Maltacom profit down by 17.3 per cent

Earnings per share down to 4c from 4c8
Mobile traffic shoots up as subsidiary company loses Lm2.0m
Local fixed line traffic main revenue generator

During the first six months of this year Maltacom has seen its profits drop by Lm0.8 million when compared to the same period last year, resulting in an earnings per share decrease of eight mils.

The Maltacom Group yesterday published its financial statements for the six-month period ending 30 June amid an international downturn in the communications and IT sectors.

The financial results show that the Group had a turnover of Lm24.2 million, which represents an increase of Lm2 million over the same period last year. However, the profit after taxation stood at Lm4 million, which is Lm0.8 million less than last year’s comparative figure. This represents a downturn of 17.3%.

Government’s tax share amounted to Lm1.6 million, which is Lm0.3 million less than last year.

Maltacom’s loss of profit is reflected in the earnings per share, which now stands at 4c0. The earnings per share for the first six months last year stood at 4c8.

Commenting on the results, Maltacom chairman Maurice Zarb Adami said the Group showed it had the ability to maintain reasonable profitability levels. Mr Zarb Adami remarked that although the Group had to face a general economic slowdown it continued investing heavily to build shareholder value substantially.

Mr Zarb Adami insisted that adopting the right strategies now is crucial to ensure tomorrow’s further growth and expansion in a competitive environment.

The Maltacom Group half-year results show the ever-increasing importance of mobile telephony in the local market. Go Mobile’s subscriber base stood at 50,000 for the first six months of this year. Local cellular interconnection traffic went up by 61% and international cellular interconnection traffic went up by 66%. This is contrasted by the reduction in both domestic and international fixed line traffic, which went down by 3% and 2.7% respectively.

However, even though mobile traffic contributed 19% to the total Group turnover, which is an increase of around 7.5% over last year, the mobile sector operated at an operating loss of Lm2 million.

Local fixed line traffic remained Maltacom’s major turnover provider with a 25% share of the cake. However, operating profits in this category were Lm1 million less than the year 2000.

Rental income increased by 6.5% in part due to the Group’s increased subscriber base and in part as a result of value added services such as the Star services and freephone facilities. Line rentals contributed 16% to the total turnover of the company.

Revenue from Internet and related services stood at Lm899,000, which is an increase of 31% over the same period last year. Although this represents only 4% of the Group’s turnover, Maltacom is expecting this revenue source to grow in the future.

Although the financial statement does not make direct reference to the Price Club saga, it clearly states that during the first six months of this year Maltacom’s results "were to a large extent affected by a significant bad debts write-off."

Before Price Club’s demise Maltacom customers could have utilised the supermarket chain to pay their telephone bills. According to Labour MP Anglu Farrugia Priceclub did not pass on the payments amounting to Lm750,000 to Maltacom.

As a result, the net cost of bad debts written off and doubtful debts provided for stood at Lm860,000. During the comparative period last year the net cost stood at a meagre Lm40,000.

Labour costs incurred during the period for the whole Group increased by 8.4% over the comparative period. The financial statement attributes this to recruitment build-up in certain subsidiary companies following the expansion of thier operations. On the other hand, the number of employees with Maltacom plc alone decreased slightly. The average headcount for Maltacom plc stands at 1,442, while that for the whole group stands at 1,744.

The Maltacom Group comprises Maltacom plc and 10 subsidiary companies. Furthermore, some of the subsidiaries have their own specialised subsidiary companies.

In addition Maltacom Group has 20% shareholding in Vodafone Malta Ltd, 20% in Elsacom Malta Ltd and 30% in Datatrak Holdings plc.