eServGlobal back in profit after Oracle transaction

eServGlobal back in profit after Oracle transaction

However, the Oracle sale hasn't been smooth after eServGlobal received a notification from Oracle claiming it anticipates incurring losses of $11.5 million

Telecoms software vendor, eServGlobal (ASX:ESV) had significant growth within its core licensed-based operations and services business since selling its USP business to Oracle.

It purchased the USP platform, which provides pre-paid charging capabilities, as well as a network services platform and messaging gateway, from the Sydney-based software company in May last year. eServGlobal's financial documents show Oracle purchased the USP assets and business for $103 million. $79.4 million was received immediately with $23.6 million placed in escrow to be released in two equal amounts on the first and second anniversary of the transaction.

However, the sale to Oracle hasn’t been completely smooth sailing with eServGlobal receiving a notification from Oracle claiming that it has or it anticipates incurring losses of $11.5 million in connection with three alleged joint customer billing issues.

eServGlobal strongly disagrees and will vigorously defend the claims, which were considered as largely unsubstantiated.

The company has lodged its objections about these allegations.

This comes on the back of the vendor announcing its unaudited results in the 12 months to June 30.

In a statement the vendor said FY11 was a year of transition with the sale of its USP assets to US-software company, Oracle, completed, and the focus on restructuring its business and building its position within value added services and Mobile Money space.

During the FY11 period, the vendor shifted from a first half EBITDA loss of $6.9 million to adjusted EBITDA profit of $3 million in the second half of the year.

Sales revenue for the period reached $42.8 million and EBITDA profit was $52.2 million including interest income.

Due to the company’s global nature and currency movements, it reported a $1.5 million foreign exchange loss for the year.

The vendor’s Mobile Money and Recharge services are gaining global market access through partners such as Nokia Siemens Networks, and currently maintain 30 deployments across 20 customers globally.

Its HomeSend mobile-to-mobile multilateral remittance hub, is also building market momentum, boasting 300 million global subscribers.

“The investments we have made in our people and products have translated into significant new wins and our entire focus for the coming financial year is on continuing to grow our position,” eServGlobal CEO, Craig Halliday, said.

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