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2 ergo Group plc (MXCP)

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Wednesday 23 May, 2012

2 ergo Group plc

Half year results

RNS Number : 8808D
2 ergo Group plc
23 May 2012
 



23 May 2012

 

2ergo Group plc

 

Half year results

 

2ergo Group plc (AIM: RGO, "2ergo" or "the Group"), the mobile solutions company, has published its results for the six months ended 29 February 2012.

 

Highlights

 

·      Development and commercial validation of podifi™ technology

·      Post period-end launch of TikTap™ the Group's local commerce contactless coupon redemption technology

·      Partnerships established with major EPOS providers endorsing podifi™ platform

·      Comprehensive strategic review undertaken

·      Focused business plan and management team in place

·      Disposal of non-core regional businesses for up to $3.8m

·      EBITDA loss from continuing operations(1) reduced to £0.9m (H2 2011: £1.9m)

 

(1) figures stated before impairment of non-core assets

 

Neale Graham, Chief Executive of 2ergo, commented:

 

"This has been a transformational period for the Group, paving the way for the launch of our very exciting podifi™ technology. We now go forward with an extremely focused business model which is already surpassing our predictions.

 

"We are pleased to see the significant experience gained from our work with Orange Wednesdays, the PizzaExpress PayPal partnership and 3M and Wendy's in the US manifesting itself in the launch of podifi™ our contactless couponing, loyalty and payment platform."

 

 

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 Group plc, the owner and international provider of innovative, proprietary contactless mobile technology podifi™ delivers coupons and vouchers, loyalty, proximity and payment solutions to organisations of all sizes in order to assist them to develop and execute their mobile strategy.

 

Market leading brands such as Aviva, Ladbrokes, PizzaExpress, Rightmove, O2, Orange, Talk Mobile, Transport for London, Phones4U, Procter & Gamble and Visit England have all benefited from 2ergo's end-to-end mobile solutions to increase sales, mobilise business processes, reduce costs and enhance customer relationships. podifi™ is the culmination of 12 years' experience in delivering customer acquisition technology for clients including Orange Wednesdays, reputed to be the world's most successful mobile loyalty programme.

 

Headquartered in the UK, 2ergo has been a pioneer of enabling innovative mobile business solutions since 1999.  2ergo is an exclusive Mobile Partner for Microsoft's Innovation Outreach Programme.

 

For more information visit www.2ergo.com

 

Strategic Overview

 

2ergo has been transformed over the last 12 months, following a comprehensive review and subsequent implementation of a new strategy across the Group.

 

In an industry going through a number of major and rapid changes (including regulatory, technological and evolving consumer demands) this comprehensive review encompassed all aspect of the Group's business including products, sales channels and routes to market, operational and technical delivery methods, geographical operations, as well as its management structure.

 

The Group is now structured around three operating units in the UK:

 

·      podifi™, the Group's contactless mobile technology aimed at large retailers and enterprises

·      TikTap™, which is based on the podifi™ platform, but is aimed at SMEs, local commerceand hospitality outlets

·      Customer Insight Services, which will provide major brands with data and customer insights derived from consumer and retail activity across these retail platforms.

 

The Group also retained 2ergo Inc. in the US, which operates its strategic partnership with Microsoft's Innovation Outreach Programme. This business is performing well and is delivering important contract wins from, for example, Wendy's Restaurants and 3M.

 

Following the review, the Group has now withdrawn from providing mainstream mobile solutions, particularly as this business has become commoditised. In doing so, the Group has significantly cut its cost base by selling its development company in India and generating up to $3.8 million by the sale of its US and Australian businesses.

 

Operational Review

 

During the period the Group has continued to expand its relationships with key clients.  Following the successful partnership with PizzaExpress, 2ergo has continued to develop the company's mobile strategy, as well as working with the broader Gondola Group. 

 

The Group has further enhanced the RAC's mobile presence and partnered with Keep Me Safe in their ground-breaking personal safety app. In addition, 2ergo is proud to have been selected by a leading high street retailer to advise on and define its mobile strategy.

 

Also during the half year, the Group ran a number of successful loyalty and customer acquisition campaigns, including Wendy's in the US, which is a forerunner to the roll out of the podifi™ technology. Based on this success, the product development and operational focus over the last six months has been on further developing podifi™ the Group's contactless mobile couponing, loyalty and payment technology.

 

podifi™

 

podifi™ is the culmination of 12 years' experience in delivering customer acquisition technology for clients including Orange Wednesdays, reputed to be the world's most successful mobile loyalty programme.

 

A key challenge that has prevented the mass adoption of mobile couponing, mobile loyalty and mobile payments within the retail sector, has been the redemption of the offer at the cash till or point of sale. Existing technologies have tended to be expensive, requiring a significant upfront investment in handset upgrades and cumbersome EPoS integration. By contrast, podifi™ is a simple "plug and play" mobile solution, which allows fast, contactless transactions to be executed simply by tapping any smartphone on a small, low-cost pod attached to the cash till.

 

The podifi™ mobile marketing platform empowers merchants to create, launch and manage mobile coupon based offers, deals or loyalty programmes within minutes.  Based around small, low-cost pods, podifi™ offers retailers the ability to build intimate customer relationships by enabling fast, contactless transactions via any smartphone, simply by tapping the phone on the pod.  This means that coupons and vouchers can be redeemed, mobile loyalty cards can be swiped and mobile payments transacted, without the need for physical vouchers to be printed and without the intervention of sales staff in store.  podifi™ gives merchants complete control over their campaigns, whilst also providing extensive analytics of their customers' transactions.

 

Significantly, podifi™ makes use of standard technology already used in smartphones, and requires no additional handset chip or hardware (such as barcode readers or PIN machines) nor staff training. Pods placed discreetly at the point of sale can transact contactless mobile payments and act as redemption points to redeem mobile coupons or loyalty cards in real time, without any upgrade required to the retailer EPOS system.

 

podifi™ can be easily incorporated into any mobile "app" or mobile website within hours and is compatible with all currently available smartphones. The technology has been designed to interact seamlessly with near field communications (NFC) handsets as or when they become available.

 

In addition, podifi™ incorporates proximity technology, allowing the delivery of personalised in-store communications and the issue of location-relevant offers and promotions. For example, pods placed at the entrance to the store can be used for consumer check in services, whilst pods positioned on shelves in specific aisles can deliver offers specific to the products in that part of the store.  The same location sensitive technology also allows customers to be tracked around the store to create in-store heat-maps providing valuable insight into customer behaviour. Once partner negotiations are concluded, contactless payment services will be launched which utilise Secure Connect, the Group's secure communication protocol.

 

2ergo will initially focus on selling its podifi™ enterprise solution directly to larger retailers which are seeking to introduce contactless mobile coupon issuance and redemption, store check-in and customer loyalty solutions into their stores.

 

This will be achieved in one of two ways; firstly, an off the shelf, white-label iOS/Android mobile application or a dedicated website, which can be fully customised with the client branding. This service can be implemented and launched within hours of receiving client instructions. Alternatively 2ergo will provide clients with a Software Development Toolkit which will allow the clients to rapidly integrate podifi™ into their existing app or service. Both solutions utilise the same underlying pod technology and are also fully configurable by means of an online management control panel. 

 

TikTap™

 

"TikTap" is a local commerce contactless coupon redemption technology developed specifically to help retailers, hospitality outlets and SME's to generate a mobile brand presence and attract customers to their store.  It comprises a specially developed "TikTap" app (available on both iOS and Android platforms) and associated in-store "pods" (based on podifi™) attached to each participating outlet's cash till.  These pods enable the customer to redeem offers simply by tapping their smartphone over the pod at point of sale. 

 

The TikTap pods are compatible with existing smartphones and plug seamlessly into the vast majority of existing electronic cash tills (including units up to 15 years old) by means of a simple cable, using either a USB or a Serial port. While simple in its installation, the pod recognises the presence of offers in the device which have been 'Tik'd' into the app's digital wallet. A simple 'Tap' over the pod validates and redeems the offer, instantly reducing the bill on the EPoS terminal by the promotional amount, creating a more reliable redemption experience for consumers and providing a full audit trail of redemptions for businesses.

 

As a result of the advanced analytics and reporting available through TikTap, participating merchants will be able to improve the relevance and success of their promotions by learning more about their customers and, in turn, will be able to deliver offers of greater relevance which will help to generate customer loyalty. Partners such as Local Authorities, Retail Groups and Town Managers will also be able to learn more about where visitors are coming into the area from, and in which outlets they are spending.

 

Both podifi™ and TikTap™ are scalable opportunities from which 2ergo will receive revenues from set up fees, monthly licence fees and transactional fees. Time to market for both TikTap™ and the off the shelf white-label podifi™ solution is fast, with relatively short sales cycles.

 

Customer Insight Services

 

Both podifi™ and TikTap™ provide valuable consumer and enterprise data analytic insights through consumer and retail activity across the platforms. This provides the Group with additional opportunities to monetise such insight through brand advertising, the provision of consumer and business data and renting access to the pod network. 

 

The brand advertising service is designed to be an online advertising portal, giving brands access to this consumer retail network, enabling them to offer promotions on a 'pay per redemption' model. Today only 1% of current advertising budgets are being used for mobile, yet 23% of consumers spend their time consuming media on mobiles. The brand advertising portal positions 2ergo in this high growth area.  The network provides significant 'real time' consumer insight and transactional data of coupon redemptions at the point of purchase which is highly valuable to brands and industry. The Group also intends to offer partner transactions through the pods, such as mobile payments and gift vouchers.

 

2ergo Inc

 

2ergo Inc, based in North America, operates the Group's strategic partnership with Microsoft's Innovation Outreach Programme and is currently in advanced discussions with 3M and Wendy's to roll out podifi™ across Wendy's chain of outlets in the US following the completion of successful trials.

 

Financial Review

 

The Income Statement reflects the disposal of the Group's international operations and the discontinuation of certain UK legacy business lines, such as offering subscription billing services to its clients.  These items are shown under the 'Discontinued Operations' heading.

 

As the Group's strategic review commenced in the second half of 2011, a more meaningful comparator for H1 2012 is H2 2011. 

 

Headline numbers for continuing operations for those periods are as follows:

 

£'000  Continuing Operations

H1 2012

H2 2011

Revenue

4,784

3,552

Gross Profit

1,757

1,564

Overheads

(2,630)

(3,456)

EBITDA (1)

(873)

(1,892)

Amortisation & Depreciation (1)

(781)

(763)

Operating Loss (1)

(1,654)

(2,655)

 

(1)     Before impairment of non-core assets

 

H1 2012 revenues of £4.8 million were up 35% on H2 2011 of £3.6 million. Gross profit from continuing operations increased from £1.6 million to £1.8 million, at a margin of 37%. The Board is confident that the business will significantly increase future margins under the new operating model.

 

The strategic review included a detailed appraisal of costs.  As a result, overheads fell from £3.5 million in H2 2011 to £2.6 million in H1 2012, with the monthly cash cost base being cut by approximately £100,000. In addition, an overhead saving of approximately £250,000 per month was achieved through the disposal of the Group's non-core overseas businesses at the end of the half year.  

 

The operating loss from continuing operations was cut to £1.7 million before impairment charges, compared to £2.7 million in the second half of 2011.

 

The review also included an analysis of the Group's assets.  This has resulted in a one-off, non-cash impairment charge of £1.9 million within continuing operations as technologies which related to non-core business were written down to reflect the Group's forward operating model.

 

The Group's reported pre-tax loss from continuing activities (after the impairment charge) was £3.7 million.  Before the impairment charge the pre-tax loss was £1.7 million (H1 2011: £1.1 million, H2 2011: £2.6 million).  Loss per share from continuing operations was 10.31p (H1 2011: 2.65p).

 

As a result of the Group's refocus and the disposal of the regional businesses, a one-off loss in respect of Discontinued Operations of £5.2 million was incurred in the period.  This arose as follows:

 

 


£m

 

Trading loss from discontinued activities and disposed international businesses

 

1.6

Loss on disposal of international businesses

0.1

Non-cash impairment of intangible assets relating to discontinued activities

3.5


5.2

 

Following the above, net assets of the Group at the period end were £15.0 million (August 2011: £23.7 million) and are stated after the proceeds of $3.0 million in cash and up to $0.8 million in deferred consideration resulting from the sale of the international businesses. As at 29 February 2012 cash balances were £2.3 million.

 

Additional sales staff are currently being recruited to pursue the market opportunities for TikTap™ and podifi™.  This will result in an increase in staff numbers and consequently costs. The Board continues to closely monitor the Group's cost base to ensure maximum efficiencies are achieved whilst delivering the new propositions.

 

The Board anticipates loss generation and, subsequently, cash utilisation to continue in H2 2012 as podifi™ and TikTap™ are launched commercially.  Revenue growth and a return to profitability are expected for FY13, with monthly EBITDA profits forecast from the end of 2012.

 

Recent Developments and Outlook

 

Management has made positive and significant change during the period, enabling the Group to move forward with a clear focus and direction. 2ergo is now underpinned by unique and transformational market leading technologies and the Board looks forward to capitalising on the considerable opportunities now being developed for both the podifi™ enterprise solution and SME-focussed TikTap™.

 

Sales performance will be greatly enhanced through key partnerships which have been established with major EPoS providers. The Group now holds formal partnerships with Casio Electronics, YCR (UK distributor for Sam4S and Samsung EPOS), ICR Touch, Geller, Uniwell and Sharp Electronics, collectively representing a significant portion of the UK market, accounting for over 500,000 EPoS installations. This means that the podifi™ terminal (or pod) can now be plugged into any of those EPoS systems, providing immediate plug and play capabilities, with full back office integration and analytics for the management and redemption of coupons.

 

In addition, the Board is pleased that TikTap™ has already secured partnership agreements with Local Government, Retailers, Business Forums and Town and City Centre Management Groups to create a network of local couponing and loyalty programmes. This will become the first UK-wide network of independent retailers, bars and restaurants delivering sustainable mobile offers under a single brand.

 

TikTap™ will launch its first programmes in Preston, Southport and Skegness, closely followed by Salford and Blackpool, where the Group has garnered enthusiastic support from both national and local merchants and traders. Following the launch this month, visitors, residents and shoppers within these areas will benefit from redeeming highly targeted and valuable local offers and deals through an installed network of podifi™ pods in and around those towns and cities.

  

2ergo looks forward to announcing further City programmes during 2012 as part of its detailed roll out plan for TikTap™.

 

The Board is delighted with the progress made to date with both podifi™ and TikTap™ and the overwhelmingly positive reaction received from both businesses and industry experts and looks forward to the future with confidence.

 

 

Consolidated unaudited interim income statement

for the six months ended 29 February 2012

 



Unaudited


Unaudited


Audited



6 months to


6 months to


Year to



29 February


28 February


31 August



2012


2011


2011


Note

£000


£000


£000

Continuing operations







Revenue

2

4,784


6,564


10,116

Cost of sales


(3,027)


(4,342)


(6,330)








Gross profit

2

1,757


2,222


3,786








Administrative costs


(5,367)


(3,272)


(7,491)








Operating loss before impairment of assets


(1,654)


(1,050)


(3,705)








Impairment of assets

6

(1,956)


-


-








Operating loss


(3,610)


(1,050)


(3,705)








Finance expense


(79)


(81)


(75)

Finance income


2


-


3








Loss before tax


(3,687)


(1,131)


(3,777)








Taxation

3

118


279


520








Loss for the period from continuing operations


(3,569)


(852)


(3,257)








Discontinued operations







(Loss)/profit for the period from discontinued operations

 

5

(5,198)


767


692








Loss for the period (all attributable to equity holders of the parent)


(8,767)


(85)


(2,565)








Loss per share














From continuing operations







Basic and diluted

4

(10.31)p


(2.65)p


(9.76)p








From continuing and discontinued operations







Basic and diluted

4

(25.32)p


(0.26)p


(7.69)p

 

 

Consolidated unaudited interim statement of comprehensive income

for the six months ended 29 February 2012

 

 



Unaudited


Unaudited


Audited



6 months to


6 months to


Year to



29 February


28 February


31 August



2012


2011


2011



£000


£000


£000








Loss for the period


(8,767)


(85)


(2,565)

Other comprehensive (loss)/income






Reclassification from Translation reserve on disposal of subsidiaries

(37)


-


-

Differences on translation of foreign operations

(69)


79


106

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

(106)


79


106

Total comprehensive loss for the period

(8,873)


(6)


(2,459)

 

 

Consolidated unaudited interim statement of financial position

as at 29 February 2012

 



Unaudited


Unaudited


Audited



29 February


28 February


31 August



2012


2011*


2011*



£000


£000


£000

Non-current assets







Intangible assets


16,707


24,075


23,473

Property, plant and equipment


599


1,038


956

Other receivables


239


-


-










17,545


25,113


24,429

 

Current assets







Trade and other receivables


2,410


9,310


3,770

Current income tax receivable


-


386


-

Cash and cash equivalents


2,252


441


2,228










4,662


10,137


5,998








Total assets


22,207


35,250


30,427








Current liabilities

Trade and other payables

Current income tax payable


(4,333)

-


 

(3,123)

(3)


(2,630)

-



 

(4,333)


 

(3,126)


(2,630)

 

Non-current liabilities

Other payables

Deferred income tax liability


(1,627)

(1,201)


(4,912)

(1,166)


(3,175)

(931)



 

(2,828)


 

(6,078)


 

(4,106)








Total liabilities


(7,161)


(9,204)


(6,736)








Net assets


15,046


26,046


23,691








Capital and reserves attributable to equity holders of the parent






Share capital


364


362


362

Share premium


11,012


10,874


10,874

Investment in own shares


(1,225)


(1,225)


(1,225)

Merger relief reserve


3,375


3,375


3,375

Merger reserve


1,512


1,512


1,512

Other reserves


(304)


(306)


(198)

Share option reserve


927


856


839

Retained (losses)/earnings


(615)


10,598


8,152








Total equity


15,046


26,046


23,691








 

 

* In accordance with International Financial Reporting Standards each line of the consolidated unaudited statement of financial position as at 28 February 2011 and 31 August 2011 includes the assets and liabilities of the discontinued operations as well as those of the continuing operations. The figures as at 29 February 2012 reflect continuing operations only.

 

 

Consolidated unaudited interim statement of changes in equity

for the six months ended 29 February 2012

 


£000

£000

£000

£000

£000

£000

£000

£000

£000

Balance at

1 September 2010

336

7,863

(1,225)

3,375

1,512

   (306)

796

10,604

22,955











Loss for the period

-

-

-

-

-

-

 

-

(85)

(85)

 

Other comprehensive income

Differences on translation of foreign operations

-

-

-

-

-

-

 

-

79

79

 

Total comprehensive loss for the period

-

-

-

-

-

-

 

-

(6)

(6)

 

Transactions with owners










Issue of share capital

26

3,011

-

-

-

-

 

-

-

3,037

IFRS 2 share based payment charge

-

-

-

-

-

-

 

60

-

60











Balance at

28 February 2011

362

10,874

(1,225)

3,375

1,512

    (306)

 

856

10,598

26,046











 


£000

£000

£000

£000

£000

£000

£000

£000

£000

 

Balance at

1 September 2011

362

10,874

(1,225)

3,375

1,512

(198)

839

8,152

23,691











Loss for the period

-

-

-

-

-

-

-

(8,767)

(8,767)

 

Other comprehensive income

Reclassification from Translation reserve on disposal of subsidiaries

-

-

-

-

-

     (37)

-

-

(37)

Differences on translation of foreign operations

-

-

-

-

-

     (69)

-

-

(69)

Total comprehensive loss for the period

-

-

-

-

-

(106)

 

 

-

 (8,767)

(8,873)

 

Transactions with owners







 

 



Issue of share capital

2

138

-

-

-

-

-

-

140

IFRS 2 share based payment expense

-

-

-

-

-

-

 

88

-

88











Balance at

29 February 2012

364

11,012

(1,225)

3,375

1,512

(304)

927

(615)

15,046











 

 

Consolidated unaudited interim statement of cash flows

for the six months ended 29 February 2012

 



Unaudited


Unaudited


Audited



6 months to


6 months to


Year to



29 February


28 February


31 August



2012


2011


2011



£000


£000


£000








Cash flows from operating activities






Loss before tax

(3,687)


(1,131)


(3,777)

Adjustments for:







Impairment of assets


1,956


-


-

Depreciation


201


196


395

Amortisation

580


247


811

Share based payment expense

88


60


156

Net finance cost


77


81


72

(Increase)/decrease in trade and other receivables

(281)


281


1,804

Increase/(decrease) in trade and other payables

530


(717)


(630)

Income tax received


398


75


483

 

Net cash flows from operating activities- continuing operations

(138)


(908)


(686)

 

Net cash flows from operating activities- discontinued operations

(77)


1,878


3,001








Cash flows from investing activities






Payments to acquire property, plant and equipment

(31)


(90)


(239)

Payments to acquire intangible assets

(883)


(1,300)


(2,928)

Sale of business, net of cash disposed

1,749


-


-

Interest received

2


-


3

 

Net cash flows from investing activities- continuing operations

837


(1,390)


(3,164)

 

Net cash flows from investing activities- discontinued operations

(598)


(724)


(1,470)








Cash flows from financing activities






Net proceeds from issue of equity

-


-


2,897

Proceeds from exercise of options over shares held in EBT

-


-


2

 

Net cash flows from financing activities

-


-


2,899








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

24


(1,144)


580

Effect of currency translation changes

-


99


162

Cash and cash equivalents at beginning of period

2,228


1,486


1,486

Cash and cash equivalents at end of period

2,252


441


2,228

 

 

Notes to the consolidated unaudited interim financial statements

 

1. Basis of preparation

 

The interim financial information has been prepared in accordance with International Financial Reporting Standards (IFRS) as described in the accounting policies set out in the financial statements for the year ended 31 August 2011 and AIM rules.

 

The comparative financial information for the period ended 28 February 2011 and the year ended 31 August 2011 has been extracted from the interim and annual financial statements of 2ergo Group plc. These interim results for the period ended 29 February 2012, which are not audited, do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006.

 

Full audited accounts of the Group in respect of the year ended 31 August 2011, which received an unqualified audit opinion and did not contain a statement under section 498(2) of the Companies Act 2006, have been delivered to the Registrar of Companies.

 

2. Segmental analysis

 

During the period the Group disposed of its interests in the Americas, Australia and India and also discontinued certain of its UK legacy business lines, such as offering subscription services to its clients. Accordingly these operations have now been reclassified as discontinued operations. As a result of this change in reportable segments, the prior period segmental information has been restated.

 


Continuing EMEA


Other


Total



2012


2012


2012



£000


£000


£000








Revenue

4,784


-


4,784

 

Gross profit


1,757


-


1,757

 

EBITDA1

(667)


(206)


(873)

Depreciation





(201)

Amortisation






(580)

Impairment of assets






(1,956)

 

Operating loss





(3,610)

Finance expense





(79)

Finance income





2

 

Loss before tax





(3,687)

 

 


Continuing EMEA


Other


Total



2011


2011


2011



£000


£000


£000








Revenue

6,564


-


6,564

 

Gross profit


2,222


-


2,222

 

EBITDA1

(538)


(69)


(607)

Depreciation





(196)

Amortisation






(247)

 

Operating loss





(1,050)

Finance expense





(81)

 

Loss before tax





(1,131)

 

 

1 Earnings before interest, tax, depreciation, amortisation and impairment of assets

 

All revenues are from external customers.

 


Continuing activities

Discontinued activities


EMEA

EMEA

Americas

Australia

India

Total


2012

£000

2012

£000

2012

£000

2012

£000

2012

£000

2012

£000








Revenue

4,784

-

1,160

198

199

6,341

 


Continuing activities

Discontinued activities


EMEA

EMEA

Americas

Australia

India

Total


2011

£000

2011

£000

2011

£000

2011

£000

2011

£000

2011

£000








Revenue

6,564

3,122

821

206

247

10,960

 

3. Taxation

 

The tax credit accrued in these interim financial statements reflects an estimated tax rate of 4% on the loss before tax, impairment of assets and notional interest for the period (2011: 25%), which is the anticipated effective composite rate for the current financial year, reflecting research and development tax credits earned.

 

4. Loss per share

 

The calculation of basic and diluted loss per share from continuing operations is based on the result attributable to ordinary shareholders divided by the weighted average number of ordinary shares in issue during the period. 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.

 













Basic and diluted loss per share

(10.31)


  (3,569)


34,624,516


(2.65)


(852)


32,131,923













 

Basic and diluted loss per share from continuing and discontinued operations is calculated as follows:

 













Basic and diluted loss per share

(25.32)


(8,767)


34,624,516


(0.26)


(85)


32,131,923

 

 

5. Discontinued activities

 

On 24 February 2012 the Group disposed of 2ergo Americas Inc, which represented its non-core North and Latin American operations, and its Indian operations. On 27 February 2012 the Group disposed of its Australian operations. In addition the Group also discontinued certain of its UK legacy business lines during the period, such as offering subscription billing services to its clients. In accordance with IFRS 5 the results of these units are classified as discontinued operations in this interim financial information.

 

The results of the discontinued operations up until the point of disposal, which have been disclosed separately in the consolidated income statement, as required by IFRS 5, are as follows:

 



6 months to


6 months to


Year to



29 February


28 February


31 August



2012


2011


2011



£000


£000


£000








Revenue


1,557


4,396


7,552

Expenses


(6,671)


(3,336)


(6,573)








(Loss)/profit before tax


(5,114)


1,060


979








Taxation on (loss)/profit before tax

-


(293)


(287)








Loss on disposal of discontinued operations


(84)


-


-








Net (loss)/profit attributable to discontinued operations

(5,198)


767


692

 

The net assets and liabilities at disposal and the loss on disposal were as follows:

 





2012





£000

 

Total proceeds*




2,436

 

Intangible assets




(1,445)

Property, plant and equipment




(129)

Goodwill




(418)

Trade and other receivables




(900)

Cash and cash equivalents




(176)

Trade and other payables




612

Deferred tax liability




9






Net assets disposed of




(2,447)






Transaction and other costs of disposal



(110)

Reclassification from Translation reserve on disposal of subsidiaries

37

 

Loss on disposal




 

(84)






* Total proceeds comprise cash of £1.9 million and deferred consideration of up to £0.5 million.

 

6. Impairment of assets

 

Following the strategic review undertaken by the Group, together with the focus on the development and realisation of value from its podifi™ contactless mobile loyalty technology, the Board consider that the value of certain assets of the Group may no longer be realisable through future cash flows. Accordingly non-core assets with a value of £1,956,000 were impaired in the period. In addition, assets relating to the discontinued operations with a value of £3,475,000 were also impaired in the period.


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