31st Jan 2014 10:03
LONDON (Alliance News) - Mobile payments company 2ergo Group PLC Friday said its losses for its last financial year narrowed - but only when including last year's heavy impairment charges.
In a statement, 2ergo, which is the company behind contactless payment system Podifi, said it made a GBP5.1 million pretax loss for the year ended August 31, compared with GBP16.2 million the year before.
However, the company's statement showed that last year's losses were inflated by a GBP12.3 million impairment charge booked against Secure Connect, the company's secure mobile communication protocol. Without the impairment charge, 2ergo's pretax loss would actually have widened to GBP5.1 million from GBP3.9 million.
Revenue fell to GBP3.5 million from GBP8.4 million, with the company blaming its planned exit from "certain of its legacy clients and areas of operations" as it moves towards its commercial model of sales of its Podifi technology supported by its advanced messaging and marketing platforms.
It said that about 82% of the fall in revenue can be put to a decline in its "non-core, low margin business", which it said is now "commoditised".
2ergo also said that over GBP1 million of revenue generated in 2012 from one-off projects was not repeated as the group moved away from bespoke, labour intensive contracts to the provision of highly scalable solutions.
But the company said the fall in its total revenue masks an increase in the revenue of its "focus areas", although it admitted these are taking longer to bear fruit than previously anticipated. It said full commercialisation of any of its current client pilots would make the company profitable.
2ergo said the focus areas are showing "encouraging signs" of a return to revenue growth.
"Revenues from certain core retained customers have grown significantly in the year and have continued to do so post the year end. Income from Podifi services during the year was low; however, the board is encouraged by progress made since the end of the year," 2ergo added.
2ergo said its margins last year were "constant" at 34% but said 2012 margins reflected the benefit of certain one-off projects.
"As the transition happened during the course of 2013, the full effect on margins will only be seen after the year end. Gross profit margins for the four months to December 2013 average 54%, showing the improvement in the quality of the group's earning," 2 ergo said.
2ergo shares were Friday quoted at 2.00 pence, down 0.25 pence, or 11%, making it one of the biggest fallers on AIM.
By Samuel Agini; [email protected]; @samuelagini
Copyright © 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
Riverfort