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ATCG.L

AT Communications Group plc

AT Communications Group plc ('ATC', AIM: ATCG), one of the UK's leading business communications groups, today publishes its interim results for the six months ended 30 June 2008.

Alex Tupman, ATC's CEO commented:-

'This is our first set of results for which we have reported like-for-like comparisons without adjusting for acquisitions and I am pleased to report a period of double digit organic revenue growth across the Group despite a challenging business environment.

We have made necessary investments during the period to support long term growth that have generated a substantial pipeline of business. Although as a consequence net debt has increased over the short term, it is being aggressively managed to ensure that the resulting profitability of the new business wins generated by the investments deliver net debt reduction.

Blue chip client wins during the period are testimony to our success at servicing high value, global business and with the necessary investment now in place, we have the scale and infrastructure to support our growth momentum. I look forward to reporting further progress in due course.'

For more information:

AT Communications Group plc		08700 55 80 80
Alex Tupman, Chief Executive
Cenkos Securities plc		020 7397 8924
Stephen Keys
Biddicks		020 7448 1000
Shane Dolan

www.atcommunications.co.uk


Chief Executive's Report

Overview

This is the first time since our maiden results that the Group has reported like-for-like sales growth without adjusting for acquisitions and I am pleased to report another period of double digit organic revenue growth across the Group in increasingly challenging economic conditions. 

These results have been achieved through necessary investments in growth areas of our business that have generated an additional pipeline and prospect bank of almost £45m, which we believe will underpin the financial performance in second half of this year, 2009 and beyond. We predict a robust second half performance with strong cash generation leading to a significant reduction in overall net debt for the full year. This investment strategy has provided the Group with the opportunity to build the business for the long term benefit of shareholders and is also supported by our new banking arrangements with HBoS, announced in January.

The results for the six months to 30 June 2008 demonstrate continued organic growth with turnover increasing by 10% to £46.8m and underlying operating profit increasing by 9% to £3.4m. Gross margins have remained stable at 39% reflecting the strong fundamentals of our business and the development and concentration on higher margin, service-related revenues where considerable investment has been made during the period. In particular, we have invested £1.9m in our Servassure division, which is now also developing external new business in addition to our successful and continually growing BT relationship. These new customers include alternative carriers, systems integrators, large Resellers and hosted providers. Servassure revenues are now split three ways; 'In Group', 'BT' and 'UK Channels' where UK Channels, a new revenue stream for the Group, has contributed over £1m of gross margin in H1 and has a pipeline and prospect bank for H2 and into 2009 of £25m of revenue. In addition, further investments in our BT team have resulted in significant growth in revenues to BT and a prospect bank totalling £20m of revenue. 

Many of our activities with current and potential customers are focused on helping them reduce their OPEX costs. This has been achieved by offering bundled services with single point of contact, multiple suppliers consolidation and a unique per seat pricing model that combines cost savings with new technology.

Our Rocom division continues to grow its market share. In particular, its Network Services revenues have more than doubled during the period and will benefit further from the significant contract win with Cable & Wireless for £5m of additional Reseller business, announced in July. Overall, contracted and recurring revenues now represent 70% of Group revenues.

Operating Results

In the six months to 30 June 2008 Group revenue grew by 10% to £46.8m (H1 2007: £42.7m). 

The split between operating divisions including 'inter-divisional sales' is as follows: Rocom £21.0m (H1 2007: 20.6m), ATC Solutions £20.7m (H1 2007: £19.4m) Servassure £10.5m (H1 2007: £8.4m) and Inter-divisional sales were £5.4m (H1 2007: £5.6m).

Each division has achieved growth in both turnover and underlying operating profit as shown in the table below:

6 months to 30 June 2008	Rocom	ATC Solutions	Servassure	Group & eliminations	Consolidated
	£'000	£'000	£'000	£'000	£'000
Turnover	20,975	20,695	10,548	(5,399)	46,819
Underlying operating profit	973	1,742	1,102	(467)	3,350
6 months to 30 June 2007
Turnover	20,587	19,383	8,360	(5,600)	42,730
Underlying operating profit	850	1,560	818	(163)	3,065
Growth
Turnover	2%	7%	26%	(4%)	10%
Underlying operating profit	14%	12%	35%	N/A	9%

Underlying operating profit grew by 9% to £3.4m (H1 2007: £3.1m). This is calculated as profit before tax and interest, adjusted for amortisation of intangibles £0.6m, restructuring and non-recurring costs of £0.2m, charge for share based payments of £0.2m and the net costs of developing new Servassure income streams of £0.9m.

Underlying pre-tax profit grew by 6% to £2.5m (see table below). This growth was impacted by higher interest charges required to fund the increase in working capital. The interest charge increased from £0.7m (H1: 2007) to £0.8m (H1: 2008).

	6 months to 30 June 2008 Unaudited	6 months to 30 June 2007 Unaudited	Year to 31 Dec 2007  Audited
	£'000s	£'000s	£'000s
Profit before tax	541	1,097	2,752
Share based payments	243	75	284
Amortisation of intangibles	648	648	1,296
Non-recurring and restructuring costs	161	500	1,892
Net investment in Servassure business	874	-	-
Underlying profit before tax	2,467	2,320	6,224

The £60k tax credit shown in the accounts (2007 H1: £279k) is due primarily to the unwinding of the deferred tax on the fair value adjustments arising on previous acquisitions. 

Underlying, diluted EPS was 2.8p compared to 3.3p in H1: 2007. This is due to an increase in the number of shares from the share placing in August 2007.

The balance sheet showed net assets of £27.4m as at 30 June (2007 H1: £21.1m). Working capital has increased to £17.3m for the period, up from £9.7m at 31 December 2007 and £7.3m at 30 June 2007. The key drivers to this are:

These higher working capital requirements, which we see reducing considerably in the second half of 2008, have led to an increase in net debt to £22.2m (2007 H1: £19.5m).

 

Review of Activities (by division)

Servassure

Servassure continues to offer 'white label' engineering, installation, maintenance and professional services both 'in Group' and to external customers. Business with external customers is now split into two main areas: 'BT' and 'UK Channels'.

Servassure has benefited from significant investment of £1.9m during the period in both the BT team and UK Channels. This investment has lead to a pipeline of new business opportunities totalling £45m, including several significant government and blue chip contracts via leading carriers. These contracts involve supplier consolidation activities, as well as other high value projects such as a centralised operator function for the Ministry of Justice, a single point of contact for 100,000 users throughout Europe and Asia, and a multi-functional contract for a major government department. 

Following a positive launch of our UK Channels division our activity during the period has been focused on customer acquisition, including, among others, Verizon, Thus, Kingston, Damovo, Siemens, IBM, Telent and Samsung. Securing these high profile new customers has generated a significant pipeline of new business for the second half year. Our focus going forward is to optimise these new relationships, demonstrate our capability and build sustainable partnerships that will continue to develop and grow into 2009 and beyond.

Many of these prospects now include the installation and maintenance of Data technologies, including Cisco and Juniper where we have invested in developing specific skill sets during the period. 

Servassure revenues are of a contract nature, in line with our declared focus on long-term revenue streams. During the period under review, Servassure enjoyed a 26% increase in revenue growth compared to the same period last year. We predict that this positive trend will continue following our investment in this high growth area of our business.

Many of Servassure's activities are focused on reducing costs by consolidating suppliers to a single vendor. This is an attractive proposition for both small and large UK and global carriers. Specifically, our single point of contact capability is attracting attention with current and potential customers by helping to reduce their OPEX costs. Many customers are also looking to extend the life cycle of their telephony infrastructure to reduce their costs which, in turn, extends our service and maintenance delivery revenue earning opportunities.

ATC Solutions

During the period, ATC Solutions division continued to evolve its leading-edge strategy in order to underpin the clarity and focus of our customer activity, sales structure and core capabilities. 

This strategy has begun to pay off with the formation of a vertical sales focus. In particular, significant success has been achieved in the Health sector where we have developed a finely tuned understanding of the specific needs of this vertical market. Significant contract wins included OGC Buying Solutions, announced in February, an 8000 extension IP Telephony roll out for Gloucestershire and Bristol Primary Care Trusts and a resilient IP Telephony solution for a 999 call centre with East Midlands Ambulance Service. 

In March, we were delighted to announce the signing of a landmark three year contract with De La Rue, the world's largest commercial security printer. We have now begun the roll-out of IP technology across De La Rue's global business units.

Other contract wins included, among others, a contract for the supply of various telephony products to West Midlands Police, the second largest police force in the UK and a maintenance contract with Staples, the world's largest office products company, supporting telephony infrastructure throughout 140 stores.

Our audit and consulting services together with our ability to bundle multiple services is also allowing us to take full advantage of customers looking to control and reduce OPEX costs in the current economic downturn. In addition, we have recently launched a unique per-seat pricing model with options based on cost saving, efficiency saving or technology refresh under a long term managed service contract. This new model has been trialled with 30 customers, all of whom have taken up either a three or five year contract.

Rocom

During the period Rocom has continued to focus exclusively on sales to the indirect channel, including Dealers and Voice and Data Resellers as well as high street retail chains such as PC World and the online e-tail community such as Amazon.

Optimising its unique 10 pillar 'Total Distribution proposition', Rocom strategic aims are: to increase market share, expand the ratio of active buying accounts, grow average order value and customer wallet share, as well as continuing to develop the product portfolio.

This focus is paying off as evidenced by a number of significant contract wins during the period. These wins included the securing of a multi-million pound distribution account with Avaya and the establishing of Rocom as the UK's sole Distribution for Aastra's system portfolio (previously Ericsson), announced in May 2008. These encouraging wins continue the positive trend established in 2007 when Rocom had a record year including significant contract wins with Siemens and Amazon, collectively valued at over £6m.

Notwithstanding the challenges of the UK and global economy, Rocom continues to demonstrate its potential and competitive advantage. Post period end, Rocom created the 'Siemens Reseller Advisory Council' securing the leading Siemens Resellers, a channel first and another multi-million revenue line. In addition, Rocom was further mandated as supplier to The Concert Group, a leading consortium of 12 resellers. 

These wins, among many others, resulted in Rocom being awarded the channel's highly prized 'Distributor of the Year' award in June 2008, which reinforces Rocom's ability to meet its 2008 target.

Looking forward, Rocom will continue its development as a leading Converged Distributor having recently agreed distribution arrangements for a Data portfolio with Enterysis and Extreme.

Management

 

The board has been strengthened during the period with the appointment of Fred Hallsworth, CA, non-executive director, announced in February. Fred was previously, Senior Client Service Partner and Head of Technology, Media and Communications for Deloitte, Scotland. He brings with him over 30 years' experience of assisting companies with fundraising, mergers and acquisitions, IPO's and associated transactions. Fred has recently been appointed Chairman of the Group's Audit Committee.

In July, the board was restructured to combine the Commercial Director and Finance Director roles. Andrew Parsliffe, FCA who was previously Commercial Director of the Group with significant FTSE financial and commercial experience, also took over the role of Group Finance Director from Ian Crawley to facilitate Ian's pursuit of other interests. The board would once again wish to thank Ian for his contribution to the Group.

Current trading and outlook

The Group is currently trading in line with the board's expectations and the pipeline and prospect bank have never looked healthier. Our Rocom and Servassure divisions are winning market share, delivering unique ways of procuring new technology and bundling existing services in our ATC Solutions division to combat a declining economy. Having made necessary investments to secure the long term future of our business, we are now aggressively addressing our debt to achieve the board's target of a significant reduction over the second half year. The board is confident of a strong second half performance of profitability and cash generation.

Finally, I would like to take this opportunity to thank our staff for their dedication and excellent work to date and look forward to updating shareholders with further progress in due course. 

Alex Tupman, Chief Executive, 9 September 2008

  Consolidated interim income statement

		6 months to 30 June 2008 Unaudited	6 months to 30 June 2007 Unaudited	Year to 31 Dec 2007 Audited
	Note	£'000s	£'000s	£'000s
Continuing operations
Revenue		46,819	42,730	88,434
Cost of sales		(28,452)	(26,246)	(52,773)
		________	________	________
Gross profit		18,367	16,484	35,661
Administrative costs		(16,943)	(14,642)	(31,443)
		________	________	________
Operating profit	3	1,424	1,842	4,218
Interest received		-	-	20
Finance costs		(883)	(745)	(1,486)
		________	________	________
Profit before tax		541	1,097	2,752
Income taxes	4	60	279	(362)
		________	________	________
Profit for the period		601	1,376	2,390
		______	______	______
Earnings per share:
Basic earnings per share	8	0.8p	2.2p	3.5p
		______	______	______
Diluted earnings per share	8	0.8p	2.1p	3.5p
		______	______	______
		______	______	______
Diluted adjusted earnings per share	8	2.8p	3.3p	7.5p
		______	______	______

Consolidated interim balance sheet

		6 months to 30 June 2008  Unaudited	6 months to 30 June 2007 Restated  Unaudited	Year to 31 Dec 2007 Audited
	Note	£'000s	£'000s	£'000s
ASSETS
Non-current assets
Property, plant and equipment		1,291	1,088	1,153
Goodwill	6	27,182	27,182	27,182
Other intangible assets	6	6,382	7,678	7,030
Deferred tax assets		525	1,195	525
		________	________	________
		35,380	37,143	35,890
		________	________	________
Current assets
Inventories	7	10,980	9,495	9,401
Trade and other receivables		26,100	19,177	23,390
Cash and cash equivalents	10	657	2,219	2,922
Derivative financial instruments		4	-	27
		________	________	________
		37,741	30,891	35,740
		________	________	________
Total assets		73,121	68,034	71,630
		______	______	______
LIABILITIES
Current liabilities
Trade and other payables		19,805	21,414	23,057
Short-term borrowings	10	9,960	8,505	6,508
Current tax payable		1,102	884	1,228
Obligations under finance leases		42	70	41
		________	________	________
		30,909	30,873	30,834
		________	________	________
Non-current liabilities
Long-term borrowings	10	12,938	13,109	11,370
Deferred income tax liability		1,914	2,875	2,109
Obligations under finance leases		-	45	7
		________	________	________
		14,852	16,029	13,486
		________	________	________
Total liabilities		45,761	46,902	44,320
		________	________	________
		________	________	________
Total net assets		27,360	21,132	27,310
		______	______	______
EQUITY
Equity attributable to equity holders of the parent
Share capital	5	771	662	771
Share premium account	5	21,771	16,967	21,771
Capital redemption reserve		6	6	6
Hedging reserve		4	-	27
Profit and loss account		4,808	3,497	4,735
		________	________	________
Total equity		27,360	21,132	27,310
		______	______	______

Consolidated interim statement of changes in equity 

		Share capital	Share premium account	Capital redemption reserve	Hedging reserve	Retained  earnings	Total equity
	Note	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Balance at 1 January 2007		609	15,123	6	-	2,723	18,461
Profit for the period		-	-	-	-	1,376	1,376
Share based payments		-	-	-	-	60	60
		---------------	-------------------	---------------------	-------------------	------------------	----------------
Total recognised income and expense		609	15,123	6	-	4,159	19,897
Dividends		-	-	-	-	(662)	(662)
Issue of share capital		53	1,908	-	-	-	1,961
Cost of shares issued		-	(64)	-	-	-	(64)
		---------------	-------------------	------------------------	-------------------	------------------	----------------
Balance at 30 June 2007		662	16,967	6	-	3,497	21,132
		=======	==========	============	==========	=========	========
Balance at 1 July 2007		662	16,967	6	-	3,497	21,132
Profit for the period		-	-	-	-	1,014	1,014
Share based payments		-	-	-	-	224	224
Gain on interest rate hedges		-	-	-	27	-	27
		---------------	-------------------	-------------------------	-------------------	------------------	----------------
Total recognised income and expense		662	16,967	6	27	4,735	22,397
Issue of share capital	5	109	5,001	-	-	-	5,110
Cost of shares issued		-	(197)	-	-	-	(197)
		---------------	-------------------	-------------------------	-------------------	------------------	----------------
Balance at 31 December 2007		771	21,771	6	27	4,735	27,310
		=======	=========	============	=========	=========	========
Balance at 1 January 2008		771	21,771	6	27	4,735	27,310
Profit for the period		-	-	-	-	601	601
Share based payments		-	-	-	-	243	243
Movement on interest rate hedges		-	-	-	(23)	-	(23)
		---------------	-------------------	-------------------------	-------------------	------------------	----------------
Total recognised income and expense		771	21,771	6	4	5,579	28,131
Dividends	9	-	-	-	-	(771)	(771)
Issue of share capital	5	-	-	-	-	-	-
Cost of shares issued		-	-	-	-	-	-
		---------------	-------------------	-------------------------	-------------------	------------------	----------------
Balance at 30 June 2008		771	21,771	6	4	4,808	27,360
		=======	==========	============	==========	=========	========

 

Consolidated interim cash flow statements

	6 months to 30    June    2008	6 months to 30     June 2007    Restated	Year to 31     December 2007
	Unaudited	Unaudited	Audited
Note	£'000s	£'000s	£'000s
Cash flows from operating activities
Profit before taxation	541	1,097	2,752
Adjustments for:
Depreciation	358	289	628
Amortisation of intangible assets	648	648	1,296
Investment revenue	-	-	(20)
Interest expense	883	745	1,486
Share based payments	243	75	284
(Increase) in inventories	(1,578)	(2,213)	(2,119)
(Increase) in trade and other receivables	(2,710)	(909)	(5,504)
(Decrease) in trade & other payables	(3,210)	(4,938)	(2,633)
	-------------------------	-------------------------	-------------------------
Cash used in operations	(4,825)	(5,206)	(3,830)
Interest paid	(883)	(745)	(1,486)
Income taxes paid	(261)	(301)	(471)
	-------------------------	-------------------------	-------------------------
Net cash (used in) operating activities	(5,969)	(6,252)	(5,787)
	-------------------------	-------------------------	-------------------------
Cash flows from investing activities
Interest received	-	-	20
Purchase of property, plant and equipment	(496)	(149)	(574)
Proceeds of property held for resale	-	3,500	3,500
Proceeds from sale of equipment	-	4	25
Acquisition of subsidiary	-	-	(207)
	-------------------------	-------------------------	-------------------------
Net cash used in investing activities	(496)	3,355	2,764
	-------------------------	-------------------------	-------------------------
Cash flows from financing activities
Proceeds from issue of shares                                      5	-	1,897	6,809
Dividends paid	(771)	(662)	(662)
New loans	20,981	5,214	458
Repayment of long-term borrowings	(19,466)	(9,548)	(6,680)
Payment of finance lease liabilities	(5)	(51)	(135)
	-------------------------	-------------------------	-------------------------
Net cash from financing activities	739	(3,150)	(210)
	-------------------------	-------------------------	-------------------------
Net decrease in cash and cash equivalents	(5,726)	(6,047)	(3,233)
Cash / (overdrafts) and cash equivalents at beginning of period	(277)	2,956	2,956
	-------------------------	-------------------------	-------------------------
Overdrafts and cash equivalents at end of period	(6,003)	(3,091)	(277)
	=========================	=========================	=========================

  Notes to the consolidated interim financial statements 

1          Nature of operations and general information

 

The AT Communications Group plc ('ATC') is one of the UK's leading business communications groups. The Group is focused on delivering a complete suite of IP-centric solutions and services to meet the requirements of the 21st century enterprise. We operate in three divisions to allow us to address the needs of organisations of all sizes through the most cost-effective route to market.

The Group was established in 1999 by current Chief Executive, Alex Tupman, and has subsequently grown significantly both organically and through acquisition. Our growth strategy is designed to leverage advances in next-generation communications in a consolidating marketplace. We have been at the forefront of both the IP technology revolution and the consolidation in the UK market - by anticipating changes to the landscape, ATC will continue to be a leading light in the ICT sector.  

ATC is the Group's ultimate parent company. It is incorporated and domiciled in Great Britain. The address of AT Communications Group plc's registered office, which is also its principal place of business, is Greenway House, Pinnacles, Harlow, Essex, CM19 5QD. AT Communications Group plc's shares are listed on the AIM Market ('AIM') of the London Stock Exchange.

The consolidated interim financial statements of ATC are presented in Pounds Sterling, which is also the functional currency of the Group. 

Basis of accounting

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted for use in the European Union. The financial statements have been prepared on the historical cost basis, except for the revaluation of certain financial instruments and follow the same format as the audited accounts for the year ended 31st December 2007.

3          Business Segments 

For management purposes, the Group is currently organised into three operating divisions - Rocom, ATC Solutions and Servassure. These divisions are the basis on which the Group reports its primary segment information. Each division is engaged in the supply of telecommunication products, services and solutions to the business market and the distinguishing feature of each division is the customer segment that it addresses. The Group's operations are all located in the UK and sales are almost exclusively to UK customers and therefore in the opinion of the directors there is only one geographic segment. On this basis no secondary segmental analysis is deemed appropriate.

Segment information about these businesses is presented below. 

 

6 months to 30 June 2008	Rocom	ATC Solutions	Servassure		Group & eliminations	Consolidated
	£'000	£'000		£'000	£'000	£'000
Revenue
External sales	19,343	20,695		6,781	-	46,819
Inter-divisional sales	1,632	-		3,767	(5,399)	-
Total revenue	20,975	20,695		10,548	(5,399)	46,819
Operating profit	919	1,707		219	(1,421)	1,424
Share based payments	54	4		9	176	243
Amortisation of intangibles	-	-		-	648	648
Non-recurring and restructuring costs	-	31		-	130	161
Net investment in the Servassure business (Headcount) Additional costs less income generated in H1 2008				874*		874
Underlying operating profit	973	1,742		1,102	(467)	3,350
Depreciation	142	95		121	-	358
Underlying EBITDA	1,115	1,837		1,223	(467)	3,708
Finance costs - net						(883)
Profit before income tax						541
Income tax credit						60
Profit for the period						601

*The net investment in Servassure has been excluded to give like-for-like comparability of operating profits between the three periods. This measure is only included to give the reader a clearer understanding of the performance of the Servassure division in H1 2008 and is not regarded as a 'non-recurring' or 'restructuring' in nature and therefore will not be treated in this fashion at the year-end.

Inter-segment sales are charged at prevailing market prices. Segmental results are shown before Group management charges have been applied.

  

Year to 31 December 2007	Rocom	ATC Solutions	Servassure	Group & eliminations	Consolidated
	£'000	£'000	£'000	£'000	£'000
Revenue
External sales	36,358	41,354	10,722	-	88,434
Inter-divisional sales	5,142	-	7,785	(12,927)	-
Total revenue	41,500	41,354	18,507	(12,927)	88,434
Operating profit	2,626	4,120	2,933	(5,461)	4,218
Share based payments	33	22	22	207	284
Amortisation of intangibles	-	-	-	1,296	1,296
Non-recurring and restructuring costs	-	86	128	1,678	1,892
Underlying operating profit	2,659	4,228	3,083	(2,280)	7,690
Depreciation	252	248	224	(96)	628
Underlying EBITDA	2,911	4,476	3,307	(2,376)	8,318
Finance costs - net					(1,466)
Profit before income tax					2,752
Income tax expense					(362)
Profit for the year					2,390

Inter-segment sales are charged at prevailing market prices. Segmental results are shown before Group management charges have been applied.

6 months to 30 June 2007	Rocom	ATC Solutions	Servassure	Group & eliminations	Consolidated
	£'000	£'000	£'000	£'000	£'000
Revenue
External sales	19,174	19,383	4,173	-	42,730
Inter-divisional sales	1,413	-	4,187	(5,600)	-
Total revenue	20,587	19,383	8,360	(5,600)	42,730
Operating profit	850	1,560	818	(1,386)	1,842
Share based payments				75	75
Amortisation of intangibles	-	-	-	648	648
Non-recurring and restructuring costs	-			500	500
Underlying operating profit	850	1,560	818	(163)	3,065
Depreciation	148	53	90		291
Underlying EBITDA	998	1,613	908	(163)	3,356
Finance costs - net					(745)
Profit before income tax					1,097
Income tax credit					279
Profit for the period					1,376

Inter-segment sales are charged at prevailing market prices. Segmental results are shown before Group management charges have been applied.

4          Income Tax

The taxation charge has been estimated has been estimated at 30% (2007: 30%).

	6 months to 30 June 2008	6 months to 30 June 2007
	£000's	£000's
Estimated tax charge at 30%	135	329
Deferred tax - reversal of temporary difference	(195)	(608)
Period credit	(60)	(279)
	===================	==================

5          Share issue

During the period to 30 June 2008 no shares were issued in a share placement arrangement. Shares issued and authorised for the period to 30 June 2008 are summarised as follows:

6 months to 30 June 2008

	Number	£
At 1 January 2008	77,141,356	22,540,013
Issue of shares net of costs	-	-
	________	________
At 30 June 2008	77,141,356	22,540,013
	==============	=============

6 months to 30 June 2007

	Number	£
At 1 January 2007	60,908,464	15,732,497
Issue of shares net of costs	5,300,000	1,897,002
	________	________
At 30 June 2007	66,208,464	17,629,499
	===============	=============

Year to 31 December 2007

	Number	£
At 1 January 2007	60,908,464	15,732,497
Issue of shares net of costs	15,938,298	6,698,516
Exercise of warrants	294,594	109,000
	________	________
At 31 December 2007	77,141,356	22,540,013
	==============	==============

 

The following tables show the significant additions and disposals to intangible assets.

	Trade name	Customer lists	Intangibles total	Goodwill
	£'000s	£'000s	£'000s	£'000s
Carrying amount at  1 January 2008	1,971	5,059	7,030	27,182
Amortisation	(94)	(554)	(648)	-
	-------------------------	-------------------------	-------------------------	-------------------------
Carrying amount at  30 June 2008	1,877	4,505	6,382	27,182
	=================	================	===============	==================

	Trade name	Customer lists	Intangibles total	Goodwill
	£'000s	£'000s	£'000s	£'000s
Carrying amount at 1 January 2007	2,160	6,166	8,326	26,975
Adjustment in respect of 2006 acquisitions	-	-	-	207
Amortisation	(94)	(554)	(648)	-
	-------------------------	-------------------------	-------------------------	-------------------------
Carrying amount at 30 June 2007	2,066	5,612	7,678	27,182
	=================	================	===============	=================

	Trade  name	Customer lists	Intangibles total	Goodwill
	£'000s	£'000s	£'000s	£'000s
Carrying amount at 1 January 2007	2,160	6,166	8,326	26,975
Adjustment in respect of 2006 acquisitions	-	-	-	207
Amortisation	(189)	(1,107)	(1,296)	-
	-------------------------	-------------------------	-------------------------	-------------------------
Carrying amount at 31 December 2007	1,971	5,059	7,030	27,182
	=================	================	===============	=================

 

	6 months to 30 June 2008 Unaudited	6 months to 30 June 2007  Unaudited	Year to 31 Dec 2007  Audited
	£'000s	£'000s	£'000s
Maintenance stock	4,070	3,885	3,967
Stock held for re-sale	4,938	4,405	4,250
Work-in-progress	1,972	1,205	1,184
	________	________	________
	10,980	9,495	9,401
	==========	==========	===========

8          Earnings per share 

 

The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year. Shares held in employee share trusts are treated as cancelled for the purposes of this calculation.

The calculation of diluted earnings per share is based on the basic earnings per share, adjusted to allow for the issue of shares and the post tax effect of dividends and/or interest, on the assumed conversion of all dilutive options and other dilutive potential ordinary shares.

Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below:

	6 months to 30 June 2008 Unaudited	6 months to 30 June 2007  Unaudited	Year to 31 Dec 2007 Audited
Earnings	£'000s	£'000s	£'000s
Earnings for the purposes of basic earnings per share being net profit attributable to equity holders of the parent	601	1,376	2,390
Effect of dilutive potential ordinary shares:	-	-	-
Earnings for the purposes of diluted earnings per share	601	1,376	2,390
Operating profit (Note 3)	1,424	1,842	4,218
Amortisation of intangible assets	648	648	1,296
Non -recurring expenses	161	500	1,892
Net investment in Servassure operations	874	-	-
Underlying profit before income tax	3,107	2,990	7,406
Less: Underlying income tax expense	(932)	(897)	(2,222)
Earnings for the purposes of diluted adjusted earnings per share	2,175	2,093	5,184
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings per share	77,141,356	63,455,978	69,231,218
Effect of dilutive potential ordinary shares:
Share options	-	607,785	27,898
Weighted average number of ordinary shares for the purposes of diluted earnings per share	77,141,356	64,063,763	69,259,116
Earnings per share	£	£	£
Basic	0.8p	2.2p	3.5p
Diluted	0.8p	2.1p	3.5p
Diluted adjusted*	2.8p	3.3p	7.5p

 

* Diluted adjusted EPS is calculated after adding back amortisation, non-recurring expenses and the net investment in the Servassure business (adjusted for tax at an underlying rate of 30%).

9                Dividends

AT Communications Group plc will make an aggregate dividend payment of £771,413 to its equity shareholders on 16th September 2008. This represents a payment of £0.01 pence per share.

	6 months to 30 June 2008 Unaudited	6 months to 30 June 2007 Unaudited	Year to 31 Dec 2007  Audited
	£'000s	£'000s	£'000s
Bank overdrafts	6,660	5,310	3,199
Bank loans	16,498	16,493	14,615
Issue costs	(565)	(287)	(382)
Other loans	305	-	381
Loan notes (issued for Britannia acquisition)	-	98	65
	22,898	21,614	17,878
The borrowings are repayable as follows:
On demand or within one year	9,960	8,505	6,508
In the second year	12,938	13,109	11,370
	22,898	21,614	17,878
Cash and cash equivalents	657	2,219	2,922
	________	________	________
	657	2,219	2,922
Net debt	22,241	19,476	14,956

ENDIR FKFKQKBKBBCK