LONDON (Alliance News) - eServGlobal Ltd, which provides mobile financial services in emerging markets, Thursday said it expects to report lower revenue for the first-half of its financial year, while also revealing plans to cut costs.
In a statement, eServGlobal said it expects revenue for the six months ended April 30 to amount to AUD13.0 million, compared with AUD16.9 million in the corresponding period of the prior year. Project backlog at the end of April was AUD7.1 million, 59% higher than at the same stage of the prior year.
eServGlobal said it is trading in line with expectations for the financial year as a whole, with revenue and adjusted earnings before interest, tax, depreciation and amortisation to at least match the prior year performance, excluding the latest actions to cut costs.
"We believe there is an opportunity for some EBITDA upside within the current year, potentially balanced by the risk of second half project delivery execution," Executive Chairman John Conoley said in a statement.
Conoley, who has been leading the company with Chief Operating Officer Stephen Blundell since being appointed as executive chairman in April, hinted at further changes to the company's management. eServGlobal had been looking for a new chief executive to replace Paolo Montessori, who resigned in March ahead of a tough annual meeting later that month, when shareholders voted against the company's remuneration report.
"In the second half, we will be looking beyond the operation to strategic opportunities and we will consider reverting to a more classic executive management structure in due course. My short period as executive chairman, working with the COO has already been very valuable in speeding up business improvement and in deepening the board's understanding of the opportunities for the business in the medium and long term," Conoley said.
The company said its plan should result in savings of more than AUD2.9 million annually, with the effects of "cost optimisation of legal entities, workforce and offices" to be felt in fully in the next financial year.
It is taking out a two-year, unsecured GBP5.0 million loan, which is being provided by two funds managed by a Henderson Global Investors company, itself part of London-listed Henderson Group PLC, to allow it to take action on costs and to support working capital requirements for the elevated delivery schedule in the second half.
eServGlobal expects to save between GBP0.2 million and GBP0.5 million in the second half, though it expects to book between GBP1.8 million and GBP2.2 million in one-off costs.
Alphagen Volantis Fund Ltd and Alphagen Volantis Catalyst Fund Ltd, both of which are managed by Henderson Alternative Investment Advisor Ltd, are providing the loan in equal parts.
An establishment fee of 2.5% will be due to Henderson in relation to the loan deal when it starts. The interest rate on the loan will equal 0.8% per month, "compound payable at the end of the term".
In addition, the company is issuing 2.8 million options, which give Henderson the right but not the obligation to buy shares in eServGlobal at an exercise price of 18 pence over a two year period. The option are equivalent to a 1.045% stake in eSevGlobal.
Henderson and its associates already own 17.5% of the company, meaning that eServGlobal consulted Canaccord Genuity Ltd, its nominated adviser, under AIM rules, which declared the loan "fair and reasonable" to other shareholders.
eServGlobal shares were down 4.0% at 17.52p on Thursday morning.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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