2009 Results Announcement

 

TIDMESG 
 
RNS Number : 9434X 
eServGlobal Limited 
25 August 2009 
 

 
 
Sydney 25 August, 2009: eServGlobal Announces 2009 Results 
eServGlobal Limited ("eServGlobal" or "the Company") ASX:ESV & LSE:ESG, a 
specialised supplier of large-scale telecoms network software and services to 
telecoms carriers around the world, today announces its audited results for the 
year to 30 June 2009. 
Key highlights: 
 
 
Financial 
  *  Revenue of A$147.2 million, compared to A$177.9 million in FY08 
  *  EBITDA of  A$2.4 million (before restructuring costs), compared to A$24.2 
  million in FY08 
  *  Restructuring costs of A$7.7m arising from headcount reduction action 
  *  Net Loss after tax of A$34.7 million, compared to profit $A10.4 million in FY08 
  *  Net cash at 30 June 2009 of A$14.1 million, compared to A$18.2 million at 30 
  June 2008 
 
Operational 
  *  New Intelligent Network & Convergent Billing wins in North America, Europe and 
  Asia/Pacific 
  *  International Remittance platform, HomeSend, trials completed and commercial 
  launch in August 2009 
  *  Headcount reduced by 13% 
  *  New CEO and COO appointed in July 2009 
 
Commenting on the results, Richard Mathews, Chief Executive Officer, said: 
 
 
"2009 was a challenging year for eServGlobal customers and subsequently for 
eServGlobal, given the difficult market conditions faced right around the world. 
However despite this, the Company has continued to secure new customers and 
introduce innovative products, which will help to drive our long-term recovery." 
 
 
"The recent introduction of a new management team (CEO,COO,CTO), a 13% reduction 
in headcount (greater than 100 staff), the continuation of cost control measures 
for the foreseeable future and a laser focus on new business opportunities, are 
all key elements of our future strategy." 
 
 
Apart from the restructuring cost, the Net Loss for the year of $34.7 million 
was influenced by two exceptional factors. Firstly, a goodwill impairment charge 
of $12.5 million reduced goodwill in the Group balance sheet to $35.5m. Secondly 
a tax expense of $5.4m was recognised.  This tax charge arose primarily from 
items specific to FY09, namely, the non deductibility of the goodwill impairment 
charge, foreign withholding tax and deferred tax assets not recognised. 
 
 
+----------------------------------------------------+------------------------------+ 
| For further information, please contact:           | T: [phone]           | 
| Richard Mathews                                    | F: [phone]           | 
| [e-mail]                           |                              | 
+----------------------------------------------------+------------------------------+ 
  Chairman's statement 
 
 
The financial outcome for the year ending 30 June 2009 saw our revenue return to 
2007 levels as the telecommunications industry reacted to the global financial 
crisis and curtailed investment in infrastructure capacity. Having entered the 
year with a cost base appropriate for a larger revenue objective, it became 
necessary to instigate a restructuring program during 2009, which resulted in a 
reduction of over 100 full time equivalent employees, mainly in our European 
operations. 
 
 
Sales revenue for the year was A$147.2 million, compared with A$177.9 million in 
the previous year, a decline of 17%. (Loss)/Profit after tax and minorities was 
A$(34.7) million for the year to 30 June 2009, compared with A$10.4 million in 
the previous year. This represents Diluted EPS of (20.1) Australian cents for 
the year, compared to 6.0 cents in FY08, after a goodwill impairment charge of 
A$12.5 million. 
 
 
The Company spent a total of A$21.9 million on R&D in FY09 including A$4.0 
million attributed to development of the HomeSend platform, which has been 
capitalised.This investment ensures that we maintain our competitive position 
and will support our growth in future years. 
 
 
Gross Profit was 45% of revenue (53.5% in FY08) reflecting the effect of lower 
revenue on the pre-existing cost base. 
 
 
Net cash declined to $14.1 million, as a result of reduced invoicing in the 
second half. 
 
 
 
 
Outlook 
 
 
We have found significant challenges in 2009 and we have made the 
business leaner and more focused. The Board and our new management team continue 
to have great confidence in our products, our markets and our people. 
 
 
We are well positioned to take advantage of improved trading conditions in 2010. 
While we expect the upcoming financial year to be tough, we also expect it to 
provide the foundation for taking the Company forward on behalf of shareholders. 
 
 
 
 
David Smart 
Chairman 
  Financial Summary 
 
 
+-----------------------------+-----------+----------+------------+----------+ 
| Results for the year to 30 June 2009               |            |          | 
|                                                    |            |          | 
|                                                    |            |          | 
+----------------------------------------------------+------------+----------+ 
|                             | Full Year to 30 Jun  | Full Year to30 Jun    | 
|                             | 09                   | 08                    | 
+-----------------------------+----------------------+-----------------------+ 
|                             |        A$ |     % of |         A$ |     % of | 
|                             |           |  Revenue |            |  Revenue | 
+-----------------------------+-----------+----------+------------+----------+ 
|                             |           |          |            |          | 
+-----------------------------+-----------+----------+------------+----------+ 
| Sales Revenue               |   147,246 |          |    177,934 |          | 
+-----------------------------+-----------+----------+------------+----------+ 
| Cost of Sales               |    81,519 |          |     82,721 |          | 
+-----------------------------+-----------+----------+------------+----------+ 
| Gross Profit                |    65,727 |    44.6% |     95,213 |    53.5% | 
+-----------------------------+-----------+----------+------------+----------+ 
| Other Revenue               |       421 |          |        272 |          | 
+-----------------------------+-----------+----------+------------+----------+ 
| R&D                         |    17,906 |    12.2% |     25,062 |    14.1% | 
+-----------------------------+-----------+----------+------------+----------+ 
| Sales and Marketing Costs   |    24,650 |          |     20,271 |          | 
+-----------------------------+-----------+----------+------------+----------+ 
| Administration Costs        |    28,853 |          |     25,990 |          | 
+-----------------------------+-----------+----------+------------+----------+ 
| Non-recurring charges       |     7,691 |    -3.5% |     24,162 |    13.6% | 
| EBITDA (before              |     2,430 |          |            |          | 
| non-recurring)              |   (5,261) |          |            |          | 
| EBITDA                      |           |          |            |          | 
+-----------------------------+-----------+----------+------------+----------+ 
| Amortisation (1)            |     7,783 |          |      6,883 |          | 
+-----------------------------+-----------+----------+------------+----------+ 
| Goodwill Impairment         |    12,501 |          |      2,997 |          | 
| Depreciation                |     3,284 |          |            |          | 
+-----------------------------+-----------+----------+------------+----------+ 
| EBIT                        |  (28,829) |          |     14,282 |          | 
+-----------------------------+-----------+----------+------------+----------+ 
| Interest Expense            |       262 |          |        400 |          | 
+-----------------------------+-----------+----------+------------+----------+ 
| (Loss)/Profit Before Tax    |  (29,091) |          |     13,882 |          | 
+-----------------------------+-----------+----------+------------+----------+ 
| Tax Expense                 |     5,435 |          |      3,342 |          | 
+-----------------------------+-----------+----------+------------+----------+ 
| (Loss)/ProfitAfter Tax      |  (34,526) |          |     10,540 |          | 
+-----------------------------+-----------+----------+------------+----------+ 
| Minority Interest           |       218 |          |        149 |          | 
+-----------------------------+-----------+----------+------------+----------+ 
| (Loss)/Profit Attributable  |  (34,744) |          |     10,391 |          | 
| to Members                  |           |          |            |          | 
+-----------------------------+-----------+----------+------------+----------+ 
 
 
Notes: 
 
(1) Amortisation is non-cash write down of intangible assets from the Ferma 
acquisition in 2005, being software & customer relationships, as required by 
IFRS. 
 
 
 
About eServGlobal 
 
 
eServGlobal (LSE: ESG & ASX: ESV) provides smart communication and payment 
services for telecommunications service providers operating on all generation 
networks. 
 
Over 80 of the world's leading service providers, with over 500 million mobile 
subscribers in more than 50 countries, are taking advantage of eServGlobal's 
end-to-end solutions and expertise to quickly deliver revenue-generating 
services. With 15 offices around the world and 650 staff, we provide flexible 
solutions, based on a deep understanding of our customers' requirements 
and challenges. 
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 
 
 
+----------------------------------------+----------------------------------------+ 
| eServGlobal Limited                    |                   Tel: [phone] | 
+----------------------------------------+----------------------------------------+ 
| Richard Mathews                        |                                        | 
+----------------------------------------+----------------------------------------+ 
| Chief Executive Officer                |                                        | 
+----------------------------------------+----------------------------------------+ 
|                                        |                                        | 
+----------------------------------------+----------------------------------------+ 
| Altium                                 |                Tel: [phone] | 
+----------------------------------------+----------------------------------------+ 
| Nominated adviser, Mike Fletcher/Paul  |                                        | 
| Lines                                  |                                        | 
+----------------------------------------+----------------------------------------+ 
| Corporate Broking, Chloe Ponsonby      |                                        | 
+----------------------------------------+----------------------------------------+ 
 
 
Cautionary statements 
Statements in this document expressing the beliefs and expectations of 
management regarding future performance are "forward-looking statements" within 
the meaning of the United States Private Securities Litigation Reform Act of 
1995. These statements are based on management's expectations as of the date of 
this document and are subject to uncertainty and changes in circumstances. 
Actual results may differ materially from these expectations due to risks and 
uncertainties including, but not limited to, uncertainty in communications 
spending, the implementation of the Company's strategic repositioning and market 
acceptance of the Company's new solutions strategy, six-monthly fluctuations in 
financial results, the Company's ability to exploit fully the value of its 
technology and its strategic partnerships and alliances, the availability of 
products from product component vendors and other risks. In addition, while 
management may elect to update forward-looking statements at some point in the 
future, management specifically disclaims any obligation to do so, even if its 
estimates change. Any reference to our website in this press release is not 
intended to incorporate the contents thereof into this press release or any 
other public announcement. 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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