Sales promotions company MKM Group is buying a similar Australian business for up to £8.95m.
MKM ran into trouble with the infamous Express cruise promotion a couple of years ago but the new management team has turned round the business. It is buying Leisure World Pty Ltd and its subsidiaries, which is known as Leapfrog Group. The initial payment is £1.95m in cash plus 20m shares at a notional price at 10p each. The rest of the consideration is dependent on performance. In the year to June 2006 Leapfrog made profits of £228,000 on turnover of £3.9m. In the seven months to January 2007, turnover is £3.48m and profit has jumped to £1.08m. The New Zealand business is beginning to make a greater contribution.
MKM swung from loss to profit in the year to March 2007. It made £456,000 profit on lower turnover of £3.9m – down from £4.6m. Management is also looking to add a second leg to the business so that it isn’t dependent on the sales promotion market.
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