TIDMESG
RNS Number : 8337K
eServGlobal Limited
30 June 2014
eServGlobal Limited (eServGlobal or the "Company")
H1 FY2014 Interim Results
Core business EBITDA profitable
Revenue increase of 24%
EBITDA of A$34.3m, increase of >100%
HomeSend joint venture launched with MasterCard
Paris: 30 June 2014
eServGlobal (AIM:ESG & ASX:ESV), the provider of end-to-end
mobile financial services to emerging markets, is pleased to
announce results for the six month period ended 30 April 2014 ("H1
FY2014").
Financial Highlights
-- H1 FY2014 revenue increased by 24% to A$16.9m (GBP9.3m(1) ) (H1 FY2013: A$13.6m)
o Solid recurring revenue (45% of total revenue)
o No over reliance on any particular Group or geography
-- H1 FY2014 EBITDA reported profit of A$34.3m (GBP19.0m)
o Core business adjusted EBITDA(2) of A$0.9m (GBP0.5m) showing a
significant improvement over H1 FY2013 (loss of A$0.7m)
o Gain on sale of HomeSend business and assets of A$33.9m
(GBP18.7m)
-- Total costs in H1 FY2014 of A$16.0m, approximately 6% lower year-on-year in Euro terms
-- Profit per share was 8.2 cents (A$) (H1 FY2013: loss per share of 1.1 cents)
-- Healthy cash balance of A$11.6m reflecting receipt of
proceeds of A$8.2m following the closure of the HomeSend Joint
Venture with MasterCard and BICS (the "HomeSend JV") and the
issuance of 4,500,000 new ordinary shares raising a total of A$3.4m
net of expenses.
(1.) Average exchange rate over the period was 0.5518 GBP to AUD (2.) Excludes gain on sale of HomeSend business assets, non-recurring items, foreign exchange gains, share based payments and loss attributable to associate resulted in a net loss of A$0.4m (1H FY2013 net gain of A$0.4m)
Operational Highlights
-- Strong organic growth in the core business driven by both new
customer wins and expansions within existing customers. Core
business solutions now in more than 65 customer sites in over 50
countries.
o Customer footprint includes presence in four Tier-1 operator
groups (Zain, Orange, Ooredoo and Vodafone), reducing customer
concentration and providing geographic diversification.
o Continued progress within the Zain Group following the
framework announcement in 2013.
o New project won with financial institution in West Africa for
end-to-end mobile money solution.
o New projects announced in Nepal, Bangladesh and Armenia.
-- The HomeSend gobal payment hub joint venture with MasterCard
and BICS successfully closed on 3 April 2014, taking the
international money transfer platform to its next level of
worldwide expansion.
-- MoneyGram signed a global agreement with HomeSend for international mobile money transfer.
Current trading and outlook
-- Following a number of project wins in FY2013 and H1 FY2014,
the Company has a strong pipeline of work with new and existing
cutomers, both traditional mobile operators and non-traditional
financial institutions, which is expected to convert to revenues in
H2 FY2014 and FY2015.
-- Revenue backlog of A$4.8m (H1 2013: A$2.5m).
Paolo Montessori, Chief Executive Officer and Managing Director,
commented:
"Today's results demonstrate that eServGlobal is a market
leader. Our core business is profitable, has a strong pipeline of
work and a substantial base of customers worldwide.
"Our technology addresses a clear and current problem, the lack
of access to bank accounts for a vast section of the global
population. Through our domestic mobile financial services
solution, we are working with operators and financial service
providers across the globe to bring safe, convenient and
cost-effective financial offerings to their users in emerging
markets.
"The creation of the HomeSend JV is a significant milestone for
eServGlobal, for the HomeSend solution and for the global payments
space. Through our participation in the JV, we will play another
key role in the shift to digital financial services by providing an
open, neutral international money transfer hub.
"The success that we have achieved in H1 FY2014 will ensure the
Company is well positioned to continue to lead in this exciting
market. "
For further information, please contact:
eServGlobal www.eservglobal.com
Tom Rowe, Company Secretary T: +61 2 8014 5050
investors@eservglobal.com
Canaccord Genuity Limited (Nomad and Broker) www.canaccordgenuity.com
Simon Bridges / Cameron Duncan / Brendan T: +44 (0) 20 7523 8000
Gulston
Charles Stanley Securities www.csysecurities.com
Dugald Carlean / Paul Brotherhood T: +44 (0) 20 7149 6000
Newgate Threadneedle www.newgatethreadneedle.com
Hilary Millar / Caroline Forde / Josh Royston T: +44 (0) 20 7653 9850
/ Jasper Randall
Introduction
eServGlobal is a leading technology provider, built on
innovative solutions which anticipate the needs of a rapidly
growing mobile financial services market. The Company is
underpinned by a strong balance sheet, ongoing revenue growth and
EBITDA profitability.
The first six months of the 2014 financial year saw eServGlobal
consolidate its position as a leader in the dynamic and expanding
mobile money space. The core business is profitable, has a strong,
visible recurring revenue stream (45% of total revenue), an
established and growing customer base and a suite of products which
are ideally suited to meet the needs of a growing market
segment.
The HomeSend JV with MasterCard and BICS was successfully closed
on 3 April 2014 and the global payment hub business is now
operating independently with the support of all JV partners.
The Company's H1 FY2014 revenues have increased by 24% yoy to
A$16.9m (H1 FY2013 A$13.6m), resulting in EBITDA of A$34.3m
(GBP19.0m). A gain on sale of the HomeSend business contributed
A$33.4m (GBP18.7m) to H1 FY2014 EBITDA. The core business recorded
an EBITDA profit of A$0.9m (GBP0.5m), showing a significant
improvement over H1 FY2013 (loss of A$0.7m).
These results demonstrate that the ongoing efforts to build a
strong, sustainable business have now come to fruition. eServGlobal
is well positioned as a leader in the mobile financial services
domain, supported by a suite of sophisticated mobile payments
solutions, a solid customer base and a network of blue-chip
partners such as MasterCard and Wincor-Nixdorf.
Operational review
eServGlobal core business: domestic mobile money services
eServGlobal's core business consists of an end-to-end suite of
mobile money and mobile financial services for emerging markets. In
countries where traditional financial services are unable to reach
substantial sections of the population, the ubiquity of the mobile
phone is enabling the creation of new financial ecosystems.
The global mobile payments space is diverse and evolving. While
in developed economies, mobile payment initiatives are competing to
find a way to add value to the existing financial infrastructure,
in emerging markets there exists a real opportunity, a problem
which is in need of a solution. eServGlobal sets itself apart from
other players in that it addresses a demand which exists today.
In H1 FY2014, eServGlobal has announced projects in Nepal,
Bangladesh and Armenia (the relevant media releases are available
on the corporate website). The Company has also won a deal with a
financial institution in West Africa which consists of an
end-to-end mobile money solution. The financial institution already
has a banking licence for the country and wants to launch a fully
featured mobile wallet solution including P2P transfers, government
disbursements, payments at merchant terminals, companion cards and
international money transfers. The service provider was referred to
eServGlobal by HomeSend, demonstrating the continuing benefits that
HomeSend brings to the core business. The project is expected to
launch later in 2014.
Folllowing the new wins throughout FY2013 and already in the new
financial year, we have a healthy pipeline of ongoing work within
the core business, both with the roll-out of solutions for new
customers, upgrades and expansions for existing customers and
ongoing support services. We have a solid track record of working
with our customers for many years. Our solutions are sticky and our
customers regularly need to expand their product offering as their
end-users demand additional features, as well as expand the size of
their licence as their subscriber base grows. This typical customer
cycle allows for a good level of visible recurring revenue within
our business (H1 FY2014 - 45% of total revenue).
International remittance: the HomeSend JV
HomeSend is a disruptive mobile to mobile multilateral
remittance hub, covering more than 1 billion potential users around
the world. HomeSend is now a joint venture of MasterCard,
eServGlobal and BICS. The HomeSend Joint Venture creates one of the
most comprehensive offerings in the market, and will be an
important step in the journey to extending cost-effective and
easy-to-use financial services to people worldwide.
By connecting the worldwide community of telecom partners and
MTOs to the more than 24,000 financial institutions on the
MasterCard network, the HomeSend JV will provide consumers new
options and flexibility for sending or receiving funds and enable
cross border remittance payments worldwide. HomeSend will enable
consumers to send money to and from mobile money accounts, payment
cards, bank account or cash outlets - regardless of their location
or that of the recipient.
-- On 27 March 2014, the Company announced that MoneyGram had
joined the HomeSend Hub (the "Hub"). This global agreement means
that MoneyGram users in more than 200 countries will be able to
remit funds to the mobile accounts of Hub members across the globe.
This significant announcement further strengthens the considerable
reach of the Hub and demonstrates that traditional MTOs (Money
Transfer Organisatons) recognise the value of being able to utilise
HomeSend to complete the 'last mile' and directly connect to mobile
wallets in emerging markets.
-- On 3 April 2014, the HomeSend JV was closed. MasterCard
payment solutions expert, Stephen Doyle, was announced as CEO. The
6-person Board consists of high level executives from MasterCard,
eServGlobal and BICS. eServGlobal is represented on the Board by
eServGlobal CEO and Managing Director, Paolo Montessori and CFO,
Stephen Blundell.
-- As HomeSend moves into the next phase of global expansion we
are seeing continued increases in marketing efforts by Hub members
to their end-users. Xpress Money launched a campaign in June to
encourage transfers from the UK and UAE to mPesa, Kenya. Similarly
in Australia, mHITs Remit is promoting its service for mobile
remittance to GLOBE GCASH and SMART Money in the Philippines, MTN
Mobile Money in Ghana, mPesa in Kenya and Telesom Zaad in
Somaliland.
-- Looking forward, HomeSend aims to be the largest processor of
digital remittances to mobile money globally by 2018.
-- HomeSend will be seamlessly integrated with the MasterCard
network, including MoneySend, allowing a consumer to send or
receive via card to and from any HomeSend customer end point.
-- Increased Hub participation and driving volume are two key
focus areas - top performing mobile money deployments will be
prioritized to drive Hub participation
Market review
The growth of domestic mobile money in emerging markets:
-- Juniper Research is predicting a surge in mobile wallets to
1.5 billion by 2018, meaning 1 in 5 handsets will have mobile
wallet functionality (up from 1 in 10 at the end of 2013). The
report highlighted that in emerging markets, mobile wallets are
enabling first time financial access for unbanked individuals,
anticipating strong growth in deployments in coming years.(3)
-- There are now over 200 million registered mobile money
accounts in emerging markets worldwide(4) , however there remains
2.5 billion working-age adults globally (more than half of the
total adult population) who have no access to formal financial
services.
-- The mobile phone remains the obvious method for reaching
unbanked people due to its ubiquity, even in emerging economies.
The GSMA reports that there are 3.2 billion unique mobile
subscribers worldwide.
-- The GSMA reports that 70% of existing mobile money service
providers are planning to increase their investments in mobile
money in 2014(5) .
-- In Sub-saharan Africa there are more than twice as many
registered mobile money users, than Facebook users(6) .
The growth in the international remittance market:
-- Growth in remittance flows to developing countries, through
official channels, is expected to accelerate to an annual average
of 8.4% over the next three years, reaching US$436 billion in 2014
and US$516 billion in 2016.(7)
-- Remittance flows through unofficial channels are estimated to
be as high as a further 40% of the total market.
-- Predicted market growth is attracting additional players to an already fragemented market, interoperability will be crucial.
-- Approx 85% of transfers are cash based, in part contributing
to the still high retail costs of remittance services.(8)
-- The G8 and the G20 have identified reducing the price of
remittances to 5% as a global target, supported by the World Bank
Global Remittances Working Group (the "GRWG"). The World Bank
states, "Remittances remain a key source of external resource flows
for developing countries, far exceeding official development
assistance and more stable than private debt and portfolio equity
flows."(9)
-- Nearly 1 out of 7 people worldwide is either an international or internal migrant.
Product development
In their State of the Industry Report, the GSMA MMU (Mobile
Money for the Unbanked) highlighted two key areas for the product
growth of mobile money in emerging markets:
-- Mobile Microfinance: Facilitating microfinance through the
mobile phone is being seen as the future of financial inclusion and
a key area for the growth of mobile money in emerging markets. Our
flagship mobile money platform, PayMobile, embeds advanced
microfinance capabilities such as micro insurance, micro savings
and micro loans to provide a complete solution in this area.
-- Interoperablity: There are now at least 52 markets in which
two or more mobile money deployments are in operation.
Interoperability has been highlighted as a critical step-chenge in
the evolution of mobile money and a way of increasing the number of
active users. HomeSend is ideally positioned to serve the
interoperability needs of mobile money deployments worldwide. The
move towards interoperability is now supported by the GSMA through
their MMI initiative.(10)
Through continued investment in product development, eServGlobal
has the capability to service these growing markets and capitalise
on the opportunities presented.
(3) http://www.juniperresearch.com/viewpressrelease.php?id=722&pr=446
(4) http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2014/02/SOTIR_2013.pdf
(5) http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2014/02/SOTIR_2013.pdf
(6) http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2014/02/SOTIR_2013.pdf
(7) The World Bank, 2014
(8) Berg Insight 2012 (9) http://siteresources.worldbank.org/INTPROSPECTS/Resources/3349341288990760745/MigrationandDevelopmentBrief22.pdf
(10) http://www.gsma.com/newsroom/operators-commit-accelerate/
Financial review
The consolidated entity achieved sales revenue for the period of
A$16.937 million (2013: A$13.621 million) - an increase of 24.3%
due to new customer wins and existing customers extending their
mobile money and Value Added Services footprint. The gross profit
realised was A$10.527 million (gross profit margin: 62%) (2013:
A$8.349 million (gross profit margin: 61%)). EBITDA for the period
was a profit of A$34.349 million (2013: EBITDA loss A$0.327
million).
The net result of the consolidated entity for the half year
ended 30 April 2014 was a profit after tax and minority interest
for the period of A$20.548 million (2013: A$2.539 million loss).
Profit per share was 8.2 cents (2013: loss per share 1.1
cents).
During the period, there was a net cash inflow of A$6.530
million primarily resulting from the receipt of proceeds of $8.241
million following the closure on 3 April 2014 of the HomeSend joint
venture with MasterCard and BICS and the issuance of 4,500,000 new
ordinary shares at A$0.75 generating net cash receipts of A$3.365
million, offset by a net outflow from operations of A$4.035
million. Cash at 30 April 2014 was A$11.570 million.
Outlook
The Board is pleased to report that the pipeline remains strong
and the Company is on solid footing for FY2014. The Board is
pleased with revenue growth from H1 FY2013 to H1 FY2014 and that
the core business is EBITDA profitable. Given our market leading
technology, robust financials and strong customer base, we are
confident that we are well positioned to continue to benefit from
the growth of the mobile money industry in emerging markets.
The close of the HomeSend JV towards the end of H1 FY2014 was a
significant milestone for eServGlobal, HomeSend and the wider
global remittance market. We are confident that, with the full
support of MasterCard, the HomeSend JV is well positioned to
dominate the shift to digital in the remittance space.
About eServGlobal
eServGlobal (AIM:ESG, ASX:ESV) offers mobile money solutions
which put feature-rich services at the fingertips of users
worldwide, covering the full spectrum of mobile financial services,
mobile wallet, mobile commerce, recharge, promotions and agent
management features. eServGlobal invests heavily in product
development, using carrier-grade, next-generation technology and
aligning with the requirements of more than 65 customers in over 50
countries.
Together with MasterCard and BICS, eServGlobal is a joint
venture partner of the HomeSend global payment hub, a market
leading solution based on eServGlobal technology and enabling
cross-border money transfer between mobile money accounts, payment
cards, bank accounts or cash outlets from anywhere in the world
regardless of the users location.
eServGlobal also builds on its extensive experience in the telco
domain to offer a comprehensive suite of sophisticated, revenue
generating Value-Added Services to engage subscribers in a dynamic
manner.
eServGlobal has been a source of innovative solutions for mobile
and financial service providers for 30 years.
To view the full PDF of this announcement including the
Independent Auditors Declaration please go to
www.eservglobal.com
Appendix 4D
eServGlobal Limited
ABN 59 052 947 743
Half-year report and appendix 4D
for the half-year ended 30 April 2014
The half-year financial report does not include notes of the
type normally included in an annual financial report and should be
read in conjunction with the 31 October 2013 financial report.
Half-year report and appendix 4D
for the half year ended
30 April 2014
Contents
Results for announcement to the market 1
Directors' Report 2
Auditor's Independence Declaration 4
Independent Review Report 5
Directors' Declaration 7
Condensed consolidated Statement of Profit or Loss and Other Comprehensive Income 8
Condensed consolidated Statement of Financial Position 9
Condensed consolidated Statement of Changes in Equity 10
Condensed consolidated Statement of Cash Flows 11
Notes to the condensed consolidated Financial Statements
12
Results for announcement to the market
Results A$ '000
--------------------------------------------- -----------------------------------
Revenues Up 24.3% to 16,937
Profit after tax attributable to
members Up >100% to 20,548
Dividends (distributions) Amount per Franked amount
security per security
------------------
Current period
Interim dividend declared Nil c 0%
Final dividend paid Nil c 0%
--------------------------------------------- --------------- ------------------
Previous corresponding period
Interim dividend declared Nil c 0%
Final dividend paid Nil c 0%
--------------------------------------------- --------------- ------------------
Record date for determining entitlements N/A
to the dividend.
-----------------------------------
Brief explanation of revenue, net profit and dividends (distributions).
The consolidated entity achieved sales revenue for the period
of $16.937 million (2013: $13.621 million) - an increase of
24.3% due to new customer wins and existing customers extending
their mobile money and Value Added Services footprint. The gross
profit realised was $10.527 million (gross profit margin: 62%)
(2013: $8.349 million (gross profit margin: 61%)). EBITDA for
the period was a profit of $34.349 million (2013: EBITDA loss
$0.327 million).
The net result of the consolidated entity for the half year
ended 30 April 2014 was a profit after tax and minority interest
for the period of $20.548 million (2013: $2.539 million loss).
Profit per share was 8.2 cents (2013: loss per share 1.1 cents).
During the period, there was a net cash inflow of $6.530 million
primarily resulting from the receipt of proceeds of $8.241 million
following the closure on 3 April 2014 of the HomeSend joint
venture with MasterCard and BICS and the issuance of 4,500,000
new ordinary shares at $0.75 generating net cash receipts of
$3.365 million, offset by a net outflow from operations of $4.035
million. Cash at 30 April 2014 was $11.570 million.
------------------------------------------------------------------------
Directors' report
The directors of eServGlobal Limited (the Company) submit
herewith the financial report of eServGlobal Limited and its
controlled entities (the Group) for the half-year ended 30 April
2014. In order to comply with the provisions of the Corporations
Act 2001, the directors report as follows:
Directors
The names of the directors of the company during or since the
end of the half year are:
Stephen Baldwin Acting Chairman (since 3 March 2014) and Non-executive Director
Paolo Montessori Chief Executive Officer & Director
Stephen Blundell Chief Finance Officer & Director
François Barrault Non-executive Director
John Conoley Non-executive Director
Thomas Rowe Non-executive Director (appointed 3 March 2014)
Richard Mathews Non-executive Chairman (resigned 3 March 2014)
Craig Halliday Non-executive Director (resigned 30 December 2013)
Review of Operations
This report is to be read in conjunction with other reports
issued contemporaneously.
eServGlobal Limited is a public company listed on the Australian
Securities Exchange (ASX:ESV) and the London Stock Exchange (AIM)
(LSE:ESG). The eServGlobal group has operations worldwide.
eServGlobal offers mobile money solutions which put feature-rich
services at the fingertips of users worldwide, covering the full
spectrum of mobile financial services, mobile wallet, mobile
commerce, recharge, promotions and agent management features.
eServGlobal invests heavily in product development, using
carrier-grade, next-generation technology and aligning with the
requirements of more than 65 customers in over 50 countries.
eServGlobal also builds on its extensive experience in the telco
domain to offer a comprehensive suite of sophisticated, revenue
generating Value-Added Services to engage subscribers in a dynamic
manner.
eServGlobal closed on 3 April 2014 a joint venture with
MasterCard and BICS to take the HomeSend global payment hub into
its next phase of expansion. The joint venture will enable
cross-border remittances and domestic person-to-person transfers
between mobile money accounts, payment cards, bank accounts or cash
outlets from anywhere in the world regardless of the users
location. MasterCard will have a majority share of the joint
venture while eServGlobal will hold 35%.
eServGlobal has been a source of innovative solutions for mobile
and financial service providers for 30 years.
The consolidated entity achieved sales revenue for the period of
$16.937 million (2013: $13.621 million) - an increase of 24.3% due
to new customer wins and existing customers extending their mobile
money and Value Added Services footprint. The gross profit realised
was $10.527 million (gross profit margin: 62%) (2013: $8.349
million (gross profit margin: 61%)). EBITDA for the period was a
profit of $34.349 million (2013: EBITDA loss $0.327 million).
The net result of the consolidated entity for the half year
ended 30 April 2014 was a profit after tax and minority interest
for the period of $20.548 million (2013: $2.539 million loss).
Profit per share was 8.2 cents (2013: loss per share 1.1
cents).
During the period, there was a net cash inflow of $6.530 million
primarily resulting from the receipt of proceeds of $8.241 million
following the closure on 3 April 2014 of the HomeSend joint venture
with MasterCard and BICS and the issuance of 4,500,000 new ordinary
shares at $0.75 generating net cash receipts of $3.365 million,
offset by a net outflow from operations of $4.035 million. Cash at
30 April 2014 was $11.570 million.
Auditor's independence declaration
The auditor's independence declaration is included on page 4 of
the half-year financial report.
Rounding off of amounts
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 directors' report and the financial report are
rounded off to the nearest thousand dollars, unless otherwise
indicated.
Signed in accordance with a resolution of the directors, made
pursuant to s.306(3) of the Corporations Act 2001.
On behalf of the directors
Stephen Baldwin
Acting Chairman
Sydney, 30 June 2014
Directors' declaration
The directors declare that:
a) in the directors' opinion, there are reasonable grounds to
believe the company will be able to pay its debts as and when they
become due and payable; and
b) in the directors' 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.
Signed in accordance with a resolution of the directors made
pursuant to s.303(5) of the Corporations Act 2001.
On behalf of the directors
Stephen Baldwin
Acting Chairman
Sydney, 30 June 2014
Condensed consolidated statement of profit or loss and other
comprehensive income for the half-year ended 30 April 2014
Consolidated
Half-Year Half-Year
Ended Ended
30 April
2014 30 April 2013
Note $'000 $'000
---------- ---------------
Revenue 16,937 13,621
Cost of sales (6,410) (5,272)
---------- ---------------
Gross profit 10,527 8,349
Interest income 33 13
Gain recognised on disposal of HomeSend
business 11 33,865 -
Foreign exchange gain 1,373 1,066
Research and development expenses (2,258) (1,037)
Sales and marketing expenses (2,841) (2,356)
Administration expenses (6,080) (6,362)
Share of loss of associate 12 (270) -
Profit/(loss) before interest expense,
tax, depreciation and amortisation
(EBITDA) 34,349 (327)
Amortisation expense - (1,171)
Depreciation expense (360) (290)
Profit/(loss) before interest expense
and tax 33,989 (1,788)
Finance costs (142) (325)
Profit/(loss) before tax 33,847 (2,113)
Income tax expense (13,230) (364)
---------- ---------------
Profit/(loss) for the period 20,617 (2,477)
========== ===============
Other comprehensive income (loss),
net of tax
Items that may be reclassified subsequently
to profit or loss
Exchange differences arising on
the translation of foreign operations
(nil tax impact) (328) (1,095)
---------- ---------------
Total comprehensive profit/(loss)
for the period 20,289 (3,572)
========== ===============
Profit (loss) attributable to:
Equity holders of the parent 20,548 (2,539)
Non controlling interest 69 62
---------- ---------------
20,617 (2,477)
========== ===============
Total comprehensive income (loss)
attributable to:
Equity holders of the parent 20,180 (3,635)
Non controlling interest 109 63
---------- ---------------
20,289 (3,572)
========== ===============
Profit/(loss) per share:
Basic (cents per share) 8.2 (1.1)
Diluted (cents per share) 8.0 (1.1)
Notes to the Financial Statements are included on pages 12 to
19
Condensed consolidated statement of financial position
as at 30 April 2014
Consolidated
---------------------------
31 October
30 April 2014 2013
Note $'000 $'000
------ -------------- -----------
Current Assets
Cash and cash equivalents 11,570 4,909
Trade and other receivables 2 (a) 25,762 21,846
Inventories 101 74
Current tax assets 352 4,272
-------------- -----------
37,785 31,101
Assets classified as held for sale - 7,754
-------------- -----------
Total Current Assets 37,785 38,855
-------------- -----------
Non-Current Assets
Investment in associate 12 30,938 -
Property, plant and equipment 195 482
Deferred tax assets 11 1,500 10,325
Goodwill 3,778 3,523
Other receivables 2 (b) 5,134 -
-------------- -----------
Total Non-Current Assets 41,545 14,330
-------------- -----------
Total Assets 79,330 53,185
-------------- -----------
Current Liabilities
Trade and other payables 8,958 8,678
Borrowings 7 3,000 3,000
Current tax payables 2,451 150
Provisions 1,175 1,265
Other 3 1,806 1,989
-------------- -----------
Total Current Liabilities 17,390 15,082
-------------- -----------
Non-Current Liabilities
Provisions 771 749
-------------- -----------
Total Non-Current Liabilities 771 749
-------------- -----------
Total Liabilities 18,161 15,831
-------------- -----------
Net Assets 61,169 37,354
============== ===========
Equity
Issued capital 8 110,060 106,695
Reserves 9 (4,151) (4,090)
Accumulated losses (44,903) (65,451)
-------------- -----------
Parent entity interest 61,006 37,154
Non controlling interest 163 200
Total Equity 61,169 37,354
============== ===========
Notes to the Financial Statements are included on pages 12 to
19
Condensed consolidated statement of changes in equity
for the half-year ended 30 April 2014
Foreign Employee Attributable
Currency equity-settled to owners
Issued Translation benefits Accumulated of the Non controlling
Capital Reserve Reserve Losses parent Interest Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000
--------- ------------- ---------------- ------------ ------------- ---------------- --------
Consolidated
Balance at
1 November
2013 106,695 (6,563) 2,473 (65,451) 37,154 200 37,354
========= ============= ================ ============ ============= ================ ========
Profit/(loss)
for the period - - - 20,548 20,548 69 20,617
Exchange
differences
arising on
translation
of foreign
operations - (368) - - (368) 40 (328)
--------- ------------- ---------------- ------------ ------------- ---------------- --------
Total
comprehensive
income/(loss)
for the period - (368) - 20,548 20,180 109 20,289
Issue of new
shares 3,365 - - - 3,365 - 3,365
Payment of
dividends - - - - - (146) (146)
Equity settled
payments - - 307 - 307 - 307
--------- ------------- ---------------- ------------ ------------- ---------------- --------
Balance at
30 April 2014 110,060 (6,931) 2,780 (44,903) 61,006 163 61,169
========= ============= ================ ============ ============= ================ ========
Balance at
1 November
2012 90,770 (2,099) 2,017 (75,699) 14,989 85 15,074
========= ============= ================ ============ ============= ================ ========
Profit/(loss)
for the period - - - (2,539) (2,539) 62 (2,477)
Exchange
differences
arising on
translation
of foreign
operations - (1,096) - - (1,096) 1 (1,095)
--------- ------------- ---------------- ------------ ------------- ---------------- --------
Total
comprehensive
income/(loss)
for the period - (1,096) - (2,539) (3,635) 63 (3,572)
Issue of new
shares 15,925 - - - 15,925 - 15,925
Equity settled
payments - - 136 - 136 - 136
--------- ------------- ---------------- ------------ ------------- ---------------- --------
Balance at
30 April 2013 106,695 (3,195) 2,153 (78,238) 27,415 148 27,563
========= ============= ================ ============ ============= ================ ========
Notes to the Financial Statements are included on pages 12 to
19
Condensed consolidated statement of cash flows
for the half-year ended 30 April 2014
Consolidated
Half-Year Half-Year
Ended Ended
30 April 2014 30 April 2013
$'000 $'000
--------------- ---------------
Cash Flows from Operating Activities
Receipts from customers 12,747 10,685
Payments to suppliers and employees (18,948) (16,641)
Refund of research & development tax
credits 2,738 -
Interest and other costs of finance
paid (142) (468)
Income tax paid (430) (163)
Net cash used in operating activities (4,035) (6,587)
--------------- ---------------
Cash Flows From Investing Activities
Proceeds from HomeSend business divestment 8,241 -
Interest received 11 7
Payment for property, plant and equipment (46) (14)
Software development costs (860) (856)
--------------- ---------------
Net cash from/(used in) investing
activities 7,346 (863)
--------------- ---------------
Cash Flows From Financing Activities
Proceeds from issue of shares 3,375 16,802
Payment for share issue costs (10) (877)
Repayment of loan - (7,200)
Dividend paid by controlled entity
to non-controlling interest (146) -
--------------- ---------------
Net cash from financing activities 3,219 8,725
--------------- ---------------
Net Increase In Cash and Cash Equivalents 6,530 1,275
Cash At The Beginning Of The Period 4,909 3,794
Effects of exchange rate changes on
the balance of cash held in foreign
currencies 131 18
--------------- ---------------
Cash and Cash Equivalents At The End
Of The Period 11,570 5,087
=============== ===============
Notes to the Financial Statements are included on pages 12 to
19
Notes to the consolidated financial statements
1. Significant accounting policies
(a) Statement of compliance
The half year financial report is a general purpose financial
report prepared in accordance with the Corporations Act 2001 and
AASB 134 Interim Financial Reporting. Compliance with AASB 134
ensures compliance with International Financial Reporting Standard
IAS 34Interim Financial Reporting. The half year financial report
does not include notes of the type normally included in an annual
financial report and should be read in conjunction with the most
recent annual financial report.
(b) Basis of preparation
The condensed consolidated 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 directors' report and the half year financial
report are rounded off to the nearest thousand dollars, unless
otherwise indicated.
The accounting policies and methods of computation adopted in
the preparation of the half year financial report are consistent
with those adopted and disclosed in the company's 2013 annual
financial report for the financial year ended 31 October 2013,
except for the impact of the Standards and Interpretations
described below. These accounting policies are consistent with
Australian Accounting Standards and with International Financial
Reporting Standards.
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 their operations and effective for
the current reporting period.
New and revised Standards and amendments thereof and
Interpretations effective for the current half-year that are
relevant to the Group include:
-- AASB 10 'Consolidated Financial Statements' and AASB 2011-7
'Amendments to Australian Accounting Standards arising from the
consolidation and Joint Arrangements standards'
-- AASB 11 'Joint Arrangements' and AASB 2011-7 'Amendments to
Australian Accounting Standards arising from the consolidation and
Joint Arrangements standards'
-- AASB 12 'Disclosure of Interests in Other Entities' and AASB
2011-7 'Amendments to Australian Accounting Standards arising from
the consolidation and Joint Arrangements standards'
-- AASB 13 'Fair Value Measurement' and AASB 2011-8 'Amendments
to Australian Accounting Standards arising from AASB 13'
-- AASB 119 'Employee Benefits' (2011) and AASB 2011-10
'Amendments to Australian Accounting Standards arising from AASB
119 (2011)'
-- AASB 127 'Separate Financial Statements' (2011) and AASB
2011-7 'Amendments to Australian Accounting Standards arising from
the consolidation and Joint Arrangements standards'
-- AASB 2012-5 'Amendments to Australian Accounting Standards
arising from Annual Improvements 2009-2011 Cycle'
-- AASB 2012-10 'Amendments to Australian Accounting Standards -
Transition Guidance and Other Amendments'
1. Significant accounting policies (continued)
Impact of the application of AASB 10
AASB 10 replaces the parts of AASB 127 'Consolidated and
Separate Financial Statements' that deal with consolidated
financial statements and Interpretation 112 'Consolidation -
Special Purpose Entities'. AASB 10 changes the definition of
control such that an investor controls an investee when a) it has
power over an investee b) it is exposed, or has rights, to variable
returns from its involvement with the investee, and c) has the
ability to use its power to affect its returns. All three of these
criteria must be met for an investor to have control over an
investee. Previously, control was defined as the power to govern
the financial and operating policies of an entity so as to obtain
benefits from its activities. Additional guidance has been included
in AASB 10 to explain when an investor has control over an
investee. Some guidance included in AASB 10 that deals with whether
or not an investor that owns less than 50 per cent of the voting
rights in an investee has control over the investee is relevant to
the Group. The adoption of AASB 10 did not have any impact on the
disclosures or on the amounts recognised in the half-year
report.
Impact of the application of AASB 11
AASB 11 replaces AASB 131 'Interests in Joint Ventures' and the
guidance contained in a related
interpretation, Interpretation 113 'Jointly Controlled Entities
- Non-Monetary Contributions by
Venturers', has been incorporated in AASB 128 (as revised in
2011). AASB 11 deals with how a
joint arrangement of which two or more parties have joint
control should be classified and
accounted for. Under AASB 11, there are only two types of joint
arrangements - joint operations
and joint ventures. The classification of joint arrangements
under AASB 11 is determined based
on the rights and obligations of parties to the joint
arrangements by considering the structure, the
legal form of the arrangements, the contractual terms agreed by
the parties to the arrangement,
and, when relevant, other facts and circumstances. A joint
operation is a joint arrangement
whereby the parties that have joint control of the arrangement
(i.e. joint operators) have rights to
the assets, and obligations for the liabilities, relating to the
arrangement. A joint venture is a joint
arrangement whereby the parties that have joint control of the
arrangement (i.e. joint venturers)
have rights to the net assets of the arrangement. Previously,
AASB 131 'Interests in Joint
Ventures' contemplated three types of joint arrangements -
jointly controlled entities, jointly
controlled operations and jointly controlled assets. The
classification of joint arrangements under
AASB 131 was primarily determined based on the legal form of the
arrangement (e.g. a joint
arrangement that was established through a separate entity was
accounted for as a jointly
controlled entity).
The initial and subsequent accounting of joint ventures and
joint operations is different.
Investments in joint ventures are accounted for using the equity
method (proportionate
consolidation is no longer allowed). Investments in joint
operations are accounted for such that
each joint operator recognises its assets (including its share
of any assets jointly held), its
liabilities (including its share of any liabilities incurred
jointly), its revenue (including its share of
revenue from the sale of the output by the joint operation) and
its expenses (including its share of
any expense incurred jointly). Each joint operation accounts for
the assets and, liabilities, as well
as revenue and expenses, relating to its interest in the joint
operation in accordance with the
applicable Standards.
The adoption of AASB 11 did not have any impact on the
disclosures or on the amounts recognised in the half-year
report.
Impact of the application of AASB 12
AASB 12 is a new disclosure standard and is applicable to
entities that have interests in subsidiaries, joint arrangements,
associates and/or unconsolidated structured entities. The adoption
of AASB 12 did not have any material impact on the disclosures or
on the amounts recognised in the half-year report.
1. Significant accounting policies (continued)
Impact of the application of AASB 13
The Group has applied AASB 13 for the first time in the current
year. AASB 13 establishes a single source of guidance for fair
value measurements and disclosures about fair value measurements.
The scope of AASB 13 is broad; the fair value measurement
requirements of AASB 13 apply to both financial instrument items
and non-financial instrument items for which other AASBs require or
permit fair value measurements and disclosures about fair value
measurements, except for share-based payment transactions that are
within the scope of AASB 2 'Share-based Payment', leasing
transactions that are within the scope of AASB 117 'Leases', and
measurements that have some similarities to fair value but are not
fair value (e.g. net realisable value for the purposes of measuring
inventories or value in use for impairment assessment
purposes).
AASB 13 defines fair value as the price that would be received
to sell an asset or paid to transfer a liability in an orderly
transaction in the principal (or most advantageous) market at the
measurement date under current market conditions. Fair value under
AASB 13 is an exit price regardless of whether that price is
directly observable or estimated using another valuation technique.
Also, AASB 13 includes extensive disclosure requirements.
AASB 13 requires prospective application from 1 January 2013. In
addition, specific transitional provisions were given to entities
such that they need not apply the disclosure requirements set out
in the Standard in comparative information provided for periods
before the initial application of the Standard. In accordance with
these transitional provisions, the Group has not made any new
disclosures required by AASB 13 for the 2013 comparative period,
and the application of AASB 13 has not had any material impact on
the amounts recognised in the consolidated financial
statements.
Impact of the application of AASB 119
In the current year, the Group has applied AASB 119 (as revised
in 2011) 'Employee Benefits' and the related consequential
amendments for the first time. The application of AASB 119 has not
had any material impact on the amounts recognised in the
consolidated financial statements.
Impact of the application of AASB 127, 2012-5 and 2012-10
The Group has applied the above standards and amendments for the
first time in the current year. The adoption of these standards and
amendments did not have any impact on the disclosures or on the
amounts recognised in the half-year report.
The adoption of all the new and revised standards and
interpretations has not resulted in any changes to the Group's
accounting policies and has no effect on the amounts reported for
the current or prior half years.
2. Trade and other receivables
31 October
30 April 2014 2013
$'000 $'000
(a) Current
Trade receivables 12,939 8,049
Work in progress 9,846 10,400
Other receivables 1,042 851
Deposits and prepayments 1,935 2,546
-------------- -----------
Total current trade and other receivables 25,762 21,846
-------------- -----------
(b) Non-current
Deferred sales proceeds 5,134 -
Total other receivables 5,134 -
-------------- -----------
Deferred sales proceeds, which relate to the sale of HomeSend
to the associate company HomeSend SRCL, are held in escrow and
are subject to indemnification provisions within the transaction
agreement. The funds are due to be paid to the Company on 3
April 2016, two years after the transaction agreement date.
3. Other Current Liabilities
31 October
30 April 2014 2013
$'000 $'000
Deferred income 1,806 1,989
-------------- -----------
4. Dividends
Half Year ended Half Year Ended
30 April 2014 30 April 2013
Cents per Total Cents per Total
share $'000 share $'000
Fully paid ordinary shares
Recognised amounts
Final dividend paid in respect
of prior financial year - - - -
---------- ------- ---------- -------
5. Segment Information
AASB 8 requires operating segments to be identified on the basis
of internal reports about components of the Group that are
regularly reviewed by the chief operating decision maker in order
to allocate resources to the segment and to assess its
performance.
The Group operates in a single segment being the
telecommunications software solutions business. Accordingly, all
reported information in the financial report relates to this single
segment.
6. Issuances, repurchases and repayment of securities
During the current period the company issued a total of
4,500,000 shares (2013: 52,198,291), raising a total of $3.365
million net of expenses (2013: $15.925 million).
The fundraising was by way of a broker managed placement of
shares to Australian investors at an issue price of $0.75 per
share.
7. Borrowings
30 April 31 October
2014 2013
$'000 $'000
Secured
Loans 3,000 3,000
3,000 3,000
---------- ---------------
Current borrowings at 30 April 2014 represent a $3 million loan
from National Australia Bank which was drawn down in full in June
2013. The bank loan is interest bearing and is secured by way of a
fixed and floating charge over the total assets of the Group. The
loan facility is due for repayment on 30 June 2014.
8. Issued Capital
30 April 2014 31 October 2013
$'000 $'000
253,545,997 fully paid ordinary
shares (31 October 2013: 249,045,997) 110,060 106,695
-------------- ----------------
30 April 2014 31 October 2013
No. '000 $'000 No. '000 $'000
--------- -------- --------- --------
Fully Paid Ordinary Shares
Balance at the beginning of the
financial period 249,046 106,695 196,848 90,770
Shares issued in the period 4,500 3,375 52,198 16,802
Costs of share issue - (10) - (877)
Balance at the end of the financial
period 253,546 110,060 249,046 106,695
9. Reserves
30 April 2014 31 October 2013
$'000 $'000
Employee equity-settled benefit 2,780 2,473
Foreign currency translation (6,931) (6,563)
-------------- ----------------
(4,151) (4,090)
-------------- ----------------
10. Financial Instruments
This note provides information about how the Group determines
fair values of various financial assets and financial
liabilities.
10.1 Fair value of the Group's financial assets and financial
liabilities that are measured at fair value on a recurring
basis
The Group does not have any financial assets or financial
liabilities that are measured at fair value on a recurring
basis.
10.2 Fair value of financial assets and financial liabilities
that are not measured at fair value on a recurring basis (but fair
value disclosures are required)
The directors consider that the carrying amounts of the
following financial assets and financial liabilities recognised in
the consolidated financial statements approximate their fair
values:
30 April 2014 31 October
2013
$'000 $'000
Financial assets
Trade and other receivables (current
and non-current 30,896 21,846
Cash and cash equivalents 11,570 4,909
Financial liabilities
Trade and other payables 8,958 8,143
Borrowings 3,000 3,000
11. Disposal of HomeSend business
On 19 December 2013 the Group announced the sale of its
international mobile money transfer business, HomeSend to a newly
formed entity, HomeSend SRCL, which is a joint venture between
eServGlobal, MasterCard and BICS.
The transaction was subject to certain conditions precedent and
was subsequently completed on 3 April 2014.
30 April
2014
$'000
(a) Consideration received
Cash consideration received 8,205
Deferred sales proceeds (refer note 2(b)) 5,134
---------
Total consideration received 13,339
---------
(b) Gain on disposal of business
Consideration received (a) 13,339
Plus: fair value of investment retained 31,125
Less: business net assets disposed (8,700)
Less: disposal related costs (1,899)
---------
Gain on disposal 33,865
---------
Net assets disposed comprise of:
Allocated goodwill 3,540
Intangible assets (capitalised R&D expenditure) 5,160
Net assets disposed of 8,700
---------
The Group recognised an income tax expense of $12.837 million on
the disposal of the HomeSend business. The current tax liability in
relation to the disposal of business is net of utilisation of
deferred tax asset relating to accumulated tax losses of $7.038
million which was recognised during the 31 October 2013 financial
year.
12. Investment in associate
Details of the material investment in associate at the end of
the reporting period are as follows:
Name of Principal activity Place of incorporation Proportion of ownership
associate and principal interest and voting rights
place of business held by the Group
----------- --------------------------- ----------------------- ------------------------------
30 April 2014 31 October
2013
----------- --------------------------- ----------------------- ---------------- ------------
Homesend Provision of international Brussels, Belgium 35% N/A
SRCL (i) mobile money services
----------- --------------------------- ----------------------- ---------------- ------------
(i) HomeSend SRCL was formed on 3 April 2014. The directors have
determined that the Group exercises significant influence over
HomeSend SRCL by virtue of its 35% voting power in shareholders
meetings and its contractual right to appoint two out of six
directors to the board of directors of that company.
The associate is accounted for using the equity method in these
condensed consolidated financial statements.
Reconciliation of the carrying amount of the investment in
associate:
30 April
2014
$000
Initial recognition of investment in associate 31,125
Share of current period loss of the associate (270)
Effects of foreign currency exchange movements 83
---------
Carrying value of investment 30,938
13. Subsequent events
There has not been any matter or circumstance, other than those
referred to in the financial statements or notes thereto, that has
arisen since the end of the financial period, that has
significantly affected, or may significantly affect, the operations
of the Group, the results of those operations, or the state of
affairs of the Group in future financial years.
Other information required to be given to ASX under listing rule
4.2A.3
Net tangible assets per Current period 31October 2013
security
Net tangible assets per 22.6 cents 10.5 cents
security
------------------------ --------------- ----------------
Dividends
Amount Amount Franked Amount Date paid/
per security amount per security payable
per security of foreign
at 30% source
tax dividend
-----------
Interim dividend: Current Nil N/A N/A N/A N/A
year
Previous period Nil N/A N/A N/A N/A
-----------
Final dividend paid
in respect of previous
financial year:
Nil N/A N/A N/A N/A
Current period:
Final dividend
Previous corresponding
period: Nil N/A N/A N/A N/A
Special dividend
Final dividend
---------------------------- ------- -------------- -------------- -------------- -----------
The dividend or distribution plans shown below are in operation.
N/A.
---------------------------------------------------------------------
The last date(s) for receipt of
election notices for the dividend N/A
or distribution plans
----------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EAEKNAELLEAF
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