LONDON -- COLT Telecom Group plc (COLT), a leading pan-European provider of business communications solutions and services said today that it continued to grow turnover, win new business and deliver improved financial performance in line with expectations.

Turnover for the quarter was GBP301.1 million, an increase of 11% on a constant currency basis and after disposals. EBITDA increased by 37% to GBP46.5 million over the comparable period in 2003. COLT generated GBP13.8 million of positive free cash flow during the quarter and is well on track to achieve its goal of becoming free cash flow positive on a sustainable basis during 2005.

Highlights (1) of the quarter include:

(1) All comparisons are with the equivalent period of the prior year

(2) EBITDA is earnings before interest, tax, depreciation, amortisation, foreign exchange and exceptional items.

(3) Free cash flow is the sum of net cash inflow from operating activities less net cash outflows from returns on investments and servicing of finance and from capital expenditure and financial investment.

Commenting on the results, Chairman of COLT, Barry Bateman, said: "I'm pleased to report that COLT continues to make good progress against its key performance targets and that these results reflect further improvements throughout the business. "COLT remains financially strong. The business generated positive free cash flow during the quarter of GBP13.8 million. Cash and liquid resources at the end of the quarter were GBP786.1 million. We remain on track to achieve our goal of being free cash flow positive on a sustainable basis during 2005."

Steve Akin, President and Chief Executive Officer, said: "First quarter performance was in line with expectations, with growth in turnover of 11% and a 37% increase in EBITDA to GBP46.5 million.

"A growing proportion of our turnover is now being generated from some of our newer services, IPVPN, Carrier Pre-Select and Intelligent Network Services in particular. In the quarter, the number of IPVPN customers rose to more than 700 across more than 5,000 sites throughout Europe making COLT one of the leading suppliers of IPVPNs in Europe.

"We continue to focus the business on maintaining and enhancing our reputation for world class customer service and our quality reputation has been further rewarded with BS7799 accreditation in recognition of our best practice in information security.

"Tight management of operating costs remains a priority. At the end of the quarter, employee numbers, including temporary and contract staff were 4,048 compared to 4,624 at the end of March 2003. SG&A as a percentage of turnover declined from 21% in the first quarter of 2003 to 19% in the first quarter of 2004. We are making steady progress in our plans to achieve further efficiency improvements through establishing a new support organisation in India."

Colt Telecom Group plc