GO plc registered a significant loss in revenues and profitability during 2009, as voluntary retirement schemes have reportedly cost the quad-play telecoms provider a staggering €11.5 million during the same year.
Financial results published yesterday reveal that GO plc have still managed to make a €7.4 million operating profit, however it is €5.9 million short of the €13.3 million the group registered in 2008.
In a statement, GO plc explained that the loss in revenue was achieved notwithstanding a significant increase in the number of customer connections, which amounted to 480,000 during the financial year.
It explained that both 2009 and 2008 results include various one time charges for voluntary retirement costs of €11.5 million (2008: €2 million), write back of provision for pensions of €0.3 million (2008: charge of €12.9 million), impairment loss on receivables of €3.1 million (2008: €0.3 million) and release of financial liabilities of €3.2million (2008: €0.2 million).
Normalised operating profit for 2009 amounted to €18.6 million as against €28.3 million in 2008. The Group achieved a normalised EBITDA of €42.6 million representing an EBITDA margin of 34.4 per cent. Comparative figures show normalised EBITDA of €52.2 million and margin of 40.3 per cent. This decline in performance is primarily the result of lower revenue. In fact, Group turnover amounted to €123.7 million, a decline of 4.5 per cent over 2008. Group revenues have also been impacted, positively, by the results of the BM Group in which the Company acquired a 60 per cent strategic shareholding in April.
The 2009 results have been negatively affected by the Group’s share of the results of Forthnet. Forthnet, however, continues to register growth in its client base, revenue streams and EBITDA levels and GO expressed confidence that in the medium term this investment will start to make a positive contribution to the results of GO.
The Board of Directors is recommending the payment of a final dividend of €0.10c net of tax per share for the approval of the shareholders at the next Annual General Meeting to be held on 17 May 2010 which dividend will be payable on May 21. This net dividend will be payable to shareholders who will be on the register of shareholders as at April 16, 2010. GO plc bosses have come out to explain the announced pre-tax loss of €3.2 million registered during last year, (2008: Profit €0.3 million) while its operating profit reached €7.4 million as against €13.3 million in 2008.
Commenting about these results, GO plc Chairman Deepak Padmanabhan said: “2009 has been a challenging year as demand for the Group’s services has been impacted by the international economic climate, increased competitive environment and the impact of regulation of certain tariffs.”
He added: “Demand for the various core services remains strong and the Group continues to manage the decline of traditional fixed-line voice services by maximizing on the growth opportunities of broadband internet and tv services. Revenue from mobile services experienced a decline due to a combination of increased competition and weaker demand due to the economic environment.”
Padmanabhan said in 2009, the Group managed to grow its broadband internet, tv and mobile client base and register only a marginal decline in its fixed-line voice connections. At year end, the Group serviced nearly 480,000 customer connections, an increase of almost 22,000 over 2008. This achievement auger well for the future, he commented.
GO’s Chief Executive Officer David Kay said the Group’s cost base remained stable with most discretionary expenditure in decline. Cost increases were primarily the result of either these being directly related to the operations of the BM Group or to revenue growth areas such as tv.
He added that in 2009, GO pursued a right-sizing programme at a cost of €11.5 million which when compared to December 2008 lead to a reduction of almost 300 employees who left in 2009 or are in the process of leaving as at year end: “This right-sizing programme is part of a larger initiative to restructure the way the Group operates to ensure it can serve its clients better and in a more cost effective manner. This reduced headcount level will deliver a significantly lower cost base in the coming years.”
David Kay said: “2009 was another important year during which we continued our programme of transformation to maintain our leadership in the local telecoms market. We have initiated several investments in our networks to ensure that provision of leading edge services is maintained and the customer benefits from better and improved services. These include the upgrading of broadband internet speeds in the last mile towards the customers’ premises, and the launch of 7.2MBps speeds on mobile internet. We continue to lead the market in terms of the value we offer and the customer experience we provide to our customers.”
During 2010, Mr Kay added, GO will continue to defend and grow its market shares on all its services and ensure profitability across all services: “We want to retain our strong position in fixed voice market, and we aim to become market leader in internet. On the mobile front, we want to ensure that we maintain revenues from pre-paid mobile and further grow post-paid and data. We are confident that we can achieve significant growth in tv, mainly as a result of the acquisition of the English Premier League and Italian Serie A football rights. The bundling of services under our Home Pack and Business Pack brands as well as cross and up-selling of services are key to grow our revenues. At the same time, we need to continue offering innovative products and services. On the business side, we want to continue strengthening our corporate business segment.”
In 2009, the Group has recorded a loss before taxation amounting to €3.2 million (2008: Profit €0.3 million). This represents a negative return of 1.8% (2008: positive 0.15%) of the average shareholders’ funds and a negative total assets employed of 1.03% (2008: positive 0.09%). Earnings per share for the year amounted to a negative €0.067 (2008: negative €0.02).
During the year the Group completed the restructuring of its banking facilities ensuring adequate financial support for the coming years and at year end non-current and current bank loans amounted to €72 million (2008: €50 million). The gearing ratio, that is, the ratio of loan finance to shareholders’ equity stood at 41.5 per cent at 31 December 2009 compared with 25.9 per cent at December 31, 2008.
