eServGlobal Limited HomeSend Capital Raise and Core Business Update (3227A)
28 9월 2015 - 3:01PM
UK Regulatory
TIDMESG
RNS Number : 3227A
eServGlobal Limited
28 September 2015
eServGlobal Limited ("eServGlobal" or the "Company")
HomeSend Capital Raise and Core Business Update
28 September 2015
eServGlobal (AIM:ESG & ASX:ESV), the provider of end-to-end
mobile financial services to emerging markets, announces that it
expects the HomeSend board to approve a capital raise of EUR10M
shortly and eServGlobal will be offered the chance to subscribe for
shares so as to maintain its 35% holding.
The pro rata offer to eServGlobal is currently expected to be
for partly paid shares, with full voting rights, with EUR875K
payable in mid October 2015 and EUR2.625M in April 2016. Should
eServGlobal fail to make the final payment in April 2016, the other
JV partners are entitled (but not obliged) to acquire all of
eServGlobal's partly paid shares at the paid up amount. The shares
will be issued, on a fully paid basis, at the same price as at
inception of the JV and will represent 14.28% of the enlarged
issued share capital of HomeSend.
The HomeSend investment proposition has improved since
inception. The Board of eServGlobal recently commissioned an
independent valuation of its investment in HomeSend that, on a DCF
basis, valued eServGlobal's interest in the enterprise value of
HomeSend at EUR18.78M* (compared to EUR16.8M post money valuation
at inception, in April 2014)**.
The funds raised are to be used to assist in a data centre move
to achieve PCI DSS compliance, to enable the establishment and
maintenance of a Payments Licence that will open up significant
additional corridors, and finally to enable more marketing and
co-marketing with partners to enhance take up of the HomeSend
service.
Core Business Update
In its trading update on 4 June 2015, the Company announced cost
saving initiatives. These initiatives have gone beyond the Board's
original plans and, by the start of FY 2016, will offer an improved
opportunity for profit and cash generation going forward. Overheads
in FY 2016 are expected to be approximately 30% lower than FY 2015
overheads. Restructuring has removed excess cost at Board and
management level, as well as targeting historical roles and
structures which provide less value going forward.
The sales organisation restructure has already been completed,
giving the sales team a stronger platform from the start of FY
2016. Irrespective of the FY 2015 result, the business will enter
FY 2016 in an improved position to capitalise on its PayMobile 3
platform allied to a streamlined structure and cost base. PayMobile
3 is the Company's newest generation of software that provides for
faster implementation and conversion of sales to revenue and at a
higher margin than the version it replaced.
For the year to 31 October 2015, whilst the Company continues to
work on a number of key sales opportunities, the Board now
considers there to be an increased risk that revenue and EBITDA
will be below market expectations. Traditionally the business has a
back end loading to its revenue profile making it very fourth
quarter sensitive. In addition, the opportunities currently being
worked on are the highest margin deals of the financial year.
Combined with cost overruns from long running historic projects,
there will be a disproportionate impact on EBITDA if these higher
margin deals are not closed before our financial year end. Whilst
the Company has not closed key opportunities in the time frame
expected, the Company has lost little of its pipeline.
The Board expects to be in a position to provide a fuller update
to the Company's FY 2015 guidance during October 2015.
The delay in signing key opportunities will have consequent
effect on cash collection, and therefore the Company expects to
have limited working capital from operations over the next few
months. In addition, the Board currently intends to participate in
the capital raising in HomeSend referred to above. For these two
reasons, the Board is looking to raise approximately GBP2.5M
shortly and up to a total of GBP5M before April 2016. The Company
is currently in discussions with a shareholder regarding a possible
loan of up to GBP5M. The Company will make a further announcement
in due course to update the market on the outcome of these
discussions.
As previously stated at the Annual General Meeting on 24 March
2015, the Board is mindful that eServGlobal is a company of two
parts - an established core business and a start-up with high
growth potential. The Board continues to keep under continuous
review the best ways in which to manage the Company to enhance
shareholder value.
*DCF valuation based on the HomeSend management business plan
adjusted in July 2015, WACC of 13.5% and minority discount of
20%.
** Based on MasterCard investment and with a minority discount
of 20%.
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 www.canaccordgenuity.com
and Broker) T: +44 (0) 20 7523
Simon Bridges / Cameron Duncan 8000
/ Emma Gabriel
Newgate www.newgatecomms.com
Adam Lloyd / Helena Bogle T: +44 (0) 20 7653
9850
About eServGlobal
eServGlobal (AIM:ESG, ASX:ESV) offers mobile money solutions
which put feature-rich services at the fingertips of users
worldwide, covering the full spectrum of mobile financial services,
mobile wallet, mobile commerce, recharge, promotions and agent
management features. eServGlobal invests heavily in product
development, using carrier-grade, next-generation technology and
aligning with the requirements of more than 65 customers in over 50
countries.
Together with MasterCard and BICS, eServGlobal is a joint
venture partner of the HomeSend global payment hub, a market
leading solution based on eServGlobal technology and enabling
cross-border money transfer between mobile money accounts, payment
cards, bank accounts or cash outlets from anywhere in the world
regardless of the users location.
eServGlobal has been a source of innovative solutions for mobile
and financial service providers for 30 years.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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September 28, 2015 02:01 ET (06:01 GMT)
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