MaltaPost plc - Interim Results

On 22 May MaltaPost plc issued its half-year results to 31 March 2008. These are the first set of results published since the company obtained a listing on the Malta Stock Exchange in January 2008.

No interim dividend was declared but in the Prospectus issued in conjunction with the Initial Public Offering, MaltaPost’s Directors adopted a policy of distributing up to 50 per cent of available profits for distribution to shareholders in every financial year. As such a full-year dividend is expected to be recommended by the Directors on approval of the company’s September 2008 full-year results.

The key highlights are:
• Turnover up 13.4 per cent to €10.9 million;
• Operating costs edge 1.8 per cent higher to €8.2 million;
• EBITDA of €1.9 million;
• Pre-tax profit climbs 157 per cent to €2.6 million;
• Shareholders’ funds of €8.8 million.

During the six months to 31 March 2008 the company’s revenue amounted to €10.9 million, representing an increase of 13.4 per cent compared to the comparative period last year. The improved turnover was attributed to an overall increase in the company’s activity which was positively influenced by a rise in volumes as a result of the General Elections as well as the philatelic/numismatic issues commemorating the introduction of the euro on 1 January 2008. MaltaPost and Lombard Bank issued a 30,000 limited edition set of Malta euro coins and miniature sheets carrying a selection of the new coins.

Total costs, incorporating staff costs, other operating costs and depreciation amounted to €8.7 million (March 07: €8.5 million). Staff costs rose by 2.7% during the first half of the financial year to €5.2 million while other operating costs were minimally higher at €3 million. The charge for depreciation was largely unchanged at €0.46 million.

Earnings before interest, tax, depreciation and amortisation (EBITDA) climbed to €1.97 million compared to just €0.4 million in the first six months of the previous financial year. The EBITDA margin improved to 18% in the first half of the financial year.

During the period under review, MaltaPost recognised a positive movement of €0.4 million related to provisions for liabilities and other charges. On the other hand, in the first half of 2007, the company had taken a charge of €0.14 million. This provision relates to amounts concerning ex-Government employees who had opted to become full-time employees of MaltaPost.

MaltaPost generated an operating profit of €2.4 million in the six month period to 31 March 2008 with a margin of 22.2 per cent substantially above the 9.2 per cent in the comparative period. Interest receivable amounted to €0.16 million resulting in a pre-tax profit of €2.6 million, significantly higher than the €1 million generated in the comparative period. After deducting the tax expense of €0.9 million, MaltaPost generated a profit of €1.7 million during the first half of the year to 31 March 2008, representing a rise of almost 160 per cent. The earnings per share works out €0.06 (Mar 07: €0.023).

The company’s profitability during the first half of the year is higher than the full-year profits projected by the Directors at the time of the IPO. The Prospectus issued in conjunction with the share offer included the financial estimates for the year ended 30 September 2008. The Directors had forecast a full-year pre-tax profit of €2.3 million and in the first six months MaltaPost’s profits already amounted to €2.6 million. Although the Directors state in the Interim Report that the local postal services industry experiences seasonal fluctuations and the first half of the financial year is characterised by higher volumes compared to the second half, the strong increase in profitability during the six month period to 31 March 2008 indicates that the company should surpass its projections.

MaltaPost’s strategy is centered around the expansion of its products and services through its retail network in order to counteract the effect that e-substitution is having on traditional mail volumes, which remains the company’s main source of revenue. The main strategic objectives of the company are to consolidate traditional revenue streams and roll out new services complementary to its core business such as direct mail services, postal cards and further development of philatelic products also in conjunction with the numismatic unit of Lombard Bank Malta. In addition, MaltaPost intends to use the expertise of the majority shareholder, Lombard Bank, to provide low-cost financial services through its branch network and aims to enter into the transport and logistics sector (mainly courier and freight forwarding) by building on its existing customer relationships and network. Moreover, in the IPO document the Directors explained that the company’s internal processes and systems will be assessed with a view to increase efficiency and improve its service levels to its customers.

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