Trading StatementJanuary 18, 2012
FOR IMMEDIATE RELEASE
18 January 2012
2011 year end trading update
Globo plc (“Globo” or “the Group”; LSE-AIM: GBO), the international Mobile Solutions, S.a.a.S and IT group, announces that its financial performance for the year ended 31 December 2011 is expected to exceed market expectations, reflecting strong growth in international revenues as the Group continues its successful expansion into the mobile applications market.
Revenues for the year are expected to have risen by approximately 46.4 per cent to €45.25 million (2010: 30.91 million) with pre-tax profit, after the impact of substantial investment, slightly ahead of market expectations. International revenues accounted for 47.9% of total revenue for the year and more than 75% of total gross profit.
Demand for Globo’s products continues to be strong and the acceleration in growth achieved in 2010, following Globo’s entry into the International Mobile Applications market in 2009, continued throughout 2011. The Group delivered further substantial growth in the consumer sector, with CitronGO! and GO!Social continuing to expand its customer base, as well as entering the emerging Mobile Enterprise Application Platform (MEAP) market with the successful commercial launch, in November 2011, of GO!Enterprise Server which made an initial contribution of approximately €2 million to total revenue for the year.
During the year, Globo supported its international growth plans for both the consumer and enterprise sectors, in emerging and advanced global markets, by investing a total of €13.1 million (2010: €7.64 million) in expanding its international footprint and the continued development of its proprietary mobile technologies and product offerings.
This investment is delivering significant momentum in international revenues which increased by 250% to € 21.65 million (2010: €6.18 million), representing 47.85 per cent of total revenues for 2011 (2010: 20%).
In aggregate, CitronGO!, GO!Social, GO!Enterprise Server, and value added services and platforms accounted for €20.72 million or 96% of international revenues for 2011 and today represent the core of Globo’s business, substantially enhancing Group margins, revenue visibility, cashflow and prospects.
Operating cash flow for the year remained healthy at approximately €6.2 million and the Group raised £17.25 million (before expenses), through an oversubscribed placing, largely with UK institutional shareholders. The February 2011 placing was concluded in order to fund growth in the international mobile arena, software and technology development and to provide additional working capital.
After investment and increased working capital requirements as a result of expansion, total borrowings at the end of the year were reduced to €8.5 million (31 December 2010: €13.29 million) with net cash of €0.8 million and cash and cash equivalents of €9.3 million at 31 December 2011.
In line with previous statements, outstanding government receivables have substantially been collected and the remaining balance is now immaterial.
There were a number of key factors contributing to the strong growth achieved by the Group in the International Mobile sector during 2011. These are highlighted as follows, together with other significant developments:
· Consumer products CitronGO! and GO!Social are now being offered in 18 countries in Latin America, North America, South East Europe, Middle East, India, China and South East Asia, through Mobile Network Operators and Value Added Services Providers;
At the end of 2011, the total active subscriber base for these products was approximately 1.4 million, an increase of 151 per cent compared to the previous year (2010: approximately 550,000);
· GO!Enterprise Server, launched in November 2011, has generated substantial interest from potential partners and end-users around the world and contributed approximately €2 million to revenues for 2011;
GO!Enterprise Server provides a powerful, easy to use, cost efficient solution to mobilise any business operation and build applications that can run on any mobile device, for use by employees or customers, with comprehensive enterprise level security. Using GO!Enterprise Server, businesses can now mobilise and access all mainstream, vertical or customised software, business tools and applications using any handset or tablet across any operating system (Android, iPhone, Windows Phone, Blackberry, J2ME, WAP, HTML5) or network (GPRS, 3G, HSPA, WiFi);
· Following the anticipated growth and in the light of further expansion plans, Group Headquarters were re-located to 2,700 square metres of purpose-built offices. Globo has also developed a carrier grade Data Centre, incorporating the latest technology and telecom equipment, to host part of its S.a.a.S and telecom offering;
· In November, Globo completed the establishment of its UK office in London to support the commercial launch of GO!Enterprise Server in the UK and Western Europe;
· During 2011, industry recognition of Globo’s technology and products continued with significant awards including “Best Telecoms Innovation in Western Europe” (World Finance Telecoms Awards 2011) and “Innovative product of the year” (Infocom Conference 2011);
· Globo acquired the outstanding 65% shareholding in ReachFurther Communications, the Cyprus-based value added service provider and content aggregator, which is now a wholly owned subsidiary of Globo S.A.; and
· In September 2011, Barry Michael Ariko joined the Board as non-executive Chairman. He has extensive experience, at senior management level, with a range of companies including Autonomy Corporation plc, Netscape Communications Corp., AOL, Oracle Corp, and Extricity Inc, as well as having a successful career within software companies throughout their growth phases.
Outlook for 2012
International demand for Globo’s mobile products continues to be strong across both the consumer and enterprise sectors. We expect continued growth in revenues from CitronGO! and GO!Social and we are planning accelerated market penetration by GO!Enterprise Serverin Western Europe, UK, US, Canada and Australia.
Globo’s customers and partners have validated our technology and business model and our strategic aim is to continue to grow and position the group as a significant, global mobile software provider.
Globo’s success is being driven by strong growth in international mobile revenues which now account for the majority of Group profits. The Board is confident in Globo’s prospects and that the Group will continue to deliver or exceed numbers in line with market expectations for the current year, and will substantially marginalise the impact of the current economic difficulties and market uncertainties within the Euro-Zone.
Against this background, the Board has embarked on a review of the options for divesting the Greek related operations, considering relevant factors including impact on revenue, funding and personnel requirements. No deadline has been set for the divestment of Greek operations.
The Board is actively considering opportunities to acquire international mobile software and services businesses with a view to continuing to accelerate the profitable expansion of the Group.
The Board anticipates that the following will be the key drivers of financial performance for 2012:
· Continuing demand for CitronGO! and GO!Social in developing markets, supported by new service offering enhancements;
· Full commercial rollout of GO!Enterprise Server, involving the establishment of a robust ecosystem of partners to resell the product to their customers globally; and
· Further expansion of Globo’s international footprint by setting up new offices in the US West and East coasts to develop its American operations driven by GO! Enterprise Server.
Globo’s non-executive Chairman, Barry Ariko, commented:
“Since joining the Board, I have been impressed by Globo’s technologies, products, people and achievements. The Group’s entry into the emerging Mobile Enterprise Application Platform represents a step change for the business and provides a major opportunity for Globo to become a significant global player. This is a rare and exciting opportunity to create substantial value for shareholders.”
Globo’s Chief Executive Office, Costis Papadimitrakopoulos, added:
“In less than 3 years, we have transformed Globo from a regional business software provider to an International Mobile Applications player, addressing both the consumer and enterprise sectors of a large market with enormous growth potential. Mobile phones and tablets have become the key tool for accessing social and business apps and we are well positioned, in terms of both technology and business model, for further expansion. We have a solid team of people with the ability to deliver and are confident about our prospects for profitable growth as Globo enters the next phase in its international development.”
Globo intends to publish full results for the year ended 31 December 2011 during March 2012.
Costis Papadimitrakopoulos, CEO
Dimitris Gryparis, Finance Director
Daniel Stewart & Company Plc (Nomad & Broker)
Noelle Greenaway (Corporate Finance)
GLOBO plc was admitted to AIM in December 2007. Founded in 1997, Globo has established itself as a leader in the international mobile and ICT market, providing a wide range of mobile, e-business and telecom software products and related services to private and government organisations and to the mobile sector. The Group has an international presence, currently with offices and subsidiaries in 8 countries, and further expansion of its international footprint is planned, in line with management’s mobile communications strategy. For further information please go to www.globoplc.com.