GO plc - Interim Results

On 9 August 2019, GO plc published its condensed interim financial statements covering the six-month period ended 30 June 2019.

Performance Overview

During the period under review, total revenues increased by 0.7% to just under €85 million. The growth was mainly registered in Cyprus where GO has a 51% shareholding interest in Cablenet Communications Systems Ltd (“Cablenet”). In fact, on a consolidated basis, Cablenet increased its revenues by 8.2% to €17.6 million compared to €16.3 million generated in H1 2018, as the company continued to expand its network, increase market resilience and also expand its customer base. Similarly, GO’s data centre subsidiary – BMIT Technologies plc – also recorded increased revenues of 5.6% to €10.8 million (net of inter-segment transactions). On the other hand, the other operations of GO in Malta suffered a decline of 2.3% in revenues to €56.5 million compared to €57.8 million in H1 2018.

On the expenditure side, cost of sales and administrative and other related expenses grew by 4.7% to €72.2 million (H1 2018: €68.9 million). However, this figure includes €2.4 million in one-time charges in relation to the partial sale of the shares in BMIT Technologies plc as well as other charges related to a voluntary retirement scheme. Furthermore, during the first half of 2018, GO reported a one-time favourable release in bad debt provisions which was not repeated in H1 2019. In aggregate, these transactions led an increase of €4 million in the administrative and related costs line item reported for the period under review. Accordingly, on an adjusted basis, overall costs dropped by around 1% to €68.2 million. Meanwhile, GO also recorded a gain of €0.9 million in its Income Statement in relation to the agreement reached on the St George’s Exchange.

Excluding depreciation and amortisation, EBITDA surged by 8.5% to €35.7 million. However, this figure includes the first impact from the introduction of accounting rule IFRS 16 – ‘Leases’ which came into effect on 1 January 2019. In fact, on an adjusted basis, the amount of EBITDA generated by GO decreased by 1.5% to €32.4 million compared to €32.9 million in the first half of 2018. On the other hand, the introduction of IFRS 16 – ‘Leases’ resulted in higher amortisation and finance charges. In fact, depreciation and amortisation increased to €21.3 million compared to €16.8 million in H1 2018. Likewise, net finance costs almost doubled to €1.42 million despite the year-on-year drop in total borrowings to €68.7 million from €69.7 million as at 30 June 2018.

Overall, GO reported a pre-tax profit of €12.9 million which is 15.5% lower than the corresponding figure last year. After taking into account tax charges of €5.09 million and minority interests of €1.45 million (pertaining to the shareholdings in Cablenet and BMIT not owned by GO), the company’s net profits attributable to shareholders amounted to €6.39 million. This translates into an annualised return on average equity of 11.6%.

The condensed Statement of Financial Position as at 30 June 2019, when compared to the corresponding figures as at 31 December 2018, shows that GO’s net assets dropped by 3.7% to €108.5 million. The contraction in the company’s balance sheet size was mostly lower due to a reduction in the amount of intangible assets, trade and other receivables as well as cash balances. Nonetheless, the decline in cash to €9.09 million from €11.7 million as at the end of 2018 also includes the payment of the ordinary net dividend for the 2018 financial year apart from the distribution of most of the proceeds received from the partial sale of the shares in BMIT through a special interim dividend. In this respect, GO also noted that its cash generation capabilities remained strong during the period under review and indeed supported capital investments amounting to nearly €17 million (H1 2018: €15.5 million).

Dividend

The Board of Directors of GO resolved to determine the extent of a dividend distribution for 2019 on the basis of the full-year results. Accordingly, no interim dividend was declared.

Outlook

In their commentary, the Directors of GO explained that the company remains committed to a strategic investment programme aimed at driving revenue growth in both Malta and Cyprus. In fact, the continued rollout of ‘Fibre-to-the-Home’ network in Malta is leading to additions to the company’s broadband base. Furthermore, throughout the first six months of 2019, GO was actively preparing to connect Vodafone to its fibre network in line with the agreement signed in late 2018 for the provision of ‘VULA’ (virtual unbundled local access) service.

Similarly, the Directors added that the level of the company’s investments in Cyprus will continue to be stepped up in the years ahead as more customers are opting for Cablenet as their preferred service provider. In fact, Cablenet’s customer base is now in excess of 66,600 subscribers, representing a year-on-year growth of more than 9%.

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GO plc – Condensed Interim Financial Statements for the six-month period ended 30 June 2019.