Globo trading update

A technology innovator delivering mobile, telecom and e-business software products and services. I have a holding in my growth portfolio (epic code: GBO).

 

Today Globo released a full year trading update, declaring that revenues for the full year from continuing operations grew by 48.3% to €106m.  This compares to 46% growth at the 9 month stage, so this looks like a strong fourth quarter. Profits are anticipated to be broadly in line with market expectations, so €29m or €0.08 per share.

 

Globo's year-end net cash position was €40.3m down from €42.0m last year, this included the payment of $12.0m and associated costs for the acquisition of Sourcebits Inc., in July 2014 and receipt of €1.2m from a further instalment due on the sale of 51% of their Greek subsidiary . Therefore free cash flow looks to be about €7m, this is a slight improvement on last year's FCF of €5.2m and the third year the company has produced FCF.

 

For this current year management stated "...Trading in 2015 has started strongly and we anticipate that as IT budgets from customers start to be deployed and BYOD (Bring Your Own Device) and demand for mobile apps increases, Globo will have the opportunity to deliver another year of strong growth and increased market penetration..."

 

The shares ended the day up 0.25p at 42.25p, valuing the company at ~7x historic earnings.  Although the company is generating FCF, it is at such a low level compared to the size of the business, that it is still acting as a drag on the shares.