TIDMESG
RNS Number : 0743P
eServGlobal Limited
28 September 2011
28 September 2011
eServGlobal Limited
FY2011 Final Consolidated Results
eServGlobal Limited (LSE: ESG & ASX: ESV) ("eServGlobal" or
the "Company"), a global telecoms software vendor specialising in
Mobile Money and Value-Added Services (VAS), today announces its
final consolidated results for the 12 months ended 30 June 2011. A
copy of the FY2011 Financial Report is attached.
Click on, or paste the following link into your web browser, to
view the associated PDF document.
http://www.rns-pdf.londonstockexchange.com/rns/0743P_-2011-9-28.pdf
Financial Highlights
o Sales revenue for the period of A$42.8M (GBP26.7M), reflecting
the sale of USP division to Oracle
o Restructuring complete and EBITDA positive in H2 FY2011
o FY2011 EBITDA of A$52.2M including interest income
o FY2011 adjusted EBITDA of -A$4.0M (-GBP2.1M) excluding gain on
disposal, interest, non-recurring charges and foreign exchange
losses
o H1 adjusted EBITDA of -A$6.9M (GBP-4.1M)
o H2 adjusted EBITDA of A$3.0M (GBP2.0M)
o Reported profit after tax of A$39.2M (FY2010: A$32.3M
loss).
o Earnings per share of AUD 19.8 cents (FY2010: loss per share
AUD 16.5 cents).
o Net cash at 30 June 2011 of A$60.8M (excluding USP Asset
proceeds of $A23.6M held in escrow and excluding accrued interest
on escrowed funds)
o A capital return of A$57M (GBP36.2M) has taken place post
period end
Operational Highlights
o Strong growth in Mobile Money and Value-Added Services
o HomeSend reaches 300 million subscribers worldwide
o Two multinational operators secured for HomeSend in the
period
o Significant investment in product development and sales
training
o Strong pipeline for the year ahead
Richard Mathews, Chairman, eServGlobal, said:
"Today, eServGlobal is a significantly stronger and better
placed company than it was 12 months ago. We are looking forward to
the year ahead as we introduce new products and services to the
market while maintaining our focus on building on our position in
Mobile Money and Value-Added Services.
This has been a particularly transformational year for HomeSend,
having signed up two multinational operator groups for our HomeSend
service, well ahead of the target set in our business plan. In the
next 12 months, our goal will be to add a third multinational group
to the HomeSend hub to maintain our unique positioning as enabling
the world's estimated 3.5 billion unbanked people to take part in
the coming mobile payment revolution."
Craig Halliday, Chief Executive Officer, eServGlobal, said:
"Over the last two years we have successfully executed on a
challenging plan: we sold the USP business and assets and returned
capital to our shareholders, we restructured the business
completely, and we have repositioned ourselves in high-growth
markets. Looking forward we anticipate a year focused on building
innovative products, securing new customers and sales channels, and
striving for operational excellence."
For further information, please contact:
eServGlobal www.eservglobal.com
Tom Rowe, Company Secretary T: +61 (0) 7 3302 0194
Info@eservglobal.com
Cenkos Securities plc www.cenkos.com
Ivonne Cantu/Stephen Keys (Nomad) T: +44 (0) 20 7397 8980
Threadneedle Communications www.threadneedlepr.co.uk
Caroline Evans--Jones/Josh Royston/Hilary T: +44 (0) 20 7653 9850
Millar
About eServGlobal
eServGlobal Limited specializes in Mobile Money solutions and
Value-Added Services (VAS), to help Mobile Service Providers
increase their revenue and gain and maintain customer ownership.
eServGlobal invests heavily in product development, using
carrier-grade, next-generation technology and aligning with the
requirements of more than 75 customers in over 55 countries.
For more than 25 years mobile, fixed, Internet and telecom, and
financial service providers have used eServGlobal solutions to lead
and innovate in their local markets, leveraging their core assets
and their trusted agent and subscriber relationships.
With 13 offices globally, eServGlobal provides full "end-to-end"
and "any account to any account" Mobile Money Services and
International Remittance Services. eServGlobal's HomeSend solution
is the only mobile-centric international remittance hub to gain
endorsement from the GSM Association.
eServGlobal's Value-Added Services in promotions, loyalty, and
messaging enable service providers to engage with their subscribers
in a personalized and dynamic manner.
To reduce time-to market and to meet the needs of operators and
banks, eServGlobal provides multiple licensing alternatives as well
as SaaS-based products and services.
eServGlobal is listed on the Australian Securities Exchange
(ESV) and the London Stock Exchange AIM (ESG). More information is
available at: www.eservglobal.com
Operational review
FY2011 was a transformational year for eServGlobal. In the
course of the financial year, we completed the demerger and sale of
our USP business to Oracle, refocusing on the high growth markets
of Mobile Money and Value-Added Services. We completely
restructured the business achieving profitability at the adjusted
EBITDA level in the second half of the year while growing our
customer base and investing in new products and platforms to pave
the way for profitable growth in the years to come.
Value-Added Services
Value-Added Services are being delivered to over 40 operators
and the SaaS portfolio is seeing healthy growth in its user
base.
o PromoMax delivers promotions and loyalty schemes to mobile
subscribers in ways that are designed to help operators increase
user revenue and fight churn and reduce customer acquisition
requirements, which represent a significant investment for mobile
operators. By offering targeted messages such as when airtime is
running low, or rewards for high value users, mobile operators are
able to drive value from their subscribers and return on
investment.
o After a year of intensive development we have taken our PRIME
platform live, delivering services to over 30 million subscribers
on a flexible, multi-tier architecture.
o Our FlexiContent service is providing revenue-generating games
and infotainment services that enable operators to differentiate
themselves in markets with increasing pressure on ARPU (average
revenue per user) and churn.
o The SaaS platform grew to 18 clients and saw almost double
twice as many individual deployments as customers extended their
services.
Mobile Money Services
Mobile Money and Recharge Services are being delivered in over
30 deployments to over 20 customers worldwide, and we continue to
increase market access via global partners.
o Mobile money opportunities continue to increase and the
upgrade path from voucher-based recharge to electronic recharge to
domestic and ultimately international mobile money services is
resonating with our customers.
o Recharge services are generating strong revenues and
consistent returns for our clients, as they move to provide
increasingly sophisticated methodologies for their clients to add
and use funds on their accounts.
o We won contracts to provide four implementations of domestic
mobile money services since the beginning of FY2011 and have a
strong pipeline for the year ahead.
o The Company secured a new win with a financial services
provider to deploy end-to-end mobile money services integrated with
eServGlobal's value-added services for loyalty and promotions.
International Mobile Remittances
HomeSend is a market-leading international mobile money transfer
service with over 300 million covered subscribers and growing. The
service is based on a long-standing strategic partnership between
eServGlobal and BICS (Belgacom International Carrier Services)
which takes advantage of eServGlobal's technological expertise in
mobile money and BICS's global hubbing infrastructure managing
roaming clearance and settlement for over 250 mobile operators
around the world.
o We are now covering over 300 million subscribers around the
world as of June 2011 (757% annual growth)
o HomeSend continued to increase its coverage with remittance
corridors between United Kingdom, Belgium, Morocco, the
Philippines, Vietnam, Nepal, China, and Ghana
o Two multinational operator groups have signed group-level
contracts to roll out to their affiliates
o Initial customer pilots have been positive, and we look
forward to extending the customer reach upon their successful
completion.
Market Overview
Mobile phones are becoming the most used technology in the
world, reaching over 75% of the global population with over 5
billion connections. Mobile money in developed markets is taking
off through the rise of smart-phones and internet-based payment
options that are based on the existing banking infrastructure.
However, only 1.5 billion people around the world have access to
formal financial services today, leaving an estimated 3.5 billion
adults with no ability to save, send, or spend their money outside
of the cash economy. Through re-leveraging existing mobile
operators' distribution networks, mobile phones represent an
effective mean to enable the delivery of financial services to
people for whom it is either unfeasible or unprofitable to provide
bank accounts.
One of the main applications for mobile payments is the
remittance of funds between developed and developing countries by
migrant workers. The World Bank estimates that over US$440 billion
was transferred through formal means in 2010, and mobile is
expected to significantly disrupt this industry, with Juiper
predicting that $65 billion will flow through mobile channels in
2014 (generating c. $5bn for the payment processors).
Looking forward, large mobile software and services providers
are increasingly identifying the need to deliver innovative premium
services to their clients in order to differentiate themselves in
the highly competitive mobile services industry. eServGlobal is
focused on generating new wins in partnership with large mobile
service providers, notably, with global partner NSN, who serve 600+
operators worldwide today. We have also executed two upgrades in
partnership with Ericsson, and are building additional partnerships
to extend our global reach.
Financial Review
The FY2011 results reflect the changes undertaken as a part of
the strategy to refocus on growth markets. The business is now
profitable at the adjusted EBITDA level, cash generative and
benefiting from growth in core revenues.
Total revenues for the year decreased to A$42.8M (2010:
A$78.0M), reflecting the sale of the USP division to Oracle.
EBITDA for the period (including interest income and proceeds
from the USP sale) was A$52.2M (2010 EBITDA loss: A$20.6M).
Adjusted EBITDA before the gain on disposal, non-recurring charges
and foreign exchange losses was a loss of A$4.0M.
As part of the Company's restructuring process and the sale of
its USP assets to Oracle, A$15.4M in non-recurring charges were
incurred in the period; the majority of which related to employee
termination payments. Due to the global nature of our business and
the continuing appreciation of the Australian dollar over the
period we recorded an A$1.5M foreign exchange loss for the year
(FY2010 Foreign exchange loss of $3.0M).
Reported profit after tax for the period was A$39.2M (FY2010:
A$32.3M loss). Earnings per share were AUD 19.8 cents (FY2010: loss
per share AUD 16.5 cents).
During the period, the cash flow was a net inflow of A$64.5M
primarily resulting from proceeds of A$79.4M from the disposal of
the USP business and assets. Cash at 30 June 2011 was A$60.8M after
repaying A$5.8M in loans and secured bank overdraft facilities.
Development expenditure incurred during the period of A$1.4M was
capitalised in the Statement of Financial Position in accordance
with the Group's accounting policies. The expenditure related to
internally generated software comprising the HomeSend platform.
Exceptional events
On August 3, 2010, the Company completed the sale of its USP
assets and business to Oracle for c.124% of our total market
capitalization at that time and A$57.1M of the sale proceeds were
returned to shareholders in August 2011. During the negotiation
process with Oracle we agreed to place A$23.6M of the proceeds in
escrow to be released in two equal amounts on the first and second
anniversaries of the sale. After the end of the financial year
eServGlobal received notification from Oracle claiming that it has
or anticipates incurring losses of A$11.5M in connection with
alleged joint customer billing issues. eServGlobal strongly
disagrees with the claims made and consequently lodged an
objection; discussions between the parties are continuing.
Business Plan for FY2012
After investing in significant training and product development
over the last year, FY2012 will be focused on growing our market
share in Mobile Money and Value-Added Services. We are working to
maintain tight cost control while increasing our footprint in
emerging markets where there is significant growth in both
subscriber numbers and in mobile money. On a strategic level, we
are actively pursuing partnerships to extend both our sales
channels and our product capabilities, ensuring we remain ahead of
the market's needs.
In terms of revenues, we expect to continue to transfer
remaining USP contracts to Oracle while growing our core Mobile
Money and Value-Added Services business. During FY2012 we expect to
generate our first revenues from HomeSend, as we have signed up two
multinational operator groups, well ahead of the schedule set in
our business plan.
Outlook
Over the last two years we have successfully executed on a
challenging plan. Looking forward we anticipate a year that is
focused on building innovative products, securing new customers and
sales channels, and striving for operational excellence.
FY2011 P&L
Year Ended Year Ended
30 June 2011 30 June 2010
$'000 $'000
---------------------------------------------- -------------- --------------
Revenue 42,808 78,015
Cost of sales (19,452) (43,427)
---------------------------------------------- -------------- --------------
Gross profit 23,356 34,588
Other income 73,315 -
Research and development expenses (5,311) (9,992)
Sales and marketing expenses (8,755) (13,908)
Administration expenses (30,432) (31,262)
----------------------------------------------
Earnings/(Loss) before interest expense,
tax, depreciation and amortisation 52,173 (20,574)
Amortisation expense (5,493) (6,877)
Depreciation expense (1,377) (2,685)
----------------------------------------------
Earnings/(Loss) before interest expense
and tax 45,303 (30,136)
Finance costs (162) (355)
Profit/(Loss) before tax 45,141 (30,491)
Income tax expense (5,982) (1,795)
---------------------------------------------- -------------- --------------
Profit/(Loss) for the year 39,159 (32,286)
---------------------------------------------- -------------- --------------
Other comprehensive income/(loss)
Exchange differences arising on the
translation of foreign operations (1,070) (5,813)
---------------------------------------------- -------------- --------------
Total comprehensive income/(loss) for
the period 38,089 (38,099)
---------------------------------------------- -------------- --------------
Earnings/(Loss) attributable to:
Equity holders of the parent 39,011 (32,443)
Non controlling interest 148 157
---------------------------------------------- -------------- --------------
39,159 (32,286)
---------------------------------------------- -------------- --------------
Total comprehensive income/(loss)
attributable to:
Equity holders of the parent 37,952 (38,229)
Non controlling interest 137 130
---------------------------------------------- -------------- --------------
38,089 (38,099)
---------------------------------------------- -------------- --------------
Earnings/(Loss) per share:
Basic (cents per share) 19.8 (16.5)
Diluted (cents per share) 19.8 (16.5)
FY2011 Balance Sheet
30 June 2011 30 June 2010
$'000 $'000
------------------------------------ ------------- -------------
Current Assets
Cash and cash equivalents 60,820 2,225
Trade and other receivables 33,722 31,143
Inventories 279 853
Current tax assets 90 4,897
------------------------------------ ------------- -------------
94,911 39,118
Assets classified as held for sale - 27,528
------------------------------------ ------------- -------------
Total Current Assets 94,911 66,646
------------------------------------ ------------- -------------
Non-Current Assets
Property, plant and equipment 1,841 3,071
Deferred tax assets 4,937 1,907
Goodwill 6,499 6,820
Other receivables 12,208 -
Other intangible assets 8,012 12,727
------------------------------------ ------------- -------------
Total Non-Current Assets 33,497 24,525
------------------------------------ ------------- -------------
Total Assets 128,408 91,171
------------------------------------ ------------- -------------
Current Liabilities
Trade and other payables 16,195 13,349
Borrowings - 5,794
Current tax payables 6,741 535
Provisions 7,024 4,123
Other 2,122 5,268
------------------------------------ ------------- -------------
32,082 29,069
Liabilities directly associated
with assets classified as held
for sale - 750
------------------------------------ ------------- -------------
Total Current Liabilities 32,082 29,819
------------------------------------ ------------- -------------
Non-Current Liabilities
Deferred tax liabilities 1,068 4,083
Provisions 448 505
------------------------------------ ------------- -------------
Total Non-Current Liabilities 1,516 4,588
------------------------------------ ------------- -------------
Total Liabilities 33,598 34,407
------------------------------------ ------------- -------------
Net Assets 94,810 56,764
------------------------------------ ------------- -------------
Equity
Issued capital 123,946 123,946
Reserves (2,390) (1,566)
Accumulated Losses (26,770) (65,781)
------------------------------------ ------------- -------------
Parent entity interest 94,786 56,599
Non controlling interest 24 165
------------------------------------
Total Equity 94,810 56,764
------------------------------------ ------------- -------------
FY2011 Cashflow
Year Ended Year Ended
30 June 2011 30 June 2010
$'000 $'000
----------------------------------------- -------------- --------------
Cash Flows from Operating Activities
Receipts from customers 49,739 108,521
Payments to suppliers and employees (60,164) (122,651)
Interest and other finance cost
paid (162) (355)
Net income tax refunded 1,022 1,444
-----------------------------------------
Net cash used in operating activities (9,565) (13,041)
----------------------------------------- -------------- --------------
Cash Flows From Investing Activities
Proceeds from disposal of assets,
net of transaction costs 73,335 -
Interest received 2,947 -
Payment for property, plant and
equipment (580) (2,214)
Software development costs (1,364) (2,195)
-----------------------------------------
Net cash provided by/(used in)
investing activities 74,338 (4,409)
----------------------------------------- -------------- --------------
Cash Flows From Financing Activities
Dividends paid (278) -
-----------------------------------------
Net cash (used in) financing activities (278) -
----------------------------------------- -------------- --------------
Net increase/(decrease) In Cash
and Cash Equivalents 64,495 (17,450)
Cash At The Beginning Of The Period (3,569) 14,135
Effects of exchange rate changes
on the balance of cash held in
foreign currencies (106) (254)
----------------------------------------- -------------- --------------
Cash and Cash Equivalents At The
End Of The Period 60,820 (3,569)
----------------------------------------- -------------- --------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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