27th Feb 2007 07:00
eServGlobal Limited27 February 2007 Appendix 4D eServGlobal Limited ABN 59 052 947 743 Half-year report and appendix 4D for the half-year ended 31 December 2006 The half-year financial report does not include notes of the type normally included in an annual financial report and should be read in conjunction with the 2006 annual financial report. Half-year report and appendix 4D for the half year ended 31 December 2006 Contents Results for announcement to the market 1 Directors' Report 2 Auditor's Independence Declaration 4 Independent Review Report 5 Directors' Declaration 7 Consolidated Income Statement 8 Consolidated Balance Sheet 9 Consolidated Statement of Recognised Income and Expenses 10 Consolidated Cash Flow Statement 11 Notes to the Consolidated Financial Statements 12 eServGlobal Limited Half year ended 31 December 2006 Results for announcement to the market Results A$ '000Revenues Up 127% to 74,202Profit after tax attributable to members Up 1,047% to 2,203 Dividends (distributions) Amount per security Franked amount per securityCurrent periodInterim dividend declared Nilc -%Final dividend paid 1.2 c 100%Previous corresponding periodInterim dividend declared Nil c -%Final dividend paid 1 c 100%Record date for determining entitlements to the N/Adividend. Brief explanation of revenue, net profit and dividends (distributions). The consolidated entity achieved sales revenue for the period of $74.202million(2005 $32.711million) - an increase of 127%. The gross profit realised was$26.400million (36%) (2005 $11.040million (34%)). EBITDA for the period was$9.022million (2005 EBITDA $1.69million). The net result of the consolidated entity for the half year ended 31 December2006 was a profit after tax and minority interest for the period of $2,203,000(2005 $192,000). Earnings per share were 1.3cents (2005 0.1cents) The operating cash flow for the period was a net inflow of $1.041million. Cashat 31 December 2006 was $6.076 million. 1 eServGlobal Limited Half year ended 31 December 2006 Directors' report The directors of eServGlobal Limited submit herewith the financial report forthe half-year ended 31 December 2006. In order to comply with the provisions ofthe Corporations Act 2001, the directors report as follows: Directors The names of the directors of the company during or since the end of the halfyear are: Ian Buddery Executive Chairman & Chief Executive OfficerFrancois Barrault Non Executive DirectorAnthony Gilbert Non Executive DirectorGraham Libbesson Non Executive DirectorJim Pratt Non Executive DirectorDavid Smart Non Executive Director Roger Agniel (former Chief Executive Officer and Director) ceased 18 January 2007 Review of Operations This report is to be read in conjunction with other reports issuedcontemporaneously. eServGlobal Limited is a public company listed on the Australian Stock Exchangeand the London Stock Exchange (AIM). With its Head Office in Sydney, Australia,the eServGlobal group has operations throughout the world. eServGlobal (LSE: ESG & ASX:ESV) specialises in enhanced multimediacommunication services and real-time multi-networks control solutions. Oursystems enable Service Providers to maximize today's proven revenue streamswhilst ensuring service continuity and new revenue opportunities when evolvingto next generation networks. eServGlobal solutions are designed for use in all types of networks from fixedto mobile to NGN/IMS. eServGlobal provides cost-effective and reliablemultimedia messaging delivery from voice to video mail; from SMS routing,antispam control and value-added services to instant messaging and presenceservices. eServGlobal delivers the most advanced prepaid top-up methods andreal-time rating enabling innovative marketing and prepaid-postpaid convergence eServGlobal has operations worldwide. More than 75 Service Providers in over 50countries are taking advantage of our advanced solutions and multi-networkexpertise to successfully address their business challenges. In addition to its Sydney office, the group has offices in Paris (France),Wellington (NZ), Hong Kong, Ipswich (UK), Brussels (Belgium), the Netherlands,Denmark, India, Egypt, Singapore, Indonesia, Beijing, Romania and Poland. The consolidated entity achieved sales revenue for the period of $74.202million(2005 $32.711million) - an increase of 127%. The gross profit realised was$26.400million (36%) (2005 $11.040million (34%)). EBITDA for the period was$9.022million (2005 EBITDA $1.69million). The net result of the consolidated entity for the half year ended 31 December2006 was a profit after tax and minority interest for the period of $2,203,000(2005 $192,000). The operating cash flow for the period was a net inflow of $1.041million. Cashat 31 December 2006 was $6.076million. 2 eServGlobal Limited Half year ended 31 December 2006 Auditor's independence declaration The auditor's independence declaration is included on page 4 of the half-yearfinancial report. Rounding off of amounts The company is a company of the kind referred to in ASIC Class Order 98/0100,dated 10 July 1998, and in accordance with that Class Order amounts in thedirectors' report and the financial report are rounded off to the nearestthousand dollars, unless otherwise indicated. Signed in accordance with a resolution of the directors, made pursuant to s.306(3) of the Corporations Act 2001. On behalf of the directors Ian BudderyExecutive Chairman & Chief Executive OfficerSydney, 26 February 2007 3 Deloitte Touche Tohmatsu A.B.N. 74 490 121 060 Grosvenor Place 225 George Street Sydney NSW 2000 PO Box N250 Grosvenor Place Sydney NSW 1220 Australia DX 10307SSE Tel: +61 (0) 2 9322 7000 Fax: +61 (0) 2 9322 7001 www.deloitte.com.au The Board of Directors eServGlobal Limited 10 Spring Street Sydney NSW 2000 26 February 2007 Dear Board Members eServGlobal Limited In accordance with section 307C of the Corporations Act 2001, I am pleased toprovide the following declaration of independence to the directors ofeServGlobal Limited. As lead audit partner for the review of the financial statements of eServGlobalLimited for the half-year ended 31 December 2006 I declare that to the best ofmy knowledge and belief, there have been no contraventions of: (i) the auditor independence requirements of the Corporations Act 2001 inrelation to the review; and (ii) any applicable code of professional conduct in relation to the review. Yours sincerely DELOITTE TOUCHE TOHMATSU Catherine HillPartnerChartered AccountantsSydney, 26 February 2007 Liability limited by a scheme approved under Professional Standards Legislation 4 Deloitte Touche Tohmatsu A.B.N. 74 490 121 060 Grosvenor Place 225 George Street Sydney NSW 2000 PO Box N250 Grosvenor Place Sydney NSW 1220 Australia DX 10307SSE Tel: +61 (0) 2 9322 7000 Fax: +61 (0) 2 9322 7001 www.deloitte.com.au Independent review report to the members of eServGlobal Limited Report on the Half-Year Financial Report We have reviewed the accompanying half-year financial report of eServGlobalLimited, which comprises the balance sheet as at 31 December 2006, and theincome statement, cash flow statement, statement of recognised income andexpense for the half-year ended on that date, selected explanatory notes and thedirectors' declaration of the consolidated entity comprising the company and theentities it controlled at the end of the half-year or from time to time duringthe half year as set out on pages 7 to 14. Directors' Responsibility for the Half-Year Financial Report The directors of the company are responsible for the preparation and fairpresentation of the half-year financial report in accordance with AustralianAccounting Standards (including the Australian Accounting Interpretations) andthe Corporations Act 2001. This responsibility includes designing, implementingand maintaining internal control relevant to the preparation and fairpresentation of the half-year financial report that is free from materialmisstatement, whether due to fraud or error; selecting and applying appropriateaccounting policies; and making accounting estimates that are reasonable in thecircumstances. Auditor's Responsibility Our responsibility is to express a conclusion on the half-year financial reportbased on our review. We conducted our review in accordance with AuditingStandard on Review Engagements ASRE 2410 Review of an Interim Financial ReportPerformed by the Independent Auditor of the Entity, in order to state whether,on the basis of the procedures described, we have become aware of any matterthat makes us believe that the financial report not accordance with theCorporations Act 2001 including: giving a true and fair view of the consolidatedentity's financial position as at 31 December 2006 and its performance for thehalf-year ended on that date; and complying with Accounting Standard AASB 134Interim Financial Reporting and the Corporations Regulations 2001. As theauditor of eServGlobal Limited, ASRE 2410 requires that we comply with theethical requirements relevant to the audit of the annual financial report. 5 A review of a half-year financial report consists of making inquiries, primarilyof persons responsible for financial and accounting matters, and applyinganalytical and other review procedures. A review is substantially less in scopethan an audit conducted in accordance with Australian Auditing Standards andconsequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly, wedo not express an audit opinion Auditor's Independence Declaration In conducting our review, we have complied with the independence requirements ofthe Corporations Act 2001. Conclusion Based on our review, which is not an audit, we have not become aware of anymatter that makes us believe that the half-year financial report of eServGlobalLimited is not in accordance with the Corporations Act 2001, including: (a) giving a true and fair view of the consolidated entity'sfinancial position as at 31 December 2006 and of its performance for thehalf-year ended on that date; and (b) complying with Accounting Standards AASB 134 Interim FinancialReporting and the Corporations Regulations 2001. DELOITTE TOUCHE TOHMATSU Catherine HillPartnerChartered AccountantsSydney, 26 February 2007 Liability limited by a scheme approved under Professional Standards Legislation 6 eServGlobal Limited Half year ended 31 December 2006 Directors' declaration The directors declare that: a) in the directors' opinion, there are reasonable grounds to believethe company will be able to pay its debts as and when they become due andpayable; and b) in the directors' opinion, the attached financial statements andnotes thereto are in accordance with the Corporations Act 2001, includingcompliance with accounting standards and giving a true and fair view of thefinancial position and performance of the consolidated entity. Signed in accordance with a resolution of the directors made pursuant to s.303(5) of the Corporations Act 2001. On behalf of the directors Ian BudderyExecutive Chairman & Chief Executive OfficerSydney, 26 February 2007 7 eServGlobal Limited Half year ended 31 December 2006 Consolidated income statement for the half-year ended 31 December 2006 Consolidated Half-Year Half-Year Ended Ended 31 December 2006 31 December 2005 $'000 $'000 Revenue 74,202 32,711Cost of sales (47,802) (21,671)Gross profit 26,400 11,040Other income 3 193Sales and marketing expenses (6,579) (4,747)Administration expenses (15,482) (5,533)Finance costs (133) (57)Profit before tax 4,209 896Income tax expense (1,942) (719)Profit for the period 2,267 177Attributable to:Equity holders of the parent 2,203 192Minority interest 64 (15) 2,267 177Earnings per share:Basic (cents per share) 1.3 0.1Diluted (cents per share) 1.3 0.1 Notes to the Financial Statements are included on pages 12 to 14 8 eServGlobal Limited Half year ended 31 December 2006 Consolidated balance sheet as at 31 December 2006 Consolidated Note 31 December 30 June 2006 2006 $'000 $'000Current AssetsCash and cash equivalents 6,076 7,471Trade and other receivables 75,144 71,366Inventories 1,300 2,569Current tax assets 117 1,341Total Current Assets 82,637 82,747Non-Current AssetsProperty, plant and equipment 3,910 3,897Deferred tax assets 7,984 9,234Goodwill 46,282 45,685Other intangible assets 33,327 35,784Total Non-Current Assets 91,503 94,600Total Assets 174,140 177,347Current LiabilitiesTrade and other payables 32,268 31,159Borrowings 2,750 2,000Current tax payables 134 -Provisions 3,984 5,746Other 2 8,608 11,684Total Current Liabilities 47,744 50,589Non-Current LiabilitiesDeferred tax liabilities 11,631 12,619Provisions 1,366 1,288Total Non-Current Liabilities 12,997 13,907Total Liabilities 60,741 64,496Net Assets 113,399 112,851EquityIssued Capital 6 114,984 114,896Reserves 7 2,050 1,769Retained earnings (3,669) (3,832)Parent Entity Interest 113,365 112,833Minority Interest 34 18Total Equity 113,399 112,851 Notes to the Financial Statements are included on pages 12 to 14 9 eServGlobal Limited Half year ended 31 December 2006 Consolidated statement of recognised income and expense for the half-year ended 31 December 2006 Consolidated Half-year Half-year ended 31 ended 31 December 2006 December 2005 $'000 $'000 Exchange differences arising on the translation of foreign (248) 152 operationsEmployee equity-benefit reserve 168 312Net income recognised directly in equity 80 464Profit for the period 2,267 177Total recognised income and expense for the period 2,347 641Attributable to:Equity holders of the parent 2,283 656Minority interest 64 (15) 2,347 641 Notes to the Financial Statements are included on pages 12 to 14 10 eServGlobal Limited Half year ended 31 December 2006 Consolidated cash flow statement for the half-year ended 31 December 2006 Consolidated Half-year ended Half-year ended 31 December 2006 31 December 2005 $'000 $'000Cash Flows from Operating ActivitiesReceipts from customers 69,128 33,417Payments to suppliers and employees (66,614) (31,231)Interest received 3 193Interest and other costs of finance paid (133) (58)Income tax paid (1,343) (4)Net cash provided by operating activities 1,041 2,317Cash Flows From Investing ActivitiesPayment for property, plant and equipment (1,170) (838)Payment for business - (63,007)Proceeds from sale of property, plant and equipment - 7Net cash used in investing activities (1,170) (63,838)Cash Flows From Financing ActivitiesProceeds from issues of equity securities 57 62,954Payment for share issue costs - (2,809)Proceeds from borrowings 750 1,000Dividends paid to members of parent company (2,040) (1,099)Net cash provided by financing activities (1,233) 60,046Net Decrease In Cash and Cash Equivalents (1,362) (1,475)Cash At The Beginning Of The Period 7,471 11,742Effects of exchange rate changes on the balance of cash held in (33) 383foreign currenciesCash and Cash Equivalents At The End Of The Period 6,076 10,650 Notes to the Financial Statements are included on pages 12 to 14 11 eServGlobal Limited Half year ended 31 December 2006 Notes to the consolidated financial statements 1. Significant accounting policies Statement of compliance The half-year financial report is a general purpose financial report prepared inaccordance with the Corporations Act 2001 and AASB 134 Interim FinancialReporting. Compliance with AASB 134 ensures compliance with InternationalFinancial Reporting Standard IAS 34 Interim Financial Reporting. The half-yearfinancial report does not include notes of the type normally included in anannual financial report and should be read in conjunction with the most recentannual financial report. Basis of preparation The condensed financial statements have been prepared on the basis of historicalcost, except for the revaluation of certain non-current assets and financialinstruments. Cost is based on the fair values of the consideration given inexchange for assets. All amounts are presented in Australian dollars. The accounting policies and methods of computation adopted in the preparation ofthe half-year financial report are consistent with those adopted and disclosedin the company's 2006 annual financial report for the financial year ended 30June 2006. 2. Other Current Liabilities Consolidated 31 December 2006 30 June 2006 $'000 $'000 Deferred income 8,608 11,684 3. Dividends Half Year ended Half Year ended 31 December 2006 31 December 2005 Cents Total Cents Total per share $'000 per share $'000Fully paid ordinary sharesRecognised amountsFinal dividend paid in respect of prior financial year 1.2 2,040 1.0 1,099 12 eServGlobal Limited Half year ended 31 December 2006 4. Segment Information The consolidated entity operates in one business segment, the TelecommunicationsSoftware Solutions business, and in the following geographical segments: Information on geographical segments (primary reporting format) Segment Revenues EXTERNAL SALES INTER SEGMENT TOTALGEOGRAPHICAL 2006 2005 2006 2005 2006 2005 $'000 $'000 $'000 $'000 $'000 $'000 Asia Pacific 499 6,282 - 834 499 7,116Europe 73,703 25,595 - - 73,703 25,595Total of all segments 74,202 32,711Other Income 3 193Consolidated 74,205 32,904 5. Issuances, repurchases and repayment of securities During the half-year eServGlobal Limited issued 271,331 ordinary shares for $57thousand on exercise of 271,331 share options issued under its executive andemployee share option plans. As a result of this share issue, $31 thousand wastransferred from the equity-settled employee benefits reserve of $632 thousandto issued capital. There were no other movements in the ordinary share capitalor other issued share capital of the company in the current half-year. eServGlobal Limited issued 1,550,000 share options (6 months to 31 December2005: 100,000) over ordinary shares under its executive and employee shareoption plan during the half-year reporting period. These share options had anaverage fair value at grant date of $0.30 per share option (6 months to December2005: $0.44). 13 eServGlobal Limited Half year ended 31 December 2006 6. Issued Capital Consolidated 31 December 30 June 2006 2006 $'000 $'000 170,014,142 fully paid ordinary shares (30 June 2006: 169,742,811) 114,984 114,896 31 December 2006 30 June 2006 No. '000 $ '000 No. '000 $ '000 Fully Paid Ordinary Shares 169,743 114,896 109,800 53,076Shares issued in the period 271 57 59,943 63,781Share issue costs - - - (2,038)Transfer from employee equity-benefit reserve - 31 - 77Balance at the end of the financial period 170,014 114,984 169,743 114,896 In accordance with the executive and employee share option plan employees areentitled to purchase shares in the company. The exercise of such share optionsin the period resulted in the ordinary share capital increasing by 271,331 (note5). 7. Reserves 31 December 2006 30 June 2006 $'000 $'000 Employee equity-benefit 632 495Foreign currency translation 1,418 1,274 2,050 1,769 14 eServGlobal Limited Half year ended 31 December 2006 Other information required to be given to ASX under listing rule 4.2A.3 Net tangible assets per security Current period Previous corresponding period Net tangible assets per security 19.9 cents 20.1cents Dividends Amount Amount per Franked amount Amount per Date paid security per security at security of / payable 30% tax foreign source dividendInterim dividend:Current year Nil N/A N/A N/A N/APrevious year Nil N/A N/A N/A N/AFinal dividend paid in respect ofprevious financial year:Current period:Final dividend 2,039,890 1.2c Fully Franked N/A N/APrevious corresponding period:Special dividendFinal dividend 1,099,423 1.0c Fully Franked N/A The dividend or distribution plans shown below are in operation. N/A. The last date(s) for receipt of election notices for the+dividend or distribution plans N/A 15 eServGlobal Limited Half year ended 31 December 2006 Details of associates and joint venture entities Name of entity Percentage of ownership interest held Aggregate share of net profit (loss) at end of period contributed to the reporting entity Current Previous Current Previous period corresponding period period corresponding period $A'000 $A'000 Total N/A N/A N/A N/A 16 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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