Last week, GO announced profits before tax of €15.6 million and cash generation from operations of €39.6 million for 2013.  The company is proposing a dividend of €0.07 net of tax.

Addressing stockbrokers and the media following the announcement of the results, GO chairman Deepak Padmanabhan said, “2013 was another positive year for GO, despite the competitive and regulatory pressures which continued to erode revenues. In fact usage across most of our services: phone, mobile, web and TV, continued to grow and the company also increased its customer base by 1 per cent to more than 500,000 customer connections. 

“The ever increasing number of customers adopting bundles of services is a vote of confidence in the Group’s product portfolio and drives GO to continue to pursue a strategy aimed at delivering tangible value to its customers. This strategy helps to deliver robust levels of revenues, profitability and cash generation from core operations.”

As a result of these encouraging results and healthy balance sheet, the board of directors is recommending that during the forthcoming annual general meeting, shareholders approve the payment of net dividend of €0.07 per share.

Yiannos Michaelides, CEO at GO said this positive result was achieved despite a slight drop of 4.0% in Group revenue to €122.1 million. This was caused by a combination of price erosion due to the competitive nature of the market and lower revenues from wholesale, including roaming, as regulators continue to mandate significant reductions in inter-operator tariffs particularly for terminating calls on mobile networks.

All telecoms in Europe have suffered as a result of these regulatory pressures.

Considering everything, GO has done really well. One must also remember that last year’s results had been impacted by a one-off gain as a result of the land deal with the government.

GO’s resilient performance was underpinned by a 3.5% reduction in cost of sales, administrative and related costs, which in 2013 stood at €102.4 million (2012: €106.1 million). This was a result of the focus on managing costs in general, including employee related costs and certain costs linked directly to sales activity.

Mr Michaelides said that last year a three-pronged strategy had been announced:

Positioning the company so as to become more customer-based;

Increasing efficiency, and

Improving human resources development.

On 1 June, 2013, GO had launched GO Limitless, which has been a huge success. It has reversed the declining trend and has improved the company’s market penetration especially through the Home Pack. GO has also trebled the market share among students with a targeted Student Plan and has risen to become the top mobile player both in smartphones and in tablets as well as the company which sells the most of new handsets.

In television, GO has become the House of Sports with a renewed agreement with Premier League, apart from Italian Serie A and Champions League – all for the price of €14.99 per month.

There has been an increase in customer base to 508,000, against a slight but predictable decline in fixed line connections to 174,000 (from 177,000).

Efficiency improvements have been obtained through a 3.5% reduction in costs across the entire company’s structure.

As regards HR development, all employees have received further training. The company also provides career development and has put in place two schemes for rewarding deserving employees.

As for future developments, the company is working on a new website and also more community activities. With regard to its property holdings, the company is planning an all-encompassing strategy to safeguard its investments. The company is focusing its branches at Mosta and Zejtun so as to serve most of the country, along with a more streamlined distribution network.

The company will intensify its fibre-to-the home network development as well as the superfast 4G, beyond the two pilot projects at Tal-Mirakli and in Sliema.

As regards data services, the company will reinforce BMIT, with its ISO 27,001 standard.

Edmond Brincat, financial director, explained that in 2013 GO reported an operating profit of €18.0 million, as against €22.4 million in the comparative year. Normalised operating profit is €20.8 million (2012: €22.2 million) while normalised EBITDA amounted to €48.4 million (2012: €51.3 million). 

GO’s profit before tax of €15.6 million is at levels similar to the prior year when one takes into account a one-off gain of €11.4 million which had been registered in 2012 following the disposal of a plot of land at Qawra. In 2012, the company had recorded profits before tax of €26.8 million.  The earnings per share amounted to €0.116 as against €0.173 in 2012.

Net cash generated from operations amounted to €39.6 million (2012: €40.0 million). Both years include items considered to be of an unusual nature, size or incidence relating to pensions and voluntary retirement costs.

Normalised cash flow from operations for 2013 amounted to €42.7 million, an increase of €1.2 million over the €41.5 million generated in 2012.

In 2013 the group’s investments implied a cash outflow of €19.3 million as the group maintained an intensive investment programme through which it is upgrading its various networks and launching new technologies which allow for the provision of improved services and innovative products.

The company’s headcount is now down to 891 from 937 and the company has retained its robust cash generation.

As regards the company’s investment in Forthnet, the GO speakers said the board has yet to make a final decision whether the company will participate in the rights issue. The situation is that the company has increased its market share and also its EBITDA but its loss has remained and even increased.

As regards the company’s property strategy, the company has land worth €55 million. An SPV is being created and its current plans are to study which sites it intends to retain, to maximise their value. As stated earlier, the sites at Mosta and Zejtun will be upgraded and retained while the St Paul’s Bay and the Sliema exchanges will be relocated at the other sites. Some sites may be developed as from 2016 and the sale of some or all of these properties is not the only option.

Yiannos Michaelides said, “Thanks to a great effort by all our employees GO has once again delivered a strong set of results, despite the challenges facing our industry.  Our focus on investing in people and technology to be able to deliver market leading products and excellent customer service is delivering the right results. The usage of all our services and the levels of customer satisfaction have continued on an upward trend. This coupled with our ongoing efforts to manage costs, augurs well for the future.”