RNS Number:4744B
MKM Group PLC
03 August 2007
MKM.L
MKM GROUP PLC
("the Group" or "the Company")
Preliminary Results for the year ended 31 March 2007
Highlights
Strategic
* Continued operational improvements at MKM Concepts, the Group's principal
operating subsidiary, enhancing service delivery to clients and improving
internal efficiencies
- StARS: new comprehensive web-based database of partner offers
- Green Suite: new ecologically sound product range
* Proposed acquisition of Leisure World Pty Limited and its subsidiaries (the
"Leapfrog Group" or"Leapfrog"), the sales promotion business based in
Australia, represents a significant step in the Group's new growth phase
- adds critical mass to existing sales promotion business, increasing
sales by a factor of over two times
- has strong synergies with MKM Concepts
- significantly broadens capability and product range
- opens up new geographic markets
* Board remains focused on developing a broadly based marketing services
business
Financial
* Group returned to profitability
- reflecting good progress at MKM Concepts
* Turnover of #3.9m (2006: #4.6m)
* Profit before tax of #456,000 (2006: loss of #362,000)
- long term relationships with blue-chip clients driving profitability
* Basic earnings per share of 1.3p (2006: loss per share of 1.2p)
* Strong balance sheet with cash of #1.906m (2006: #1.696m)
* Board views prospects for the enlarged group very positively
Commenting, Chairman Andrew Johnson, said,
"I am delighted to announce that the Company has made excellent progress, both
at MKM Concepts and in our strategic ambition to build a broadly based marketing
services group.
Over the period, we have invested both in our ability to fulfil client
campaigns, with the development of StARS our new web-based database programme,
and in new products, including Green Suite, our eco-friendly range.
The proposed acquisition of Leapfrog, announced this morning, is very exciting
and represents a major advance in our plans to develop the Group. Leapfrog adds
critical mass to our sales promotion activities, more than doubling the existing
business. The acquisition also opens the way for significant international
expansion. We believe that the logic of our growth strategy remains compelling
and view the outlook for the Group very positively."
Enquiries to:
MKM Group Plc (www.mkmgroupplc.com)
Andrew Johnson, Executive Chairman
Matthew Toynton, Finance Director 0161 877 1112
WH Ireland
David Youngman 0161 832 2174
Biddicks
Katie Tzouliadis, Managing Director 020 7448 1000
Sophie Lane
CHAIRMAN'S STATEMENT
OVERVIEW
The Group's results for the year to 31 March 2007 as a whole are pleasing and
slightly ahead of our expectations at the half year stage.
As shareholders are aware, our ambitions are to develop a more broadly based
marketing services business therefore the Board has been considering
opportunities to expand the Company through acquisitions in the marketing
services sector.
I am thus delighted to announce our proposal to acquire the Leapfrog Group.
Further details of this proposed acquisition will be published in a separate
announcement. Shareholder approval will be sought at an Extraordinary General
Meeting to be held on 29 August 2007. Leapfrog and MKM Concepts are very similar
businesses and the integration of the two businesses will substantially
strengthen our sales promotion and loyalty business and gives us a solid
platform upon which to build.
FINANCIAL REVIEW
The Group generated a profit before tax of #456,000 (2006: loss before tax of
#362,000) This result was generated from turnover of #3.9m (2006: #4.6m) The
significant improvement in profitability compared with the prior year reflected
the strength of the foundation established over the past 18 months at MKM
Concepts, our sales promotion business. Specifically, MKM Concepts has developed
a number of long term relationships with blue-chip clients which are generating
profitable returns.
In addition, it should be noted that these results hide a strong performance by
MKM Concepts, the current single trading subsidiary. The Group is currently
carrying central overhead costs of approximately #340,000 associated with the
AIM quote and pursuing growth through acquisition. As the Group expands through
the acquisition of Leapfrog, these central costs will not increase.
The income statement for 2007 reflects a tax credit of #124,000 as a result of
the recognition of a deferred tax asset for the first time. This deferred tax
asset is a combination of the future impact of carried forward losses and share
options. The Group has recognised the deferred tax asset as it has now
established a track record of profitability.
The Directors' Report explains that these accounts have been prepared under
International Financial Reporting Standards (IFRS) for the first time. This
change in accounting policies results in the Group reporting a reduction in
administrative expenses in both 2006 and 2007 as can be seen within note 2.
The current business is delivered with a relatively low level of capital
investment. The investment that is required drives our IT capability and our
fulfilment to clients.
Once again we ended the year with a strong balance sheet, with cash of
#1,906,000 (2006: #1,696,000).
OPERATIONS
After the major restructuring undertaken over the course of the last financial
year, the focus at MKM Concepts has been two-fold; to continue to improve the
Company operationally and to win new business. The team has made good progress
in both areas.
Operationally, MKM Concepts is now in a much stronger position. Its quality
control and operational delivery have been significantly enhanced. This brings
benefits to us, in terms of internal efficiencies, and for our clients as we
enhance our service delivery. In September I referred to the fact that we had
initiated a programme to achieve ISO 9001 and I am pleased to say that we
received accreditation in April 2007. The travel operations were successfully
merged into one subsidiary and adopted one common operating system.
A major investment over the year has been in the development of StARS, MKM
Concepts new web-based database programme. The StARS programme will allow MKM
Concepts to hold comprehensive details on all their partner offers on one
database and readily support the activity of multiple clients. Consumers will
benefit from the improved presentation of the offers and our clients will have
access to enhanced management information. The programme represents a major step
forward in the fulfilment of campaigns for clients. The programme was launched
in the final quarter of the financial year and I am pleased to report that
initial reaction from clients has been very positive.
At the beginning of the third quarter of the financial year, a significant
loyalty client contract was cancelled as a result of a change in the client's
marketing strategy. However, I am pleased to report that MKM Concepts has won
two major new partnership agreements in the last few months. These are long term
contracts where MKM Concepts will be putting in place sales promotion programmes
designed to help, attract, develop and retain customers. The StARS technology
will underpin the delivery of these programmes. I am also pleased to report that
MKM Concepts has renewed its partnership agreements with HSBC Bank plc and First
Direct. MKM Concepts supports the running of HSBC's "Premier" and "Plus"
accounts and the "firstdirectory" account for First Direct.
Over the year, the business continued to be active with shorter term, tactical
sales programmes for clients. These are contracted on a campaign-by-campaign
basis.
MKM Concepts continually seeks to add new sales products to its product offer. A
significant recent development has been the development of the 'Green Suite'
range of ecologically sound sales promotion offers. The 'Green Suite' range is
being used as part of HSBC's campaign to promote its range of Green current
accounts.
BOARD MEMBERSHIP
Following the proposed acquisition of Leapfrog, we expect Brian Smillie and
Richard Tenser (co-founders of Leapfrog and respectively Executive Chairman and
Chief Executive) to join the Board as International Managing Director and
International Development Director respectively. As co-founders and Executive
Directors of Leapfrog, they bring considerable commercial skills and experience
and add further depth to the senior management team.
STRATEGY
I outlined in my statement last year a strategy to build a more broadly based
marketing services group. We remain focused on acquiring a second leg for the
Group in a related field within the sector and are particularly interested in
businesses with a strong data focus. We have looked at a number of businesses
which meet these criteria and continue to search for an appropriate business.
We also stated our commitment to developing the MKM Concepts sales promotion
business. We have today entered into a conditional agreement to acquire the
entire share capital of the Leapfrog Group. Leapfrog is a very similar business
to MKM Concepts based in Australia and New Zealand with plans to develop in the
Asia-Pacific region. The merger of the MKM Concepts and Leapfrog businesses will
give the Group a first rate and robust loyalty and sales promotion business with
substantial potential for growth. The two businesses will be integrated and
pursue a coherent strategy. The business will place considerable emphasis on
achieving strong organic growth, building client relationships with global
brands, introducing innovative products and entering new geographic markets in
Europe and Asia Pacific. The Leapfrog management team have demonstrated the
ability to achieve significant growth and expand into new countries.
Whilst our immediate focus will be on ensuring we maximise the benefit of the
acquisition of the Leapfrog business, we will also continue our search for a
data orientated second leg.
CURRENT TRADING AND PROSPECTS
The Company continues to make progress and we remain committed to our objective
of creating a significantly larger, more broadly based marketing business. We
believe the proposed acquisition represents a significant advance and view
prospects for the enlarged group very positively.
Andrew Johnson
Executive Chairman
2 August 2007
MKM Group Plc
Consolidated income statement for the year ended 31 March 2007
2007 2006
#'000 #'000
Revenue 3,888 4,575
Cost of sales (1,411) (3,279)
-------------------------
GROSS PROFIT 2,477 1,296
Administrative expenses (2,073) (1,689)
-------------------------
PROFIT/(LOSS) FROM OPERATIONS 404 (393)
Finance expense (1) (17)
Finance income 53 48
-------------------------
PROFIT/(LOSS) BEFORE TAXATION 456 (362)
Income tax credit 124 4
-------------------------
PROFIT/(LOSS) FOR THE YEAR 580 (358)
=========================
Attributable to the equity holders of the parent 580 (358)
=========================
Basic earnings/(loss) per share (pence) 1.3 (1.2)
Diluted earnings/(loss) per share (pence) 1.1 (1.2)
MKM Group Plc
Consolidated statement of changes in equity for the year ended 31 March 2007
Share
Share Share Option Retained
capital premium Reserve earnings Total
#'000 #'000 #'000 #'000 #'000
Balance as at 1 April 2006 218 2,205 31 (687) 1,767
------------------------------------------------
Changes in equity for year ended 31
March 2007
Net income recognised
directly in equity - - 30 - 30
Deferred tax asset relating
to share options - - 51 - 51
Net profit for the period - - - 580 580
------------------------------------------------
Total recognised income and expense for
the period - - 81 580 661
------------------------------------------------
Balance as at 31 March 2007 218 2,205 112 (107) 2,428
================================================
Consolidated statement of changes in equity for the year ended 31 March 2006
Share
Share Share Option Retained
capital premium Reserve earnings Total
#'000 #'000 #'000 #'000 #'000
Balance as at 1 April 2005 66 949 15 (329) 701
------------------------------------------------
Changes in equity for year ended 31
March 2006
Net income recognised
directly in equity - - 16 - 16
Net loss for the period - - - (358) (358)
------------------------------------------------
Total recognised income and expense for
the period - - 16 (358) (342)
Issue of equity shares 152 1,256 - - 1,408
------------------------------------------------
Balance as at 31 March 2006 218 2,205 31 (687) 1,767
================================================
MKM Group Plc
Consolidated balance sheet as at 31 March 2007
31 March 31 March
2007 2006
#'000 #'000
NON-CURRENT ASSETS
Property, plant & equipment 277 285
Intangibles 703 823
Deferred tax assets 178 -
------------------------
1,158 1,108
CURRENT ASSETS
Inventories 10 1
Trade and other receivables 796 259
Cash and cash equivalents 1,906 1,696
------------------------
2,712 1,956
CURRENT LIABILITIES
Trade and other payables (1,437) (1,276)
Provisions (5) (21)
------------------------
(1,442) (1,297)
------------------------
NET ASSETS 2,428 1,767
========================
CAPITAL AND RESERVES ATTRIBUTABLE TO THE EQUITY
HOLDERS OF THE COMPANY
Share Capital 218 218
Share Premium 2,205 2,205
Share Option Reserve 112 31
Retained earnings (107) (687)
------------------------
TOTAL EQUITY 2,428 1,767
========================
MKM Group Plc
Consolidated cash flow statement for the year ended 31 March 2007
2007 2007 2006 2006
#'000 #'000 #'000 #'000
CASHFLOWS FROM OPERATING ACTIVITIES
Profit/(loss) before taxation 456 (362)
Adjustments for
Interest receivable (53) (48)
Depreciation 80 129
Loss on sale of non-current - 178
assets
Interest expense 1 17
Share option charge 30 16
------ ------
514 (70)
Increase in inventories (9) -
(Increase)/decrease in trade receivables (537) 643
(Decrease)/increase in trade payables 278 (1,636)
Decrease in provisions (16) -
------ ------
Cash generated from operations (284) (993)
Interest paid (1) (17)
Taxation credit received - 270
------ ------
(1) 253
------ ------
Net cash generated from/(used in) operations 229 (810)
------ ------
CASHFLOWS FROM INVESTING ACTIVITIES
Purchase of non-current assets (72) (114)
Proceeds from sale of non-current assets - 14
Interest receivable 53 48
------
------
Net cash from investing activities (19) (52)
------ ------
CASHFLOWS FROM FINANCING ACTIVITIES
Issue of ordinary share capital - 1,408
Interest on capital - (1)
------
------
Net cash generated from financing activities - 1,407
------ ------
Net increase in cash and cash equivalents 210 545
Cash and cash equivalents at the beginning of the period 1,696 1,151
------ ------
Cash and cash equivalents at the end of the period 1,906 1,696
====== ======
MKM Group Plc
Notes forming part of the financial statements for the year ended 31 March 2007
1 Preliminary announcement
The financial information set out in this document does not constitute the
company's statutory accounts for the year ended 31 March 2007, but is derived
from those audited accounts to that date which received an unqualified auditors'
report and did not contain statements under the Companies Act 1985, s237(2) or
(3) and will be filed with the Registrar of Companies.
The financial information for the year ended 31 March 2006 is derived from the
Group's financial statements to that date but have undergone a change in
accounting policies to International Financial Reporting Standards (see note 2).
The financial statements to 31 March 2006 received an unqualified auditors'
report and did not contain statements under the Companies Act 1985, s237(2) or
(3) and have been filed with the Registrar of Companies.
The preliminary announcement has been prepared on the basis of the accounting
policies set out in the statutory financial statements for the year ended 31
March 2007.
2 First time adoption of International Financial Reporting Standards (IFRS)
Reconciliations and explanatory notes on how the transition to IFRS has affected
profit and net assets previously reported under UK Generally Accepted Accounting
Principles are given below:
Income statement reconciliation for the year ended 31 March 2006
Share Employee
option bonus
Amortisation charge scheme
reversal accrual
UK GAAP IFRS
2006 2006
#'000 #'000 #'000 #'000 #'000
Sub note 1 2 3
REVENUE 4,575 - - - 4,575
Cost of sales (3,279) - - - (3,729)
-------------------------------------------------------------
GROSS PROFIT 1,296 - - - 1,296
Other income - - - - -
Administrative expenses (1,712) 44 (16) (5) (1,689)
-------------------------------------------------------------
LOSS FROM OPERATIONS (416) 44 (16) (5) (393)
Finance expense (17) - - - (17)
Finance income 48 48
-------------------------------------------------------------
LOSS BEFORE TAXATION (385) 44 (16) (5) (362)
INCOME TAX CREDIT 4 - - - 4
-------------------------------------------------------------
PROFIT/(LOSS) FOR THE PERIOD (381) 44 (16) (5) (358)
=============================================================
Balance sheet reconciliation as at 1 April 2005
Share
Option
UK GAAP Charge IFRS
1st April 1st April
2005 2005
#'000 #'000
Sub note 2
NON-CURRENT ASSETS
Property, plant & equipment 493 - 493
Intangibles 823 - 823
-----------------------------------------
1,316 - 1,316
CURRENT ASSETS
Inventories 1 - 1
Trade and other receivables 1,172 - 1,172
Cash and cash equivalents 1,151 - 1,151
-----------------------------------------
2,324 - 2,324
CURRENT LIABILITIES
Trade & other payables (2,047) - (2,047)
Provisions (892) - (892)
(2,939) - (2,939)
-----------------------------------------
NET ASSETS 701 - 701
=========================================
CAPITAL AND RESERVES ATTRIBUTABLE TO THE
EQUITY HOLDERS OF THE COMPANY
Share capital 66 - 66
Share premium 949 - 949
Share option reserve - 15 15
Retained earnings (314) (15) (329)
-----------------------------------------
EQUITY SHAREHOLDERS' FUNDS 701 - 701
=========================================
Balance sheet reconciliation as at 31 March 2006
Employee
Share bonus Income
Option scheme statement
Charge accrual Amortisation movements
reversal
UK GAAP IFRS
31 March 31 March
2006 2006
#'000 #'000 #'000 #'000 #'000 #'000
NON-CURRENT ASSETS
Property, plant &
equipment 285 - - - - 285
Intangibles 779 - - 44 - 823
-------------------------------------------------------------------
1,064 - - 44 - 1,108
CURRENT ASSETS
Inventories 1 - - - - 1
Trade and other
receivables 259 - - - - 259
Cash and cash
equivalents 1,696 - - - - 1,696
-------------------------------------------------------------------
1,956 - - - - 1,956
CURRENT
LIABILITIES
Trade & other
payables (1,276) - - - - (1,276)
Provisions (16) - (5) - - (21)
-------------------------------------------------------------------
(1,292) - (5) - - (1,297)
-------------------------------------------------------------------
NET ASSETS/
(LIABILITIES) 1,728 - (5) 44 - 1,767
===================================================================
CAPITAL AND
RESERVES
ATTRIBUTABLE TO
THE EQUITY
HOLDERS OF THE
COMPANY
Share capital 218 - - - - 218
Share premium 2,205 - - - - 2,205
Share option
reserve - 31 - - - 31
Retained earnings (695) (15) - - 23 (687)
-------------------------------------------------------------------
EQUITY
SHAREHOLDERS'
FUNDS 1,728 16 - - 23 1,767
===================================================================
Adjustments
Explanations of the adjustments made to the UK GAAP income statement and balance
sheets are as follows:
Sub-note explanation
1 Amortisation reversal
Under IFRS 3, Business combinations, goodwill acquired on acquisition is no
longer amortised over a specified useful life but is subject to an annual
impairment review.
The IFRS 1, First-time adoption exemption not to restate goodwill has been
exercised, the carrying amount of goodwill at the date of transition, 1 April
2005 is stated as #823,000.
Goodwill is subject to an annual impairment review.
2 Share option charge
IFRS 2, Share based payments attributes a fair value to employee share option
awards. This fair value was included for the first time in the Group's interim
results to September 2006 but was not previously included in the published full
year results to March 2006.
3 Employee benefit accrual
IAS 19, Employee benefits recognises the costs to the company of
providing short-term employee benefits within the period they have been earned.
Cash flow statement for the year ended 31 March 2006
The only changes to the cash flow statement are presentational. The key ones
include:
* Presenting a statement showing movements in cash and cash equivalents,
rather than just cash. Cash under UK GAAP comprised only amounts accessible in
24 hours without penalty less overdrafts repayable on demand.
* Classifying tax cash flows as relating to operating activities.
3 Events after the balance sheet date
On 2 August 2007, the Group entered into a conditional agreement to acquire the
entire issued share capital of Leisure World Pty Limited for a combination of
cash and shares. Leisure World Pty Limited is the Australian based parent
company of the Leapfrog Group, a sales promotion company with a similar product
and client profile to MKM Group Plc.
Completion of the acquisition is subject to the approval of shareholders at an
Extraordinary General Meeting to be held on 29 August 2007. Following completion
of the transaction, it is expected that Brian Smillie and Richard Tenser will
join the Group Board of Directors.
4 Notes supporting cash flow statement
2007 2006
#'000 #'000
Cash available on demand 1,906 1,696
---------------------
1,906 1,696
=====================
Net cash increase in cash and cash equivalents 210 545
Cash and cash equivalents at beginning of year 1,696 1,151
---------------------
Cash and cash equivalents at end of year 1,906 1,696
=====================
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR OKBKBCBKDNFK
Mkm Group (LSE:MKM)
Graphique Historique de l'Action
De Mai 2024 à Juin 2024
Mkm Group (LSE:MKM)
Graphique Historique de l'Action
De Juin 2023 à Juin 2024
