30th Aug 2011 07:00
30 August 2011
eServGlobal Limited
FY2011 Results - Trading Update
STRONG GROWTH IN MOBILE MONEY AND VALUE-ADDED SERVICES
HOMESEND REACHES 300 MILLION SUBSCRIBERS WORLDWIDE
TRANSITIONED TO POSITIVE EBITDA IN H2 2011
ON TRACK TO MEET EXPECTATIONS
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 a trading update on its results for the twelve months ended 30 June 2011. This trading update accompanies the unaudited results provided to the Australian Stock Exchange under ASX rules. Audited consolidated results will be released at the end of September 2011.
Highlights
Restructuring complete and EBITDA positive in H2 FY2011: on track to meet expectations.
o Sales revenue for the period of A$42.8M (£26.7M[1])
o FY2011 EBITDA profit of $52.2M including interest income
o FY2011 adjusted EBITDA of -A$4.0M (-£2.1M) excluding gain on disposal, interest, non-recurring charges and foreign exchange losses
o H1 adjusted EBITDA of -A$6.9M (£-4.1M)
o H2 adjusted EBITDA of A$3.0M (£2.0M)
o H2 adjusted EBITDA represents a A$9.9M increase over H1 FY2011
o Net cash at 30 June 2011 of A$60.8M (excluding USP Asset proceeds held in escrow of $A23.6M)
o A capital return of A$57M (£36.2M) has taken place post period end[2]
Operational Highlights
FY2011 was a year of transition. With the sale of USP assets to Oracle successfully completed, eServGlobal focused on restructuring the business and building its position in the high-growth areas of Mobile Money and Value-Added Services. The customer base has now increased to over 70 clients due to significant growth in both core license-based operations and the Company's new SaaS and HomeSend services. In the same period the Company moved from an H1 EBITDA loss of A$6.9M to an H2 EBITDA profit of A$3.0M excluding interest income and adjusting for foreign exchange losses, non-recurring charges, and gains associated with the USP Asset Sale.
Mobile Money and Recharge Services are being delivered in over 30 deployments at over 20 customers worldwide, and gaining global market access via partners such as Nokia Siemens Networks (NSN)
o Two new domestic mobile money deployments in H2 FY2011
o 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
o New wins with global partner NSN, who serves 600+ operators worldwide today
o Two upgrades in partnership with Ericsson
HomeSend, the innovative mobile to mobile multilateral remittance hub, is building momentum
o Covering 300 million subscribers around the world as of June 2011 (+600% vs. H1 2011)
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
Completion of USP Asset Sale to Oracle enabled eServGlobal to reposition itself in the high growth markets of Mobile Money and Value-Added Services
o Completed sale of USP Assets and Business to Oracle for A$103M on 3 August 2010 after purchase price adjustments; A$79.4M was received immediately with A$23.6M placed in escrow to be released in two equal amounts on the first and second anniversary of the transaction
o Invested heavily in restructuring the business and in taking new, innovative products and services to market
Subsequent events
o 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 three alleged joint customer billing issues.
o eServGlobal strongly disagrees with the claims made and considers these claims largely unsubstantiated. eServGlobal has lodged an objection and intends to vigorously defend these claims.
o Capital return of A$57M (A$0.29 (£0.184) per share) distributed to shareholders on 23 August 2011
Financial Review
The Company achieved sales revenue for the period of A$42.8M and gross profits of A$23.4M. EBITDA for the period as reported to the ASX (including interest income and proceeds from the USP sale) was a profit of A$52.2M (2010 EBITDA loss: A$20.6M). Adjusted EBITDA as reported to the ASX before the gain on disposal, non-recurring charges and foreign exchange losses was A$0.0M.
As part of the Company's cost cutting strategy and the sale of USP assets to Oracle, we incurred A$15.4M in non-recurring charges in the period. Due to the global nature of our business and currency movements we recorded a A$1.5M foreign exchange loss for the year (FY2010 Foreign exchange loss of $3.0M).
Reported profit 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$58.7M 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.
Craig Halliday, Chief Executive Officer, eServGlobal, said:
"The results for this financial year demonstrate the success of the transformation we have achieved at eServGlobal. We have created an organisation that is flexible enough to meet the demands of operators and banks in emerging markets while transitioning to EBITDA profitability in just six months. The investments we have made in our people and products have translated into significant new wins and our entire focus for the coming financial year is on continuing to grow our position in the high growth, high margin markets of Mobile Money and Value-Added Services."
FY2011 Unaudited P&L
| Year Ended 30 June 2011 $'000 | Year Ended 30 June 2010 $'000 | |
Revenue | 42,808 | 78,015 | |
Cost of sales | (19,452) | (43,427) | |
Gross profit | 23,356 | 34,588 | |
Gain on disposal of business | 69,340 | - | |
Interest income | 3,975 | - | |
Research and development expenses | (5,311) | (9,992) | |
Sales and marketing expenses | (8,755) | (13,908) | |
Administration expenses | (30,432) | (31,262) | |
| EBITDA incl. interest income | 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 period | 39,159 | (32,286) | |
Other comprehensive (loss) income | |||
Exchange differences arising on the translation of foreign operations | (1,070) | (5,813) | |
Total comprehensive income/(loss) for the period | 38,089 | (38,099) | |
Profit/(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) | ||
Profit/(Loss) per share: | |||
Basic (cents per share) | 19.8 | (16.5) | |
Diluted (cents per share) | 19.8 | (16.5) |
FY2011 Unaudited Balance Sheet
30 June 2011 $'000 | 30 June 2010 $'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 (employee benefits) | 7,024 | 4,123 | |
Other (Deferred revenue) | 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 (employee benefits) | 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 Unaudited Cashflow
Year Ended 30 June 2011 $'000 | Year Ended 30 June 2010 $'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) | |
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 cost | 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) |
Unaudited Notes to the Financial Statements
a) Reconciliation of cash | Year Ended 30 June 2011 $'000 | Year Ended 30 June 2010 $'000 | ||
|
| |||
| Cash and cash equivalents | 60,820 | 2,225 | |
|
b) Reconciliation of profit for the year to net cash flows from operating activities | Year Ended 30 June 2011 $'000 | Year Ended 30 June 2010 $'000 | |
Profit/(Loss) for the year | 39,159 | (32,286) | |
Interest received | (3,975) | - | |
Depreciation of non-current assets | 1,377 | 2,685 | |
Amortisation of non-current assets | 5,493 | 6,877 | |
Loss/(profit) on disposal of non-current assets | 533 | 62 | |
Equity settled share-based payments | 235 | (191) | |
Gain on disposal of business | (69,340) | - | |
Increase/(decrease) in current income tax balances | 11,013 | 2,076 | |
Increase/(decrease) in deferred tax balances | (6,045) | (2,934) | |
Changes in net assets and liabilities, net of effects from acquisition of businesses: | |||
(Increase)/decrease in assets: | |||
- Receivables | 8,889 | 32,166 | |
- Inventories | 574 | (231) | |
Increase/(decrease) in liabilities: | |||
- Trade payables | 2,791 | (18,594) | |
- Provisions | 2,914 | (1,229) | |
- Other liabilities | (3,183) | (1,442) | |
Net cash used in operating activities | (9,565) | (13,041) |
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 70 customers in over 45 countries.
For more than 25 years mobile, fixed, Internet and telecom 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 14 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
For further information, please contact:
eServGlobal | www.eservglobal.com |
Tom Rowe, Company Secretary | T: +61 (0) 7 3302 0194
|
Cenkos Securities plc Ivonne Cantú/Stephen Keys (Nomad) | www.cenkos.com T: +44 (0) 20 7397 8980 |
Threadneedle Communications Caroline Evans‐Jones/Josh Royston/Hilary Millar | www.threadneedlepr.co.uk T: +44 (0) 20 7653 9850 |
[1] Unless otherwise indicated all GBP/AUD ForEx rates are converted at monthly averages as per Group accounting policies.
[2] Capital return proceeded at 0.6337 GBP / AUD as at Record Date of August 16 2011. Payment processed on August 23 2011.
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