Malta’s quad-play telecoms provider GO announced its financial results for the year ended 31 December. While maintaining its revenue levels, the group recorded a loss before taxation amounting to e1.3 million compared to a e27.6 million profit in 2007. This drop in profits is the result of various one-time transactions including the Cable & Wireless Pensions provision and the share of the results of Greek telecoms company Forthnet. If these one-time transactions are excluded, the results for the year reflect a positive operational performance when compared to the previous year.
This profitability represents a negative return of 0.6 per cent (2007: positive 13.8 per cent) of the average shareholders’ funds and of negative 0.4 per cent (2007: positive 10.2 per cent) of the average total assets employed. Earnings per share for the year amounted to a negative e0.03 (2007: e0.165).
The Board of Directors is recommending the payment of a final dividend of e0.12c net of tax per share for the approval of the shareholders at the next annual general meeting to be held on 15 May, which dividend will be payable on 20 May. This net dividend will be payable to shareholders who will be on the register of shareholders as at 17 April.
In 2008, GO’s turnover amounted to e130.3 million (2007: e131.9 million) — a decrease of 1.2 per cent over 2007. However, this decrease is mainly the result of the group’s decision to discontinue its international call centre business as a result of the lack of profitability of this business unit.
Revenue from core services remained strong. The declining trend in traditional fixed line services continued throughout the year, which decline was mitigated by the continued growth in broadband and TV services. Mobile also continued with its growth rate, albeit at a lower rate.
Overall, the group increased turnover from its core services. This is an encouraging performance when one considers that the year has been characterised by increased competition and further regulation, both at EU as well as local levels, which have put increased pressure on the group’s retail activities.
The group registered an operating profit of e11.8 million when compared to an operating profit of e28.6 million in 2007. However, both years included one-off transactions, namely a charge for pensions of e12.9 million in 2008 and income of e9.6 million from a VAT claim refundable in 2007, besides voluntary retirement costs in both years. If these transactions are excluded, the group’s operational performance improved by 14.6 per cent from e23.3 million in 2007 to e26.7 million this year. This performance is the result of the group’s revenue performance, the termination of the loss making international call centre business, reduced depreciation, tighter control over costs and a leaner organisation.
In 2008 the group registered a loss before tax of e1.3 million. While the group registered improved operational performance as already explained, it was impacted by two major transactions. Following a court judgement on 7 July 2008, the company had to recognise a charge of e12.9 million in respect of past pension costs. Furthermore, the group is recognising its share of the results of Forgendo Limited which have led to a charge of e15.6 million. Although Forthnet registered a loss in 2008, this result is in line with Forgendo’s expectations.
Cash generation remains healthy, allowing the group to sustain its investment programme and retain the payment of a dividend. Overall the group continues to enjoy a strong balance sheet, enabling it to pursue various investment opportunities.
The group’s operations remain strong and are supported by a robust balance sheet ensuring the group’s ability to pursue its objective of remaining the leading Maltese telecommunications service provider.
Commenting about these results, GO chairman Sonny Portelli said: “In 2008, GO experienced growth in broadband, mobile and television services, which are making up for the decline in revenues from traditional fixed line voice services which continued in the year.
Forthnet’s results for the year are in line with Forgendo’s expectations. Moreover, this investment is expected to deliver significant benefit over the medium term.”
He added: “Despite the competitive and regulatory pressures, last year GO managed to maintain its level of turnover. When factoring out the one-off transactions, the operational profitability is very positive.”
In 2008, several more quad-play outlets offering all four services opened. The first quad-play bundle, Home Pack, proved to be very popular. In addition, throughout the year, GO launched the bundled fixed-wireless broadband offering – Broadband Everywhere, as well as the free on-net fixed calling tariff plan – Talk Anytime. In December, GO launched its range of BlackBerry solutions.
GO’s top level objectives for 2009 are five-fold: To retain customers and up-sell via bundled services; pursue new business opportunities such as data centre business; continue to focus on customer needs, improve systems and streamline processes to retain revenues at a time when market is not expected to grow; rationalise costs including headcount; and finalise restructuring process.