TIDMMKM
RNS Number : 0273A
MKM Group PLC
01 October 2009
MKM GROUP PLC
("the Group" or "the Company")
Final Results for the year ended 31 March 2009
Key Points
* Continuing operations show revenues of GBP3.8m (2008: GBP3.8m) and a loss after
tax of GBP898,000 (2008: GBP32,000). This result includes an impairment of the
goodwill associated with the Promodus business of GBP430,000.
* The Group ceased trading in its historical Australian subsidiaries within the
year, due to the adverse Global macro-economic conditions. This generated a loss
due to discontinued operations of GBP7.4m
* Successful launch of Airport Angel product which has added significant value to
the Group in relation to revenues achieved and product offerings.
* Post year end, the Group sold its majority stake in Promodus Limited to Stripe
Marketing, allowing increased managerial focus upon the remaining core UK
activities.
* The Board view the prospects for the forthcoming 12 months positively as the
interventions made within the reported year have established a solid base for
growth of revenues achievable and international presence.
Brian Smillie, Chief Executive, commented,
"The Group has had an eventful year to 31 March 2009 that has defined the future
direction of the Group and laid the foundations for its future growth.
The Global macro-economic conditions have adversely affected the Australian
operations to such a degree that the Group ceased trading the historical
subsidiaries and associated activities were discontinued as of the balance sheet
date.
In contrast, the UK based business has enjoyed a successful launch of its
Airport Angel product and a revitalisation of its partnership and tactical
products.
We view prospects for the Group positively despite the difficult economic
environment."
Enquiries:
+----------------------------------------------+-------------------------+
| MKM Group Plc (www.mkmgroupplc.com) | T: 0161 877 1112 |
| Brian Smillie, Chief Executive | |
| Matthew Toynton, Finance Director | |
| | |
+----------------------------------------------+-------------------------+
| WH Ireland | T: 0161 832 2174 |
| Robin Gwyn | |
| | |
+----------------------------------------------+-------------------------+
CHIEF EXECUTIVE'S STATEMENT
OVERVIEW
The financial year to 31 March 2009 was an eventful one that has defined the
future direction of the Group and laid the foundations for its future growth.
The UK based business has enjoyed a successful launch of its Airport Angel
product and a revitalisation of its partnership and tactical products. In
contrast, the Global macro-economic conditions have adversely affected the
Australian operations to such a degree that the Group ceased trading the
historical subsidiaries and associated activities were discontinued as of the
balance sheet date. It has been possible to identify some salvageable activity
in a new subsidiary (Salad Marketing PTY Ltd) whose trading is immaterial to the
Group. As a result, the accounts are presented with the Australian trading being
recorded as a discontinued operation. Post year-end the Group has sold 90 per
cent of its interest in Promodus, the London based marketing consultancy
business. These changes should benefit the Group in the long term and allows
managerial focus upon the key growth opportunity areas.
The Airport Angel product and the StARS platform have been the cornerstone of
securing new client contracts in the UK and have helped to strengthen existing
client relationships via extending our product portfolio. The Group is now
focussed upon leveraging these two areas and specifically exploiting the
international nature of Airport Angel.
FINANCIAL REVIEW
The full year results of the continuing businesses show sales of GBP3.8m (2008:
GBP3.8m) and a loss after tax of GBP898,000 (2008: GBP32,000). This result
includes an impairment of the goodwill associated with the Promodus business of
GBP430,000.
The results show an overall loss after tax of GBP8.3m as a result of the loss
from discontinued operations of GBP7.4m in addition to the loss from continuing
operations noted above. This loss from discontinued operations includes the
trading loss associated with the Australian operations of GBP1.3m, the
de-recognition of the goodwill associated with the Australian businesses of
GBP4.9m and impairment losses recognised on cessation of trade of GBP1.2m.
We ended the year with borrowings in excess of cash and cash equivalents of
GBP172,000 (2008: deficit GBP208,000). Further information on the going concern
basis of preparation is included in Note 2 to this announcement.
OPERATIONS
Airport Angel
Airport Angel membership allows consumers to access airport lounges across the
world and to receive a number of other support services aimed at enhancing their
travel experience. The product includes an innovative text service which enables
consumers to receive information on their mobile phones about their plane
arrival and departure times.
The launch of Airport Angel in August 2008 has provided more opportunities to
exhibit excellence in customer service as well as maintaining our long-standing
focus upon perfect client delivery. As the Airport Angel membership base has
increased since launch, the operational teams have implemented new processes,
applying the methodologies of ISO 2001 as staff have been refocused upon new
areas.
Airport Angel has been well received by the market and, as at the year end we
had seven live corporate clients across four countries within the financial
services sector and we are adding thousands of members every month.
The UK continuing operation has retained its ambitious plans for the development
of Airport Angel and expects to continue to expand its geographical and industry
sector client base over the next 12 months.
StARS
StARS, our web-based database programme has continued to be utilised across all
of our product areas; Tactical Sales Promotions, Loyalty and Partnership
programmes and Airport Angel. The StARS programme allows us to hold
comprehensive details of promotional offers on one database and readily supports
the activity of multiple clients. StARS also enables our clients' consumers to
access promotional offers easily and provides clients with enhanced management
information on the results of marketing campaigns.
Promodus
The Promodus business, which specialised in providing a full range of marketing
services, had a very challenging year as many of its clients reduced their
expenditure as a result of the Global economic downturn. The financial results
show sales of GBP587,000 (2008: GBP464,000) against which a loss after tax has
been recorded in the consolidated income statement of GBP106,000 (2008: profit
of GBP20,000). Numerous interventions were made during the year to remove
discretionary costs and to replace some of the lost sales. Unfortunately, these
interventions were not wholly successful and post year-end, in August 2009 we
were approached by Stripe Marketing Ltd to acquire the business. The Board
evaluated the prospects of maintaining 100 per cent ownership or selling its
majority stakeholding and concluded that a sale of 90 per cent of the share
capital in Promodus would provide the best combination of financial return in
the medium term and security for the staff and clients. The consideration
received by the Group was 24,743 ordinary GBP1 shares in Stripe Marketing,
representing 8 per cent of the issued share capital of Stripe Marketing, and the
provision of design and office services to MKM for a limited period to a value
of GBP32,620.
BUSINESS DEVELOPMENT
In the annual report last year we reported that I had taken on the management of
the sales force internationally, thereby including more direct control on the UK
tactical and Airport Angel revenue streams. This intervention has been
strengthened further by my appointment as Chief Executive in November 2008.
Since this point the Executive Directors have increased the focus for the entire
organisation upon new sales or enhancing the current client service. Through the
final months of the year ended March 2009 and since year-end I have been
primarily based in the UK working closely with my fellow Directors; Mark Koch
and Matthew Toynton. Together we have focussed upon expanding the reach of our
Airport Angel product and revitalising the Partnership and Tactical offerings.
THE BOARD
The composition of the Board changed within the year. In November 2008, Richard
Tenser changed his role to become a Non-executive Director, Brian Smillie became
Chief Executive and Andrew Johnson became a Non-executive but maintained his
Chairmanship. In January 2009, Andrew Johnson and Michael Squires resigned their
posts as Non-executive Chairman and a Non-executive Director respectively. The
Board would formally like to thank all the directors for their contribution to
the Group.
STRATEGY
We have adapted our strategy for the future to incorporate the changing economic
environment and to ensure that the key parts of our product portfolio receive
the investment and resource they need to fully realise their potential. The
changes to the Group have allowed significantly higher levels of managerial
focus upon our agreed objectives and we are considering a number of possible
alternative options for securing this investment in order to maximise value for
shareholders.
CURRENT TRADING & PROSPECTS
The Group entered the current financial year with a good platform on which to
build with Airport Angel, and Tactical and Partnership programmes in the UK and
internationally.
Our entire product offering appeals to clients in the challenging current
economic environment where customer retention, acquisition and loyalty are
vitally important. We have strong international client relationships that are
leading to cross-referrals and new business opportunities.
We view prospects for the Group positively despite the difficult economic
environment.
BRIAN SMILLIE
CHIEF EXECUTIVE
30 September 2009
MKM Group Plc
Consolidated Income Statement for the year ended 31 March 2009
+-----------+--------+----------+----------------+----+--+---------+--+---------+
| | | | | | | 2009 | | 2008 |
+-----------+--------+----------+----------------+----+--+---------+--+---------+
| | | | | | | GBP'000 | | GBP'000 |
+-----------+--------+----------+----------------+----+--+---------+--+---------+
| | | | | | | | | |
+-----------+--------+----------+----------------+----+--+---------+--+---------+
| CONTINUING OPERATIONS | | | | | | |
+-------------------------------+----------------+----+--+---------+--+---------+
| | | | | | | | | |
+-----------+--------+----------+----------------+----+--+---------+--+---------+
| Revenue | | | | | | 3,755 | | 3,808 |
+-----------+--------+----------+----------------+----+--+---------+--+---------+
| Cost of sales | | | | | (1,719) | | (1,401) |
+--------------------+----------+----------------+----+--+---------+--+---------+
| | | | | | | | | |
+-----------+--------+----------+----------------+----+--+---------+--+---------+
| Gross profit | | | | | 2,036 | | 2,407 |
+--------------------+----------+----------------+----+--+---------+--+---------+
| | | | | | | | | |
+-----------+--------+----------+----------------+----+--+---------+--+---------+
| Administrative expenses | | | | (2,517) | | (2,429) |
+-------------------------------+----------------+----+--+---------+--+---------+
| Goodwill impairment | | | (430) | | - |
+------------------------------------------------+----+--+---------+--+---------+
| Total administrative expenses | | | | (2,947) | | (2,429) |
+-------------------------------+----------------+----+--+---------+--+---------+
| | | | | | | | | |
+-----------+--------+----------+----------------+----+--+---------+--+---------+
| Operating loss | | | | | (911) | | (22) |
+--------------------+----------+----------------+----+--+---------+--+---------+
| | | | | | | | | |
+-----------+--------+----------+----------------+----+--+---------+--+---------+
| Finance expense | | | | | (6) | | (22) |
+--------------------+----------+----------------+----+--+---------+--+---------+
| Finance income | | | | | 3 | | 41 |
+--------------------+----------+----------------+----+--+---------+--+---------+
| | | | | | | | | |
+-----------+--------+----------+----------------+----+--+---------+--+---------+
| Loss before tax | | | | | (914) | | (3) |
+--------------------+----------+----------------+----+--+---------+--+---------+
| | | | | | | | | |
+-----------+--------+----------+----------------+----+--+---------+--+---------+
| Tax | | | | | | 16 | | (29) |
+-----------+--------+----------+----------------+----+--+---------+--+---------+
| | | | | | | | | |
+-----------+--------+----------+----------------+----+--+---------+--+---------+
| Loss for the year from continuing operations | | | (898) | | (32) |
+------------------------------------------------+----+--+---------+--+---------+
| | | | | | | | | |
+-----------+--------+----------+----------------+----+--+---------+--+---------+
| | | | | | | | | |
+-----------+--------+----------+----------------+----+--+---------+--+---------+
| DISCONTINUED OPERATIONS | | | | | |
+------------------------------------------------+----+--+---------+--+---------+
| | | | | | | | | |
+-----------+--------+----------+----------------+----+--+---------+--+---------+
| Trading loss for the year | | | (1,275) | | (172) |
+------------------------------------------------+----+--+---------+--+---------+
| De-recognition of goodwill on cessation of | | | (4,944) | | - |
| trade | | | | | |
+------------------------------------------------+----+--+---------+--+---------+
| Impairment losses recognised on cessation of | | | (1,178) | | - |
| trade | | | | | |
+------------------------------------------------+----+--+---------+--+---------+
| | | | | | | | | |
+-----------+--------+----------+----------------+----+--+---------+--+---------+
| Loss for the year from discontinued operations | | | (7,397) | | (172) |
| net of tax | | | | | |
+------------------------------------------------+----+--+---------+--+---------+
| Attributable to the equity holders of the | | | (8,295) | | (204) |
| parent | | | | | |
+------------------------------------------------+----+--+---------+--+---------+
| | | | | | | | | |
+-----------+--------+----------+----------------+----+--+---------+--+---------+
| Loss per share | | | | | | | |
+--------------------+----------+----------------+----+--+---------+--+---------+
| | | | | | | | | |
+-----------+--------+----------+----------------+----+--+---------+--+---------+
| From continuing operations | | | | | | |
+-------------------------------+----------------+----+--+---------+--+---------+
| | | | | | | | | |
+-----------+--------+----------+----------------+----+--+---------+--+---------+
| Basic and diluted (pence) | | | | (0.96) | | (0.05) |
+-------------------------------+----------------+----+--+---------+--+---------+
| | | | | | | | | |
+-----------+--------+----------+----------------+----+--+---------+--+---------+
| From continuing and discontinued operations | | | | | |
+------------------------------------------------+----+--+---------+--+---------+
| | | | | | | | | |
+-----------+--------+----------+----------------+----+--+---------+--+---------+
| Basic and diluted (pence) | | | | (8.89) | | (0.34) |
+-------------------------------+----------------+----+--+---------+--+---------+
| | | | | | | | | |
+-----------+--------+----------+----------------+----+--+---------+--+---------+
MKM Group Plc
Consolidated Statement of Changes in Equity for the year ended 31 March 2009
+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| | | Share | | Share | | Share | | Merger | | Translation | | Deferred | | Retained | | Total |
| | | capital | | premium | | option | | reserve | | reserve | | share | | earnings | | |
| | | | | | | reserve | | | | | | capital | | | | |
| | | | | | | | | | | | | consideration | | | | |
+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| | | | | | | | | | | | | | | | | |
+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| Balance as at 1 | 365 | | 2,647 | | 86 | | 1,767 | | (84) | | 671 | | (311) | | 5,141 |
| April 2008 | | | | | | | | | | | | | | | |
+---------------------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| | | | | | | | | | | | | | | | | |
+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| Changes in equity for year | | | | | | | | | | | | | | |
| ended 31 March 2009 | | | | | | | | | | | | | | |
+--------------------------------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| | | | | | | | | | | | | | | | | |
+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| | Loss for | - | | - | | - | | - | | - | | - | | (8,295) | | (8,295) |
| | the year | | | | | | | | | | | | | | | |
+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| Total recognised | - | | - | | - | | - | | - | | - | | (8,295) | | (8,295) |
| income and expense | | | | | | | | | | | | | | | |
| for the period | | | | | | | | | | | | | | | |
+---------------------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| | | | | | | | | | | | | | | | | |
+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| Equity charge in | - | | - | | (21) | | - | | - | | - | | - | | (21) |
| respect of share | | | | | | | | | | | | | | | |
| based payments | | | | | | | | | | | | | | | |
+---------------------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| Issue of equity | 102 | | | | | | 445 | | | | (671) | | - | | (124) |
| shares | | | | | | | | | | | | | | | |
+---------------------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| Exchange rate loss | - | | - | | - | | - | | (75) | | - | | - | | (75) |
| on translation of | | | | | | | | | | | | | | | |
| overseas operations | | | | | | | | | | | | | | | |
+---------------------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| Translation reserve | | | | | | | | | 159 | | | | | | 159 |
| reversal due to | | | | | | | | | | | | | | | |
| cessation of trade | | | | | | | | | | | | | | | |
+---------------------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| | | | | | | | | | | | | | | | | |
+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| Balance as at | 467 | | 2,647 | | 65 | | 2,212 | | - | | - | | (8,606) | | (3,215) |
| 31March 2009 | | | | | | | | | | | | | | | |
+---------------------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| | | | | | | | | | | | | | | | | |
+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| | | | | | | | | | | | | | | | | |
+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| | | Share | | Share | | Share | | Merger | | Translation | | Deferred | | Retained | | Total |
| | | capital | | premium | | option | | reserve | | reserve | | share | | earnings | | |
| | | | | | | reserve | | | | | | capital | | | | |
| | | | | | | | | | | | | consideration | | | | |
+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| | | | | | | | | | | | | | | | | |
+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| Balance as at 1 | 218 | | 2,205 | | 112 | | - | | - | | - | | (107) | | 2,428 |
| April 2007 | | | | | | | | | | | | | | | |
+---------------------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| Changes in equity for year | | | | | | | | | | | | | | |
| ended 31 March 2008 | | | | | | | | | | | | | | |
+--------------------------------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| | | | | | | | | | | | | | | | | |
+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| | Loss for | - | | - | | - | | - | | - | | - | | (204) | | (204) |
| | the year | | | | | | | | | | | | | | | |
+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| Total recognised | - | | - | | - | | - | | - | | - | | (204) | | (204) |
| income and expense | | | | | | | | | | | | | | | |
| for the period | | | | | | | | | | | | | | | |
+---------------------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| | | | | | | | | | | | | | | | | |
+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| Equity credit in | - | | - | | 25 | | - | | - | | - | | - | | 25 |
| respect of share | | | | | | | | | | | | | | | |
| based payments | | | | | | | | | | | | | | | |
+---------------------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| Deferred tax asset | - | | - | | (51) | | - | | - | | - | | - | | (51) |
| relating to share | | | | | | | | | | | | | | | |
| options | | | | | | | | | | | | | | | |
+---------------------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| Issue of equity | 147 | | 442 | | - | | 1,767 | | | | 671 | | | | 3,027 |
| shares | | | | | | | | | | | | | | | |
+---------------------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| Exchange rate loss | - | | - | | - | | - | | (84) | | - | | - | | (84) |
| on translation of | | | | | | | | | | | | | | | |
| overseas operations | | | | | | | | | | | | | | | |
+---------------------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| | | | | | | | | | | | | | | | | |
+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| Balance as at 31 | 365 | | 2,647 | | 86 | | 1,767 | | (84) | | 671 | | (311) | | 5,141 |
| March 2008 | | | | | | | | | | | | | | | |
+---------------------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| | | | | | | | | | | | | | | | | |
+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
| | | | | | | | | | | | | | | | | |
+----------+----------+----------+----------+----------+----------+----------+----------+----------+----------+-------------+----------+---------------+----------+----------+----------+----------+
MKM Group Plc
Consolidated Balance Sheet as at 31 March 2009
+----------------------+--------+--------+--------+-------+--------+--------+--------+---+------------+
| | | | | 31 March 2009 | | 31 March |
| | | | | | | 2008 |
+----------------------+--------+--------+--------+----------------------------------+---+------------+
| | | | | GBP'000 | | GBP'000 |
+----------------------+--------+--------+--------+----------------------------------+---+------------+
| | | | | | | |
+----------------------+--------+--------+--------+----------------------------------+---+------------+
| Non-current | | | | | |
| assets | | | | | |
+-------------------------------+--------+--------+----------------------------------+---+------------+
| Property, plant & | | 210 | | 691 |
| equipment | | | | |
+----------------------------------------+--------+----------------------------------+---+------------+
| Goodwill | | | | 703 | | 6,202 |
+----------------------+--------+--------+--------+----------------------------------+---+------------+
| Intangibles | | | 309 | | 395 |
+-------------------------------+--------+--------+----------------------------------+---+------------+
| Deferred tax | | | 140 | | 185 |
| assets | | | | | |
+-------------------------------+--------+--------+----------------------------------+---+------------+
| | | | | 1,362 | | 7,473 |
+----------------------+--------+--------+--------+----------------------------------+---+------------+
| Current assets | | | | | |
+-------------------------------+--------+--------+----------------------------------+---+------------+
| Trade and other | | 723 | | 2,635 |
| receivables | | | | |
+----------------------------------------+--------+----------------------------------+---+------------+
| Cash and cash equivalents | | 477 | | 134 |
+----------------------------------------+--------+----------------------------------+---+------------+
| | | | | 1,200 | | 2,769 |
+----------------------+--------+--------+--------+----------------------------------+---+------------+
| | | | | | | |
+----------------------+--------+--------+--------+----------------------------------+---+------------+
| Total assets | | | 2,562 | | 10,242 |
+-------------------------------+--------+--------+----------------------------------+---+------------+
| | | | | | | |
+----------------------+--------+--------+--------+----------------------------------+---+------------+
| Current | | | | | |
| liabilities | | | | | |
+-------------------------------+--------+--------+----------------------------------+---+------------+
| Trade and other payables | | (4,123) | | (4,068) |
+----------------------------------------+--------+----------------------------------+---+------------+
| Borrowings | | | (649) | | (342) |
+-------------------------------+--------+--------+----------------------------------+---+------------+
| Loan stock | | | (450) | | (450) |
+-------------------------------+--------+--------+----------------------------------+---+------------+
| Provisions | | | | (490) | | (159) |
+----------------------+--------+--------+--------+----------------------------------+---+------------+
| | | | | (5,712) | | (5,019) |
+----------------------+--------+--------+--------+----------------------------------+---+------------+
| Non-current liabilities | | | | |
+----------------------------------------+--------+----------------------------------+---+------------+
| Borrowings | | | (65) | | (82) |
+-------------------------------+--------+--------+----------------------------------+---+------------+
| | | | | | | |
+----------------------+--------+--------+--------+----------------------------------+---+------------+
| Total | | | (5,777) | | (5,101) |
| liabilities | | | | | |
+-------------------------------+--------+--------+----------------------------------+---+------------+
| | | | | | | |
+----------------------+--------+--------+--------+----------------------------------+---+------------+
| Net | | | | (3,215) | | 5,141 |
| (liabilities)/assets | | | | | | |
+----------------------+--------+--------+--------+----------------------------------+---+------------+
| | | | | | | |
+----------------------+--------+--------+--------+----------------------------------+---+------------+
| | | | |
+-------------------------------------------------+-------+------------------------------+------------+
| Share capital | | | 467 | | 365 |
+-------------------------------+--------+--------+-------------------------+------------+------------+
| Share premium | | | 2,647 | | 2,647 |
+-------------------------------+--------+--------+-------------------------+------------+------------+
| Share option | | | 65 | | 86 |
| reserve | | | | | |
+-------------------------------+--------+--------+-------------------------+------------+------------+
| Deferred share capital | | - | | 671 |
| consideration | | | | |
+----------------------------------------+--------+-------------------------+------------+------------+
| Merger reserve | | | 2,212 | | 1,767 |
+-------------------------------+--------+--------+-------------------------+------------+------------+
| Translation | | | - | | (84) |
| reserve | | | | | |
+-------------------------------+--------+--------+-------------------------+------------+------------+
| Retained | | | (8,606) | | (311) |
| earnings | | | | | |
+-------------------------------+--------+--------+-------------------------+------------+------------+
| | | | | | | |
+----------------------+--------+--------+--------+-------------------------+------------+------------+
| (Deficit)/ equity attributable to | (3,215) | | 5,141 |
| equity holders of the parent | | | |
+-------------------------------------------------+-------------------------+------------+------------+
| | | | | | | |
+----------------------+--------+--------+--------+-------+--------+--------+--------+---+------------+
MKM Group Plc
Consolidated Cash Flow Statement for the year ended 31 March 2009
+--+---+-----------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | | | | Year ended | | | | Year ended |
+--+---+-----------------------------------------+--+----------------------+--+--+--+----------------------+
| | | | | 31 March 2009 | | | | 31 March 2008 |
+--+---+-----------------------------------------+--+----------------------+--+--+--+----------------------+
| | | | | GBP'000 | | GBP'000 | | | | GBP'000 | | GBP'000 |
+--+---+-----------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| CASHFLOWS FROM OPERATING ACTIVITIES | | | | | | | | | | |
+------------------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | (Loss)/profit after taxation | | (8,295) | | | | | | (204) | | |
+--+---------------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | Adjustments for | | | | | | | | | | |
+--+---------------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | | Interest receivable | | (3) | | | | | | (41) | | |
+--+---+-----------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | | Depreciation | | 235 | | | | | | 148 | | |
+--+---+-----------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | | Amortisation | | 129 | | | | | | 26 | | |
+--+---+-----------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | | Gain on deferred consideration | | - | | | | | | (97) | | |
+--+---+-----------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | | Interest expense | | 6 | | | | | | 68 | | |
+--+---+-----------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | | Impairment losses recognised on | | 1,178 | | | | | | - | | |
| | | cessation of trade | | | | | | | | | | |
+--+---+-----------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | | Goodwill impairment | | 5,374 | | | | | | - | | |
+--+---+-----------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | | Tax credit not received | | (16) | | | | | | (45) | | |
+--+---+-----------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | | Share option (credit)/charge | | (21) | | | | | | 25 | | |
+--+---+-----------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | Operating cashflow before movement in | | | | (1,413) | | | | | | (120) |
| | working capital | | | | | | | | | | |
+--+---------------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | | | | | | | | | | | | |
+--+---+-----------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | Decrease/(increase) in receivables | | 1,524 | | | | | | (596) | | |
+--+---------------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | (Decrease)/increase in payables | | (144) | | | | | | 212 | | |
+--+---------------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | Increase in provisions | | 252 | | | | | | 154 | | |
+--+---------------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | Cash generated by operations | | | | 1,632 | | | | | | (230) |
+--+---------------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | | | | | | | | | | | | |
+--+---+-----------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | Interest paid | | | | (6) | | | | | | (68) |
+--+---------------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | | | | | | | | | | | | |
+--+---+-----------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| Net cash generated from/(used in) operations | | | | 213 | | | | | | (418) |
+------------------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | | | | | | | | | | | | |
+--+---+-----------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| CASHFLOWS FROM INVESTING ACTIVITIES | | | | | | | | | | |
+------------------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | Purchase of property, plant and equipment | | (26) | | | | | | (378) | | |
+--+---------------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | Purchase of intangible assets | | (180) | | | | | | (247) | | |
+--+---------------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | Acquisition of share capital in new | | - | | | | | | (1,366) | | |
| | companies | | | | | | | | | | |
+--+---------------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | Costs associated with acquisition | | - | | | | | | (422) | | |
+--+---------------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | Cash within acquired Company | | - | | | | | | 272 | | |
+--+---------------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | Acquisition of subsidiary | | - | | | | | | (1,516) | | |
+--+---------------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | Interest received | | 3 | | | | | | 41 | | |
+--+---------------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| Net cash outflow from investing activities | | | | (203) | | | | | | (2,100) |
+------------------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | | | | | | | | | | | | |
+--+---+-----------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| CASHFLOWS FROM FINANCING ACTIVITIES | | | | | | | | | | |
+------------------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | Issue of ordinary share capital | | - | | | | | | 475 | | |
+--+---------------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | Increase in bank overdraft | | 307 | | | | | | 342 | | |
+--+---------------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| Net cash generated from financing activities | | | | 307 | | | | | | 817 |
+------------------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | | | | | | | | | | | | |
+--+---+-----------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | | | | | | | | | | | | |
+--+---+-----------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| Net (decrease)/increase in cash and cash | | | | 317 | | | | | | (1,701) |
| equivalents | | | | | | | | | | |
+------------------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| Cash and cash equivalents at the beginning of | | | | 134 | | | | | | 1,906 |
| the period | | | | | | | | | | |
+------------------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| Effect of foreign exchange rate changes | | | | 26 | | | | | | (71) |
+------------------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| Cash and cash equivalents at the end of the | | | | 477 | | | | | | 134 |
| period | | | | | | | | | | |
+------------------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | | | | | | | | | | | | |
+--+---+-----------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| Net increase/(decrease) in cash and cash | | | | 493 | | | | | | (1,528) |
| equivalents of continued operations | | | | | | | | | | |
+------------------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | | | | | | | | | | | | |
+--+---+-----------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| Net increase/(decrease) in cash and cash | | | | (176) | | | | | | (173) |
| equivalents of discontinued operations | | | | | | | | | | |
+------------------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
| | | | | | | | | | | | | |
+--+---+-----------------------------------------+--+---------+--+---------+--+--+--+---------+--+---------+
MKM Group Plc
Notes forming part of the financial statements for the year ended 31 March 2009
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 2009 or 31 March 2008,
but is derived from those audited accounts. Statutory accounts for 2008 have
been delivered to the Registrar of Companies and those for 2009 will be
delivered following the Company's Annual General Meeting. The auditors have
reported on those accounts: their reports were unqualified, did not draw
attention to any matters by way of emphasis and did not contain statements under
s237 (2) or (3) Companies Act 1985. The information in this preliminary
announcement has been computed in accordance with International Financial
Reporting Standards (IFRS), but does not contain sufficient information to
comply with IFRS. The company has today published full financial statements that
comply with IFRS.
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 2009. The annual accounts for the year ended 31 March 2009 have been
posted to shareholders and will be available from the Company's website on
www.mkmgroupplc.com.
2. Significant accounting policies
Basis of preparation
Going Concern
The annual report and accounts notes that the Directors have formed a judgement,
at the time of approving the financial statements, that there is a reasonable
expectation that the Group has adequate resources to continue in operational
existence for the foreseeable future. This has been based on a detailed review,
focussed upon three key areas:
* Preparation of forecast cashflow to October 2010 based on latest management
information.
* Potential uncertainties within our future trading performance were incorporated
through sensitivities applied within this forecast.
* Review of available financing arrangements.
As described in the Chief Executive's statement and the Directors' report, the
current economic environment has been challenging, resulting in the cessation of
trading of the Australian operations at 31 March 2009. In the UK this effect has
been less significant and in recent months there has been increased demand for
products supporting clients' customer retention objectives.
The launch of Airport Angel has positively affected the Group's cashflow
position which is forecast to continue through the annual renewal revenue from
existing members as well as new members joining the scheme each month.
The forecast cashflow has been prepared through to October 2010 on the basis of
latest forecast results for the period. These take account of reasonably
possible changes in trading performance and show the Group will be able to
operate within the level of its current facility.
This Group has an overdraft facility to meet its day to day working capital
requirements. The original facility agreement expired during 2008 since which
time the Directors have been in active discussions with the Group's bankers to
arrange a new facility for the same value. The bankers have recently confirmed
that they have formally extended the facility to 14 October 2009 and from these
discussions the Directors are satisfied that the facility will continue to be
provided and can confirm that no matters have been drawn to their attention to
suggest that this renewal may not be forthcoming on acceptable terms. Due to the
nature of the facility the overdraft continues to be repayable on demand.
MKM Group Plc
Notes forming part of the financial statements for the year ended 31 March 2009
As a result of this detailed review, the directors have a reasonable expectation
that the Company and Group as a whole have adequate resources to continue in
operational existence for the foreseeable future and as such, they continue to
adopt the going concern basis in preparing the annual report and accounts
2. Loss per share
+------------------------+-------------+--+--------------+--+-------------+--+-------------+--+--------------+--+-------------+
| | Continuing | | Discontinued | | Total | | Continuing | | Discontinued | | Total |
| | operations | | operations | | | | operations | | operations | | |
+------------------------+-------------+--+--------------+--+-------------+--+-------------+--+--------------+--+-------------+
| | 2009 | | 2009 | | 2009 | | 2008 | | 2008 | | 2008 |
+------------------------+-------------+--+--------------+--+-------------+--+-------------+--+--------------+--+-------------+
| | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
+------------------------+-------------+--+--------------+--+-------------+--+-------------+--+--------------+--+-------------+
| Numerator | | | | | | | | | | | |
+------------------------+-------------+--+--------------+--+-------------+--+-------------+--+--------------+--+-------------+
| | | | | | | | | | | | |
+------------------------+-------------+--+--------------+--+-------------+--+-------------+--+--------------+--+-------------+
| (Loss) for the year | (898) | | (7,397) | | (8,295) | | (32) | | (172) | | (204) |
+------------------------+-------------+--+--------------+--+-------------+--+-------------+--+--------------+--+-------------+
| | | | | | | | | | | | |
+------------------------+-------------+--+--------------+--+-------------+--+-------------+--+--------------+--+-------------+
| (Loss) used in basic | (898) | | (7,397) | | (8,295) | | (32) | | (172) | | (204) |
| EPS | | | | | | | | | | | |
+------------------------+-------------+--+--------------+--+-------------+--+-------------+--+--------------+--+-------------+
| | | | | | | | | | | | |
+------------------------+-------------+--+--------------+--+-------------+--+-------------+--+--------------+--+-------------+
| (Loss) used in diluted | (898) | | (7,397) | | (8,295) | | (32) | | (172) | | (204) |
| EPS | | | | | | | | | | | |
+------------------------+-------------+--+--------------+--+-------------+--+-------------+--+--------------+--+-------------+
| | | | | | | | | | | | |
+------------------------+-------------+--+--------------+--+-------------+--+-------------+--+--------------+--+-------------+
| Denominator | | | | | | | | | | | |
+------------------------+-------------+--+--------------+--+-------------+--+-------------+--+--------------+--+-------------+
| | | | | | | | | | | | |
+------------------------+-------------+--+--------------+--+-------------+--+-------------+--+--------------+--+-------------+
| Weighted average | 93,287,760 | | 93,287,760 | | 93,287,760 | | 60,630,267 | | 60,630,267 | | 60,630,267 |
| number of shares used | | | | | | | | | | | |
| in EPS | | | | | | | | | | | |
+------------------------+-------------+--+--------------+--+-------------+--+-------------+--+--------------+--+-------------+
| | | | | | | | | | | | |
+------------------------+-------------+--+--------------+--+-------------+--+-------------+--+--------------+--+-------------+
| Basic and diluted | (0.96) | | (7.92) | | (8.89) | | (0.05) | | (0.28) | | (0.34) |
| (loss) per share | | | | | | | | | | | |
| (pence) | | | | | | | | | | | |
+------------------------+-------------+--+--------------+--+-------------+--+-------------+--+--------------+--+-------------+
| | | | | | | | | | | | |
+------------------------+-------------+--+--------------+--+-------------+--+-------------+--+--------------+--+-------------+
The basic earnings per share has been calculated using the loss after tax,
divided by the weighted average number of shares in issue of 93,287,760 (2008:
60,630,267).
As a result of the loss in the year to 31 March 2009 and the comparative period,
the diluted earnings per share is the same as the basic earnings per share as
the employee share options are anti-dilutive.
MKM Group Plc - Group Financial Statements
Notes forming part of the financial statements for the year ended 31 March 2009
3. Discontinued Operations
Leisure World
On 29 August 2007, the Group acquired 100% of the issued share capital of
Leisure World Pty Ltd (trading as the Leapfrog Group in Australia). Leisure
World Pty Ltd is the parent company of a Group of companies involved in Loyalty
and Tactical Sales promotion activities across Asia Pacific.
On 31 March 2009, Leisure World Pty and its subsidiary undertakings ceased to
trade. On this date a small element of the previous business was transferred to
a new subsidiary, Salad Marketing PTY Ltd, also 100% owned by MKM Group PLC,
which commenced trading on 1 April 2009. A thorough review has been completed of
the assets and liabilities remaining in Leisure World Pty Ltd and subsidiary
undertakings which were not transferred to Salad Marketing PTY Ltd and
impairments recorded accordingly. A charge to the income statement has arisen
due to the impairment of assets at 31 March 2009 as a result of the cessation of
trade at this date.
Subsequent to the year end the majority of the companies within the Leisure
World Group have commenced the liquidation process - see Note 4. The liabilities
associated with the discontinued operations remain in the balance sheet at 31
March 2009 as at that date, in accordance with IAS39, Financial Instruments:
Recognition and Measurement, they had not been extinguished.
The results of the discontinued operations which have been included in the
consolidated income statement were as follows:
+----------+--------+--------+------------------+-------+---------+---+---------+
| | | | | | 2009 | | 2008 |
+----------+--------+--------+------------------+-------+---------+---+---------+
| | | | | | GBP'000 | | GBP'000 |
+----------+--------+--------+------------------+-------+---------+---+---------+
| | | | | | | | |
+----------+--------+--------+------------------+-------+---------+---+---------+
| Revenue | | | | | 3,963 | | 3,162 |
+----------+--------+--------+------------------+-------+---------+---+---------+
| | | | | | | | |
+----------+--------+--------+------------------+-------+---------+---+---------+
| Expenses | | | | | (5,238) | | (3,362) |
+----------+--------+--------+------------------+-------+---------+---+---------+
| | | | | | | | |
+----------+--------+--------+------------------+-------+---------+---+---------+
| Loss from operations | | | (1,275) | | (200) |
+----------------------------+------------------+-------+---------+---+---------+
| | | | | | | | |
+----------+--------+--------+------------------+-------+---------+---+---------+
| Finance expense | | | | | (46) |
+----------------------------+------------------+-------+---------+---+---------+
| | | | | | |
+----------------------------+------------------+-------+---------+---+---------+
| Attributable tax credit | | | - | | 74 |
+----------------------------+------------------+-------+---------+---+---------+
| | | | | | | | |
+----------+--------+--------+------------------+-------+---------+---+---------+
| Trading loss for the year | | | (1,275) | | (172) |
+----------------------------+------------------+-------+---------+---+---------+
| | | | | | | | |
+----------+--------+--------+------------------+-------+---------+---+---------+
| De-recognition of goodwill on cessation of | | (4,944) | | - |
| trade | | | | |
+-----------------------------------------------+-------+---------+---+---------+
| | | | | |
+-----------------------------------------------+-------+---------+---+---------+
| Impairment losses recognised on cessation of | | (1117) | | - |
| trade | | | | |
+-----------------------------------------------+-------+---------+---+---------+
| | | | | |
+-----------------------------------------------+-------+---------+---+---------+
| Attributable tax charge | | (61) | | - |
+-----------------------------------------------+-------+---------+---+---------+
| | | | | | | | |
+----------+--------+--------+------------------+-------+---------+---+---------+
| Net loss attributable to discontinued | | (7,397) | | (172) |
| operations | | | | |
+-----------------------------------------------+-------+---------+---+---------+
| | | | | | | | |
+----------+--------+--------+------------------+-------+---------+---+---------+
During the year, Leisure World Pty Ltd recorded net cash operating cash outflows
of GBP176,000, paid GBP22,000 in respect of investing activities and paid
GBP35,000 in respect of financing activities. These values are contained within
the Group's aggregate position as shown on the Group consolidated cashflow
statement.
MKM Group Plc - Group Financial Statements
Notes forming part of the financial statements for the year ended 31 March 2009
4. Post balance sheet events
On 2 September 2009, the Group disposed of 90% of its shareholding in Promodus
Ltd. The Group received a consideration of 24,743 ordinary GBP1 shares in Stripe
Marketing, representing 8% of the issued share capital of Stripe Marketing, and
the provision of design and office services to the Group for a limited period to
a value of GBP32,620. Stripe Marketing is a recently established private company
which has not yet filed any audited accounts.
The following subsidiaries that had ceased to trade at 31 March 2009 went into
liquidation on the dates shown below:
* Leapfrog Loyalty and Rewards Solutions Pty Ltd - 17 June 2009;
* Aussie Breaks - 30 June 2009;
* Leisure World Pty Ltd - 30 June 2009; and
* Leapfrog Promotion and Incentive Solutions Pty Ltd - 4 August 2009.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GLBDGGBGGGCB
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