Financial Express (Holdings) Limited (“we”, “our”, “us” and derivatives) are committed to protecting and respecting your privacy. This Privacy Policy, together with our Terms of Use, sets out the basis on which any personal data that we collect from you, or that you provide to us, will be processed by us relating to your use of any of the below websites (“sites”).

  • FEAnalytics.com
  • FEInvest.net
  • FETransmission.com
  • Investegate.co.uk
  • Trustnet.hk
  • Trustnetoffshore.com
  • Trustnetmiddleeast.com

For the purposes of the Data Protection Act 1998, the data controller is Trustnet Limited of 2nd Floor, Golden House, 30 Great Pulteney Street, London, W1F 9NN. Our nominated representative for the purpose of this Act is Kirsty Witter.

WHAT INFORMATION DO WE COLLECT ABOUT YOU?

We collect information about you when you register with us or use any of our websites / services. Part of the registration process may include entering personal details & details of your investments.

We may collect information about your computer, including where available your operating system, browser version, domain name and IP address and details of the website that you came from, in order to improve this site.

You confirm that all information you supply is accurate.

COOKIES

In order to provide personalised services to and analyse site traffic, we may use a cookie file which is stored on your browser or the hard drive of your computer. Some of the cookies we use are essential for the sites to operate and may be used to deliver you different content, depending on the type of investor you are.

You can block cookies by activating the setting on your browser which allows you to refuse the setting of all or some cookies. However, if you use your browser settings to block all cookies (including essential cookies) you may not be able to access all or part of our sites. Unless you have adjusted your browser setting so that it will refuse cookies, our system will issue cookies as soon as you visit our sites.

HOW WE USE INFORMATION

We store and use information you provide as follows:

  • to present content effectively;
  • to provide you with information, products or services that you request from us or which may interest you, tailored to your specific interests, where you have consented to be contacted for such purposes;
  • to carry out our obligations arising from any contracts between you and us;
  • to enable you to participate in interactive features of our service, when you choose to do so;
  • to notify you about changes to our service;
  • to improve our content by tracking group information that describes the habits, usage, patterns and demographics of our customers.

We may also send you emails to provide information and keep you up to date with developments on our sites. It is our policy to have instructions on how to unsubscribe so that you will not receive any future e-mails. You can change your e-mail address at any time.

In order to provide support on the usage of our tools, our support team need access to all information provided in relation to the tool.

We will not disclose your name, email address or postal address or any data that could identify you to any third party without first receiving your permission.

However, you agree that we may disclose to any regulatory authority to which we are subject and to any investment exchange on which we may deal or to its related clearing house (or to investigators, inspectors or agents appointed by them), or to any person empowered to require such information by or under any legal enactment, any information they may request or require relating to you, or if relevant, any of your clients.

You agree that we may pass on information obtained under Money Laundering legislation as we consider necessary to comply with reporting requirements under such legislation.

ACCESS TO YOUR INFORMATION AND CORRECTION

We want to ensure that the personal information we hold about you is accurate and up to date. You may ask us to correct or remove information that is inaccurate.

You have the right under data protection legislation to access information held about you. If you wish to receive a copy of any personal information we hold, please write to us at 3rd Floor, Hollywood House, Church Street East, Woking, GU21 6HJ. Any access request may be subject to a fee of £10 to meet our costs in providing you with details of the information we hold about you.

WHERE WE STORE YOUR PERSONAL DATA

The data that we collect from you may be transferred to, and stored at, a destination outside the European Economic Area (“EEA”). It may be processed by staff operating outside the EEA who work for us or for one of our suppliers. Such staff may be engaged in, amongst other things, the provision of support services. By submitting your personal data, you agree to this transfer, storing and processing. We will take all steps reasonably necessary, including the use of encryption, to ensure that your data is treated securely and in accordance with this privacy policy.

Unfortunately, the transmission of information via the internet is not completely secure. Although we will do our best to protect your personal data, we cannot guarantee the security of your data transmitted to our sites; any transmission is at your own risk. You will not hold us responsible for any breach of security unless we have been negligent or in wilful default.

CHANGES TO OUR PRIVACY POLICY

Any changes we make to our privacy policy in the future will be posted on this page and, where appropriate, notified to you by e-mail.

OTHER WEBSITES

Our sites contain links to other websites. If you follow a link to any of these websites, please note that these websites have their own privacy policies and that we do not accept any responsibility or liability for these policies. Please check these policies before you submit any personal data to these websites.

CONTACT

If you want more information or have any questions or comments relating to our privacy policy please email publishing@financialexpress.net in the first instance.

 Information  X 
Enter a valid email address

2 ergo Group plc (MXCP)

  Print      Mail a friend

Thursday 01 December, 2011

2 ergo Group plc

Full year results

RNS Number : 1198T
2 ergo Group plc
01 December 2011
 



1 December 2011

 

2ergo Group plc

 

Full year results

 

2ergo Group plc (AIM: RGO, "2ergo" or "the Group"), the international mobile business and marketing solutions company, has published its full year results for the 12 months ended 31 August 2011.

 

Highlights

·      Revenues £17.7 million (2010: £21.4 million)

·      Gross profit £9.9 million (2010: £10.6 million) with gross margins of 56% (2010: 50%)

·      EBITDA1  £10,000 (2010: £1.4 million)

·      Loss before tax £2.8 million (2010: £0.8 million)

·      Cash balances at 31 August 2011 £2.2 million (2010: £1.5 million)

·      Significant new business wins with leading organisations in all regions of operation

·      Further progress in product and services development

·      The Group invested £4.6 million (2010: £5.1 million) in hardware, software licences and product and platform development

 

1 Before non-cash share option charge

 

Neale Graham, Chief Executive of 2ergo, commented:

 

"The Group has continued to make solid progress during the year even though we have faced challenges with regulatory changes in our industry. We have delivered on a number of key operational objectives in terms of product and service development, and securing significant new business in all regions of operation.

 

"We have aligned our sales and marketing strategy to meet the needs of increasingly discerning customers, which has given us strong traction in the market and our sales pipeline continues to grow.

 

"Whilst the difficult macro-economic situation continues to create a challenging trading environment, key client and partner relationships forged during the year are expected to drive the business forward in 2012."

 

For further information, please contact:

 

2ergo Group plc

+44 (0)161 874 4222

Neale Graham, CEO


Jill Collighan, Group Finance Director




College Hill

+44 (0)20 7457 2020

Adrian Duffield/Jon Davies




Numis Securities Limited

+44 (0)20 7260 1000

Stuart Skinner as Nominated Advisor


David Poutney as Corporate Broker


 

 

About 2ergo Group plc

 

2ergo is the international mobile business and marketing solutions company.  It combines innovative proprietary mobile technologies and professional services to help organisations of all sizes to develop and execute their mobile strategy.

 

Organisations such as the Australian Broadcasting Corporation, Vodafone Hutchison Australia, Fox Sports, Fox Business, Orange, Aviva, Fidelity, Transport for London, Ladbrokes, Times of India, Airtel, PizzaExpress, O2 and Procter & Gamble have all benefited from 2ergo's proprietary end-to-end mobile solutions to increase sales, mobilise business processes, reduce costs and enhance customer relationships.

 

2ergo communicates with all types of mobile users, millions of times each day through innovative mobile business solutions that incorporate search, security, advertising, location, proximity, coupons, tickets, mCommerce and data network analytics, enabling fully-integrated and personalised one to one marketing communications.

 

Headquartered in the UK, 2ergo has been a pioneer of enabling innovative mobile business solutions across multiple sectors and geographies since 1999.  Its international presence spans North America, Latin America, India and Australia. 2ergo is AIM listed on the London Stock Exchange (AIM: RGO).

 

For more information, visit www.2ergo.com.

 

Overview

 

The Group has continued to make solid progress during the year, delivering key operational objectives in terms of product and service development, and securing significant new business in all regions of operation.

 

The Group's investment in core technology development has strengthened its ability to provide customers with industry-leading services.  It has also responded to changing market conditions by focusing its sales and marketing strategy on fast-growing and high-margin services.

 

As the mobile partner to major international corporations, the Group's core focus is on working with its clients to grow their revenues through effective customer acquisition, retention and loyalty campaigns in the mobile space.  This involves providing them with integrated solutions, not just one-off products or services.  It thereby directly aligns the Group with the business needs of organisations looking to leverage the mobile channel, when many are seeking new revenue opportunities to offset declining business from traditional, and often more costly, sales channels.

 

During the year, the Group took the decision to suspend, and ultimately not re-connect, some legacy client services.  This followed a detailed review of the impact of regulatory changes associated with the implementation of the PhonepayPlus 12th Code of Practice.  The Group also successfully managed a number of other regulatory challenges from PhonepayPlus in respect of its legacy business.  As previously advised to the market, these regulatory issues and the associated management time and cost materially impacted the Group's income streams and profitability during the year.

 

The mobile market has continued to evolve at a rapid pace, becoming unrecognisable to the market of only two years ago.  The rush to "app" development is having a direct impact on margins and the Group believes that this area is becoming commoditised and unattractive, as well as difficult to scale through the use of "in-house" development teams.

 

As a result, the Group has taken the strategic decision to reduce its exposure to applications development.  2ergo will now manage the delivery of this area of the business through working in close partnership with external application development partners.  This move will result in a reduction in the Group's cost base.  

 

The Group's progress in delivering its key objectives, in terms of both its operational development and securing significant new business in all regions of operation, is expected to drive the business forward into 2012.

 

Partnerships

 

2ergo was selected as the exclusive mobile technology and platform development provider to Microsoft's Innovation Outreach Program (IOP) for 2011.  The IOP is a premier community of senior innovation executives from 30 top global companies, including 3M, Procter & Gamble and NCR.

 

This relationship has already delivered a substantial proof of concept trial for a leading US restaurant chain.  2ergo is delivering an end-to-end mobile solution to attract footfall, create loyalty and generate more profitable customer relationships.  The initial trial is being implemented across 60 stores in the US between August and December, with the potential to be rolled out to a further 5,000 stores across the United States.

 

The partnership with Gondola Group to develop an end-to-end mobile solution for its PizzaExpress restaurant chain has proved to be very successful.  This solution enables PizzaExpress customers to search for their nearest restaurant, make and confirm bookings, and pay their bill via PayPal, using their smartphone, by means of an integrated payment system linked to the restaurant chain's point of sale systems.  The award winning iPhone "app" achieved almost 100,000 downloads in the first week of launch.  As a result of 2ergo's success in this sector, the Group has recently signed a contract to deliver an mCommerce solution and a series of smartphone applications to a large Australian restaurant chain encompassing more than 300 outlets.

 

As a result of the partnership with U.S. Cellular announced in May, 2ergo is providing the operator with a comprehensive managed service encompassing mobile marketing consultancy, project management and creative services, as well as implementing mobile marketing campaigns to U.S. Cellular's 6.1 million customers.  This model of providing managed mobile services to deliver quantifiable marketing results has subsequently been deployed on a wider scale with well-established clients, notably AT&T.

 

A key strategic partnership with Callcredit Information Group, a consumer data and marketing firm, has further enhanced the Group's mobileDNA offering.  This is a proprietary database of over 10 million mobile numbers, which contains insights from users' mobile activity and transactions from the Group's 11 years' experience in mobile marketing campaigns and services.  This new partnership will enable the two companies to provide their corporate customers with mobile business solutions that target users, based on their mobile behaviour, as well as their financial and social background.

 

Product development

 

The Group made further progress with the development of key components of its core technology, the Multiserve Platform, in particular harnessing mobileDNA and the Group's consumer analytical and profiling module, with VoucherNet, 2ergo's patented mobile couponing solution.  Pivotal to this has been the extensive work carried out integrating VoucherNet with 2ergo's EPOS manufacturing partners.  This means that the Group is now able to process mobile coupons, vouchers and tickets at the point of sale, through a wide range of EPOS terminal types.  This integrated coupon redemption facility creates a truly end-to-end service, enabling customers to pay their retail bill via the smartphone, as utilised by PizzaExpress.

Since 2004 the "un-integrated" version of VoucherNet has delivered over 30 million mobile coupons worldwide.  By combining this technology with 2ergo's mobileDNA database, the Group has created a compelling customer proposition for organisations that want to use mobile vouchers and coupons to drive traffic or footfall, incentivise and reward customers, and measure response rates through one fully integrated service.  This solution has significant appeal to the retail sector, and the Group is in discussion with a number of major retailers with a view to integrating mobile technologies into their multi-channel marketing strategies. 

 

The fact that the Group has achieved ISO 27001 information security standard underlines 2ergo's commitment to best practice.  This standard is not mandatory, but it reaffirms 2ergo's commitment to reaching the highest standards in industry regulation and client satisfaction.  Current regulation in and around mobile payments and marketing continues to be a concern, as industry guidelines are weak at best, and left open to interpretation by inconsistently applied regulation of client services.

 

2ergo has made a strategic decision to move towards securing all data transfer services at the earliest opportunity.  Mobile security will become a major issue for the wider mobile market over the next few

years and by adopting this strategy early 2ergo will be able to further differentiate its offer.  

In the shorter term, coupon and ticketing security is an imminent challenge for organisations operating in that space.  2ergo's security technology overcomes these issues.  The Group will continue to develop its mobile security and payment technology 'Secure Connect', a secure mobile communication protocol for smartphone apps and transactional mobile websites, which will become a key differentiator in coming years. 

 

Geographic review

 

During the year, 2ergo has continued to build a healthy pipeline of business, and secured significant new business wins across all regions of operation. 

 

The Group continues to deliver "Orange Wednesdays", widely perceived as the most successful mobile coupon and redemption campaign in the UK.  Interactive, location-sensitive mobile solutions have also been implemented for Visit England, which provides details and images for thousands of England's top attractions and payasUgym.  The latter is a rapidly growing business, offering a 'pay as you go' service across multiple gym chains, within which customers are able to redeem prepaid gym vouchers at reception via their mobile devices. 

 

2ergo's work with Transport for London (TFL) is part of a four year contract to develop and manage a mobile service platform for its Journey Planner services portfolio ahead of the Olympic Games, covering London Underground, Docklands Light Railway, bus, cycle and taxi information.  The Group's work with TFL, Visit England and similar clients provides 2ergo with the blueprint and strategy for the roll out of other location-based services.

 

2ergo has continued to grow in Australia by working with clients such as the Australian Broadcasting Corporation, Vodafone Hutchison Australia and Nine MSN, as well as winning several new clients in new sectors.  A three-year agreement with the Australian Securities Exchange (ASX) was agreed in October 2010.  This enables the ASX to deliver content and equity prices to investors and market followers, allowing users to view and search real-time company announcements via alerts, 'push notifications' and PDF downloads.

 

Progress has been made in the retail sector, with a two-year agreement with Fantastic Holdings in addition to the success in building & supporting mobile sites for leading auto retailer Automotive Holding, house builder Alcock Brown Neaves and St George Bank.  2ergo Australia has also signed agreements to build smartphone solutions for AlphaPharm, Penguin and Eagle Boys Pizza. 

 

In the US, the Group continues to deepen its relationship with key clients through the development of new initiatives to enhance their mobile propositions.  The business has transitioned its engagement model to a managed, solutions-sales approach, thereby differentiating the business from competitors typically offering single products.  This new consultative approach, embracing consultation, execution, and analytics, has paid dividends and has been the foundation of significant new client engagements, such as those with Microsoft and U.S. Cellular detailed above.  It has also served to expand the engagement with existing key accounts such as AT&T and Procter & Gamble.

 

2ergo has continued its positive momentum in India.  The Group strengthened its client base in the media sector by signing deals for iPad applications with Radio One and India Today Group, both leading national media companies, thereby building on the Group's previous success in delivering mobile services for the prestigious Times of India group.

 

2ergo has also made good progress in the Indian retail sector following the signing of a number of new contracts, including one with Samsung for an SMS based application which helps consumers to locate their nearest stockist.  The FMCG sector also saw 2ergo successfully build a number of IVR (Interactive Voice Response) applications for Procter & Gamble and Marico, that helped these companies extend their reach to the large number of Indian consumers that are neither English speaking nor Internet users.

 

 

Financial review

 

On 1 September 2011 the 12th Code of Practice (the Code) issued by PhonepayPlus, the phone-paid services regulator, came into effect.  The Code is principally self-regulating on the industry and sees the mobile network operators become more accountable for ensuring compliance.

 

As announced by the Group on 14 June 2011, in the run up to the Code becoming effective, the mobile network operators adopted their own operating principles based on their individual interpretations of the Code.  As a result the Group put on hold some client services pending a detailed audit of those services to ensure that they were compliant with each individual network's particular interpretation of the Code.

 

Following that audit, the Group took the decision not to reconnect some clients' non-core services. Primarily as a result of these actions, together with continued active management by the Group in reducing the scale of its low margin wholesale operations, revenue for the year was £17.7 million (2010: £21.4 million).

 


Revenue


Gross Profit


2011

2010

%


2011

2010

%


£000

£000

Change


£000

£000

Change









Direct/Business Partner

12,421

12,457

0%


9,641

10,161

-5%

5,247

8,966

-41%


251

455

-45%


17,668

21,423

-18%


9,892

10,616

-7%

 

2ergo continues to generate revenue in three ways: from initial set up fees, from ongoing monthly fees and from recurring transactions.  Income from transactional and monthly fees accounted for 88% of total revenue and 83% of total gross profit.  The gross margin on these fees rose from 46% in 2010 to 53%.

 

Gross profit was £9.9 million (2010: £10.6 million) with gross profit margins increasing from 50% to 56%, due to the change in mix of sales as shown above.

 

Overheads were £12.6 million (2010: £11.2 million).  Of this increase, £0.7 million relates to additional depreciation and amortisation of the Group's patented technology and £0.2 million relates to the non-cash IFRS 2 share based payment charge, with the remainder primarily being the full year annualised effect of the Group's 2010 investment within the mobile market.

 

EBITDA, before the IFRS 2 share based payment charge, was £10,000 (2010: £1.4 million).  Of the £2.1 million amortisation charge (2010: £1.5 million), £0.3 million (2010: £0.3 million) was in respect of acquisitions made by the Group.

 

Net interest charges were £0.1 million (2010: £0.2 million) and relate to IAS 23 notional interest charges in respect of the deferred consideration on the acquisition in 2009 of Activemedia Technologies.

 

Group loss before tax was £2.8 million (2010: £0.8 million).  After a tax credit of £0.2 million (2010: £0.3 million), the basic loss per share was 7.69p (2010: 1.55p).

 

The Group continued its investment in the development of its patented technology and invested £4.6 million (2010: £5.1 million) in its hardware, software licences and product and platform development.

 

The successful placing of 2.4 million shares in February 2011, raising £2.9 million net proceeds, allowed certain technology developments to be brought forward as well as providing additional working capital.  This financing has meant 2ergo's patented loyalty technology has been developed ahead of schedule and is already gaining significant interest and traction with major retail brands.

 

Cash balances at 31 August 2011 were £2.2 million (2010: £1.5 million) with no debt.  The current net cash balance stands at approximately £1 million.

 

Current trading and outlook

 

The Group sales pipeline continues to build and current trading is in line with the Board's expectations.  Although deals are taking longer to close than anticipated due to the current economic climate, the Board believes that this is being counter balanced by a fuller pipeline.

 

The Group has made solid progress and is in a good position to capitalise on the growth of the market.   Mobile devices are now used by 76% of the world's population and are looked at on average 150 times per day; they also have unique characteristics of always being on, location aware,  personally targetable and increasingly being able to interact at point of sale.  Major brands are therefore increasingly incorporating the mobile channel into their marketing and advertising strategies.

 

Similarly, 2ergo's own research has found that consumers who use a smartphone to browse the internet would feel comfortable making a purchase via mCommerce and one in 10 retail searches online now takes place on a mobile device.  These figures are supported by Google, which reports that between 10% and 15% of all searches on Google's site are coming from mobile phones.

 

Opportunities across the mobile sector continue to grow and develop internationally and the Board believes 2ergo is extremely well positioned to leverage its 11 year investment in market leading mobile technology and intellectual property in the coming years.

 

 

 

Consolidated income statement

for the year ended 31 August 2011

 




2011

2010


Note

 


£000

 

£000

 

Revenue

2


17,668

21,423

Cost of sales



(7,776)

(10,807)






Gross profit

2


9,892

10,616






Administrative costs



(12,618)

(11,160)






Operating loss



(2,726)

(544)






Finance expense



(75)

(241)

Finance income



3

10






Loss before taxation



(2,798)

(775)






Taxation



233

281






Loss for the financial year



(2,565)

(494)






Loss per share





Basic and diluted

3


(7.69)p

(1.55)p

 

All activities relate to continuing operations.

 

 

 

Consolidated statement of comprehensive income

for the year ended 31 August 2011

 




2011

2010




£000

 

£000

 






Loss for the financial year



(2,565)

(494)

 

Other comprehensive income



Differences on translation of foreign operations

106

(51)

 

Other comprehensive income/(loss) for the financial year, net of tax

106

(51)






Total comprehensive loss for the financial year

(2,459)

(545)

 

 

 

Consolidated statement of financial position

as at 31 August 2011

 



2011

2010


Note

£000

£000

Non-current assets




Intangible assets

4

23,473

22,934

Property, plant and equipment


956

1,183







24,429

24,117

 

Current assets




Trade and other receivables


3,770

6,550

Current income tax receivable


-

472

Cash and cash equivalents


2,228

1,486







5,998

8,508





Total assets


30,427

32,625





Current liabilities

Trade and other payables


(2,630)

(3,577)

 

Non-current liabilities

Other payables

4

(3,175)

(4,929)

Deferred income tax liability


(931)

(1,164)



 

(4,106)

 

(6,093)

 

Total liabilities


(6,736)

(9,670)





Net assets


23,691

22,955





Capital and reserves attributable to equity holders of the parent



Share capital


362

336

Share premium


10,874

7,863

Investment in own shares


(1,225)

(1,225)

Merger relief reserve


3,375

3,375

Merger reserve


1,512

1,512

Other reserves


(198)

(306)

Share option reserve


839

796

Retained earnings


8,152

10,604





Total equity


23,691

22,955





 

 

 

Consolidated statement of changes in equity

for the year ended 31 August 2011

 


Share capital

Share premium

Investment in own shares

Merger relief reserve

Merger reserve

Other reserves

Share option reserve

Retained earnings

Total


£000

£000

£000

£000

£000

£000

£000

£000

£000











Balance at 31 August 2009

335

7,724

(1,373)

3,375

1,512

(338)

914

11,343

23,492











Loss for the financial year

-

-

-

-

-

-

-

(494)

(494)

 

Other comprehensive income










Differences on translation of foreign operations

-

-

-

-

-

-

-

(51)

(51)











Total comprehensive  loss for the financial year

-

-

-

-

-

-

-

(545)

(545)

 

Transactions with owners










Issue of share capital

1

139

-

-

-

-

-

-

140

Purchase of shares into treasury

-

-

(140)

-

-

-

-

-

(140)

Sale of shares from treasury

-

-

46

-

-

-

-

-

46

Reserves transfer

-

-

242

-

-

-

-

(242)

-

IFRS 2 share based payment credit

-

-

-

-

-

-

(1)

-

(1)

Tax related to share based payments

-

-

-

-

-

-

-

(69)

(69)

Fair value of vested options exercised in the year

-

-

-

-

-

-

(39)

39

-

Fair value of vested options lapsed in the year

-

-

-

-

-

-

(78)

78

-

Exercise of options over shares in EBT

-

-

-

-

-

32

-

-

32

 

 

1

139

148

-

-

32

(118)

(194)

8











Balance at 31 August 2010

336

7,863

(1,225)

3,375

1,512

(306)

796

10,604

22,955











Loss for the financial year

-

-

-

-

-

-

-

(2,565)

(2,565)

 

Other comprehensive income










Differences on translation of foreign operations

-

-

-

-

-

106

-

-

106











Total comprehensive loss for the financial year

-

-

-

-

-

106

-

(2,565)

(2,459)

 

Transactions with owners










Issue of share capital

26

3,011

-

-

-

-

-

-

3,037

IFRS 2 share based payment charge

-

-

-

-

-

-

156

-

156

Fair value of vested options exercised in the year

-

-

-

-

-

-

(1)

1

-

Fair value of vested options lapsed in the year

-

-

-

-

-

-

(112)

112

-

Exercise of options over shares in EBT

-

-

-

-

-

2

-

-

2

 

 

26

3,011

-

-

-

2

43

113

3,195











Balance at 31 August 2011

362

10,874

(1,225)

3,375

1,512

(198)

839

8,152

23,691

 

 

 

Consolidated statement of cash flows

for the year ended 31 August 2011

 



2011

2010



£000

£000

Cash flows from operating activities




Loss before taxation


(2,798)

(775)

Adjustments for:




Depreciation


481

432

Amortisation


2,099

1,478

Share based payment expense/(credit)


156

(1)

Net finance cost


72

231

Decrease in trade and other receivables

2,780

81

Decrease in trade and other payables


(947)

(685)

Net income tax received/(paid)


472

(205)

 

Net cash flows from operating activities


2,315

556





Cash flows from investing activities




Payments to acquire property, plant and equipment


(253)

(746)

Payments to acquire intangible assets


(4,384)

(4,394)

Purchase of subsidiary undertakings


-

(236)

Interest received


3

10

 

Net cash flows from investing activities


(4,634)

(5,366)





Cash flows from financing activities




Net proceeds from issue of equity


2,897

-

Net proceeds from sale of shares from treasury


-

46

Purchase of shares into treasury


-

(140)

Proceeds from exercise of options over shares held in EBT

2

32

 

Net cash flows from financing activities


2,899

(62)





Net increase/(decrease) in cash and cash equivalents in the year


580

(4,872)

Effect of currency translation changes


162

(76)

Cash and cash equivalents at beginning of year


1,486

6,434

 

Cash and cash equivalents at end of year


2,228

1,486

 

 

 

Notes to the consolidated preliminary financial statements

 

1    Basis of preparation

 

The financial information set out herein does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006.  The financial information for the year ended 31 August 2011 has been extracted from the statutory accounts of 2ergo Group plc for that year which, if adopted by the members at the Annual General Meeting, will be filed with the Registrar of Companies.  The financial information for the year ended 31 August 2010 has been extracted from the statutory accounts for that year which have been delivered to the Registrar of Companies.  The auditors reported on those accounts; their report was unqualified and did not contain a statement under either section 498 (2) or section 498 (3) of the Companies Act 2006.

 

The preliminary financial information has been prepared in accordance with the accounting policies set out in the Group's statutory accounts for the year ended 31 August 2010.

 

2    Segmental analysis

 

The Group is organised into four principal operating divisions for management purposes representing the geographies which the Group operates in.  Each key territory has one manager responsible for reporting of results for that territory to the chief operating decision maker (CODM).  Each territory segment can access all of the Group's products, with clients benefiting from the opportunities created by combining the Group's products in 2ergo's sector and client specific propositions.  The EMEA segment includes the Group's performance in Europe, the Middle East and Africa.  The Americas segment includes the Group's performance in the US, Central and Southern America.  Other segments reported are for performance in India and Australia.  The Other segment includes non-allocated income and expenditure from the Group's central services.

 

The CODM assesses the performance of each operating segment based on revenue, gross profit and earnings before interest, tax, depreciation and amortisation (EBITDA) measures.  The Group's revenues and gross profits may be further analysed between Direct and Wholesale services.

 


EMEA

Americas

Australia

India

Other

Total


2011

£000

2011

£000

2011

£000

2011

£000

2011

£000

2011

£000

Revenue







Direct

9,569

1,906

513

433

-

12,421

Wholesale

5,247

-

-

-

-

5,247

 

 

14,816

1,906

513

433

-

17,668

 

Gross profit







Direct

7,217

1,534

497

393

-

9,641

Wholesale

251

-

-

-

-

251

 

 

7,468

1,534

497

393

-

9,892

 

EBITDA1

1,373

(246)

(388)

(480)

(405)

(146)

Depreciation






(481)

Amortisation






(2,099)

 

Operating loss






(2,726)

Finance expense






(75)

Finance income






 3

 

Loss before tax






(2,798)

 

 


EMEA

Americas

Australia

India

Other

Total


2010

£000

2010

£000

2010

£000

2010

£000

2010

£000

2010

£000

Revenue







Direct

9,491

2,082

267

617

-

12,457

Wholesale

8,966

-

-

-

-

8,966

 

 

18,457

2,082

267

617

-

21,423

 

Gross profit







Direct

7,540

1,845

262

514

-

10,161

Wholesale

455

-

-

-

-

455

 

 

7,995

1,845

262

514

-

10,616

 

EBITDA1

2,331

(455)

(320)

(17)

(173)

1,366

Depreciation






(432)

Amortisation






(1,478)

 

Operating loss






(544)

Finance expense






(241)

Finance income






10

 

Loss before tax






(775)

 

1 Earnings before interest, tax, depreciation and amortisation.

 

 

3    Loss per share

 

The calculation of basic and diluted loss per share is based on the result attributable to ordinary shareholders divided by the weighted average number of ordinary shares in issue during the year.  The weighted average number of shares for the purpose of calculating the basic and diluted measures is the same.  This is because the outstanding share options would have the effect of reducing the loss per ordinary share and therefore would be anti-dilutive.

 




2011



2010


Loss


Weighted average

Loss


Weighted average


per share

Loss

number of

per share

Loss

number of


pence

£000

ordinary shares

pence

£000

 ordinary shares








Basic and diluted

(7.69)

(2,565)

33,369,925

(1.55)

(494)

31,856,117

 

4    Business Combinations

 

Intangible assets includes £11.1 million (2010: £12.8 million) goodwill in respect of the acquisitions of Broca plc (£7.4 million), Wapfly Technologies Pty Limited (£0.2 million) and Activemedia Technologies Limited (£3.5 million) made during the year ended 31 August 2009.

 

On 24 July 2009, the Group acquired the entire issued share capital of Activemedia Technologies Limited and its Indian subsidiary undertaking Active Media Technologies Private Limited (now renamed Two Ergo India Private Limited) for initial cash consideration of £0.2 million with further estimated discounted consideration payable of £6.9 million, subsequently revised to £3.3 million in 2011.  The deferred contingent consideration, which is payable in tranches, is discounted and calculated as the sum of 2.8 times Ticketing & Couponing operating profit and 4 times Indian profit after tax for the year to 31 August 2012 based on management projections.  It is dependent on the financial performance of the acquired business and is subject to an overall cap (covering both the Ticketing & Couponing and India cash generating units) related to Group performance. Consideration is payable between November 2009 and November 2013 and will be settled, at the discretion of the Group, by the issue of new ordinary shares in the Company or loan notes.

 

 

5    Report and Accounts

 

A copy of the Annual Report and Accounts will be sent to all shareholders with notice of the Annual General Meeting.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
FR FDMFASFFSESF