GO plc - Full-Year Results

On 16 March, GO plc published its 2011 full year financial statements.

Despite the tough competitive telecommunications market and the extensive regulations in Malta which had a substantial impact on the mobile business, overall Group turnover was only marginally lower at €131.6 million. GO explained that the reduction in revenue from the mobile business and the continued decline in the fixed-line business was compensated by growth in other areas of business including TV, data services as well as data hosting and related activities. Customer connections in Malta grew to over 500,000 during 2011 with an increase in customers making use of broadband, TV and mobile.

Gross profit during 2011 declined by 6.4% to €50 million reflecting the increased cost of sales as the company serviced more clients. The Group’s operating profits were impacted by a non-recurring charge of €5.2 million related to pension obligations and voluntary retirement schemes. During the year, GO continued to streamline its processes and reduced its number of employees to 1,014.

Operating profits including these one-time charges retreated by 19.2% to €18.4 million (2010: €22.8 million). However, operating profit before these non-recurring items improved marginally to €23.7 million. Likewise, normalized EBITDA increased by 4.6% to €51.4 million.

The major item impacting the 2011 financial performance was a charge of €62.3 million representing the write-down in the value of the shareholding in Forgendo as well as amounts receivable from this jointly-controlled entity. As at 31 December 2011, the amounts receivable from Forgendo were reduced to a mere €3.6 million. The additional write-down on the investment in Forgendo during the year came about following the goodwill impairment of €128.5 million recognised by Forthnet during 2011. Meanwhile, Forthnet’s operational performance improved during 2011 with a 1.4% increase in revenue to €415.6 million as the company experienced an increase in the number of households that registered to take up bundled pay-TV and broadband services. Forthnet registered a 23.5% increase in adjusted EBITDA to €80.3 million following the increased revenue coupled with operational efficiencies including a cost-cutting exercise.

GO’s loss before tax surged to €45.2 million (2010: loss of €9.1 million) and after accounting for a tax expense of €5.3 million, GO incurred a total loss of €51 million during 2011.

The balance sheet as at 31 December 2011 shows total assets of €215 million compared to €285.9 million the previous year. The substantial reduction is due to the charge recognised during the year following the significantly lower value attributed to GO’s investment in Forthnet through Forgendo. Similarly, shareholders’ funds declined to €83.4 million from €144.1 million in 2010 giving a net asset value per share of €0.82 as at 31 December 2011 (2010: €1.42).

The cash flow statement reveals that net cash generated from operations amounted to €35.1 million compared to €43.2 million in 2010. During the last two financial years, a number of one-off items impacted the cash flow mainly related to costs related to pensions and the voluntary retirement scheme and a VAT refund in 2010. On a normalized basis, operations cash flow in 2011 of €40.4 million is only marginally below the €40.9 million in 2010.

In the light of the losses incurred and the reduction in shareholders’ funds, the Board of Directors did not recommend the payment of a dividend to shareholders. The Annual General Meeting will be held on Wednesday 9 May at the Hilton.

Download a copy of the GO plc 2011 Preliminary Results.