TIDMESG
RNS Number : 7777W
eServGlobal Limited
24 November 2010
ESERVGLOBAL LIMITED 2010 ANNUAL GENERAL MEETING
CHAIRMAN'S AND CEO'S ADDRESSES
25 November 2010
eServGlobal Limited (ASX: ESV & LSE: ESG) today released the
addresses by Chairman David Smart and Chief Executive Officer
Richard Mathews at eServGlobal's 2010 annual general meeting of
shareholders.
Those addresses are attached to this announcement.
ENDS
eServGlobal Limited is listed on the Australian Securities
Exchange (ASX: ESV) and the London Stock Exchange AIM market (LSE:
ESG). More information can be found at: www.eservglobal.com
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
Corporate Broking, Chloe Ponsonby
Sydney, 25 November 2010
eServGlobal Limited 2010 Annual General Meeting: Chairman's
Address
Ladies and Gentlemen,
The 2010 financial year was largely dominated by the significant
activity relating to the sale of the USP business to Oracle
Corporation, which was completed in early August 2010. While it was
certainly a mammoth task for all involved, the Board believes that
the benefit to the company's shareholders was well worth the time,
effort and cost involved in the process.
With the sale of the USP products, the business has moved from
the Intelligent Network (IN) market, dominated by large
multinational telecommunications companies (such as Ericcson,
Alcatel-Lucent and Nokia Siemens), to the Mobile Money market for
which there presently is no clear market leader.
Turning to the company's remaining businesses, our strategy for
the recharge business has not changed. That is, we will continue to
provide solutions to telecommunications carriers across the globe,
with particular focus on emerging markets in the Middle East,
Africa, Asia and Latin America, which are amongst the fastest
growing telecoms markets in the world. Our international remittance
platform (HomeSend) will remain focused on the world's vast
unbanked population.
We all know now that the global recession affected all countries
and all markets, with an unprecedented collapse in first credit
then new investment activity. Few of our customers escaped the
difficulties and together with the anticipated decrease in revenue
as a direct consequence of key USP customers deferring traditional
end of financial year orders, revenues declined by 47% to AUD$78
million.
As foreshadowed at the 2009 Annual General Meeting, we revised
our forecasts down in the first half of the year and initiated cost
reduction programs. For the full year, the total annualised cost
saving made during the 12 months was AUD$46 million.
The net result of the consolidated entity for the full year was
a loss after tax and minority interest of AUD$32 million (2009:
loss of AUD$35 million).
Following the Oracle transaction, the 2011 financial year will
be a year of transition in which eServGlobal's management and
organisational structure will be focused on growing the remaining
businesses. The Mobile Money (notably HomeSend) and recharge
businesses represent exciting growth opportunities, albeit they are
at varying stages of development and revenue generating
potential.
The Mobile Money market provides a great opportunity for
organisations such as ours to build products and provide services
that are new, unique and dare I say it, revolutionary.
The USP operations and customer base made up the bulk of our
Asia Pacific business. Following their disposal, we reviewed the
makeup of the Board and concluded that a greater representation by
European based directors was more appropriate going forward. In
July, Ian Buddery resigned as a director and was replaced by Jamie
Brooke who represents our largest European shareholder. It is our
intention to continue to align the Board representation with our
business and customer operations
During the year, 17.5% (34,480,569) of the company's shares have
moved from being held by holders on the Australian Securities
Exchange (ASX) to being held by holders on the London Stock
Exchange (AIM).
While there was no change in the number of issued shares during
the FY2010 year (196,847,706), the number of options reduced from
3,258,805 to 902,855 as at the end of October.
At this meeting, shareholders have been asked to consider, and
if they think fit, approve a resolution to reduce the capital of
the company, which will involve a return of capital to all
shareholders. If approved, all shareholders will receive a cash
payment of AUD$0.33 per share held on a specified record date in
the future. To date we have not received either a class ruling or a
private ruling from the ATO supporting the taxation treatment of
this capital reduction. As such, if this resolution is approved by
shareholders today, it will still be contingent upon the ATO
issuing those supportive rulings.
The company would like to announce some personnel changes, to
take effect immediately at the end of this meeting. Richard Mathews
will stand down as the company's CEO and will become the new
non-executive Chairman of the Board. Craig Halliday, presently the
company's COO, will step into the CEO role.
These changes have been made for a number of reasons:-
1. Richard's focus has been on M&A activities and on the
strategic direction and options for the company going forward. His
move to the Chairman's role will allow him to more effectively
concentrate on these important areas
2. The operations, employees and customers of the business are
largely European, African or Middle Eastern based. Craig is based
in Europe and has done a terrific job of running the field
operations of the business to date and has demonstrated a strong
ability to drive growth, establish and enhance customer
relationships and manage all operational aspects of the business.
The board has every confidence in his ability to run the business
in its entirety.
3. Following the sale of the USP business to Oracle, the Board
believes that the reduced size and complexity of the on-going
business operations do not warrant both a CEO and COO; albeit the
Company will continue to benefit from the continued contribution of
the existing team under a more effective organisational
structure
I will continue as both a non-executive director of the company
and as chairman of the audit committee subject of course to the
vote of the meeting on my re-election.
Overall, global economic conditions remain challenging and
therefore we will maintain our conservative approach to financial
planning. However we continue to have every confidence in our
people, our products and our customers.
I will now ask our Chief Executive Officer, Richard Mathews, to
address you.
David Smart
Chairman
Sydney, 25 November 2010
eServGlobal Limited 2010 Annual General Meeting: CEO's
Address
What a difference a year makes. This time last year, we
announced a $35 million loss, had little backlog and an
unsatisfactory sales pipeline.
Before the announcement of a change in management mid last year,
the stock was trading in the early 30's which was just above its
net asset value. The market cap of the business was AUD$54
million.
At this meeting, we are recommending a AUD$65 million return of
capital (AUD$0.33 cents per share), we still have AUD$24 million in
escrow and the stock price has doubled. Currently the company has a
market cap of approximately AUD$127 million.
Of course, the key reason that we are in a position to return
capital to our shareholders is due to the sale of our USP business
to Oracle for AUD$107 million.
We are sure that Oracle, with their global sales and marketing
expertise and reach, will take the USP platform to another level.
This view was of course reflected in the price they were prepared
to pay for the asset. We are of course continuing to work closely
with them as we transition customers and contracts. We will also
continue to partner with them for many years to come given we have
many joint customers.
Following the USP sale, our business is now smaller than it was.
Between February 2009 and July 2009 we reduced our contractor and
employee headcount by 193 (27%). Oracle took over another 194
employees (28%) hence we have approximately 45% of the total number
of staff we had before the Global Financial Crisis. We have already
and will continue to move development and support functions from
high cost economies to lower cost economies. There is still some
headcount alignment required between our revenue streams and cost
structures which we will address during this financial year.
Along with many other Australian businesses, we have felt the
effects of the stronger Australian dollar, recording a AUD$5.8
million foreign exchange loss for the year. While there appears to
be no reason why the Australian dollar will depreciate in the
foreseeable future, our remaining revenue and costs are mainly in
Euros which provides a natural foreign exchange hedge.
The 2010 financial year saw the first three new products go
live, all of which have been retained in the current business.
(1) FlexiContent - this service was used by Orange affiliates
throughout Africa for both the African Cup of Nations and the World
Cup football tournament
(2) PromoMax - this year our first PromoMax customer went live
on their own machines. We also provided PromoMax in a "Software as
a Service" format to one of our current customers. Both
implementations were in Africa.
(3) HomeSend - we went live during the year with a number of
Mobile Network Operators
We are excited by these new products and by the future of the
business. In the software business the first customer is always the
most expensive to acquire so we are looking forward to expanding
the customer base for these products during the upcoming year.
Following the close of the Oracle transaction, our first
priority has been to educate the market on the breadth and depth of
our Mobile Money offering. We have been supplying Mobile Money
functionality to our customers for over 12 years. Our customers
have already been using our products and services to provide Mobile
Money offering to their subscribers and we now need to take these
offerings and build them back into our standard product.
In this market, there are two distinctly different markets
(banked subscribers and unbanked subscribers) which have different
characteristics and requirements. Currently we are very well
positioned in the unbanked segment with our HomeSend solution and
our relationship with Belgacom International Carrier Services
(BICS).
Now that HomeSend is fully operational, we will work with BICS
to add more operators to the network. We have also begun
discussions with Mobile Transfer Organisations and banks to enable
a complete end to end solution.
There has been heavy investment in the Mobile Money space during
the last five years. Just last week, the Bill and Melinda Gates
Foundation pledged US$500 million to help the world's poorest
people to save using systems like branchless banking and mobile
phones.
The analysts' view is that it is a race to become the market
leader and while it is impossible to predict the future, we are
positioned extremely well to be part of the solution. We expect to
continue to be at the forefront of the Mobile Money revolution and
look forward to both the challenges and potential rewards that come
with rapidly evolving technologies.
Our goal remains to achieve consistent, profitable growth
through supporting our customers and achieving new sales.
I would like to thank our staff, those who went across to Oracle
and of course our remaining staff for their commitment and teamwork
which enabled us to achieve what we have over the last year and
whose hard work will allow us to succeed in the future.
I again thank our shareholders for their support and I look
forward to our continuing success.
Richard Mathews
Chief Executive Officer
This information is provided by RNS
The company news service from the London Stock Exchange
END
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