22 April 2014: Colt Group S.A. (London Stock Exchange: COLT) today issued its Interim Management Statement for the three months ended 31 March 2014.
Three months to 31 March
Group revenue for the quarter amounted to €399.8 million (Q1 ‘13: €392.1 million). This reflects year on year revenue growth of 2.0% (Q1 ‘13: declined 1.3%). On a constant currency basis Group revenue grew 1.2%
(Q1 ’13: declined 0.7%) with contributions from all four lines of business:
- Network Services revenue grew 0.4% (Q1 ’13: 1.9%). Managed networking revenues grew 9.8%, while bandwidth services and other revenues declined by 6.5%. Legacy (SDH low speed connections) revenues accounted for the majority of the decline at €5.5m.
- Voice Services revenue grew 0.8% (Q1 ’13: declined 4.6%). Enterprise voice declined by 11.4% (Q1 ’13: 12.0%) driven by regulatory driven price declines and contraction of certain lower margin customer accounts. Growth in Carrier voice offset the decline in Enterprise voice albeit at low margins. The impact of regulatory driven price changes amounted to €6.1m negative impact in the quarter compared with €10.8m in Q1 ’13.
- Data Centre Services revenue (excluding modular product sales) grew 8.1% (Q1 ’13: declined 3.4%). Growth in colocation revenue was offset by the timing of sales of our modular ftec halls which are not recurring in nature. As a result, total data centre revenue grew 0.5% (Q1 ’13: declined 1.0%).
- IT Services revenue grew 15.0% (Q1 ’13: 4.3%) largely due to increased levels of equipment sales.
Group EBITDA of €74.1 million (Q1 ‘13: €80.5 million) represented a year on year decline of €6.4 million (8.0%). The decline in EBITDA resulted from margin compression due to product mix changes, the continued churn and pricing pressures in our bandwidth products and the flow through of previous year rate declines to our Enterprise voice customers. In bandwidth products, highly profitable legacy products are being replaced with lower margin managed networking services. In voice products, the impact of termination rate declines have affected both overall revenue and margin on enterprise and wholesale business. We would expect this pressure on margins to continue through the year.
Net funds2 as at 31 March 2014 amounted to €157.0 million (31 December 2013: €195.6 million). The cash outflow of €38.6 million for the quarter (Q1 ’13: outflow of €54.2m) reflected normal seasonal outflows, including annual prepayments and staff incentives. Capital expenditure for the first quarter of 2014 decreased to €74.5 million (Q1 ‘13: €81.2 million).
1 EBITDA is profit before net finance costs, tax, depreciation, amortisation, foreign exchange and exceptional items
2 Net funds includes deposits classified as current asset investments
Rakesh Bhasin, Chief Executive Officer, said:
“We are moving forward with our reorganisation into four lines of business. I believe this structure will provide the focus we need to address challenges in the marketplace. It will also allow us to prioritise investments that are of greatest strategic and commercial value to our Group. I am confident that these changes will help us grow the business and improve profit margins in future years.”
Click here to read the full Interim Management Statement
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.
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