TIDMESG
RNS Number : 7535W
eServGlobal Limited
31 January 2013
eServGlobal Limited
ABN 59 052 947 743
Financial report for the financial year ended 31 October
2012
Annual financial report
For the financial year ended
31 October 2012
Contents
Page
Directors' report 2
Auditor's independence declaration 15
Corporate governance statement 16
Independent audit report 24
Directors' declaration 26
Consolidated statement of comprehensive
income 27
Consolidated statement of financial
position 28
Consolidated statement of changes in
equity 29
Consolidated statement of cash flows 30
Notes to the financial statements 31
Additional securities exchange information 78
Directors' report
The directors of eServGlobal Limited submit herewith
the financial report for the financial year ended
31 October 2012.
The names and particulars of the directors of the
company during or since the end of the financial
year are:
Name Particulars
---------------- ------------------------------------------------
Richard Mathews Non-executive Chairman.
Richard is the Non-Executive Chairman
and former Chief Executive Officer of
eServGlobal. He has over 20 years' management
experience in telecommunications, software
and investment. He is a founding partner
of MHB Holdings. Previously, Mr. Mathews
was CEO of Mincom, Australia's largest
enterprise software company, increasing
the share price from $2.50 to $8.77 in
a two-year period. He has also held the
role of Senior Vice President, International
at J.D. Edwards and is currently managing
director of listed company RungePincockMinarco
Limited.
He holds a Bachelor of Commerce and a
Bachelor of Science and is an Associate
Chartered Accountant.
Richard was appointed as a director in
July 2009.
David Smart Non-executive Director and Chairman of
the Audit Committee.
David held senior executive positions
in large scale manufacturing and merchandising
businesses for more than 20 years. This
includes 13 years as Chief Financial
Officer of Tubemakers of Australia Limited
and Metal Manufactures Limited. He is
a non-executive director of a listed
company Saunders International Limited.
David holds a Bachelor of Commerce and
MBA from the University of New South
Wales and is a Fellow of the Australian
Society of Certified Practicing Accountants.
David has been a member of the Board
since July 2000.
François Non-executive Director and Chairman of
Barrault the Remuneration and Nomination Committee.
François is the founder and chairman
of FDB Partners, an investment and consulting
firm that specializes in technology,
renewable energy and publishing. He has
previously served as CEO of BT Global
services, President of BT International,
and as a member of the board and the
operating committee of BT Group PLC.
His extensive experience includes key
roles within Lucent Technologies such
as President, Mobility International
and President and CEO for the EMEA region.
Prior to Lucent, he worked at Ascend
Communications, where he held the position
of Senior Vice President, International.
He has also held executive positions
within IBM, Computervision/Prime and
Stratus and was co-founder and Chairman
of the Board of Astria, an e-commerce
software supplier.
He holds a Master of Science (D.E.A)
in Robotics/AI and an E.D.P in Engineering
from the Ecole Centrale de Nantes.
François has been a member of the
Board since March 2003.
Directors' report
James Brooke Non-executive Director.
James is a Chartered Accountant with
experience in strategic consulting, finance
and investment. He is currently a fund
manager at Henderson in the Henderson
Volantis Small Cap Team with responsibility
for active corporate engagement. He previously
worked in the private equity industry
for ten years, initially with 3i in the
London buyout team and more recently
as a venture capitalist with Quester
where he specialized in IT services and
telecommunications investments. Prior
to this, he was with Deloitte's strategic
consultancy business after having trained
with them as a Chartered Accountant.
He is a non-executive Director of Lochard
Energy Group PLC and Renovo PLC.
He holds a BA in Mathematics from Oxford
University and an MSc in Telecommunications
from University College London.
Craig Halliday Executive Director.
Craig is the Chief Executive Officer
and Managing Director.
Prior to eServGlobal, Craig served as
Executive President of Field Operations
(COO) at Mincom, where he achieved record-breaking
growth in both revenues and profitability.
He has worked in the high-tech industry
as an executive and investor since 1996
and has held senior roles including President
of PeopleSoft Japan and various management
positions within J.D. Edwards.
Craig holds a Bachelor of Science from
Edinburgh University and is a member
of the Institute of Chartered Accountants
in England and Wales.
Stephen Baldwin Non-executive Director
Stephen is a qualified chartered accountant
with over 25 years of business experience.
He commenced his career with Price Waterhouse
and had a total of 10 years with the
firm in three different countries. He
was subsequently employed in the funds
management industry for 12 years, initially
with Hambro-Grantham and then with Colonial
First State (where he was that group's
Head of Private Equity from 2000 to 2006).
He has extensive Board experience, primarily
with unlisted companies but was also
the sole executive director of a listed
investment vehicle for a number of years.
Other current roles include advising
one of Australia's larger superannuation
funds on their global private equity
program.
Stephen holds a Bachelor of Commerce
(Honours) from the University of Cape
Town and is a member of the Institute
of Chartered Accountants of Australia.
Stephen was appointed a director and
a member of the Audit and Remuneration
and Nomination Committees on 25 November
2011.
Directors' report
Directorships of other listed companies
Directorships of other listed companies held by Directors in the
3 years immediately before the end of the financial year are as
follows:
Name Company Period of Directorship
---------------- ----------------------- -------------------------
Richard Mathews RungePincockMinarco 28 August 2012 - Ongoing
Limited
David Smart Saunders International 22 October 2007 -
Limited Ongoing
James Brooke Lochard Energy 14 December 2010-
Group plc Ongoing
Renovo plc 30 June 2011- Ongoing
Company Secretary
Tom Rowe has served as Company Secretary of eServGlobal since 6
April 2011. He is a Corporate and Commercial Lawyer practising with
Simpsons Solicitors with a specialty in corporate transactions,
corporate governance and listed company secretarial practice. Mr
Rowe holds a BA LLB (Hons) from the University of Adelaide and is
an Associate of the Chartered Institute of Secretaries.
Principal activities
eServGlobal Limited specializes in Mobile Money
solutions and Value-Added Services (VAS), to help
Mobile Service Providers increase their revenue
and gain and maintain customer ownership. eServGlobal
invests heavily in product development, using carrier-grade,
next-generation technology and aligning with the
requirements of more than 95 customers in over 50
countries.
For more than 25 years mobile, fixed, Internet and
telecom providers have used eServGlobal solutions
to lead and innovate in their local markets, leveraging
their core assets and their trusted agent and subscriber
relationships.
With 13 offices globally, eServGlobal provides full
"end-to-end" and "any account to any account" Mobile
Money Services and International Remittance Services.
eServGlobal's HomeSend solution is the only mobile-centric
international remittance hub to gain endorsement
from the GSM Association.
eServGlobal's Value-Added Services in promotions,
loyalty and messaging enable service providers to
engage with their subscribers in a personalized
and dynamic manner.
To reduce time-to market and to meet the needs of
operators and banks, eServGlobal provides multiple
licensing alternatives as well as SaaS-based products
and services.
Directors' report
Review of operations
This report is to be read in conjunction with other
reports issued contemporaneously.
The consolidated entity achieved sales revenue for
the year of $28.1million (four month period to 31
October 2011 $7.0 million).
The EBITDA loss was $8.7 million after non-recurring
costs of $2.9 million, foreign exchange losses of
$3.4 million and share based payments of $0.6 million
(four month period to 31 October 2011 EBITDA loss
$6.2 million after non-recurring costs of $0.2 million,
foreign exchange losses of $0.6 million and share
based payments of $0.3 million). The net result
of the consolidated entity for the year to 31 October
2012 was a loss after tax and minority interest
for the year of $15.7 million (four month period
to 31 October 2011 loss after tax and minority interest
$9.3 million). Loss per share was 8.0 cents (four
month period to 31 October 2011: loss per share:
4.7 cents).
The operating cash flow for the year was a net outflow
of $21.2 million. Total cash flow for the year was
a net outflow of $6.3 million. Cash at 31 October
2012 was $3.8 million.
Changes in state of affairs
There were no significant changes in the state of
affairs of the Group during the financial year.
Subsequent Events
The Company raised GBP3.740 million ($5.736 million)
through the placing (the "First Placing") of 17,807,815
new ordinary shares (the "First Placing Shares")
with institutional investors in the UK and approximately
GBP2.457 million ($3.768 million) by means of a
direct subscription for 11,700,000 new ordinary
shares (the "Subscription Shares") by investors
in Australia (the "Subscription"). The issue price
for the First Placing Shares and the Subscription
Shares (together the "New Shares") was 21 pence
($0.32) per share.
The First Placing and Subscription resulted in the
issue of a total of 29,507,815 new ordinary fully
paid shares which represented 14.99 percent of the
current issued ordinary share capital of the Company.
Following completion of the First Placing and Subscription,
the Company had 226,355,521 ordinary shares in issue
(the "Enlarged Share Capital").
The Company subsequently raised a further GBP4.765
million ($7.220 million) through the placing (the
"Second Placing") of 22,690,476 new ordinary shares
(the "Second Placing Shares") with institutional
investors in the UK.
The issue price for the Second Placing Shares was
also 21 pence ($0.32) per share. The Second Placing
Shares represented approximately 10 percent of the
Enlarged Share Capital. Following completion of
the First Placing, Subscription and Second Placing
the Company has 249,045,997 ordinary shares in issue.
The proceeds of the First Placing and Subscription
will strengthen the balance sheet, enhance the Company's
ability to compete for larger contracts and partnerships,
and will enable the Company to accelerate technology
development for HomeSend and mobile money services.
The proceeds of the Second Placing will accelerate
payment of the Company's $7.2 million outstanding
shareholder loans. On 29(th) January 2013 the Company
gave seven days irrevocable notice to the lenders
of its intention to repay these loans.
Future developments
Disclosure of information regarding likely developments
in the operations of the Group in future financial
years and the expected results of those operations
is likely to result in unreasonable prejudice to
the Group. Accordingly, this information has not
been disclosed in this report.
Directors' report
Share options
eServGlobal Employee Share Option Plan
The company has an ownership-based remuneration
scheme for directors, key management personnel and
employees. In accordance with the provisions of
the scheme, directors and employees may be granted
options to acquire ordinary shares in the company.
The Board believes that the options scheme has a
significant role to play in motivating employees
to help ensure the continued performance of the
company. The exercise of any share options is not
dependant on any performance criteria, however,
is dependent on a period of service relative to
the vesting dates.
Share options granted to directors and senior management
During the financial year and up to the date of
this report the company granted 10,200,000 options
to the directors and senior management of the entity
(four months to 31 October 2011: nil). Further details
of the executive and employee share option plan
are disclosed in Note 6 to the financial statements.
Details of unissued shares under option as at the date of this
report are:
Number of Exercise
shares under Class of price of Expiry date
Issuing Entity option shares option of options
--------------- ------------- -------- --------- -------------
eServGlobal
Limited 1,500,000 Ordinary $0.36 27 April 2017
--------------- ------------- -------- --------- -------------
eServGlobal
Limited 7,700,000 Ordinary $0.36 14 May 2017
--------------- ------------- -------- --------- -------------
During the financial year and up to the date of this report,
there were no options exercised.
Indemnification of officers and auditors
During the financial year, the company paid a premium
in respect of a contract insuring the directors
of the company (as named above), the company secretary,
and all key management personnel officers of the
company and of any related body corporate against
any liability incurred as a director, secretary
or key management personnel officer to the extent
permitted by the Corporations Act 2001. The contract
of insurance prohibits disclosure of the nature
of the liability cover and the amount of the premium.
During the financial year the company agreed to
indemnify, to the extent permitted by the Corporations
Act, the directors, company secretary and chief
financial officer against any liability incurred
as an officer of the company.
The company has not otherwise, during or since the
financial year, indemnified or agreed to indemnify
an officer or auditor of the company or of any related
body corporate, against any liability incurred by
such an officer or auditor.
Directors' attendance at Board and Committee meetings held
during the financial year
Board of Directors Audit Committee Remuneration
and Nomination
Committee
----------------- --------------------- ------------------- -------------------
Directors Held Attended Held(*) Attended Held(*) Attended
(*)
----------------- ------- ------------ -------- --------- -------- ---------
David Smart 14 11 4 4 - -
----------------- ------- ------------ -------- --------- -------- ---------
François
Barrault 13 11 - - 4 4
----------------- ------- ------------ -------- --------- -------- ---------
Richard Mathews 13 12 - - - -
----------------- ------- ------------ -------- --------- -------- ---------
James Brooke 13 10 - - - -
----------------- ------- ------------ -------- --------- -------- ---------
Stephen Baldwin 12 12 4 4 4 4
----------------- ------- ------------ -------- --------- -------- ---------
Craig Halliday 13 13 - - - -
----------------- ------- ------------ -------- --------- -------- ---------
(*) Held during term of director's appointment to Board, Audit
or Remuneration and Nomination Committees.
Board meetings held and attended by David Smart and Stephen
Baldwin includes a special purpose committee comprised solely of
those two directors.
Directors' report
Non-audit services
The directors are satisfied that the provision of non-audit
services, during the financial year, by the auditor (or by another
person or firm on the auditor's behalf) is compatible with the
general standard of independence for auditors imposed by the
Corporations Act 2001.
The audit committee, in conjunction with the Chief Financial
Officer, assesses the provision of non-audit services by the
auditors to ensure that the auditor independence requirements of
the Corporations Act 2001 in relation to the audit are met.
Details of amounts paid or payable to the auditor for non-audit
services provided during the financial year by the auditor are
outlined in Note 7 to the financial statements.
Auditor's independence declaration
The auditor's independence declaration is included on page 15 of
the financial report.
Rounding off of amounts
The company is a company of the kind referred to
in ASIC Class Order 98/0100, dated 10 July 1998,
and in accordance with that Class Order, amounts
in the directors' report and the financial report
are rounded off to the nearest thousand dollars
unless otherwise indicated.
Directors' report
Remuneration Report
Determining remuneration policy for directors and
key management personnel, and its relationship to
eServGlobal's performance
The Company is listed on both the Australian Securities
Exchange and the London Stock Exchange (AIM). It
is an international group which is faced with all
of the market pressures that flow in such circumstances.
It must compete successfully with other international
organisations that are substantially larger and
which have the ability to draw on enormous resources.
Our employees are based in diverse parts of the
globe and regularly must travel to work in remote
locations. The remuneration policies must be appropriate
to these circumstances.
In determining the appropriate remuneration policies
for the Group, the Board believes that the salary
packages must be sufficient, in the international
marketplace in which the Group operates, to attract,
retain and motivate high calibre, hard working,
dedicated employees, who have the knowledge and
skills appropriate for the business. In this regard,
a component of the salary package for employees
is paid after the results of a financial year are
completed, and the entitlement is based primarily
on the results achieved by the Group. The Board's
broad policy is implemented through its Remuneration
and Nominations Committee.
Director and key management personnel details
The following persons acted as directors of the Company and the
Group during or since the end of the financial year:
-- Richard Mathews (Non-executive Chairman)
-- David Smart (Non-executive director)
-- François Barrault (Non-executive director)
-- James Brooke (Non-executive director)
-- Craig Halliday (Chief Executive Officer and Managing Director)
-- Stephen Baldwin (Non-executive director, appointed 25 November 2011)
The key management personnel of the Group for the financial year
to 31 October 2012 were:
-- Craig Halliday (Chief Executive Officer)
-- Stephen Blundell (Chief Financial Officer)
-- Remi Arame (Vice President Sales)
-- Paolo Montessori (VP Mobile Money and appointed Chief
Operating Officer since the end of the financial year)
Directors' report
Elements of director and key management personnel
remuneration
Non-executive directors are paid directors' fees and, in the
case of those who are Australian based, compulsory superannuation
fund contributions are made on their behalf. The Board reviews the
level of fees from time to time, and sets individual non-executive
directors fees based on the levels of fees for comparable listed
companies in the appropriate parts of the world. The non-executive
directors are appointed by either the Board or shareholder vote and
any appointment is subject to re-election on retirement required at
Annual General Meetings.
The Chief Executive Officer (CEO) is remunerated on a salary
package that includes a base salary, and health plan contributions
and a substantial portion that is a variable component, which is
dependent on agreed performance objectives. The variable component
comprises elements relating to achievement of financial plan and
specific business objectives. The CEO is a permanent employee with
no fixed employment term and a notice period of six months required
by either party.
The Chief Financial Officer (CFO) is remunerated on a salary
package basis that includes a base salary, pension contributions
and a portion that is a variable component which is dependent on
agreed performance objectives. The variable component comprises
elements relating to achievement of financial plan and specific
business objectives. The CFO is a permanent employee with no fixed
employment term and a notice period of six months required by
either party.
The Vice President Sales is remunerated on a salary package that
includes a base salary, a portion that is a variable component
(which is dependent on agreed performance objectives relating to
sales), pension contributions and various allowances such as
housing and education. The Vice President Sales is a permanent
employee with no fixed employment term and a notice period of
thirty days required by either party.
The Chief Operating Officer (COO) is remunerated on a salary
package basis that includes a base salary, pension contributions
and a portion that is a variable component which is dependent on
agreed performance objectives. The variable component comprises
elements relating to achievement of financial plan and specific
business objectives. The COO is a permanent employee with no fixed
employment term and a notice period of three months required by
either party.
Directors' report
Elements of remuneration which are dependent on
company performance
The Board believes that it is critical that the
specified employees are driven by the financial
performance of eServGlobal and, as detailed below,
has structured key management personnel packages
so that a substantial portion of the variable component
of their packages is directly linked to financial
outcomes of eServGlobal. The targets are established
annually and are approved by the Board at the same
time as approval of the Group's business plan. The
two key measures of this are: annual revenue and
earnings before interest, tax, depreciation and
amortisation components. This component is confirmed
in conjunction with the completion of the financial
statements. The COO, Vice President of Sales and
CFO variable component is earned in full by reference
to the financial result of the company. The CEO
variable component is earned 50% on the financial
result of the company and 50% on strategic and stakeholder
management objectives. These targets are selected
to ensure alignment of shareholders' interests with
key management personnel remuneration.
The tables below set out summary information about the Group's
earnings and movements in shareholder wealth for the three years to
June 2011, the four month period to 31 October 2011 and the year to
31 October 2012.
31 October 31 October 30 June 30 June 30 June
2012 2011 2011 2010 2009
$'000 $'000 $'000 $'000 $'000
-------------------- ----------- ----------- -------- --------- ---------
Revenue 28,070 7,017 42,808 78,015 147,246
EBITDA (8,656) (6,186) 52,173 (20,574) (5,261)
Net (loss)/ profit
after tax (15,589) (9,258) 39,159 (32,286) (34,525)
-------------------- ----------- ----------- -------- --------- ---------
31 October 31 October 30 June 30 June 30 June
2012 2011 2011 2010 2009
------------------------- ----------- ----------- -------- -------- --------
Share price at start
of year $0.520 $0.730 $0.600 $0.455 $0.820
Share price at end
of year $0.200 $0.520 $0.730 $0.600 $0.455
Interim dividend - - - -
- 12.1
Final dividend cps - - -
- 16.9
Capital distribution cps - - -
Basic (loss)/earnings
per share (8.0) (4.7) 19.8 (16.5) (20.1)
Diluted (loss)/earnings
per share (8.0) (4.7) 19.8 (16.5) (20.1)
------------------------- ----------- ----------- -------- -------- --------
Directors' report
The directors and the group's key management personnel received,
or will receive, the following amounts as compensation for their
services as directors and key management personnel of the Group
during the financial year:
Post Share
Employment based
Short-term employee benefits benefits payments
--------------- -------------------------------------- ----------------- --------- ------------ ---------- -------------
Percentage
Bonus of
(incl. remuneration
variable Super-annuation related
Salary pay Termination to
2012 & fees component) Non-monetary Options Benefits Total performance
--------------- ---------- ----------- ------------- ----------------- --------- ------------ ---------- -------------
$ $ $ $ $ $ $ %
--------------- ---------- ----------- ------------- ----------------- --------- ------------ ---------- -------------
Non-executive
Directors
R Mathews 140,000 - - 12,600 - - 152,600 -
S Baldwin
(vi) 87,083 - - - - - 87,083
F Barrault 82,004 - - - - - 82,004 -
J Brooke - - - - - - - -
(i)
D Smart 85,000 - - 7,650 - - 92,650 -
Group's
Key Management
Personnel
R Arame
(ii) (iii) 253,849 194,579 41,762 35,429 73,058 - 598,677 45%
S Blundell
(ii) (iv) 246,077 108,493 - 13,772 73,058 - 441,400 41%
C Halliday
(ii) (v) 506,040 542,529 20,399 - 144,508 - 1,213,476 57%
P Montessori
(ii) (iii)
(vii) 187,500 91,689 - - 18,678 - 297,867 37%
Total 1,587,553 937,290 62,161 69,451 309,302 - 2,965,757 -
--------------- ---------- ----------- ------------- ----------------- --------- ------------ ---------- -------------
(i) J Brooke has agreed that he receive no benefit for his services.
(ii) Key management personnel are remunerated on a salary
package basis that includes an appropriate portion that is a
variable component which is dependent on company performance. Key
management personnel had their variable pay components confirmed in
conjunction with the completion of the financial statements. The
variable components for key management personnel were confirmed on
the achievement of customer orders or earnings before interest,
tax, depreciation and amortisation targets established during the
financial year.
(iii) Paid in Euros and subject to foreign exchange fluctuations at Group level.
(iv) Paid in GBP and subject to foreign exchange fluctuations at Group level.
(v) Paid in USD and subject to foreign exchange fluctuations at Group level.
(vi) Appointed on 25 November 2011.
(vii) Appointed on 6 February 2012.
Directors' report
The directors and the group's key management personnel received
the following amounts as compensation for their services as
directors and key management personnel of the Group during the
previous financial period:
Post Share
Short-term employee Employment based
benefits benefits payments
----------- ------------------------------------- ----------------- ---------- ------------ ------ -------------
Percentage
Four Bonus of
months (incl. remuneration
to 31 variable Super-annuation related
October Salary pay Termination to
2011 & fees component) Non-monetary Options Benefits Total performance
----------- -------- ------------ ------------- ----------------- ---------- ------------ ------ -------------
$ $ $ $ $ $ $ %
----------- -------- ------------ ------------- ----------------- ---------- ------------ ------ -------------
Non-executive
Directors
R Mathews 46,667 - - 4,200 - - 50,867 -
F Barrault 28,477 - - - - - 28,477 -
J Brooke - - - - - - - -
(i)
A Eisen - - - - - - - -
(i) (vi)
M Jeffries - - - - - - - -
(i) (vi)
D Smart 29,583 - - 2,663 - - 32,246 -
Group's
Key Management
Personnel
R Arame
(ii) (iii) 124,217 95,278 13,775 11,686 35,830 - 280,786 47%
S Blundell
(ii) (iv) 82,313 31,088 - 4,607 35,830 - 153,838 43%
C Halliday
(ii) (v) 160,250 54,799 6,147 - 35,830 - 257,026 35%
Total 471,507 181,165 19,922 23,156 107,490 - 803,240 -
----------------- -------- -------- ------- ------- -------- --- -------- ----
(i) A Eisen, M Jeffries and J Brooke have agreed that they will
receive no benefit for their services.
(ii) Key management personnel are remunerated on a salary
package basis that includes an appropriate portion that is a
variable component which is dependent on company performance. Key
management personnel had their variable pay components confirmed in
conjunction with the completion of the financial statements. The
variable components for key management personnel were confirmed on
the achievement of customer orders or earnings before interest,
tax, depreciation and amortisation targets established during the
period.
(iii) Paid in Euros and subject to foreign exchange fluctuations at Group level.
(iv) Paid in GBP and subject to foreign exchange fluctuations at Group level.
(v) Paid in USD and subject to foreign exchange fluctuations at Group level.
(vi) Resigned on 24 October 2011.
Directors' report
Directors' shareholdings
The following table sets out each director's relevant
interest in shares and options in shares of the
company or a related body corporate during the financial
year and as at the date of this report.
Directors Fully paid ordinary Executive share
shares options
------------------------------- ---------------------------- ------------------
David Smart 40,000 -
------------------------------- ---------------------------- ------------------
62,005 (2)
7,272,727 (4)
Craig Halliday 16,110,592 (1) 1,500,000
------------------------------- ---------------------------- ------------------
François Barrault 500,000 -
------------------------------- ---------------------------- ------------------
16,110,592 (1)
Richard Mathews 206,683 (2) -
------------------------------- ---------------------------- ------------------
James Brooke(3) 35,153,419 -
------------------------------- ---------------------------- ------------------
Stephen Baldwin 932,600
------------------------------- ---------------------------- ------------------
(1) Relevant interest in shares held by MHB Holdings
Pty Ltd.
(2) Relevant interest in shares held by Paua Pty
Ltd.
(3) Shares held by Henderson Global Investors Limited
of which James Brooke is a key management personnel.
(4) Shares held by National Nominees Limited
Share-based payments granted as compensation for
the current financial year
During the financial year, the following share-based payment
arrangements were in existence.
Expiry Exercise Grant date
Options series Grant date date price fair value
-------------------- ------------ -------- --------- ------------
Issued 7 March
2007 (i) 07-Mar-07 2012 $0.52146 $0.33
-------------------- ------------ -------- --------- ------------
Issued 4 October
2007 (i) 04-Oct-07 2012 $0.80146 $0.44
-------------------- ------------ -------- --------- ------------
Issued 11 February
2011 (i) (iii) 07-Mar-11 2016 $0.48146 $0.16
-------------------- ------------ -------- --------- ------------
Issued 27 April
2012 (ii) 27-Apr-12 2017 $0.36000 $0.13
-------------------- ------------ -------- --------- ------------
Issued 14 May
2012 (ii) 14-May-12 2017 $0.36000 $0.11
-------------------- ------------ -------- --------- ------------
(i) In accordance with the terms of the Employee Share Option
Plan the options issued vest as to one-third on each of the first,
second and third anniversary dates from the date of issue and
expire five years from date of issue.
(ii) Options issued in these series vest fully on the second
anniversary date from the date of issue and expire five years from
the date of issue.
(iii) Options issued in this series were cancelled and replaced
with options issued on 14 May 2012.
Value of options issued to directors and key management
personnel
Key management personnel receiving options are entitled to the
beneficial interest under the option only if they continue to be
employed with the Group at the time the option vests. Any exposure
in relation to the risk associated with the movement in the
underlying share price rests with the key management personnel.
1,000,000 options held by the Managing Director were cancelled
during the year. 2,000,000 options held by other key management
personnel were cancelled and replaced with replacement options on
14 May 2012.
During the financial year no options were forfeited as a result
of a condition required for vesting (other than continuing
employment with the company) not being satisfied. No options vested
during the year.
The following table discloses the options granted, exercised or
lapsed during the financial year:
Directors' report
Name Number Value of Value of Value
of options options options of options
granted granted exercised lapsed
at the at the exercise (ii)
grant date date
(i)
$ $ $
-------------- ------------ ------------ ----------------- ------------
R Arame 1,000,000 106,940 - -
-------------- ------------ ------------ ----------------- ------------
S Blundell 1,000,000 106,940 - -
-------------- ------------ ------------ ----------------- ------------
P Montessori 750,000 80,205 - -
-------------- ------------ ------------ ----------------- ------------
C Halliday 1,500,000 190,845 - -
-------------- ------------ ------------ ----------------- ------------
(i) The value of options granted during the period is recognised
in compensation over the vesting period of the grant, in accordance
with the Australian Accounting Standards.
(ii) The value of options lapsing during the period due to the
failure to satisfy a vesting condition is determined assuming the
vesting condition has been satisfied.
Signed in accordance with a resolution of the directors
made pursuant to s.298 (2) of the Corporations Act
2001.
On behalf of the Board
Richard Mathews
Chairman
30 January 2013
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1217 Australia
DX 10307SSE
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
www.deloitte.com.au
30 January 2013
The Board of Directors
eServGlobal Limited
c/- Simpsons Solicitors
Level 2, Pier 8/9
23 Hickson Road,
Millers Point NSW 2000
Dear Board Members
eServGlobal Limited
In accordance with section 307C of the Corporations Act 2001, I
am pleased to provide the following declaration of independence to
the directors of eServGlobal Limited.
As lead audit partner for the audit of the financial statements
of eServGlobal Limited for the financial year ended 31 October
2012, I declare that to the best of my knowledge and belief, there
have been no contraventions of:
(i) the auditor independence requirements of the Corporations
Act 2001 in relation to the audit; and
(ii) any applicable code of professional conduct in relation to
the audit.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
Weng W Ching
Partner
Chartered Accountants
Corporate governance statement
The eServGlobal Limited board is responsible for establishing
the corporate governance framework of the group having regard to
the ASX Corporate Governance Council (CGC) published guidelines as
well as its corporate governance principles and recommendations.
eServGlobal is also required to comply with, inter alia, the
Corporations Act 2001 (Cwth), the ASX Listing Rules and the London
Stock Exchange AIM Rules for Companies. The table below and
accompanying statement outlines the main corporate governance
practices of eServGlobal during the financial year and the extent
of eServGlobal's compliance with the CGC's recommendations as at
the date of this report.
Recommendation Comply
---- ------------------------------------------------------------- -------
Principle 1 - Lay solid foundations for
management and oversight
1.1 Companies should establish the functions
reserved to the board and those delegated
to senior executives and disclose those
functions.
1.2 Companies should disclose the process
for evaluating the performance of senior
executives.
1.3 Companies should provide the information *
indicated in the Guide to reporting
on Principle 1.
Recommendation Comply
---- ------------------------------------------------------------- -------
Principle 2 - Structure the board to add
value
2.1 A majority of the board should be independent x
directors.
2.2 The chair should be an independent director. x
2.3 The roles of chair and chief executive
officer (CEO) should not be exercised
by the same individual.
2.4 The board should establish a nomination
committee.
2.5 Companies should disclose the process
for evaluating the performance of the
board, its committees and individual
directors.
2.6 Companies should provide the information *
indicated in the Guide to reporting
on Principle 2.
Recommendation Comply
---- ------------------------------------------------------------- -------
Principle 3 - Promote ethical and responsible
decision-making
3.1 Companies should establish a code of
conduct and disclose the code or a summary
of the code as to:
* The practices necessary to maintain confidence in the
company's integrity;
* The practices necessary to take into account their
legal obligations and the reasonable expectations of
their stakeholders; and
* The responsibility and accountability of individuals
for reporting and investigating reports of unethical
practices.
3.2 Companies should establish a policy x
concerning diversity and disclose the
policy or a summary of that policy.
The policy should include requirements
for the board to establish measurable
objectives for achieving gender diversity
for the board to assess annually both
the objectives and the progress in achieving
them.
3.3 Companies should disclose in each annual x
report the measurable objectives for
achieving gender diversity set by the
board in accordance with the diversity
policy and progress towards achieving
them.
3.4 Companies should disclose in each annual
report the proportion of women employees
in the whole organisation, women in
senior executive positions and women
on the board.
3.5 Companies should provide the information
indicated in the Guide to reporting
on Principle 3.
Corporate governance statement
---- ------------------------------------------------------------- -------
Recommendation Comply
---- ------------------------------------------------------------- -------
Principle 4 - Safeguard integrity in financial
reporting
4.1 The board should establish an audit
committee.
4.2 The audit committee should be structured *
so that it:
* Consists only of non-executive Directors.
* Consists of a majority of independent Directors.
* Is chaired by an independent chair, who is not chair
of the board.
* Has at least three members.
4.3 The audit committee should have a formal
charter.
4.4 Companies should provide the information *
indicated in the Guide to reporting
on Principle 4.
Recommendation Comply
---- ------------------------------------------------------------- -------
Principle 5 - Make timely and balanced disclosure
5.1 Companies should establish written policies
designed to ensure compliance with ASX
listing rule disclosure requirements
and to ensure accountability at a senior
executive level for that compliance
and disclose those policies or a summary
of those policies.
5.2 Companies should provide the information
indicated in the Guide to reporting
on Principle 5.
Recommendation Comply
---- ------------------------------------------------------------- -------
Principle 6 - Respect the rights of shareholders
6.1 Companies should design a communications
policy for promoting effective communication
with shareholders and encouraging their
participation at general meetings and
disclose their policy or a summary of
that policy.
6.2 Companies should provide the information
indicated in the Guide to reporting
on Principle 6.
Recommendation Comply
---- ------------------------------------------------------------- -------
Principle 7 - Recognise and manage risk
7.1 Companies should establish policies *
for the oversight and management of
material business risks and disclose
a summary of those policies.
7.2 The board should require management
to design and implement the risk management
and internal control system to manage
the Company's material business risks
and report to it on whether those risks
are being managed effectively. The board
should disclose that management has
reported to it as to the effectiveness
of the Company's management of its material
business risks.
7.3 The board should disclose whether it
has received assurance from the CEO
[or equivalent] and the Chief Financial
Officer (CFO) [or equivalent] that the
declaration provided in accordance with
section 295A of the Corporations Act
is founded on a sound system of risk
management and internal control and
that the system is operating effectively
in all material respects in relation
to financial reporting risks.
7.4 Companies should provide the information
indicated in the Guide to reporting
on Principle 7.
Recommendation Comply
---- ------------------------------------------------------------- -------
Principle 8 - Remunerate fairly and responsibly
8.1 The board should establish a remuneration
committee.
8.2 The remuneration committee should be *
structured so that it:
* Consists of a majority of independent Directors.
* Is chaired by an independent chair.
* Has at least three members.
8.3 Companies should clearly distinguish
the structure of non-executive directors'
remuneration from that of executive
directors and senior executives.
8.4 Companies should provide the information *
indicated in the Guide to reporting
on Principle 8.
* indicates partial compliance. Refer to further
details below.
Corporate governance statement
Principle 1. Lay solid foundations for management
and oversight
1.1 Companies should establish the functions reserved
to the board and those delegated to senior executives
and disclose those functions.
The primary responsibilities of eServGlobal's board
include:
* the establishment of long term goals of the company
and strategic plans to achieve those goals;
* the review and adoption of the annual business plan
and budgets for the financial performance of the
company and monitoring the results on a monthly
basis;
* the appointment of the Chief Executive Officer;
* ensuring that the company has implemented adequate
systems of internal control together with appropriate
monitoring of compliance activities; and
* the approval of the annual and half-yearly financial
statements and reports.
The board meets on a regular basis, on average at
least once monthly, to review the performance of
the company against its goals, both financial and
non-financial. In normal circumstances, prior to
the scheduled monthly board meetings, each board
member is provided with a formal board package containing
appropriate management and financial reports.
The responsibilities of senior management including
the Chief Executive Officer are contained in letters
of appointment and job descriptions given to each
executive on appointment and updated at least annually
or as required.
The primary responsibilities of senior management
are to:
(i) Achieve the annual business plan and budget
(ii) Ensure the highest standards of quality and
service are delivered to customers
(iii) Ensure that employees are supported, developed
and rewarded to the appropriate professional standards
(iv) Ensure that the company continues to produce
innovative technology and leading products
Decision making in respect of the functions reserved
for the board and those delegated to management
is in accordance with a delegation of authority
policy and procedures adopted by the board.
1.2 Companies should disclose the process for evaluating
the performance of senior executives.
The performance of all senior executives is reviewed
at least once a year by the Chief Executive Officer,
in conjunction with the full board. They are assessed
against personal and company key performance indicators
established at the start of each calendar year for
each individual. For more detail, refer to the Remuneration
Report.
1.3 Companies should provide the information indicated
in the Guide to reporting on Principle 1.
A performance evaluation for each senior executive
has taken place in the reporting period in line
with the process disclosed. A statement covering
the primary responsibilities of the board is set
out in 1.1 above. A statement covering the primary
responsibilities of the senior management is set
out in 1.1 above. A copy of the board charter is
not publicly available.
Corporate governance statement
Principle 2. Structure the board to add value
2.1 A majority of the board should be independent
directors.
The eServGlobal board consists of five non-executive
directors and one executive director. David Smart,
Stephen Baldwin and Francois Barrault are considered
to be independent directors. Richard Mathews and
James Brooke are not considered to be independent
by virtue of being associated with substantial shareholders
of the company. Craig Halliday is not considered
independent as he is the Chief Executive Officer
of the company and associated with a substantial
shareholder of the Company. As such, a majority
of the board are not independent directors. The
board is composed equally of independent and non-independent
directors. The board believes the composition is
appropriate at the present stage and will continue
to review this on an ongoing basis.
2.2 The chair should be an independent director.
Richard Mathews is the former Chief Executive Officer
of the Company and stepped into the position of
Chairman of the Board in 2010. While this movement
resulted in a chairman who is not independent, the
company believes that a chairman with a strong knowledge
of the company's operations is in the best interests
of the company at this stage.
2.3 The roles of chair and chief executive officer
should not be exercised by the same individual.
Richard Mathews is the company's Chairman and Craig
Halliday is the Chief Executive Officer.
2.4 A nomination committee should be established.
The Company has established a Remuneration and Nomination
Committee. The members of this Committee are Francois
Barrault and Stephen Baldwin. Many of the functions
of the Remuneration and Nomination Committee were
also carried out in conjunction with the full board.
2.5 Companies should disclose the process for evaluating
the performance of the board, its committees and
individual directors.
The eServGlobal chairman undertakes an annual informal
evaluation process in reviewing the performance
of directors and the board.
2.6 Companies should provide the information indicated
in the Guide to reporting on Principle 2
A description of the skills and experience of each
director is contained in the Directors' Report.
The names of the directors considered to be independent
are specified in 2.1 above.
Directors are able to take independent professional
advice at the expense of the company, with the prior
agreement of the chairman.
The period of office held by each director is specified
in the Directors' Report.
An evaluation of the board of directors did take
place during the reporting period as described at
2.5 above.
New directors are selected by and voted on by the
board. The board does not have a formal policy for
the nomination and appointment of directors but
considers the position on merit on a case by case
basis. Any director appointed by the board must
retire at the next Annual General Meeting of the
company but may submit himself/herself for re-election.
Further, each year, a third of directors retire
by rotation and are subject to re-election by shareholders
at the Annual General Meeting.
A copy of the Remuneration and Nomination Committee
charter is not publicly available.
Corporate governance statement
Principle 3. Promote ethical and responsible decision-making
3.1 Companies should establish a code of conduct
and disclose the code or a summary of the code as
to:
* the practices necessary to maintain confidence in the
company's integrity;
* the practices necessary to take into account their
legal obligations and the reasonable expectations of
their stakeholders; and
* the responsibility and accountability of individuals
for reporting and investigating reports of unethical
practices.
eServGlobal Limited's policies contain a formal
code of ethics that applies to all directors and
employees, who are expected to maintain a high standard
of conduct and work performance, and observe standards
of equity and fairness in dealing with others. The
detailed policies and procedures encapsulate the
company's ethical standards.
The code of ethics is available on the company's
website www.eservglobal.com.
3.2 Companies should establish a policy concerning
diversity and disclose the policy or a summary of
that policy. The policy should include requirements
for the board to establish measurable objectives
for achieving gender diversity for the board to
assess annually both the objectives and the progress
in achieving them.
The company has not established a policy concerning
diversity.
3.3 Companies should disclose in each annual report
the measurable objectives for achieving gender diversity
set by the board in accordance with the diversity
policy and progress towards achieving them.
The company has not established measurable objectives
for achieving gender diversity
3.4 Companies should disclose in each annual report
the proportion of women employees in the whole organisation,
women in senior executive positions and women on
the board.
The proportion of women within the organisation
is: 23%
Women within whole organisation: 46
Women in senior executive positions: 22%
Women on the board: none
3.5 Companies should provide the information indicated
in the Guide to reporting on Principle 3.
The company's business operations are conducted
worldwide, and its Code of Ethics has been designed
to accommodate the business operations of all the
countries in which the company operates. The Code
of Ethics complies with Principle 3.1.
Corporate governance statement
Principle 4. Safeguard integrity in financial reporting
4.1 The board should establish an audit committee.
The company has established an Audit Committee.
4.2 The audit committee should be structured so
that it:
* consists only of non-executive directors.
* consists of a majority of independent directors.
* is chaired by an independent chair, who is not chair
of the board.
* has at least three members.
The Audit Committee comprised David Smart and Stephen
Baldwin. All members of the Audit Committee are
qualified and experienced accountants. David Smart
and Stephen Baldwin are considered to be independent
directors. Despite not having at least three members,
the board believes that the Audit Committee is of
an appropriate size for the company.
4.3 The audit committee should have a formal charter.
The company has adopted an Audit Committee charter.
4.4 Companies should provide the information indicated
in the Guide to reporting on Principle 4
The names and qualifications of the audit committee
members and the number of meetings of the audit
committee are contained in the Directors' Report.
The Audit Committee charter is not publicly available
on the company's website.
The Audit Committee meets with and receives regular
reports from the external auditors concerning any
matters that arise in connection with the performance
of their role, including the adequacy of internal
controls.
In conjunction with the auditors, the Audit Committee
monitors the term of the external audit engagement
partner and ensures that the regulatory limit for
such term is not exceeded. At the completion of
the term, or earlier in some circumstances, the
auditor nominates a replacement engagement partner.
The Audit Committee interviews the nominee to assess
relevant prior experience, potential conflicts of
interest and general suitability for the role. If
the nominee is deemed suitable, the Audit Committee
reports to the board on its recommendation.
Principle 5. Make timely and balanced disclosure
5.1 Companies should establish written policies
designed to ensure compliance with ASX listing rule
disclosure requirements and to ensure accountability
at a senior executive level for that compliance
and disclose those policies or a summary of those
policies.
The eServGlobal board, Company Secretary and senior
management are aware of the ASX Listing Rules, AIM
Rules and Corporations Act disclosure requirements,
and take steps to actively monitor and ensure ongoing
compliance. At each board meeting, there is a separate
agenda item on this topic where directors review
the disclosures made by the company over the past
month and consider any existing issues that may
give rise to further required disclosure.
The Chairman and Chief Executive Officer continually
monitor developments in the company and its business
and in conjunction with the Company Secretary report
any developments immediately to the board for consideration.
All announcements are reviewed by the Company Secretary
and/or other external legal advisers before release
to the ASX or AIM.
5.2 Companies should provide the information indicated in the
Guide to reporting on Principle 5.
The company's continuous disclosure policy is described
above.
Corporate governance statement
Principle 6. Respect the rights of shareholders
6.1 Companies should design a communications policy
for promoting effective communication with shareholders
and encouraging their participation at general meetings
and disclose their policy or a summary of that policy.
eServGlobal provides information to its shareholders
through the formal communications processes (eg
ASX & AIM announcements, annual general meeting,
annual report, and shareholder letters). This material
is also available on the eServGlobal website (www.eservglobal.com)
and on the ASX and AIM websites.
Shareholders are encouraged to participate in the
AGMs and time is set aside for formal and informal
questioning of the board and senior management.
The company requests that its external auditor attend
the annual general meeting and be available to answer
any shareholder questions about the conduct of the
audit and the preparation and content of the audit
report.
6.2 Companies should provide the information indicated
in the Guide to reporting on Principle 6.
The company's communications policy is described
in 6.1 above.
Principle 7. Recognise and manage risk
7.1 Companies should establish policies for the
oversight and management of material business risks
and disclose a summary of those policies.
The board monitors the risks and internal controls
of eServGlobal in conjunction with the Audit Committee.
The Audit Committee looks to the Chief Executive
Officer and Chief Financial Officer to ensure that
an adequate system is in place to identify and,
where possible, appropriately manage and mitigate
risks inherent in the business, and to implement
appropriate internal controls.
Categories of risks managed cover all major aspects
of a global technology company. The details are
not disclosed as this may disadvantage the company
in regard to its competitors.
7.2 The board should require management to design
and implement the risk management and internal control
system to manage the Company's material business
risks and report to it on whether those risks are
being managed effectively. The board should disclose
that management has reported to it as to the effectiveness
of the Company's management of its material business
risks.
The board has required management to design and
implement the risk management and internal control
system to manage the company's material business
risks and report to it on whether those risks are
being managed effectively. Management has reported
to the board as to the effectiveness of the company's
management of its material business risks.
7.3 The board should disclose whether it has received
assurance from the CEO [or equivalent] and the Chief
Financial Officer (CFO) [or equivalent] that the
declaration provided in accordance with section
295A of the Corporations Act is founded on a sound
system of risk management and internal control and
that the system is operating effectively in all
material respects in relation to financial reporting
risks.
The board has received assurance from the Chief
Executive Officer and the Chief Financial Officer
that the declaration provided in accordance with
section 295A of the Corporations Act 2001 is founded
on a sound system of risk management and internal
control and that the system is operating effectively
in all material respects in relation to financial
reporting risks.
7.4 Companies should provide the information indicated
in the guide to reporting on Principle 7.
The board has received the report from management
under recommendation 7.2; the board has received
assurance from the Chief Executive Officer and the
Chief Financial Officer under recommendation 7.3;
the company's policies on risk oversight and management
of material business risks are not publicly available
for the reason specified above.
Corporate governance statement
Principle 8. Remunerate fairly and responsibly
8.1 The board should establish a remuneration committee.
The Company has established a Remuneration and Nomination
Committee. The members of that Committee are Francois
Barrault and Stephen Baldwin.
8.2 The remuneration committee should be structured
so that it:
-- Consists of a majority of independent directors
-- Is chaired by an independent chair
-- Has at least three members.
The committee consists of a majority of independent
directors.
The committee is chaired by Francois Barrault and
despite not having three members the board believes
the size of the committee is appropriate to discharge
its mandate.
8.3 Companies should clearly distinguish the structure
of non-executive directors' remuneration from that
of executive directors and senior executives.
Non-executive directors are paid a fixed directors
fee as set out in the Directors' Report.
Senior executives remuneration packages, which consist
of base salary, fringe benefits, incentive schemes
(including performance related bonuses), superannuation
and pension payments and entitlements upon retirement
or termination, are reviewed annually with due regard
to performance.
8.4 Companies should provide the information indicated
in the guide to reporting on Principle 8.
The members of the Remuneration and Nomination
Committee and its operation are described above.
There are no schemes for retirement benefits, other
than superannuation, for non-executive directors.
Non-executive directors do not receive options or
bonus payments.
A copy of the Remuneration and Nomination committee
charter is not publicly available.
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
Grosvenor Place
225 George Street
Sydney NSW 2000
PO Box N250 Grosvenor Place
Sydney NSW 1220 Australia
DX 10307SSE
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
www.deloitte.com.au
Independent Auditor's Report
to the Members of eServGlobal Limited
Report on the Financial Report
We have audited the accompanying financial report of eServGlobal
Limited, which comprises the statement of financial position as at
31 October 2012, the statement of comprehensive income, the
statement of cash flows and the statement of changes in equity for
the year ended on that date, notes comprising a summary of
significant accounting policies and other explanatory information,
and the directors' declaration of the consolidated entity
comprising the company and the entities it controlled at the year's
end or from time to time during the financial year as set out on
pages 26 to 77.
Directors' Responsibility for the Financial Report
The directors of the company are responsible for the preparation
of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the
Corporations Act 2001. The directors are also responsible for such
internal control as the directors determine is necessary to enable
the preparation of the financial report that is free from material
misstatement, whether due to fraud or error. In Note 1, the
directors also state, in accordance with Accounting Standard AASB
101 Presentation of Financial Statements, that the financial
statements comply with International Financial Reporting
Standards.
Auditor's Responsibility
Our responsibility is to express an opinion on the financial
report based on our audit. We conducted our audit in accordance
with Australian Auditing Standards. Those standards require that we
comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable
assurance that the financial report is free from material
misstatement.
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the financial report. The
procedures selected depend on the auditor's judgement, including
the assessment of the risks of material misstatement of the
financial report, whether due to fraud or error. In making those
risk assessments, the auditor considers internal control, relevant
to the entity's preparation of the financial report that gives a
true and fair view, in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity's internal
control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting
estimates made by the directors, as well as evaluating the overall
presentation of the financial report.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit
opinion.
Auditor's Independence Declaration
In conducting our audit, we have complied with the independence
requirements of the Corporations Act 2001. We confirm that the
independence declaration required by the Corporations Act 2001,
which has been given to the directors of eServGlobal Limited, would
be in the same terms if given to the directors as at the time of
this auditor's report.
Opinion
In our opinion:
(a) the financial report of eServGlobal Limited is in accordance
with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity's
financial position as at 31 October 2012 and of its performance for
the year ended on that date; and
(ii) complying with Australian Accounting Standards and the
Corporations Regulations 2001;
(b) the consolidated financial statements also comply with
International Financial Reporting Standards as disclosed in Note
1.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 8 to
14 of the directors' report for the year ended 31 October 2012. The
directors of the company are responsible for the preparation and
presentation of the Remuneration Report in accordance with section
300A of the Corporations Act 2001. Our responsibility is to express
an opinion on the Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
Opinion
In our opinion the Remuneration Report of eServGlobal Limited
for the year ended 31 October 2012, complies with section 300A of
the Corporations Act 2001.
DELOITTE TOUCHE TOHMATSU
Weng W Ching
Partner
Chartered Accountants
Sydney, 30 January 2013
Directors' declaration
The directors declare that:
(a) in the directors' opinion, there are reasonable grounds to
believe that the company will be able to pay its debts as and when
they become due and payable;
(b) the attached financial statements are in compliance with
International Financial Reporting Standards, as stated in Note 1 to
the financial statements;
(c) in the director's opinion, the attached financial statements
and notes thereto are in accordance with the Corporations Act 2001,
including compliance with accounting standards and giving a true
and fair view of the financial position and performance of the
consolidated entity; and
(d) the directors have been given the declarations required by
section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of the directors made
pursuant to section 295(5) of the Corporations Act 2001.
On behalf of the directors
Richard Mathews
Chairman
Brisbane, 30 January 2013
Consolidated statement of comprehensive income for the financial
year ended 31 October 2012
Year Ended Period Ended
31 October 31 October
2012 2011
Note $'000 $'000
--------------------------------------- ----- ------------ -------------
Revenue 2 28,070 7,017
Cost of sales (12,267) (4,234)
--------------------------------------- ----- ------------ -------------
Gross profit 15,803 2,783
Other income 2 389 769
Research and development expenses (2,289) (547)
Sales and marketing expenses (6,132) (2,782)
Administration expenses (16,427) (6,409)
--------------------------------------- -----
Loss before interest expense,
tax, depreciation and amortisation (8,656) (6,186)
Amortisation expense 3 (4,704) (1,581)
Depreciation expense 3 (637) (326)
--------------------------------------- -----
Loss before interest expense
and tax (13,997) (8,093)
Finance costs 3 (1,405) (605)
Loss before tax 3 (15,402) (8,698)
Income tax expense 4 (187) (560)
--------------------------------------- ----- ------------ -------------
Loss for the year (15,589) (9,258)
--------------------------------------- ----- ------------ -------------
Other comprehensive income
Exchange differences arising
on the translation of foreign
operations 1,277 146
--------------------------------------- ----- ------------ -------------
Total comprehensive loss for
the year (14,312) (9,112)
--------------------------------------- ----- ------------ -------------
Loss attributable to:
Equity holders of the parent (15,715) (9,304)
Non controlling interest 126 46
--------------------------------------- ----- ------------ -------------
(15,589) (9,258)
--------------------------------------- ----- ------------ -------------
Total comprehensive loss attributable
to:
Equity holders of the parent (14,438) (9,158)
Non controlling interest 126 46
--------------------------------------- ----- ------------ -------------
(14,312) (9,112)
--------------------------------------- ----- ------------ -------------
Loss per share:
Basic (cents per share) 21 (8.0) (4.7)
Diluted (cents per share) 21 (8.0) (4.7)
Notes to the financial statements are included on pages 31 to
77
Consolidated statement of financial position as at 31 October
2012
31 October 31 October
2012 2011
Note $'000 $'000
------------------------------- ------ ----------- -----------
Current Assets
Cash and cash equivalents 27(a) 3,794 10,129
Trade and other receivables 8 14,094 40,425
Inventories 10 158 170
Current tax assets 4 90 90
------------------------------- ------ ----------- -----------
Total Current Assets 18,136 50,814
------------------------------- ------ ----------- -----------
Non-Current Assets
Property, plant and equipment 11 912 1,541
Deferred tax assets 4 6,005 5,359
Goodwill 12 5,878 6,382
Other intangible assets 13 3,508 6,808
------------------------------- ------ ----------- -----------
Total Non-Current Assets 16,303 20,090
------------------------------- ------ ----------- -----------
Total Assets 34,439 70,904
------------------------------- ------ ----------- -----------
Current Liabilities
Trade and other payables 14 7,816 15,247
Borrowings 15 1,200 14,000
Current tax payables 4 69 6,904
Provisions 16 1,724 2,515
Deferred Revenue 17 2,125 2,190
------------------------------- ------ ----------- -----------
Total Current Liabilities 12,934 40,856
------------------------------- ------ ----------- -----------
Non-Current Liabilities
Borrowings 15 6,000 -
Deferred tax liabilities 4 - 790
Provisions for employee
benefits 16 431 385
------------------------------- ------ ----------- -----------
Total Non-Current Liabilities 6,431 1,175
------------------------------- ------ ----------- -----------
Total Liabilities 19,365 42,031
------------------------------- ------ ----------- -----------
Net Assets 15,074 28,873
------------------------------- ------ ----------- -----------
Equity
Issued capital 18 90,770 90,770
Reserves 19 (82) (1,983)
Accumulated Losses 20 (75,699) (59,984)
------------------------------- ------ ----------- -----------
Parent entity interest 14,989 28,803
Non controlling interest 85 70
------------------------------- ------
Total Equity 15,074 28,873
------------------------------- ------ ----------- -----------
Notes to the financial statements are included on pages 31 to
77
Consolidated statement of changes in equity for the year ended
31 October 2012
Foreign Employee Retained Attributable
Currency equity-settled Earnings to owners Non
Issued Translation benefits (Accumu-lated of the controlling
Capital Reserve Reserve Losses) parent Interest Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000
--------- ------------- ---------------- --------------- ------------- ------------- ---------
Consolidated
Balance at 1
November
2011 90,770 (3,376) 1,393 (59,984) 28,803 70 28,873
---------------- --------- ------------- ---------------- --------------- ------------- ------------- ---------
Profit/(Loss)
for
the year - - - (15,715) (15,715) 126 (15,589)
Other
comprehensive
income (loss)
for
the year
Exchange
differences
arising on
translation
of foreign
operations - 1,277 - - 1,277 - 1,277
---------------- --------- ------------- ---------------- --------------- ------------- ------------- ---------
Total
comprehensive
income (loss)
for
the year - 1,277 - (15,715) (14,438) 126 (14,312)
Payment of
dividends - - - - - (111) (111)
Equity settled
payments - - 624 - 624 - 624
---------------- --------- ------------- ---------------- --------------- ------------- ------------- ---------
Balance at 31
October
2012 90,770 (2,099) 2,017 (75,699) 14,989 85 15,074
---------------- --------- ------------- ---------------- --------------- ------------- ------------- ---------
Balance at 1 July
2011 123,946 (3,522) 1,132 (26,770) 94,786 24 94,810
------------------------- --------- -------- ------ --------- --------- --- ---------
Profit/(Loss) for
the period - - - (9,304) (9,304) 46 (9,258)
Other comprehensive
income (loss) for
the period
Exchange differences
arising on translation
of foreign operations - 146 - - 146 - 146
------------------------- --------- -------- ------ --------- --------- --- ---------
Total comprehensive
income (loss) for
the period - 146 - (9,304) (9,158) 46 (9,112)
Capital distribution (33,176) - - - (33,176) - (33,176)
Payment of dividends
(Note 22) - - - (23,910) (23,910) - (23,910)
Equity settled payments - - 261 - 261 - 261
------------------------- --------- -------- ------ --------- --------- --- ---------
Balance at 31 October
2011 90,770 (3,376) 1,393 (59,984) 28,803 70 28,873
------------------------- --------- -------- ------ --------- --------- --- ---------
Notes to the financial statements are included on pages 31 to
77
Consolidated statement of cash flows for the year ended 31
October 2012
Year Ended Period Ended
31 October 31 October
2012 2011
Note $'000 $'000
-------------------------------- ------ ------------ -------------
Cash Flows from Operating
Activities
Receipts from customers 30,182 11,007
Payments to suppliers and
employees (42,083) (19,067)
Interest and other finance
cost paid (1,536) (331)
Net income tax paid (7,813) (448)
-------------------------------- ------
Net cash used in operating
activities 27(c) (21,250) (8,839)
-------------------------------- ------ ------------ -------------
Cash Flows From Investing
Activities
Proceeds from asset disposal
(escrow deposit) 23,307 -
Interest received 562 1,817
Payment for property, plant
and equipment (140) (29)
Software development costs (1,826) (500)
-------------------------------- ------
Net cash provided by investing
activities 21,903 1,288
-------------------------------- ------ ------------ -------------
Cash Flows From Financing
Activities
Dividends paid to owners
of the company 22 - (23,910)
Capital distribution - (33,176)
Dividend paid by controlled
entity to non-controlling
interest (111) -
Proceeds from borrowings 2,500 14,000
Repayment of borrowings (9,300) -
-------------------------------- ------
Net cash used in financing
activities (6,911) (43,086)
-------------------------------- ------ ------------ -------------
Net Decrease In Cash and
Cash Equivalents (6,258) (50,637)
Cash At The Beginning Of
The Year 10,129 60,820
Effects of exchange rate
changes on the balance
of cash held in foreign
currencies (77) (54)
-------------------------------- ------ ------------ -------------
Cash and Cash Equivalents
At The End Of The Year 27(a) 3,794 10,129
-------------------------------- ------ ------------ -------------
Notes to the financial statements are included on pages 31 to
77
Notes to the Financial Statements for the financial year ended
31 October 2012
1. SUMMARY OF ACCOUNTING POLICIES
Statement of compliance
The financial statements are general purpose financial
statements which have been prepared in accordance
with the Corporations Act 2001, Accounting Standards
and Interpretations, and comply with other requirements
of the law.
The financial statements include the consolidated
financial statements of the Group.
Accounting Standards include Australian equivalents
to International Financial Reporting Standards ('A-IFRS').
Compliance with A-IFRS ensures that the financial
statements and notes of the Group comply with International
Financial Reporting Standards ('IFRS').
The financial statements were authorised for issue
by the directors on 30 January 2013.
Reporting period
The current financial year is for the year ended 31 October
2012. The comparative period is for the four months ended 31
October 2011 as, during the prior period, the Group changed its
financial year from 30 June to 31 October.
Basis of preparation
The financial statements have been prepared on the
basis of historical cost. Cost is based on the fair
values of the consideration given in exchange for
assets. All amounts are presented in Australian
dollars, unless otherwise noted.
The company is a company of the kind referred to
in ASIC Class Order 98/100, dated 10 July 1998,
and in accordance with that Class Order amounts
in the financial statements are rounded off to the
nearest thousand dollars, unless otherwise indicated.
The following significant accounting policies have been adopted
in the preparation and presentation of the financial
statements:
(a) Cash and cash equivalents
Cash and cash equivalents include cash on hand and in banks,
deposits held at call with banks and financial institutions,
investments in money market instruments with maturities of three
months or less from the date of acquisition, and bank overdrafts.
Bank overdrafts are shown within short--term borrowings in current
liabilities on the statement of financial position.
(b) Employee benefits
Provision is made for benefits accruing to employees in respect
of wages and salaries, annual leave and long service leave when it
is probable that settlement will be required and they are capable
of being measured reliably.
Provisions made in respect of employee benefits expected to be
settled within 12 months, are measured at their nominal values
using the remuneration rate expected to apply at the time of
settlement.
Provisions made in respect of employee benefits which are not
expected to be settled within 12 months are measured as the present
value of the estimated future cash outflows to be made by the Group
in respect of services provided by employees up to reporting
date.
Defined contribution plans
Contributions to defined contribution superannuation plans are
expensed when employees have rendered service entitling them to the
contributions.
Notes to the Financial Statements for the financial year ended
31 October 2012
1. SUMMARY OF ACCOUNTING POLICIES (continued)
(c) Financial assets
Investments
Financial assets are classified into the following specified
category: 'loans and receivables'. The classification depends on
the nature and purpose of the financial assets and is determined at
the time of initial recognition.
Loans and receivables
Trade and other receivables that have fixed or determinable
payments that are not quoted in an active market are classified as
'loans and receivables'. Loans and receivables are measured at
amortised cost using the effective interest method less impairment.
Interest income is recognised by applying the effective interest
rate.
Appropriate allowances for estimated irrecoverable amounts are
recognised in profit or loss when there is objective evidence that
the asset is impaired. The allowance recognised is measured as the
difference between the asset's carrying amount and the present
value of estimated future cash flows discounted at the effective
interest rate computed on initial recognition.
The carrying amount of loans and receivables is reduced by the
impairment loss through the use of an allowance account. Subsequent
recoveries of amounts previously written off are credited against
the allowance account. Changes in the carrying value of the
allowance account are recognised in profit or loss.
(d) Financial instruments issued by the Group
Debt and equity instruments
Debt and equity instruments are classified as either liabilities
or as equity in accordance with the substance of the contractual
arrangement. An equity instrument is any contract that evidences a
residual interest in the assets of an entity after deducting all of
its liabilities. Equity instruments issued by the Group are
recorded at the proceeds received, net of direct issue costs.
Transaction costs on the issue of equity instruments
Transaction costs arising on the issue of equity instruments are
recognised directly in equity as a reduction of the proceeds of the
equity instruments to which the costs relate. Transaction costs are
the costs that are incurred directly in connection with the issue
of those equity instruments and which would not have been incurred
had those instruments not been issued.
Notes to the Financial Statements for the financial year ended
31 October 2012
1. SUMMARY OF ACCOUNTING POLICIES (continued)
(d) Financial instruments issued by the Group (continued)
Other financial liabilities
Other financial liabilities, including borrowings, are initially
measured at fair value, net of transaction costs and are
subsequently measured at amortised cost using the effective
interest method, with the interest expense recognised on an
effective yield basis. The effective interest method is a method of
calculating the amortised cost of a financial liability and of
allocating interest expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated future
cash payments through the expected life of the financial liability,
or, where appropriate, a shorter period.
Trade payables
Trade payables are initially measured at fair value, and are
subsequently measured at amortised cost.
(e) Foreign currency
Foreign currency transactions
All foreign currency transactions arising during the financial
year are brought to account using the exchange rate in effect at
the date of the transaction. Foreign currency monetary items at
reporting date are translated at the exchange rate existing at
reporting date. Non-monetary assets and liabilities carried at fair
value that are denominated in foreign currencies are translated at
the rates prevailing at the date when the fair value was
determined. Non-monetary items that are measured at historical cost
in a foreign currency are not re-translated.
Exchange differences are recognised in profit or loss in the
year in which they arise.
Foreign operations
All overseas subsidiaries, other than those that are part of the
eServGlobal Holdings SAS group, report in their functional currency
of AUD, in accordance with the requirements of AASB 121 "The
Effects of Changes in Foreign Currency Exchange Rates" and as a
consequence all exchange rate translation differences are taken to
profit or loss. The eServGlobal Holdings SAS group reports in its
functional currency of EUR and on consolidation, the assets and
liabilities of the eServGlobal Holdings SAS group are translated at
exchange rates prevailing at the reporting date. Income and expense
items are translated at the average exchange rates for the year
unless exchange rates fluctuate significantly. Exchange differences
arising, if any, are recognised in the foreign currency translation
reserve, and recognised in profit or loss on disposal of the
foreign operation.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity on or after the date of transition to A-IFRS
are treated as assets and liabilities of the foreign entity and
translated at exchange rates prevailing at the reporting date.
Notes to the Financial Statements for the financial year ended
31 October 2012
1. SUMMARY OF ACCOUNTING POLICIES (continued)
(f) Goods and services tax
Revenues, expenses and assets are recognised net of the amount
of goods and services tax (GST), except:
i. where the amount of GST incurred is not recoverable from the
taxation authority, it is recognised as part of the cost of
acquisition of an asset or as part of an item of expense; or
ii. for receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the
taxation authority is included as part of receivables or
payables.
Cash flows are included in the statement of cash flows on a
gross basis. The GST component of cash flows arising from investing
and financing activities which is recoverable from, or payable to,
the taxation authority is classified as operating cash flows.
(g) Goodwill
Goodwill, representing the excess of the cost of acquisition
over the fair value of the identifiable assets, liabilities and
contingent liabilities acquired, is recognised as an asset and not
amortised, but tested for impairment annually and whenever there is
an indication that the goodwill may be impaired.
Any impairment is recognised immediately in profit or loss and
is not subsequently reversed. Refer also to Note 1(h).
(h) Impairment of assets
At each reporting date, the Group reviews the carrying amounts
of its tangible and intangible assets to determine whether there is
any indication that those assets have suffered an impairment loss.
If any such indication exists, the recoverable amount of the asset
is estimated in order to determine the extent of the impairment
loss (if any). Where the asset does not generate cash flows that
are independent from other assets, the Group estimates the
recoverable amount of the cash-generating unit to which the asset
belongs.
For the purpose of impairment testing, goodwill is allocated to
the cash-generating units expected to benefit from the synergies of
the business combination.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised in profit or
loss immediately.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but only to the extent
that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been
recognised for the asset (cash-generating unit) in prior years. A
reversal of an impairment loss is recognised in profit or loss
immediately.
Notes to the Financial Statements for the financial year ended
31 October 2012
1. SUMMARY OF ACCOUNTING POLICIES (continued)
(i) Income tax
Current tax
Current tax is calculated by reference to the amount of income
taxes payable or recoverable in respect of the taxable profit or
tax loss for the year. It is calculated using tax rates and tax
laws that have been enacted or substantively enacted by reporting
date. Current tax for current and prior year is recognised as a
liability (or asset) to the extent that it is unpaid (or
refundable).
Deferred tax
Deferred tax is accounted for in respect of temporary
differences arising from differences between the carrying amount of
assets and liabilities in the financial statements and the
corresponding tax base of those items.
In principle, deferred tax liabilities are recognised for all
taxable temporary differences. Deferred tax assets are recognised
to the extent that it is probable that sufficient taxable amounts
will be available against which deductible temporary differences or
unused tax losses and tax offsets can be utilised. However,
deferred tax assets and liabilities are not recognised if the
temporary differences giving rise to them arise from the initial
recognition of assets and liabilities (other than as a result of a
business combination) which affects neither taxable income nor
accounting profit. Furthermore, a deferred tax liability is not
recognised in relation to taxable temporary differences arising
from goodwill.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply to the year(s) when the asset and
liability giving rise to them are realised or settled, based on tax
rates (and tax laws) that have been enacted or substantively
enacted by reporting date. The measurement of deferred tax
liabilities and assets reflects the tax consequences that would
follow from the manner in which the Group expects, at the reporting
date, to recover or settle the carrying amount of its assets and
liabilities.
Deferred tax assets and liabilities are offset when they relate
to income taxes levied by the same taxation authority and the Group
intends to settle its current tax assets and liabilities on a net
basis.
Current and deferred tax for the year
Current and deferred tax is recognised as an expense or income
in profit or loss, except when it relates to items credited or
debited directly to equity, in which case the deferred tax is also
recognised directly in equity, or where it arises from the initial
accounting for a business combination, in which case it is taken
into account in the determination of goodwill or excess.
Notes to the Financial Statements for the financial year ended
31 October 2012
1. SUMMARY OF ACCOUNTING POLICIES (continued)
(j) Intangible assets
All intangible assets acquired in a business combination are
identified and recognised separately from goodwill where they
satisfy the definition of an intangible asset and their fair value
can be measured reliably.
Software and Documentation
Software and Documentation are recorded initially at fair value
and have an estimated useful life. Amortisation is charged on a
straight line basis over their useful lives.
Customer Relationships
Customer Relationships are recorded initially at fair value and
have an estimated useful life. Amortisation is charged on a
straight line basis over their useful lives.
(k) Inventories
Inventories are valued at the lower of cost and net realisable
value. Costs are assigned to inventory on hand by the method most
appropriate to each particular class of inventory, with the
majority being valued on a first in first out basis. Net realisable
value represents the estimated selling price less all estimated
costs to be incurred in marketing, selling and distribution.
(l) Leases
Operating lease payments, where substantially all of the risks
and benefits remain with the lessor, are recognised as an expense
on a straight-line basis over the lease term, except where another
systematic basis is more representative of the time pattern in
which economic benefits from the leased asset are consumed.
Contingent rentals are recognised as an expense in the year in
which they are incurred.
Lease incentives
In the event that lease incentives are received to enter into
operating leases, such incentives are recognised as a liability.
The aggregate benefits of incentives are recognised as a reduction
of rental expense on a straight-line basis.
(m) Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) (referred to as 'the Group' in these financial
statements). Control is achieved where the Company has the power to
govern the financial and operating policies of an entity so as to
obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the
year are included in consolidated profit or loss from the effective
date of acquisition or up to the effective date of disposal, as
appropriate.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies into
line with those used by other members of the Group.
All intra-group transactions, balances, income and expenses are
eliminated in full on consolidation.
Notes to the Financial Statements for the financial year ended
31 October 2012
1. SUMMARY OF ACCOUNTING POLICIES (continued)
(m) Basis of consolidation (continued)
Non-controlling interest in the net assets (excluding goodwill)
of consolidated subsidiaries are identified separately from the
Group's equity therein. Non-controlling interests consist of the
amount of those interests at the date of the original business
combination and the non-controlling interest's share of changes in
equity since the date of the combination. Total comprehensive
income is attributed to non-controlling interests even if this
results in the non-controlling interests having a deficit
balance.
Acquisitions of subsidiaries and businesses are accounted for
using the purchase method. The cost of the business combination is
measured as the aggregate of the fair values (at the date of
exchange) of the assets given, liabilities incurred or assumed, and
equity instruments issued by the group in exchange for control of
the acquiree. The acquiree's identifiable assets, liabilities and
contingent liabilities that meet the conditions for recognition
under AASB 3 "Business Combinations" are recognised at their fair
values at the acquisition date, except for non-current assets (or
disposal groups) that are classified as held for sale in accordance
with AASB 5 "Non-current Assets Held for Sale and Discontinued
Operations", which are recognised and measured at fair value less
costs to sell. Acquisition related costs are recognised in profit
or loss as incurred.
Goodwill arising on acquisition is recognised as an asset and
initially measured at cost, being the excess of the cost of the
business combination over the group's interest in the net fair
value of the identifiable assets, liabilities and contingent
liabilities recognised. If after reassessment, the group's interest
in the net fair value of the acquiree's identifiable assets,
liabilities and contingent liabilities exceeds the cost of the
business combination, the excess is recognised immediately in
profit or loss.
The interest of minority shareholders in the acquiree is
initially measured at the minority's proportion of the net fair
value of the assets, liabilities and contingent liabilities
recognised.
(n) Property, plant and equipment
Plant and equipment, office furniture and fittings and leasehold
improvements are stated at cost less accumulated depreciation and
impairment. Cost includes expenditure that is directly attributable
to the acquisition of the item. In the event that settlement of all
or part of the purchase consideration is deferred, cost is
determined by discounting the amounts payable in the future to
their present value as at the date of acquisition.
Depreciation is provided on property, plant and equipment.
Depreciation is calculated on a straight line basis so as to write
off the net cost of each asset over its expected useful life to its
estimated residual value. Leasehold improvements are depreciated
over the period of the lease or estimated useful life, whichever is
the shorter, using the straight line method. The estimated useful
lives, residual values and depreciation method are reviewed at the
end of each annual reporting period.
The following estimated useful lives are used in the calculation
of depreciation:
Office furniture and fittings 5 years
Plant and equipment 3 years
Leasehold improvements over the period of the lease
Notes to the Financial Statements for the financial year ended
31 October 2012
1. SUMMARY OF ACCOUNTING POLICIES (continued)
(o) Provisions
Provisions are recognised when the Group has a present
obligation, the future sacrifice of economic benefits is probable,
and the amount of the provision can be measured reliably.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at
reporting date, taking into account the risks and uncertainties
surrounding the obligation. Where a provision is measured using the
cash flows estimated to settle the present obligation, its carrying
amount is the present value of those cash flows.
When some or all of the economic benefits required to settle a
provision are expected to be recovered from a third party, the
receivable is recognised as an asset if it is virtually certain
that recovery will be received and the amount of the receivable can
be measured reliably.
Onerous Contracts
An onerous contract is considered to exist where the Group has a
contract under which the unavoidable cost of meeting the
contractual obligations exceeds the economic benefits expected to
be received. Present obligations arising under onerous contracts
are recognised as a provision to the extent that the present
obligation exceeds the economic benefits expected to be
received.
(p) Research and development costs
Internally-generated intangible assets - research and
development expenditure
Expenditure on research activities is recognised as an expense
in the period in which it is incurred. Where no
internally-generated intangible asset can be recognised,
development expenditure is recognised as an expense in the period
as incurred.
An intangible asset arising from development (or from the
development phase of an internal project) is recognised if, and
only if, all of the following have been demonstrated:
-- the technical feasibility of completing the intangible asset
so that it will be available for use or sale;
-- the intention to complete the intangible asset and use or sell it;
-- the ability to use or sell the intangible asset;
-- how the intangible asset will generate probable future economic benefits;
-- the availability of adequate technical, financial and other
resources to complete the development and to use or sell the
intangible asset; and
-- the ability to measure reliably the expenditure attributable
to the intangible asset during its development.
The amount initially recognised for internally-generated
intangible assets is the sum of the expenditure incurred from the
date when the intangible asset first meets the recognition criteria
listed above.
The expenditure capitalised includes cost of materials, direct
labour and a proportion of overheads. Other development expenditure
is recognised in profit or loss as an expense as and when
incurred.
Subsequent to initial recognition, internally-generated
intangible assets are reported at cost less accumulated
amortisation and accumulated impairment losses, on the same basis
as intangible assets acquired separately.
Notes to the Financial Statements for the financial year ended
31 October 2012
1. SUMMARY OF ACCOUNTING POLICIES (continued)
(q) Revenue recognition
Sale of Goods and Licences
Revenue from the sale of goods and licences is recognised when
the Group has passed control of the goods or other assets to the
buyer, except in the case of projects involving significant
customisation where revenue is recognised by reference to the stage
of completion of the project.
Rendering of Services
Revenue from services to supply custom designed and developed
software or solutions is recognised by reference to the stage of
completion of the project. The stage of completion is determined by
assessing, at the reporting date, the level of actual services
performed as a percentage of total services to be performed in
relation to the project.
Revenue recognised in advance of the corresponding bill being
raised is recorded as 'work in progress', whilst bills raised in
advance of the services being performed is recorded as 'deferred
income'.
Where a loss is expected to occur it is recognised immediately
and a provision is made in relation to any future work on the
contract.
Revenue from Support, Maintenance and Facilities Management
Agreements
Revenue from support and maintenance contracts is recognised
over time as it is earned.
Work in Progress
Work in progress is stated at the aggregate of contract costs
incurred to date plus recognised profits less recognised losses and
progress billings. If there are contracts where progress billings
exceed the aggregate costs incurred plus profits less losses, the
net amounts are presented in other liabilities.
Contracts costs include all costs directly related to specific
contracts and costs that are specifically chargeable to the
customers under the terms of the contract.
(r) Share-based payments
Equity-settled share-based payments are measured at fair value
at the date of grant. Fair value is measured by use of either a
Black Scholes or binomial model. The expected life used in the
model has been adjusted, based on management's best estimate, for
the effects of non-transferability, exercise restrictions, and
behavioural considerations.
The fair value determined at the grant date of the
equity-settled share-based payments is expensed on a straight-line
basis over the vesting period, based on the Group's estimate of
shares that will eventually vest.
(s) Derivative financial instruments and hedge accounting
The Group uses derivative financial instruments (primarily
foreign currency forward contracts) to hedge its risks associated
with foreign currency fluctuations relating to transactions arising
from specific customer orders. Derivatives are initially recognised
at fair value at the date a derivative contract is entered into and
are subsequently remeasured to their fair value at each reporting
date. The resulting gain or loss is recognised in profit or loss
immediately unless the derivative is designated and effective as a
hedging instrument, in which event, the timing of the recognition
in profit or loss depends on the nature of the hedge
relationship.
Notes to the Financial Statements for the financial year ended
31 October 2012
1. SUMMARY OF ACCOUNTING POLICIES (continued)
Derivative financial instruments and hedge accounting
(s) (continued)
The fair value of all derivative financial instruments
outstanding at the reporting date are recognised in the statement
of financial position as either financial assets or financial
liabilities. Changes in the fair value of derivative financial
instruments that are designated and effective as hedges of future
cash flows are recognised directly in equity, with any ineffective
portion being recognised in profit or loss. Amounts deferred in
equity are recycled in profit or loss in the periods when the
hedged item is recognised in profit or loss in the same line of the
income statement as the recognised hedged item.
Changes in the fair value of derivative financial instruments
that do not qualify for hedge accounting are recognised in profit
or loss as they arise.
Derivatives embedded in other financial instruments, or other
non financial host contracts, are treated as separate derivatives
when their risks and characteristics are not closely related to
those of the host contract, and the host contract is not carried at
fair value with unrealised gains or losses reported in profit or
loss.
Critical accounting judgments and key sources
(t) of estimation uncertainty
The directors evaluate estimates and judgments incorporated into
the financial statements based on historical knowledge and best
available current information. Estimates assume a reasonable
expectation of future events and based on current trends and
economic data, obtained both externally and within the Group.
The following are the key assumptions concerning the future, and
other key sources of estimation uncertainty at the reporting date,
that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next
financial year:
Impairment of goodwill
The Group assesses impairment at each reporting date by
evaluating conditions specific to the Group that may lead to
impairment of goodwill. Where an impairment trigger exists, the
recoverable amount of the asset is determined. Value--in--use
calculations performed in assessing recoverable amounts incorporate
a number of key estimates described in Note 12.
Revenue recognition
Revenue in relation to the supply of custom designed and
developed software or solutions is recognised on each project by
reference to the stage of completion of the project. The method of
calculating the percentage completion of the project involves an
element of judgement based on future project costs and
profitability of each project. The information used to forecast
these costs is based on historical events and current economic data
on a customer by customer basis.
Unused tax losses
The recognition of unused tax losses as a deferred tax asset
requires estimation and judgement of the availability of future
taxable profits and is subject to compliance with the relevant tax
legislations. At the date of this report, the directors have
assessed the degree of probability of recovering the remaining
unused tax losses. Accordingly, a deferred tax asset has been
recognised to the extent that the probability criteria has been
met.
Notes to the Financial Statements for the financial year ended
31 October 2012
1. SUMMARY OF ACCOUNTING POLICIES (continued)
(u) Adoption of new and revised Accounting Standards
In the current year, the Group has adopted all of the new and
revised Standards and Interpretations issued by the Australian
Accounting Standards Board (the AASB) that are relevant to its
operations and effective for the current annual reporting
period.
Details of the impact of the adoption of these new accounting
standards are set out in the individual accounting policy notes set
out below
(u.1) Standards and Interpretations affecting amounts reported
in the current year (and/or prior years)
The following new and revised Standards and Interpretations have
been adopted in the current year and have affected the amounts
reported in these financial statements. Details of other Standards
and Interpretations adopted in these financial statements that have
had no effect on the amounts reported are set out in Note
1(u.2).
Standards affecting presentation and disclosure
Amendments to AASB The amendments (part of AASB
7 'Financial Instruments: 2010-4 'Further Amendments
Disclosure' to Australian Accounting Standards
arising from the Annual Improvements
Project') clarify the required
level of disclosures about
credit risk and collateral
held and provide relief from
disclosures previously required
regarding renegotiated loans.
----------------------------- -------------------------------------------
Amendments to AASB The amendments (part of AASB
101 'Presentation 2010-4 'Further Amendments
of Financial Statements' to Australian Accounting Standards
arising from the Annual Improvements
Project') clarify that an
entity may choose to present
the required analysis of items
of other comprehensive income
either in the statement of
changes in equity or in the
notes to the financial statements.
----------------------------- -------------------------------------------
AASB 1054 'Australian AASB 1054 sets out the Australian-specific
Additional Disclosures' disclosures for entities that
and AASB 2011-1 'Amendments have adopted Australian Accounting
to Australian Accounting Standards. This Standard contains
Standards arising disclosure requirements that
from Trans-Tasman are in addition to IFRSs in
Convergence Project' areas such as compliance with
Australian Accounting Standards,
the nature of financial statements
(general purpose or special
purpose), audit fees, imputation
(franking) credits and the
reconciliation of net operating
cash flow to profit (loss).
AASB 2011-1 makes amendments
to a range of Australian Accounting
Standards and Interpretations
for the purpose of closer
alignment to IFRSs and harmonisation
between Australian and New
Zealand standards. The Standard
deletes various Australian-specific
guidance and disclosures from
other Standards (Australian-specific
disclosures retained are now
contained in AASB 1054), and
aligns the wording used to
that adopted in IFRSs.
The application of AASB 1054
and AASB 2011-1 in the current
year has resulted in the simplification
of disclosures in regards
to audit fees, franking credits
and capital and other expenditure
commitments as well as an
additional disclosure on whether
the Group is a for-profit
or not-for-profit entity.
----------------------------- -------------------------------------------
Notes to the Financial Statements for the financial year ended
31 October 2012
1. SUMMARY OF ACCOUNTING POLICIES (continued)
(u.1) Standards and Interpretations affecting amounts reported
in the current year (and/or prior years) (continued)
AASB 124 'Related AASB 124 (revised December
Party Disclosures' 2009) has been revised on
(revised December the following two aspects:
2009) (a) AASB 124 (revised December
2009) has changed the definition
of a related party and (b)
AASB 124 (revised December
2009) introduces a partial
exemption from the disclosure
requirements for government-related
entities.
The Company and its subsidiaries
are not government-related
entities. The application
of the revised definition
of related party set out in
AASB 124 (revised December
2009) in the current year
has resulted in the identification
of related parties that were
not identified as related
parties under the previous
Standard.
Specifically, associates of
the ultimate holding company
of the Company are treated
as related parties of the
Group under the revised Standard
whilst such entities were
not treated as related parties
of the Group under the previous
Standard. The related party
disclosures set out in Note
26 to the consolidated financial
statements have been changed
to reflect the application
of the revised Standard. Changes
have been applied retrospectively.
-------------------- -------------------------------------
Standards and Interpretations affecting the reported results or
financial position
There are no new and revised Standards and Interpretations
adopted in these financial statements affecting the reporting
results or financial position.
(u.2) Standards and Interpretations adopted with no effect on
financial statements
The following new and revised Standards and Interpretations have
also been adopted in these financial statements. Their adoption has
not had any significant impact on the amounts reported in these
financial statements but may affect the accounting for future
transactions or arrangements.
Standards affecting presentation and disclosure
AASB 2009-14 'Amendments Interpretation 114 addresses when
to Australian Interpretation refunds or reductions in future
- Prepayments of a contributions should be regarded
Minimum Funding Requirement' as available in accordance with
paragraph 58 of AASB 119; how
minimum funding requirements might
affect the availability of reductions
in future contributions; and when
minimum funding requirements might
give rise to a liability. The
amendments now allow recognition
of an asset in the form of prepaid
minimum funding contributions.
The application of the amendments
to Interpretation 114 has not
had material effect on the Group's
consolidated financial statements.
------------------------------ -----------------------------------------
AASB 2009-12 'Amendments The application of AASB 2009-12
to Australian Accounting makes amendments to AASB 8 'Operating
Standards' Segments' as a result of the issuance
of AASB 124 'Related Party Disclosures'
(2009). The amendment to AASB
8 requires an entity to exercise
judgement in assessing whether
a government and entities known
to be under the control of that
government are considered a single
customer for the purposes of certain
operating segment disclosures.
The Standard also makes numerous
editorial amendments to a range
of Australian Accounting Standards
and Interpretations. The application
of AASB 2009-12 has not had any
material effect on amounts reported
in the Group's consolidated financial
statements.
------------------------------ -----------------------------------------
Notes to the Financial Statements for the financial year ended
31 October 2012
1. SUMMARY OF ACCOUNTING POLICIES (continued)
(u.2) Standards and Interpretations adopted with no effect on
financial statements (continued)
AASB 2010-5 'Amendments The Standard makes numerous editorial
to Australian Accounting amendments to a range of Australian
Standards' Accounting Standards and Interpretations.
The application of AASB 2010-5
has not had any material effect
on amounts reported in the Group's
consolidated financial statements.
--------------------------- -------------------------------------------
AASB 2010-6 'Amendments The application of AASB 2010-6
to Australian Accounting makes amendments to AASB 7 'Financial
Standards - Disclosures Instruments - Disclosures' to
on Transfers of Financial introduce additional disclosure
Assets' requirements for transactions
involving transfer of financial
assets. These amendments are intended
to provide greater transparency
around risk exposures when a financial
asset is transferred and derecognised
but the transferor retains some
level of continuing exposure in
the asset.
To date, the Group has not entered
into any transfer arrangements
of financial assets that are derecognised
but with some level of continuing
exposure in the asset. Therefore,
the application of the amendments
has not had any material effect
on the disclosures made in the
consolidated financial statements.
--------------------------- -------------------------------------------
(u.3) Standards and Interpretations in issue not yet adopted
At the date of authorisation of the financial statements, the
Standards and Interpretations listed below were in issue but not
yet effective. The potential impact of the new or revised Standards
and Interpretations has not yet been determined.
Effective for annual reporting periods beginning on Expected
Standard/Interpretation or after to be initially
applied
in the financial
year ending
-------------------------------------------- ------------------
-- AASB 9 'Financial Instruments'(December 1 January 2015 31 October
2009), AASB 2009-11 'Amendments 2016
to Australian Accounting Standards
arising from AASB 9', AASB 2012-6
'Amendments to Australian Accounting
Standards - Mandatory Effective
Date of AASB 9 and Transition
Disclosures'
-------------------------------------------- ------------------
AASB 9 'Financial Instruments'(December 1 January 2015 31 October
2010), AASB 2010-7 'Amendments 2016
to Australian Accounting Standards
arising from AASB 9 (December
2010)', AASB 2012-6 'Amendments
to Australian Accounting Standards
- Mandatory Effective Date of
AASB 9 and Transition Disclosures'
-------------------------------------------- ------------------
-- AASB 5 'Non-current Assets 1 July 2012 31 October
Held for Sale and Discontinued 2013
Operations'
-------------------------------------------- ------------------
-- AASB 7 'Financial Instruments: 1 July 2012 31 October
Disclosures' 2013
-------------------------------------------- ------------------
-- AASB 10 'Consolidated Financial 1 January 2013 31 October
Statements', AASB 2011-7 'Amendments 2014
to Australian Accounting Standards
arising from the Consolidation
and Joint Arrangements Standards'
-------------------------------------------- ------------------
-- AASB 11 'Joint Arrangements', 1 January 2013 31 October
AASB 2011-7 'Amendments to Australian 2014
Accounting Standards arising
from the Consolidation and Joint
Arrangements Standards'
-------------------------------------------- ------------------
-- AASB 12 'Disclosure of Interests 1 January 2013 31 October
in Other Entities', AASB 2011-7 2014
'Amendments to Australian Accounting
Standards arising from the Consolidation
and Joint Arrangements Standards'
-------------------------------------------- ------------------
Notes to the Financial Statements for the financial year ended
31 October 2012
1. SUMMARY OF ACCOUNTING POLICIES (continued)
(u.3) Standards and Interpretations in issue not yet adopted
(continued)
-- AASB 13 'Fair Value Measurement' and AASB 2011-8 'Amendments to Australian 1 January 2013 31 October 2014
Accounting Standards
arising from AASB 13'
-- AASB 101 'Presentation of Financial Statements' 1 July 2012 31 October 2013
-- AASB 112 'Income taxes' 1 July 2012 31 October 2013
-- AASB 119 'Employee Benefits'(2011) and AASB 2011-10 'Amendments to Australian 1 January 2013 31 October 2014
Accounting
Standards arising from AASB 119 (2011)'
-- AASB 120 'Accounting for Government Grants and Disclosure of Government 1 July 2012 31 October 2013
Assistance'
-- AASB 121 'The Effects of Changes in Foreign Exchange Rates' 1 July 2012 31 October 2013
-- AASB 127 'Separate Financial Statements' (2011), AASB 2011-7 'Amendments to 1 January 2013 31 October 2014
Australian
Accounting Standards arising from the Consolidation and Joint Arrangements Standards'
-- AASB 128 'Investments in Associates and Joint Ventures'(2011), AASB 2011-7 1 January 2013 31 October 2014
'Amendments
to Australian Accounting Standards arising from the Consolidation and Joint
Arrangements Standards'
-- AASB 132 'Financial Instruments: Presentation' 1 July 2012 31 October 2013
-- AASB 133 'Earnings per Share' 1 July 2012 31 October 2013
-- AASB 134 'Interim Financial Reporting' 1 July 2012 31 October 2013
-- AASB 2011-9 'Amendments to Australian Accounting Standards - Presentation of Items 1 July 2012 31 October 2013
of Other
Comprehensive Income'
-- AASB 2011-13 'Amendments to Australian Accounting Standards - Improvements AASB 1 July 2012 31 October 2013
1049'
-- AASB 2012-2 'Amendments to Australian Accounting Standards - Disclosures - 1 January 2013 31 October 2014
Offsetting Financial
Assets and Financial Liabilities'
-- AASB 2012-3 'Amendments to Australian Accounting Standards - Disclosures - 1 January 2014 31 October 2015
Offsetting Financial
Assets and Financial Liabilities'
-- AASB 2012-5 'Amendments to Australian Accounting Standards arising from Annual 1 January 2013 31 October 2014
Improvements
2009-2011 Cycle'
-- AASB 2012-10 'Amendments to Australian Accounting Standards - Transition Guidance 1 January 2013 31 October 2014
and Other
Amendments'
-- Interpretation 20 'Stripping Costs in the Production Phase of a Surface Mine' and 1 January 2013 31 October 2014
AASB
2011-12 'Amendments to Australian Accounting Standards arising from Interpretation
20'
At the date of authorisation of the financial statements, the following IASB was also
in issue
but not effective, although an Australian equivalent Standard has not yet been
issued:
-- Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27) I January 2014 31 October 2015
Notes to the Financial Statements for the financial year ended
31 October 2012
Consolidated
Period
Year Ended Ended
31 October 31 October
2012 2011
$'000 $'000
2. REVENUE
a) Revenue from continuing
operations consisted
of the following items:
Revenue from the sale
of goods 9,813 946
Revenue from the rendering
of services 18,257 6,071
-------------------------------------
Total Revenue from continuing
operations 28,070 7,017
------------------------------------- ------------ ------------
b) Other Income
Interest revenue 389 769
------------------------------------- ------------ ------------
Notes to the Financial Statements for the financial year ended
31 October 2012
3. LOSS BEFORE TAX Consolidated
Year Period
Ended Ended
31 October 31 October
2012 2011
$'000 $'000
Loss before tax has been arrived
at after charging (crediting)
the following:
Net foreign exchange loss 3,387 566
Finance costs:
Interest - other entities 1,405 605
Depreciation of non-current
assets:
Office furniture and fittings 40 51
Leasehold improvements 3 4
Plant and equipment 594 271
------------------------------------------------ ------------- ------------
Total depreciation of non-current
assets 637 326
Amortisation of intangible assets:
Customer relationships, software
and documentation 4,704 1,581
Operating lease rental expenses:
Minimum lease payments 2,063 843
Net loss on disposal of non-current
assets
Plant and equipment 123 31
(Write back)/ impairment recognised
on trade receivables (Note 8) (200) 92
Employee benefit expense:
Contributions to defined contribution
plans 26 11
Other employee benefits 23,546 6,769
Equity settled share-based payments 624 261
------------------------------------------------ ------------- ------------
Total employee benefits expense 24,196 7,041
Notes to the Financial Statements for the financial year ended
31 October 2012
4. INCOME TAXES Year Period
Ended Ended
31 October 31 October
2012 2011
$'000 $'000
(a) Income tax recognised
in loss
Tax expense comprises:
Current tax expense 1,753 1,212
Adjustments recognised in
the current year in relation
to the current tax of prior
years (130) 48
Deferred tax (income)/expense
relating to the origination
and reversal of temporary
differences (1,436) (700)
------------------------------------ ------------ ------------
Total tax expense 187 560
------------------------------------ ------------ ------------
The prima facie income tax
expense on pre-tax accounting
loss from operations reconciles
to the income tax expense
in the financial statements
as follows:
Loss from operations (15,402) (8,698)
------------------------------------ --------- --------
Income tax expense/ (benefit)
calculated at 30% (4,621) (2,610)
Non-deductible expenses 591 225
Foreign withholding tax credits
not utilised 943 367
Deferred tax assets not recognised 3,698 2,441
Non-assessable income (217) (67)
Effect of different tax rate
in foreign operations (77) 156
Under/(over) provision of
income tax in previous year (130) 48
------------------------------------ --------- --------
187 560
------------------------------------ --------- --------
The tax rate used in the above reconciliation
is the corporate tax rate of 30% payable
by Australian corporate entities on taxable
profits under Australian tax law. There has
been no change in the corporate tax rate
when compared with the previous reporting
period.
Consolidated
31 October 31 October
2012 2011
$'000 $'000
(b) Current tax assets
and liabilities
Current tax assets:
Tax refund receivable 90 90
------------------------- ----------- -----------
Current tax payables:
Income tax payable 69 6,904
------------------------- ----------- -----------
Notes to the Financial Statements for the financial year ended
31 October 2012
4. INCOME TAXES (continued)
Deferred tax balances
Deferred tax assets and liabilities arise from the
following:
Consolidated
--------------------------- ------------------------------------------------
Opening Credited Closing
balance Reclassified to income balance
--------- ------------- ----------- ---------
Year to 31 October
2012 $'000 $'000 $'000 $'000
--------------------------- --------- ------------- ----------- ---------
Deferred tax liabilities:
Exchange difference
on foreign subsidiary (15) - 15 -
Intangible assets 805 - (805) -
--------------------------- --------- ------------- ----------- ---------
790 - (790) -
--------------------------- --------- ------------- ----------- ---------
Deferred tax assets:
Tax losses - revenue 866 - 154 1,020
Research & development
tax credits 3,913 - 570 4,483
Foreign tax credits 124 - (11) 113
Doubtful debts 319 - - 319
Accrued costs 103 - (68) 35
Other 34 - 1 35
--------------------------- ---------
5,359 - 646 6,005
--------------------------- --------- ------------- ----------- ---------
Consolidated
--------------------------- ------------------------------------------------
Opening Credited Closing
balance Reclassified to income balance
--------- ------------- ----------- ---------
Four months to 31 October
2011 $'000 $'000 $'000 $'000
--------------------------- --------- ------------- ----------- ---------
Deferred tax liabilities:
Exchange difference
on foreign subsidiary - - (15) (15)
Intangible assets 1,068 - (263) 805
--------------------------- --------- ------------- ----------- ---------
1,068 - (278) 790
--------------------------- --------- ------------- ----------- ---------
Deferred tax assets:
Tax losses - revenue 1,099 - (233) 866
Research & development
tax credits 3,294 - 619 3,913
Foreign tax credits 88 - 36 124
Doubtful debts 319 - - 319
Accrued costs 103 - - 103
Other 34 - - 34
--------------------------- ---------
4,937 - 422 5,359
--------------------------- --------- ------------- ----------- ---------
Notes to the Financial Statements for the financial year ended
31 October 2012
4. INCOME TAXES (continued)
Tax consolidation
Relevance of tax consolidation to the consolidated
entity
The company and its wholly-owned Australian resident
entities have formed a tax-consolidated group and
are therefore taxed as a single entity. The head
entity within the tax-consolidated group is eServGlobal
Limited. The members of the tax-consolidated group
are identified at Note 24.
Nature of tax funding arrangements and tax sharing
agreements
Entities within the tax-consolidated group have entered
into a tax funding arrangement and a tax-sharing
agreement with the head entity. Under the terms of
the tax funding arrangement, eServGlobal Limited
and each of the entities in the tax-consolidated
group has agreed to pay a tax equivalent payment
to or from the head entity, based on the current
tax liability or current tax asset of the entity.
Such amounts are reflected in amounts receivable
from or payable to other entities in the tax-consolidated
group.
The tax sharing agreement entered into between members
of the tax-consolidated group provides for the determination
of the allocation of income tax liabilities between
the entities should the head entity default on its
tax payment obligations. No amounts have been recognized
in the financial statements in respect of this agreement
as payment of any amounts under the tax sharing agreement
is considered remote.
5. KEY MANAGEMENT PERSONNEL COMPENSATION
Key management personnel compensation policy
The Remuneration and Nominations Committee reviews
the remuneration packages of all key management
on an annual basis and makes recommendations to
the Board. The Boards approach on Remuneration Policies
is set out in the Remuneration Report which forms
part of the Directors' Report.
The aggregate compensation made to key management personnel of
the Group is set out as follows:
Consolidated
Period
Year Ended Ended
31 October 31 October
2012 2011
$ $
Short-term employee
benefits 2,587,004 672,594
Post-employment benefits 69,451 23,156
Share-based payments 309,302 107,490
-------------------------- ------------ ------------
2,965,757 803,240
-------------------------- ------------ ------------
Notes to the Financial Statements for the financial year ended
31 October 2012
6. EXECUTIVE AND EMPLOYEE SHARE OPTIONS
The Group has ownership-based remuneration schemes
for directors, key management personnel and employees
of the Group. In accordance with the provisions
of the scheme, directors and employees may be granted
options to acquire ordinary shares in the company.
The board believes that the options scheme has a
significant role to play in motivating employees
to help ensure the continued performance of the
Group. The vesting of any share options is not dependent
on any performance criteria, however, is dependent
on a period of service relative to the vesting dates.
During the financial year, the company issued 10,200,000
options (four month period to 31 October 2011: nil).
Under the eServGlobal Employee Share Option Plan,
established 4 August 2000 to assist in the attraction,
retention and motivation of employees and Directors
of the company and its related bodies corporate,
at 31 October 2012, key management personnel and
employees are entitled to purchase an aggregate
of 9,200,000 (31 October 2011: 7,710,000) ordinary
shares of the entity at an exercise price of $0.36
(31 October 2011: $0.48 to $0.80) per ordinary share.
At 31 October 2012, none (31 October 2011: 410,000)
of these options had vested. The options may be
exercised at various times up until 13 May 2017.
The holders of such options do not have the right,
by virtue of the option to participate in any share
issue or interest issue of any other body corporate
or scheme, and do not participate in any dividends
declared.
The following share-based payment arrangements were in existence
during the year:
Exercise Fair value
Grant Expiry Price at grant
Option Series Number Date Date $ date
-------------------- ---------- ---------- ------- --------- -----------
Issued 7 March
2007 (i) 350,000 07-Mar-07 2012 0.52146 $0.33
Issued 4 October
2007 (i) 110,000 04-Oct-07 2012 0.80146 $0.44
Issued 11 February
2011 (i) (iii) 7,300,000 07-Mar-11 2016 0.48146 $0.16
Issued 27 April
2012 (ii) (iv) 1,500,000 27-Apr-12 2017 0.36000 $0.13
Issued 14 May
2012 (ii) (iv) 8,700,000 14-May-12 2017 0.36000 $0.11
-------------------- ---------- ---------- ------- --------- -----------
In accordance with the terms of the Employee Share Option
Plan:
(i) Options issued in these series vest as to one-third on each
of the first, second and third anniversary dates from the date of
issue and expire five years from date of issue.
(ii) Options issued in these series vest fully on the second
anniversary date from the date of issue and expire five years from
the date of issue.
(iii) During the year, 1,000,000 options were cancelled,
6,050,000 options were cancelled and issued as replacement options
and 250,000 options lapsed.
(iv) Options in these series were issued pursuant to shareholder approval granted in March 2012
In accordance with the terms of the Employee Share
Option Plan, options may be exercised at any time
from the date on which they vest to the date of
their expiry.
Notes to the Financial Statements for the financial year ended
31 October 2012
6. EXECUTIVE AND EMPLOYEE SHARE OPTIONS (continued)
The fair value of the options were derived by an appropriately
qualified expert who chose to use the binomial pricing model. Where
relevant, the expected life used in the model has been adjusted
based on a best estimate for the effects of non-transferability,
exercise restrictions and behavioural considerations. Expected
volatility is based on the historical share price volatility over
the past 5 years. The risk-free rate is sourced from the Reserve
Bank of Australia.
Inputs into the models for the series of options:
Risk free
Share rate of Sub optimal
price return Dividend early
Issue at grant to expiry Years yield exercise
Date date (p.a.) to expiration/exercise (p.a.) Volatility factor
----------- ---------- ----------- ------------------------ --------- ----------- -------------------
45.00%
7-Mar-07 0.77 5.80% 5 1.5% - 55.00% 2.00
45.00%
4-Oct-07 1.07 6.42% 5 1.5% - 50.00% 2.00
07-Mar-11 0.47 5.30% 4.93 0.0% 45.00% none assumed
27-Apr-12 0.30 3.23% 5 0.0% 52.50% none assumed
14-May-12 0.25 2.82% 5 0.0% 52.50% none assumed
----------- ---------- ----------- ------------------------ --------- ----------- -------------------
The following reconciles the outstanding share options granted
under the executive share option plan at the beginning and the end
of the financial year:
31 October 2012 31 October 2011
------------------------ ------------------------
Weighted Weighted
average average
exercise exercise
Number of price Number price
Options $ of Options $
Balance at the beginning
of the year 7,710,000 0.656 7,760,000 0.656
Granted during the
year 10,200,000 0.360 - -
Expired/ lapsed/
cancelled during
the year (8,710,000) 0.622 (50,000) 0.690
-------------------------- ------------ ---------- ------------ ----------
Balance at the end
of the year 9,200,000 0.360 7,710,000 0.656
-------------------------- ------------ ---------- ------------ ----------
Exercisable at the
end of the financial
year - - 410,000 0.765
-------------------------- ------------ ---------- ------------ ----------
Notes to the Financial Statements for the financial year ended
31 October 2012
6. EXECUTIVE AND EMPLOYEE SHARE OPTIONS (continued)
Exercised during the financial year
No options were exercised during the financial year, nor during
the previous financial period.
Balance at the end of the financial year
The share options outstanding at the end of the financial year
are as follows:
Vested Unvested Expiry Exercise Contractual
----------------- ---------- ------- ---------- ------- --------- ------------
No. No. Date Price Life
------- ---------- ------- --------- ------------
Issued No $ (days)
----------------- ---------- ------- ---------- ------- --------- ------------
Issued 27 April
2012 1,500,000 - 1,500,000 2017 $0.36 1,638
Issued 14 May
2012 7,700,000 - 7,700,000 2017 $0.36 1,655
9,200,000 - 9,200,000
---------- ------- ----------
Notes to the Financial Statements for the financial year ended
31 October 2012
Consolidated
Year Period
Ended Ended
31 October 31 October
2012 2011
$ $
7. REMUNERATION OF AUDITORS
Auditor of the Parent Entity
Auditing of the financial report 135,000 82,500
135,000 82,500
--------------------------------------- ------------ ------------
Other Auditors
Auditing the financial report 121,883 51,374
Other services - Taxation 20,806 -
----------------------------------
142,689 51,374
--------------------------------------- ------------ ------------
277,689 133,874
--------------------------------------- ------------ ------------
The auditor of eServGlobal is Deloitte
Touche Tohmatsu in Australia and the Other
Auditors are all affiliated firms of Deloitte
Touche Tohmatsu. Fees paid to other auditors
are charged in respective foreign currencies
and are subject to exchange rate fluctuations.
Notes to the Financial Statements for the financial year ended
31 October 2012
31 October 31 October
2012 2011
$'000 $'000
8. CURRENT TRADE AND OTHER RECEIVABLES
Trade receivables (i) 9,683 10,608
Less : Allowance for doubtful
debts (892) (1,092)
------------------------------------------ ----------- -----------
8,791 9,516
Prepayments 956 1,046
Goods and services tax receivable 461 868
Work in progress (Note 9) 3,602 4,910
Deferred sales proceeds - 23,534
Deposits and accrued interest 284 551
14,094 40,425
------------------------------------------ ----------- -----------
(i) The average credit period on sales of goods
and rendering of services is 60 days (31 October
2011: 60 days). Historically, the Group has had
no requirement to charge interest on overdue receivables,
although customer contractual terms include the
ability to do this. Objective evidence is determined
by reference to knowledge of disputes at balance
date, where applicable. The Group also considers
any change in the quality of the trade receivable
from the date credit was initially granted up to
the reporting date.
Before accepting any new customers, the Group
obtains, where considered necessary, third party
references to assess the potential customer's credit
worthiness. The majority of the Group's outstanding
trade receivables consist of large Telecommunication
companies and are considered high quality creditworthy
customers.
Included in the Group's trade receivable balance
are debtors with a carrying amount of $2.6 million
(31 October 2011: $4.9 million) which are past
due at the reporting date for which the Group has
not provided as there has not been a significant
change in credit quality and the amounts are still
considered recoverable. The Group does not hold
any collateral over these balances. The average
days overdue for these receivables is 108 days
(31 October 2011: 133 days).
Consolidated
31 October 31 October
2012 2011
$'000 $'000
Ageing of past due but not
impaired
By up to 30 days 640 466
30 - 90 days 410 1,116
90 - 120 days 371 248
120 + days 1,129 3,047
------------------------------------------ ----------- -----------
2,550 4,877
------------------------------------------ ----------- -----------
Movement in allowance for doubtful
debts
Balance at the beginning of the
year 1,092 1,000
Impairment (reduction)/losses
recognised on receivables (200) 92
Balance at the end of the year (892) 1,092
------------------------------------ ------ ------
Notes to the Financial Statements for the financial year ended
31 October 2012
31 October 31 October
2012 2011
9. WORK IN PROGRESS $'000 $'000
Contract work in progress 17,750 17,064
Progress billings and advances
received (16,273) (14,344)
---------------------------------------- ----------- -----------
1,477 2,720
---------------------------------------- ----------- -----------
Recognised and included in
the financial statements as
amounts due:
From customers:
Current (Note 8) 3,602 4,910
To customers as deferred income:
Current (Note 17) (2,125) (2,190)
---------------------------------------- -----------
1,477 2,720
---------------------------------------- ----------- -----------
31 October 31 October
2012 2011
$'000 $'000
10. CURRENT INVENTORIES
Finished goods 158 170
--------------------------- ----------- -----------
Notes to the Financial Statements for the financial year ended
31 October 2012
11. PROPERTY, PLANT AND EQUIPMENT
Consolidated
---------------------------------------------------------
Office
furniture Leasehold Plant
and fittings improvements and equipment Total
-------------- -------------- --------------- --------
$'000 $'000 $'000 $'000
-------------- -------------- --------------- --------
Gross carrying amount
- at cost
Balance at 30 June
2011 715 11 8,327 9,053
Additions 22 - 7 29
Disposals (86) - - (86)
Net foreign currency (3) - (67) (70)
-------------------------------- -------------- -------------- --------------- --------
Balance at 31 October
2011 648 11 8,267 8,926
Additions 4 - 136 140
Disposals (72) (11) (3,059) (3,142)
Net foreign currency (53) - (684) (737)
-------------------------------- -------------- -------------- --------------- --------
Balance at 31 October
2012 527 - 4,660 5,187
-------------------------------- -------------- -------------- --------------- --------
Accumulated depreciation
Balance at 30 June
2011 584 4 6,624 7,212
Depreciation expense 51 4 271 326
Disposal (55) - - (55)
Net foreign currency (4) - (94) (98)
-------------------------------- -------------- -------------- --------------- --------
Balance at 31 October
2011 576 8 6,801 7,385
Depreciation expense 40 3 594 637
Disposal (72) (11) (2,936) (3,019)
Net foreign currency (55) - (673) (728)
-------------------------------- -------------- -------------- --------------- --------
Balance at 31 October
2012 489 - 3,786 4,275
-------------------------------- -------------- -------------- --------------- --------
Net book value
As at 31 October
2011 72 3 1,466 1,541
-------------------------------- -------------- -------------- --------------- --------
As at 31 October
2012 38 - 874 912
-------------------------------- -------------- -------------- --------------- --------
Notes to the Financial Statements for the financial year ended
31 October 2012
Consolidated
31 October 31 October
2012 2011
$'000 $'000
12. GOODWILL
Gross carrying amount and net
book value
Balance at the beginning of
the financial year 15,391 15,637
Translation effects of foreign
currency exchange movements (1,063) (246)
----------------------------------------------- ------------- ------------
Balance at end of financial
year 14,328 15,391
----------------------------------------------- ------------- ------------
Accumulated impairment losses
Balance at the beginning of
the financial year (9,009) (9,138)
Translation effects of foreign
currency exchange movements 559 129
----------------------------------------------- -------------
Balance at end of financial
year (8,450) (9,009)
----------------------------------------------- ------------- ------------
Net book value
At the beginning of the financial
year 6,382 6,499
----------------------------------------------- ------------- ------------
At the end of the financial
year 5,878 6,382
----------------------------------------------- ------------- ------------
During the financial year, the Group assessed
the recoverable amount of goodwill based on
the methodology below, and determined that
no further impairment was required (four month
period to 31 October 2011: $ nil). The recoverable
amount was assessed by reference to the cash-generating
unit's value in use. A discount factor of 25%
per annum (four month period to 31 October
2011: 23% per annum) was applied in the value
in use model. No write-down of the carrying
amounts of other assets in the cash- generating
unit was necessary.
Allocation of goodwill to cash-generating units
Goodwill has been allocated for impairment
testing purposes to a single cash generating
unit, being the entire business. This is because
substantially the entire product list of the
combined entity is available for sale to, and
being sold to, substantially the entire customer
base of the combined entity.
The recoverable amount of the cash-generating
unit is determined based on a value-in-use
calculation which uses cash flow projections
based on financial budgets approved by management
covering a 5 year period, and a terminal value
based upon an extrapolation of cash flows beyond
the 5 year period using an estimated growth
rate of 3% per annum.
The key assumptions used in the value-in-use
calculation for the cash generating unit are
as follows:
* Sales are expected to grow over the forecast period
between 10% to 17%.
* A gross margin of 60% over the forecast period: this
is based upon average gross margins achieved in the
period immediately before the forecast period.
* In performing the value-in-use calculations, the
company has applied post-tax discount rates to
discount the forecast future attributable post tax
cash flows. The equivalent pre-tax discount rate is
25% per annum.
* Operating expenses are expected to increase steadily
over the forecast period, but at a rate lower than
the sales growth.
Management believes that any reasonably possible
change in the key assumptions on which recoverable
amount is based would not cause the aggregate
carrying amount to exceed the aggregate recoverable
amount of the cash-generating unit.
Notes to the Financial Statements for the financial year ended
31 October 2012
13. INTANGIBLES
Consolidated
-------------------------------------------------------------
Software Customer
& documentation relationships Software
acquired acquired development Total
$'000 $'000 $'000 $'000
----------------- --------------- -------------- ---------
Gross carrying amount
Balance at 30 June
2011 17,545 20,955 6,391 44,891
Internally developed - - 500 500
Effects of foreign
currency exchange
movements - (58) (92) (150)
-------------------------- ----------------- --------------- -------------- ---------
Balance at 31 October
2011 17,545 20,897 6,799 45,241
Internally developed - - 1,826 1,826
Effects of foreign
currency exchange
movements - (164) (283) (447)
-------------------------- ----------------- --------------- -------------- ---------
Balance at 31 October
2012 17,545 20,733 8,342 46,620
-------------------------- ----------------- --------------- -------------- ---------
Accumulated Amortisation
and impairment
Balance at 30 June
2011 (17,545) (17,391) (1,943) (36,879)
Amortisation expense - (891) (690) (1,581)
Effects of foreign
currency exchange
movements - 15 12 27
-------------------------- ----------------- --------------- -------------- ---------
Balance at 31 October
2011 (17,545) (18,267) (2,621) (38,433)
Amortisation expense - (2,479) (2,225) (4,704)
Effects of foreign
currency exchange
movements - 13 12 25
-------------------------- ----------------- --------------- -------------- ---------
Balance at 31 October
2012 (17,545) (20,733) (4,834) (43,112)
-------------------------- ----------------- --------------- -------------- ---------
Net Book Value
As at 31 October
2011 - 2,630 4,178 6,808
-------------------------- ----------------- --------------- -------------- ---------
As at 31 October
2012 - - 3,508 3,508
-------------------------- ----------------- --------------- -------------- ---------
Significant intangible assets
Software development costs of $8.342 million are
amortised over three years.
Notes to the Financial Statements for the financial year ended
31 October 2012
Consolidated
31 October 31 October
2012 2011
$'000 $'000
14. CURRENT TRADE AND OTHER PAYABLES
Trade payables (i) 1,359 2,214
Accruals and other payables 6,457 13,033
---------------------------------------- ----------- -----------
7,816 15,247
---------------------------------------- ----------- -----------
(i) The average credit period on purchases
of certain goods is 45 days (31 October 2011:
45 days). No interest is charged on overdue
payables. The Group has financial risk management
policies in place to ensure that all payables
are paid within the credit timeframe.
31 October 31 October
2012 2011
$'000 $'000
15. BORROWINGS
Secured
Loans 7,200 14,000
Current (i) (iii) 1,200 14,000
Non-current (ii) (iii) 6,000 -
------------------------ ----------- -----------
7,200 14,000
------------------------------ ----------- -----------
(i) Current loans represent a loan from former
shareholder Guiness Peat Group International
Holdings BV. The loan is secured by way of
a fixed and floating charge over the assets
of the Group, interest bearing at 9.75% per
annum and due for repayment on 31 August
2013.
(ii) Non-current loans represent loans from
shareholders, MHB Holdings Pty Ltd ($1,988,100),
Volantis Capital Limited ($2,507,748), Strathclyde
pensions fund ($672,252) and Halliday LLC
($831,900). The loan is secured by way of
a fixed and floating charge over the assets
of the Group and is interest bearing at 9.75%
per annum. During the year, these shareholders
agreed to extend the due date of the loans
to 15 February 2014. Accordingly this loan
is classified as non-current borrowings at
31 October 2012.
(iii) On 29(th) January 2013 the Company
gave seven days irrevocable notice to the
lenders of its intention to repay all the
outstanding $7.2 million shareholder loans.
Notes to the Financial Statements for the financial year ended
31 October 2012
16. PROVISIONS
Retirement
Employee contribution
provisions plans (i) Total
------------ -------------- ------
$'000 $'000 $'000
------------ -------------- ------
Consolidated
Balance as at 31 October
2011 2,515 385 2,900
Additional provisions
recognised 36 46 82
Utilised during the
year (827) - (827)
--------------------------- ------------ -------------- ------
Balance as at 31 October
2012 1,724 431 2,155
--------------------------- ------------ -------------- ------
Current 1,724 - 1,724
Non-current - 431 431
--------------------------- ------------ -------------- ------
1,724 431 2,155
--------------------------- ------------ -------------- ------
(i) The retirement contribution plan is the statutory
termination payment due to eligible employees in
France.
Consolidated
31 October 31 October
2012 2011
$'000 $'000
17. OTHER CURRENT LIABILITIES
Deferred income (Note 9) 2,125 2,190
--------------------------------- ----------- -----------
Notes to the Financial Statements for the financial year ended
31 October 2012
18. ISSUED CAPITAL
31 October 31 October
2012 2011
$'000 $'000
196,847,706 fully paid ordinary
shares (31 October 2011: 196,847,706) 90,770 90,770
--------------------------------------------------------------------- ------------ ------------
31 October 31 October
2012 2011
No. $ No. $
'000 '000 '000 '000
---------------------------------- ---------------------------------- ------------ ------------ --------
Fully Paid Ordinary Shares
Balance at the beginning
of financial year 196,848 90,770 196,848 123,946
Balance at the end of financial
year 196,848 90,770 196,848 90,770
---------------------------------- ---------------------------------- ------------ ------------ --------
In the prior period to 31 October 2011, based
on the Company's shareholders approval, the
directors declared a capital return of $0.16854
per share and paid to shareholders on 23(rd)
August 2011. Total amount paid was $33,176,000.
Subsequent to the balance sheet date a total
of 52,198,291 new ordinary shares were issued
through placement and subscription. The Company
now has 249,045,997 ordinary shares in issue.
Further details are contained in Note 30
Fully paid ordinary shares carry one vote
per share and carry the right to dividends.
Changes to the then Corporations Law abolished
the authorised capital and par value concept
in relation to share capital from 1 July
1998. Therefore, the company does not have
a limited amount of authorised capital and
issued shares do not have a par value.
Share Options
In accordance with the terms of the executive
and employee share option plan as at 31 October
2012, employees are entitled to exercise
options granted and thus acquire shares in
the company. Details of the executive and
employee share option plan are contained
in Note 6 to the financial statements.
Notes to the Financial Statements for the financial year ended
31 October 2012
Consolidated
31 October 31 October
2012 2011
$'000 $'000
19. RESERVES
Foreign currency translation (2,099) (3,376)
Employee equity-settled benefits 2,017 1,393
-------------------------------------------- ----------- ------------
(82) (1,983)
-------------------------------------------- ----------- ------------
Foreign currency translation reserve
Balance at beginning of financial
year (3,376) (3,522)
Translation of foreign operations 1,277 146
-------------------------------------------- ----------- ------------
Balance at the end of the financial
year (2,099) (3,376)
-------------------------------------------- ----------- ------------
Exchange differences relating to the translation
from Euros, being the functional currency
of the eServGlobal SAS and its controlled
entities, into Australian dollars are brought
to account by entries made directly to the
foreign currency translation reserve.
Employee equity-settled benefits
reserve
Balance at beginning of financial
year 1,393 1,132
Share based payments 624 261
Balance at the end of the financial
year 2,017 1,393
---------------------------------------- ------ ------
The employee equity-settled benefits reserve
arises on the grant of share options to key
management personnel and employees under
the executive and employee share option plan.
Amounts are transferred out of the reserve
and into issued capital when options are
exercised. Further information about share-based
payments to key management personnel and
employees is contained in Note 6 to the financial
statements.
20. ACCUMULATED LOSSES 31 October 31 October
2012 2011
$'000 $'000
Balance at beginning of the financial
year (59,984) (26,770)
Loss for the year attributable
to equity holders of the parent (15,715) (9,304)
Payment of dividends (Note 22) - (23,910)
--------------------------------------------- ----------- -----------
Balance at end of financial year (75,699) (59,984)
--------------------------------------------- ----------- -----------
Notes to the Financial Statements for the financial year ended
31 October 2012
Consolidated
Period
Year Ended Ended 31
31 October October
2012 2011
Cents Per Cents Per
Share Share
21. LOSS PER SHARE
Basic loss per share (8.0) (4.7)
---------------------------------- ------------- -----------
Diluted loss per share (8.0) (4.7)
---------------------------------- ------------- -----------
Basic loss per share
The loss and weighted average number of ordinary
shares used in the calculation of basic loss
per share are as follows:
Period
Ended 31
October
2011
Year Ended $'000
31 October
2012
$'000
Earnings - being the loss
for the year attributable
to equity holders of the
parent (15,715) (9,304)
---------------------------------- ------------- -----------
31 October 31 October
2012 2011
No '000 No '000
Weighted average number
of ordinary shares 196,848 196,848
---------------------------------- ------------- -----------
Diluted loss per share
The loss and weighted average number of ordinary
and potential ordinary shares used in the
calculation of diluted loss per share are
as follows:
Period
Ended 31
October
2011
Year Ended $'000
31 October
2012
$'000
----------------------------
Earnings - being the loss
for the year attributable
to equity holders of the
parent (15,715) (9,304)
---------------------------------- ------------- -----------
31 October 31 October
2012 2011
No '000 No '000
Weighted average number
of ordinary shares and potential
ordinary shares (a) 196,848 196,848
----------------------------------- ----------- -----------
(a) Weighted average numbers of ordinary shares
and potential ordinary shares used in the
calculation of diluted loss per share reconciles
to the weighted average number of ordinary
shares used in the calculation of basic loss
per share as follows:
Weighted average number
of ordinary shares and potential
ordinary shares used in
the calculation of diluted
loss per share 196,848 196,848
----------------------------------- ----------- -----------
There were no options on issue at year end that have been
considered dilutive for the purposes of determining diluted
earnings per share for the year ended 31 October 2012.
Notes to the Financial Statements for the financial year ended
31 October 2012
Consolidated
31 October 31 October
2012 2011
Cents Total Cents Total
Per Share $'000 Per Share $'000
22. DIVIDENDS
Recognised Amounts
Special dividend recognised
and paid
Fully Paid Ordinary Shares
partly franked - - 0.12146 23,910
In respect of the current financial year no dividend
has been declared.
In the prior period to 31 October 2011, based on
the Company's shareholders approval, the directors
declared a special dividend of $0.12146 per share
(franked amount at $0.083 per share) and paid to
shareholders on 23(rd) August 2011. Total dividend
paid was $23,910,000.
23. LEASES
Operating Leases
Leasing arrangements
Operating leases relate to office facilities with
lease terms of up to five years. The Group does
not have an option to purchase the leased asset
at the expiry of the lease period.
Consolidated
Year Period
Ended Ended
31 October 31 October
2012 2011
$'000 $'000
Non-cancellable operating leases
No longer than 1 year 1,512 1,892
Longer than 1 year and not longer
than 5 years 2,425 3,806
Longer than 5 years - -
---------------------------------- ----------- -----------
3,937 5,698
------------------------------------- ----------- -----------
Notes to the Financial Statements for the financial year ended
31 October 2012
Ownership
Interest
COUNTRY OF INCORPORATION 31 October 31 October
2012 2011
% %
------------------------- --------------------------- ----- ---------------------- ----------------------
24. SUBSIDIARIES
Parent Entity
eServGlobal Limited Australia (vi)
(vii)
Subsidiary
eServGlobal Holdings
SAS France (i) 100 100
eServGlobal SAS France (i) (iii)(viii) 100 100
Indonesia (i)
PT eServGlobal Indonesia (ix) 100 100
eServGlobal (Beijing)
Telecommunication
Technical
Services, Co Ltd China (i) (ix) 100 100
eServGlobal Telecom
Romania Srl Romania (i)(ix)(viii) 50 50
eServGlobal Telecom
Serviços do Brasil
Ltda Brazil (i) (ix) 100 100
eServGlobal (NZ) Pty Australia (ii)
Limited (v) (vi) 100 100
eServGlobal (HK) Limited Hong Kong (i) 100 100
eServGlobal NVSA Belgium (i) 100 100
United Kingdom
eServGlobal UK Limited (x) 100 100
eServ UK Limited United Kingdom(iv) 100 100
eServGlobal Singapore
Pte. Ltd. Singapore (i) 100 100
United States
eServGlobal Inc of America (iv) 100 100
eServGlobal Aust Pty Australia (iv)
Limited (v) (vi) 100 100
(i) These subsidiaries carry on business in their
country of incorporation; France, Indonesia,
China, Romania, Brazil, Hong Kong, Belgium
and Singapore.
(ii) eServGlobal (NZ) Pty Ltd carries on business
in Australia and has a branch which carries
on business in New Zealand.
(iii) eServGlobal SAS carries on business in France
and has branches or representative office
which carry on business in Egypt, Poland,
India and the United Arab Emirates.
(iv) These subsidiaries did not trade in the year
ended 31 October 2012.
(v) These subsidiaries are classified as small
proprietary companies and, in accordance
with the Corporations Act 2001, are relieved
from the requirement to prepare, audit and
lodge a financial report.
(vi) These companies are members of the Australian
tax consolidated group.
(vii) eServGlobal Limited is the head entity within
the tax consolidated group.
(viii) This company is a subsidiary of eServGlobal
Holdings SAS. Management have determined
that the group has the power to govern the
financial and operating policies eServ Global
Telecom Romania Srl.
(ix) These companies are subsidiaries of eServGlobal
SAS.
(x) eServGlobal UK Limited carries on business
in the United Kingdom and has a branch which
carries on business in the Netherlands.
Notes to the Financial Statements for the financial year ended
31 October 2012
25. SEGMENT INFORMATION
The Group operates in a single segment being
the telecommunications software solutions business.
Information reported to the chief operating
decision maker for the purposes of resource
allocation and assessment of segment performance
focuses on telecommunication software solution
business.
Revenue from major products and services
The following is an analysis of the Group's
revenue from continuing operations from its
major products and services.
Year Ended Period
31 October Ended
2012 31 October
2011
$'000 $'000
Hardware 613 129
Licences 9,200 817
Services 3,378 1,398
Support 12,148 4,437
Software as a Service 2,731 236
----------------------------------- ------------ ------------
Total revenue from continuing
operations 28,070 7,017
----------------------------------- ------------ ------------
Geographical information
The Group's revenue from continuing operations
from external customers are detailed below
based on the external customers' domiciles.
Year Ended Period
31 October Ended
2012 31 October
2011
$'000 $'000
Middle East 7,863 1,970
Asia Pacific 3,783 1,538
Europe 3,706 1,383
Africa 12,120 1,955
Central and South America 598 171
----------------------------------- ------------ ------------
Total revenue from continuing
operations 28,070 7,017
----------------------------------- ------------ ------------
Information about major customers
Included in the Group's revenue from continuing
operations from external customers are revenues
of approximately $13.8 million (four month period
ended 31 October 2011: $4.1 million) which arose
from sales to the Group's largest customers.
Notes to the Financial Statements for the financial year ended
31 October 2012
26. RELATED PARTY DISCLOSURES
a) Equity Interests in Related
Parties
Equity Interests in Controlled Entities
Details of the percentage of ordinary shares
held in subsidiaries are disclosed in Note 24
to the financial statements.
b) Key management personnel compensation
Details of key management personnel compensation
are disclosed in Note 5 to the financial statements.
c) Key management personnel equity holdings
Fully paid ordinary shares issued
by eServGlobal Limited.
Balance Received Net other Balance
at 1 November on exercise change at 31
of options October
------------------- --------------- ------------- ---------- -------------
No. No. No. No.
------------------- --------------- ------------- ---------- -------------
Year to 31
October 2012
D Smart 40,000 - - 40,000
R Mathews(i) 16,317,275 - - 16,317,275
C Halliday(ii) 23,445,324 - - 23,445,324
F Barrault 500,000 - - 500,000
James Brooke(iii) 35,153,419 - - 35,153,419
Stephen Baldwin
(iv) - - 932,600 932,600
Four months
to 31 October
2011
D Smart 40,000 - - 40,000
R Mathews(i) 16,317,275 - - 16,317,275
C Halliday(ii) 23,445,324 - - 23,445,324
F Barrault 500,000 - - 500,000
James Brooke(iii) 35,153,419 - - 35,153,419
(i) Has the power to exercise, control the exercise of, or
influence the exercise of, the voting powers or disposal of the
securities to which the relevant interest relates of the 16,110,592
ordinary shares held by MHB Holdings Pty Ltd and 206,683 shares
held by Paua Pty Ltd.
(ii) Has the power to exercise, control the exercise of, or
influence the exercise of, the voting powers or disposal of the
securities to which the relevant interest relates of the 16,110,592
ordinary shares held by MHB Holdings Pty Ltd, 62,005 held by Paua
Pty Ltd, and 7,272,727 shares held by National Nominees Limited
(iii) J Brooke has a relevant interest in shares held by
Henderson Global Investors Limited
(iv) Stephen Baldwin appointed a Director on 25 November 2011.
Notes to the Financial Statements for the financial year ended
31 October 2012
26. RELATED PARTY DISCLOSURES (continued)
c) Key management personnel equity holdings
(continued)
Options issued by eServGlobal Limited to Key Management
Personnel
Balance Granted Exercised Net other Balance Balance Vested Vested Vested
at 1 as change at vested but and during
November compen-sation 31 at 31 not exercisable the
October October exercisable year
--------- ------------- --------- ----------- --------- ------- ----------- ----------- ------
No. No. No. No. No. No. No. No. No.
-------------- --------- ------------- --------- ----------- --------- ------- ----------- ----------- ------
Year to
31 October
2012
Craig Halliday 1,000,000 1,500,000 - (1,000,000) 1,500,000 - - - -
R Arame 1,000,000 1,000,000 - (1,000,000) 1,000,000 - - - -
S Blundell 1,000,000 1,000,000 - (1,000,000) 1,000,000 - - - -
P
Montessori(i) - 750,000 - - 750,000 - - - -
--------- ------------- --------- ----------- --------- ------- ----------- ----------- ------
Balance Granted Exercised Net other Balance Balance Vested Vested Vested
at 1 as change at vested but and during
July compen-sation 31 at 31 not exercisable the
October October exercisable year
--------- ------------- --------- ----------- --------- ------- ----------- ----------- ------
No. No. No. No. No. No. No. No. No.
--------- ------------- --------- ----------- --------- ------- ----------- ----------- ------
Four months
to 31 October
2011
Craig Halliday 1,000,000 - - - 1,000,000 - - - -
R Arame 1,000,000 - - - 1,000,000 - - - -
S Blundell 1,000,000 - - - 1,000,000 - - - -
(i) P Montessori was employed on 6 February 2012.
Each executive share plan option converts into one ordinary
share of eServGlobal Limited when the option is exercised and the
exercise price paid. When options are issued, no amounts are paid
or payable by the recipient of the option (Refer Note 6).
d) Non executive directors option holdings
There were no options in issue to non executive directors during
the financial year or in the prior financial period.
Notes to the Financial Statements for the financial year ended
31 October 2012
26. RELATED PARTY DISCLOSURES (continued)
Consolidated
Year Period
Ended
31 Ended 31
October October
2012 2011
$ $
e) Loans from related parties
Loans from shareholders 6,000,000 14,000,000
During the year, the Group paid
down part of the secured loans
from shareholders and one of
the lenders, Guinness Peat Group
ceased to be a related party
of the company (refer Note 15).
f) Other related party transactions
Interest on shareholder loans 915,740 525,963
Mr Baldwin's Director's Fees,
as detailed in the Directors'
Report, are paid to his private
company 87,083 -
g) Parent Entities
The parent and ultimate parent entity in the
Group is eServGlobal Limited.
Notes to the Financial Statements for the financial year ended
31 October 2012
27. NOTES TO THE STATEMENT OF CASH FLOWS
Consolidated
Year Ended 31 October 2012 Period Ended 31 October 2011
$'000 $'000
a) Reconciliation of cash
For the purposes of the statement of cash
flows, cash and cash equivalents includes
cash on
hand and in banks and investments in money
market instruments, net of outstanding bank
overdrafts.
Cash at the end of the financial year as
shown in the statement of cash flows is
reconciled
to the related items in the statement of
financial position as follows:
Cash and cash equivalents 3,794 10,129
Bank overdraft - -
3,794 10,129
b) Financing facilities
Secured loan facility
* amount used 7,200 14,000
- -
* amount unused
Total Secured loan facilities 7,200 14,000
c) Reconciliation of loss for the year to
net cash flows from operating activities
Loss for the year (15,589) (9,258)
Interest income (562) (1,816)
Depreciation of non-current assets 637 326
Amortisation of non-current assets 4,704 1,581
Loss on disposal of non-current assets 123 31
Unrealised foreign exchange loss 2,290 411
Equity settled share-based payments 624 261
Proceeds from asset disposal (escrow
deposit) (23,307) -
Increase/(decrease) in current income tax
balances (6,835) 163
Increase/(decrease) in deferred tax
balances (1,435) (701)
Changes in net assets and liabilities, net
of effects from acquisition of businesses:
- (Increase)/decrease in assets:
- Receivables 26,331 5,505
- Inventories 12 109
Increase/(decrease) in liabilities:
- Trade payables (7,428) (948)
- Provisions (747) (4,571)
- Other liabilities (68) 68
Net cash used in operating activities (21,250) (8,839)
Notes to the Financial Statements for the financial year ended
31 October 2012
27. NOTES TO THE STATEMENT OF CASH FLOWS (continued)
Consolidated
31 October 2012 31 October 2011
$'000 $'000
d) Cash balance not available for use 428 420
The above cash balance which is not available for use is held as
security by the financial institutions in relation to a financial
guarantee that has been issued on behalf of the company. The cash
balance is held in interest yielding account.
28. FINANCIAL INSTRUMENTS
a) Significant Accounting
Policies
Details of the significant accounting policies and methods adopted, including the criteria
for recognition, the basis of measurement and the basis on which revenues and expenses are
recognised, in respect of each class of financial asset, financial liability and equity instrument
are disclosed in Note 1 to the financial statements.
b) Capital Risk Management
The Group manages its capital to ensure that entities in the Group will be able to continue
as a going concern while maximising the return to stakeholders through the optimisation of
the debt and equity balance. The Group's overall strategy remains unchanged from the period
ended 31 October 2011.
The capital structure of the Group includes cash and cash equivalents and equity attributable
to equity holders of the parent, comprising issued capital, reserves and retained earnings.
At 31 October 2012 the Group had no bank borrowings (31 October 2011: $ nil). The Group has
other borrowings of $ 7.2m which are secured (31 October 2011: $ 14.0m). Operating cash flows
are used to maintain and expand the Group's assets as well as to pay for operating expenses,
tax liabilities and software development activities.
c) Financial Risk Management
Objectives
The Group's activities expose it to a variety of financial risks: market risk (including currency
and interest rate risk), credit risk and liquidity risk. The Group's overall risk management
program focuses on the unpredictability of financial and exchange rate markets and seeks to
minimise potential adverse effects on the Group's performance. The Group seeks to minimise
the effect of foreign currency risks using derivative financial instruments detailed at 28
(e). A risk management framework, including the policy on use of financial derivatives is
governed by the Board of Directors. The Group does not enter into or trade financial instruments,
including derivative financial instruments, for speculative purposes.
d) Market Risk
The Group's activities expose it primarily to the financial risks of changes in foreign currency
exchange rates. The Group has entered into forward foreign exchange contracts to cover foreign
currency receipts arising from specific customer orders. There has been no change to the Group's
exposure to market risks or the manner in which it manages and measures the risk from the
previous period.
Notes to the Financial Statements for the financial year ended
31 October 2012
28. FINANCIAL INSTRUMENTS (continued)
e) Foreign Currency Risk Management
The Group undertakes certain transactions denominated in foreign currencies that are different
to the functional currency of the respective entities undertaking the transactions, hence
exposures to exchange rate fluctuations arise. Exchange rate exposures arising from specific
customer orders are managed within approved policy parameters utilising forward foreign exchange
contracts.
The carrying amount of the Group's foreign currency denominated monetary assets and monetary
liabilities at the reporting date that are denominated in a currency that is different to
the functional currency of the respective entities holding the monetary assets and liabilities
are as follows:
Assets Liabilities
31 October 2012 31 October 2011 31 October 2012 31 October 2011
$'000 $'000 $'000 $'000
US dollars 2,532 3,346 266 55
Euro 98 253 14 99
Forward foreign exchange contracts
There are no forward foreign currency contract outstanding as at the reporting date:
Average Exchange Rate Foreign Currency Contract Value Fair Value
Outstanding 31 October 2012 31 October 2011 31 October 2012 31 October 2011 31 October 2012 31 October 2011 31 October 2012 31 October 2011
Contracts USD'000 USD'000 $'000 $'000 $'000 $'000
Sell US
Dollars
Less than 3
months n/a 1.0846 - 394 - 363 - (12)
3 to 6
months n/a n/a - - - - - -
7 to 9
months n/a n/a - - - - - -
- 394 - 363 - (12)
Consolidated
31 October 2012 31 October 2011
Categories of financial instruments $'000 $'000
Financial Assets:
Cash and cash equivalents 3,794 10,129
Loans and receivables
Receivables 8,791 9,516
Deferred sales proceeds - 23,534
Deposits and accrued interest 284 551
Financial Liabilities:
Trade payables (at amortised cost) 1,359 2,214
Borrowings 7,200 14,000
Notes to the Financial Statements for the financial year ended
31 October 2012
28. FINANCIAL INSTRUMENTS
(continued)
Foreign currency sensitivity analysis
The following table details the Group's sensitivity to a 10% increase and decrease in the
Australian dollar against the relevant foreign currencies, which represents management's assessment
of the possible change in foreign exchange rates. The sensitivity analysis includes only outstanding
foreign currency denominated monetary items (arising from monetary assets and liabilities
held at balance date in a currency different to the functional currency of the respective
entities holding the assets or liabilities) and adjusts their translation at a year end for
a 10% change in foreign currency rates.
USD Impact
Consolidated
31 October 2012 31 October 2011
$'000 $'000
Profit or loss 311 378
Euro Impact
Consolidated
31 October 2012 31 October 2011
$'000 $'000
Profit or loss 12 37
A positive number indicates an increase in profit or loss with the Australian Dollar strengthening
against the respective currency. For a weakening of the Australian Dollar against the respective
currency there would be an equal and opposite impact on the profit, and the amounts above
would be negative.
In management's opinion, the above sensitivity analysis is not fully representative of the
inherent foreign exchange risk as the year end exposure does not necessarily reflect the exposure
during the course of the year.
In addition, the Group includes certain subsidiaries whose functional currencies are different
to the Group's presentation currency. The main operating entity outside of Australia is based
in France. This entity transacts primarily in its functional currency, the Euro, and does
not have significant foreign currency exposures, because of the hedging policies outlined
above. As stated in the Group's Accounting Policies Note 1(e), on consolidation the assets
and liabilities of these entities are translated into Australian dollars at exchange rates
prevailing on the balance date. The income and expenses of these entities is translated at
the average exchange rates for the year. Exchange differences arising are classified as equity
and are transferred to a foreign exchange translation reserve. The Group's future reported
profits could therefore be impacted by changes in rates of exchange between the Australian
Dollar and the Euro.
f) Interest Rate Risk
Management
The Group's exposure to interest rate risk at 31 October 2012 is limited to the interest generated
on deposits balances invested during the course of the year which attract a variable interest
rate and yielded weighted average interest rate of 0.2% for the financial year (period ended
31 October 2011: 4.6%).
Interest rate sensitivity
analysis
The Group's sensitivity to interest rates is restricted only to surplus cash placed on short-term
deposit or short-term drawings on facilities utilised to manage operational cash requirements
across the entities within the group.
Notes to the Financial Statements for the financial year ended
31 October 2012
28. FINANCIAL INSTRUMENTS
(continued)
g) Credit Risk Management
Credit risk refers to the risk that a counterparty will default on its contractual obligations
resulting in financial loss to the Group. The Group has adopted the policy of only dealing
with creditworthy counterparties, as a means of mitigating the risk of financial loss from
defaults. Trade receivables consist of a relatively small number of closely managed customers,
spread across diverse geographical areas. Ongoing credit evaluation is performed on the financial
condition of accounts receivable as part of the overall client management process.
The carrying amount of the financial assets recorded in the financial statements, net of any
allowance for losses, represents the Group's maximum exposure to credit risk.
h) Liquidity Risk Management
Ultimate responsibility for liquidity risk management rests with the board of directors, who
have built an appropriate liquidity risk management framework for the management of the Group's
short, medium and long-term funding and liquidity management requirements. The Group manages
liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing
facilities by continuously monitoring forecast and actual cash flows and matching the maturity
profiles of financial assets and liabilities.
Liquidity and interest
risk tables
The following tables detail the Group's remaining contractual maturity for its non-derivative
financial liabilities. The tables have been drawn up based on the undiscounted cash flows
of financial liabilities based on the earliest date on which the Group can be required to
pay. The table includes principal cash flows.
Weighted average
effective interest
rate Less than 1 month 3 months - 1 year
% $'000 1-3 months $'000 $'000 1-5 years $'000
Consolidated
31 October 2012
Trade payables -
Non-interest bearing - 906 453 - -
Borrowings 9.75% - - 1,200 6,000
31 October 2011
Trade payables -
Non-interest bearing - 1,476 738 - -
Borrowings 9.75% - - 14,000 -
Notes to the Financial Statements for the financial year ended
31 October 2012
28. FINANCIAL INSTRUMENTS
(continued)
The following tables detail the Group's expected maturity for its non-derivative financial
assets. The tables have been drawn up based on the undiscounted contractual maturities of
the financial assets including interest that will be earned on those assets except where the
Group anticipates that the cash flow will occur in a different period based on the earliest
date on which the Group can expect to receive payment. The table includes both interest and
principal cash flows.
Weighted average
effective
interest rate Less than 1 month 3 months - 1 year 5+ years
% $'000 1-3 months $'000 $'000 1-5 years $'000 $'000
Consolidated
31 October 2012
Cash and cash
equivalents 0.02% 3,794 - - -
Deposits -
Non-interest
bearing - - - 284 - -
Trade receivables
- Non-interest
bearing - 4,835 2,418 1,538 - -
----------------
8,629 2,418 1,822 - -
31 October 2011
Cash and cash
equivalents 3.93% 10,129 - - - -
Deposits -
interest bearing 3.50% 6,400 6,014 11,230 - -
Deposits -
Non-interest
bearing - - - 551 - -
Trade receivables
- Non-interest
bearing - 5,234 2,617 1,665 - -
----------------
21,763 8,631 13,446 - -
i) Fair Value of Financial
Instruments
The fair values of financial assets and financial liabilities are determined as follows:
* The fair value of other financial assets and
financial liabilities are determined in accordance
with generally accepted pricing models based on
discounted cash flow analysis using prices from
observable current market transactions;
* Foreign currency forward contracts are measured using
quoted forward exchange rates and yield curves
derived from quoted interest rates matching
maturities of the contracts.
The directors consider that the carrying amount of financial assets and financial liabilities
recorded at amortised cost in the financial statements approximates their fair values.
Notes to the Financial Statements for the financial year ended
31 October 2012
29. PARENT ENTITY INFORMATION
29.1 Financial position 31 October 2012 31 October 2011
$'000 $'000
Assets
Current assets 894 11,465
Non-current assets 21,972 32,772
Total assets 22,866 44,237
Liabilities
Current liabilities 1,792 15,365
Non-current liabilities 6,000 -
Total liabilities 7,792 15,365
Equity
Issued capital 90,770 90,770
Accumulated losses (77,713) (63,291)
Reserves
Employee equity-settled benefits 2,017 1,393
Total equity 15,074 28,872
29.2 Financial performance Period Ended
Year Ended 31 October 2011
31 October 2012 $'000
$'000
Loss for the year (14,422) (9,113)
Other comprehensive income - -
Total comprehensive loss (14,422) (9,113)
Notes to the Financial Statements for the financial year ended
31 October 2012
30. SUBSEQUENT EVENTS
The Company raised GBP3.740 million ($5.736 million) through the placing (the "First Placing")
of 17,807,815 new ordinary shares (the "First Placing Shares") with institutional investors
in the UK and approximately GBP2.457 million ($3.768 million) by means of a direct subscription
for 11,700,000 new ordinary shares (the "Subscription Shares") by investors in Australia (the
"Subscription"). The issue price for the First Placing Shares and the Subscription Shares
(together the "New Shares") was 21 pence ($0.32) per share.
The First Placing and Subscription resulted in the issue of a total of 29,507,815 new ordinary
fully paid shares which represented 14.99 percent of the current issued ordinary share capital
of the Company. Following completion of the First Placing and Subscription, the Company had
226,355,521 ordinary shares in issue (the "Enlarged Share Capital").
The Company subsequently raised a further GBP4.765 million ($7.220 million) through the placing
(the "Second Placing") of 22,690,476 new ordinary shares (the "Second Placing Shares") with
institutional investors in the UK.
The issue price for the Second Placing Shares was also 21 pence ($0.32) per share. The Second
Placing Shares represented approximately 10 percent of the Enlarged Share Capital. Following
completion of the First Placing, Subscription and Second Placing the Company has 249,045,997
ordinary shares in issue.
On 29(th) January 2013 the Company gave seven days irrevocable notice to the lenders of its
intention to repay all the outstanding $7.2 million shareholder loans.
31. ADDITIONAL COMPANY INFORMATION
eServGlobal Limited is a listed public company, incorporated in Australia and operating in
Australia, Europe, the Middle East, North Africa, Asia/Pacific and the Americas.
Registered Office
c/o Simpsons Solicitors
Level 2, Pier 8/9
23 Hickson Road
Millers Point Sydney NSW 2000
Australia
Additional Securities Exchange Information
as at 25 January 2013
Ordinary share capital
249,045,997 fully paid ordinary shares are held by 990 individual shareholders on the Australian
Securities Exchange and 142 individual depository interest holders on the London Stock Exchange
(AIM).
All issued ordinary shares carry one vote per share.
Options
19 individual option holders hold 9,200,000 options
Options do not carry a right to vote.
Distribution of holders of equity securities
Fully Paid Ordinary Shares Depository Interests Listed Options- not listed
Listed on ASX on LSE (AIM)
1-1,000 123 7 -
1,001-5,000 366 15 -
5,001-10,000 189 11 -
10,001-100,000 260 58 -
100,001-Over 52 51 19
Total 990 142 19
Holding less than a
marketable parcel 133
Substantial shareholders Number
Legal and General Investment Management Plc 44,104,905
Henderson Global Investors Ltd 35,153,419
Acorn Capital Limited 28,376,000
MHB Holdings Pty Ltd, Paua Pty Ltd and Richard Mathews 23,590,002
Halliday LLC and Craig Halliday 23,590,002
Investec Asset Management Limited 19,047,619
Hargreave Hale Limited 11,508,068
Twenty largest holders of quoted equity securities
Australian Securities Exchange London Stock Exchange (AIM)
Computershare Clearing Pty Ltd holds 154,302,981 ordinary
fully paid shares on behalf of the
Depositary Interest Holders.
Ordinary Shareholders Number % of Depository Interest (DI) Holders Number % of
capital DI
Holders
NATIONAL NOMINEES LIMITED 21,874,813 8.78 VIDACOS NOMINEES LIMITED 27,723,343 17.97
MHB HOLDINGS PTY LTD 16,110,592 6.47 NORTRUST NOMINEES LIMITED<TDS> 25,011,599 16.21
J P MORGAN NOMINEES AUSTRALIA STATE STREET NOMINEES LIMITED
LIMITED 11,805,819 4.74 <OMO4> 19,047,619 12.34
HSBC CUSTODY NOMINEES 6,032,865 2.42 HSBC GLOBAL CUSTODY NOMINEE (UK) 12,205,368 7.91
(AUSTRALIA) LIMITED LIMITED <764685>
BT PORTFOLIO SERVICES LIMITED 4,121,388 1.65 HSBC GLOBAL CUSTODY NOMINEE (UK) 11,648,006 7.55
<MCMANAMEY SUPER FUND A/C> LIMITED <667656>
LINK 405 PTY LTD 3,161,189 1.27 NORTRUST NOMINEES LIMITED <SLEND> 7,430,076 4.82
CITICORP NOMINEES PTY LIMITED 2,769,688 111 TD WEALTH INSTITUTIONAL NOMINEES 6,385,330 4.14
<COLONIAL FIRST STATE INV (UK) LIMITED <KKCLT>
A/C>
MERRIL LYNCH (AUSTRALIA)
NOMINEES PTY LIMITED 2,105,000 0.85 BNY (OCS) NOMINEES LIMITED <HIT> 5,595,790 3.63
HSBC CUSTODY NOMINEES 2,056,840 0.83 THE BANK OF NEW YORK (NOMINEES) 5,300,000 3.43
(AUSTRALIA) LIMITED LIMITED <RUEGF>
<NT-COMNWLTH SUPER CORP A/C>
PATRICK MCGRORY 1,730,426 0.69 HSBC GLOBAL CUSTODY NOMINEE (UK) 3,260,714 2.11
LIMITED <978777>
RBC INVESTOR SERVICES 1,017,534 0.41 HSBC GLOBAL CUSTODY NOMINEE (UK) 2,929,600 1.90
AUSTRALIA NOMINEES PTY LIMITED <944287>
LIMITED <PISELECT>
MR STEPHEN JOHN BALDWIN
<SUPERANNUATION FUND ACCOUNT> 850,000 0.34 PERSHING NOMINEES LIMITED <LSCLT> 2,484,834 1.61
HALLAM DRAINAGE PTY LTD 782,890 0.31 LR NOMINEES LIMITED <NOMINEE> 1,961,144 1.27
JANVIN PTY LTD 600,000 0.24 MORSTAN NOMINEES LIMITED <SEG> 1,852,000 1.20
CITICORP NOMINEES PTY LIMITED 545,310 0.22 HSBC GLOBAL CUSTODY NOMINEE (UK) 1,844,037 1.20
LIMITED <887711>
MR FRANCOIS BARRAULT 500,000 0.20 BNY (OCS) NOMINEES LIMITED 1,707,708 1.11
MR JAMES PRATT 500,000 0.20 HSBC GLOBAL CUSTODY NOMINEE (UK) 1,376,000 0.89
LIMITED <909731>
MR NIGEL PILCHER + MRS
FRANCES PILCHER <PLICHER BNY MELLON NOMINEES LIMITED
SUPER FUND A/C> 444,000 0.18 <BSDTAGG> 1,206,650 0.78
NBT PTY LTD 400,000 0.16 AURORA NOMINEES LIMITED <2126900> 1,183,920 0.77
MR IAN FRASER MCMANAMEY 376,266 0.15 BARCLAYSHARE NOMINEES LIMITED 930,012 0.60
Additional Securities Exchange Information
as at 25 January 2013
Secretary
Tom Rowe
Chief Financial Officer
Stephen Blundell
Registered Office & Principal Administration Office
Level 2, Pier 8/9
23 Hickson Road
Millers Point Sydney NSW 2000
Australia
Share Registry
Computershare Registry Services Pty Ltd
Level 3, 60 Carrington Street
Sydney NSW 2000
Australia
Stock Exchange listings
eServGlobal Limited's ordinary shares are quoted
on the Australian Securities Exchange Limited under
the ticker "ESV", and on the London Stock Exchange
(AIM) as Depository Interests under the ticker "ESG".
This information is provided by RNS
The company news service from the London Stock Exchange
END
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