Profits up 257%; Driven by Acquisition and Organic Growth

Financial Highlights

-Turnover increased by 80% to £17.13m (2004: £9.50m)
-Pre-tax profit before goodwill up 257% to £1.15m (2004: £0.32m)
-Pre-tax profit increased to £0.66m (2004: £0.10m)
-Underlying earnings per share* has increased 78% to 4.24p

(*Underlying earnings per share is earning per share before goodwill)

Operating Highlights

-Four acquisitions completed since 31 March 2004
—-enhanced products and services
—-extended customer base
—-broader technical capability
—-benefits of synergy
-Acquisition of London based Data Centre - iP House
-Increased automation of products and services
-Significant UK VoIP player

Simon Cleaver, Business Serve, Chief Executive, said:

“Business Serve has experienced another successful year with strong acquisitive and organic growth as shown by our results which are in line with market expectations.”

“We are pleased with the performance of the acquisitions made to date and have set ourselves the target of completing the integration projects by the second quarter of the new financial year. In the coming 12 months, we will continue to seek suitable acquisition opportunities where they meet our financial and strategic goals.”

“Through this successful acquisition strategy we have broadened our range of products spanning the telecommunications (including VoIP) and ISP services, thus allowing us to reposition the company as one of the UK’s leading Converged Communications Providers.”

“We believe that as this market continues to mature, many of the more traditional ISPs and telcos will see their margins under continued pressure, particularly in the residential sector. However, the UK business market is seeing a transition towards more complex combined Internet and telecommunication solutions – Converged Communications - where healthy margins will continue to be achievable. Business Serve is ideally positioned to take advantage of this transition.”

“The Board is particularly excited about our new VoIP services. We believe we are a long way ahead of most of our competition and can see great potential for dynamic growth in this area of our business. We aim to achieve market penetration through the leveraging of our Strategic Partners who will be distributing our VoIP Plug and Play CD ROMs with their products. We will also soon be launching our competitively priced flat rate VoIP calling plans.”

“In addition to the headline figures, this year has seen huge strides in our automation programs. Many of our products and services can now be purchased online and customers have a greatly enhanced experience through the ability to organise and configure their services directly over the Internet through their Online Control Panel account.”

“I believe that during this year, we have laid solid foundations in terms of product, infrastructure, staff and direction which will ensure that Business Serve has a very exciting 2006.”

More information is available in our Annual Report and Accounts for 2005 which is available to view or download at http://www.businessserve.co.uk/2005

About Business Serve plc

Business Serve plc is one of the leading Converged Communication Providers in the UK. By combining traditional ISP products with Telecommunication services, including VoIP technology, Business Serve is able to deliver highly resilient and cost effective Converged Communication solutions to the corporate, SME and SoHO marketplaces.

Business Serve, in the last few years, has shown rapid expansion through a combination of organic growth and acquisition. Employing 204 staff within five offices nationwide, Business Serve is concentrating on providing cutting edge products with increased user flexibility designed to deliver an excellent and constantly improving customer experience.

http://www.businessserve.co.uk