 81% to $25.0 million (2012: $13.8m million)
• Positive EBITDA of $1.0 million (2012: $7.4 million negative)
• Cash at period end of $78.3 million (2012: $81.8m)
• Backlog at 31 December 2013 of $455 million
• Strong sales momentum in all product categories
Commenting, John Brackenbury, CBE, Avanti Chairman said:
"Revenues almost doubled in the period showing that we are building strong sales momentum. The efficiencies generated by the use of Ka band, and the Quality and Flexibility of our design have generated enduring competitive advantages for Avanti. Predicting growth in new markets is an imprecise science, but we are now exporting to 88 countries and to 122 customers including some of the best names in telecoms, media and specialist satellite service providers, giving a strong basis for confidence."
For further information please contact:
Avanti Communications Group Plc Tel: +44 (0) 20 7749 1600
David Williams, Chief Executive
Nigel Fox, Finance Director
Cenkos Securities plc Tel: +44 (0) 20 7397 8900
Max Hartley (Nomad)/Julian Morse
Jefferies Hoare Govett Tel: +44 (0) 20 7029 8000
Neil Collingridge/John Fishley
Tulchan Communications Tel: +44 (0) 20 7353 4200James Macey-White
About Avanti
· Avanti is a carriers' carrier, selling wholesale data telecoms to service providers which use them to create networks for enterprise, carrier, government and consumer users.
· Avanti serves customers in Europe, Middle East and Africa.
· Avanti's network consists of three satellites in orbit plus a fourth under construction and an international fibre network connecting data centres in several countries.
· Customers access the fleet through the Avanti Cloud platform, the most powerful proprietary system in the Industry.
· Avanti has Ka band (and some Ku and S band) spectrum filings in the ITU Master Register at 33.5°W, 21.5° East and 31.0° East
Chairman's Statement
Overview
I am pleased to present the results for the six months ended 31 December 2013. During the period, acceptance of our products amongst mainstream telecoms, media and VSAT service providers continued to grow well. We made good progress in each of our main product categories and in all geographies. The Company is growing strongly whilst maintaining high levels of network performance and customer service.
The transaction to acquire the Artemis satellite enables us to offer a new product set to certain mainly government customers, but also brought new spectrum which we expect to be able to use to support the launch of a new satellite at some time before 2020.
The completion of a $370m bond issue was important for Avanti since it extended maturities to 2019 on competitive terms whilst greatly improving our financial flexibility to engage in transactions like Artemis.
Revenues almost doubled in the period showing that we are building strong sales momentum. The efficiencies generated by the use of Ka band, and the Quality and Flexibility of our design have generated enduring competitive advantages for Avanti. Predicting growth in new markets is an imprecise science, but we are now exporting to 88 countries and to 122 customers including some of the best names in telecoms, media and specialist satellite service providers, giving a strong basis for confidence.
Operational review
Avanti's business model is based on providing high speed data communications services using Ka band satellites, which greatly reduces the cost per Megabit; and a highly resilient IP Cloud infrastructure which enables customers to build and configure networks with enormous flexibility and zero capital commitment. This concept is unique in our industry and is the source of competitive advantage.
We signed 40 contracts in the half. 26 were new customers and 14 were repeat customers. Last year we recognised that the telecoms industry was in a period of investment conservatism and structured contract proposals to make doing business with Avanti as riskless as possible, the success of this strategy is seen in contract volumes. Although small contracts do not add greatly to backlog, providing good service to high quality telcos is likely to result in enduring business relationships that build backlog over time with multiple repeat orders and extensions.
Backlog grew to $455m, accounted for in the following proportions: Enterprise, 48% Carrier Services 2%, Broadband 30% and Government 20%. $76m of backlog relates to 2015. The growth in customer numbers is expected to feed through to utilisation with increased orders from low initial commitments. Peak utilisation rates were, on HYLAS1: 49% (Jun 13 45%) and on HYLAS2 21% (Jun 13 15%).
Our four core application markets: Enterprise; Government; Carrier Services and Broadband all showed good progress in the period.
In Enterprise, we signed up a number of the largest and most respected international VSAT companies in the industry including Globecomm, Speedcast, Hermes and Internet Solutions and increased business with several existing customers. Our Satellite News Gathering ("SNG") product is now well established with many of the World's largest broadcasters and we were entrusted with work on some of the most significant television events. We worked with several broadcasters on South African events in December and are currently broadcasting from the Winter Olympics in Sochi. We expect to see growth from substitution in this SNG market as the move to Ultra HD favours our very high capacity low cost up links.
In Carrier Services, we extended business with our first cellular backhaul Mobile Network Operator ("MNO") customer, and launched service for three separate MNO networks during the period. The opportunity is good in Europe and very large across Africa because most MNOs are striving to deliver coverage commitments and seek new subscriber revenues. Avanti helps them to do this at low cost.
In Government, the launch of Avanti Government Services has made an impact on our ability to promote ourselves as the high security provider of choice. We were awarded a $15m project to build a high value-added network in one African country and are confident that more strong government business will be forthcoming shortly.
In Broadband, we have made installations with the incumbent telcos in each of our main markets in Africa during the period. In Europe, previously weak markets in the South are showing signs of confidence and sales have picked up. Broadband in Europe is the only market in which price is weak.
The Avanti fleet performed with above 99.9% reliability in the period. This is largely a factor of the resilience built into the ground network which is unique amongst competitors.
Construction of HYLAS 3 is on schedule for launch of commercial service in 2016. The capacity is planned to serve West Africa, but the entire payload is steerable and so the markets could be changed.
The Avanti Cloud is a World leading IP platform that provides very flexible access to the Avanti satellite fleet. During the period our R&D team introduced a number of new innovations designed to enhance flexibility and also to make installations more automated. Several of these are the subject of patents pending.
The acquisition of the Artemis satellite from the European Space Agency was completed on December 31st. Upfront consideration was nil, and Avanti assumed modest ongoing operating costs. The satellite has 0.5Gb of Ka band capacity in a powerful steerable beam available for sale to data relay customers, as well as mobile communications and navigation payloads. It also brought spectrum filings in the ITU master register at Ka, S, L and Ku band. The satellite is expected to have a remaining useful life of at least three years, and give us an opportunity to place a new satellite into the orbital position at 21.5°E at any time up to 2020.
Results
Our financial results are reported in US dollars for the first time. The Board determined that the functional currency of Avanti Communications Group plc became US dollars following the issuance of the high yield bond in October 2013. Furthermore, with revenues forecast to be predominantly invoiced in US dollars and interest also US dollar denominated, it is now appropriate to commence reporting group results in that currency.
Prior periods have been translated at the rates prevailing at that time and a table of indicative exchange rates used is included in note 10 at the end of these financial statements.
Income Statement
Revenues for the six month period to 31 December 2013 were $25.0 million, an increase of 81% over the same period last year and 36% higher than the six months to 30 June 2013.
The gross loss increased to $12.6 million (2012: $10.1 million) primarily as a result of a full period depreciation charge of $22.5 million (2012: $15.4 million) following the launch of HYLAS 2. In addition in the period there were some additional one off ground station expenditures to support the MNO backhaul projects.
Overheads in the period were $16.6 million (2012: $14.3 million) which is slightly higher in dollar terms compared to the 6 months to June 2013 of $14.2 million. However, currently the majority of overheads are sterling denominated, primarily staff costs, and are as such, subject to variances in dollar/sterling exchange rates.
EBITDA was positive at $1.0 million (2012: loss of $7.4 million).
Interest expenses increased in line with the new bond financing which was completed in October 2013 and attracts a coupon of 10% payable semi-annually in April and October each year. The finance charges also include costs of repaying the previous facility early together with the costs of raising the bond which are charged to the income statement over the 6 year life of the bond.
We have chosen, in accordance with the relevant accounting standards not to recognise any deferred tax credit in the current period. Avanti already carries a significant deferred tax asset and also has unclaimed capital allowances on the two satellite assets which will shelter any tax liabilities for at least 3 years. Details of the deferred tax asset not recognised are set out in note 5.
Balance Sheet
On 31 December 2013 Avanti took ownership of the Artemis Satellite together with the orbital filings at 21.5° East. Avanti paid nil consideration for these assets and so with the exception of some de-minimis first year costs and end of life costs which have been capitalised at $1.7 million they are not shown in the balance sheet. Avanti, now, therefore has 3 orbital filings in the ITU master register that have nil carrying value on the balance sheet. These orbital filings have significant current and future value.
As shown in the exchange table in note 10 some balance sheet items have moved materially because of exchange rates with dollar sterling period end rates moving from 1.521 at June 2013 to 1.657 at December 2013.
The most significant movement in the period was the re-financing of the EXIM and COFACE facilities with a High Yield Bond. The total raised was $370 million at a rate of 10%. The bond has a 6 year term, non-callable for four and half years. The bond was nearly twice oversubscribed and the rate was 181 basis points below the average new issuer price in our credit category during the previous twelve months. The Bond is shown in the balance sheet, in accordance with IAS 39, net of the costs of issuance which are charged to the income statement on a straight line basis over the life of the 6 year bond.
Trade receivables are slightly higher at the period end reflecting both quarterly invoicing in advance for many customers, but also slightly slower than expected collections from some customers who are growing, and to whom we give credit terms rather than price reductions. Avanti has suffered only one customer failure (a European customer buying Middle East capacity) and an adjustment has been made to backlog.
Cash and cash equivalents increased by $19.6 million since June 2013.
Current liabilities fell from $55.1 million as at the end of June 2013 to $36.6 million primarily as a result of repaying the short term debt liabilities to EXIM and COFACE, and a reduction in finance lease liabilities.
Cash Flow
Cash flow from operating activities, before working capital movements, was an inflow of $2.5 million (2012: outflow $(7.4) million). Increases in accrued interest and interest paid on the repayment of the EXIM and COFACE facilities, together with capital expenditure payments of $12.9 million meant that the business absorbed cash of $26.9 million before financing activities. Financing activities added a net $44.5 million (2012: $37.1 million) to the balance sheet which with an exchange gain of $1.9 million (2012: gain $1.9 million) had the net effect of increasing cash by $19.6 million (2012: reduction $38.6 million) in the period.
Current Trading and Outlook
The second half started positively with the award of a large African government contract. We won several million dollars of broadband business in Western Europe from competitors based on quality of service advantages. Our cellular backhaul product gained new pilot projects in Africa last month, and our SNG product is currently used in high profile events like Sochi. We continue to sell to new large and expert customers and backlog is growing. Our business growth will remain difficult to forecast, but the growth in the size and quality of the customer base and a satisfying repeat order rate gives us firm belief that we are building a profitable and enduring business.
AVANTI COMMUNICATIONS GROUP PLC
CONSOLIDATED UNAUDITED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 31 December 2013
Unaudited | Unaudited | Audited | ||
Half year | Half year | Year ended | ||
31-Dec-13 | 31-Dec-12 | 30-Jun-13 | ||
Note | $'000 | $'000 | $'000 | |
Revenue | 24,961 | 13,819 | 32,125 | |
Cost of sales | (15,071) | (8,547) | (19,517) | |
Satellite depreciation | (22,470) | (15,367) | (38,456) | |
Gross loss | (12,580) | (10,095) | (25,848) | |
Operating expenses | (16,581) | (14,329) | (28,484) | |
Other operating income | 7 | 6,500 | 937 | 1,513 |
Loss from operations | (22,661) | (23,487) | (52,819) | |
Finance income | 8 | 56 | 166 | 441 |
Finance expense | 8 | (19,184) | (2,142) | (6,506) |
Loss before taxation | (41,789) | (25,463) | (58,884) | |
Income tax credit | 5 | - | 3,452 | 10,554 |
Loss for the period | (41,789) | (22,011) | (48,330) | |
Attributable to: | ||||
Equity shareholders of the parent | (41,540) | (21,984) | (47,736) | |
Non-controlling interests | (249) | (27) | (594) | |
Loss per share (cents) | 6 | (38.68 c) | (20.41 c) | (44.49 c) |
Diluted loss per share (cents) | 6 | (38.68 c) | (20.41 c) | (44.49 c) |
CONSOLIDATED UNAUDITED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 31 December 2013
Unaudited | Unaudited | Audited | ||
Half year | Half year | Year ended | ||
31-Dec-13 | 31-Dec-12 | 30-Jun-13 | ||
Note | $'000 | $'000 | $'000 | |
Loss for the period | (41,789) | (22,011) | (48,330) | |
Other comprehensive income/(loss) | ||||
Exchange differences on translation of foreign operations and investments | 11 | 21,606 | 7,454 | (8,193) |
Total comprehensive loss for the period | (20,183) | (14,557) | (56,523) | |
Attributable to: | ||||
Equity shareholders of the parent | (19,934) | (14,530) | (55,929) | |
Non-controlling interests | (249) | (27) | (594) |
The accompanying notes form an integral part of this condensed consolidated interim financial information. All items in the statement above will be subsequently recycled to the income statement.
CONSOLIDATED UNAUDITED STATEMENT OF FINANCIAL POSITION
AS AT 31 December 2013
Unaudited | Unaudited | Audited | ||
Half year | Half year | Year ended | ||
31-Dec-13 | 31-Dec-12 | 30-Jun-13 | ||
$'000 | $'000 | $'000 | ||
ASSETS | ||||
Non-current assets | ||||
Property, plant and equipment | 612,950 | 634,614 | 613,828 | |
Intangible assets | 14,260 | 14,465 | 13,512 | |
Deferred tax assets | 20,504 | 12,247 | 18,853 | |
Total non-current assets | 647,714 | 661,326 | 646,193 | |
Current assets | ||||
Inventories | 5,495 | 2,095 | 4,509 | |
Trade and other receivables | 28,582 | 22,003 | 20,685 | |
Derivative instruments | - | 25 | - | |
Cash and cash equivalents | 78,297 | 81,839 | 58,699 | |
Total current assets | 112,374 | 105,962 | 83,893 | |
Total assets | 760,088 | 767,288 | 730,086 | |
LIABILITIES AND EQUITY | ||||
Current liabilities | ||||
Trade and other payables | 32,769 | 23,645 | 28,018 | |
Loans and other borrowings | 3,808 | 11,044 | 27,043 | |
Total current liabilities | 36,577 | 34,689 | 55,061 | |
Non-current liabilities | ||||
Trade and other payables | 17,376 | 24,152 | 21,707 | |
Loans and other borrowings | 358,723 | 299,425 | 286,006 | |
Total non-current liabilities | 376,099 | 323,577 | 307,713 | |
Total liabilities | 412,676 | 358,266 | 362,774 | |
Equity | ||||
Share capital | 1,889 | 1,889 | 1,889 | |
Share premium | 415,130 | 415,130 | 415,130 | |
Translation reserve | (1,296) | (7,255) | (22,902) | |
Retained earnings and other reserves | (66,700) | 53 | (25,443) | |
Total parent shareholders' equity | 349,023 | 409,817 | 368,674 | |
Non-controlling interests | (1,611) | (795) | (1,362) | |
Total equity | 347,412 | 409,022 | 367,312 | |
Total liabilities and equity | 760,088 | 767,288 | 730,086 |
The accompanying notes form an integral part of this condensed consolidated interim financial information.
CONSOLIDATED UNAUDITED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 31 December 2013
Unaudited | Unaudited | Audited | ||
Half year | Half year | Year ended | ||
31-Dec-13 | 31-Dec-12 | 30-Jun-13 | ||
$'000 | $'000 | $'000 | ||
Cash flow from operating activities | ||||
Loss before taxation | (41,789) | (25,463) | (58,884) | |
Derivative valuation | - | 180 | 199 | |
Interest receivable | (7) | - | - | |
Interest payable | 19,184 | 1,796 | - | |
Foreign exchange losses in operating activities | (271) | (261) | - | |
Depreciation and amortisation of non-current assets | 23,658 | 16,089 | 39,850 | |
Provision for doubtful debts and accrued income | 1,418 | (18) | 2,553 | |
Onerous lease provision | - | - | (5) | |
Share based payment expense | 283 | 328 | 588 | |
Cash flow from/(to) operating activities before movement in working capital | 2,476 | (7,349) | (15,699) | |
Movement in working capital: | ||||
(Increase) in inventories | (968) | (664) | (3,267) | |
(Increase) in trade and other receivables | (2,543) | (644) | (4,109) | |
Increase/(decrease) in trade and other payables | (10,160) | (14,473) | 6,640 | |
Cash absorbed by operations | (11,195) | (23,130) | (16,435) | |
Net interest paid | (2,781) | (2,115) | (7,977) | |
Net cash absorbed in operating activities | (13,976) | (25,245) | (24,412) | |
Cash flows from investing activities | ||||
Payments for property, plant and equipment | (12,887) | (52,390) | (73,783) | |
Net cash used in investing activities | (12,887) | (52,390) | (73,783) | |
Cash flows from financing activities | ||||
Proceeds from borrowings | 370,000 | 39,619 | 43,823 | |
Repayment of borrowings | (305,367) | (675) | (4,704) | |
Incremental transaction costs associated with financing | (10,816) | - | - | |
Loss on de-recognition of previous loans | (6,827) | - | - | |
Payments for finance leases | (2,446) | (1,829) | (537) | |
Net cash received from financing activities | 44,544 | 37,115 | 38,582 | |
Effects of exchange rate on the balances of cash and cash equivalents | 1,917 | 1,940 | (2,107) | |
Net increase/(decrease) in cash and cash equivalents | 19,598 | (38,580) | (61,720) | |
Cash and cash equivalents at the beginning of the period | 58,699 | 120,419 | 120,419 | |
Cash and cash equivalents at the end of the period | 78,297 | 81,839 | 58,699 |
The accompanying notes form an integral part of this condensed consolidated interim financial information.
CONSOLIDATED UNAUDITED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 31 December 2013
Share Capital | Share Premium | Retained Earnings | Foreign Currency Translation Reserve | Non-controlling interests | Total Reserves | |
$'000 | $'000 | $'000 | $'000 | $'000 | $'000 | |
At 1 July 2012 | 1,889 | 415,130 | 21,709 | (14,709) | (768) | 423,251 |
Loss for the period attributable to shareholders | - | - | (21,984) | - | (27) | (22,011) |
Other comprehensive income | - | - | - | 7,454 | - | 7,454 |
Share based payments | - | - | 328 | - | - | 328 |
At 31 December 2012 (Unaudited) | 1,889 | 415,130 | 53 | (7,255) | (795) | 409,022 |
At 1 January 2013 | 1,889 | 415,130 | 53 | (7,255) | (795) | 409,022 |
Loss for the period attributable to shareholders | - | - | (25,752) | - | (567) | (26,319) |
Other comprehensive income | - | - | - | (15,647) | - | (15,647) |
Share based payments | - | - | 260 | - | - | 260 |
Tax credit taken directly to reserves | - | - | (4) | - | - | (4) |
At 30 June 2013 (Audited) | 1,889 | 415,130 | (25,443) | (22,902) | (1,362) | 367,312 |
At 1 July 2013 | 1,889 | 415,130 | (25,443) | (22,902) | (1,362) | 367,312 |
Loss for the period attributable to shareholders | - | - | (41,540) | - | (249) | (41,789) |
Other comprehensive income | - | - | - | 21,606 | - | 21,606 |
Share based payments | - | - | 283 | - | - | 283 |
At 31 December 2013 (Unaudited) | 1,889 | 415,130 | (66,700) | (1,296) | (1,611) | 347,412 |
The accompanying notes form an integral part of this condensed consolidated interim financial information.
1. General Information
Avanti Communications Group plc ('the Company') is a public company incorporated and domiciled in the United Kingdom. The address of its registered office is 20 Black Friars Lane, London EC4V 6EB. The Company is listed on AIM.
These unaudited condensed consolidated interim financial statements were approved for issue on 11 February 2014.
2. Basis of Preparation
These unaudited condensed interim consolidated financial statements ("the interim financial statements") for the six months ended 31 December 2013 have been prepared in accordance with IAS 34, "Interim Financial Reporting", as adopted by the EU. The interim financial statements should be read in conjunction with the annual financial statements for the year ended 30 June 2013, which have been prepared in accordance with International Financial Reporting Standards ("IFRSs"), as adopted by the EU.
The accounting policies applied are consistent with those of the annual financial statements for the year ended 30 June 2013, except as described below.
From 1 July 2013 the Group changed its presentational currency to USD. Comparative information has been restated in USD in accordance with the guidance defined in IAS 21. The prior period financial statements and associated notes have been retranslated from Sterling to USD in compliance with IAS 21 as follows:
· Assets and liabilities were translated at closing rate;
· Income and expenses were translated at actual rates or appropriate averages;
· Equity components were translated at historical rates;
· Differences resulting from the retranslation of the opening net assets and the results for the year have been taken to reserves.
The interim financial statements have not been audited or reviewed and do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The audited statutory accounts for the year ended 30 June 2013 were approved by the Board of Directors on 10 September 2013 and have been delivered to the Registrar of Companies. The auditor's report on these accounts was not qualified, did not draw attention to any matter by way of emphasis and did not contain statements under section 498(2) or (3) of the Companies Act 2005.
3. Accounting Policies
Except as described below, the same accounting policies, presentation and methods of computation are followed in these condensed consolidated interim financial statements as were applied in the preparation of the Group's annual financial statements for the year ended 30 June 2013.
The condensed consolidated interim financial information presented does not comply with the full disclosure requirements of all applicable IFRSs.
4. Segmental reporting
The Group adopted IFRS 8, 'Operating Segments', in the financial year commencing 1 July 2009. IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Operating Decision Maker (the Avanti Executive Board) to allocate resources and assess performance.
All resources are allocated on the basis of satellite services. As a result, the Group only has one operating segment, being satellite services.
5. Taxation
No income tax credit or deferred tax asset has been recognised in respect of the losses for the six month period to 31 December 2013 (30 June 2013 $10.6 million tax credit recognised, 31 December 2012 $3.5 million tax credit recognised). Whilst the group foresees utilising the losses in future periods, it has taken a prudent approach and has not recognised the income tax credit or deferred tax asset in this period.
The group already carries a significant deferred tax asset in its balance sheet, and has unclaimed capital allowances on the two satellite assets which are expected to shelter any tax liabilities for at least three years.
6. Earnings per share
Unaudited | Unaudited | Audited | |||||||
Half year | Half year | Year ended | |||||||
31-Dec-13 | 31-Dec-12 | 30-Jun-13 | |||||||
$'000 | $'000 | $'000 | |||||||
Loss attributable to equity shareholders of the company | (41,540) | (21,984) | (47,736) | ||||||
Weighted average number of ordinary shares for the purpose of basic | |||||||||
earnings per share (all measures) | 107,406,589 | 107,721,552 | 107,306,711 | ||||||
Loss per share (cents) | (38.68 c) | (20.41 c) | (44.49 c) | ||||||
Diluted loss per share (cents) | (38.68 c) | (20.41 c) | (44.49 c) |
7. Other operating income
Unaudited | Unaudited | Audited | ||||||||
Half year | Half year | Year ended | ||||||||
31-Dec-13 | 31-Dec-12 | 30-Jun-13 | ||||||||
$'000 | $'000 | $'000 | ||||||||
Exchange gain/(loss) on trade receivables and payables | 463 | (261) | (353) | |||||||
Ex gratia receipt | 5,342 | - | - | |||||||
Other grant income | 695 | 698 | 1,366 | |||||||
Liquidated damages | - | 500 | 500 | |||||||
Total other operating income | 6,500 | 937 | 1,513 | |||||||
The ex gratia receipt arose following a commercial settlement in relation to the Hylas 2 procurement.
8. Finance income/(expense)
Unaudited | Unaudited | Audited | |||||||
Half year | Half year | Year ended | |||||||
31-Dec-13 | 31-Dec-12 | 30-Jun-13 | |||||||
$'000 | $'000 | $'000 | |||||||
Finance income | |||||||||
Financing exchange gain | 49 | 156 | 413 | ||||||
Interest income on bank deposits | 7 | 10 | 28 | ||||||
56 | 166 | 441 | |||||||
Finance expense | |||||||||
Interest expense on borrowings and loans | (2,479) | (1,823) | (7,942) | ||||||
Interest expense on bonds | Note 9 | (9,744) | - | - | |||||
Fair value on derivatives | - | (180) | (199) | ||||||
Loan breakage cost | (6,827) | - | - | ||||||
Finance lease expense | (134) | (139) | (249) | ||||||
Less: interests capitalised on satellite in construction | - | - | 1,884 | ||||||
(19,184) | (2,142) | (6,506) |
9. Loans and borrowings
The Company issued 10% Senior Secured Notes of $370,000,000 on 1 October 2013.
Issuer | Original Notional Value | Description of instrument | Due | |||||||
Avanti Communications Group plc | $ 370 m | 10% Senior Secured Notes | 1 October 2019 | |||||||
The bond is disclosed in non-current loans and borrowings as detailed below: | ||||||||||
Unaudited | Unaudited | Audited | ||||||||
Half year | Half year | Year ended | ||||||||
31-Dec-13 | 31-Dec-12 | 30-Jun-13 | ||||||||
$'000 | $'000 | $'000 | ||||||||
Bond | 370,000 | - | - | |||||||
less: Debt issuance costs | (11,848) | - | - | |||||||
add: Debt issuance costs for the period | 494 | - | - | |||||||
358,646 | - | - | ||||||||
The group has disclosed the bond net of the costs of debt issuance. The costs of debt issuance are amortised over the life of the bond.
The costs related to the bond are recognised in the income statement as follows:
Unaudited | Unaudited | Audited | |||||||
Half year | Half year | Year ended | |||||||
31-Dec-13 | 31-Dec-12 | 30-Jun-13 | |||||||
$'000 | $'000 | $'000 | |||||||
Interest charge | (9,250) | - | - | ||||||
Amortisation of debt issuance costs | (494) | - | - | ||||||
(9,744) | - | - |
10. Exchange rates GBP/USD
The consolidated financial results are reported in US dollars for the first time. Prior periods have been translated at the rates prevailing at that time and a table of exchange rates used is presented below.
Period | Period end rate | Average rate | ||
6 months to 31 December 2013 | 1.657 | 1.598 | ||
12 months to 30 June 2013 | 1.521 | 1.569 | ||
6 months to 31 December 2012 | 1.615 | 1.593 | ||
12 months to June 2012 | 1.570 | 1.584 |
11. Exchange differences on translation of foreign operations and investments
From 1 July 2013, the Group changed its presentational currency to US Dollars, and the Group parent company changed its functional currency to US Dollars.
On consolidation, income statement items are translated from the functional currency of the individual entity into US dollars at average rates of exchange, and statement of financial position items are translated into US dollars at year end exchange rates. Exchange differences on the translation of the net assets of entities with functional currencies other than the US dollar are recognised directly in the foreign currency translation reserve via the statement of comprehensive income.
Furthermore, exchange gains and losses which arise on certain intercompany balances between the Group parent company and other Group entities are taken to the statement of comprehensive income. This is because in substance they represent part of the Group's net investment in the entities.