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Colt to exit IT services

30 June 2015 07:47

Colt Group is to exit IT services and focus on its core strengths of network, voice and data centre services.

Colt says its IT services business would continue to need considerable investment in the short-to-medium term in order to deliver profitability and it does not believe this business can compete and grow successfully with a level of risk that is acceptable.

To allow increased focus on its core infrastructure and asset based activities, the board has decided to exit IT Services over the next two to three years.

Colt will continue to honour existing customer contracts through to termination, but will no longer seek new business.

Colt expects to incur exceptional cash costs of £45m to £55m and a non-cash impairment charge of c.£90m. There is also expected to be exceptional restructuring costs of c.£25 million relating to the Core business.

The group anticipates around £25m of annual savings related to this restructuring to be reflected in core business EBITDA partially in 2015 and fully in 2016.

In order to deliver improved profitability, competitiveness and cash returns, cost transformation across the Group continues to be a key strategic focus.

Colt says the trading performance of the group in Q2 is in line with management expectations and interim results will be reported before the end of July.

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