2ergo Group plc Year-end trading update

2ergo Group plc Year-end trading update

2ergo Group plc, the international provider of mobile business strategy and mobile marketing solutions, has today published its trading update for the year to 31 August 2011.

On 14 June 2011, the Group announced that it had put certain clients' services on hold whilst a review of those services was carried out to ensure compliance with latest industry and mobile network operator guidelines. The Board is satisfied with the results of that audit, which has led the Group to take the decision not to reconnect some clients' non-core services. The Group now expects to announce revenue of approximately £18 million and a break-even EBITDA position for the year ended 31 August 2011, with net cash balances of £2 million at the year end.


Neale Graham, 2ergo CEO, commented:

"There is strong momentum in the business and our pipeline of opportunities is growing rapidly.  We are seeing particular interest in our retail solutions and the power of our Mobile DNA solution to drive customer acquisition campaigns for clients.

"We are in discussion with a number of major retailers with a view to integrating mobile technologies into multi-channel marketing strategies incorporating our market leading solutions for the redemption of mobile vouchers and coupons.

"Furthermore, key client and partner relationships developed during the last year are now bearing fruit and are expected to drive the business forward into 2012.

"We are now looking forward to significant growth in 2012."


New partnerships
The partnership with Gondola Group to develop an end-to-end mobile solution for its Pizza Express restaurant chain has proved to be very successful.  This solution means that Pizza Express customers can search for their nearest restaurant, book and confirm their bookings, and pay their bill via PayPal, using their smartphone by means of an integrated payment system linked to the restaurant chain's point of sale systems. The associated iPhone "app" was the number 1 app on Apple's App Store in the lifestyle category, with almost 100,000 downloads in the first week of launch. 

The Group is actively engaged in discussions with a number of household brands in the hospitality sector to explore similar solutions, and has recently signed a contract to deliver a mCommerce solution and a series of smartphone applications to a large Australian restaurant chain encompassing more than 300 outlets.

The Group's position as exclusive mobile technology and platform development provider to the Microsoft Innovation Outreach Program (IOP) has delivered substantial proof of concept trial for a leading US quick service restaurant chain.  2ergo will deliver an end-to-end mobile solution to attract footfall, create loyalty and generate more profitable customer relationships.  The initial trial will be implemented across 60 stores in the US between August and December, with the potential to be rolled out to a further 5,000 stores across the United States.

As a result of the partnership with U.S. Cellular announced in May, 2ergo is providing the operator with a comprehensive managed service encompassing mobile marketing consultancy, project management and creative services, as well as implementing mobile marketing campaigns to U.S. Cellular's 6.1 million customers. This model of providing managed mobile services to deliver quantifiable marketing results has subsequently been deployed on a wider scale with well established clients, notably AT &T. The US team continues to expand the client portfolio through strong engagement with other network operators.

A key strategic partnership with Callcredit Information Group, a consumer data and marketing firm (see separate announcement today) has further enhanced the Group's MobileDNA offering.  This is a proprietary database of over 10 million mobile numbers, which contains insights from users' mobile activity and transactions from the Group's 11 years' experience in mobile marketing campaigns and services. This new partnership will enable the two companies to provide their corporate customers with mobile business solutions that target users, based on their mobile behaviour, as well as their financial and social background.

Organisational structure
Following an operational review to provide clearer management responsibilities, Neale Graham is now sole Chief Executive, Jill Collighan Group Finance Director, and Barry Sharples, an executive director. John Stevens and Colin McCaffery have been appointed to the operational board, as Group Managing Director, and Group Product and Technical Director respectively.

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