Mc Mining Regulatory News (MCM)

Motivcom plc

("Motivcom" or "the Group")

Interim Results for the six months ended 30 June 2013

Motivcom plc (AIM:MCM), a leading business services group offering incentives & loyalty expertise and meetings & event management services to major blue-chip corporate clients, is pleased to announce its unaudited interim results for the six months ended 30 June 2013.

Financial Highlights

Unaudited Interim Results for the period ended 30 June 2013

* Operating profit of £1,606,000 (2012: £1,027,000) plus amortisation of intangibles of £202,000 (2012: £310,000)

† Profit before tax of £1,560,000 (2012: £897,000) plus amortisation of intangibles of £202,000 (2012: £310,000) and unwinding of discount relating to contingent consideration liability of £44,000 (2012: £110,000)

‡ See reconciliation in Note 5

Commenting on the results, Colin Lloyd, Chairman of Motivcom plc, said: "The Board is pleased to report on a successful period, in which operating profit increased and new client wins were secured across all divisions. The tender offer in April 2013 to buy back 10% of the Group's equity benefited our shareholders and our strong cash position gives the Group the ability to consider further tender offers and bolt-on acquisitions should appropriate opportunities arise.

"The Group's continued innovation and investment in technology has underpinned our levels of business activity during the period, and we are pleased to confirm that the Board's outlook for the Group remains positive."

- Ends -

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CHAIRMAN'S STATEMENT

I am pleased to report the results for Motivcom for the six months to 30 June 2013. The Group has benefited from the cost reductions that were implemented in 2012 which resulted in reduced operating costs and increased headline operating profit. Cash balances remain strong and were in line with expectations.

I am also pleased that on 14 April 2013 shareholders benefited from the cash generative nature of the Group's business through a tender offer for 10% of the Company's ordinary shares for a total consideration of £3,311,000. The Headline basic earnings per share were partially enhanced by this tender offer, increasing by 48%. The £3,838,000 cash position at the end of June 2013 continues to provide the Group with flexibility to consider further tender offers and bolt-on acquisitions should appropriate opportunities arise.

Financial update

The Group's gross profit was broadly in line with 2012 at £13,745,000 (2012: £13,885,000). The Group has benefited from the cost reductions that were implemented in 2012 which resulted in reduced operating costs and a headline operating profit of £1,808,000 (2012: £1,337,000), an increase of 35%. Headline profit before tax increased by 37% to £1,806,000 (2012: £1,317,000) and headline basic earnings per share increased by 48% to 4.86 pence (2012: 3.28 pence).

In view of the cash generative nature of the Group's business and the Board's confidence in Motivcom's prospects, the Board is pleased to propose an interim dividend for the period to June 2013 of 1.8 pence, an increase of 20% (2012: 1.5 pence). This will be paid on 1 November 2013 to shareholders on the register at close of business on 4 October 2013. As I have detailed previously, the Board intends to continue its progressive dividend policy.

Divisional Reports

Motivation

The motivation division has continued to deliver good growth during the period with headline operating profits increasing by 20% to £876,000 (2012: £729,000). New business enquiries remain at steady levels with a marked improvement in the speed and reliability of client decisions.

Motivation programme activity has benefited from new client wins in 2012 which are at various stages of implementation. We are experiencing a more committed and stable environment from our existing client base which is now taking positive steps to invest in our area of employee engagement.

Our voucher / gift card business remains consistent with previous years and continues to benefit from the shift from paper vouchers to plastic retailer gift cards. Improved functionality and lower distribution costs continue to drive efficiencies into this operation.

Spree, our pre paid MasterCard product, has continued to grow with transaction values in H1 reaching £88 million (H1 2012: £82 million). Spree offers rich cashback saving at most key high street brands and is available to employee and membership groups. The recent growth in the market for cashback cards is testament to the effectiveness of this approach that we first introduced in 2007. Investment in cardholder marketing, mobile solutions and product for the SME market have driven both growth in the cardholder base and improved profitability from existing cardholders.

A steady stream of new business wins means that the division is performing well and the Board anticipates that it will continue to make good progress in H2 2013 and on into 2014.

Promotions

The Board is pleased to report that the promotions division has performed considerably better than H1 2013 with headline operating profits doubling to £201,000 (2012: £107,000).

Employee Benefits and Communications

Our publishing business has, despite the substantial market move to digital, been successful in achieving 100% client retention, as well as winning a number of significant new clients. It continues to develop innovative technological solutions which will assist the business in retaining clients, increasing client spend and winning new clients.

Following a successful 2012 for Employee Benefits, 2013 has continued apace. We are pleased to report continuing client wins within the private and public sectors. The Group's increasing use of technologically based solutions and the introduction of mobile adaptability give the Board confidence for a positive H2 2013.

Sales Promotion

A positive start to the year has been driven by the structural changes made during 2012. These changes have improved sales focus and operational efficiency in H1 and are expected to contribute further in H2 and into 2014. Both Filmology and Fotorama have won significant levels of new business. Treatme, our activity and experience business, has been successfully integrated, and has a new web presence in both the consumer and B2B arenas. The strategy of building the business within the B2B and retail space has begun with a number of B2B clients secured and distribution through a major national retailer. The Board remains confident that this division will perform to expectation for 2013.

Events

The events division has shown a significant improvement in performance over H1 2012 with headline operating profits increasing by 38% to £806,000 (2012: £585,000).

Our contracted venue sourcing business finds venues and manages meetings programmes for large global and international companies. This area saw a positive start to 2013 with booking volumes for H1 in excess of 2012 by 20%. This trend has continued through the summer period and we are on track to exceed 2012 volumes. Fewer delegate numbers at each event and lower hotel rates create margin pressures which we are combating with improved technological efficiency, however profitability remains challenging in this area. We expect continued growth in this area as economic confidence leads to recovery. This in turn will lead to potentially higher hotel rates and the opportunity for increased business at higher margins could improve profit significantly in 2014. We are investing in new technology and IT solution platforms to further improve efficiency and provide service differentiation and we expect this investment to be on line by mid 2014.

Our event businesses develop creative conferences, product launches and incentive rewards for over 100 top global brands. The event management and live production areas have continued to see budgetary pressures and reducing numbers of delegates impacting volume, average spend per head and profitability. Traditionally our event management division follows the trends of our venue sourcing business usually 8-12 months later. We therefore expect a year of flat performance in events management, leading to an upturn in 2014 based on the trend currently being experienced in venue sourcing. We continue to monitor costs in this area.

The market remains challenging but there are signs of significant and potentially rapid improvements in market conditions as confidence returns to the sales and marketing community. Our creative approach to client service and business development means we are well placed to take advantage of any market recovery.

Outlook

In the last few years Motivcom companies have invested substantially in systems technologies and digital enabling solutions for clients, operating hundreds of web sites and social media engagement programmes. Almost half the Group revenues are enabled from these developments. The technologies, many of which are unique, provide an excellent platform for future development in the digital age.

The business intake of the Motivcom companies continues to meet the Group's annual budget and I expect the Group to perform in line with your Board's expectations.

Colin Lloyd

Chairman

25 September 2013

CONSOLIDATED INTERIM INCOME STATEMENT (UNAUDITED)

FOR THE PERIOD ENDED 30 JUNE 2013

CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

FOR THE PERIOD ENDED 30 JUNE 2013

All activities are classed as continuing

CONSOLIDATED INTERIM BALANCE SHEET (UNAUDITED)

AT 30 JUNE 2013

CONSOLIDATED INTERIM CASH FLOW STATEMENT (UNAUDITED)

FOR THE PERIOD ENDED 30 JUNE 2013

Cash generated from operations

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

FOR THE PERIOD ENDED 30 JUNE 2013

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2013

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, employee benefits products and communication programmes.

The Company is a public limited liability company incorporated and domiciled in England. The address of its registered office is Avalon House, Breckland, Linford Wood, Milton Keynes MK14 6LD. The Company has its primary and only listing on Aim, London Stock Exchange's international market for smaller growing companies.

These unaudited condensed consolidated interim financial statements (the interim financial statements) have been approved for issue by the Board of Directors on 25 September 2013.

2 Basis of preparation

These interim financial statements of Motivcom plc are for the six months ended 30 June 2013. 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 2012 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 2012 except for the application of the following standards as of 1 January 2013:

• IFRS 10 'Consolidated Financial Statements' (IFRS 10)

• IFRS 13 'Fair Value Measurement' (IFRS 13)

• Annual Improvements 2009-2011 (Annual Improvements)

There have been no effects whatsoever from applying these standards.

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 2013.

The Group's financial risk management policies are described in its financial statements for the year ended 31 December 2012.

3 Segment Information

At 30 June 2013 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, employee benefit products and communications ("Promotions"). Unallocated costs represent corporate and share-based payment expenses.

The segment results for the six months ended 30 June 2013 are as follows:

The segment results for the six months ended 30 June 2012 are as follows:

The segment results for the year ended 31 December 2012 are as follows:

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.

The Group's business is divided into two main streams - Incentives and Loyalty ("Incentives") and Meetings and Event Management ("Meetings"). Incentives comprises the segment results of Motivation and Promotions but also includes the motivation business of AYMTM Limited included in Events. Meetings comprises the segment results of Events less the motivation business of AYMTM Limited. The Group recognises that this additional information enables its shareholders to better appreciate the nature of its business.

The segment results for the six months ended 30 June 2013 are as follows:

The segment results for the six months ended 30 June 2012 are as follows:

The segment results for the year ended 31 December 2012 are as follows:

4 Income tax expenses

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.

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 2013.

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.

Dividends

During the first six months of 2013 Motivcom plc paid a final dividend in respect of 2012 of £903,000 to its equity shareholders (2012: £835,000). This represents a payment of 3.00 pence per share (2012: 2.85 pence).

6 Share-based payments

The Group has seven contracted share option schemes, comprising those disclosed in the Group's most recent financial statements and a Sharesave Scheme introduced on 3 June 2013. The following options have been valued in accordance with the provisions of IFRS 2.

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 the EMI Option Schemes and the CT Lloyd Option Scheme:

- 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 CSOP:

- 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%

The following additional assumptions were used for Sharesave Scheme 7:

- Expected volatility of 62% based on the average volatility of the Company since flotation in August 2004

- A dividend yield of 2.32%

- Risk free interest rate of 1.06%

The following additional assumptions were used for Sharesave Scheme 8:

- Expected volatility of 38% based on the average volatility of the Company since flotation in August 2004

- A dividend yield of 4.37%

- Risk free interest rate of 0.34%

The following additional assumptions were used for Sharesave Scheme 9:

- Expected volatility of 35% based on the average volatility of the Company since flotation in August 2004

- A dividend yield of 4.00%

- Risk free interest rate of 0.71%

7 Intangible assets

8 Acquisitions

The Group did not make any acquisitions during the period, nor in the six months ended 30 June 2012.

9 Share Capital

On 15 April 2013 the Company purchased 3,010,181 of its own shares at a price per share of 110 pence for a total cost of £3,311,000 by means of a Tender Offer to all shareholders. Additionally, costs of £36,000 were incurred. The shares were immediately cancelled on 15 April 2013 and £15,000 transferred from share capital to capital redemption reserve.

On 10 May 2012 the Company made an on market purchase of 100,000 of its own ordinary shares at 90 pence per share and placed the shares in Treasury.

10 Fair value hierarchy

IFRS 7 Improving Disclosures about Financial Instruments requires the Group to present certain information about financial instruments measured at fair value in the balance sheet. At 30 June 2012 and 30 June 2013 the only financial instruments measured at fair value through profit and loss were contingent consideration. The fair value is estimated using a valuation technique. Significant inputs into the model are based on management's assumptions of the cash outflow and appropriate discount rates. The fair value measurements in respect of deferred consideration are classified as level 3 in the fair value hierarchy as inputs for the asset or liability are not based on observable market data (unobservable inputs).

The losses (after deduction of tax) recognised in profit and loss account are disclosed in the table for headline basic earnings per share in Note 5.