Final Results
August 08 2005 - 3:01AM
UK Regulatory
Embargoed Release: 07:00hrs Monday 8th August 2005
MKM Group plc
('MKM' or the 'Group')
Preliminary Results for the Year Ended 31 March 2005
Highlights
First major loyalty contract signed
Post year end deal wins include a substantial contract with one of the world's
largest banks
Mark Koch, CEO, commented:
"We have been through an extremely difficult period but are pleased that we can
now see a way forward to get the Group back on track. We are pleased to have
reached an agreement with Express Newspapers after protracted negotiations. The
loans that my brother and I have made available to the Group are evidence of
our continued faith in the business. Steps have been taken to reduce the
Group's overheads and we have been able to obtain bank lines of credit to
bridge our working capital requirements until the fundraising is completed. The
future viability of the Group is dependent on achieving a successful
fundraising, but following this we believe that we can return the Group to a
stable and successful future."
For Further Information:
Lorraine O'Toole MKM Group plc 0161 606 0750
Finance Director
Andrew Tan Hansard Communications 020 7245 1100
Account Director 07957 203 685
Chief Executive's statement
I am sorry to have to report on a disappointing year for the Group. The Group
incurred exceptional costs totalling �1.16m which arose from the cruise
promotion with Express Newspapers and the core business was further affected by
negative press coverage of this promotion.
GROUP COMPANIES
The Group has three trading companies:
MKM Marketing & Promotions Limited - the Group's principal trading company,
which designs the promotional campaigns that revolve around offers that include
flights, hotel accommodation, holidays, theatre tickets, dining out, cinema
tickets and days out.
Hidden Retreats Limited - a luxury tour operator with ATOL and IATA licences.
Hidden Retreats Limited's division, called Rise Travel, sources flights and
accommodation for the Group's travel based promotions.
Travel Design Limited - an ABTA bonded travel agency which provides the
facility to redeem MKM Marketing & Promotions holiday vouchers as well as
generating commission from tour operators.
FINANCIAL REVIEW
Group turnover of �10.28m for the year ended 31 March 2005 compared with �6.45m
in the prior year, represents an increase of �3.83m.
Loss before tax was �1.39m after exceptional expenses of �1.16m. This compares
with a profit in the financial year ended 31 March 2004 of �0.67m.
The reduction in profitability for the core business was due to a reduction in
number of sales, brought about by negative press attention. In the prior year
the Group had heavily invested in staff in order to handle this anticipated
growth. The result of this was an excessive overhead cost in relation to the
turnover achieved. Post year end a staff redundancy programme has taken place
reducing staff numbers from 86 to 35.
CURRENT TRADING
Turnover for the year ended 31 March 2005 was affected by negative press
comment, including in respect of the cruise promotion. However, the Board are
hopeful that trading will improve.
The first quarter has continued to be a difficult time for the Group due to
negotiations with Express Newspapers and restructuring within the Group.
Management accounts for the three months ended 30 June 2005 show a pre-tax loss
of �569,000. The Directors anticipate that, following the signing of the
agreement with Express Newspapers and the Group restructuring, the rate of loss
will reduce as the majority of circumstances adversely affecting the Group have
now been resolved. The Board are enthusiastic about several arrangements
recently entered into. These include:
a contract with one of the world's largest banks pursuant to which selected
customers will be entitled to discounts and offers for holidays, flights,
leisure and entertainment activities which the Group will source and
facilitate;
the first Breeze Loyalty Programme contract;
an agreement with a major financial institution for a flight and holiday
voucher programme; and
a contract with a major cosmetic manufacturer pursuant to which the Group will
source and facilitate a promotions offer.
MANAGEMENT AND STAFF
The staff have faced a difficult year and redundancies have taken place. I
would like to thank the staff for their loyalty and patience during this time.
I believe that we now have the necessary structure in place to focus on and
rebuild the core business.
PROSPECTS
The Directors believe that the prospects of the Group are improving
particularly given the arrangements detailed above. The level of interest in
the Group's products, services and the Breeze Loyalty Programme gives the
Directors belief in the Group's long term future.
The company also intends to explore the development of online campaigns which
the Board believes will increase the marketability of its core businesses.
Mark Koch
Chief Executive
8 August 2005
MKM GROUP PLC
Consolidated Profit And Loss Account For The Year Ended 31 March 2005
Notes Unaudited Year Audited
Ended
Year Ended
31 March 2005
31 March
2004
�'000 �'000
Turnover 10,279 6,452
Cost of sales (7,083) (4,078)
Exceptional cost of sales (790) -
________ _________
Gross profit 2,406 2,374
Administrative expenses (3,465) (1,702)
Exceptional administrative expenses (367) -
_________ _________
Operating (loss)/profit (1,426) 672
Interest receivable and similar income
73 19
Interest payable and similar charges (38) (25)
_________ _________
(Loss)/profit on ordinary activities
before taxation
(1,391) 666
Tax credit/(charge) on profit on
ordinary activities
231 (189)
_________ _________
(Loss)/profit on ordinary activities
after taxation
(1,160) 477
Dividends - -
_________ _________
Retained (loss)/profit for the period
(1,160) 477
_________ _________
Earnings per share
Basic (10.8)p �4,773
_________ _________
Diluted (10.8)p �4,773
_________ _________
MKM GROUP PLC
Consolidated Balance Sheet At 31 March 2005
Unaudited Audited
At 31 March 2005 At 31 March 2004
�'0000
�'000
Fixed assets
Intangible assets 823 874
Tangible assets 493 144
_______ _______
1,316 1,018
Current assets
Stocks 1 1
Debtors 1,172 1,153
Cash at bank and in hand 1,151 1,373
_______ ______
2,324 2,527
Creditors: amounts falling due within
one year
2,935 2,118
_______ ______
Net current (liabilities)/assets (611) 409
_______ _______
Total assets less current liabilities
705 1,427
Creditors: amounts falling due after
more than one year
- 527
Provision for liabilities and charges
Deferred taxation 4 4
_______ ______
4 531
_______ _______
701 896
_______ _______
Capital and reserves
Called up share capital 66 -
Share premium account 949 -
Profit and loss account (314) 896
_______ _______
Equity shareholders' funds 701 896
_______ _______
MKM GROUP PLC
Consolidated Cash Flow Statement For The Year Ended 31 March 2005
Note Unaudited Audited
Year Ended Year Ended
31 March 31 March
2005 2004
�'000 �'000
Net cash inflow from operating activities 3 129 619
Returns on investments and servicing of
finance
4 35 (6)
Taxation (318) (148)
Capital expenditure and financial investment
4 (438) (68)
Acquisitions 4 (120) (168)
________ _______
Net cash(outflow)/inflow before financing (712) 229
Financing 4 555 328
________ _______
(Decrease)/increase in cash in the year (157) 557
________ _______
Reconciliation of net cash flow to movement
in net debt
(Decrease)/increase in cash in the year (157) 557
Cash outflow/(inflow) from financing 410 (328)
________ ________
Change in net funds resulting from cash flows
5 253 229
New finance leases - (5)
________ ________
Movement in net funds in the year 253 224
Net funds at the start of the year 893 669
________ ________
Net funds at the end of the year 5 1,146 893
________ ________
NOTES:
Preliminary Announcement
The financial information set out in this document does not constitute the
Group's statutory accounts for the year ended 31 March 2005, but is derived
from those draft unaudited accounts to that date, which will be filed with the
Registrar of Companies following the Company's annual general meeting.
The financial information for the year ended 31 March 2004 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 2004.
2 Basis of Preparation
The financial information set out in this document has been prepared on the
going concern basis. The Directors have reviewed funding requirements of the
business and are proposing to raise a minimum of �1.1m (gross) by means of the
Placing and Open Offer. The Directors are of the opinion after having made due
and careful enquiry that, taking into account the minimum amount required to be
raised under the Placing and Open Offer, the Group has sufficient working
capital for the foreseeable future, that is at least 12 months from the date of
Admission. Due and careful enquiry includes the preparation and review of
integrated profit and loss, cash flow and balance sheet projections to 31 March
2007.
Reconciliation of Operating Profit to Net Cash Inflow From Operating Activities
Unaudited Audited
Year Ended Year Ended
31 March 2005 31 March 2004
�'000 �'000
Operating (loss)/profit (1,426) 672
Depreciation 87 38
Amortisation 51 51
Decrease in debtors 251 5
Increase/(decrease) in
creditors 1,164 (147)
Loss on disposal of fixed assets 2 -
____ ____
Net cash inflow from operating activities 129 619
____ ____
Analysis of Cash Flow
Unaudited Audited
Year Ended Year Ended
31 March 2005 31 March 2004
�'000 �'000
Returns on investments and servicing of finance
Interest received 73 19
Interest paid (38) (22)
Interest elements of finance rental payments - (3)
____ ____
35 (6)
____ ____
Capital expenditure
Payments to acquire tangible fixed assets (441) (68)
Proceeds from disposal of tangible fixed assets 3 -
____ ____
(438) (68)
____ ____
Acquisitions and disposals
Payments to acquire subsidiary undertakings (120) (164)
Bank overdrafts acquired with subsidiaries - (4)
____ ____
(120) (168)
____ ____
Financing
Other loan advance (403) 403
Issue of share capital 965 -
Capital element of hire purchase repayments (7) (5)
Repayments of other loans - (70)
____ ____
555 328
____ ____
Analysis of Net Debt
Audited Unaudited Unaudited Unaudited
at cash flow other at year
beginning non-cash end
of year changes �'000
�'000
�'000 �'000
Cash at bank and in hand 1,373 (222) - 1,151
Overdrafts (65) 65 - -
_____ _____ _____ _____
1,308 (157) - 1,151
Debt due within one year - - - -
Debt due after one year (403) 403 - -
Finance leases and hire purchase
contracts
(12) 7 - (5)
_____ _____ _____ _____
Total 893 253 - 1,146
_____ _____ _____ _____
END
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