TIDMESG
RNS Number : 3006S
eServGlobal Limited
20 December 2016
eServGlobal Limited (eServGlobal, the "Group" or the
"Company")
Paris: 20 December 2016
eServGlobal Results Commentary FY2016
eServGlobal (LSE: ESG.L & ASX: ESV.AX), the provider of
innovative mobile financial technology, announces its preliminary
results and ASX Appendix 4E for the financial year ended 31 October
2016.
Summary
-- Revenue of A$21.6m (EUR14.5m) compared to the prior year of A$25.9m (EUR17.6m)
-- Considerably reduced EBITDA loss of A$11.0m (EUR7.3m)
compared to the prior year EBITDA loss of A$22.9m (EUR15.6m)
-- Core mobile money business adjusted EBITDA loss of A$7.0m
(EUR4.6m) compared to a prior year adjusted EBITDA loss of A$10.4m
(EUR7.1m).
-- Net loss after tax of A$21.7m (EUR14.5m) compared to a prior year loss of A$32.4m (EUR22.0m)
-- Capitalised technology development costs of A$1.5m (EUR1.0m)
in respect of PayMobile 3.0 mobile money platform. First channel
partner signed.
-- Cash and cash equivalents at 31 October 2016 of A$9.4m
(EUR6.5m). Net cash flow used in operating activities decreased
from A$15.7m (EUR10.7m) in FY15 to A$12.0m (EUR8.0m) in FY16
-- Raised a total of A$26.2m (EUR17.5m) (net of expenses)
through a Placing and Open Offer issuing 374.4 million ordinary
shares
-- Strengthened management team with appointment of Andrew Hayward as CFO
Summary Financials FY16 FY16 FY15 FY15
Full Full Full Full
Year Year Year Year
A$m EURm+ A$m EURm+
Revenue 21.6 14.5 25.9 17.6
Cost of Sales 15.5 10.4 20.6 14.0
Gross Profit 6.1 4.1 5.3 3.6
Share of loss of associate 4.6 3.1 3.8 2.6
Adjusted Operating
Costs* 14.8 9.9 17.1 11.6
Adjusted EBITDA (Core
Business)** (7.0) (4.6) (10.4) (7.1)
Net Interest (7.1) (4.7) (1.4) (1.0)
Amortization (3.0) (2.0) (1.9) (1.3)
Depreciation (0.1) (0.1) (0.1) (0.1)
Adjusted PBT* (17.2) (11.4) (13.8) (9.5)
Reported PBT (21.1) (14.1) (30.3) (20.6)
Income Tax 0.6 0.4 2.1 1.4
PAT (21.7) (14.5) (32.4) (22.0)
+Average exchange rate was 0.6671 EUROS to AUD (FY2015
0.6805)
* Excludes equity-accounted share of HomeSend loss of A$4.6m
(FY2015 A$3.8m), foreign exchange gains of A$3.6m (FY2015 gain of
A$0.8m), non-recurring costs of A$0.2m (FY2015 A$3.3m), share based
payments of A$0.1m (FY2015 A$0.1m), goodwill impairment of nil
(FY2015 A$4.0m) and debtor and work in progress provisions made
after impairment re-assessment of prudent provisioning policies of
A$2.7m (FY2015 A$6.9m)
** Excludes all items above (*) except goodwill impairment of
nil (FY2015 A$4.0m) which is included in the profit and loss
statement below the EBITDA total
Note: numbers in summary financials may not necessary total due
to rounding
John Conoley, Executive Chairman, commented, "Although much of
the revenue is yet to be recognised, we are pleased to see the
increase in sales activity for the core business in the year to 31
October 2016, with a 60% increase in orders compared to the prior
year, especially in light of the poor start to FY16. This includes
a number of multi year contracts and a significant channel partner
agreement. The year has demonstrated steady progress in the
re-alignment of the business, and we are focused on pushing forward
in 2017 to complete the turnaround of the core business.
"The potential of the HomeSend joint venture remains
significant, with material progress made during the year at a
strategic level. We look forward to the strategic developments
evolving into operational progress throughout 2017.
"On behalf of eServGlobal, I would like to thank our investors
for their continued support in 2016 and the staff for their hard
work during a challenging period. We are confident we will provide
further evidence of our success in the year ahead."
For further information, please contact:
eServGlobal www.eservglobal.com
Alison Cheek, VP Corporate Communications investors@eservglobal.com
finnCap Limited (Nomad and Broker) www.finnCap.com
Jonny Franklin-Adams / Carl Holmes T: +44 (0) 20 7220
(Corporate Finance) 0500
Tim Redfern / Mia Gardner (Corporate
Broking)
Alma PR (Financial Public Relations) www.almapr.co.uk
Hilary Buchanan / John Coles T: +44 (0) 208 004
4218
The information communicated in this announcement contrain
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
About eServGlobal
eServGlobal (AIM:ESG, ASX:ESV) offers mobile money solutions
which put feature-rich services at the fingertips of users
worldwide, covering the full spectrum of mobile financial services,
mobile wallet, mobile commerce, recharge, promotions and agent
management.
For more than 30 years, eServGlobal has been a source of
innovation for telcos and financial institutions. Using
carrier-grade, next-generation technology, eServGlobal aligns with
the requirements of customers around the globe.
Together with MasterCard and BICS, eServGlobal is a joint
venture partner of the HomeSend global payment hub, enabling
cross-border money transfer between mobile wallets, cards, bank
accounts or cash outlets from anywhere in the world.
INTRODUCTION
This has been a year of steady progress in the realignment of
the core mobile financial software solutions business and further
strategic progress for HomeSend, the cross-border payments joint
venture in which eServGlobal has a 35% holding. The market
continues to evolve and mature and the opportunity remains
significant. The shift towards completing simple and secure
financial services, both domestically and cross-border via the
mobile phone continues at pace. With 134 million active accounts,
mobile money is nearing the same level of adoption as PayPal, which
records 173 million active users globally[i]. The number of mobile
phone subscribers worldwide is expected to increase by almost 1
billion new users by 2020, and over 90% of that growth is forecast
to come from developing markets[ii], in regions where penetration
of traditional financial services remains low. Through its full
spectrum technology portfolio, eServGlobal is uniquely positioned
to lead this transforming market.
FINANCIAL REVIEW
The Group achieved revenue for the year of A$21.6m (FY15:
A$25.9m).
Earnings before interest, tax, depreciation and amortisation
("EBITDA") was a loss of A$11.0m after foreign exchange gains of
A$3.6m and share based payments of A$0.1m (FY15: EBITDA loss of
A$22.9m after foreign exchange gains of A$0.9m and share based
payments of A$0.1m).
The net result of the consolidated entity for the year to 31
October 2016 was a loss after tax and minority interest for the
period of A$21.7m (FY15: loss after tax and minority interest
A$32.4m). Included in this result was an income tax expense of
A$0.6m (FY15: income tax expense of A$2.1m). Loss per share was 6.0
cents (FY15: loss per share 12.3 cents).
The operating cash flow for the year was a net outflow of
A$12.0m (FY15: net outflow A$15.7m). Total cash flow for the period
was a net inflow of A$5.5m (FY15: net inflow of A$1.0m). Cash at 31
October 2016 was A$9.4m (31 October 2015: A$5.0m).
Adjusted EBITDA for the core business was a loss of A$7.0m
(FY15: A$10.4m). The main adjustments to the total EBITDA loss of
A$7.0m are for the equity-accounted share of the losses of the
HomeSend joint venture company of A$4.6m and the debtor and work in
progress provisions of A$2.7m made after impairment re-assessment
of prudent provisioning policies, offset by foreign exchange gains
of A$3.6m.
The full unaudited accounts are presented in the Appendix
4E.
OPERATIONAL REVIEW
Core - Mobile Financial Technology
As reported in the recent trading update, the total contracted
bookings of over A$30.3m (EUR21.0m) was encourangingly 60% higher
than in FY15. Contracts were signed at the year end where revenue
recognition will fall into future years. The Company welcomes this
return of sales activity, including multi-year contracts, however
remains cognisant that there is no room for complacency going into
the next financial year and beyond.
Adjusted operating costs in FY16 were A$14.8m (EUR9.9m), down
from A$17.1m (EUR11.6m) in FY15 representing a 13.5% decrease. This
is a significant achievement for the Company and has been achieved
through focussed management and restructuring of the
organisation.
A key strategic goal for FY16 was to diversify the sales process
by working with channel partners. Initial success with this
strategy was achieved in October when eServGlobal signed a major
channel partnership for mobile financial technology in areas of
Africa. This partnership is expected to bring significant growth in
regional opportunities over the next five years.
HomeSend - Global Payments JV with MasterCard and BICS
FY16 was a year of strategic progress for HomeSend on several
fronts, laying the foundations for operational advances in the
coming year. During the year the joint venture achieved its
objectives to secure a Payment Institutions License, move to a
PCI-DSS compliant data centre, and, as a result, connect to the
Mastercard core processing network, paving the way for access to
more than 24,000 financial institutions.
These strategic acheivements have positioned the hub to now
provide global payments functionality, significantly enlarging its
target market to include global bank and card transfers. This marks
an important evolution in the profile of HomeSend's customers.
Early traction in this new market has been demonstrated by the
launch of services with through Mastercard Send as well as with the
agreement with KEB Hana Bank in Korea.
As the global shift to cashless transactions continues, HomeSend
is well positioned to play a central role in cross-border digital
transactions. In particular, it is playing an increasingly
important role within Mastercard's suite of innovative payment
methods to 'fight the war on cash'. Mastercard's Regional Sales
teams are now engaged to promote HomeSend and have demonstrated
early success.
The Board of eServGlobal is pleased with the continuing progress
of the joint venture.
OUTLOOK
Looking forward, in FY17 we will continue to pursue our growth
strategy for the core business while maintaining a focus on
reducing costs. The Company is looking to new regions outside of
the Middle East as well as increasing engagement with further
channel partners. These efforts will be supported by our redesigned
software platform, PayMobile 3, which is well positioned to grow
sales following the increased order flow.
Total costs (incuding costs of sales) in FY16 were A$28.6m
(EUR19.1m), and are expected to be reduced further to below A$26m
(EUR18m) in FY17. The Board expects to break even at this level.
Working capital and specifically cash collection remain a key focus
of the business and continued enhancements in internal processes
will be driven throughout the forthcoming year to reduce the debtor
days further from the closing postion of 122 days down from 170
days in FY15.
The Company remains confident in the prospects for the HomeSend
joint venture based on continued progress at a strategic level in
2016. This remains in a startup phase of development but the
addition of key contracts coming on line in the forthcoming year,
growth in revenue is expected to increase significantly. Further
progress is expected to be made in 2017 reaching break even in the
calendar year.
[i] GSMA, State of the Industry Report, 2015
[ii] GSMA, The Mobile Economy, 2016
This information is provided by RNS
The company news service from the London Stock Exchange
END
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