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RNS Number : 3718U Mission Group PLC (The) 28 March 2023
THE MISSION GROUP plc
("MISSION", "the Group")
FINAL RESULTS FOR THE YEAR ENDED 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
· REVENUE (OPERATING INCOME) £79.8m £72.5m +£7.3m
· HEADLINE OPERATING PROFIT* £8.7m £8.0m +£0.7m
· HEADLINE PROFIT MARGINS 10.9% 11.1% -0.2%
· HEADLINE PROFIT BEFORE TAX* £7.8m £7.5m +£0.3m
· REPORTED PROFIT BEFORE TAX £0.7m £6.8m -£6.1m
· HEADLINE EARNINGS PER SHARE* 6.8p 6.6p +0.2p
· HEADLINE DILUTED EARNINGS PER SHARE* 6.7p 6.5p +0.2p
· TOTAL DIVIDEND 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 020 7408 4090
Shore Capital (Nomad and Broker)
Kate Hoare / Alexander Clelland / India Spencer 0204 529 0549
HOUSTON (Financial PR and Investor Relations)
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 (http://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 £8.7m (2021: £8.0m). A focus on cost
management in response to significant cost and wage inflationary pressures
resulted in an improvement in headline PBT to £7.8m (2021: £7.5m).
Operating profit of £1.6m was significantly down (2021: £7.3m), 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. £100m 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
£79.8m now broadly recovered to pre pandemic levels (2019: £81.0m). 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:
During 2022
· The acquisition of Livity, a youth focussed creative consultancy in February,
for a consideration of £0.1m 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.
· The acquisition of Influence Sports & Media ("Influence") in December for
an initial consideration of £1.5m. 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 £8.7m (2021: £8.0m). A review of non-core operations
primarily in relation to Asia and Pathfindr resulted in one-off charges of
£5.7m (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
£0.7m (2021: £6.8m).
Billings and revenue
Turnover (billings) was 19% higher than the previous year, at £182.7m (2021:
£153.3m), 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 £79.8m (2021: £72.5m), with
growth delivered across all reported business segments.
Of this £7.3m growth in revenue, £4.5m (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 £2.8m 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 £7.3m in 2021 to £1.6m in 2022, a decrease of £5.7m.
Reported profit before tax decreased by £6.0m, from £6.7m to £0.7m whilst
reported profit after tax reduced by £5.3m from £5.3m to £0.0m.
Adjustments to reported profits, detailed further in Note 3, totalled £7.0m
(2021: £0.7m) 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 £2.4m charge. The second relates
to the impairment of Pathfindr, resulting in a £2.9m charge.
In addition to this the Group invested £0.8 in new ventures (2021: £0.4m)
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 £0.6m compared to £0.2m profit in 2021. The
2022 charge consists primarily of the amortisation of intangibles recognised
on acquisitions of £0.5m (2021: £0.4m) 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 £0.8m reduction in movement of fair value
consideration (2022: £0.3m).
The Board engaged in a significant restructuring and resizing in 2021. The
resultant one-off costs associated with this restructure last year totalled
£0.5m.
Adjusting for these items delivers a headline operating profit of £8.7m
showing good, 8% growth on 2021 (£8.0m).
The headline operating expenditure base increased in the year by 10% (from
£64.5m in 2021 to £71.2m 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 £1.0m increased significantly on 2021 (£0.7m) 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 £7.8m, a reasonable
improvement on 2021 at £7.5m.
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 £0.7m on a reported profit before tax of £0.7m, 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 £0.0m (2021: £5.3m 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:
£36.0m, 2021: £38.7m).
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 £0.8m 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 £1.9m.
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 £2.0m 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 £4.1m (2021:
£3.3m), to be satisfied by a mix of shares and cash. All of this is dependent
on post-acquisition earn-out profits. £1.4m is expected to fall due for
payment in cash within 12 months and a further £0.1m 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 £7.7m (2021 £10.3m). 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 £3.6m in comparison to
2021.
At the end of the year the Group's net bank debt stood at £11.4m (2021:
£10.3m). 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 £11.4m. This represents an
increase in net debt of £1.1m on the 2021 year-end net bank debt of £10.3m.
Headline operating profit of £8.7m (2021: £8.0m) converted into £6.8m
(2021: £1.7m) of 'free cash flow' (defined as net cash inflow from operating
activities less tangible and intangible capital expenditure).
Bank loans increased by £1.0m and this, coupled with the free cash flow
provided funding for new acquisitions amounting to £1.9m (2021: £0.7m), the
settlement of contingent obligations relating to the profits generated by
previous acquisitions totalling £0.8m (2021: £6.7m) and dividends of £2.2m
(2021: £2.1m). The working capital movement is defined as the aggregate
movement in receivables, stock and payables and was reported as an inflow of
£1.1m (2021: £4.8m 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 £20m (expiring 5 April 2025), the option to increase the
facility by £5m, an overdraft facility of £3.0m, 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 £'000 £'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 2022 31 December 2021
£'000 £'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 £'000 £'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 reserve (610) -
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 2022 31 December 2021
£'000 £'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 73 (48)
awards settled in cash
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 attributable to equity holders of parent
Share- based incentive Foreign currency translation reserve
reserve £'000 Non-controlling interest
Share Share premium Own shares £'000 Retained earnings Total equity
capital £'000 £'000
£'000 £'000 £'000 £'000
£'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
(http://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 Buying Events Public Relations Total
& Digital
Year to 31 December 2022 £'000 £'000 £'000 £'000 £'000
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 Buying Events Public Relations Total
& Digital
Year to 31 December 2021 £'000 £'000 £'000 £'000 £'000
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 31 Year to 31
December December
2022 2021
£'000 £'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
£'000 £'000 £'000 £'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 2022 31 December 2021
£'000 £'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 2022 31 December 2021
£'000 £'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 2022 31 December 2021
£'000 £'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 2022 31 December 2021
£'000 £'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 2022 31 December 2021
£'000 £'000
Profit before taxation 743 6,751
Profit on ordinary activities before tax at the standard rate of corporation 141 1,283
tax of 19.00% (2021: 19.00%)
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 2022 31 December 2021
£'000 £'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 1,437 1,379
pence) per share
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
£'000 £'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 2021
2022
£'000 £'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 £2.0m 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
£'000 £'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 2022 31 December 2021
£'000 £'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 £228,000 (2021: £225,000). 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 2022 31 December 2021
£'000 £'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 £6.5m (2021: £7.4m) that is past due but not
impaired, of which £1.0m (2021: £1.1m) is greater than 3 months past due.
Accrued income has increased by £1,722,000 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 2022 31 December 2021
£'000 £'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 2022 31 December 2021
£'000 £'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 £75,000 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 £20m, expiring on 5 April 2024, with an option
to increase the facility by £5m 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 £3.0m 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 2022 31 December 2021
£'000 £'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
£'000 £'000 £'000 £'000 £'000 £'000
1,371 - 1,371 692 - 692
Less than one year
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
£'000 £'000 £'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 £3,337,000, 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 £128,000 and
were expensed.
Maximum contingent consideration of £6,500,000 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 £1,780,000 to date.
The fair value of the net identifiable assets acquired was £73,000 resulting
in goodwill and previously unrecognised other intangible assets of
£3,264,000. 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 adjustments Fair
value value
£'000 £'000 £'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 £439,000, operating income of £329,000 and
headline operating profit of £222,000 to the results of the Group in 2022.
16.3 Other Acquisitions
A total of £508,000 was invested in other acquisitions during the year,
comprising initial cash consideration of £336,000 and deferred contingent
consideration of £172,000.
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 £185.2m, £80.8m
and £9.0m had the Group consolidated the results of the acquisitions made
during the year, from the beginning of the year.
17. Share Capital
31 December 2021 31 December 2021
£'000 £'000
Allotted and called up:
91,015,897 Ordinary shares of 10p each (2021: 91,015,897 Ordinary shares of 9,102 9,102
10p each)
Share-based incentives
The Group has the following share-based incentives in issue:
At start of year Granted/ Waived/ At end of year
acquired lapsed Exercised
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 £'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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