11th Sep 2006 14:25
eServGlobal Limited11 September 2006 eServGlobal Annual Report 2006 CEO Letter Dear Shareholders, I am delighted to welcome you to our annual report for the year ended June 30,2006. eServGlobal is today a significantly larger and stronger company with aworkforce of more than 500, the majority in France, Great Britain, Belgium, NewZealand and Romania. Its worldwide presence is well established, with more than70 customers in more than 50 countries and offices in 15 countries. This industrial and commercial strength allows us to propose our solutionsanywhere in the world, our activity being essentially focussed in Europe, theMiddle East, North Africa, Asia and Asia/Pacific. The ability to deliveradvanced technology, with compelling economics, to operators in both thedeveloped and developing world, is a key strength of our company Based on the merged global portfolio of our products, we are now in a positionto deliver fully fledged Intelligent Network technology with all the requiredservices and features, notably for real-time charging applications. Moreover, our leading position in real-time convergent charging, which allowsoperators to collect revenue as calls, messages, data and content are delivered,provides the platform for our long term success. Results The revenue for the combined business reached $95.463 million for the full year,of which $62.559 million was produced in the second half, reflecting the fullsix months contribution from Ferma SA. The new group has a broader spread ofoperations, approximately 25% of customer revenue was generated in Europe, 35%in Africa/Middle East, 30% in Asia and 10% in Asia-Pacific, compared with 65% inEurope and 35% in Asia Pacific for the original operations last year. We delivered $37.613 million of gross profit for the year, a 39.6% marginreflecting the new mix of revenues in the combined business, where a largerproportion of predictable contracts now exists. However, the merger costs beingnow behind us, margin growth is one of our key objectives for coming years. We achieved an overall EBITDA margin of 10.6% ($10.088 million) compared to10.75 % ($4,131 million, before restatement for A-IFRS) in FY05. Synergiesachieved from the acquisition allowed us to reduce sales and admin costs (beforedepreciation and amortisation) from 34.5% of revenue in FY05 to 29.5% in FY06. Costs associated with the acquisition were responsible for a major reduction inour cash position in November. The uplift in business activity in the secondhalf placed further demand on our cash. Despite this, we ended the year with$5.471 million in net cash and we are confident that we will have positivecash-flow in the 2007 fiscal year. Market Background The global telecommunications market is characterised by low growth in developedcountries but very high growth in the developing world. Established carriers arelooking for new technologies to reduce the cost of delivering services whilstemerging carriers need to employ the most efficient and flexible platformspossible, to manage the challenges of rapid growth and rapid technology change. The historical model of multiple networks, multiple service platforms andmultiple charging platforms is being replaced by a new converged model. Thisconvergence benefits both the carrier's infrastructure cost and the subscriber'susage experience. eServGlobal's product offering operates across all network types and is designedto deliver the benefits of convergence, across all layers of charging control,from payments systems up to specialized network elements, ensuring best valuefor carriers as they implement real-time business control across bothconventional and new quad-play networks. eServGlobal also has a unique position, as the only independent IN softwaresupplier positioned between network infrastructure providers and billingproviders. We are a market leader in mobile re-charge, a market leader in voiceand data messaging and have a heritage of deep telecommunications technologyleadership. We have a partner-driven sales and delivery model, we have the privilege to workwith leaders in the industry and we have an excellent record of delivery andsupport. This strategy underpins our confidence in continuing growth andincreased profitability, whilst maintaining the trust of our customers forsustained reliability, flexibility and innovation of our solutions. Plan for 2007 We have carefully evaluated both our customer requirements and the marketopportunity for the 2007 fiscal year. Our business plan is considered andcautious, yet will deliver top and bottom line growth whilst we continue toinvest in our products and new markets The plan features a continuing focus on solutions for the new telecomsenvironment, a continuing focus on growth through partners and continuing focuson sustainable long-term shareholder value growth. In 2006 we brought together two diverse groups of people, carried out a complexand challenging integration and have emerged as a united and formidable team.This was achieved due to the skill, enthusiasm and commitment of every personinvolved. As we look to the 2007 plan, we have every confidence in our team,our technology and our position in the market. I thank our shareholders for your continuing support and I commit to you that wewill strive to deliver the highest levels of shareholder value into the future. Sincerely, Dr Roger Agniel Chief Executive Officer Paste the following link into your web browser to download the PDF document: http://www.rns-pdf.londonstockexchange.com/rns/7652i_-2006-9-11.pdf This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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