Colt Group S.A. results, six months ended 30 June 2015

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

Key information:

 Six months to 30 JuneUnderlying1
€ millions2015 Unaudited2014
Nominal Movement
Constant Currency Movement
Currency Movement
Group revenue790.8 770.42.6%(1.3%)756.60.2%
Network Services433.9 415.34.5%0.2%411.11.3%
Voice Services186.1 260.8(28.7%)(31.8%)180.7(1.3%)
Data Centre Services57.5 56.81.3%(3.8%)56.8(3.8%)
IT Services33.3 37.5(11.2%)(13.7%)37.5(13.7%)
Colt Asia80.0    —N/AN/A70.58.9%
EBITDA2156.4 145.47.6%6.7%146.45.6%
(Loss)/profit before tax3 (13.0)13.6(195.6%)(125.5%)N/AN/A
Free cash outflow4(7.3)(29.1)74.9%N/A(45.8)N/A
Capital expenditure(125.6)(137.5)8.7%N/A(150.2)N/A
Net funds573.3 167.1(56.1%)N/AN/AN/A

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
2 EBITDA reflects profit before net finance costs and related foreign exchange, tax, depreciation, amortisation and exceptional items
3 (Loss)/profit before tax is stated before exceptional items
4 Free cash flow is net cash generated from operating activities less net cash used to purchase non-current assets and net finance costs paid
5 Net funds reflects cash and cash equivalents

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.

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