TIDMESG
RNS Number : 2503A
eServGlobal Limited
19 December 2014
eServGlobal Limited (eServGlobal or the "Company")
eServGlobal Preliminary Results (LSE:AIM) and Appendix 4E (ASX):
FY2014
Paris: 19 December 2014
eServGlobal (AIM: ESG & ASX: ESV), the provider of
end-to-end mobile financial services to emerging markets, is
pleased to announce its preliminary results and ASX Appendix 4E for
the financial year ended 31 October 2014.
FINANCIAL HIGHLIGHTS
-- Net profit after tax of A$14.2m (GBP7.9m) compared to a prior
year profit of A$10.4m (GBP6.6m)
-- Gain on sale recognised following the completion of the
HomeSend Joint Venture of A$31.7m (GBP17.5m). eServGlobal now
recognizes its 35% share of the profits and losses of HomeSend.
-- Core domestic mobile money business adjusted EBITDA of A$2.6m
(GBP1.4m) compared to a prior year EBITDA of A$1.7m (GBP1.1m).
-- During the financial year, technology development costs of
A$5.4m (GBP3.0) have been capitalised in respect of a new feature
rich and hardware agnostic mobile money platform enabling
eServGlobal to sell through channel partners and improve project
margins
-- Cash and cash equivalents at 31 October 2014 of A$3.7m
(GBP2.0m). Net cash flow used in operating activities reduced from
A$8.9m (GBP5.6m) in FY13 to A$4.1m (GBP2.3m) in FY14
-- Recurring support and SaaS revenues represent approximately 40% of total revenue
Summary Financials FY14 FY14 FY13 FY13
Full Year Full Year Full Year Full Year
A$M GBPM+ A$M GBPM
Revenue 31.3 17.3 31.0 19.6
Cost of Sales 13.4 7.4 11.8 7.5
Gross Profit 17.9 9.9 19.2 12.2
Gain recognised on disposal
of HomeSend -31.7 -17.5
Share of loss of associate 2.3 1.3
Adjusted Operating Costs* 15.3 8.5 17.5 11.1
Adjusted EBITDA 2.6 1.4 1.7 1.1
Net Interest -0.3 -0.1 -0.4 -0.2
Amortization 0.0 0.0 -1.9 -1.2
Depreciation -0.6 -0.3 -0.5 -0.3
Adjusted PBT* 1.7 1.0 -1.1 -0.6
Reported PBT 27.8 15.3 4.5 2.8
Income Tax 13.5 7.5 5.9 3.7
PAT 14.2 7.9 10.4 6.6
+Average exchange rate was 0.5521 GBP to AUD (FY2013 0.633)
* Excludes Gain recognised on disposal of Homesend and share of
HomeSend loss of A$29.4m (FY2013 nil), foreign exchange losses of
A$0.4m (FY2013 gain of A$8.0m), non-recurring costs of A$2.5m
(FY2013 A$2.0m), interest income of A$0.03m (FY2013 A$0.06m) and
share based payments of A$0.4m (FY2013 A$0.5m)
**Numbers in summary financials may not necessary total due to
rounding
OPERATIONAL HIGHLIGHTS
-- The HomeSend Joint Venture was successfully closed on 3
April, taking the international money transfer platform to its next
level of worldwide expansion. The JV is now operating as an
independent entity, with the full support of all three partners;
eServGlobal, MasterCard and BICS.
-- During FY14 significant progress has been made in activating
new HomeSend corridors, creating an extensive footprint of
connected countries. There are currently 486 technically live
corridors (compared to 51 live corridors at the same time in 2013)
connecting 99 sending countries and 32 receiving countries.
-- HomeSend transaction numbers and volumes are showing strong
growth: as at November 2014, HomeSend transaction numbers had
increased over 600% YOY. As new corridors go live, the number of
transactions will increase exponentially.
-- eServGlobal's customer base remains stable with more than 65
core business customers in over 50 countries. Having invested in
building this base over recent years, the company is now
benefitting from expansion and extension business.
-- The company has continued the strategic diversification of
its customer base throughout FY14 to include a higher mix of
Financial Institutions (FIs) complementing the existing footprint
with Mobile Network Operators (MNOs).
-- eServGlobal's customer footprint includes presence in four of
the Tier 1 Operator Groups (Zain, Orange, Ooredoo and Vodafone)
reducing customer concentration and providing geographic
diversification.
-- eServGlobal is realizing the rewards of investment in its
scalable and modular technology platform as the revenue mix moves
to a higher proportion of repeatable, high margin expansion and
extension sales.
-- Recurring revenues represented 40% during FY14 through
predictable, ongoing service and support agreements.
-- eServGlobal has a backlog of work of A$4.9M (GBP2.7m) (43%
more backlog than the same time last year).
Paolo Montessori, CEO and Managing Director, eServGlobal,
said:
"2014 has been an eventful year and a period of considerable
progress for eServGlobal. The creation of the HomeSend JV, with our
partners MasterCard and BICS, has opened a new chapter for the
multilateral international remittance and payments hub. HomeSend
has shown encouraging leaps forward during 2014, including a
significant increase in the number of live international remittance
corridors driving growth in transaction volumes by over 600%, and
this leaves me very positive about the outlook of this
business.
"Our core business of delivering mobile financial services in
emerging markets is showing positive progress. We enter the new
financial year with a stable and diversified customer base, high
proportion of recurring revenues, and a healthy backlog of work.
This, combined with continuing investment and drive, gives me great
confidence that we will deliver growth and improved operating
margins in the coming years."
An interview with CEO and Managing Director, Paolo Montessori,
presenting these results is available at the following link:
http://www.eservglobal.com/investors/FY14_Results
For further information, please contact:
www.eservglobal.com
eServGlobal
Tom Rowe, Company Secretary T: +61 (0)2 8014 5050
Alison Cheek, Communications Manager
Canaccord Genuity Limited (Nomad and Broker) www.canaccordgenuity.com
Simon Bridges / Cameron Duncan / Brendan T: +44 (0) 20 7523 8000
Gulston
Charles Stanley Securities www.csysecurities.com
Dugald Carlean / Paul Brotherhood T: +44 (0) 20 7149 6000
Newgate Threadneedle www.newgatethreadneedle.com
Hilary Buchanan / Adam Lloyd / Jasper Randall T: +44 (0) 20 7653 9850
About eServGlobal
eServGlobal (AIM:ESG, ASX:ESV) offers mobile money solutions
which put feature-rich services at the fingertips of users
worldwide, covering the full spectrum of mobile financial services,
mobile wallet, mobile commerce, recharge, promotions and agent
management features. eServGlobal invests heavily in product
development, using carrier-grade, next-generation technology and
aligning with the requirements of more than 65 customers in over 50
countries.
Together with MasterCard and BICS, eServGlobal is a joint
venture partner of the HomeSend global payment hub, a market
leading solution based on eServGlobal technology and enabling
cross-border money transfer between mobile money accounts, payment
cards, bank accounts or cash outlets from anywhere in the world
regardless of the users location.
eServGlobal also builds on its extensive experience in the telco
domain to offer a comprehensive suite of sophisticated, revenue
generating Value-Added Services to engage subscribers in a dynamic
manner. eServGlobal has been a source of innovative solutions for
mobile and financial service providers for 30 years.
INTRODUCTION
The mobile phone represents the opportunity to facilitate
financial inclusion. There are currently 2.5 billion working-age
adults who are unbanked with as many as 80% of adults in Africa not
having access to formal financial services.
Simultaneously, the numbers of people living outside their
country of birth is continually increasing. The World Bank
estimates that remittances sent by migrants to developing countries
grew by 5% in 2014 to reach US$435bn.
These are two distinct but related markets which represent an
immense opportunity. eServGlobal is well positioned to address both
of these markets. Through its core business the Company provides
domestic mobile financial services to emerging markets, while
through the HomeSend Joint Venture, the company addresses the
significant international remittance market.
eServGlobal continues to consolidate its position as one of the
top mobile money vendors in the industry. The company's investment
in customer acquisition and technology evolution in recent years is
now coming to fruition as project lifecycles progress from the
initial low-margin deployment phase to expansion and extension
projects as well as predictable recurring revenue through support
and service agreements.
eServGlobal's flagship mobile money technology, PayMobile, is
built on a modular platform which is scalable to easily accommodate
expansion and extensions as the customer's market grows in size and
matures in requirements. Operating within a nascent market such as
mobile money, it is crucial to have a platform which can adapt to
the varying levels of financial services demanded in individual
markets.
In April 2014, the HomeSend global payments hub was successfully
launched as a joint venture of MasterCard, eServGlobal and BICS.
eServGlobal maintains a 35% share in the joint venture and has two
seats on the 6-person Board of Directors. HomeSend provides unique
technology, purpose-built for remittances. The combination of
HomeSend's technology with MasterCard's network provides an
exponential reach to consumers around the world.
Following several years of focusing on customer acquisition and
technology development, HomeSend has progressed in FY14 to focus on
deployment of live corridors. There are now 486 technically live
corridors connecting 99 sending countries and 32 receiving
countries. FY15 will see the emphasis progress to increasing
transaction numbers and volumes.
OPERATIONAL REVIEW
In FY14, eServGlobal reported an adjusted EBITDA of A$2.6M
(GBP1.4M). Efforts over the last few years have seen eServGlobal
reduce its cost structure and transition into higher margin
projects to record a second consecutive year of EBITDA
profitability, in line with analyst expectations.
The Company has an improved backlog of work compared to the same
time last year, which will positively impact FY2015.
Core business: Mobile money and mobile financial services
eServGlobal's 'core' business consists of a comprehensive suite
of mobile money and mobile financial solutions for domestic
transactions in emerging markets. The Company focusses on providing
a technology which can 'bank the unbanked'. Mobile Network
Operators (MNOs) or Financial Institutions (FIs) are looking to
this type of technology to extend their business into new markets
and to facilitate financial inclusion. eServGlobal's solutions are
being delivered to customers worldwide in more than 50
countries.
Developments and highlights throughout the year:
-- During FY14 the Company invested in the development and
deployment of a new release of eServGlobal's flagship mobile money
platform, PayMobile 3.0. Following the significant new customer
wins in FY13, the rollout of these projects on the new release of
this modular, scalable platform was a key priority in FY14.
o PayMobile 3.0 is now live in several locations with positive
feedback from customers.
o As these projects mature, PayMobile 3.0 will easily expand
capacity to keep pace with growing subscriber numbers and can be
extended to offer additional features as new services launch.
Launching mobile money services in financially underserved markets
is an evolutionary process and PayMobile's platform architecture
will support this type of high-margin extension work.
-- The Company continued to expand its customer footprint with
several new projects, both with traditional telco players and with
new players such as financial institutions. These new projects
positioned eServGlobal in several new geographies.
o eServGlobal signed an MOU with BDCOM Online Ltd, Bangladesh,
to extend mobile financial services across Bangladesh
o Announced a partnership with MNepal Limited, a consortium of
bank and non-bank entities, to offer a mobile financial service
solution in the Nepal market
o The company's mobile money platform, PayMobile was launched
with VivaCell-MTS, Armenia, strengthening the presence within the
VivaCell Group and continuing the geographic diversification of the
customer footprint into Eastern Europe.
-- eServGlobal was named as a winner of Juniper Research's
Future Mobile Awards in the category of best Mobile Money Transfer
solution.
-- Continued progress within the Zain Group, eServGlobal was
featured as a key Technology Partner at the Zain Group's Technology
Conference in November.
HomeSend: International remittance
HomeSend enables consumers to send money to and from mobile
money accounts, payment cards, bank accounts or cash outlets -
regardless of their location or that of the recipient. HomeSend's
vision is to create a global open ecosystem to enable any type of
payment across service providers and industries. HomeSend natively
interfaces with eServGlobal's domestic mobile money platform,
providing a synergy between the two solutions.
HomeSend is a joint venture of MasterCard, eServGlobal and BICS.
Following a five-year strategic partnership between eServGlobal and
BICS, the HomeSend joint venture was successfully launched in April
2014. During the first year of independent operation, the joint
venture has made substantial progress in establishing key
relationships and connections globally.
Developments and highlights throughout the year:
-- Significant progress in corridor deployments continued
throughout the year, driving a strong increase in volume and
transaction numbers. New connections are going live each month,
currently 486 technically live corridors, connecting 99 sending
countries and 32 receiving countries. Some of the significant
expansions include:
o MoneyGram, a leading global money transfer and payment
services company, now has live connections to HomeSend.
o Xpress Money has expanded its reach via HomeSend to Mobile
wallets in countries such as Ghana
o WorldRemit, one of the largest online MTOs, is also now live
from the US leveraging HomeSend.
o Vodafone Fiji (receiver mobile wallet) is live with sending
connections from World Remit and mHITs
o HomeSend and Indosat announced an agreement to make remittance
services available to 60 million subscribers across Indonesia
through Indosat's Dompetku mobile money platform.
-- The pipeline of prospects includes a strong mix of
traditional MTOs, emerging digital players and a range of mobile
money and ewallet offerings across the developing world.
-- New strategic initiatives on how HomeSend can deliver value
beyond remittances such as government payments, aid disbursements
and connection to NGOs to deliver micro-finance initiatives.
-- Integration of HomeSend to MasterCard's MoneySend service has
commenced with completion expected in FY15.
-- Strong outlook for the business; forecasts for FY16 and FY17
are larger than eServGlobal's expectations at the time of the joint
venture formation.
-- HomeSend partner marketing is increasing with recent
campaigns from Xpress Money, World Remit, Vodafone Fiji and mHITs
amongst others.
-- MasterCard reiterated their commitment to the joint venture.
HomeSend is an important part of MasterCard's strategy to target
new flows of payment and electronify remittances.
HomeSend's aspiration is to become the largest processor of
digital remittances and to drive the shift to digital.
MARKET REVIEW
Domestic mobile money services in emerging markets
Market size and potential
There are 7.2 billion mobile connections globally, of which 5.7
billion are in the developing world. In emerging markets,
infrastructure is developing differently to the developed world.
Some countries have opted to skip landlines and go straight to
mobile. The mobile is not just a method of communication, but a
catalyst to access to life-changing services.
Mobile money and mobile financial services in emerging markets
is an opportunity with immeasurable potential. The number of live
deployments has been steadily increasing for the last decade;
however there remains a substantial untapped market. There are 687
mobile network operators in the 'developing world', of these only
156 currently offer mobile money services. Mobile money can be
launched by either mobile network operators or financial
institutions, further extending the potential market. Of the 251
'mobile money for the unbanked' deployments which are currently
live, more than 30% are offered by financial institutions.
eServGlobal is well positioned to service this growing market,
with extensive experience in holding customer balances and an
in-depth understanding of the mobile infrastructure.
The GSMA MMU State of the Industry Report published in 2014
found that 70% of existing mobile money service providers are
planning to increase their investments in mobile money in the
coming year.
Technology and product mix review
As a nascent industry, mobile money service providers must take
an evolutionary approach to launching new services. Industry body,
the GSMA MMU, found that P2P (person-to-person) payments, airtime
recharge and bill payments are offered by the vast majority of
service providers and are usually the first products to be
launched.
As the financial literacy of the market matures, the service
provider can nourish the deployment with new services. In 2013 bulk
payment was adopted faster than any other product at an annualised
growth rate of 617%. There is a demand for faster and more
efficient mechanisms for delivering bulk payments, such as salary
disbursements or government-to-person (G2P) transfers.
eServGlobal's platform approach is optimised to accompany
service providers on the journey from initial essential services to
more advanced features as the subscriber base demands. By adopting
a modular approach, eServGlobal can easily extend the solution to
include new features and expand license capacity.
International Remittance
The World Bank reports that remittances to developing countries
are projected to grow by 5.0% to reach US$435bn in 2014
(accelerating from the 3.4% expansion of 2013); and rise further by
4.4% to US$454bn in 2015. In 2013, remittances were more than three
times larger than ODA (Official Development Assistance) and,
excluding China, significantly exceed foreign direct investment
flows to developing countries.
Forced migration due to conflict is at its highest level since
WW2, affecting more than 51 million people. In addition, forced
migration driven by natural disasters affects another 22 million
people bringing the total to at least 73 million. Increased
migration levels directly impact the levels of international
remittance.
The World Bank highlights the increasing number of electronic
payment service providers (including mobile money providers) as
supporting remittances and financial inclusion. "The establishment
of digital payments from remittances instead of cash is of enormous
benefit to poor people in emerging markets." The World Bank notes
international interoperability of mobile systems and AML-CFT
regulations still create barriers for wider adoption of
international remittances through mobile phones. As an open and
neutral hub, HomeSend is uniquely positioned to address these
barriers and to tap this substantial market.
While the global trend shows a falling average cost for sending
remittance, the cost to Africa remains stubbornly high, above 11%,
with some corridors to Sub-Saharan Africa incurring fees ranging
from 18% to 22% of the transaction amount. HomeSend, with a lower
average transaction fee, is targeting the substantial remittance
flows in these regions. HomeSend represents a more affordable,
instant and safe way to send remittance to emerging countries.
The GSMA MMU State of the Industry Report found that many
service providers of domestic mobile money services intend to
expand their product offering to launch international remittance in
the near future. The number of mobile money services offering
international remittance doubled from 2012 to 2013 and a further
45% those in the study were expecting to launch international
remittance services during 2014.
FINANCIAL REVIEW
The consolidated entity achieved sales revenue for the year of
A$31.3 million (2013: A$31.0 million).
Earnings before interest, tax, depreciation and amortisation
("EBITDA") was A$29.2 million after foreign exchange losses of
A$0.4 million and share based payments of A$0.4 million (2013:
EBITDA was A$7.3 million after foreign exchange gains of A$8.0
million and share based payments of A$0.5 million).
The net result of the consolidated entity for the year to 31
October 2014 was a profit after tax and minority interest for the
period of A$14.8 million (2013: A$10.4 million). Included in this
result was an income tax expense of A$13.5 million (2013: income
tax credit of $5.9 million). Earnings per share were 5.8 cents
(2013: 4.3 cents).
The operating cash flow for the year was a net outflow of A$4.2
million (2013: A$8.7 million). Total cash flow for the period was a
net outflow of A$1.3 million (2013: net inflow of A$0.9 million).
Cash at 31 October 2014 was A$3.7 million.
The full unaudited accounts are presented in the Appendix
4E.
OUTLOOK
eServGlobal has made substantial progress in FY14. The customer
footprint remains strong and the Company continues to aggressively
pursue the sizeable addressable market for the core business.
Investment has been made in the development of the PayMobile
platform, the latest version of which is now in operation at
several customer sites. Feedback is positive, and this highly
scalable and modular platform will open new opportunities with
channel partners and new customer types on both a global and local
level.
eServGlobal will continue to invest in the rapid deployment of
projects to enable the Company to benefit as the customer project
lifecycle moves into higher margin work, such as the expansion of
services, and capacity extensions as subscriber numbers
increase.
The HomeSend Joint Venture has made significant progress.
eServGlobal believes the Joint Venture will realise its ambitions
to be a leading player in global digital payments.
Appendix 4E
Preliminary Final Report
for the year ended 31 October 2014
eServGlobal Limited
ABN 59 052 947 743
1. Reporting Period
Current reporting period : Financial year ended 31 October
2014
Previous reporting period : Financial year ended 31 October
2013
2. Results (unaudited) for announcement to the market
Results A$ '000
--------------------------------------------- --------------------------------------------
Revenue Up 0.8% to 31,261
Profit/(Loss) after tax Up 37.3% to 14,240
Profit/(Loss) after tax attributable
to members Up 37.6% to 14,102
Dividends (distributions) Amount per security Franked amount
per security
-------------------
Current period
Interim dividend Nil c 0%
Final dividend Nil c 0%
--------------------------------------------- ----------------------- -------------------
Previous corresponding period
Interim dividend Nil c 0%
Final dividend Nil c 0%
--------------------------------------------- ----------------------- -------------------
Record date for determining entitlements -
to the dividend.
--------------------------------------------
Brief explanation of the figures above
The consolidated entity achieved sales revenue for the year of $31.3
million (2013: $31.0 million).
Earnings before interest, tax, depreciation and amortisation ("EBITDA")
was $28.6 million after foreign exchange losses of $0.4 million and
share based payments of $0.4 million (2013: EBITDA was $7.3 million
after foreign exchange gains of $8.0 million and share based payments
of $0.5 million).
The net result of the consolidated entity for the year to 31 October
2014 was a profit after tax and minority interest for the period of
$14.2 million (2013: $10.4 million). Included in this result was an
income tax expense of $13.5 million (2013: income tax credit of $5.9
million). Earnings per share were 5.6 cents (2013: 4.3 cents).
The operating cash flow for the year was a net outflow of $4.1 million
(2013: $8.7 million). Total cash flow for the period was a net outflow
of $1.3 million (2013: net inflow of $0.9 million). Cash at 31 October
2014 was $3.7 million.
Subsequent Events
There has not been any matter or circumstance that has arisen since
the end of the financial year that has significantly affected, or may
significantly affect, the operations of the Group, the results of those
operations, or the state of affairs of the Group in future financial
years.
--------------------------------------------------------------------------
3. Consolidated statement of profit or loss and other comprehensive income
Year Ended Year Ended
31 Oct 2014 31 Oct 2013
Note $'000 $'000
------------- -------------
Revenue 31,261 31,003
Cost of sales (13,359) (11,789)
------------- -------------
Gross profit 17,902 19,214
Interest income 30 55
Gain recognised on disposal of HomeSend
business 9 31,684 -
Foreign exchange (loss)/ gain (449) 8,024
Research and development expenses (2,151) (2,717)
Sales and marketing expenses (5,218) (4,683)
Administration expenses (10,900) (12,614)
Share of loss of associate 10 (2,275) -
Earnings before interest expense,
tax,
depreciation and amortisation 28,623 7,279
Amortisation expense - (1,875)
Depreciation expense (584) (468)
Earnings before interest expense
and tax 28,039 4936
Interest expense (284) (441)
Profit before tax 27,755 4,495
Income tax credit/(expense) (13,515) 5,879
------------- -------------
Profit for the year 14,240 10,374
============= =============
Other comprehensive income/(loss)
Items that may be reclassified subsequently
to profit or loss:
Exchange differences arising on
the translation of foreign operations
(nil tax impact) (471) (4,475)
------------- -------------
Total comprehensive income for the
year 13,769 5,899
============= =============
Profit attributable to:
Equity holders of the parent 14,102 10.248
Non controlling interest 138 126
------------- -------------
14,240 10,374
============= =============
Total comprehensive income attributable
to:
Equity holders of the parent 13,599 5,784
Non controlling interest 170 115
------------- -------------
13,769 5,899
============= =============
Earnings per share:
Basic (cents per share) 5.6 4.3
Diluted (cents per share) 5.5 4.2
4. Consolidated statement of financial position
31 Oct 2014 31 Oct 2013
Note $'000 $'000
----- ------------ ------------
Current Assets
Cash and cash equivalents 3,679 4,909
Trade and other receivables 27,604 21,846
Inventories 173 74
Current tax assets 98 4,272
------------ ------------
31,554 31,101
Assets classified as held for sale - 7,754
------------ ------------
Total Current Assets 31,554 38,855
------------ ------------
Non-Current Assets
Investment in associate 10 27,777 -
Property, plant and equipment 3 482
Deferred tax assets 1,701 10,325
Goodwill 3,568 3,523
Other intangible assets 7 5,443 -
Other receivables 9(a) 4,939 -
------------ ------------
Total Non-Current Assets 43,431 14,330
------------ ------------
Total Assets 74,985 53,185
------------ ------------
Current Liabilities
Trade and other payables 11,512 8,143
Borrowings 3,000 3,000
Current tax payables 2,023 150
Provisions 1,174 1,800
Deferred revenue 1,117 1,989
------------ ------------
Total Current Liabilities 18,826 15,082
------------ ------------
Non-Current Liabilities
Provisions 865 749
------------ ------------
Total Non-Current Liabilities 865 749
------------ ------------
Total Liabilities 19,691 15,831
------------ ------------
Net Assets 55,294 37,354
============ ============
Equity
Issued capital 5, 6 110,574 106,695
Reserves 5 (4,155) (4,090)
Accumulated Losses (51,349) (65,451)
------------ ------------
Parent entity interest 55,070 37,154
Non controlling interest 224 200
Total Equity 55,294 37,354
============ ============
5. Consolidated statement of changes in equity
Foreign Employee Attributable
Currency equity-settled to owners
Issued Translation benefits Accumu-lated of the Non controlling
Capital Reserve Reserve Losses parent Interest Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000
--------- ------------- --------------- -------------- ------------- ---------------- --------
Balance at 1
November
2013 106,695 (6,563) 2,473 (65,451) 37,154 200 37,354
========= ============= =============== ============== ============= ================ ========
Profit for the
year - - - 14,102 14,102 138 14,240
Exchange
differences
arising on
translation
of foreign
operations - (503) - - (503) 32 (471)
--------- ------------- --------------- -------------- ------------- ---------------- --------
Total
comprehensive
income for the
year
(net of tax) - (503) - 14,102 13,599 170 13,769
--------- ------------- --------------- -------------- ------------- ---------------- --------
Issue of new
shares
(Note 6) 3,879 - - - 3,879 - 3,879
Payment of
dividends - - - - - (146) (146)
Equity settled
payments - - 438 - 438 - 438
--------- ------------- --------------- -------------- ------------- ---------------- --------
Balance at 31
October
2014 110,574 (7,066) 2,911 (51,349) 55,070 224 55,294
========= ============= =============== ============== ============= ================ ========
Balance at 1
November
2012 90,770 (2,099) 2,017 (75,699) 14,989 85 15,074
========= ============= =============== ============== ============= ================ ========
Profit for the
year - - - 10,248 10,248 126 10,374
Exchange
differences
arising on
translation
of foreign
operations - (4,464) - - (4,464) (11) (4,475)
--------- ------------- --------------- -------------- ------------- ---------------- --------
Total
comprehensive
income for the
year
(net of tax) - (4,464) - 10,248 5,784 115 5,899
--------- ------------- --------------- -------------- ------------- ---------------- --------
Issue of new
shares
(Note 6) 15,925 - - - 15,925 - 15,925
Equity settled
payments - - 456 - 456 - 456
Balance at 31
October
2013 106,695 (6,563) 2,473 (65,451) 37,154 200 37,354
========= ============= =============== ============== ============= ================ ========
6. Issue of new shares
During the current year the company issued a total of 5,928,055
shares (2013: 52,198,291), raising a total of $3.879 million net of
expenses (2013: $15.925 million).
A total of 4,500,000 shares were issued by way of a broker
managed placement of shares to Australian investors at an issue
price of $0.75 per share, raising a total of $3.365 million net of
expenses.
1,428,055 shares were issued during the year through the
exercise of employee share options at an option price of $0.36 per
share, raising $0.514 million.
.
7. Other intangible assets
During the financial year eServGlobal commenced development of a
new technology platform designed to strengthen the company's
position as the leading mobile money solution provider. The
development costs incurred in the year of $5.443 million have been
capitalised.
8. Consolidated statement of cash flows
Year Ended Year Ended
31 Oct 2014 31 Oct 2013
$'000 $'000
------------- -------------
Cash Flows from Operating Activities
Receipts from customers 24,290 23,851
Payments to suppliers and employees (30,100) (31,058)
Refund of research & development tax
credits 2,738 -
Interest and other finance cost paid (282) (591)
Income tax paid (720) (1,088)
Net cash used in operating activities (4,074) (8,886)
------------- -------------
Cash Flows From Investing Activities
Proceeds from HomeSend business divestment,
net of transaction costs 5,418 -
Interest received 11 11
Payment for property, plant and equipment (76) (111)
Software development costs (6,327) (1,839)
Net cash used in investing activities (974) (1,939)
------------- -------------
Cash Flows From Financing Activities
Proceeds from issue of shares 3,889 16,802
Payment for share issue costs (10) (877)
Dividend paid by controlled entity
to non-controlling interest (146) -
Proceeds from borrowings - 3,000
Repayment of borrowings - (7,200)
Net cash provided by financing activities 3,733 11,725
------------- -------------
Net (decrease)/ increase in Cash and
Cash Equivalents (1,315) 900
Cash At The Beginning Of The Year 4,909 3,794
Effects of exchange rate changes on
the balance of cash held in foreign
currencies 85 215
------------- -------------
Cash and Cash Equivalents At The End
Of The Year 3,679 4,909
============= =============
8.1 Notes to the consolidated statement of cash flows
31 Oct 2014 31 Oct 2013
$'000 $'000
a) Reconciliation of cash
Cash and cash equivalents 3,679 4,909
-------------- -------------
Year Ended Year Ended
31 Oct 2014 31 Oct 2013
$'000 $'000
b) Reconciliation of profit
for the year to net cash flows
from operating activities
Profit for the year 14,240 10,374
Interest received (11) (11)
Depreciation of non-current
assets 584 468
Amortisation of non-current
assets - 1,875
(Profit)/Loss on disposal of
non-current assets 2 (10)
Foreign exchange (gain)/loss,
including changes in foreign
currency net assets and liabilities (718) (6,534)
Equity settled share-based payments 438 456
Gain on disposal of business (31,684) -
Share of loss of associate 2,275 -
(Increase)/decrease in current
income tax balances 6,048 (4,101)
(Increase)/decrease in deferred
tax balances 8,624 (4,320)
Changes in net assets and liabilities:
- (Increase)/decrease in assets:
- Trade Receivables (5,758) (7,752)
- Inventories (99) 84
Increase/(decrease) in liabilities:
- Trade and other payables 3,369 327
- Provisions (511) 394
- Other liabilities (873) (136)
Net cash used in operating activities (4,074) (8,886)
------------- -------------
9. Disposal of HomeSend business
On 19 December 2013 the Group announced the sale of its
international mobile money transfer business, HomeSend to a newly
formed entity, HomeSend SRCL, which is a joint venture between
eServGlobal, MasterCard and BICS.
The transaction was subject to certain conditions precedent and
was subsequently completed on 3 April 2014.
31 October
2014
$'000
(a) Consideration received
Cash consideration received 8,205
Deferred sales proceeds (i) 5,134
-----------
Total consideration received 13,339
-----------
(i) Deferred sales proceeds, which relate to the sale of
HomeSend to the associate company HomeSend SRCL, are held
in escrow and are subject to indemnification provisions
within the transaction agreement. The funds are due to
be paid to the Company on 3 April 2016, two years after
the transaction agreement date.
(b) Gain on disposal of business
Consideration received (a) 13,339
Plus: fair value of investment retained 31,125
Less: business net assets disposed (8,700)
Less: disposal related costs (4,080)
-----------
Gain on disposal 31,684
-----------
Net assets disposed comprise of:
Allocated goodwill 3,540
Intangible assets (capitalised R&D expenditure) 5,160
Net assets disposed of 8,700
-----------
10. Investment in associate
Details of the material investment in associate at the end of
the reporting period are as follows:
Name of Principal activity Place of incorporation Proportion of ownership
associate and principal interest and voting rights
place of business held by the Group
----------- --------------------------- ----------------------- ------------------------------
31 October 31 October
2014 2013
----------- --------------------------- ----------------------- -------------- --------------
Homesend Provision of international Brussels, Belgium 35% N/A
SRCL (i) mobile money services
----------- --------------------------- ----------------------- -------------- --------------
(i) HomeSend SRCL was formed on 3 April 2014. The directors have
determined that the Group exercises significant influence over
HomeSend SRCL by virtue of its 35% voting power in shareholders
meetings and its contractual right to appoint two out of six
directors to the board of directors of that company.
The associate is accounted for using the equity method.
Reconciliation of the carrying amount of the investment in
associate:
31 October
2014
$000
Initial recognition of investment in associate 31,125
Share of current period loss of the associate (2,275)
Effects of foreign currency exchange movements (1,073)
-----------
Carrying value of investment 27,777
11. Net Tangible Assets per security
31 October 2014 31 October 2013
Net tangible assets per 18 cents 10.5 cents
security
------------------------ ---------------- ----------------
12. Dividends
Amount Amount Franked Amount Date paid/
per security amount per security payable
per security of foreign
at 30% source
tax dividend
-----------
Interim dividend: Current Nil N/A N/A N/A N/A
year
Previous year Nil N/A N/A N/A N/A
-----------
Final dividend: Current Nil N/A N/A N/A N/A
year
Previous year Nil N/A N/A N/A N/A
---------------------------- ------- -------------- -------------- -------------- -----------
There are no Dividend Reinvestment Plans.
13. Control gained over entities
N/A
13.1 Loss of control over entities
N/A
14. Subsequent Events
There has not been any matter or circumstance that has arisen
since the end of the financial year, that has significantly
affected, or may significantly affect, the operations of the Group,
the results of those operations, or the state of affairs of the
Group in future financial years.
15. Commentary on Results for the Period
Refer to the explanation of results in Section 2.
16. Accounts
This report is based on accounts which are in the process of
being audited.
PAOLO MONTESSORI
Director
19 December 2014
This information is provided by RNS
The company news service from the London Stock Exchange
END
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