Go plc reports post-tax loss of €5.22m despite 7.2% increase in revenue

Communications group Go plc yesterday announced a half-yearly post-tax net loss €5.22 million despite a 7.2 per cent growth in revenue to €64.19 million and a 46 per cent increase in normalised operating profit to €11.35 million.

Chairman Deepak Padmanabhan attributed the “very positive” results to customer base growth ahead of 2010 projections as the company reaped the benefits of sales activity, and a reduced headcount. The group had seen 50 per cent more clients connected to its various networks more than in the first half of 2009 as the customer connections fast approached the 500,000 mark.

The “healthy” group has witnessed strong growth in broadband, data and TV services, while the decline in demand for fixed line services has slowed. Despite increases in mobile customer numbers, developments in the mobile market – particularly new operators – led to a marginal decline in revenue for this arm.

Chief executive officer David Kay told The Times Business afterwards there was no reason why the positive trends would not continue into the second half of the year “barring any major upsets, which we not anticipate”. Mr Kay said the added impetus of the enhanced TV package, thanks to considerable investment in premium sports and movie content, would give the financials a boost. Thousands had subscribed to TV sports packages although he admitted the numbers were slightly behind projections, partly because of the Social Affairs Committee debacle over a shared TV rights controversy.

Mr Kay yesterday insisted Go had exclusive ownership of the rights to the English Premier League and Italian Serie A after winning a commercial bid.

“There will not be a material impact this year (of sports package revenue on financial results) particularly with the football as our coverage for 2010 is four months, so we are really building for next year. I would be hoping to talk in a similar vein at the year’s end as I am today,” he said.

Mr Kay added that as Go continued to invest in other services under its €100 million six-year technical plan, customers would have access to the newest services and the latest technology.

Mobile coverage and data speeds were continuously being en­hanced, now that the mobile network has been completely replaced. With the gradual introduction of fibre-to-the-home, Go plans to begin its deployment of IPTV (TV services over broadband as opposed to digital terrestrial) early next year.

Meanwhile, Go has managed to drive down the majority of costs with programmes in place to address others. With the headcount now reduced to 1,060 – Go’s final target hovers around 1,000 – payroll costs have been cut by €2.1 million. However the balance sheet has been impacted by electricity costs, and increased cost of sales.

Go’s interim balance sheet has also borne the brunt of a €7.3 million loss from its share of results in the investment in Forthnet SA, the Greek telecommunications company through its joint venture Forgendo. Additionally, there was an adjustment to the carrying amount of the investment in Forgendo following the capitalisation of an interest-free loan. The group’s loss before taxation related to Forthnet amounted to €0.65 million, compared to a restated loss of €4.49 million in the first six months of last year.

Forgendo has increased its shareholding in Forthnet from 37.1 per cent to 39.9 per cent.

Mr Padmanabhan said Go through Forgendo had continued to consolidate its position as major shareholder with controlling interest in Forthnet, and pointed out that the share price did not reflect the true value of the company as it was “heavily under priced”.

Forthnet’s customer numbers were positive however: the pay TV customer base had seen increases which had not been witnessed for six years and broadband business was ahead of projections for 2010.

Go plc’s group earnings before interest, tax, depreciation and amortisation (EBITDA) and before significant one-offs amounted to €23.13 million as against €19.86 million in the same period last year.

Revenue from the BM companies in which Go acquired a 60 per cent stake last year reached €4.89 million. Cost of sales amounted to €38.06 million. Representing growth of 5.1 per cent over the €36.2 million registered in 2009, Go said the increase is directly related to the revenue generated by the BM companies.

The directors did not recommend the payment of an interim dividend.