FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of April 2006
COLT TELECOM GROUP plc
(Translation of Registrant's Name into English)
Beaufort House
15 St. Botolph Street
London
EC3A 7QN
England
_________________________________
(Address of Principal Executive Offices)
(Indicate by check mark whether the Registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.)
Form 20-F..X... Form 40-F.....
(Indicate by check mark whether the Registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934)
Yes ..... No ..X...
(If "Yes" is marked, indicate below the file number assigned to the Registrant
in connection with Rule 12g3-2(b): 82- ________)
This Form 6-K shall be deemed to be incorporated by reference in the
Registrant's Registration Statement on Form F-3 (Reg. No.333-05972), in the
Registrant's Registration Statement on Form S-8 (Reg. No.333-8362)
27 April 2006
COLT Telecom Group plc announces results for the quarter ended 31 March 2006
COLT Telecom Group plc (COLT), a leading European provider of business
communications, today reported its results for the first quarter of 2006.
FIRST QUARTER HIGHLIGHTS
Compared to Q1 2005:
- Revenue increased by 0.2% to GBP307.7m. On a constant currency basis and
after excluding reductions in fixed to mobile prices, revenue increased by
4.1%
- Non-switched revenues grew by 3.0% to GBP125.2m
- Gross margin before depreciation increased by 1.7 percentage points to
35.7%
- Selling, general and administrative expenses were reduced by GBP5.2m to
GBP62.2m
- EBITDA(1) increased by GBP10.5m to GBP47.6m
- Loss before taxation decreased by GBP21.1m to GBP7.3m
- Free cash flow(2) improved by GBP8.0m to an outflow GBP7.9m
Compared to Q4 2005:
- Revenue decreased by 0.7% to GBP307.7m. On a constant currency basis and
after excluding reductions in fixed to mobile prices, revenue increased by
0.2%
- Non-switched revenues grew by 1.1% to GBP125.2m
- Gross margin before depreciation decreased by 0.6 percentage points to
35.7%
- Selling, general and administrative expenses were reduced by GBP0.7m to
GBP62.2m
- EBITDA decreased by GBP2.0m to GBP47.6m
- Loss before taxation decreased by GBP9.8m to GBP7.3m
- Free cash flow decreased by GBP15.2m to an outflow of GBP7.9m
COLT Chairman Barry Bateman said:
"The markets in which COLT operates continue to be challenging. Compared to a
year ago, the financial performance of the Company has nevertheless improved.
However, compared to the fourth quarter of 2005, revenues were flat and EBITDA
and cash flow were both slightly lower.
"In February, we announced a series of corporate actions intended to put COLT
into the optimum position to deliver value to its shareholders over the longer
term. Since then, we have made good progress on that programme and today I am
pleased to announce Luxembourg as the proposed new domicile for COLT. In early
May, we will send full details of our proposals to shareholders and, subject to
their approval, our programme should be completed by the end of June."
(1) EBITDA is earnings before net finance costs, tax, depreciation,
amortisation, foreign exchange, exceptional items and profit on repurchase
of debt
(2) Free cash flow is net cash generated from operating activities less net
cash used in investing activities and net finance costs paid
Jean-Yves Charlier, Chief Executive Officer, said:
"Compared to the previous quarter, COLT reported flat revenues, lower EBITDA and
cash flow but reduced losses. Nevertheless, non-switched revenues grew for the
fifth successive quarter and we are now winning an increasing number of larger
contracts across Europe, whilst our new converged service, COLT Total, is
continuing to be well received in the marketplace. During the quarter, we also
launched a number of new products, including our IP Voice service in partnership
with Avaya.
"We are also pleased to announce a number of new projects including a major
Switched Ethernet VPN contract with Lufthansa in Germany and a large
pan-European Ethernet network services contract with iBahn. At the same time, we
have also agreed a substantial three year non-switched services contract with a
major global carrier for nearly a thousand sites across Europe.
"At the same time, we have also continued to work on our transformation
initatives. Our new Customer Service Centre in Barcelona was opened ahead of
schedule in March and it already has over 85 employees providing world-class
services to our customers across Europe. We also continued to transfer processes
to our centre in India which operates now with over 630 employees.
"COLT continues to face many challenges, with non-switched revenue growth being
our primary objective. We are nevertheless confident that as a result of our
transformation initatives we will see further progress during 2006."
Financial review
Total revenue
Revenue for the quarter was GBP307.7m (Q4 2005: GBP309.9m; Q1 2005: GBP307.1m) a
decrease of 1.5% over the fourth quarter of 2005 but an increase of 1.2% over
the first quarter of 2005, both on a constant currency basis. Excluding the
impact of reductions in fixed to mobile prices, constant currency revenue
increased by 0.2% over the fourth quarter of 2005 and by 4.1% over the first
quarter of 2005. Non-switched revenue as a percentage of total revenue was 40.7%
(Q4 2005: 39.9%; Q1 2005: 39.6%).
Switched revenue
Switched revenue for the quarter decreased by 2.0% to GBP182.2m (Q4 2005:
GBP185.9m) and decreased by 1.6% over the first quarter of 2005 (Q1 2005:
GBP185.2m). Within switched revenue the proportion of carrier was 33.5% (Q4
2005: 34.6%; Q1 2005: 32.7%). Switched revenue from corporate customers for the
quarter decreased by 0.8% to GBP78.4m (Q4 2005: GBP79.0m) and decreased by 5.8%
over the first quarter of 2005 (Q1 2005: GBP83.2m). Switched revenue from
wholesale customers decreased by 2.9% to GBP103.8m (Q4 2005: GBP106.9m) and
increased by 1.8% over the first quarter of 2005 (Q1 2005: GBP102.0m).
Non-switched revenue
Non-switched revenue for the quarter increased by 1.1% to GBP125.2m (Q4 2005:
GBP123.8m) and increased by 3.0% over the first quarter of 2005 (Q1 2005:
GBP121.5m). Non-switched revenue from corporate customers increased by 1.9% to
GBP100.3m (Q4 2005: GBP98.4m) and increased by 4.0% over the first quarter of
2005 (Q1 2005: GBP96.4m). Non-switched revenue from wholesale customers
decreased by 2.0% to GBP24.9m (Q4 2005: GBP25.4m) and decreased by 0.8% over the
first quarter of 2005 (Q1 2005: GBP25.1m).
Cost of sales
Cost of sales decreased by 4.2% to GBP236.7m (Q4 2005: GBP247.2m before
exceptional items) and decreased by 6.0% over the first quarter of 2005 (Q1
2005: GBP251.8m).
Interconnect and network costs increased by 0.3% to GBP197.9m (Q4 2005:
GBP197.4m) and decreased by 2.3% over the first quarter of 2005 (Q1 2005:
GBP202.6m).
Network depreciation decreased by 22.1% to GBP38.8m (Q4 2005: GBP49.8m before
exceptional items) and decreased by 21.1% over the first quarter of 2005 (Q1
2005: GBP49.2m).
Operating expenses
Operating expenses decreased by 4.2% to GBP69.1m (Q4 2005: GBP72.1m before
exceptional items) and decreased by 7.5% over the first quarter of 2005 (Q1
2005: GBP74.7m).
Selling, general and administrative (SG&A) expenses for the quarter decreased by
1.1% to GBP62.2m (Q4 2005: GBP62.9m) and decreased by 7.7% over the first
quarter of 2005 (Q1 2005: GBP67.4m). SG&A expenses as a proportion of revenue
were 20.2% (Q4 2005: 20.3%; Q1 2005: 21.9%).
Other depreciation decreased by 25.0% to GBP6.9m (Q4 2005: GBP9.2m before
exceptional items) and decreased by 5.5% over the first quarter of 2005 (Q1
2005: GBP7.3m).
Finance income and finance costs and similar charges
Finance income for the quarter decreased by GBP0.5m to GBP2.0m (Q4 2005:
GBP2.5m) and decreased by GBP1.2m over the first quarter of 2005 (Q1 2005:
GBP3.2m). Finance costs and similar charges for the quarter increased by GBP1.0m
to GBP11.2m (Q4 2005: GBP10.2m) and decreased by GBP1.0m over the first quarter
of 2005 (Q1 2005: GBP12.2m).
Taxation
COLT had no taxable profits in the quarter ended 31 March 2006 or in the quarter
ended 31 March 2005.
Cash flow
There was a free cash outflow of GBP7.9m in the quarter (Q4 2005: inflow of
GBP7.3m; Q1 2005: outflow of GBP15.9m).
COLT had balances of cash and cash equivalents at 31 March 2006 of GBP221.6m
compared with GBP225.3m at 31 December 2005 and GBP349.0m at 31 March 2005.
Financial Information
Consolidated income statement
Three months ended
31 March
2006 2005
GBPm GBPm
Revenue 307.7 307.1
Cost of sales
Interconnect and network (197.9) (202.6)
Network depreciation (38.8) (49.2)
(236.7) (251.8)
Gross profit 71.0 55.3
Operating expenses
Selling, general and administrative (62.2) (67.4)
Other depreciation (6.9) (7.3)
(69.1) (74.7)
Operating profit (loss) 1.9 (19.4)
Other income (expense)
Finance income 2.0 3.2
Finance costs and similar charges (11.2) (12.2)
(9.2) (9.0)
Loss on ordinary activities before taxation (7.3) (28.4)
Taxation -- --
Loss for period (7.3) (28.4)
Basic and diluted loss per share GBP(0.00) GBP(0.02)
All of the Group's activities are continuing. The basis on which this
information has been prepared is described in Note 1 to this financial
information.
Consolidated reconciliation of changes in equity
Three months ended
31 March
2006 2005
GBPm GBPm
Loss for period (7.3) (28.4)
Issue of share capital 3.2 --
Shares to be issued under share option plans 0.8 0.5
Revaluation of warrants -- (0.3)
Exchange differences -- (9.3)
Net changes in equity (3.3) (37.5)
Opening equity 339.9 681.8
Closing equity 336.6 644.3
Consolidated balance sheet
At 31 At 31 At 31
March December March
2006 2005 2005
GBPm GBPm GBPm
ASSETS
Non-current assets
Intangible assets 40.0 38.9 62.8
Property, plant and equipment 830.8 834.2 1,139.5
Total non-current assets 870.8 873.1 1,202.3
Current assets
Trade receivables 186.6 184.8 203.8
Prepaid expenses and other debtors 65.4 53.7 60.4
Cash and cash equivalents 221.6 225.3 349.0
Total current assets 473.6 463.8 613.2
Total assets 1,344.4 1,336.9 1,815.5
EQUITY
Capital and reserves
Share capital 2,358.9 2,355.7 2,354.4
Other reserves 24.5 23.7 21.9
Retained earnings (2,046.8) (2,039.5) (1,732.0)
Total equity 336.6 339.9 644.3
LIABILITIES
Non-current liabilities
Convertible debt 229.2 224.0 241.7
Non-convertible debt 356.5 351.8 352.0
Provisions for liabilities and 34.9 35.7 44.9
charges
Total non-current liabilities 620.6 611.5 638.6
Current liabilities
Convertible debt -- -- 131.8
Loan finance 10.5 10.3 --
Trade and other payables 376.7 375.2 400.8
Total current liabilities 387.2 385.5 532.6
Total liabilities 1,007.8 997.0 1,171.2
Total equity and liabilities 1,344.4 1,336.9 1,815.5
Consolidated cash flow statement
Three months ended
31 March
2006 2005
GBPm GBPm
Net cash generated from operating activities 30.4 22.4
Cash flows from investing activities
Purchase of tangible fixed assets (33.3) (31.4)
Disposal of tangible fixed assets 0.3 --
Net cash used in investing activities (33.0) (31.4)
Cash flows from financing activities
Finance costs and similar charges (7.3) (10.0)
Finance income 2.0 3.1
Issue of ordinary shares 3.2 --
Redemption of non-convertible debt -- (80.9)
Net cash used in financing activities (2.1) (87.8)
Net movement in cash and cash equivalents (4.7) (96.8)
Cash and cash equivalents at beginning of period 225.3 452.7
Effect of exchange rate changes on cash and cash
equivalents 1.0 (6.9)
Cash and cash equivalents at end of period 221.6 349.0
Notes to the Financial Information
1. Basis of presentation and principal accounting policies
COLT Telecom Group plc ("COLT" or "the Company"), together with its
subsidiaries, is referred to as "the Group". Consolidated financial information
has been presented for the Group for the three months ended 31 March 2006.
The financial information for the three months ended 31 March 2006 and 31 March
2005 is unaudited and does not constitute statutory accounts within the meaning
of Section 240 of the Companies Act 1985.
The financial information has been prepared in accordance with International
Accounting Standard 34 (IAS 34) "Interim Financial Reporting". The financial
information should be read in conjunction with the full consolidated financial
statements of the Group for the year ended 31 December 2005. The accounting
policies used are consistent with those used in the annual financial statements.
The presentation of the financial information is consistent with the annual
financial statements, except where noted below. Where necessary, comparatives
have been reclassified from previously reported interim financial information to
take into account any presentational changes made in the annual financial
statements or in this interim financial information.
Net exchange gains or losses taken through the income statement have been
reclassified and are now presented as part of finance costs and similar charges.
The Group's operations are not generally subject to significant seasonal or
cyclical variations.
2. Segmental information
The Group operates in a single business segment, telecommunications, and in the
geographical areas shown below.
The reported segments are Germany, Strategic Markets, UK and France. Strategic
Markets comprises Austria, Belgium, Denmark, Ireland, Italy, Netherlands,
Portugal, Spain, Sweden and Switzerland.
Switched revenue comprises services that involve the transmission of voice, data
or video through a switching centre. Non-switched revenue includes managed and
non-managed network services, bandwidth services and voice traffic which is
delivered in a digital form (IP Voice).
For the three months ended 31 March 2006, 31 December 2005 and 31 March 2005,
revenue and result by segment were as follows:
Three months ended 31 March 2006
Germany Strategic UK France Total
Markets
GBPm GBPm GBPm GBPm GBPm
Carrier 26.0 20.1 9.4 5.6 61.1
Non-carrier 54.2 30.2 19.2 17.5 121.1
Total switched 80.2 50.3 28.6 23.1 182.2
Non-switched 34.2 43.4 29.5 18.1 125.2
Other -- 0.3 -- -- 0.3
Revenue by segment 114.4 94.0 58.1 41.2 307.7
Operating result by
segment (0.6) 4.2 (3.9) 2.2 1.9
Three months ended 31 December 2005
Germany Strategic UK France Total
Markets
GBPm GBPm GBPm GBPm GBPm
Carrier 26.3 21.9 10.3 5.9 64.4
Non-carrier 55.8 28.4 20.3 17.0 121.5
Total switched 82.1 50.3 30.6 22.9 185.9
Non-switched 33.6 42.4 29.7 18.1 123.8
Other -- 0.2 -- -- 0.2
Revenue by segment 115.7 92.9 60.3 41.0 309.9
Operating result by
segment before
exceptional items (6.3) (2.6) (2.0) 1.5 (9.4)
Exceptional item -
Impairment -- (99.9) (46.8) (100.5) (247.2)
Operating result by
segment after
exceptional items (6.3) (102.5) (48.8) (99.0) (256.6)
Three months ended 31 March 2005
Germany Strategic UK France Total
Markets
GBPm GBPm GBPm GBPm GBPm
Carrier 24.0 24.2 7.5 4.8 60.5
Non-carrier 59.0 26.5 22.4 16.8 124.7
Total switched 83.0 50.7 29.9 21.6 185.2
Non-switched 33.5 40.2 29.7 18.1 121.5
Other -- 0.4 -- -- 0.4
Revenue by segment 116.5 91.3 59.6 39.7 307.1
Operating result by
segment (4.4) (4.1) (8.8) (2.1) (19.4)
In addition, for the three months ended 31 March 2006, 31 December 2005 and 31
March 2005, revenue by customer type is presented below. Corporate revenue
includes services to corporate and government accounts. Wholesale revenue
includes services to other telecommunications carriers, resellers and internet
service providers.
Three months ended
31 March 2006
Corporate Wholesale Total
GBPm GBPm GBPm
Carrier -- 61.1 61.1
Non-carrier 78.4 42.7 121.1
Total switched 78.4 103.8 182.2
Non-switched 100.3 24.9 125.2
Other -- 0.3 0.3
Revenue 178.7 129.0 307.7
Three months ended
31 December 2005
Corporate Wholesale Total
GBPm GBPm GBPm
Carrier -- 64.4 64.4
Non-carrier 79.0 42.5 121.5
Total switched 79.0 106.9 185.9
Non-switched 98.4 25.4 123.8
Other 0.2 -- 0.2
Revenue 177.6 132.3 309.9
Three months ended
31 March 2005
Corporate Wholesale Total
GBPm GBPm GBPm
Carrier -- 60.5 60.5
Non-carrier 83.2 41.5 124.7
Total switched 83.2 102.0 185.2
Non-switched 96.4 25.1 121.5
Other 0.4 -- 0.4
Revenue 180.0 127.1 307.1
Revenue for the three months ended 31 March 2006, compared to the three months
ended 31 December 2005 and 31 March 2005 and after excluding the impact of
foreign exchange, is shown below:
Q1 Q1 Compared to Q4 Q1 Compared to Q1
2006 2006 2005 % Growth 2006 2005 % Growth
GBPm GBPm GBPm
Actual Constant Actual Constant Constant Actual Constant
currency currency currency currency
(1) (1) (2) (2)
Corporate
Total switched 78.4 77.8 (0.8) (1.5) 79.1 (5.8) (4.9)
Non-switched 100.3 99.6 1.9 1.2 101.4 4.0 5.2
Total 178.7 177.4 0.6 (0.1) 180.5 (0.7) 0.3
Wholesale
Carrier 61.1 60.6 (5.1) (5.9) 61.6 1.0 1.8
Non-carrier 42.7 42.3 0.5 (0.5) 43.1 2.9 3.9
Total switched 103.8 102.9 (2.9) (3.7) 104.7 1.8 2.6
Non-switched 24.9 24.8 (2.0) (2.4) 25.2 (0.8) 0.4
Other 0.3 0.3 n/a n/a 0.3 n/a n/a
Total 129.0 128.0 (2.5) (3.3) 130.2 1.5 2.4
Total
Carrier 61.1 60.6 (5.1) (5.9) 61.6 1.0 1.8
Non-carrier 121.1 120.1 (0.3) (1.2) 122.2 (2.9) (2.0)
Total switched 182.2 180.7 (2.0) (2.8) 183.8 (1.6) (0.8)
Non-switched 125.2 124.4 1.1 0.5 126.6 3.0 4.2
Other 0.3 0.3 n/a n/a 0.3 n/a n/a
Total 307.7 305.4 (0.7) (1.5) 310.7 0.2 1.2
(1) Q1 2006 revenue has been restated using Q4 2005 exchange rates, and compared
to revenue which was reported in Q4 2005
(2) Q1 2006 revenue has been restated using Q1 2005 exchange rates, and compared
to revenue which was reported in Q1 2005
3. Loss per share
--------------
Three months ended
31 March
--------------
2006 2005
Loss for period (GBPm) (7.3) (28.4)
Weighted average number of ordinary shares (m) 1,515.1 1,511.1
Basic and diluted loss per share GBP(0.00) GBP(0.02)
4. Reconciliation of net loss to cash generated from operations
Three months ended
31 March
2006 2005
GBPm GBPm
Loss for the period (7.3) (28.4)
Finance costs and similar charges 11.2 12.2
Finance income (2.0) (3.2)
Depreciation 45.7 56.5
Share option charge 0.8 0.5
Movement in receivables (11.2) (23.3)
Movement in payables (5.3) 11.0
Movement in provisions (1.6) (3.0)
Exchange differences 0.1 0.1
Net cash generated from operations 30.4 22.4
5. EBITDA reconciliation
Three months ended
31 March
2006 2005
GBPm GBPm
Net cash generated from operations 30.4 22.4
Movement in receivables 11.2 23.3
Movement in payables 5.3 (11.0)
Movement in provisions 1.6 3.0
Exchange differences (0.1) (0.1)
Share option charge (0.8) (0.5)
EBITDA 47.6 37.1
6. Free cash flow reconciliation
Three months ended
31 March
2006 2005
GBPm GBPm
EBITDA 47.6 37.1
Movement in receivables (11.2) (23.3)
Movement in payables (5.3) 11.0
Movement in provisions (1.6) (3.0)
Exchange differences 0.1 0.1
Share option charge 0.8 0.5
Finance costs and similar charges paid (7.3) (10.0)
Finance income received 2.0 3.1
Net cash used in investing activities (33.0) (31.4)
Free cash outflow (7.9) (15.9)
Additional Information
Operating statistics
Q1 06 Q4 05 Q1 05 Growth Growth
Q1 06 Q1 06
- -
Q4 05 Q1 05
Customers (at end of quarter)
Germany 7,610 7,741 7,685 (2%) (1%)
Strategic Markets 9,589 9,295 8,671 3% 11%
UK 2,893 2,850 2,799 2% 3%
France 2,910 2,935 3,070 (1%) (5%)
23,002 22,821 22,225 1% 3%
Customers (at end of quarter)
Corporate 21,763 21,615 20,982 1% 4%
Wholesale 1,239 1,206 1,243 3% --
23,002 22,821 22,225 1% 3%
Switched Minutes (m) (for quarter)
Germany 4,076 3,773 3,580 8% 14%
Strategic Markets 1,634 1,508 1,350 8% 21%
UK 956 1,036 990 (8%) (3%)
France 974 1,041 953 (6%) 2%
7,640 7,358 6,873 4% 11%
Private Wire VGEs (000) (at end of quarter)
Germany 14,549 13,920 12,624 5% 15%
Strategic Markets 15,990 13,543 11,260 18% 42%
UK 14,048 13,607 10,552 3% 33%
France 6,248 5,829 4,410 7% 42%
50,835 46,899 38,846 8% 31%
Headcount (at end of quarter)
Germany 887 899 991 (1%) (10%)
Strategic Markets 1,023 1,028 1,074 -- (5%)
UK 1,034 1,015 1,148 2% (10%)
France 381 384 413 (1%) (8%)
India 631 545 272 16% 231%
3,956 3,871 3,898 2% 1%
Strategic Markets comprises Austria, Belgium, Denmark, Ireland, Italy,
Netherlands, Portugal, Spain, Sweden and Switzerland. Customers represent the
number of customers who purchase network and data solutions products. VGEs are
the comparable number of voice circuits, of 64 kilobytes per second, each
approximately equivalent in capacity to the non-switched circuit being measured.
Headcount comprises active employees excluding temporary and contract workers.
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
Telecom Group plc 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 the laws,
regulations and policies governing the ownership of telecommunications licenses,
(ii) the Group's ability to manage its growth, (iii) the nature of the
competition that the Group will encounter and (iv) unforeseen operational or
technical problems. 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.
Enquiries:
COLT Telecom Group plc
Luke Glass
Director Corporate Communications
Email: luke.glass@colt.net
Tel: +44 (0) 20 7390 3681
Gill Maclean
Head of Corporate Communications
Email: gill.maclean@colt.net
Tel: +44 (0) 20 7863 5314
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Current Report on Form-6K to be signed on its
behalf by undersigned, thereunto duly authorized.
Date: 27 April 2006 COLT Telecom Group plc
By: ___Caroline Griffin Pain___
Caroline Griffin Pain
Company Secretary