AT Communications Share Discussion Threads

[masurenguy] 15/4/2009 07:09

Rocom was clearly an acquisition too far and prior to its disposal net debt was up yet again to £18m. However having disposed of Rocom for £12.45m and written off the remaining Goodwill of £5.9m post y/e they have cleared the decks and are now in a much stronger position to grow their core remaining divisions with net debt down to circa £6.5m. The strong growth in sales and profit contribution from Servassure in particular should provide a solid basis for future growth in both sales and profits.
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RNS Number : 5667Q
AT Communications Group Plc
15 April 2009

Preliminary results for the year ended 31 December 2008

ATC reports strong operating performance in continuing activities and a positive outlook/

AT Communications Group plc, the award-winning supplier of Information and
Communications Technology ("ICT") solutions announces its preliminary results
for the year ended 31 December 2008.

Financial highlights:

* Group revenue up 11% to GBP98.4m (2007: GBP88.4m). Continuing revenues (post disposal of Rocom) up by 22% to GBP52.9m (2007: GBP43.3m)

* Underlying EBITDA up 5% to GBP8.7m (2007: GBP8.3m). Continuing underlying EBITDA up 40% to GBP5.3m (2007: GBP3.8m)

* Operating profit before amortisation, impairment, non-recurring expenses and share based payments increased by 3% to GBP8.0m (2007: GBP7.7m). Continuing operating profit increased by 41% to GBP4.8m (2007: GBP3.4m)

* Pre-tax profit, before amortisation, impairment, non-recurring expenses and share based payments decreased by 4% to GBP6.0m (2007: GBP6.2m)

* Net debt increased to GBP18.1m at 31 December 2008 (2007: 15.0m)

* Underlying profit after tax increased by 41% to GBP4.8m before charging GBP5.9m of impairment of intangible assets relating to the disposal of Rocom Ltd

* Adjusted EPS decreased to 7.5p (2007: 7.9p)

Operational highlights:

* Investments in people and service development for our Servassure division during the period resulted in 58% increase in revenues for that division

* Success of this strategy evidenced by period contract wins with OGC Buying Solutions and further new maintenance wins with Comet (via BT), IBM, as well as post period end contract wins with BT.

* Contract wins during the period include distribution agreements with Amazon, AVAYA and Ericsson, a global IPT roll out with De La Rue and Voice and Data contracts with Carpetright.

Post balance sheet events
* ATC balance sheet improved though Rocom disposal
* Rocom disposal for a consideration of GBP12.45m
* Further post period end contract wins include an agreement with BT to expand third part maintenance revenues and a series of IPT Healthcare contracts with four NHS Primary Care Trusts.

Commenting on results, Scott Kean, Interim Chief Executive, said: "2008 has been a year of transition in which we have again, despite the economic
downturn, achieved organic revenue growth. The disposal of Rocom, post year end has strengthened our balance sheet. It also allows us to refocus on our core divisions and capabilities with a view to continuing to reduce our levels of debt while still growing profitably. Our Servassure division has performed well, achieving 58% growth during the period. Significant new contract secured after the year end reflects the market's confidence in our capabilities, which will further underpin our future success. Despite these challenging times, I am confident of the future prospects for the refocused Group and look forward to updating shareholders with further news in due course."




Board strengthened with appointment of New Non-Executive Director and
prospective Chairman

The Board of AT Communications is delighted to announce the appointment of John Standen as Non-Executive Director and, following Gerry Spencer's announcement today of his intention to step down from the Board at the Company's forthcoming AGM, John will succeed Gerry as Chairman.

John (60), spent almost 30 years with Barclays Plc before retiring in 1998
having held a number of senior management positions. His career with Barclays
was mostly spent in corporate finance and included being CEO of the Corporate
Finance division of BZW. Post 1998, John has developed significant Non-Executive Director experience across a range of sectors and has been involved in some major corporate challenges, such as being Chairman of Reg Vardy plc when it was acquired by Pendragon plc in 2006 for GBP500m. He was also Chairman of Chapelthorpe plc, a mini conglomerate, which reduced its
banking indebtedness substantially during his involvement up to 2006. He has
held other non-executive roles within a variety of IT, technology and software
companies over the last ten years.

He is currently Chairman of Xploite plc, an IT data storage business, Stanelco
plc, a bio plastics business and a senior non-executive director of Lavendon
Group plc Europe's market-leading 'powered access' equipment rental group.

Commenting on the appointment, Scott Kean Interim CEO of AT Communications, said: "I am delighted to welcome John to the Board. He brings extensive City experience to the Group and will be invaluable to the management team as we grow our recently restructured business. Once again, I would like to take this opportunity to thank Gerry for his significant contribution over the years and wish him the very best for the future."

Save as disclosed below there are no additional disclosures to be made in
accordance with paragraph (g) of Schedule 2 of the AIM rules for John Standen.

[rivaldo] 11/4/2009 12:15

Interesting snippet from a Collins Stewart broker note issued 24th March per a poster on i.i.i - with a 34p target price.

I suspect 34p is a little hopeful (!), but if the results and outlook are as solid as hoped then we could go a fair way up from here:

"Price target 34p

AT Communications (ATC) announced the disposal of Rocom Ltd this morning for a headline £12.5m. The consideration includes an upfront payment of £12m and one further, unconditional, £0.5m payment in 12 months. This disposal transforms the company s balance sheet, which has weighed heavily on the rating of the shares in the last year, and should provide the catalyst for a re-rating of the stock in the short term.

Trading on a PE of only 2.8 to December 2009 (EV/EBITDA 3.1), the shares clearly offer material upside now that any doubts over the financial stability of the group have been removed. We believe that this distressed rating, together with the announcement that Alex Tupman is stepping down as CEO, also leaves the group vulnerable to a take-over approach.

Forecasts

Whilst it is difficult to make definitive forecasts in the absence of audited figures for 2008, we have reduced our revenue and EBITDA forecasts for 2009 to £54.4m and £5.1m respectively. These figures exclude the two months of contribution from Rocom in 2009, which we estimate to amount to revenue of £7m and EBITDA of £0.4m, and assume that sales fall by 3% at the continuing operations in 2009. We consider this assumption to be conservative given the continued growth of Servassure and the promise of further major contract wins in due course .

We believe that Rocom has consumed cash in each of the last three years as the business has grown. Rocom consumed at least £2.0m of cash in 2008, despite the solid EBITDA contribution. Thus, the disposal not only strengthens ATC s balance sheet, but should help to improve the future cash flow profile of the group. We expect net debt to be c£6m by the end of 2009 (1.2x EBITDA), excluding the positive impact of the £3m of deferred consideration to be received over the next two years.

ATC post Rocom

Post the disposal of Rocom, ATC consists of three businesses -Network services, Solutions and Servassure. Servassure has grown rapidly in the last two years and we believe offers scope for material upgrades to our forecasts through the remainder of 2009. We expect a marginal decline in revenues from both Network Services and the Solutions business. We estimate that c70% of sales in the continuing business are contracted and recurring.
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[masurenguy] 09/4/2009 09:06

Little bit of speculative buying prior to next Wednesdays results !

[masurenguy] 30/3/2009 07:32

RNS Number : 6582P
AT Communications Group Plc
30 March 2009

Notice of Results: AT Communications Group plc, announces that its full year results for the year ended 31st December 2008 will be announced on Wednesday 15th April 2009.

[brumont] 29/3/2009 08:07

Time to close this thread as the header is out of date. Neither correct in the case of debt or pertinent in the case of the FD.

[masurenguy] 27/3/2009 12:57

The price only fell back because someone sold 38,155 @14p, which was below the Bid, at around 11.30am. Buys are still well ahead of Sells today. The Outlook in the Results statementr will be particularly interesting since it will project a new year without Rocom sales (41%) and operating profit contribution (27%) with debt in the region of £6m.

We should be looking for forward sales of at least £60m from Solutions & Serveassure but it will be interesting to see the potentially positive impact on both margins and operating expenses after the Rocom disposal. Improved margins, lower expenses and significantly lower gearing should have a positive impact over the next 12 months !

[rivaldo] 27/3/2009 11:54

Perhaps an overhang cleared then Mas? Certainly looking stronger here than in the past.

Results were 9th April last year, so s/be only a week or two to go. We know that the results will be fine, but more importantly the outlook is very strong too - and they'll be able to boast about debt reduction too:

From the year end trading update:



"The Group expects to report turnover and EBITDA in line with expectations at approximately £97 million and £8.8 million respectively, and pre-tax and pre-goodwill profits in the order of £6 million."

"In addition, the Group has started the year with a strong order book and expects to shortly announce further major contracts wins from its Servassure division. The Group remains focused on effective working capital management with all new business underpinning this strategy by being working capital positive."

EDIT - oh well :o((

[masurenguy] 26/3/2009 11:59

Sizeable transaction of 677,000 @14.75p went through about 20 minutes ago !

[brumont] 26/3/2009 10:35

absolutely no reason to pass the divi given that they have already reduced debt to £5m.
However, as long as we see an upward movement in the share price to reflect the new reality, I dont care either way.

[jwe] 26/3/2009 09:54

130k buy just gone through so looking good with some bigger buyers coming in.Not sure about expecting a divi though,it could well be passed this year.

[masurenguy] 26/3/2009 09:50

A little bit of buying interest following this mornings news.
Still no date announced for the results - last year they were on April 9th.

[staymour] 26/3/2009 09:08

Well it's all good grist to the mill.

Looks like everyone is waiting to see what the results tell us.

On the face of it a nicely cleaned up business with much reduced debt levels, and a nice divi yield.

[rivaldo] 26/3/2009 07:14

Now this is pretty exciting news imo (even as an RNSNON)....the possibilities must be huge across all the remaining NHS Trusts:



"New Health Sector Contracts worth £1.4m secured

ATC is pleased to announce that the Group's ATC solutions division has secured a series of new Primary Care Trust (PCT) contract wins.

These include a combined Primary Care Trust project for both Luton and Bedfordshire with ATC designing, installing and maintaining a full IP voice and data solution across both territories.

In addition, the Group has secured a new contract with 2gether NHS Trust, the governing body for mental health services across Gloucester and Bristol. ATC will roll out a complete IP solution across 40 sites and 2,500 extensions that centralises mobile convergence and tele-working whilst drastically reducing the Trust's ongoing OPEX costs.

The Group is also delighted to announce that Nottingham's PCT has extended its initial 2 year contract with ATC to install IP hardware across 23 sites that will centralise their messaging platform as well as their Pandemic Flu contact centre.

Scott Kean, ATC's Interim CEO commented:-

'Within our refocused business, I am delighted to announce a series of new health sector wins, which is testimony to the strength of our sector experience and capability following recent investments in our ATC Solutions division. Significant opportunities exist within this sector and ATC is very well positioned to capture further market share'."

[scburbs] 24/3/2009 11:45

Actually they have effectively provided the EBITDA for the remaining business. It is not £6.2m it is £5.3m (£8.8m less £3.5m), although this will include certain central costs that perhaps would be excluded in a business valuation.

On EBITDA of £5.3m the numbers are 28p at 5*EBITDA and 18p at 3.55*EBITDA (both still assuming debt at £5m).

[scburbs] 24/3/2009 11:40

Good to see the disposal news even at a low valuation.

Estimate of the value of the remainder is £6.2m EBITDA*5 = £31m EV
less £5m debt gives £26m equity value or 34p per share.

The remaining business should trade at a premium to the Rocom exit multiple as Rocom will have been at a discounted multiple due to its negative working capital characteristics.

If the Rocom exit multiple is used then the equity is value c.22p.

[brumont] 24/3/2009 11:38

Have just been quoted 14.98 to buy 10,000, so the 16p quote is a tad optimistic.
However, that does mean the 500000 was a buy so the upward momentum may continue.

[staymour] 24/3/2009 11:27

Rocom was tying up large amounts of working capital and was generating the lowest margins of the three divisions.

Think market reaction though muted gives an indication that it was a good move overall.

Servassure has had a lot of investment poured into it recently and it and the Solutions business should now constitute a tight little business operation.

Hopefully the date of the prelims will be announced very shortly now this major update is out of the way.

[jwe] 24/3/2009 11:15

David-I suspect it is being veiwed that the purchase of Rocom was a bad move(esp as they made a loss on it).It looks to have been consuming cash,so in todays enviroment it is best sold

[davidosh] 24/3/2009 10:58

Why is Alex stepping down now ? Surely there is still much to do here and the company does have his initials. Is the suggestion that it was a bad move buying Rocom ? What is happening to the director that was in charge of Rocom ? Is he staying with the company ? Is he applying for the CEO job maybe ?

What date are the results coming out and why not given in this RNS ?

[puffin tickler] 24/3/2009 10:47

Seems a fair reaction to the news, better price than might have been feared given the current market leaving a tighter rump business with much reduced debt and good prospects going forward.

[staymour] 24/3/2009 10:21

Something that could also have a positve influence on the share price is who they appoint as the new ceo.

Hopefully this person will maintain a strong financial discipline on the group.

[jwe] 24/3/2009 09:55

Probably not a R/O.More likely a matched buy and sell imo

[rivaldo] 24/3/2009 09:45

Looks like 2m shares bought at 15p....

EDIT - or is it a rollover at 15p/15.04p?

[rivaldo] 24/3/2009 09:13

Nice to see this finally paying off.

Not a bad deal in the current market, though hardly a blockbuster - as jwe says it was a cash drain and has stabilised the group.

M/cap is around £11m at 14.5p. Underlying EBITDA for Servassure and Solutions is almost £6.2m based on doubling up the 2008 interims. H2 is normally better than H1 from memory, so this should even out allowing for a bit of slowdown, although the last trading update was very optimistic.

With say £5m-£6m of debt this means ATCG is pretty cheap (as are a lot of stocks!), but ATCG now has the momentum, its future is secured and it should in theory do relatively well in a downturn as has been noted previously.

The new 2009 forecasts will be interesting. Hopefully the 2008 results will be as positive as the last trading update.