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MKM Group reports on expansion and end-of-year results
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In its final results for the year ended 31 March 2008, MKM Group reported on the strategic shift of its business towards longer-term contracted marketing programmes.

It also said that since year end it had launched a new flagship product, called Airport Angel, to support the strategy to build long-term loyalty contracts.

With major new contracts signed post year end, its board said they viewed prospects positively despite the difficult economic environment.

The group, which operates in the UK as The Leapfrog Group, was considerably enlarged by two acquisitions: Leapfrog in August 2007 and Promodus in October 2007. These more than doubled the size of the group, broadened the group’s geographic reach and strengthened the group’s market offering.

Integration of the acquisitions has been substantially completed including rebranding of existing loyalty and sales promotion business under the Leapfrog name, integrated IT platforms now in place, and shared product development resources.

Pro forma revenue of the combined business was £10.3m (2007 statutory revenue of £3.9m) and pro forma operating profit of the combined business was £686,000, after taking into account pre-acquisition one-off charges not expected to re-occur. These assume that the acquisition of both the Leapfrog and Promodus businesses had been completed on the first day of the financial year, derived from management information.

The audited results show revenue of £6,970,000 (2007 £3,888,000) and a loss from operations of £222,000 (2007 profit £404,000). These include seven months’ contribution from the Leapfrog business and six months’ contribution from Promodus, being the results generated since acquisition.

Andrew Johnson, executive chairman, commented: “The  acquisitions of the Leapfrog business in Australia in August 2007 and the Promodus business in London in October 2007, more than doubled the group’s size and have broadened our geographic reach and strengthened our market offering.

“We now have a larger and broader business base upon which we can build. Whilst it has taken longer to achieve our targets than we had hoped at the time of the acquisitions, we now have a good platform upon which to grow, with an emphasis on recurring revenues.

“Traditionally, in a tough economic climate, the market focuses more on exploiting sales promotion and direct marketing tools which have measurable results. Thus whilst the economic slowdown has increased the time taken to close large contracts, we believe that we will be able to build our business through providing clients with innovative and cost effective campaigns with measurable results.

“We view prospects for the Group positively despite the difficult economic environment.”

September 30, 2008
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