Motivcom tops reduced expectations

Things look to be back on a sound footing at Motivcom, the business services group which went through the pain of a profit warning back in September.

Finance director Sue Hocken told Sharecast at the time of its profits warning that it had set its full year guidance at a cautious level and that the company had no wish to revisit it, and true to her word, the company has produced figures slightly ahead of revised expectations.

Revenue slipped to £105.95m in 2011 from £115.48m in 2010, as order intake slowed because of tough UK business conditions.

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Headline operating profit decreased by 16% to £4.02m from £4.76m in 2010 on a gross profit that increased by 6% to £29.50m from 2010's £27.78m.

Headline profit before tax also fell by 16%, to £3.95m from £4.69m the year before. Headline basic earnings per share decreased by 13% to 9.97p from 11.48p a year earlier.

Net cash at the end of 2011 stood at £5.64m, down from £6.24m a year earlier, but not bad after the company splashed out £2.52m on acquisitions.

Both of the acquired companies, Allsave, in the employee benefits sector, and Goldserve, a digital global events prospecting company, have integrated well.

Hocken sounded especially pleased with the performance of Allsave which is "performing exceedingly well".

"They are enjoying being part of the group and we are seeing cross-selling opportunities," Hocken told Sharecast.

The company has announced a final dividend of 2.85p, which makes the full year dividend of 4.0p 25% higher than 2010's pay-out of 3.2p.

Although the company is committed to a progressive dividend policy, it still has plenty of cash for suitable acquisitions.

"We are an acquisitive company," Hocken stated, "but the companies have to be in our space and something we understand. It has to be something where we can save costs through synergies or, if it is a stand-alone business, we ask, can we cross-sell and grow its top line?"

In a familiar refrain, Hocken said it is looking at a few target companies but vendors are still holding out for what Motivom sees as unrealistic valuations.

"Historically, 50% of our growth has come from acquisitions," noted John Sylvester, the executive director of Motivcom's Motivation and Incentive Services division, so it looks like a case of 'watch this space'.

In the meantime, the company is "definitely busy with a lot of tenders and new opportunities, and these are coming to fruition at a slightly faster pace than a few months ago," Sylvester said.

The last word goes to Chairman Colin Lloyd: "Our five year stated strategy continues to progress to plan, and Motivcom's strong cash balances put the group in an excellent position to capitalise on future opportunities as they arise, both acquisitive and organic."

Motivcom's share rose 3.5p to 97.5p on the results.