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AT Communications Group

Companies: ATCG ��
09/04/2008

Business communications counter ATC, whose partners and clients include BT, Cable & Wireless, HMV, Tesco and Somerfield, dialled up strong adjusted profits growth for calendar year 2007.

Pre-tax profits, before amortisation and one-off and non-cash costs, grew 35% to �6.2m, though profit before tax fell to �2.8m (2006: �3.7m). Sales grew by more than 60% to �88.4m, reflecting full-year flourishes from two key 2006 acquisitions, as well as strong 11% organic growth.

These strong results were achieved despite management having to integrate earlier acquisitions – chief executive Alex Tupman says further deals are 'unlikely' this year in the current climate – as well as restructure the group into three key divisions, ATC Solutions, Rocom and Servassure. Each arm has lately cheered with high-profile contract wins, trending towards more complex, higher-margin deals with the likes of Avaya and De La Rue.

ATC, with plenty of growth to go for organically, is focusing its efforts on the fast-growing IP-based parts of the communications market. Moreover, visibility levels are growing, with more than 70% of annualised sales now contracted and recurring. Having reached critical mass, strengthened its balance sheet and with further contracts set to excite, unloved ATC looks a compelling share price recovery play. Based on last year’s increased earnings of 8.1p (2006: 7.4p), the company trades on a miserly historic earnings multiple of just 4.4 times. Buy.

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James Crux

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