Go defends decision to declare no interim dividend for 2011

Telecoms group Go has defended its decision to declare no interim dividend for a fourth year.

Go saw its balance sheet to June 30 dented yet again by charges related to investment vehicle Forgendo’s stake in Greek operator Forthnet, among others, despite an “encouraging improvement” in Go’s operating performance in the first six months of this year.

Go’s pre-tax loss to June 30 soared to €14.1 million from €0.7 million in the first six months of 2010, attributable partly to a charge of €22.2 million on the value of its investments in and loans to Forgendo.

On August 31, Go’s board of directors resolved to base its dividend distribution for 2011 on the full year results and declared no dividend.

Forgendo is the special purposes vehicle jointly owned by Go plc and its majority shareholder Emirates International Telecommunications (Malta). It is Forthnet’s largest shareholder.

Asked for Go’s message to shareholders given the recurrence of this scenario in relation to the company’s interests in Greece, chief executive officer David Kay told The Times Business yesterday: “Forthnet has been seeing steady growth in spite of the difficult economic situation in Greece. It has seen its revenues grow by 3.8 per cent thanks to a growing customer base and its adjusted EBITDA has also improved by 35.2 per cent to €23.7 million.

“It is pertinent to point out that Go did not give interim dividends in 2008, 2009 or 2010 either.” Go registered an operating profit of €9.2 million for the first six months of the year, down €2 million from the operating profit of €11.2 million in 2010. The results of both periods were affected by voluntary retirement costs and increased pension obligations. In keeping with its commitment to right-size the company, Go has succeeded in reducing its headcount to under 1,000.

Group revenue totalled €65.2 million (€64.2 million in 2010), thanks to “sustained growth” in broadband, data and TV services. Revenue from data centre operations and related activities reached €5.6 million, an increase of 14.4 per cent over the same period last year.

Last March, Mr Kay told The Times Business Forgendo aimed to secure majority control in Forthnet and will continue to build on its 41 per cent stake when share prices were “right”.