GO sees €14.1m half-year loss

GO plc today reported a pre-tax loss of €14.1 million in the six months to the end of June, caused by extraordinary items and, especially, its overseas investment.

In a company statement, the communications group said that during the six months it achieved an operating profit of €9.2 million, down by €2.0 million over the same period last year.

However, the results of both periods were negatively impacted by voluntary retirement costs and increased pension obligations, items considered to be of an unusual nature, size or incidence.

Normalised results before such items showed that in 2011 the Group's operating profit amounted to €12.4 million, an increase of 8.9% over the corresponding period last year, during which the Group registered an operating profit of €11.4 million.

"The encouraging improvement in the operating performance of the Group is due to improved revenues and continued efforts to control costs, " GO said.

Revenue amounted to €65.2 million as against €64.2 million in 2010 representing growth of 1.6%.

GO said it had seen sustained growth in broadband, data and TV services which continued to compensate for the decline the Group is experiencing in traditional fixed-voice services, although the rate of decline has continued to slow down.

However, the intense competition in the mobile market during the first half of 2011 led to a decline in revenue from mobile operations, even though the subscriber base continued to grow.

Whilst revenue from mobile operations was further impacted by reduced mobile termination rates as a result of regulatory intervention, as a Group such reduction in mobile termination rates had an overall positive impact.

Revenue from the data centre operations and related activities amounted to €5.6 million representing growth of 14.4% over the comparable period last year.

Cost of sales and administration costs excluding costs of an unusual nature, size or incidence amounted to €53.3 million, and although at a level equivalent to the comparable period they represented savings in payroll and various discretionary cost items, GO said. They were, however , offset by an increase in costs directly related to increased sales activity, primarily TV content.

The Group's earnings before interest, tax, depreciation and amortisation (EBITDA) and before costs of unusual nature, size or incidence amounted to €26.1 million as against €23.1 million in the comparative period, an increase of 12.9%.

"The Group's encouraging operating performance was negatively impacted by GO's investment in Forthnet, through Forgendo Limited. Forthnet's results during the first half of 2011 continued to be negatively impacted by the Greek economic situation and the financial measures being implemented by Greece to address the financial crisis," GO said.

"Despite facing a deteriorating financial environment, Forthnet has maintained a leading position both in the telecommunications and in the PayTV business. Forthnet's efforts were focused on achieving better operating performance from investments the company made in TV content rights and in telecommunications related infrastructure. Forthnet continued its efforts to expand the customer base with joint sell offerings of PayTV and telecommunications by fully utilising the commercial synergies of its product range.

As a result of this strategy, during the first half of 2011 Forthnet's LLU customer base reached 472K, whilst active PayTV subscribers amounted to 358K. The increase in the overall subscriber base had a positive impact on revenue which amounted to €206.3 million, an increase of 3.8% over the comparative period, whilst the company also achieved a reduction of €6.3 million, equivalent to 9.0%, in cost of sales, advertising, payroll and other discretionary cost items. These initiatives resulted in an EBITDA of €40.3 million reflecting an increase of 14.9%. However, the prevailing economic environment in Greece negatively impacted Forthnet's valuation of its investment in Nova and lead Forthnet to recognise a charge for impairment of goodwill amounting to €38.2 million."

After providing for net finance costs amounting to €1.2 million and an overall charge of €22.2 million on the value of its investment in and loans advanced to Forgendo, the GO said it registered a loss before taxation of €14.1 million, compared to a loss of €0.7 million in the comparative period last year.

The net loss after tax amounted to €17.3 million compared to a net loss of €5.2 million for the six-month period to 30 June 2010.