Buoyant preliminary results from promotions provider MKM give evidence of its emergence from two years in the lossmaking wilderness.

Sales for the year to March more than halved to £4.6m as MKM was almost wrecked by a disastrous cruise promotion deal with the Express Newspapers, which not only lost the group a great deal of money but also half its clients and much potential new business.

New chairman Andrew Johnson assumed an executive role last December, allowing founder Mark Koch to concentrate on winning new business, which he is already doing. These changes – and the addition of new FD Matthew Toynton, who has cleaned up the balance sheet – seem to be paying off, as the group made a £310,000 profit in the second half of the year, reducing full year losses from £1.4m to £385,000.

For next year, house broker WH Ireland predicts a turnaround to a profit of £560,000 and earnings of 1.3p, from sales down 8% to £4.2m.

MKM’s business is to helps clients such as Tesco’s, Sainsbury’s and Proctor & Gamble drive sales of their various products by matching them up with partner companies which can provide appealing ‘prizes’ for their customers. Examples include organising a free manicure for every pack of Tampax tampons bought or free pantomime tickets in return for certain purchases from Sainbury’s.

And now Johnson is trying to ‘improve the quality of earnings’ by signing clients to longer-term contracts, such as that agreed with HSBC and First Direct banks to provide certain ‘premier customers’ with exclusive offers. He is also looking to make an acquisition, in marketing services, using a blend of shares and its £1.7m cash.

Until the Express deal, MKM had always been cash generative and profitable. Now that the business has been restored to a surer footing and is looking for a second leg to stand on it looks very cheap.