RNS Number:6096I
MKM Group PLC
07 September 2006
MKM.L
MKM Group Plc
("MKM Group" or "the Group")
Preliminary results for the year ended 31st March 2006
MKM Group Plc, the marketing services group, announces its preliminary results
for the year ended 31st March 2006.
Highlights
* Successful restructuring of the Group completed
* Group returned to profitability in second half of year, generating
earnings before tax of #127,000
* Loss before tax for full year reduced to #385,000 (2005: loss before tax
#1.4m)
* Successful placing and open offer in September 2005 raised #1.4m
* Net cash of #1.7m at 31st March 2006
* Key Board appointments:
* New Executive Chairman, Andrew Johnson
* Finance Director, Matthew Toynton
* Non-executives Directors, David Mond and Michael Squires
* New strategic plan in place
* Encouraging start to current year - improved performance at MKM Concepts
Andrew Johnson, Executive Chairman of MKM Group commented:
"I am pleased to report that, in the second half of the year, the Group returned
to profitability. As a business, we ended the year in a much stronger position
than we started and I believe that we are now in a very good position to build
positively for the future.
The Group traded profitably in the second half. This significantly improved
performance reflected the benefit of the restructuring implemented in the first
half, which reduced overheads and direct costs. The improved results also
reflect enhanced margins resulting from the change in business mix.
Since the year end, we have reviewed the future strategic direction of the Group
and initiated a strategy to build a more broadly based marketing services
group. We are looking to acquire a second leg for the Group operating in a
related field within the sector.
We have had an encouraging start to the year and have a strong balance sheet.
This position will enable us to grow the business organically whilst seeking to
make a complementary acquisition to broaden the business."
Enquiries to:
MKM Group Plc (www.mkmgroupplc.com)
Andrew Johnson, Executive Chairman
Matthew Toynton, Finance Director 0161 877 1112
Biddicks
Katie Tzouliadis, Managing Director 020 7448 1000
MKM Group Plc
Chairman's Statement
Overview
This is my first preliminary results statement as Chairman, having joined the
Group in October 2005 and I am pleased to report that, in the second half of the
year, the Group returned to profitability. As a business, we ended the year in a
much stronger position than we started and I believe that we are now in a good
position to build positively for the future.
The year was challenging following the issues arising from the cruise promotion
in early 2005. However, by the end of the first half, we successfully completed
a fundamental restructuring of the business and in September 2005, raised #1.4m
through a placing and open offer of shares. We ended the year, at 31st March
2006, with net cash of #1.7m.
In December 2005, my role changed and I have become involved with the business
in a full time executive capacity. Following the year end, we have further
strengthened the Board, with two appointments including a new Group Finance
Director and the team is working well together.
The current financial year has started well. MKM Concepts continues to progress
and as we review the strategic direction of the Group, we are optimistic about
future developments.
Financial Overview
After incurring a loss before tax of #512,000 in the first half, the Group
returned to profitability in the second half, generating a pre-tax profit of
#127,000. For the year as a whole, therefore, the pre-tax loss was significantly
reduced to #385,000 (2005: loss before tax of #1.4m). This result was generated
from turnover of #4.6m (2005: #10.3m).
The significantly improved performance in the second half reflected the benefit
of the restructuring implemented in the first half, which reduced overheads and
direct costs. The improved results also reflect enhanced margins resulting from
an increase in the proportion of longer term contracted revenue.
We have also carried out a full review of the Group's fixed assets and working
capital. As a result, we took a decision to write down the book value of the
fixed assets and wrote off the investment that had previously been made in a
software operating system for our subsidiary travel operation. The total value
of the write off was #165,000 and this is included within the second half profit
of #127,000.
In September 2005, the Group raised #1.4m (before expenses) via a placing and
open offer. A total of 27,562,725 new Ordinary Shares of 0.5p each were issued
at 5p each. At this time, the two founding Directors, Mark and Victor Koch, each
invested #175,000 and Sound Financial plc invested #550,000. David Mond,
Non-executive Director of the Group, is a director and shareholder of Sound
Financial plc.
In December 2005, I subscribed for a further 3 million new Ordinary 0.5p shares
at 5p per share. These two changes take the Group's total number of Ordinary
Shares in issue to 43,744,545.
We ended the year with a strengthened balance sheet, with cash of #1.7m, up from
#1.1m last year.
Operations
At MKM Concepts, the first half of the year saw the resolution of the cruise
promotion problems which arose in early 2005. Following a final settlement with
Express Newspapers in July 2005, we implemented a major restructuring programme.
This was substantially completed over the first half.
In the second half, we were able to focus on business development, successfully
developing our product offering for the partnership and loyalty markets. Based
on longer term contracts, this offering will provide greater visibility of
earnings going forward and will underpin our future revenue growth.
We have strengthened the operational management in order to enhance the service
levels which we provide to our clients and their customers. We have also
initiated a programme to achieve ISO 9002, the international reference standard
for business-to-business quality management, and Investors in People
accreditation in the first quarter of 2007.
Board Strengthened
I was pleased to join the Board as Chairman in October 2005 and I took on the
full time role of Executive Chairman in December 2005
We have further strengthened the Group Board both during the year and after the
period end. We appointed a new Group Finance Director, Matthew Toynton, in May
2006 and at the same time, a new Non-executive Director, Michael Squires, having
previously appointed David Mond as Non-executive Director in September 2005.
Matthew joins us from Procter & Gamble where he was responsible for the
financial direction and control of their European beauty care operations.
Matthew's immediate focus has been on strengthening the Group's operational and
financial processes and control.
David is the senior partner of Hodgsons, the chartered accountants, and now
focuses on corporate finance, investment and insolvency activities. He is
Chairman of Sound Financial Plc an investment company which owns 10,400,000
shares of MKM Group plc and is also a director of ClearDebt Group plc and
Strategic Retail plc both AIM quoted companies.
Michael is highly experienced at a senior management level with particular
service industry expertise. He has worked for TMP Worldwide Inc, one of the
world's largest recruitment advertising network, and Cadbury Schweppes. He is
currently Chairman of European Study Group Limited and Solon Partnership
Limited.
Strategy
Since the year end, we have reviewed the future strategic direction of the Group
and initiated a strategy to build a more broadly based marketing services group.
We are looking to acquire a second leg for the Group operating in a related
field within the sector. We are particularly interested in businesses with a
strong data focus. The Group's aim is to provide clients with real value,
combining excellence in creativity with first rate operational delivery.
Current Trading and Prospects
We have created a platform on which we feel confident we can build. We have had
an encouraging start to the year and have a strong balance sheet. This enables
us to grow the MKM Concepts business organically whilst seeking to make a
complementary acquisition to broaden the Group.
Andrew Johnson
Executive Chairman
Date: 7th September 2006
MKM GROUP PLC
Consolidated Profit and loss account for the year ended 31 March 2006
_______________________________________________________________________________
unaudited audited
2006 2005
#'000 #'000
Turnover 4,575 10,279
-------------------------
Cost of sales 3,279 7,083
Exceptional cost of sales - 790
-------------------------
Total cost of sales 3,279 7,873
-------------------------
Gross profit 1,296 2,406
-------------------------
Administrative expenses 1,712 3,465
Exceptional administrative expenses - 367
-------------------------
Total administrative expenses 1,712 3,832
-------------------------
Operating loss (416) (1,426)
Interest receivable and similar income 48 73
Interest payable and similar charges (17) (38)
-------------------------
Loss on ordinary activities before taxation (385) (1,391)
Tax credit on loss 4 231
-------------------------
Retained loss for the year (381) (1,160)
=========================
Losses per share
Basic and diluted (1.3)p (10.8)p
=========================
MKM GROUP PLC
Consolidated balance sheet at 31 March 2006
_______________________________________________________________________________
unaudited audited
2006 2005
#'000 #'000 #'000 #'000
Fixed assets
Intangible assets 779 823
Tangible assets 285 493
------- -------
1,064 1,316
Current assets
Stocks 1 1
Debtors 259 1,172
Cash at bank and in hand 1,696 1,151
------- --------
1,956 2,324
Creditors: amounts falling due
within one year 1,276 2,047
------- --------
Net current assets 680 277
------- -------
Total assets less current liabilities 1,744 1,593
Provision for liabilities and charges 16 892
------- -------
16 892
------- -------
1,728 701
======= =======
Capital and reserves
Called up share capital 218 66
Share premium account 2,205 949
Profit and loss account (695) (314)
------- -------
Equity shareholders' funds 1,728 701
======= =======
MKM GROUP PLC
Consolidated cash flow statement for the year ended 31 March 2006
_______________________________________________________________________________
unaudited audited
Note 2006 2005
#'000 #'000
Net cash (outflow)/inflow from
operating activities 3 (1,063) 129
Returns on investments and servicing of
finance 4 31 35
Taxation 270 (316)
Capital expenditure and financial
investment 4 (100) (438)
Acquisitions 4 - (120)
---------------------
Net cash outflow before financing (862) (710)
Financing 4 1,407 553
---------------------
Increase/(Decrease) in cash in the year 545 (157)
=====================
Reconciliation of net cash flow to movement
in net debt
Increase/(decrease) in cash in the year 545 (157)
Cash outflow from debt financing 1 412
---------------------
Change in net funds resulting from cash flows 5 546 255
Net funds at the start of the year 1,147 892
---------------------
Net funds at the end of the year 5 1,693 1,147
=====================
MKM GROUP PLC
_______________________________________________________________________________
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 2006, but is derived
from those draft unaudited accounts to that date.
The financial information for the year ended 31 March 2005 is extracted from the
Group's financial statements to that date which 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 2005.
2 Basis of preparation
The financial information set out in these accounts has been prepared on the
going concern basis. The Directors are of the opinion that the Group has
sufficient working capital for the foreseeable future that is at least 12 months
from the date of this announcement.
3 Reconciliation of operating profit to net cash inflow from operating
activities
2006 2005
#'000 #'000
Operating (loss) (416) (1,426)
Depreciation 129 87
Amortisation 44 51
Decrease in debtors 643 251
(Decrease)/increase in creditors (1,544) 1,164
Loss on disposal of fixed assets 81 2
-----------------
Net cash (outflow)/inflow from operating
activities (1,063) 129
=================
4 Analysis of cash flows
2006 2005
#'000 #'000
Returns on investments and servicing of finance
Interest received 48 73
Interest paid (17) (38)
-----------------
31 35
=================
Capital expenditure
Payments to acquire tangible fixed assets (114) (441)
Proceeds from disposal of tangible fixed assets 14 3
----------------
(100) (438)
================
Acquisitions and disposals
Payments to acquire subsidiary undertakings - (120)
Financing
Issue of ordinary share capital 1,408 965
Capital element of hire purchase repayments (1) (9)
Repayment of other loans - (403)
----------------
1,407 553
================
5 Analysis of net debt
At Other
beginning Cash non-cash At
of year flow changes year end
#'000 #'000 #'000 #'000
Cash at bank and in hand 1,151 545 - 1,696
Finance leases and hire
purchase contracts (4) 1 - (3)
-------------------------------------------
Total 1,147 546 - 1,693
===========================================
6 Annual Report
The Annual Report will be sent to shareholders on 26th September 2006.
Additional copies will be available to the public, free of charge, from the
Company's registered office at Nelson House, Park Road, Timperley, Cheshire
WA14 5BZ.
7 Annual General Meeting
The company's Annual General Meeting will be held on 2nd November 2006 at 11 am
at the offices of Halliwells LLP, St James Court, Brown Street, Manchester M2
2JF.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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