With almost 100,000 homes and over 28,480 customers connected to Malta’s only true fibre network by the end of July, GO’s Fibre-to-the-Home rollout project is well on track to cover close to 120,000 homes by the end of 2019. In the first six months of 2019 in fact, GO was actively preparing to open this network to competition, allowing it to offer broadband services to its customers, using GO’s true fibre network. This follows an agreement that was signed in late 2018.
Against this backdrop, the Group’s performance for the first six months of 2019 remained strong as GO’s strategy to strengthen all lines of revenue and to control costs has realised tangible results.
During the first half of 2019, the Group increased its revenues by €0.6 million, closing at €84.9 million compared to €84.3 million at end June 2018. There has also been a reduction in the cost of sales, thereby improving gross profit margin by 1.4%. Moreover, in June 2019, GO has also finalised its agreement on St. George’s Exchange generating an aggregate gain of €0.9 million.
GO’s operating profit decreased by €1.7 million, closing at €14.3 million (2018: €16 million). This result was due to GO’s incurring of a one-off €2.4 million cost relating to the IPO of BMITT as well as the voluntary retirement scheme. Moreover in 2018, the Group was positively impacted by the first-time adoption of IFRS 9 which resulted in a one-time release in bad debts provisions. These in aggregate led to a €4 million increase in administrative and other related expenses in the current reporting period.
Excluding all one-off items, operating profit improved by €1 million when compared to the 2018 results. This reinforces GO’s positive strategy, keeping tab on its cost base whilst enhancing efficiencies in its operations.
Investments in GO’s subsidiaries have also positively contributed to the overall profitability of the Group. The investment in BMITT continues to deliver positive results. During the period under review, 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.
GO’s subsidiary in Cyprus, Cablenet continued to register positive results. Revenue increased by 8.5%, EBITDA by 12%, operating profit remained stable whereas profit before tax increased by 4.7%. This is due to Cablenet’s continued expansion of its network and more customers opting for Cablenet as their preferred service provider. Customer base grew by more than 9% compared to 2018, now exceeding 66,685 subscribers.
Cash generation from operations remains strong and stable across the entire Group and during the period under review amounted to €24.8million (2018: €24.8 million). The continued strong cash generation from operations enabled the Group to fund investments of €16.9 million (2018: €15.5 million). The Group’s cash position was amplified by the proceeds from the disposal of the non-controlling interest in BMITT, part of which was distributed as a special dividend in the current year.
The Group continues to enjoy a healthy financial position. As at 30th June 2019 the Group had a total asset base of €313.5 million which is 38.6% (2018: 47%) funded through equity. The reduction, when compared to 2018, is due to the increase in right-of-use assets which are financed by lease liabilities. During the first six months of 2019, borrowings net of cash holdings increased from €56.5 million as at 31 December 2018 to €59.6 million as at 30 June 2019.
“These results continue to confirm that whilst we continue to keep our customers connected to what matters most to them, our strategy is also delivering returns to all shareholders,” comments GO’s CEO Nikhil Patil.
“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.