Last checked at 29 Sep 2010 07:00
| Press Release | 29 September 2010 |
Motivcom plc
("Motivcom" or "the Group")
Interim Results for the six months ended 30 June 2010
Motivcom plc (AIM:MCM), a leading UK business services group offering marketing communications, events and incentive expertise to major blue-chip corporate clients is pleased to announce its unaudited interim results for the six months ended 30 June 2010.
Financial Highlights
Unaudited Interim Results for the period ended 30 June 2010
·; Gross profit increased by 15% to £12,931,000 (2009: £11,210,000)
·; Headline operating profit* increased by 41% to £2,535,000 (2009: £1,794,000)
·; Headline profit before tax† increased by 54% to £2,496,000 (2009: £1,617,000)
·; Headline basic earnings per share‡ increased by 52% to 6.11 pence (2009: 4.01 pence)
·; Operating profit increased by 52% to £2,385,000 (2009: £1,574,000)
·; Profit before tax increased by 68% to £2,346,000 (2009: £1,397,000)
·; Basic earnings per share increased by 66% to 5.73 pence (2009: 3.45 pence)
·; Interim dividend increased by 25% to 1.00 pence per share (2009: 0.80 pence per share)
·; Net cash of £5,044,000 (2009: net debt £202,000)
* Operating profit of £2,385,000 (2009: £1,574,000) plus amortisation of intangibles of £150,000 (2009: £220,000)
† Profit before tax of £2,346,000 (2009: £1,397,000) plus amortisation of intangibles of £150,000 (2009: £220,000)
‡ See reconciliation in note 5
Commenting on the results, Colin Lloyd, Chairman of Motivcom plc, said:
"I am pleased to report that Motivcom has enjoyed a 54% increase in headline profit before tax in the reported period. This reflects the pick up of business in certain areas mentioned in my statement of 30 March 2010. This strong first half gives us confidence that the full year outcome will be significantly ahead of our initial expectations".
For further information:
| Motivcom plc |
|
| Sue Hocken | Tel: +44 (0) 1908 352007 |
| sue.hocken@motivcom.com | www.motivcom.com |
| Grant Thornton Corporate Finance |
|
| Philip Secrett/Daniela Amihood | Tel: +44 (0)207 383 5100 |
| philip.j.secrett@gtuk.com | www.gtuk.com |
CHAIRMAN'S STATEMENT
Motivcom has enjoyed a 54% increase in headline profit before tax in the reported period. The interim dividend has, accordingly, been increased by 25%. We are delighted by this robust performance and have now enjoyed compound growth of 18% in headline operating profit since our admission to AIM in 2004.
Strategy
Motivcom is committed to becoming a substantial business in its sector. We will continue to deliver leading products and services to our markets with the objective of holding a top three UK position in each of our business segments. I am pleased to say that in almost all areas across the Group we hold a No.1 or No.2 position.
To achieve this we have set clear and robust objectives:
Acquisition Growth: There are substantial consolidation opportunities in our sector. In the last few years we have acquired and successfully integrated seven businesses into the wider Motivcom family and have achieved this without exposed borrowings or material share issues. Acquisitions remain a key part of the Group's strategy and we continue to look for opportunities.
Lower Dependency: To manage the changing market and economic dynamics, the Group has set an objective of reducing dependency on any one sector or client. We have made good progress in developing an increasingly diverse client and business base.
Organic Growth: With over 700 major clients in our Group we have initiated a programme of client cross referral between our Group companies and divisions to stimulate organic growth. The growth opportunities are substantial; our internal research has shown that 77% of our clients buy only one product or service from us. To deliver on this opportunity we have developed an incentive led internal reward and communication programme amongst our 430 employees. The business benefits are now flowing through.
Innovation and New Product Development: The Group is committed to an active programme of new product development and we have introduced a more structured approach to assessing and investing in this area. This is a core strength and recent innovations have contributed to much of the success in our divisions. We see material growth opportunities in the future through further product developments in the pipeline.
Technology Investment: Technology plays an ever increasingly fundamental role in our many offerings. To build on our substantial assets in this area we have continued to invest in both infrastructure and people resources to ensure that we have a continuous programme to create the market leading solutions demanded by our clients. In equal measure we have taken steps to ensure that we deliver the high level of integrity, security and resilience that is coming under ever increasing scrutiny in this discipline.
Procurement: With ever increasing volumes through our businesses we have taken steps to consolidate key areas of procurement enabling our Group to be more competitive and reduce COGS input, whilst retaining their own unique characteristics and expertise in trading within their specialist market sectors.
Cash Management: The Group continues to focus on robust cash management and treasury functions resulting in healthy cash surpluses and in turn creating future corporate development flexibility.
Staff Motivation: Substantial areas of the business provide market leading employee motivation and performance improvement programmes. Motivcom itself uses this expertise across its own employee base to ensure that we continue to attract and retain the best talent and that we provide the strength and depth of management to maximise current opportunities and drive long term growth.
International Expansion: Our approach to international expansion remains cautious. We have established a presence in Paris and Dublin in response to client demand. A small number of other opportunities are under investigation with short term viability remaining central to this element of our growth strategy.
Financial update
The results for the six month period show that headline operating profit has increased by 41% to £2,535,000 (2009: £1,794,000) on gross profit that has increased by 15% to £12,931,000 (2009: £11,210,000). Headline profit before tax increased by 54% to £2,496,000 (2009: £1,617,000) and headline basic earnings per share increased by 52% to 6.11 pence (2009: 4.01 pence).
Gross profit increased by £1,721,000 from £11,210,000 to £12,931,000 whilst revenue fell by £1,645,000 from £48,979,000 to £47,334,000. We now operate as an Agent rather than Principal for one of our larger clients in respect of their pass through costs and consequently those pass through costs are, appropriately, no longer disclosed in revenue and cost of sales. Headline operating profit increased by £741,000 from £1,794,000 to £2,535,000. The Promotions division ran various large and successful promotions in the period, including several for the World Cup. Net finance costs decreased by £138,000 from £177,000 to £39,000 following the expiry in November 2009 of the fixed rate interest hedge which was entered into in 2008 prior to the significant fall in interest rates.
The difference between headline profit before tax and profit before tax is the amortisation of intangibles mainly relating to the 2007 acquisition of Zibrant. The amortisation charge for Zibrant customer relationships reduces by 33% in 2010.
Net assets increased to £19,275,000 from £18,061,000 at 31 December 2009, providing the Group with continued scope to make appropriate investments to further its development. The Group had net cash at 30 June 2010 of £5,044,000.
The Board has approved an interim dividend of 1.00 pence per ordinary share (2009: 0.80 pence per share). This will be paid on 5 November 2010 to all shareholders on the register at close of business on 8 October 2010.
Divisional Reports
Motivation
Following a solid performance in 2009, H1 has seen a pick-up in spending commitments and enquiries from key sectors such as automotive and IT distribution. In addition our voucher business is expected to return to year on year growth in mid H2 although margin pressures remain. Our investment in sales and technology resources is delivering well and will show good returns in the second half and into 2011.
The star of the show has been our prepaid card business where load values have exceeded 150% growth on prior year at the end of H1. This level of growth is expected to accelerate with three new card programmes going live early in Q4. Our prepaid card proposition is particularly attractive to companies seeking opportunities to retain employee and customer loyalty through a unique set of retail cash back offers. The austere economic environment will continue to drive growth of this market.
Events
2010 has so far been an excellent year of recovery and growth in the events arena and exceeded our initial expectations following disappointing recessionary effects in 2009. The focus of our growth has been primarily within the European conference sector with long haul incentive travel still underperforming.
We have witnessed major existing clients increasing and extending their activity and this growth has additionally been supported by several significant new client wins. Margins have remained under pressure during the continuing economic uncertainty. However we expect to see significant double digit growth in volume business for 2010.
Promotions
Sales Promotion
All the sales promotion businesses have seen healthy levels of activity. This has been boosted by several World Cup promotions which are non repeating, but provide an excellent platform of expertise in major media sporting events leading up to the 2012 Olympics. Our Cinema business has benefited by quality content and, although not operating any one major promotion, has run a greater number. Travel and leisure continues to be a strong promotional tool. Furthermore Entice, our affinity platform, has been fully re-developed and the initial signs suggest we have a best in class product.
All trading areas are already working on sizeable parcels of business for 2011 which is encouraging and providing good visibility into next year. New product development is still a critical aspect of the division's future and it is pleasing to report we will be launching some exciting developments in the later stages of this year and beyond.
Employee Benefits & Communications
Current level of new business opportunities is high. The continued economic uncertainty is resulting in some pressure on margins. This is offset in part by efficiency gains and better use of technology. We have seen a desire by corporates to aggregate their benefit supply and delivery. Our vertical integrated positioning is helping us to capitalise on this demand. The communications division has had a tough first half, but has recently seen a strong surge of new business opportunities in early H2 that we expect to contribute into 2011. Employee communications seem to be back in vogue, especially in organisations that have made cuts in the last two years, although competition to supply is intense.
The outlook is still strong with UK business still wanting to ensure they are communicating and offering the best and most far reaching benefits they can.
Outlook
In my statement of 30 March 2010 I said that we were seeing encouraging signs in many areas of the Group's activities. This has materialised into our excellent H1 performance. The strong first half gives us confidence that the full year outcome will be significantly ahead of -our initial expectations.
Colin Lloyd
Chairman
CONSOLIDATED INTERIM INCOME STATEMENT (UNAUDITED)
FOR THE PERIOD ENDED 30 JUNE 2010
|
|
|
Six months ended 30 June 2010 |
Six months ended 30 June 2009 |
Year ended 31 December 2009 |
|
| Note | £000 | £000 | £000 |
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|
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| Revenue | 3 | 47,334 | 48,979 | 102,391 |
| Cost of sales |
| (34,403) | (37,769) | (79,616) |
| Gross profit |
| 12,931 | 11,210 | 22,775 |
| Administrative expenses |
| (10,396) | (9,416) | (18,945) |
| Amortisation of intangibles |
| (150) | (220) | (439) |
| Operating profit | 3 | 2,385 | 1,574 | 3,391 |
| Finance costs - net |
| (39) | (177) | (327) |
| Profit before income tax |
| 2,346 | 1,397 | 3,064 |
| Income tax expense | 4 | (677) | (391) | (835) |
| Profit for the period |
| 1,669 | 1,006 | 2,229 |
|
|
|
|
|
|
| Attributable to: |
|
|
|
|
| Equity holders of the Company |
| 1,669 | 1,006 | 2,229 |
|
|
|
|
|
|
| Earnings per share for profit attributable to the equity holders of the Company during the year (expressed in pence) |
|
|
|
|
| - basic | 5 | 5.73 | 3.45 | 7.65 |
| - diluted | 5 | 5.51 | 3.41 | 7.48 |
CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
FOR THE PERIOD ENDED 30 JUNE 2010
|
|
Six months ended 30 June 2010 £000 |
Six months ended 30 June 2009 £000 | Year ended 31 December 2009 £000 |
|
|
|
|
|
| Profit for the period | 1,669 | 1,006 | 2,229 |
|
|
|
|
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| Other comprehensive income: |
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|
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| Cash flow hedging: |
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|
|
| - current year gains | - | 105 | 178 |
| - reclassification to profit or loss | - | (35) | (14) |
|
|
|
|
|
| Other comprehensive income, net of tax | - | 70 | 164 |
|
|
|
|
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| Total comprehensive income for the period | 1,669 | 1,076 | 2,393 |
|
|
|
|
|
| Attributable to: |
|
|
|
| Equity holders of the Company | 1,669 | 1,076 | 2,393 |
All activities are classed as continuing
CONSOLIDATED INTERIM BALANCE SHEET (UNAUDITED)
AT 30 JUNE 2010
| . |
Note |
At 30 June 2010 £000 |
At 30 June 2009 £000 |
At 31 December 2009 £000 |
| ASSETS |
|
|
|
|
| Non-current assets |
|
|
|
|
| Property, plant and equipment |
| 4,989 | 5,124 | 5,006 |
| Intangible assets | 7 | 21,360 | 21,504 | 21,405 |
| Deferred income tax assets |
| 28 | 28 | - |
|
|
|
|
|
|
|
|
| 26,377 | 26,656 | 26,411 |
|
|
|
|
|
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| Current assets |
|
|
|
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| Inventories |
| 816 | 605 | 494 |
| Trade and other receivables |
| 26,922 | 17,881 | 18,855 |
| Cash and cash equivalents |
| 11,794 | 7,374 | 8,984 |
|
|
|
|
|
|
|
|
| 39,532 | 25,860 | 28,333 |
|
|
|
|
|
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| Total assets |
| 65,909 | 52,516 | 54,744 |
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| EQUITY |
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| Capital and reserves attributable to the Company's equity holders |
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| Share capital |
| 155 | 155 | 155 |
| Share premium account |
| 9,920 | 9,920 | 9,920 |
| Own shares |
| (1,225) | (1,225) | (1,225) |
| Other reserves |
| 75 | 75 | 75 |
| Hedging reserve |
| - | (94) | - |
| Retained earnings |
| 10,350 | 8,066 | 9,136 |
|
|
|
|
|
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| Total equity |
| 19,275 | 16,897 | 18,061 |
|
|
|
|
|
|
| LIABILITIES |
|
|
|
|
| Non-current liabilities |
|
|
|
|
| Borrowings |
| 5,924 | 6,704 | 6,314 |
| Deferred income tax liabilities |
| 304 | 526 | 350 |
| Provisions | 8 | 75 | 400 | - |
|
|
|
|
|
|
|
|
| 6,303 | 7,630 | 6,664 |
| Current liabilities |
|
|
|
|
| Trade and other payables |
| 38,809 | 26,653 | 28,196 |
| Current income tax liabilities |
| 742 | 436 | 523 |
| Derivative financial instruments |
| - | 94 | - |
| Borrowings |
| 780 | 806 | 780 |
| Provisions | 8 | - | - | 520 |
|
|
|
|
|
|
|
|
| 40,331 | 27,989 | 30,019 |
|
|
|
|
|
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| Total liabilities |
| 46,634 | 35,619 | 36,683 |
|
|
|
|
|
|
| Total equity and liabilities |
| 65,909 | 52,516 | 54,744 |
CONSOLIDATED INTERIM CASH FLOW STATEMENT (UNAUDITED)
FOR THE PERIOD ENDED 30 JUNE 2010
|
| Note |
Six months ended 30 June 2010 £000 |
Six months ended 30 June 2009 £000 |
Year ended 31 December 2009 £000 |
| Cash flows from operating activities |
|
|
|
|
| Cash generated from operations |
| 5,010 | 643 | 3,635 |
| Interest paid |
| (67) | (196) | (349) |
| Income tax paid |
| (504) | (184) | (630) |
| Net cash generated from operating activities |
| 4,439 | 263 | 2,656 |
|
|
|
|
|
|
| Cash flows from investing activities |
|
|
|
|
| Acquisition of subsidiary, net of cash acquired and dividends due to former shareholders |
8 |
(550) |
- |
- |
| Purchases of property, plant and equipment (PPE) |
| (217) | (217) | (356) |
| Proceeds from sale of PPE |
| - | 17 | 17 |
| Interest received |
| 34 | 27 | 42 |
| Net cash used in investing activities |
| (733) | (173) | (297) |
|
|
|
|
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| Cash flows from financing activities |
|
|
|
|
| Repayments of borrowings |
| (400) | (480) | (906) |
| Dividends paid |
| (496) | (437) | (670) |
| Net cash used in financing activities |
| (896) | (917) | (1,576) |
|
|
|
|
|
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| Net increase/(decrease) in cash |
| 2,810 | (827) | 783 |
| Cash at beginning of period |
| 8,984 | 8,201 | 8,201 |
| Cash at end of period |
| 11,794 | 7,374 | 8,984 |
Cash generated from operations
|
|
|
Six months ended 30 June 2010 £000 |
Six months ended 30 June 2009 £000 |
Year ended 31 December 2009 £000 |
|
|
|
|
|
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| Profit before income tax |
| 2,346 | 1,397 | 3,064 |
| Adjustments for: |
|
|
|
|
| - depreciation |
| 234 | 249 | 501 |
| - net interest payable |
| 39 | 177 | 327 |
| - share based payments |
| 16 | 15 | 34 |
| - loss on disposal of PPE |
| - | 7 | 11 |
| - amortisation of intangibles |
| 150 | 220 | 439 |
| Changes in working capital (excluding the effects of acquisitions and exchange differences on consolidation): |
|
|
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|
| - inventories |
| (322) | 65 | 176 |
| - trade and other receivables |
| (8,067) | 1,525 | 550 |
| - trade and other payables |
| 10,614 | (3,012) | (1,467) |
| Cash generated from operations |
| 5,010 | 643 | 3,635 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
FOR THE PERIOD ENDED 30 JUNE 2010
|
| Share capital £000 | Share premium £000 | Own shares £000 | Other reserves £000 | Hedging reserve £000 | Retained earnings £000 | Total equity £000 |
|
Balance at 1 January 2009 |
155 | 9,920 | (1,225) | 75 | (164) | 7,474 | 16,235 |
| Dividends paid | - | - | - | - | - | (437) | (437) |
| Share based payments | - | - | - | - | - | 15 | 15 |
| Deferred tax on equity share based payments | - | - | - | - | - | 8 | 8 |
| Issue of shares | - | - | - | - | - | - | - |
| Transactions with owners | - | - | - | - | - | (414) | (414) |
| Profit for the period | - | - | - | - | - | 1,006 | 1,006 |
| Other comprehensive income: |
|
|
|
|
|
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| Cash flow hedge: |
|
|
|
|
|
|
|
| - current year gains | - | - | - | - | 105 | - | 105 |
| - reclassification to profit or loss | - | - | - | - | (35) | - | (35) |
| Total comprehensive income for the period | - | - | - | - | 70 | 1,006 | 1,076 |
| At 30 June 2009 | 155 | 9,920 | (1,225) | 75 | (94) | 8,066 | 16,897 |
| Dividends paid | - | - | - | - | - | (233) | (233) |
| Share based payments | - | - | - | - | - | 19 | 19 |
| Deferred tax on equity share based payments | - | - | - | - | - | 57 | 57 |
| Deferred tax on property | - | - | - | - | - | 4 | 4 |
| Transactions with owners | - | - | - | - | - | (153) | (153) |
| Profit for the period | - | - | - | - | - | 1,223 | 1,223 |
| Other comprehensive income: |
|
|
|
|
|
|
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| Cash flow hedge: |
|
|
|
|
|
|
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| - - current year losses | - | - | - | - | 73 | - | 73 |
| - - reclassification to profit or loss | - | - | - | - | 21 | - | 21 |
| Total comprehensive income for the period | - | - | - | - | 94 | 1,223 | 1,317 |
| Balance at 31 December 2009 | 155 | 9,920 | (1,225) | 75 | - | 9,136 | 18,061 |
| Dividends paid | - | - | - | - | - | (496) | (496) |
| Share based payments | - | - | - | - | - | 16 | 16 |
| Deferred tax on equity share based payments |
- |
- |
- |
- |
- |
20 |
20 |
| Deferred tax on property | - | - | - | - | - | 5 | 5 |
| Transactions with owners | - | - | - | - | - | (455) | (455) |
| Profit for the period | - | - | - | - | - | 1,669 | 1,669 |
| Other comprehensive income: |
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| Cash flow hedge: |
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|
|
|
|
|
|
| - current year gains | - | - | - | - | - | - | - |
| - reclassification to profit or loss | - | - | - | - | - | - | - |
| Total comprehensive income for the period | - | - | - | - | - | 1,669 | 1,669 |
| At 30 June 2010 | 155 | 9,920 | (1,225) | 75 | - | 10,350 | 19,275 |
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE PERIOD ENDED 30 JUNE 2010
1 General information
Motivcom plc ("the Company") and its subsidiaries (together "Motivcom plc" or "the Group") are involved in (1) the development and administration of third party motivation and incentive programmes (2) the provision of incentive travel, live events and venue finding and (3) the provision of trade and consumer sales promotions and employee benefits products.
The Company is a limited liability company incorporated and domiciled in England. The address of its registered office is Rockingham Drive, Linford Wood, Milton Keynes MK14 6LY. The Company has its primary and only listing on the AIM market of London Stock Exchange plc.
These unaudited condensed consolidated interim financial statements (the interim financial statements) have been approved for issue by the Board of Directors on 23 September 2010.
2 Basis of preparation
These interim financial statements of Motivcom plc are for the six months ended 30 June 2010. They have been prepared in accordance with IAS 34, Interim Financial Reporting. They do not constitute statutory accounts as defined in Section 435 of the Companies Act 2006. They should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2009 which are available on the Group's website (www.motivcom.com) and have been filed with The Registrar of Companies. The auditors report on those financial statements was unqualified and did not contain a statement made under Section 498(3) of the Companies Act 2006.
These interim financial statements have been prepared in accordance with the accounting policies adopted in the last financial statements for the year ended 31 December 2009 except for the prospective adoption of the following standards as of 1 January 2010:
(i) IFRS 3 Business Combinations (Revised 2008);
(ii) IAS 27 Consolidated and Separate Financial Statements (Revised 2008); and
(iii) Amendment to IAS 39 Financial Instruments: Recognition and Measurement - Eligible Hedged Items.
IFRS 3 Business Combinations (Revised 2008) (IFRS 3R) introduces major changes to the accounting requirements for business combinations. The most significant changes in IFRS 3R that had an impact on the Group in 2010 are:
(i) Acquisition-related costs are recorded as an expense in the income statement where previously they would have been accounted for as part of the acquisition;
(ii) The assets acquired and liabilities assumed are generally measured at their acquisition-date fair values unless IFRS 3R provides an exception and provides specific measurement rules; and
(iii) Any contingent consideration is measured at fair value at the acquisition date. If the contingent consideration arrangements give rise to a financial liability, any subsequent changes are generally recognised in profit or loss. Previously contingent consideration was recognised at the acquisition date only if its payment was probable.
For the six months ended 30 June 2010, the adoption of IFRS 3R has affected the accounting for the acquisition of the trade of Peppermint Productions Limited by increasing the Group's expenses related to acquisition-related costs by £4,000.
IAS 27 Consolidated and Separate Financial Statements (Revised 2008) (IAS 27R) introduces changes to the accounting requirements for the loss of control of a subsidiary and for changes in the interest in subsidiaries. IAS 39 Financial Instruments: Recognition and Measurement - Eligible Hedged Items (IAS 39R) applies to cash flow hedges. The Group did not have any transactions that required accounting for under either IAS 27R or IAS 39R in the current financial period and therefore, the adoption of IAS 27R and IAS 39R did not have an impact in these interim financial statements.
The accounting policies have been applied consistently throughout the Group in preparing these interim financial statements.
The financial statements are prepared on a going concern basis. In considering going concern, the directors have reviewed the Group's future cash requirements and earnings projections. The directors believe these forecasts have been prepared on a prudent basis and have also considered the impact of a range of potential changes to trading performance. The directors have concluded that the Group should be able to operate within its current facilities and comply with its banking covenants for the foreseeable future and therefore believe it is appropriate to prepare the financial statements of the Group on a going concern basis. This is supported by the Group's liquidity position at 30 June 2010. The Group's financial risk management policies are described in its financial statements for the year ended 31 December 2009.
3 Segment Information
At 30 June 2010 the Group is organised into three main operating segments - (1) development and administration of third party motivation and incentive programmes ("Motivation") - (2) the provision of incentive travel, live events and venue finding ("Events") - (3) trade and consumer sales promotions and employee benefit products ("Promotions"). Unallocated costs represent corporate and share-based payment expenses.
The segment results for the six months ended 30 June 2010 are as follows:
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| Motivation £000 | Events £000 | Promotions £000 | Unallocated £000 | Group £000 |
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| Revenue from external clients | 14,085 4,471 | 18,326 325 | 14,923 162 | - (4,958) | 47,334 - |
| Inter-segment revenues | |||||
| Total revenue | 18,556 | 18,651 | 15,085 | (4,958) | 47,334 |
| Gross profit | 1,943 | 6,671 | 4,317 | - | 12,931 |
| Administrative expenses | (1,822) | (5,345) | (3,106) | (123) | (10,396) |
| Headline operating profit | 121 | 1,326 | 1,211 | (123) | 2,535 |
| Amortisation of intangibles |
|
|
|
| (150) |
| Operating profit |
|
|
|
| 2,385 |
| Net interest expense |
|
|
|
| (39) |
| Profit before tax |
|
|
|
| 2,346 |
The segment results for the six months ended 30 June 2009 are as follows:
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| Motivation £000 | Events £000 | Promotions £000 | Unallocated £000 | Group £000 |
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| Revenue from external clients | 15,918 3,043 | 20,764 122 | 12,297 18 | - (3,183) | 48,979 - |
| Inter-segment revenues | |||||
| Total revenue | 18,961 | 20,886 | 12,315 | (3,183) | 48,979 |
| Gross profit | 2,177 | 6,001 | 3,032 | - | 11,210 |
| Administrative expenses | (1,668) | (4,722) | (2,924) | (102) | (9,416) |
| Headline operating profit | 509 | 1,279 | 108 | (102) | 1,794 |
| Amortisation of intangibles |
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|
|
| (220) |
| Operating profit |
|
|
|
| 1,574 |
| Net interest expense |
|
|
|
| (177) |
| Profit before tax |
|
|
|
| 1,397 |
The segment results for the year ended 31 December 2009 are as follows:
|
| Motivation £000 | Events £000 | Promotions £000 | Unallocated £000 | Group £000 |
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|
|
| Revenue from external clients Inter-segment revenues | 33,947 5,661 | 41,795 - | 26,649 181 | - (5,842) | 102,391 - |
| Total revenue | 39,608 | 41,795 | 26,830 | (5,842) | 102,391 |
| Gross profit | 4,268 | 11,153 | 7,354 | - | 22,775 |
| Administrative expenses | (3,453) | (9,398) | (5,854) | (240) | (18,945) |
| Headline operating profit | 815 | 1,755 | 1,500 | (240) | 3,830 |
| Amortisation of intangibles |
|
|
|
| (439) |
| Operating profit |
|
|
|
| 3,391 |
| Net interest expense |
|
|
|
| (327) |
| Profit before tax |
|
|
|
| 3,064 |
IFRS 8 requires that an entity reports a measure of assets and liabilities for each reportable segment only if such an amount is regularly provided to the Chief Operating Decision Maker. As no such amounts are regularly provided to the Chief Operating Decision Maker, segment assets and liabilities are not disclosed.
4 Income tax expenses
|
|
Six months ended 30 June 2010 £000 |
Six months ended 30 June 2009 £000 | Year ended 31 December 2009 £000 |
|
|
|
|
|
| Current tax | 724 | 469 | 886 |
| Overprovision of tax for prior year | (2) | (32) | (35) |
| Deferred tax | (45) | (46) | (16) |
|
| 677 | 391 | 835 |
5 Earnings per share and dividends
Basic
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period.
|
|
Six months ended 30 June 2010 £000 |
Six months ended 30 June 2009 £000 | Year ended 31 December 2009 £000 |
|
|
|
|
|
| Profit attributable to equity holders of the Company | 1,669 | 1,006 | 2,229 |
| Weighted average number of ordinary shares in issue (thousands) |
29,132 |
29,132 |
29,132 |
| Basic earnings per share in pence | 5.73 | 3.45 | 7.65 |
Diluted
Diluted earnings per share is calculated adjusting the weighted average number of ordinary shares outstanding to assume conversion of all contracted dilutive potential ordinary shares. The Company has only one category of dilutive potential ordinary shares, share options.
The calculation is performed for the share options to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company's shares) based on the monetary value of the subscription rights attached to outstanding share options and taking account of the yet unexpensed share based payment charge relating to those options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options. Tranches two to four of the options granted to C T Lloyd have been excluded from this calculation as all the conditions attaching to the proposed options had not been met at 30 June 2010.
|
| Six months ended 30 June 2010 £000 | Six months ended 30 June 2009 £000 | Year ended 31 December 2009 £000 |
|
|
|
|
|
| Profit attributable to equity holders of the Company | 1,669 | 1,006 | 2,229 |
| Weighted average number of ordinary shares in issue (thousands) |
29,132 |
29,132 |
29,132 |
| Adjustment for share options (thousands) | 1,179 | 403 | 660 |
| Weighted average number of ordinary shares for diluted earnings per share (thousands) |
30,311 |
29,535 |
29,792 |
| Diluted earnings per share in pence | 5.51 | 3.41 | 7.48 |
Headline basic
Headline basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company plus the amortisation of intangible assets by the weighted average number of ordinary shares in issue during the period.
|
| Six months ended 30 June 2010 £000 | Six months ended 30 June 2009 £000 | Year ended 31 December 2009 £000 |
|
|
|
|
|
| Profit attributable to equity holders of the Company | 1,669 111 | 1,006 161 | 2,229 321 |
| Amortisation of intangibles (after deduction of tax) | |||
| Headline profit attributable to equity holders of the |
|
|
|
| Company | 1,780 | 1,167 | 2,550 |
| Weighted average number of ordinary shares in issue (thousands) |
29,132 |
29,132 |
29,132 |
| Headline basic earnings per share in pence | 6.11 | 4.01 | 8.75 |
Dividends
During the first six months of 2010 Motivcom plc paid a second interim dividend in respect of 2009 of £496,000 to its equity shareholders (2009: 2008 final dividend of £437,000). This represents a payment of 1.70 pence per share (2009: 1.50 pence).
6 Share-based payments
The Group has eight contracted share option schemes, comprising those disclosed in the Group's most recent financial statements and a Sharesave Scheme introduced on 28 May 2010. The following options have been valued in accordance with the provisions of IFRS 2.
|
Scheme | Date of original grant |
Number of options |
Option price |
Vesting conditions |
Life of option |
Fair Value |
|
|
|
|
|
|
|
|
|
EMI Option Scheme |
29/03/2004 |
150,000 |
£0.04285 | 2 years from 25/08/2004 |
10 Years |
£0.01 |
| EMI Option Scheme | 21/11/2005 | 111,111 | £0.945 | 3 Years | 10 Years | £0.11 |
| Sharesave Scheme 3 | 04/06/2007 | 12,264 | £1.125 | 3 Years | 3 Years | £0.23 |
| Sharesave Scheme 4 | 03/06/2008 | 124,150 | £0.685 | 3 Years | 3 Years | £0.16 |
| Sharesave Scheme 5 | 07/05/2009 | 862,914 | £0.27 | 3 Years | 3 Years | £0.09 |
| Sharesave Scheme 6 | 28/05/2010 | 116,975 | £0.655 | 3 Years | 3 Years | £0.24 |
| CSOP | 23/01/2009 | 375,000 | £0.33 | 3 Years | 10 Years | £0.11 |
|
C T Lloyd Option Scheme |
21/06/2007 |
768,588 |
£0.005 | Each £20m growth in market value |
10 Years |
£0.12 |
The fair value of services received in return for share options granted to employees is measured by reference to the fair value of share options granted. The estimate of fair value of the services received is measured based on a binomial lattice model for the EMI, CSOP and Sharesave Schemes and a Monte Carlo model for the C T Lloyd Option Scheme. The vesting period is used as an input to those models.
The following additional assumptions were used for all schemes except for the CSOP and Sharesave Schemes 3, 4, 5 and 6:
- Expected volatility of 24% based on the average volatility of the Company since flotation in August 2004
- A dividend yield of 1.20%
- Risk free interest rate of 5.31%
The following additional assumptions were used for Sharesave Scheme 3:
- Expected volatility of 22% based on the average volatility of the Company since flotation in August 2004
- A dividend yield of 1%
- Risk free interest rate of 5.50%
The following additional assumptions were used for Sharesave Scheme 4:
- Expected volatility of 34% based on the average volatility of the Company since flotation in August 2004
- A dividend yield of 2.35%
- Risk free interest rate of 4.92%
The following additional assumptions were used for CSOP and Sharesave Scheme 5:
- Expected volatility of 62% based on the average volatility of the Company since flotation in August 2004
- A dividend yield of 4.79%
- Risk free interest rate of 2.49%
The following additional assumptions were used for Sharesave Scheme 6:
- Expected volatility of 63% based on the average volatility of the Company since flotation in August 2004
- A dividend yield of 3.07%
- Risk free interest rate of 1.64%
7 Intangible assets
|
| Six months ended 30 June 2010 £000 | Six months ended 30 June 2009 £000 | Year ended 31 December 2009 £000 |
| Goodwill |
|
|
|
| Balance at beginning of period | 20,662 105 | 20,542 - | 20,542 120 |
| Acquired through business combination | |||
| Balance at end of period | 20,767 | 20,542 | 20,662 |
|
|
|
|
|
| Other intangibles |
| ||
| Balance at beginning of period | 743 | 1,182 | 1,182 |
| Amortisation | (150) | (220) | (439) |
| Balance at end of period | 593 | 962 | 743 |
|
|
|
|
|
| Total |
|
|
|
| Balance at beginning of period | 21,405 | 21,724 | 21,724 |
| Acquired through business combination | 105 | - | 120 |
| Amortisation | (150) | (220) | (439) |
| Balance at end of period | 21,360 | 21,504 | 21,405 |
8 Acquisitions
Motivation Travel Management
Additional consideration of £520,000 was paid in 2010 relating to the 2007 acquisition of Motivation Travel Management Limited. This amount was fully provided at 31 December 2009.
Peppermint
On 11 June 2010 P&MM Limited, a subsidiary of the Company, acquired the trade and certain assets of Peppermint Productions Limited (Peppermint) for an initial cash consideration of £35,000. Additional variable deferred cash consideration is payable subject to Peppermint achieving specified levels of gross profit in the years ending 31 December 2011, 2012 and 2013. The fair value of the deferred consideration has been estimated for the three years in question by applying the income approach. The fair value estimates are based on assumed discounted gross profit in excess of £150,000 per annum, resulting in a provision of £75,000 being made in these financial statements. Associated costs of £4,000 were paid and these have been charged to administrative expenses in the income statement in the period. Peppermint provides incentive travel and conference facilities in the United Kingdom and overseas to corporate clients.
The book value and provisional fair value of computer equipment acquired was £5,000. The provisional fair value of the resulting purchased goodwill was £105,000. At acquisition there were no other assets or material ongoing contracts in place with clients and therefore £105,000 of acquisition consideration has been attributed to the sales, account direction and production ability and skills of key personnel of Peppermint. Under IFRS no value can be attributed to such intangibles and this has contributed to the amount recognised as purchased goodwill. The goodwill has been allocated to the Events segment and is expected to be tax deductible. Due to the proximity of the acquisition to the reporting date the fair values have been determined provisionally.
Peppermint did not contribute to the Group's revenues and profits in the period.
9 Events after the reporting date
On 8 July 2010 the Company made an on market purchase of 150,000 of its own ordinary shares of 0.5 pence each at an average price of 82.0 pence for a total consideration of £124,000 including broker and stamp duty costs. The Company has put these shares into Treasury and now holds 2,122,007 Ordinary Shares in Treasury, representing 6.8% of the Company's total issued share capital.