Preliminary Final Report

eServGlobal Limited

Tel: +61 7 3302 0194

Jason Lilienstein

info@eservglobal.com

Company Secretary

Altium (AIM)

Nominated adviser, Paul Lines

Tel: +44(0)845 505 4343

Results

A$ '000

Revenue

Down

47.0%

to

$78,015

(Loss) after tax

Down

6.5%

to

($32,286)

(Loss) after tax attributable to members

Down

6.6%

to

($32,443)

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 ¢

¢

0%

0%

Record date for determining entitlements to the dividend.

N/A

Brief explanation of the figures above

The consolidated entity achieved sales revenue for the period of $78M (2009 $147.2M) - a decrease of 47%. This decrease in revenue was anticipated (refer to company announcements on 26 May 2010 and 14 July 2010) and was a consequence of key USP customers deferring traditional end of financial year orders due to the announcement on 26 May 2010 that the company had entered into a conditional agreement to sell its USP business to Oracle.

The EBITDA loss (before non-recurring restructuring and foreign exchange losses) was $14,2M (2009 EBITDA profit before non-recurring restructuring and foreign exchange losses: $3,1M), consistent with the previous company announcement of 14 July 2010.

The net result of the consolidated entity for the full year ended 30 June 2010 was a loss after tax and minority interest for the period of $32.3M (2009 $34.5M).

Loss per share was 16.5 cents (2009: loss per share: 20.1 cents).

In accordance with the group's accounting policies, development expenditure incurred during the period of $2.2M (2009: $4M) was capitalised in the Statement of Financial Position. This expenditure related to internally generated software comprising the HomeSend platform.

The transaction costs relating to the sale of the USP business to Oracle which were incurred prior to 30 June 2010 ($0.9M) have been expensed in the current year.

Foreign exchange losses for the year totalled $3.0M (2009: Foreign exchange loss of $0.6M).

The operating cash flow for the period was a net outflow of $13.0M primarily resulting from the settlement of termination payments to departing employees. Cash at 30 June 2010 was $2.2M.

Subsequent Events

On 26 May 2010, the company entered into a conditional agreement to sell the assets and undertakings of its USP business to Oracle Australia Pty Limited.

The sale was subject to numerous conditions including shareholders' approval, which was obtained on 30 June 2010. The sale was not completed as at 30 June 2010 and accordingly, the assets and related liabilities attributable to the sale have been classified as "Assets classified as held for sale" and "Liabilities directly associated with assets classified as held for sale" in the Consolidated Balance Sheet as at 30 June 2010.

The sale of the USP business was completed on 3 August 2010, subsequent to the 30 June 2010 balance sheet date. The sale price of the USP business was AUD$107M and the transaction will be accounted for in the financial year ending 30 June 2011.

Year Ended

30 June 2010

$'000

Year Ended

30 June 2009

$'000

Revenue

78,015

147,246

Cost of sales

(43,427)

(77,342)

Gross profit

34,588

69,904

Other income

-

421

Research and development expenses

(9,992)

(17,906)

Sales and marketing expenses

(13,908)

(24,214)

Administration expenses

(31,262)

(33,466)

(20,574)

(5,261)

Amortisation expense

(6,877)

(7,783)

Impairment of goodwill

-

(12,501)

Depreciation expense

(2,685)

(3,284)

(30,136)

(28,829)

Finance costs

(355)

(262)

Loss before tax

(30,491)

(29,091)

Income tax expense

(1,795)

(5,434)

Loss for the period

(32,286)

(34,525)

Other comprehensive (loss) income

Exchange differences arising on the translation of foreign operations

(5,813)

2,498

Total comprehensive (loss) income for the period

(38,099)

(32,027)

(Loss) profit attributable to:

Equity holders of the parent

(32,443)

(34,743)

Non controlling interest

157

218

(32,286)

(34,525)

Total comprehensive (loss) income attributable to:

Equity holders of the parent

(38,229)

(32,016)

Non controlling interest

130

(11)

(38,099)

(32,027)

(Loss) per share:

Basic (cents per share)

(16.5)

(20.1)

Diluted (cents per share)

(16.5)

(20.1)

30 June 2010

$'000

30 June 2009

$'000

Current Assets

Cash and cash equivalents

2,225

14,135

Trade and other receivables

31,143

63,493

Inventories

853

623

Current tax assets

4,897

7,368

39,118

85,619

Assets classified as held for sale

27,528

-

Total Current Assets

66,646

85,619

Non-Current Assets

Property, plant and equipment

3,071

4,891

Deferred tax assets

1,907

2,929

Goodwill

6,820

35,483

Other intangible assets

12,727

20,383

Total Non-Current Assets

24,525

63,686

Total Assets

91,171

149,305

Current Liabilities

Trade and other payables

13,349

31,963

Borrowings

5,794

-

Current tax payables

535

930

Provisions

4,123

5,562

Other (Deferred revenue)

5,268

7,219

29,069

45,674

Liabilities directly associated with assets classified as held for sale

750

-

Total Current Liabilities

29,819

45,674

Non-Current Liabilities

Deferred tax liabilities

4,083

8,040

Provisions

505

537

Total Non-Current Liabilities

4,588

8,577

Total Liabilities

34,407

54,251

Net Assets

56,764

95,054

Equity

Issued capital

123,946

123,946

Reserves

(1,566)

4,411

Accumulated Losses

(65,781)

(33,338)

Parent entity interest

56,599

95,019

Non controlling interest

165

35

Total Equity

56,764

95,054

Issued Capital $'000

Foreign Currency Translation Reserve

$'000

Employee equity-settled benefits Reserve

$'000

Retained Earnings (Accumu-lated Losses) $'000

Attributable to owners of the parent

$'000

Non controlling Interest

$'000

Total $'000

Consolidated

Balance at 1 July 2009

123,946

3,323

1,088

(33,338)

95,019

35

95,054

Profit/(Loss) for the period

-

-

-

(32,443)

(32,443)

157

(32,286)

Exchange differences arising on translation of foreign operations

-

(5,786)

-

-

(5,786)

(27)

(5,813)

Total comprehensive (loss) for the period

-

(5,786)

-

(32,443)

(38,229)

130

(38,099)

Equity settled payments

-

-

(191)

-

(191)

-

(191)

Balance at 30 June 2010

123,946

(2,463)

897

(65,781)

56,599

165

56,764

Balance at 1 July 2008

115,325

596

1,042

6,536

123,499

46

123,545

Profit/(Loss) for the period

-

-

-

(34,743)

(34,743)

218

(34,525)

Exchange differences arising on translation of foreign operations

-

2,727

-

-

2,727

(229)

2,498

Total comprehensive income for the period

-

2,727

-

(34,743)

(32,016)

(11)

(32,027)

Issue of shares

8,460

-

-

-

8,460

-

8,460

Transfer from equity settled benefits reserve

161

-

(161)

-

-

-

-

Equity settled payments

-

-

207

-

207

-

207

Payment of dividends

-

-

-

(5,131)

(5,131)

-

(5,131)

Balance at 30 June 2009

123,946

3,323

1,088

(33,338)

95,019

35

95,054

Year Ended

30 June 2010

$'000

Year Ended

30 June 2009

$'000

Receipts from customers

108,521

159,013

Payments to suppliers and employees

(122,651)

(165,926)

Interest and other finance cost paid

(355)

(262)

Income tax refunded

1,444

5,081

Net cash used in operating activities

(13,041)

(2,094)

Cash Flows From Investing Activities

Interest received

-

271

Payment for property, plant and equipment

(2,214)

(2,159)

Software development costs

(2,195)

(4,035)

Net cash used in investing activities

(4,409)

(5,923)

Cash Flows From Financing Activities

Proceeds from issues of equity securities

-

8,460

Proceeds from borrowings

5,794

-

Dividends paid

-

(5,131)

Net cash provided by financing activities

5,794

3,329

Net Decrease In Cash and Cash Equivalents

(11,656)

(4,688)

Cash At The Beginning Of The Period

14,135

18,288

Effects of exchange rate changes on the balance of cash held in foreign currencies

(254)

535

Cash and Cash Equivalents At The End Of The Period

2,225

14,135

6.1 Notes to the consolidated statement of cash flows

2010 $'000

2009 $'000

a) Reconciliation of cash

Cash and cash equivalents

2,225

14,135

2010 $'000

2009 $'000

b) Reconciliation of profit for the year to net cash flows from operating activities

(Loss) for the year

(32,286)

(34,525)

Interest received

-

(271)

Depreciation of non-current assets

2,685

3,284

Amortisation of non-current assets

6,877

7,783

Impairment of goodwill

-

12,501

Loss/(profit) on disposal of non-current assets

62

32

Equity settled share-based payments

(191)

207

Increase/(decrease) in current income tax balances

2,076

(969)

Increase/(decrease) in deferred tax balances

(2,934)

3,316

Changes in net assets and liabilities, net of effects from acquisition of businesses:

- (Increase)/decrease in assets:

- Receivables

32,166

16,627

- Inventories

(231)

833

- Other assets

-

5,077

Increase/(decrease) in liabilities:

- Trade payables

(18,594)

(15,199)

- Provisions

(1,229)

(577)

- Other liabilities

(1,442)

(213)

(13,041)

(2,094)

June 2010

June 2009

Net tangible assets per security

5.3 cents

19.9 cents

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:

Final dividend

Nil

Nil

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

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