28th Feb 2011 07:00
Appendix 4D
eServGlobal Limited
ABN 59 052 947 743
Half-year report and appendix 4D
for the half-year ended 31 December 2010
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 2010 annual financial report.
Half-year report and appendix 4D
for the half year ended
31 December 2010
Contents
Results for announcement to the market 1
Directors' Report 2
Auditor's Independence Declaration 4
Independent Review Report 5
Directors' Declaration 7
Condensed consolidated Statement of Comprehensive Income 8
Condensed consolidated Statement of Financial Position 9
Condensed consolidated Statement of Changes in Equity 10
Condensed consolidated Statement of Cash Flows 11
Notes to the condensed consolidated Financial Statements 12
Results for announcement to the market
Results | A$ '000
| |||||
Revenues
| Down | 48.7% | to | 22,471 | ||
(Loss) Profit after tax attributable to members
| Up | >100% | to | 53,040 | ||
Dividends (distributions) | Amount per security | Franked amount per security | ||||
Current period Interim dividend declared Final dividend paid
|
Nil ¢ Nil ¢ |
0% 0%
| ||||
Previous corresponding period Interim dividend declared Final dividend paid
|
Nil ¢ Nil ¢ |
0% 0% | ||||
Record date for determining entitlements to the dividend. | N/A | |||||
| Brief explanation of revenue, net profit and dividends (distributions).
The consolidated entity achieved sales revenue for the period of $22.471 million (2009 $43.763 million) - a decrease of 48.7% due to the sale of the USP business and assets. The gross profit realised was $8.527 million (gross profit margin: 38%) (2009 $20.207 million (gross profit margin: 46%)). EBITDA for the period was a profit of $63.501 million (2009 EBITDA loss $7.746 million).
The net result of the consolidated entity for the half year ended 31 December 2010 was a profit after tax and minority interest for the period of $53.04 million (2009 $11.926 million loss after tax). Earnings per share were 26.9 cents (2009: loss per share 6.1cents).
In accordance with the Group's accounting policies, development expenditure incurred during the period of $0.749 million was capitalised in the Statement of Financial Position. The expenditure related to internally generated software comprising the HomeSend platform.
During the period, the cash flow for the period was a net inflow of $74.028 million primarily resulting from proceeds received of $79.439 million following the disposal of the USP business and assets. Cash at 31 December 2010 was $70.447 million. |
Directors' report
The directors of eServGlobal Limited submit herewith the financial report of eServGlobal Limited and its controlled entities (the Group) for the half-year ended 31 December 2010. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows:
Directors
The names of the directors of the company during or since the end of the half year are:
Richard Mathews Non Executive Chairman
Craig Halliday Chief Executive Officer & Director (appointed on 18 January 2011)
David Smart Non Executive Director
François Barrault Non Executive Director
Anthony M Eisen Non Executive Director
Michael Jefferies Alternate Non Executive Director for Anthony M Eisen
Jamie Brooke Non Executive Director (appointed on 26 July 2010)
Review of Operations
This report is to be read in conjunction with other reports issued contemporaneously.
eServGlobal Limited is a public company listed on the Australian Securities Exchange (ASX:ESV) and the London Stock Exchange (AIM) (LSE:ESG). Along with its Head Office in Brisbane, Australia, the eServGlobal group has operations worldwide.
eServGlobal specializes in mobile money solutions and value-added services (including promotions, loyalty, messaging, and multiplay) to help telecom 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 60 customers in over 45 countries. For 24 years, mobile, fixed, internet and multiplay telecom providers have used eServGlobal's capabilities 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 financial services and international money transfers.
The consolidated entity achieved sales revenue for the period of $22.471 million (2009 $43.763 million) - a decrease of 48.7%. The gross profit realised was $8.527 million (gross profit margin: 38%) (2009 $20.207 million (gross profit margin: 46%)). EBITDA for the period was a profit of $63.501 million (2009 EBITDA loss $7.746 million).
The net result of the consolidated entity for the half year ended 31 December 2010 was a profit after tax and minority interest for the period of $53.04 million (2009 $11.926 million loss after tax). Earnings per share were 26.9 cents (2009: loss per share 6.1cents).
In accordance with the Group's accounting policies, development expenditure incurred during the period of $0.749 million was capitalised in the Statement of Financial Position. The expenditure related to internally generated software comprising the HomeSend platform.
During the period, the cash flow for the period was a net inflow of $74.028 million primarily resulting from proceeds received of $79.439 million following the disposal of the USP business and assets. Cash at 31 December 2010 was $70.447 million.
Auditor's independence declaration
The auditor's independence declaration is included on page 4 of the half-year financial 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 the directors' report and the financial report are rounded off to the nearest thousand 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
Richard Mathews
Chairman
Brisbane, 28 February 2011
The Board of Directors
eServGlobal Limited
Suite 5, 30 Florence Street
Newstead, QLD 4006
Australia
28 February 2011
Dear Board Members,
eServGlobal Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of eServGlobal Limited.
As lead audit partner for the review of the financial statements of eServGlobal Limited for the half year ended 31 December 2010, I declare that to the best of my knowledge and belief, there have been no contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the review; and
(ii) any applicable code of professional conduct in relation to the review.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
Weng W Ching
Partner
Chartered Accountants
Independent Auditor's Review Report
to the Members of eServGlobal Limited
We have reviewed the accompanying half-year financial report of eServGlobal Limited, which comprises the condensed statement of financial position as at 31 December 2010, and the condensed statement of comprehensive income, the condensed statement of cash flows and the condensed statement of changes in equity for the half-year ended on that date, selected explanatory notes and, the directors' declaration of the consolidated entity comprising the company and the entities it controlled at the end of the half-year or from time to time during the 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 of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed 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 matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity's financial position as at 31 December 2010 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of eServGlobal Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.
A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Auditor's Independence Declaration
In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of eServGlobal Limited, would be in the same terms if given to the directors as at the time of this auditor's report.
Conclusion
Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of eServGlobal Limited is not in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the consolidated entity's financial position as at 31 December 2010 and of its performance for the half-year ended on that date; and
(b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.
DELOITTE TOUCHE TOHMATSU
Weng W Ching
Partner
Chartered Accountants
Sydney, 28 February 2011
Directors' declaration
The directors declare that:
a) in the directors' opinion, there are reasonable grounds to believe the company will be able to pay its debts as and when they become due and payable; and
b) in the directors' opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the financial 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
Richard Mathews
Chairman
Brisbane, 28 February 2011
Condensed consolidated statement of comprehensive income
for the half-year ended 31 December 2010
| Consolidated | ||
| Half-Year Ended 31 December 2010 $'000 | Half-Year Ended 31 December 2009 $'000 | |
Revenue | 22,471 | 43,763 | |
Cost of sales | (13,944) | (23,556) | |
Gross profit | 8,527 | 20,207 | |
Gain on disposal of business | 72,088 | - | |
Interest income | 1,839 | 59 | |
Research and development expenses | (3,135) | (4,840) | |
Sales and marketing expenses | (4,854) | (6,432) | |
Administration expenses | (10,964) | (16,740) | |
| Earnings / (loss) before interest expense, tax, depreciation and amortisation | 63,501 | (7,746) | |
Amortisation expense | (3,193) | (3,505) | |
Depreciation expense | (816) | (1,486) | |
| Earnings / (loss) before interest expense and tax | 59,492 | (12,737) | |
Finance costs | (69) | (83) | |
Profit / (loss) before tax | 59,423 | (12,820) | |
Income tax benefit / (expense) | (6,234) | 980 | |
Profit / (loss) for the period | 53,189 | (11,840) | |
Other comprehensive income (loss) | |||
Exchange differences arising on the translation of foreign operations | (1,443) | (1,525) | |
Total comprehensive income (loss) for the period | 51,746 | (13,365) | |
Profit (loss) attributable to: | |||
Equity holders of the parent | 53,040 | (11,926) | |
Non controlling interest | 149 | 86 | |
53,189 | (11,840) | ||
Total comprehensive income (loss) attributable to: | |||
Equity holders of the parent | 51,597 | (13,451) | |
Non controlling interest | 149 | 86 | |
51,746 | (13,365) | ||
Earnings (loss) per share: | |||
Basic (cents per share) | 26.9 | (6.1) | |
Diluted (cents per share) | 26.9 | (6.1) | |
Notes to the Financial Statements are included on pages 12 to 14Condensed consolidated statement of financial position
as at 31 December 2010
| Consolidated | ||
Note | 31 December 2010 $'000 | 30 June 2010 $'000 | |
Current Assets | |||
Cash and cash equivalents | 70,447 | 2,225 | |
Trade and other receivables | 2 | 33,572 | 31,143 |
Inventories | 385 | 853 | |
Current tax assets | 1,986 | 4,897 | |
106,390 | 39,118 | ||
Assets classified as held for sale | - | 27,528 | |
Total Current Assets | 106,390 | 66,646 | |
Non-Current Assets | |||
Property, plant and equipment | 2,265 | 3,071 | |
Deferred tax assets | 1,196 | 1,907 | |
Goodwill | 6,295 | 6,820 | |
Other receivables | 11,984 | - | |
Other intangible assets | 3 | 9,285 | 12,727 |
Total Non-Current Assets | 31,025 | 24,525 | |
Total Assets | 137,415 | 91,171 | |
Current Liabilities | |||
Trade and other payables | 13,568 | 13,349 | |
Borrowings | - | 5,794 | |
Current tax payables | 6,857 | 535 | |
Provisions | 1,973 | 4,123 | |
Other | 4 | 4,465 | 5,268 |
26,863 | 29,069 | ||
Liabilities directly associated with assets classified as held for sale | - | 750 | |
Total Current Liabilities | 26,863 | 29,819 | |
Non-Current Liabilities | |||
Deferred tax liabilities | 1,591 | 4,083 | |
Provisions | 461 | 505 | |
Total Non-Current Liabilities | 2,052 | 4,588 | |
Total Liabilities | 28,915 | 34,407 | |
Net Assets | 108,500 | 56,764 | |
| |||
Equity | |||
Issued capital | 9 | 123,946 | 123,946 |
Reserves | 10 | (3,019) | (1,566) |
Accumulated Losses | (12,741) | (65,781) | |
Parent entity interest | 108,186 | 56,599 | |
Non controlling interest | 314 | 165 | |
Total Equity | 108,500 | 56,764 | |
Notes to the Financial Statements are included on pages 12 to 14Condensed consolidated statement of changes in equity
for the half-year ended 31 December 2010
Issued Capital $'000 | Foreign Currency Translation Reserve $'000 | Employee equity-settled benefits Reserve $'000 | Accumulated Losses $'000 | Attributable to owners of the parent $'000 | Non controlling Interest $'000 | Total $'000 | |
Consolidated | |||||||
Balance at 1 July 2010 | 123,946 | (2,463) | 897 | (65,781) | 56,599 | 165 | 56,764 |
Profit for the period | - | - | - | 53,040 | 53,040 | 149 | 53,189 |
Exchange differences arising on translation of foreign operations | - | (1,443) | - | - | (1,443) | - | (1,443) |
Total comprehensive profit for the period | - | (1,443) | - | 53,040 | 51,597 | 149 | 51,746 |
Equity settled payments | - | - | (10) | - | (10) | - | (10) |
Balance at 31 December 2010 | 123,946 | (3,906) | 887 | (12,741) | 108,186 | 314 | 108,500 |
Balance at 1 July 2009 | 123,946 | 3,323 | 1,088 | (33,338) | 95,019 | 35 | 95,054 |
Loss for the period | - | - | - | (11,926) | (11,926) | 86 | (11,840) |
Exchange differences arising on translation of foreign operations | - | (1,525) | - | - | (1,525) | - | (1,525) |
Total comprehensive income for the period | - | (1,525) | - | (11,926) | (13,451) | 86 | (13,365) |
Equity settled payments | - | - | (140) | - | (140) | - | (140) |
Balance at 31 December 2009 | 123,946 | 1,798 | 948 | (45,264) | 81,428 | 121 | 81,549 |
Notes to the Financial Statements are included on pages 12 to 14Condensed consolidated statement of cash flows
for the half-year ended 31 December 2010
| Consolidated | ||
Half-Year Ended 31 December 2010 $'000 | Half-Year Ended 31 December 2009 $'000 | ||
| Cash Flows from Operating Activities | |||
Receipts from customers | 30,490 | 64,518 | |
Payments to suppliers and employees | (38,139) | (71,320) | |
Interest and other costs of finance paid | (69) | (83) | |
Income tax refunded / (paid) | 1,217 | (206) | |
Net cash used in operating activities | (6,501) | (7,091) | |
Cash Flows From Investing Activities | |||
Proceeds from disposal of assets | 79,439 | - | |
Interest received | 1,839 | 59 | |
Payment for property, plant and equipment | - | (2,255) | |
Software development costs | (749) | (1,289) | |
Net cash from/ (used in) investing activities | 80,529 | (3,485) | |
Net increase/(decrease) In Cash and Cash Equivalents | 74,028 | (10,576) | |
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 | (12) | (139) | |
Cash and Cash Equivalents At The End Of The Period | 70,447 | 3,420 | |
Notes to the Financial Statements are included on pages 12 to 14
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 in accordance with the Corporations Act 2001 and AASB 134 Interim Financial Reporting. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 Interim Financial Reporting. 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 most recent annual financial report.
Basis of preparation
The condensed financial statements have been prepared on the basis of historical cost. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars.
The company is a company of the kind referred to in ASIC Class Order 98/010, dated 10 July 1998, and in accordance with that Class Order amounts in the directors' report and the half-year financial report are rounded off the nearest thousand dollars, unless otherwise indicated.
The accounting policies and methods of computation adopted in the preparation of the half-year financial report are consistent with those adopted and disclosed in the company's 2010 annual financial report for the financial year ended 30 June 2010, unless otherwise stated.
Adoption of New and Revised Accounting Standards
The company has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to their operations and effective for the current reporting period:
·; Amendments to AASB 5, 8, 101, 107, 117, 118, 136 and 139 as a consequence of AASB 2009-5 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project.
AASB 2009-5 introduces amendments into Accounting Standards that are equivalent to those made by the IASB under its program of annual improvements to its standards. A number of the amendments are largely technical, clarifying particular terms, or eliminating unintended consequences. Other changes are more substantial, such as the current/non-current classification of convertible instruments, the classification of expenditures on unrecognised assets in the statement of cash flows and the classification of leases of land and buildings.
The adoption of these amendments has not resulted in any changes to the company's accounting policies and have no affect on the amounts reported for the current or prior periods.
2. Current trade and other receivables
| Consolidated | |
31 December 2010 $'000 | 30 June 2010 $'000 | |
Trade receivables | 12,401 | 21,111 |
Work in progress | 6,465 | 7,467 |
Other receivables | 13,445 | 814 |
Deposits and prepayments | 1,261 | 1,751 |
33,572 | 31,143 | |
3. Other intangible assets
Software & Documentation
$'000 | Customer Relationships
$'000 | Software Develop-ment $'000 | Total
$'000 | |
Carrying value at 1 July 2010 | 1,065 | 6,603 | 5,059 | 12,727 |
Internally developed | - | - | 749 | 749 |
Amortisation expense for the period | (1,038) | (1,387) | (768) | (3,193) |
Effects of foreign exchange movements | (23) | (483) | (492) | (998) |
Carrying value at 31 December 2010 | 4 | 4,733 | 4,548 | 9,285 |
Carrying value at 1 July 2009 | 5,153 | 11,448 | 3,782 | 20,383 |
Internally developed | - | - | 1,289 | 1,289 |
Amortisation expense for the period | (1,855) | (1,650) | - | (3,505) |
Effects of foreign exchange movements | (328) | (832) | (297) | (1,457) |
Carrying value at 31 December 2009 | 2,970 | 8,966 | 4,774 | 16,710 |
4. Other Current Liabilities
| Consolidated | |
31 December 2010 $'000 | 30 June 2010 $'000 | |
Deferred income |
4,465 |
5,268 |
5. Dividends
Half Year ended 31 December 2010
| Half Year ended 31 December 2009
| |||
Cents per share | Total $'000 | Cents per share | Total $'000 | |
Fully paid ordinary shares | ||||
Recognised amounts | ||||
Final dividend paid in respect of prior financial year | - | - | - | - |
6. Segment Information
AASB 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance.
The Group operates in a single segment being the telecommunications software solutions business.
7. Issuances, repurchases and repayment of securities
During the half-year, the company did not issue any shares (6 months to December 2009: nil).
The company did not issue share options over ordinary shares under its executive and employee share option plan during the half-year reporting period (6 months to 31 December 2009: nil).
8. Facilities
Subsequent to balance date, the company renewed its $5 million bank bill facility to 31 August 2011. The facility is subject to a range of covenants and provisions.
9. Issued Capital
| Consolidated | ||
31 December 2010 $'000 | 30 June 2010 $'000 | ||
196,847,706 fully paid ordinary shares (30 June 2010: 196,847,706) |
123,946 |
123,946 | |
31 December 2010 | 31 December 2009 | ||||
No. '000 | $ '000 | No. '000 | $ '000 | ||
Fully Paid Ordinary Shares | |||||
Balance at the beginning of the financial period | 196,848 | 123,946 | 196,848 | 123,946 | |
Shares issued in the period | - | - | - | - | |
Balance at the end of the financial period | 196,848 | 123,946 | 196,848 | 123,946 | |
10. Reserves
| Consolidated | ||
31 December 2010 $'000 | 30 June 2010 $'000 | ||
Employee equity-settled benefit | 887 | 897 | |
Foreign currency translation | (3,906) | (2,463) | |
(3,019) | (1,566) | ||
Other information required to be given to ASX under listing rule 4.2A.3
| Net tangible assets per security
| Current period
| June 2010 | December 2009 |
Net tangible assets per security | 47.2 cents | 5.3 cents | 16.3 cents |
Dividends
Amount | Amount per security | Franked amount per security at 30% tax | Amount per security of foreign source dividend | Date paid/ payable | |
Interim dividend: Current year |
Nil |
N/A |
N/A |
N/A |
N/A |
Previous year |
Nil |
N/A |
N/A |
N/A |
N/A |
Final dividend paid in respect of previous financial year:
Current period: Final dividend
Previous corresponding period: Special dividend Final dividend
|
Nil
Nil
|
N/A
N/A |
N/A
N/A |
N/A
N/A |
N/A
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 | |
Details of associates and joint venture entities
Name of entity | Percentage of ownership interest held at end of period | Aggregate share of net profit (loss) contributed to the reporting entity | ||
Current period | Previous corresponding period | Current period
$A'000 | Previous corresponding period $A'000 | |
Total | N/A | N/A | N/A | N/A |
Related Shares:
Wameja Di