A technology innovator delivering mobile, telecom and e-business software products and services. I have a holding in my growth portfolio (epic code: GBO).
Globo issued a trading update today on the first half year stating that revenues from continuing operations grew by 45% to €46.5m, slightly ahead of market expectations.
Profit before tax is also expected to be slightly ahead of market expectations and management state that they generated Free Cash Flow, driven by an increased weighting towards GO!Enterprise sales, which have a shorter cash collection cycle. The net cash position was €46m, a £3.2m increase from the end of last year.
Management updated the market on Globo Technologies SA, the Greek subsidiary that Globo divested 51% of in December 2012. The Group has received the third instalment of €775k from the acquiring entity, comprising €500k of principal and €275k in interest due. This third instalment was received on 30 June 2014 and maintains the schedule of payments which is due for completion in December 2016. To date, the Group has received €2m, out of €11 m, of principal consideration and €783k in interest, in line with the payment schedule.
Despite recent positive trading and cash generation (small but positive) the share price at 51p, remains well below the placing at 71p in October 2013 that raised €28m gross. The company is rated at about 8x expected earnings this year, which appears good value, but as I stated after their prelims were announced - the risks remain until stronger free cash flow can be generated and the institutions and private investors with short positions are convinced that better profits can be had elsewhere.
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