LONDON (Alliance News) - Motivcom PLC Monday continued to recommend a takeover from Sodexo Motivation Solutions UK Ltd, as it posted a decline in profit in the half year to end-June.
Motivcom is a business services group which offers incentives and loyalty expertise.
It posted a pretax profit of GBP686,000, down from GBP1.1 million a year before, despite seeing revenue rise to GBP40.3 million from GBP35.2 million, as this was offset by higher cost of sales.
Earlier this month, the company received an offer at 148 pence per share from Sodexo, and the company said it believes the offer is in the best interest of shareholders. Sodexo will not acquire Motivcom's Summersault Communications Ltd and Zibrant Ltd businesses, which will be acquired by their respective managements, and were considered to be discontinued operations in the company's first half results.
Motivcom posted a loss from discontinued operations of GBP10.6 million, primarily as a result of a goodwill impairment on the sale of Zibrant.
Motivcom said that its trading in the first half has been below its expectations, as whilst its order intake has been satisfactory, much of the work is weighted towards the second half of the year.
Its Promotions division missed expectations, posting an operating loss of GBP589,000, compared to a profit of GBP201,000 a year before, as activity and opportunities were pushed back into the second half of the year. Motivcom said it has held back certain investments it had planned in this area, and will instead focus on cost savings to offset the under-performance.
Events also fell short of expectations, posting an operating profit of GBP67,000, down from GBP805,000 a year before. Motivcom said it had invested in updating its systems and replacing hardware during the first half, and launched its new creative Zibrant LIVE! brand. It expects this business to post a "significantly improved" performance in the second half as a result.
In its Motivation division revenue rose 46%, boosted by new and existing client wins. Voucher and gift card volumes were up 7%, benefiting from the shift from paper vouchers to plastic retailer gift cards. Motivcom said it expects to make good progress in this division in the second half of the year and in 2015.
Shares in Motivcom were trading down 0.7% at 144.48 pence Monday morning.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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