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Proposed Sale of USP Business

eServGlobal Limited ACN 052 947 743

Wednesday, 30 June 2010

at 10.00am AEST

Blackwattle Room 1

Crowne Plaza Darling Harbour

150 Day Street

SYDNEY NSW 2000

AUSTRALIA

This document includes forward-looking statements. The words "believe", "anticipate", "expect", "intend", "aim", "plan", "predict", "continue", "assume", "positioned", "may", "will", "should", "shall", "risk" and any other similar expressions that are predictions of or indicate future events and future trends identify forward-looking statements. These forward-looking statements include all matters that are not historical facts. Shareholders should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors that are in may cases beyond the Company's control. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance, and the Company's actual results of operations, financial condition and liquidity, and the development of the industry in which it operates may differ materially from that made in or suggested by the forward-looking statements contained in this document. The cautionary statements set forth above should be considered in connection with any subsequent written or oral forward-looking statements that the Company, or persons acting on its behalf, may issue. These forward-looking statements are made as of the date of this document and are not intended to give any assurances as to future results. Save as required by law or regulation the Company undertakes no obligation to update these forward-looking statements, and will not publicly release any revisions it may make to these forward-looking statements that may result from events or circumstances arising after the date of this document.

Circular to Shareholders and Notice of General Meeting

eServGlobal Limited ACN 052 947 743

Notice is given that the General Meeting of eServGlobal Limited (Company) will be held at:

Special Business

Proposed sale of USP Business

To consider and if in favour pass the following resolution as an ordinary resolution:

'For the purposes of AIM Rule 15 and for all other purposes, to approve the disposal of the assets and undertakings of the USP Business operated by eServGlobal Limited and certain of its subsidiaries to Oracle Corporation Australia Pty Limited in accordance with the terms and subject to the conditions of the asset purchase agreement dated 26 May 2010, the principal terms of which are set out in the attached Explanatory Memorandum and that the Directors of the Company be authorised to take all such steps as any of them may consider necessary or desirable to implement and give full effect to the intentions of the parties under the asset purchase agreement (including agreeing any amendments or waiver or variation of the terms and conditions of the asset purchase agreement as they may, in their sole discretion, deem fit, appropriate or necessary).'

Dated 26 May 2010

By order of the Board

Jason Lilienstein

Company Secretary

Notes

Determination of entitlement to attend and vote at the Meeting

The Company has determined, in accordance with the Corporations Act, that for the Meeting or any adjourned Meeting, Shares will be taken to be held by those persons recorded in the Company's register of members as at 10.00am AEST on 28 June 2010.

Depository Interest Holders (UK only) wishing to attend the meeting are required to request the appropriate authority from the depositary interest trustee, and registered shareholder, ComputerShare Clearing Pty Ltd. A request can be made by returning the form at the bottom of the Form of Instruction being sent to DI Holders. Please note that DI Holders will not be permitted to vote in person at the Meeting.

Voting by proxy

A Shareholder who is entitled to attend and vote at the Meeting may appoint a proxy to attend and vote at the Meeting on behalf of that Shareholder. A proxy need not be a Shareholder of the Company. If a Shareholder is entitled to cast two or more votes at the Meeting, the Shareholder may appoint two proxies and may specify the proportion or number of votes each proxy is appointed to exercise. If the appointment does not specify the proportion or the number of the Shareholder's votes that each proxy may exercise, each proxy may exercise half of the Shareholder's votes on a poll.

A corporation may elect to appoint a representative in accordance with the Corporations Act in which case the Company will require written proof of the representative's appointment which must be lodged with or presented to the Company before the meeting.

Proxies may be lodged with the Company's share registry Computershare Investor Services Pty Ltd:

To be effective, the Company must receive the completed proxy form and, if the form is signed by the Shareholder's attorney or authorised representative, the authority under which the proxy form is signed (or a certified copy of the authority) by no later than 10.00am AEST on 28 June 2010.

A DI Holder may only vote by giving its instructions on Form of Instruction to the registered Shareholder of their Shares, ComputerShare Clearing Pty Ltd. This Form of Instruction is required to be received by ComputerShare Clearing Pty Ltd no later than four days before the General Meeting. DI Holders will not be entitled to vote in person at the meeting.

Glossary of terms

In the attached Notice of Meeting and Explanatory Memorandum the following words and expressions have the following meanings:

Explanatory memorandum

eServGlobal Limited ACN 052 947 743

Proposed sale of USP Business

Introduction

1 eServGlobal Limited announced on 26 May 2010 that it has entered into the Agreement to sell the assets and undertakings of its USP Business, including the USP Products, to Oracle for a cash consideration of up to USD$93,750,000 (AUD$113.4 million, £65 million) subject to certain deductions. The material terms of the Agreement and the purchase price deductions are described below.

2 The revenue attributable to the USP Business in the financial year ended 30 June 2009 was AUD$61,560,000 (£36 million) (42% of the total revenue for eServGlobal in that year). The profits attributable to the USP Products and other associated assets cannot be calculated, as they are not currently accounted for separately from the Non-USP Products and assets as the Company does not account for or report contribution by product. This is due to many of the customers of the Company utilising both USP and Non-USP Products and is further due to the fact that the cost accounting and reporting undertaken by the Company is by expense category not product category.

3 eServGlobal will retain its Non-USP Business and intends to continue to operate and grow that business after the disposal of the USP Business.

4 The proposed sale of the USP Business requires the approval of Shareholders under Rule 15 of the AIM Rules. Accordingly, completion of the Proposed Transaction is conditional, amongst other things, on the approval of Shareholders of the Company at the General Meeting.

5 The purpose of this document is to provide Shareholders with information on, amongst other things, the Proposed Transaction and to explain why the Board considers the Proposed Transaction to be in the best interests of the Company and the Shareholders as a whole and to recommend to Shareholders to vote in favour of the Resolution to be Proposed at the General Meeting.

Transaction rationale

6 The USP platform on which the USP Products are based is a leading pre-paid billing platform which was built, implemented and developed by the Company.

7 In recent years, more and more telecommunications operators are looking for suppliers to provide convergent billing solutions which contain both pre-paid and post-paid billing in a single offer. In view of the fact that the Company does not have a post-paid billing solution, the Company cannot independently provide convergent billing in a single offer. To that end, the Company is dependent upon post-paid billing partners when providing solutions to tier one telecommunications operators. As these partners introduce their own pre-paid platforms, the value of the USP platform to the Company reduces.

8 The Directors and management consider that the purchase price reflects an attractive and fair valuation for the USP Business and includes a sufficient premium to reflect the strategic value to Oracle of the Company's leading USP Products. Oracle is a natural acquirer of this segment of the Company's business as it does not currently itself operate a pre-paid billing platform and the Company's USP Platform is built on Oracle tools, database and runs on Oracle hardware.

9 Furthermore, the Directors of the Company believe that the business of the Company will benefit from the separation of the USP Business from the Non-USP Business. Following completion of the Proposed Transaction, the focus of the Company will be on the development, support and customisation of the high growth areas of mobile money services and value add services. eServGlobal also plans to expand its "software as a service" delivery and licensing models to create greater flexibility, agility and scalability. The Non-USP Business is independent of the USP Business and assets and the directors are of the view that the transaction will not diminish the Company's ability to engage with telecommunications operators for the sale of the Non-USP Products.

Terms of the Agreement

10 The Company has entered into the Agreement to sell the assets and undertakings of its USP Business to Oracle for cash consideration of up to USD$93,750,000 (AUD$113.4 million, £65 million) to be paid in Australian dollars at completion. The conversion of the amount due will be based on the exchange rate current on the Reuters Currencies website 9 business days before completion. Implementation of the transaction will also result in the assumption of certain liabilities by Oracle, including in relation to some employees and other obligations. The consideration is to be adjusted at completion so that accounts receivable (which are being retained by eServGlobal) and some accrued employee entitlements are deducted from the purchase price. An amount of USD$20,750,000 (AUD$25.1 million, £14.4 million) (converted into Australian dollars using the currency conversion method described above) will be retained by Oracle in escrow. The rationale for the escrow amount is described below.

11 In broad terms, the assets and undertakings of the USP Business include the USP Products, approximately 200 employees in various jurisdictions, agreements with over 20 customers to provide the USP Products, together with services (including consulting and development services) in respect of the USP Products, various fixed assets and the leases for three premises.

12 The Conditions precedent to completion of the Agreement and the Proposed Transaction are numerous and include:

(a) approval by Shareholders of the Company to the Proposed Transaction for the purposes of Rule 15 of the AIM Rules and for any other purpose;

(b) obtaining the consent of relevant third parties (including customers) to the transfer of rights and obligations of eServGlobal under their agreements with eServGlobal to Oracle;

(c) the execution of non-competition agreements by various key employees of eServGlobal ; and

(d) the execution and delivery of numerous ancillary documents including:

(i) intellectual property assignment and licence documents in respect of the intellectual property rights relevant to the USP Business;

(ii) transitional services agreements (under which eServGlobal agrees to provide various services to Oracle for varying periods), to assist with the transition of the USP Business from eServGlobal to Oracle;

(iii) a subcontract agreement under which Oracle agrees to provide some services in respect of the USP Products as eServGlobal's subcontractor for some customer contracts that are not going to be taken over by Oracle; and

(iv) an intellectual property licence agreement under which eServGlobal obtains a licence back of some specific intellectual property rights relevant to the USP Business so that eServGlobal can continue to provide support services to some customers.

13 The Conditions must be satisfied or waived by 6 September 2010. In the event that not all the Conditions are satisfied (or waived by Oracle) prior to this date, Oracle or eServGlobal will have the right to terminate the Agreement and discontinue the Proposed Transaction.

14 eServGlobal will be subject to a requirement to conduct the USP Business in the usual and ordinary course during the period between the signing of the Agreement and the implementation of the Proposed Transaction, as well as a number of more specific restrictions in respect of the USP Business during that period, unless Oracle provides its consent.

15 eServGlobal has agreed not to solicit an offer from any third party or participate in any discussions or negotiations with any third party in relation to a broad range of competing transactions, however it is permitted to respond to an unsolicited proposal where the fiduciary duties of eServGlobal's board requires it to do so.

16 Pursuant to the Agreement, the Company has given numerous warranties and indemnities including in relation to a broad range of aspects of the USP Business, the USP Products and the underlying intellectual property rights to Oracle. The Company's maximum liability under these warranties and indemnities is equal to the purchase price except in the case of fraud and in relation to the excluded assets and liabilities, in which case the Company's liability is unlimited. Claims for breach of warranties must be made prior to the expiry of four and a half years from the completion date (in some cases the expiry of the claims period is two years from the completion date). An amount of USD$20,750,000 (AUD$25.1 million, £14.4 million) (converted into Australian dollars using the currency conversion method described above) will be retained by Oracle in escrow as a source of indemnification for Oracle for two years following completion. After the expiry of one year (assuming funds are available and no claims are outstanding), half of that amount will be released to eServGlobal and the remainder will be retained in escrow for a further year. If there are no claims under the Agreement, the remaining amount will be released to eServGlobal on the second anniversary of the completion date.

17 The Company has agreed to pay Oracle a break fee of USD$937,500 (AUD$1.1 million, £650,000) (converted into Australian dollars in the manner set out above) in the event that the Proposed Transaction does not proceed because:

(a) the Resolution under this Notice of Meeting is not passed by an ordinary majority of Shareholders; or

(b) it is determined by the Directors of the Company that the Proposed Transaction is not in the best interests of the Shareholders, based on the receipt of a superior proposal and the Resolution under this Notice of Meeting is not passed by an ordinary majority of Shareholders. 

18 The Company's major shareholder, Guinness Peat Group (holding approximately 19% of the issued share capital of eServGlobal) has entered into an agreement with Oracle under which it agrees to vote its shares in favour of the transaction. In addition, MHB Holdings Pty Ltd (a company associated with Richard Mathews), Wallaby Hill Pty Ltd (a company associated with Ian Buddery) and Craig Halliday (representing approximately 20% of the Company's issued share capital in aggregate) are supportive of the transaction and have confirmed in writing to the Company that in the absence of a superior proposal from a third party, they intend to vote their shares in favour of the Resolution.

19 The Agreement contains a non-compete clause under which the Company agrees that it and each of its affiliates will not:

(a) carry on a business that is the same as or substantially similar to or competitive with the USP Business or the USP Products for a period of 3 years after completion, except with respect to certain limited exceptions relating to the Non-USP Business;

(b) directly or indirectly solicit for employment any key or continuing employees of the USP Business for a period of 3 years after completion;

(c) directly or indirectly solicit the business of any person who is a customer, supplier, licensee, licensor, franchisee, consultant or other business relation or induce any of those persons to cease doing business with Oracle for a period of 3 years after completion. 

The Company's operations following the sale of the USP Business

20 Following completion of the Proposed Transaction, the Company will focus on growing and operating its Non-USP Business utilising the Non-USP Products. The Director's believe that new eServGlobal will remain a strong value proposition, specialising in software and associated consulting, support and development services for its suite of software products and solutions, which are described below.

21 The Non-USP Business has agreements with, and provides services to more than 60+ customers. Further, 315 out of 540 staff currently employed with eServGlobal will remain employed by eServGlobal and will continue to work in the Non-USP Business.

22 The Company will continue to operate the Non-USP Business which comprises:

(a) its entire recharge business which consists of software and associated consulting, support and development services for its software products and solutions, including:

(i) PromoMax - a carrier grade solution for telecommunications operators to build targeted, personalised, diversified and timely promotions and loyalty programs in the new generation environment;

(ii) Mailis - a flexible, modular and scalable solution enabling service providers to deliver voice mail, unified mail and video mail to both retail and business customers;

(iii) UIP - the Company's highly scalable and multi-lingual interactive voice response solution; and

(b) its international mobile remittance business, Homesend, which is a global hubbing service that offers cross border person-to-person transfers of money, air time and roaming recharge.

23 Following completion of the Proposed Transaction, the Company will focus the Non‑USP Business on two key areas:

(a) mobile money services which comprise of full 'end-to-end' and 'any account to any account' mobile financial services and international money transfers. These services will allow mobile users to make bill payments by mobile phone, send credits to another mobile phone subscriber to enable them to recharge their phone, and transfer money internationally to another mobile phone subscriber, even across a different network; and

(b) value added services which enable telecommunications operators to engage with their subscribers in a personalised and dynamic manner.

As part of that focus, the Company will continue to develop, support and provide its customers with the personalised solutions that they need, while accelerating their time to market with agile solutions built for fast deployment, flexibility and adaptability.

24 Given the increasing rate of access to mobile phones around the world (including by over 1 billion that may not even have access to traditional bank accounts), and that mobile users are increasingly using those phones for purposes other than simply making and receiving calls, the market opportunity for the new eServGlobal business is exciting and the directors believe mobile money and e-payment services is a fast growing area. For example, by 2015 it is anticipated that 3-15% of the international money transfers currently handled by various formal or informal agent networks will be carried out using a mobile handset, generating US$1.2 - 6.2 billion in service revenues.

25 To this end the Company will:

(a) provide 'software as a service' alternatives, in addition to the current licensing models to increase speed to market and also build a more predictable revenue stream;

(b) consolidate functionality across each of its platforms and provide a common user interface to allow easier cross sell;

(c) continue to reinvigorate the indirect sales channels; and

(d) continue to invest in the HomeSend platform.

26 In the financial year ended 30 June 2009 the Non-USP Business generated approximately AUD$85,600,000 (£48.9 million) in revenue (58% of total revenue generated by eServGlobal in that year). 

27 The balance sheet set out at Annexure A sets out the asset, liability and equity position for each of the USP Business and Non-USP Business for the half year ended 31 December 2009.

Advantages and disadvantages of the Proposed Transaction

28 The advantages of the Proposed Transaction (should it proceed) for the Company and the Shareholders include the following:

(a) the Board considers that the cash purchase price represents an attractive valuation for the USP Business;

(b) all Shareholders will retain their current percentage ownership interest in the capital of the Company;

(c) the Company will not be subject to any ongoing risk due to the competitive pressures associated with the USP Business;

(d) the Company will be able to focus all of its attention following completion of the Proposed Transaction upon the development of the Non-USP Products and Non-USP Business; and

(e) the Company will, through the realisation of a major business component, be in a strong liquidity position in a period of worldwide liquidity tightness.

29 A disadvantage for the Company and the Shareholders in respect of the Proposed Transaction is that the Company and the Shareholders will no longer have an ownership interest in the USP Business or the USP Products (and other assets) and the revenue generated by those assets and will be prevented from carrying on a business which competes with the USP Business for three years following completion.

Guidance Update

30 Given the Board's proposal to sell the USP Business and assets to Oracle, the Board is issuing updated guidance to the market as follows.

31 Given the timing of the Proposed Transaction, key USP customers will likely defer traditional end of financial year orders to coincide with the transition of the USP Business and assets to Oracle. Given the month of June is historically the largest month in the financial year for license sales, the impact of the Proposed Transaction on FY2010 revenue and earnings on the eServGlobal business going forward is expected to be material. The Company's revenue and earnings are highly seasonal with a disproportionately large amount of the Company's revenue earned in the last few months (particularly June) of the financial year.

32 The Board believes the purchase price reflects an adequate premium to reflect the intrinsic valuation of the USP Business and assets which takes into account any benefit that Oracle might receive from the deferment of orders into the period following completion of the Proposed Transaction.

33 As the Proposed Transaction is by way of an asset sale, the Company accounts will reflect the profit on sale of the USP Business and assets. The profit (based on current exchange rates and after potential purchase price adjustments and transaction fees) arising from the Proposed Transaction is in excess of AUD$103 million (£60.7 million).

34 The Australian dollar has strengthened considerably against the Euro during the year, which has additionally impacted revenues, and over the full year has had a negative impact of approximately AUD$12 - 14 million (£6.9 - 8.1 million) based on our budgeted rate of $0.542 AUD per Euro.

35 As a result of the above factors the Board now believes that FY2010 revenue will be in the range of AUD$77 million to AUD$82 million (£43.4 - 46.2 million) (FY2009: AUD$147.2 million, £85.1 million) and overall FY2010 EBITDA (before non recurring restructuring and foreign exchange losses) will be in the range of AUD$92 million to AUD$97 million (£52 - 54 million) (FY2009: AUD$2.4 million) (£1.4 million) having regard to both FY2010 operating activities and the sale of the USP Business and assets.

36 As a consequence of the transaction, FY2011 will be a year of transition in which eServGlobal's management and organisational structure will be focused on growing the remaining non-USP businesses. Both the HomeSend platform and the Value-Added Services platform represent exciting growth opportunities, albeit they are at varying stages of development and revenue generating potential. Management expects to grow both revenue and earnings progressively over the medium to long term. While FY2011 will be a year of transition, the Board believes it can achieve revenue in the range of AUD$38 million to AUD$45 million (£22 - 26 million) and generate positive EBITDA (before non-recurring restructuring charges) of up to AUD$5 million (£2.9 million).

Consideration and use of proceeds

37 The USP Business is being sold for a cash consideration of USD$93,750,000 (AUD$113.4 million, £65 million) of which USD$20,750,000 (AUD$25.1 million, £14.4 million) will be retained by Oracle for up to 2 years following completion. The escrow amount is being retained in support of the warranties and indemnities provided by eServGlobal to Oracle. Release of the escrow amount to the Company is not conditional on the performance of the USP Business once it is acquired by Oracle.

38 Following completion of the Proposed Transaction, the Board will conduct a capital management and strategic review to consider, amongst other things, the extent to which the net cash proceeds in relation to the sale of the USP Business exceeds the Company's requirements going forward having regard to:

(a) the business plan associated with the retained Non-USP Business over the medium term, including its working capital needs, and its capital investment and restructuring requirements;

(b) the desirability of paying down in part the Company's existing credit facilities;

(c) the amount of tax payable by the Company in connection with the Proposed Transaction; and

(d) the Company's current and possible future obligations to Oracle with respect to the Agreement, having regard to the fact that a portion of the sale proceeds will remain in escrow for two years following completion of the Proposed Transaction.

39 If and to the extent the Board considers that a portion of the sale proceeds are in excess of the Company's requirements, it will investigate the most efficient form of distribution of that excess to Shareholders, which may itself require Shareholder approval. Shareholders should note that no determination in this regard has been made by the Board at this time. The Board expects to update Shareholders in relation to its capital management and strategic review during the second half of 2010.

Recommendation

40 The Directors consider the Proposed Transaction to be in the best interests of the Company and the Shareholders as a whole. Accordingly, the Directors unanimously recommend Shareholders to vote in favour of the Resolution to be proposed at the General Meeting.

41 The Company's major shareholder, Guinness Peat Group (holding approximately 19% of the issued share capital of eServGlobal) has entered into an agreement with Oracle under which it agrees to vote its shares in favour of the transaction. In addition, MHB Holdings Pty Ltd (a company associated with Richard Mathews), Wallaby Hill Pty Ltd (a company associated with Ian Buddery) and Craig Halliday (representing approximately 20% of the Company's issued share capital in aggregate) are supportive of the transaction and have confirmed in writing to the Company that in the absence of a superior proposal from a third party, they intend to vote their shares in favour of the Resolution.

Annexure

Balance Sheet

The above unaudited pro forma statement of net assets of the Company has been prepared for illustrative purposes only to show the split of assets and liabilities for the USP Business and the non-USP business at an overview level and has not been audited. The figures presented are based on management's estimates in some cases, using assumptions which apply their financial and operational knowledge of the business.