Revenues fall as 2ergo implements strategy change

MOBILE technology group 2ergo has seen first half revenues impacted by the groups strategic move away from low-margin business.

Revenues at the Salford-based business fell 9% to £10.2m in the six months to February 28 (2009: £11.2m), while it suffered a pre-tax loss of £725,000 (2009: profit of £1.7m).

The group said the figures reflected a full six month’s impact of its move away from low-margin, high-volume business, compared to a phased removal of these clients in the first half of 2009.

However, gross profit increased 4% to £5m, from £4.8m a year earlier and the company said its pipeline and work in progress had doubled in the last six months.

The company increased its net assets to £22.8m from £15.5m and had cash balances of £3.2m with no debt.

2ergo said six months ago that it planned to embark on a programme of substantial investment for the long-term development of the group.
 
Barry Sharples, joint chief executive of 2ergo, said: “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.”

Mr Sharples admitted that lead times on decision making for some clients had extended but added the company was in a strong position because public awareness of mobile communication products “has never been higher”.

He added: “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.”

During the period, the group won contract work from large clients, including a four year contract with Transport for London, allowing it to provide mobile applications and services to visitors and residents throughout London. 

The company has appointed new joint group managing directors, Jill Collighan and John Stevens. Ms Collighan has been with 2ergo since 2002, having been appointed group finance director in 2004, while Mr Stevens joins from DSGi Business, where he was sales and marketing director.