An ongoing takeover bid from Fidelity has spurred Colt (COLT) into action, with the telecoms group announcing another widescale restructuring programme in June. These results show why that's needed. Cash profits rose 8 per cent, but only due to cost savings and the acquisition of peer KVH Asia. Sales fell in three of the telecom group's four divisions.
Sales inched upwards at Colt's network division as it benefited from strong demand for managed services, a strengthened sales team and a focus on high-speed data, cloud access and other growth markets. But its gains were offset by a 32 per cent slump in constant-currency voice revenues. That reflected the group's withdrawal from lower-margin wholesale contracts and regulatory cuts to how much it can charge other carriers to deliver calls on its network.
Colt is exiting the IT services industry to focus on network, voice and data centre services. Management recognised €128m (£90.4m) in one-off expenses related to the strategy, restructuring charges and share-based payments, and expects to incur up to €48m in further reorganisation costs. It expects the initiative to generate €25m in annual savings from next year.
Larger profits and assiduous cost control allowed Colt to staunch its free cash outflow, which narrowed by three-quarters to €7.3m.
Consensus analyst forecasts are for EPS of 2¢ this year (2¢ in 2014).
| COLT (COLT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 187.9p | MARKET VALUE: | £1.7bn | |
| TOUCH: | 187.3-187.9p | 12-MONTH HIGH: | 193p | LOW: 113p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 162¢ | NET CASH: | €73.3m | |
| Half-year to 30 Jun | Turnover (€m) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 770 | 5 | nil | nil |
| 2015 | 791 | -141 | -16 | nil |
| % change | +3 | - | - | - |
£1=€1.42 | ||||
