GO plc - Full-Year Results
On 12 March 2020, GO plc published the annual results for the financial year ended 31 December 2019.
Performance Overview
During 2019, GO generated €177.79 million in revenues, representing an increase of 3.5% over the previous comparable period. In this respect, the company explained that the local telecommunications segment suffered a 1.4% decline in revenues to around €115.6 million given a one-off contract for the supply of hardware systems which was recorded in 2018 and not repeated during the year under review as well as the continued substitution of legacy fixed voice services with other telecommunication services which generate a lower average revenue per user (ARPU). These offset the continued growth in the Group’s subscriber base. On the other hand, the Group’s two major subsidiaries reported increased revenues with BMIT Technologies plc registering a 5.4% increase to €22.4 million on the back of growth across all major services and Cablenet reporting a 19.2% increase in turnover to €39.8 million on back of a larger customer base in line with the expanded network coverage in new areas and the introduction of new football related TV packages in mid-2019.
Cost of sales, administrative expenses and related costs increased by 9% to €154.3 million largely due to three factors: (i) a €4.8 million increase in depreciation and amortisation charges following the hefty capital expenditure undertaken by the Group in recent years; (ii) €6.3 million in expenses related to Cablenet’s investment in TV content; (iii) an increase in the provision of bad debts to €0.5 million in contrast to a reduction of €1.1 million in 2018.
Excluding the depreciation and amortisation charges, GO’s earnings before interest, tax, depreciation and amortisation (EBITDA) amounted to €73.2 million representing a 5.3% increase over the previous year. Nonetheless, the improvement in EBITDA is largely attributable to the implementation of IFRS16. In fact, excluding the effect of this new accounting standard, GO’s EBITDA would have declined by 4.2% to €66.6 million. The drop in EBITDA is mainly emanating from the Group’s local telecommunications segment as well as from its subsidiary in Cyprus as Cablenet’s EBITDA contracted on the back of the investment undertaken in sports premium content.
As a result, operating profit amounted to €25.85 million representing a 21.9% drop from the previous year’s figure of €33.09 million.
Net finance costs more than doubled to just over €3 million largely reflecting the additional charge related to lease liabilities in accordance with the aforementioned introduction of IFRS 16.
Overall, GO reported a pre-tax profit of €22.83 million representing a 27.9% drop from the €31.67 million pre-tax profit recorded in 2018. After accounting for a tax charge of €9.84 million (2018: €11.23 million) and minority interests of €1.33 million (2018: €1.47 million), GO’s net profit for 2019 amounted to €11.66 million, 38.5% less than the €18.97 million reported in 2018. This translates into an earnings per share of €0.1151 (2018: €0.1873).
The Statement of Financial Position shows that total assets grew by 28.3% to €327.74 million, largely reflecting the recognition of €50.1 million in right-of-use assets in line with the requirements of the aforementioned IFRS 16 as well as a €13.4 million increase in intangible assets to just over €71 million which in turn reflect the investment in TV content in Cyprus. Likewise, total liabilities increased by 49.5% to €202.17 million also due to the impact of IFRS 16 as well as the TV content acquired in Cyprus. Excluding the impact of IFRS 16, net debt decreased by 0.8% to €56.1 million. However, in view of the reduction in the profitability of the company, the net debt-to-EBITDA multiple increased to 0.84 times as at 31 December 2019 compared to 0.81 times as at the end of 2018. Overall, shareholders’ funds contracted by 2% to €110.4 million compared to €112.6 million as at 31 December 2018. This translates into a net asset value per share of €1.09 (2018: €1.112).
Ordinary Dividend
Notwithstanding the drop in profitability, the Directors of GO are recommending an unchanged net dividend of €0.14 per share. This is payable on 4 June 2020 to all shareholders as at the close of trading on 28 April 2019 subject to shareholders’ approval at the upcoming Annual General Meeting scheduled to be held on 2 June 2020.