TIDMCOLT
RNS Number : 6102U
Colt Group S.A.
31 July 2015
Press release
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 underlying(1) basis Colt Group revenue grew 0.2%,
EBITDA increased 5.6% and free cash flow improved EUR38.5m 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 EUR156.4m represented year on year growth of
7.6% (EUR11.0m). 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
EUR29.1m in H1 2014 to EUR7.3m 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 EUR128.4m of exceptional expenses during
H1 2015 including a non-cash impairment expense of EUR87.1m in
relation to the exit of IT Services, associated restructuring
expenses of EUR32.2m, plus a EUR9.1m 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 June Underlying(1)
--------------------- ================================================ ============================
EUR millions 2015 2014 Nominal Constant 2014 Underlying
Unaudited Unaudited Movement Currency Unaudited Constant
B/(W) Movement Underlying(1) Currency
B/(W) Movement
B/(W)
--------------------- ----------- ----------- ---------- ---------- --------------- -----------
Group revenue 790.8 770.4 2.6% (1.3%) 756.6 0.2%
--------------------- ----------- ----------- ---------- ---------- --------------- -----------
Network Services 433.9 415.3 4.5% 0.2% 411.1 1.3%
--------------------- ----------- ----------- ---------- ---------- --------------- -----------
Voice Services 186.1 260.8 (28.7%) (31.8%) 180.7 (1.3%)
--------------------- ----------- ----------- ---------- ---------- --------------- -----------
Data Centre
Services 57.5 56.8 1.3% (3.8%) 56.8 (3.8%)
--------------------- ----------- ---------- ---------- --------------- -----------
IT Services 33.3 37.5 (11.2%) (13.7%) 37.5 (13.7%)
--------------------- ----------- ----------- ---------- ---------- --------------- -----------
Colt Asia 80.0 -- N/A N/A 70.5 8.9%
--------------------- ----------- ----------- ---------- ---------- --------------- -----------
EBITDA(2) 156.4 145.4 7.6% 6.7% 146.4 5.6%
--------------------- ----------- ----------- ---------- ---------- --------------- -----------
(Loss)/profit
before tax(3) (13.0) 13.6 (195.6%) (125.5%) N/A N/A
--------------------- ----------- ----------- ---------- ---------- --------------- -----------
Free cash
outflow(4) (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 funds(5) 73.3 167.1 (56.1%) N/A N/A N/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."
BUSINESS OVERVIEW
Underlying progress of the business is demonstrated by looking
at the 2014 reported numbers adjusted for inclusion of Colt Asia
pro-forma (pre-acquisition) revenue and EBITDA, and removing the
contribution of low margin carrier voice contracts (which we have
since exited) and non-recurring duct sales. Underlying Group
revenue grew 0.2% and underlying EBITDA increased 5.6%, primarily
driven by cost savings and the 2014 restructuring programme.
Underlying free cash outflow improved EUR38.5m from H1 2014.
In June we announced our new business plan to refocus the
Company's activities and accelerate the improvement of its
performance. The development of the Business Plan preceded and is
unrelated to the Offer announced by Fidelity on 19 June 2015 to
acquire the shares in Colt not already owned by it. The Business
Plan gives Colt greater focus on its core - Network, Voice and Data
Centre Services, with a managed exit from IT Services. The
fundamentals of our core Network Services and Voice Services
businesses are solid and continue to improve. We have already
initiated the implementation of the Business Plan.
As a result of our new business plan and as announced in June,
the Group recognised EUR128.4m of exceptional expenses including a
non-cash impairment expense of EUR87.1m in relation to the exit of
IT Services and associated restructuring expenses of EUR32.2m. We
expect to incur total restructuring expenses of EUR70-80m once the
conditions to book the related provision are met. Of this EUR25m
relates to restructuring in the Core business where we anticipate
around EUR25m of annual savings, partially in 2015 and fully in
2016. We also incurred a EUR9.1m expense in relation to long term
incentive schemes that vested under scheme rules as a result of the
Fidelity Share Offer in June, rather than being spread over the
remaining term of the relevant schemes had the Offer not been made.
In accordance with the guidance provided at 30 June 2015, the Core
Business (excluding IT Services and exceptional items) posted
revenue for the half year of EUR757.5m (2014: EUR732.9m) and free
cash inflow of EUR7.7m (2014: outflow of EUR0.4m).
FINANCIAL REVIEW
Group revenue grew 2.6% (declined 1.3% on a constant currency
basis). The growth was principally due to the contribution of Colt
Asia revenue and the positive impact of foreign exchange. EBITDA
increased by 7.6% in the period due to the contribution from Colt
Asia which more than offset the impact from regulated termination
rate reductions and gross margin impact from product mix changes in
Network Services. Group free cash outflow improved in the half by
EUR21.8m year-on-year to EUR7.3m (H1 2014: net outflow of EUR29.1m)
due to an increase in cash generated from operations driven by
improved EBITDA, a reduced working capital outflow and lower
capital expenditure. Foreign currency movements (primarily the
strength of Sterling vs. Euro) positively affected revenue in H1
2015 by EUR30.6m.
The Group incurred exceptional expenses of EUR128.4m during H1
2015 as noted above.
Revenue
Group revenue for the first half of 2014 was EUR790.8m (H1 2014:
EUR770.4m) a 2.6% increase over H1 2014 mainly due to currency
movements, with the contribution of Colt Asia revenue offset by our
exit from low margin carrier voice trading. Details of the
financial performance by line of business are presented further
below. In summary nominal terms: Network Services revenue grew 4.5%
to EUR433.9m (H1 2014: EUR415.3m); Voice Services revenue decreased
by 28.7% to EUR186.1m (H1 2014: EUR260.8m); Data Centre Services
grew 1.3% to EUR57.5m in H1 2015 (H1 2014: EUR56.8m); IT Services
revenue decreased 11.2% to EUR33.3m in H1 2015 (H1 2014: EUR37.5m)
and Colt Asia contributed EUR80.0m to revenue compared to pro-forma
(pre-acquisition by Colt) H1 2014 revenue of EUR70.5m.
Cost of sales and gross profit (before exceptional items)
Gross profit (before exceptional items) increased 5.8% to
EUR205.6m during the period (H1 2014: EUR194.3m). As a percentage
of revenue, gross profit before exceptional items increased to
26.0% (H1 2014: 25.2%) primarily due to the inclusion of Colt Asia
results in H1 2015 and the exit from low margin carrier voice
trading. This growth was partially offset by regulatory driven
termination rate reductions in Voice Services, increased use of
lower margin third party networks (off-net connections) in Network
Services and EUR22.6m higher infrastructure depreciation in the
period driven by Colt Asia.
Operating expenses (before exceptional items)
Operating expenses (before exceptional items) of EUR217.0m (H1
2014: EUR186.2m) increased 16.5% (EUR30.8m) due to the inclusion of
Colt Asia and the effects of foreign currency movements,
principally Sterling based costs. This offset savings in selling,
general and administrative expenses from our workforce
transformation and cost control programmes.
EBITDA (before exceptional items)
Group EBITDA increased 7.6% to EUR156.4m (H1 2014: EUR145.4m)
due to the contribution of Colt Asia EBITDA and cost saving
measures, including restructuring, partially offset by lower EBITDA
from Network Services.
(Loss)/profit before tax
There was a loss before tax and before exceptional items of
EUR13.0m in H1 2015 (H1 2014: profit of EUR13.6m), with the
movement due to the inclusion of Colt Asia results, foreign
currency movements and incremental depreciation.
Exceptional items
The Group incurred exceptional expenses of EUR128.4m during H1
2015 as noted above.
Taxation
The Group recognised a tax expense of EUR3.0m in H1 2015 (H1
2014: EUR2.8m). The current tax expense arose in jurisdictions
where we cannot fully offset income against accumulated tax benefit
carried forward. The Group continues to recognise a deferred tax
asset because it is probable future taxable income will arise to
utilise the asset.
(Loss)/profit after tax
There was a loss after tax before exceptional items of EUR16.0m
in H1 2015 (H1 2014: profit of EUR10.8m), with the movement due to
the inclusion of Colt Asia results and negative impact of foreign
currency translation and revaluation. Including the 2015
exceptional restructuring expense of EUR128.4m, the loss after tax
increased to EUR144.4m in H1 2015 (H1 2014: profit of EUR2.4m).
Free cash flow
Free cash flow remains a core focus of the business. The free
cash outflow of EUR7.3m in H1 2015 was an improvement on the
EUR29.1m outflow of the first half of last year. Net cash generated
from operating activities (excluding restructuring payments)
increased by EUR19.5m (16.9%) to EUR134.7m (H1 2014: EUR115.2m).
This was aided by EUR9.1m reduced working capital outflow compared
to H1 2014. As usual, the first half working capital outflow
included our normal annual outflows for staff bonuses and
prepayments for network capacity and IT support.
Net capital expenditure of EUR125.6m in H1 2015 was EUR11.9m
(8.7%) lower than H1 2014 (EUR137.5m). The main movements were
lower spend on our internal investments across Colt and higher
investment in our data centre capacity as well as Colt Asia
capex.
Statement of financial position
Non-current assets decreased EUR53.1m to EUR1,694.5m (31
December 2014: EUR1,747.6m) mainly due to the IT Services
exceptional impairment charge in the period partially offset by the
impact of foreign exchange gains arising on translation of non-Euro
denominated operations. The movement in net working capital
balances, comprising receivables, payables and provisions, is
discussed in the cash flow section above. Net cash and deposits of
EUR73.3m decreased EUR4.1m compared to 2014 year end, reflecting
the net cash outflow for the period. Shareholders' funds decreased
EUR67.4m in H1 2015, as the loss for the period was partially
offset by exchange gains on translation of foreign operations for
the period.
Revolving credit facility
The EUR150.0m revolving credit facility put in place in August
2014 has an initial three year term. We can request a one-year
extension to the facility at the end of years one and two, giving a
total term of five years. Under the agreement, notice of an
extension request has to be given 30 days prior to the anniversary
date of the facility. Given the potential impact of the Fidelity
bid on the future funding needs of the business, we sought, and
have been granted an extension to the end of September to the
notice period for requesting the extension (which is at the
lenders' discretion).
BUSINESS REVIEW
Network Services
Colt provides data connectivity products and services from
simple broadband access to complex managed networking solutions to
support businesses and wholesale carriers across Europe, Asia and
North America. Our services are dedicated to business and wholesale
customers so our network investment is focused on the cities and
information hubs (such as business parks, financial districts and
major data centres) where our customers do business. Our network
addresses the connectivity needs of the SME to the multinational
through a combination of local access and international
breadth.
Revenue of EUR433.9m increased 4.5% compared to prior year
(EUR415.3m). Managed Network revenue grew by 11.5% (EUR16.7m) and
Bandwidth Services (excluding legacy SDH bandwidth) 3.1% (EUR7.4m).
This was partially countered by the continued decline in legacy SDH
bandwidth revenue, contracting 15.9% year-on-year (EUR5.5m) in the
first half of 2015. We expect the decline in SDH business to
continue but with a slowing absolute rate of decline as revenue
from this product continues to be phased out. On an underlying
constant currency basis, excluding non-recurring duct sales, total
Network Services revenue increased by EUR5.2m (1.3%).
EBITDA declined 2.1% to EUR114.8m (H1 2014: EUR117.3m) mainly as
a result of the non-recurring 2014 duct sale, with the continued
margin pressures due to changing revenue mix largely compensated by
the benefits of currency movements and ongoing cost efficiency
programmes. On an underlying constant currency basis EBITDA
increased EUR0.8m (0.7%).
Voice Services
Colt delivers reliable carrier and enterprise grade voice
services with a focus on customers in Western Europe and, through
our recent acquisition of Colt Asia. We provide traditional
telephony services as well as VoIP to both enterprises and service
providers (carriers, cloud service providers).
External Voice revenue declined by 28.7% (EUR74.7m) to EUR186.1m
(H1 2014: EUR260.8m). The decline was driven by a 54.9% (EUR74.9m)
reduction in Wholesale Voice revenue. In Q1 2014 we announced our
withdrawal from low margin carrier voice trading contracts to free
up network capacity for higher margin Enterprise Voice business.
Accordingly, Wholesale Voice revenue reduced from EUR136.5m in H1
2014 to EUR61.6m in H1 2015. On an underlying constant currency
basis total Voice revenue declined 1.3%.
Voice Services EBITDA increased by 0.6% (EUR0.2m) to EUR26.3m
(H1 2014: EUR26.1m). The majority of this margin improvement was
driven by positive foreign currency impacts which offset the impact
of regulatory termination rate price declines (EUR6.0m). On an
underlying constant currency basis total Voice EBITDA increased
EUR2.8m (12.6%).
Data Centre Services
Colt Data Centre Services offers colocation and value added data
centre services in secure, carrier neutral facilities across Europe
and Asia.
Data Centre Services revenue grew 1.3% (EUR0.7m) to EUR57.5m (H1
2014: EUR56.8m) in the half year, consisting wholly of colocation
revenue. This weaker growth performance was due to ceased sales of
ftec data halls and salesforce vacancies in key markets in the
period. EBITDA decreased 8.2% (EUR1.2m) to EUR13.5m (H1 2014:
EUR14.7m) reflecting higher fixed costs in the period.
IT Services
In June 2015 we announced that we would be exiting our IT
Services business over the next two to three years to focus on our
core infrastructure and asset based activities. We will continue to
honour existing customer contracts through to termination, but will
no longer seek new business. The operations of the business will be
streamlined accordingly over three years.
IT Services revenue for H1 2015 declined by 11.2% (EUR4.2m) to
EUR33.3m (H1 2014: EUR37.5m) due to lower equipment sales. IT
Services generated an EBITDA loss of EUR7.7m, an improvement of
EUR4.9m from H1 2014 which was driven by lower personnel costs.
Colt Asia
In December 2014 we completed the acquisition of Colt Asia, an
infrastructure-based service provider of network and data centres
across Asian cities, with headquarters in Tokyo and additional
operations in Hong Kong, Seoul and Singapore, strengthening Colt's
position as a global provider of Network, Voice and Data Centre
Services.
Colt Asia contributed EUR80.0m to revenue and EUR9.5m to EBITDA
in the first half of 2015. Colt Asia pro-forma (pre-acquisition by
Colt) revenue and EBITDA for the same period last year were
EUR70.5m and EUR9.2m respectively.
TRADING OUTLOOK
In accordance with the guidance provided in our 30 June 2015
announcement, management is targeting for the Group to deliver Core
Business revenues in a range of EUR1,500m to EUR1,520m in 2015, and
in a range of EUR1,500m to EUR1,530m in 2016, and positive free
cash flow for the Core Business in a range of EUR70m to EUR80m for
full year 2015, improving to a range of EUR100m to EUR120m in
2016.
Going concern
As stated in note 1 to the condensed financial statements, the
Directors are satisfied that the Group has sufficient resources to
continue in operation for the foreseeable future, a period not less
than 12 months from the date of this report. Accordingly, they
continue to adopt the going concern basis in preparing the
condensed financial statements.
Recent offer by Fidelity
Fidelity first approached the independent directors of Colt with
a proposal to acquire the remaining shares in Colt in April 2015.
Following discussions with the independent directors of Colt and
certain shareholders, Fidelity announced on 19 June 2015 its
intention to make an offer at a price of 190p in cash per share.
The Offer Document and Circular Announcement were posted to
shareholders by Fidelity on 9 July with the Response Circular
posted to shareholders by Colt on 17 July. An EGM has been convened
by Colt for the 11 August 2015 for shareholders to vote on
resolutions in connection with the offer. Depository Interest
Holders register votes are due on 6 August. Proxies for ordinary
shareholders are due on 7 August.
PRINCIPAL RISKS AND UNCERTAINTIES
Colt has processes for identifying, evaluating and managing the
principal risks and uncertainties faced by the Group. The risk
assessment process is updated at least annually and the Group has a
detailed risk management process which identifies the key risks and
uncertainties it faces. These risks and uncertainties continue to
be: global and regional economic conditions; technical faults and
outages; changes in laws and regulation; security of Colt's
infrastructure and IT systems; Colt's ability to provide a high
level of customer service; changes in technology within the
industry; maintaining business critical processes in shared service
centres; and reliance on certain suppliers.
Some or all of the above risks have the potential to impact our
results or financial position during the remaining six months of
the financial year. The Directors do not consider that the
principal risks and uncertainties have changed since the
publication of the Annual Report for the year ended 31 December
2014. Further details of these key risks and uncertainties can be
found on pages 31 to 34 of the 2014 Annual Report which is
available from the Colt website (www.colt.net).
RESPONSIBILITY STATEMENT
The Directors confirm that to the best of our knowledge:
a. this condensed set of financial statements has been prepared
in accordance with IAS 34 'Interim Financial Reporting' as adopted
by the European Union, including a description of significant
events and transactions during the period;
b. the interim management report herein includes a fair review
of the information required by DTR 4.2.7R (indication of important
events during the six months and description of principal risks and
uncertainties for the remaining six months of the year);
c. the interim management report includes a fair review of DTR
4.2.8R (disclosure of related parties' transactions and changes
therein); and
d. the highlights, business overview, financial review and
business review include a fair review of the information required
under Article 4(2)(c) of the Luxembourg Transparency Law of 11
January 2008.
By order of the Board
Chief Executive Officer Chief Financial Officer
Rakesh Bhasin Hugo Eales
30 July 2015 30 July 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.
Investor conference call details: Date: Friday 31 July 2015,
13.00 (BST)
A presentation on the half year results, to be discussed on the
conference call, and a breakdown of the revenue and profit
performance by the individual lines of business have both been
published separately on our website and can be found at
http://www.colt.net/uk/en/investor-relations/index.htm
Register in advance by accessing this link
https://eventreg1.conferencing.com/webportal3/reg.html?Acc=131463&Conf=192977
If you are unable to register, please dial one of the following
numbers and quote access code: 954333
UK - +44 (0)20 7031 4064
US - +1 888 365 0240 (Toll free)
This Press Release is also available via the Colt website at
www.colt.net
Investor Relations:
Morten Singleton
DDI: +44 (0)20 7863 5314
Mobile: +44 (0)7535 445159
Press:
Helen Toft
DDI: +44 (0)20 7039 2420
Mobile: +44 (0)7855 301078
Email: morten.singleton@colt.net
Email: helen.toft@colt.net
Colt Group S.A.
Condensed consolidated income statement (Unaudited)
Six months ended 30 June
--------------------------------------------------------------------------------------
2015 2014
Before Exceptional After Before Exceptional After
exceptional items exceptional exceptional items exceptional
items items items items
EURm EURm EURm EURm EURm EURm
------------- ------------ ------------- ------------- ------------ -------------
Revenue 790.8 -- 790.8 770.4 -- 770.4
Cost of sales
Interconnect and
network expenses (452.9) (17.7) (470.6) (466.4) (3.5) (469.9)
Infrastructure
depreciation (132.3) (64.2) (196.5) (109.7) -- (109.7)
(585.2) (81.9) (667.1) (576.1) (3.5) (579.6)
------------- ------------ ------------- ------------- ------------ -------------
Gross profit 205.6 (81.9) 123.7 194.3 (3.5) 190.8
------------- ------------ ------------- ------------- ------------ -------------
Operating expenses
Selling, general
and administrative (181.5) (23.6) (205.1) (158.6) (4.9) (163.5)
Other depreciation
and amortisation (35.5) (22.9) (58.4) (27.6) -- (27.6)
------------- ------------ ------------- ------------ -------------
(217.0) (46.5) (263.5) (186.2) (4.9) (191.1)
------------- ------------ ------------- ------------- ------------ -------------
Operating (loss)/profit (11.4) (128.4) (139.8) 8.1 (8.4) (0.3)
------------- ------------ ------------- ------------- ------------ -------------
Other income (expense)
Finance income -- -- -- 0.2 -- 0.2
Finance costs (3.6) -- (3.6) (0.5) -- (0.5)
Net foreign exchange
gain arising on
finance activities 2.0 -- 2.0 5.8 -- 5.8
------------- ------------ ------------- ------------- ------------ -------------
(1.6) -- (1.6) 5.5 -- 5.5
------------- ------------ ------------- ------------- ------------ -------------
(Loss)/profit
before taxation (13.0) (128.4) (141.4) 13.6 (8.4) 5.2
Taxation (3.0) -- (3.0) (2.8) -- (2.8)
(Loss)/profit
for the period (16.0) (128.4) (144.4) 10.8 (8.4) 2.4
------------- ------------ ------------- ------------- ------------ -------------
Basic and diluted
(loss)/earnings (EUR (EUR EUR EUR
per share 0.02) 0.16) 0.01 0.00
------------- ------------ ------------- ------------- ------------ -------------
Condensed consolidated statement of comprehensive income
(Unaudited)
Six months ended
30 June
-------------------
2015 2014
EURm EURm
----------- ------
(Loss)/profit for the
period (144.4) 2.4
Items that may be reclassified
subsequently to the income statement:
Exchange gain differences on
translation of foreign operations 74.9 19.7
----------- ------
Total recognised comprehensive
(loss)/income for the
period (69.5) 22.1
----------- ------
The basis on which this information has been prepared is
described in note 1 to this financial information.
Colt Group S.A.
Condensed consolidated statement of financial position
(Unaudited)
At 30 At 31 At 30
June December June
EURm 2015 2014 2014
-------- --------- --------
ASSETS
Non-current assets
Intangible assets 199.5 231.0 180.0
Property, plant and equipment 1,429.9 1,455.3 1,322.4
Deferred tax assets 65.1 61.3 60.4
Total non-current assets 1,694.5 1,747.6 1,562.8
Current assets
Trade and other receivables 308.0 302.4 270.8
Cash and cash equivalents 73.3 77.4 167.1
Total current assets 381.3 379.8 437.9
-------- --------- --------
Total assets 2,075.8 2,127.4 2,000.7
-------- --------- --------
EQUITY
Capital and reserves
Share capital and share
premium 1,408.8 1,407.1 1,406.9
Other reserves (84.2) (159.5) (177.9)
Retained earnings 127.9 272.3 305.3
-------- --------- --------
Total equity 1,452.5 1,519.9 1,534.3
-------- --------- --------
LIABILITIES
Non-current liabilities
Finance lease liabilities 40.5 39.1 --
Provisions for other liabilities
and charges 59.0 44.9 16.5
Other payables 1.0 4.1 3.0
Post employment benefits 25.3 22.9 5.3
Deferred tax liabilities -- -- 0.1
Total non-current liabilities 125.8 111.0 24.9
-------- --------- --------
Current liabilities
Trade and other payables 455.8 461.8 417.2
Current tax liabilities 9.9 9.3 8.4
Finance lease liabilities 2.2 1.8 --
Provisions for other liabilities
and charges 29.6 23.6 15.9
Total current liabilities 497.5 496.5 441.5
-------- --------- --------
Total liabilities 623.3 607.5 466.4
Total equity and liabilities 2,075.8 2,127.4 2,000.7
-------- --------- --------
The financial statements on pages 7 to 15 were approved by the
Board of Directors on 30 July 2015 and were authorised on its
behalf by
Hugo Eales / Chief Financial Officer Rakesh Bhasin / Chief
Executive Officer
Colt Group S.A.
Condensed consolidated statement of changes in equity
(Unaudited)
Share
capital
and
share Other Retained Total
EURm premium reserves* profit equity
--------- ----------- --------- --------
At 31 December 2013 1,405.5 (197.3) 302.9 1,511.1
Profit for the period -- -- 2.4 2.4
Shares issued in
the period 1.4 (1.4) -- --
Share plan credit -- 1.1 -- 1.1
Exchange gain differences
on translation of
foreign operations -- 19.7 -- 19.7
At 30 June 2014 1,406.9 (177.9) 305.3 1,534.3
--------- ----------- --------- --------
At 31 December 2014 1,407.1 (159.5) 272.3 1,519.9
Loss for the period -- -- (144.4) (144.4)
Shares issued in
the period 1.7 (1.0) -- 0.7
Share plan credit -- 1.4 -- 1.4
Exchange gain differences
on translation of
foreign operations -- 74.9 -- 74.9
At 30 June 2015 1,408.8 (84.2) 127.9 1,452.5
--------- ----------- --------- --------
* Other reserves include shares to be issued, translation
reserves and other reserves which were disclosed separately in the
2014 Annual Report.
Colt Group S.A.
Condensed consolidated statement of cash flows (Unaudited)
Six months ended
30 June
-------------------
2015 2014
EURm EURm
--------- --------
Net cash generated from
operating activities 120.9 108.3
Cash flows from investing
activities:
Purchase of intangible
assets and property,
plant and equipment (125.9) (137.7)
Proceeds from the disposal
of intangible assets
and property, plant and
equipment 0.3 0.2
Acquisition of subsidiary
net of cash -- (0.3)
Finance income received 0.3 0.2
--------- --------
Net cash used in investing
activities (125.3) (137.6)
Cash flows from financing
activities:
Finance costs paid (2.9) (0.1)
Net cash used in financing
activities (2.9) (0.1)
--------- --------
Net movement in cash
and cash equivalents (7.3) (29.4)
Cash and cash equivalents
at beginning of period 77.4 195.6
Effect of exchange rate
changes on cash and cash
equivalents 3.2 0.9
Cash and cash equivalents
at end of period 73.3 167.1
--------- --------
Colt Group S.A.
Notes to the condensed set of financial statements
1. Basis of preparation and principal accounting policies
Colt Group S.A. ("Colt S.A" or "the Company"), together with its
subsidiaries, is referred to as "the Group". Condensed consolidated
financial statements have been presented for the Group for the six
months ended 30 June 2015.
The financial information for the six months ended 30 June 2015
is unaudited and does not constitute consolidated financial
statements within the meaning of Luxembourg company law of 19
December 2002.
The condensed set of financial statements for the Group has been
prepared in accordance with International Accounting Standard 34
(IAS 34) "Interim Financial Reporting", as adopted by the European
Union. The financial information should be read in conjunction with
the Group's consolidated financial statements for the year ended 31
December 2014, prepared in accordance with International Financial
Reporting Standards ('IFRS') as adopted by the European Union.
The same accounting policies, presentation and methods of
computation are followed in the condensed set of financial
statements as applied in the Group's latest annual audited
financial statements except for the standards and amendments that
are effective for accounting periods beginning on 1 January 2015
that are disclosed on page 93 of the Group's 2014 Annual Report.
The impact of these amendments is not material.
The Directors are satisfied that the Group has sufficient
resources to continue in operation for the foreseeable future, a
period no less than 12 months from the date of this report.
Accordingly, they continue to adopt the going concern basis in
preparing the condensed financial statements.
The Group's operations are not generally subject to significant
seasonal or cyclical variations.
2. Segmental information
The Group is managed around its five lines of business: Network
Services, Voice Services, Data Centre Services, IT Services and
Colt Asia. Colt's five lines of business correspond to its
reportable segments in line with the information reported to its
chief operating decision maker, the Board of Directors.
Network Services revenue includes managed networking and
bandwidth services. Voice Services revenue comprises services
including the transmission of voice, data or video through a
switching centre and voice traffic which is delivered in a digital
form (IP Voice). Data Centre Services incorporates retail and
wholesale colocation and sales of our modular data centres. IT
Services embraces hosting, storage and cloud network services. Colt
Asia comprises integrated communications and IT management
solutions. The line of business revenue includes internal revenue
which represents recharges between the lines of business.
The Group measures the performance of its operating segments
through a measure of segment profit or loss which is referred to as
EBITDA in Colt's management reporting system. EBITDA is profit
before net finance costs, tax, depreciation, amortisation, foreign
exchange and exceptional items. Line of business EBITDA includes
all directly attributable costs and the recharge of shared
operating costs from Corporate and Shared Services functions and
sales organisation. The bases used to recharge these costs may be
further refined in the future.
The Group has a large customer base and no undue reliance on any
one major customer, therefore no such related revenue is required
to be disclosed by IFRS 8.
The accounting policies adopted by each segment are described in
note 1.
Colt Group S.A.
Notes to the condensed set of financial statements
2. Segmental information (continued)
For the six months ended 30 June 2015 and 30 June 2014, revenue
and EBITDA by reportable segment were as follows:
Six months ended 30 June 2015
---------------------------------------------------------------------
EURm Network Voice Data IT Colt Consolidated
Services Services Centre Services Asia
Services
---------- ---------- ---------- ---------- ------ -------------
Total segment
revenue 437.4 186.1 61.0 33.3 81.7 799.5
Internal revenue (3.5) -- (3.5) -- (1.7) (8.7)
External revenue 433.9 186.1 57.5 33.3 80.0 790.8
---------- ---------- ---------- ---------- ------ -------------
EBITDA 114.8 26.3 13.5 (7.7) 9.5 156.4
---------- ---------- ---------- ---------- ------ -------------
Six months ended 30 June 2014*
---------------------------------------------------------------------
EURm Network Voice Data IT Colt Consolidated
Services Services Centre Services Asia
Services
---------- ---------- ---------- ---------- ------ -------------
Total segment
revenue 418.3 260.8 60.1 37.5 -- 776.7
Internal revenue (3.0) -- (3.3) -- -- (6.3)
External revenue 415.3 260.8 56.8 37.5 -- 770.4
---------- ---------- ---------- ---------- ------ -------------
EBITDA 117.3 26.1 14.7 (12.7) -- 145.4
---------- ---------- ---------- ---------- ------ -------------
*Certain lines of business revenue and EBITDA figures have been
restated to ensure comparability between periods as we refined
allocation bases.
Assets and liabilities are not reported by segment to the chief
operating decision-maker therefore are not disclosed in this
note.
Colt Group S.A.
Notes to the condensed set of financial statements
3. Earnings per share
Six months ended
30 June
-------------------
2015 2014
-------- ---------
Basic weighted average number
of ordinary shares (m) 896.7 894.6
Dilutive ordinary shares from
share options (m)* 0.2 5.3
Diluted weighted average number
of ordinary shares (m) 896.9 899.9
-------- ---------
Before exceptional items
(Loss)/profit for the year
before exceptional items (EURm) (16.0) 10.8
-------- ---------
(EUR
Basic (loss)/earnings per share 0.02) EUR 0.01
-------- ---------
Diluted (loss)/earnings per (EUR
share 0.02) EUR 0.01
-------- ---------
After exceptional items
(Loss)/profit for the year
after exceptional items (EURm) (144.4) 2.4
-------- ---------
(EUR
Basic (loss)/earnings per share 0.16) EUR 0.00
-------- ---------
Diluted (loss)/earnings per (EUR
share 0.16) EUR 0.00
-------- ---------
* Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares.
4. Exceptional items
The Group recognised EUR128.4m of exceptional expenses during H1
2015 including a non-cash impairment expense of EUR87.1m in
relation to the exit of IT Services, associated restructuring
expenses of EUR32.2m, plus a EUR9.1m expense in relation to long
term incentive schemes that vested under scheme rules as a result
of the Fidelity Share Offer in June.
In June 2015, Colt announced the decision to exit IT Services
over the next two to three years in order to allow increased focus
on its core Network Services, Voice Services and Data Centre
Services businesses. The Group recognised exceptional expenses in
relation to the associated restructuring programme (EUR32.2m) and a
non-cash impairment expense against our IT Services line of
business (EUR87.1m). Of the EUR32.2m restructuring expense,
EUR14.8m was recognised in cost of sales and the remaining EUR17.4m
in operating expenses. Of the EUR87.1m impairment expense, EUR64.2m
was recognised in cost of sales and the remaining EUR22.9m in
operating expenses.
Of the EUR9.1m exceptional expense recognised in relation to the
automatic vesting of long term incentive schemes, EUR2.9m was
recognised in cost of sales and the remaining EUR6.2m in operating
expenses.
During April 2014, Colt announced a reorganisation of its
business resulting in workforce restructuring actions. The Company
incurred an exceptional expense of EUR8.4m in the period to 30 June
2014 associated with the costs of implementing these plans. Of the
EUR6.9m restructuring cash payments (see Note 6) made during the
period, EUR2.0m were made in relation to the above restructuring
announced in 2014, with the balance related to the restructuring
program commenced at the end of 2012.
Colt Group S.A.
Notes to the condensed set of financial statements
5. Analysis of cash and cash equivalents
Six months ended
30 June
-------------------
2015 2014
EURm EURm
-------- ---------
Net movement in cash and cash
equivalents (7.3) (29.4)
Other non-cash movements 3.2 0.9
-------- ---------
Net movement in cash and cash
equivalents (4.1) (28.5)
Opening cash and cash equivalents 77.4 195.6
Closing cash and cash equivalents 73.3 167.1
-------- ---------
Analysed in the statement of
financial position:
Cash and cash equivalents 73.3 167.1
-------- ---------
6. Reconciliation of profit for the period to net cash generated
from operations and free cash outflow
Six months ended
30 June
-------------------
2015 2014
EURm EURm
--------- --------
(Loss)/profit for the period
(before exceptional items) (16.0) 10.8
Taxation charge 3.0 2.8
Net foreign exchange gain arising
on financing activities (2.0) (5.8)
Finance costs 3.6 0.5
Finance income -- (0.2)
Depreciation and amortisation 167.8 137.3
EBITDA(1) 156.4 145.4
--------- --------
Other non-cash items 2.6 1.1
Income taxes paid (2.4) (2.2)
Movement in receivables 10.2 9.6
Movement in payables (29.8) (38.3)
Movement in provisions (excluding
restructuring payments) (2.3) (0.4)
Restructuring payments (13.8) (6.9)
Net cash generated from operations 120.9 108.3
--------- --------
Finance costs paid (2.9) (0.1)
Finance income received 0.3 0.2
Net capital expenditure (125.6) (137.5)
Free cash outflow(2) (7.3) (29.1)
--------- --------
([1]) EBITDA is profit for the period 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 finance costs paid
Colt Group S.A.
Notes to the condensed set of financial statements
7. Transactions with related parties
Related parties as a result of holding shares in the Group
During the six months ended 30 June 2015, an amount of EUR3.7m
was billed to FIL and its subsidiaries for Network, Voice, Data and
IT Services (H1 2014: EUR3.5m) and an outstanding balance of
EUR0.2m (H1 2014: EUR0.7m) was payable to Colt. An amount of
EUR2.0m was paid to FMR in relation to land and buildings rented
from an FMR subsidiary. At 30 June 2015 an outstanding balance of
EUR39.0m was due to FMR in relation to a finance lease.
The Group periodically places funds with FIL in unsecured money
market mutual funds. At 30 June 2015, the Group placed EUR2.5m with
FIL (H1 2014: EUR4.4m).
8. Acquisition of subsidiaries
ThinkGrid
In March 2015, the Group paid EUR0.2m (H1 2014: EUR0.3m) of the
contingent consideration in relation to the 2012 acquisition of
ThinkGrid.
9. Contingent consideration liability
Six months
ended
30 June
2015 2014
EURm EURm
------ ------
As at 1 January 0.4 1.5
Settlement (see note 8) (0.2) (0.3)
Exchange differences recognised
in translation reserve 0.1 (0.1)
As at 30 June 0.3 1.1
------ ------
The fair value of the contingent consideration in relation to
the acquisition of ThinkGrid in 2012 was EUR0.3m (31 December 2014:
EUR1.1m) as at 30 June 2015. The amount is expected to be settled
in 2015 and has not been discounted due to immateriality. The 2014
amount assumed a discount rate of 4.0%. This financial liability
has a Level 3 fair value hierarchy as the future payments were
contingent on the ThinkGrid business achieving contractually agreed
financial and non-financial targets.
10. Capital and other financial commitments
Six months ended
30 June
-------------------
2015 2014
EURm EURm
--------- --------
Contracts placed for future plant
and equipment capital expenditure
not provided for in the financial
statements 45.3 37.5
--------- --------
Colt Group S.A.
APPENDIX 1 - Analysis of cash used in investing activities
(capital expenditure) (Unaudited)
An analysis of cash capital expenditure* within the Group's
consolidated cash flow statement for the six months ended 30 June
2015, compared to the six months ended 30 June 2014, is shown
below:
Six months ended
30 June
EURm 2015 2014 Movement
------ ------ ---------
Customer order related 83.7 84.0 (0.3)
Data centre services expansion 17.6 8.7 8.9
Network expansion 2.2 3.7 (1.5)
Product and services development 3.3 13.6 (10.3)
------ ------ ---------
23.1 26.0 (2.9)
Internal IT/Operations infrastructure 8.4 19.8 (11.4)
DCS infrastructure 5.3 5.3 (0.0)
Other 5.1 2.4 2.7
------ ------ ---------
Total 125.6 137.5 (11.9)
------ ------ ---------
*The categories shown above may further be refined in the
future.
APPENDIX 2 - Constant currency analysis (Unaudited)
An analysis of revenue and EBITDA for the six months ended 30
June 2015, compared to the six months ended 30 June 2014 after
excluding the impact of foreign exchange, is shown below:
Six months ended 30 June
-----------------------------------------------
2015 2014* % Movement
-------------------------------
Foreign
exchange
REVENUE EURm EURm Actual Business impact**
------ ------ -------- --------- ----------
Network Services 433.9 415.3 4.5% 0.2% 4.3%
Voice Services 186.1 260.8 (28.7%) (31.8%) 3.1%
Data Centre Services 57.5 56.8 1.3% (3.8%) 5.1%
IT Services 33.3 37.5 (11.2%) (13.7%) 2.5%
Colt Asia 80.0 -- -- -- --
Total revenue 790.8 770.4 2.6% (1.3%) 3.9%
------ ------ -------- --------- ----------
EBITDA 156.4 145.4 7.6% 6.7% 0.9%
------ ------ -------- --------- ----------
*Certain lines of business revenue and EBITDA figures have been
restated to ensure comparability between periods as we refined
allocation bases.
**The foreign exchange impact has been calculated by
retranslating non-Euro revenue and EBITDA in the prior period to
the current month's average exchange rate. The most significant
exchange impact on the reported results come from the 11.2%
strengthening of the Sterling against the Euro impacting revenue
over the last year.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR RMMJTMBTJBFA
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