MaltaPost plc - Full-Year Results

On 21 December 2020, MaltaPost plc published its annual report for the financial year ended 30 September 2020.

Performance Overview

During the financial year under review, MaltaPost plc registered a 0.9% decrease in turnover to €34.4 million reflecting the major disruptions to MaltaPost’s international postal network as the airport was closed for three months due to COVID-19 and only reopened with a significantly reduced flight network. This resulted in a sudden decrease in postal volumes. Moreover, the year-on-year decline in letter mail was accelerated by the pandemic which was only partially offset by the increase in tariffs approved by the Malta Communications Authority (MCA) as well as by the one-off income generated from the distribution of the Government vouchers through registered mail. The 2020 Annual Report also indicates an almost 36% drop in philatelic sales to €0.24 million as well as a 3.5% drop in revenue to €4.25 million from other services including document management, bill collection and financial services.

Meanwhile, other income increased to €0.48 million compared to €0.1 million in the previous financial year on the back of the COVID-19 wage supplements received from the government totalling €0.38 milllion.

MaltaPost plc also registered a 1.5% drop in operational expenses to €30.2 million reflecting a mix of cost containment measures, digital transformation as well as lower postal volumes which offset additional expenses related to COVID-19 including the lease of an additional five hubs so as to reduce staff concentration within the last mile delivery hubs.

As a result, MaltaPost registered an earnings before interest, tax, depreciation and amortisation (EBITDA) figure of €4.3 million, an increase of 14.1% from the previous comparable figure. After accounting for depreciation and amortisation charges of €1.5 million (FY2018/19: €1.02 million), the operating profit amounted to €2.84 million representing a 2.1% improvement over the previous year’s comparable figure.

During the financial year under review, MaltaPost plc reported a €0.15 million share of loss from the new life insurance company IVALIFE Limited. MaltaPost has a 25% stake in this start-up.

Net interest costs contracted by 54.5% to €0.09 million reflecting the €0.06 million in lease liabilities accounted for as interest charges (following the implementation of IFRS16) as well as the €0.04 million drop in interest received to €0.15 million.

Overall, MaltaPost’s pre-tax profits declined by 6.6% to €2.78 million when compared to the previous financial year. The tax charge for the year amounted to €1.02 million, which is 1% lower than the €1.03 million charge incurred in the previous financial period. Accordingly, post-tax profits decreased by 9.6% to €1.76 million (FY2018/19: €1.95 million). This translates into an earnings per share of €0.0468 (FY2018/19: €0.0518).

The Statement of Financial Position shows a 7.9% increase in total assets to €46.5 million (30 September 2019: €43.2 million) largely due to the inclusion of €1.8 million in right of use assets (in line with IFRS16) as well as the 4.7% increase in property, plant and equipment to €18.7 million (as the Company continued to invest in its branch network through a mix of new branches and refurbish existing ones) and the 32.5% increase in cash and bank balances to €10.9 million (excluding cash collected on behalf of third parties). Similarly, total liabilities increased by 19.5% to €19.4 million mainly due to the inclusion of €1.8 million in lease liabilities (in line with IFRS16) as well as a current tax liability of €0.84 million. Overall, the Company’s equity base expanded by 0.8% to €27.2 million which translates into a net asset value per share of €0.722 (30 September 2019: €0.716).

Dividend

The Directors recommended an unchanged final net dividend of €0.04 per share to all shareholders as at close of trading on Friday 8 January 2021. The dividend will be paid on 12 March 2021 subject to shareholders’ approval at the upcoming Annual General Meeting scheduled to be held on 12 February 2021.

Outlook

In their commentary, the Directors of MaltaPost noted that the outlook for the coming year is definitely set to be challenging and difficult to forecast as COVID-19 is expected to continue to have an adverse impact on consumption and thus resulting in a reduction in traditional postal volumes as well as the accelerated decline in traditional Letter Mail. On the other hand, although the parcel business is expected to continue to grow, this activity is attracting strong local and international competition resulting in pressure on both tariffs and quality of service requirements.

Furthermore, whilst the company remains committed to its Universal Service Obligation, the Company is still awaiting the approval of the Malta Communications Authority (MCA) to implement the further revision of certain postal tariffs as originally proposed in 2018. This revision is necessary to address the loss-making service that MaltaPost provides under the Universal Service Obligation (USO) as a result of the year-on-year shrinkage in Letter Mail volumes as well as the impact of ever increasing labour costs (including a new Collective Agreement whereby all staff had their remuneration improved together with other financial incentives) coupled with the challenges being faced to recruit and retain staff. Moreover, MaltaPost is also in discussions with the Regulator to revise outbound tariffs to address the substantial increase in cross border mail costs as recently introduced by the Universal Postal Union.

Nonetheless, MaltaPost is well positioned to pursue its investment programme including the strengthening of its branch network, the gradual introduction of new last mile delivery tools as well as diversification into new business lines. In fact, MaltaPost continues to manage the other non-postal lines of business to further supplement its core activity. The CEO noted that the diversification into logistics, document management, insurance (through the 25% stake in IVALIFE Limited and a 49% stake in Untours Insurance Agents Limited) and financial services bodes well for the future and shall provide a fair return on investment as the foundations are in place to make the company stronger.

Download

MaltaPost plc – Annual Report for the financial year ended 30 September 2020.

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