17th Nov 2009 07:00
eServGlobal: Trading Update
Sydney: 17 November 2009
eServGlobal Limited (ASX: ESV & LSE: ESG) (eSG), a specialised supplier of large-scale telecoms network software and services to telecoms carriers around the world, today updates the market on expected outturn for the year ending 30 June 2010. Based on trading so far this year and the board's view on the current level of orders/demand, the board expects an increased full year EBITDA (Earnings Before Interest, Taxation, Depreciation and Amortisation and before exceptional items) result, despite reduced turnover and challenging global market conditions.
Since its appointment at the commencement of this financial year, the new management team has conducted a thorough review of the business and is well advanced in developing the company's strategy and market positioning. The hallmarks of this strategy relate to a resolute focus on eSG's customers and their needs, rationalisation and careful management of the company's cost structure and focused product development to ensure eSG is well positioned to benefit from a gradual return to past levels of global communication spending, which is not expected to occur until 2010/2011.
In the course of 2009, management has taken positive action and downsized the business by more than 100 full time employees. In combination with a significant reduction in contractors' costs and a continued focus on variable cost reduction, the company now expects total operational costs for FY2010 of AUD$103.6m (FY2009: AUD$144.3m), a reduction of AUD$40.7m (28%) from the previous year.
As a result of this significant reduction in costs, the company expects to achieve FY2010 EBITDA (before non-recurring restructuring charges) in the range of AUD$8m to AUD$12m (FY2009: AUD$2.4m).
This operating result is based on achieving turnover of between AUD$110m and AUD$120m (FY2009: AUD$147.2m). Due to market weakness, revenues for the six months to 31 December 2009 are expected to be above AUD$40m with the second half delivering above AUD$70m, demonstrating the returning strength of the business due to initiatives implemented by the new management team during the current half year.
Consequently, the company expects a first half FY2010 EBITDA loss (before non-recurring restructuring charges) of between AUD$7m to AUD$9m (First half FY2009: EBITDA profit of AUD$7m), while the second half is expected to achieve positive EBITDA of AUD$17m to AUD$19m (Second half FY2009: EBITDA loss of AUD$12.3m).
The company expects to incur a restructuring charge of approximately AUD$5m in FY2010.
The company's Chairman, David Smart said: "The board is very pleased with the successful restructuring of the business for the current market conditions and the positive momentum achieved by the new management team in a short period of time. eServGlobal is very well positioned to meet the challenges of the current environment and capitalise on opportunities for growth which will be driven by both continuing subscriber growth and the uptake of new mobile services. "
About eServGlobal
eServGlobal is listed on the Australian Stock Exchange (ASX: ESV) and the London Stock Exchange AIM market (LSE: ESG). More information can be found at: www.eservglobal.com
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