TIDMCOLT
RNS Number : 9368L
Colt Group S.A.
01 May 2015
Colt Group S.A. Interim Management Statement for the quarter
ended 31 March 2015
1 May 2015: Colt Group S.A. (London Stock Exchange: COLT) issued
today its Interim Management Statement for the three months ended
31 March 2015.
Financial review:
Three months to
31 March
------------------- ========================================
EUR millions 2015 Unaudited 2014 Year
Unaudited on Year
Movement
------------------- --------------- ----------- ----------
Revenue 394.6 399.8 (1.3%)
------------------- --------------- ----------- ----------
EBITDA(1) 76.4 74.1 3.1%
------------------- --------------- ----------- ----------
Free cash flow(2) (16.3) (38.7) 57.8%
------------------- --------------- ----------- ----------
Highlights:
-- For the first quarter of 2015 Colt Group delivered a solid
set of results including growth in EBITDA and improved cash flows,
in line with the focus of the business.
-- The performance of our core businesses, Network Services and
Voice Services, both delivered encouraging underlying revenue and
EBITDA performance. We continue to focus on improving the
performance of our Data Centre Services and IT Services
businesses.
-- It is still early days in the integration of KVH but this is
on plan. The business has continued to deliver on revenue and
EBITDA growth, in accordance with expectations. This is the first
full quarter of KVH's contribution to Colt Group performance.
-- Management believe the Group will deliver modestly positive cash flows for full year 2015.
(1) EBITDA reflects profit before net finance costs and related
foreign exchange, tax, depreciation, amortisation and exceptional
items
(2) Free cash flow is net cash generated from operating
activities less net cash used to purchase non-current assets and
net interest paid
Financial Performance
Revenue declined 1.3% from Q1'14, as a result of our prior year
exit from low margin carrier voice trading contracts, offset by a
first full quarter contribution from KVH which was acquired in
December 2014. On a constant currency basis Group revenue declined
5.4%, explained by the following movements:
-- Network Services revenue declined 1.4% to EUR213.8 million
(Q1'14: increased 0.5%) with growth in Managed networking revenue
countered by the continuing decline in SDH (low speed circuits) and
a major duct sale in Q1 2014.
-- Voice Services revenue decreased 35.8% to EUR95.7 million
(Q1'14: increased 1.4%). Wholesale Voice revenue (which combines
Carrier Voice services and reseller voice, previously part of
Enterprise Voice services) declined as a result of our exit from
low margin carrier voice trading. Enterprise Voice revenue fell,
largely due to regulatory driven price reductions. In underlying
terms, Voice revenues are roughly flat year on year, a solid
performance in a declining market.
-- Data Centre Services revenue decreased 4.1% to EUR28.3
million (Q1'14: decreased 1.3%) Excluding a one-off termination
billing and related run rate impact from Q1'14, underlying
colocation revenue was roughly flat. This weaker performance was
due to salesforce vacancies in key markets which we are actively
addressing.
-- IT Services revenue declined EUR3.5 million, or 17.5%, to
EUR16.8 million (Q1 '14: increased 24.6%). This was due to lower
revenue from low margin asset sales; an area we are de-focusing
from unless wrapped into wider deals.
-- KVH contributed EUR40.0 million in its first full quarter of
consolidation to Group revenue. KVH pro-forma revenue for Q1 '14 on
a constant currency basis was EUR36.3 million. Excluding one-off
termination billings in Q1 '15, revenue grew by 7.8%, including
strong Voice growth.
Group EBITDA of EUR76.4 million (Q1 '14: EUR74.1 million)
represents year on year growth of 3.1%. KVH EBITDA and the benefits
of the 2014 restructuring programme more than compensated for
margin compression within Network Services and the impact from the
exit of low margin Voice business. On a constant currency basis
Group EBITDA grew 2.2%.
Net cash and deposits as at 31 March 2015 amounted to EUR64.6
million (31 December 2014: EUR77.4 million). Net cash flows
improved by EUR22.3 million with a free cash outflow of EUR16.3
million in Q1'15 compared to an outflow of EUR38.7 million in Q1
'14. The primary difference in cash flows between the quarters
relates to an improved working capital performance and reduction in
capital expenditure spend. Capital expenditure for Q1'15 decreased
EUR15.4 million to EUR59.1 million (Q1 '14: EUR74.5 million) as we
sought to maximise our return on investment. Timing elements
contributed to the overall year on year Group cash flow improvement
this quarter, with underlying progress almost half that of the
headline improvement.
Operational progress
The workforce restructuring announced in April 2014 is
continuing largely as planned. In Q1 2015 the Group incurred
payments of EUR5.3m associated with implementing the plan, taking
the total cash outflows to date to EUR19.9m. The overall costs of
the programme is still anticipated to be c.EUR30m and this will be
completed by the end of Q2 '15. The business is still expected to
benefit from a similar run rate of ongoing annual cost savings
partly this year, and fully in 2016. Cost transformation across the
Group continues to be a key strategic focus as well as ensuring we
effectively manage our cost base.
In alignment with Colt's strategic focus on information
intensive industries, our Capital Markets capability was
significantly enhanced with the April announcement of the launch of
our financial services extranet, Colt PrizmNet. This connects
providers of financial content - including market data, research
and other services - to Capital Markets firms. A dedicated private
network with deterministic low latency will guarantee reliable,
consistent, and transparent content delivery.
It is still early days in the integration of KVH, which is
tracking to plan and we are already seeing engagement with several
large customers due to the strength of the combined Colt and KVH
capability. We remain on track to deliver on the cost synergy
benefits outlined with the announcement of the deal.
We have separately announced this morning the appointment of
Carl Grivner as our new Executive Vice President for Network
Services. Carl has more than 25 years of executive and leadership
experience in the telecommunications and technology industry, most
recently as CEO of Pacnet and XO Communications.
Outlook
The Group performance in Q1 was in line with Colt's
expectations. The Group remains focused on profitable growth and
continued cost transformation plans and expects to be modestlycash
flow positive for the full year 2015.
Rakesh Bhasin, Chief Executive Officer, said:
"The new focus we have brought to the organisation through the
implementation of the lines of business is starting to deliver
results. Our core Network Services and Voice Services in particular
show underlying signs of improvement and the Group is showing
headline visibility of year on year cash flow improvement. We will
continue to drive efficiency and asset utilisation across the
organisation to deliver improved performance in 2015."
FORWARD LOOKING STATEMENTS
This report contains 'forward looking statements' including
statements concerning plans, future events or performance and
underlying assumptions and other statements which are other than
statements of historical fact. Colt Group S.A., 'the Group', wishes
to caution readers that any such forward looking statements are not
guarantees of future performance and certain important factors
could in the future affect the Group's actual results and could
cause the Group's actual results for future periods to differ
materially from those expressed in any forward looking statement
made by or on behalf of the Group. These include, among others, the
following: (i) any adverse change in regulations and technology
within the IT services and communications industries, (ii) the
Group's ability to manage its growth, (iii) the nature of the
competition that the Group will encounter and wider economic
conditions including economic downturns, (iv) unforeseen
operational or technical problems and (v) the Group's ability to
raise capital. The Group undertakes no obligation to release
publicly the results of any revision to these forward looking
statements that may be made to reflect errors or circumstances that
occur after the date hereof.
Enquiries:
Investor Relations:
Morten Singleton
DDI:+44 (0) 20 7863 5314
Mobile: +44 (0) 7535 445159
Email: morten.singleton@colt.net
Press:
Helen Toft
DDI: +44 (0) 20 7039 2420
Mobile: +44 (0) 7855 301078
Email: helen.toft@colt.net
This information is provided by RNS
The company news service from the London Stock Exchange
END
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