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Cash-rich 2ergo is seeking to swoop

kevin feddy
20/11/2008

MOBILE phone technology business 2ergo Group has a £9.1m cash pile and is looking for global acquisitions.

The Rawtenstall-based business remains confident about its prospects and says it has `vast' growth opportunities. Chairman Keith Seeley said the group, which is debt-free, is now searching to identify quality, well-valued opportunites for takeovers.

The strategy emerged as 2ergo unveiled a 33 per cent rise in full-year, pre-tax profits from £2.6m to £3.4m as gross margins rose from 26 to 30 per cent, and despite a slight drop in revenues, from £33.3m to £32.56m.

The fall in income was attributed to a policy of dumping low-margin, high maintenance clients during the year to August 31.

Shares in the AIM-listed group slipped two per cent to 149p, valuing the business at just under £46m.

During the year, 2ergo sealed a five-year deal with O2 to enable the company to communicate with its 17.8m customers via text messages and emails. It already has a similar deal in place with US telecoms giant AT&T.

Joint chief executive Neale Graham said: "Our product set is now truly global. Our growth opportunities are vast, strengthened by an extremely solid balance sheet and our proven ability to win clients with a global footprint, such as O2."

The firm has strengthened its management team under group managing director Chris Brassington, in readiness for further expansion.

Mr Graham said 2ergo was well placed to weather the economic storm as its products and services help clients cut costs.

Mr Seeley said: "We go into 2009 confident that 2ergo is in an enviable position, having world leading technology, an extremely strong balance sheet and an experienced board, supported by loyal staff."

While 2ergo's technology enables companies to run text and voice message competitions, supply news alerts and casino games, it has introduced products to allow firms to create mobile marketing and advertising campaigns at a fraction of the cost of traditional methods.

Its technology has also been used by clients such as the US Army, for recruitment.