TIDMTMG
RNS Number : 3718U
Mission Group PLC (The)
28 March 2023
THE MISSION GROUP plc
("MISSION", "the Group")
FINAL RESULTS FOR THE YEARED 31 DECEMBER 2022
Resilient Group-wide performance driven by sustained growth
across Agency portfolio and progress on strategic growth priorities
- 2023 trading in line with expectations
28 March 2023
The MISSION Group (AIM: TMG), creator of Work That Counts (TM) ,
comprising a group of digital marketing and communications Agencies
delivering real, sustainable growth for its Clients, is pleased to
announce its final results for the year ended 31 December 2022.
FINANCIAL HIGHLIGHTS
Year ended 31 December 2022 2021 change
GBP79.8m GBP72.5m +GBP7.3m
* REVENUE (OPERATING INCOME)
GBP8.7m GBP8.0m +GBP0.7m
* HEADLINE OPERATING PROFIT*
* HEADLINE PROFIT MARGINS 10.9% 11.1% -0.2%
GBP7.8m GBP7.5m +GBP0.3m
* HEADLINE PROFIT BEFORE TAX*
GBP0.7m GBP6.8m -GBP6.1m
* REPORTED PROFIT BEFORE TAX
* HEADLINE EARNINGS PER SHARE* 6.8p 6.6p +0.2p
* HEADLINE DILUTED EARNINGS PER SHARE* 6.7p 6.5p +0.2p
* TOTAL DIVID PER SHARE 2.50p 2.40p +0.1p
* Headline results are calculated before acquisition
adjustments, start-up costs and exceptional restructuring costs (as
set out in Note 3).
* Strong revenue growth of 10% spanning all business
segments
* Headline operating profit for full year 2022 up 8%
driven by operational improvements
* Excellent Group-wide performance demonstrates
resilience across the Agency portfolio
* Stable balance sheet with low level of acquisition
obligations outstanding
* Debt leverage ratios remain comfortably within Board
limits
* Proposed final dividend of 1.67 pence per share
brings total for 2022 to 2.50 pence per share, up 4%
on 2021 (2.40 pence)
BUSINESS HIGHLIGHTS
* Excellent progress against strategic priorities, with
strong investment in creative, customer experience,
and data and analytics to drive business development
* Strong and enduring Client retention across Agencies.
New blue-chip Clients include Diageo, Disney+, ScS,
Bugatti, Phihong Tech and Macmillan Cancer
* Investment for growth through acquisition of Livity
(youth creative consultancy) and Influence (sports
marketing)
* Board restructured to better position the Group for
strategic growth plan
* Brand refresh to deliver 'Work That Counts TM "
underpins our vision to be the preferred creative
partner for real business growth
* Inaugural ESG Report demonstrating further progress
on our 'Making Positive Change' Manifesto, including
Group carbon impact reduction of 40% since 2019
OUTLOOK
-- Trading in 2023 has started well and in line with Board's expectations
-- Group continues to monitor and capture market opportunities -
post-year end acquisition of Mezzo Labs, a global data science and
digital analytics consultancy and launch of Turbine, an integrated
Growth Media agency specialising in earned, owned and paid media
for consumer brands.
Julian Hanson-Smith, MISSION 's Non-Executive Chair, commented:
" MISSION's continued growth in 2022 highlights the resilience and
strength of the Group across all of its Agencies, and our ability
to deliver value for Clients in a time of economic uncertainty.
This reflects MISSION's strategic growth plan and progress to drive
improved performance. Trading in the year-to-date is in line with
our expectations. The investments we have made as part of our plan
mean MISSION is well positioned for growth in 2023 and beyond."
ENQUIRIES
James Clifton, Chief Executive Officer
Giles Lee, Chief Financial Officer
The MISSION Group plc 020 7462 1415
Mark Percy / James Thomas / Fiona Conroy
Shore Capital (Nomad and Broker) 020 7408 4090
Kate Hoare / Alexander Clelland / India Spencer
HOUSTON (Financial PR and Investor Relations) 0204 529 0549
NOTES TO EDITORS
MISSION is a group of digital marketing and communications
Agencies. Employing 1,000 people across 27 locations and three
continents, the Group successfully combines its diverse expertise
to produce Work That Counts (TM) for our Clients, whatever their
ambitions. Creating real standout, sharing real innovation and
delivering real business growth for some of the world's biggest
brands. www.themission.co.uk
CHAIR'S STATEMENT
In 2022 MISSION showcased its ability to adapt to the well
documented macro-economic uncertainties, and to inflationary and
wage pressures. This combination of challenges created real
pressures, some out of our control, but the Group adapted quickly
and continued to make progress against our strategic goals.
In a resilient performance, MISSION delivered 10% year on year
revenue improvement with all business segments achieving growth,
and in line with industry norms. Importantly we continued to build,
refine and restructure the core areas of our business. Investments
were made in growth sectors using a combination of 'buy and build',
expanding our capabilities in data and analytics, creative and
customer experience, and performance media. All this activity
ensured MISSION remains competitive and best positioned to meet the
evolving business needs of our clients.
The operational improvements made in 2021 and 2022 underpinned
headline operating profit growth of 8.0% to GBP8.7m (2021:
GBP8.0m). A focus on cost management in response to significant
cost and wage inflationary pressures resulted in an improvement in
headline PBT to GBP7.8m (2021: GBP7.5m). Operating profit of
GBP1.6m was significantly down (2021: GBP7.3m), reflecting a series
of one-off adjustments relating to the strategic review of non-core
operations, including the Group's Asian operations and Industrial
IoT solutions business Pathfindr.
Following the launch of our ESG strategy, Making a Positive
Change, in 2020, we were clear that we wanted to challenge
ourselves with a series of ambitious commitments to make a positive
difference. Thanks to the efforts of the entire Group, I'm very
pleased to be able to report good progress across a number of key
areas, outlined in our first ESG Report.
Board
We continued to restructure our Board. In September 2022 Mark
Lund joined MISSION as Non-Executive Director and Deputy Chair.
Mark has spent over 25 years leading and founding marketing and
advertising organisations, and his experience is already proving
invaluable as we implement our growth plan.
Executive Director Sue Mullen retired from the Board in January
2023 but remains with the Group as Chair of Story. Andy Nash, a
Non-Executive Director, retired from the Board in September.
On behalf of the Group, I would like to thank both Sue and Andy
for their contribution during their respective tenures.
Dividend
In line with our progressive dividend policy, and MISSION's
sustained progress, the Board is recommending a final dividend of
1.67 pence per share for shareholders on the register as at 14 July
2023. Combined with the half year dividend, this brings the total
dividend for the year to 2.50p, representing a 4% increase on the
prior year (2021: 2.40 pence per share).
Outlook
The progress made in 2022 has ensured MISSION now has the right
platform in place to support the next phase of our growth,
delivering Work That Counts (TM) as the preferred creative partner
for real business growth. Our sharpened strategic plan aims to
deliver an operating income target of c. GBP100m by 2025, with
higher margin performance trending to 13% across our areas of
strength.
I would like to thank all of our colleagues across the Group for
their commitment to progressing our plans for MISSION.
Julian Hanson-Smith
Non-Executive Chair
CHIEF EXECUTIVE'S STATEMENT
MISSION delivered a resilient performance in 2022. Whilst the
macro-economic environment has continued to pose challenges for all
businesses and constrained growth across the majority of sectors
and markets, we have remained focused on our strategic growth
plans, building on the strong momentum achieved in the previous
years.
In these challenging times, brands expect total commitment and
smart thinking from their agencies, continuing to prioritise
investment in creative partnerships that can drive real business
growth. Despite the headwinds of 2022, MISSION has demonstrated the
strong entrepreneurial culture of this business. The investments we
have made in recent years across the Group to expand our
capabilities and services, strengthen our teams and improve our
operational practices and processes, have stood the Group in strong
stead to capitalise on the opportunities available to us.
This has underpinned a robust revenue performance, with
operating income of GBP79.8m now broadly recovered to pre pandemic
levels (2019: GBP81.0m). Despite the significant inflationary
pressures, careful management of costs has seen the Group protect
margin and deliver year on year headline operating profit growth.
Whilst profit at a reported level was impacted by the exceptional
costs primarily associated with the strategic restructuring of our
Asian operations and Pathfindr business, these decisions ensure
these areas of our business are best positioned for long term
growth.
Work That Counts (TM) - evolving our business model to better
support our vision
'Work That Counts,' articulates the Group's vision to be the
preferred creative partner for real business growth, with a clear
mission to ensure that everything we do is designed to deliver work
that makes the difference our Clients are looking for, whatever
their ambition.
Building on the momentum achieved across the business in recent
years, we are now evolving our strategy to better support this
vision, with a focus on driving profitable growth through the
expansion of an Agency Driven business model. This will see us move
away from an 'Agency-First' approach to leverage our Client
specialisms across Sports & Entertainment, Health &
Wellness, Business & Corporate, Consumer & Lifestyle and
Technology and Mobility, enhancing margin through the centralised
support we can offer through MISSION Advantage, our portfolio of
specialist services which underpin the strategic and creative
strengths of our Agencies and MISSION Commercial which provides
centralised operations, HR and business support.
Performance and Progress
All business segments achieved growth over the course of the
year - testament to the underlying resilience of our business
model. Our exposure to higher growth B2B sectors such as Technology
and Healthcare continues to underpin this performance with strong
year on year growth once again from April Six (Technology) and
Solaris Health (Healthcare).
Whilst our creative Agency krow experienced a more challenged
year than originally forecast, February saw the successful launch
of krow-x, which better imbeds CX insight into their creative
process.
We also continued to see good trading recovery from our Agencies
who were most exposed to sectors impacted by the pandemic including
property-specialist ThinkBDW (Property).
In May 2022, we took the decision to merge Story and Chapter to
create Story Group, uniting these two Agencies with similar Client
relationships and cultures to offer better scale, geographic reach
and broader sector experience, enhancing their collective
reputation. We saw a significant uplift in new business enquiries
generated by the launch of the enhanced profile over the course of
H2.
Client retention has continued to be strong throughout the year.
47% of our Clients have been retained by the Group for more than 5
years and 29% for more than 10 years. It is particularly pleasing
to see that the growing breadth of capabilities and services which
we are able to offer our Clients through the MISSION family has
played a critical role in growing some of these Client
relationships with our expanding remits for Phihong Tech, Macmillan
Cancer and Simplyhealth being important examples of this.
New Business acquisition gathered momentum over the course of
the year with new client wins including Westmill Foods, BAM
Clothing, McCarthy Stone and Croda. The strength of the MISSION
Group capability was integral to our appointment to new Client
Taiwanese electrical group Phihong, now working with three of our
Agencies as part of a new Group mandate.
The entrepreneurial nature of the MISSION approach means that
our Agencies are empowered to respond quickly to the trends they
are seeing in their markets, drawing on the Group's central
offering and driving cross-Agency collaboration to bring new
capabilities and services to address evolving Client need and
demand.
Over the course of the year this included a collaboration
between Speed Communications and Bray Leino to launch a new
consultancy 'Anything But Grey'- specifically to cater for
businesses and brands seeking to engage a 50 plus audience, with
subsequent new Client wins including Saga. In response to market
trends ThinkBDW also launched Think Digital, a proposition that
will better virtually showcase housing development projects to
customers.
As previously announced, in the second half of the year we took
the decision to fundamentally restructure our Asian operations,
where performance has been impacted by the extended effect of
COVID-19 on the region. Our operations are now streamlined and
centred on Singapore & Malaysia. In order to support
international expansion in new regions, we have created MISSION
Hubs to sit as part of MISSION Advantage which will offer a more
structured approach to the Group's international expansion going
forward.
We have also reviewed the progress and potential of Pathfindr,
the Group's Industrial IoT solutions business. As announced in our
trading update on the 12 January 2023, given the supply chain and
wider market challenges experienced we now expect growth will be
slower in the near term. We remain hopeful about the long term
growth of Pathfindr but have fully impaired the value of our
investment to date and deferred further investment in the short
term with the team remaining focussed on realising the current live
opportunities.
Investing for growth
Over the course of 2022 we have continued to make significant
progress in building the Group's capabilities and service offering
and have seen the benefit of the investments made both in the
current and prior year.
These have included:
D uring 2022
-- The acquisition of Livity, a youth focussed creative
consultancy in February, for a consideration of GBP0.1m
satisfied in cash. Livity works with leading brands to
help them understand youth culture and enable them to
engage with the next generation with purpose. The acquisition
enhances MISSION' s brand, strategy, creative and content
capabilities, underpinning the Generation Z marketing
offering across the Group.
-- T he acquisition of Influence Sports & Media ("Influence")
in December for an initial consideration of GBP1.5m.
Influence works with sponsors and brands, rights holders,
investors and industry Clients in both the UK and US
to deliver marketing communications strategies, commercial
programs, and actionable market intelligence. The acquisition
strengthens and scales MISSION's social media and marketing
capabilities across the sports and entertainment markets.
-- The acquisition of social media Agency Populate in October
further strengthening MISSION's social media capabilities.
Post Year End
-- The acquisition of Mezzo Labs , a global data science
and digital analytics consultancy in February . Mezzo
Labs is a leading provider of innovative data services
with over 16-years' experience in data strategy and architecture,
web analytics, CX analytics, marketing automation, insights
generation, data science, Conversion Rate Optimisation
(CRO) and personalisation. The acquisition enhances the
Group's capabilities within the data science and digital
analytics space.
-- The launch of integrated growth digital Agency Turbine
in March, which specialises in earned, owned and paid
media. The launch is a direct response of the growing
demand for an effective solution to the challenges of
multi-channel digital marketing, offering a fresh approach
to digital growth marketing that focuses on generating
the results that really matter to commercial success.
Making a Positive Change
Following the successful launch of our inaugural Environmental,
Social and Governance (ESG) manifesto 'Making Positive Change' in
2020, I am delighted that the year has seen us deliver our first
ever ESG Report, demonstrating the progress we have made against
our commitments. We believe the impact MISSION makes on the world
should be positive, always. That our interaction with our People,
Clients, Communities, and the wider environment needs to make a
difference. Ultimately, what we do needs to matter, and it needs to
support positive change.
Particular highlights in the report have included the progress
we have made in reducing our carbon impact as a Group with a
reduction of 41% in 2019-2021 and our commitment to improving Group
Diversity and Inclusion through our partnership with Creative
Access, the social enterprise working Group. Full details of our
progress can be found in our ESG Report which is available on our
website within the Culture section under Making A Positive
Change.
Outlook
Trading in 2023 has begun well and in line with the Board's
expectations. Whilst revenue generation is weighted towards the
second half of the year we have been pleased with the positive new
business momentum experienced to date.
The investments made throughout the business position us well to
capitalise on the growth opportunities that continue to present
themselves. Our teams are motivated and energised for the year
ahead and we look forward to reporting further progress as the year
continues.
James Clifton
Group Chief Executive
CHIEF FINANCIAL OFFICER'S REVIEW
Trading performance
Overview
2022 is characterised by strong revenue growth together with
investment, both in our people and in new, margin-enhancing
capabilities. Alongside this the Group has taken a cautious view of
non-core operations as it renews its strategic focus to deliver
sustainable revenue & margin growth through Work That Counts
(TM) .
Operating income growth in 2022 of 10% along with the
maintenance of headline operating margins at 11% (2021: 11%),
ensured good headline operating profit growth of 8% to GBP8.7m
(2021: GBP8.0m). A review of non-core operations primarily in
relation to Asia and Pathfindr resulted in one-off charges of
GBP5.7m (as described more fully below and set out in Note 3) and
this, combined with increased borrowing costs led to a reported
profit before tax of GBP0.7m (2021: GBP6.8m).
Billings and revenue
Turnover (billings) was 19% higher than the previous year, at
GBP182.7m (2021: GBP153.3m), but since billings include
pass-through costs (e.g. TV companies' charges for buying airtime),
the Board does not consider turnover to be a key performance
measure for its Agencies. Instead, the Board views operating income
(turnover less third-party costs) as a more meaningful measure of
activity levels. Taken as a whole, the Group's operating income
(referred to as "revenue") for the year increased by 10% to
GBP79.8m (2021: GBP72.5m), with growth delivered across all
reported business segments.
Of this GBP7.3m growth in revenue, GBP4.5m (6%) was organic,
reflecting the continued growth across a number of MISSION
Agencies. April Six, our specialist technology and mobility Agency
that grew strongly during the pandemic continued to out-perform and
the Group also benefited from strong performances in our Think BDW,
Solaris Health and Spark Agencies.
The remaining GBP2.8m of growth came in part from the benefit of
a full year of Soul trading (acquired October 2021) and
supplemented by the revenue impact of new MISSION agencies Livity
(acquired February 2022) and Influence (acquired December
2022).
The majority of our businesses have now recovered well if not
fully from the disruption of COVID-19. Both our Asian operation,
Bray Leino Splash, and Asset Tracking IOT investment Pathfindr were
significantly affected by the continued prevalence of the pandemic
in China and the region. Each business has fundamentally reviewed
and restructured its operations in light of this and the Board has
taken a view on the subsequent impact this alongside the
short-medium term trading environment has had on the goodwill and
other asset values carried by these companies.
One of the differentiating features of MISSION is the longevity
and loyalty of its Client base. We believe this is due to the
dynamic and Agency-driven culture which ensures Clients receive a
boutique level of Client service but supported by the resources of
a multi-national group.
Profit and margins
The Directors measure and report the Group's performance
primarily by reference to headline results to avoid the distortions
created by the one-off events and non-cash accounting adjustments
relating to acquisitions that are detailed above. Headline results
are therefore calculated before acquisition adjustments,
exceptional items and losses from new ventures as described below
and set out in Note 3.
Whilst Headline Operating profits grew, reported operating
profit fell sharply this year, from GBP7.3m in 2021 to GBP1.6m in
2022, a decrease of GBP5.7m.
Reported profit before tax decreased by GBP6.0m, from GBP6.7m to
GBP0.7m whilst reported profit after tax reduced by GBP5.3m from
GBP5.3m to GBP0.0m.
Adjustments to reported profits, detailed further in Note 3,
totalled GBP7.0m (2021: GBP0.7m) a significant increase on previous
years. This was primarily due to one-off adjustments relating to
the strategic review of two non-core operations. The first is the
fundamental restructure and future valuation of Bray Leino Splash,
resulting in a combined GBP2.4m charge. The second relates to the
impairment of Pathfindr, resulting in a GBP2.9m charge.
In addition to this the Group invested GBP0.8 in new ventures
(2021: GBP0.4m) most notably the Livity youth-marketing offer as
well as early-stage foundation of performance marketing and data
science capabilities to support future strategic endeavour.
Acquisition-related costs of GBP0.6m compared to GBP0.2m profit
in 2021. The 2022 charge consists primarily of the amortisation of
intangibles recognised on acquisitions of GBP0.5m (2021: GBP0.4m)
as well as professional fees in support of the acquisitions such as
Influence made in the year. The 2021 profit was driven by a one-off
GBP0.8m reduction in movement of fair value consideration (2022:
GBP0.3m).
The Board engaged in a significant restructuring and resizing in
2021. The resultant one-off costs associated with this restructure
last year totalled GBP0.5m.
Adjusting for these items delivers a headline operating profit
of GBP8.7m showing good, 8% growth on 2021 (GBP8.0m).
The headline operating expenditure base increased in the year by
10% (from GBP64.5m in 2021 to GBP71.2m in 2022) with the Group
determined to continue to invest in its most important asset, its
people and their wellbeing, even as macro-economic pressures
heightened. In spite of - or as a result of - this investment the
Group was able to maintain operating margins in line with 2021 at
11%.
Interest charges of GBP1.0m increased significantly on 2021
(GBP0.7m) driven primarily by considerable interest rate increases
globally as central banks sought to curb inflationary
pressures.
The resultant headline profit before tax for 2022 was GBP7.8m, a
reasonable improvement on 2021 at GBP7.5m.
Taxation
The headline tax rate held steady at 21.1% (2021: 22.0%).
On a reported basis in 2022 the impact of the large one-off
non-deductible expenditure primarily in relation to impairment of
goodwill resulted in a tax charge of GBP0.7m on a reported profit
before tax of GBP0.7m, a rate of 95.2% compared to the more normal
level of 21.2% reported in 2021.
The tax rate is generally expected to be consistently higher
than the statutory rate (of 19.0%, unchanged from 2021) since the
amortisation of acquisition-related intangibles is not deductible
for tax purposes and tax rates on our US operations are
substantially higher that the UK corporation tax rate.
Earnings Per Share
After tax, the reported profit for the year was GBP0.0m (2021:
GBP5.3m profit) and EPS was 0.0p pence (2021: 6.0 pence). On a
diluted basis, EPS was 0.0 pence (2021: 5.9 pence).
However, after adjustments, Headline EPS was 6.8 pence (2021:
6.6 pence) and, on a diluted basis, was 6.7 pence (2021: 6.5
pence).
Dividend
The Board adopts a progressive dividend policy, aiming to grow
dividends each year in line with earnings but always balancing the
desire to reward shareholders via dividends with the need to fund
the Group's growth ambitions and maintain a strong balance sheet
and healthy distributable reserves (2022: GBP36.0m, 2021:
GBP38.7m).
A dividend of 0.83 pence per share was paid in December 2022.
The Board has proposed a resolution for a final dividend of 1.67
pence per share in its AGM Notice, bringing the total for the year
to 2.50 pence per share. This represents a 4% increase on the total
dividend declared in 2021 (2.40 pence per share).
Balance sheet
In common with other marketing communications groups the main
features of our balance sheet are the goodwill and other intangible
assets resulting from acquisitions made over the years and the debt
taken on in connection with those acquisitions.
The level of intangible assets relating to acquisitions and
internal investments increased by GBP0.8m in the year. This
movement being primarily a function of the acquisition of Influence
in December netting off against the impairment of the Bray Leino
Splash goodwill balance and Pathfindr intangible asset impairment.
The level of 'total debt' (combined net bank debt and acquisition
obligations) increased by GBP1.9m.
The Board undertakes an annual assessment of the value of all
goodwill, explained further in Note 10. At 31 December 2022 the
Board concluded that, with the exception of a GBP2.0m write down of
the Bray Leino Splash goodwill as described above, no impairment in
the carrying value was required.
The Group's acquisition obligations at the end of 2022 were
GBP4.1m (2021: GBP3.3m), to be satisfied by a mix of shares and
cash. All of this is dependent on post-acquisition earn-out
profits. GBP1.4m is expected to fall due for payment in cash within
12 months and a further GBP0.1m in cash in the subsequent 12
months. The Directors believe that the strength of the Group's
balance sheet can comfortably accommodate these obligations
alongside the Group's commitments to capital expenditure (expected
to run at similar levels to recent years) and dividend
payments.
Consolidated Net Current Assets closed at GBP7.7m (2021
GBP10.3m). This was in part the result of the increase in
Acquisition Obligations noted above and in part an increase in
Trade creditors at the year end of GBP3.6m in comparison to
2021.
At the end of the year the Group's net bank debt stood at
GBP11.4m (2021: GBP10.3m). On an adjusted basis (pre IFRS16) the
leverage ratio of net bank debt to headline EBITDA was x1.2 at 31
December 2022 (2021: x1.2). The Group's adjusted ratio of total
debt, including remaining acquisition obligations, to EBITDA at 31
December 2022 was x1.6 (2021: x1.5).
Cash flow
The underlying cash performance is strong following the
settlement of a number of prior-period obligations.
The closing net bank debt position for 2022 was GBP11.4m. This
represents an increase in net debt of GBP1.1m on the 2021 year-end
net bank debt of GBP10.3m.
Headline operating profit of GBP8.7m (2021: GBP8.0m) converted
into GBP6.8m (2021: GBP1.7m) of 'free cash flow' (defined as net
cash inflow from operating activities less tangible and intangible
capital expenditure).
Bank loans increased by GBP1.0m and this, coupled with the free
cash flow provided funding for new acquisitions amounting to
GBP1.9m (2021: GBP0.7m), the settlement of contingent obligations
relating to the profits generated by previous acquisitions
totalling GBP0.8m (2021: GBP6.7m) and dividends of GBP2.2m (2021:
GBP2.1m). The working capital movement is defined as the aggregate
movement in receivables, stock and payables and was reported as an
inflow of GBP1.1m (2021: GBP4.8m outflow).
Working capital days: Total debtor days decreased, work in
progress days decreased very slightly and creditors days increased
a small amount. Overall, the Group's total working capital days of
9.6 represents a significant improvement upon the 2021 equivalent
(15.0 days).
Going concern
The Directors have considered the financial projections and cash
flow projections for the Group alongside the availability of
committed bank facilities of GBP20m (expiring 5 April 2025), the
option to increase the facility by GBP5m, an overdraft facility of
GBP3.0m, and the headroom afforded against Total Debt Leverage and
Bank Debt Leverage covenant tests for the coming 12 months. This
leads the Directors to become satisfied that, taking account of
reasonably possible changes in trading performance, it is
appropriate to adopt the going concern basis in preparing the
financial statements.
Key performance indicators
KPIs are designed to monitor the Group's revenue and profit
growth, within a safe capital structure. Whilst COVID-19 has
interrupted the Group's consistent track record
of growth, the Board has reviewed and reconfirmed the Group's
KPI targets as being appropriate for a post-pandemic
environment.
The targets, along with the outcome for 2022 are as follows:
-- Achieve organic revenue growth of at least 5% per year [delivered + 6%];
-- Increase headline operating profit margins to 14% [delivered 11%];
-- Grow headline profit before tax by 10% year-on-year [delivered 4%]; and
-- Maintain the ratio of net bank debt to EBITDA* at or below
x1.5 [delivered x1.2] and the ratio of total debt (including both
bank debt and deferred acquisition consideration) to EBITDA at or
below x2.0 [delivered x1.6].
*EBITDA is headline operating profit before depreciation and
amortisation charges.
At the individual Agency level, the Group's financial KPIs
comprise revenue and controllable profitability measures,
predominantly based on the achievement of the annual budget. More
detailed KPIs are applied within individual Agencies. In addition
to financial KPIs, the Board periodically monitors the length of
Client relationships, the forward visibility of revenue and the
retention of key staff.
Outlook
We entered the year expecting 2023 to be another year of growth,
albeit at a time of increasing global macro-economic and political
uncertainty.
The year has started well and prospects for organic growth are
good. We also expect to make additional margin improvements in
spite of the cost pressures impacting our sector and we anticipate
reaping the benefits of our strategic review, focus on the core
operation and investments made both to our talent base and in new
offerings and capabilities. Furthermore and as a result of the
actions taken in 2022 this growth is well set to be highly cash
generative.
Giles Lee
Group Chief Financial Officer
Consolidated Income Statement
For the year ended 31 December 2022
Year to Year to
31 December 31 December
2022 2021
Note GBP'000 GBP'000
TURNOVER 2 182,685 153,287
Cost of sales (102,871) (80,792)
OPERATING INCOME 2 79,814 72,495
Headline operating expenses (71,157) (64,476)
HEADLINE OPERATING PROFIT 8,657 8,019
Goodwill and business
impairment 3 (5,257) -
Start-up costs 3 (776) (367)
Acquisition adjustments 3 (593) 156
Restructuring costs 3 (402) (496)
OPERATING PROFIT 1,629 7,312
Share of results of associates
and joint ventures 160 140
---------------- --------------
PROFIT BEFORE INTEREST
AND TAXATION 1,789 7,452
Net finance costs 5 (1,046) (701)
PROFIT BEFORE TAXATION 6 743 6,751
Taxation 7 (707) (1,432)
---------------- --------------
PROFIT FOR THE YEAR 36 5,319
---------------- --------------
Attributable to:
Equity holders of the
parent 9 5,423
Non-controlling interests 27 (104)
---------------- --------------
36 5,319
---------------- --------------
Basic earnings per share
(pence) 9 0.0 6.0
Diluted earnings per share
(pence) 9 0.0 5.9
Headline basic earnings
per share (pence) 9 6.8 6.6
Headline diluted earnings
per share (pence) 9 6.7 6.5
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2022
Year to Year to
31 December 31 December
2022 2021
GBP'000 GBP'000
PROFIT FOR THE YEAR 36 5,319
Other comprehensive (loss)
/ income - items that
may be reclassified separately
to profit or loss:
Exchange differences on
translation of foreign
operations (688) 70
-------------- --------------
TOTAL COMPREHENSIVE (LOSS)
/ INCOME FOR THE YEAR (652) 5,389
-------------- --------------
Attributable to:
Equity holders of the
parent (601) 5,489
Non-controlling interests (51) (100)
-------------- --------------
(652) 5,389
-------------- --------------
Consolidated Balance Sheet
As at 31 December 2022
As at As at
31 December 31 December
2022 2021
Note GBP'000 GBP'000
FIXED ASSETS
Intangible assets 10 99,741 98,974
Property, plant and equipment 2,090 2,102
Right of use assets 9,536 9,149
Investments, associates and
joint ventures 11 437 517
111,804 110,742
------------- -------------
CURRENT ASSETS
Stock 2,185 2,112
Trade and other receivables 12 41,255 40,538
Cash and short term deposits 6,153 6,066
------------- -------------
49,593 48,716
CURRENT LIABILITIES
Trade and other payables 13 (39,667) (37,338)
Corporation tax payable (794) (380)
Bank loans 14 (27) -
Acquisition obligations 16.1 (1,371) (692)
(41,859) (38,410)
------------- -------------
NET CURRENT ASSETS 7,734 10,306
TOTAL ASSETS LESS CURRENT LIABILITIES 119,538 121,048
------------- -------------
NON CURRENT LIABILITIES
Bank loans 14 (17,488) (16,393)
Lease liabilities 15 (8,481) (8,077)
Acquisition obligations 16.1 (2,772) (2,623)
Deferred tax liabilities (622) (483)
------------- -------------
(29,363) (27,576)
------------- -------------
NET ASSETS 90,175 93,472
------------- -------------
CAPITAL AND RESERVES
Called up share capital 17 9,102 9,102
Share premium account 45,928 45,928
Own shares 18 (994) (518)
Share-based incentive reserve 1,010 868
Foreign currency translation (610) -
reserve
Retained earnings 35,558 37,820
------------- -------------
EQUITY ATTRIBUTABLE TO EQUITY
HOLDERS OF THE PARENT 89,994 93,200
------------- -------------
Non-controlling interests 181 272
------------- -------------
TOTAL EQUITY 90,175 93,472
------------- -------------
Consolidated Cash Flow Statement
For the year ended 31 December 2022
Year to Year to
31 December 31 December
2022 2021
GBP'000 GBP'000
Operating profit 1,629 7,312
Depreciation, amortisation and impairment
charges 8,701 4,029
Decrease in the fair value of contingent
consideration (334) (761)
Loss on disposal of property, plant
and equipment 10 11
Non-cash charge for share options, growth
shares and shares awarded, net of awards
settled in cash 73 (48)
Decrease / (increase) in receivables 149 (6,703)
Increase in stock (73) (918)
Increase in payables 1,056 2,798
------------- -------------
OPERATING CASH FLOWS 11,211 5,720
Net finance costs paid (1,002) (781)
Tax paid (482) (1,355)
------------- -------------
Net cash inflow from operating activities 9,727 3,584
------------- -------------
INVESTING ACTIVITIES
Proceeds on disposal of property, plant
and equipment 64 72
Purchase of property, plant and equipment (1,092) (884)
Investment in software and product development (1,852) (1,024)
Acquisitions of or investments in businesses (1,893) (663)
Payment relating to acquisitions made
in prior years (790) (6,714)
Cash acquired with subsidiaries 271 435
Net cash outflow from investing activities (5,292) (8,778)
------------- -------------
FINANCING ACTIVITIES
Dividends paid (2,180) (2,100)
Dividends paid to non-controlling interests (40) -
Payment of lease liabilities (1,935) (2,016)
Increase in bank loans 992 11,500
Purchase of own shares held in EBT (497) -
Net cash (outflow) / inflow from financing
activities (3,660) 7,384
------------- -------------
Increase in cash and cash equivalents 775 2,190
Exchange differences on translation
of foreign subsidiaries (688) 70
Cash and cash equivalents at beginning
of year 6,066 3,806
------------- -------------
Cash and cash equivalents at end of
year 6,153 6,066
------------- -------------
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
Total
Share- Foreign attributable
based currency to equity Non-controlling
Share Share Own incentive translation Retained holders interest Total
capital premium shares reserve reserve earnings of parent equity
GBP'000
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2021 9,102 45,928 (591) 642 (66) 34,842 89,857 372 90,229
--------------- --------- --------- --------- ----------- ------------- ---------- -------------- ----------------- ---------
Profit for
the year - - - - - 5,423 5,423 (104) 5,319
Exchange
differences
on
translation
of foreign
operations - - - - 66 - 66 4 70
--------------- --------- --------- --------- ----------- ------------- ---------- -------------- ----------------- ---------
Total
comprehensive
income for
the year - - - - 66 5,423 5,489 (100) 5,389
Share option
charge - - - 174 - - 174 - 174
Growth share
charge - - - 52 - - 52 - 52
Shares awarded
and sold
from own
shares - - 73 - - (345) (272) - (272)
Dividend
paid - - - - - (2,100) (2,100) - (2,100)
--------------- --------- --------- --------- ----------- ------------- ---------- -------------- ----------------- ---------
At 31 December
2021 9,102 45,928 (518) 868 - 37,820 93,200 272 93,472
--------------- --------- --------- --------- ----------- ------------- ---------- -------------- ----------------- ---------
Profit for
the year - - - - - 9 9 27 36
Exchange
differences
on
translation
of foreign
operations - - - - (610) - (610) (78) (688)
--------------- --------- --------- --------- ----------- ------------- ---------- -------------- ----------------- ---------
Total
comprehensive
income for
the year - - - - (610) 9 (601) (51) (652)
Share option
charge - - - 33 - - 33 - 33
Growth share
charge - - - 109 - - 109 - 109
Own shares
purchased
by EBT - - (497) - - - (497) - (497)
Shares awarded
and sold
from own
shares - - 21 - - (91) (70) - (70)
Dividend
paid - - - - - (2,180) (2,180) (40) (2,220)
--------------- --------- --------- --------- ----------- ------------- ---------- -------------- ----------------- ---------
At 31 December
2022 9,102 45,928 (994) 1,010 (610) 35,558 89,994 181 90,175
--------------- --------- --------- --------- ----------- ------------- ---------- -------------- ----------------- ---------
Notes to the Consolidated Financial Statements
1. Principal Accounting Policies
Basis of preparation
The results for the year to 31 December 2022 have been extracted
from the audited consolidated financial statements, which are
expected to be published by 29 March 2023.
The financial information set out above does not constitute the
Company's statutory accounts for the years to 31 December 2022 or
2021 but is derived from those accounts. Statutory accounts for the
year ended 31 December 2021 were delivered to the Registrar of
Companies following the Annual General Meeting on 21 June 2022 and
the statutory accounts for 2022 are expected to be published on the
Group's website ( www.themission.co.uk ) shortly, posted to
shareholders at least 21 days ahead of the Annual General Meeting
("AGM") on 20 June 2023 and, after approval at the AGM, delivered
to the Registrar of Companies.
The auditors, PKF Francis Clark, have reported on the accounts
for the years ended 31 December 2022 and 31 December 2021; their
reports in both years were (i) unqualified, (ii) did not include a
reference to any matters to which the auditors drew attention by
way of emphasis without qualifying their report and (iii) did not
contain a statement under Section 498 (2) or (3) of the Companies
Act 2006 in respect of those accounts.
2. Segmental Information
IFRS 15: Revenue from Contracts with Customers requires the
disaggregation of revenue into categories that depict how the
nature, amount, timing and uncertainty of revenue and cash flows
are affected by economic factors. The Board has considered how the
Group's revenue might be disaggregated in order to meet the
requirements of IFRS 15 and has concluded that the activity and
geographical segmentation disclosures set out below represent the
most appropriate categories of disaggregation. The Board considers
that neither differences between types of Clients, sales channels
and markets nor differences between contract duration and the
timing of transfer of goods or services are sufficiently
significant to require further disaggregation.
For management purposes the Group monitored the performance of
its separate operating units, each of which carries out a range of
activities, as a single business segment. However, since different
activities have different revenue characteristics, the Group's
turnover and operating income has been disaggregated below to
provide additional benefit to readers of these financial
statements.
Following the implementation of a Shared Services function from
the start of 2018 and the resulting transfer of certain
Agency-specific contracts onto centrally-managed arrangements, a
significant portion of the total operating costs are now centrally
managed and segment information is therefore now only presented
down to the operating income level.
Advertising Media Events Public Total
& Digital Buying Relations
Year to 31 December GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2022
------------ -------- -------- ----------- --------
Turnover 109,406 39,008 25,440 8,831 182,685
------------ -------- -------- ----------- --------
Operating income 62,045 4,335 6,255 7,179 79,814
------------ -------- -------- ----------- --------
Advertising Media Events Public Total
& Digital Buying Relations
Year to 31 December GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2021
------------ -------- -------- ----------- --------
Turnover 103,062 28,878 13,081 8,266 153,287
------------ -------- -------- ----------- --------
Operating income 56,725 3,305 5,492 6,973 72,495
------------ -------- -------- ----------- --------
As contracts typically have an original expected duration of
less than one year, the full amount of the accrued income balance
at the beginning of the year is recognised in revenue during the
year. All media buying turnover is recognised at a point in time.
Virtually all other turnover from continuing operations is
recognised over time.
Assets and liabilities are not split between activities.
Geographical segmentation
The following table provides an analysis of the Group's
operating income by region of activity:
Year to Year to
31 31
December December
2022 2021
GBP'000 GBP'000
UK 67,766 63,160
USA 9,156 6,425
Asia 2,667 2,720
Rest of Europe 225 190
79,814 72,495
--------- ---------
3. Reconciliation of Headline Profit to Reported Profit
The Board believes that headline profits, which eliminate
certain amounts from the reported figures, provide a better
understanding of the underlying trading of the Group. The
adjustments to reported profits generally fall into three
categories: acquisition-related items, exceptional restructuring
costs and start-up costs.
Year ended Year ended
31 December 31 December
2022 2021
PBT PAT PBT PAT
GBP'000 GBP'000 GBP'000 GBP'000
Headline profit 7,771 6,130 7,458 5,819
Goodwill and business impairment (5,257) (4,697) - -
Start-up costs (776) (629) (367) (341)
Acquisition-related items (Note
4) (593) (443) 156 243
Restructuring costs (402) (325) (496) (402)
Reported profit 743 36 6,751 5,319
-------- -------- ------ ------
Goodwill and business impairment costs relate to the impairment
of Splash goodwill and the impairment of Pathfindr fixed assets and
stock, following a review of the valuation of these cash generating
units and assets, and the loss on disposal of the Fenturi
investment in associate and write-off of intercompany balance.
Start-up costs derive from organically started businesses or
loss-making businesses acquired and comprise the trading losses of
such entities until the earlier of two years from commencement or
when they show evidence of becoming sustainably profitable.
Start-up costs in 2022 relate to the trading losses of the new
Livity youth-marketing offer as well as costs associated with the
early-stage foundation of performance marketing and data science
capabilities. Start-up costs in 2021 related to the launch of a
Mongoose Sports venture in Birmingham and the venture Alive,
launched in Asia in 2021.
Restructuring costs in 2022 comprised the costs associated with
the major fundamental restructuring of the Splash business. Board
restructuring costs in 2021 comprised leaving packages payable to
former MISSION directors Robert Day, Peter Fitzwilliam and David
Morgan following their resignations.
4. Acquisition Adjustments
Year to Year to
31 December 31 December
2022 2021
GBP'000 GBP'000
Decrease in fair value of contingent consideration 334 761
Amortisation of other intangibles recognised
on acquisitions (519) (446)
Acquisition transaction costs expensed (408) (159)
------------- -------------
(593) 156
------------- -------------
The decrease in fair value of contingent consideration relates
to a net downward (2021: downward) revision in the estimate payable
to vendors of businesses acquired in prior years . Acquisition
transaction costs relate to professional fees in connection with
acquisitions made or contemplated.
5. Net Finance Costs
Year to Year to
31 December 31 December
2022 2021
GBP'000 GBP'000
Interest on bank loans and overdrafts,
net of interest on bank deposits (656) (283)
Amortisation of bank debt arrangement
fees (48) (67)
Interest expense on lease liabilities (342) (351)
Net finance costs (1,046) (701)
------------- -------------
6. Profit Before Taxation
Profit or loss on ordinary activities before taxation is stated
after charging / (crediting):
Year to Year to
31 December 31 December
2022 2021
GBP'000 GBP'000
Depreciation of owned tangible fixed assets 1,068 1,094
Depreciation expense on right of use assets 1,918 1,995
Amortisation of intangible assets recognized
on acquisitions 519 446
Amortisation of other intangible assets 337 494
Expense relating to short term leases 376 521
Expense relating to low value leases 12 17
Income from subleasing right of use assets (194) -
Staff costs before furlough grants 55,032 49,629
Furlough grants received - (347)
Bad debts and net movement in provision for
bad debts 386 177
Auditors' remuneration 238 179
(Profit) / loss on foreign exchange (411) 51
7. Taxation
Year to Year to
31 December 31 December
2022 2021
GBP'000 GBP'000
Current tax:
UK corporation tax at 19.00% (2021: 19.00%) 380 1,133
Adjustment for prior periods (36) (64)
Foreign tax on profits of the period 364 226
------------- -------------
708 1,295
Deferred tax:
Current year originating temporary differences (1) 137
Tax charge for the year 707 1,432
------------- -------------
Factors Affecting the Tax Charge for the Current Year:
The tax assessed for the year is higher (2021: higher) than the
standard rate of corporation tax in the UK. The differences
are:
Year to Year to
31 December 31 December
2022 2021
GBP'000 GBP'000
Profit before taxation 743 6,751
------------- -------------
Profit on ordinary activities before tax
at the standard rate of corporation tax
of 19.00% (2021: 19.00%) 141 1,283
Effect of:
Rate changes (99) 119
Non-deductible expenses / income not taxable 562 (42)
Depreciation (lower than) capital allowances (76) (32)
Losses not utilized - 36
Higher rates on overseas earnings 190 160
Adjustments in respect of prior periods (36) (64)
Other differences 25 (28)
------------- -------------
Actual tax charge for the year 707 1,432
------------- -------------
8. Dividends
Year to Year to
31 December 31 December
2022 2021
GBP'000 GBP'000
Amounts recognised as distributions to
equity holders in the year:
Interim dividend of 0.83 pence (2021: 0.80
pence) per share 743 721
Final dividend of 1.60 pence (2021: deferred
2019 final dividend of 1.53 pence) per
share 1,437 1,379
------------- -------------
2,180 2,100
------------- -------------
The 2019 final dividend of 1.53 pence per share was proposed in
the 2019 annual report and accounts but subsequently deferred due
to the priority to preserve cash during the pandemic. Following the
much-improved net debt position at 31 December 2020, this dividend
was paid in March 2021 and, in accordance with IFRS, recognised in
the 2021 accounts.
A final dividend of 1.67 pence per share is to be paid in July
2023 should it be approved by shareholders at the AGM. In
accordance with IFRS this final dividend will be recognised in the
2023 accounts.
9. Earnings Per Share
The calculation of the basic and diluted earnings per share is
based on the following data, determined in accordance with the
provisions of IAS 33: Earnings Per Share.
Year to Year to
31 December 31 December
2022 2021
GBP'000 GBP'000
Earnings
Reported profit for the year
Attributable to:
Equity holders of the parent 9 5,423
Non-controlling interests 27 (104)
------------- -------------
36 5,319
------------- -------------
Headline earnings (Note 3)
Attributable to:
Equity holders of the parent 6,103 5,923
Non-controlling interests 27 (104)
6,130 5,819
Number of shares
Weighted average number of Ordinary shares
for the purpose of basic earnings per
share 89,906,999 90,134,211
Dilutive effect of securities:
Employee share options 617,992 1,414,543
Weighted average number of Ordinary shares
for the purpose of diluted earnings per
share 90,524,991 91,548,754
Reported basis
Basic earnings per share (pence) 0.0 6.0
Diluted earnings per share (pence) 0.0 5.9
Headline basis:
Basic earnings per share (pence) 6.8 6.6
Diluted earnings per share (pence) 6.7 6.5
A reconciliation of the profit after tax on a reported basis and
the headline basis is given in Note 3.
10. Intangible Assets
31 December 31 December
2022 2021
GBP'000 GBP'000
Goodwill 96,213 94,604
Other intangible assets 3,528 4,370
99,741 98,974
------------- ------------
In accordance with the Group's accounting policies, an annual
impairment test is applied to the carrying value of goodwill. The
review performed assesses whether the carrying value of goodwill is
supported by the net present value of projected cash flows derived
from the underlying assets for each cash-generating unit ("CGU"),
discounted using an appropriate discount rate. It is the Directors'
judgement that each distinct Agency represents a CGU. The initial
projection period of four years includes the annual budget for each
CGU, based on insight into Clients' planned marketing expenditure
and targets for net new business growth derived from historical
experience, and extrapolations of the budget in subsequent years
based on known factors and estimated trends. The key assumptions
used by each CGU concern revenue growth and staffing levels and
different assumptions are made by different CGUs based on their
individual circumstances. Beyond this initial projection period, a
generic long term growth rate of 2.0% is assumed for all units
based on information published by market analysts. The resulting
pre-tax cash flow forecasts were discounted using the Group's
estimated pre-tax Weighted Average Cost of Capital ("WACC"), which
is 8.36% (2021: 8.75%, the average of the WACC over the 10 years
from 2012 to 2021).
As a result of the performance and restructuring of the
operations of Bray Leino Splash Pte Ltd, the Directors considered
it prudent to impair GBP2.0m of goodwill relating to this CGU. No
other impairments in goodwill were required. No change to this
conclusion is reached as a result of the following independent
changes in assumptions: nil growth in 2023 and a one-year delay in
the achievement of 2023 budgets; any reduction in short term growth
rates beyond 2024; nil long term growth rates; a 1% increase in
discount rate. The only change in assumptions that would result in
a material impairment in the carrying value of the Group's goodwill
is an increase in discount rate of 4%, which management do not
believe is a reasonably possible change in key assumption.
11. Investments, Associates and Joint Ventures
Year to Year to
31 December 31 December
2022 2021
GBP'000 GBP'000
At 1 January 517 317
Profit during the year 160 140
Additions - 60
Disposal of Fenturi (240) -
At 31 December 437 517
------------ ------------
12. Trade and Other Receivables
31 December 31 December
2022 2021
GBP'000 GBP'000
Trade receivables 25,052 25,727
Accrued income 13,273 11,551
Prepayments 2,051 2,154
Other receivables 879 1,106
41,255 40,538
------------ ------------
An allowance has been made for estimated irrecoverable amounts
from the provision of services of GBP228,000 (2021: GBP225,000).
The estimated irrecoverable amount is arrived at by considering the
historical loss rate and adjusting for current expectations, Client
base and economic conditions. Both historical losses and expected
future losses being very low, the Directors consider it appropriate
to apply a single average rate for expected credit losses to the
overall population of trade receivables and accrued income.
Accrued income relates to unbilled work in progress and has
substantially the same risk characteristics as the trade
receivables for the same types of contracts.
31 December 31 December
2022 2021
GBP'000 GBP'000
Gross trade receivables 25,280 25,952
Gross accrued income 13,273 11,551
------------ -------------
Total trade receivables and accrued income 38,553 37,503
Expected loss rate 0.6% 0.6%
Provision for doubtful debts 228 225
Trade receivables include GBP6.5m (2021: GBP7.4m) that is past
due but not impaired, of which GBP1.0m (2021: GBP1.1m) is greater
than 3 months past due.
Accrued income has increased by GBP1,722,000 as a result of an
increase in the volume of work taking place just prior to the 2022
year end, including two large campaigns from new clients, where the
work has been performed prior to year end, but the customer will
only be invoiced and pay in 2023.
13. Trade and Other Payables
31 December 31 December
2022 2021
GBP'000 GBP'000
Trade creditors 14,454 10,807
Deferred income 8,903 9,128
Other creditors and accruals 10,771 11,196
Other tax and social security payable 3,957 4,611
Lease liabilities (Note 15) 1,582 1,596
39,667 37,338
------------ ------------
Trade creditors increased as a result of the increased level of
trading towards the end of 2022 versus 2021, accompanied by
slightly slower payment of creditors as evidenced by an increase in
trade creditors days.
14. Bank Overdrafts, Loans and Net Bank Debt
31 December 31 December
2022 2021
GBP'000 GBP'000
Bank loan outstanding 17,575 16,500
Unamortised bank debt arrangement fees (60) (107)
Carrying value of loan outstanding 17,515 16,393
Less: Cash and short term deposits (6,153) (6,066)
------------ ------------
Net bank debt 11,362 10,327
------------ ------------
The borrowings are repayable as follows:
Less than one year 27 -
In one to two years 17,521 -
In two to three years 22 16,500
In three to four years 5 -
17,575 16,500
Unamortised bank debt arrangement fees (60) (107)
17,515 16,393
Less: Amount due for settlement within
12 months (shown under current liabilities) (27) -
------------ ------------
Amount due for settlement after 12 months 17,488 16,393
------------ ------------
Bank debt arrangement fees, where they can be amortised over the
life of the loan facility, are included in finance costs. The
unamortised portion is reported as a reduction in bank loans
outstanding.
Included in the above is GBP75,000 of bank loans owing by
Populate Social Ltd, one of the companies acquired during the year.
These borrowings are repayable over a four year period.
At 31 December 2022, the Group's committed bank facilities
comprised a revolving credit facility of GBP20m, expiring on 5
April 2024, with an option to increase the facility by GBP5m and by
one year. Interest on the new facility is based on SONIA (sterling
overnight index average) plus a margin of between 1.50% and 2.25%
depending on the Group's debt leverage ratio, payable in cash on
loan rollover dates. On 8 March 2023 the option to extend the
facility by one year was exercised, extending the facility
expiration date to 5 April 2025.
In addition to its committed facilities, at 31 December 2022 the
Group had available an overdraft facility of up to GBP3.0m with
interest payable by reference to National Westminster Bank plc Base
Rate plus 2.25%.
At 31 December 2022, there was a cross guarantee structure in
place with the Group's bankers by means of a fixed and floating
charge over all of the assets of the Group companies in favour of
National Westminster Bank plc.
All borrowings are in sterling.
15. Lease Liabilities
Obligations under leases are due as follows:
31 December 31 December
2022 2021
GBP'000 GBP'000
In one year or less (shown in trade and
other payables) 1,582 1,596
In more than one year 8,481 8,077
10,063 9,673
------------ ------------
16. Acquisitions
16.1 Acquisition Obligations
The terms of an acquisition provide that the value of the
purchase consideration, which may be payable in cash or shares at a
future date, depends on uncertain future events such as the future
performance of the acquired company. The Directors estimate that
the liability for contingent consideration payments is as
follows:
31 December 2022 31 December 2021
Cash Shares Total Cash Shares Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Less than one year 1,371 - 1,371 692 - 692
Between one and two
years 53 - 53 430 - 430
In more than two years
but less than three
years 1,820 - 1,820 300 - 300
In more than three
years but less than
four years 899 - 899 1,893 - 1,893
4,143 - 4,143 3,315 - 3,315
--------- --------- --------- --------- ---------- ---------
A reconciliation of acquisition obligations during the period is
as follows:
Cash Shares Total
GBP'000 GBP'000 GBP'000
At 31 December 2021 3,315 - 3,315
Obligations settled in the
period (790) - (790)
Adjustments to estimates of
obligations (334) - (334)
New acquisitions 1,952 - 1,952
At 31 December 2022 4,143 - 4,143
-------- --------- ---------
16.2 Acquisition of Influence Sports Ltd
On 7 December 2022, the Group acquired the entire issued share
capital of Influence Sports Ltd ("Influence"). Headquartered in
London and with a strong presence in the US, Influence works with
sponsors and brands, rights holders, investors and industry Clients
to deliver marketing communications strategies, commercial
programs, and actionable market intelligence. The fair value of the
consideration given for the acquisition was GBP3,337,000,
comprising initial cash consideration and deferred contingent
consideration. The deferred contingent consideration is to be
satisfied by the issue of new ordinary shares up to a maximum of
40% at MISSION 's discretion, with the balance payable in cash.
Costs relating to the acquisition amounted to GBP128,000 and were
expensed.
Maximum contingent consideration of GBP6,500,000 is dependent on
Influence achieving a profit target over the period 1 January 2023
to 31 December 2025. The Group has provided for contingent
consideration of GBP1,780,000 to date.
The fair value of the net identifiable assets acquired was
GBP73,000 resulting in goodwill and previously unrecognised other
intangible assets of GBP3,264,000. Goodwill arises on consolidation
and is not tax-deductible. Management carried out a review to
assess whether any other intangible assets were acquired as part of
the transaction. Management concluded that both a brand name and
customer relationships were acquired and attributed a value to each
of these by applying commonly accepted valuation methodologies. The
goodwill arising on the acquisition is attributable to the
anticipated profitability of Influence.
Book Fair value Fair
value adjustments value
----------------------------------- -------- ------------- ---------
GBP'000 GBP'000 GBP'000
----------------------------------- -------- ------------- ---------
Net assets acquired:
Fixed assets 9 - 9
Trade and other receivables 460 - 460
Cash and cash equivalents 89 - 89
Trade and other payables (483) - (483)
Deferred tax (2) - (2)
73 - 73
Other intangibles recognised
at acquisition - 573 573
Deferred tax adjustment - (143) (143)
73 430 503
Goodwill 2,834
----------------------------------- -------- ------------- ---------
Total consideration 3,337
Satisfied by:
Cash 1,557
Deferred contingent consideration 1,780
----------------------------------- -------- ------------- ---------
3,337
----------------------------------- -------- ------------- ---------
Influence contributed turnover of GBP439,000, operating income
of GBP329,000 and headline operating profit of GBP222,000 to the
results of the Group in 2022.
16.3 Other Acquisitions
A total of GBP508,000 was invested in other acquisitions during
the year, comprising initial cash consideration of GBP336,000 and
deferred contingent consideration of GBP172,000.
16.4 Pro-forma results including acquisitions
The Directors estimate that the turnover, operating income and
headline operating profit of the Group would have been
approximately GBP185.2m, GBP80.8m and GBP9.0m had the Group
consolidated the results of the acquisitions made during the year,
from the beginning of the year.
17. Share Capital
31 December 31 December
2021 2021
GBP'000 GBP'000
Allotted and called up:
91,015,897 Ordinary shares of 10p each
(2021: 91,015,897 Ordinary shares of 10p
each) 9,102 9,102
------------ ------------
Share-based incentives
The Group has the following share-based incentives in issue:
At start Granted/ Waived/ At end
of year acquired lapsed Exercised of year
TMMG Long Term Incentive
Plan 711,211 - (146,628) (171,362) 393,221
Growth Share Scheme 3,200,000 - - - 3,200,000
The TMMG Long Term Incentive Plan ("LTIP") was created to
incentivise senior employees across the Group. Nil-cost options are
awarded at the discretion of, and vest based on criteria
established by, the Remuneration Committee. During the year,
171,362 options were exercised at an average share price of 59.7p
and at the end of the year 271,859 of the outstanding options are
exercisable.
Shares held in an Employee Benefit Trust (see Note 18) will be
used to satisfy share options exercised under the Long Term
Incentive Plan.
A Growth Share Scheme was implemented in June 2021. Participants
in the scheme subscribed for Ordinary B shares in The Mission
Marketing Holdings Limited (the "growth shares") at a nominal
value. These growth shares can be exchanged for an equivalent
number of Ordinary Shares in MISSION if MISSION's share price
equals or exceeds 150p for at least 15 consecutive days during the
period ending on the date the Company's financial results for the
year ended 31st December 2023 are announced; if not, they will have
no value.
18. Own Shares
No. of shares GBP'000
At 31 December 2020 897,814 591
Awarded or sold during the year (179,676) (73)
At 31 December 2021 718,138 518
Own shares purchased 827,937 497
Awarded or sold during the year (50,537) (21)
At 31 December 2022 1,495,538 994
-------------- --------
Shares are held in an Employee Benefit Trust to meet certain
requirements of the Long Term Incentive Plan. During the year,
827,937 (2021: nil) shares were purchased at an average share price
of 60.0p. This represents 0.9% of the total issued share
capital.
19. Post Balance Sheet Events
There have been no material post balance sheet events.
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END
FR JRMFTMTITBIJ
(END) Dow Jones Newswires
March 28, 2023 02:00 ET (06:00 GMT)
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