GO tumbles as Forthnet losses widen

This morning, the Greek telecoms operator Forthnet, in which GO plc has an indirect investment, published its 2011 half-year results revealing a loss after tax of almost €60 million (June 2010: loss of €32.5 million) despite registering further growth in telecom and Pay-TV subscriptions. The increase in the loss for the period was mainly due to the €38.2 million impairment on the goodwill of Forthnet’s Pay-Tv business. This will inevitably adversely impact the 2011 interim results of GO plc which are expected to be published later on today. Today GO’s share price dropped 4.4% to €1.21 on volumes of 13,650 shares possibly in reaction to the widening losses evident in Forthnet. GO’s share price closed at just above its all-time low of €1.20.

Elsewhere in the local equity market, HSBC Bank Malta plc eased 0.4% lower to €2.65 on volumes of 3,500 shares. Similarly, Lombard Bank Malta plc shed 0.8% to drop back to the €2.68 level on a small trade of 500 shares. Meanwhile, Bank of Valletta plc remains well supported at around the €2.50 level as the equity edged 0.4% higher today to close at €2.51 on continued high volumes reaching almost 41,000 shares.

The only other active equity, MIDI plc slid 2.3% lower to €0.42 on low volumes despite reporting a rise in pre-tax profits to €1.79 million as revenue substantially increased to €22.6 million following the execution of the final deeds of sale of 23 residential apartments in Block T10.

Monthly Review

During the month of August, the MSE Share Index closed in negative territory for the third consecutive month as it shed a further 4.8% to 3,070.104 points (-18.8% year-to-date). The August slump was mainly due to the 10% decline in Middlesea Insurance plc; the 9.9% drop in International Hotel Investments plc on the back of the on-going political turmoil in Libya and GO plc which retreated by 6.9% on increased concerns and uncertainty regarding its significant investment in the Greek telecoms Group, Forthnet. On the other hand, only three equities (all forming part of the small market cap category) closed in positive territory including RS2 Software plc which advanced by a further 5.3% after reporting a substantial improvement in first half pre-tax profits to €1.6 million. RS2 now ranks as the best performing equity since the start of 2011 with a 20.6% rise.

The bond market was subject to increased volatility as Eurozone yields experienced sharp movements on a mix of news related to the EU sovereign debt crisis, global economic growth and stimulus from governments and Central Banks around the world. Overall, the Rizzo Farrugia MGS Index ended the month of August 0.9% higher at 990.038 points.

Trading activity across local equities rose by 77.1% during the month under review to just under €2.9 million whilst the value of trades in the corporate bond market remained relatively unchanged at €2.5 million. On the other hand, a significant increase in trading activity was evident across Malta Government Stocks as a total of €92.5 million (nominal) changed hands.