GO Plc. Annual Report 2015

7/25/2019 GO Plc. Annual Report 2015

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Annual Report and Accounts 2015

HELPING BUSINESSES, FAMILIES ANDFRIENDS TO STAY CONNECTED


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GO is Maltas leadin telecommunications

services oranisation, with over 500,000

customer connections. The first quadruple play

operator in the market, GO is a convered and

interated telecommunications roup, offerin

an unparalleled rane of services: fixed line

telephony; mobile telephony; broadband

Internet services and diital television. GOalso provides business-related services, such

as data networkin solutions, business IP

services, manaed and co-location facilities.

GOs rowth is the result of a focused stratey

of deliverin international standard products

and services, and a first rate customer

experience. The Group invests heavily

in technoloy and infrastructure, with an

ambitious investment proramme comprisin

a number of far-sihted projects, such as4G and providin fibre to the home, thereby

creatin a resilient and unmatched network

that is revolutionisin Maltas connectivity.

GO is listed on the Malta Stock Exchane.


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02 2015 at a Glance04 Chairmans Messae 07 Chief Executive Officers Review

12 Commercial Review 18 GO in the Community22 Board of Directors23 Directors Report28 Corporate Governance Statement of Compliance34 Remuneration Committee Report36 Independent Auditors Report

38 Financial Statements39 Statements of Financial Position 41 Income Statements

42 Statements of Comprehensive Income43 Statements of Chanes in Equity 47 Statements of Cash Flows48 Notes to the Financial Statements

127 Five Year Record128 Company Information

CONTENTS

GO ANNUAL REPORT 2015


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02 2015 AT A GLANCE

2015 AT A GLANCE

123.7M

2.8%

IN REVENUE

COSTS

The Group is Maltas leadininterated telecommunicationsservices provider and its hih speednetworks form the backbone of theislands modern communicationsinfrastructure. The services providedby the Group include fixed-lineand mobile telephony, data andTV services for consumers andbusiness clients. The Group also

provides business clients with datacentre facilities and ICT solutions.GO continues to connect moreclients to its mobile, broadband andTV networks, rowin its customerbase in 2015 and now servicin wellin excess of 500,000 customerconnections, which is, by far, thelarest customer base of anyoperator in Malta.

The Groups stron performanceclearly demonstrates GOs onoinability to out-perform the sectorand is also in stark contrastto the challenes bein facedin many other EU markets. In2015, the Group reported stable

revenue streams of 123.7 million,an increase of 1.2% over thecomparative year, as it continues

to achieve rowth in retail activitieswithin the context of a fiercelycompetitive market and constantlyevolvin customer expectations.

This rowth more than compensatedfor the decline in wholesale activity

experienced as a result of continued,and disproportionate, reulation atboth local and EU level.

The drive to increase efficiencies,and manae costs, in a planned andsustainable manner, is as importantas the effort to row revenues.Durin 2015, excludin items of

unusual nature, size or incidence(such as those relatin to voluntaryretirement schemes and provisions

for pension obliations), the Groupscost of sales and administrativecosts declined by 2.8% to 96.3million (2014: 99.1 million), as GOmaintains its focus on manain costs

without dilutin or compromisinthe customer experience.

Followin on from its positiveperformance durin 2015, in January2016 GO increased its minority stakeand acquired a majority shareholdinin Cablenet CommunicationsSystems Limited, the Cypriot tripleplay telecommunications company.Cablenet continues to performstronly, rowin customer numbersand profitability across its broadbandInternet, fixed telephony and diital

HD TV portfolio.

This ame-chanin developmentis one with far-reachin implicationsfor GO, which now also operates ina market which is double the size ofits domestic market in Malta. GOsincreased stake in Cablenet alsoenables the Group to leverae clearsyneries between GO and Cablenet,and to share winnin strateies in anumber of areas in a market that hasmany similarities to Malta.


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GO ANNUAL REPORT 2015 03

34.2MPRE TAX PROFIT OF

60 MILLIONINVESTED IN FIBRE & 4GThe lare-scale, multi-year,investment prorammes in GOs coretelecommunications infrastructurein Malta is proceedin smoothly, andthe Group is well on track, both withthe onoin roll out of Fibre-To-The-Home and fibre connected 4G. Theserequire sinificant capital investment,in excess of 60 million over the next

few years, and will further future-proofa communications infrastructure thatis, literally, second to none.

Superfast Internet fibre connectionswill mean customers will be able touse the Internet in ways that until nowone can only have imained, bothfrom a business perspective and forthose lookin for the ultimate homeTV and amin experience, whilst the

investment in 4G will offer a superiormobile Internet service.

2015 has been an excellent yearfor GO and its shareholders, withincreased profitability and healthycash flows as a result of a provenproramme that is deliverin rowthand control over costs. Durin theyear, the GO Group reported pre-taxprofit of 34.2 million, as it continuedto reister a stron performance in itscore operations.

Group operatin profit reached27.8 million in 2015 (up from 21.8million in 2014), an increase of 27.9%.Normalised operatin profit improvedfrom 24.4 million in 2014 to 29.0million in 2015, representin rowthof 19%. On a normalised basis, roupEBITDA amounted to 52.8 million(2014: 49.2 million) an increase of7.3% over the prior year.

Not only is GO truly a diversifiedquad play telecommunications player,increasinly, it is also diversifyin tobecome a one stop shop for all thecommunications and ICT needs ofbusiness located in, and operatin from,Malta. This is achieved by combinin

traditional core competenciesin fixed, mobile telephony andInternet, with hostin, data andcloud services which are providedby the Groups subsidiary BMIT.

In 2015, data services accounted for noless than 11.5% of total Group revenuefrom external customers, representina steady year-on-year increase. It isworth notin that durin 2015, GOentered into a preliminary areementto acquire a majority stake in ICT

specialists Kinetix, which acquisitionwas concluded early in 2016. Thisfurther strenthens GOs ability toservice business customers.

UNLOCKING VALUE FROMPROPERTY PORTFOLIODurin the year GO completedthe spin-off of its property arm,Malta Properties Company p.l.c.

(formerly known as Malta PropertiesCompany Limited), which is nowquoted separately on the MaltaStock Exchane.

This is a major milestone, followinthe development and implementationover a number of years of astratey aimed at deliverin valueto shareholders from the Groups

extensive property portfolio. As aresult of the spin-off, shareholdersenjoyed a net dividend of 0.3313,the hihest in the Companys history.

Telecommunications

Data Services

14.2M

109.5M

2015 REVENUE 123.7MILLION


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04 CHAIRMANS MESSAGE

CHAIRMANS MESSAGE

HIGHLIGHTS FOR 2015

TODAY, THE GROUP HAS A MOREINTERNATIONAL DIMENSION, A HEALTHY

AND PROFITABLEBUSINESSMODEL, DIVERSIFIED INCOME STREAMS,A NUMBER OF STRONG BRANDS AND A

FOCUSEDSENIOR MANAGEMENTTEAM DRIVING A ROBUST AND SUCCESSFULSTRATEGY THAT WILL CONTINUE TO DELIVER.

WELL PREPARED FOR GOS NEXT CHAPTERAs Chairman of our Company, it is my duty, toether with the

Board of Directors, to safeuard the interests of all shareholders, todeliver an attractive return to them, and to enhance and row theunderlyin value of their investment. It is a responsibility not takenlihtly, and not without its own burdens, so it is satisfyin to note,as GO now prepares to write the next chapter in its successfulhistory, just how well placed the Group is to fore ahead.

In many ways, these are momentous times for our Group,a time durin which several major strateic initiatives arecomin to fruition, in line with our lon term plans, and a timewhere the rewards for our efforts, and of our perseverance, arebecomin amply clear. Today the Group has a more international

dimension, a healthy and profitable business model, diversifiedincome streams, a number of stron brands and a focused seniormanaement team drivin a robust and successful stratey thatwill continue to deliver.

THE SALE PROCESSIn July, Emirates International Telecommunications, our majorityshareholder, announced its intention to dispose of its 60 per centshareholdin in GO p.l.c.. Followin this announcement the Boardof Directors decided that it would be in the best interests of allshareholders to seek bids to purchase the entire shareholdin.This would provide your Board with reater flexibility in itsneotiations with potential buyers and, at the same time, ive all

our investors the opportunity to benefit from the value eneratedthrouh the sale. This view was endorsed by an ExtraordinaryGeneral Meetin which took place in October and which alsoauthorised the Board to disclose all relevant information topotential bidders.

The process of sellin a company as lare, and as multifaceted,as GO is complex and not without its own challenes. Throuhout,

however, the focus of the Board has remained on securin thebest possible bid, one which reflects the enuine value, and futurepotential, of the Company.

GROWING VALUEAs those who follow our performance will doubtless have noted,the value of GO has been steadily rowin over recent years. Thepotential sale of GOs entire shareholdin now follows a year inwhich several initiatives added further value and made GO evenmore attractive.

The spin-off of Malta Properties Company, approved by another

Extraordinary General Meetin, which took place in July, did notonly deliver the immediate value of a special dividend of 33.6million which benefited all GO shareholders. Additionally, as aseparate entity but with contractual obliations with GO, MPC isnow able to focus on creatin physical environments which aretailor made to GOs requirements and on new initiatives aimedat enhancin its portfolio of premium properties and pursuin awider client base of well-established tenants.

This will help GO continue consolidatin and optimisin itstechnical and operational functions across the entire product andservice offerin. It is encourain to see the achievement of amajor milestone followin the development and implementation

over a number of years of a stratey aimed at deliverin value toshareholders from the Groups extensive property portfolio.


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Mr Deepak PadmanabhanChairman


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06

GROWING VALUE CONTINUEDIn line with our plans to internationalise GOs outlook and pursuerowth, important decisions were also taken with reards tothe Groups investment in Cablenet Communications SystemsLimited in Cyprus. Followin the initial purchase of 25% of theissued share capital in 2014, GO has now taken up the optionof convertin a 12 million loan provided at the time of theinitial investment into equity toether with the option to acquiremajority control.

This will have very sinificant implications, as GO effectivelybecomes an operator in two European markets. Not only is thepotential market in Cyprus twice the size of that in Malta, but thefuture incorporation of Cablenets results into GOs coupled with

the increasin value of the initial investment as both Cablenetand the Cypriot economy strenthen, will have a very noticeable,positive impact on GOs results.

A further investment with the potential to deliver lon termpositive rowth and contribute further to strenthenin the valueof GO was the decision to acquire a majority stake in the MalteseICT company Kinetix. This will definitely strenthen GOs abilityto service the communications and ICT requirements of GOsbusiness customers.

Meanwhile, the lare-scale, multi-year, investment prorammes

in GOs core telecommunications infrastructure in Malta isproceedin, and are well on track both with the onoin roll outof fibre connected 4G and Fibre-To-The-Home. Thouh thesenaturally both require sinificant capital investment, they willfurther future-proof a communications infrastructure that issecond to none.

EXCELLENT RESULTSOn top of all this, GO also delivered an excellent financialperformance in 2015, eneratin a profit before tax of 34.2million, while the Groups operatin profit rew 27.9% to 27.8million. This result was achieved from a combination of increasedrevenue and reduction in costs. Normalised EBITDA increased by

7.3% to 52.8 million from 49.2 million in 2014.

On the back of such a positive performance, your Board is in aposition to recommend a sinificant increase in dividend from0.07 paid in 2014 to 0.10 net of tax for 2015.

These results were delivered on the basis of revenue whichamounted to 123.7 million, an increase of 1.2% over thecomparative year. It is important to also bear in mind thecontext of a fiercely competitive market and constantly evolvincustomer expectations, which is also impacted by continued, anddisproportionate, reulation at both local and EU level. In thisscenario, the results hihliht not only the fact that GOs Boardof Directors and executive team have been pursuin a soundstratey but also the hard work of all Group employees.

Amidst all the ood news, 2015 proved once aain to be adifficult year in Greece, both economically and politically. As aresult, Forendo could not complete the sale of its shareholdinin Forthnet. Consequently, the carryin amount of GOs equity

investment in this joint venture could no loner be classifiedas held for sale in the consolidated financial statements andhas been restated to nil, in accordance with the requirements ofequity accountin.

AN ACTIVE CORPORATE CITIZENAs one of Maltas larest and hihest profile commercial entities,and a central player in the national economy, GO also has aresponsibility towards the community. As technoloy continuesto advance, the risks associated with the diital divide are clearand it remains important to do whatever we can to ensure thatno one is left behind. GO continues to pursue an active Corporate

Social Responsibility proramme which includes particularlysinificant support throuhout the year for the Malta CommunityChest Fund.

DELIVERING AN EVEN BETTER FUTURE2015 has certainly been a busy and undoubtedly very successfulyear. It is encourain to note also that the year has followedseveral other successful ones, which demonstrates that despiteall the challenes which GO has faced the sound strateyadopted by the manaement team and the dedication of ouremployees deliver stron results.

I am therefore extremely pleased to be in a position to reaffirm

that GO has delivered for its customers, its shareholders, itsemployees and for the society it operates in, to the benefit ofthe Maltese economy.

And, I have no doubt, all this auurs well for the future.

CHAIRMANS MESSAGECONTINUED

CHAIRMANS MESSAGE


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CHIEF EXECUTIVE OFFICERS REVIEW

HIGHLIGHTS FOR 2015

WE DELIVERED A STRONGPERFORMANCE WITH PROFIT BEFORE TAX

REACHING34.2M.OUR OPERATINGPROFIT AMOUNTED TO 27.8 MILLION, AN

INCREASEOF 27.9%ON THE21.8 MILLION RECORDED IN 2014.

A STRONG, ENCOURAGING, PERFORMANCEOnce aain, the GO Group has delivered what, on many fronts,is a very positive and encourain year. We delivered a stronperformance with profit before tax reachin 34.2 million. Ouroperatin profit amounted to 27.8 million, an increase of 27.9%on the 21.8 million recorded in 2014. On a normalised basis,Group EBITDA amounted to 52.8 million (2014: 49.2 million)an increase of 7.3% over the prior year. Normalised operatin

profit improved from 24.4 million in 2014 to 29.0 million in2015, representin rowth of 19%.

GO continued to row its customer base in 2015, and serviceswell in excess of 500,000 customer connections, which is, byfar, the larest customer base of any operator in Malta. GOcontinues to connect more clients to its mobile, broadband andTV networks, and this rowth more than compensates for themarinal reduction in fixed-voice connections.

Equally encourain is the sustained rowth in bundled serviceas the Companys Limitless, Homepack and Duopack productlines retain their customer appeal, supported by our onoin

investments in content, particularly premium TV drama, moviesand sport. We are, without doubt, also reapin the benefits ofsustained effort and investment in both infrastructure, and inGOs considerable human resources.

The Group also continues to do well in its data centre businessand reistered encourain rowth in a number of cloud-based services aimed primarily at businesses based in Malta.As a result of all this, GO delivered robust levels of revenues,profitability and cash eneration from its core operations.

On-oin efforts to drive efficiency are also worth notin, as GOreduced operatin costs by 2.8 million over 2014, a reduction of

2.8%, without dilutin the strenth of its offerin or the level of itscustomer response.

BUILDING FOR THE FUTUREOf course, the strenth of any company should be juded bythe results it delivers over a number of years. It is therefore veryencourain to note that, not only have we maintained a positivemomentum in recent years, but also that, throuhout 2015, GOcontinued to take the necessary decisions to ensure that such apositive performance can be sustained in the foreseeable future.

First and foremost, we have continued to invest in providinMalta with the communications infrastructure it needs to meet

the increasin demands of customers and to ensure the countrycontinues to compete successfully in the lobal economy. Ourvery sinificant investments in Maltas only fibre connected 4Gnetwork and in Fibre-To-The-Home (FTTH), which in total willamount to well over 60 million, have continued.


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08 CHIEF EXECUTIVE OFFICERS REVIEW

BUILDING FOR THE FUTURE CONTINUEDNationwide 4G coverae is close at hand while more than27,000 homes in various locations across Malta have beenpassed with fibre. Combined, these two projects will ive ourcustomers access to super-fast hihly reliable Internet both athome and on the move.

This will also enable the much heralded Internet of Thins to

become a reality, makin all of our lives better. The fact that onlyGO offers fibre connected 4G and fibre Internet directly intocustomers premises ives us a sinificant point of differenceover competin operators. Truly, we are developin an un-matched, and future-proof, communications infrastructure thatives GO a sinificant, and sustainable, competitive advantae.

Additionally, in what was a very busy and productive year, 2015also witnessed a number of other key developments which aredesined to continue to deliver value in the comin years. Thespin-off of Malta Properties Company p.l.c. not only eneratedconsiderable value for shareholders, but will also have an onoin

positive effect on GOs own operations as GO will be able tofocus exclusively on its core business.

As recently announced, GO has also taken the decision toacquire a majority shareholdin in Cablenet CommunicationsSystems Limited, the Cypriot triple play telecommunicationscompany. GO first invested in Cablenet in 2014, and over recentmonths this company has continued to perform stronly, rowincustomer numbers and profitability across its broadband internet,fixed telephony and diital HD TV portfolio. This ame-chanindevelopment is one with far-reachin implications for GO, whichnow also operates in a market which is double the size of itsdomestic market in Malta.

Malta itself continues to offer interestin areas of opportunity.GO has invested in acquirin a controllin stake in the ICT firmKinetix, which specialises in the desin, implementation, support

and optimisation of ICT solutions for the corporate sector. Itsincorporation into the GO Group allows us to further expand therane of services we offer to our business customers.

This also marks another step in GOs onoin proress tobecomin a one stop shop for all the communications and ICTneeds of the business community, combinin traditional corecompetencies in fixed and mobile telephony, and Internet, with

hostin, data and cloud services provided by the continuallyrowin BMIT. This is now further enhanced with the ICT skillsof Kinetix. The ICT sector in Malta is, of course, a sinificantone, and one where there could be rowth potential. But it isalso framented and we believe that consolidatin this serviceinto the Groups product portfolio therefore represents a ooddevelopment opportunity.

Another area of sinificant chane, which GO embarked upon in2015, and which will continue to deliver results in the years ahead,was the launch of our new 5 year Transformation Proramme.

GO is now well on the way to becomin an aile e-company,makin us more efficient and flexible and better able toadapt our products and services to our customers fastchanin requirements.

LOOKING FORWARD WITH OPTIMISMAs outlined, a reat many thins have been accomplished,across all areas of the business, in 2015.

The stron financial results are testament to the hard work notonly of the leadership team but of all GO staff. As a leadinprovider of communications, IT and entertainment services,GO continues to operate successfully in a fiercely competitive

market which is hihly reulated both in Malta and at EU level.

Thouh achievin such success can never be taken for ranted,GO has put in place the foundations and taken the necessarydecisions, to be able to look forward with considerable optimism.

CHIEF EXECUTIVE OFFICERS REVIEWCONTINUED


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Mr Yiannos MichaelidesChief Executive Officer


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10 CUSTOMER CONNECTIONS


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As Maltas first and leadin quadruple play operator, GOcontinued to increase its customer base across key rowthareas includin mobile, TV, and Internet as well as businessrelated services like data networkin solutions, business IPservices, manaed and co-location facilities.

500,000+CUSTOMER

CONNECTIONS


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12 COMMERCIAL REVIEW

COMMERCIAL REVIEW

2015 WAS THE YEAR IN WHICH THE FUTURE ARRIVEDIn April, GO launched a 50 million investment in Fibre-To-The-Home. A real fibre network with fibre connected directly intoour customers premises, which will revolutionise how peopleuse the Internet. The resultin dramatic increase in speed anddata capacity will, not only build on GOs hih-quality Internetservice, but will also vastly improve our customers TV and

amin experience. It will also herald the Internet of Thins, anew era in which many more devices both at home and at workwill be connected to the Internet. In terms of entertainment,communication, home security, safety and enery efficiency,amon other areas, we will all be able to enrich our lives.

Followin the April announcement, we have continued to reistersinificant proress in the rollout of Fibre-To-The-Home. A numberof localities, includin Sliema, St Julians, Gira, Ta Xbiex, Piet,Msida as well as parts of Lija, Attard and Melliea have alreadyseen some 27,000 households passed. Our Internet customersin Fibre-To-The-Home areas have seized the opportunity touprade to Fibre. While clearly a very sinificant investment, it is

equally clear that the demand for Internet speed and capacity isset to row exponentially. In this new era, GO is the only nationalprovider which is investin in a future proof network to deliver anunmatched Internet service in Fibre areas.


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Fibre was not the only major investment which GO committedto in 2015. Durin the past year we also launched our 4Gmobile Internet network. Our network is, in fact, the only local4G network which is fully connected by a fully resilient fibrenetwork. This has a sinificant effect not only on the quality ofservice experienced by customers but, most importantly, on itsresilience. While no system is 100% immune to faults, GOs fibre-

connected 4G network delivers an unmatched service, especiallyin inclement weather.

Aside from these major investments, and resultin new services,which will further cement GOs position as the leadin providerof communications services in Malta, 2015 has been particularlybusy on a number of other fronts. TV remains a key area ofvalue for GO, particularly our Premium Sports channels and GOStars HD, which provides the very latest and best TV drama andmovies. GO has continued to invest in more enriched content aswell as in providin customers with more flexible ways to accessTV prorammes wherever they are.

A clear example of this stratey came with GOs investmentto secure the rihts for the UEFA Champions Leaue until2018. This was accompanied by the launch of our ChampionsLeaue mobile App, available, for free, to GO Sports PremiumInteractive TV residential subscribers. This App ives customersaccess to live text updates, in-match video clips and hihlihts,in-depth statistics and live scores on their smart phones andtablets, further complementin the live TV available on mobiledevices throuh TV Anywhere and the functionality provided tocustomers in their homes throuh Interactive TV. Throuhout2015, GO Stars also continued to broadcast the worlds bestsport includin Premier Leaue, Serie A, Formula One, Ruby, and

Tennis and the very latest TV drama. Mad Men, Downton Abbeyand House of Cards were just some of the lobal hits, aired inMalta by GO, normally within hours of their oriinal broadcast inthe United States or United Kindom.

1. Set up at St Elmo for Valletta Summit.2. Fibre cables connectin to server at Fort St Anelo for CHOGM.

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COMMERCIAL REVIEWCONTINUED

GOs determination to provide the best TV experience in Maltawas rewarded with a Best Buy Award for offerin the best

value for money diital television service for both local andinternational TV channels in Malta. The award was based on anindependent survey on a representative sample of the Maltesepopulation carried out by Swiss oranisation Icertias.

The onoin focus on providin the best possible customerexperience was also evidenced by our updates to the Limitlessmobile plans. These were simplified into three plans; LimitlessOne, Limitless Two and Limitless Three. Startin from just 24 amonth, and introducin the SIM only concept to Malta, all theseplans include as a minimum, limitless calls to all GO mobile andfixed lines, 1GB of data, and free calls and SMS to other networks.

Over the past year there has also been considerable investmentin cross trainin our Call Centre staff on both Customer Careand Tech Support. This means that customers who contact uswith any queries and more likely to have their concerns dealt with

by the first person they speak to. In addition to improvin thecustomer experience, this exercise has also made our Call Centre

more efficient, enablin us to answer more calls, quickly.

Our investments in product improvement were, of course,supported by a number of successful marketin campains andpromotions. These raned from doublin of data bundles tonew Pay As You GO customers, ivin free access to GO Sportsand GO Stars HD to all TV customers for limited periods, andofferin customers who subscribe to GOs Limitless Home PackInteractive packaes all the benefits which the service offers forfree for the first two months. Customer promotions have alsoenabled us to thank and reward some of our Premium Sportscustomers with the thrillin experience of watchin live PremierLeaue and Serie A matches and enjoyin a fantastic holiday in

The Seychelles. All of this, toether with many other initiatives,have all contributed to another successful year in which GOcontinued to row customer numbers and market share, withmore than 500,000 customer connections across ourproduct portfolio.

COMMERCIAL REVIEW

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The end of 2015 also saw the openin of GOs new conceptstore at the PAMA shoppin villae. Apart from a new modern

desin, the outlet delivers a brand new retail concept, includinan innovative intellient queuin system, allowin customers tocomfortably wait to be served whilst tryin out the latest smartphones and tablets.

GOs success in the consumer sement has been matched bya positive year in the business sement, where we also continueto innovate and provide value across all our products whichare tailored to meet the needs of small, medium and larebusinesses operatin in, and from, Malta. A notable successin 2015 was our selection as the telecoms provider for theValletta Summit and Commonwealth Heads of GovernmentMeetin, both of which were held towards the end of the year.

These two lobal events required a world-class communicationsinfrastructure to support the needs of both the politicaldeleations attendin and the international media, acrossmultiple venues.

Another hih profile success was the areement sined withBank of Valletta to provide the bank with a nationwide dedicated

Giabit fibre network, which will future proof its communicationsinfrastructure, enablin it to deliver more interactive services toits customers. GOs reputation and relationship with the businesscommunity, which it also serves throuh the data, IP, manaedand co-locations services provided successfully by BMIT, wasfurther strenthened throuh its support for a number of hihprofile events includin the Malta iGamin Seminar and EYsMalta Open For Business Conference.

2015 has, once aain, proved to be an excitin year for GO.We continue to evolve and successfully promote our existinproduct portfolio while at the same time innovatin to meet theever rowin expectations of customers. Simultaneously, we

are makin the necessary investments to secure a viable andsuccessful future.

1 6.Our new outlet at the PAMAshoppin villae delivers an innovativeretailin concept, includin an intellientqueuin system, and provides customerswith the opportunity to try out the latestsmart phones and tablets.

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16 FIBRE-TO-THE-HOME


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In April 2015, GO launched Fibre-To-The-Home (FTTH)brinin the next eneration of Internet services to Malta.The five year 50 million roll out of fibre will deliver vastlyimproved speeds and data capacity, enablin a numberof new excitin possibilities in areas such as Ultra HihDefinition TV, cloud services and hih-end amin. ByDecember 2015, over 27,000 homes have already beenpassed across various localities includin Sliema, St Julians,Ta Xbiex, Piet, Msida, Attard, and Mtarfa.

50MIN FIBRE-TO-THE-HOME

INVESTING


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18 GO IN THE COMMUNITY

As Maltas leadin provider of communications services, GOplays a key strateic role in the countrys economy. Our morethan 500,000 customer connections mean that we have arelationship with practically every household and business inMalta. This fact places on GO, not only a responsibility to deliverthe best possible products and services, but also to support theCommunity more broadly.

Throuhout 2015, GO continued to support the work of theMalta Community Chest Fund (MCCF) which remains Maltasprimary charitable oranisation, helpin thousands of people inneed every year. GOs onoin support for MCCF has been both

technical, providin services and infrastructure, and financial.From Januarys Citrus Festival at San Anton Palace throuh toDecembers record breakin l-Istrina at the Cottonera SportsComplex, GO has been an enabler and supporter of the Fundswork, playin its part in helpin those in need.

GOs corporate support for the Community is backed up by thepassionate commitment of many of our employees. Throuhthe GO Cares Fund employees donate part of their salaries,donations which are matched by the Company towards oodcauses. In the past year, this initiative has supported animalcharities, childrens homes, and homes for the elderly. The focushas not only been on Malta but also further afield with fundsraised helpin Caritas to build new playrounds for childrenwhose homes and lives were shattered by the Nepal earthquake.

This joint effort between GO and its employees is not just aboutraisin money. Its also about ivin time. Throuhout the year,

employees ive thousands of hours to support the causes theyare passionate about, with GOs full support. This includes morethan 400 hours of work which are required every Christmas toset up the communications infrastructure for l-Istrina.

GOIN THE

COMMUNITY

1, 3, and 7. The GO Cares Employee Fund,to which GO staff contribute both fromtheir salaries and time, oranises variousevents throuhout the year. Amonthese, in 2015, the Fund oranised a visitto the National Aquarium for children

from St Teresa Home in urrieq, StJoseph Home in abbar and St JosephHome in Santa Venera (7),and a dayof activities for the elderly residentsat Roseville home in Attard (1 and 3).

2. Her Excellency Marie Louise ColeiroPreca, President of Malta, paid anofficial visit to GO p.l.c. in May 2015.GO is a principal supporter of the MaltaCommunity Chest Fund providincommunications services and financialsupport to many of the oranisations

fund raisin activities, includin theannual Citrus Festival and l-Istrina.

4, 5 and 6. Throuhout 2015, GOcontinued to provide sinificanttechnical and financial support to

the Malta Community Chest Fund(MCCF) which remains Maltas primarycharitable oranisation. This includedsupplyin the entire communicationsinfrastructure for l-Istrina.

8. A roup of employees, led bySenior HR Manaer JosephineGrima, representin the GO CaresEmployee Fund presented a donationof 5,000 to Dar tal-Providenza,durin the homes annual New YearsDay fund raisin marathon.

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Helpin those in need will continue to be one of GOs priorities in2016, durin which time we will also be increasin our focus onchildren, particularly literacy. This, however, is by no means thefull extent of GOs contribution to the Community. Our supportfor sports and cultural activity will also continue. A hihliht of2015 was GOs sponsorship of the Joseph Calleja Concert whichalso featured Anastacia and provided a unique opportunity fora number of up and comin Maltese performers to showcasetheir talents to a much wider audience. On the sportin front,GO also focused on helpin Maltese talent to compete and shinealonside their international peers, such as in the RC44 VallettaCup sailin competition.

In 2015, GO also made sinificant contributions to numerousevents which provided the business community with bothvaluable insihts and networkin opportunities. As the drivers ofproress, entrepreneurs and business leaders need access to theriht information and contacts to help their business row. Eventssuch as the EY Conference, which also includes the publicationof the results of EYs annual Malta Attractiveness Survey, and theMalta iGamin Seminar, are amon those which deliver on thisfront and which GO has supported.

Lookin forward, GO will remain an active participant in Maltaseconomic, social, and cultural life, committed as it is to deliverin

a better future for all.

HELPING THOSE IN NEED

WILL CONTINUE TO BE ONE

OF GOS PRIORITIES IN 2016.

4 7

8

5 6


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20 4G NETWORK


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In December 2015, GO launched Maltas only fully fibreconnected 4G network, which delivers unrivalled superfastand reliable mobile Internet. This means that GO is nowable to offer customers a unique experience both in termsof speed and reliability. The fact that the network is fullyfibre connected means it is much more resilient and canscale up seamlessly as demand increases.

MALTAS ONLYFULLY FIBRE CONNECTED

4G NETWORK


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22 BOARD OF DIRECTORS

BOARD OF DIRECTORS

DEEPAK PADMANABHANCHAIRMAN

An Honours Enineerin raduate inElectronics, with a Post Graduate Diploma inComputer Communications and Networks,

has over twenty two years of industryexperience in telecommunications, includinwork on merers and acquisitions, strateyand investments and value creation.

FRANCIS GALEA SALOMONECOMPANY SECRETARY

Holds a bachelors deree in InternationalBusiness and a Masters deree in EuropeanStudies from the University of Kent(Canterbury), also read law at the University

of Malta. Acts for a number of local andinternational clients in the bankin, insuranceand financial services sectors and lectures atthe Institute of Financial Services Providers.Board member of various companies.

NIKHIL PATIL

Director of Stratey and Investments atEmirates International Telecommunicationsand member of the Executive Committee atGO and Board Member at BMIT. Completedhis bachelors in Mechanical Enineerin fromthe University of Mumbai, holds a Masters inIndustrial Enineerin from Georia Institute ofTechnoloy and an MBA from IMD, Switzerland.

BRIGITTE ZAMMIT

General Counsel and Head of Leal andReulatory Affairs for Emirates InternationalTelecommunications (EIT). An alumni ofIMD, Switzerland and the Said BusinessSchool, Oxford, UK. Holds a Doctor of Laws

from the University of Malta and a Master ofLaws in Computer and TelecommunicationsLaw from the University of London. In 2010she co-authored a book on cross-borderamblin law and policy.

JAMES KINSELLA

Graduated in arts from Haverford Collee,Philadelphia, USA. Started his career in thefield of international journalism and movedrapidly to occupy senior manaementpositions within several media companies.Authored an award winnin book on mediaand contributed to several other publications.

THE NOBLE PAUL TESTAFERRATAMORONI VIANI

A Director of Aquasun Services L imited, withresponsibility for market research, contractinwith tour operators, administration and property.Also a Director of Moroni Investments, Circles

Limited, Euro Appliances Company Limited,MACAPPS Limited, Spinola Hotels Limited andSt Geores Park Company Limited.

PAUL FENECH

Owner and founder of Classic GroupLimited, where he is Executive Chairman.He is also the president of the RepublicStreet Business Community and active

member of the Valletta BusinessCommunity Committee as well asVice President, and founder, of theValletta Alive Foundation.

SAVIOUR BALDACCHINO

An enineer by profession, and currentlyservin on a number of public boards, hehas occupied various manaerial posts.Was involved in a number of key projects

such as the first satellite earth station,information technoloy implementation andformed part of the business developmentadvisory team at Maltacom.

NORBERT PRIHODA

Occupies a senior position with responsibilityfor EITLs Portfolio Group, focusin on creatinshareholder value, from transformation,restructurin and manain risk, as well asfacilitatin execution of improved operationalstrateies focused on topline rowth. Graduatedin International Business Manaement andconcluded his PhD studies in 2005.


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The Directors are pleased to present their report toether withthe financial statements of the Company for the year ended on31 December 2015.

PRINCIPAL ACTIVITIESThe Group is Maltas leadin interated telecommunicationsservices provider and its hih speed networks form the backboneof the islands modern communications infrastructure. Theservices provided by the Group include fixed-line and mobiletelephony, data and TV services for consumers and businessclients. The Group also provides business clients with datacentre facilities and ICT solutions.

Insofar as their electronic communications operations areconcerned, the Company and certain of its subsidiary andassociated companies are reulated by and are subject to theprovisions of the Electronic Communications (Reulation) Act,2004 and reulations issued thereunder.

BUSINESS REVIEWA review of the business of the Group durin the year underreview, events which took place since the end of the accountinperiod and an indication of likely future developments are ivenin the Chief Executive Officers Review on pae 7 of the

Annual Report.

REVIEW OF FINANCIAL PERFORMANCE2015 has been a positive year for GO as the Group is reapin thebenefits of the stratey it embarked upon a few years back.

Durin the year GO completed the spin-off of its property arm,Malta Properties Company p.l.c. (formerly known as MaltaProperties Company Limited), which as of last November isquoted separately on the Malta Stock Exchane. It is encourainto see the achievement of a major milestone followin thedevelopment and implementation over a number of years of

a stratey aimed at deliverin value to shareholders from theGroups extensive property portfolio. As a result of the spin-offshareholders enjoyed a net dividend of 0.3313, the hihest inthe Companys history.

Back to the Groups core business, competition in thetelecommunications sector remains intense, whilst consumerbehaviour remains in a state of transition, driven by the rowinconverence of telecommunications, information technoloy,media and entertainment as people access the Internetfrom anywhere and at any time usin a multitude of devices.Domestic operators not only compete aainst each other buthave to contend with competin services which are available

free of chare throuh applications over the Internet providedby oranisations with a lobal reach. Innovation and a positivecustomer experience are crucial to succeed in suchan environment.

At the core of GOs business model is a determination to striveto satisfy the needs of customers and a commitment to delivera customer experience that is second to none. For this reasonGO continues to invest heavily in both innovation and customerexperience. In order to better pursue a holistic approach toconsumers telecommunication needs, durin the year underreview the Group mered its mobile business into GO p.l.c.,strenthenin GOs operations and providin better focus onivin customers access to secure and always-available networksthat will enable them to enjoy service offerins seamlessly overwired and wireless networks. This stratey is deliverin oodresults as can be confirmed from an analysis of the financialperformance for the financial year ended 31 December 2015.

The Group is reportin an operatin profit of 27.8 million, anincrease of 27.9% over the prior year result of 21.8 million. Thisresult was achieved from a combination of increased revenueand reduction in costs. Both years include items consideredto be of unusual nature, size or incidence relatin to voluntaryretirement costs and provision for pensions. Normalised EBITDAincreased by 7.3% to 52.8 million from 49.2 million in 2014.The Group achieved positive results in revenue eneration.At 123.7 million revenue is 1.2% ahead of the comparative year

as the Group manaed to row revenue from retail activities,which rowth made up for the decline in income from wholesaleactivities, a direct consequence of reulatory intervention.Whilst retail revenue from leacy fixed voice service continuedto decline, GO experienced rowth in all other retail sectors,particularly mobile and cloud-based services. Attractive bundlinpropositions continue to drive the stron performance at theretail level whilst business is positively reactin to innovativecloud based services.

Cost of sales, administrative and related costs, excludin itemsof unusual nature, size or incidence, amounted to 96.3 million

(2014: 99.1 million). The overall reduction of 2.8 million (2.8%)is the result of continued roup-wide effort to drive down costswithout compromisin on customer experience.

Durin the year the company was compelled to reclassifyits investment in Forthnet from non-current asset classifiedas held for sale to investment in associate. This chane inclassification is mandatory because accountin standards clearlystipulate that any process to sell an asset classified as held forsale must be completed within twelve months. As the politicaland macroeconomic situation in Greece remains challenin itwas not possible to pursue the sale option and the investmentis therefore bein reclassified. Reclassification triers equity

accountin which implied that the remainin investment inForthnet, amountin to 6.6 million, had to be completely writtendown to a value of nil as a prior year adjustment.

DIRECTORS REPORT


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24 DIRECTORS REPORT

REVIEW OF FINANCIAL PERFORMANCE CONTINUEDOn a positive note, the investment in Cablenet is proressinin line with expectations, whilst the Cypriot economy is alsoshowin positive sins of recovery. This implied an upside of7 million in the value of GOs options to convert its loan toCablenet into equity and to further acquire majority control of thecompany. GO exercised these options in January 2016.

As a result of the reclassification of the investment in Forthnet,the prior year profit before tax has been restated to 13.7 million,whilst the increase in value of GOs options to invest further inCablenet helped achieve a profit before tax for the year ended31 December 2015 of 34.2 million. The earnins per shareamounted to 0.261 as aainst 0.079 as restated for 2014.

Cash enerated from operations amounted to 36.8 million,a decrease of 3.6 million over 2014, mainly as a directconsequence of the spin-off process and the balances betweenGO and Malta Properties Company p.l.c.. In 2015 the Groupsinvestments amounted to a cash outflow of 33.4 million, ofwhich 7.5 million represent additional investment in Cablenet.Investments in property, plant, equipment and intanible assetsamounted to 25.9 million, 5.8 million more than the valueinvested in 2014, as the Group maintains an intensive investment

proramme throuh which it is upradin its various networksand launchin new technoloies which enable the provisionof improved services and innovative products. This year GOlaunched its 4G network whilst it also maintained momentum inthe continued rollout of its Fibre-to-the-Home (FTTH) network.The rollout of the 4G network will be complete durin the firsthalf of 2016, whilst the investments in FTTH will be maintainedin the comin years. Throuh these investments GO will ensurethat its customers continue to enjoy the best possible fixed-lineand mobile broadband experience.

Durin 2015 GO reduced its borrowins by 9.6 million as it did

not contract any new facilities and paid dividends amountin to7.1 million. Whilst the Groups cash and cash equivalents werereduced from a positive 11.6 million as at December 2014 toa neative 3.6 million as at December 2015, GO has a loanof 16 million receivable from Malta Properties Company p.l.c.,which loan will be repaid latest in 2017, whilst GO also enjoysadequate facilities in place to maintain its investment proramme.

GOs business model is deliverin results as GO continues toservice in excess of 500,000 customer connections, makinit the larest customer base of any operator on the islands.GO also continues to enjoy year-on-year rowth in customerconnections as rowth in broadband, TV and mobile more than

compensate for the decline in traditional fixed voice connections.Equally encourain is the annual rowth in the number of

customers adoptin bundles of services across fixed, broadband,TV and mobile. The loyalty shown by customers in GOsproduct portfolio continues to deliver robust levels of revenues,profitability and cash eneration from core operations. Within thishihly competitive environment these results continue to auurwell for GO to retain a stron presence in the local market acrossall product lines and to remain the leadin telecommunicationsservices provider and operator of choice, offerin the mostextensive product rane.

FINANCIAL POSITIONFollowin another year of robust operatin performance,shareholders funds as at year end amounted to 92.1 millionin spite of a dividend distribution of 7.1 million in May and afurther distribution of 33.6 million as part of the spin-offprocess. The Groups net asset value per share stands at 0.91,whilst the Groups equity position stands at 1.95x the Groups netdebt position.

The Groups total asset base stands at 207.6 million, a reductionof 9.7 million over the prior year. The main differences overlast year are directly related to the spin-off process which sawa reduction in land and buildins (and investment property) of51 million and the creation of a loan receivable from Malta

Properties Company p.l.c. of 16 million. The Groups total assetbase is 44.4% funded throuh equity (2014: 47.6%).

In September 2014 GO concluded the acquisition of 25%shareholdin in Cablenet Communication Systems Limited, acable company incorporated and operatin in Cyprus, in returnfor a loan of 12 million which GO extended to Cablenet byDecember 2015. This loan is interest free up to 31 December2017 and durin this period GO enjoys the option to convertthis loan into equity, part of a path that can see GO ownin51% of the share capital of Cablenet. As Cablenet continues toperform well and the Cypriot economy continues to show sins

of recovery, the net value of these options increased from 0.3million as at December 2014 to 7.3 million as at December2015. GO exercised these options in January 2016.

The Groups current assets amounted to 44.8 million (2014:50.3 million) and are mainly represented by receivables of31.4 million (2014: 30.3 million), inventories of 9.7 million(2014: 7.5 million) and cash of 2.7 million (2014: 12.5million). The increase in inventory is temporary and directlyrelated to onoin investments, whilst the reduction in liquidityis directly related to GOs investment proramme, which wasfunded entirely from internally enerated resources as a result ofa healthy liquidity position at the beinnin of the year and robust

operational performance.

DIRECTORS REPORTCONTINUED


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DIRECTORS REPORT CONTINUEDFINANCIAL POSITION CONTINUEDTotal liabilities increased from 113.8 million (restated) as atDecember 2014 to 115.5 million as at December 2015. Thereis also a shift from non-current liabilities to current liabilities asnon-current liabilities decreased from 58.9 million to 50.5million, whilst current liabilities increased from 55 million to64 million. However, both the shift to current liabilities as wellas the increase in total liabilities is deemed to be temporary anddirectly related to the current investment proramme whichpeaked durin the year under review, mainly as a result of theinvestment in 4G.

Continued stron operational performance, fundinarranements in place and the scheduled repayment of the loanof 16 million by Malta Properties Company p.l.c. will continue toallow the Group to fund its investments in technoloy, honour itsobliations with its bankers and pursue new investment initiativesaimed at increasin shareholder value.

The Directors recommend that at the forthcomin AnnualGeneral Meetin, the shareholders approve the payment of a netdividend of 0.10 per share (after taxation) such dividend to bepayable on 13 May 2016. Total distributions relatin to this years

operations amount to 0.10 per share.

The amount of 10,131,049 has been transferred to the dividendpayment reserve.

Retained profits carried forward at the balance sheet dateamounted to 33.6 million (2014: 28.8 million as restated) forthe Group and 38.7 million (2014: 59.2 million as restated) forthe Company.

BOARD OF DIRECTORSThe Directors who served on the Board durin the year under

review or up to the date of this report are listed hereunder. Noneof the Directors in office durin the year or at the balance sheetdate held an executive appointment with the Company orits subsidiaries.

Mr Deepak Padmanabhan (Chairman)Mr James KinsellaMr Nikhil PatilMr Norbert PrihodaMr Paul FenechThe Noble Paul Testaferrata Moroni VianiMr Saviour BaldacchinoMs Briitte Zammit (appointed 30 September 2015)

Mr Yasser Zeineldin (resined 30 September 2015)

In terms of Article 58.2 of the Articles of Association, the termof appointment of the Directors still in office expires at theforthcomin Annual General Meetin.

The Noble P. Testaferrata Moroni Viani, Mr S. Baldacchinoand Mr P. Fenech offered themselves for election at theSeventeenth Annual General Meetin for the three seats onthe Board of Directors, and were elected to represent theCompanys shareholders.

Of the Directors of the Company, Mr D. Padmanabhan and theNoble P. Testaferrata Moroni Viani (toether with Mr Y. Michaelides Chief Executive Officer) were actin as Directors of InnovateSoftware Limited.

Mr D. Padmanabhan (toether with Mr Y. Michaelides Chief Executive Officer) were actin as Directorsof GO Data Centre Services Limited.

Mr D. Padmanabhan (toether with Mr Y. Michaelides Chief Executive Officer) were also actin asDirectors of Forthnet S.A.at 31 December 2015.

Mr N. Patil and Mr N. Prihoda (toether with Mr Y. Michaelides

Chief Executive Officer and Mr J. Attard Chief TechnicalOfficer) were actin as Directors of the followin subsidiarycompanies at 31 December 2015: BMIT Limited, Bellnet Limitedand BM Support Services Limited.

Mr N. Patil (toether with Mr Y. Michaelides Chief ExecutiveOfficer and Mr E. Brincat Chief Finance Officer) were actinas Directors of Cablenet Communications Systems Limitedat31 December 2015.

None of the Directors have service contracts with either theCompany or its subsidiaries.

REMUNERATION COMMITTEE ANDCORPORATE GOVERNANCEThe activities of the remuneration committee and the Groupsarranements for corporate overnance are reported onpaes 28 to 35.

DIRECTORS RESPONSIBILITIESThe Directors are required by the Companies Act (Cap 386 ofthe Laws of Malta) to prepare financial statements in accordancewith International Financial Reportin Standards as adopted bythe EU which ive a true and fair view of the state of affairs of theCompany as at the end of each reportin period and of the profit

and loss for that period.


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26 DIRECTORS REPORT

DIRECTORS RESPONSIBILITIES CONTINUEDIn preparin the financial statements, the Directors areresponsible for:

Selectin and applyin consistently suitable accountin policies; Makin accountin judments and estimates that are

reasonable; and Ensurin that the financial statements are prepared on the

oin concern basis unless it is inappropriate to presume thatthe Company will continue in business as a oin concern.

The Directors are also responsible for desinin, implementinand maintainin such internal control as they deem necessaryfor the preparation of financial statements that are free fromfinancial misstatements, whether due to fraud or error.

INFORMATION PROVIDED IN ACCORDANCE WITHLISTING RULE 5.70.1

There were no material contracts to which the Company, orany of its subsidiaries was a party, and in which anyone of theCompanys Directors was directly or indirectly interested.

GOING CONCERNThe Directors, as required by the Listin Rule 5.62, have

considered the Companys operatin performance, the balancesheet at year end, as well as the business plan for the cominyear, and they have a reasonable expectation that the Grouphas adequate resources to continue in operational existence forthe foreseeable future. For this reason, in preparin the financialstatements, they continue to adopt the oin concern basis inpreparin the financial statements.

AUDITORSThe auditors, PricewaterhouseCoopers, have expressed theirwillinness to continue in office.

A resolution to re-appoint the auditors and to authorise theDirectors to fix their remuneration will be proposed at theforthcomin Annual General Meetin.

INFORMATION PROVIDED IN ACCORDANCE WITHLISTING RULE 5.64

The authorised share capital of the Company is three hundredforty nine million four hundred and five thousand eihthundred euro (349,405,800) divided into six hundred million(600,000,000) shares of fifty eiht point two three four threeeuro cents (0.582343) each share.

The issued share capital of the Company is fifty eiht million nine

hundred and ninety seven thousand, four hundred and fifty threeeuro and fifty one euro cents (58,997,453.51) divided into onehundred and one million three hundred and ten thousand four

hundred and eihty eiht (101,310,488) ordinary shares of fiftyeiht point two three four three euro cents (0.582343) eachshare, which have been subscribed for and allotted fully paid up.

The issued shares of the Company consist of one class ofordinary shares with equal votin rihts attached.

The Company did not modify in any way the structure of its sharecapital durin the year. No further issues were made and neitherdid the Company acquire ownership of or any rihts over anyportion of its issued share capital.

The Directors confirm that as at 31 December 2015, onlyEmirates International Telecommunications (Malta) Limited helda shareholdin in excess of 5% of the total issued share capital.

Any shareholder holdin in excess of 40% of the issued sharecapital of the Company havin votin rihts may appoint theChairman. In the event that there is no one sinle shareholderhavin such a shareholdin, the Chairman shall be elected byshareholders at the Annual General Meetin of the Company.

The rules overnin the appointment of Board membersare contained in Clause 55.3 of the Companys Articles of

Association as follows:

The Directors shall be appointed as set out hereunder:

(a) A Shareholder holdin not less than 12% (twelve per cent)of the issued share capital of the Company havin votinrihts shall be entitled to appoint one Director for every such12% holdin by letter addressed to the Company. Providedthat anyone Shareholder who, pursuant to the provisions ofsub article 55.1 (a) is entitled to appoint the Chairman, shallfor the purposes of the appointment of Directors in terms ofthis sub-article have 12% of his holdins deducted and may

accordinly only appoint Directors with the residual balanceof shares havin votin rihts after such deduction.

(b) Any Shareholder who does not qualify to appoint Directors,in terms of the provisions of pararaph (a) of this sub-article55.3, and who has not areated his holdins with thoseof other Shareholders for the purposes of appointin aDirector(s) pursuant thereto, shall be entitled to participateand vote in an election of Directors to take place once inevery year at the Annual General Meetin of the Company.

DIRECTORS REPORTCONTINUED


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DIRECTORS REPORT CONTINUEDINFORMATION PROVIDED IN ACCORDANCE WITHLISTING RULE 5.64 CONTINUED

(c) Shareholders entitled to appoint Directors pursuant to theprovisions of pararaph (a) sub-article 55.3 shall not beentitled to participate in the election of Directors in termsof pararaph (b) of this sub-article.

(d) Members shall be entitled in lieu of votin at an election ofDirectors, to areate their shareholdins, and to appointone Director for every twelve per cent (12%) shareholdinhavin votin rihts held between them, by letter addressedto the Company in accordance with the provisions of sub-article 55.3 (a); and for the purposes of this pararaph andvotin rihts of persons entitled to vote pursuant to theprovisions of sub-article 55.3 (b) remainin after the exerciseof such vote may areate such rihts as aforesaid.

Any amendment to the Companys Memorandum and Articlesof Association has to be made in accordance with theCompanies Act.

Without prejudice to any special rihts previously conferredon the holders of any of the existin shares or class thereof,

any share in the Company may be issued with such preferred,deferred, or other special rihts or such restrictions, whether inreard to dividend, votin, return of capital or otherwise as the

Board of Directors may from time to time determine, as providedfor in Clauses 3.2 and 3.3 of the Articles of Association, as lonas any such issue of Equity Securities falls within the authorisedshare capital of the Company.

The Company may, subject to the applicable restrictions,limitations and conditions contained in the Companies Act,acquire its own shares and/or Equity Securities.

The Company confirms that only one chief officer has anindefinite contract that includes a severance payment clause.

Pursuant to Listin Rules 5.64.2, 5.64.4, 5.64.5, 5.64.6, 5.64.7 and5.64.10 it is hereby declared that, as at 31 December 2015, noneof the requirements apply to the Company.

We, the undersined, declare that to the best of our knowlede,the financial statements prepared in accordance with theapplicable accountin standards, ive a true and fair view ofthe assets, liabilities, financial position and profit or loss of theCompany and its subsidiaries included in the consolidationtaken as a whole, and that this report includes a fair review of theperformance of the business and the position of the Companyand its subsidiaries included in the consolidation taken as a

whole, toether with a description of the principal risks anduncertainties that they face.

Mr Nikhil PatilDirector

Mr Deepak PadmanabhanChairman

Approved by the Board of Directors on the 11 February 2016 and sined on its behalf by:

Reistered officeGO

Fra Dieu StreetMarsaMalta

11 February 2016


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28 CORPORATE GOVERNANCE STATEMENT OF COMPLIANCE

A. INTRODUCTIONPursuant to the Malta Financial Services Authority Listin Rules,GO p.l.c. (the Company) whose equity securities are listedon a reulated market should endeavour to adopt the Codeof Principles of Good Corporate Governance (the Code) ascontained in Appendix 5.1 to Chapter 5 of the Listin Rules. Interms of the Listin Rules the Company is hereby reportin onthe extent of its adoption of the Code.

The Company acknowledes that the Code does not prescribemandatory rules but recommends principles so as to provideproper incentives for the Board of Directors (the Board) and theCompanys manaement to pursue objectives that are in theinterests of the Company and its shareholders. Good corporateovernance is the responsibility of the Board, and in this reardthe Board has carried out a review of the Companys compliancewith the Code durin the period under review, and herebyprovides its report thereon.

As demonstrated by the information set out in this statement,toether with the information contained in the Report of theRemuneration Committee to the Shareholders, the Companybelieves that it has, save as indicated herein the section entitledNon-Compliance with the Code, throuhout the period under

review, applied the principles and complied with the provisionsof the Code.

B. COMPLIANCEPrinciple 1: The BoardThe Board, the members of which are appointed by theshareholders, is primarily tasked with the administration ofthe Companys resources in such a way as to enhance theprosperity of the business over time, and therefore the value ofthe shareholders investment. The Board is composed of eihtDirectors (one of whom is the Chairman) all of whom are non-executive Directors.

The Board is in reular contact with the Chief Executive Officerand is continuously informed of any decisions taken by theExecutive Committee in order to ensure an effective contributionto the decision makin process, whilst at the same timeexercisin prudent and effective controls. Directors, individuallyand collectively, are of appropriate calibre, with the necessaryskill and experience to assist them in providin leadership,interity and judement in directin the Company towards themaximisation of shareholder value.

The Board deleates specific responsibilities to a number ofcommittees, notably the Remuneration Committee, the AuditCommittee and the Executive Committee, each of whichoperates under formal terms of reference approved by the Board.

Further detail in relation to the Committees and theresponsibilities of the Board is found in pararaph Principles 4and 5 of this statement.

Principle 2: Chairman and Chief Executive OfficerThe roles of Chairman and Chief Executive Officer are filled byseparate individuals, and the Chief Executive Officer is appointedby the Board for a definite period of time. Durin the periodunder review Mr Y. Michaelides continued in his office as ChiefExecutive Officer.

The responsibilities and roles of the Chairman and the ChiefExecutive Officer are clearly established and areed to by theBoard of Directors.

The Chairman is responsible to lead the Board and set itsaenda. The Chairman ensures that the Board is in receipt ofprecise, timely and objective information and also encouraesactive enaement by all members of the Board for discussion

of complex and contentious issues.

The Chairman also leads the Executive Committee, thecomposition of which is set out below, and whose main role andresponsibilities are to execute areed stratey and manae thebusiness. His role in this respect does not render his directorshipan executive role.

Principle 3: Composition of the BoardIn accordance with the provisions of the Companys Articlesof Association, the appointment of Directors to the Board isexclusively reserved to the Companys shareholders, except in so

far as appointment is made to fill a casual vacancy on the Board,and which appointment would expire at the Companys AnnualGeneral Meetin followin appointment. Any vacancy amon theDirectors may be filled by the co-option of another person to fillsuch vacancy. Such co-option shall be made by the Boardof Directors.

The Board has the overall responsibility for the activities carriedout within the Company and the Group and thus decides on thenature, direction, stratey and framework of the activities and setsthe objectives for the activities.

CORPORATE GOVERNANCE STATEMENT OF COMPLIANCE


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CORPORATE GOVERNANCE STATEMENT OF COMPLIANCE CONTINUEDB. COMPLIANCE CONTINUEDPrinciple 3: Composition of the Board CONTINUEDThe Board of Directors is currently chaired by Mr D. Padmanabhanand comprises eiht (8) non-executive Directors. The followinDirectors served on the Board durin the period under review:

Mr Deepak Padmanabhan (Chairman)Mr James KinsellaMr Norbert PrihodaMr Nikhil PatilMr Paul FenechThe Noble Paul Testaferrata Moroni VianiMr Saviour BaldacchinoMs Briitte Zammit (appointed 30 September 2015)Mr Yasser Zeineldin (resined 30 September 2015)

For the purposes of the Code, the non-executive Directorsare independent. The Company deems that, althouh Mr D.Padmanabhan has an employee and director relationship withthe controllin shareholder, in terms of Supportin Principle 3(vii)of the Code of Principles of Good Corporate Governance suchrelationship is not considered to create a conflict of interest such

as to jeopardise exercise of his free judment.

Principles 4 and 5:The Responsibilities of the Board and Board MeetinsThe Board has a formal schedule of matters reserved to it fordecisions, but also deleates specific responsibilities to variousboard committees and sub-committees, the most prominentbein the Audit Committee, the Remuneration Committee andthe Executive Committee. Directors receive board and committeepapers in advance of meetins and have access to the advice andservices of the Company Secretary. Directors may, in the courseof their duties, take independent professional advice on any

matter at the Companys expense. The Directors are fully awareof their responsibility always to act in the best interests of theCompany and its shareholders as a whole, irrespective of whoeverappointed or elected them to serve on the Board. As deleatedand monitored by the Board, the Company Secretary keepsdetailed records of all dealins by Directors and senior executivesof the Company and its subsidiaries in the Companys shares andall minutes of meetins of the Board and its sub-committees.

Durin the year under review the Board met nine (9) times.

On joinin the Board, a Director is provided with a presentationby the departmental heads on the activities of their respective

business unit in the Company and its subsidiaries. The Directorsreceive monthly manaement accounts on the Group financialperformance and position.

The Board has the responsibility to ensure that the activities areoranised in such a way that the accounts, manaement of fundsand financial conditions in all other respects are controlled in asatisfactory manner and that the risks inherent in the activitiesare identified, defined, measured, monitored and controlled inaccordance with external and internal rules, includin the Articlesof Association of the Company. The Board of Directors, throuhthe work carried out by the Executive Committee, continuouslyassesses and monitors the Companys operational and financialperformance, assesses and controls risk, and monitors competitiveforces in all areas of operation. It also ensures that both theCompany and its employees maintain the hihest standards ofcorporate conduct.

Board CommitteesAudit Committee

The Audit Committee supports the work of the Board in termsof quality control of the Groups financial reports and internalcontrols. The Audit Committee is currently chaired by Mr N. Patil,with the other members bein Ms B. Zammit and the Noble P.Testaferrata Moroni Viani. The Audit Committee is independentand is constituted in accordance with the requirements of theListin Rules, with the Noble P. Testaferrata Moroni Viani beinchosen as the member competent in accountin and/or auditin

in view of his experience in the field. The Internal Auditor ispresent at Audit Committee meetins. The Chief Finance Officerand the external auditors of the Company attend the meetinsof the Committee by invitation. Other executives are requestedto attend when required. The Company Secretary also acts asSecretary to the Audit Committee.

The Committee scrutinises and monitors related partytransactions. It considers the materiality and the nature of therelated party transactions carried out by the Company to ensurethat the arms lenth principle is adhered to at all times.

As part of its duties, the Committee receives and considersreports on the system of internal financial controls and the auditedstatutory financial statements of all companies comprisin theGroup. The Committee held three (3) meetins durin the year.The external auditors attended all of these meetins.

Remuneration Committee

The Committee is responsible for determinin and areein withthe Board the framework or broad policy for the Remunerationof the Companys chief officers, the Chairman of the Company,the Directors of the Board, and such other members as it isdesinated to consider. In determinin such policy, the Committeetakes into account all factors which it deems necessary, includin

the position of the Group companies relative to other companiesin the marketplace.


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B. COMPLIANCE CONTINUEDPrinciples 4 and 5: The Responsibilities of the Boardand Board Meetins CONTINUEDRemuneration Committee CONTINUED

The objective of such policy shall be to ensure that Directorsand chief officers are provided with appropriate incentivesto encourae enhanced performance and are, in a fair andresponsible manner, rewarded for their individual contributions tothe success of the Group companies. The Group RemunerationCommittee is currently chaired by Mr D. Padmanabhan, theother members bein the Noble P. Testaferrata Moroni Viani andMr P. Fenech. The Company Secretary, Dr F. Galea Salomone,acts as Secretary to the Remuneration Committee. The GroupRemuneration Committee met three (3) times in 2015. TheReport of the Committee to the shareholders is set out onpaes 34 and 35.

Executive Committee

The day-to-day manaement of the Company is led by theChief Executive Officer and supported by the Board of Directorsdirectly and throuh the Executive Committee (EC). The ECis equipped with the necessary decision-makin tools andstrict Board oversiht to facilitate the successful execution ofits duties. The EC provides oversiht, uidance and leadership

for the manaement of the business within the uidelines andapproval limits set from time to time by the Board of Directors.It recommends and forwards to the Board of Directors thosedecisions that are outside its approval limits.

The EC is currently chaired by Mr D. Padmanabhan with the othermembers bein Mr Y. Michaelides, Mr N. Prihoda, Mr E. Brincatand Mr N. Patil. The Company Secretary acts as secretary to theEC. The Committee held nine (9) meetins durin the yearunder review.

Principle 6: Information and Professional Development

The Board is responsible for the appointment of the ChiefExecutive Officer. The Chief Executive Officer, althouhresponsible for the recruitment and selection of seniormanaement, consults with the Remuneration Committee andwith the Board on the appointment of senior manaement.

On joinin the Board, Board members are informed in writin bythe Company Secretary of the Directors duties and obliations,relevant leislation as well as rules and bye-laws. In addition,Directors have access to the advice and services of the CompanySecretary and the Board is also advised directly, as appropriate, byits leal advisors. Directors are also provided with a presentationby the departmental heads on the activities of their respective

business unit in the Company and subsidiaries. The Directorsreceive monthly manaement accounts on the Groups financialperformance and position. The Company Secretary ensureseffective information flows within the Board, committees and

between senior manaement and Directors, as well as facilitatinprofessional development. The Company Secretary advises theBoard throuh the Chairman on all overnance matters.

Directors may, in the course of their duties, take independentprofessional advice on any matter at the Companys expense.The Company will provide for additional individual Directorstrainin on a requirements basis.

Principle 7: Evaluation of the Boards PerformanceThe Chairman of the Board informally evaluates theperformance of the Board members, which assessment isfollowed by discussions within the Board. Throuh this processthe activities and workin methods of the Board and eachcommittee member are evaluated. Amonst the thins examinedby the Chairman throuh his assessment are the followin: howto improve the work of the Board further, whether or not eachindividual member takes an active part in the discussions of theBoard and the committees; whether they contribute independentopinions and whether the meetin atmosphere facilitates opendiscussions. Under the present circumstances the Board doesnot consider it necessary to appoint a committee to carry out aperformance evaluation of its role as the Boards performance isfurthermore also under the scrutiny of the shareholders.

On the other hand, the performance of the Chairman is evaluatedby the Board of Directors of the ultimate controllin party, takininto account the manner in which the Chairman is appointed. Theself-evaluation of the Board has not led to any material chanesin the Companys overnance structures and oranisations.

Principle 8: CommitteesThe Remuneration Committee is dealt with under theRemuneration Report, which also includes the RemunerationStatement in terms of Code Provisions 8.A.3 and 8.A.4.

The Company has opted not to set up a Nomination Committee.Further explanation is provided under the section entitled Non-Compliance with the Code of this Statement.

Principles 9 and 10: Relations with Shareholders and with theMarket, and Institutional ShareholdersThe Company reconises the importance of maintainin adialoue with its shareholders and of keepin the marketinformed to ensure that its strateies and performance are wellunderstood. Durin the period under review the Company hasmaintained an effective communication with the market throuha number of Company announcements and press releases.

The Company also communicates with its shareholders throuhthe Companys Annual General Meetin (AGM). The Chairmanof the Board ensures that all Directors attend the AGM and thatboth the Chairman of the Board and the Chairman of the AuditCommittee are available to answer questions.

CORPORATE GOVERNANCE STATEMENT OF COMPLIANCE CONTINUED



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CORPORATE GOVERNANCE STATEMENT OF COMPLIANCE CONTINUEDB. COMPLIANCE CONTINUEDPrinciples 9 and 10: Relations with Shareholders and with theMarket, and Institutional Shareholders CONTINUEDBoth the Chairman and Chief Executive Officer also ensurethat sufficient contact is maintained with major shareholdersto understand issues and concerns. Apart from the AGM, theCompany communicates with its shareholders by way of theAnnual Report and Financial Statements and also throuhthe Companys website (www.o.com.mt) which also containsinformation about the Company and its business, includin anInvestor Relations section.

In addition, the Company holds meetins with stockbrokers andfinancial intermediaries at least twice a year, which meetinsusually coincide with the publication of financial statements.

The office of the Company Secretary maintains reularcommunication between the Company and its investors. Individualshareholders can raise matters relatin to their shareholdins andthe business of the Group at any time throuhout the year, and areiven the opportunity to ask questions at the AGM or to submitwritten questions in advance.

As provided by the Companies Act, 1995 minority shareholdersmay convene Extraordinary General Meetins.

Principle 11: Conflicts of InterestThe Directors are fully aware of their responsibility always to actin the best interests of the Company and its shareholders asa whole irrespective of whoever appointed or elected them toserve on the Board.

On joinin the Board and reularly thereafter, the Directorsare informed of their obliations on dealin in securities of the

Company within the parameters of law, includin the ListinRules, and Directors follow the required notification procedures.

Directors interest in the shareholdin of the Company:

Number of shares asat 31 December 2015

Mr Deepak Padmanabhan nilMr James Kinsella nilMr Nikhil Patil nilMr Norbert Prihoda nilMs Briitte Zammit nil

Mr Paul Fenech 130,995The Noble Paul Testaferrata Moroni Viani 78,394Mr Saviour Baldacchino 10,600

Mr P. Fenech has a beneficial interest in the Company of 130,995shares throuh the shareholdin of Classic Group Ltd. in GO p.l.c..

As at year-end, Mr S. Baldacchino had a beneficial interest in theCompany of 10,600 shares.

As at 31 December 2015, The Noble P. Testaferrata Moroni Vianihad a beneficial interest in the Company of 75,494 and 2,900shares throuh the shareholdin of Testaferrata Moroni Viani(Holdins) Ltd. and Testaferrata Moroni Viani Ltd. respectivelyin GO p.l.c.. He also had a beneficial interest in Forthnet S.A. of14,750 shares.

As at 31 December 2015, Mr D. Padmanabhan had a beneficialinterest in Forthnet S.A. of 71,536 shares.

None of the other Directors of the Company have any interestin the shares of the Company or the Companys subsidiariesor investees or any disclosable interest in any contracts orarranements either subsistin at the end of the last financialyear or entered into durin this financial year.

There were no other chanes in the Directors interest in theshareholdin of the Company between year-end and

9 February 2016.

Principle 12: Corporate Social ResponsibilityAs a major presence in the community, GO has always taken itscorporate social responsibility very seriously and, as in previousyears, in 2015 the Group has maintained a steady proramme ofactivities aimed at improvin the quality of life of its work forceand their families, as well as of the local community and societyat lare. L-Istrina was once aain an event which was heavilysupported by GO, not only in terms of a substantial donation butalso in terms of equipment, communications infrastructure andhundreds of man-hours, freely iven to ensure the success of this

annual fundraiser. GO also continued to support various NGOs,particularly animal welfare oranisations.

The Company retained a careful eye on environmentalconsiderations in all its activities, as well as ethical behaviourwith reards to its interactions with all its stakeholders.

It is always particularly encourain to note that while employeesupport for company-driven events is rowin from year to year, soare the number of personal initiatives taken, as this is very much inline with the Companys belief in a holistic approach to their work-life balance as well as strenthenin community team spirit.


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C. NONCOMPLIANCE WITH THE CODEPrinciple 3: Executive and Non-Executive Directors on the BoardAs explained in Principle 3 in Section B, the Board is composedentirely of non-executive Directors. Notwithstandin this, it isconsidered that the Board, as composed, provides for sufficientlybalanced skills and experience to enable it to dischare its dutiesand responsibilities effectively. In addition, no cases of conflict ofinterest are foreseen.

Principle 4: Succession Policy for the Board(code provision 4.2.7)This Code Provision recommends the development of asuccession policy for the future composition of the Board ofDirectors and particularly the executive component thereof, forwhich the Chairman should hold key responsibility.

In the context of the appointment of Directors bein a matterreserved exclusively to the Companys shareholders (exceptwhere the need arises to fill a casual vacancy) as explained underPrinciple 3 in Section B, considerin that every Director retiresfrom office at the AGM and on the basis of the Directors non-executive role, the Company does not consider it feasible to havein place such a succession policy.

Principle 6: Succession Plan for Senior ManaementAlthouh the Chief Executive Officer is responsible for therecruitment and appointment of senior manaement, theCompany has not established a formal succession plan. Thisis basically due to the fact that the appointment of seniormanaement is always discussed at the RemunerationCommittee and approved by the Board of Directors.

Principle 8 B: Nomination CommitteePursuant to the Companys Articles of Association, theappointment of Directors to the Board is reserved exclusively tothe Companys shareholders. Shareholders holdin not less than

12% (twelve per cent) of the issued share capital of the Companyhavin votin rihts shall be entitled to appoint one Director for

every such 12% holdin by letter addressed to the Company.The other shareholders are entitled to appoint the remaininBoard members at the AGM in accordance with the provisions ofthe Articles of Association. The nomination of a candidate by ashareholder is to be seconded by a shareholder or shareholdersholdin at least 15,000 shares.

Within this context, the Board believes that the settin up of aNomination Committee is currently not suited to the Companysince it will not be able to undertake satisfactorily its full functionsand responsibilities as envisaed by the spirit of the Code. TheCompany also considers that some of the functions of theNomination Committee (particularly those relatin to successionplannin and the appointment of senior manaement) arealready dealt with by the Remuneration Committee.

Principle 9: Conflicts between Shareholders (code provision 9.3)Currently there is no established mechanism disclosed inthe Companys Memorandum and Articles of Association totrier arbitration in the case of conflict between the minorityshareholders and the controllin shareholders. In any such casesshould a conflict arise, the matter is dealt with in the appropriatefora in the Board meetins, wherein the minority shareholders arerepresented. There is also an open channel of communication

between the Company and the minority shareholders via theoffice of the Company Secretary.

D. INTERNAL CONTROLSThe key features of the Groups system of internal controls areas follows:

OranisationThe Group operates throuh boards of Directors of subsidiarieswith clear reportin lines and deleation of powers. TheCompanys Chairman is also the chairman of the board ofDirectors of the Companys subsidiaries, except for BMIT Limited,

BM Support Services Limited and Bellnet Limited.

CORPORATE GOVERNANCE STATEMENT OF COMPLIANCE CONTINUED



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CORPORATE GOVERNANCE STATEMENT OF COMPLIANCE CONTINUEDD. INTERNAL CONTROLS CONTINUEDControl environmentThe Group is committed to the hihest standards of businessconduct and seeks to maintain these standards across all of itsoperations. Group policies and employee procedures are in placefor the reportin and resolution of fraudulent activities.

The Group has an appropriate oranisational structure forplannin, executin, controllin and monitorin businessoperations in order to achieve Group objectives. Lines ofresponsibility and deleation of authority are documented.

The Group and the individual companies comprisin it haveimplemented control procedures desined to ensure completeand accurate accountin for financial transactions and to limitthe potential exposure to loss of assets or fraud. Measures takeninclude physical controls, sereation of duties and reviews bymanaement, internal audit and the external auditors.

Risk identificationGroup manaement is responsible toether with each of thesubsidiary companies manaement, for the identification and

evaluation of key risks applicable to their areas of business. Theserisks are assessed on a continual basis and may be associatedwith a variety of internal or external sources includin controlbreakdowns, disruption in information systems, competition,natural catastrophe and reulatory requirements.

Information and communicationGroup companies participate in periodic strateic reviews whichinclude consideration of lon-term financial projections and theevaluation of business alternatives.

Monitorin and corrective actionThere are clear and consistent procedures in place for monitorinthe system of internal financial controls. The Audit Committeemeets reularly durin the year and, within its te

GO Plc. Annual Report 2015

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Transcript of GO Plc. Annual Report 2015