MKM Mkm Group

RNS Number:2829N
MKM Group PLC
05 February 2008


MKM
                                 MKM GROUP PLC

                         ("the Group" or "the Company")

                                 Trading Update

MKM today announces an update on trading for the Company's financial year to 31 
March 2008.

On 18 December 2007, when MKM announced its interim results, we stated that we 
were pleased with the progress we had made both during the period and since 
completing our acquisitions; Leapfrog and Promodus. We also reported that we were 
working on a number of major contract discussions but that it was difficult to 
predict the timing of their successful closure.

I am pleased to announce that progress with the integration of our new
businesses is proceeding well and, at the end of January, our MKM Concepts
business in the UK adopted the Leapfrog name. I am also pleased to report that
our new business initiatives remain very encouraging. However, in respect of the
major contracts which we were negotiating with a number of clients in the
financial services sector in both the UK and Australia, it is now clear that
certain clients have delayed the start date of new marketing strategies. As a
consequence, significant new revenue, which we had expected to arise in the last
quarter of the current financial year, will now fall into the new financial
year. Additionally, the Australian business has also suffered from the loss of a
major contract in the financial services sector, resulting from a decision by
the client to take a significant proportion of the activity in-house. The impact
of these changes is that the Group's sales and profits for the current financial
year will be below current market expectations.

The Group has reviewed its cost base and taken appropriate action to reduce
overheads and, in general, tighten operations. The cost of implementing these
changes will result in a one-off charge in this year's accounts of approximately
�225,000.

Executive Director, Victor Koch, will be leaving the Company with immediate 
effect.  The Board would like to thank Victor for his contribution to the Group 
over many years.

Given current management expectations for the year, it is probable that the
final payment associated with our acquisition of the Leapfrog business in
Australia will involve the payment of a further 4 million ordinary shares and
�600,000 in a combination of either cash or shares, at the Company's discretion.

Whilst the short term sales position is very disappointing, the new business
pipeline across the Group remains strong and we are optimistic that the order
intake shortfall will prove to be temporary. Additionally, during the last few
months, our Leapfrog UK business has developed a new product under the name of
'Airport Angel'. 'Airport Angel' has been designed to strengthen our product
offer within the financial services sector and has been well received by both
existing and new clients. Based upon this positive response, the product will be
formally launched in April 2008. As Leapfrog targets new business, its focus
continues to be on securing long-term loyalty accounts, which are typically for
3 to 4 years, against short-term, tactical marketing campaigns. This focus will
create improved earnings visibility.

The Board remains committed to its growth strategy and is optimistic about the
longer term prospects for the business.




Enquiries:

MKM Group plc         Andrew Johnson, Executive Chairman       T: 0161 877 1112
(www.mkmgroupplc.com) Matthew Toynton, Finance Director

WH Ireland Limited    David Youngman                           T: 0161 832 2174

Biddicks              Katie Tzouliadis                         T: 020 7448 1000





                      This information is provided by RNS
            The company news service from the London Stock Exchange

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