Interim Results for the six months ending 28 February 2009

2ergo Group plc
(“2ergo” or “the Group”)

Interim Results for the six months ending 28 February 2009

2ergo is a leading provider of mobile enabling technologies in four key areas: business, entertainment, media and marketing. The Group’s technological expertise and innovative approach has led it to partner with some of the world’s most respected brands, across a broad range of sectors. 

The 2ergo Multiserve Platform continues to benefit from many years research and development. Its unique set of technologies form the intelligence layer between mobile network operators, the internet and customer facing applications. It integrates voice, data, text, email, video and mobile internet channels, flexibly and seamlessly, to form a powerful yet agile nucleus from which new and innovative mobile solutions can be developed.

The Group is pleased to announce its interim results for the six months ended 28 February 2009.

• Gross profit from direct sales and enhanced Business Partner Programme up 24% to £4.4 million, increasing Group gross margins from 26% to 44%, ahead of expectations.
• Strategy to reduce exposure to high volume low-margin wholesale distribution business proving successful.
• EBITDA, before impairment of investment in Broca plc, up 23% to £2.1 million (2008: £1.8 million).
• 2ergo Americas reports its first profits.
• Global expansion into Asia and Australia through acquisitions and partnerships.
• Strengthening of product portfolio through continued research and development investment and the acquisitions of Broca plc in the UK and Wapfly Technologies Pty Limited in Australia, both completed after the period end.
• Completed buy-back of 750,000 2ergo shares into treasury, at a cost of £1.1 million. 
• Debt free with cash reserves increased to £9.6 million.

Barry Sharples, Joint Chief Executive of 2ergo, commented: “2ergo is now in its tenth year of trading and has established itself as a leading mobile solutions expert. The Group is cash generative and debt free, with cash reserves of over £9 million.

“Revenue this half was down, as predicted, due to the action reported in our last annual results to remove high-volume, but low-margin, wholesale business to concentrate on 2ergo’s core sustainable business. This has allowed better resource allocation and increased productivity, resulting in a marked increase in profits.

“2ergo Americas is steadily increasing business volumes month on month with the US’s leading media companies and I’m pleased to report that they have posted their first profits.

“The global recession continues to generate opportunities for 2ergo as it focuses on providing solutions that improve productivity for clients, in addition to the growing requirement from global media players to harness mobile technology to provide cost effective methods to reach their targeted audiences.

“The recession should also assist in the execution of our growth strategy as potential acquisitions continue to present themselves. Our strong financial position should allow us to complete transactions ahead of competitive bidders.

“During the period, the management team has also ensured a seamless relocation into our new global headquarters which provide a rewarding environment for our employees at the same time as increasing awareness and assisting access to our growing global client base.

“This period has seen significant investment and development across the Group which is helping to drive 2ergo on its intended route towards being the leading global expert in mobile enabling technologies.”

For further information, please contact:

2ergo Group plc +44 (0)161 874 4222
Neale Graham, Joint CEO
Barry Sharples, Joint CEO
Jill Collighan, Finance Director

Tavistock Communications +44 (0)20 7920 3150
Lulu Bridges / Andrew Dunn

Numis Securities Limited +44 (0)20 7260 1000
Stuart Skinner as Nominated Advisor
David Poutney as Corporate Broker 

For a full copy of the report, please click here.

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