27 May 2010 07:00
27 May 2010
2ergo Group plc
("2ergo" or "the Group")
Interim Results for the six months ending 28 February 2010
2ergo is a leading provider of mobile enabling technology for organisations across multiple sectors and geographies. Our clients range from multinational media and entertainment businesses to regional local authorities; and from international telcos and financial services companies to global FMCG brands. We enable our clients to access the rapidly growing mobile technology market, helping them to take advantage of integrated internet and mobile communications to increase sales, enhance customer experiences, mobilise business processes and reduce costs.
The Group is pleased to announce its interim results for the six months ended 28 February 2010 following the announcement on 24 November 2009 of a programme of substantial investment for the long-term development of the Group.
|
| Six months to | Six months to |
|
|
| February 2010 | February 2009 | % change |
|
|
|
|
|
|
|
£'000 |
£'000 |
|
| Revenue | 10,210 | 11,170 | -9% |
| Gross Profit | 5,032 | 4,859 | +4% |
| Pre-tax (loss) / profit (1) EBITDA (1) | (725) 157 | 1,723 2,146 | -142% -93% |
| Basic (loss) / earnings per share (1)
| (1.72)p
| 4.37p
| -139%
|
(1) figures stated before notional interest charge on deferred consideration in 2010 and before impairment of investment in Broca plc in 2009
Highlights
·; Gross margin increased from 43.5% to 49.3%
·; Gross profit from core target market of direct and business partner sales increased by 9%
·; Increase in net assets from £15.5 million to £22.8 million
·; Doubling of pipeline and work in progress over the last 6 months
·; Awarded prestigious 4 year contract with Transport for London and other blue chip client wins
·; Transitioning business through extensive investment to maximise future growth
·; Integration of acquisitions progressing well
·; Continued innovation and product development into award winning product set
·; Debt free, with cash balances of £3.2 million
Barry Sharples, Joint Chief Executive of 2ergo, commented: "When we announced this year's investment plan in our last report few people fully understood the impact of the current global recession and the problems it would cause for consumers and businesses alike.
"It is against this backdrop that we are delighted with 2ergo's positioning during a transitional period as we invest for growth and as we integrate recent acquisitions across different geographies.
"While lead times on decision making for some of our clients have naturally extended in this climate, public awareness of mobile communication solutions has never been higher. Forward thinking clients see 2ergo's solutions as a means to solve business issues regionally, nationally and internationally and have therefore continued to implement such programmes unabated.
"The size of 2ergo's current pipeline and work in progress is testament to this, and has presented the Group with its biggest challenge to date; that of keeping up with the recruitment of the right calibre of management and staff.
"The confidence we have in knowing of the enormous worldwide opportunity reconfirms our strategy. Our unique disruptive and transformational technologies lead us to strongly believe that 2ergo is best positioned to exploit these opportunities further as the global economy recovers over the coming years."
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 / Paul Young |
|
|
|
|
| Numis Securities Limited | +44 (0)20 7260 1000 |
| Stuart Skinner as Nominated Advisor |
|
| David Poutney as Corporate Broker |
|
27 May 2010
2ergo Group plc
("2ergo" or "the Group")
Interim Results for the six months ending 28 February 2010
Operational Review
Within the past six months an increasing number of blue chip companies have realised the importance of developing a mobile communications strategy and we are pleased to report that our pipeline and work in progress have more than doubled over this time.
During the reporting period, and testament to the strength of our technology, people and products, we were awarded a prestigious 4 year contract to provide Transport for London ('TFL') with a comprehensive mobile services solution. This solution will allow TFL to provide mobile applications and services to visitors and residents throughout London. We are delighted to have been chosen to partner with TFL in such an innovative and progressive initiative.
We are also delighted to have provided services to various leading organisations - all of whom have launched mobile services which change, and in some cases revolutionise, their respective industries. These clients include the Guardian Media Group, Fox Media and Rightmove - the latter winning 'Best Use of Mobile' at the Revolution awards earlier this year. These services have not only helped our clients to revolutionise their businesses, but also provide vital and new profitable revenue streams, thus creating modern business models whilst satisfying consumer demand for 'any place, anytime, anywhere' and on-demand services.
In addition, we have enjoyed fulfilling an increased demand for mobile handset applications ('apps'). The explosion in app awareness driven primarily by Apple and Google Android has been quite phenomenal, with apps providing a natural access point for many companies on their journey to launching full blown, sophisticated mobile technologies throughout their businesses. We are servicing clients with this easy entry point by developing such apps, whilst providing a practical, economical and well thought out strategy to enhance these apps into more complete, advanced mobile services going forward. Our ability to provide this complete and future-aware service is proving to be an additional and key differentiator.
Furthermore, we anticipate the need for security becoming a major factor in the roll-out of true mobile commerce services. To this end, we are committed to the continued development of our patented and unique mobile security technology and we are currently in advanced discussions with a number of organisations where our solutions would have a meaningful impact on the ability to carry out commercial tasks through mobile devices.
With the population of mobile devices outnumbering PCs by 4 to 1, and with that number predicted to grow over the coming years, it is clear that the mobile market is set to enter an exciting growth period. In anticipation of this we have continued to commit further resources to our strategy of investment for the long-term development of the Group.
We also remain committed to a policy of continuous improvement and innovation around our leading edge product solutions, as evidenced by the recent release of 'Campaign Manager 5'. This product offers a market leading mobile CRM platform proven to increase sales, reduce costs and deliver enhanced customer loyalty. It was launched in San Francisco at AD:Tech in April 2010 after significant product development and is already generating considerable pipeline opportunities.
In addition to our continued product investment, we have invested significantly in our regional operations and our recent acquisitions during the period. In India, following our acquisition of Activemedia Technology in July 2009, we have completed the re-brand to 2ergo India and initiated a brand awareness drive. Significant wins include a mobile couponing platform with the largest Indian mobile network operator and an interactive voice campaign for a leading global pharmaceutical brand.
In Australia, we have partnered with Vodafone Hutchison Australia and Cricket Australia to develop Australia's first ever live TV application for the iPhone, and we have continued to grow our relationship with the Australian Broadcasting Corporation ('ABC') into ABC Commercial and ABC TV Multiplatforms. We are continuing the migration of our full range of core products into the region and are well placed to extend our service offering into new clients.
In the US, we have expanded our relationship with News Corp to deliver mobile solutions for Fox Soccer and we have continued to serve Fox News by extending their Fox Business application onto the Google Android platform. We have also entered into a strategic partnership with Universal Uclick to deliver a multiple operating system specifically targeted at the newspaper industry.
The integration of our acquisitions and the roll out of our full product suite into all our geographies is progressing well, and, although the regions are not yet contributing to profitability, we are confident of significant future growth from all areas.
Whilst there has been unprecedented interest in our mobile solutions as demonstrated by our growing and healthy pipeline across all regions, the global economic downturn has led to certain sales cycles being slower than anticipated. In addition, performance was held back in certain areas due to protracted lead times in recruitment and training. We have also reviewed our client engagement strategy resulting in a more practical and efficient model.
Investment is continuing to be made in resources to meet the increased client demand, and a number of key management appointments have been made to strengthen the team. We have also appointed new joint group managing directors, Jill Collighan and John Stevens. Jill has been with 2ergo since 2002, having been appointed group finance director in 2004, whilst John joins the Group from DSGi Business where he was sales and marketing director. He has more than 25 years commercial experience in retail and B2B sectors. Jill and John will drive the business forward with focus and execute our strategy for sustained growth.
Financial Review
Group revenue for the six months to 28 February 2010 was £10.2 million, compared to £11.2 million in 2009. This reflects a full six month's impact of our previously stated move away from low-margin, high-volume business, compared to a phased removal of these clients in the first half of 2009, as can be seen below:
|
| Revenue |
| Gross Profit | ||||
|
| 2010 | 2009 | % |
| 2010 | 2009 | % |
|
| £000 | £000 | Change |
| £000 | £000 | Change |
|
|
|
|
|
|
|
|
|
| Direct/Business Partner | 5,844 | 5,139 | +14% |
| 4,830 | 4,437 | +9% |
| Wholesale Reseller Channel | 4,366 | 6,031 | -28% |
| 202 | 422 | -52% |
|
| 10,210 | 11,170 | -9% |
| 5,032 | 4,859 | +4% |
During the period revenue from our core target market of direct and Business Partner Programme sales increased by 14% and gross profit in this area grew by 9%, with overall Group gross profit for the six months increasing by 4% to £5.0 million. The success of this strategy is reflected in the increase in gross margins in the period, rising from 43.5% to 49.3%.
Overheads for the six months increased by £2.5 million from £3.3 million to £5.8 million. The Board previously announced that, as a result of investment to capitalise on the significant opportunities for growth, overheads would increase by £7.1 million during the current financial year. Of this increase, £3.2 million was anticipated to be incurred in the first half of the year. The actual increase in overheads in the period in relation to this investment is £2.0 million, as set out below:
| Description | Forecast Full Yr £m | Actual H1 £m |
| Additional sales and marketing staff costs | 2.1 | 0.6 |
| Full year staff costs within Wapfly, AMT and Broca | 1.4 | 0.6 |
| Additional technical staff costs Additional staff costs to support enlarged group | 1.0 0.3 | 0.1 0.1 |
| Other staff cost increases | 0.4 | - |
| Total staff cost increases | 5.2 | 1.4 |
|
|
|
|
| Non-staff overheads from acquisitions | 0.8 | 0.4 |
| Incremental operating costs arising from capital investment | 0.5 | - |
| Additional operating costs for enlarged group | 0.6 | 0.2 |
| Total other cost increases | 1.9 | 0.6 |
|
|
|
|
| Total increase in overhead | 7.1 | 2.0 |
For the full year the Board anticipates the increase in overheads to be in the region of £5.0 million as opposed to the original forecast of £7.1 million. This is a result of further efficiencies and synergies achieved following the acquisitions, combined with a more practical and efficient client engagement model.
As a result of the investment during the period, Group operating loss was £0.7 million, compared to a profit of £1.5 million in the first half of 2009. The 2009 figure is stated before an impairment charge of £3.2 million which arose in that period following the acquisition of Broca plc.
EBITDA for the six months was £0.2 million (2009: £2.1 million before impairment charges). Of the amortisation charge for the period £0.1 million was in respect of acquisitions made by the Group. Net interest charges for the period were £0.2 million, and relate to IAS 23 notional interest charges in respect of the deferred consideration arising on the acquisition in 2009 of Activemedia Technologies Limited.
Overall, the loss before tax for the period was £0.9 million, compared to £1.5 million after impairment charges in 2009 (£1.7 million profit before impairment charges).
The tax charge for the full year is estimated at a rate of 20%, creating a tax credit of £0.2 million for the six months. Loss after tax for the period was £0.7 million, with basic loss per share being 2.25p (2009: 4.37p earnings per share before impairment charge).
Following the acquisitions made in the second half of 2009, net assets increased from £15.5 million at 28 February 2009 to £22.8 million.
Cash balances at 28 February 2010 were £3.2 million (31 August 2009: £6.4 million). During the six months we invested £1.4 million in technology hardware, licences and product development and invested a further £0.3 million in buying shares into treasury and satisfying earn out obligations. Cash balances at the period end were suppressed by the timing of receipts, predominantly from the mobile network operators. Within four days of the period end, over £1.0 million had been received in respect of debtors outstanding at 28 February.
Outlook
Across the world, the number of mobile phones already outweighs the number of networked PCs by a factor of 4 to 1, according to Visiongain's Google in Mobile 2009 report, a ratio that is increasing rapidly. As such the potential market opportunity for 2ergo's mobile applications, mobile internet, mobile CRM and mCommerce solutions far outweighs the growth of the fixed line internet over the last decade. In addition, the lesser requirement for fixed infrastructure means that the growth of both mobile and Smartphones hold a greater promise for breaching the digital divide than the availability of fixed, broadband communications ever could.
Right now, mobile engagement and mobile commerce are markets still in their infancy; organisations can recognise the potential of the market but do not yet know how to fully access and capitalise on this opportunity; Smartphone applications are how they dip their toe in the water of the mobile market. Ovum estimates that the total number of application downloads alone will grow to $18.6 billion by 2014.
The growth of the mobile internet market is matched by the growth of the mobile security market, estimated to grow to $4 billion by 2014, according to ABI's 2010 Mobile Security Marketplace report. The availability of secure mobile transactions supports the forecast growth of the number of mobile banking users worldwide to 894 million by 2015, according to Berg Insight.
We are confident that 2ergo's disruptive and transitional technology, which facilitates complex mobile solutions, provides a significant barrier to entry for competitors. Also, our services and products are increasingly becoming integrated into our clients' business models and crucial to their financial performance. We further benefit through our ability to offer consultancy and long term managed services which increases opportunities exponentially. 2ergo's outlook has never been stronger.
-Ends-
Condensed consolidated unaudited interim income statement
for the six months ended 28 February 2010
|
|
| 6 months to 28 February 2010 |
| 6 months to 28 February 2009 |
| Year to 31 August 2009 |
|
| Note
| £000
|
| £000
|
| £000
|
| Revenue |
| 10,210 |
| 11,170 |
| 22,693 |
| Cost of sales |
| (5,178) |
| (6,311) |
| (11,806) |
|
|
|
|
|
|
|
|
| Gross profit |
| 5,032 |
| 4,859 |
| 10,887 |
|
|
|
|
|
|
|
|
| Administrative costs |
| (5,764) |
| (6,526) |
| (10,502) |
|
|
|
|
|
|
|
|
| Operating (loss)/profit before impairment of available for sale investment |
| (732) |
| 1,527 |
| 3,579 |
| Impairment of available for sale investment |
3 |
- |
|
(3,194) |
|
(3,194) |
|
|
|
|
|
|
|
|
| Operating (loss)/profit |
| (732) |
| (1,667) |
| 385 |
|
|
|
|
|
|
|
|
| Finance expense |
| (168) |
| - |
| - |
| Finance income |
| 7 |
| 196 |
| 234 |
|
|
|
|
|
|
|
|
| (Loss)/profit before tax |
| (893) |
| (1,471) |
| 619 |
|
|
|
|
|
|
|
|
| Taxation | 4 | 179 |
| (431) |
| (803) |
|
|
|
|
|
|
|
|
| Loss for the period |
| (714) |
| (1,902) |
| (184) |
|
|
|
|
|
|
|
|
| Loss per share |
|
|
|
|
|
|
| Basic and diluted | 5 | (2.25)p |
| (6.44)p |
| (0.60)p |
All activities relate to continuing operations.
Condensed consolidated unaudited interim statement of comprehensive income
for the six months ended 28 February 2010
|
|
| 6 months to 28 February 2010 |
| 6 months to 28 February 2009 |
| Year to 31 August 2009 |
|
|
| £000
|
| £000
|
| £000
|
| Loss for the period |
| (714) |
| (1,902) |
| (184) |
|
Other comprehensive income |
|
|
|
|
|
|
| Recycling of valuation loss on available for sale investment taken to equity |
| - |
| 2,394 |
| 2,394 |
| Reinstatement of cost of previously impaired available for sale investment |
| - |
| - |
| 3,194 |
| Tax |
| - |
| - |
| (150) |
|
Other comprehensive income for the period, net of tax |
| - |
| 2,394 |
| 5,438 |
|
|
|
|
|
|
|
|
| Total comprehensive income for the period |
| (714) |
| 492 |
| 5,254 |
Condensed consolidated unaudited interim statement of financial position
as at 28 February 2010
|
|
| 28 February 2010 |
| 28 February 2009 |
| 31 August 2009 |
|
| Note | £000
|
| £000
|
| £000
|
| Non-current assets |
|
|
|
|
|
|
| Intangible assets |
| 21,362 |
| 3,056 |
| 21,273 |
| Property, plant and equipment |
| 1,304 |
| 635 |
| 823 |
| Available for sale investments | 3 | - |
| 810 |
| - |
|
|
|
|
|
|
|
|
|
|
| 22,666 |
| 4,501 |
| 22,096 |
|
Current assets |
|
|
|
|
|
|
| Trade and other receivables |
| 7,103 |
| 5,563 |
| 6,068 |
| Loan to related party |
| - |
| 1,031 |
| - |
| Cash and cash equivalents |
| 3,180 |
| 9,585 |
| 6,434 |
|
|
|
|
|
|
|
|
|
|
| 10,283 |
| 16,179 |
| 12,502 |
|
|
|
|
|
|
|
|
| Total assets |
| 32,949 |
| 20,680 |
| 34,598 |
|
|
|
|
|
|
|
|
| Current liabilities Trade and other payables Current income tax payable |
|
(3,169) - |
| (4,629) (516) |
| (3,878) (267) |
|
|
|
(3,169) |
| (5,145) |
| (4,145) |
|
Non-current liabilities Other payables Deferred tax liability |
| (6,779) (225) |
| - - |
| (6,736) (225) |
|
|
|
(7,004) |
| - |
|
(6,961) |
|
|
|
|
|
|
|
|
| Total liabilities |
| (10,173) |
| (5,145) |
| (11,106) |
|
|
|
|
|
|
|
|
| Net assets |
| 22,776 |
| 15,535 |
| 23,492 |
|
|
|
|
|
|
|
|
| Equity |
|
|
|
|
|
|
| Share capital |
| 335 |
| 306 |
| 335 |
| Share premium |
| 7,724 |
| 7,724 |
| 7,724 |
| Investment in own shares |
| (1,467) |
| (1,089) |
| (1,373) |
| Merger relief reserve |
| 3,375 |
| - |
| 3,375 |
| Merger reserve |
| 1,512 |
| 1,512 |
| 1,512 |
| Other reserves |
| 630 |
| 501 |
| 576 |
| Retained earnings |
| 10,667 |
| 6,581 |
| 11,343 |
|
|
|
|
|
|
|
|
| Total equity |
| 22,776 |
| 15,535 |
| 23,492 |
|
|
|
|
|
|
|
|
Condensed consolidated unaudited interim statement of changes in equity
for the six months ended 28 February 2010
|
| Share capital | Share premium account | Investment in own shares | Merger relief reserve | Merger reserve | Other reserves | Retained earnings | Total |
|
| £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 |
|
Balance at 1 September 2008 | 306 | 7,724 | - | - | 1,512 | 475 | 6,089 | 16,106 |
|
|
|
|
|
|
|
|
|
|
| Recycling of valuation loss on available for sale investment taken to equity | - | - | - | - | - | - | 2,394 | 2,394 |
|
|
|
|
|
|
|
|
|
|
| Net gain recognised directly in equity | - | - | - | - | - | - | 2,394 | 2,394 |
|
|
|
|
|
|
|
|
|
|
| Loss for the period | - | - | - | - | - | - | (1,902) | (1,902) |
|
|
|
|
|
|
|
|
|
|
| Total recognised income and expense for the period | - | - | - | - | - | - | 492 | 492 |
|
Purchase of shares into treasury | - | - | (1,089) | - | - | - | - | (1,089) |
| IFRS 2 share based expense | - | - | - | - | - | 26 | - | 26 |
|
|
|
|
|
|
|
|
|
|
| Balance at 28 February 2009 | 306 | 7,724 | (1,089) | - | 1,512 | 501 | 6,581 | 15,535 |
|
|
|
|
|
|
|
|
|
|
|
| Share capital | Share premium account | Investment in own shares | Merger relief reserve | Merger reserve | Other reserves | Retained earnings | Total |
|
| £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 |
|
Balance at 1 September 2009 | 335 | 7,724 | (1,373) | 3,375 | 1,512 | 576 | 11,343 | 23,492 |
|
|
|
|
|
|
|
|
|
|
| Loss for the period | - | - | - | - | - | - | (714) | (714) |
|
|
|
|
|
|
|
|
|
|
| Total recognised income and expense for the period | - | - | - | - | - | - | (714) | (714) |
|
Purchase of shares into treasury | - | - | (140) | - | - | - | - | (140) |
| Sale of shares from treasury | - | - | 46 | - | - | - | - | 46 |
| IFRS 2 share based expense | - | - | - | - | - | 60 | - | 60 |
| Fair value of options exercised in the period | - | - | - | - | - | (38) | 38 | - |
| Exercise of options over shares in EBT | - | - | - | - | - | 32 | - | 32 |
|
|
|
|
|
|
|
|
|
|
| Balance at 28 February 2010 | 335 | 7,724 | (1,467) | 3,375 | 1,512 | 630 | 10,667 | 22,776 |
|
|
|
|
|
|
|
|
|
|
Condensed consolidated unaudited interim statement of cash flows
for the six months ended 28 February 2010
|
| 6 months to 28 February 2010 | 6 months to 28 February 2009 | Year to 31 August 2009 |
|
| £000
| £000
| £000
|
| Cash flows from operating activities |
|
|
|
| (Loss)/profit before tax | (893) | (1,471) | 619 |
| Adjustments for: |
|
|
|
| Impairment of available for sale investment | - | 3,194 | 3,194 |
| Depreciation | 200 | 97 | 250 |
| Amortisation | 689 | 522 | 1,139 |
| Share based expense | 60 | 26 | 101 |
| Net finance cost/(income) | 161 | (196) | (234) |
| (Increase)/decrease in trade and other receivables | (957) | 1,306 | 959 |
| Decrease in trade and other payables | (641) | (113) | (1,711) |
| Income tax paid | (154) | (414) | (778) |
|
Net cash flows from operating activities | (1,535) | 2,951 | 3,539 |
|
|
|
|
|
| Cash flows from investing activities |
|
|
|
| Payments to acquire property, plant and equipment | (686) | (370) | (614) |
| Payments to acquire intangible assets | (736) | (641) | (2,411) |
| Loan granted to related party | - | (531) | (1,133) |
| Purchase of subsidiary undertakings | (235) | - | (1,024) |
| Cash acquired with subsidiaries | - | - | 96 |
| Interest received | 7 | 145 | 234 |
|
Net cash flows from investing activities | (1,650) | (1,397) | (4,852) |
|
|
|
|
|
| Cash flows from financing activities |
|
|
|
| Net proceeds from sale of shares from treasury | 46 | - | - |
| Purchase of shares into treasury | (140) | (1,089) | (1,373) |
| Proceeds from exercise of options over shares held in EBT | 25 | - | - |
|
Net cash flows from financing activities | (69) | (1,089) | (1,373) |
|
|
|
|
|
| Net (decrease)/increase in cash and cash equivalents in the period | (3,254) | 465 | (2,686) |
| Cash and cash equivalents at beginning of period | 6,434 | 9,120 | 9,120 |
|
Cash and cash equivalents at end of period | 3,180 | 9,585 | 6,434 |
Notes to the condensed 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 2009 and AIM rules, except for the adoption of IFRS 8, the impact of which is set out in note 2 below.
The comparative financial information for the period ended 28 February 2009 and the year ended 31 August 2009 has been extracted from the interim and annual financial statements of 2ergo Group plc. These interim results for the period ended 28 February 2010, 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 2009, 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 has adopted IFRS 8 Operating Segments, which is applied retrospectively. Operating segments are identified based on internal management reporting information that is regularly reviewed by the chief operating decision makers (CODM) and is used to make strategic decisions. Any transactions between operating segments are carried out at arm's length prices.
The Group has adopted early the 2009 Annual Improvements and Amendments to IFRS and therefore segmental assets, which are not regularly reviewed by the CODM, are not disclosed.
The Group generally operates in geographical segments with each key territory having one manager responsible for the reporting of results for that territory to the CODM. Each territory can access all of the Group's products, with clients benefiting from the opportunities created by combining those products.
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 | Total |
|
| 2010 £000 | 2010 £000 | 2010 £000 | 2010 £000 | 2010 £000 |
| Revenue |
|
|
|
|
|
| Direct | 4,380 | 1,023 | 130 | 311 | 5,844 |
| Wholesale | 4,366 | - | - | - | 4,366 |
|
| 8,746 | 1,023 | 130 | 311 | 10,210 |
|
Gross profit |
|
|
|
|
|
| Direct | 3,530 | 923 | 127 | 250 | 4,830 |
| Wholesale | 202 | - | - | - | 202 |
|
| 3,732 | 923 | 127 | 250 | 5,032 |
|
|
|
|
|
|
|
| EBITDA (1) | 579 | (143) | (111) | (58) | 267 |
| Depreciation |
|
|
|
| (200) |
| Amortisation |
|
|
|
| (689) |
| Other non-allocated income and expenses |
|
|
|
| (110) |
|
Operating loss |
|
|
|
| (732) |
|
| EMEA | Americas | Australia | India | Total |
|
| 2009 £000 | 2009 £000 | 2009 £000 | 2009 £000 | 2009 £000 |
| Revenue |
|
|
|
|
|
| Direct | 4,029 | 1,110 | - | - | 5,139 |
| Wholesale | 6,031 | - | - | - | 6,031 |
|
| 10,060 | 1,110 | - | - | 11,170 |
|
Gross profit |
|
|
|
|
|
| Direct | 3,438 | 999 | - | - | 4,437 |
| Wholesale | 422 | - | - | - | 422 |
|
| 3,860 | 999 | - | - | 4,859 |
|
EBITDA (1) | 1,893 | 154 | - | - | 2,047 |
| Depreciation |
|
|
|
| (97) |
| Amortisation |
|
|
|
| (522) |
| Impairment of available for sale investment |
|
|
|
| (3,194) |
| Other non-allocated income and expenses |
|
|
|
| 99 |
|
Operating loss |
|
|
|
| (1,667) |
(1) Earnings before interest, tax, depreciation and amortisation
3 Impairment of available for sale investment
The available for sale investment in 2009 was in the ordinary shares of Broca plc, which was a UK listed equity security denominated in sterling. The impairment charge arose in the first half of 2009, when the Group held a 19.2% interest in Broca plc. In accordance with the principles of IAS 39, the carrying value of the asset was required to be written down to the quoted share price of Broca plc, giving rise to the impairment charge of £3.19 million through the income statement for the 6 months to 28 February 2009.
Subsequent to the 2009 half year, the Group completed the acquisition of the remaining share capital of Broca plc. The goodwill arising on the acquisition of the entire 100% interest in Broca plc was £6.79 million (including £3.2 million in relation to the initial 19.2% holding). This is supported by its value in use and is not considered to be impaired.
In terms of overall net asset values therefore, the impairment charge arising in the first half of 2009 was reversed in the second half of that year, but IAS 39 requires that the reversal of the original charge was not through the income statement. The overall impact was that while the income statement for 2009 included an impairment of £3.19 million in respect of the previously held available for sale investment, the subsequent acquisition accounting was such that the impairment was reversed within the balance sheet and reinstated within goodwill.
4 Taxation
The tax credit accrued in these interim financial statements reflects an estimated tax rate of 20% on the loss before tax for the period (2009: 25%), which is the anticipated effective composite rate for the current financial year.
5 Loss per share
The calculation of basic loss per share is based on the loss attributable to ordinary shareholders divided by the weighted average number of ordinary shares in issue during the period. The calculation of diluted loss per share is based on the basic loss per share adjusted to allow for the assumed conversion of all dilutive options. The weighted average number of shares for the purpose of calculating diluted loss per share is the same as for the basic loss per share calculation. This is because the outstanding share options would have the effect of reducing the loss per ordinary share and therefore would be anti-dilutive.
|
| Loss per share pence | Loss £000 | 2010 Weighted average number of ordinary shares | Loss per share pence | Loss £000 | 2009 Weighted average number of ordinary shares |
|
Basic and diluted loss per share | (2.25) | (714) | 31,805,219 | (6.44) | (1,902) | 29,542,618 |
An adjusted (loss)/earnings per share, before the notional interest charge arising in respect of the deferred consideration for the acquisition of Activemedia Technologies Limited in 2010, and before the impairment of the investment in Broca in 2009, has been presented in addition to the loss per share as defined in IAS 33 since, in the opinion of the directors, this provides a more meaningful indicator for investors. It can be reconciled from the basic loss per share as follows:
|
| Loss per share pence | Loss £000 | 2010 Weighted average number of ordinary shares | (Loss)/ earnings per share pence | (Loss)/ earnings £000 | 2009 Weighted average number of ordinary shares |
|
Basic loss per share | (2.25) | (714) | 31,805,219 | (6.44) | (1,902) | 29,542,618 |
| Interest charge on deferred consideration |
| 168 | - |
| - | - |
| Impairment of available for sale investment |
| - | - |
| 3,194 | - |
| Adjusted basic and diluted (loss)/earnings per share | (1.72) | (546) | 31,805,219 | 4.37 | 1,292 | 29,542,618 |