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RNSNumber:4740AGloboplc29September2015
Globoplc29September2015FORIMMEDIATERELEASE
GLOBOplc("Globo"or"theGroup")
INTERIMRESULTSFORTHESIXMONTHSENDED30JUNE2015
Globoplc(LSEAIM:GBO/OTCQX:GOBPY),the internationalproviderofEnterpriseMobilityManagement(EMM),mobilesolutionsandsoftwareasaservice(SaaS),ispleasedtoannounceitsunauditedinterimresultsforthesixmonthsended30June2015.Financialhighlights
Revenueup56%to72.4million(H12014:46.5million)oGO!Enterpriserevenueup126%to44.9million(H12014:19.9million)oCitronGO!andGO!Socialrevenueup6%to21.3million(H12014:20.1million)oTelecom&SaaSrevenuegrew16%YoYto5.0million(H12014:4.3million)
TheGroupcontinuestobuildonitsstrongrecurringrevenuestreams:
oGO!EnterpriseEMM&MADPhadarenewalrateoftheprioryear'slicencesofroughly99%
o68%ofGO!EnterpriseMBSprojectrevenuewasgeneratedbyrepeatorders
H1Grossprofitmarginincreasedto59%(H12014:58%)primarilyduetotheincreasedproportionofdirectsales
EBITDAincreased55%to34.2million(H12014:22.0million)Lasttwelvemonths(LTM)EBITDAwas63.1millionProfitbeforetaxrose37%to22.0million(H12014:16.1million)Earningspershareincreased14%to0.049(H12014:0.043)Netcashgeneratedfromoperationsincreasedto21.0million(H12014:16.6million)
Freecashflow1of7.2million(H12014:4.2million)LTMfreecashflowof10.3millionNetcashpositionincreasedto47.4million(31December2014:40.4million)
1FreeCashFlow(FCF).Freecashflowiscalculatedbytakingthenetcashflowfromoperatingandinvestingactivities,addingbackthecostofacquisitions.
Operatinghighlights
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Significantgrowthinlicenceandenduserbase:
o GO!EnterpriseEnterpriseMobilityManagement ("EMM") businesstoemployeedevice licences installed base up 93% to 1.1 million at the half year (30 June2014:0.569million)
o GO!EnterpriseMobileApplicationDevelopmentPlatform("MADP")businesstoconsumer licences installed base up 63% to 40.8 million (30 June 2014: 24.9million)
o CitronGO! andGO!Socialmonthly active users up 9% to 3.7million (30 June2014:3.4million)
Renewal of approximately 50,000GO!Enterprise EMM licences and an incrementalpurchaseorderfromaU.S.Fortune100company,worthUS$1.2million(1.0million).
U.S.growthremainsontrack,withexpandedoperationsandheadcountincreasesintheregion.DuringtheperiodwestrengthenedoursalesandmarketingcapabilitieswiththeadditionofKeithHigginsasourU.S.ChiefMarketingOfficerandthehiringofnumeroussales and marketing professionals. In order to attract additional talent, a softwaredevelopment centre has been established in Pittsburgh, Pennsylvania. TheGroup hasalsoexpandedthecapabilitiesofitsCanfield,Ohiodevelopmentcentre.
Globo secured a major contract for numerous mobile application projects with astrategicallysignificantSouthAsianindustrialconglomeratecustomerinJune2015.Theinitial contract value is in excess of US$1million, and the diversified nature of thecustomeroffersadditionalfutureopportunitiesfornewprojectsandlicencegrowth.
Newcustomersadded inQ22015, includingeRevmax,CenClear,NorthlandsPolice,AegeanOil, InternationalLife,Lafarge,UBBBank,PeoplecertandWatt&Volt.Thesenew customers follow strong contractwins inQ1 2015, including theU.S.Army, ING,EMC,INTEL,Musananda(UAE),VodafoneandCocaCola.
Continuedawardsandrecognitionfromindustryobservers:
oHighlighted inOvum's201516DecisionMatrix forMADPSolutionsasamajor"MarketChallenger"amongstthe12leadingMADPvendors,withthepotentialtobecomeaTier1player
o Highlighted in Gartner's 2015 Enterprise Mobility Management Suites MagicQuadrant
oInnovativeApplicationAwardinFebruary2015forthe"EMBRYOGENESIS"app
oRecognitionforourTUIappinMarchbyTourismAwards2015inthecategory'Applicationsforsmartphonesandtablets'
oDistinctionattheMobileExcellenceAwards2015inJuneforthemobileapp"beinlife"(InternationalLife)
Announcement at Mobile World Congress in Barcelona of FIPS 1402 certifiedencryptionforGO!AppZone.Globoistheonlycompanytooffer this levelofsecurityforsuchadevelopmentplatform.
Launch in theU.S. of aFullySponsoredLevel 1ADRwithoverthecounter tradingfacilitiesontheOTCQXplatform,tradedunderthetickerGOBPY.
SituationinGreece
Since the end of June 2015, our Greek operations have faced the challenges of the Greekpolitical uncertainty in combination with the impact on financial markets of slowing growth inChinawhichresultedincapitalcontrols.
The Group has taken all relevant measures to avoid any operational or financial impact, aspreviously announced.OurGreek revenues in 2015areestimatedat between6%and7%of
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totalrevenueandwedonotseeanypotentialimpactonourresultsforthisyear.ThesituationinGreecehasnowstabilisedandourGreekoperationscontinuetofunctionasnormal.
Postperiodend
Wehaveannounceda14million proposedacquisition of aBringYourOwnDevice(BYOD)andMobileSecuritysoftwareproviderbased inEurope.Theacquisition targetoffersasetofsecuritysolutionsforthemobileindustrywithstrongfocusonBYODandMobile Applications Security. It has a successful track record with customers in thebanking, finance and public sectors, and has built a strong reseller network includingtelecommunications companies, IT solutions providers and mobile technology players.ThisacquisitionisintendedtoenhancetheGO!Enterpriseportfoliowithcertainaspectsofsecurity that arenot covered in the currentGO!Entepriseplatform,andprovide instantaccesstocertainadditionalregulatedfinancialmarkets.GloboexpectstheacquisitiontobecompletedinOctober2015.
GlobohasenteredintoamajorpartnershipwithILoveVelvet(ILV)Inc.,basedinNewYork,toaddressthemobilePOS(mPOS)marketglobally.OurcombinedmPOSsolutionhasbeenselectedbyamajorInternationalBanktoenableitsmorethan2millionsmallbusinessandprofessionalscustomers.OfficialcommerciallaunchisplannedforQ12016afterthecompletionofapilotprogrammescheduledforQ42015.
Outlook
OurpositioningwithinthefieldofMobileEnterprisecreatesstrongmomentumforfurthergrowthinenterprisecustomersandnewprojectwins.
Strongbusinessmomentumisexpectedduetothetraditionallystrongersecondhalfof
theyearandcontinuedUSexpansion.
Ourcurrentcashpositionandcashflowcoversallofouroperatingrequirementsandwillenableustopursueselectiveacquisitionopportunitiesinthenearterm.Inordertogrowthe business through more sizeable acquisitions, we continue our High Yield Bonddiscussions.Globomaintainsaprudentviewon themethodsof financing itsacquisitionledgrowth.
Commentingontheresults,CostisPapadimitrakopoulos,CEOofGlobo,said:"Weareproudof thecontinuedsuccessofourgrowthstrategy.Over thecourseof justa fewyears,GlobohasbeenpositionedasoneoftheleadersintheMobileEnterprisespaceandourbusiness continues to evolve in a number of different business areas. Our Internationaloperations and growing US presence are driving opportunities for our customers and theEnterprisetransformationtowardsmobilesystemsandapplicationsisaccelerating.Weremaincommittedtoincreasingshareholdervalue,boththroughorganicgrowthandstrategicinvestmentsintechnology,expertiseandmarketreach."
ApresentationtoanalystsandbrokershostedbyCostisPapadimitrakopoulos,ChiefExecutiveOfficer,andDimitrisGryparis,FinancialDirector,willbeheldat10.30on29September2015at55OldBroadStreetStreet,London,EC2M1RX.Tojoinviaconferencecall:UKdialin:08003680649Overseasdialin:+442030598125AccessCode:GloboTojoinviathewebsite:http://globoplc.com/interimresults2015presentation/TheslidesforthepresentationwillbeavailableonGlobo'swebsite:http://www.globoplc.com/enGB/resultsandpresentations/Forfurtherinformationpleasecontact:Globoplc +442073788828CostisPapadimitrakopoulos,CEODimitrisGryparis,FinanceDirector
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MikeJeremy,IRORBCCapitalMarkets +442076534000(NominatedAdviser&Broker)
PierreSchreuderorEmaJakasovic
CanaccordGenuity +442075238000(JointBroker)SimonBridgesorEmmaGabriel
BrunswickGroup
ChrisBlundellorCharlesPemberton +442074045959AboutGloboplcGlobo Plc is a global provider of complete enterprise mobility solutions and SaaS. OurGO!Enterprise (EMM) and GO!AppZone (MADP) offerings help businesses expand theirengagement with employees and customers through the mobile channel via a secure andextensible environment that runs on all smart devices. The Group operates internationallythrough subsidiaries and offices in theU.S.,U.K.,Europe,MiddleEast andSouthEastAsia.Globowasincludedinthe2014GartnerEnterpriseMobilityManagementMagicQuadrantreport,inOvum's201415DecisionMatrix forEMMSolutionsand201516DecisionMatrix forMADPSolutions, and in IDC's January 2015 report on Mobile Enterprise Application DevelopmentPlatforms.Formoreinformationvisitwww.globoplc.com.CHIEFEXECUTIVEOFFICER'SREPORTOverviewInthesixmonthsto30June2015Globomaintainedstrongoperationalmomentum,drivenbyourEnterprise Mobility product suite, Mobility Business Solutions (MBS) offering, and increaseddirectsalesleadingtostrongrevenuegrowthandcashgeneration.Themainareasoffocusduringtheperiodhavebeenthe:
IncreaseofourdirectsalespersonnelandexecutioncapacityIncreaseofourtechnicalcapabilitiesintheimplementationofstrongEnterpriseMobility
solutionsdrivenbysecurityandMobileAppsExpansionofourU.S.activitiesandmarketpenetrationOptimisationofourSalesandMarketingprocessestoattractnewdirectcustomersand
achievestrongerengagementwithcrosssellingandupsellingopportunities Establishmentofstrongpartnershipsthatwillhelpusbuildastrongercommercialand
innovationpathEvaluationofacquisitiontargetsthatwillhelpthecompanyscaleup Optimisation of our international presence and operational platform to minimise the
exposure to operational and software development costs, thus keeping the underlyingmarginsataverystronglevel
ContinuousinnovationinnewproductsandexpansionofexistingonesDuring the period we continued to improve our competitive position in an enterprise mobilitymarketwhich isbeingdrivenbystrongdemand forenterpriseuseofsmartphonesand tabletsandincreasinginterestinmobilebasedapplications.Our Enterprise and Consumer mobile product lines continued to deliver significant growth,formingthebasisforfuturerecurringrevenuesandprofitgenerationfortheGroup.As expected our Enterprise Business is now the most dominant component of our revenue,representing62%ofourtotalsales,drivingourworkingcapitalperformanceandimprovingcashgeneration.We saw strong underlying demand and new customer wins for our GO!Enterprise platform,leading to revenue growth of 126% to 44.9 million (H1 2014: 19.9 million). Our consumermobility revenue (CitronGO!andGO!Social) alsoperformedwell, growing6% to21.3million(H12014:20.1million).Overall,Grouprevenuegrewby56%to72.4million(H12014:46.5million).EBITDAincreasedby55% to34.2million (H12014:22.0million),whilstprofit before taxgrew5.9million to22.0million(H12014:16.1million).
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FreeCashFlow2totalled7.2millioninthefirsthalfcomparedto4.2millioninthesameperiodlastyear.Thisisareflectionoftheshift inrevenuebalancetowardsenterprisemobilitywithanassociatedimprovementinthepaymentcycle.2FreeCashFlow(FCF).Freecashflowiscalculatedbytakingthenetcashflowfromoperatingandinvestingactivities,addingbackthecostofacquisitions.
CustomerandcontractwinsThroughoutthefirsthalfof2015wehavebeenwinningnewcustomersinadditiontonewusersandbusinessfromourexistingcustomers.Significant new customers include eRevmax, CenClear, Northlands Police, Aegean Oil,International Life, Lafarge, UBB Bank, Peoplecert and Watt & Volt, U.S. Army, ING, EMC,INTEL,Musananda(UAE),VodafoneandCocaCola.Inaddition,wesecuredamaterialSouthAsian industrialconglomeratecustomer inJune2015fornumerousmobileapplicationprojects.ThiscustomerisalreadycontributingastrongrevenuestreamwhichisexpectedtosurpassUS$1millionduring2015,withstrongfuturepotential.These additions augment an interim base of approximately 3,500 enterprise customers andassociatedrecurringrevenuestreamsfromGO!Enterpriseprojectsandlicences.GO!EnterpriseBusinessrecurrenceAs expectedGO!Enterprise has become our dominant revenue stream. This brings improvedrecurringrevenuevisibilitywith97%licenceretention,withalmostno licencechurnanda65%repeatprojectratio.U.S.ExpansionGlobocontinueditsU.S.growthbyexpandingoperationsandincreasingheadcountintheregion.DuringtheperiodwestrengthenedoursalesandmarketingcapabilitieswiththeadditionofKeithHiggins as our U.S. ChiefMarketingOfficer and the hiring of numerous sales andmarketingprofessionals. In order to attract additional talent, a software development centre has beenestablished in Pittsburgh, Pennsylvania. The Group has also expanded the capabilities of itsCanfield,Ohiodevelopmentcentre.First half revenue in the U.S. increased by 611% to 15.2 million (H1 2014: 2.1 million)contributing21%oftotalgrouprevenue.WeconsidertheU.S.ourmostimportantmarketasitrepresents60%oftheglobalEMM+MADPmarket, which in 2015 is expected to reach $4.6 billion. Our main focus remains the U.S.Enterprisemidtiermarket(companieswithrevenuesofbetween$10millionand$1billion)whichisinitselfequivalenttothefifthlargesteconomyintheworld.OurU.S.operationsareheadquarteredinPaloAltowithadditionalofficesinSanFrancisco,NewYork,OhioandPittsburgh,withrepresentativeslocatedinCanada,LosAngelesandAtlanta.Wecurrentlyemployapproximately29%ofourglobalheadcountintheU.S.RecognitioninGartner's"MagicQuadrantforEnterpriseMobilityManagementSuites"and"MagicQuadrantforMobileApplicationDevelopment"reportsDuringtheperiodweachievedinclusioninboththeEMMandMADPGartnerMagicQuadrant,being officially one of the 4 players globally that has presence in both reports. This is atremendousachievementandhighlightsourcommitmenttoourinvestmentstrategy.StrategyInvestmentsandAcquisitionsAs theMobileEnterpriseMarket evolvesweobserve continuing consolidation favouring largerentities.Wedefinethismarketasdividedintothreelevelseachofalmostequalscale,asfollows:
Toptier global playerswho providemobility solutions as part of their overall productportfolio,withtheconsequencethattheycannotofferthefocusof"pureplay"alternatives
Agroupofleading"pureplay"playerswhoprovidemainlyEnterpriseMobilitySolutionsastheirmainstreambusiness
A lower tier of smaller technology or service companies that offer innovativemobile
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solutionsandservicesbutwithlimitedabilitytoexecuteorgrow.Globo'sstrategy is toestablish leadership in the"pureplay"segment throughacombinationoforganicgrowth,backedbyproductinvestments,andselectiveacquisitions.TheGrouphasbeen targetinga seriesofacquisitionssince theendof2014andwehope toprogresscertainof theseover thecomingmonths.Wehaverecentlyannounced theproposedacquisitionofaninnovativeBYODMobileSecurityCompanyinEuropefor14million.Ourcurrentcashpositionandcashflowcoversallofouroperatingrequirementsandwillenableus topursueselectiveacquisitionopportunities in thenear term. Inorder togrowthebusinessthroughmoresizeableacquisitions,wecontinueourHighYieldBonddiscussions.TheCompanymaintainsaprudentviewonthemethodsoffinancingitsacquisitionledgrowth.LaunchofnewproductsandservicesDuring the first half of the yearwe expanded the capability of ourGO!Enterprise offering inmanydifferentareas:
AtMobileWorldCongress (MWC) in Barcelona in Februarywe announced the fullavailability of our FIPS 1402 certified Mobile Application Development Platform(GO!AppZone)beingtheonlycompanyworldwideofferingsuchasolution.
DuringJunewereleasedourGO!AppZonedeployservicewhichnowoffersconnectivityand control of mobile apps through the GO!AppZOne cloud in a "pay as you go"transactionalmodel.ThisimprovementisexpectedtodrivesignificantdemandforSMEsdeployingmobileappsinamorecostefficientway
DuringJunewecompletedGO!EnterpriseWindows10developmentincooperationwithMicrosoftandbeingoneofthefirstvendorstosupportthenewOperatingSystemfromitsfirstdayoflaunch.
Development of further product enhancements and new features has kept us busyduringH12015andnewproductreleasesareexpectedthisyear.
Operationalperformance:GO!Enterprise,CitronGO!andGO!SocialDuringtheperiod,ourcombinedmobilesolutionsrevenuesgrew65%to66.2millioncomparedto40.0millioninthesameperiodlastyear.GO!EnterpriseOur expansion plans are underpinned by the combination of global growth in demand forsmartphonesand tabletsand theBYOD trend.This isamarketwhich IDCpredictswill reachUS$7.0billionby2017.The first half of the year showed our commitment to continued product expansion andimprovement,withthelaunchofGO!AppZoneStudioandGO!EnterpriseWorkSpace.Our fully integrated solutions of mobile Security, Mobile Productivity and Mobile ApplicationDevelopment Platform in combination with a strong consulting and services offering isunderpinning our future performance and opens up significant opportunities within eachcustomer.Wecontinuetobuildourdirectsalesforce,notablyintheU.S.andUKandweareexpandingourMBScapability,addingpersonnelinGreeceandIndiawherelabourcostsaremorefavourable.In themeantimeweare rampingupourcustomer facingconsultants in theU.S.andWesternEuropewhileexpandingourindirectrelationshipswithresellersandsoftwareintegrators.RevenuefromGO!Enterpriseisrecognisedintwocategories:
Via licensingoptionsonaperuser/devicebasis,whichare renewedannuallyoronaperpetualbasis.Theseareaccompaniedbysoftwareassuranceservicecontracts.
ViaconsultingandimplementationservicesforthedevelopmentoftailormadesolutionsandappsforcustomersorpartnerswithintheMBSdivision.
Thetableprovidesabreakdownofrevenuedriversinrespectivebusinessdivisions:
H12015Licences
InstalledBase3
H12015Revenue
H12014Licences
InstalledBase3H12014Revenue
EnterpriseMobilityManagement(EMM)Licences4
1.1million 11.4million 569,500 5.0million
MobileApplicationDevelopment
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DevelopmentPlatform(MADP)Licences5
40.8million 14.0million 24.9 4.9million
MobilityBusinessSolutions(MBS)Services6
N/A 19.5million N/A 10.0million
TOTAL 44.9million 19.9million
3DisclosednumberofInstalledBaseisnotequaltothelicencessoldduringtheperiod.Itrepresentsthetotalnumberoflicencesbeingactiveatthespecifictimeincludinglicencessoldduringtheperiodandlicencesthatareactiveandhavebeensoldinpreviousperiods.4EnterpriseMobilityManagement(EMM)licensesincludeGO!EnterpriseOffice,Mobilizer,BOX,MDM,Sync,LinkBusinesstoEmployeelicenses,soldonapernameddevicemodel.5MobileApplicationDevelopmentPlatformlicensesincludeGO!EnterpriseReach(BusinesstoConsumerlicenses)soldinblocksof50,000or100,000devices.6MobilityBusinessSolutions(MBS)relatedtoGO!EnterpriseProjectServicesWeareplanningtolaunchsignificantaddonstoourGO!EnterpriseandGO!AppZoneplatformstappingintoseveral"hot"areasofthemarketsuchasInternetofThings(IoT),WearabledevicesaswellintoMachinetoMachine(M2M)communicationswhereweseeatremendousopportunityfor future growth. In themeantimewe are expanding ourGO!AppsEcosystemof readymadeapps thatgive instantaccess tocustomerswhowantanoutof theboxsolution thatworks forthem.The expansion of our GO!AppZone (MADP) family of products with the introduction ofGO!AppZone cloud services are offering Application Test services, Application Native Buildservices for iOS,Android,Windows8andBlackBerryaswellasaCloudConnector (MBAAS)whichcaninterconnectapplicationsandBackEndSystemsinasecureandflexibleway.Wearebuildingadevelopercommunityofusersandthefollowonpotentialforrevenuestreamsbuiltonthedesiretosecure,deployandmonetisetheresultingapps.We are confident that the breadth of services thatGO!Enterprise offers (EMM andMADP)combined with the momentum of demand for mobile first services and our US sales anddistribution initiative inparticularwill furtherenableGlobo tobuildon its recognisedpositionasoneoftheleadingmobileenterprisesoftwareandsolutionproviders.CitronGO!/GO!SocialCitronGO!/GO!Socialsawfirsthalfrevenueof21.3million(H12014:20.1million),up6%fromthepreviousyear,andrepresenting29%of totalGrouprevenuecompared to43%inH12014.Featurephonescontinuetorepresentasignificantportionofthemobiledevicesusedaroundtheworld and mostly in the emerging markets. Several factors such as cost, energy and dataconsumptionofsmartphonesandslowmobilenetworkinfrastructuresintheemergingworld,limitthe entrance of smartphones,making CitronGO! a favourable solution for those who want toenjoysocialnetworks,chatandemailfromafeaturephone.GloboprovisionstheCitronGO!andGO!Socialofferingonawhitelabelbasiswithanemergingmarketsemphasis(giventhecontinuingprevalenceoffeaturephoneuse).Revenuesaregenerated fromservicesprovided toendusersviaMobileValueAddedServiceProviders (MVASPs) and Mobile Network Operators (MNOs) as part of their own contentofferings. As of 30 June 2014, CitronGO! and GO!Social were being offered in countriesthroughoutEurope,Africa,LatinAmerica,AsiaandtheMiddleEast,principallyviamobilevalueadded service providers (MVASPs) as part of their own subscription application and contentofferings.Attheendofthefirsthalfwehadrecorded7.6millionuniqueusersandregistered3.7million as active on amonthly basis. Globo receives a fixed service fee per active user on amonthlybasis.TelecomS.a.a.SSolutionsTelecomS.a.a.SSolutionssawfirsthalfrevenueof5.0million(H12014:4.3million),anincreaseof16%onthepreviousyear.Thisstronggrowthresultedfromutilisationofinvestmentswe have made in the previous two years in order to enrich our service portfolio with new
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we have made in the previous two years in order to enrich our service portfolio with newservices.InthisdivisionGloboprovidesitsWiPLUSWiFiservice,afullymanageddeploymentforhotels,airports or marinas etc., and similar locations, for which venue owners pay a monthly fee.Secondly, viaReachFurtherCommunicationsGlobo providesMVASServices toMNOsandotherVASPs.Finally,GloboMobileInc.providesothertelecomservicestointernationaltelecomcarriers.Globo continues toexpand its product offeringwithin this segment,which isEBITDAenhancing to overall performance and supports the Group's overall mobile offering whilstincreasingmarketfootprint.OutlookGlobocontinues itsgrowthtrajectory forbothrevenuesandprofitsandfreecashflowwhile itsoperational performance is underpinned by growing recurring revenues from its EnterpriseMobilityproductsandservices.OurEnterprisesolutionsarerecognisedfortheirqualityandbreadthofcompletenessandvision,which fuel our future growth as ever more Enterprises use the mobile channel to increaseemployeeeffectivenessandcustomerengagement.Thefirsthalfof2014sawacontinuedgrowthinourUSrevenuesandoperationswherewethinkthereisagreatpotentialinthefutureandwehavebeeninvestingheavily.Inthemeantimewetake advantage of our geographic diversification tomaximize returns andminimize expenses,thusachievingaverystrongoperatingresult.ThecontinuousdevelopmentandnewinnovationswithinofourproductlinedrivesfuturedemandandwearesatisfiedthatwearenowrecognizedasoneofthemostcompletevendorsintheMobileEnterprisespace.Since thebeginningof theyearwehavebeenevaluatingseveralacquisitionopportunities thatwe feel will add significant value to the Group. We have recently announced the proposedtransactionforthefirstone.Webelievethatourorganicgrowth,strongtechnologyofferingandourabilitytointegratenewbusinessesintheshorttermwillresultinfutureacquisitionsactingasamultiplyingfactorforourperformance.We are now in the traditionally stronger second half of the year and we look forward to anexcitingperiodofgrowthfortheGroupin2015andbeyond.CostisPapadimitrakopoulosChiefExecutiveOfficer
FinancialReviewTheGroupdeliveredastrongfinancialperformanceacrossallbusinessareasinthefirsthalfof2015.Revenue increasedby56% to72.4million (H12014: 46.5million), reflectingpredominantlygoodgrowthinthemobilesectoroftheGroup.Grossprofitincreasedby59%to42.96million(H12014:27.0million)withagrossmarginof59.3%(H12014:58%).Earningsbeforeinterest,tax,depreciationandamortisation(EBITDA)increased55%to34.19million(H12014:22.04million).Depreciationandamortisationofnoncurrentassetswas10.96million(H12014:5.61million),reflectingsignificantinvestmentinproductdevelopment.Operatingprofitincreasedby41%to23.23million(H12014:16.43million).Profit before taxwas 22.00million, an increase of 37% over the same period last year (H12014:16.06million).Thetaxationchargefortheperiodwas3.57million(H12014:0.43million).Basicearningspersharefortheperiodincreasedby14%to0.049(H12014:0.043).Attheendofthecurrentperiod,theGrouphadnetassetsof198.20million(H12014:155.57million) and total assets of 283.67 million (H1 2014: 203.94 million). Total assets included78.72 million in noncurrent assets, 5.38 million in inventories and work in progress, and95.21 million in trade and other receivables, prepayments and other current assets. Totalliabilitiesincreasedby77%to85.47million(H12014:48.36million).
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liabilitiesincreasedby77%to85.47million(H12014:48.36million).On30June2015,cashandcashequivalentstotalled104.36million(30June2014:67.78million)andnetcashwas47.43million.Improvedworkingcapitalperformanceresultedinoperatingcashflowof23.02million(H12014:18.23million).Netoperatingcashflowincreasedby27%to21.04million(H12014:16.56million).During the period a total of 14.22million (H1 2014: 12.69million) was invested in productdevelopmentandinfrastructure,mainlyrelatingtothemobileproductsandservicesoftheGroup.TheGroup has recorded FreeCash Flow7 of 7.2million (H1 2014: 4.2million) due to theincreaseinGO!Enterprisesaleswhichhaveashortercollectioncycle.During the period, and prior to the expiry of the available drawdown, the Group used theremaining term loan under the Barclays & EWUB facility. The use of the loan proceeds areintendedtofundthecontemplatedacquisitionsthatwehavejustrecentlystartedtoexecute.7FreeCashFlow(FCF).Freecashflowiscalculatedbytakingthenetcashflowfromoperatingandinvestingactivities,addingbackthecostofacquisitions.
Ourliquiditymanagementhasresultedinseveralchangesduringtheperiod:
Sincethebeginningoftheperiodwehaveprogressivelytransferredourreservestobankaccountswithstrongerratingthanthepreviousones.TheGroupholdsbankaccountswithseveralbanksintheUK,Switzerland,USA,Dubai,India,GreeceandCyprus.At30June2015theGroupheldcashinbankswiththefollowingcreditratings:
CreditRating
Asat30June
2015
'000
Asat31December
2014
'000
A+,A,AA,Aa3* 103,489 9,977B3,B,B,Baa3 869 72,774CA 11Total 104,358 82,762*BankslocatedinUK,USandSwitzerland
Inaneffort tominimizeexposure toasinglecurrencyandFX fluctuations, theGroupholds cash balances in several currencies given its diversified collections and paymentneeds.At30June2015thedistributionofbalancespercurrencywasthefollowing:
Currency
Asat30June
2015
Euro() 57.1%BritishPound() 20.8%USDollar($) 21.9%LocalCurrencies(Rupiahs,Dirhams) 0.2%Total 100%
GloboTechnologiesS.Aperformance&outlookRevenue atGloboTechnologiesS.A., an associate of theGroup, increased by 3% to 19.35million(H12014:18.74million).Profitaftertaxwas0.78million(H12014:1.71million),withprofitattributabletotheGroupof0.38million(H12014:0.84million).TheGroupreceived,on
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schedule, the fifth instalment, of 1.65million, from the acquiring entity (GMBOHoldings Ltd,previouslyZipersiConsultingLtd).Thiscomprised1.48millionofprincipaland173Kininterestdue,inrespectoftheGroup'sdivestmentof51%ofGloboTechnologiesS.A.,theebusinessandsoftwareservice.Weexpect thatoutstandingpayments, totalling6.7million, tobereceived inthreeinstalmentsuptotheendof2016,willbecollectedontimeFinancialperformancemetricsAs our Group is continuing its international growth and in the need of providing additionalfinancialanalysisofcertainKPIs thatcomplywithdifferentreportingstandards(NonIFRS)weareprovidingasetoffinancialKPIsanalysisthatexaminesseveralareasofourworkingcapitalperformanceinordertoevaluatethe:DaysSalesOutstanding(DSO)We define DSO as the result of multiplying 365 days by outstanding qualifying receivables(relatedtocustomersales)dividedbythetotalvalueofraisedinvoicesforthelasttwelvemonths.Forthelasttwelvemonthsended30June2015theDSOcalculationisthefollowing:
LTMH12015
'000
LTMH12014
'000
Qualifyingtradereceivables* 49,194 27,678LTMInvoicesIssued 139,450 88,900DSOs 129 114
*Qualifyingtradereceivablesincludetradereceivable,notesreceivable,chequesreceivableandexcludeprepaymentstovendors
Theincreaseof15daysinDSOsismainlyaresultofinvoiceageingasoutlinedintheRVWAA(seebelow)calculationbelow.ReceivablesVolumeWeightedAverageAging(RVWAA)
Given the seasonality of stronger sales duringQ2 andQ4 of each year, it is important toexaminethevolumeweightedaverageageingofreceivablesinordertojudgethereceivablescollectabilityqualityandcontrollingandcollectionsexecutionperformance.ThiswayweevaluatetheoverallreceivablescollectionperformanceasafinancialKPIFortheperiodended30June2015theRVWAAcalculationisthefollowing:
Upto
3months
'000
Between36months
'000
Between612months
'000
Over12months
'000
QualifiedtradereceivablesH12015* 37,835 9,509 1,850
QualifiedtradereceivablesH12014* 7,400 6,806 12,642 830
RVWAAH12015 71Days
RVWAAH12014 185Days*Qualifyingtradereceivablesincludetradereceivable,notesreceivable,chequesreceivableandexcludeprepaymentstovendorsAs shownabove, theGrouphas reduced theRVWAAby62% to71days (H12014: 185days) as a result of increased controls and execution in collection policies and customerrelations.
NonIFRSAdjustmentstoGrossProfit,OperatingProfit,PBT,EBITDA,OperatingCash,InvestingandFreeCashflowduetoR&Dexpenditure
The Group IFRS accounting policy follows the IAS 38 standard for the capitalization of
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product Research & Development expenses. As a result the costs for developing ourproductsarecapitalizedandareamortizedoveraperiodof3years.WeherebypresentnonIFRSadjustmentsinseveralKPIsofourfinancialperformanceaftertheadjustmentofR&Dexpensesbeingdirectlyexpensed (insteadofbeingcapitalizedandthenamortised).
FinancialKPIsH12015
'000
H12014
'000
IFRSGrossProfit 42,959 27,001NonIFRSR&DAdjustments 10,515 5,289NonIFRSGrossProfit 53,474 32,290NonIFRSGrossProfitMargin 74% 69%
IFRSOperatingProfit 23,230 16,340NonIFRSOperatingProfitAdjustments (3,455) (6,910)NonIFRSOperatingProfit 19,775 9,430NonIFRSOperatingProfitMargin 27% 20%
IFRSProfitBeforeTax 22,001 16,058NonIFRSR&DAdjustments (3,455) (7,000)NonIFRSEarningsBeforeTax 18,546 9,058NonIFRSEarningsBeforeTaxMargin 26% 19%
EBITDA 34,191 21,952NonIFRSR&DAdjustments (13,970) (12,199)NonIFRSEBITDA 20,221 9,753NonIFRSEBITDAMargin 28% 21%
IFRSNetOperatingCashFlow 21,039 16,559NonIFRSR&DAdjustments (13,970) (12,289)NonIFRSOperatingCashFlow 7,069 4,270
IFRSInvestingCashFlow (14,005) (12,970)NonIFRSR&DAdjustments 13,970 12,289NonIFRSOperatingCashFlow (35) (681)
FreeCashFlow 7,192 4,216NonIFRSR&DAdjustments 0 0NonIFRSFreeCashFlow 7,192 4,216
DimitrisGryparisChiefFinancialOfficer8FreeCashFlow(FCF).Freecashflowiscalculatedbytakingthenetcashflowfromoperatingandinvestingactivities,addingbackthecostofacquisitions.
CONSOLIDATEDSTATEMENTOFCOMPREHENSIVEINCOMEForthe6monthsended30June2015 Sixmonths
Sixmonths Year
ended ended ended30June 30June 31December
2015 2014 2014
'000 '000 '000
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(unaudited) (unaudited) (audited)Revenue(Note2) 72,426 46,499 106,386Costofsales (29,467) (19,498) (43,604)
GrossProfit 42,959 27,001 62,782Otheroperatingincome 1,612 3,092 204Distributionexpenses (9,123) (2,929) (8,547)Administrativeexpenses (8,063) (6,021) (15,000)Otheroperatingexpenses (4,155) (4,713) (2,118)
OperatingProfit 23,230 16,430 37,321Financeincome 368 347 792Financecosts (1,981) (1,554) (4,125)Shareofgain/(loss)ofassociate 384 835 1,715
ProfitbeforeTax 22,001 16,058 35,703Taxation (3,573) (435) (692)
Profitfortheperiodfromoperations 18,428 15,623 35,011
Total 18,428 15,623 35,011Othercomprehensiveincome
Exchangedifferencesontranslatingforeign 3,779 2,103 2,815operations
Othercomprehensiveincomefortheperiod,netoftax 3,779 2,103 2,815
Totalcomprehensiveincomefortheperiod 22,207 17,726 37,826
Attributableto:
EquityholdersoftheCompanyfromoperations 22,207 17,726 37,826
EarningspershareforprofitfromcontinuingoperationsattributabletotheequityholdersoftheCompanyBasicanddilutedearningspersharetotaloperations(pershare)(Note3) 0.049 0.043 0.094
CONSOLIDATEDSTATEMENTOFFINANCIALPOSITIONAt30June2015
Asat Asat Asat30June 30June 31December
2015 2014 2014'000 '000 '000
(unaudited) (unaudited) (audited)ASSETSNonCurrentAssetsProperty,plantandequipment 2,619 2,692 2,776Intangibleassets 49,243 39,849 45,260Goodwill 7,615 9,019 7,615Deferredtaxassets 640 394 481Otherreceivables 4,607 7,452 6,045Investmentinanassociate 13,723 12,459 13,339
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Otherinvestments 276 51 118
TotalNonCurrentAssets 78,723 71,916 75,634
CurrentAssets
Inventoriesandworkinprogress 5,382 5,642 4,870Tradereceivables(Note4) 54,495 32,958 50,788Otherreceivables 4,868 3,174 4,234Othercurrentassets 35,845 22,465 21,101Cashandcashequivalents 104,358 67,780 82,825
TotalCurrentAssets 204,948 132,019 163,818
TOTALASSETS 283,671 203,935 239,452
EQUITYANDLIABILITIES
Shareholders'EquityOrdinaryshares 4,653 4,653 4,653Sharepremium 65,890 65,890 65,890Otherreserves 5,440 5,115 5,440Translationreserve 6,631 2,140 2,852Retainedearnings 115,590 77,774 97,162
TotalEquityCapitalandReserves 198,204 155,572 175,997
NonCurrentLiabilities
Borrowings 51,660 21,814 39,697Retirementbenefitobligations 279 283 281Financeleaseliabilities 18 8 23Otherliabilities 425Provisionsforotherliabilitiesandcharges 612 593Deferredtaxliabilities 6,489 872 3,305
TotalNonCurrentLiabilities 59,058 23,402 43,899
CurrentLiabilitiesTradeandotherpayables 8,972 4,682 4,698Incometaxpayable 1,718 3,668 1,078Taxespayable 841 416 772Financeleaseliabilities 19 13 22Borrowings 5,270 2,700Otherliabilities 9,589 16,182 10,286
TotalCurrentLiabilities 26,409 24,961 19,556
TOTALEQUITYANDLIABILITIES 283,671 203,935 239,452
CONSOLIDATEDCASHFLOWSTATEMENT
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Forthe6monthsended30June2015
Sixmonths Sixmonths Yearended ended ended
30June 30June 31December2015 2014 2014'000 '000 '000
(unaudited) (unaudited) (audited)CashFlowsfromOperatingActivitiesCashgeneratedfromoperations(Note5) 23,020 18,228 36,414Interestpaid (1,981) (1,554) (4,125)Incometaxpaid (115) (1,337)
NetCashgeneratedfromOperatingActivities 21,039 16,559 30,952CashFlowfromInvestingActivitiesInvestmentsinbusinesscombinations (158) (627) (9,149)Purchasesoftangibleandintangibleassets (14,215) (12,690) (24,425)Proceedsfromsaleoftangibleandintangibleassets Interestreceived 368 347 792
NetCashusedinInvestingActivities (14,005) (12,970) (32,782)CashFlowsfromFinancingActivitiesProceedsfromissueofsharecapital Shareissueexpenses Proceedsfromborrowings 15,433 30,036Repaymentofborrowings (900) (10,000)Proceedsfromnewfinanceleases 37Repaymentsofobligationsunderfinanceleases (8) (3) (14)FinancingfeesofSeniorSecuredTermLoan 433 464
NetCashfromFinancingActivities 14,958 (3) 20,523
NetIncreaseinCashandCashEquivalents 21,992 3,586 18,693
MovementinCashandCashEquivalentsCashandcashequivalentsatthebeginningoftheperiod 82,825 64,194 64,194Exchangegain/(loss)oncashandcashequivalents (459) (62)Netincreaseincashandcashequivalents 21,992 3,586 18,693
CashandCashEquivalentsattheEndofthePeriod 104,358 67,780 82,825
STATEMENTOFCHANGESINEQUITYFORTHEPERIODENDED30JUNE2015
AttributabletoequityholdersoftheCompany
ShareCapital
SharePremium
OtherReserves
CurrencyTranslation
ReserveRetainedEarnings Total
'000 '000 '000 '000 '000 '000
Balanceat1January2014 4,653 65,890 5,115 37 62,151 137,846Profitfortheperiod 15,623 15,623Othercomprehensiveincomefortheperiod 2,103 2,103Totalcomprehensiveincomefortheperiod
2,103 15,623 17,726
IncreaseinCapital Shareoptionslapsed Totalcontributions
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byanddistributionstoownersoftheCompany
4,653 65,890 5,115 2,140 77,774 155,572
Balanceat30June2014 4,653 65,890 5,115 2,140 77,774 155,572
Balanceat1January2015 4,653 65,890 5,440 2,852 97,162 175,997Profitfortheperiod 18,428 18,428Othercomprehensiveincomefortheperiod 3,779 3,779Totalcomprehensiveincomefortheperiod
3,779 18,428 22,207
IncreaseinCapital Shareoptionslapsed TotalcontributionsbyanddistributionstoownersoftheCompany
4,653 65,890 5,440 6,631 115,590 198,204
Balanceat30June2015 4,653 65,890 5,440 6,631 115,590 198,204
NOTESTOTHEINTERIMFINANCIALSTATEMENTSForthe6monthsended30June20151BasisofpreparationThecondensedconsolidatedinterimfinancial informationforthe6monthsended30June2015hasbeenpreparedinaccordancewithInternationalAccountingStandard34'InterimFinancial Reporting'. The condensed consolidated interim financial information should beread inconjunctionwith theannual financialstatements for theyearended31December2014, which have been prepared in accordance with International Financial ReportingStandards(IFRSs)asadoptedbytheEuropeanUnion.2SegmentinformationThe followingsegmentsarebasedon themanagement reports receivedby theBoardofDirectors(whoarethechiefoperatingdecisionmakers)whichareusedtomakestrategicdecisions. The Directors consider the business from a product perspective. The mainsegmentsare:Mobile products and services: The main activity of the Group. The Group sells its ownmobilesoftwareproductsandservicestoitsclients.Telecomservices (S.a.a.S):TheGroupcombines telecomserviceswith itsownsoftwareproducts (ebusiness andWiFi services) that are then sold on a "software as a service"basis.Thirdpartygoods:TheGroupresellsthirdpartygoods,toitscustomers,mainlycomprisingmobileequipmentaspartofintegratedmobilesolutionprojects.Transactionsbetweensegmentsarerecordedatcost.TheDirectorsassesstheperformanceof theoperatingsegmentsbasedonrevenuefromexternalcustomersandgrossprofit.ThesegmentinformationprovidedtotheDirectorsforthereportablesegmentsforthe6monthsended30June2015isasfollows:
Thirdpartygoods
TelecomServicesS.a.a.S
Mobileproductsand Total
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services'000 '000 '000 '000
Revenuefromexternalcustomers 1,203 5,024 66,199 72,426Inventorycosts (1,066) (1,066)Otherexpenses (2,062) (15,824) (17,886)Amortisation (929) (9,586) (10,515)
GrossProfit 137 2,033 40,789 42,959
Depreciation 58 388 446
Expenditureontangiblefixedassets 100 145 245
Expenditureonintangiblefixedassets 89 13,881 13,970
Totalassets 168 22,410 230,063 252,641
TotalLiabilities 331 4,980 19,829 25,140A further analysis of theGroup's revenue for the period ended 30 June 2015 is shownbelow:Revenueforthesixmonthsended30June2015('000)
Thirdpartygoods
Telecomservices(S.a.a.S.)
Mobileproductsand
servicesTotal
Consumermobilityservices 21,285 21,285
Enterprisemobilitylicenses&subscriptions 25,359 25,359
Mobilesoftwareprojects 19,555 19,555
Thirdpartygoods 1,203 1,203
WiFiBroadbandservices 199 199
SoftwareasaService 4,825 4,825
Total 1,203 5,024 66,199 72,426
ThesegmentinformationprovidedtotheDirectorsfortheperiodended30June2014isasfollows:
Thirdpartygoods
Telecomservices(S.a.a.S.)
Mobileproducts
andservices
Total
'000 '000 '000 '000
Revenuefromexternalcustomers 2,118 4,313 40,068 46,499
Inventorycosts (1,921) (1,921)
Otherexpenses (1,509) (10,779) (12,288)
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Amortisation (1,120) (4,169) (5,289)
GrossProfit 197 1,684 25,120 27,001
Depreciation 53 270 323
Expenditureontangiblefixedassets 64 337 401Expenditureonintangiblefixedassets 100 12,189 12,289Totalassets 902 21,765 145,005 167,672
Totalliabilities 160 2,266 11,674 14,100AfurtheranalysisoftheGroup'srevenuefortheperiodended30June2014,isshownbelow:
Revenueforthesixmonthsended30June2014('000)
Thirdpartygoods
Telecomservices(S.a.a.S.)
Mobileproductsand
servicesTotal
Consumermobilityservices 20,125 20,125
Enterprisemobilitylicenses&subscriptions 9,948 9,948
Mobilesoftwareprojects 9,995 9,995
Thirdpartygoods 2,118 2,118
WiFiBroadbandservices 225 225
SoftwareasaService 4,088 4,088
Total 2,118 4,313 40,068 46,499Areconciliationofgrossprofittoprofitbeforetaxationisprovidedasfollows:
Sixmonths
Sixmonths
ended ended30June2015 30June2014
'000 '000(unaudited) (unaudited)
Grossprofitforreportablesegments 42,959 27,001
Otheroperatingincome 1,612 3,092Distributionexpenses (9,123) (2,929)
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Administrativeexpenses (8,063) (6,021)
Otheroperatingexpenses (4,155) (4,713)
Incomefromassociates 384 835
Financecosts(net) (1,613) (1,207)
Profitbeforetax 22,001 16,058
Revenuefromexternalcustomers
Sixmonths Sixmonthsended ended
30June2015 30June2014'000 '000
(unaudited) (unaudited)
SouthEasternEurope 25,349 20,611WesternEurope 7,967 2,725EasternEurope 2,173 2,140Africa 3,621 1,502Central/SouthAmerica 8,691 8,197NorthAmerica 15,195 2,134Asia/MiddleEast 9,415 9,190Oceania 15
Total 72,426 46,4993EarningsperShareBasicearningspersharearecalculatedbydividingtheprofitaftertaxattributabletoequityholdersbytheweightedaveragenumberofordinarysharesinissueduringtheperiod.
Sixmonths Sixmonths Yearended ended ended
30June2015 30June201431December
2014
(unaudited) (unaudited) (audited)
ProfitfromtotaloperationsattributabletoequityholdersoftheCompany(000's) 18,428 15,623 35,011
WeightedaveragenumberofordinarySharesinissue 373,689,061 363,107,113 373,689,061Dilutedearningspershareassumesthatoptionsandwarrantsoutstandingat30June2015wereexercisedat1July2015,foroptionsandwarrantswheretheexercisepricewaslessthantheaveragepriceoftheordinarysharesduringtheperiod.Onthisbasis,thecalculationof diluted earnings per share is based on the profit attributable to ordinary shareholdersdivided by 373,711,762 (six months ended 30 June 2014: 363,107,113, year ended 31December2014:373,716,423)ordinaryshares.
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4TradeReceivables
Asat Asat30June 30June
2015 2014'000 '000
Tradereceivables 47,296 27,456Postdatedchequesreceived 1,916 233Notesreceivables 5Less:provisionforimpairmentofreceivables (18) (15)Tradereceivablesnet 49,194 27,679Advancepaymentstosubcontractorsandsuppliers 5,301 5,279
Total 54,495 32,958Tradereceivablescomprisecustomerreceivablesincreditandpostdatedchequesreceived.TheGroupretainsallrisksassociatedwithpostdatedchequesreceiveduntilthefundsclearthebankonthepresentationdate.
Asat30June2015 Asat30June2014
'000 '000
Upto3months
Between3and6months
Between6and12months
Over12months
Upto3months
Between3and6months
Between6and12months
Over12months
Tradereceivablesfromcustomers 37,719 9,509 50 7,274 6,806 12,642 718
AdvancepaymentstoVendors 3,151 2,116 12 22 68 5,143 4 65
Tradereceivablesfrompostdatedcheques 116 1,800 126 112
Total 40,986 11,625 1,862 22 7,468 11,949 12,646 895
5CashgeneratedfromOperations
Sixmonths
Sixmonths Year
ended ended Ended30June 30June 31December
2015 2014 2014'000 '000 '000
(unaudited) (unaudited) (audited)
Profitfortheperiodbeforetax 22,001 16,058 35,703
Adjustmentsfor:Profitondisposaloftangible/intangibleassets 6Depreciationofproperty,plantandequipment 446 323 731
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Amortisationofintangibleassets 10,515 5,289 12,803Movementinprovisions 16 (32) 149Shareof(profit)ofassociate (384) (835) (1,715)Sharebasedpayments 325Impairmentofassets 592Foreignexchangeonoperatingactivities 3,779 2,104 Financecosts(net) 1,613 1,207 3,333Adjustmentsforchangesinworkingcapital(Increase)/Decreaseininventoryandworkinprogress (512) 495 1,266Increaseintradereceivables (2,903) (2,941) (17,658)
Increaseinothercurrentassets (15,199) (5,168) (3,657)
Increaseintradeandotherpayables 3,648 1,728 4,536
CashgeneratedfromOperations 23,020 18,228 36,414
ThisinformationisprovidedbyRNSThecompanynewsservicefromtheLondonStockExchange
ENDIREAFNPAAASEAF