Globo (LON:GBO) (27.75p and 1.9% of JIC portfolio) has issued a positive trading update for the year ended 31st December 2012 in which it says it pleased to report that it has achieved a financial performance ahead of market expectations. Revenue was up 285 to €58m. However, if one strips out the Greek business which was divested in early December and compare the like for like numbers for the continuing business was up 66% at €46m.
The Company says EBITDA (earnings before interest, tax, depreciation and amortisation or the bad bits!) were up 42% to at least €29m with the continuing operations contributing the substantial majority total profits. This was driven mainly by the Group's mobile software products which account for 90% of the continuing operations.
The consumer offerings achieved revenue of €29m, up 25% on 2011 and the "strategically more important" GO!Enterprise recorded sales of €12m up from €2m in 2011. The Company addresses one area that has been of concern: operating cash flow for the year increased significantly to €13m but this is an area that investors will want to keep an eye on. Over the year as a whole the Group achieved organic free cash, (excluding acquisitions and disposals) for the year of €1.6m.
The outlook statement was positive with the Company confident that its acquisition of Dialect Technologies in February 2012 will see GO!Enterprise breakthrough in the US market and become a significant contributor to Group performance.
Conclusion: The key to Globo's future success rests on its ability to accelerate sales of GO!Enterprise. It has had some success, most notably with its 24th December announcement of a new contract with a European Tier-! mobile network operator. I bought the shares on 28th December 2012 since when they have risen 34%. However, I'm not tempted to sell as on consensus forecasts they are valued at 10x 2013 earnings (21% growth) and only 6.8x 2014 for 45% growth. Further progress should be made when the Group announces new contracts.
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Johnrosier
I manage my subscription website www.JohnsInvestmentChronicle.com in which I show my portfolio and all transactions. I blog within an hour of trading, with an explanation, and send an alert email to all my subscribers. I do not pretend to have all the answers but I hope my portfolio, and the trades, provides food for thought as well as helping those who are new to managing their own portfolios.I think what I do is unique. There are plenty of tipsters out there who will remind you of the good ones and quietly forget the duffers; I do not have that luxury as the portfolio is there for all to see. I have to confront my mistakes and deal with them. A tipster also does not show how a tip fits into the context of an overall portfolio. My portfolio of up to 30 holdings has different holding sizes based on my conviction behind the stock and its risk. I set up www.JohnsInvestmentChronicle.com in January 2012. Prior to that :In September 1984, I left university with a degree in Zoology and started work in the City of London. Over the next twenty five years most of my time was spent managing UK equity portfolios with Fleming Investment Management and Henderson Global Investors, for company and local authority pension schemes as well as the reserve fund for a well known charity. During 2009 I left full time employment and decided to take time out to consider the next stage of my career. In the meantime I have been putting my years of experience to good use investing the family savings. I have thoroughly enjoyed the freedom of investing from home and despite some tricky periods during 2011 it has been a rewarding experience. more »
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