eservglobal investor presentation h1 fy2012 · eservglobal investor presentation h1 fy2012 . 2 high...
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eServGlobal Investor Presentation
H1 FY2012
2
High growth products and services
Large, tier-1 customers
Large, blue chip partners
eServGlobal A provider of premium software & services in high-growth markets.
Recharge International Remittance
Value-Added Services
Mobile Money
3
eServGlobal
} Two Divisions
} Core Business: PayMobile and Value Added Services
} HomeSend: Mobile Remittances
} PayMobile
} 250 million subscribers worldwide.
} Over thirty installations with 20+ customers worldwide.
} HomeSend
} 380 million subscribers covered
} 7 multinational members
} Strategic partnership with BICS
Highlights
5
Financial Highlights and Outlook
} H1 FY2012 revenue increased by 20% on monthly basis A$12.6m (£8.3M+) } Compared against the prior reported period (Four months from 1 July to 31 October 2011: A
$7.0m).
} The pipeline is strong and management is confident that revenues will continue to increase in the second half of the year.
} Recurring revenues, such as maintenance and revenue share fees increased to 62% of total (48% in H1 FY2011)
} Improvement of Gross Margin percentage against H1 FY2011 results (40% vs. 37%)
} Adjusted* OpEx reduced by 39% against H1 FY2011 (A$9.3M vs. A$15.3M)
} Adj. EBITDA of –A$4.3M shows A$2.6M increase over H1 FY 2011
} Adj. PBT of -A$7.3M and adj. PAT of –A$7.5M
+Average exchange rates used over the period of 0.658 GBP to AUD. For information purposes only. *Adjusted to exclude Foreign Exchange impact of A$2.4M and A$1.4M in non-recurring costs in H2 FY2012.
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Operational Highlights
35 50
300 380
FY2010 FY2011 H1
FY2011 H2
Today
HomeSend Subscriber Coverage
Customer Base1 60 65 75 83
Millions
1. FY2010 excludes c. 20 clients with USP products only.
+
June 2010 Dec 2010 June 2011 April 2012
Finance Review
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Majority of the revenue in the period was of a recurring nature
$0M $2M $4M $6M $8M
$10M $12M $14M
Support & Transactional
Licenses Services Hardware
$AM
H1 FY2012 Revenue by Type
Project Work
Support, SaaS, & HomeSend
In addition to continuing support, over 90% of project revenues in the half year were of a recurring nature, namely, routine upgrades, extensions, and change requests.
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Sequential improvements in revenues and costs 1
£1.1M £1.4M
4 Month Accounting Period
FY2012 H1 FY2012 H2
Monthly Revenues GBP Millions Source: Cenkos Estimates
1. Cenkos Note available upon request
2. FY2012 Costs are anticipated to decrease partly as a results of the completion of handoff of low-margin USP contract coverage.
October 2011 April 2012
+20% +c.20%
£2.1M £1.9M
4 Month Accounting Period
FY2012 H1 FY2012 H2
Monthly Costs GBP Millions Source: Cenkos Estimates
-12% -c.20%
October 20122
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H1 FY2012 Highlights 6 month period from November 1 2011 to April 30 2012
+Average exchange rates used over the period of 0.658 GBP to AUD. For information purposes only. *Adjusted to exclude foreign exchange impact of A$2.4M and A$1.4M in non-recurring costs.
H1 FY12 April 2012
H1 FY12 April 2012
A$M £M+
Revenue $12.6 M £8.3 M Cost of sales -‐$7.6 M -‐£5.0 M Gross profit $5.0 M £3.3 M
Adjusted OperaHng Costs* -‐$9.3 M -‐£6.1 M Adjusted EBITDA* -‐$4.3 M -‐£2.8 M
Net Interest -‐$0.3 M -‐£0.3 M AmorHzaHon -‐$2.3 M -‐£1.5 M DepreciaHon -‐$0.4 M -‐£0.2 M Adjusted PBT* -‐$7.3 M -‐£4.8 M
Income Tax Expense -‐$0.1M -‐£0.1 M Adjusted PAT* -‐$7.4 M -‐£4.9 M
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Cashflow H1 FY12 April 2012
4 Month Year October 2011
H1 FY11 December 2010
A$M A$M A$M Cash Flows from Opera:ng Ac:vi:es Receipts from customers $15.4 M $11.0 M $30.5 M Payments to suppliers and employees -‐$27.0 M -‐$19.1 M -‐$38.1 M Interest and other costs of finance paid -‐$0.7 M -‐$0.3 M -‐$0.1 M Income tax refunded / (paid) -‐$7.6 M -‐$0.4 M $1.2 M Net cash used in opera:ng ac:vi:es -‐$19.8 M -‐$8.8 M -‐$6.5 M
Cash Flows From Inves:ng Ac:vi:es Proceeds from disposal of assets $11.5 M -‐ $79.4 M Interest received $1.0 M $1.8 M $1.8 M Payment for property, plant and equipment $0.0 M $0.0 M -‐ Soaware development costs -‐$0.6 M -‐$0.5 M -‐$0.7 M Net cash from/(used in) inves:ng ac:vi:es $11.8 M $1.3 M $80.5 M
Cash Flows From Financing Ac:vi:es Dividends paid -‐ -‐$23.9 M -‐ Capital distribuHon -‐ -‐$33.2 M -‐ Repayment of loan -‐$2.0 M -‐ -‐ Proceeds from borrowings $2.5 M $14.0 M -‐ Net cash from/(used in) financing acHviHes $0.5 M -‐$43.1 M -‐
Net increase/(decrease) In Cash and Cash Equivalents -‐$7.5 M -‐$50.6 M $74.0 M
Cash At The Beginning Of The Period $10.1 M $60.8 M -‐$3.6 M Effects of exchange rate changes on the balance of cash held in foreign currencies $0.0 M -‐$0.1 M $0.0 M
Cash and Cash Equivalents At The End Of The Period $2.6 M $10.1 M $70.4 M
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Balance Sheet H1 FY12 April 2012
A$M
4 Month Year October 2011
A$M Current Assets Cash and cash equivalents $2.6 M $10.1 M Trade and other receivables $25.9 M $40.4 M Inventories $0.2 M $0.2 M Current tax assets $0.1 M $0.1 M Total Current Assets $28.8 M $50.8 M Non-‐Current Assets Property, plant and equipment $1.2 M $1.5 M Deferred tax assets $5.4 M $5.4 M Goodwill $6.0 M $6.4 M Other receivables -‐ -‐ Other intangible assets $4.8 M $6.8 M Total Non-‐Current Assets $17.4 M $20.1 M
Total Assets $46.2 M $70.9 M
Current Liabili:es Trade and other payables $8.8 M $15.2 M Borrowings $14.5 M $14.0 M Current tax payables $0.1 M $6.9 M Provisions $1.7 M $2.5 M Other $2.0 M $2.2 M Total Current Liabili:es $27.1 M $40.9 M Non-‐Current Liabili:es Deferred tax liabiliHes $0.4 M $0.8 M Provisions $0.4 M $0.4 M Total Non-‐Current Liabili:es $0.8 M $1.2 M
Total Liabili:es $27.9 M $42.0 M
Net Assets $18.3 M $28.9 M
Business Review: HomeSend
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Introducing HomeSend
Money is sent from Belgium: Imane sends €100 to her brother
Her brother in Morocco
receives funds in
local currency
Send with HomeSend Receive on Mobile Account
Sending money internationally is transparent and instant 24x7
Received funds move straight into the mobile ecosystem
HomeSend, a strategic partnership between eServGlobal and BICS, is a mobile money transfer hub covering over 380M mobile subscribers, bank customers, and Money Transfer Organization users around the world.
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HomeSend enables low value, high volume transactions
FX Spread
Sending Agent Commission
Hub Commission
Receiving Agent Commission
$10 $20 $40
200% 100% 50%
0.1% 0.1% 0.1%
Competing Money Transfer Organizations Australia to Nepal June 2012
200% 100% 50% Total Price to transfer money via Leading Competing MTO:
HomeSend Price to transfer money: 5% plus sending agent fee (typically A$5 but anticipated to reduce over time)
Amount Sent:
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HomeSend Business Model HomeSend makes money through a share of the end-to-end commission on transferred funds between a variety of remittance service providers.
HomeSend price 4.5 – 6.5%
Banks
MNOs
E-WalletProviders
PSPs
MTOs
Other Hubs
Agents
Shops
Distributors
ATMs
BranchesInternet/Mobile Banking
Merchants
Banks
MNOs
E-WalletProviders
PSPs
MTOs
Other Hubs
Agents
Shops
Distributors
ATMs
BranchesInternet/Mobile Banking
Merchants
Sender Cash-in 1
Sending RSP Commission 2
HomeSend Hub Commission 3
Receiving RSP Commission 4
Receiver Cash-Out 5
1.5% 0.75% eSG
0.75% BICS
1.5%
0-1%
0-1%
1.5%
HomeSend Business Model Basis
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HomeSend current and planned coverage
Live or in the course of going live
Pipeline
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Our Present Focus
Get Transaction Volumes Up
Pricing promotions Marketing efforts
Drive Receiving Power: Emerging Markets
Open API’s to cash-out networks Hosted m-Wallet / agent mg’t service
Eastnets (Pakistan), WafaCash (Morocco)
Build the Platform
GSMA Endorsement
1st Mover Advantage, Patent Pending Regulatory Compliance
Drive Sending Power: Developed Markets
New deal with Lyca - high-growth MvNO
MFIC partnership, Qtel Group, MTN Group
Sign up MNO Receivers
Coverage of much of Africa , Middle East, Russia & CIS
Target to extend coverage to Asia and LatAm and sign 4th receiver
Sign up MNO Senders
Sending presence in Middle East 3 Multinational operators signed
HomeSend Progress We have now signed up a critical mass of MNO receivers for HomeSend and our focus is on extending the network of senders.
Target European senders
4 Multinational receivers signed DONE
DONE
Business Review: Core Business
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Value-Added Services We provide value-added services for over 40 operators around the world.
Messaging & Voicemail Providing core messaging and voicemail services.
B2C Infotainment Services We provide infotainment services for millions of clients in emerging markets.
Our Base
Growth Market
Market Evolution
Loyalty & Retention As consumer choice increases, so does churn and the need to find cutting-edge ways to retain customers and drive value.
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Mobile money market trends
} Accelerated growth in developed markets will be a driver for mobile transfers to unbanked markets
} Barclays Card apps, NatWest apps, Google Wallet, iPhone Passport
} The mobile money for the unbanked market remains nascent but is beginning to build traction
} Strong interest from mobile operators and banks
} Operators initially reticent to invest in emerging technologies; however deal pipeline is increasing as market continues to mature
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Case Study: mCoin mobile money in Indonesia
• Over 90% of Indonesians have mobiles, but the majority of the population does not have a bank account.
• Transferring money domestically takes time and is expensive to do.
• Traditional banks cannot serve them with the infrastructure cost… but mobile money can.
• eSG’s mobile money platform with mCoin fills this gap, enabling people to send money faster and more cost effectively than is currently possible for the majority of Indonesians.
• mCoin work closely with agents who educate users on the service and help them to register for mobile money accounts and store and withdraw their funds.
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Case Study: Nepalese bill payment facilities
• eServGlobal and the largest operator in Nepal teamed up to re-imagine the bill payment process in Nepal.
• In Nepal, most people pay bills by queuing at a designated bill payment counter. Without bank accounts or credit cards, direct debit is impossible; and paying bills in person is both costly and time consuming for all parties involved.
• Subscribers may now use their mobiles to pay bills, saving time and money for all involved.
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Case Study: Value-added services driving record revenues at a tier-one operator
• During the period we deployed our SMS Gateway service, enabling the North African operator’s 30 million subscribers to access SMS-based infotainment and animation services.
• Following the deployment of the new software, the operator reported record results, doubling its revenue from SMS Gateway related services from the existing base and surpassing the project’s ROI in less than one month.
• Additionally, eServGlobal supplies Pay-For-Me and Missed Call Alert service for this operator.
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Summary
} Proforma revenues are up and proforma costs are down against the prior reporting period.
} We are targeting high-growth and high-potential markets and we are investing in our capabilities in those areas.
} We have returned A$57M to shareholders in the past year and continue to focus on delivering shareholder returns.
} With high-growth emerging markets comes risk and the Middle East remains challenging. We are actively working to reduce our exposure via new partners and new markets.
} We continue to focus on winning new customers and deals.
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Disclaimer
This presentation is being furnished for information purposes only and does not constitute or form part of, and should not be construed as, an offer, invitation or recommendation for the sale, purchase or issue of any shares or other securities in eServGlobal Ltd (“eServGlobal” or the “Company”) or any member of its group (the “Group”) and neither it nor any part of it shall form the basis of, or be relied upon in connection with, any investment decision, contract or commitment whatsoever.
The information set out herein has not been verified by the Company or by independent agents and may be subject to amendment without notice, and such information may change materially. No representation, warranty or undertaking, express or implied, is or will be made or given by the Company, any of it subsidiaries or any of its or their directors, officers, employees, agents or advisers or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this presentation and any reliance you place on them will be at your sole risk. The Company, its subsidiaries and any of its or their directors, officers, employees, agents or advisers, save with respect to any liability or fraud, expressly disclaim any and all liability which may be based on the information set out therein and any errors therein or omissions therefrom.
In particular, but without limitation, any statements and projections with respect to eServGlobal’s performance contained in this presentation have been prepared on the basis of management figures arrived at as part of the Company’s normal budgetary process and reflect various assumptions, expectations, beliefs and estimates which may or may not prove to be accurate or realistic. Such statements and projections have not been verified and are not guarantees of future performance, and involve risks, uncertainties and other important factors that may cause eServGlobal’s actual results, performance or achievements to be materially different from those anticipated by such forward-looking statements and projections. Without prejudice to the foregoing, none of the Company, its subsidiaries or any of its or their directors, officers, employees, agents or advisers accept any liability whatsoever (in negligence or otherwise) for any loss howsoever arising, whether directly or indirectly, from use of this presentation or its contents or otherwise arising in connection therewith. This presentation does not constitute a recommendation regarding the securities of the Company.
