Takeover target eServGlobal reports reduced revenues & profit

Stuart Corner
Wednesday, 25 February 2009 01:23

IT Industry - Market

eServGlobal (ASX: ESV) a company that develops and implements convergent charging and rating, mobile payment, network services and messaging products has reported reduced revenues, EBITDA and profit of the half year to 31 December and says it is continuing discussions with potential purchasers.

Sales revenue for the first half was $83.1m, compared with $91.1m for the previous corresponding period. EBITDA for the first half was $7.1m, compared with $13.2m in the previous corresponding period, partly due to costs associated with a restructuring programme. NPAT was down from $5.25m to $0.73m.

Executive chairman, Ian Buddery, said: "The first half EBITDA was impacted by our restructuring programme, which will transfer headcount and infrastructure to our low cost locations in Romania and India and which will begin to bring cost savings in the second half of this fiscal year, taking full effect in the 2010 fiscal year."

He added: "The global telecommunications market is being affected by the global economic downturn however eServGlobal is able to deliver solutions now that maximise operator revenues in the short term, while we continue to develop new products that will position us as a leader in the next wave of telecommunications growth...We believe that the second half will demonstrate improved revenue and profit performance and a momentum for continuing growth in FY10, driven by demand for our new products and recovering subscriber growth in emerging countries."

Buddery said the company's prospects had been buoyed by the release at Mobile World Congress in Barcelona of its Social Relationship Manager (SRM) and an endorsement of its products by the global GSM Association.

"GSMA, the global mobile operators' association, recently selected eServGlobal's HomeSend service as one of three remittance platforms endorsed for their 750 GSM mobile phone operators and three billion subscribers worldwide," Buddery said. He claimed that "HomeSend is the only mobile-centric platform and represents both a new revenue channel for operators and a cost saving for subscribers."

SRM enables telecoms operators to "engage with a potential market of over 650 million social network website users and features an innovative deployment10 Feb) model, which allows us to penetrate new accounts with a compelling business benefit," (ExD 10 Feb).

Meanwhile the company is negotiating with potential purchasers, saying that a short-list of potential buyers has been drawn up, and further announcements will be made in due course.

Buddery told the company's AGM last November that "We have enjoyed a successful year growing the business in 2008. This has been recognised by potential investors in the company and we have received several preliminary approaches. To coordinate our response and to ensure shareholder value is maximised the board has appointed ABN Amro Bank NV to advise on potential options in relation to these approaches."