- We are focused on driving value through delivering network, voice, data centre and IT services and solutions to businesses. Our unique asset base, combining international reach with local depth in key cities and information hubs in Europe, Asia and North America, means we are well positioned to take advantage of the opportunities from the continuing growth in enterprise communications and IT outsourcing. Our global operations are supported by our shared service centres. As we expand to new cities, this structure provides the opportunity for improved operational efficiency and profitability.
- At the end of the year we completed the acquisition of KVH, a similar business to Colt operating in Asia, expanding our capability in several key cities and strengthening our service capability as a global provider of network, voice, data centre and IT services.
- Our strategy is defined by three priorities: a focus on key markets, delivering an exceptional customer experience and optimising the use of our assets. During 2014 we completed the restructuring of Colt along four lines of business: Network, Voice, Data Centre and IT Services; increasing the focus on our assets, providing end to end ownership and responsibility for revenue, profits and cash returns and enhancing visibility of performance and delivery.
- Colt Group financial performance in 2014 reflects this ongoing transformation of our business, with a disappointing first half followed by a second half that delivered to expectations: Our Network Services business mix is evolving, with a decline in legacy SDH connections being countered by growth in managed networking; Voice Services performance reflected our proactive withdrawal from low margin carrier voice trading contracts; IT Services underperformed with the business in transformation from traditional platforms to cloud solutions; Data Centre Services grew, but slower than the market rate as it only recently refocused on retail colocation. We expect the completion of the transformation in 2015 should result in improved performance towards the end of the year.
- Our balance sheet strength and debt capacity allows us to support the necessary organic and inorganic investments to deliver our strategy. There is unlikely to be any near-term distribution of dividends as we maximise value generation for shareholders by investing in the full execution of our strategy.
31 July 2015: Colt Group S.A. (London Stock Exchange: COLT) issued today the results for the six months ended 30 June 2015.
Headlines of the first half of 2015:
- On an underlying1 basis Colt Group revenue grew 0.2%, EBITDA increased 5.6% and free cash flow improved €38.5m from H1 2014.
- Group revenue increased 2.6% from H1 2014. On a constant currency basis Group revenue declined 1.3% as the contribution of Colt Asia (formerly known as KVH) revenue was more than offset by our exit from low margin carrier voice trading contracts.
- Group EBITDA of €156.4m represented year on year growth of 7.6% (€11.0m). The contribution of Colt Asia EBITDA and benefits of the 2014 restructuring programme continued to offset the margin compression within Network Services. On a constant currency basis Group EBITDA grew 6.7%.
- Free cash improved materially with the outflow reducing from €29.1m in H1 2014 to €7.3m in H1 2015 due to improved EBITDA and working capital, and reductions in capital expenditure.
- As announced in June, to accelerate improved performance, the Group will focus on its Network, Voice and Data Centre Services, the “Core Business”, and exit IT Services.
- The Group recognised €128.4m of exceptional expenses during H1 2015 including a non-cash impairment expense of €87.1m in relation to the exit of IT Services, associated restructuring expenses of €32.2m, plus a €9.1m expense in relation to long term incentive schemes that vested under scheme rules as a result of the Fidelity share offer in June.
- Fidelity announced its intention to make an offer at a price of 190p in cash per share on 19 June 2015. The Offer process is ongoing and our EGM is set for 11 August
1 2014 unaudited underlying performance includes Colt Asia pro-forma revenue and EBITDA. It removes the impact of low margin carrier voice contracts which we have since exited and non-recurring duct sales H1 2014 and excludes the effect of currency movements
Rakesh Bhasin, Chief Executive Officer, commented:
The decisions we have made over the last couple of years, including the acquisition of KVH, the reorganisation into the Lines of Business and go-to market alignment, are starting to deliver results. This places the business on a solid footing, with further improvements to come. Through the implementation of our new business plan, which we announced in June, we will continue to focus and simplify the organisation and we are confident we will deliver our recent guidance for the Core Business.