19 June 2015

FOR IMMEDIATE RELEASE

GLOBO plc
("Globo" or "the Group")

High Yield Bond Investor Meetings

Globo plc (LSE-AIM: GBO / OTCQX: GOBPY), the international provider of Enterprise Mobility Management (EMM), mobile solutions and software as a service (SaaS), announces that it will be conducting a series of investor meetings in the US and UK commencing on 19 June 2015 in relation to a potential issue of senior secured high yield notes (the 'Notes').

Upon successful completion of the offer the net proceeds from the sale of the Notes will primarily be used to fund further acquisitions that support the Group's international expansion strategy in its key growth markets. Additionally, proceeds will be used to repay existing indebtedness and for general corporate purposes.

Globo's CEO, Costis Papadimitrakopoulos commented:
"Following on our US expansion and the successful acquisitions of both Notify Technologies Inc. and the services operations of Sourcebits Inc., we are looking to accelerate our expansion through additional strategic acquisitions in both the US and Europe. Our strong financial performance underpins our ability to access the high yield debt market for future growth and acquisitions without diluting our shareholders. We feel that this is the right time to accelerate our growth and execution capabilities as we continue to successfully build a leadership position in the Mobile Enterprise space."

HOW IS MOVING AT THIS LOW PRICE 39.25p
double bottom or further down to go?

negative comment 15 july 2015 - from value and opportunity
http://valueandopportunity.com/2015/07/15/globo-plc-value-superstar-or-too-good-to-be-true/

Analysis by Juicyshares some time back

Globo Plc – A high growth company generating cash.

Disclaimer: I am invested in GBO.L. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article or any affiliation with Globo other than being a shareholder.

Summary:

Cash analysis demonstrates strong operational and financial performance
Cash flows expected to accelerate
Bond issue and acquisitions a potential game changer

Globo’s revenue has grown at a compound annual growth rate of 38% since 2007.
Despite the rapid growth Globo trades on far lower multiples than its peers so looks undervalued and over the last 2 years it has been the subject of several persistent negative reviews and comments regarding accounting treatment, lack of cash flow, lack of online reviews, whether reported revenues are real, criticism over high debtor days and even questions over where it stores its cash.

So is Globo a good investment or a sham as some claim?

This investor ultimately only cares about cash, I want to know if the future cash flow generated by a company discounted to present value represents a significant premium to today’s market value. People say that cash doesn’t lie, so I have gone back to 2007 to see where the cash has come from and where it has gone.

Where has the cash come from?

Cash Generated by the business: From 2007 to 2014, Globo generated a net operating cash flow (after interest and tax payments) of €83.2m.
Cash from equity: In the same period Globo raised €67.9m from the issue of shares net of expenses.
Cash from bank loans: Globo borrowed €74.7m and repaid €27.8m of bank loans, net borrowings were €46.9m

So Globo generated €83.2m of cash internally and has received €114.8m through financing, giving a total cash in-flow of €198.0m

Where has the cash gone?

€93.0m has been invested in tangible and intangible assets (mainly intangibles) which includes capitalisation of R&D expenses. It is this that some commentators have been critical of although others have pointed out that Globo are only doing what is required of them under FRS. A further €13.7m was used to acquire businesses, €6.7m of cash was disposed of with the sale of 51% of the legacy Greek business.

€82.8m of cash remains on the balance sheet (as at 31st December 2014).

One way to think of it is that Globo has spent all the money it has raised through financing on transforming the business from a Greece focused business software company to an international enterprise mobility business. All the money Globo has generated internally is in the bank.

So the next question is, has the money spent been put to good use?

A lot has been made of the fact that Globo spends more money than it generates. Despite being free cash flow positive for the last three years, this statement is in fact true of every year going back to 2007. Free cash flow less acquisition costs has always been negative. Some of you may be familiar with the concept of Owner Earnings which is defined as the cash generated by a business after all expenses including acquisition costs. It’s termed Owner Earnings because this cash could if desired be returned to shareholders in one form or another, or a business could choose to reinvest if it believed it would generate a return on investment in excess of the cost of capital. Anyway, Globo’s owner earnings have never been positive.

But this doesn’t mean that Globo is a bad business or doesn’t represent a good investment opportunity. To answer these questions we need to consider the future prospects of the business. The trends in the financial data over the last 8 years reveal some useful insights.

Globo revenue has increased every year, in fact it increased 10-fold between 2007 and 2014 and appears to be growing exponentially. The one-off levelling out in 2012 was because Globo shed €12m of revenue with the sale of 51% of the legacy Globo Tech business.

The more mathematically minded will recognise that the growth in revenue is not following a straight line but appears to be accelerating. The fact that 2015H1 revenue (not shown) at €72.4m is higher than the entire 2013 revenue appears to corroborate this observation and is consistent with the high recurring revenues reported by Globo. This ‘sticky’ business is like a gathering snowball; the bigger it gets the more it accumulates. If this trend continues (even excluding further acquisitions), expect sales to comfortably exceed €500m within the next 5 years.

Growth in net operating cash flow is also accelerating. There has been a marked increase in net operating cash flow over the last 3 years since Globo launched GO!Enterprise and as a percentage of revenue, net operating cash flow appears steady at around 29% of revenue.

Capex (including capitalised R&D costs) has also been increasing year on year but importantly at a slower rate than operating cash flow.

The trend in capitalised costs as a percentage of revenue is actually decreasing. This is in contrast to the operating cash flow which is why for the last three years Globo has been able to generate increasing free cash flows.

The trend in free cash flow generation has continued into 2015 with €7.2m generated in H1 compared with €7.3m for the whole of 2014. Given that Globo’s revenue is normally weighted to the second half, the strong H1 result indicates that 2015 as a whole should generate free cash flow in the region €15-20m.

So there are 4 clear trends:

Revenue increasing exponentially consistent with Globo’s claims that they are winning new business while retaining spend from existing customers.
Net operating cash flow increasing in line with revenue (at 29% of revenue)
Capex decreasing as a percentage of the accelerating revenue
Free cash flow increasing year on year, probably at an accelerating rate.

My conclusion is that the €114.8m of cash raised through financing (and spent/invested) has been well invested in transforming Globo from a Greek software company to an international enterprise mobility player. The evidence for this conclusion is the increasing free cash flows. This year I’m expecting around €15-20m free cash flow or about 13 to 17% return on investment. I expect free cash flow to increase next year, and the year after, and the year after.

But what about the proposed $180m bond issue and subsequent acquisitions? Some have been critical about the high debt burden, the high interest charge (expected to be around 10%) and are sceptical because neither the acquisition targets nor time frame are known.

To understand why Globo want to raise $180m to buy businesses you need to understand Globo’s place in a rapidly growing but competitive market.

Globo’s strength is that it offers both EMM and MADP solutions, it has won large contracts (e.g. Milton Keynes) because of this. Additionally, the Mobility Business Solutions division (MBS) supports customers in their mobile strategies and implementation. IBM and SAP are the only other vendors recognised by Gartner in both EMM and MADP Magic Quadrants. EMM is becoming increasingly commoditised which is why Globo’s better known competitors like Good and Mobileiron struggle to make money. MADP is higher growth and higher margin and Globo is well positioned to be a one stop shop for companies looking to create, deploy and manage mobile applications.

The problem is that Globo’s brand recognition is low in the US which is the largest and most important market. Globo has strong products but versus the leaders in both EMM and MADP, Globo lacks both scale and the selling resources needed to be a leader. Hence the need to acquire a business or businesses that will provide that capability enabling Globo to rapidly expand its customer base and increase brand recognition.

Targeted acquisitions have the potential to transform Globo’s place in the industry, propelling Globo towards a leadership position. If executed correctly, the acquisitions should accelerate cash flows and increase shareholder value. Given management's track record of strong execution I’ve no reason to doubt they will deliver this time.

Despite the undeniable operational and financial progress (the above analysis is based on cash which does not lie), Globo trades on a substantial discount to its peers. Like some other AIM stocks, Globo has been the subject of short selling which tends to drive prices down. Additionally, some commentators are persistently insinuating that something is wrong, there are too many red flags and no doubt these persistent negative comments have had an effect.
This cash analysis supports my view that Globo is a well run, high growth company that has managed its cash resources well in a difficult climate striking the right balance between growth and cash generation. My discounted cash flow model indicates a fair value model of 114p verses a share price currently of 42p.

The author is a private investor in Globo.

https://docs.google.com/document/d/1r_jrhnZZr1cGd982p_Tf1IXB2a8o-k04_SI87xgh_ZY/edit

Further movement up this morning, so looking good on the charting

IC /2015/08/05/comment/simon thompson - short-sellers-in-for-shock-treatment

"Indeed, the share price could be in for a very sharp re-rating because investors have ignored a bullish first half trading update that confirmed that the company is bang on track to lift EPS from 6.7p to at least 8.7p in 2015. This means Globo’s shares are being priced on a cash adjusted prospective PE ratio of 4,a valuation that fails to recognise its growing international bias and intention to make complimentary acquisitions. Bears of the stock are playing a very dangerous game.

Trading on a bid-offer spread of 42.5p to 42.75p, I continue to rate Globo’s shares a buy and have a 69p target price, having initiated coverage six months ago with a conditional buy recommendation at 47p a share"

That's started to have some effect today. It's been a frustrating ride but better times are around the corner and it does look far too cheap!

That's started to have some effect today. It's been a frustrating ride but better times are around the corner and it does look far too cheap!

Better yet @ 44.75p

Volume is growing today

ST of IC today - Bears of the stock are playing a very dangerous game.

45.75p +1.50p

another movement on the right direction
-----------------
From IC some time back ( 2 February 2015 ), good interview with CEO, tired of the shorters taking the SP down

from IC
“When we announce details (of our acquisitions and fundraising) short sellers will be in for a surprise and it will not be a pleasant one” says Costis Papadimitrakopoulos, chief executive of Aim-traded Greek mobile software provider Globo (GBO: 42.75p).

Indeed, short sellers who have driven down Globo’s share price in the fortnight since the company issued a bullish first half trading update, and which prompted the company to issue a statement last week, would be well advised to take note especially if they are basing their investment view on the contents of two defamatory articles concerning the company circulating the internet since mid-July. In fact, having interviewed Mr Papadimitrakopoulos at length yesterday, it’s time to put the record straight.

Firstly, Globo’s boss points out that 90 per cent of all the cash on the company’s balance sheet, a sum equating to €82.8m at the end of December 2014, is deposited with “investment grade banks” and all of this money is fully accessible with no tax restrictions on transfers whatsoever. This is contrary to what the shorters would have you believe. In fact, the company only has €100,000 of its cash balance deposited with Greek banks, a point I made when I last published an article on the company (‘Primed for major re-ratings’, 22 July 2015).

Secondly, there are sound reasons why the company has opted to raise a high yield bond to finance its acquisition strategy. For starters, Globo’s current bank facilities with Barclays and East West United Bank have 10 different covenants which it must comply with. These are quite restrictive if it’s going to significantly scale up the business by making some sizeable acquisitions.

The company has a “good relationship” with these lenders, but the facilities of €65m are due to expire in October 2016 and between now and then Globo will be making capital repayments. In fact, it has already made two such payments in the past few months. True, an interest rate of Euribor plus 3.5 per cent is attractive on these current bank facilities, but by raising in excess of US$150m (£97m) through a five-year high yield bond, as Globo is trying to do right now, and with no maintenance covenants, the company is actually mitigating risk for its shareholders. That’s because any new facility with Barclays and East West United Bank would still have restrictive covenants which would be “dangerous for shareholders” if Globo pursues a substantial acquisition strategy.

Although the market will ultimately decide on the pricing of the bond issue Mr Papadimitrakopoulos says the coupon rate will be “more than 8 per cent, maybe 9.5 per cent or even 10.1 per cent”. That’s a reflection of the current state of the high yield bond market, rather than Globo which has recently been given a credit rating of f BB- from rating agency S&P and B2 from Moody's.

The point being that a ‘covenant lite’ bond issue priced around the upper end of that coupon rate would still be accretive for shareholders on a cash profit basis given the potential synergy benefits from acquisitions. Just as important, the company will not be diluting their interests by issuing shares to fund acquisitions.

Moreover, the company’s cost of equity is far higher that the likely coupon rate on the bond, and interest payments are tax deductable against operating profits. It’s also worth noting that the plan is to refinance the acquisitions within two to three years through lower cost bank facilities and possibly an equity issue once the operational and financial benefits have materialised, so the bond funding is certainly not long-term. Also, once the acquisition strategy has proved itself, then shareholders in Globo will also see the benefit from the lower cost credit lines as more of the company’s profits will be captured by them rather than the bondholders.

On the M&A trail

What has not been made clear to equity shareholders, and something that the short sellers have taken advantage of, is that half the proceeds of the bond issue will be used for “acquisitions within six months, and the balance within 15 months.” The targets being looked at are located in the US, Western Europe and Australia and importantly all offer “the technology, geographic reach and people to multiply our sales into new channels”.

Mr Papadimitrakopoulos is looking at paying a multiple of 10 times cash profits for acquisitions (and that’s before factoring in synergy benefits) and expects additional sales from tapping into these new channels to reap a further 20 per cent upside in cash profits. It’s also worth pointing out that by adopting this particular approach, rather than taking on the execution risk of building up an operation from scratch in new territories, Globo can accelerate the ramp up in its business and avoid incurring start-up losses in the first few years. That mitigates risk.

Clearly, the company’s free cashflow of €10m (£7m) in the past 12 months is not enough to fund an acquisition spree on the scale Globo is looking at even if the company uses a large proportion of its aforementioned cash deposits to pay the consideration. True, it currently has net funds of €47.4m, up from €40.4m at the end of December 2014, a sum equivalent to almost 9p a share, but even after factoring in cash on deposit then it still needs external funding to scale up the business quickly.

And that’s important because if Globo’s board want to fulfil their ambition of becoming a leading pure-play operator in the enterprise mobility management (EMM) and Mobile Application Development Platform (MADP) business segments, offering businesses solutions to expand their engagement with employees and customers through the mobile channel via a secure and extensible environment that runs on all smart devices, then strategically it needs to act now. “Tech is a fast market and you need to execute fast. You either win it or lose it” says Mr Papadimitrakopoulos. He’s in no mood to lose it.

Short covering and newsflow to spark substantial re-rating

It’s my strong view that if Globo pulls off its high yield bond issue, and I understand that some serious fixed income investors are considering the fundraise right now, and reveals details of its first strategic acquisitions to its shareholders, then short sellers will be scrambling to cover their positions. We shouldn’t have long to wait because we can expect news on this front “within weeks”.

Indeed, the share price could be in for a very sharp re-rating because investors have ignored a bullish first half trading update that confirmed that the company is bang on track to lift EPS from 6.7p to at least 8.7p in 2015. This means Globo’s shares are being priced on a cash adjusted prospective PE ratio of 4,a valuation that fails to recognise its growing international bias and intention to make complimentary acquisitions. Bears of the stock are playing a very dangerous game.

Trading on a bid-offer spread of 42.5p to 42.75p, I continue to rate Globo’s shares a buy and have a 69p target price, having initiated coverage six months ago with a conditional buy recommendation at 47p a share ('Going global', 2 February 2015).

The CEO maybe not be happy, but the shorters managed to bring the share price down to 25p yesterday and then 4M appeared on the ticker ( closing )

well today is on the bounce very fast.

still looking at it since 27p earlier with very strong buying and a UT at 29.25p not long ago, I will wait for a good intraday retracement, maybe to get some.

Managed to get some at 28.50p It did not had a proper retrace and hold all day much at the same price

will announce its 2015 Interim Results on Tuesday 29 September 2015.

Why Have Globo Plc & Tern PLC Been So Volatile In Recent Days?
The Motley Fool By Alessandro Pasetti - Wednesday, 16 September, 2015

Tern (LSE: TERN) fell almost 14% from its intra-day high on Tuesday, but Globo (LSE: GBO) fared even worse yesterday, when its shares lost 16% of value during the trading session.
Here’s my quick take on these two very different companies.

Top Pick
Globo’s downbeat performance since mid-June has surprised me. Its shares roared back today, and were up 15% at the time of writing, but I am puzzled. It is really hard to say why they have fallen and risen so much during the last couple of days, given that aside from an update on its high-yield bond fundraising, there’s not been much to report this week.

“This process has been delayed by market events through the summer of 2015,” the tech company said on Monday, and it’s possible that investors were not pleased with that. Still, it also said that its financing plans have received “strong interest from numerous investors“, and frankly its balance sheet doesn’t strike me as being particularly stretched, while its core cash flow profile is sound. Trading multiples also point to value.

It has succumbed to broader market volatility in the third quarter, but its first-half trading update was decent and personally I think its stock remains a good buy at 28p.

Risk
Tern is up 10% today, and currently trades at 21p. This is a tiny firm that invests in the tech world, and as such I would expect it to have a relatively weak balance sheet, negative operating cash flows and funding needs that are essentially backed by investors who are willing to embrace risk.

That’s precisely what you’d be buying today, which is not necessarily a big problem given that its investment portfolio could indeed deliver rapidly rising returns.

The biggest risk is represented by possible dilution stemming from several rounds of equity financing that may be needed to support its cost base as well as its ambitious expansion plans.

Until higher revenues are generated, though, personally I’d leave it to opportunistic traders.

30.50p +1.75p

Moving up fast now
Plenty of interest at the moment and share price following yesterday's bounce

and much faster now on reaching 32 v 33p+3.75p with 1.1M volume on just 2 hours of trading.

there was a 50K buy @ 32.90p that got things moving

At twiter
Aim Buster ‏@AIM_Buster 15h15 hours ago
#Globoplc $GBO
Have started to scale in for the push up. Excellent company. Interims due end of Sep

from the British Bulls tonight..........

GLOBO
Last Signal:BUY
Last Pattern:BULLISH HARAMI
Last Close:31.00 Change:+2.25 change+7.83%

Confirmation Status
Signal Update Our system’s recommendation today is to BUY. The BULLISH HARAMI pattern finally received a confirmation because the prices crossed above the confirmation level which was at 28.75p

another nice start of the day to 33.25p +2p, hope it last

Very volatile of late, but I still think this is undervalued and in due course will be higher and more stable. Here's hoping anyway.

MORE from Motley fool........

http://www.iii.co.uk/articles/267365/are-these-3-aim-stocks-set-soar-boohoocom-plc-monitise-plc-and-globo-plc

Similarly, mobile apps specialist Globo (LSE:GBO) also has huge potential. It focuses on creating efficiencies for companies using mobile devices and, in the last five years, has increased profit at an annualised rate of 36%. Furthermore, Globo has increased its bottom line in each one of those years, indicating that it is a very consistent performer.

Looking ahead, Globo is forecast to continue its strong performance by posting a rise in net profit of 21% in the current year, followed by further growth of 17% next year. And, with its share price having fallen by 20% since the turn of the year, Globo has a PEG ratio of only 0.2. This indicates that it has a very wide margin of safety, thereby moving the risk/reward ratio further in the investor's favour.

In addition, with Globo having only a modest amount of debt on its balance sheet (its debt to equity ratio stands at just 24%), it seems to be sensibly financed and all set to post stunning share price gains over the long term.