Go plc 29/3 - 213800V8BKIBDZ1U5X47

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Group cost of sales and administrative and related costs amounted to €171.2 million (2020: €165 million), an increase of €6.2 million of which €2.9 million relates to cost of goods and services sold and direct costs incurred in the generation of back-to-back incremental revenues.

Group earnings before interest, tax, depreciation and amortisation (EBITDA) amounted to €73.2 million (2020: €72.1 million), an increase of 1.5% compared to 2020.

The higher Group EBITDA generated coupled with a reduction in depreciation and amortisation charges of €1.1 million, contributed to a Group operating profit for 2021 of €23.5 million, equivalent to an increase of €2.2 million of 10.2% compared to 2020

Group profit for the year amounted to €10.4 million, a reduction of €3.6 million compared to the prior year which is mainly attributable to a one-off gain on investment of €3.1 million realised in 2020. Earnings per share amount to €0.098 (2020: €0.133).

Net cash generated from operations amounted to €67.8 million (2020: €63.7 million). The Group continued to invest on various fronts to provide customers with cutting-edge products and services and stay ahead of the ever-changing technological developments. Significant investments continued to be deployed towards the expansion of fibre networks in Malta and Cyprus, and a third submarine cable connecting Malta to mainland Europe and the Middle East, scheduled to go live in the second quarter of 2022.

The total investment activities across the Group resulted in a net cash outflow of €50.5 million (2020: €57.7 million), with €49.2 million being deployed in the acquisition of property, plant and equipment, and intangible assets, and €1.3 million in financial investments in subsidiaries and associates. At company level, net cash used in investing activities amounted to €28.1 million (2020: €24.8 million). At BMITT, cash deployed for property, plant and equipment amounted to €1.7 million, lower than the prior year due to the one-time payment of €4 million for the acquisition of the Zejtun Data Centre in 2020. Cablenet maintained similar levels of investment cash flows of 2020.

One of the key highlights of 2021 was the launch of GO’s €60 million unsecured bond on the Malta Stock Exchange with the total value of applications exceeding the €60 million limit threefold. The GO bond which followed a €40 million bond issued by Cablenet in 2020, brings the total funds raised by the GO Group on the local debt capital market to €100 million over a two-year period.

On a consolidated basis, proceeds from bank loan drawdowns amounted to €12 million (2020:€16.6 million) against which bank loan repayments amounted to €45.6 million (2020: €20 million), including the repayment of European Investment Bank loans through the bond proceeds. Total dividends paid to shareholders by the Group amounted to €24.8 million (2020: €12.2 million). Consolidated cash and cash equivalents as at end of year amounted to €34.1 million, an increase of €8.9 million compared to year end 2020.

Within a highly competitive environment, these results continue to augur well, as the Group seeks to retain a strong presence in its domestic market as well as grow its presence in Cyprus across all product lines, striving to remain the leading telecommunication services provider and operator of choice.

The Group continued to invest in training, development, and upskilling of its human resources to ensure the highest levels of customer service and operational excellence. Staff training and wellbeing costs for the year amounted to €698,000 (2020: €438,000). Total employee benefit expense for the year amounted to €34.8 million (2020: €37.3 million). The average number of persons employed by the Group during the year, including part-timers and students, amounted to 1,179 (2020:1,213).

The Group continues to retain a careful eye on environmental considerations in all its activities, as well as ethical behaviour with regards to its interactions with all its stakeholders. Both are explained in greater detail in the non-financial disclosures section on pages 6 to 16.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Group total assets stand at €368.6 million (2020: €357.4 million), an increase of €11.3 million over the prior year. The Group’s current assets amounted to €86 million (2020: €79.2 million) and are mainly represented by trade and other receivables of €36.4 million (2020: €39.3 million), inventories of €8.5 million (2020: €6.3 million) and cash of €39.9 million (2020: €33 million). Total liabilities increased from €231 million as at December 2020 to €258.7 million as at December 2021.

Financial position

The Group continues to maintain a healthy financial position with shareholders’ funds as at year-end amounting to €109.9 million (2020: €126.4 million), a decrease of €16.5 million compared to the prior year. The Group’s net asset value per share stands at €1.08 (2020: €1.25), whilst the Group’s Net Debt to Total Capital ratio stands at 53% (2020: 48%).

A strong and sustained operational performance and appropriate funding arrangements will allow the Group to continue to fund its investments in technology, honour its obligations with its lenders and pursue new investment initiatives aimed at increasing shareholder value.

Total dividend distributions during the year amounted to €0.23 per share. The Directors recommend that at the forthcoming Annual General Meeting, the shareholders approve the payment of a net final dividend of €0.09 per share (after taxation).

Non-financial statement in terms of the requirements of the Sixth Schedule to the Companies Act (Cap. 386)

GO’s Business Model

GO boasts a bright and successful 46-year legacy of doing what it does best – connecting Malta, its people, and businesses to what matters most to them. As the incumbent player in the Maltese telecommunications market, GO has long established itself as a strong and integral part of the Maltese community and contributed significantly to the success of the Maltese economy. It has taken a leading role as one of the largest investors in Malta’s digital infrastructure, which is critical for country’s digital transformation.

The sections within the Directors’ report termed “Principal Activities”, “Business Review”, “Review of Financial Performance” and “Our Principal Risks and Uncertainties” provide detailed information on the undertaking’s business model. The section Business Review refers to the Chief Executive Officer’s Review on pages 1 to 3 of the Annual Financial Report which highlights the business model and strategy in detail. In our view the required information on the undertaking’s business model has been included within the Annual Financial Report. The section of the Directors’ report termed “Our Principal Risks and Uncertainties”, presented below, contains a detailed analysis of the principal risks linked to GO’s business model and operations which potentially impact areas like environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters.

GO’s vision and commitment for the future is grounded on the following strategic pillars:

Take a lead role in delivering a true digital Malta where no one is left behind.

GO’s purpose is to ‘drive a digital Malta where no one is left behind’. It is defined by the digital transformation taking place across societies. It goes beyond the provision of products and services, or the roll-out of infrastructure. It is focused on the impact it wants to leave on societies in Malta and beyond. Digital technologies are reshaping the way one works, rests, plays, and interacts with others in exciting ways. Digital has quickly become a fundamental enabler and is critical to the current and future wellbeing of Malta and its people. It is a privilege and a huge responsibility for GO to be relied upon to provide critical services for individuals, organisations, and the whole country of Malta. Lives and livelihoods depend on the services it offers every day.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Not everyone is benefiting evenly from the digital revolution. Digital access and skills are key to a good life in today’s world. Everyone should have access to technology and the skills to benefit from and contribute to the digital revolution. Therefore, in addition to the investment in network infrastructure and technology, GO is also investing in digital education and skill building in order for Malta to thrive, grow demand for GO services and yield greater opportunities for innovation.

Delivering the best customer experience, cutting-edge products and services and exceptional value to customers

Embracing the digital revolution requires customer centricity. One of the strengths that sets GO apart from its competitors is its financial and operational ability backed by decades of experience, rolling out new networks and cutting-edge technologies to its customers. GO has invested heavily in its promise to ensure that every household has access to TrueFibre technology (FTTH). Today, GO’s FTTH network covers more than 170,000 households. This means that these households have the opportunity to enjoy the fastest, most resilient, and future-ready technology that exists today and which sets them up for many years to come. GO has invested more than €234 million in its infrastructure in the past 10 years alone. The Company is on track to deliver nationwide TrueFibre coverage in the coming years.

FTTH is the technology of the present, and the future. It allows GO to be innovative in the products it can offer, flexible in the bundling options, and provide services delivered at the highest possible speeds. GO is also investing heavily in its international connectivity. In 2022, GO will complete its €25 million investment in a third submarine cable, becoming the only operator in Malta with full in-house redundancy measures. More importantly, for the first time in telecoms history, GO will be the only provider connecting Malta to France and the middle and far east.

Becoming a digital enterprise

Going digital as an organisation enables GO to provide a seamless service to its customers, reduce non value-adding costs, be more price-competitive and continue to invest in a digital Malta. Furthermore, it enables the Company to invest in making its staff the most highly digitally-skilled workforce on the islands. The Company has invested heavily in its systems that continue to support exceptional customer service and reporting structures.

Minimising environmental impact

Digital enablement can play a key role in protecting the environment. The costs of pollution and the benefits of environmental sustainability are increasingly recognised worldwide. The ongoing Coronavirus Pandemic has given us a glimpse of what future climate-related crises could look like – unpredictable swift, and global. Such crises pose enormous risks to businesses and companies across the globe must take action to safeguard societies and ultimately themselves from such crises. Making capital investments that minimise their carbon footprint is one way of doing this.

Our principal risks and uncertainties

Security and resilience

The Group’s commercial success is dependent upon the resilience of the various networks, IT systems, exchanges and data centres. Our networks, systems and infrastructure face a variety of hazards that could cause significant interruptions to the delivery of our services. If the Group experiences any significant failure of its systems the impact could be considerable and include significant financial loss besides reputational damage that could jeopardise future revenue.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

The Group identifies and mitigates risks through structured risk management processes. Risk mitigation includes significantly investing in the security and resiliency of its key networks and infrastructure wherever this is possible and feasible. The increasing risk of cyber threats is also continuously analysed and appropriate cyber security controls and capabilities are updated as necessary to protect the Group and its information, people and services against attacks to confidentiality, integrity and availability. Information Security and Data governance committees are established and they provide the required guidance and direction to ensure risk management and security initiatives are in line with Group business objectives. The Group adopts a robust industry standard control framework that focuses on prevention supported by tried-and-tested recovery capabilities.

Customer data processing

On a daily basis the Group processes personal data of its significant client base. The Group recognises the importance of adhering to data privacy laws and wants its customers to feel confident that the Group acts properly and protects the data they share with it. Failure to abide by all relevant data protection and privacy laws could result in reputational damage for the Group as well as regulatory action and fines. The Group manages this risk by having in place a robust governance and monitoring framework. This framework defines roles and responsibilities of employees who have access to personal data, provides training and awareness to these employees and includes monitoring, reporting and audit to ensure compliance with various policies and procedures aimed to protect customer data and privacy.

Ability to grow

The Group operates in two highly developed and well-penetrated markets characterised by extensive competition, pressure on pricing, technology substitution and product convergence. The Group strives to maintain its ability to grow revenues in spite of this adverse environment as failure to do so will impact profitability and the Group’s ability to maintain its investment programme. The Group mitigates this risk by identifying opportunity to diversify its product portfolio and invest in new markets. The Group also pursues innovative product bundling and extends to its customer new technologies soon after these become available whilst working hard to become a leaner organisation.

i-gaming industry

The i-gaming industry has grown to become one of Malta’s main economic pillars. GO is a major supplier of technology and services to operators working out of Malta and any negative impact on the ability of the industry to retain its significant presence in Malta will impact the Group’s profitability. Aware of this risk the Group is augmenting its range of co-location services to include a holistic ICT experience targeted at the Group’s large business client base, thereby reducing the Group’s reliance on the i-gaming industry.

Communications industry regulation

The Malta Communications Authority can request GO to provide specific wholesale services on specified terms following market reviews. These terms and regulations can include control over prices, both at the wholesale as well as the retail level besides other conditions. Furthermore, GO is also bound by regulation that from time to time come into force across the European Union. Regulatory requirements and constraints can impact revenues and GO’s ability to compete effectively with the resultant impact on profitability and cash generation. GO manages this risk by maintaining ongoing dialogue with regulators through a team of regulatory specialists who, with the help of various advisors, continuously monitor and review regulatory changes and how these may impact the Group.

Pensions

GO is faced with a number of court cases from past employees for the payment of a pension. Whilst GO has acknowledged the entitlement to a pension in various cases, most of which have been settled through the payment of a lump sum, a number of other claims remain pending and will be decided by the Maltese Courts. In the case of an adverse decision GO may have to recognise the obligation to pay a pension to various claimants which obligations could, in their totality, be material. To mitigate this risk GO has appointed a strong team of legal advisors to argue GO’s position.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Financial risk management

The Group’s activities potentially expose it to a variety of financial risks: market risk (including foreign exchange risk, cash flow and fair value interest rate risk), credit risk, and liquidity risk. The Group’s overall risk management, covering risk exposures for all subsidiaries, focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the respective company’s financial performance. The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. Accordingly, the Company’s Board of Directors provides principles for overall Group risk management, as well as risk management policies covering risks referred to above and specific areas such as investment of excess liquidity. A detailed review of the risk management policies employed by the Group is included in Note 2 to the financial statements.

Policies adopted by the Group

Throughout the years, GO has proven to be a major contributor to society, both environmentally and socially and has taken one of the top spots as a leading employer on the island, attracting top talent locally and internationally. GO has formally adopted policies in relation to Human Rights which includes employee matters, the Anti bribery and Corruption policy and the Environmental Policy. These policies apply to all GO employees, directors, officers, as well as consultants, contractors, trainees, seconded staff, temporary workers, summer workers, volunteers, interns, agents, sponsors and any other person who performs services to, for, or on behalf of, or is otherwise associated with GO.

The Company is controlled by Tunisie Telecom and accordingly any policies in such areas would necessarily have to take into account the circumstances, direction and strategy of the controlling party, focusing on policies, if any, adopted by the controlling party and non-financial key indicators, if any, utilised by the controlling party at Group level to monitor progress in such areas.

Respect for human rights

GO recognises certain fundamental rights also extend to the workplace and is committed to respecting the human rights of individuals in all aspects of its business. For this reason, the Company has adopted a Human Rights Policy to nurture an organisational culture that deeply respects human dignity, human rights and personal recognition. Furthermore, the Company is committed to take steps as may be necessary to identify and prevent interference with fundamental rights and provide for the respectful exercise of those rights by all persons, consistent with the safe, effective and efficient performance of work.

The Company respects all fundamental human rights and will be guided in the conduct of its business by the provisions of the United Nations Universal Declaration of Human Rights, the International Labour Organisation (ILO) core labour standards and Maltese law on the matter. In this area, telecommunication companies typically refer to such matters as:

•Human rights integration;

•Services used for defence, military, law enforcement, security or cybersecurity purposes and services provided in extreme or high-risk countries;

•Modern slavery;

•Big sporting events and the risks these events pose in relation to labour rights violations and community displacement.

GO’s analysis backing the disclosures within this non-financial statement indicate that the abovementioned matters are not that relevant taking cognisance of GO’s business model and its scale of operations.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Developing a learning culture

Employee matters

During the year under review, which unfolded against the continued backdrop of the global pandemic, our people remained at the top of GO’s agenda. The pandemic did not only change the way people worked; it also changed the way people learnt and developed. Steadfast in the belief that, unless GO serves its people well, it cannot serve its customers well, 2021 provided the springboard for further opportunities for continued growth and learning.

At GO, learning is ongoing because we believe it is the key enabler for change. In the context of nurturing a culture that supports a growth mindset, in the second quarter of 2021, we proudly launched our GO Academy, which is playing a pivotal role in equipping our people with the required skills, mind-sets and behaviours to achieve organisational growth. In the spirit of our Purpose as a company, which is to drive a digital Malta where nobody is left behind, GO Academy is for everyone at GO, ensuring that everyone has the opportunity for personal growth.

Apart from offering technical and functional training, which was revamped to ensure that departmental learning needs are met, and that content is delivered in keeping with the Academy’s learning ethos, priority-learning programmes were devised based on three pillars, namely Purposeful Leadership, Customer Centricity and Digital Excellence. These pillars are critical for us to develop the necessary skills to becoming a Purpose-led organisation.

However, the most innovative element of the Academy is the component dedicated to self-directed learning, for our people to feel empowered to define their own learning goals and independently invest in learning programmes that will help achieve these goals. To this end, we have joined forces with an international, digital learning platform and provided our people with a personal annual learning budget to enable them to access different online content. As a direct result of the launch of GO Academy, during 2021, the number of training hours per person almost doubled. In this respect, we will continue to raise the bar, year on year, to continue investing further in our people.

As part of our learning culture at GO, the art of giving and receiving feedback is a foundational skill for all of us as it accelerates our personal and professional development, improving how we work together and how we serve our customers. One way in which we get to put this skill into practice is during the weekly “Hangout” sessions, which were introduced in 2020 as a way of keeping connected with our people during the pandemic. These sessions were retained because they serve to keep our people informed about Company results and major business decisions and give everyone an equal opportunity to ask the members of the Executive Committee questions about any aspect of the business.

Employee surveys

In the spirit of feedback, we also want to create opportunities to give our One GO Team a voice, and, as happened in recent years, an external agency was commissioned to administer an employee satisfaction survey. The survey, which ran for a month in October 2021, gathered feedback about our people’s experience working at GO, by focusing on leadership effectiveness, corporate culture, performance management, employee wellbeing, training and development, communication and team cohesiveness and reward and recognition. The response rate in the year under review was the highest participation rate registered since the survey started being administered.

Driving purpose and values

When we had embarked on our purpose and culture transformation journey almost two years ago, several Purpose Champions, representing the larger functions at GO, had been appointed to ensure that purpose and values are infused across the organisation. The role of our Purpose Champions has since evolved, and today our Champions are tasked with observing the organisation, identifying any blockers that are inhibiting us from driving purpose and values and working with respective teams to overcome them. The Purpose Champions are also encouraged to role model the desired behaviours and take an active role in defining what a purpose-driven organisation looks like and how this can be translated into their respective functions.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

In support of driving our purpose and values, the new STAR (Special Thanks and Recognition) programme, rolled out in 2021, encourages our people to share their positive experiences about other colleagues who went above and beyond to live our purpose and values. During the year under review, we have had a very encouraging take-up with many colleagues participating in the programme with the express purpose of praising others.

Non-birthing leave policy

We are tangibly committed to enhancing the working experience at GO and improving the well-being of all our people in a myriad of ways. In honour of our belief in, and our drive to, safeguard, gender equality, we rolled out our non-birthing leave policy, which entitles the non-birthing parent to four weeks of birth leave at full pay, thus giving both caregivers the opportunity to be actively involved in their child’s upbringing.

Working from abroad policy

Following the introduction of hybrid working arrangements in 2020, during the year under review, we took working remotely to the next level and implemented a temporary work from abroad policy for a defined period, which enhances our flexible culture and supports both our people, if their role allows them to do so, and business operations. The temporary work from abroad policy strengthens GO as an inclusive employer and allows our people to have an overall better working experience. An inclusive culture is fundamental to ensuring our diverse workforce can develop and grow.

Diversity and Inclusion

Diversifying the mix of our people continues to be a priority within our people strategy. We continue to attract and recruit highly talented individuals world-wide. Today, our people come from all over the globe, spanning four continents. On the occasion of World Day for Cultural Diversity, we celebrated the beauty and uniqueness of our One GO team, by surprising them with a taste of home, seeing that the pandemic last year had severely hampered international travel movements.

In 2021, our GO Cares team was able to organise several initiatives, thanks to ongoing monthly contributions from our people, as well as the organisation of fund-raising seasonal events. Entities that benefitted from GO Cares included Europa Donna (Malta), Tree4U, Nahsebfik and SOAR Services.

Recruitment & Retention

In 2021, GO adopted a fresh approach to overcome the challenge of limited local supply, particularly to fill digital roles, and leverage global talent.

We believe that talented people know other talented people. During the year under review, we extended our recruitment referral policy, intended to reward individuals who do not work at GO but who might know of talent who would fit our culture and would refer them to us.

GO as an Employer

GO is proud to be an Equal Opportunity Employer. We are committed to equal employment opportunities regardless of race, gender, age, religion, disability, sexual orientation, and national origin. Total employee benefit expense for the year amounted to €34.8 million (2020: €37.3 million). The average number of persons employed by the Group, including part-timers and students, during the year amounted to 1,179 (2020: 1,213).

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

During an Award Ceremony organised by the Foundation for Human Resources Development (FHRD), GO was one of the first 12 companies nation-wide to be awarded the FHRD Quality Mark, which recognises the professionalism, competence and contribution of the HR function in GO, through the implementation of various policies and strategies which include : HR Policies and Practices, Recruitment, Selection and Talent Management, Compensation, Benefits and Total Rewards, Employment and Industrial Relations, Performance Management, HR Information Systems and People Training and Development.

We have ensured that the right policies are in place, and updated regularly, on matters related to Whistle Blowing, Social Media, Anti-Harassment and Anti Bullying and all other aspects outlined in the relevant employment legislation; and in making sure these are updated from time to time and that such knowledge is disseminated throughout the organisation. All policies duly reflect the standards set by Maltese legislation.

Our health, safety and wellbeing strategy includes that every line of business is responsible for the safety of their employees and third parties which may be effected by their operations. Our people receive specific health and safety training and/or are provided with the necessary health and safety information whereas their line managers take responsibility for making sure their teams know how to comply with health and safety standards Policies and programmes are in place to make sure we adhere to our own standards and that these standards meet or exceed minimum legal requirements. We will also work to make sure our products comply with safety regulations, including meeting industry standards. We provide direction to help teams understand and control health and safety risks and help everyone feel involved in health, safety and wellbeing issues.

Change is the new constant at GO. Yet, although the pandemic has obliged us to devise new ways of working together, by remaining focused on our Purpose of driving a digital Malta where no one is left behind and by living our corporate values – ‘Obsessing about our Customer’, ‘Acting like an Owner’ and ‘Working as One GO Team’, we have managed to become even more connected as an organisation, and continue to successfully reach and exceed our set targets.

GO is very conscious about the personal data it handles daily, especially when dealing with its customers. It has taken a number of steps to ensure compliance with all relevant legislation, including the GDPR and Data Protection Act, and to implement internal processes which safeguard our customers’ privacy and personal data on a daily basis.

GO’s Privacy Policy, which is published on its website and made readily available, gives both customers and non-customers a full picture on the type of personal data GO process as well as the manner and extent to which it does so. It also explains and outlines the process for customers to exercise their rights with respect to their personal data and how to take matters up with our Data Protection Officer.

Over the past year, our Data Protection Officer has handled very few complaints, requests for information or customer-related issues. Given the number of customers and data processes we have in place, we consider this to be a true testament to our commitment and success in this area. Our customers have faith in us and with good reason, and we want to ensure that we continue to build on that trust.

As with everything else, we are sure that this is, and will continue to be, down to our employees, who remain the cornerstone of our organisation. Apart from the Privacy Policy, our employees across all the Group are carefully implementing a number of other specially written internal policies and procedures which help guide and educate those strategies, decisions and interactions which may have an impact, big or small, on a customer’s personal data. Such documentation is updated whenever necessary. We also hold regular training sessions for all staff so as to continually keep privacy and the protection of personal data at the forefront of our services.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Our purpose as a Company is to drive a digital Malta where no one is left behind. We have always taken an active role in the Maltese community, supporting social causes that aid numerous families in need. One cause in particular which we supported during 2021 is the Your Device Your Right initiative, managed by the Malta Trust Foundation, in which GO provided free internet connections for underprivileged families in support of the children’s’ online education.

Social support

We recognise that in moments of trial, one needs to remain connected to what matters to them most. As a Company we are privileged to be at the heart of this. In this spirit, and against the backdrop of developments in Ukraine, we have recently extended mobile connectivity to our active subscribers in the region to ensure that they can stay connected to family and friends, and likewise, nulled all charges for calls and SMSs from Malta to Ukraine.

Our aim is to invest in a number of initiatives that deliver social and environmental benefits and which somehow reflect our purpose as a company. This investment is a mixture of cash, time volunteered and in-kind contributions. As a Company, we had to strike the right balance between supporting the community, protecting the business and safeguarding shareholder interests. We therefore had to allocate resources as efficiently as possible, particularly in view of the uncertainties that prevailed. It was decided that no new official sponsorships would be entertained during 2021 until we had visibility of the economy stabilising.

We did however honour our commitments that were agreed to in previous years.

Support towards the Malta Community Chest Fund Foundation continued throughout the year – mainly through L-Istrina, which was once again an event which was heavily supported by GO, not only in terms of a substantial donation but also in terms of equipment, communications infrastructure and hundreds of man-hours, freely granted to ensure the success of this annual fundraiser. GO also supported various NGOs including Caritas, Dar tal-Providenza and Puttinu Cares.

Activities by GO Cares Foundation continued throughout the year.

Environmental matters and climate related information

Digital enablement can play a key role in protecting the environment. The costs of pollution, and the benefits of environmental sustainability, are increasingly recognised worldwide. The ongoing COVID-19 crisis has given us a glimpse of what future climate related crisis could look like: unpredictable, swift and global. Such crises pose enormous risk to business. Businesses across the globe have to take action to safeguard societies and ultimately themselves from such crises. Making capital investments that minimise their carbon foot print is one way of doing this.

GO recognises its responsibility in being part of this change and is taking tangible action to minimise our environmental impact. At the heart of GO’s purpose is digital enablement which is the basis of the GO’s strategy in becoming a sustainable company. GO’s sustainable strategy is based on 3 pillars:

•Reduce – reduce sources of carbon emissions by investing in our FTTH network and switching off our copper network. During 2021, GO invested €6,332,000 in its FTTH and over 47% of our customers are being served over our FTTH network. Another project that is underway to reduce our carbon emissions is migrating our legacy exchanges to smaller exchanges. In February 2021, the Marsa exchange migration was completed and works have started on the B’Kara exchange which is targeted to be completed by 2022. In 2021, this investment amounted to €985,000.

•Replace – replace key infrastructure and sources of energy with renewables. The strategy in this area is to replace its fleet to an electric fleet, develop net zero buildings and switch to renewable energy. The aim is for these projects to be in place by 2025.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

•Transform – transform our business processes and in turn aid our customers reduce their own carbon footprint. From 2020, GO has been pushing its customers to interact digitally especially with regards to renewals and payments. From 2021, customers no longer need to come to our outlets to renew their contracts and contracts are now being signed and stored digitally so saving on paper consumption. In 2021, procedures were also put in place where every customer premises equipment is tested and refurbished when brought back by our customers, with the aim of extending the life cycle of these products and aiding the circular economy, this reduced our wastage in this type of equipment by 80%.

During 2020, GO undertook a study to measure its carbon footprint that arise from scope 1 which is the direct emissions from owned or controlled sources, scope 2 which measures the indirect emissions from the generation of purchased electricity, and also a limited amount of scope 3 categories. In 2021, GO widened the scope of this exercise to include all scope 3 categories which includes all indirect emissions that occur in the value chain including upstream and downstream emissions. As a result of this expanded and more comprehensive exercise, the carbon footprint for 2021 amounted to 50k tonnes of carbon dioxide equivalent, of which circa 43k tonnes are as a result of scope 3, which in the current year figures include a wider definition of activities. These include emissions from suppliers (upstream) and from clients (downstream) as a result of their interaction with GO and as well as employees working remotely. Below is a comparative analysis of the carbon footprint measured in tonnes of carbon dioxide equivalent, for the years 2021 and 2020:

2021

2020

Scope 1 – direct emissions from owned or Controlled sources

543

562

Scope 2 – indirect emissions from the generation of purchased electricity

6,544

7,225

Scope 3 – all indirect emissions not included in scope 2

EU taxonomy disclosure

On 6 July 2021, the European Commission adopted the Delegated Act supplementing Article 8 of the Taxonomy Regulation (“the Disclosures Delegated Act”), which requires large financial and non-financial companies to provide information to investors about the environmental performance of their assets and economic activities.

Article 8(2) of the Taxonomy Regulation, i.e. Regulation (EU) 2020/852, requires non-financial undertakings to disclose information on the proportion of their turnover, capital expenditure and operating expenditure (‘key performance indicators’) which are considered taxonomy-eligible. The Disclosures Delegated Act specifies the disclosure obligations including the content, methodology and presentation of information to be disclosed on the economic activities that are aligned with the Taxonomy Regulation. Taxonomy-eligible economic activities comprise any economic activity which is described in relation to the six environmental objectives laid out in article 9 of the same regulation. As of 1 January 2023, for reporting period 2022, taxonomy-alignment, requiring the economic activity in question to also meet the technical screening criteria outlined in annexes to the EU Climate Delegated Act to the Taxonomy Regulation, shall also be reported upon.

In order to identify its economic activities covered by the European Taxonomy, GO Group relied on the EU Climate Delegated Act, and Annex 1 & 2 to this Delegated Act. Eligible activity classification was done through the officially-assigned NACE codes, in particular J60 and J63.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

The evaluation of the eligibility of the Group’s business activities has been conducted on the basis of the Taxonomy and Delegated Regulation (Annex I – KPIs of non-financial undertakings) and its definition of the denominator and numerator of the 3 required KPIs mentioned above. It was performed through a methodological approach consisting of:

•extracting total denominator for the 3 KPIs from the financial reporting system,

•identifying those activities that might fall within the list of economic activities covered in ‘Delegated Acts’,

•documenting and assessing for each of those economic activities their ’eligibility’ to the first two environmental objectives: ’Climate Change Mitigation’ and ’Climate Change Adaptation’ included in the EU taxonomy in order to determine the numerator of each of the 3 KPIs.

Turnover is considered to cover all business activities of the Group during the year ended 31 December 2021, at a gross level taking into account all underlying economic activities. It is calculated as the part of the net turnover derived from products or services associated with the taxonomy-aligned economic activities.

CaPex consists of additions to property, plant and equipment and intangible assets during the financial ended 31 December 2021, before depreciation, amortisation and any re-measurements recognised by the Group, which have been accounted for in accordance with IFRS as adopted by the EU and relate to assets that are associated with taxonomy-aligned economic activities.

OpEx consists of all operating expenditure, including maintenance and repair and other direct expenditure relating to the day-to-day servicing of assets of property, plant and equipment that are necessary to ensure the continued and effective functioning of such assets during the year ended 31 December 2021, at a gross level taking into account all underlying economic activities.

The table below outlines the actual KPI related to the EU Taxonomy, based on the above considerations and methodology:

Taxonomy eligible activities

Taxonomy non-eligible activities

Anti-corruption and bribery matters

One of GO’s key objectives is to strive for ethical behaviour with regards to its interactions with all its stakeholders. Our Company’s long-standing commitment to doing business with integrity means avoiding corruption in any form, including bribery, and complying with the local legislation in this respect. GO has set up a formal policy in respect of these matters.

This policy sets out the responsibilities of company officials and guidance on how to recognise and deal with bribery and corruption. GO prohibits bribery and corruption in all its forms. In all our dealings with public officials or private individuals or businesses, we must be open and transparent, conduct ourselves appropriately and strictly adhere to our business processes. This will ensure that no bribery or corruption takes place and avoid any appearance or suggestion of improper behaviour.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

In order to ensure compliance to this policy, GO has in place a procurement process, in which all purchasing above a certain limit has to abide by rigorous procurement procedures and the authorisation levels of its officials. In line with environment commitments GO has invested in a paperless office and in this regard all transactions from the initial procurement stage up to approval is digitally stored, thus ensuring that GO has a full digital audit trail of the entire process.

Our suppliers provide the products and services that are so important in executing our strategy. We want to know who we are doing business with and who is acting on our behalf. So, we choose suppliers using principles that make sure we act ethically and responsibly, ensuring as much as is practicable that suppliers act in a socially and environmentally responsible way. GO carries out due diligence checks and also ongoing monitoring of the suppliers, agents, resellers and distributors base in order to detect at source any unusual behaviour and make sure that the organisation’s zero tolerance policy is consistently portrayed both to the current supplier base and any potential new comers to the scene. Since it is crucial that we maintain high ethical standards. We do not tolerate fraud, bribery, any form of corruption or any illegal or unethical activity. We follow local and international law, including anti-corruption and bribery laws. Our policy is that procurement contracts include anti-corruption and bribery clauses.

We also face the risks associated with inappropriate and unethical behaviour in the market by our people or associates, such as suppliers or agents, which can be difficult to detect. GO faces the risks that the controls designed to prevent, detect and correct such behaviour may be circumvented. Controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and there can be no assurance that any design will succeed in achieving its stated goals under all potential conditions, regardless of how remote.

If our people, or associates like suppliers or agents, breach anti-corruption, bribery, sanctions or other legislation there could be significant penalties, criminal prosecution and damage to our brand. This could have an impact on future revenue and cash flows depending on the nature of the breach, the legislation concerned and any penalties. Accusations of corruption, bribery, violating sanctions, regulations or other laws could lead to reputational damage with investors, regulators and customers. If fraud is committed, there is a risk of financial misstatement which if undetected can have a material financial impact and potential litigation together with regulatory consequences.

Financial and other controls play an important part in our ability to prevent and detect inappropriate and unethical behaviour. This behaviour includes fraud, deliberate financial misstatement and improper accounting practices, as well as breaches of anti-corruption, bribery, or sanctions legislation. If the design, operation or the assurance over these controls is ineffective or circumvented, there is a greater risk that the impacts described above may materialise.

We have a controls and compliance programme to strengthen awareness of the standards we expect, the capabilities of our people, and to reinforce the importance of doing business in an ethical, disciplined and standardised way. As part of the implementation of the policy, we asked all our people to complete training to embrace our zero tolerance to bribery and corruption. We have policies covering gifts, hospitality, charitable donations and sponsorship. We run tailored training for people in higher-risk roles like procurement and sales.

We also have procedures in place where employees can report in complete confidence to the Group Internal Auditor and that any retaliation against someone who reports a concern is strictly prohibited. Also our internal audit team runs checks on our business to ensure that the policies are being adhered to.

The Group will monitor the application of the policy referred to with a view to determining, if considered applicable, objectives and KPIs in coming financial years to explain further progress in respect of these areas. However, the outcome of this process depends on the manner in which events unfold in future.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

The Directors who served on the Board during the year under review or up to the date of this report are listed hereunder. None of the Directors in office during the year or at the balance sheet date held an executive appointment with the Company or its subsidiaries.

Board of Directors

Paul Testaferrata Moroni Viani

Samir Saied (resigned 13 October 2021)

In terms of Article 58.2 of the Articles of Association, the term of appointment of the Directors still in office expires at the forthcoming Annual General Meeting.

Paul Fenech, Deepak Padmanabhan and Paul Testaferrata Moroni Viani offered themselves for election at the twenty-third Annual General Meeting for the three seats on the Board of Directors and thus there was no need for an election and the three were re-appointed to represent the Company’s minor shareholders.

Faker Hnid, Nikhil Patil (GO’s Chief Executive Officer) and Reuben Attard (GO’s Chief Finance Officer) acted as Director of BMIT Technologies p.l.c. (BMITT.)

Faker Hnid, Nikhil Patil (GO’s Chief Executive Officer), Reuben Attard (GO’s Chief Finance Officer) acted as directors on the boards of the following subsidiaries of BMITT: on BMIT Limited, Bellnet Limited and BM Support Services Limited.

Faker Hnid and Paul Testaferrata Moroni Viani, together with Nikhil Patil (GO’s Chief Executive officer) were acting as Directors of Cablenet Communications Systems p.l.c. during the year ended 31 December 2021.

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

The composition of Officers and Senior Management is further disclosed under section 'Company Information'. Further information is also given in the Corporate Governance - Statement of Compliance.

Remuneration committee and corporate governance

The activities of the remuneration committee and the Group’s arrangements for corporate governance are reported on pages 21 to 35.

Directors’ responsibilities

The Directors are required by the Companies Act (Cap. 386) to prepare financial statements in accordance with International Financial Reporting Standards as adopted by the EU which give a true and fair view of the state of affairs of the Company as at the end of each reporting period and of the profit and loss for that period.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

In preparing the financial statements, the Directors are responsible for:

•ensuring that the financial statements have been drawn up in accordance with International Financial Reporting Standards as adopted by the EU;

•selecting and applying consistently suitable accounting policies;

•making accounting judgements and estimates that are reasonable; and

•ensuring that the financial statements are prepared on the going concern basis unless it is inappropriate to presume that the Company will continue in business as a going concern.

The Directors are also responsible for designing, implementing and maintaining such internal control as they deem necessary for the preparation of financial statements that are free from financial misstatements, whether due to fraud or error, and that comply with the Maltese Companies Act (Cap. 386). They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The financial statements of GO p.l.c. for the year ended 31 December 2021 are included in the Annual Financial Report 2021, which is published in hard-copy printed form and will be made available on the Company’s website. The Directors are responsible for the maintenance and integrity of the Annual Financial Report on the website in view of their responsibility for the controls over, and the security of, the website. Access to information published on the Company’s website is available in other countries and jurisdictions, where legislation governing the preparation and dissemination of financial statements may differ from requirements or practice in Malta.

Information provided in accordance with Capital Markets Rule 5.70.1

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

Going concern

The Directors, as required by the Capital Markets Rule 5.62, have considered the Company’s operating performance, the balance sheet at year end, as well as the business plan for the coming year, and they have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, in preparing the financial statements, they continue to adopt the going concern basis.

Auditors

The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office. A resolution to re-appoint the auditors and to authorise the Directors to fix their remuneration will be proposed at the forthcoming Annual General Meeting.

Information provided in accordance with Capital Markets Rule 5.64

The authorised share capital of the Company is three hundred forty nine million four hundred and five thousand eight hundred euro (€349,405,800) divided into six hundred million (600,000,000) shares of fifty eight point two three four three euro cent (58.2343 euro cent) each share.

The issued share capital of the Company is fifty eight million nine hundred and ninety seven thousand, four hundred and fifty three euro and fifty one euro cent (€58,997,453.51) divided into one hundred and one million three hundred and ten thousand four hundred and eighty eight (101,310,488) ordinary shares of fifty eight point two three four three euro cent (58.2343 euro cent) each share, which have been subscribed for and allotted fully paid up. The issued shares of the Company consist of one class of ordinary shares with equal voting rights attached.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

The Company did not modify in any way the structure of its share capital during the year. No further issues were made and neither did the Company acquire ownership of or any rights over any portion of its issued share capital.

The Directors confirm that as at 31 December 2021, only TT ML Limited held a shareholding in excess of 5% of the total issued share capital.

Any shareholder holding in excess of 40% of the issued share capital of the Company having voting rights may appoint the Chairman. In the event that there is no one single shareholder having such a shareholding, the Chairman shall be elected by shareholders at the Annual General Meeting of the Company.

The rules governing the appointment of Board members are contained in Clause 57.2 of the Company’s Articles of Association as follows:

The Directors shall be appointed as set out hereunder:

(a)A Shareholder holding not less than 12% (twelve per centum) of the issued share capital of the Company having voting rights shall be entitled to appoint one Director for every such 12% holding by letter addressed to the Company. Provided that anyone Shareholder who, pursuant to the provisions of sub article 57.1 (a) is entitled to appoint the Chairman, shall for the purposes of the appointment of Directors in terms of this sub-article have 12% of his holdings deducted and may accordingly only appoint Directors with the residual balance of shares having voting rights after such deduction.

(b) Any Shareholder who does not qualify to appoint Directors, in terms of the provisions of paragraph (a) of this sub-article 57.2, and who has not aggregated his holdings with those of other Shareholders for the purposes of appointing a Director(s) pursuant thereto, shall be entitled to participate and vote in an election of Directors to take place once in every year at the Annual General Meeting of the Company.

(c) Shareholders entitled to appoint Directors pursuant to the provisions of paragraph (a) sub-article 57.2 shall not be entitled to participate in the election of Directors in terms of paragraph (b) of this sub-article.

(d) Members shall be entitled in lieu of voting at an election of Directors, to aggregate their shareholdings, and to appoint one Director for every twelve per cent (12%) shareholding having voting rights held between them, by letter addressed to the Company in accordance with the provisions of sub-article 57.2 (a); and for the purposes of this paragraph and voting rights of persons entitled to vote pursuant to the provisions of sub-article 57.2 (b) remaining after the exercise of such vote may aggregate such rights as aforesaid.

Any amendment to the Company’s Memorandum and Articles of Association has to be made in accordance with the Companies Act (Cap. 386).

Without prejudice to any special rights previously conferred on the holders of any of the existing shares or class thereof, any share in the Company may be issued with such preferred, deferred, or other special rights or such restrictions, whether in regard to dividend, voting, return of capital or otherwise as the Board of Directors may from time to time determine, as provided for in Clauses 3.2 and 3.3 of the Articles of Association, as long as any such issue of equity securities falls within the authorised share capital of the Company.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

The Company may, subject to the applicable restrictions, limitations and conditions contained in the Companies Act (Cap. 386), acquire its own shares and/or equity securities.

Pursuant to Capital Markets Rules 5.64.2, 5.64.4, 5.64.5, 5.64.6, 5.64.7, 5.64.10 and 5.64.11 it is hereby declared that, as at 31 December 2021, none of the requirements apply to the Company.

We, the undersigned, declare that to the best of our knowledge, the financial statements prepared in accordance with the applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and its subsidiaries included in the consolidation taken as a whole, and that this report includes a fair review of the performance of the business and the position of the Company and its subsidiaries included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

Signed on behalf of the Company's Board of Directors on 30 March 2022 by Paul Testaferrata Moroni Viani and Paul Fenech as per the Directors' Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Financial Report 2021.

Dr Francis Galea Salomone

30 March 2022

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Corporate governance - Statement of compliance

A.Introduction

Pursuant to the Malta Financial Services Authority Capital Markets Rules, GO p.l.c. (‘the Company’ or GO) whose equity securities are listed on a regulated market should endeavour to adopt the Code of Principles of Good Corporate Governance (‘the Code’) as contained in Appendix 5.1 to Chapter 5 of the Capital Markets Rules. In terms of the Capital Markets Rules the Company is hereby reporting on the extent of its adoption of the Code.

The Company acknowledges that the Code does not prescribe mandatory rules but recommends principles so as to provide proper incentives for the Board of Directors (‘the Board’) and the Company’s management to pursue objectives that are in the interests of the Company and its shareholders. Good corporate governance is the responsibility of the Board, and in this regard the Board has carried out a review of the Company’s compliance with the Code during the period under review, and hereby provides its report thereon.

As demonstrated by the information set out in this statement, together with the information contained in the Remuneration Report to the Shareholders, the Company believes that it has, save as indicated herein the section entitled Non-Compliance with the Code, throughout the period under review, applied the principles and complied with the provisions of the Code.

B.Compliance

Principle 1: The Board

The Board, the members of which are appointed by the shareholders, is primarily tasked with the administration of the Company’s resources in such a way as to enhance the prosperity of the business over time, and therefore the value of the Shareholders’ investment. The Board is composed of eight Directors (one of whom is the Chairman) all of whom are non-executive Directors.

The Board is in regular contact with the Chief Executive Officer and is continuously informed of any decisions taken by the senior management in order to ensure an effective contribution to the decision making process, whilst at the same time exercising prudent and effective controls. Directors, individually and collectively, are of appropriate calibre, with the necessary skill and experience to assist them in providing leadership, integrity and judgement in directing the Company towards the maximisation of shareholder value.

The Board delegates specific responsibilities to a number of committees, notably the Remuneration Committee and the Audit Committee, each of which operates under formal terms of reference approved by the Board.

Further detail in relation to the Committees and the responsibilities of the Board is found in paragraph ‘Principles 4 and 5’ of this statement.

Principle 2: Chairman and Chief Executive Officer

The roles of Chairman and Chief Executive Officer are filled by separate individuals, and the Chief Executive Officer is appointed by the Board for a definite period. During the period under review Nikhil Patil was the Chief Executive Officer.

The responsibilities and roles of the Chairman and the Chief Executive Officer are clearly established and agreed to by the Board of Directors.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Corporate governance - Statement of compliance - continued

Principle 2: Chairman and Chief Executive Officer - continued

The Chairman is responsible to lead the Board and set its agenda. The Chairman ensures that the Board is in receipt of precise, timely and objective information and also encourages active engagement by all members of the Board for discussion of complex and contentious issues.

The Chairman also leads the Executive Committee, the composition of which is set out below, and whose main role and responsibilities are to execute agreed strategy and manage the business. His role in this respect does not render his directorship an executive role.

Principle 3: Composition of the Board

In accordance with the provisions of the Company’s Articles of Association, the appointment of Directors to the Board is exclusively reserved to the Company’s shareholders, except in so far as appointment is made to fill a casual vacancy on the Board, and which appointment would expire at the Company’s Annual General Meeting following appointment. Any vacancy among the Directors may be filled by the co-option of another person to fill such vacancy. Such co-option shall be made by the Board of Directors.

The Board has the overall responsibility for the activities carried out within the Company and the Group and thus decides on the nature, direction, strategy and framework of the activities and sets the objectives for the activities.

The Board of Directors is currently comprised from eight (8) non-executive Directors. The following Directors served on the Board during the period under review:

Paul Testaferrata Moroni Viani

Samir Saied (resigned on 13 October 2021)

For the purposes of the Code, the non-executive Directors are independent. The Company deems that, although Sofiane Antar, Faker Hnid, Lassaad Ben Dhiab and Norbert Prihoda, and resigned Chairman Samir Saied have/had an employee and director relationship with the controlling shareholder, in terms of Supporting Principle 3 (vii) of the Code of Principles of Good Corporate Governance such relationship is not considered to create a conflict of interest such as to jeopardise exercise of their free judgement.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Corporate governance - Statement of compliance - continued

Principle 3: Composition of the Board - continued

Application of Diversity Policy in relation to the Board of Directors

The Company does not have in place a formal diversity policy which is applied in relation to the Board of Directors with regard to aspects such as age, gender or educational and professional backgrounds. This is principally attributable to the fact that the Company is controlled by Tunisie Telecom and accordingly policies such as this which govern the composition of the Board necessarily have to take into account the circumstances, direction and strategy of the controlling party. Notwithstanding the absence of a diversity policy, the Company endeavours to have in place a Board composed of members who possess a diverse range of skills, characteristics and qualities. The objective of the Company is that the Board composition contributes to different views and opinions, enhancing the level and quality of challenge together with oversight exercised at Board level.

Principles 4 and 5: The Responsibilities of the Board and Board Meetings

The Board has a formal schedule of matters reserved to it for decisions, but also delegates specific responsibilities to various board committees and sub-committees, the most prominent being the Audit Committee and the Remuneration Committee. Directors receive board and committee papers in advance of meetings and have access to the advice and services of the Company Secretary. Directors may, in the course of their duties, take independent professional advice on any matter at the Company’s expense. The Directors are fully aware of their responsibility to always to act in the best interests of the Company and its shareholders as a whole, irrespective of whoever appointed or elected them to serve on the Board. As delegated and monitored by the Board, the Company Secretary keeps detailed records of all dealings by Directors and senior executives of the Company and its subsidiaries in the Company’s shares and all minutes of meetings of the Board and its sub-committees.

During the year under review the Board met fifteen (15) times and attendance by Board members was as follows:

Attended

Sofiane Antar

Mr. Lassaad Ben Dhiab

Paul Testaferrata Moroni Viani

Samir Saied (resigned on 13 October 2021)

On joining the Board, a Director is provided with a presentation by the departmental heads on the activities of their respective business unit in the Company and its subsidiaries. The Directors receive, on a regular basis, information on the Group financial performance and position. The Board has the responsibility to ensure that the activities are organised in such a way that the accounts, management of funds and financial conditions in all other respects are controlled in a satisfactory manner and that the risks inherent in the activities are identified, defined, measured, monitored and controlled in accordance with external and internal rules, including the Articles of Association of the Company. The Board of Directors continuously assesses and monitors the Company’s operational and financial performance, assesses and controls risk, and monitors competitive forces in all areas of operation. It also ensures that both the Company and its employees maintain the highest standards of corporate conduct.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Corporate governance - Statement of compliance - continued

Principles 4 and 5: The Responsibilities of the Board and Board Meetings - continued

Board Committees

Audit Committee

The Audit Committee supports the work of the Board in terms of quality control of the Group’s financial reports and internal controls. The Audit Committee is currently chaired by Faker Hnid, with the other members being Deepak Padmanabhan and Paul Fenech. The Audit Committee is independent and is constituted in accordance with the requirements of the Capital Markets Rules, with Faker Hnid being chosen as the member competent in accounting and/or auditing in view of his experience in the field. The Internal Auditor is present at Audit Committee meetings. The Chief Finance Officer and the external auditors of the Company attend the meetings of the Committee by invitation. Other executives are requested to attend when required. The Company Secretary also acts as Secretary to the Audit Committee.

The Committee scrutinises and monitors related party transactions. It considers the materiality and the nature of the related party transactions carried out by the Company to ensure that the arm’s length principle is adhered to at all times.

As part of its duties, the Committee receives and considers reports on the system of internal financial controls and the audited statutory financial statements of all companies comprising the Group. The Committee held ten (10) meetings during the year. The external auditors attended four (4) of these meetings.

Remuneration Committee

The Committee is responsible for determining and agreeing with the Board the framework or broad policy for the Remuneration of the Company's chief officers, the Chairman of the Company, the Directors of the Board, and such other members as it is designated to consider. In determining such policy, the Committee takes into account all factors which it deems necessary, including the position of the Group companies relative to other companies in the marketplace. The objective of such policy shall be to ensure that Directors and chief officers are provided with appropriate incentives to encourage enhanced performance and are, in a fair and responsible manner, rewarded for their individual contributions to the success of the Group companies.

The Remuneration Committee was chaired by the Chairman of the Board of Directors, the other members being Paul Testaferrata Moroni Viani and Paul Fenech. The Company Secretary, Dr Francis Galea Salomone, acts as Secretary to the Remuneration Committee. The Remuneration Committee met two (2) times in 2021. The Remuneration Report is set out on pages 30 to 35.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Corporate governance - Statement of compliance - continued

Principle 6: Information and Professional Development

The Board is responsible for the appointment of the Chief Executive Officer. The Chief Executive Officer, although responsible for the recruitment and selection of senior management, consults with the Remuneration Committee and with the Board on the appointment of senior management.

On joining the Board, Board members are informed in writing by the Company Secretary of the Directors’ duties and obligations, relevant legislation as well as rules and bye-laws. In addition, Directors have access to the advice and services of the Company Secretary and the Board is also advised directly, as appropriate, by its legal advisors. Directors are also provided with a presentation by the departmental heads on the activities of their respective business unit in the Company and subsidiaries. On a regular basis, the Directors receive periodic information on the Group’s financial performance and position. The Company Secretary ensures effective information flows within the Board, committees and between senior management and Directors, as well as facilitating professional development. The Company Secretary advises the Board through the Chairman on all governance matters.

Directors may, in the course of their duties, take independent professional advice on any matter at the Company’s expense. The Company will provide for additional individual Directors' training on a requirements basis.

Principle 7: Evaluation of the Board’s Performance

The Chairman of the Board informally evaluates the performance of the Board members, which assessment is followed by discussions within the Board. Through this process the activities and working methods of the Board and each committee member are evaluated. Amongst the things examined by the Chairman through his assessment are the following: how to improve the work of the Board further, whether or not each individual member takes an active part in the discussions of the Board and the committees; whether they contribute independent opinions and whether the meeting atmosphere facilitates open discussions. Under the present circumstances the Board does not consider it necessary to appoint a committee to carry out a performance evaluation of its role as the Board’s performance is furthermore also under the scrutiny of the shareholders.

On the other hand, the performance of the Chairman is evaluated by the Board of Directors of the ultimate controlling party, taking into account the manner in which the Chairman is appointed. The self-evaluation of the Board has not led to any material changes in the Company’s governance structures and organisations.

Principle 8: Committees

The function of the Remuneration Committee is dealt with under the Remuneration Report, which also includes the Remuneration Statement 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 the Market, and Institutional Shareholders

The Company recognises the importance of maintaining a dialogue with its shareholders and of keeping the market informed to ensure that its strategies and performance are well understood. During the period under review the Company has maintained an effective communication with the market through a number of Company announcements and press releases.

The Company also communicates with its shareholders through the Company’s Annual General Meeting (‘AGM’). The Chairman of the Board ensures that all Directors attend the AGM and that both himself and the Chairman of the Audit Committee are available to answer questions.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Corporate governance - Statement of compliance - continued

Principles 9 and 10: Relations with Shareholders and with the Market, and Institutional Shareholders - continued

Both the Chairman and Chief Executive Officer also ensure that sufficient contact is maintained with major shareholders to understand issues and concerns.

Apart from the AGM, the Company communicates with its shareholders by way of the Annual Financial Report and Financial Statements and also through the Company’s website (www.go.com.mt) which also

contains information about the Company and its business, including an Investor Relations section.

In addition, the Company holds meetings with major stockbrokers and financial intermediaries, which meetings usually coincide with the publication of financial statements.

The office of the Company Secretary maintains regular communication between the Company and its investors. Individual shareholders can raise matters relating to their shareholdings and the business of the Group at any time throughout the year, and are given the opportunity to ask questions at the AGM or to submit written questions in advance.

As provided by the Companies Act (Cap. 386), minority shareholders may convene Extraordinary General Meetings.

Principle 11: Conflicts of Interest

The Directors are fully aware of their responsibility to always to act in the best interests of the Company and its shareholders as a whole irrespective of whoever appointed or elected them to serve on the Board.

On joining the Board and regularly thereafter, the Directors are informed of their obligations on dealing in securities of the Company within the parameters of law, including the Capital Markets Rules, and Directors follow the required notification procedures.

Directors’ interest in the shareholding of the Company:

Number of shares

as at 31 December 2021

Sofiane Antar

nil

Lassaad Ben Dhiab

nil

Paul Fenech

130,995

Faker Hnid

nil

Deepak Srinivas Padmanabhan

nil

Norbert Prihoda

nil

Paul Testaferrata Moroni Viani

78,394

Samir Saied (resigned 13 October 2021)

nil

Paul Fenech has a beneficial interest in the Company of 130,995 shares through the shareholding of Classic Group Ltd. in GO.

Paul Testaferrata Moroni Viani has a beneficial interest in the Company of 75,494 and 2,900 shares through the shareholding of other related parties including Testaferrata Moroni Viani (Holdings) Ltd. and Testaferrata Moroni Viani Ltd. respectively in GO.

None of the other Directors of the Company have any interest in the shares of the Company or the Company’s subsidiaries or investees or any disclosable interest in any contracts or arrangements either subsisting at the end of the last financial year or entered into during this financial year.

GO p.l.c.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Corporate governance - Statement of compliance - continued

Principle 11: Conflicts of Interest - continued

There were no other changes in the Directors’ interest in the shareholding of the Company between year-end and 27 February 2022.

Principle 12: Corporate Social Responsibility

As a major presence in the community, GO has always taken its corporate social responsibility very seriously. As in previous years, in 2021 the Group has maintained a steady programme of activities aimed at improving the quality of life of its work force and their families, as well as of the local community and society at large. L-Istrina was once again an event which was heavily supported by GO, not only in terms of a substantial donation but also in terms of equipment, communications infrastructure and hundreds of man-hours, freely given to ensure the success of this annual fundraiser. GO also continued to support various NGOs. During the year GO also continued to build on the ‘GO for the Future’ campaign supporting various educational initiatives which encourage reading and a passion for science.

The Company retained a careful eye on environmental considerations in all its activities, as well as ethical behaviour with regards to its interactions with all its stakeholders.

It is always particularly encouraging to note that while employee support for company-driven events is growing from year to year, so are the number of personal initiatives taken, as this is very much in line with the Company’s belief in a holistic approach to their work-life balance as well as strengthening community team spirit.

C.Non-compliance with the Code

Principle 3: Executive and Non-Executive Directors on the Board

As explained in Principle 3 in Section B, the Board is composed entirely of non-executive Directors. Notwithstanding this, it is considered that the Board, as composed, provides for sufficiently balanced skills and experience to enable it to discharge its duties and responsibilities effectively. In addition, no cases of conflict of interest are foreseen.

Principle 4: Succession Policy for the Board (code provision 4.2.7)

This Code Provision recommends the development of a succession policy for the future composition of the Board of Directors and particularly the executive component thereof, for which the Chairman should hold key responsibility.

In the context of the appointment of Directors being a matter reserved exclusively to the Company’s shareholders (except where the need arises to fill a casual vacancy) as explained under Principle 3 in Section B, considering that every Director retires from office at the AGM and on the basis of the Directors’ non-executive role, the Company does not consider it feasible to have in place such a succession policy.

Principle 6: Succession Plan for Senior Management

Although the Chief Executive Officer is responsible for the recruitment and appointment of senior management, the Company has not established a formal succession plan. This is basically due to the fact that the appointment of senior management is always discussed at the Remuneration Committee and approved by the Board of Directors.

GO p.l.c.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Corporate governance - Statement of compliance - continued

Principle 8 B: Nomination Committee

Pursuant to the Company’s Articles of Association, the appointment of Directors to the Board is reserved exclusively to the Company’s shareholders. Shareholders holding not less than 12% (twelve per centum) of the issued share capital of the Company having voting rights shall be entitled to appoint one Director for every such 12% holding by letter addressed to the Company. The other shareholders are entitled to appoint the remaining Board members at the AGM in accordance with the provisions of the Articles of Association. The nomination of a candidate by a shareholder is to be seconded by a shareholder or shareholders holding at least 15,000 shares.

Within this context, the Board believes that the setting up of a Nomination Committee is currently not suited to the Company since it will not be able to undertake satisfactorily its full functions and responsibilities as envisaged by the spirit of the Code. The Company also considers that some of the functions of the Nomination Committee (particularly those relating to succession planning and the appointment of senior management) are already dealt with by the Remuneration Committee.

Principle 9: Conflicts between Shareholders (code provision 9.3)

Currently there is no established mechanism disclosed in the Company’s Memorandum and Articles of Association to trigger arbitration in the case of conflict between the minority shareholders and the controlling shareholders. In any such cases should a conflict arise, the matter is dealt with in the appropriate fora in the Board meetings, wherein the minority shareholders are represented. There is also an open channel of communication between the Company and the minority shareholders via the office of the Company Secretary.

D.Internal controls

The key features of the Group’s system of internal controls are as follows:

Organisation

The Group operates through boards of directors of subsidiaries with clear reporting lines and delegation of powers.

Control environment

The Group is committed to the highest standards of business conduct and seeks to maintain these standards across all of its operations. Group policies and employee procedures are in place for the reporting and resolution of fraudulent activities.

The Group has an appropriate organisational structure for planning, executing, controlling and monitoring business operations in order to achieve Group objectives. Lines of responsibility and delegation of authority are documented.

The Group and the individual companies comprising it have implemented control procedures designed to ensure complete and accurate accounting for financial transactions and to limit the potential exposure to loss of assets or fraud. Measures taken include physical controls, segregation of duties and reviews by management, internal audit and the external auditors.

GO p.l.c.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Corporate governance - Statement of compliance - continued

Risk identification

Group management is responsible together with each of the subsidiary companies’ management, for the identification and evaluation of key risks applicable to their areas of business. These risks are assessed on a continual basis and may be associated with a variety of internal or external sources including control breakdowns, disruption in information systems, competition, natural catastrophe and regulatory requirements.

Information and communication

Group companies participate in periodic strategic reviews which include consideration of long-term financial projections and the evaluation of business alternatives.

Monitoring and corrective action

There are clear and consistent procedures in place for monitoring the system of internal financial controls. The Audit Committee meets regularly during the year and, within its terms of reference as approved by the Malta Financial Services Authority, reviews the effectiveness of the Group’s systems of internal financial controls. The Committee receives reports from management, internal audit and the external auditors.

E.General meetings

Shareholders’ influence is exercised at the Annual General Meeting (AGM), which is the highest decision-making body of the Company. All shareholders, registered in the Shareholders’ Register, have the right to participate in the Meeting and to vote for the full number of their respective shares. A shareholder who cannot participate in the Meeting can be represented by proxy.

Business at the Company’s AGM will cover the Annual Financial Report and Financial Statements, the declaration of dividends, election of Directors and the approval of their remuneration, the appointment of the auditors and the authorisation of the Directors to set the auditors’ fees. Shareholders’ meetings are called with sufficient notice to enable the use of proxies to attend, vote or abstain. The Company clearly recognises the importance of maintaining a regular dialogue with its shareholders in order to ensure that its strategies and performance are understood. It communicates with the shareholders through the AGM by way of the Annual Financial Report and Financial Statements and by publishing its results on a regular basis during the year. This is done through the Investor Relations Section on the Company’s internet site, the office of the Company Secretary, and Company announcements to the market in general. A free-phone service is reserved for communication by shareholders with the Company. Regular meetings are held with financial intermediaries and stockbrokers.

GO p.l.c.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Remuneration report

The Remuneration Committee is responsible to draw up a Remuneration Policy and submit it for the Board’s consideration. In determining such policy, the Committee takes into account all factors which it deems necessary, including the position of the Group companies relative to other companies in the marketplace. The objective of such policy shall be to ensure that Directors and Chief Officers are provided with appropriate incentives to encourage enhanced performance and are, in a fair and responsible manner, rewarded for their individual contributions to the success of the Group Companies. The remuneration policy is applicable for a maximum period of four years and has been approved by the shareholders at the Annual General Meeting held on 28 July 2020 with 76,626,100 votes in favour and 22,760 votes against. This remuneration policy approved on 28 July 2020 is in line with the policy applied for the remuneration paid to Directors and Chief Executive Officer in the preceding period. All remuneration for directors was in conformity with this policy.

Role of the Remuneration Committee and Shareholder Involvement

The Committee is composed of three (3) non-executive Directors. During 2021, the Remuneration Committee was composed of Paul Testaferrata Moroni Viani and Paul Fenech and Samir Saied (who resigned from Chairman on 13 October 2021), all of whom are non-executive Directors of the Company. The Chief Executive Officer (CEO) of the Company is invited to attend the meetings of the Committee. The Company Secretary, Dr. Francis Galea Salomone acts as Secretary to the Remuneration Committee. During the period under review the Committee held three meetings. All Committee members attended the meetings held.

During 2021, the Remuneration Committee (the ‘Committee’) has been tasked to draw up the Remuneration Policy and submit it for the Board’s consideration. This Remuneration Policy sets out the elements underpinning GO’s policy for the remuneration of its Board of Directors. This Policy is focused on delivering fair, responsible and transparent remuneration that would contribute to the achievement of the Company’s long-term interests, sustainability and strategic objectives and that would support GO in maintaining its status as a leading player in the Maltese telecoms sector.

The Remuneration Policy has been prepared in accordance with the requirements of the EU Shareholder Rights Directive as reflected in Chapter 12 of the Capital Markets Rules issued by the Malta Financial Services Authority. This Policy has been considered and approved by the Company’s Board of Directors and by the Company’s shareholders at the last Annual General Meeting. The approved policy can be viewed on the company’s website.

The Remuneration Committee, shall, from time to time review the Policy to ensure its continued alignment with the Company’s business strategy. The Board of Directors shall submit the Company’s remuneration policy before the Company’s General Meeting for its approval every four (4) years, or earlier, in the case material amendments are effected thereto.

It is the opinion of the Company’s Board of Directors that there is no risk of a conflicting interest in the drawing up of this Policy as it is being submitted before the Company’s General Meeting for its consideration and approval. Furthermore, the aggregate emoluments payable to the Board of Directors in any one financial year are also determined by the General Meeting of Shareholders.

Underlying Framework

The Policy is based on the principle of paying fair and reasonable remuneration to the most appropriate persons, based on criteria of responsibility, qualification and dedication, while ensuring that such payment is competitive and in the longer-term interest of the Company. GO believes that pursuant to this Policy, it can continue attracting and retaining professional and qualified persons to achieve its operational objectives and business strategies in an increasingly competitive environment. It is in the Company’s interest, for its continued success, to ensure that such persons are provided with appropriate incentives that would motivate them and encourage their performance.

GO p.l.c.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Remuneration report - continued

In drawing up this Policy, the Remuneration Committee considered local and international best market practices for entities of comparable size, activity and complexity as well as applicable statutory provisions.

Whilst decisions on remuneration of employees other than the Company’s Senior Management remain the responsibility of Company management, the Committee has considered the Company’s wider employee remuneration structure, practices and reward philosophy when establishing this Policy so as to ensure consistency of remuneration practices across the Company.

Directors

The Company’s Board of Directors is composed entirely of Non-Executive Directors. The Chief Executive Officer (“CEO”) is tasked with the Company’s day-to-day management. In accordance with Capital Markets Rule 12.2A, this Remuneration Policy shall also apply to the Company’s CEO. Whilst the principles underlying the Policy have equal application, a distinction is to be drawn between the remuneration payable to the Directors and that payable to the CEO.

Director’s Remuneration

Directors are appointed to the Board in accordance with Article 57 of the Company’s Articles of Association. The Chairman is appointed for a period as determined by the appointing shareholder. Directors appointed by Shareholders holding not less than twelve percent (12%) of the issued share capital of the Company shall hold the position for the period determined by the appointing Shareholders, so long as it does not exceed three (3) years. The tenure of the remaining directors who are elected by the Shareholders in General Meeting, extends from one annual general meeting to the next. None of the Directors have a service contract with the Company but four of the directors are employees of the ultimate parent, however there are no specific amounts of their remuneration allocated to their role at GO.

In accordance with Article 65 of the Articles of Association of the Company, the aggregate remuneration of all Directors in any one financial year shall be determined by the Shareholders in General Meeting. The Board of Directors shall be responsible to establish and allocate, from such amount, a fixed fee to each Director which shall be payable on a monthly basis. A benchmarking exercise was conducted and despite the fact that the AGM approved a total amount of €300,000, the Directors’ fees as approved by the Board for 2021 were set at €35,000 per annum for each Director. This level was deemed consistent with market practice and conducive to the achievement of the Company’s strategic and long term objectives. The Board of Directors has agreed to review the current remuneration to ensure that it is commensurate with the duties and responsibilities of directors.

A Director may be invited to sit on a committee or working group of the Company or to perform other services related to the operations of the Company which fall outside the scope of his/her ordinary duties as a Director. In such a case, and in accordance with Article 66 of the Articles of Association, the Board shall have the discretion to remunerate such Director, in addition to or in substitution of his/her remuneration as Director. A Director may also hold such other office with the Company, in addition to the office of Director, and his/her remuneration therefore shall be determined by the Board from time to time. Directors may be paid all travelling, hotel and other expenses properly incurred by them in attending and returning from meetings of Board of Directors or of Board committees or General Meetings, or in connection with the business of the Company. Such expenses shall be reimbursable in accordance with the Company’s expenses policy from time to time.

GO p.l.c.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Remuneration report - continued

For the duration of their directorship, Directors shall be entitled to benefit from certain benefits such as a telecommunications services package and coverage under a professional indemnity insurance. The Remuneration Committee is tasked with the periodical review of non-cash benefits granted by the Company to Directors such as to ensure that this component of remuneration remains competitive with respect to market benchmarks. The Committee has the discretion to recommend the granting of reasonable additional benefits as may be deemed appropriate, but none were granted during the current year.

Non-Executive Directors are not entitled to any payments linked to termination of their directorships. Article 70.3 of the Articles of Association of the Company allows for the payment of a gratuity, pension or allowance to Executive Director on retirement. At present all Directors to the Board are Non-Executive.

Directors Emoluments

The total emoluments received by Directors from the Company for the financial year ended 31 December 2021 and 2020 are specified below:

(*) :

-Mr Norbert Prihoda was appointed 6 February 2020.

-Mr Samir Said resigned on 11 October 2021.

-Mr Mohamed Fadhel Kraiem resigned on 28 February 2020.

2021

2020

Director

Gross

fixed

remuneration

Net of tax deducted at source received

Gross

fixed

remuneration

Net of tax deducted at source received

Mr Sofiane Antar

€35,000

€23,590

€35,000

€23,590

Mr Lassaad Ben Dhiab

€35,000

€23,590

€35,000

€23,590

Mr Paul Fenech

€35,000

€29,756

€35,000

€29,756

Mr Faker Hnid

€35,000

€23,590

€35,000

€15,384

Mr Deepak Srinivas Padmanabhan

€35,000

€22,760

€35,000

€22,760

Mr Norbert Prihoda (*)

€35,000

€23,543

€31,455

€21,286

Mr Paul Testaferrata Moroni Viani

€35,000

€22,750

€35,000

€22,750

Mr Samir Said (*)

€27,327

€ 22,750

€22,167

€15,248

Mr Mohamed Fadhel Kraiem (*)

€5,833

GO p.l.c.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Remuneration report - continued

Mr Hnid also received gross directorship from two Group companies amounting to €45,557 (2020: €15,384) or €29,700 (2020: €10,000) net of tax deducted at source.

Mr Padmanabhan also received gross directorship fees from one Group company amounting to €12,000 (2020: €Nil) or €7,800 (2020: €Nil) net of tax deducted at source.

Mr Said also received gross directorship fees remuneration from one Group company amounting to €15,615 (2020: €6,667) or €10,010 (2020: €4,333) net of tax.

Mr Testaferrata Moroni Viani also received gross directorship fees from one Group company amounting to €20,000 (2020: €6,667) or €13,000 (2020: €4,343) net of tax deducted at source. During 2020, Mr Testaferrata Moroni Viani got refunded other expenses amounting to €3,767 (2021 €Nil).

Other benefits to the Directors exclude reimbursement of mobile and internet services, which are considered standard and uniformly granted within the sector.

CEO’s Remuneration

The Remuneration Policy with respect to the Company’s Chief Executive Officer is designed to attract and motivate a qualified and professional individual possessing the necessary know-how and experience to steer the Company’s short and long-term business strategy in a highly competitive market and structured to provide a fair and appropriate balance between the fixed and variable components of the remuneration awarded.

In determining the policy, the Company has taken account of the CEO’s role within the Company, his assigned functions and responsibilities. Relevant market data has been considered to ascertain that compensation awarded is in line with that granted by companies of comparable size for roles of similar scope and responsibility. Remuneration structure and practices applicable to other senior executives within the Company have also been taken into account.

The CEO’s remuneration is made up of fixed and variable elements as described below.

The CEO shall receive a fixed salary which corresponds to a basic remuneration received for the performance of his executive functions. This component is designed to reflect the individual’s professional profile and level of responsibility and shall not, in any way, be linked to variable parameters or results achieved. The fixed element, emanating from the contract of employment, is determined by reference to market practice amongst other factors, and is set at a level that motivates the CEO in striving to attain company long-term strategic and performance objectives. Furthermore, the Company does not have the possibility to reclaim any variable remuneration. The level of variable remuneration is deemed set at a level that contributes to striving towards attaining the Group’s long-term performance goals. The level of variable remuneration is set in a manner which maintains an adequate proportion of fixed and variable remuneration.

The CEO shall also be entitled to benefit under an annual bonus scheme aimed at rewarding his performance. The incentive is measured according to the level of achievement of a set of targets as described below, and objectives as determined by the Remuneration Committee on an annual basis, and which are designed to contribute to the business interest and sustainability of the Company.

The nature of the performance targets may vary from year to year depending on the circumstances of the Company’s business operations. For 2021, the performance targets were based on EBITDA and operating cashflow generation.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Remuneration report - continued

The degree of achievement of the said targets shall be determined by the Remuneration Committee. In the case of financial objectives, the Remuneration Committee shall compare the target objectives with realised outcomes. In the case of non-financial objectives, the evaluation would involve the Committee’s subjective assessment of the CEO’s performance which shall be exercised in a reasonable manner.

Save for the annual bonus incentive described above, the CEO shall not be entitled to benefit under any other incentive scheme having a variable nature and shall not be entitled to any share-based remuneration.

With the aim of offering a market-competitive remuneration package, the CEO shall be entitled to a number of benefits as would typically be available to senior executives. These shall include professional indemnity insurance policy and health insurance policy cover, free telecommunication services, accommodation and flights, and a fully covered company car. The CEO shall also be entitled to claim reimbursement of expenses incurred up to a capped monthly amount of €3,500 in accordance with the Company’s expenses policy.

The CEO is engaged on a three-year contract which was signed in 2021, which may be terminated by three (3) months’ notice by either party. The contract does not provide for supplementary pension, early retirement schemes or payments linked to termination.

The total emoluments received by the CEO for this financial year were €350,448 (2020: €350,335) as fixed remuneration and €269,278 (2020: €132,266) as variable remuneration. Mr Patil was reimbursed expenses amounting to €31,676 (2020: €23,500).

Senior Management Remuneration

For the purposes of this Remuneration Statement, references to Senior Management shall mean the Chief Executive Officer and the Chief Officers.

The base salaries of all Senior Management are established in accordance with the Company’s salary structure. The Remuneration Committee is satisfied that in all cases the base remuneration established is in line with the criteria described in the introduction to this report. In particular, in reaching this conclusion, the Committee has paid due regard to market conditions and remuneration rates offered by comparable organisations for comparable roles and to the established performance-related remuneration and evaluation system.

Members of the Senior Management are each entitled to a cash performance bonus. In addition, the Board of Directors may approve additional bonuses for outstanding performances and achievements. Performance is measured on the basis of appraisals drawn up or endorsed by the CEO. These bonuses constitute the variable remuneration disclosed in the table below.

The rate at which the bonus is paid depends on the Committee’s evaluation of the CEO’s assessment of the individual officer’s performance. Bonuses are calculated on the basis of personal performance, and departmental and Company objectives. Total amounts are subject to the discretion of the Remuneration Committee and the Board of Directors.

The Company does not have a policy in place which regulates the terms and conditions of contracts of Senior Management with respect to contract duration, notice periods, termination payments and related matters.

As is the case with Directors, Senior Management are entitled to non-cash benefits in terms of a number of services offered by the Company and to health insurance. None of the Senior Management are entitled to profit sharing, share options or pension benefits.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Remuneration report - continued

In terms of the Code Provisions 8.A.5, total emoluments received by Senior Management during the year under review were €1,168,477 (2020: €1,310,462) as fixed remuneration and €688,031 (2020: €324,498) as variable remuneration.

During the financial year ended 31 December 2020, the Company has recognised a charge totalling €478,000 payable to two of its Chief Officers whose employment was terminated.

F.Other information on remuneration in terms of Appendix 12.1 of the Capital Markets Rules

In terms of the requirements within Appendix 12.1 of the Capital Market Rules, the following table presents the annual change of remuneration, of the company’s performance, and of average remuneration on a full-time equivalent basis of the company’s employees (other than directors) over the two most recent financial years. The Company’s Directors, which are all non-executive Directors, have been excluded from the table below since they have a fixed fee as described in Section B above.

Employee remuneration (excluding CEO)

23,936

24,150

(0.9)

Annual aggregate employee remuneration

24,556

24,632

(0.3)

Average employee remuneration (excluding

CEO) - full-time equivalent

4.9

Average number of employees

748

792

Company performance – EBITDA

47,883

45,212

5.9

Company operating cash flow generated

46,220

39,668

8.1

Group performance – EBITDA

73,212

72,129

1.5

Group operating cash flow generated

67,843

63,665

6.6

The Group and the Company’s performance is measured using EBITDA and operating cashflow generated as management has determined that EBITDA is the best measure of direct performance.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Company information

Our purpose

GO is Malta’s leading telecommunications services organisation, with over 500,000 customer connections. The first quadruple play operator in the market, GO is a converged and integrated telecommunications group, offering an unparalleled range of services: fixed line telephony, mobile telephony, broadband internet services and digital television. GO also provides business-related services, such as data networking solutions, business IP services, cloud services, IPLCs, managed and co-location facilities. Our purpose is ‘to drive a digital Malta where no-one is left behind’.

Company registration number: C22334

T: (+356) 2594 2458/9, (+356) 8007 5702 (Freephone) | investor_relations@go.com.mt | www.go.com.mt

Registered shareholders with five percent (5%) or more of the Share Capital of the Company:

As at 31 December 2021, TT ML Limited held 65.42% of the total issued share capital.

Board of Directors

Sofiane Antar

Lassaad Ben Dhiab

Paul Fenech

Faker Hnid

Deepak Padmanabhan

Norbert Prihoda

Paul Testaferrata Moroni Viani

Samir Saied (resigned 13 October 2021)

Company Secretary

Dr Francis Galea Salomone

Chief Officers

Nikhil Patil

Chief Executive Officer

Reuben Attard

Chief Finance Officer

Arthur Azzopardi

Chief Officer – GO Business

Kelvin Camenzuli

Chief Digital Officer

Ayrton Caruana

Chief Service Operations Officer

Antonio Ivankovic

Chief Customer Experience Officer

Sarah Mifsud

Chief People Officer

GO p.l.c.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Statements of financial position

Group

Company

As at 31 December

Notes

2021

2020

2021

2020

€000

ASSETS

Non-current assets

Property, plant and equipment

Investments in subsidiaries

51,587

50,877

Investments in associates

Trade and other receivables

Total non-current assets

Trade and other receivables

Cash and cash equivalents

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Statements of financial position - continued

EQUITY AND LIABILITIES

Total capital and reserves attributable

to owners of the Company

Non-controlling interests

Non-current liabilities

Deferred tax liabilities

Provisions for pensions

Total non-current liabilities

Provisions for pensions

Total current liabilities

Current tax liabilities

238

443

Total equity and liabilities

The accompanying notes are an integral part of these financial statements

The financial statements on pages 37 to 140 were approved and authorised for issue by the Board of Directors on 30 March 2022. The financial statements were signed on behalf of the Company’s Board of Directors by Paul Testaferrata Moroni Viani and Paul Fenech as per the Directors’ Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Financial Report 2021.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Income statements

Administrative and other related expenses

Year ended 31 December

Depreciation and amortisation

Gain on disposal of other investment

Owners of the Company

Non-controlling interests

Earnings per share (euro cent)

9c8

13c3

The accompanying notes are an integral part of these financial statements.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Statements of comprehensive income

Other comprehensive income

Year ended 31 December

Items that will not be reclassified to profit or

loss

Income tax relating to components of other

obligations

(82)

comprehensive income:

Total other comprehensive income for the year,

obligations

(12)

net of tax

Total comprehensive income for the year

The accompanying notes are an integral part of these financial statements.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Statements of changes in equity

Attributable to owners of the Company

Balance at 1 January 2020

Transfer upon realisation through

disposal of other investment

10, 21

(643)

643

(696)

643

Transactions with owners in their

capacity as owners

Dividends paid to equity holders

(10,131)

(2,151)

(12,282)

Deemed distribution by subsidiary

(84)

(51)

(135)

Changes in ownership interest that

do not result in loss of control:

Acquisition of non-controlling interests

Total transactions with owners in their

Balance at 31 December 2020

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Statements of changes in equity - continued

Group - continued

Attributable to owners of the Company

Balance at 1 January 2021

Transactions with owners in their

capacity as owners

Dividends paid to equity holders relating

to preceding financial year

(16,210)

(2,915)

(19,125)

Dividends paid to equity holders relating

to current financial year

(7,092)

Changes in ownership interest that

do not result in loss of control:

Acquisition of non-controlling interests

Total transactions with owners in their

Balance at 31 December 2021

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Statements of changes in equity - continued

Balance at 1 January 2020

Transactions with owners in their capacity

15,670

15,617

Dividends paid to equity holders

(10,131)

Total transactions with owners in their capacity

Balance at 31 December 2020

(10,131)

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Statements of changes in equity - continued

Balance at 1 January 2021

Transactions with owners in their capacity

13,617

13,639

Dividends paid to equity holders for the preceding

financial year

(16,210)

Dividends paid to equity holders for the current

financial year

(7,092)

Total transactions with owners in their capacity

Balance at 31 December 2021

(23,302)

The accompanying notes are an integral part of these financial statements.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Statements of cash flows

Cash flows from operating activities

Year ended 31 December

Cash generated from operations

Interest paid on bank overdrafts

Interest charges on lease liabilities

Payments under voluntary retirement scheme

Payments in relation to pension obligations

(80)

Net cash from operating activities

Cash flows from investing activities

Payments to acquire property, plant and

equipment and intangible assets

Payment for acquisition of non-controlling stake

Payment for acquisition of interests in associates

(2,182)

Payment for acquisition of other investments

(568)

(406)

Proceeds from disposal of other investment

3,235

Loans advanced to subsidiary

(2,451)

Loan interest received from subsidiary

403

Loan repayments by subsidiary

7,000

Dividend received from subsidiary

3,034

2,239

Net cash used in investing activities

Cash flows from financing activities

Proceeds from bank loans

Repayment of bank loans

Proceeds from bond issue, net of issue costs

59,172

39,336

59,172

Principal element of lease payments

Net cash (used in)/from financing activities

Net movements in cash and cash equivalents

Cash and cash equivalents at beginning

Exchange differences on cash and cash

Equivalents

(17)

Movement in cash pledged as guarantees

Cash and cash equivalents at end of year

The accompanying notes are an integral part of these financial statements.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Notes to the financial statements

1.Summary of significant accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

1.1 Basis of preparation

The consolidated financial statements include the financial statements of GO p.l.c. (GO) and its subsidiaries and are prepared in accordance with the requirements of International Financial Reporting Standards (IFRSs) as adopted by the EU and with the requirements of the Maltese Companies Act (Cap. 386). They have been prepared under the historical cost convention, except as modified by the fair valuation of certain financial instruments and the land and buildings class within property, plant and equipment. Unless otherwise stated, all financial information presented has been rounded to the nearest thousand.

The preparation of financial statements in conformity with IFRSs as adopted by the EU requires the use of certain accounting estimates. It also requires Directors to exercise their judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in Note 3.

Financial position of the Group and the Group’s cash flow forecasting process

As at 31 December 2021, the Group’s current liabilities exceeded its current assets by €2.194 million (2020: €3.366 million). The Group envisages that a significant level of earnings will be generated throughout the forthcoming financial year, through its cash generating units, which will enable the Group to manage effectively its forecasted cash flows and liquidity needs. Furthermore, the Group has unutilised banking facilities which are considered in the context of the Group’s liquidity management programme. These factors are embedded within the Group’s cash flow forecasts.

The Group monitors the direct and indirect impacts of the COVID-19 pandemic and the conflict with Ukraine on its cash flow forecasting process, with a view to assessing on a regular basis the potential effects on its business model and cash flow generation attributable to the different cash generating units. Up to the date of authorisation for issue of these financial statements, the impacts are considered to be minimal. As events unfold and conditions develop, the Group will adapt its assessment and cash flow forecasts accordingly.

Standards, interpretations and amendments to published standards effective in 2021

In 2021, the Group adopted amendments to existing standards that are mandatory for the Group’s accounting period beginning on 1 January 2021. The adoption of these revisions to the requirements of IFRSs as adopted by the EU did not result in changes to the Group’s accounting policies impacting the financial performance and position.

Standards, interpretations and amendments to published standards that are not yet adopted

Certain new standards, amendments and interpretations to existing standards have been published by the date of authorisation for issue of these financial statements but are mandatory for the Group’s accounting periods beginning after 1 January 2021. The Group has not early adopted these revisions to the requirements of IFRSs as adopted by the EU and the Directors are of the opinion that there are no requirements that will have a possible significant impact on the Group’s and Company’s financial statements in the period of initial application.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

1.Summary of significant accounting policies - continued

1.2Consolidation

(a)Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. The Group also assesses existence of control where it does not have more than 50% of the voting power but is able to govern the financial and operating policies by virtue of de-facto control. De-facto control may arise in circumstances where, for instance the size of the Group’s voting rights relative to the size and dispersion of holdings of other shareholders give the Group the power to govern the financial and operating policies. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The Group applies the acquisition method of accounting to account for business combinations that fall within the scope of IFRS 3. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed (identifiable net assets) in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of the acquiree’s identifiable net assets.

Goodwill is initially measured as the excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired. If this is less than the fair value of the identifiable net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in profit or loss.

Upon consolidation, inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries are changed where necessary to ensure consistency with the policies adopted by the Group.

In the Company’s separate financial statements, investments in subsidiaries are accounted for by the cost method of accounting, i.e. at cost less impairment. Cost is adjusted to reflect changes in consideration arising from contingent consideration amendments. Cost also includes directly attributable costs of acquiring the investment. Provisions are recorded where, in the opinion of the Directors, there is an impairment in value. Where there has been an impairment in the value of an investment, it is recognised as an expense in the period in which the diminution is identified. The results of subsidiaries are reflected in the Company’s separate financial statements only to the extent of dividends receivable. On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to profit or loss.

(b)Transactions with non-controlling interests

The Group treats transactions with non-controlling interests, where the acquisition or disposal of partial interests in a subsidiary has no impact on the Group’s ability to control the subsidiary’s financial and operating policies, as transactions with equity owners of the Group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of the identifiable net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

1.Summary of significant accounting policies - continued

1.2Consolidation - continued

When the Group ceases to have control, any retained interest in the entity is remeasured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

(d)Joint ventures

Under IFRS 11, investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor. Joint ventures are accounted for using the equity method in the consolidated financial statements. Under the equity method of accounting, interests in joint ventures are initially recognised at cost and adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses and movements in other comprehensive income. When the Group’s share of losses in a joint venture equals or exceeds its interests in the joint ventures (which includes any long-term interests that, in substance, form part of the Group’s net investment in the joint ventures), the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures.

Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures have been changed where necessary to ensure consistency with the policies adopted by the Group.

In the Company’s separate financial statements, investments in joint ventures are accounted for by the cost method of accounting, i.e. at cost less impairment. Provisions are recorded where, in the opinion of the Directors, there is impairment in value. Where there has been impairment in the value of an investment, it is recognised as an expense in the period in which the diminution is identified. The results of the joint venture are reflected in the Company’s separate financial statements only to the extent of dividends receivable. On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to profit or loss

(e) Associates

Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting in the consolidated financial statements. Under the equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the investor’s share of the profit or loss of the investee after the date of acquisition. The Group’s investment in associates includes goodwill identified on acquisition.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate.

The Group’s share of post-acquisition profit or loss is recognised in the income statement, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the investment.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

1.Summary of significant accounting policies - continued

1.2Consolidation - continued

When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it

has incurred legal or constructive obligations or made payments on behalf of the associate.

The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount adjacent to ‘share of profit/(loss) of associates’ in the income statement.

Profits and losses resulting from upstream and downstream transactions between the Group and its associates are recognised in the Group’s financial statements only to the extent of unrelated investor’s interests in the associates. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

Dilution gains and losses arising in investments in associates are recognised in the income statement.

In the Company’s separate financial statements, investments in associates are accounted for by the cost method of accounting, i.e. at cost less impairment. Provisions are recorded where, in the opinion of the Directors, there is impairment in value. Where there has been impairment in the value of an investment, it is recognised as an expense in the period in which the diminution is identified. The results of the associate are reflected in the Company’s separate financial statements only to the extent of dividends receivable. On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to profit or loss.

(f) Business combinations involving entities under common control

Business combinations involving entities under common control are transactions in which all of the combining entities are controlled by the same party or parties before and after the transaction and that control is not transitory. The key feature of a transaction among entities under common control is that there is no change in the ultimate control of the combining entities as a result of the transaction. Control could be exercised by a group of individuals that are all part of the same close family group when they have the collective power to govern the financial and operating policies of the entity.

The Company has chosen to apply the pooling of interests method or predecessor accounting to account for transactions involving entities under common control. The Company accounts for business combinations involving entities under common control by recording:

(i)the transaction as if it had already taken place at the beginning of the earliest period presented;

(ii)the assets and liabilities of the acquired entity using predecessor book values from the consolidated financial statements of the controlling party; and

(iii)the difference between the consideration given and the aggregate book value of the assets and liabilities of the acquired entity as an adjustment to equity.

When the controlling party does not prepare financial statements, the book values from the financial statements of the acquired entity are used.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

1. Summary of significant accounting policies - continued

1.3Segment reporting

The Group determines and presents operating segments based on the information that internally is provided to the Board of Directors, which is the Group’s chief operating decision-maker in accordance with the requirements of IFRS 8, Operating Segments.

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components, and for which discrete financial information is available. An operating segment’s operating results are reviewed regularly by the Board of Directors to make decisions about resources to be allocated to the segment and to assess its performance executing the function of the chief operating decision-maker.

1.4Foreign currency translation

(a)Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in euro, which is the Company’s functional and presentation currency.

(b)Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. All foreign exchange gains and losses are presented in the income statement within ‘other income’ or ‘other expenses’.

1.5Property, plant and equipment

All property, plant and equipment is initially recorded at historical cost. Land and buildings comprise various exchanges, offices and outlets around the Maltese islands. Land and buildings are shown at fair value based on periodic, but at least triennial, valuations by external independent valuers, less subsequent depreciation for buildings. Valuations are carried out on a regular basis such that the carrying amount of property does not differ materially from that which would be determined using fair values at the end of the reporting period. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset, and the net amount is restated to the revalued amount of the asset.

All other property, plant and equipment is stated at historical cost less accumulated depreciation and accumulated impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located, and capitalised borrowing costs. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

Borrowing costs which are incurred for the purpose of acquiring or constructing a qualifying asset are capitalised as part of its cost. Borrowing costs are capitalised while acquisition or construction is actively underway. Capitalisation of borrowing costs is ceased once the asset is substantially complete, and is suspended if the development of the asset is suspended.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

1.Summary of significant accounting policies - continued

1.5Property, plant and equipment - continued

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

Increases in the carrying amount arising on revaluation of land and buildings are credited to other comprehensive income and shown as a revaluation reserve in shareholders’ equity. Decreases that offset previous increases of the same individual asset are charged in other comprehensive income and debited against the revaluation reserve directly in equity; all other decreases are charged to profit or loss. Any subsequent increases are recognised in profit or loss up to the amount previously charged to profit or loss, and then reflected in other comprehensive income and shown as a revaluation reserve.

An external, independent valuer, having appropriate recognised professional qualifications and recent experience in the location and category of property being valued, values the Group’s property portfolio at periodical intervals. The fair values are based on market values, being the estimated amount or price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. In the absence of current prices in an active market, the valuations are prepared by considering the aggregate of the estimated cash flows expected to be received from renting out the property. A yield that reflects the specific risk inherent in the net cash flows is then applied to the net annual cash flows to arrive at the property valuation.

Land is not depreciated as it is deemed to have an indefinite life. Depreciation on other assets is calculated using the straight-line method to allocate their cost or revalued amounts to their residual values over their estimated useful life. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term.

The rates of depreciation used for the current and comparative periods are as follows:

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

1.Summary of significant accounting policies - continued

1.5Property, plant and equipment - continued

The assets’ residual values and useful lives are reviewed and adjusted if appropriate, at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (Note 1.7). Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount and are recognised in profit or loss.

When revalued assets are sold, the amounts included in the revaluation reserve relating to the asset are transferred to retained earnings.

1.6Intangible assets

(a)Indefeasible rights of use

Indefeasible rights of use (IRUs) and Droit de Passage (DDPs) correspond to the right to use a portion of the capacity of a terrestrial or submarine transmission cable granted for a fixed period. IRUs are recognised as an asset when the Group has the specific indefeasible right to use an identified portion of the underlying asset, generally optic fibres, or dedicated wavelength bandwidth, and the duration of the right is for the major part of the underlying asset’s economic life. They are depreciated over the shorter of the expected period of use and the life of the contract.

(b)Computer software

The Group’s computer software comprises software developed by Group entities and software acquired by Group entities. Costs associated with maintaining computer software programmes are recognised as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognised as intangible assets when the following criteria are met:

•it is technically feasible to complete the software product so that it will be available for use;

•management intends to complete the software product and use or sell it;

•there is an ability to use or sell the software product;

•it can be demonstrated how the software product will generate probable future economic benefits;

•adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and

•the expenditure attributable to the software product during its development can be reliably measured.

Directly attributable costs that are capitalised as part of the software product include the software development employee costs and an appropriate portion of relevant overheads.

Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.

Computer software development costs recognised as assets are amortised over their estimated useful lives.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

1.Summary of significant accounting policies - continued

1.6Intangible assets - continued

(c)Goodwill

Goodwill represents the excess of the consideration transferred over the fair value of the Group’s share of the identifiable net assets of the acquired subsidiary at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in ‘intangible assets’.

Goodwill that is recognised separately within ‘intangible assets’ is carried at cost less accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units (CGUs) or groups of CGUs that are expected to benefit from the synergies of the business combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes.

A cash-generating unit to which goodwill has been allocated is tested for impairment annually, and also whenever there is an indication that the unit may be impaired, by comparing the carrying amount of the unit, including the goodwill, with the recoverable amount of the unit. The recoverable amount is the higher of fair value less costs to sell and value in use. Impairment losses on goodwill are not reversed.

(d)Licences

Separately acquired licences are shown at historical cost. Licences acquired in a business combination are recognised at fair value at the acquisition date. Licences have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost of licences over their estimated useful lives. Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives.

(e)Brand names

Brand names acquired in a business combination are recognised at fair value at the acquisition date. These assets have a finite useful life and are carried at cost less accumulated amortisation, which amortisation is calculated using the straight-line method over the expected life of the brand. The fair value of the brand names acquired in a business combination is based on the discounted estimated royalty payments that have been avoided as a result of the trademark being owned.

(f)Customer relationships

Contractual customer relationships acquired in a business combination are recognised at fair value at the acquisition date. The contractual customer relations have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method over the expected life of the customer relationship. The fair value of customer relationships acquired in a business combination is determined using the multi-period excess earnings method, whereby the subject asset is valued after deducting a fair return on all other assets that are part of creating the related cash flows.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

1.Summary of significant accounting policies - continued

1.6Intangible assets - continued

(g) Broadcasting rights

Broadcasting rights represent the payments made in relation to acquiring rights to broadcast various television networks or events. Amortisation is calculated using the straight-line method to allocate the cost of these rights over their contractual life. Premium TV content such as film or sports broadcasting rights, are recognised in the statement of financial position when they are contracted and expensed when broadcast. The cost of premium TV content is recognised in profit or loss on the first broadcast, or where the rights are for a period, seasons or competitions, such rights are principally recognised on a straight-line basis across the period, seasons or competitions.

(h)Technical knowledge

Technical knowledge acquired or developed to a plan or design for the production of new or substantially improved products and processes is capitalised if the product or process is technically and commercially feasible and the Group has sufficient resources to complete development. The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads. Capitalised expenditure on technical knowledge is stated at cost less accumulated amortisation and accumulated impairment losses.

(i)Other intangible assets

Other intangibles include the customer bases acquired by the Group. They have finite useful lives and are measured at cost less accumulated amortisation and accumulated impairment losses.

Amortisation

Amortisation is calculated using the straight-line method to allocate the cost of the intangible assets to their residual value over their estimated useful lives as follows:

Years

Indefeasible rights of use (IRUs)

Leasehold rights on buildings

1.33

Brand names

6 - 10

Customer relationships

Technical knowledge

2 -15

Broadcasting rights

over the period of rights

The assets’ residual values and useful lives are reviewed and adjusted as appropriate, at the end of each reporting period.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

1.Summary of significant accounting policies - continued

1.7Impairment of non-financial assets

Assets that have an indefinite useful life, for example goodwill or certain intangible assets, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

Goodwill that forms part of the carrying amount of an investment in a joint venture is not recognised separately, and therefore is not tested for impairment separately. Instead, the entire amount of the investment in a joint venture is tested for impairment as a single asset when there is objective evidence that the investment in a joint venture may be impaired.

1.8Non-current assets held for sale

Non-current assets are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell.

1.9Financial assets

Classification

The Group classifies its financial assets in the following measurement categories:

-those to be measured subsequently at fair value (either through Other Comprehensive Income, or through profit or loss), and

-those to be measured at amortised cost.

The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will either be recorded in profit or loss or Other Comprehensive Income (OCI). For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI).

The Group reclassifies debt investments when and only when its business model for managing those assets changes.

Recognition and derecognition

The Group recognises a financial asset in its statement of financial position when it becomes a party to the contractual provisions of the instrument.

Regular way purchases and sales of financial assets are recognised on settlement date, the date on which an asset is delivered to or by the Group. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership or has not retained control of the asset.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

1.Summary of significant accounting policies - continued

1.9Financial assets - continued

Measurement

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.

Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.

Debt instruments

Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Group classifies its debt instruments:

• Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as a separate line item in the statement of profit or loss, subject to materiality.

• FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/(losses). Interest income from these financial assets is included in finance income using the effective interest rate method. Foreign exchange gains and losses are presented in other gains/(losses) and impairment losses are presented as a separate line item in the statement of profit or loss.

• FVPL: assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a debt investment that is subsequently measured at FVPL is recognised in profit or loss and presented net within other gains/(losses) in the period in which it arises.

Equity instruments

The Group subsequently measures all equity investments at fair value. Where the Group’s management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognised in profit or loss when the Group’s right to receive payments is established.

Changes in the fair value of financial assets at FVPL are recognised in other gains/(losses) in the income statement as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

1.Summary of significant accounting policies - continued

1.9Financial assets - continued

Impairment

The Group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

For trade receivables and contract assets, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

For all other financial assets that are subject to impairment under IFRS 9, the Group applies a three-stage model for impairment, based on changes in credit quality since initial recognition. A financial asset that is not credit impaired on initial recognition is classified in stage 1.

Financial assets in stage 1, have their expected credit loss measured at an amount equal to the portion of lifetime expected credit loss that results from default events possible within the next 12 months, or until contractual maturity if shorter. If the Group identifies a significant increase in credit risk since initial recognition, the asset is transferred to stage 2 and its expected credit loss is measured on a lifetime basis, that is up until contractual maturity. If the Group determines that a financial asset is credit impaired, the asset is transferred to stage 3 and the expected credit loss is measured on a lifetime credit loss basis.

1.10Inventories

Goods held for resale and other inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted-average cost method, and comprises the invoiced value of goods, including transport and handling costs. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

1.11Trade and other receivables

Trade receivables comprise amounts due from customers for services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less expected credit loss allowances.

Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, when they are recognised at fair value. The Group holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method.

1.12Cash and cash equivalents

In the statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with banks and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

1.Summary of significant accounting policies - continued

1.13Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares are shown in equity as a deduction, net of tax, from the proceeds.

1.14Financial liabilities

The Group recognises a financial liability in its statement of financial position when it becomes a party to the contractual provisions of the instrument. The Group’s financial liabilities, other than derivative contracts, are classified as financial liabilities measured at amortised cost, i.e. not at fair value through profit or loss under IFRS 9. Financial liabilities not at fair value through profit or loss are recognised initially at fair value, being the fair value of consideration received, net of transaction costs that are directly attributable to the acquisition or the issue of the financial liability. These liabilities are subsequently measured at amortised cost. The Group derecognises a financial liability from its statement of financial position when the obligation specified in the contract or arrangement is discharged, is cancelled or expires.

1.15Trade and other payables

Trade payables comprise obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

1.16Borrowings

Borrowings are recognised initially at the fair value of proceeds received, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least twelve months after the end of the reporting period.

1.17Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

1.Summary of significant accounting policies - continued

1.18Current and deferred tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

The current tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the reporting date.

Deferred tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

1.19Provisions for legal and other claims

Provisions for legal and other claims are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

1.Summary of significant accounting policies - continued

1.20Revenue recognition

Revenues include all revenues from the ordinary business activities of GO. Ordinary activities do not only refer to the core business but also to other recurring sales of goods or rendering of services. Revenues are recorded net of value added tax. GO’s business includes mobile services, broadband access to the fixed network and the internet, television, connection and roaming fees billed to other mobile operators (wholesale business), and sales of mobile handsets, other telecommunications equipment, and accessories.

(a)Sale of goods and services

Revenues are recognised in accordance with the provision of goods or services, provided that collectability of the consideration is probable.

IFRS 15 requires that at contract inception the goods or services promised in a contract with a customer are assessed and each promise to transfer to the customer the good or service is identified as a performance obligation. Promises in a contract can be explicit or implicit if the promises create a valid expectation to provide a good or service based on the customary business practices, published policies, or specific statements.

A contract asset must be recognised if GO recorded revenue for fulfillment of a contractual performance obligation before the customer paid consideration or before – irrespective of when payment is due – the requirements for billing and thus the recognition of a receivable exist.

A contract liability must be recognised when the customer paid consideration or a receivable from the customer was due before GO fulfilled a contractual performance obligation and thus recognised revenue.

Multiple-element arrangements involving the delivery or provision of multiple products or services must be separated into distinct performance obligations, each with its own separate revenue contribution that is recognised as revenue on fulfillment of the obligation to the customer. This especially concerns the sale of a mobile handset or other telecommunications equipment combined with the conclusion of a mobile or fixed-network telecommunications contract. The total transaction price of the bundled contract is allocated among the individual performance obligations based on their relative – possibly estimated – stand-alone selling prices, i.e., based on a ratio of the stand-alone selling price of each separate element to the aggregated stand-alone selling prices of the contractual performance obligations. As a result, the revenue to be recognised for products (often delivered in advance) such as mobile handsets that are sold at a subsidised or nil price in combination with a long-term service contract is higher than the amount billed or collected. This leads to the recognition of a contract asset – a receivable arising from the customer contract that has not yet legally come into existence – in the statement of financial position. The contract asset is reversed and reduced over the remaining minimum contract period, lowering revenue from the other performance obligations (in this case mobile service revenues) compared with the amounts billed. In contrast to the amounts billed, this results in higher revenue from the sale of goods and lower revenue from the provision of services.

Customer activation fees and other advance one-time payments by the customer that do not constitute consideration for a separate performance obligation are classified as contract liabilities and are deferred and recognised as revenue over the minimum contract term or, in exceptional cases (e.g., in the case of contracts that can be terminated at any time) over the expected contract period. The same applies to fees for installation and set-up activities that do not have an independent value for the customer.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

1.Summary of significant accounting policies - continued

1.20Revenue recognition - continued

As distinct from promotional offers, options to purchase additional goods or services free of charge or at a discount are separate performance obligations (material rights) for which part of the revenue is deferred as a contract liability until the option is exercised or expires, providing the discount on future purchases is an implicit component of the consideration for the current contract and is also significant. The measure of significance is whether the decision by the (average) customer to enter into the current contract is likely to have been significantly influenced by their right to the future discount.

IFRS 15 provides more detailed guidance on how to account for contract modifications. Changes must be accounted for either as a retrospective change (creating either a catch-up or deferral of previously recorded revenues), prospectively with a reallocation of revenues amongst identified performance obligations, or prospectively as separate contracts which will not require any reallocation.

Service offers

GO proposes to customers a range of fixed and mobile telephone services, fixed and mobile internet access services and content offers (TV). Contracts are for a fixed term (generally 24 months). Revenue generated from the use of voice and data communications (comprising fixed and wireless traffic) as well as television is recognised upon rendering of the agreed service, based on use by customers (e.g. call minutes, minutes of traffic or bytes of data processed) or availability over time period (e.g. monthly service costs).

Revenue from calls and messaging is recognised at the time the call or message is effected over the Group’s network. For prepaid traffic, the amount of unused traffic generates deferred revenue presented in ‘Contract liabilities’ on the statement of financial position. Revenue from the sale of prepaid credit is deferred until such time as the customer uses the credit or credit expires.

Revenues from traffic sales and services at a fixed rate over a specified period of time (flat rate) are recognised on a straight-line basis over the term covered by the rate paid by the customer. For service contracts with a continuous service provision, the contractually agreed total consideration is generally recognised as revenue on a straight-line basis over the minimum contract term, regardless of the payment pattern.

Fees consisting primarily of monthly charges for access to broadband, other internet access and connected services, TV and voice services, are recognised as revenue as the service is provided.

Contracts with customers generally do not include a material right, as the price invoiced for contracts and the services purchased and consumed by the customer beyond the specific scope (e.g. additional consumption and options) generally reflect their stand-alone selling prices. Service obligations transferred to the customer at the same pace are treated as a single obligation.

When contracts include contractual clauses covering commercial discounts (initial discount on signature of the contract) or free offers (e.g. three months of subscription free of charge), the Group defers these discounts or free offers over the enforceable period of the contract (period during which the Group and the customer have a firm commitment).

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

1.Summary of significant accounting policies - continued

1.20Revenue recognition - continued

If the performance obligations are not classified as distinct, the offer revenue is recognised on a straight-line over the contract term.

Separate equipment sales

Equipment (primarily mobile phones) sales may be separate from, or bundled with, a service offer. When separate from a service offer, the amount invoiced is recognised in revenue on delivery and receivable immediately. Revenue and expenses associated with the sale of telecommunications equipment are recognised when the products are delivered, provided there are no unfulfilled Company obligations that affect the customer’s final acceptance of the arrangement. When the equipment sale is combined with a service offer, the amount allocated to the equipment (bundled sale – see below) is recognised in revenue on delivery and received over the service contract.

Bundled equipment and service offers

GO proposes offers to its customers comprising equipment (e.g. a mobile handset) and services (e.g. a communication contract). Equipment revenue is recognised separately if the two components are distinct (i.e. if the customer can receive the service separately). Where one of the components in the offer if not at its separate selling price, revenue is allocated to each component in proportion to their individual selling prices. This is notably the case in offers combining the sales of a mobile phone at a reduced or nil price, where the individual selling price of the mobile phone is considered equal to its purchase cost and logistics expenses plus a commercial margin based on market practice.

Wholesale services offers

Where contract services are not covered by a firm volume commitment, revenue is recognised as the services are provided (which corresponds to transfer of control) over the contractual term. Where under contracts, the price, volume and term are defined, related revenue is recognised progressively based on actual traffic during the period, to reflect transfer of control to the customer. Revenue arising from the interconnection of voice and data traffic between other telecommunications operators is recognised at the time of transit across the Group’s network. Interconnection revenues are recognised in the period in which the calls are made or traffic used.

Financing

The Group does not expect to have a significant number of contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Group does not adjust any of the transaction prices for the time value of money.

(b)Rental income

Rental income from investment property is recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease.

(c)Interest income

Interest income is recognised using the effective interest method.

(d)Dividend income

Dividend income is recognised when the right to receive payment is established.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

1.Summary of significant accounting policies - continued

1.21Contract costs

Contract costs comprise the incremental costs of obtaining a contract (mainly sales commission paid to employees and third-party resellers) and the costs to fulfill a contract. These must be capitalised if it can be assumed that the costs will be compensated by future revenue from the contract. Incremental costs of obtaining a contract are additional costs that would have not been incurred had the contract not been concluded. Costs to fulfill a contract are costs relating directly to a contract that are incurred after contract inception and serve the purpose of fulfilling the contract but are incurred prior to fulfillment and cannot be capitalised under any other standard. GO makes use of the option to immediately recognise contract costs as an expense if the amortisation period of the asset it would have recognised in respect of them, would not have exceeded a year.

The costs of obtaining service contracts are capitalised and released to profit or loss on a straight-line basis over the enforceable contract term or over the estimated period of the customer relationship, if shorter.

Costs to fulfill a contract, when they qualify as non-distinct from the performance obligation, are capitalised and costs incurred are recorded on a time-apportioned basis over the effective period of the contract. The assumptions underlying the period over which the costs of fulfilling a contract are expensed are periodically reviewed and adjusted in line with observations; termination of the contractual relationship with the customer results in the immediate expensing of the remaining deferred costs. Where the carrying amount of deferred costs exceeds the remaining consideration expected to be received for the transfer of the related goods and services, less expected costs relating directly to the transfer of these goods and services still to be incurred, the excess amount is similarly immediately expensed.

1.22Customer contract assets and liabilities

The timing of revenue recognition may differ from customer invoicing. Trade receivables presented in the statement of financial position represent an unconditional right to receive consideration (primarily cash), i.e. the services and goods promised to the customer have been transferred.

By contrast, contract assets mainly refer to amounts allocated per IFRS 15 as compensation for goods or services provided to customers for which the right to collect payment is subject to providing other services or goods under that same contract. This is the case in a bundled offer combining the sale of a mobile phone and mobile communication services for a fixed-period, where the mobile phone is invoiced at a reduced or nil price leading to the reallocation of a portion of amounts invoiced for telephone communication services to the supply of the mobile phone. The excess of the amount allocated to the mobile phone over the price invoiced is recognised as a contract asset and transferred to trade receivables as the service is invoiced. Contract assets, like trade receivables, are subject to impairment for credit risk. The recoverability of contract assets is also verified, especially to cover the risk of impairment should the contract be interrupted.

Contract liabilities represent amounts paid by customers before receiving the goods and/or services promised in the contract. This is typically the case for advances received from customers or amounts invoiced and paid for goods or services not transferred yet, such as contracts payable in advance or prepaid packages (previously recognised in deferred income).

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

1.Summary of significant accounting policies - continued

1.23Leases

The Group is the lessee

At inception of a contract, an entity shall assess whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

•fixed payments (including in-substance fixed payments), less any lease incentives receivable

•variable lease payments that are based on an index or a rate, initially measured using the index or rate as at the commencement date

•amounts expected to be payable by the Group under residual value guarantees

•the exercise price of a purchase option if the Group is reasonably certain to exercise that option, and

•payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Group, the lessee’s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.

To determine the incremental borrowing rate, the Group:

•where possible, uses recent third-party financing received by the lessee as a starting point, adjusted to reflect changes in financing conditions since third party financing was received;

•uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by the Group, where there is no third party financing; and

•makes adjustments specific to the lease, e.g. term, country, currency and security.

Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Right-of-use assets are measured at cost comprising the following:

•the amount of the initial measurement of lease liability;

•any lease payments made at or before the commencement date less any lease incentives received; and

•any initial direct costs.

Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

1.Summary of significant accounting policies - continued

1.23Leases - continued

Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).

For leases of properties, the following factors are normally the most relevant:

•if there are significant penalties to terminate (or not extend), the Group is typically reasonably certain to extend (or not terminate);

•if any leasehold improvements are expected to have a significant remaining value, the Group is typically reasonably certain to extend (or not terminate);

•otherwise, the Group considers other factors including historical lease durations and the costs and business disruption required to replace the leased asset.

The lease term is reassessed if an option is actually exercised (or not exercised) or the Group becomes obliged to exercise (or not exercise) it. The assessment of reasonable certainty is only revised if a significant event or a significant change in circumstances occurs, which affects this assessment, and that is within the control of the lessee.

The Group is the lessor

Operating leases

Assets leased out under operating leases are included in property, plant and equipment in the statement of financial position and are accounted for in accordance with Note 1.5. They are depreciated over their expected useful lives on a basis consistent with similar owned property, plant and equipment. Rental income from operating leases is recognised in profit or loss on a straight-line basis over the lease term.

Finance leases

When assets are leased out under finance leases, the present value of the lease payments is recognised as a receivable. The difference between the gross receivable and the present value of the receivable is recognised as unearned finance income.

The method for allocating gross earnings to the accounting period is referred to as the ‘actuarial method’. The actuarial method allocates rentals between finance income and repayment of capital in each accounting period in such a way that finance income will emerge as a constant rate of return on the lessor’s net investment in the lease.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

1.Summary of significant accounting policies - continued

1.24Employee benefits

(a)Provisions for pensions

As explained in Note 21, following a judgement by the Court of Appeal on 7 July 2008, the Group was required to set up a pension scheme in favour of its eligible employees and former employees within three months of the judgement on a basis similar to that prescribed by the Pensions Ordinance, 1937. Such a scheme is in the form of a defined benefit plan.

A defined benefit plan defines an amount of pension benefit that an employee will receive on retirement. In the Group’s case, this amount is dependent on an employee’s final compensation upon retirement, as well as completed months of service. Eligibility to the scheme is also dependent on a minimum of 10 years’ service and vests only if at retirement date the employee is still in the employment of the Group.

The liability recognised in the statement of financial position in respect of a defined benefit plan is the present value of the defined benefit obligation at the end of the reporting period, together with adjustments for unrecognised past-service costs. A defined benefit obligation is calculated annually using the projected unit credit method. The present value of a defined benefit obligation is determined by discounting the estimated future cash outflows using interest rate yields of government or high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise. Past-service costs are recognised immediately in profit or loss.

(b)Termination benefits

Termination benefits are recognised as an expense when the Group is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancies are recognised as an expense if the Group has made an offer encouraging voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably.

1.25Dividend distribution

Dividend distribution to the Company’s shareholders is recognised as a liability in the Company’s financial statements in the period in which the dividends are approved by the Company’s shareholders.

The Company measures a liability to distribute non-cash assets as a dividend to its owners at the fair value of the assets to be distributed. Upon settlement of the dividend payable the Company recognises the difference between the carrying amount of the assets to be distributed and the carrying amount of the dividend payable in profit or loss.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

1.Summary of significant accounting policies - continued

1.26Borrowing costs

Borrowing costs which are incurred for the purpose of acquiring or constructing qualifying property, plant and equipment or investment property are capitalised as part of its cost. Borrowing costs are capitalised while acquisition or construction is actively underway, during the period of time that is required to complete and prepare the asset for its intended use. Capitalisation of borrowing costs is ceased once the asset is substantially complete and is suspended if the development of the asset is suspended. All other borrowing costs are expensed. Borrowing costs are recognised for all interest-bearing instruments on an accrual basis using the effective interest method. Interest costs include the effect of amortising any difference between initial net proceeds and redemption value in respect of the Group’s interest-bearing borrowings.

2.Financial risk management

2.1Financial risk factors

The Group’s activities potentially expose it to a variety of financial risks: market risk (including foreign exchange risk, cash flow and fair value interest rate risk), credit risk, and liquidity risk. The Group’s overall risk management, covering risk exposures for all subsidiaries, focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the respective companies’ financial performance. The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. Accordingly, the Company’s Board of Directors provides principles for overall Group risk management, as well as risk management policies covering risks referred to above and specific areas such as investment of excess liquidity. The Group sometimes uses derivative financial instruments to hedge certain risk exposures. The Group’s risk policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities.

(a)Market risk

(i)Foreign exchange risk

Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities which are denominated in a currency that is not the respective entity’s functional currency, which would be considered a foreign currency. The Group’s and the Company’s revenues, purchases and operating expenditure, financial assets and liabilities, including financing, are mainly denominated in euro. However, a portion of the Group’s revenues and purchases, including interconnect traffic, and certain capital expenditure are denominated in foreign currencies. Accordingly, the Group is potentially exposed to foreign exchange risk arising from such transactions.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

(a)Market risk - continued

(i)Foreign exchange risk - continued

The Group’s main risk exposures reflecting the carrying amount of receivables and payables denominated in foreign currencies at the end of the reporting periods were as follows:

Net recognised receivables/

(payables) denominated

Available funds in foreign

Net recognised receivables/

(payables) denominated

Available funds in foreign

Management does not consider foreign exchange risk attributable to recognised assets and liabilities arising from transactions denominated in foreign currencies, presented within the tables above, to be significant. Accordingly, a sensitivity analysis for foreign exchange risk disclosing how profit or loss and equity would have been affected by changes in foreign exchange rates that were reasonably possible at the end of the reporting period is not deemed necessary.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

2.1 Financial risk factors - continued

(a)Market risk - continued

(ii)Cash flow and fair value interest rate risk

The interest rate profile of the Group’s and the Company’s interest-bearing financial instruments at the end of the reporting periods is analysed below:

Financial assets measured at amortised cost

Subject to floating rates

Subject to fixed rates

Financial liabilities measured at amortised

cost

Subject to floating rates

Subject to fixed rates

* The amounts attributable to other receivables disclosed above, are stated gross of provisions for impairment.

The Group’s significant instruments which are subject to fixed interest rates consist principally of bonds issued and bank loans. In this respect, the Group is potentially exposed to fair value interest rate risk in view of the fixed interest nature of these instruments, which are however measured at amortised cost.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

(a)Market risk - continued

(ii)Cash flow and fair value interest rate risk - continued

The Group’s interest rate risk principally arises from bank borrowings issued at variable rates that are partially offset by balances held with banks subject to floating interest rates, which expose the Group to cash flow interest rate risk. Floating interest rates on these financial instruments are linked to reference rates such as Euribor or the respective banker’s base rate. Management monitors the impact of changes in market interest rates on amounts reported in profit or loss in respect of these instruments taking into consideration refinancing, renewal of existing positions, alternative financing and hedging techniques.

Based on the analysis referred to above, management considers the potential impact on profit or loss of a defined interest rate shift that is reasonably possible at the end of the reporting period as a measure of cash flow interest rate risk. An increase/(decrease) of 100 basis points (2020: 100 basis points) would have (decreased)/increased the profit for the Group and Company by €285,000 and €280,000 respectively (2020: (decrease)/increase in profit by €531,000 and €303,000), which principally takes into account the impact of this shift on the interest amounts arising on variable interest borrowings as at 31 December 2021. Accordingly, the Group’s financial results are substantially independent of changes in market interest rates and the level of interest risk to the Group is deemed to be quite contained.

(iii)Price risk

The Group is not materially exposed to equity securities price risk attributable to investments held by the Group taking into account the carrying amount of the investments held in the context of the Group’s total assets.

(b)Credit risk

Credit risk principally arises from cash and cash equivalents comprising deposits with financial institutions, and loans to related parties, as well as credit exposures to wholesale and retail customers, including outstanding receivables and committed transactions. The Group’s and the Company’s principal exposures to credit risk as at the end of the reporting period are analysed as follows:

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Trade and other receivables (including contract assets)

The Group assesses the credit quality of its trade customers, the majority of which are unrated, taking into account financial position, past experience and other factors. The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. It has policies in place to ensure that sales of services are effected to customers with an appropriate credit history. Standard credit terms are in place for individual clients, however, wherever possible, new corporate customers are analysed individually for creditworthiness before the Group’s standard payment and service delivery terms and conditions are offered. The creditworthiness analysis for new customers includes a review through external creditworthiness databases when available. The Group monitors the performance of its trade and other receivables on a regular basis to identify incurred collection losses, which are inherent in the Group’s debtors, taking into account historical experience in collection of accounts receivable.

In view of the nature of the Group’s activities and the market in which it operates, a limited number of customers account for a certain percentage of the Group’s trade and other receivables. Whilst no individual customer or group of dependent customers is considered by management as a significant concentration of credit risk with respect to contractual debts, these material exposures are monitored and reported more frequently and rigorously. These customers trade frequently with the respective Group undertaking and are deemed by management to have positive credit standing, usually taking cognisance of the performance history without defaults.

The Group manages credit limits and exposures actively in a practicable manner such that past due amounts receivable from customers are within controlled parameters. The Group’s trade and other receivables, which are not credit impaired financial assets, are principally debts in respect of transactions with customers for whom there is no recent history of default. Management does not expect any significant losses from non-performance by these customers.

Impairment of trade and other receivables (including contract assets)

The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables and contract assets.

To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk characteristics and the days past due. Contract assets have substantially the same risk characteristics as the trade receivables for the same types of contracts. The Group has therefore concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for contract assets.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

The expected loss rates are based on the payment profiles of sales over a period of time before the reporting date and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. The Group adjusts the historical loss rates based on expected changes in these factors. On that basis, the loss allowance as at 31 December 2021 and 31 December 2020 was determined as follows:

As a response to the outbreak of COVID-19, the Group monitors the account activity and repayment patterns of its receivables. For this purpose, customers were segmented based on shared credit risk characteristics predominantly by economic sector, and accordingly receivables pertaining to those segments which have been impacted by COVID-19 were subjected to more rigorous monitoring. The Group has not experienced a material shift in repayment patterns attributable to its customers post the COVID-19 outbreak, with no significant deterioration in collection rates detected. The Group has also engaged in monitoring information available on macroeconomic factors affecting customer repayment ability, with a view to also assess the actual and projected impact of the pandemic on the business models of the customers serviced by the Group and accordingly on their repayment ability. As a result of these assessments, at 31 December 2021, the Group determined that the level of expected credit losses has not materially changed taking cognisance of the projected impact on the repayment ability of the Group’s customers, the repayment pattern actually experienced, and the estimated life of trade receivables.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Credit loss allowances include specific provisions against credit impaired individual exposures with the amount of the provisions being equivalent to the balances attributable to credit impaired receivables. The Group considers that there is evidence of impairment if any of the following indicators is present:

- significant financial difficulties of the debtor

- probability that the debtor will enter bankruptcy or financial reorganisation, and

- default or late payments (more than 90 days overdue).

The closing loss allowances for trade and other receivables as at 31 December 2021 reconcile to the opening loss allowances as follows:

Change in loss allowances recognised

in profit or loss during the year

1,411

349

957

Balance at 31 December

Change in loss allowances recognised

in profit or loss during the year

212

Balance at 31 December

479

441

229

The Group established an allowance for impairment that represented its estimate of expected credit losses in respect of trade and other receivables. The individually credit impaired trade receivables mainly relate to a number of independent customers which are in unexpectedly difficult economic situations and which are accordingly not meeting repayment obligations. Hence, provisions for impairment in respect of credit impaired balances with corporate trade customers relate to entities which are in adverse trading and operational circumstances. Reversals of provisions for impairment of credit impaired receivables arise in those situations where customers recover from unfavourable circumstances and accordingly start meeting repayment obligations. The Group and the Company do not hold any significant collateral as security in respect of the credit impaired assets.

Trade receivables and contract assets are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group, and a failure to make contractual payments for a period greater than that reflecting status as 180 days past due.

Impairment losses on trade receivables and contract assets are presented as net impairment losses in ‘administrative and other related expenses’ within operating profit. Subsequent recoveries of amounts written off are credited against the same line item.

As at 31 December 2021, trade receivables of €2,067,000 (2020: €2,245,000) and €2,067,000 (2020: €2,045,000) for the Group and the Company respectively, were past due but not credit impaired. Such past due debtors comprise mainly debts allocated to the over 180 days past due category and the balances would in certain cases be recovered through offsetting of balances due to the Group with contractual liabilities owed to the same customer.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

These past due debtors mainly relate to a number of independent customers for whom there is no recent history of default. Whilst a limited number of customers account for a certain percentage of the Group’s past due debts, management has not identified any major concerns with respect to concentration of credit risk as outlined above. Categorisation of receivables as past due is determined by the Group on the basis of the nature of the credit terms in place and credit arrangements actually utilised in managing exposures with customers.

At 31 December 2021 and 2020, the carrying amount of trade receivables that would otherwise be past due or credit impaired and whose terms have been renegotiated is not deemed material in the context of the Group’s trade receivables figures.

Cash and cash equivalents

The Group principally banks with local and European financial institutions with high-quality standing or rating.

While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, the identified impairment loss is insignificant.

Loans receivable from subsidiaries and amounts due from subsidiaries

The Company’s receivables include loans receivable from a subsidiary and other amounts owed by subsidiaries (Notes 11 and 15). The Company monitors intra-group credit exposures at individual entity level on a regular basis and ensures timely performance of these assets in the context of overall Group liquidity management. The Company assesses the credit quality of these related parties taking into account financial position, performance and other factors. The Company takes cognisance of the related party relationship with these entities and management does not expect any significant losses from non-performance or default.

Loans receivable and non-current receivables from subsidiary are categorised as Stage 1 for IFRS 9 purposes (i.e. performing) in view of the factors highlighted above. The expected credit loss allowances on such loans are based on the 12-month probability of default, capturing 12-month expected losses and hence are considered insignificant.

Since the current balances owed by subsidiaries are repayable on demand, expected credit losses are based on the assumption that repayment of the balance is demanded at the reporting date. Accordingly, the expected credit loss allowance attributable to such balances is insignificant.

(c)Liquidity risk

The Group is exposed to liquidity risk in relation to meeting future obligations associated with its financial liabilities, which comprise borrowings (Note 19), lease liabilities (Note 20) and trade and other payables (Note 22). Prudent liquidity risk management includes maintaining sufficient cash and committed credit lines to ensure the availability of an adequate amount of funding to meet the Group’s obligations.

Management monitors liquidity risk by reviewing expected cash flows through cash flow forecasts, and ensures that no additional financing facilities are expected to be required over the coming year. This is performed at a central treasury function, which controls the overall liquidity requirements of the Group within certain parameters.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

(c)Liquidity risk - continued

The Group ensures that it has sufficient cash on demand, within pre-established benchmarks, to meet expected operational expenses and servicing of financial obligations over specific short-term periods, excluding the potential impact of extreme circumstances that cannot reasonably be predicted. The Group’s liquidity risk is actively managed taking cognisance of the matching of cash inflows and outflows arising from expected maturities of financial instruments, together with the Group’s committed bank borrowing facilities and other financing that it can access to meet liquidity needs. In this respect, management does not consider liquidity risk to the Group as significant taking into account the liquidity management process referred to above. The tables below analyse the Group’s and the Company’s financial liabilities, which expose the reporting entity to liquidity risk, into relevant maturity groupings based on the remaining term at the end of the reporting period to the contractual maturity date. The amounts disclosed in the tables are the contractual undiscounted cash flows. Balances due within twelve months equal their carrying balances, as the impact of discounting is not significant.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

2.2Capital risk management

The Group’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may issue new shares or adjust the amount of dividends paid to shareholders.

The Group monitors the level of capital on the basis of the ratio of aggregated net debt to total capital. Net debt is calculated as total borrowings (as shown in the statement of financial position) less cash and cash equivalents. Total capital is calculated as equity, as shown in the respective statement of financial position, plus net debt.

The figures in respect of the Group’s and the Company’s equity and borrowings are reflected below:

Lease liabilities (Note 20)

Less: Cash and cash equivalents (Note 16)

The Group manages the relationship between equity injections and borrowings, being the constituent elements of capital as reflected above, with a view to managing the cost of capital. The level of capital, as reflected in the consolidated statement of financial position, is maintained by reference to the Group’s respective financial obligations and commitments arising from operational requirements. In view of the nature of the Group’s activities and the extent of borrowings or debt, the capital level at the end of the reporting period determined by reference to the consolidated financial statements is deemed adequate by the Directors.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

2.3Fair values of financial instruments and non-recurring fair value measurements

Fair value estimation in relation to financial instruments measured at fair value

The Group’s financial instruments, which are carried at fair value, include the Group’s other investments (Note 12). However, as at 31 December 2021, no fair value adjustments have been recognised in respect of these investments as the carrying amount fairly approximates fair value.

The Group is required to disclose fair value measurements by level of a fair value measurement hierarchy for financial instruments that are measured in the statement of financial position at fair value (Level 1, 2 or 3). The different levels of the fair value hierarchy are defined as fair value measurements using:

•quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);

•inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly i.e. as prices, or indirectly i.e. derived from prices (Level 2); and

•inputs for the asset or liability that are not based on observable market data i.e. unobservable inputs (Level 3).

The fair value of financial assets traded in active markets is based on quoted market prices at the end of the reporting period. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer or broker and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the Group is the current bid price. The fair value of financial assets and other financial instruments (e.g. over-the-counter derivatives) that are not traded in an active market, is determined by using valuation techniques, principally discounted cash flow models. When the Group uses valuation techniques, it makes assumptions that are based on market conditions existing at the end of each reporting period. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2. If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.

Fair values of financial instruments not carried at fair value

At 31 December 2021 and 2020, the carrying amounts of certain financial instruments not carried at fair value comprising cash at bank, receivables, payables, accrued expenses and short-term borrowings reflected in the financial statements are reasonable estimates of fair value in view of the nature of these instruments or the relatively short period of time between the origination of the instruments and their expected realisation. The fair value of advances to related parties and other balances with related parties, which are short-term or repayable on demand, is equivalent to their carrying amount. The fair value of non-current financial instruments for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments. The carrying amount of the Company’s non-current amounts receivable from subsidiaries fairly approximates the estimated fair value of these assets based on discounted cash flows. The fair value of the Group’s non-current floating interest rate bank borrowings at the end of the reporting period is not significantly different from the carrying amounts. The current market interest rates utilised for discounting purposes, which were almost equivalent to the respective instruments’ contractual interest rates, are deemed observable and accordingly these fair value estimates have been categorised as Level 2.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

2.3Fair values of financial instruments and non-recurring fair value measurements - continued

Fair values of financial instruments not carried at fair value - continued

Information on the fair value of the bonds issued to the public is disclosed in the respective note to the financial statements. The fair value estimate in this respect is deemed Level 1 as it constitutes a quoted price in active market.

3.Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. These estimates and assumptions present a risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. The Group’s management also makes judgements, apart from those involving estimations, in the process of applying the entity's accounting policies that may have a significant effect on the amounts recognised in the financial statements.

3.1Impairment testing

IFRSs require management to undertake an annual test for impairment of goodwill and non-financial assets having an indefinite useful life, and require management to test for impairment if events or changes in circumstances indicate that the carrying amount of a non-financial asset having a finite useful life may not be recoverable. For the purposes of assessing impairment, non-financial assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). The Group also assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired.

Impairment testing is an area involving management judgement, requiring assessment as to whether the carrying value of assets or cash-generating units can be supported by the net present value of future cash flows derived from such assets or cash-generating units using cash flow projections, which have been discounted at an appropriate rate. In calculating the net present value of the future cash flows, in particular those derived from the Group’s cash-generating units, certain assumptions are required to be made in respect of highly uncertain matters including management’s expectations of growth in earnings before interest, taxation, depreciation and amortisation (EBITDA); developments in number of subscribers and average revenue per user (ARPU); long-term growth rates; and the selection of discount rates to reflect the risks involved. Changing the assumptions selected by management, in particular the discount rate and growth rate assumptions used in the cash flow projections, could significantly affect the Group’s impairment evaluation and hence results.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

3.Critical accounting estimates and judgements - continued

3.2Business combinations

The definition of control encompasses three distinct principles, which, if present, identify the existence of control by the Group over an investee, hence forming a parent-subsidiary relationship: power over the investee; exposure, or rights, to variable returns from its involvement with the investee; and the ability to use its power over the investee to affect the amount of the investor’s returns. When the Group assesses whether it has power over an investee, it needs to assess whether any rights it has are protective (rather than substantive), whether rights held by other investors are protective, or whether other parties have substantive rights that can prevent the Group from directing the relevant investee's activities (for example, veto rights). Protective rights are different to substantive rights. Protective rights are considered as rights designed to protect the interest of the party holding those rights without giving that party power over the entity to which those rights relate. Given that power is required to control an investee, if the Group only has protective rights it will not control the investee.

The recognition of business combinations requires the excess of the purchase price of acquisitions over the net book value of assets acquired to be allocated to the assets and liabilities of the acquired entity. The Group makes judgements and estimates in relation to the fair value allocation of the purchase price. The amount of goodwill initially recognised as a result of a business combination is dependent on the allocation of the purchase price to the fair value of the identifiable assets acquired and the liabilities assumed. The determination of the fair value of the assets and liabilities is based, to a considerable extent, on management’s judgement. Allocation of the purchase price affects the results of the Group as intangible assets with a finite life are amortised, whereas intangible assets with an indefinite life and goodwill are not amortised. Identifiable intangible assets may include customer bases and brands. The fair value of these assets is determined by discounting estimated future net cash flows generated by the asset where no active market for the assets exist. The use of different assumptions for the expectations of future cash flows and the discount rate would change the valuation of the intangible assets.

3.3Provisions for pension obligations

The Group exercises judgement in measuring and recognising provisions for its pension obligations because of the inherent uncertainty in this evaluation process, actual losses may be different from the originally estimated provision. The present value of the pension obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the cost for pensions include the discount rate. Any changes in these assumptions will impact the carrying amount of pension obligations. In the Company’s case, the specific judgements involved are more subjective, taking cognisance of the nature of the Company’s obligations and the ongoing developments in this respect.

3.4Fair valuation of property

The Group’s land and buildings category of property, plant and equipment is fair valued on the basis of professional advice, which considers current market prices for the properties. Fair valuation of property requires the extensive use of judgement and estimates.

3.5Estimation of useful life

The useful life used to amortise intangible assets relates to the future performance of the assets acquired and management’s judgement of the period over which economic benefit will be derived from the asset. The useful lives and residual values of the Group’s property, plant and equipment are determined by management at the time the asset is acquired and reviewed annually for appropriateness. The lives are based on historical experience with similar assets as well as anticipation of future events which may impact their life such as changes in technology.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

3.Critical accounting estimates and judgements - continued

3.5Estimation of useful life - continued

Assessment of matters referred to above

In the opinion of the Directors, the accounting estimates and judgements made in the course of preparing these consolidated financial statements, which have been highlighted above, are not difficult, subjective or complex to a degree which would warrant their description as critical in terms of the requirements of IAS 1.

The Directors also draw attention to the fact that there are no assumptions and other major sources of estimation uncertainty at the end of the reporting period, that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

4.Segment information

4.1Operating segments

The Group has three reportable segments, which are effectively the Group’s key and distinct strategic business units and cash-generating units, as they represent the lowest level at which separately identifiable cash flows can be identified. The strategic business units are managed separately with their own separate management structure and board of directors.

The following summary describes the operations in each of the Group’s reportable segments:

Malta Telecommunication Services (Malta Telecommunications CGU) comprise the Group’s fixed-line telephony services, mobile telephony services, digital television services, sale of broadband, internet services and other business communication solutions provided within Malta, through the Company’s activities.

Data Centre Services (Data Centre CGU) comprise the Group’s operations of BMIT Technologies p.l.c. (BMITT), which provides data centre facilities and ICT solutions in Malta.

Cyprus Telecommunication Services (Cyprus Telecommunications CGU) comprise the Group’s operations of the Cypriot subsidiary, Cablenet Communications Systems p.l.c. The company provides broadband, cable television and telephony services. The operations of the Cypriot subsidiary constitute a reportable segment in view of the specific nature and characteristics of the Cypriot telecommunications sector, giving rise to a varied degree of business risks and returns.

The Group’s internal reporting to the Board of Directors and Senior Management is analysed according to these three segments. For each of these three strategic business units, the Board of Directors reviews internal management reports at least on a monthly basis.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

4.Segment information - continued

4.1Operating segments - continued

Information about reportable segments

Inter-segment revenue

Revenue from external customers

Reportable segment profit before tax

Results for reportable segments

Information about profit or loss:

Depreciation and amortisation

Change in credit loss allowances in

respect of trade receivables

Reportable segment assets

Reportable segment liabilities

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

4.Segment information - continued

4.1Operating segments - continued

A reconciliation of reportable segment results, assets and liabilities and other material items, to the amounts presented in the consolidated financial statements, is as follows:

Total profit for reportable segments and consolidated profit after tax

10,441

14,061

Assets

Total assets for reportable segments

370,937

360,617

Inter-segment eliminations

(2,306)

(3,250)

Consolidated total assets

368,631

357,367

Liabilities

Total liabilities for reportable segments

261,040

234,256

Inter-segment eliminations

(2,306)

(3,250)

Consolidated total liabilities

258,734

231,006

4.2Information about geographical segments

The Group’s revenues are derived from operations carried out in Malta and in Cyprus. The Telecommunications segments for both Malta and Cyprus also derive revenue from incoming interconnect traffic and inbound roaming from foreign administrators worldwide. Considering the nature of the Group’s activities, its non-current assets are predominantly located in Malta and Cyprus.

4.3Information about major customers

The Group does not have any particular major customer, as it largely derives revenue from a significant number of customers availing of its services. Accordingly, the Group does not deem necessary any relevant disclosures in respect of reliance on major customers.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

5.Property, plant and equipment

Year ended 31 December 2020

Accumulated depreciation and

Year ended 31 December 2021

Reclassification to Intangible

5,635

476

6,178

assets (see Note 7)

(9,580)

Accumulated depreciation and

The Group’s land and buildings are secured as collateral for the Group’s banking facilities.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

5.Property, plant and equipment - continued

Year ended 31 December 2020

Year ended 31 December 2021

Reclassification to Intangible

5,267

476

5,743

assets (see Note 7)

(9,580)

Completion of Class 2 Transaction – acquisition of property during the year ended 31 December 2020

On 23 May 2019 BM IT Limited (BM IT), a subsidiary, entered into a promise of sale agreement with BM Holdings & Investments Limited, a company had registered in Malta with registration number C 39616 and with registered address at 124, Triq ic-Cawsli, Qormi, QRM 3906, Malta (the “Vendor”).

Pursuant to the promise of sale agreement, BM IT promised and bound itself to purchase and acquire from the vendor a building, without official number constructed on two plots of land known as plot 55 and plot 56 respectively, situated in Triq Manuel Borg Gauci corner with Triq Luigi Maria Galea in Tal-Handaq, Qormi, Malta (the “Property”). The property houses the BMITT Group’s largest data centre with a capacity of approximately 300 racks, which property was previously leased out to BM IT Limited.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

The acquisition was approved at an Extraordinary General Meeting of the subsidiary held on 6 August 2020, as announced by a Company Announcement bearing the same date. The final deed of sale and purchase in respect of the property was executed on 17 January 2020.

The acquisition of the property, for a consideration of €4,000,000, enables the BMITT Group to carry on a significant part of its operations from its own property. This minimises, and in some cases, avoids risks associated with a migration to another facility, including financial expense, operational disruption and risk of loss of business, as customers allocated to the data centre operating from the property will not need to be relocated. As a result of the acquisition of the property, the BMITT Group will be incurring less expenditure on the rental of premises.

Fair valuation of land and buildings

The Company’s land and buildings within property, plant and equipment, with a carrying amount of €4,261,000 (2020: €4,282,000) at the end of the reporting period, were revalued on 31 December 2021 by an independent firm of property valuers having appropriate recognised professional qualifications and experience in the location and category of the property being valued. Management have reviewed the carrying amounts of the properties as at 31 December 2021, on the basis of assessments by the independent property valuers, and no adjustments to the carrying amounts were deemed necessary as at that date taking cognisance of the developments that occurred during the current financial year.

Valuations were made on the basis of open market value taking cognisance of the specific location of the properties, the size of the sites together with their development potential, the availability of similar properties in the area, and whenever possible, having regard to recent market transactions for similar properties in the same location.

A subsidiary’s leasehold property, with a carrying amount of €2,202,000 at the end of the reporting period, was revalued in prior years by an independent firm of property valuers having appropriate professional qualifications and experience in the category of the property being valued. Management has reviewed the carrying amount of the property as at 31 December 2021 and no adjustments to the carrying amounts were deemed necessary as at that date.

As part of the due diligence performed prior to acquiring the property, the directors of BMITT commissioned an independent firm of architects to carry out a market valuation of the property, by considering the estimated amount for which the property should be exchanged on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. In the opinion of the directors, as at 31 December 2021, no significant changes or developments have been experienced since the acquisition that impacted the property’s fair value by giving rise to a material shift in its estimated market value.

The Group is required to analyse non-financial assets carried at fair value by level of the fair value hierarchy within which the recurring fair value measurements are categorised in their entirety (Level 1, 2 or 3). The different levels of the fair value hierarchy have been defined as fair value measurements using:

•Quoted prices (unadjusted) in active markets for identical assets (Level 1);

•Inputs other than quoted prices included within Level 1 that are observable for the asset, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2);

•Inputs for the asset that are not based on observable market data (that is, unobservable inputs) (Level 3).

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Fair valuation of land and buildings - continued

The Group’s land and buildings, within property, plant and equipment, comprise exchanges, data centres, warehouses, offices and retail outlets. All the recurring property fair value measurements at 31 December 2021 and 2020 use significant unobservable inputs and are accordingly categorised within Level 3 of the fair valuation hierarchy.

The Group’s policy is to recognise transfers into and out of fair value hierarchy levels as of the beginning of the reporting period. There were no transfers between different levels of the fair value hierarchy during the years ended 31 December 2021 and 2020.

A reconciliation from the opening balance to the closing balance of land and buildings for recurring fair value measurements categorised within Level 3 of the value hierarchy, is reflected in the table above. The changes during the year are mainly attributable to additions and depreciation charge.

Valuation processes

The valuations of the properties are performed regularly on the basis of valuation reports prepared by independent and qualified valuers. These reports are based on both:

•information provided by the respective company which is derived from the company’s financial systems and is subject to the company’s overall control environment; and

•assumptions and valuation models used by the valuers – the assumptions are typically market-related. These are based on professional judgement and market observation.

The information provided to the valuers, together with the assumptions and the valuation models used by the valuers, are reviewed by the Chief Finance Officer (CFO). This includes a review of fair value movements over the period. When the CFO considers that the valuation report is appropriate, the valuation report is recommended to the Audit Committee. The Audit Committee considers the valuation report as part of its overall responsibilities.

At the end of every reporting period, the CFO assesses whether any significant changes or developments have been experienced since the last external valuation. This is supported by an assessment performed by the independent firm of property valuers. The CFO reports to the Audit Committee on the outcome of this assessment.

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

The external valuations of the Company’s Level 3 property have been performed using predominantly an adjusted sales comparison approach. In view of a limited number of similar sales in the local market, the valuations have been performed using unobservable inputs. The significant input to this approach is generally a sales price per square metre related to transactions in comparable properties located in proximity to the Group’s property, with significant adjustments for differences in the size, age, exact location and condition of the property.

Valuation techniques

Information about fair value measurements using significant unobservable inputs (Level 3)

At 31 December 2021 and 2020

Description by class based on

Current use as office premises

The higher the sales price per square metre the higher the resultant fair valuation. The highest and best use of the properties referred to above is equivalent to their current use.

If the land and buildings were stated on the historical cost basis, the carrying amounts would be as follows:

Annual Financial Report and Consolidated Financial Statements - 31 December 2021

Depreciation and impairment charge

The depreciation and impairment charge for the year is recognised in profit or loss as follows:

Administrative and other related expenses

Impairment charge attributable to specific project during the year ended 31 December 2020

As announced on 1 December 2020, BMITT Group reassessed all its projects taking cognisance of the impacts of COVID-19 on the local economy and on the specific sectors which are more relevant to its operations and activities. BMITT Group remained committed to executing its business plan and did not envisage adverse financial impacts based on information available as at the date of signing of the 2020 financial statements. However, the board had reviewed in detail the amounts capitalised within property, plant and equipment in respect of the ongoing projects, taking into account the announcement referred to previously. In this context, the board had taken a prudent stance and resolved to impair an amount of €257,878 which had been previously capitalised in respect of one ongoing project, based on the likelihood that should a decision be taken not to pursue this project any further, this amount would not be covered by the recoverable amount attributable to assets pertaining to this specific project.

Recoverability of the telecommunications infrastructure

At 31 December 2021, the Group’s telecommunications infrastructure and licences together with other related tangible and intangible assets, attributable to the Malta Operations and Cyprus Operations CGUs, were carried at an aggregate amount of €131,853,000 (2020: €125,161,000) and €43,940,000 (2020: €43,091,000) respectively. No impairment indicators were identified by management in respect of these CGUs as at the end of the reporting period (Note 7).