TIDMESG
RNS Number : 3807N
eServGlobal Limited
28 January 2016
eServGlobal Limited
ABN 59 052 947 743
Financial report for the financial year ended 31 October
2015
Annual financial report
For the financial year ended
31 October 2015
Contents
Page
Executive Chairman's report 2
Directors' report 4
Auditor's independence declaration 20
Independent audit report 21
Directors' declaration 23
Consolidated statement of profit or loss and other
comprehensive income 24
Consolidated statement of financial position 25
Consolidated statement of changes in equity 26
Consolidated statement of cash flows 27
Notes to the financial statements 28
Additional securities exchange information 76
Executive Chairman's Review
2015 was a poor year for the core business of this company. We
know that our shareholders are rightly disappointed in our
performance. So are we. In the second half of the year we took
steps to address our issues. We believe that these were the right
actions for the company and we aim for the benefits of these
actions to become apparent in this new financial year.
Although newsflow from our HomeSend joint venture has been
limited, our Board regards actual progress to have been
satisfactory. We are cognisant that HomeSend is, for a significant
portion of our shareholders, the primary motivation to support
eServGlobal. The investment case for HomeSend remains
unchanged.
However, it is the core business that has concerned us all,
primarily due to its cash consumption. This business is now
improving and we believe that we have identified all the factors
that have hindered it. There is no intrinsic external reason why
the core business cannot be a success. A refreshed Board and
management team possess the desire to deliver a much-improved
result in this and subsequent years. Steps to reduce costs and to
improve our processes around sales execution and cash collection
are well in hand. Total overheads in FY2016 are planned to be below
A$14M, compared to approximately A$20M in FY2015.
A significant contributor to the result for 2015 was the impact
on project delivery resulting from poorly defined project scope and
deliverables in the sales process. As a result, in 2015 we were
faced with very challenging projects and deliveries.
A typical project can historically last from three months to a
year, and those timescales worsened in 2015. This in turn led to
significant unplanned project costs, and followed through to delays
in orders and take up. This absorbed huge amounts of time in the
business and was very distracting for all departments, essentially
bringing the sales engine to a halt. Our efforts to resolve this
have been successful and only the tail of these issues persisted
into the early part of the 2016 financial year. Going forward, the
business again has better prospects.
Key to refreshing this business has been the introduction of
PayMobile 3. Challenging projects completed in 2015 were largely
based on PayMobile 2. The difference in the two versions of this
product is substantial. PayMobile 3 'productises' what, in
PayMobile 2, was a large collection of routines needing significant
bespoke project work, and this meant scoping and delivering
projects was challenging and risky. That risk diminishes with
PayMobile 3, which is now live in several sites. A recent
end-to-end implementation of the new platform was completed 35%
faster than previous projects on PayMobile 2.
In the core business, we have been too focused on using only our
own direct sales team and we have been too concentrated on a narrow
geographic customer-base, centred on the Middle East. This narrow
focus affected the 2015 results. Tentative steps had been made to
widen our routes to market and our geography in the past, but
PayMobile 2 was not well-suited to the task.
PayMobile 3 is much more 'channel friendly'. Although each
installation still needs some customisation, our ability to work
with partners, especially in new geographies, has increased. This
supports our belief that we can grow the sales of this business,
and without commensurate growth in costs. We are targeting initial
evidence of progress in broadening our routes to market in the
current year.
A reorganisation of the company's go-to-market strategy of this
scale will take time to deliver visible results for our
shareholders. We expect to turn the corner on our performance
shortly. As we start to evidence that, we will begin to consider
the longer term in more detail.
Mobile financial services in emerging markets is an opportunity
of immense potential. As economies and political landscapes change,
the mobile phone remains the obvious method to connect people
socially and financially across networks, countries and borders.
The core business has the capability to widen its position to
capitalise on this from within its current skills and cost
base.
The HomeSend joint venture is approaching the completion of an
important transition in its lifecycle, from a start-up to, we
expect, a fast growing business, and then later to a very
profitable business.
The focus on corridor deployment during 2015 has resulted in
important growth, with 2,362 live corridors at the end of November
2015, a 50% increase from June 2015 and a 386% increase since
November 2014. New connections are going live each month,
connecting over 200 sending countries and 33 receiving
countries.
We are encouraged by the number of leading MTOs (Money Transfer
Organisations) to have joined the hub, including several of the top
10 MTOs worldwide. We see no reason why this trend will not
continue. MasterCard continues to show strong support for this JV
and have reiterated this in several statements by the senior
executives throughout the year. The connection to the MasterCard
Send platform will mark an important milestone for HomeSend,
leveraging the industry-leading MasterCard network.
eServGlobal's Board remain thoroughly committed to this venture
and are confident in its direction.
Currently, we have a very small Board. While this may not be
considered the optimal size from a governance perspective, it has
been ideal in recent months when we have needed to make quick
decisions. We will review the size of the Board in time. I would
like to thank my colleagues on the Board for their ongoing efforts
and guidance during the year.
I also want to express, on behalf of the Board, gratitude to the
refreshed management team who have shown dedication and energy to
tackle a challenging situation and thank you also to all the staff
who have supported eServGlobal in these crucial first steps towards
recovery and a profitable, sustainable future.
John Conoley
Chairman
Directors' report
The directors of eServGlobal Limited submit herewith the financial
report for the financial year ended 31 October 2015.
The names and particulars of the directors of the company who
served during or since the end of the financial year are shown
below. The directors held office during the whole of the financial
year except as noted:
Name Particulars
----------------- -----------------------------------------------------------------------
John Conoley Executive Chairman
John's extensive experience spans the software, hardware,
IT services, telecommunications and energy markets.
He began his career in the IT industry with IBM in
1983, and worked on a range of industries in technical,
sales, and marketing roles. Since then, Mr. Conoley
has held general management and director-level roles
in small and medium-sized private and public companies.
His most recent roles include: Non-executive director
with IT security company Vistorm, Head of the GBP1.6bn
B2B Energy Division at Eon, Chief Executive Officer
of mobile device company Psion PLC, an international
company listed in the UK. He is also currently CEO
of a Private Equity backed software company based
in the UK.
John holds a Bachelor of Arts (Hons) from Southampton
University.
John was appointed as a Director and a member of the
Audit Committee on 1 May 2013. John was appointed
Executive Chairman on 20 April 2015.
Stephen Baldwin Non-executive Director, Chairman of the Audit Committee
and Chairman of the Remuneration and Nomination Committee
Stephen is a chartered accountant with over 30 years
of business experience. He commenced his career with
Price Waterhouse and had a decade with the firm in
three different countries. He was subsequently employed
in the funds management industry for many years, initially
with Hambro-Grantham and then with Colonial First
State, where he was that group's Head of Private Equity.
He has extensive Board experience across multiple
industries. 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 and
January 29, 2016 02:00 ET (07:00 GMT)
as at 26 January 2016
Ordinary share capital
265,774,052 fully paid ordinary shares are held by 1,190 individual shareholders
on the Australian Securities Exchange and 149 individual depository interest
holders on the London Stock Exchange (AIM).
All issued ordinary shares carry one vote per share.
Options
15 individual option holders hold 6,140,000 options exercisable at $0.36
per option.
Henderson Global Investors Limited holds 39,866,107 options exercisable
at GBP0.0456 per option.
Options do not carry a right to vote.
Distribution of holders of equity securities
Fully Paid Ordinary Depository Options- not
Shares Interests listed
Listed on ASX Listed on LSE (AIM)
1-1,000 165 7 -
1,001-5,000 406 12 -
5,001-10,000 192 12 -
10,001-100,000 357 65 2
100,001-Over 70 53 14
Total 1,190 149 16
Holding less than a
marketable
parcel 661
Substantial shareholders Number
Legal and General Investment Management
Plc 45,295,200
Henderson Global Investors Ltd 46,549,213
Acorn Capital Limited 32,913,500
Twenty largest holders of quoted equity securities
Australian Securities Exchange London Stock Exchange (AIM)
Computershare Clearing Pty Ltd holds
161,729,209 ordinary fully paid shares
on behalf of the Depositary Interest
Holders.
Ordinary Number % of Depository Interest (DI) Number % of
Shareholders capital Holders DI Holders
HSBC CUSTODY NOMINEES NORTRUST NOMINEES LIMITED
(AUSTRALIA) LIMITED 12,346,351 4.65 <TDS> 28,244,699 17.46
J P MORGAN NOMINEES
AUSTRALIA AURORA NOMINEES LIMITED
LIMITED 10,906,213 4.10 <2234100> 18,393,230 11.37
NATIONAL NOMINEES NORTRUST NOMINEES LIMITED
LIMITED 10,755,869 4.05 <SLEND> 16,071,461 9.94
HSBC GLOBAL CUSTODY
CITICORP NOMINEES PTY NOMINEE (UK) LIMITED
LIMITED 7,911,957 2.98 <764685> 12,500,000 7.73
HSBC GLOBAL CUSTODY
PAUA PTY LTD <THE PAUA NOMINEE (UK) LIMITED
A/C> 4,355,812 1.64 <667656> 11,648,006 7.20
BT PORTFOLIO SERVICES
LIMITED <MCMANAMEY
SUPER STATE STREET NOMINEES
FUND A/C> 4,282,604 1.61 LIMITED <OM04> 11,117,000 6.87
HSBC CUSTODY NOMINEES
(AUSTRALIA) LIMITED HSBC GLOBAL CUSTODY
<NT-COMNWLTH NOMINEE (UK) LIMITED
SUPER CORP A/C> 3,884,437 1.46 <944287> 8,685,000 5.37
CITICORP NOMINEES PTY
LIMITED <COLONIAL
FIRST BNY (OCS) NOMINEES LIMITED
STATE INV A/C> 3,821,936 1.44 <HIT> 6,595,790 4.08
THE BANK OF NEW YORK
UBS NOMINEES PTY LTD 3,197,166 1.20 (NOMINEES) LIMITED <703632> 6,454,503 3.99
BNP PARIBAS NOMS PTY GOLDMAN SACHS SECURITIES
LTD <DRP> 2,798,933 1.05 (NOMINEES) LIMITED <ILSEG> 5,216,464 3.23
BNP PARIBAS NOMINEES
PTY LTD <AGENCY
LENDING HAREWOOD NOMINEES LIMITED
DRP A/C> 2,605,935 0.98 <4153230> 4,548,469 2.81
HSBC GLOBAL CUSTODY
NOMINEE (UK) LIMITED
3RD WAVE INVESTORS LTD 2,200,000 0.83 <978777> 3,260,714 2.02
PATRICK MCGRORY 1,730,426 0.65 CHASE NOMINEES LIMITED 2,975,000 1.84
RBC INVESTOR SERVICES
AUSTRALIA NOMINEES PTY APOLLO NOMINEES LTD
LIMITED <PISELECT> 1,515,971 0.57 <CRE> 2,587,448 1.60
MR BRENDAN THOMAS BNY MELLON NOMINEES
BIRTHISTLE 1,130,000 0.43 LIMITED <BSDTGUSD> 2,319,589 1.43
HSBC GLOBAL CUSTODY
NOMINEE (UK) LIMITED
MR JOHN JOSEPH RYAN 1,035,500 0.39 <887711> 2,044,037 1.26
MR STEPHEN JOHN
BALDWIN
+ MRS ANDREA MAREE
BALDWIN
<THE STEVE BALDWIN SF FITEL NOMINEES LIMITED
A/C> 850,000 0.32 <DMOD> 1,782,039 1.10
PLATFORM SECURITIES
MR REMI ARAME 800,000 0.30 NOMINEES LIMITED <KKCLT> 1,757,825 1.09
HONNE INVESTMENTS PTY BNY (OCS) NOMINEES LIMITED
LIMITED 700,000 0.26 <UKREITS> 1,707,708 1.06
JAMES CAPEL (NOMINEES)
MR FRANCOIS BARRAULT 500,000 0.19 LIMITED <PC> 1,141,000 0.71
Company Secretary
Tom Rowe
Registered Office & Principal Administration Office
C/o Simpsons Solicitors
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".
Date of Annual General Meeting
14 March 2016
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR DMGZMFRRGVZZ
(END) Dow Jones Newswires
January 29, 2016 02:00 ET (07:00 GMT)
Eservglobal (LSE:ESG)
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