20 May 2009 07:00
| Embargoed until 0700 | 20 May 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.
| Six months to | Six months to | ||
| February 2009 | February 2008 | % change | |
| £'000 | £'000 | ||
| Revenue | 11,170 | 17,829 | -37% |
| Gross Profit | 4,859 | 4,580 | +6% |
| Adjusted pre-tax profit (1) | 1,723 | 1,490 | +16% |
| Adjusted EBITDA (1) | 2,146 | 1,751 | +23% |
| Adjusted basic earnings per share (1) | 4.37p | 3.80p | +15% |
(1) figures stated before £3.2 million one-off impairment charge of investment in Broca plc
Highlights
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 Neale Graham, Joint CEO Barry Sharples, Joint CEO Jill Collighan, Finance Director | +44 (0)161 874 4222 |
| Tavistock Communications Lulu Bridges / Andrew Dunn | +44 (0)20 7920 3150 |
| Numis Securities Limited Stuart Skinner as Nominated Advisor David Poutney as Corporate Broker | +44 (0)20 7260 1000 |
2ergo Group plc
("2ergo" or "the Group")
Interim Results for the six months ending 28 February 2009
The Board's early strategy to build cash reserves and resist taking on debt, yet provide sufficient investment for growth and cutting-edge research and development has continued to pay dividends and positions the Group in an extremely strong position. The Group is cash generative and debt free with cash reserves of £9.6 million.
2ergo's direct sales and enhanced Business Partner Programme are proving to be successful and profitable routes to market as demonstrated by these Interim Results. The ongoing development of the Group's relationships with key customers and partners has enabled the transition of the business further into more technically sophisticated, higher margin services.
In addition to this, anticipating changeable and recessionary conditions, the Group launched several new products and services. Those products and services provide clients with the opportunity to optimise business processes and offer significant and fast returns on investment. The impact of these services has been significant during the period, demonstrated by the continued high levels of new client wins, many of whom are internationally recognised organisations operating globally.
Financial Review
During the first half of 2009, the Group has continued its strategy of reducing exposure to low-margin wholesaler-introduced business and focussing on its direct sales and enhanced Business Partner Programme, which command higher margins. As detailed in the Group's Annual Report of 31 August 2008, this successful strategy resulted in the disconnection of a number of low margin clients from the Multiserve Platform, the full impact of which is demonstrated by a reduction in overall revenue, but a significant increase in gross profit from the Group's core business. The results are as follows:
| Revenue | Gross Profit | ||||||
| 2009 | 2008 | % | 2009 | 2008 | % | ||
| £000 | £000 | Change | £000 | £000 | Change | ||
| Direct/Business Partner | 5,139 | 4,232 | +21% | 4,437 | 3,573 | +24% | |
| Wholesale Reseller Channel | 6,031 | 13,597 | -56% | 422 | 1,007 | -58% | |
| 11,170 | 17,829 | -37% | 4,859 | 4,580 | +6% | ||
In the six months to 28 February 2009, total revenue was £11.2 million, compared to £17.8 million for the same period in 2008. This reflects the Board's strategy of reducing business from its wholesale reseller clients with revenue in this area falling to £6.0 million from £13.6 million. The gross profit from these wholesale services was £0.4 million, compared to £1.0 million in 2008, with a margin of just 7%, which the Board considers unacceptable given the high maintenance nature and price-sensitivity of this reseller channel. This reduction in gross profit as a result of the move away from wholesaler-introduced business was more than compensated for by 2ergo's direct sales and enhanced Business Partner Programme which contributed an additional £0.9 million to gross profit.
The Group's focus on direct and Business Partner sales as its chosen route to market is already paying dividends, with revenue in this area increasing by 21%, up from £4.2 million in 2008 to £5.1 million in 2009, and gross profit rising from £3.6 million to £4.4 million, an increase of 24%, demonstrating the growth potential and profitability of the Group's business. Gross margins in this area were 86%, compared to 84% in 2008.
The Group has maintained its traditional revenue model in all core areas, charging set up fees, monthly fees and transactional fees for its products and services. The recurring nature of this revenue model further underpins the Group's growth potential.
2ergo continues to make good progress in the Americas, where revenues increased by 40% to $1.7 million during the period (2008: $1.2 million). This growth was led by the acquisition of several new clients, including leading marketing agencies, and also the further uptake of new 2ergo products by existing clients, proving again the Group's ability to develop innovative new products and services. Compared to a $434k loss for the same period last year the Board is delighted to report that this period, for the first time, 2ergo Americas delivered a net profit, generating $176k, a turnaround of some $610k. Following the opening of its New York office, the Group's Americas presence now includes Washington, New York, Buenos Aires and Mexico City.
Overheads have continued to be actively well managed, and remain constant at £3.3 million. This was assisted partly by the Group's decision to move some of its development capabilities to Buenos Aires. By consolidating its development and customer support capabilities across geographies the Group has seen improved efficiencies and shortened development timeframes on revenue generating projects and product development.
Group operating profit, before impairment charges, rose to £1.5 million (2008: £1.3 million) an increase of 21%. Due to the acquisition of Broca plc by 2ergo (completed after the period end by the issue of 0.0909 of a 2ergo share in exchange for each Broca share) the 19.2% investment held by the Group in Broca at 28 February 2009 has been impaired from its original cost of 52p per share to 11p per share, being 0.0909 of 2ergo's share price at that date. This has resulted in an impairment charge in the Income Statement of £3.2 million, £2.4 million of which had previously been written off the Balance Sheet valuation of the Broca investment directly to reserves.
EBITDA before impairment charges grew by 23% from £1.8 million to £2.1 million. Of the amortisation charge for the period, £0.1 million was in respect of acquisitions made by the Group. Profit before tax and impairment charges was £1.7 million compared to £1.5 million in 2008, an increase of 16%. The loss before tax was £1.5 million (2008: profit of £1.5 million) after the one-off impairment charge.
The tax charge for the year, based on profit before impairment, is estimated at a rate of 25% (2008: 25%). Profit after tax (and before impairment) for the period was £1.3 million, an increase of 16% from the £1.1 million achieved in 2008. Basic earnings per share, before impairment, were 4.37p (2008: 3.80p).
Net assets at the period end stood at £15.5 million (2008: £14.7 million), with cash at bank increasing from £9.1 million to £9.6 million. The cash inflow from operating activities in the period was £3.0 million, compared to £0.5 million in the first half of 2008, following the collection of receipts from mobile network operators in a more timely manner than in previous periods. The net assets and cash balance are both stated after the purchase of 750,000 2ergo shares into treasury, at a cost of £1.1 million.
The Group's cash position, its debt free status and its ability to generate cash month-on-month leaves it ideally placed to face the ongoing macro economic uncertainty with continued confidence.
Operational Review
During the period the Group relocated its head office to MediaCity UK in Manchester. This delivers the Group the best possible facilities in a purpose-built location, surrounded by major media companies, including existing and prospective clients. MediaCity UK will be a significant international hub for the media and creative industries with the UK's leading broadcast, media and technology companies at its heart. The Board is delighted with the Group's relocation and is already seeing benefits from this impressive and strategic location.
As borne out by these results, the Group has seen great success in delivering its strategy of securing higher margin business from its direct sales activity and client wins during the period include Dulux, Manchester United, Whitbread and Interflora. In addition, the Group is proud to have secured relationships with Ogilvy, McCann Ericsson and Kantar as part of its enhanced Business Partner Programme.
In January, 2ergo was awarded a four year contract by the body representing the UK's Office of Government Commerce ("OGC"), becoming one of only five approved suppliers of mobile solutions to the public sector. This has already led to several public sector wins and it is expected that the selection by OGC will lead to further multiple contracts with central and local government organisations over the coming months and years.
The Group has also expanded into India through the recruitment of Active Media Technologies Limited ("AMT") and its Indian subsidiary Active Media Technologies Private Limited to 2ergo's Business Partner Programme. AMT are providers of mobile value added services and solutions, deploying mobile coupons, vouchers, tickets and loyalty programmes to create innovative customer relationship management solutions and mobile marketing campaigns. The company serves its Indian and European clients through offices in New Delhi, Mumbai and London, and its technology is currently integrated with most major mobile operators in India. There are 300 million mobile subscribers in India, and with subscriber numbers increasing by up to 10 million per month, the partnership opens up a vast audience to 2ergo and its clients. 2ergo is pleased to announce that the partnership is already leading to some high profile opportunities for the Group in India.
Further increasing its global reach, after the period end the Group has acquired Wapfly Technologies Pty Limited in Australia. As a result of the acquisition, the Group provides media giant ABC (Australian Broadcasting Corporation) with its mobile internet solution. In its first week, the ABC Apple iPhone application was downloaded by more iPhone customers than any other and was ranked the number one iPhone application in Australia in just three days. News on the site is refreshed constantly and content varies by region through the deployment of location based services. TV and radio shows are broadcast to the mobile with internal advertising featured on the site. This advertising is served through Wapfly's proprietary mobile ad-serving platform. The prestigious contract with ABC and the intellectual rights to the technology supporting it are now owned by 2ergo.
Also after the period end, the Group completed the acquisition of Broca plc. Broca's patented technology will enable 2ergo's clients to have the ability to provide end to end security over multiple communication protocols to enable new and innovative mobile phone and wireless data applications where security of data is paramount. Whilst the Board believes that this technology could provide security solutions for most mobile phone and wireless networks globally, it has particularly strong potential in emerging markets such as Asia, Africa and South America to help provide mobile payment and mobile banking solutions, and fits well with 2ergo's expanding global footprint and the Group's business and marketing propositions.
The Group has finalised its research, development and technology review, resulting in the distribution of technical development into non-UK offices. Certain non-core development activities have now been redeployed into the Group's South American technical team resulting in cost savings and improved efficiencies.
Americas Review
The Board continues to be pleased with the progress made through the Group's Americas subsidiaries and although revenues do not represent a significant contribution in the period it is pleasing to see the Group's services being used by an ever increasing number of major US companies which has led to the posting of 2ergo Americas first period of profit.
The Group's subsidiaries have enjoyed increased business from their existing client base including Fox, CBS, NBC, Univision, AT&T and Disney, and new clients won during the period, including Gillette, BMW, Pampers, Chevrolet, Renault and Bayer.
Mobile internet usage is particularly high in the US, where the most popular sites continue to be in the "news and information" category. Therefore, the Board is particularly pleased that the FOX News election-specific mobile site, created using 2ergo technology, was one of the most viewed mobile internet sites in America on the night of the recent US Presidential elections.
Furthermore, the introduction of smartphones has stimulated further growth, prompting a record number of page impressions on the FOX News mSite, powered by 2ergo, which grew by 68% from November 2008 to March 2009. 2ergo Americas is now one of the biggest commercial providers of mobile news in the US and has been trusted by the top five broadcast companies in the US for mobile digital provision.
With a strong team, an award winning product set, and an enviable client list, backed by a Group with significant cash reserves, 2ergo Americas stands apart from its competitors and is poised to deliver significant growth over the coming years.
Outlook
Despite the current global recession, industry commentators continue to predict significant worldwide growth for the mobile technology sector, a view that the Board shares and which is upheld by the Group's continued strong performance during the period. This natural sector growth coupled with planned increased investment in sales and marketing will support the Group's organic growth in its current territories. Further growth will be driven through the Group's global Business Partner Programme and acquisitions, both of which have considerable traction with an encouraging pipeline of opportunities.
-Ends-
Condensed consolidated unaudited interim income statement
for the six months ended 28 February 2009
| 6 months to 28 February 2009 | 6 months to 29 February 2008 | Year to 31 August 2008 | ||||
| Note | £000 | £000 | £000 | |||
| Revenue | 11,170 | 17,829 | 32,565 | |||
| Cost of sales | (6,311) | (13,249) | (22,796) | |||
| Gross profit | 4,859 | 4,580 | 9,769 | |||
| Administrative costs | (3,332) | (3,314) | (6,761) | |||
| Operating profit before impairment of available for sale investment | 1,527 | 1,266 | 3,008 | |||
| Impairment of available for sale investment | 2 | (3,194) | - | - | ||
| Operating (loss)/profit | (1,667) | 1,266 | 3,008 | |||
| Finance income | 196 | 224 | 438 | |||
| (Loss)/profit before tax | (1,471) | 1,490 | 3,446 | |||
| Taxation | 3 | (431) | (372) | (911) | ||
| (Loss)/profit for the period | (1,902) | 1,118 | 2,535 | |||
| (Loss)/earnings per share | ||||||
| Basic | 4 | (6.44)p | 3.80p | 8.54p | ||
| Diluted | 4 | (6.44)p | 3.66p | 8.27p |
All activities relate to continuing operations.
Condensed consolidated unaudited interim balance sheet
as at 28 February 2009
| 28 February 2009 | 29 February 2008 | 31 August 2008 | ||||
| Note | £000 | £000 | £000 | |||
| Non-current assets | ||||||
| Intangible assets | 3,056 | 3,020 | 2,937 | |||
| Property, plant and equipment | 635 | 264 | 362 | |||
| Available for sale investments | 2 | 810 | 1,834 | 1,610 | ||
| Loan to related party | 5 | - | - | 500 | ||
| 4,501 | 5,118 | 5,409 | ||||
| Current assets | ||||||
| Trade and other receivables | 5,563 | 7,109 | 6,817 | |||
| Loan to related party | 5 | 1,031 | - | - | ||
| Cash and cash equivalents | 9,585 | 9,072 | 9,120 | |||
| 16,179 | 16,181 | 15,937 | ||||
| Total assets | 20,680 | 21,299 | 21,346 | |||
| Current liabilities | ||||||
| Trade and other payables | (4,629) | (6,529) | (4,742) | |||
| Current income tax payable | (516) | - | (498) | |||
| (5,145) | (6,529) | (5,240) | ||||
| Non-current liabilities | ||||||
| Deferred tax liability | - | (79) | - | |||
| Total liabilities | (5,145) | (6,608) | (5,240) | |||
| Net assets | 15,535 | 14,691 | 16,106 | |||
| Equity | ||||||
| Share capital | 306 | 306 | 306 | |||
| Share premium | 7,724 | 7,724 | 7,724 | |||
| Merger reserve | 1,512 | 1,512 | 1,512 | |||
| Other reserves | 501 | 410 | 475 | |||
| Treasury shares reserve | (1,089) | - | - | |||
| Retained earnings | 6,581 | 4,739 | 6,089 | |||
| Total equity | 15,535 | 14,691 | 16,106 | |||
Condensed consolidated unaudited interim statement of changes in equity
for the six months ended 28 February 2009
| Share capital | Share premium account | Merger reserve | Other reserves | Treasury shares reserve | Retained earnings | |
| £000 | £000 | £000 | £000 | £000 | £000 | |
| Balance at 1 September 2007 | 301 | 7,141 | 1,512 | 192 | - | 6,170 |
| Valuation loss on available for sale investment taken to equity | - | - | - | - | - | (2,771) |
| Tax on items taken directly to or transferred from equity | - | - | - | - | - | 165 |
| Net loss recognised directly in equity | - | - | - | - | - | (2,606) |
| Profit for the period | - | - | - | - | - | 1,118 |
| Total recognised income and expense for the period | - | - | - | - | - | (1,488) |
| Issue of share capital | 5 | 583 | - | - | - | - |
| IFRS 2 share based expense | - | - | - | 205 | - | - |
| Fair value of options exercised in the period | - | - | - | (57) | - | 57 |
| Exercise of options over shares in EBT | - | - | - | 70 | - | - |
| Balance at 29 February 2008 | 306 | 7,724 | 1,512 | 410 | - | 4,739 |
| Share capital | Share premium account | Merger reserve | Other reserves | Treasury shares reserve | Retained earnings | |
| £000 | £000 | £000 | £000 | £000 | £000 | |
| Balance at 1 September 2008 | 306 | 7,724 | 1,512 | 475 | - | 6,089 |
| Recycling of valuation loss on available for sale investment taken to equity | - | - | - | - | - | 2,394 |
| Net gain recognised directly in equity | - | - | - | - | - | 2,394 |
| Loss for the period | - | - | - | - | - | (1,902) |
| Total recognised income and expense for the period | - | - | - | - | - | 492 |
| Purchase of shares into treasury | - | - | - | - | (1,089) | - |
| IFRS 2 share based expense | - | - | - | 26 | - | - |
| Balance at 28 February 2009 | 306 | 7,724 | 1,512 | 501 | (1,089) | 6,581 |
Condensed consolidated unaudited interim cash flow statement
for the six months ended 28 February 2009
| 6 months to 28 February 2009 | 6 months to 29 February 2008 | Year to 31 August 2008 | ||||
| £000 | £000 | £000 | ||||
| Cash flows from operating activities | ||||||
| (Loss)/profit before tax | (1,471) | 1,490 | 3,446 | |||
| Adjustments for: | ||||||
| Impairment of available for sale investment | 3,194 | - | - | |||
| Depreciation | 97 | 69 | 148 | |||
| Amortisation | 522 | 416 | 948 | |||
| Share based expense | 26 | 205 | 267 | |||
| Finance income | (196) | (224) | (438) | |||
| Decrease/(increase) in trade and other receivables | 1,306 | (1,070) | (949) | |||
| Decrease in trade and other payables | (113) | (298) | (2,006) | |||
| Income tax paid | (414) | (120) | (244) | |||
| Net cash flows from operating activities | 2,951 | 468 | 1,172 | |||
| Cash flows from investing activities | ||||||
| Payments to acquire property, plant and equipment | (370) | (78) | (255) | |||
| Payments to acquire intangible assets | (641) | (793) | (1,162) | |||
| Loan granted to related party | (531) | - | (500) | |||
| Interest received | 145 | 224 | 438 | |||
| Net cash flows from investing activities | (1,397) | (647) | (1,479) | |||
| Cash flows from financing activities | ||||||
| Net proceeds from share issue | - | - | 101 | |||
| Purchase of treasury shares | (1,089) | - | - | |||
| Proceeds from exercise of options over shares held in EBT | - | - | 75 | |||
| Net cash flows from financing activities | (1,089) | - | 176 | |||
| Net increase/(decrease) in cash and cash equivalents in the period | 465 | (179) | (131) | |||
| Cash and cash equivalents at beginning of period | 9,120 | 9,251 | 9,251 | |||
| Cash and cash equivalents at end of period | 9,585 | 9,072 | 9,120 | |||
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 2008 and AIM rules.
The comparative financial information for the period ended 29 February 2008 and the year ended 31 August 2008 has been extracted from the interim and annual financial statements of 2ergo Group plc. These interim results for the period ended 28 February 2009 do not comprise statutory accounts within the meaning of section 240 of the Companies Act 1985.
Full audited accounts of the Group in respect of the year ended 31 August 2008 which received an unqualified audit opinion and did not contain a statement under either section 237(2) or (3) of the Companies Act 1985, have been delivered to the Registrar of Companies.
Results for the six months ended 28 February 2009 and 29 February 2008 have not been audited.
2 Impairment of available for sale investment
The Group's investment in the ordinary shares of Broca plc (Broca) is categorised as an available for sale investment. Available for sale investments are measured at fair value, with changes in value recognised in equity, through the statement of changes in equity. Gains and losses arising from investments classified as available for sale are recognised in the income statement when they are sold or when the investment is impaired.
On 5 February 2009, the Group announced that it had reached agreement on the terms of a recommended all share acquisition of the entire issued and to be issued share capital of Broca. At 28 February 2009 this valued the entire share capital of Broca at approximately £4.2 million and the proposed acquisition provided an indication that the Group's available for sale investment in Broca was impaired and therefore the loss arising from the investment has been recognised in the income statement in the period. Of the loss recognised in the period of £3.2 million, £2.4 million relates to the reduction in the fair value of the investment in Broca which had previously been recognised through equity.
3 Taxation
The tax charge accrued in these interim financial statements reflects an estimated tax rate of 25% on profit before tax and impairment for the period to 28 February 2009 (2008: 25%), which is the anticipated effective composite rate for the current financial year.
4 Earnings per share
The calculation of basic earnings per share is based on earnings attributable to ordinary shareholders divided by the weighted average number of ordinary shares in issue during the year. The calculation of diluted earnings per share is based on the basic earnings 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 earnings per share is the same as for the basic earnings per share calculation. This is because the outstanding share options would have the effect of reducing the earnings per ordinary share and therefore would be anti-dilutive.
| Earnings per share pence | Earnings £000 | 2009 Weighted average number of ordinary shares | Earnings per share pence | Earnings £000 | 2008 Weighted average number of ordinary shares | ||||||
| Basic (loss)/ earnings per share | (6.44) | (1,902) | 29,542,618 | 3.80 | 1,118 | 29,414,620 | |||||
| Dilutive effect of share options | - | 1,102,216 | |||||||||
| Diluted (loss)/ earnings per share | (6.44) | (1,902) | 29,542,618 | 3.66 | 1,118 | 30,516,836 | |||||
An adjusted earnings per share, before the impairment of the investment in Broca, has been presented in addition to the earnings 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 earnings per share as follows:
| Earnings per share pence | Earnings £000 | 2009 Weighted average number of ordinary shares | Earnings per share pence | Earnings £000 | 2008 Weighted average number of ordinary shares | ||||||
| Basic (loss)/ earnings per share | (6.44) | (1,902) | 29,542,618 | 3.80 | 1,118 | 29,414,620 | |||||
| Impairment of available for sale investment | 3,194 | - | - | - | |||||||
| Adjusted basic earnings per share | 4.37 | 1,292 | 29,542,618 | 3.80 | 1,118 | 29,414,620 | |||||
| Dilutive effect of share options | 766,870 | 1,102,216 | |||||||||
| Adjusted diluted earnings per share | 4.26 | 1,292 | 30,309,488 | 3.66 | 1,118 | 30,516,836 | |||||
5 Loan to related party
The loan to related party represents a loan facility first made available to Broca plc in the year ended 31 August 2008. The loan is repayable within 18 months of the date that the facility was first made available.
6 Event after the balance sheet date
On 8 April 2009, the acquisition of Broca plc became effective. Consideration for the acquisition was satisfied by the issue of 2,872,856 ordinary shares in 2ergo Group plc to the holders of ordinary shares in Broca. Broca is now a 100% owned subsidiary of the Group and as such the results of Broca will be consolidated from the effective date. The Group is at the preliminary stage of determining the fair value of the assets acquired.