eServGlobal Ltd (AX:ESV) H118 results confirm it has reduced its cost base further and is still targeting EBITDA break-even for FY18. It also noted it is having conversations with interested parties relating to the disposal of its core business. This would leave the company holding its 35.7% stake in the HomeSend joint venture, which we estimate makes up most of the current valuation.
Reduced cost base evident in H118 results
eServGlobal saw a small year-on-year decrease in revenues in H118 but, after a period of cost cutting and restructuring, it has materially reduced the EBITDA loss. The company received orders worth €7.7m/A$12.0m in H118, but only recognised €1.2m/A$1.9m in H118, providing a strong backlog going into H218. Management continues to target break-even at the EBITDA level for FY18 and has reduced its expectations for the total cost base for FY18 from €12–12.5m/A$19.0–19.8m to €11–11.5m/A$17.4–18.2m, with further cost reductions likely in FY19. We have made minor changes to our revenue and EBITDA forecasts for FY18. We reflect a higher working capital outflow for FY18 than previously forecast and expect net cash of A$2.5m at the end of FY18.
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