Virtual network operator Vanco has warned that it will miss its interim cash flow targets because of delays in the signing of three contracts.

The company now predicts a cash outflow of £20m, down £10m on earlier forecasts, which in turn sent shares falling to their lowest level in two years.

Vanco says the delay is in signing three new contracts with existing customers.

‘In common with most new contracts, these contracts contain substantial initial fees,’ the company said in a statement. ‘One of these contracts has since been signed.’

Vanco, which does not own a physical network but buys capacity from telecommunications firms, manages data networks for large organisations.

The supplier said it is confident that revenue and operating profit for the year will still be in line with market expectations. Sales are expected to reach approximately £227m and profits to top £27m.

Trading for the year has been strong, Vanco said, with total orders for the first six months of the year amounting to £120m compared to £50m last year.