Motivcom, the AIM listed incentives and marketing consultancy, has justified its much improved share price reported here yesterday (see Share price recovery exposes the weak) by announcing a 47.5% improvement in post-tax profits for 2009 as clients placed emphasis on staff retention incentives as well as customer loyalty schemes.
All three divisions â€“ incentives, sales promotion and events – reported improved operating profits, resulting in a post-tax group profit for the year of ÂŁ2.2 million compared with ÂŁ1.5 million in 2008. And, unlike many of its peer group, there were no exceptional redundancy, asset impairment or other reorganisation costs to damage profits.
The growth was achieved despite a slight fall in gross income, helped by a near 9% reduction in operating costs – proof, if ever required, of the bottom line benefit to be derived from such savings. As a result, the groupâ€™s operating profit margin improved from 11% in 2008 to 14.9% in 2009.
Motivcom also enjoys a sound balance sheet with no net borrowings (net cash was ÂŁ1.8 million at 31 December 2009) and ÂŁ18 million of shareholdersâ€™ funds. Current liabilities exceeded readily realisable assets by ÂŁ1.7 million, but that should not cause investors any significant anxiety given the absence of net borrowings and the overall balance sheet strength. Whether by accident or design Motivcom made no acquisitions during last year, thereby preserving its resources for more favourable conditions.
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