Fibernet Group PLC - Trading Statement

Embargoed until 0700 on Wednesday 7^th December 2005

Fibernet Group Plc

First Quarter Trading Statement

Basingstoke, 7th December 2005

Fibernet Group plc, the bespoke network service provider, today reports on progress for the first quarter of the financial year, ended 30 November (Stuttgart: A0Z24E - news) 2005.

Highlights:

Service Contract revenues increased to £11.6m

· Q1 2006 £11.6m

· Q4 2005 £11.4m

· Q3 2005 £11.1m

· Q2 2005 £11.2m

· Q1 2005 £11.6m*

* Note: reported Q1 2005 service contract revenue was £11.6m. This included an exceptional contract termination payment of £0.5m. Excluding this exceptional payment, the underlying revenue was £11.1m.

Total (Other OTC: TTFNF.PK - news) new contract value (TCV) signed was £12.7m

· Q1 2006 £12.7m

· Q4 2005 £16.2m

· Q3 2005 £7.8m

· Q2 2005 £14.2m

· Q1 2005 £9.9m

The 12 month rolling TCV run rate increased from £48.1m in Q1 2005 to £50.9m in Q1 2006.

An exceptional gain of £1.5m has been recorded, arising from the sale of an asset (£0.3m) and the restructuring of several fibre leases (£1.2m). The restructuring of the leases also yields a reduction in ongoing annual operating costs of £0.5m.

The funding position remains strong; cash is predominantly used to connect new customers.

Cash balance:

· Q1 2006 £16.9m

· Q4 2005 £17.2m

· Q3 2005 £10.5m

· Q2 2005 £11.7m

· Q1 2005 £13.4m

Charles McGregor, Chief Executive, comments:

"Fibernet's performance in the first quarter has been solid and we continue our progress towards profitability. New business orders and contract renewals for the first quarter have both been to plan. Our margins remain in line with our expectation and we continue to maintain a substantial cash balance. The validity of our niche focus is well supported by these results."

Trading:

In the last quarter we have made positive progress in all areas of the business.

We have continued to enjoy success in the Business Continuity and Storage Networking market with large corporate customers and we are pleased to report new business wins in this area including T-Systems (for Linklaters) and repeat orders from JP Morgan and GlaxoSmithKline (Other OTC: GLAXF.PK - news) . Our special relationship with Cisco Systems (NasdaqGS: CSCO - news) in this area remains a strong differentiating factor.

Our recent execution of a major technology and capacity upgrade for our national network was both well timed and operationally well executed. The upgrades were planned to coincide with a series of major investments by tier 1 and tier 2 Internet Service Providers (as well as a number of new entrants to the broadband market) in local loop unbundling projects. Very few of these companies own their own national infrastructure and Fibernet's neutrality (we do not provide consumer or SME broadband) and suitability (our upgrades provide exactly the right sort of service for very high density broadband deployments) have enabled the company to capture business with both OPAL (for The Carphone Warehouse) and Be Un Limited. We expect to report further progress in this area in due course.

Our presence in this most demanding of markets was rewarded last month with an award for being the "Best National European Wholesale Provider" at Telcap's 5^th Annual European Telecommunications Congress in Amsterdam.

Our Systems Partners channel continues to perform well and we are pleased to report that our current partner recruitment programme is generating considerable interest and the first orders from this initiative are now being delivered.

Our Ethernet services remain in strong demand and now account for a very high proportion of our sales into the service provider market. We were pleased to win, amongst many others, significant new orders for these services from Star Internet and Edge Communications during the period.

Our Carrier Rings in London and Frankfurt are delivering to plan and our product development programme to further extend these services into the rapidly growing market for international Voice over Internet Protocol is entering its final beta test phase.

During the period, the company purchased a number of fibre optic cables and ducts previously leased by the business. The purchase of these assets provides an exceptional gain of £1.2m and in addition will reduce operating costs by £0.4m in the current financial year and then by £0.5m in each financial year thereafter, predominantly through a reduction in finance charges. The total capital cost of the purchase is £3.15m. £2.0m of the payment will be made in December 2005 and the remainder in December 2006. Should certain conditions be met, the final payment will be accelerated. In addition, a contract was signed to sell previously impaired assets providing a further exceptional gain of £0.3m. The total exceptional gains of £1.5m will be recorded in the first half year results.

Summary

A satisfactory quarter of trading once again supports the validity of our focus on high value, low volume niche Enterprise networking projects, underpinned by the relatively high volume business placed by our Service Provider customers and our growing Systems Partner channel. The sales pipeline in all three markets supports our confident outlook.

Ends.

For further information or any other investor enquiries, please contact:

Charles McGregor

Chief Executive
Tel +44 (0)1256 858685