12 JUNE 2002
The Maltacom Group yesterday announced pre-tax profits of Lm2.9 million for this years first quarter, up from the Lm2.6 million registered for last years first quarter.
The profit represents an annualised return of 18.4 per cent on the average shareholders funds and of 10.1 per cent on the average total assets employed.
Earnings per share for the quarter amounted to 1c9, unchanged from last year, while the gross margin for the quarter amounted to Lm6 million - equivalent to 46.7 per cent of turnover. However, no interim dividend is being declared.
The Group reports that net operating costs over the period had amounted to Lm10.1 million and mainly consisted of interconnection, labour, foreign administration charges and depreciation.
The tax expense for the quarter amounted to Lm1 million and represents an effective tax rate of 34.2 per cent.
Commenting on the results, Maltacoms Chairman, Maurice Zarb Adami explained, "These results reflect the changes occurring in the industry. In general, conditions have become more challenging but our business is naturally resilient. Mobile voice telephony continues to grow and to challenge the fixed lines business. In 2002 we will continue the in-depth restructuring of our organisation. The main objective is to realign the companys strategies and to make the company more amenable to its customers, to better cater for their needs. We intend to continue to use and to expand our platform for the high growth segments of the market, mainly value added services, data transmission, broadband Internet and Internet services, particularly e-commerce enabling services. We believe these will be important major contributors to revenue in the future".
Meanwhile, Maltacom Chief Executive Stephen Muscat added, "These financial results confirm our steady progress. Our strategy of diversification in new subsidiaries is already reaping benefits and will enable us to secure long-term financial growth for the Group".
Over this years first quarter, the Groups profit from direct operations has increased by 10.2% when compared with the first quarter of 2001. In addition, the Groups profit before tax increased by 11% when compared with the same quarter last year.
However, after accounting for taxation, the Groups profit for the quarter decreased marginally by 2.7% over last year.
The Groups turnover for the quarter has maintained the positive trends registered in past years. This, coupled with the increase in the investment income generated from an associated undertaking, compensated for the increase in costs being incurred by the company and certain subsidiaries.
Furthermore, long outstanding debtor balances were reviewed and this resulted in a requirement to increase the provision for doubtful debts for the quarter.
Of particular satisfaction is the fact that further growth has been registered in the Groups activities, and that for the most part, expansion has continued to be financed mainly by internal cash generation.
The Groups earnings per share of 1c9 for the quarter has remained stable when compared with the quarter ended 31 March 2001. Earnings per share before exceptional item stood at 1c9 for the current quarter and 1c7 (€ 0.043) for the comparative quarter.
During the quarter under review, profit after tax attributable to the Group has also remained stable at Lm1.91 million compared to Lm 1.97 million for the quarter ended March 2001. The Group succeeded in increasing its revenue and in achieving a higher return on its financial fixed assets, outweighing the increase in the Group administrative and distribution costs. An increase of 10.2% was registered in the profit from direct operations.
The change over during the current quarter to a new billing system has somewhat weakened the companys credit control function. In fact, the average credit period allowed to debtors has increased from 74 days at the end of December 2001 to 135 days at the end of the current quarter. This has occurred since due to the introduction of the new billing system the issue of bills was somewhat delayed by a few weeks and therefore the two debtor days measures are not, strictly speaking, comparable. As the issue of bills gathers pace it is expected that the situation will get back to normal in due course.
As outlined in the Offering Memorandum for the companys shares of June 1998, the company had embarked on the re-organisation and restructuring of its labour force. At 31 March 2002, 408 employees had applied and been approved under the various schemes launched by the company for voluntary early retirement.