24 September 2024
THE
MISSION GROUP plc
("MISSION", "the Group")
INTERIM
RESULTS FOR THE SIX MONTHS TO 30 JUNE 2024
Resilient
organic revenue growth despite challenging trading
environment
New
business momentum underpins full year outlook, with trading in line
with revenue and headline operating profit expectations
MISSION Group plc (AIM: TMG), creator of Work That
CountsTM, comprising a group of digital
marketing and communications Agencies, is pleased
to announce
its interim results for the six months ended 30 June
2024 ("the period" or "H1").
FINANCIAL HIGHLIGHTS
|
·
|
Resilient revenue performance across
most segments combined with diligent cost control delivered a
robust headline operating profit outcome for the period, despite an
unpredictable trading environment.
|
|
|
Six months ended 30 June
|
2024
|
2023
Continuing
operations**
|
%
|
2023
All
operations
|
%
|
|
|
Revenue
|
£42.2m
|
£41.4m
|
+2%
|
£41.8m
|
+1%
|
|
|
Headline Operating Profit*
|
£2.6m
|
£2.5m
|
+4%
|
£2.0m
|
+33%
|
|
|
Headline Profit Before
Tax*
|
£1.3m
|
£1.6m
|
-19%
|
£1.0m
|
+27%
|
|
|
Reported Profit Before
Tax
|
£0.0m
|
£0.6m
|
|
£0.1m
|
-30%
|
|
|
Headline Earnings Per Share
(pence)*
|
1.0
|
1.3
|
-23%
|
0.8
|
+22%
|
|
|
Headline Diluted Earnings Per Share *
(pence)
|
1.0
|
1.3
|
-23%
|
0.8
|
+22%
|
|
·
|
Net bank debt of £19.6m with £4.3m
HMRC Time To Pay creditor repaid in full during the period (31
December 2023 equivalent: £19.7m being £15.4m net bank debt + £4.3m
HMRC Time To Pay creditor).
|
|
·
|
As a result of this, total debt***
reduced to £24.0m as at 30 June 2024 (£25.1m as at 31 December
2023).
|
|
·
|
Successful refinancing of the Group's debt facilities with
long standing lender NatWest.
|
*Headline results are calculated
before start-up costs, acquisition adjustments, goodwill and
business impairment, bank refinancing, equity placing and
restructuring costs.
** Continuing activities in 2023
exclude the results of the Group's 80% interest in Pathfindr which
was sold in December 2023.
*** Total debt includes net bank debt
and outstanding acquisitions obligations and any outstanding HMRC
Time To Pay creditors.
BUSINESS HIGHLIGHTS
|
·
|
H1 performance is in line with Board
expectations, driven by organic revenue growth across the Group,
particularly MISSION's
Property and Sports & Entertainment Agencies.
|
|
·
|
Notable new Client wins during the
period include Mastercard, BNP Paribas, FatFace, GoHenry, Okta,
Popeyes, England Cricket Board, Guinness Homes, Fonterra and
McCarthy Stone.
|
|
·
|
MISSION's global sports Agency,
Influence Sports & Media, part of Mongoose, will open an office
in Saudi Arabia to support significant new Client wins in the
country. Mongoose has also been appointed as Global Sponsorship
sales Agency for Formula E and brokered Southampton F.C.'s
sponsorship with P&O Cruises.
|
|
·
|
Bray Leino Events has won the
contract for full operational service provision of the UK Pavilion
at the upcoming Osaka World Trade Expo (Expo 2025) in Japan,
comprising over 130 individual events, retail and
hospitality.
|
|
·
|
MISSION continues to make good
progress against the Value Restoration Plan with the vast majority
of the approximately £5m of annualised projected profit
improvements already in place for the year. Planned cost savings
and operating efficiency improvements are in total H2 weighted, but
tracking to expectations for full delivery by the end of
2024.
|
|
·
|
The Group continues to progress
discussions on options to deleverage its
balance sheet. A further update will be provided when
appropriate.
|
OUTLOOK
|
·
|
Post period-end developments
underpin confidence for full year outlook and include significant
additional Client wins comprising new, multinational US Technology
Clients, alongside household brands including Pizza Hut, Danske
Bank, Bensons for Beds and Bugatti.
|
|
·
|
As in previous years, the Group
expects the majority of its profit to be generated in the second
half of the year.
|
|
·
|
The Board remains cautiously
optimistic that the Group is on track to deliver against full year
revenue and headline operating profit expectations but is mindful
of the continued unpredictable trading environment.
|
David Morgan, MISSION's Non-Executive Chair, commented:
"Despite an unpredictable trading
environment in the first half of the year, the Group has remained
firmly focussed on the delivery of profit targets, deleveraging and
strengthening the balance sheet.
"The
creativity of our Agencies demonstrates our commitment to
delivering work that underpins real business growth and
in July we were pleased to update the
market, reporting positive ongoing momentum across the Group as we
entered the second half of the year. These latest strategic new
Client wins announced today reflect the growing strength of
MISSION's capabilities and
underpin our confidence in the long-term outlook. I'm particularly
pleased to announce our new office in Saudi Arabia to support our
new Clients in the country, which also positions us well for wider
opportunities in the region.
"We look forward to announcing
further new Client wins in due course."
ENQUIRIES:
Cat Davis - Group Marketing
Director
E: cdavis@themission.co.uk
The MISSION Group
PLC
Via Houston
Simon Bridges / Andrew Potts / Harry
Rees
E: missiongroup@cgf.com
Canaccord Genuity Limited (Nominated
Adviser and
Broker)
020 7523 8000
Kate Hoare / Alexander Clelland /
India Spencer
E: mission@houston.co.uk
Houston
PR
0204 529 0549
NOTES TO EDITORS
The MISSION Group Plc. is The Brand
Performance Group.
Delivering measurable,
results-driven campaigns as the preferred creative partner for real
business growth. We offer top-tier agencies, strategic specialisms
and global reach delivering outstanding performance for brands. We
call it Work That Counts™ www.themission.co.uk
The information contained within
this announcement is deemed to constitute inside information as
stipulated under the Market Abuse (Amendment) (EU Exit) Regulations
2019. Upon the publication of this announcement, this inside
information is now considered to be in the public domain.
OVERVIEW
MISSION has continued to make
good progress in the first half of 2024 against our key priorities.
Whilst the wider trading environment has remained unpredictable,
with ongoing macro-economic uncertainty and the early timing of the
UK general election continuing to manifest general client caution
throughout the period, our entrepreneurial Agencies have remained
focussed on our plans to drive value creation for all our
stakeholders.
Across the Group we have continued
to leverage the investments made in previous years to enhance and
evolve MISSION's service
offering and capabilities. This underpinned success on several
significant new business mandates in the first half of the year and
has generated encouraging new business momentum as we enter
H2.
The Group is encouraged to report
like for like revenue growth of 2 percent to £42.2m (2023: £41.4m)
for the period. Headline operating profit of £2.6m (2023: £2.0m
reported, £2.5m from continuing operations), was driven by revenue
growth across the majority of Group segments, particularly the
Property and Sports & Entertainment segments, as well as
profitable recovery in the Technology and Mobility segment from
last year's slowdown in the US market.
Headline reported profit before tax of £1.3m (2023: £1.0m reported,
£1.6m from continuing operations) reflects the impact of both
higher debt levels when compared to last year (increase in interest
of £0.2m) and also the full period impact of notional interest
charges against new property leases (£0.1m).
Value Restoration
Plan
Significant progress has been made
on the Group's Value Restoration Plan ("VRP") announced on 17
January, 2024. The cost reduction elements of the Value Restoration
Plan ("VRP") of £3.6m have been successfully implemented and the
benefits are being realised across the year. These included £2m
from headcount reductions as reported at the full year 2023
results, supplemented by further savings of £1.6m of central
expenditure savings including staff costs, property and recruitment
charges. The planned operating efficiency elements of the VRP of
£1.2m are also tracking to expectations for delivery by the end of
2024. The H1 2024 cost savings benefit from the VRP has been
c£1.6m, with the balance expected to benefit H2.
On 28 March 2024, the Group was
pleased to announce the successful refinancing of its previous debt
facility with long-standing lender NatWest. The new NatWest debt
facility is a £20m Revolving Credit Facility, and a £9m overdraft
facility. On 1 July 2024, following continued disciplined cash
management, the Group and NatWest agreed to reduce the overdraft
facility limit to £7m. Alongside the refinancing the Group also
continues to progress discussions regarding options
to deleverage its balance sheet. A further update will be
provided when appropriate.
Net bank debt stood at £19.6m as of
30 June 2024 (30 June 2023: £14.9m) versus £15.4m on 31 December
2023. The increase in net debt reflects the settlement of the HMRC
Time To Pay debt of £4.3m as at 31 December 2023 which was fully
repaid in the period. It is important to note that given the second
half weighting of the Group's profits and a number of one-off
expenses incurred in the first half year relating to refinancing
and defending the unsolicited approach from Brave Bison, the Group
would expect to see a reduction in the net debt position in the
second half of the financial year.
Total debt has been reduced by £1.1m
over the period to stand at £24.0m on 30 June 2024 (30 June 2023:
£20.0m) in comparison with £25.1m on 31 December 2023. This
reduction has been achieved alongside the settlement of
£1.1m of outstanding acquisition
obligations from prior years in the first half of the year of which
£0.6m were in cash) and the settlement of the £4.3m Time To Pay
creditor.
Performance and
progress
MISSION has reported like for
like revenue growth of 2%, guided by strong performances across
most Group segments, particularly in our Property
and Sports & Entertainment segments. As
previously mentioned, the Group has benefited from the continued
recovery of the Technology and Mobility segment, with profits
improving by £0.4m on H1 2023. This partially offset
the lacklustre performance of the Group's Consumer & Lifestyle
and Business & Corporate segments for the period, where
profitability was impacted by the restrictions on Government
spending in May and June as a result of the earlier than expected
timing of the UK general election. Our Health & Wellness
segment experienced a slower pick up in trading than forecast and
there was the timing impact of a contract in our Sports &
Entertainment segment that was secured after the end of
H1.
Additional Client wins secured
across the business throughout the period include Okta, Popeyes,
FatFace, GoHenry, Mastercard, BNP Paribas, England Cricket Board,
Guinness Homes, Fonterra and McCarthy Stone.
Since the period end, the Group has
secured a number of notable new business wins with the robust new
business pipeline for H2 demonstrating encouraging momentum despite
broader macro-economic uncertainty and a challenging trading
environment.
Alongside a series of new
high-quality Client wins with major US Technology firms, the Group
has been awarded a prestigious and significant Events assignment
for the UK Pavilion at EXPO2025 in Osaka, Japan. This is a full
operational services contract that will commence in 2024 and
comprises of over 130 individual events, retail and hospitality
that will be led by Bray Leino Events.
MISSION's global sports Agency,
Influence Sports & Media, part of Mongoose, has also won a
significant new Client in Saudi Arabia and will open an office in
Jeddah later this year to support the client and to leverage its
expertise to capitalise on opportunities across the region.
Mongoose has also been appointed as Global Sponsorship sales Agency
for Formula E and brokered Southampton F.C.'s shirt sponsorship
with P&O Cruises.
Rejection of unsolicited,
conditional proposal from Brave Bison plc
On 29 April 2024, the Board of
MISSION received an
unsolicited conditional proposal regarding a possible offer by
Brave Bison for the Group. This proposal, together with a
subsequent revised proposal, was unanimously rejected following
consultation with its financial adviser and certain shareholders.
Brave Bison confirmed on 9 June 2024 that it did not intend to make
an offer.
MISSION believes this was an
opportunistic approach that significantly undervalued the Group and
its prospects, as well as being dilutive to its shareholders and
resulted in exceptional costs which ultimately further impacted
profitability and debt reduction. As previously announced, the
Board of MISSION is open to
proposals that it believes would enhance shareholder value and
deliver benefits to MISSION's shareholders. The Board of
MISSION did not consider
the proposals to meet those criteria. The Board of MISSION remains confident in the
Group's standalone prospects.
MISSION's focus remains firmly
on deleveraging, restoring balance sheet strength and delivering
performance that achieves our profit targets, demonstrates the
creativity of our Agencies, and shows our commitment to delivering
work that underpins real business growth.
FINANCIAL PERFORMANCE
Billings and
Revenue
Turnover ("billings") for the six
months ended 30 June 2024 increased by 2% to £94.4m (2023: £92.9m)
while operating income ("revenue") increased by 1% to £42.2m (2023:
£41.8m).
Profit, Margins and Earnings
Per Share
The increased revenues demonstrate
good progress. Firm, but future-focussed cost control alongside a
continued commitment to sharing infrastructure through the
MISSION Made and Shared
Services initiatives, has enabled the Group to deliver an operating
profit that is ahead of the prior year comparison.
Headline operating profits increased
by 4% to £2.6m (H1 2023: £2.0m reported, £2.5m from continuing
operations). Headline operating margins increased to 6.2% (H1 2023:
4.7%, 6.1% from continuing operations). Continuing activities in
2023 exclude the results of the Group's 80% interest in Pathfindr
which was sold in December 2023.
Financing costs increased to £1.5m
(H1 2023: £1.0m), reflecting both a higher average level of debt in
the period and also the full period impact of interest on new
property leases. Financing costs for H2 are expected to remain at
similar levels to H1 reflecting the net debt position and the
effect of the accounting treatment of new property leases. Headline
profit before tax increased to £1.3m (H1 2023: £1.0m).
Adjustments to headline profits
before tax in the first half of 2024, at £1.2m, were higher than
the prior year comparable period (H1 2023: £0.9m). After these
adjustments, reported profit before tax was £0.0m (H1 2023:
£0.1m).
The Group estimates an effective tax
rate on headline profits before tax of 25% (H1 2023: 24%),
resulting in an increase in headline earnings to £0.9m for the six
months (H1 2023: £0.8m) and reported profit after tax of £0.0m (H1
2023: £0.0m). Fully diluted EPS decreased to a loss of 0.1 pence
(H1 2023: 0.0 pence), while headline diluted EPS increased to 1.0
pence (H1 2023: 0.8 pence).
Balance Sheet and Cash
Flow
The key balance sheet ratio measured
and monitored by the Board is the ratio of debt to headline EBITDA
("leverage ratio"). The Group closed the half year at 2.7x (30 June
2023: 1.7x, 31 December 2023: 2.0x). Whilst higher than prior
comparators, the ratio offers significant headroom against the
facility limit of 3.5x for the period.
The Board also monitors the ratio of
total debt, including remaining acquisition obligations, to EBITDA
and this ratio has increased to 3.2x (30 June 2023: 2.2x, 31
December 2023: 2.7x). Again, there is significant headroom against
the facility limit of 4.0x for the period.
The headroom afforded by the
covenant tests for the period ensures that the Group will avoid the
highest level of interest rates for the period.
The Group spent £nil on acquisitions
during the period (2023 £0.3m) and a total of £1.1m of acquisition
obligations from prior years were settled in the first half of the
year of which £0.6m were in cash (30 June 2023: £0.4m all of which
were cash). After adjustments to estimated future contingent
consideration payments the total estimated acquisition liability at
30 June 2024 totalled £4.4m (30 June 2023: £5.1m). Of this £0.2m is
due for payment in the second half of 2024.
Capital expenditures have been
strictly controlled and as such spend of £0.3m is reduced on H1
2023 (£2.0m).
Trade and other receivables
increased marginally against last year to £54.3m (30 June 2023:
£53.7m), while trade and other payables decreased slightly to
£51.2m (30 June 2023: £52.2m). These movements, alongside an
increase in stock of £0.5m and increased lease payables of £0.7m
have driven the increase in net working capital in comparison to
June 2023.
Consequently, the Group's net bank
debt on 30 June 2024 of £19.6m has increased against the positions
on both 30 June 2023 (£14.9m) and 31 December 2023 (£15.4m).
However, the increase in net debt since the start
of the new financial year ultimately reflects the settlement of the
HMRC Time To Pay creditor which stood at £4.3m as at 31 December
2023 and has now been fully repaid.
As a result, total debt (being net
bank debt plus outstanding acquisition obligations) closed at
£24.0m (30 June 2023: £20.0m), down from £25.1m on 31 December 2023.
Dividend
The Board has made the decision to
pause dividend payments alongside other major capital allocations
until balance sheet strength is restored and net debt is reduced
(2023: 0 pence per share). The Board will keep this decision under
regular review.
OUTLOOK
MISSION has a significant
second-half weighting with respect to profitability. Post
period-end developments underpin confidence for full year outlook
and include significant additional Client wins. Revenue growth is
anticipated across all the Group's sectors with monthly run rates
from the Technology and Mobility segment being monitored carefully
and continuing to improve. The Board remains cautiously optimistic
that the Group is on track to deliver against full year revenue and
headline operating profit expectations but is mindful of the
continued unpredictable trading environment.
Notes to the unaudited Interim
Report for the six months ended 30 June 2024
1. Accounting
Policies
Basis of preparation
The condensed consolidated interim
financial statements for the six months ended 30 June 2024 have
been prepared in accordance with the IAS 34 "Interim Financial
Reporting" and the Group's accounting policies.
The Group's accounting policies are
in accordance with International Financial Reporting Standards as
adopted by the United Kingdom and are set out in the Group's Annual
Report and Accounts 2023 on pages 68-72. These are consistent with
the accounting policies which the Group expects to adopt in its
2024 Annual Report. The Group has not early-adopted any Standard,
Interpretation or Amendment that has been issued but is not yet
effective.
The information relating to the six
months ended 30 June 2024 and 30 June 2023 is unaudited and does
not constitute statutory financial statements as defined in Section
434 of the Companies Act 2006. The comparative figures for the year
ended 31 December 2023 have been extracted from the Group's Annual
Report and Accounts 2023, on which the auditors gave an unqualified
opinion and did not include a statement under section 498 (2) or
(3) of the Companies Act 2006. The Group Annual Report and Accounts
for the year ended 31 December 2023 have been filed with the
Registrar of Companies.
Going concern
The Directors have considered the
financial projections and cash flow projections for the Group
alongside the availability of renewed committed bank facilities of
£20m (expiring 5 April 2026), an overdraft facility of £7m (which
will reduce to £3m in the event there is a deleveraging event -
further information in Note 31 to the 2023 year end financial
statements), and the headroom afforded against the covenant tests
for the coming 12 months. The Directors have also considered and
understood the mitigating actions that would be required in the
event of reduced revenue profiles and any consequential
difficulties with covenant compliance. Such potential mitigating
actions would include a review of headcount, particularly in the
areas impacted by any downturn. Furthermore the Group have
considered actions that can be taken should increased headroom be
required. This would most likely be the disposal of non-core or
high value agency assets. Against these scenarios, the Group has
adequate headroom against the facilities described above. 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.
Accounting estimates and judgements
The Group makes estimates and
judgements concerning the future and the resulting estimates may,
by definition, vary from the actual results. The Directors
considered the critical accounting estimates and judgements used in
the interim financial statements and concluded that the main areas
of judgement are:
· Potential impairment of goodwill;
· Contingent payments in respect of acquisitions;
· Revenue recognition policies in respect of contracts which
straddle the period end;
· Valuation of intangible assets on acquisitions; and
· Intangible development costs.
2. Segmental Information
Business segmentation
For management purposes the Board
monitors the performance of its individual agencies and groups them
into service segments based on the sectors in which they operate.
Each reportable segment therefore includes a number of agencies
with similar characteristics.
The Board assesses the performance
of each segment by looking at turnover, operating income and
headline operating profit. The headline operating profit shown
below is after the reallocation to the agencies of certain head
office costs relating to the Shared Services function. These costs
include a significant portion of the total operating costs which
are now centrally managed.
The Board does not review the assets
and liabilities of the Group on a segmental basis. A segmental
breakdown of assets and liabilities is therefore not
disclosed.
|
|
Business &
Corporate
|
Consumer &
Lifestyle
|
Health &
Wellness
|
Property
|
Sports &
Entertainment
|
Technology &
Mobility
|
MISSION Advantage &
Central
|
Investments
|
Total
|
|
Six
months to 30 June 2024
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
Turnover
|
35,569
|
12,784
|
1,948
|
16,015
|
4,023
|
16,629
|
7,424
|
-
|
94,392
|
|
Operating income
|
10,219
|
9,117
|
1,659
|
7,477
|
3,327
|
7,339
|
3,094
|
-
|
42,232
|
|
Headline operating profit
|
995
|
653
|
(2)
|
995
|
371
|
640
|
(1,028)
|
-
|
2,624
|
|
|
Business &
Corporate
|
Consumer &
Lifestyle
|
Health &
Wellness
|
Property
|
Sports &
Entertainment
|
Technology &
Mobility
|
MISSION Advantage &
Central
|
Investments
|
Total
|
|
Six
months to 30 June 2023
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
Turnover
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
34,725
|
12,874
|
2,165
|
14,973
|
4,032
|
17,494
|
6,217
|
-
|
92,480
|
|
Discontinued operations
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
428
|
428
|
|
Total Group
|
34,725
|
12,874
|
2,165
|
14,973
|
4,032
|
17,494
|
6,217
|
428
|
92,908
|
|
Operating income
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
10,127
|
9,180
|
2,032
|
6,821
|
3,000
|
7,849
|
2,439
|
-
|
41,448
|
|
Discontinued operations
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
350
|
350
|
|
Total Group
|
10,127
|
9,180
|
2,032
|
6,821
|
3,000
|
7,849
|
2,439
|
350
|
41,798
|
|
Headline operating profit / (loss)
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
1,350
|
868
|
216
|
585
|
357
|
273
|
(1,126)
|
-
|
2,523
|
|
Discontinued operations
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(557)
|
(557)
|
|
Total Group
|
1,350
|
868
|
216
|
585
|
357
|
273
|
(1,126)
|
(557)
|
1,966
|
|
|
Business &
Corporate
|
Consumer &
Lifestyle
|
Health &
Wellness
|
Property
|
Sports &
Entertainment
|
Technology &
Mobility
|
MISSION Advantage &
Central
|
Investments
|
Total
|
|
Year to 31 December 2023
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
Turnover
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
67,215
|
26,128
|
4,438
|
30,983
|
10,373
|
40,876
|
15,437
|
-
|
195,450
|
|
Discontinued operations
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
438
|
438
|
|
Total Group
|
67,215
|
26,128
|
4,438
|
30,983
|
10,373
|
40,876
|
15,437
|
438
|
195,888
|
|
Operating income
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
20,785
|
18,195
|
3,949
|
15,038
|
6,675
|
15,084
|
6,594
|
-
|
86,320
|
|
Discontinued operations
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
230
|
230
|
|
Total Group
|
20,785
|
18,195
|
3,949
|
15,038
|
6,675
|
15,084
|
6,594
|
230
|
86,550
|
|
Headline operating profit / (loss)
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
2,831
|
1,322
|
712
|
2,303
|
1,368
|
165
|
(2,221)
|
-
|
6,480
|
|
Discontinued operations
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,438)
|
(1,438)
|
|
Total Group
|
2,831
|
1,322
|
712
|
2,303
|
1,368
|
165
|
(2,221)
|
(1,438)
|
5,042
|
Geographical segmentation
The following table provides an
analysis of the Group's operating income by region of
activity:
|
|
Six months
to
|
Six months
to
|
Year
ended
|
|
|
30 June
2024
|
30
June
2023
|
31
December
2023
|
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
UK
|
37,905
|
35,828
|
75,278
|
|
USA
|
3,083
|
4,203
|
7,688
|
|
Asia
|
1,130
|
1,643
|
3,340
|
|
Rest of Europe
|
114
|
124
|
244
|
|
|
42,232
|
41,798
|
86,550
|
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.
|
|
Six months
to
30 June
2024
Unaudited
£'000
|
Six
months to
30
June
2023
Unaudited
£'000
|
Year
ended
31
December
2023
Audited
£'000
|
|
|
|
PBT
|
PAT
|
PBT
|
PAT
|
PBT
|
PAT
|
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
|
From
continuing operations
|
|
|
|
|
|
Headline profit
|
1,264
|
948
|
1,556
|
1,185
|
4,158
|
2,953
|
|
Acquisition-related items (Note
4)
|
(626)
|
(492)
|
(418)
|
(341)
|
(1,652)
|
(1,453)
|
|
Bank refinancing and equity raise
costs
|
(301)
|
(226)
|
-
|
-
|
(475)
|
(356)
|
|
Restructuring costs
|
(203)
|
(203)
|
-
|
-
|
(715)
|
(536)
|
|
Start-up costs
|
(86)
|
(65)
|
(512)
|
(384)
|
(1,818)
|
(1,363)
|
|
Goodwill, business and intangible
impairment
|
-
|
-
|
-
|
-
|
(10,409)
|
(10,381)
|
|
Reported profit / (loss)
|
48
|
(38)
|
626
|
460
|
(10,911)
|
(11,136)
|
|
|
|
|
|
|
|
|
|
| |
|
From
discontinued operations
|
|
|
|
|
|
Headline profit
|
-
|
-
|
(557)
|
(426)
|
(1,438)
|
(1,098)
|
|
Profit on sale of
Pathfindr
|
-
|
-
|
-
|
-
|
308
|
355
|
|
Reported loss
|
-
|
-
|
(557)
|
(426)
|
(1,130)
|
(743)
|
|
|
|
|
|
|
|
|
|
From
continuing and discontinued operations
|
|
|
|
|
|
|
|
Headline profit
|
1,264
|
948
|
999
|
759
|
2,720
|
1,855
|
|
Acquisition-related items (Note
4)
|
(626)
|
(492)
|
(418)
|
(341)
|
(1,652)
|
(1,453)
|
|
Bank refinancing and equity raise
costs
|
(301)
|
(226)
|
-
|
-
|
(475)
|
(356)
|
|
Restructuring costs
|
(203)
|
(203)
|
-
|
-
|
(715)
|
(536)
|
|
Start-up costs
|
(86)
|
(65)
|
(512)
|
(384)
|
(1,818)
|
(1,363)
|
|
Goodwill, business and intangible
impairment
|
-
|
-
|
-
|
-
|
(10,409)
|
(10,381)
|
|
Profit on sale of
Pathfindr
|
-
|
-
|
-
|
-
|
308
|
355
|
|
Reported profit / (loss)
|
48
|
(38)
|
69
|
34
|
(12,041)
|
(11,879)
|
|
|
|
|
|
|
|
|
|
| |
Bank refinancing and equity raise
costs in 2023 consisted of various professional fees incurred in
connection with the bank refinancing, and other related costs
associated with this process. Costs in 2024 consist of further such
expenses, accelerated bank debt arrangement fees (see note 5) and
fees from various consulting and legal firms advising and assisting
in the Board's consideration of an equity issue.
Restructuring costs in 2023
consisted of costs of closing down the April Six Singapore office,
and redundancy, PILON and TUPE related costs associated with
restructuring and right sizing of various business units in the
last quarter of the year following the downgraded full year profit
expectation announced to the market. Restructuring costs in 2024
consist of costs of closing down the MISSION China
office.
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 2023 related to
Livity, the launch of Turbine, an integrated Growth Media agency,
specialising in owned, earned and paid media for consumer facing
brands, the trading losses of BLS China launched in 2023, as well
as costs associated with the early-stage foundation of performance
marketing and data science capabilities. Start-up costs in 2024
consist of the launch of the US office of the Influence
business.
In 2023, goodwill, business and
intangible impairment costs related to the impairment of Story UK
Ltd, Story Agency Ltd, Krow Agency Ltd and Krow Communications Ltd
goodwill and the write off of the Mission Brand Bonding Index
intangible asset.
4. Acquisition Adjustments
|
|
|
Six months
to
30 June
2024
Unaudited
|
Six months
to
30
June
2023
Unaudited
|
Year
ended
31
December 2023
Audited
|
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
Amortisation of intangible
assets
recognised on acquisitions
|
(382)
|
(259)
|
(942)
|
|
Movement in fair value of contingent
consideration
|
(48)
|
(22)
|
(434)
|
|
Acquisition transaction costs
expensed
|
(196)
|
(137)
|
(276)
|
|
|
|
(626)
|
(418)
|
(1,652)
|
|
|
|
|
| |
The movement in fair value of
contingent consideration relates to a 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, including reverse acquisitions.
5. Net Finance Costs
|
|
Six months
to
|
Six months
to
|
Year
ended
|
|
|
30 June
2024
|
30
June
2023
|
31
December 2023
|
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Net interest on bank loans,
overdrafts and deposits
|
(988)
|
(742)
|
(1,795)
|
|
Amortisation of bank debt arrangement
fees
|
(21)
|
(23)
|
(45)
|
|
Interest expense on leases
liabilities
|
(425)
|
(277)
|
(632)
|
|
Headline net finance costs
|
(1,434)
|
(1,042)
|
(2,472)
|
|
|
|
|
|
|
Accelerated amortisation of debt
arrangement fees
|
(60)
|
-
|
-
|
|
Net
finance costs
|
(1,494)
|
(1,042)
|
(2,472)
|
The increase in net interest on bank
loans, overdrafts and deposits in the period is driven primarily by
an increase in the interest rate payable on the bank debt following
general increases in interest rates by the BOE and higher margins
payable on the new revolving credit facility entered into on 27
March 2024.
The increase in interest expense on
lease liabilities in the period is the result of the general
increase in interest rates and increase in Right of Use Assets and
Lease Liabilities following the entering into of new leases, most
notably the new London office.
Following the reduction in full year
profit expectations announced to the market last year, the Group
agreed a new revolving credit facility on 27 March 2024 and
incurred additional bank debt arrangement fees that are being
amortised over the period of the new facility. In addition, the
remaining unamortised bank debt arrangement fees relating to the
replaced facility were fully written off during the period. These
additional bank debt arrangement fees, over and above what would
have been amortised had the Group not refinanced, amounting to
£60,000, have been classified as a headline
adjustment.
6. Taxation
The taxation charge for the period
ended 30 June 2024 has been based on an estimated effective tax
rate on headline profit on ordinary activities of 25% (30 June
2023: 24%).
7. 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".
|
|
Six months
to
|
Six months
to
|
Year
to
|
|
|
30 June
2024
|
30
June
2023
|
31
December
2023
|
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
|
|
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Earnings
|
|
|
|
|
|
|
|
|
|
Reported profit for the period
|
|
|
|
|
|
|
|
|
|
From
continuing operations
|
|
|
|
|
Attributable to:
|
|
|
|
|
Equity holders of the
parent
|
(88)
|
429
|
(11,283)
|
|
Non-controlling interests
|
50
|
31
|
147
|
|
|
(38)
|
460
|
(11,136)
|
|
|
|
|
|
|
From
discontinued operations
|
|
|
|
|
Attributable to:
|
|
|
|
|
Equity holders of the
parent
|
-
|
(426)
|
(743)
|
|
Non-controlling interests
|
-
|
-
|
-
|
|
|
-
|
(426)
|
(743)
|
|
|
|
|
|
|
From
continuing and discontinued operations
|
|
|
|
|
Attributable to:
|
|
|
|
|
Equity holders of the
parent
|
(88)
|
3
|
(12,026)
|
|
Non-controlling interests
|
50
|
31
|
147
|
|
|
(38)
|
34
|
(11,879)
|
|
Headline earnings (Note 3)
|
|
|
|
|
|
|
|
|
|
From
continuing operations
|
|
|
|
|
Attributable to:
|
|
|
|
|
Equity holders of the
parent
|
898
|
1,154
|
2,806
|
|
Non-controlling interests
|
50
|
31
|
147
|
|
|
948
|
1,185
|
2,953
|
|
|
|
|
|
|
From
discontinued operations
|
|
|
|
|
Attributable to:
|
|
|
|
|
Equity holders of the
parent
|
-
|
(426)
|
(1,098)
|
|
Non-controlling interests
|
-
|
-
|
-
|
|
|
-
|
(426)
|
(1,098)
|
|
|
|
|
|
|
From
continuing and discontinued operations
|
|
|
|
|
Attributable to:
|
|
|
|
|
Equity holders of the
parent
|
898
|
728
|
1,708
|
|
Non-controlling interests
|
50
|
31
|
147
|
|
|
948
|
759
|
1,855
|
|
Number of shares
|
|
|
|
|
Weighted average number of Ordinary
shares for the purpose of basic earnings per share
|
90,357,314
|
89,531,712
|
89,549,143
|
|
Dilutive effect of
securities:
|
|
|
|
|
Employee share options
|
248,391
|
370,183
|
341,144
|
|
Weighted average number of Ordinary
shares for the purpose of diluted earnings per share
|
90,605,705
|
89,901,895
|
89,890,287
|
|
Reported basis:
|
|
|
|
|
|
|
|
|
|
From
continuing operations
|
|
|
|
|
Basic earnings per share
(pence)
|
(0.1)
|
0.5
|
(12.6)
|
|
Diluted earnings per share
(pence)
|
(0.1)
|
0.5
|
(12.6)
|
|
From
discontinued operations
|
|
|
|
|
Basic earnings per share
(pence)
|
-
|
(0.5)
|
(0.8)
|
|
Diluted earnings per share
(pence)
|
-
|
(0.5)
|
(0.8)
|
|
From
continuing and discontinued operations
|
|
|
|
|
Basic earnings per share
(pence)
|
(0.1)
|
0.0
|
(13.4)
|
|
Diluted earnings per share
(pence)
|
(0.1)
|
0.0
|
(13.4)
|
|
Headline basis:
|
|
|
|
|
|
|
|
|
|
From
continuing operations
|
|
|
|
|
Basic earnings per share
(pence)
|
1.0
|
1.3
|
3.1
|
|
Diluted earnings per share
(pence)
|
1.0
|
1.3
|
3.1
|
|
From
discontinued operations
|
|
|
|
|
Basic earnings per share
(pence)
|
-
|
(0.5)
|
(1.2)
|
|
Diluted earnings per share
(pence)
|
-
|
(0.5)
|
(1.2)
|
|
From
continuing and discontinued operations
|
|
|
|
|
Basic earnings per share
(pence)
|
1.0
|
0.8
|
1.9
|
|
Diluted earnings per share
(pence)
|
1.0
|
0.8
|
1.9
|
Basic earnings per share includes
shares to be issued subject only to time as if they had been issued
at the beginning of the period.
A reconciliation of the profit after
tax on a reported basis and the headline basis is given in Note
3.
8. Intangible Assets
|
|
30
June
2024
|
30
June
2023
|
31
December 2023
|
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Goodwill
|
87,975
|
98,123
|
87,857
|
|
Other intangible assets
|
2,248
|
3,581
|
2,771
|
|
|
90,223
|
101,704
|
90,628
|
Goodwill
|
|
Six months to 30
June
2024
|
Six months
to 30 June
2023
|
Year ended
31 December 2023
|
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Cost
|
|
|
|
|
At 1
January
|
104,426
|
102,486
|
102,486
|
|
Recognised on acquisition of
subsidiary
|
-
|
1,910
|
1,920
|
|
Adjustment to consideration / net
assets acquired
|
118
|
-
|
20
|
|
At
30 June / 31 December
|
104,544
|
104,396
|
104,426
|
|
Impairment adjustment
|
|
|
|
|
At 1
January
|
16,569
|
6,273
|
6,273
|
|
Impairment during the
period
|
-
|
-
|
10,296
|
|
At
30 June / 31 December
|
16,569
|
6,273
|
16,569
|
|
|
|
|
|
|
Net
book value
|
87,975
|
98,123
|
87,857
|
The increase in goodwill during the
period relates to an adjustment to the net assets acquired of Mezzo
Labs Ltd.
In accordance with the Group's
accounting policies, an annual impairment test is applied to
the carrying value of goodwill, unless there is an
indication that one of the cash generating units has become
impaired during the year, in which case an impairment test is
applied to the relevant asset. The next
impairment test will be undertaken at 31 December 2024. In 2023, as
a result of the performance and restructuring of the operations of
Story Agency Ltd, Story UK Ltd, Krow Agency Ltd and Krow
Communications Ltd, and having calculated the net present value of
projected cash flows derived from these operations, goodwill
relating to these CGUs was impaired by £10,296,000.
Other Intangible Assets
|
|
|
Six months
to
|
Six months
to
|
Year
ended
|
|
|
|
30 June
2024
|
30
June
2023
|
31
December 2023
|
|
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
Cost
|
|
|
|
|
At 1
January
|
11,797
|
11,575
|
11,575
|
|
|
Additions
|
8
|
522
|
629
|
|
|
Transfer from property, plant and
equipment
|
14
|
-
|
-
|
|
|
Disposals
|
(10)
|
-
|
(407)
|
|
|
At
30 June / 31 December
|
11,809
|
12,097
|
11,797
|
|
|
|
|
|
|
|
|
Amortisation and impairment
|
|
|
|
|
|
At 1
January
|
9,026
|
8,047
|
8,047
|
|
|
Charge for the period
|
532
|
469
|
1,295
|
|
|
Transfer from property, plant and
equipment
|
13
|
-
|
-
|
|
|
Disposals
|
(10)
|
-
|
(316)
|
|
|
At
30 June / 31 December
|
9,561
|
8,516
|
9,026
|
|
|
|
|
|
|
|
|
Net
book value
|
2,248
|
3,581
|
2,771
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Other intangible assets consist of
Client relationships, trade names, and software and product
development costs.
9. Right of Use Assets and Lease
Liabilities
The Group leases several assets
including property, office equipment, computer equipment and motor
vehicles. Under IFRS 16, the Group recognises Right of Use Assets
and Lease Liabilities in relation to these leases. Assets and
liabilities reduce over the period of the lease and increase when a
lease is renewed, or a new lease entered into.
|
|
Property
|
Office equipment, computer
equipment and motor vehicles
|
Total
|
|
|
|
|
|
|
|
£'000
|
£'000
|
£'000
|
|
Cost
|
|
|
|
|
At 1
January 2023
|
15,168
|
2,399
|
17,567
|
|
Additions
|
10,481
|
227
|
10,708
|
|
Disposals
|
(790)
|
(243)
|
(1,033)
|
|
At
30 June 2023
|
24,859
|
2,383
|
27,242
|
|
Additions
|
-
|
25
|
25
|
|
Disposals
|
(1,975)
|
-
|
(1,975)
|
|
At
31 December 2023
|
22,884
|
2,408
|
25,292
|
|
Additions
|
66
|
303
|
369
|
|
Disposals
|
(1,365)
|
(769)
|
(2,134)
|
|
At
30 June 2024
|
21,585
|
1,942
|
23,527
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
At 1
January 2023
|
6,164
|
1,867
|
8,031
|
|
Charge for the period
|
1,039
|
172
|
1,211
|
|
Disposals
|
(790)
|
(243)
|
(1,033)
|
|
At
30 June 2023
|
6,413
|
1,796
|
8,209
|
|
Charge for the period
|
1,220
|
181
|
1,401
|
|
Disposals
|
(750)
|
-
|
(750)
|
|
At
31 December 2023
|
6,883
|
1,977
|
8,860
|
|
Charge for the period
|
1,116
|
151
|
1,267
|
|
Disposals
|
(1,365)
|
(769)
|
(2,134)
|
|
At
30 June 2024
|
6,634
|
1,359
|
7,993
|
|
|
|
|
|
|
Net
book value at 30 June 2023
|
18,446
|
587
|
19,033
|
|
Net
book value at 31 December 2023
|
16,001
|
431
|
16,432
|
|
Net
book value at 30 June 2024
|
14,951
|
583
|
15,534
|
Obligations under leases are due as
follows:
|
|
30
June
2024
|
30
June
2023
|
31
December 2023
|
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
In one year or less (shown in trade
and other payables)
|
2,375
|
1,632
|
1,983
|
|
In more than one year
|
15,047
|
18,226
|
15,768
|
|
|
17,422
|
19,858
|
17,751
|
10. Bank Loans and Net Bank Debt
|
|
30 June
2024
|
30
June
2023
|
31
December 2023
|
|
|
Unaudited
|
Unaudited
|
Audited
|
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
|
|
Bank loan outstanding
|
20,039
|
20,060
|
20,049
|
|
Adjustment to amortised
cost
|
(185)
|
(77)
|
(55)
|
|
Carrying value of loan
outstanding
|
19,854
|
19,983
|
19,994
|
|
Less: Cash and short term
deposits
|
(226)
|
(5,096)
|
(4,632)
|
|
Net bank debt
|
19,628
|
14,887
|
15,362
|
|
|
|
|
|
|
The borrowings are repayable as
follows:
|
|
|
|
|
Less than one year
|
21
|
23
|
21
|
|
In one to two years
|
20,018
|
21
|
20,023
|
|
In two to three years
|
-
|
20,016
|
5
|
|
|
20,039
|
20,060
|
20,049
|
|
Adjustment to amortised
cost
|
(185)
|
(77)
|
(55)
|
|
|
19,854
|
19,983
|
19,994
|
|
Less: Amount due for settlement
within 12
months (shown under current
liabilities)
|
(21)
|
(23)
|
(21)
|
|
Amount due for settlement after 12
months
|
19,833
|
19,960
|
19,973
|
At 30 June 2024, the Group's
committed bank facilities comprised a revolving credit facility of
£20.0m, expiring on 5 April 2026. Interest
on the facility is based on SONIA (sterling overnight index
average) plus a margin of between 2.25% and 4.90% depending on the
Group's debt leverage ratio, payable in cash on loan rollover
dates.
In addition to its committed
facilities, the Group had available an overdraft facility of up to
£9.0m until 30 June 2024, reducing to £7.0m from 1 July 2024, with
interest payable by reference to National Westminster Bank plc Base
Rate plus 2.25%.
Included in the above is £39,000 of
bank loans owing by Populate Social Ltd, one of the companies
acquired in 2022. These borrowings are repayable over a two year
period.
11. Acquisitions Obligations
The terms of an acquisition may
provide that the value of the purchase consideration, which may be
payable in cash or shares or other securities 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 payments that may be due is as follows:
|
|
Cash
£'000
|
Shares
£'000
|
Total
£'000
|
|
30
June 2024
Less than one year
|
3,473
|
35
|
3,508
|
|
Between one and two years
|
890
|
-
|
890
|
|
|
4,363
|
35
|
4,398
|
A reconciliation of acquisition
obligations during the period is as follows:
|
|
Cash
£'000
|
Shares
£'000
|
Total
£'000
|
|
|
|
|
|
|
At 31 December 2023
|
5,465
|
-
|
5,465
|
|
Adjustments to estimates of
obligations
|
(488)
|
536
|
48
|
|
Obligations settled in the
period
|
(614)
|
(501)
|
(1,115)
|
|
At
30 June 2024
|
4,363
|
35
|
4,398
|
|
|
|
|
| |
During the period certain acquisition
obligations previously expected to be settled in cash were actually
settled in shares.
12.
Post balance sheet events
There have been no material post
balance sheet events.