COLT offentliggør resultat for Q3 2004
Diverse d. 20. oktober. 2004, skrevet af The Boss 0 Kommentarer. Vist: 484 gange.
20 October 2004
COLT TELECOM GROUP PLC ANNOUNCES RESULTS FOR THE
THREE AND NINE MONTHS ENDED 30 SEPTEMBER 2004
COLT Telecom Group plc (COLT), a leading pan-European provider of business communications solutions and services said today that during the third quarter it continued to grow turnover and reduce losses in line with market expectations. COLT also said that it would be announcing separately today its strategic direction for profitable growth ? "Future in Focus" ? which it expects will enhance its prospects and position in the marketplace.
Highlights of the quarter (1) include:
? Turnover of £303.7 million, up 7% (2) on a constant currency basis
? Gross margin before depreciation of 31.6%
? EBITDA (3) decreased by 23% from £43.3 million to £33.4 million
? Loss for the period (4) decreased by 11% from £35.7 million to £31.8 million
? Strong financial position with cash and liquid resources of £791.4 million
? Early redemption of £324 million of bonds, transaction completed on 19 October
? Proforma cash and liquid resources of £467.4 million post redemption of the bonds
? Further strengthening of top management team
? COLT wins World Communication Award for Customer Care for fourth successive year
Barry Bateman, Chairman, said:
"During the third quarter COLT continued to grow revenues and margins were broadly in line with the second quarter. However price erosion across a number of products and pressure on costs combined to lead to a disappointing decline in EBITDA. Nevertheless, COLT?s underlying financial position remains strong: losses are reducing and we have taken action to reduce interest payments through the early redemption of some of our bonds, reflecting our confidence in the future. Our financial performance needs to improve further to enable us to achieve a satisfactory return on capital and to this end, we have strengthened our senior management team during the quarter and are setting a future direction for profitable growth which builds on the core strengths of our pan-European backbone, 32 metropolitan area networks with fibre access and best-in-industry customer service.?
Jean?Yves Charlier, Chief Executive Officer, said:
"COLT made further progress in a difficult quarter by growing revenues and reducing losses. We further reinforced our reputation for best-in-industry customer service by winning the prestigious World Communication Award for Customer Care for the fourth successive year.
"Despite these achievements, the revenue mix was not what it needs to be and we continue to be challenged by the market environment and by pressures on our cost base. We have taken action to strengthen our senior management team in sales and marketing as well as in our key markets of France and the UK. Furthermore, after a strategy review, we are implementing an enhanced set of strategic initiatives ? "Future in Focus" ? designed to re-establish the company as an innovator and as one of the top three players in each of the metropolitan markets in which it operates across Europe.
(1) Comparison with equivalent quarter of the prior year.
(2) Excluding Fitec, which was disposed of in December 2003.
(3) EBITDA is earnings before interest, tax, depreciation, amortisation, foreign exchange and exceptional items.
(4) Before exceptional items.
?To renew with innovation, we are also announcing today our SecureIT service for SME customers, the first in a portfolio of new services to extend COLT?s IP management services to the LAN and desktop environment."
KEY FINANCIAL DATA Three months ended
30 September Nine months ended
30 September
2003 2004 2003 2004
£ m £ m £ m £ m
Turnover 295.4 303.7 860.1 906.1
Interconnect and network costs (193.3) (207.8) (569.3) (610.9)
Gross profit before depreciation
102.1 95.9
290.8 295.2
Gross profit before depreciation %
34.5% 31.6%
33.8% 32.6%
Network depreciation (54.0) (46.6) (154.0) (139.2)
Gross profit 48.1 49.3 136.8 156.0
Loss for the period (before exceptional items) (35.7) (31.8) (111.1) (77.8)
Loss for the period (after exceptional items) (35.7) (31.5) (103.6) (77.6)
EBITDA (1) 43.3 33.4 115.2 118.1
(1) EBITDA is earnings before interest, tax, depreciation, amortisation, foreign exchange and exceptional items.
Financial Review
Unless otherwise stated all comparisons are between the three and nine months ended 30 September 2004 and 30 September 2003.
Turnover
Turnover for the three months ended 30 September 2004 was £303.7 million (2003: £295.4 million). This was an increase of 7% on a constant currency basis and excluding the turnover contributed by Fitec (which was disposed of in December 2003). Turnover for the nine months ended 30 September 2004 was £906.1 million (2003: £860.1 million). This was an increase of 9% on a constant currency basis and excluding the turnover contributed by Fitec. The increase in turnover was driven by demand for COLT?s services from existing and new customers and new service introductions.
Corporate
Turnover from corporate customers for the three months ended 30 September 2004 decreased by 2% to £173.6 million (2003: £177.2 million). Turnover from corporate customers for the nine months ended 30 September 2004 increased by 1% to £518.4 million (2003: £511.3 million). Turnover from corporate customers represented 57% of total turnover in the three and nine months ended 30 September 2004 (2003: 60% and 59%). Switched turnover for the three months decreased by 5% to £81.0 million (2003: £85.4 million) and for the nine months increased by 1% to £250.9 million (2003: £248.8 million). Non-switched turnover for the three months decreased by 1% to £90.7 million (2003: £91.2 million) and for the nine months increased by 1% to £265.1 million (2003: £261.6 million).
Wholesale
Turnover from wholesale customers for the three months ended 30 September 2004 increased by 10% to £130.2 million (2003: £118.2 million). Turnover from wholesale customers for the nine months ended 30 September 2004 increased by 11% to £387.6 million (2003: £348.7 million). Turnover from wholesale customers represented 43% of total turnover in the three and nine months ended 30 September 2004 (2003: 40% and 41%).
Switched turnover for the three months increased by 13% to £103.8 million (2003: £91.5 million) and for the nine months increased by 16% to £309.0 million (2003: £265.9 million). Non-switched turnover for the three months decreased by 1% to £26.3 million (2003: £26.7 million) and for the nine months decreased by 5% to £78.5 million (2003: £82.5 million).
Cost of Sales
Cost of sales for the three months ended 30 September 2004 increased by 3% to £254.4 million (2003: £247.3 million). Cost of sales for the nine months ended 30 September 2004 increased by 4% to £750.1 million (2003: £723.3 million).
Interconnection and network costs for the three months ended 30 September 2004 increased by 7% to £207.8 million (2003: £193.3 million). Interconnection and network costs for the nine months ended 30 September 2004 increased by 7% to £610.9 million (2003: £569.3 million). The increases reflected the overall increase in switched revenues.
Network depreciation for the three months ended 30 September 2004 decreased by 14% to £46.6 million (2003: £54.0 million). Network depreciation for the nine months ended 30 September 2004 decreased by 10% to £139.2 million (2003: £154.0 million). The decreases reflected the effect of some assets being fully depreciated, partially offset by further investment in fixed assets to support the growth in demand for services and new service developments.
Operating Expenses
Operating expenses for the three months ended 30 September 2004 increased by 2% to £69.9 million (2003: £68.5 million). Operating expenses for the nine months ended 30 September 2004 decreased by 3% to £199.2 million (2003: £204.8 million).
Selling, general and administrative (SG&A) expenses for the three months ended 30 September 2004 increased by 6% to £62.5 million (2003: £58.8 million). SG&A expenses for the nine months ended 30 September 2004 increased by 1% to £177.0 million (2003: £175.6 million). SG&A expenses as a proportion of turnover for the three and nine months was 20.6% and 19.5% (2003: 19.9% and 20.4%). The increases in SG&A expenses reflected the initial costs associated with the establishment of COLT?s presence in India and increased personnel costs.
Other depreciation and amortisation for the three months ended 30 September 2004 decreased by 25% to £7.3 million (2003: £9.8 million). Other depreciation and amortisation for the nine months ended 30 September 2004 decreased by 24% to £22.1 million (2003: £29.2 million). The reductions reflected the effect of some assets being fully depreciated, partially offset by increased investment in customer service and other support systems.
Interest Receivable, Interest Payable and Similar Charges
Interest receivable for the three months ended 30 September 2004 decreased by 7% to £5.6 million (2003: £6.0 million). Interest receivable for the nine months ended 30 September 2004 decreased by 18% to £16.6 million (2003: £20.2 million). The decreases were as a result of reduced average balances of cash and investments in liquid resources following the purchase and redemption of £144.5 million of the Company's outstanding notes during 2003.
Interest payable and similar charges for the three months ended 30 September 2004 decreased by 24% to £16.9 million (2003: £22.1 million). Interest payable and similar charges for the nine months ended 30 September 2004 decreased by 24% to £51.5 million (2003: £67.3 million). These decreases were due primarily to the reduction in debt levels following the purchase and redemption of £144.5 million of the Company?s outstanding notes during 2003.
Interest payable and similar charges for the three months included £8.4 million (2003: £8.6 million) of interest and accretion on convertible debt and £8.7 million (2003: £12.9 million) of interest and accretion on non-convertible debt. Interest payable and similar charges for the nine months included £25.2 million (2003: £25.8 million) of interest and accretion on convertible debt and £26.1 million (2003: £39.4 million) of interest and accretion on non-convertible debt. In the three and nine months there was also £(0.2) million and £0.1 million respectively of other interest and unwinding of discounts on provisions. Interest payable and similar charges for the quarter comprised £11.2 million and £5.7 million of interest and accretion respectively.
Gain on Purchase of Debt
Gains arising on the purchase of £13.2 million of debt during the three months ended 30 September 2004 were £0.2 million (2003: nil). Gains arising on the purchase of £13.2 million of debt during the nine months ended 30 September 2004 were £0.2 million (2003: £7.6 million).
Exchange Gains
For the three months ended 30 September 2004 there were exchange gains of £0.1 million (2003: £0.9 million). For the nine months ended 30 September 2004 there were exchange gains of £0.2 million (2003: £4.1 million). The exchange gains in the prior year were due primarily to movements in the British pound relative to the U.S. dollar on cash and debt balances denominated in U.S. dollars.
Tax on Loss on Ordinary Activities
COLT had no taxable profits in the nine months ended 30 September 2003 and 2004.
Financial Needs and Resources
FREE CASHFLOW Three months ended
30 September Nine months ended
30 September
2003 2004 2003 2004
£ m £ m £ m £ m
EBITDA 43.3 33.4 115.2 118.1
Changes in working capital and provisions 1.9 2.9 (2.2) 6.3
Interest paid (net) (3.2) (4.8) (21.3) (17.7)
Capital expenditure (32.9) (32.5) (108.3) (89.4)
Free cash inflow (outflow) 9.1 (1.0) (16.6) 17.3
There was a free cash outflow of £1.0 million in the three months ended 30 September 2004 (2003: inflow of £9.1 million). For the nine months ended 30 September 2004 there was an inflow of £17.3 million (2003: outflow of £16.6 million). The improvement in free cash flow for the nine months was driven by reduced capital expenditure, lower payments against provisions and reduced interest payments.
Net cash outflows from financing for the three months ended 30 September 2004 were £13.2 million (2003: inflow of £0.5 million). Net cash outflows from financing for the nine months ended 30 September 2004 were £12.7 million (2003: outflow of £23.3 million). COLT had balances of cash and investments in liquid resources at 30 September 2004 of £791.4 million compared with £802.4 million at 31 December 2003.
On 19 October 2004 all of the outstanding DM600 million 2% Senior Convertible Notes due August 2005 and the ?368 million 2% Senior Convertible Notes due December 2006 were redeemed. The redemptions were at the accreted principal amount of the Notes plus accrued interest and were funded out of cash and liquid resources. The aggregate amount payable was £324 million.
Consolidated Profit and Loss Account
Three months ended 30 September
2003
2004
Before Exceptional Items 2004
Exceptional Items 2004
After Exceptional Items 2004
After Exceptional Items
£'000 £'000 £'000 £'000 $'000
Turnover 295,368 303,710 -- 303,710 549,411
Cost of sales
Interconnect and network (193,322) (207,813) -- (207,813) (375,934)
Network depreciation (53,977) (46,611) -- (46,611) (84,319)
(247,299) (254,424) -- (254,424) (460,253)
Gross profit 48,069 49,286 -- 49,286 89,158
Operating expenses
Selling, general and administrative (58,790) (62,522) -- (62,522) (113,102)
Other depreciation and amortisation (9,756) (7,337) -- (7,337) (13,273)
(68,546) (69,859) -- (69,859) (126,375)
Operating loss (20,477) (20,573) -- (20,573) (37,217)
Other income (expense)
Interest receivable 6,010 5,600 -- 5,600 10,130
Gain on purchase of debt -- -- 205 205 371
Interest payable and similar charges (22,139) (16,882) -- (16,882) (30,540)
Exchange gain 880 104 -- 104 188
(15,249) (11,178) 205 (10,973) (19,851)
Loss on ordinary activities before taxation (35,726) (31,751) 205 (31,546) (57,068)
Taxation -- -- -- -- --
Loss for period (35,726) (31,751) 205 (31,546) (57,068)
Basic and diluted loss per share £(0.02) £(0.02) £0.00 £(0.02) $(0.04)
There is no difference between the loss on ordinary activities before taxation and the retained loss for the periods stated above, and their historical cost equivalents. All of the Group?s activities are continuing. The basis on which this information has been prepared is described in Note 1 to these financial statements.
Consolidated Profit and Loss Account
Nine months ended 30 September
2003
Before
Exceptional
Items 2003
Exceptional Items 2003
After
Exceptional
Items 2004
Before Exceptional Items 2004
Exceptional Items 2004
After Exceptional Items 2004
After Exceptional Items
£'000 £?000 £?000 £'000 £'000 £'000 $'000
Turnover 860,055 -- 860,055 906,053 -- 906,053 1,639,050
Cost of sales
Interconnect and network (569,265) -- (569,265) (610,931) -- (610,931) (1,105,174)
Network depreciation (154,039) -- (154,039) (139,155) -- (139,155) (251,731)
(723,304) -- (723,304) (750,086) -- (750,086) (1,356,905)
Gross profit 136,751 -- 136,751 155,967 -- 155,967 282,145
Operating expenses
Selling, general and administrative (175,589) -- (175,589) (177,023) -- (177,023) (320,235)
Other depreciation and amortisation (29,247) -- (29,247) (22,129) -- (22,129) (40,031)
(204,836) -- (204,836) (199,152) -- (199,152) (360,266)
Operating loss (68,085) -- (68,085) (43,185) -- (43,185) (78,121)
Other income (expense)
Interest receivable 20,186 -- 20,186 16,637 -- 16,637 30,096
Gain on purchase of debt -- 7,589 7,589 -- 205 205 371
Interest payable and similar charges (67,307) -- (67,307) (51,477) -- (51,477) (93,122)
Exchange gain 4,058 -- 4,058 222 -- 222 402
(43,063) 7,589 (35,474) (34,618) 205 (34,413) (62,253)
Profit (loss) on ordinary activities before taxation (111,148) 7,589 (103,559) (77,803) 205 (77,598) (140,374)
Taxation -- -- -- -- -- -- --
Loss for period (111,148) 7,589 (103,559) (77,803) 205 (77,598) (140,374)
Basic and diluted loss per share £(0.07) £0.00 £(0.07) £(0.05) £0.00 £(0.05) $(0.09)
There is no difference between the loss on ordinary activities before taxation and the retained loss for the periods stated above, and their historical cost equivalents. All of the Group?s activities are continuing. The basis on which this information has been prepared is described in Note 1 to these financial statements.
Consolidated Statement of Total Recognised Gains and Losses
Three months ended 30 September Nine months ended 30 September
2003 2004 2004 2003 2004 2004
£'000 £'000 $'000 £'000 £'000 $'000
Loss for period (35,726) (31,546) (57,068) (103,559) (77,598) (140,374)
Exchange differences 3,473 7,371 13,335 28,968 (11,869) (21,471)
Total recognised losses (32,253) (24,175) (43,733) (74,591) (89,467) (161,845)
Consolidated Reconciliation of Changes in Equity Shareholders? Funds
Three months ended 30 September Nine months ended 30 September
2003 2004 2004 2003 2004 2004
£'000 £'000 $'000 £'000 £'000 $'000
Loss for period (35,726) (31,546) (57,068) (103,559) (77,598) (140,374)
Issue of share capital 610 -- -- 612 742 1,342
Shares to be issued (117) -- -- (229) (215) (389)
Transfer investment in own shares -- -- -- -- (195) (353)
Exchange differences 3,473 7,371 13,335 28,968 (11,869) (21,471)
Net changes in equity shareholders' funds (31,760) (24,175) (43,733) (74,208) (89,135) (161,245)
Opening equity shareholders' funds 912,562 797,933 1,443,461 955,010 862,893 1,560,973
Closing equity shareholders' funds 880,802 773,758 1,399,728 880,802 773,758 1,399,728
Consolidated Balance Sheet
At 31
December 2003 At 30 September 2004
£'000 £'000 $'000
Fixed assets
Intangible fixed assets (net) 9,493 7,691 13,913
Tangible fixed assets (cost) 2,934,503 2,951,025 5,338,404
Accumulated depreciation (1,590,218) (1,701,121) (3,077,328)
Tangible fixed assets (net) 1,344,285 1,249,904 2,261,076
Investments in own shares 195 -- --
Total fixed assets 1,353,973 1,257,595 2,274,989
Current assets
Trade debtors 199,849 194,269 351,433
Prepaid expenses and other debtors 66,834 46,444 84,017
Investments in liquid resources 742,143 736,077 1,331,563
Cash at bank and in hand 60,239 55,290 100,020
Total current assets 1,069,065 1,032,080 1,867,033
Total assets 2,423,038 2,289,675 4,142,022
Capital and reserves
Called up share capital 37,754 37,776 68,337
Share premium 2,315,904 2,316,624 4,190,773
Merger reserve 27,359 27,359 49,492
Shares to be issued 215 -- --
Profit and loss account (1,518,339) (1,608,001) (2,908,874)
Equity shareholders? funds 862,893 773,758 1,399,728
Provisions for liabilities and charges 62,860 48,966 88,579
Creditors
Amounts falling due within one year
Convertible debt -- 315,866 571,402
Other 352,736 351,952 636,681
Amounts falling due after more than one year
Convertible debt 700,131 367,110 664,102
Non-convertible debt 444,418 432,023 781,530
Total amounts falling due after more than one year 1,144,549 799,133 1,445,632
Total creditors 1,497,285 1,466,951 2,653,715
Total liabilities, capital and reserves 2,423,038 2,289,675 4,142,022
Consolidated Cash Flow Statement
Three months ended 30 September Nine months ended 30 September
2003 2004 2004 2003 2004 2004
£'000 £?000 $'000 £'000 £'000 $'000
Net cash inflow from operating activities 45,264
36,354 65,765 112,951 124,385 225,012
Returns on investments and servicing of finance
Interest received 6,023 5,550 10,040 20,277 15,902 28,767
Interest paid, finance costs and similar charges
(9,251) (10,378) (18,774)
(41,546) (33,639) (60,853)
Net cash outflow from returns on investments and servicing of finance (3,228) (4,828) (8,734) (21,269) (17,737) (32,086)
Capital expenditure and financial investment
Purchase of tangible fixed assets (32,909) (32,574) (58,926) (108,300) (93,345) (168,860)
Sale of tangible fixed assets -- 86 155 -- 3,970 7,182
Net cash outflow from capital expenditure and financial investment (32,909) (32,488) (58,771) (108,300) (89,375) (161,678)
Management of liquid resources 3,816 (4,170) (7,544) 46,659 (8,075) (14,608)
Financing
Issue of ordinary shares 473 -- -- 474 527 953
Purchase of convertible debt -- (1,635) (2,958) (14,166) (1,635) (2,958)
Purchase of non-convertible debt -- (11,612) (21,006) (9,606) (11,612) (21,006)
Net cash inflow (outflow) from financing 473 (13,247) (23,964) (23,298) (12,720) (23,011)
Increase (decrease) in cash
13,416 (18,379) (33,248) 6,743 (3,522) (6,371)
Notes to Financial Statements
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 statements have been presented for the Group for the three and nine months ended 30 September 2003 and 2004.
The financial statements for the three and nine months ended 30 September 2003 and 2004 are unaudited and do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. In the opinion of management, the financial statements for these periods reflect all the adjustments necessary to present fairly the financial position, results of operations and cash flows for the periods in conformity with generally accepted accounting principles in the U.K. All adjustments, with the exception of the exceptional items described in Note 4, were of a normal recurring nature. The balance sheet at 31 December 2003 has been extracted from the Group?s 2003 statutory accounts.
Accounting policies and presentation applied are consistent with those applied in preparing the Group?s financial statements for the year ended 31 December 2003 except for the adoption of UITF 38 ?Accounting for ESOP trusts?. Applying the UITF has resulted in the balance sheet reclassification of the £195,000 investment in own shares from fixed assets to the profit and loss account.
Certain British pound amounts in the financial statements have been translated into U.S. dollars at 30 September 2004 and for the periods then ended at the rate of $1.809 to the British pound, which was the noon buying rate in the City of New York for cable transfers in British pounds as certified for customs purposes by the Federal Reserve Bank on such date. Such translations should not be construed as representations that the British pound amounts have been or could be converted into U.S. dollars at that or any other rate.
Notes to Financial Statements
2. Segmental information
North Region comprises Belgium, Denmark, Ireland, The Netherlands, Sweden and UK. Central Region comprises Austria, Germany and Switzerland. South Region comprises France, Italy, Portugal and Spain.
Switched turnover comprises services that involve the transmission of voice, data or video through a switching centre. Non-switched turnover includes managed and non-managed network services, and bandwidth services.
Wholesale turnover includes services to other telecommunications carriers, resellers and internet service providers (ISPs). Corporate turnover includes services to corporate and government accounts.
For the three months ended 30 September 2003 and 2004, turnover by segment was as follows:
Three months ended 30 September 2003
Corporate
Wholesale North
Region Central Region South Region Total
£?000 £?000 £?000 £?000 £?000 £?000
Switched 85,428 91,469 52,271 82,566 42,060 176,897
Non-switched 91,202 26,695 41,720 41,594 34,583 117,897
Other 533 41 -- 574 -- 574
Total 177,163 118,205 93,991 124,734 76,643 295,368
Three months ended 30 September 2004
Corporate
Wholesale North
Region Central Region South Region Total
£?000 £?000 £?000 £?000 £?000 £?000
Switched 81,000 103,813 52,404 95,578 36,831 184,813
Non-switched 90,727 26,343 40,726 43,293 33,051 117,070
Other 1,827 -- 159 1,228 440 1,827
Total 173,554 130,156 93,289 140,099 70,322 303,710
For the nine months ended 30 September 2003 and 2004, turnover by segment was as follows:
Nine months ended 30 September 2003
Corporate
Wholesale North
Region Central Region South Region Total
£?000 £?000 £?000 £?000 £?000 £?000
Switched 248,796 265,904 155,527 238,255 120,918 514,700
Non-switched 261,609 82,483 123,944 120,181 99,967 344,092
Other 909 354 79 905 279 1,263
Total 511,314 348,741 279,550 359,341 221,164 860,055
Nine months ended 30 September 2004
Corporate
Wholesale North
Region Central Region South Region Total
£?000 £?000 £?000 £?000 £?000 £?000
Switched 250,908 308,979 161,889 280,956 117,042 559,887
Non-switched 265,114 78,536 122,116 126,168 95,366 343,650
Other 2,403 113 275 1,352 889 2,516
Total 518,425 387,628 284,280 408,476 213,297 906,053
Notes to Financial Statements
3. Loss per share
Three months ended 30 September Nine months ended 30 September
2003 2004 2004 2003 2004 2004
£'000 £?000 $'000 £'000 £'000 $'000
Loss for period (35,726) (31,546) (57,068) (103,559) (77,598) (140,374)
Weighted average number of ordinary shares (?000) 1,508,037 1,511,021 1,511,021 1,507,463 1,510,784 1,510,784
Basic and diluted loss per share £(0.02) £(0.02) $(0.04) £(0.07) £(0.05) $(0.09)
4. Exceptional items
Gain on purchase of debt
During the three and nine months ended 30 September 2004, the Group purchased some of its debt for a cash outlay of £13.2 million, resulting in an exceptional gain of £0.2 million. There were no purchases of debt in the three months ended 30 September 2003. Exceptional gains arising on the purchase of debt during the nine months ended 30 September 2003 amounted to £7.6 million.
5. Cash flow reconciliations
5a. Reconciliation of operating loss to net cash inflow from operating activities
Three months ended 30 September Nine months ended 30 September
2003 2004 2004 2003 2004 2004
£'000 £?000 $'000 £'000 £'000 $'000
Operating loss (20,477) (20,573) (37,217) (68,085) (43,185) (78,121)
Depreciation and amortisation 63,733 53,948 97,592 183,286 161,284 291,762
Exchange differences (19) (846) (1,530) 123 56 101
Decrease in debtors 11,206 272 492 15,020 21,465 38,830
(Decrease) increase in creditors (935) 6,856 12,403 3,325 (2,477) (4,481)
Movement in provisions for liabilities and charges (8,244) (3,303) (5,975) (20,718) (12,758) (23,079)
Net cash inflow from operating activities 45,264 36,354 65,765 112,951 124,385 225,012
5b. EBITDA reconciliation
Three months ended 30 September Nine months ended 30 September
2003 2004 2004 2003 2004 2004
£'000 £?000 $'000 £'000 £'000 $'000
Net cash inflow from operating activities 45,264 36,354 65,765 112,951 124,385 225,012
Adjusted for:
Exchange differences 19 846 1,530 (123) (56) (101)
Movement in debtors (11,206) (272) (492) (15,020) (21,465) (38,830)
Movement in creditors 935 (6,856) (12,403) (3,325) 2,477 4,481
Total working capital adjustments (10,271) (7,128) (12,895) (18,345) (18,988) (34,349)
Movement in provisions
for liabilities and charges 8,244 3,303 5,975 20,718 12,758 23,079
EBITDA 43,256 33,375 60,375 115,201 118,099 213,641
Notes to Financial Statements
6. Changes in cash and investments in liquid resources
Three months ended 30 September Nine months ended 30 September
2003 2004 2004 2003 2004 2004
£'000 £?000 $'000 £'000 £'000 $'000
Beginning of period 920,519 793,976 1,436,303 934,882 802,382 1,451,509
Net (decrease) increase in investments in liquid resources before exchange differences (3,816) 4,170 7,544 (46,659) 8,075 14,608
Effects of exchange differences on investments in liquid resources 4,715 10,467 18,935 37,268 (14,141) (25,581)
Net increase (decrease) in cash before exchange differences 13,416 (18,379) (33,248) 6,743 (3,522) (6,371)
Effects of exchange differences on cash (430) 1,133 2,049 2,170 (1,427) (2,582)
End of period 934,404 791,367 1,431,583 934,404 791,367 1,431,583
7. Summary of differences between U.K. Generally Accepted Accounting Principles ("U.K. GAAP") and U.S. Generally Accepted Accounting Principles ("U.S. GAAP")
a. Effects of conforming to U.S. GAAP ? impact on net loss
Three months ended 30 September Nine months ended 30 September
2003 2004 2004 2003 2004 2004
£'000 £?000 $'000 £'000 £'000 $'000
Loss for period (35,726) (31,546) (57,068) (103,559) (77,598) (140,374)
Adjustments:
Deferred compensation (i), (ii) (292) 441 798 (815) 310 561
Amortisation of intangibles (iii) 544 502 908 1,612 1,508 2,728
Capitalised interest, net of depreciation (iv) (715) (810) (1,465) (2,268) (2,816) (5,094)
Profit on sale of IRUs (v) 262 261 472 783 783 1,416
Warrants (vi) 140 (352) (637) 127 (929) (1,681)
Installation revenue (vii) 773 855 1,547 2,044 4,252 7,692
Direct costs attributable to installation revenue (vii) (1,401) (796) (1,440) (2,672) (4,180) (7,562)
Impairment (viii) (2,805) (2,805) (5,073) (8,416) (8,415) (15,223)
Loss for period under US GAAP (39,220) (34,250) (61,958) (113,164) (87,085) (157,537)
Weighted average number of ordinary shares (?000) 1,508,037 1,511,021 1,511,021 1,507,463 1,510,784 1,510,784
Basic and diluted loss per share £(0.03) £(0.02) £(0.04) £(0.08) £(0.06) £(0.10)
Notes to Financial Statements
(i) The Group acquired ImagiNet in July 1998 and Fitec in July 2001. The consideration for both of these purchases included deferred shares and payments. The final elements of the consideration were paid in July 2003.
Under U.K. GAAP, the deferred shares and payments were included in the purchase consideration. The excess purchase consideration over the fair value of assets and liabilities acquired was attributed to goodwill and is being amortised over its estimated economic life.
Under U.S. GAAP, these deferred shares and payments were excluded from the purchase consideration and recognised as compensation expense in the profit and loss account over the period in which the payments vested. Total compensation charge for the three and nine months ended 30 September 2003 was £nil million and £0.3 million respectively. Because no payments were outstanding in the nine months to 30 September 2004, the total compensation charge for the period was £nil.
(ii) The Group operates an Inland Revenue approved Savings-Related Share Option Scheme ("SAYE Scheme"). Under this scheme, options may be granted at a discount of up to 20%. Under U.K. GAAP no charge is taken in relation to the discount. Under U.S. GAAP, the difference between the market value of the shares on the date of grant and the price paid for the shares is charged as a compensation cost to the profit and loss account over the period over which the shares vest.
Also under U.S. GAAP, an employer?s offer to enter into a new SAYE contract at a lower price causes variable accounting for all existing awards subject to the offer. Variable accounting commences for all existing awards when the offer is made, and for those awards that are retained by employees because the offer is declined, variable accounting continues until the award is exercised, forfeited or expires unexercised. New awards are accounted for as variable to the extent that the previous, higher priced options are cancelled.
The total expected compensation cost is recorded within equity shareholders? funds as unearned compensation and additional paid in share capital, with unearned compensation being charged to the profit and loss account over the vesting period. The total compensation cost for the three and nine months ended 30 September 2003 was a charge of £0.3 million and £0.5 million respectively and for the three and nine months ended 30 September 2004 was a credit of £0.4 million and £0.3 million respectively.
(iii) Under U.S. GAAP, goodwill with an indefinite useful life is not amortised but is tested for impairment annually. Under U.K. GAAP goodwill is amortised on a straight line basis over its useful economic life.
The Group had unamortised goodwill of £8.1 million at 30 September 2004, which is no longer amortised under U.S. GAAP but will be assessed for impairment annually. Amortisation expense related to goodwill, under U.K. GAAP, was £0.5 million and £1.6 million for the three and nine months ended 30 September 2003 and for the three and nine months ended 30 September 2004 was £0.5 million and £1.5 million respectively.
(iv) Adjustment to reflect interest amounts capitalised under U.S. GAAP, less depreciation for the period.
(v) In 2000 and 2001 the Group concluded a number of infrastructure sales in the form of 20-year indefeasible rights-of-use ("IRU") with characteristics which qualify the transactions as outright sales under U.K. GAAP. Under U.S. GAAP, these sales are treated as 20-year operating leases. The adjustment reflects the recognition of profit under U.S. GAAP on the sale of IRUs concluded in prior years.
(vi) The Group has received warrants from certain suppliers in the ordinary course of business. Under U.K. GAAP, warrants are treated as financial assets and recorded at the lower of cost or fair value. Hence for U.K. GAAP purposes the warrants have been recognised at nil. Under U.S. GAAP, the warrants are recorded at fair value with unrecognised gains and losses reflected in the profit and loss account.
Notes to Financial Statements
(vii) In accordance with SAB 101 "Revenue Recognition in Financial Statements", for the three and nine months ended 30 September 2003 and 2004, customer installation revenues together with attributable direct costs are recognised over the expected customer relationship period. At 30 September 2004, the cumulative increase in net losses under SAB 101 was £0.7 million, representing cumulative deferred installation revenues of £69.1 million and costs of £68.4 million.
(viii) During the quarter ended 30 September 2002, the Group recorded charges of £443.8 million under U.S. GAAP to reflect the impairment of goodwill, network and non-network fixed assets, resulting in a GAAP difference of £107.2 million at that time. For the three and nine months ended 30 September 2004 depreciation in the amount of £2.8 million and £8.4 million was recorded in respect of the assets which had not been impaired for U.S. GAAP purposes.
(ix) The Group operates a number of employee share schemes on which it incurs employer payroll taxes. Under U.K. GAAP, the cost of employer payroll taxes is recognised over the period from the date of grant to the end of the performance period. Under U.S. GAAP, the cost is recognised when the tax obligation arises.
b. Effects of conforming to U.S. GAAP ? impact on net equity
At 30 September 2004
£'000 $'000
Equity shareholders? funds under U.K. GAAP 773,758 1,399,728
U.S. GAAP adjustments:
Adjustment for deferred compensation (i), (ii) (10,456) (18,915)
Unearned compensation (i), (ii) (25) (45)
Additional paid in share capital (i), (ii) 10,481 18,960
Amortisation of intangibles (iii) 7,524 13,611
Warrants (vi) 122 220
Payroll taxes on employee share schemes (ix) 385 696
Impairment (viii) 84,754 153,320
Profit on sale IRUs (v) (16,940) (30,644)
Capitalised interest, net of depreciation (iv) 35,064 63,431
Deferred profit on installations (vii) (690) (1,248)
Approximate equity shareholders' funds under U.S. GAAP 883,977 1,599,114
(i) - (ix) See note a. for description and adjustment.
c. Effects of conforming to U.S. GAAP ? stock options
At 30 September 2004 the Group had certain options outstanding under its Option Plan. As permitted by SFAS No.123, "Accounting for Stock-Based Compensation", the Group elected not to adopt the recognition provisions of the standard and to continue to apply the provisions of Accounting Principles Board Opinion No.25, ?Accounting for Stock Issued to Employees,? in accounting for its stock options and awards. Had compensation expense for stock options and awards been determined in accordance with SFAS No.123, the Group?s loss for the three months ended 30 September 2004 would have been £36.5 million ($66.1 million).
Additional Information
Constant currency turnover analysis
Turnover for the three months ended 30 September 2004, compared to the three months ended 30 June 2004 and 30 September 2003 and after excluding the impact of foreign exchange, is shown below:
Compared to Q2 2004 Compared to Q3 2003
Q3 2004
£?000 Q3 2004
£?000 % Growth Q3 2004
£?000 % Growth
Actual Adjusted(1) Actual Adjusted(1) Adjusted(2) Actual Adjusted(2)
Corporate
Switched 81,000 80,516 0.8% 0.2% 83,434 (5.2%) (2.3%)
Non-switched and Other 92,554 92,009 1.9% 1.3% 95,442 0.9% 4.0%
Total 173,554 172,525 1.4% 0.8% 178,876 (2.0%) 1.0%
Wholesale
Switched 103,813 103,137 (3.3%) (4.0%) 107,510 13.5% 17.5%
Non-switched and Other 26,343 26,188 16.3% 15.6% 27,178 (1.5%) 1.7%
Total 130,156 129,325 0.1% (0.6%) 134,688 10.1% 13.9%
Total
Switched 184,813 183,653 (1.5%) (2.2%) 190,944 4.5% 7.9%
Non-switched and Other 118,897 118,197 4.7% 4.1% 122,620 0.4% 3.5%
Total 303,710 301,850 0.8% 0.2% 313,564 2.8% 6.2%
(1) Q3 2004 turnover has been restated using Q2 2004 exchange rates, and compared to turnover which was reported in Q2 2004
Q3 03 Q2 04 Q3 04 Growth
Q3 04 -
Q2 04 Growth
Q3 04 -
Q3 03
Customers (at end of quarter)
North Region 5,334 5,736 5,724 0% 7%
Central Region 6,466 7,929 7,960 0% 23%
South Region 5,605 5,940 6,041 2% 8%
17,405 19,605 19,725 1% 13%
Customers (at end of quarter)
Corporate 16,532 18,432 18,518 0% 12%
Wholesale 873 1,173 1,207 3% 38%
17,405 19,605 19,725 1% 13%
Switched minutes (million) (for quarter)
North Region 1,519 1,489 1,425 (4%) (6%)
Central Region 2,969 3,593 3,580 0% 21%
South Region 1,010 1,114 1,060 (5%) 5%
5,498 6,196 6,065 (2%) 10%
Private wire VGEs (000) (at end of quarter)
North Region 10,125 11,737 12,619 8% 25%
Central Region 10,621 13,013 15,623 20% 47%
South Region 4,432 5,642 6,431 14% 45%
25,178 30,392 34,673 14% 38%
Headcount (at end of quarter)
North Region 1,597 1,568 1,603 2% 0%
Central Region 1,461 1,361 1,330 (2%) (9%)
South Region 1,114 928 956 3% (14%)
4,172 3,857 3,889 1% (7%)
(2) Q3 2004 turnover has been restated using Q3 2003 exchange rates, and compared to turnover which was reported in Q3 2003
North Region comprises Belgium, Denmark, Ireland, The Netherlands, Sweden and UK. Central Region comprises Austria, Germany and Switzerland. South Region comprises France, Italy, Portugal and Spain. Customers represent the number of customers who purchase network and data solutions products. 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 ability of the Group to expand and develop its networks in new markets, (iii) the Group?s ability to manage its growth, (iv) the nature of the competition that the Group will encounter and (v) 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
John Doherty
Director Corporate Communications
Email: jdoherty@colt.net
Tel: +44 (0) 20 7390 3681
Gill Maclean
Head of Corporate Communications
Email: gill.maclean@colt-telecom.com
Tel: +44 (0) 20 7863 5314
THREE AND NINE MONTHS ENDED 30 SEPTEMBER 2004
COLT Telecom Group plc (COLT), a leading pan-European provider of business communications solutions and services said today that during the third quarter it continued to grow turnover and reduce losses in line with market expectations. COLT also said that it would be announcing separately today its strategic direction for profitable growth ? "Future in Focus" ? which it expects will enhance its prospects and position in the marketplace.
Highlights of the quarter (1) include:
? Turnover of £303.7 million, up 7% (2) on a constant currency basis
? Gross margin before depreciation of 31.6%
? EBITDA (3) decreased by 23% from £43.3 million to £33.4 million
? Loss for the period (4) decreased by 11% from £35.7 million to £31.8 million
? Strong financial position with cash and liquid resources of £791.4 million
? Early redemption of £324 million of bonds, transaction completed on 19 October
? Proforma cash and liquid resources of £467.4 million post redemption of the bonds
? Further strengthening of top management team
? COLT wins World Communication Award for Customer Care for fourth successive year
Barry Bateman, Chairman, said:
"During the third quarter COLT continued to grow revenues and margins were broadly in line with the second quarter. However price erosion across a number of products and pressure on costs combined to lead to a disappointing decline in EBITDA. Nevertheless, COLT?s underlying financial position remains strong: losses are reducing and we have taken action to reduce interest payments through the early redemption of some of our bonds, reflecting our confidence in the future. Our financial performance needs to improve further to enable us to achieve a satisfactory return on capital and to this end, we have strengthened our senior management team during the quarter and are setting a future direction for profitable growth which builds on the core strengths of our pan-European backbone, 32 metropolitan area networks with fibre access and best-in-industry customer service.?
Jean?Yves Charlier, Chief Executive Officer, said:
"COLT made further progress in a difficult quarter by growing revenues and reducing losses. We further reinforced our reputation for best-in-industry customer service by winning the prestigious World Communication Award for Customer Care for the fourth successive year.
"Despite these achievements, the revenue mix was not what it needs to be and we continue to be challenged by the market environment and by pressures on our cost base. We have taken action to strengthen our senior management team in sales and marketing as well as in our key markets of France and the UK. Furthermore, after a strategy review, we are implementing an enhanced set of strategic initiatives ? "Future in Focus" ? designed to re-establish the company as an innovator and as one of the top three players in each of the metropolitan markets in which it operates across Europe.
(1) Comparison with equivalent quarter of the prior year.
(2) Excluding Fitec, which was disposed of in December 2003.
(3) EBITDA is earnings before interest, tax, depreciation, amortisation, foreign exchange and exceptional items.
(4) Before exceptional items.
?To renew with innovation, we are also announcing today our SecureIT service for SME customers, the first in a portfolio of new services to extend COLT?s IP management services to the LAN and desktop environment."
KEY FINANCIAL DATA Three months ended
30 September Nine months ended
30 September
2003 2004 2003 2004
£ m £ m £ m £ m
Turnover 295.4 303.7 860.1 906.1
Interconnect and network costs (193.3) (207.8) (569.3) (610.9)
Gross profit before depreciation
102.1 95.9
290.8 295.2
Gross profit before depreciation %
34.5% 31.6%
33.8% 32.6%
Network depreciation (54.0) (46.6) (154.0) (139.2)
Gross profit 48.1 49.3 136.8 156.0
Loss for the period (before exceptional items) (35.7) (31.8) (111.1) (77.8)
Loss for the period (after exceptional items) (35.7) (31.5) (103.6) (77.6)
EBITDA (1) 43.3 33.4 115.2 118.1
(1) EBITDA is earnings before interest, tax, depreciation, amortisation, foreign exchange and exceptional items.
Financial Review
Unless otherwise stated all comparisons are between the three and nine months ended 30 September 2004 and 30 September 2003.
Turnover
Turnover for the three months ended 30 September 2004 was £303.7 million (2003: £295.4 million). This was an increase of 7% on a constant currency basis and excluding the turnover contributed by Fitec (which was disposed of in December 2003). Turnover for the nine months ended 30 September 2004 was £906.1 million (2003: £860.1 million). This was an increase of 9% on a constant currency basis and excluding the turnover contributed by Fitec. The increase in turnover was driven by demand for COLT?s services from existing and new customers and new service introductions.
Corporate
Turnover from corporate customers for the three months ended 30 September 2004 decreased by 2% to £173.6 million (2003: £177.2 million). Turnover from corporate customers for the nine months ended 30 September 2004 increased by 1% to £518.4 million (2003: £511.3 million). Turnover from corporate customers represented 57% of total turnover in the three and nine months ended 30 September 2004 (2003: 60% and 59%). Switched turnover for the three months decreased by 5% to £81.0 million (2003: £85.4 million) and for the nine months increased by 1% to £250.9 million (2003: £248.8 million). Non-switched turnover for the three months decreased by 1% to £90.7 million (2003: £91.2 million) and for the nine months increased by 1% to £265.1 million (2003: £261.6 million).
Wholesale
Turnover from wholesale customers for the three months ended 30 September 2004 increased by 10% to £130.2 million (2003: £118.2 million). Turnover from wholesale customers for the nine months ended 30 September 2004 increased by 11% to £387.6 million (2003: £348.7 million). Turnover from wholesale customers represented 43% of total turnover in the three and nine months ended 30 September 2004 (2003: 40% and 41%).
Switched turnover for the three months increased by 13% to £103.8 million (2003: £91.5 million) and for the nine months increased by 16% to £309.0 million (2003: £265.9 million). Non-switched turnover for the three months decreased by 1% to £26.3 million (2003: £26.7 million) and for the nine months decreased by 5% to £78.5 million (2003: £82.5 million).
Cost of Sales
Cost of sales for the three months ended 30 September 2004 increased by 3% to £254.4 million (2003: £247.3 million). Cost of sales for the nine months ended 30 September 2004 increased by 4% to £750.1 million (2003: £723.3 million).
Interconnection and network costs for the three months ended 30 September 2004 increased by 7% to £207.8 million (2003: £193.3 million). Interconnection and network costs for the nine months ended 30 September 2004 increased by 7% to £610.9 million (2003: £569.3 million). The increases reflected the overall increase in switched revenues.
Network depreciation for the three months ended 30 September 2004 decreased by 14% to £46.6 million (2003: £54.0 million). Network depreciation for the nine months ended 30 September 2004 decreased by 10% to £139.2 million (2003: £154.0 million). The decreases reflected the effect of some assets being fully depreciated, partially offset by further investment in fixed assets to support the growth in demand for services and new service developments.
Operating Expenses
Operating expenses for the three months ended 30 September 2004 increased by 2% to £69.9 million (2003: £68.5 million). Operating expenses for the nine months ended 30 September 2004 decreased by 3% to £199.2 million (2003: £204.8 million).
Selling, general and administrative (SG&A) expenses for the three months ended 30 September 2004 increased by 6% to £62.5 million (2003: £58.8 million). SG&A expenses for the nine months ended 30 September 2004 increased by 1% to £177.0 million (2003: £175.6 million). SG&A expenses as a proportion of turnover for the three and nine months was 20.6% and 19.5% (2003: 19.9% and 20.4%). The increases in SG&A expenses reflected the initial costs associated with the establishment of COLT?s presence in India and increased personnel costs.
Other depreciation and amortisation for the three months ended 30 September 2004 decreased by 25% to £7.3 million (2003: £9.8 million). Other depreciation and amortisation for the nine months ended 30 September 2004 decreased by 24% to £22.1 million (2003: £29.2 million). The reductions reflected the effect of some assets being fully depreciated, partially offset by increased investment in customer service and other support systems.
Interest Receivable, Interest Payable and Similar Charges
Interest receivable for the three months ended 30 September 2004 decreased by 7% to £5.6 million (2003: £6.0 million). Interest receivable for the nine months ended 30 September 2004 decreased by 18% to £16.6 million (2003: £20.2 million). The decreases were as a result of reduced average balances of cash and investments in liquid resources following the purchase and redemption of £144.5 million of the Company's outstanding notes during 2003.
Interest payable and similar charges for the three months ended 30 September 2004 decreased by 24% to £16.9 million (2003: £22.1 million). Interest payable and similar charges for the nine months ended 30 September 2004 decreased by 24% to £51.5 million (2003: £67.3 million). These decreases were due primarily to the reduction in debt levels following the purchase and redemption of £144.5 million of the Company?s outstanding notes during 2003.
Interest payable and similar charges for the three months included £8.4 million (2003: £8.6 million) of interest and accretion on convertible debt and £8.7 million (2003: £12.9 million) of interest and accretion on non-convertible debt. Interest payable and similar charges for the nine months included £25.2 million (2003: £25.8 million) of interest and accretion on convertible debt and £26.1 million (2003: £39.4 million) of interest and accretion on non-convertible debt. In the three and nine months there was also £(0.2) million and £0.1 million respectively of other interest and unwinding of discounts on provisions. Interest payable and similar charges for the quarter comprised £11.2 million and £5.7 million of interest and accretion respectively.
Gain on Purchase of Debt
Gains arising on the purchase of £13.2 million of debt during the three months ended 30 September 2004 were £0.2 million (2003: nil). Gains arising on the purchase of £13.2 million of debt during the nine months ended 30 September 2004 were £0.2 million (2003: £7.6 million).
Exchange Gains
For the three months ended 30 September 2004 there were exchange gains of £0.1 million (2003: £0.9 million). For the nine months ended 30 September 2004 there were exchange gains of £0.2 million (2003: £4.1 million). The exchange gains in the prior year were due primarily to movements in the British pound relative to the U.S. dollar on cash and debt balances denominated in U.S. dollars.
Tax on Loss on Ordinary Activities
COLT had no taxable profits in the nine months ended 30 September 2003 and 2004.
Financial Needs and Resources
FREE CASHFLOW Three months ended
30 September Nine months ended
30 September
2003 2004 2003 2004
£ m £ m £ m £ m
EBITDA 43.3 33.4 115.2 118.1
Changes in working capital and provisions 1.9 2.9 (2.2) 6.3
Interest paid (net) (3.2) (4.8) (21.3) (17.7)
Capital expenditure (32.9) (32.5) (108.3) (89.4)
Free cash inflow (outflow) 9.1 (1.0) (16.6) 17.3
There was a free cash outflow of £1.0 million in the three months ended 30 September 2004 (2003: inflow of £9.1 million). For the nine months ended 30 September 2004 there was an inflow of £17.3 million (2003: outflow of £16.6 million). The improvement in free cash flow for the nine months was driven by reduced capital expenditure, lower payments against provisions and reduced interest payments.
Net cash outflows from financing for the three months ended 30 September 2004 were £13.2 million (2003: inflow of £0.5 million). Net cash outflows from financing for the nine months ended 30 September 2004 were £12.7 million (2003: outflow of £23.3 million). COLT had balances of cash and investments in liquid resources at 30 September 2004 of £791.4 million compared with £802.4 million at 31 December 2003.
On 19 October 2004 all of the outstanding DM600 million 2% Senior Convertible Notes due August 2005 and the ?368 million 2% Senior Convertible Notes due December 2006 were redeemed. The redemptions were at the accreted principal amount of the Notes plus accrued interest and were funded out of cash and liquid resources. The aggregate amount payable was £324 million.
Consolidated Profit and Loss Account
Three months ended 30 September
2003
2004
Before Exceptional Items 2004
Exceptional Items 2004
After Exceptional Items 2004
After Exceptional Items
£'000 £'000 £'000 £'000 $'000
Turnover 295,368 303,710 -- 303,710 549,411
Cost of sales
Interconnect and network (193,322) (207,813) -- (207,813) (375,934)
Network depreciation (53,977) (46,611) -- (46,611) (84,319)
(247,299) (254,424) -- (254,424) (460,253)
Gross profit 48,069 49,286 -- 49,286 89,158
Operating expenses
Selling, general and administrative (58,790) (62,522) -- (62,522) (113,102)
Other depreciation and amortisation (9,756) (7,337) -- (7,337) (13,273)
(68,546) (69,859) -- (69,859) (126,375)
Operating loss (20,477) (20,573) -- (20,573) (37,217)
Other income (expense)
Interest receivable 6,010 5,600 -- 5,600 10,130
Gain on purchase of debt -- -- 205 205 371
Interest payable and similar charges (22,139) (16,882) -- (16,882) (30,540)
Exchange gain 880 104 -- 104 188
(15,249) (11,178) 205 (10,973) (19,851)
Loss on ordinary activities before taxation (35,726) (31,751) 205 (31,546) (57,068)
Taxation -- -- -- -- --
Loss for period (35,726) (31,751) 205 (31,546) (57,068)
Basic and diluted loss per share £(0.02) £(0.02) £0.00 £(0.02) $(0.04)
There is no difference between the loss on ordinary activities before taxation and the retained loss for the periods stated above, and their historical cost equivalents. All of the Group?s activities are continuing. The basis on which this information has been prepared is described in Note 1 to these financial statements.
Consolidated Profit and Loss Account
Nine months ended 30 September
2003
Before
Exceptional
Items 2003
Exceptional Items 2003
After
Exceptional
Items 2004
Before Exceptional Items 2004
Exceptional Items 2004
After Exceptional Items 2004
After Exceptional Items
£'000 £?000 £?000 £'000 £'000 £'000 $'000
Turnover 860,055 -- 860,055 906,053 -- 906,053 1,639,050
Cost of sales
Interconnect and network (569,265) -- (569,265) (610,931) -- (610,931) (1,105,174)
Network depreciation (154,039) -- (154,039) (139,155) -- (139,155) (251,731)
(723,304) -- (723,304) (750,086) -- (750,086) (1,356,905)
Gross profit 136,751 -- 136,751 155,967 -- 155,967 282,145
Operating expenses
Selling, general and administrative (175,589) -- (175,589) (177,023) -- (177,023) (320,235)
Other depreciation and amortisation (29,247) -- (29,247) (22,129) -- (22,129) (40,031)
(204,836) -- (204,836) (199,152) -- (199,152) (360,266)
Operating loss (68,085) -- (68,085) (43,185) -- (43,185) (78,121)
Other income (expense)
Interest receivable 20,186 -- 20,186 16,637 -- 16,637 30,096
Gain on purchase of debt -- 7,589 7,589 -- 205 205 371
Interest payable and similar charges (67,307) -- (67,307) (51,477) -- (51,477) (93,122)
Exchange gain 4,058 -- 4,058 222 -- 222 402
(43,063) 7,589 (35,474) (34,618) 205 (34,413) (62,253)
Profit (loss) on ordinary activities before taxation (111,148) 7,589 (103,559) (77,803) 205 (77,598) (140,374)
Taxation -- -- -- -- -- -- --
Loss for period (111,148) 7,589 (103,559) (77,803) 205 (77,598) (140,374)
Basic and diluted loss per share £(0.07) £0.00 £(0.07) £(0.05) £0.00 £(0.05) $(0.09)
There is no difference between the loss on ordinary activities before taxation and the retained loss for the periods stated above, and their historical cost equivalents. All of the Group?s activities are continuing. The basis on which this information has been prepared is described in Note 1 to these financial statements.
Consolidated Statement of Total Recognised Gains and Losses
Three months ended 30 September Nine months ended 30 September
2003 2004 2004 2003 2004 2004
£'000 £'000 $'000 £'000 £'000 $'000
Loss for period (35,726) (31,546) (57,068) (103,559) (77,598) (140,374)
Exchange differences 3,473 7,371 13,335 28,968 (11,869) (21,471)
Total recognised losses (32,253) (24,175) (43,733) (74,591) (89,467) (161,845)
Consolidated Reconciliation of Changes in Equity Shareholders? Funds
Three months ended 30 September Nine months ended 30 September
2003 2004 2004 2003 2004 2004
£'000 £'000 $'000 £'000 £'000 $'000
Loss for period (35,726) (31,546) (57,068) (103,559) (77,598) (140,374)
Issue of share capital 610 -- -- 612 742 1,342
Shares to be issued (117) -- -- (229) (215) (389)
Transfer investment in own shares -- -- -- -- (195) (353)
Exchange differences 3,473 7,371 13,335 28,968 (11,869) (21,471)
Net changes in equity shareholders' funds (31,760) (24,175) (43,733) (74,208) (89,135) (161,245)
Opening equity shareholders' funds 912,562 797,933 1,443,461 955,010 862,893 1,560,973
Closing equity shareholders' funds 880,802 773,758 1,399,728 880,802 773,758 1,399,728
Consolidated Balance Sheet
At 31
December 2003 At 30 September 2004
£'000 £'000 $'000
Fixed assets
Intangible fixed assets (net) 9,493 7,691 13,913
Tangible fixed assets (cost) 2,934,503 2,951,025 5,338,404
Accumulated depreciation (1,590,218) (1,701,121) (3,077,328)
Tangible fixed assets (net) 1,344,285 1,249,904 2,261,076
Investments in own shares 195 -- --
Total fixed assets 1,353,973 1,257,595 2,274,989
Current assets
Trade debtors 199,849 194,269 351,433
Prepaid expenses and other debtors 66,834 46,444 84,017
Investments in liquid resources 742,143 736,077 1,331,563
Cash at bank and in hand 60,239 55,290 100,020
Total current assets 1,069,065 1,032,080 1,867,033
Total assets 2,423,038 2,289,675 4,142,022
Capital and reserves
Called up share capital 37,754 37,776 68,337
Share premium 2,315,904 2,316,624 4,190,773
Merger reserve 27,359 27,359 49,492
Shares to be issued 215 -- --
Profit and loss account (1,518,339) (1,608,001) (2,908,874)
Equity shareholders? funds 862,893 773,758 1,399,728
Provisions for liabilities and charges 62,860 48,966 88,579
Creditors
Amounts falling due within one year
Convertible debt -- 315,866 571,402
Other 352,736 351,952 636,681
Amounts falling due after more than one year
Convertible debt 700,131 367,110 664,102
Non-convertible debt 444,418 432,023 781,530
Total amounts falling due after more than one year 1,144,549 799,133 1,445,632
Total creditors 1,497,285 1,466,951 2,653,715
Total liabilities, capital and reserves 2,423,038 2,289,675 4,142,022
Consolidated Cash Flow Statement
Three months ended 30 September Nine months ended 30 September
2003 2004 2004 2003 2004 2004
£'000 £?000 $'000 £'000 £'000 $'000
Net cash inflow from operating activities 45,264
36,354 65,765 112,951 124,385 225,012
Returns on investments and servicing of finance
Interest received 6,023 5,550 10,040 20,277 15,902 28,767
Interest paid, finance costs and similar charges
(9,251) (10,378) (18,774)
(41,546) (33,639) (60,853)
Net cash outflow from returns on investments and servicing of finance (3,228) (4,828) (8,734) (21,269) (17,737) (32,086)
Capital expenditure and financial investment
Purchase of tangible fixed assets (32,909) (32,574) (58,926) (108,300) (93,345) (168,860)
Sale of tangible fixed assets -- 86 155 -- 3,970 7,182
Net cash outflow from capital expenditure and financial investment (32,909) (32,488) (58,771) (108,300) (89,375) (161,678)
Management of liquid resources 3,816 (4,170) (7,544) 46,659 (8,075) (14,608)
Financing
Issue of ordinary shares 473 -- -- 474 527 953
Purchase of convertible debt -- (1,635) (2,958) (14,166) (1,635) (2,958)
Purchase of non-convertible debt -- (11,612) (21,006) (9,606) (11,612) (21,006)
Net cash inflow (outflow) from financing 473 (13,247) (23,964) (23,298) (12,720) (23,011)
Increase (decrease) in cash
13,416 (18,379) (33,248) 6,743 (3,522) (6,371)
Notes to Financial Statements
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 statements have been presented for the Group for the three and nine months ended 30 September 2003 and 2004.
The financial statements for the three and nine months ended 30 September 2003 and 2004 are unaudited and do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. In the opinion of management, the financial statements for these periods reflect all the adjustments necessary to present fairly the financial position, results of operations and cash flows for the periods in conformity with generally accepted accounting principles in the U.K. All adjustments, with the exception of the exceptional items described in Note 4, were of a normal recurring nature. The balance sheet at 31 December 2003 has been extracted from the Group?s 2003 statutory accounts.
Accounting policies and presentation applied are consistent with those applied in preparing the Group?s financial statements for the year ended 31 December 2003 except for the adoption of UITF 38 ?Accounting for ESOP trusts?. Applying the UITF has resulted in the balance sheet reclassification of the £195,000 investment in own shares from fixed assets to the profit and loss account.
Certain British pound amounts in the financial statements have been translated into U.S. dollars at 30 September 2004 and for the periods then ended at the rate of $1.809 to the British pound, which was the noon buying rate in the City of New York for cable transfers in British pounds as certified for customs purposes by the Federal Reserve Bank on such date. Such translations should not be construed as representations that the British pound amounts have been or could be converted into U.S. dollars at that or any other rate.
Notes to Financial Statements
2. Segmental information
North Region comprises Belgium, Denmark, Ireland, The Netherlands, Sweden and UK. Central Region comprises Austria, Germany and Switzerland. South Region comprises France, Italy, Portugal and Spain.
Switched turnover comprises services that involve the transmission of voice, data or video through a switching centre. Non-switched turnover includes managed and non-managed network services, and bandwidth services.
Wholesale turnover includes services to other telecommunications carriers, resellers and internet service providers (ISPs). Corporate turnover includes services to corporate and government accounts.
For the three months ended 30 September 2003 and 2004, turnover by segment was as follows:
Three months ended 30 September 2003
Corporate
Wholesale North
Region Central Region South Region Total
£?000 £?000 £?000 £?000 £?000 £?000
Switched 85,428 91,469 52,271 82,566 42,060 176,897
Non-switched 91,202 26,695 41,720 41,594 34,583 117,897
Other 533 41 -- 574 -- 574
Total 177,163 118,205 93,991 124,734 76,643 295,368
Three months ended 30 September 2004
Corporate
Wholesale North
Region Central Region South Region Total
£?000 £?000 £?000 £?000 £?000 £?000
Switched 81,000 103,813 52,404 95,578 36,831 184,813
Non-switched 90,727 26,343 40,726 43,293 33,051 117,070
Other 1,827 -- 159 1,228 440 1,827
Total 173,554 130,156 93,289 140,099 70,322 303,710
For the nine months ended 30 September 2003 and 2004, turnover by segment was as follows:
Nine months ended 30 September 2003
Corporate
Wholesale North
Region Central Region South Region Total
£?000 £?000 £?000 £?000 £?000 £?000
Switched 248,796 265,904 155,527 238,255 120,918 514,700
Non-switched 261,609 82,483 123,944 120,181 99,967 344,092
Other 909 354 79 905 279 1,263
Total 511,314 348,741 279,550 359,341 221,164 860,055
Nine months ended 30 September 2004
Corporate
Wholesale North
Region Central Region South Region Total
£?000 £?000 £?000 £?000 £?000 £?000
Switched 250,908 308,979 161,889 280,956 117,042 559,887
Non-switched 265,114 78,536 122,116 126,168 95,366 343,650
Other 2,403 113 275 1,352 889 2,516
Total 518,425 387,628 284,280 408,476 213,297 906,053
Notes to Financial Statements
3. Loss per share
Three months ended 30 September Nine months ended 30 September
2003 2004 2004 2003 2004 2004
£'000 £?000 $'000 £'000 £'000 $'000
Loss for period (35,726) (31,546) (57,068) (103,559) (77,598) (140,374)
Weighted average number of ordinary shares (?000) 1,508,037 1,511,021 1,511,021 1,507,463 1,510,784 1,510,784
Basic and diluted loss per share £(0.02) £(0.02) $(0.04) £(0.07) £(0.05) $(0.09)
4. Exceptional items
Gain on purchase of debt
During the three and nine months ended 30 September 2004, the Group purchased some of its debt for a cash outlay of £13.2 million, resulting in an exceptional gain of £0.2 million. There were no purchases of debt in the three months ended 30 September 2003. Exceptional gains arising on the purchase of debt during the nine months ended 30 September 2003 amounted to £7.6 million.
5. Cash flow reconciliations
5a. Reconciliation of operating loss to net cash inflow from operating activities
Three months ended 30 September Nine months ended 30 September
2003 2004 2004 2003 2004 2004
£'000 £?000 $'000 £'000 £'000 $'000
Operating loss (20,477) (20,573) (37,217) (68,085) (43,185) (78,121)
Depreciation and amortisation 63,733 53,948 97,592 183,286 161,284 291,762
Exchange differences (19) (846) (1,530) 123 56 101
Decrease in debtors 11,206 272 492 15,020 21,465 38,830
(Decrease) increase in creditors (935) 6,856 12,403 3,325 (2,477) (4,481)
Movement in provisions for liabilities and charges (8,244) (3,303) (5,975) (20,718) (12,758) (23,079)
Net cash inflow from operating activities 45,264 36,354 65,765 112,951 124,385 225,012
5b. EBITDA reconciliation
Three months ended 30 September Nine months ended 30 September
2003 2004 2004 2003 2004 2004
£'000 £?000 $'000 £'000 £'000 $'000
Net cash inflow from operating activities 45,264 36,354 65,765 112,951 124,385 225,012
Adjusted for:
Exchange differences 19 846 1,530 (123) (56) (101)
Movement in debtors (11,206) (272) (492) (15,020) (21,465) (38,830)
Movement in creditors 935 (6,856) (12,403) (3,325) 2,477 4,481
Total working capital adjustments (10,271) (7,128) (12,895) (18,345) (18,988) (34,349)
Movement in provisions
for liabilities and charges 8,244 3,303 5,975 20,718 12,758 23,079
EBITDA 43,256 33,375 60,375 115,201 118,099 213,641
Notes to Financial Statements
6. Changes in cash and investments in liquid resources
Three months ended 30 September Nine months ended 30 September
2003 2004 2004 2003 2004 2004
£'000 £?000 $'000 £'000 £'000 $'000
Beginning of period 920,519 793,976 1,436,303 934,882 802,382 1,451,509
Net (decrease) increase in investments in liquid resources before exchange differences (3,816) 4,170 7,544 (46,659) 8,075 14,608
Effects of exchange differences on investments in liquid resources 4,715 10,467 18,935 37,268 (14,141) (25,581)
Net increase (decrease) in cash before exchange differences 13,416 (18,379) (33,248) 6,743 (3,522) (6,371)
Effects of exchange differences on cash (430) 1,133 2,049 2,170 (1,427) (2,582)
End of period 934,404 791,367 1,431,583 934,404 791,367 1,431,583
7. Summary of differences between U.K. Generally Accepted Accounting Principles ("U.K. GAAP") and U.S. Generally Accepted Accounting Principles ("U.S. GAAP")
a. Effects of conforming to U.S. GAAP ? impact on net loss
Three months ended 30 September Nine months ended 30 September
2003 2004 2004 2003 2004 2004
£'000 £?000 $'000 £'000 £'000 $'000
Loss for period (35,726) (31,546) (57,068) (103,559) (77,598) (140,374)
Adjustments:
Deferred compensation (i), (ii) (292) 441 798 (815) 310 561
Amortisation of intangibles (iii) 544 502 908 1,612 1,508 2,728
Capitalised interest, net of depreciation (iv) (715) (810) (1,465) (2,268) (2,816) (5,094)
Profit on sale of IRUs (v) 262 261 472 783 783 1,416
Warrants (vi) 140 (352) (637) 127 (929) (1,681)
Installation revenue (vii) 773 855 1,547 2,044 4,252 7,692
Direct costs attributable to installation revenue (vii) (1,401) (796) (1,440) (2,672) (4,180) (7,562)
Impairment (viii) (2,805) (2,805) (5,073) (8,416) (8,415) (15,223)
Loss for period under US GAAP (39,220) (34,250) (61,958) (113,164) (87,085) (157,537)
Weighted average number of ordinary shares (?000) 1,508,037 1,511,021 1,511,021 1,507,463 1,510,784 1,510,784
Basic and diluted loss per share £(0.03) £(0.02) £(0.04) £(0.08) £(0.06) £(0.10)
Notes to Financial Statements
(i) The Group acquired ImagiNet in July 1998 and Fitec in July 2001. The consideration for both of these purchases included deferred shares and payments. The final elements of the consideration were paid in July 2003.
Under U.K. GAAP, the deferred shares and payments were included in the purchase consideration. The excess purchase consideration over the fair value of assets and liabilities acquired was attributed to goodwill and is being amortised over its estimated economic life.
Under U.S. GAAP, these deferred shares and payments were excluded from the purchase consideration and recognised as compensation expense in the profit and loss account over the period in which the payments vested. Total compensation charge for the three and nine months ended 30 September 2003 was £nil million and £0.3 million respectively. Because no payments were outstanding in the nine months to 30 September 2004, the total compensation charge for the period was £nil.
(ii) The Group operates an Inland Revenue approved Savings-Related Share Option Scheme ("SAYE Scheme"). Under this scheme, options may be granted at a discount of up to 20%. Under U.K. GAAP no charge is taken in relation to the discount. Under U.S. GAAP, the difference between the market value of the shares on the date of grant and the price paid for the shares is charged as a compensation cost to the profit and loss account over the period over which the shares vest.
Also under U.S. GAAP, an employer?s offer to enter into a new SAYE contract at a lower price causes variable accounting for all existing awards subject to the offer. Variable accounting commences for all existing awards when the offer is made, and for those awards that are retained by employees because the offer is declined, variable accounting continues until the award is exercised, forfeited or expires unexercised. New awards are accounted for as variable to the extent that the previous, higher priced options are cancelled.
The total expected compensation cost is recorded within equity shareholders? funds as unearned compensation and additional paid in share capital, with unearned compensation being charged to the profit and loss account over the vesting period. The total compensation cost for the three and nine months ended 30 September 2003 was a charge of £0.3 million and £0.5 million respectively and for the three and nine months ended 30 September 2004 was a credit of £0.4 million and £0.3 million respectively.
(iii) Under U.S. GAAP, goodwill with an indefinite useful life is not amortised but is tested for impairment annually. Under U.K. GAAP goodwill is amortised on a straight line basis over its useful economic life.
The Group had unamortised goodwill of £8.1 million at 30 September 2004, which is no longer amortised under U.S. GAAP but will be assessed for impairment annually. Amortisation expense related to goodwill, under U.K. GAAP, was £0.5 million and £1.6 million for the three and nine months ended 30 September 2003 and for the three and nine months ended 30 September 2004 was £0.5 million and £1.5 million respectively.
(iv) Adjustment to reflect interest amounts capitalised under U.S. GAAP, less depreciation for the period.
(v) In 2000 and 2001 the Group concluded a number of infrastructure sales in the form of 20-year indefeasible rights-of-use ("IRU") with characteristics which qualify the transactions as outright sales under U.K. GAAP. Under U.S. GAAP, these sales are treated as 20-year operating leases. The adjustment reflects the recognition of profit under U.S. GAAP on the sale of IRUs concluded in prior years.
(vi) The Group has received warrants from certain suppliers in the ordinary course of business. Under U.K. GAAP, warrants are treated as financial assets and recorded at the lower of cost or fair value. Hence for U.K. GAAP purposes the warrants have been recognised at nil. Under U.S. GAAP, the warrants are recorded at fair value with unrecognised gains and losses reflected in the profit and loss account.
Notes to Financial Statements
(vii) In accordance with SAB 101 "Revenue Recognition in Financial Statements", for the three and nine months ended 30 September 2003 and 2004, customer installation revenues together with attributable direct costs are recognised over the expected customer relationship period. At 30 September 2004, the cumulative increase in net losses under SAB 101 was £0.7 million, representing cumulative deferred installation revenues of £69.1 million and costs of £68.4 million.
(viii) During the quarter ended 30 September 2002, the Group recorded charges of £443.8 million under U.S. GAAP to reflect the impairment of goodwill, network and non-network fixed assets, resulting in a GAAP difference of £107.2 million at that time. For the three and nine months ended 30 September 2004 depreciation in the amount of £2.8 million and £8.4 million was recorded in respect of the assets which had not been impaired for U.S. GAAP purposes.
(ix) The Group operates a number of employee share schemes on which it incurs employer payroll taxes. Under U.K. GAAP, the cost of employer payroll taxes is recognised over the period from the date of grant to the end of the performance period. Under U.S. GAAP, the cost is recognised when the tax obligation arises.
b. Effects of conforming to U.S. GAAP ? impact on net equity
At 30 September 2004
£'000 $'000
Equity shareholders? funds under U.K. GAAP 773,758 1,399,728
U.S. GAAP adjustments:
Adjustment for deferred compensation (i), (ii) (10,456) (18,915)
Unearned compensation (i), (ii) (25) (45)
Additional paid in share capital (i), (ii) 10,481 18,960
Amortisation of intangibles (iii) 7,524 13,611
Warrants (vi) 122 220
Payroll taxes on employee share schemes (ix) 385 696
Impairment (viii) 84,754 153,320
Profit on sale IRUs (v) (16,940) (30,644)
Capitalised interest, net of depreciation (iv) 35,064 63,431
Deferred profit on installations (vii) (690) (1,248)
Approximate equity shareholders' funds under U.S. GAAP 883,977 1,599,114
(i) - (ix) See note a. for description and adjustment.
c. Effects of conforming to U.S. GAAP ? stock options
At 30 September 2004 the Group had certain options outstanding under its Option Plan. As permitted by SFAS No.123, "Accounting for Stock-Based Compensation", the Group elected not to adopt the recognition provisions of the standard and to continue to apply the provisions of Accounting Principles Board Opinion No.25, ?Accounting for Stock Issued to Employees,? in accounting for its stock options and awards. Had compensation expense for stock options and awards been determined in accordance with SFAS No.123, the Group?s loss for the three months ended 30 September 2004 would have been £36.5 million ($66.1 million).
Additional Information
Constant currency turnover analysis
Turnover for the three months ended 30 September 2004, compared to the three months ended 30 June 2004 and 30 September 2003 and after excluding the impact of foreign exchange, is shown below:
Compared to Q2 2004 Compared to Q3 2003
Q3 2004
£?000 Q3 2004
£?000 % Growth Q3 2004
£?000 % Growth
Actual Adjusted(1) Actual Adjusted(1) Adjusted(2) Actual Adjusted(2)
Corporate
Switched 81,000 80,516 0.8% 0.2% 83,434 (5.2%) (2.3%)
Non-switched and Other 92,554 92,009 1.9% 1.3% 95,442 0.9% 4.0%
Total 173,554 172,525 1.4% 0.8% 178,876 (2.0%) 1.0%
Wholesale
Switched 103,813 103,137 (3.3%) (4.0%) 107,510 13.5% 17.5%
Non-switched and Other 26,343 26,188 16.3% 15.6% 27,178 (1.5%) 1.7%
Total 130,156 129,325 0.1% (0.6%) 134,688 10.1% 13.9%
Total
Switched 184,813 183,653 (1.5%) (2.2%) 190,944 4.5% 7.9%
Non-switched and Other 118,897 118,197 4.7% 4.1% 122,620 0.4% 3.5%
Total 303,710 301,850 0.8% 0.2% 313,564 2.8% 6.2%
(1) Q3 2004 turnover has been restated using Q2 2004 exchange rates, and compared to turnover which was reported in Q2 2004
Q3 03 Q2 04 Q3 04 Growth
Q3 04 -
Q2 04 Growth
Q3 04 -
Q3 03
Customers (at end of quarter)
North Region 5,334 5,736 5,724 0% 7%
Central Region 6,466 7,929 7,960 0% 23%
South Region 5,605 5,940 6,041 2% 8%
17,405 19,605 19,725 1% 13%
Customers (at end of quarter)
Corporate 16,532 18,432 18,518 0% 12%
Wholesale 873 1,173 1,207 3% 38%
17,405 19,605 19,725 1% 13%
Switched minutes (million) (for quarter)
North Region 1,519 1,489 1,425 (4%) (6%)
Central Region 2,969 3,593 3,580 0% 21%
South Region 1,010 1,114 1,060 (5%) 5%
5,498 6,196 6,065 (2%) 10%
Private wire VGEs (000) (at end of quarter)
North Region 10,125 11,737 12,619 8% 25%
Central Region 10,621 13,013 15,623 20% 47%
South Region 4,432 5,642 6,431 14% 45%
25,178 30,392 34,673 14% 38%
Headcount (at end of quarter)
North Region 1,597 1,568 1,603 2% 0%
Central Region 1,461 1,361 1,330 (2%) (9%)
South Region 1,114 928 956 3% (14%)
4,172 3,857 3,889 1% (7%)
(2) Q3 2004 turnover has been restated using Q3 2003 exchange rates, and compared to turnover which was reported in Q3 2003
North Region comprises Belgium, Denmark, Ireland, The Netherlands, Sweden and UK. Central Region comprises Austria, Germany and Switzerland. South Region comprises France, Italy, Portugal and Spain. Customers represent the number of customers who purchase network and data solutions products. 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 ability of the Group to expand and develop its networks in new markets, (iii) the Group?s ability to manage its growth, (iv) the nature of the competition that the Group will encounter and (v) 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
John Doherty
Director Corporate Communications
Email: jdoherty@colt.net
Tel: +44 (0) 20 7390 3681
Gill Maclean
Head of Corporate Communications
Email: gill.maclean@colt-telecom.com
Tel: +44 (0) 20 7863 5314
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