Colt Group Reports Q1
LONDON -- Colt Group S.A. (London Stock Exchange: COLT) issued today its Interim Management Statement for the three months ended 31 March 2015.
Revenue declined 1.3% from Q114, as a result of our prior year exit from low margin carrier voice trading contracts, offset by a first full quarter contribution from KVH which was acquired in December 2014. On a constant currency basis Group revenue declined 5.4%, explained by the following movements:
Wholesale Voice revenue (which combines Carrier Voice services and reseller voice, previously part of Enterprise Voice services) declined as a result of our exit from low margin carrier voice trading. Enterprise Voice revenue fell, largely due to regulatory driven price reductions. In underlying terms, Voice revenues are roughly flat year on year, a solid performance in a declining market.
Group EBITDA of 76.4 million (Q1 14: 74.1 million) represents year on year growth of 3.1%. KVH EBITDA and the benefits of the 2014 restructuring programme more than compensated for margin compression within Network Services and the impact from the exit of low margin Voice business. On a constant currency basis Group EBITDA grew 2.2%. Net cash and deposits as at 31 March 2015 amounted to 64.6 million (31 December 2014: 77.4 million). Net cash flows improved by 22.3 million with a free cash outflow of 16.3 million in Q115 compared to an outflow of 38.7 million in Q1 14. The primary difference in cash flows between the quarters relates to an improved working capital performance and reduction in capital expenditure spend. Capital expenditure for Q115 decreased 15.4 million to 59.1 million (Q1 14: 74.5 million) as we sought to maximise our return on investment. Timing elements contributed to the overall year on year Group cash flow improvement this quarter, with underlying progress almost half that of the headline improvement.
The workforce restructuring announced in April 2014 is continuing largely as planned. In Q1 2015 the Group incurred payments of 5.3m associated with implementing the plan, taking the total cash outflows to date to 19.9m. The overall costs of the programme is still anticipated to be c.30m and this will be completed by the end of Q2 15. The business is still expected to benefit from a similar run rate of ongoing annual cost savings partly this year, and fully in 2016. Cost transformation across the Group continues to be a key strategic focus as well as ensuring we effectively manage our cost base.
In alignment with Colts strategic focus on information intensive industries, our Capital Markets capability was significantly enhanced with the April announcement of the launch of our financial services extranet, Colt PrizmNet. This connects providers of financial content including market data, research and other services to Capital Markets firms. A dedicated private network with deterministic low latency will guarantee reliable, consistent, and transparent content delivery.
It is still early days in the integration of KVH, which is tracking to plan and we are already seeing engagement with several large customers due to the strength of the combined Colt and KVH capability. We remain on track to deliver on the cost synergy benefits outlined with the announcement of the deal.
We have separately announced this morning the appointment of Carl Grivner as our new Executive Vice President for Network Services. Carl has more than 25 years of executive and leadership experience in the telecommunications and technology industry, most recently as CEO of Pacnet and XO Communications.
The Group performance in Q1 was in line with Colts expectations. The Group remains focused on profitable growth and continued cost transformation plans and expects to be modestly cash flow positive for the full year 2015.
Rakesh Bhasin, Chief Executive Officer, said: The new focus we have brought to the organisation through the implementation of the lines of business is starting to deliver results. Our core Network Services and Voice Services in particular show underlying signs of improvement and the Group is showing headline visibility of year on year cash flow improvement. We will continue to drive efficiency and asset utilisation across the organisation to deliver improved performance in 2015.