GO Plc

Earnings Release • Mar 16, 2012

16 March 2012

COMPANY ANNOUNCEMENT

The following is a Company Announcement issued by GO p.l.c. ("the Company") pursuant to Malta Financial Services Authority Listing Rules

Quote

The Board of Directors of the Company has approved the attached Preliminary Statement of annual results for the fi nancial year ended 31st December 2011. These audited fi nancial statements are also available for viewing on the Company's website at www.go.com.mt.

The Board of Directors do not recommend the payment of a dividend.

The Annual General Meeting will be held on Wednesday 9th May 2012 at the Malta Hilton, St. Julians.

Unquote

Francis Galea Salomone LL.D. Company Secretary

Postal Address: PO Box 40, Marsa MRS 1001 Malta.

Registered Address: GO plc, Spencer Hill, Marsa MRS 1950 Malta.

Company Registration Number: C 22334 VAT Number: 1282 - 6209

t +356 2121 0210 f +356 2594 5895 e info@go.com.mt www.go.com.mt

GO p.l.c. Preliminary Statement of Group Results and State of Affairs

For the Year Ended and at 31 December

This Statement is published pursuant to The Malta Financial Services Authority Listing Rules Chapter 5 and Article 4(2)(b) of the Prevention of Financial Markets Abuse (Disclosure and Notifi cation) Regulations, 2005.

The fi nancial information has been extracted from GO p.l.c.'s Annual Report and Consolidated Financial Statements for the year ended 31 December 2011 as approved by the Board of Directors on 16 March 2012, which have been audited by PricewaterhouseCoopers. These fi nancial statements will be laid before the members at the general meeting to be held on 9 May 2012.

The Group's fi nancial statements are prepared in accordance with International Financial Reporting Standards as adopted by the EU and the requirements of the Maltese Companies Act, 1995.

STATEMENTS OF FINANCIAL POSITION

As at 31 December

	The Group		The Company
	2011	2010	2011	2010
	€000	€000	€000	€000
ASSETS
Non-current assets
Property, plant and equipment	120,789	120,752	79,560	88,897
Investment property	1,140	1,219	1,140	1,219
Intangible assets	26,347	31,426	11,679	13,806
Investments in subsidiaries	-	-	27,233	27,260
Investment in jointly-controlled entity	-	5,275	-	5,275
Loans receivable from subsidiaries	-	-	21,796	142
Loans receivable from
jointly-controlled entity	3,625	56,583	3,625	56,583
Other investments and
related instruments	100	1,347	100	603
Deferred tax assets	5,670	3,330	6,043	5,091
Trade and other receivables	1,018	1,335	458	953
Total non-current assets	158,689	221,267	151,634	199,829
Current assets
Inventories	8,335	7,856	7,101	6,747
Trade and other receivables	35,314	43,665	37,419	46,743
Loans receivable from subsidiaries	-	-	720	2,691
Current tax assets	3,393	1,872	1,865	1,865
Cash and cash equivalents	9,302	11,228	870	1,312
Total current assets	56,344	64,621	47,975	59,358
Total assets	215,033	285,888	199,609	259,187
EQUITY Share capital Reserves	58,998 15,499	58,998 20,047	58,998 4,849	58,998 4,408
Retained earnings	8,863	65,043	28,144	77,326
Total capital and reserves attributable to
owners of the Company	83,360	144,088	91,991	140,732
Non-controlling interests	-	5,391	-	-
Total equity	83,360	149,479	91,991	140,732
LIABILITIES
Non-current liabilities
Borrowings	66,000	68,000	66,000	68,000
Derivative fi nancial instruments	1,483	1,335	1,483	1,335
Deferred tax liabilities	2,873	979	-	-
Trade and other payables	2,450	3,753	2,450	3,753
Provisions for pensions	3,070	3,915	3,070	3,915
Total non-current liabilities	75,876	77,982	73,003	77,003
Current liabilities
Trade and other payables	49,790	50,215	29,229	35,160
Current tax liabilities	208	1,294	-	-
Borrowings	3,142	5,025	2,729	4,399
Provisions for pensions	2,657	1,893	2,657	1,893
Total current liabilities	55,797	58,427	34,615	41,452
Total liabilities	131,673	136,409	107,618	118,455
Total equity and liabilities	215,033	285,888	199,609	259,187

The fi nancial statements were approved and authorised for issue by the Board of Directors on 16 March 2012 and signed on its behalf by:

Chairman Director

INCOME STATEMENTS For the Year Ended 31 December		The Group		The Company
	2011	2010	2011	2010
	€000	€000	€000	€000
Revenue	131,570	132,324	79,128	78,320
Cost of sales	(81,562)	(78,879)	(58,212)	(60,799)
Gross profi t	50,008	53,445	20,916	17,521
Administrative and other related expenses	(32,485)	(31,468)	(22,500)	(16,690)
Other income	1,171	1,163	1,160	1,122
Other expenses	(257)	(331)	(218)	(243)
Operating profi t/(loss)	18,437	22,809	(642)	1,710
Analysed as follows: Operating profi t before non-recurring items Non-recurring items presented within	23,650	23,131	4,571	2,032
'Administrative and other related expenses'	(5,213)	(322)	(5,213)	(322)
Operating profi t after non-recurring items	18,437	22,809	(642)	1,710
Finance income	412	342	34,833	24,437
Finance costs	(2,763)	(2,719)	(2,745)	(2,680)
Adjustments arising on fair valuation of land and buildings Impairment charge on investment	1,035	(1,191)	(98)	(1,191)

in subsidiary	-	-	(27)	-
Losses attributable to investment in jointly-controlled entity	(62,313)	(28,315)	(65,205)	(32,881)
Loss before tax Tax expense	(45,192) (5,259)	(9,074) (9,096)	(33,884) (10,117)	(10,605) (7,195)
Loss for the year	(50,451)	(18,170)	(44,001)	(17,800)
Attributable to: Owners of the Company Non-controlling interests	(50,999) 548	(19,157) 987	(44,001) -	(17,800) -
Loss for the year	(50,451)	(18,170)	(44,001)	(17,800)
Earnings per share (euro cents)	(50c3)	(18c9)	(43c4)	(17c6)

STATEMENTS OF COMPREHENSIVE INCOME

For the Year Ended 31 December

	2011 €000	2010 €000	2011 €000	2010 €000
Loss for the year	(50,451)	(18,170)	(44,001)	(17,800)
Other comprehensive income:
Change in fair value of derivative designated as hedging instrument in
cash fl ow hedge	(148)	(278)	(148)	(278)
Surplus/impairment charges arising on revaluation of land and buildings	(157)	(938)	1,049	(207)
Share of other comprehensive income of jointly-controlled entity	-	170	-	-
Losses from changes in fair value of available-for-sale fi nancial assets Income tax relating to components of other	(503)	-	(503)	-
comprehensive income	(892)	694	(73)	(771)
Total other comprehensive income for the year,
net of tax	(1,700)	(352)	325	(1,256)
Total comprehensive income for the year	(52,151)	(18,522)	(43,676)	(19,056)
Attributable to:
Owners of the Company Non-controlling interests	(52,699) 548	(19,509) 987	(43,676) -	(19,056) -
Total comprehensive income for the year	(52,151)	(18,522)	(43,676)	(19,056)

The Group The Company

STATEMENTS OF CHANGES IN EQUITY

For the Year Ended 31 December

The Group		Attributable to owners of the Company
	Share capital €000	Reserves €000	Retained earnings €000	Total €000	Non- controlling interests €000	Total equity €000
Balance at 1 January 2010	58,998	20,283	94,447	173,728	4,404	178,132
Comprehensive income Loss for the year	-	-	(19,157)	(19,157)	987	(18,170)
Other comprehensive income: Cash fl ow hedge, net of deferred tax	-	(181)	-	(181)	-	(181)
Impairment charges in respect of revalued land and buildings Movements in deferred tax liability on revalued land and	-	(938)	-	(938)	-	(938)
buildings determined on the basis applicable to capital gains	-	597	-	597	-	597
Share of other comprehensive income of jointly-controlled entity Transfer from retained earnings in	-	170	-	170	-	170
relation to insurance contingency reserve	-	116	(116)	-	-	-
Total other comprehensive income	-	(236)	(116)	(352)	-	(352)
Total comprehensive income	-	(236)	(19,273)	(19,509)	987	(18,522)
Transactions with owners in their capacity as owners
Dividends to equity holders	-	-	(10,131)	(10,131)	-	(10,131)
Total transactions with owners	-	-	(10,131)	(10,131)	-	(10,131)
Balance at 31 December 2010	58,998	20,047	65,043	144,088	5,391	149,479
Balance at 1 January 2011	58,998	20,047	65,043	144,088	5,391	149,479
Comprehensive income Loss for the year	-	-	(50,999)	(50,999)	548	(50,451)
Other comprehensive income: Cash fl ow hedge, net of
deferred tax Impairment charges in respect	-	(96)	-	(96)	-	(96)
of revalued land and buildings Movements in deferred tax liability on revalued land and	-	(157)	-	(157)	-	(157)
buildings determined on the basis applicable to capital gains Losses from changes in fair value	-	(944)	-	(944)	-	(944)
of available-for-sale fi nancial assets Transfer from retained	-	(503)	-	(503)	-	(503)
earnings in relation to insurance contingency reserve	-	116	(116)	-	-	-
Total other comprehensive Income	-	(1,584)	(116)	(1,700)	-	(1,700)
Total comprehensive income	-	(1,584)	(51,115)	(52,699)	548	(52,151)
Transactions with owners in their capacity as owners Acquisition of non-controlling
interest Dividends to equity holders	- -	(2,964) -	- (5,065)	(2,964) (5,065)	(5,939) -	(8,903) (5,065)
Total transactions with owners	-	(2,964)	(5,065)	(8,029)	(5,939)	(13,968)
Balance at 31 December 2011	58,998	15,499	8,863	83,360	-	83,360

The Company

	Share capital €000	Reserves €000	Retained earnings €000	Total equity €000
Balance at 1 January 2010	58,998	5,548	105,373	169,919
Comprehensive income Loss for the year	-	-	(17,800)	(17,800)
Other comprehensive income: Cash fl ow hedge, net of deferred tax Impairment charges in respect of revalued	-	(181)	-	(181)
land and buildings Movement in deferred tax liability on revalued land and buildings determined on the basis	-	(207)	-	(207)
applicable to capital gains	-	(868)	-	(868)
Transfer from retained earnings in relation to insurance contingency reserve	-	116	(116)	-
Total other comprehensive income	-	(1,140)	(116)	(1,256)
Total comprehensive income	-	(1,140)	(17,916)	(19,056)
Transactions with owners in their capacity
as owners Dividends to equity holders	-	-	(10,131)	(10,131
Total transactions with owners	-	-	(10,131)	(10,131)
Balance at 31 December 2010	58,998	4,408	77,326	140,732
Balance at 1 January 2011	58,998	4,408	77,326	140,732
Comprehensive income Loss for the year	-	-	(44,001)	(44,001)
Other comprehensive income:
Cash fl ow hedge, net of deferred tax Surplus arsing on revaluation of land and	-	(96)	-	(96)
buildings Movement in deferred tax liability on revalued	-	1,049	-	1,049
land and buildings determined on the basis applicable to capital gains	-	(125)	-	(125)
Losses from changes in fair value of available-for-sale fi nancial assets	-	(503)	-	(503)
Transfer from retained earnings in relation to insurance contingency reserve	-	116	(116)	-
Transfer of surplus upon realisation through disposal of revalued land and buildings	-	(530)	-	(530)
Deferred tax on realisation of surplus through disposal of revalued land and buildings	-	530	-	530
Total other comprehensive income	-	441	(116)	325
Total comprehensive income	-	441	(44,117)	(43,676)
Transactions with owners in their capacity as owners
Dividends to equity holders	-	-	(5,065)	(5,065)
Total transactions with owners	-	-	(5,065)	(5,065)
Balance at 31 December 2011	58,998	4,849	28,144	91,991

GO p.l.c. Preliminary Statement of Group Results and State of Affairs

For the Year Ended and at 31 December

STATEMENTS OF CASH FLOWS

The Group		The Company
			2010
			€000
			15,915
			82
			(106)
			(1,328)
			(973)
			(150)
			3,371
35,126	43,183	26,780	16,811
			(13,237)
			(50)
			12,250
			(3,254)
694	-	372	-
-	-	(16,197)	-
(25,559)	(25,482)	(15,891)	(4,291)
			(2,000)
			(10,110)
			(2,517)
(9,691)	(14,627)	(9,691)	(14,627)
(124)	3,074	1,198	(2,107)
			937
			43
			(6)
			(1,133)
	2011 €000 49,575 109 (82) (9,182) (2,208) (3,086) - (17,772) (8,159) - (322) (2,000) (5,068) (2,623) 8,109 81 (746) 7,320	2010 €000 51,547 104 (143) (10,616) (973) (150) 3,414 (22,228) - - (3,254) (2,000) (10,110) (2,517) 4,992 97 (54) 8,109	2011 €000 32,167 40 (67) (66) (2,208) (3,086) - (14,466) - 14,400 - (2,000) (5,068) (2,623) (1,133) 30 (81) 14

REVIEW OF GROUP OPERATIONS

The Board of Directors have considered the impact that events taking place in Greece have had on the carrying value of GO's investment in Forgendo Limited. This impact has signifi cantly reduced the reserves of the Group. The Directors consider it to be in the Group's best interest to ensure that it rebuilds an adequate level of reserves. The Directors recommend that at the forthcoming Annual General Meeting to be held on 9 May 2012, the shareholders approve that no dividends are paid.

Performance

The results for the year represent the combination of a steady performance of the Maltese operations which continue to deliver a healthy level of operating profi t and the material negative impact of international economic events on the company's investment in Forgendo Limited. Forgendo is jointly owned with the company's immediate parent on a 50/50 basis and currently holds 41.27% of the issued share capital of Forthnet S.A., a telecommunications company operating primarily in Greece.

2011 has been characterised by fi nancial uncertainties substantially impacting the Eurozone in general and a number of countries within the Eurozone in particular. Greece is one of the worst impacted countries. Over the past year, Greece has been implementing extensive restructuring of its economy to address its economic crisis. This economic climate has seriously impacted Forthnet. Despite an acceptable operating performance, Forthnet's results include a charge of €128.5 million representing an impairment charge attributable to goodwill arising from Forthnet's investment in Nova, its TV arm. The results of Forthnet have signifi cantly diluted GO's carrying value of its investment in Forgendo. Furthermore, given the volatility currently prevailing in Greece, the Directors no longer consider it prudent to retain a value based on a value in use assessment of Forthnet and as of December 2011, the carrying value of this investment refl ects the share price of Forthnet as quoted on the Athens Stock Exchange at the reporting date. These events lead GO to recognise a charge of €62.3 million representing a write-down in the value of its shareholding in and amounts receivable from Forgendo as at December 2011 to €3.6 million.

GO is reporting an operating profi t of €18.4 million. Although this represents a decline of €4.4 million when compared to 2010, if one excludes one-time charges relating to pension obligations and voluntary retirement schemes, GO achieved growth of 2.2% in its normalised operating profi t from €23.1 million in 2010 to €23.7 million this fi nancial year. Normalised EBITDA amounted to €51.4 million, an increase of €2.3 million (4.6%) over the comparative period.

The telecommunications market continues to be characterised by a tough competitive environment and extensive regulation, which have substantially impacted the Group's mobile business. In spite of these conditions and a continued challenging economic environment, GO managed to retain its overall level of turnover. The reduction in revenue from mobile business, substantially impacted by regulation, and the continued decline in traditional fi xed-line voice services have been offset by growth in TV and data services in general. The Group also experienced growth in data hosting and related activities.

The Group retains a strong presence in the local market and continues to offer a wide range of services to its large customer base through more than 500,000 customer connections. As the Group's incumbent position in fi xed-line voice services continues to be challenged, the Group continues to grow its base of customers who make use of broadband, TV and mobile services, albeit growth is slowing down as market reaches saturation.

The Group's total cost base amounted to €108.8 million. Whilst this represent a marginal reduction of €1.2 million over the previous year, discretionary expenditure continued to be addressed and in general only expenditure directly related to sales activity experienced growth. Of note is the growth in costs relating to the TV business as a result of the substantial growth in client base and the acquired role as the main provider of premium content in general and sports in particular. The Group continues to streamline processes and to invest in technology and innovation, which allow it to continue to right-size its operations. The average number of persons employed by the Group during the year amounted to 1,014, a reduction of 3.7% over the previous year.

The Group is reporting a loss before taxation of €45.2 million (2010: €9.1 million). The loss per share amounted to €0.503 (2010: €0.189).

Net cash generated from operations amounted to €35.1 million (2010: €43.2 million). Both years include onetime items relating to pensions and voluntary retirement costs, whilst the comparative period include a refund of VAT relating to prior periods. Normalised cash fl ow from operations for 2011 amounted to €40.4 million, marginally below the €40.9 million generated in 2010. In 2011 the Group maintained its investment programme at the same level of 2010 and invested €25.6 million.

Financial position

Shareholders' funds amounted to €83.4 million (2010: €144.1 million). The reduction is due to the charge recognised during the fi nancial year as a result of the reduction in the value of GO's investment in Forthnet through Forgendo, which has substantially eroded the Group's retained earnings. The Group's net asset value per share stands at €0.82 (2010: €1.42).

The Group's current assets amounted to €56.3 million (2010: €64.6 million) and are mainly represented by receivables of €35.3 million (2010: €43.7 million) and cash of €9.3 million (2010: €11.2 million). The level of invoiced amounts receivable stands at €22.5 million (2010: €22.1 million) confi rming that in spite of the challenging economic environment, the Group did not experience any signifi cant deterioration in its collection process. Current liabilities amounted to €55.8 million (2010: €58.4 million) and substantially consist of trade and other payables, which amounted to €49.8 million (2010: €50.2 million).