GO’s operating profit drops €1.7m, revenues up €0.6m in H1

GO’s operating profit dropped by €1.7m to €14.3 million in the first half of the year, as compared to €16m in 2018, according to a press statement sent to Business Malta. Nevertheless, the group increased its revenues by €0.6m to €84.9m, compared to €84.3m at the end of June 2018.

Excluding all one-off items, operating profit improved by €1m when compared to the 2018 results. This reinforces GO’s positive strategy, keeping a tab on its cost base while enhancing efficiencies in its operations, the service provider says.

The drop in GO’s operating profit was due to the group’s incurring of a one-off €2.4m cost relating to the IPO of BMITT, as well as its voluntary retirement scheme, the press statement says.

GO says that the investment in BMITT continues to deliver “positive results”. In the first half of the year, BMITT retained same levels of operating profit as in 2018, whereas registered a marginal decrease in profit before taxation, in particular through the adoption of IFRS16 which resulted in higher amortisation and finance charges, the press statement adds.

Moreover, in 2018, the first-time adoption of IFRS 9 resulted in a “one-time release in bad debts provisions”, which positively impacted the group, leading to an increase of €4m in administrative and other related expenses in total during the first half.

GO Plc has also seen a reduction in the cost of sales, which has improved the gross profit margin by 1.4%, the press statement says. Additionally, GO has also recently finalised its agreement on St. George’s Exchange generating an aggregate gain of €0.9m.

Cypriot subsidiary performs well

Cablenet’s — GO’s Cypriot subsidiary — revenue increased by 8.5%, EBITDA was up by 12%, pretax profit before tax increased by 4.7% and operating profit “remained stable”, the press release says. GO attributes the results to Cablenet’s continued expansion of its network and customer base; as the latter grew by more than 9% compared to 2018, now exceeding 66,685 subscribers.

Cash generation for the entire group amounted to €24.8m in the first half of the year, staying unchanged from €24.8m in 2018. GO says its cash generation enabled the group to fund investments of €16.9m — as compared to €15.5m in 2018.

As of 30 June 2019, the group had a total asset base of €313.5m which is 38.6% funded through equity, as compared to 47% in 2018. GO attributes the reduction to the increase in right-of-use assets which are financed by lease liabilities. Borrowings net of cash holdings increased from €56.5m — as of 31 December 2018 — to €59.6m — as of 30 June 2019.

With almost 100,000 homes and over 28,480 customers connected to GO’s network in Malta by the end of July, GO believes that its Fibre-to-the-Home rollout project is well on track to cover close to 120,000 homes by the end of 2019.

“These results continue to confirm that while we continue to keep our customers connected to what matters most to them, our strategy is also delivering returns to all shareholders,” said Nikhil Patil, Chief Executive Officer of GO.

“This year, we have capitalised on our popular brand Homepack and revamped our offering by allowing customers to personalise their own Homepack by choosing the services that best suit their lifestyle, a move that has been very positively received by our customers. Moreover, the significant investments that GO has made in its mobile network are leading to substantial increases in our mobile subscriber base and growth in usage of mobile data. Our investments in networks and technology will continue to drive our passion to serve customers better,” added Mr Patil.