AT Communications Share Discussion Threads

[stegrego] 27/7/2008 17:07

Well thats not much good - my average is more than that!

[welsheagle] 27/7/2008 16:21

LONDON (Thomson Financial) - AT Communications Plc. is in line for a possible management buyout this week in an offer which could be worth up to 40 pence a share, the Independent on Sunday reported.

[london calling] 24/7/2008 22:46

Worrying to see the FD going after just a year and given his previous experience, not least as he bought quite large numbers of shares when the price was much higher. Will he retain these or sell them? the new contracts are good news and indicative that the company is making progress but as davidosh says, a trading statement on the first half results would be useful. I sold, at a loss, at 30-34p, so am not currently a holder. The dive in the share price in the last few weeks does not bode well.

[dorkus maximus] 24/7/2008 15:48

yes, and miss one of those balloon payments on the debt repayment and Mr Bank Manager will come down on it....just imagine where the price will be if that happened!!

[masurenguy] 24/7/2008 15:38

Well the debt is entirely related to the £18m Rocom aquisition in August 2006. The aquisition was funded by debt wheras, with the infallible wisdom of hindsight, it would have been much better to have funded it by dilution. In the current climate any form of long term debt is a negative in terms of market sentiment.

Having said that the debt was reduced to £15m at the last year end and is projected to be reduced to £12m by the end of this year. The key to achieving this is growth in income emanating from growth in sales. They are clearly making good sales progress as indicated by the 5 major new blue chip contracts that have been announced so far this year.

Feb: New 2 yr contract with Amazon 'expected to generate in excess of several million pounds of revenues per annum over the period and is an extension to an existing contract first awarded in 2004'.

Mar: New 3 yr contract with De La Rue 'anticipated to be worth "several million pounds" over the period with maintenance revenues generating a similar amount.

Mar: New 2 yr contract with Avaya worth £7m of revenues over two years to distribute Avaya's portfolio of Small to Medium Business products.

Apr: New 'multi-million-pound contract with Ericsson'. Rocom will serve as Ericsson's Master UK distributor for all voice,data and mobility applications.

July: New 3 yr contract with C & W to 'act as an exclusive partner of its
expanding product portfolio into the small and medium enterprise and reseller
markets which is expected to drive additional annual revenues in excess of £5m'

Broker forecasts show a current year PER of just 3.2 and a forward PER of 2.9.

ATCG Forecasts
YEnding Revenue Pre-tax EPS P/E PEG
31-Dec-08 £98.53 6.60 7.12p 3.2 n/a
31-Dec-09 £105.5 7.86 7.94p 2.9 0.3

The company is also currently paying a dividend of 1p per share (went xd yesterday) which is the equivalent to a yield of 4.5% at todays share price.

If one adds the projected year end debt to the current market cap the EV is now £29m which translates into an equivalent forward PER of just over 5. The current price is primarily a reflection of the present broader market economic issues than anything else since whilst the share price has more than halved in the past 12 months sales and EBITDA have increased by 63% and 40% respectively during the same period.

[dorkus maximus] 24/7/2008 12:35

the debt gets u in the end

[papalpower] 24/7/2008 12:11

Another Masurenguy ramp gone wrong ????????? Is it ?

[whiterussians] 23/7/2008 16:51

Since the year end the Group has refinanced its debt and strengthened its balance sheet. The new facility with HBOS comprises a term loan of £16.5m amortising over 5 years .................

Having to pay the back back in 5 years looks abnormally short. Wonder if they have had pressure from the bank??

[whiterussians] 23/7/2008 13:07

tanking again

[whiterussians] 23/7/2008 13:05

I thought Op profit was before the goodwill amortisation. Do you think they need to take a write off on the goodwill under IFRS?!!!! No imho.

Price is tanking.

[puffin tickler] 23/7/2008 03:33

dorkus

operating profit is AFTER "paying" 1.9 M depreciation and amortisation, both of which release cash. OK depreciation perhaps needs to be spent on replacing assets but amortisation of 1.3 M can pay back debt. Also high exceptional charge of 1.9M for restructuring reduced the OR, exceptionals are rather the rule for ATCG but we can expect over 1M extra cash from here too.

So, need 4.5M interest and capital; should have 4.1 operating profit + 1.3 amortisation +1.1 less exceptionals = 6.5M. Very comfortable.

They will only have a cash problem if sales growth turns significantly into reverse.

[dorkus maximus] 22/7/2008 22:51

Errr they only have op. profit of £4.1m so repayments not covered by cash. ouch!!

[puffin tickler] 22/7/2008 19:28

Alot, but quite doable

[whiterussians] 22/7/2008 15:10

AT - high debts and finance director leaves on 18 July.
Is this good news?







Masurenguy - 22 Jul'08 - 08:20 - 1221 of 1222


From the Final Results to 31st Dec that were issued on April 9th

"The Group's net cash position improved by £3.0m during the year with net debt
reduced to £15.0m (2006: £18.0m)....Since the year end the Group has refinanced its debt and strengthened its balance sheet. The new facility with HBOS comprises a term loan of £16.5m amortising over 5 years and a committed revolving credit facility for £7.5m."




whiterussians - 22 Jul'08 - 15:07 - 1222 of 1222 edit


£16.5m over five years is about £4.5m of interest and capital that needs to be repaid every year for five years I think. Sounds like a lot.

Finance director resigned on the 18th July

[whiterussians] 22/7/2008 15:07

£16.5m over five years is about £4.5m of interest and capital that needs to be repaid every year for five years I think. Sounds like a lot.

Finance director resigned on the 18th July

[masurenguy] 22/7/2008 08:20

From the Final Results to 31st Dec that were issued on April 9th

"The Group's net cash position improved by £3.0m during the year with net debt
reduced to £15.0m (2006: £18.0m)....Since the year end the Group has refinanced its debt and strengthened its balance sheet. The new facility with HBOS comprises a term loan of £16.5m amortising over 5 years and a committed revolving credit facility for £7.5m."

[dorkus maximus] 22/7/2008 07:54

How much debt has this one got and what are the bank covenants?

Thank you
dm

[jwe] 21/7/2008 18:29

M-thanks for the update although i admit to selling a few of these early this morning, but will hold the majority to see how things pan out

[dorisken] 21/7/2008 13:25

I have been a holder of these for a while, on the back of dirs purchases.
Whilst I am always nervous of a Fin Dir leaving, I am reassured by the posts that folk have bothered to post on this BB. So thankyou and I shall continue to be a ( albeit nervous ) holder.

[scburbs] 21/7/2008 12:45

Thanks for the reminder PP, It does seem like ATCG are ticking the boxes for the expected upgrade and 50% upside from the mid 30's (or whatever the price was at the time of the note).

From KPC Peel Hunt note.

"Despite recent good newsflow in contract wins, and improvement in metrics, we still need to see these are a trend."

With the Ericsson and Cable & Wireless large contract wins it certainly looks like a trend to me. Looks like KBC Peel Hunt will be getting ready to upgrade (assuming Crawley is not leaving because of a lack of control over cashflow!)

Masurenguy, Thanks for taking the time. Did you get any feel for the reasons behind Crawley's departure? He doesn't seem to have lasted very long which isn't a good sign.

[masurenguy] 21/7/2008 11:48

I've spoken to the company this morning in relation to both Ian Crawleys departure and todays announcement of the contract win with C & W.

Ian Crawleys departure was both amicable and by mutual agreement and a full handover to Andrew Parsliffe has already been implemented. He joined the Company last year as Commercial Director and has circa 30 years of prior finance and commercial experience with several FTSE main market companies. He already knows and understands the companys business model and is clearly up to speed with current business developments from his prior role. IC remains a significant shareholder in the company and, as far as I'm aware, he still anticipates achieving a good return on his investment here in due course.

The C & W contract is certainly a very important milestone for the company since it will enable ATC to develop its customer base even further by being in a position to exclusively offer the comprehensive C & W range of IP, hosting, digital media and security products specifically targeted at the growing SME market. This new partnership agreement will also uniquely facilitate ATC with direct online access to C & W systems which will provide them with a much more efficient and cost effective competitive advantage. This new partnership with C & W, following other significant blue chip contract wins with Ericsson, Avaya and De La Rue over the past few months, clearly demonstrates the maturing credibility that ATC is now achieving in the Telecoms sector.

[papalpower] 21/7/2008 09:33

Its worth remembering this from April :


KBC Peel Hunt say "SELL"


AT Communications (ATCG) – Initiation of Coverage:

Results in line – EST: N/A, REC: SELL

While AT Communications appears undervalued, at only 5x adj EPS as reported today for the period ending December 2007 and in line with our forecasts at every level, we will wait for confirmation of delivery of positive key operating trends before upgrading our recommendation. With more potential negative than positive company and market triggers, we believe we are at least six months away from a change in the tide of sentiment should the company continue to deliver in line with expectations, as that is when improving fundamentals might confirm control of net debt (which admittedly is already less than 2x EBITDA, but still must deter consolidators and prevent AT from making further substantial acquisitions).

Keep an eye on ATC: development of trends to the September interims will be the key and we are impressed with the developments in the product lines. Despite recent good newsflow in contract wins, and improvement in metrics, we still need to see these are a trend. One for the brave at the moment and one to watch in six months time when interim performance becomes apparent, with a potential 50% upward shareprice movement, if recovery is proven, in our opinion.

At 4.4x December 2008E PER, and a 3.5% dividend yield the stock appears cheap but not yet compelling with so many macro and stock specific risk factors.

[masurenguy] 21/7/2008 07:48

"Welsheagle - 29 Jan'08 - 924: LONDON (Thomson Financial) - AT Communications Group PLC said finance director Ian Crawley bought 100,000 shares in the company at 38 pence each, upping his stake in the UK-based IT technology supplier to about 2.46 mln shares, or 3.19 pct of the issued share capital.

Masurenguy - 29 Jan'08 - 925: He has now made three purchases, in June and July last year and then a third purchase last week. His average purchase price is now 41.1p, which represents a personal investment of just over £1m."
.............................................................................................

That's right Gryphon2, IC invested £1m at an average price of 41p. Very good C & W £5m new contract announcement this morning following the De La Rue, Avaya and Ericsson contract wins over the past few months and 'interesting timing' following the Board reshuffle announcement after Fridays close !