GO Plc

Earnings Release • Mar 10, 2015

COMPANY ANNOUNCEMENT COMPANY

The following is a Company Announcement issued by GO p.l.c. ("the Company 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 financial year ended 31 December 2014. These audited financial statements are also available for viewing on the Company's website at www.go.com.mt.

The Board of Directors further resolved to recommend that the Annual General Meeting approves the payment of a final net dividend of €0.07 net of taxation per share. The payment of this Net Dividend amounts to the sum of €7,091,734. The final dividend will be paid on the 8 May 2015 to all shareholders who are on the shareholders' register as at Thursday 2 April 2015.

The Annual General Meeting will be held on Tuesday 5 May 2015 at the Malta Hilton, St. Julians.

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Francis Galea Salomone LL.D. Galea LL.D. Company Secretary Secretary

10 March 2015

GO p.l.c. Preliminary Statement of Group Results an p.l.c. Preliminary of Results and State d State of Affairs of Affairs Affairs For the Year Ended and at 31 December 2014 Year Ended December 2014

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 Notification) Regulations, 2005.

The financial information has been extracted from GO p.l.c.'s Annual Report and Consolidated Financial Statements for the year ended 31 December 2014 as approved by the Board of Directors on 10 March 2015, which have been audited by PricewaterhouseCoopers.

These financial statements will be laid before the members at the general meeting to be held on 5 May 2015. The Group's financial 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 Statements position

		As at 31 December As 31 December
		Group		Company Company
	2014 €000	2013 €000	2014 €000	2013 €000
ASSETS
Non-current assets current assetsassets
Property, plant and equipment	133,640 133,640	136,170	67,656	70,075
Investment property	2,199	1,571	-	-
Intangible assets	13,526	19,268	5,368	9,580
Investments in subsidiaries	-	-	27,233	27,233
Investment in associate Loans receivable from subsidiaries	1,681 -	- -	1,681 49,524	- 49,524
Loans receivable from associate	3,673	-	3,673	-
Deferred tax assets	8,497	8,627	6,261	5,709
Derivative financial instruments	2,383	-	2,383	-
Trade and other receivables	1,387	1,217	668	430
Total non-current assets	166,986 166,986	166,853	164,447164,447 164,447	162,551
Current assets Current assets
Inventories	7,468	6,915	6,170	5,434
Trade and other receivables	30,311	30,620	31,669	33,322
Current tax assets	-	186	10	186
Cash and cash equivalents	12,509	30,402	9,505	26,315
Total current assets	50,288	68,123	47,354	65,257
Non-current assets classified as held for sale	6,592	-	6,592	-
Total assets	223,866	234,976	218,393 218,393	227,808

Statements of financial position- continued

		As at 31 December 31 December
	Group Group 2014	2013	2014	Company Company Company 2013
EQUITY AND LIABILITIES	€000	€000	€000	€000
EQUITY Share capital Reserves Retained earnings	58,998 15,640 35,379	58,998 16,536 27,961	58,998 5,188 59,637	58,998 5,271 49,983
Total equity	110,017 110,017	103,495	123,823123,823 123,823	114,252
LIABILITIES
Non-current liabilities current liabilities Borrowings Deferred tax liabilities Provisions for pensions Derivative financial instruments Trade and other payables	44,573 7,178 3,667 2,049 1,388	59,246 7,109 3,370 512 3,656	39,896 - 3,667 2,049 1,388	54,327 - 3,370 512 3,656
Total non-current liabilities	58,855	73,893	47,000	61,865
Current liabilities liabilities Borrowings Provisions for pensions Derivative financial instruments Trade and other payables Current tax liabilities	9,425 2,834 91 42,522 122	13,014 2,651 - 41,896 27	7,978 2,834 91 35,487 1,180	11,651 2,651 - 37,164 225
Total current liabilities	54,994	57,588	47,570	51,691
Total liabilities	113,849 113,849	131,481	94,570	113,556
Total equity and liabilities and liabilities	223,866 223,866	234,976	218,393 218,393	227,808

The financial statements were authorised for issue by the Board on 10 March 2015 and were signed on its behalf by:

Mr. Deepak Padmanabhan Mr. Nikhil Patil Chairman Director

Income statements statements

	Year ended 31 December 31 December
	Group 2014 2013 €000 €000		Company 2014 €000	Company 2013 €000
Revenue Cost of sales	122,258 122,258 (71,890)	122,141 (75,355)	73,394 (47,311)	74,691 (50,464)
Gross profit Administrative and other related expenses Other income Other expenses	50,368 (29,801) (29,801) 1,337 (140)	46,786 (29,867) 1,165 (103)	26,083 (25,758) 937 (109)	24,227 (25,912) 1,251 (73)
Operating profit/(loss) Operating profit/(loss)	21,764 21,764	17,981	1,153	(507)
Analysed as follows: Operating profit before non-recurring items Non-recurring items presented within 'Administrative and other related	24,367	20,775	3,756	2,287
expenses'	(2,603)	(2,794)	(2,603)	(2,794)
Operating profit/(loss) after non-recurring items	21,764	17,981	1,153	(507)
Finance income Finance costs Adjustments arising on fair valuation	390 (2,315)	411 (2,755)	24,343 (1,957)	19,889 (2,470)
of property	491	-	69	-
Profit before tax Tax expense	20,330 (5,704)	15,637 (3,887)	23,608 (6,746)	16,912 (4,102)
Profit for the year - for -attributable attributable to owners of the Company owners Company Company	14,626	11,750	16,862	12,810
Earnings per share (euro cents) Earnings share	14c4	11c6

Statements of comprehensive income Statements

	Year ended 31 December December ended
	Group 2014 €000	2013 €000	Company Company Company 2014 €000	2013 €000
Comprehensive income Comprehensive income Profit for the year	14,626	11,750	16,862	12,810
Other comprehensive income Other comprehensive income Items that will not be reclassified to profit or loss
Surplus arising on revaluation of land and buildings	38	-	19	-
Remeasurements of defined benefit obligations	(566)	(346)	(566)	(346)
Income tax relating to components of other comprehensive income: Surplus arising on revaluation of land and buildings	(956)	-	(124)	-
Remeasurements of defined benefit obligations	198	121	198	121
Items that may be subsequently reclassified to profit or loss Change in fair value of derivative
designated as hedging instrument in cash flow hedge	421	771	421	771
Income tax relating to components of other comprehensive income	(147)	(270)	(147)	(270)
Total other comprehensive income for the year, net of tax	(1,012) (1,012)	276	(199)	276
Total comprehensive income for the year Total comprehensive the year	13,614	12,026	16,663	13,086

Statements of changes in equity Statements in

Group

	Share capital €000	Reserves €000	Retained earnings €000	Total €000
Balance at 1 January 2013	58,998	16,144	26,458	101,600
Comprehensive income income Profit for the year	-	-	11,750	11,750
Other comprehensive income: Cash flow hedge, net of deferred tax	-	501	-	501
Remeasurements of defined benefit obligations, net of deferred tax Transfer from retained earnings in relation to insurance contingency	-	(225)	-	(225)
reserve	-	116	(116)	-
Total other comprehensive income	-	392	(116)	276
Total comprehensive income comprehensive income	-	392	11,634	12,026
Transactions with owners in their owners capacity as owners capacity Distribution to owners: Dividends to equity holders	-	-	(10,131)	(10,131)
Balance at 31 December at December
2013	58,998	16,536	27,961	103,495 103,495 103,495

Statements of changes in equity-continued continuedcontinued

Group – continued

	Share capital €000	Reserves €000	Retained earnings €000	Total €000
Balance at 1 January 2014	58,998	16,536	27,961	103,495
Comprehensive income income Profit for the year	-	-	14,626	14,626
Other comprehensive income: Surplus arising on revaluation of land and buildings Movement in deferred tax liability on revalued	-	38	-	38
land and buildings determined on the basis applicable to property disposals	-	(956)	-	(956)
Cash flow hedge, net of deferred tax	-	274	-	274
Remeasurements of defined benefit obligations, net of deferred tax Transfer from retained earnings	-	(368)	-	(368)
in relation to insurance contingency reserve	-	116	(116)	-
Total other comprehensive income	-	(896)	(116)	(1,012)
Total comprehensive income comprehensive income	-	(896)	14,510	13,614
Transactions with owners in their owners capacity as owners capacity capacity as owners Distribution to owners: Dividends to equity holders	-	-	(7,092)	(7,092)
Balance at 31 December at December 2014	58,998	15,640	35,379	110,017110,017 110,017

Statements of changes in equity-continued continuedcontinued

Company

	Share capital €000	Reserves €000	Retained earnings €000	Total equity €000
Balance at 1 January 2013	58,998	4,879	47,420	111,297
Comprehensive income Comprehensive income Profit for the year	-	-	12,810	12,810
- Other comprehensive income: Cash flow hedge, net of deferred tax Remeasurements of defined benefit	-	501	-	501
obligations, net of deferred tax Transfer from retained earnings in relation to insurance contingency reserve	- -	(225) 116	- (116)	(225) -
- Total other comprehensive income	-	392	(116)	276
Total comprehensive income Total comprehensive income	-	392	12,694	13,086
Transactions with owners in their capacity Transactions with their capacity eir as owners as owners owners Distribution to owners:
Dividends paid to equity holders	-	-	(10,131)	(10,131)
Balance at 31 December 2013 Balance 31 December 2013	58,998	5,271	49,983	114,252114,252 114,252

Statements of changes in equity-continue continuecontinued

Company – –continued continuedcontinued

	Share capital €000	Reserves €000	Retained earnings €000	Total Equity €000
Balance at 1 January 2014	58,998	5,271	49,983	114,252
Comprehensive income income Profit for the year	-	-	16,862	16,862
- Other comprehensive income: Surplus arising on revaluation of land and buildings Movement in deferred tax liability on revalued land and buildings determined	-	19	-	19
on the basis applicable to property disposals Cash flow hedge, net of deferred tax Remeasurements of defined benefit	- -	(124) 274	- -	(124) 274
2 obligations, net of deferred tax Transfer from retained earnings in relation to	-	(368)	-	(368)
insurance contingency reserve - Total other comprehensive income	- -	116 (83)	(116) (116)	- (199)
Total comprehensive income income	-	(83)	16,746	16,663
Transactions with owners in their capacity Transactions with in their as owners owners owners
Distribution to owners: Dividends paid to equity holders	-	-	(7,092)	(7,092)
Balance at 31 December 2014 2014	58,998	5,188	59,637	123,823 123,823

The Group and the Company's retained earnings include non-distributable profits amounting to €11,356,000, arising on disposal of property during the year ended 31 December 2012.

Statements of cash flows Statements

		Year ended 31 December 31 December
	Group Group		Company Company Company
	2014 €000	2013 €000	2014 €000	2013 €000
Cash flows from operating activities Cash activities Cash generated from operations Interest received	48,778 390	47,097 124	37,710 25	19,243 113
Interest paid on bank overdrafts Tax paid	(194) (6,669)	(18) (6,210)	(24) (110)	(18) (96)
Tax refund received Payments under voluntary retirement scheme Payments in relation to pension obligations	724 (2,595) (2,595) (90)	1,664 (2,820) (266)	- (2,595) (90)	- (2,820) (266)
Net cash from operating activities	40,344	39,571	34,916	16,156
Cash flows from investing activities Cash investing activities Payments to acquire property, plant and equipment
and intangible assets Dividends received	(20,105) (20,105) -	(19,341) -	(13,910) -	(15,695) 17,679
Loans advanced to joint venture Loans advanced to associate	(6,014) (6,014) (4,500) (4,500)	- -	(6,014) (6,014) (4,500)	- -
Net cash (used in)/from investing activities	(30,619)	(19,341)	(24,424)	1,984
Cash flows from financing activities Cash financing activities Repayments of bank loans Proceeds from bank loans	(14,771) (14,771)	(20,120) 15,500	(14,500) -	(19,000) 15,500
Dividends paid Loan interest paid	- (7,011) (2,121)	(9,930) (2,815)	(7,011) (2,121)	(9,930) (2,280)
Net cash used in financing activities	(23,903)	(17,365)	(23,632)	(15,710)
Net movements in cash and cash equivalents Net movements in and	(14,178) (14,17	2,865	(13,140) (13,140)	2,430
Cash and cash equivalents at beginning of year Cash beginning year Exchange differences on cash and cash	24,7 24,762	21,886	21,389	18,954
equivalents Movement in cash pledged as guarantees	(23) 1,043	11 -	21 1,043	5 -
Cash and cash equivalents at end of year Cash end of	11,604 11,604	24,762	9,313	21,389

Review of Group operations of Group

The Board of Directors is recommending that the Annual General Meeting approves the payment of a final net dividend of €0.07 per share. The payment of this net dividend amounts to the sum of €7,091,734. The final dividend will be paid on the 8 May 2015 to all shareholders who are on the shareholders' register as at Thursday 2 April 2015.

Performance

The Maltese telecoms market follows trends similar to those experienced across Europe, characterised by extensive competition which stimulates innovation and leads to a wide range of services for voice, data or television broadcasting. Consumer behaviour remains in a state of transition, driven by the growing convergence of telecommunications, information technology, media and entertainment as people access the Internet from anywhere and at any time using a multitude of devices. Domestic operators not only compete against each other but have to contend with competing services which are available free of charge through applications over the Internet provided by organisations with a global reach. Consumer expectations and innovative technologies imply increased costs to deliver the quality service that customers have come to expect, however disproportionate regulation at both the local and EU level has made access to technology more affordable for consumers as price pressure increased.

Acknowledging this trend, GO continues to invest in its networks to ensure that its customers have access to secure and always-available networks that will enable them to enjoy service offerings seamlessly over wired and wireless networks. Beyond investment in technology and innovation, at the core of this business model is a determination to strive to satisfy the needs of customers and a commitment to deliver a customer experience that is second to none.

The Group's strategy is also resulting in positive financial results as the Group reports improved operating profit from €18.0 million in 2013 to €21.8 million in 2014, an increase of 21.0%. However both years include items considered to be of unusual nature, size or incidence. Normalised operating Group profit for the year ended 31 December 2014 amounted to €24.3 million (2013: €20.8 million) whilst normalised EBITDA amounted to €49.2 million (2013: €48.4 million). In the year under review GO is reporting a profit before tax of €20.3 million (2013: €15.6 million). The earnings per share amounted to €0.144 as against €0.116 in 2013. This growth in profitability is the result of stable revenues and lower costs.

The Group achieved positive results in revenue generation. Although at €122.3 million Group revenues are at the same level of those achieved in the comparative year, the Group managed to grow revenue from retail activities which growth made up for the decline in income from wholesale activities, a direct consequence of regulatory intervention. Whilst retail revenue from legacy fixed voice service continued to decline, GO experienced growth in all other retail sectors, particularly mobile.

Cost of sales, administrative and related costs, excluding items of unusual nature, size or incidence, amounted to €99.1 million (2013: €102.4 million). The overall reduction of €3.3 million (3.2%) is the result of a combination of lower wholesale costs and continued focus on managing costs without compromising on customer experience.

Cash generated from operations amounted to €48.8 million, an increase of €1.7 million over 2013. In 2014 the Group's investments amounted to a cash outflow of €26.1 million. If one excludes the investment in the joint venture of €6.6 million, €20.1 million investment in property, plant, equipment and intangible assets are €0.7 million more than the value invested in 2013 as the Group maintains an intensive investment programme through which it is upgrading its various networks and launching new technologies which enable the provision of improved services and innovative products. One of the main initiatives which gained momentum during the year under review is investments in Fibre-to-the-Home (FTTH). Investments in FTTH will be maintained in the coming years and complimented with investments in 4G to ensure that GO customers continue to enjoy the best possible fixed-line and mobile broadband experience.

During 2014 GO reduced its borrowings by €14.8 million, extended a loan of €4.5 million to Cablenet Systems Limited and paid dividends amounting to €7.0 million but still closed the year with cash and cash equivalents of €11.6 million.

Review of Group operations–continued continuedcontinued

Performance - -continued continuedcontinued

GO's business model is delivering results as GO continues to service in excess of 500,000 customer connections, making it the largest customer base of any operator on the islands. GO also continues to enjoy year-on-year growth in customer connections as growth in broadband, TV and mobile more than compensate for the decline in traditional fixed voice connections. Equally encouraging is the annual growth in the number of customers adopting bundles of services across fixed, broadband, TV and mobile. The trust shown by customers in GO's product portfolio continues to deliver robust levels of revenues, profitability and cash generation from core operations. Within this highly competitive environment these results continue to augur well for GO to retain a strong presence in the local market across all product lines and to remain the leading telecommunications service provider and operator of choice, offering the most extensive product range.

Financial position position

Following another year of robust operating performance, shareholders' funds as at year end increased from €103.5 million as at December 2013 to €110.0 million as at end 2014 as the Group's performance during 2014 exceeded the distribution of retained earnings as a result of a dividend of €0.07 per share net of taxation paid during the year. The Group's net asset value per share stands at €1.09, an increase of 6.3% over 2013 which stood at €1.02.

The Group's total asset base stands at €223.9 million of which €55.4 million are represented by property. The Group's total asset base is 49.1% funded through equity (2013: 44.0%).

GO's investment in Forthnet S.A. through Forgendo Limited has been classified as 'Non-current assets held for sale' at a value of €6.6 million, representing GO's share of the investment made by Forgendo to participate in the capital increase process undertaken by Forthnet in January 2014. As explained in Note 10 to the financial statements this classification is the result of offers received by Forthnet in 2014 which may result in GO disposing of its investment in Forgendo.

In September 2014 GO concluded the acquisition of 25% shareholding in Cablenet Systems Limited, a cable company incorporated and operating in Cyprus, in return for a loan of €12.0 million which GO will extend to Cablenet over a maximum period of two years. This loan is interest free up to 31 December 2017 and during this period GO enjoys the option to convert this loan into equity, part of a path that can see GO owning 51% of the share capital of Cablenet.

The Group's current assets amounted to €50.3 million (2013: €68.1 million) and are mainly represented by receivables of €30.3 million (2013: €30.6 million) and cash of €12.5 million (2013: €30.4 million). The healthy liquidity position, the result of robust operational performance, continues to allow the Group to fund its investments in technology, pursue new initiatives aimed at increasing shareholder value and honour its obligations with its bankers substantially from internal resources.

Non-current liabilities are down from €73.9 million as at December 2013 to €58.9 million as at December 2014. Similarly, current liabilities are lower and amounted to €55.0 million as against €57.6 million as at December 2013. The total reduction in liabilities of €17.6 million is substantially due to a reduction in borrowings and are matched by a reduction of €17.9 million in cash and cash equivalents.