As of the end of the first Year trading, the Network expects to own the following range of equipment:
- Broadcast Equipment
- IT & Office
- Fixtures & Fittings
The majority of the Network’s capital expenditure is planned in the Pre-Launch period. The average equipment life within the company is expected to be not less than four operational years. An annual budget contingency has been made to expand the availability of field equipment in Years 3 and 4 (TX #2 & #3). An allocation in Years 3 and 4 has also been made to increase data storage as demand on systems increases.
Financing of Equipment Assets
The Network has the option to lease the majority of its equipment purchases using three and four-year finance leases, however, may be subject to investment conditions. The reflection of Leasing on capital requirements is addressed for each Budget Tier, and presented in the form of a set of Consolidated Management Accounts, and projected Table for Deficit & Surplus calculations. Full accounts for such options are available by arrangement, and this option is based on fully leasing all Equipment requirements. Additionally the Management is advised that Leasing options may be explored for Studio Design and Fitting out element, though has not at this time been explored. Leases are favoured over Hire purchase agreements due to the requirement to fully fund the VAT element in advance of the start of the contractual term in the latter case. It is expected that in the event of leasing agreements being applied, the practice would continue into the future, even if the circumstances for an IPO/ICO arise, either after a suitable operating period, or as part of the path to establishing the Network, though the Network’s gearing ratio is expected to be significantly reduced in the event of such a placing.
Depreciation is to be charged at rates calculated to write off the cost of fixed assets over their estimated useful lives once the assets have been brought into use. Charges will be calculated by either straight line or reducing balance method on a monthly basis. Rates varying between 12.5% and 33% per annum as appropriate to the asset will apply.
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