Final Results for the Year Ended 31 December 2020

RNS Number : 3614V
Mission Group PLC (The)
14 April 2021
 

 

 

 

THE MISSION GROUP plc

("MISSION", "the Group")

 

FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2020

 

14 April 2021

 

The MISSION Group plc (AIM: TMG), the alternative group for ambitious brands , today announces its final results for the year ended 31 December 2020.

 

 

FINANCIAL HIGHLIGHTS

 


Year ended 31 December

2020

H1 2020

2019

·

Revenue

£61.5m

£29.1m

£81.0m

·

Operating Profit*/(Loss)

£1.9m

£(1.8)m

£10.8m

·

Profit Margins

3.1%

(6.2)%

13.3%

·

Headline Profit/(Loss) Before Tax*

£1.2m

£(2.2)m

£10.2m

·

Reported (Loss)/Profit Before Tax

(£2.1m)

£(2.3)m

£8.3m

·

Earnings Per Share*

1.0p

(1.92)p

9.47p

·

Diluted Earnings Per Share*

1.0p

(1.92)p

9.00p

 

·

Cash conservation measures resulted in year-end net bank debt of £1.2m, an historic low (2019: £4.9M).

 

* Headline results are calculated before acquisition adjustments, exceptional items, losses from start-up activities and investment write-offs. A reconciliation of headline to reported results is set out in Note 3.

 

BUSINESS HIGHLIGHTS

·

Trading began to recover in H2, reversing H1 losses felt at the height of the pandemic and delivering a headline PBT performance ahead of market expectations.

·

Client retention remained strong, with well over 50% of revenues generated from Clients of five years or more.

·

Diversity of Client portfolio ensured Group was at forefront of activity in more resilient sectors, with strong performances in healthcare and technology.

·

Continued to win new Clients and assignments, including the launch of chemical group INEOS's hand sanitiser and expansion of the remit with Amazon Web Services.

·

Significant steps taken to refine and strengthen the MISSION Advantage, enabling Agencies to call upon specialist expertise as needed.

·

Launch of MISSION MADE, a new centralised 24/7 Digital Production and Innovation studio to support Agencies across the Group.

·

Completed acquisition of Innovationbubble, the psychological insights and behavioural solutions consultancy, and welcomed brand activation consultancy, ALIVE, into the Group.

·

Development of inaugural Environmental, Social and Governance (ESG) manifesto, 'Making Positive Change.'

 

OUTLOOK

·

Trading in the first quarter of FY21 is on track with Group's expectations.

·

Encouraged by the robust and growing pipeline of new business opportunities.

·

Focussed on leveraging infrastructure by adding high margin, high engagement capabilities in data, analytics, and performance media, underpinning a 14% margin target by 2022

·

Removal of uncertainty around Brexit negotiations opens up further opportunities across international markets.

 

 

Commenting on the results, David Morgan, Chairman of The MISSION Group plc, said:  "In the face of adversity, the MISSION Agencies and their people responded brilliantly to the challenges set through 2020. To achieve headline profitability whilst at the same time reducing debt was quite an achievement and the Group's ability to take swift, proactive, astute and at times difficult decisions, all whilst maintaining a seamless service to our Clients, is impressive. I therefore offer my sincere thanks to the people working across MISSION. Their continued dedication and hard work throughout such a time means that MISSION is now emerging as an even stronger business than before, better positioned to make progress against its long-term plans and strategy."

 

ENDS

CONTACT

 

THE MISSION GROUP plc

James Clifton, Group Chief Executive

Peter Fitzwilliam, Chief Financial Officer

Tel: 020 7462 1415

SHORE CAPITAL (Nomad and Broker)

Mark Percy / James Thomas / Sarah Mather

Tel: 020 7408 4080

 

HOUSTON (Financial PR and Investor Relations)

Kate Hoare / Laura Stewart

Tel: 0204 529 0549

 

NOTES TO EDITORS  

MISSION   is a collective of Creative and MarTech Agencies led by entrepreneurs who encourage an independent spirit.   Employing 1,000 people across 27 locations and 3 continents, the Group successfully combines its diverse expertise to bring about commercially effective solutions for some of the world's biggest Clients. 

www.themission.co.uk

 

 

CHAIRMAN'S STATEMENT

 

EMERGING STRONGER

 

If it is true that we are only as good as what adversity throws at us, then it is fair to say that the MISSION Agencies and their people responded brilliantly to the challenges set through 2020.

 

To achieve profitability* whilst at the same time reducing debt was quite an achievement and I was impressed by the speed of response, the operational cost reductions made and the ability to maintain a seamless service to our Clients albeit where for most of the year the majority of our people were working remotely.

 

I therefore offer my sincere thanks to our people working across MISSION, for their continued dedication and hard work throughout such a time. All credit to everyone concerned.

 

In the face of this adversity, their commitment and entrepreneurial approach has seen the Group not only continue to deliver outstanding work for Clients day-in day-out, but also to make further strategic progress against its growth plans. This has been fundamental to leveraging the strong recovery in the Group's markets in the second half of the year, reversing first half losses and enabling it to deliver a robust and profitable* FY20 performance.

 

The Group has taken proactive, astute and at times difficult decisions, which has meant that MISSION is now emerging as an even stronger business than before, better positioned to make progress against its long-term plans and strategy.

 

The Group has further evolved the changes made in the prior year to reposition the business. Under James Clifton's strong leadership there has been further refinement of the Group structure, putting MISSION at the centre as a collaborator and supporter of its Agencies. This has been supported by both organic investment and new acquisitions, strengthening the expertise and capabilities that MISSION provides to its global network of Clients.

 

Board

 

All good things come to an end and Peter Fitzwilliam has decided to stand down from the business as Chief Financial Officer after 11 years. I have nothing but admiration for the financial stewardship, expertise and input that he has brought to MISSION since we restructured the business in 2010. Peter has been instrumental to MISSION's success during his tenure and it has been my privilege to work with him. On behalf of the Board I would like to thank him for his outstanding contribution, he leaves with our warmest of wishes.

 

I am delighted to report that Peter will remain available to the business in an advisory capacity, and I look forward to his support and advice as we go forward.

 

From April 2021, Peter will be replaced as Group Chief Financial Officer by Giles Lee, who has worked closely with Peter, James and myself as MISSION's Group Commercial Director for some years. Giles' undoubted financial capability coupled with his deep understanding of the sector, our Agencies and his experience centralising our back office functions, made him the unrivalled choice to succeed Peter.

 

Barry Cook has also informed the Board of his intention to retire to pursue his existing charitable and non-executive roles. Barry co-founded krow in 2005 which was acquired by MISSION in 2018 and was appointed to the Board in June 2019. We wish him well in his future endeavours.

 

Dividend

 

As outlined in our Trading Update on 20 January 2021, the improved trading performance and strong cash position underpinned the Board's decision to reinstate the deferred 2019 final dividend of 1.53 pence per share which was committed to in our 2019 Annual Report (the period before COVID-19). It was paid on 1 March 2021 to shareholders on the share register as at close of business on 12 February 2021.

 

Whilst the Board believes it would not be appropriate to pay any dividend in respect of FY20, we remain committed to our previously stated long term progressive dividend policy and will continue to monitor the situation as this year progresses in line with the performance of the Group.

 

Outlook

 

The Board is cautiously optimistic for 2021. Whilst the economic impact from COVID-19 has run deep and its legacy is yet to be fully understood, MISSION's performance so far this year has been encouraging.

 

We are confident that thanks to the hard work and dedication of all the Group's employees, MISSION remains well positioned to make further progress against its strategic priorities in 2021 and beyond.

 

David Morgan

Chairman

 

* Reference to profitability is in relation to headline profit. A reconciliation of headline profit to the Group's reported loss for the year is set out in Note 3.

 

CHIEF EXECUTIVE'S REVIEW

 

2020 was clearly a year like no other and I would like to congratulate our team on this robust performance in the face of incredibly challenging market conditions. Their extraordinary efforts have ensured that MISSION has emerged from the pandemic an even stronger and fitter business than we were before, focussed on the significant opportunities that are now presenting themselves across our markets.

 

COVID-19 has accelerated certain structural shifts across our industry which we are well positioned to capitalise on. Our dynamic and independent 'Agency First' culture and methodology has ensured our Agencies have remained agile throughout this difficult year, at the forefront of these changing dynamics and continually reinforcing our position as a trusted business partner to our Clients that we pride ourselves on.

 

Survive, Strive, Thrive

 

We entered the pandemic in a position of strength following a strong trading performance in FY19, our ninth consecutive year of growth. Through our phased COVID-19 management strategy of 'survive, strive, thrive', we were quick to take decisive and effective measures in the first half of the year to mitigate the impact of the crisis and conserve cash. These actions provided us with strong building blocks from which to bounce back as trading began to recover in the second half of the financial year, reversing the first half losses felt at the economic height of the pandemic and delivering a profitable headline PBT performance, ahead of market expectations.

 

Our primary focus throughout this difficult year has been the health and wellbeing of our people and ensuring business continuity for our Clients. Whilst some of our Agencies were inevitably significantly impacted due to their respective industry focus, the diversity of our Client portfolio ensured that we were at the forefront of activity in more resilient sectors such as healthcare and technology. 

 

Despite the incredibly challenging trading environment, the entrepreneurial and creative culture that exists throughout MISSION has seen us make further progress against our strategic priorities. We continue to place increasing focus on the additive value that MISSION can bring to our Agencies and over the course of the year we have taken significant steps to refine and strengthen the MISSION Advantage, enabling our Agencies to call upon specialist expertise as needed, to deliver a flexible multi-discipline service for our Clients .

 

Strategic investments in the MISSION Advantage have underpinned this momentum. In July we were delighted to announce the acquisition of the international psychological insights and behavioural solutions consultancy, Innovationbubble, which provides expert research and advice to a growing portfolio of Clients. This ranges from blue-chip companies including Asda, Aviva, HSBC and a number of leading pharmaceutical businesses, to high profile brands such as Diesel and SpaceNK, helping them better understand what drives the behaviour of their customers and ultimately how to improve marketing activity.  Although modest in financial terms, we view the acquisition as a significant strategic advance. We have been delighted at how quickly the Innovationbubble team have integrated themselves into the Group, already working closely with a number of the Agencies, and we have been particularly pleased by the positive responses from our Clients, Group-wide, to this valuable extended capability.

 

In October we launched MISSION MADE, our new centralised 24/7 Digital Production and Innovation studio. MISSION MADE initially supported four Agencies across the Group but a full roll-out is now underway and expected to be completed in the next 12 months. Two hubs have been created in Norwich and Ho Chi Minh City, providing access to a range of digital production services including web and mobile development, motion graphics, digital design and technical management.

 

Finally, in October we also welcomed brand activation consultancy, ALIVE, into the Group. This small but international team, based in Singapore, offer expert advice and results-driven activation campaigns for global brands across multiple media channels and marketing platforms, expanding the range of services we can offer our Agencies even further.

 

Performance Overview

 

Operating income ("revenue") fell by 24% to £61.5m (2019: £81.0m), with the impact of COVID-19 being felt initially in our Asian operations and then most notably in our property and events businesses. After an exceptionally challenging Q2, we saw a sequential recovery as the year progressed. Margins (headline operating profit as a percentage of revenue) recovered strongly in H2 to 11.5%, reflecting careful management of costs and benefit of Government support, resulting in an H2 headline operating profit of £3.7m and £1.9m for the year (2019: £10.8m).

 

In times of adversity, opportunities inevitably present themselves and, as previously highlighted, the diversity of our portfolio has meant that we have been well placed to grasp these opportunities. Our specialist technology and mobility Agency, April Six, capitalised on the enormous growth in the use of online platforms and delivered an excellent performance, with key highlights including the successful expansion of the Agency's scope of work with Amazon Web Services. The Group also launched the chemical group INEOS' hand sanitiser range in response to the impact of the pandemic. In addition, Pathfindr, our asset tracking business, demonstrated its ability to innovate, adapting its core technology to create the Safe Distancing Assistant, a device to warn if personnel within businesses come within two metres of each other.

 

Making A Positive Change

 

Despite the distractions of 2020, I am delighted that the year has seen us cement our commitment to Making Positive Change through the development of our inaugural Environmental, Social and Governance (ESG) manifesto. This manifesto embodies our commitment to ensuring that the impact MISSION makes on the world should always be positive and that our interaction with our people, Clients, communities and the wider environment makes a difference.

 

This manifesto has been developed through our work with advisory partners Creative Access and Green Element, and outlines an ambitious but deliverable and measurable strategy which is supported by our overall growth plans. We look forward to reporting on our progress in the coming years as we deliver this plan.

 

A key part of our manifesto is focused on introducing and developing talent in the industry. We work in many local communities and in several cases are a key employer in the towns where we have offices. In these areas we will continue to open our doors to local schools, colleges and universities to encourage emerging talent. As part of this we have introduced an Apprenticeship programme that has seen us take on 28 individuals, with a target to more than double this number by 2023.

 

Outlook

 

Trading in the first quarter of FY21 is on track with our expectations. Whilst the lockdown restrictions implemented in January 2021 have inevitably impacted certain markets and sectors more than others, our performance remains in line with our plans.

 

The Government's roadmap to exiting lockdown is providing much needed clarity for UK businesses. We are encouraged by the robust and growing pipeline of new business opportunities that are presenting themselves. It is particularly pleasing to see that a growing proportion of this pipeline includes collaboration between two or more Agencies from across the Group. 

 

Whilst our global operations have not been affected by Brexit, the removal of much of the uncertainty around negotiations opens up even more opportunities for us across our international markets. We see significant further opportunity for MISSION here through our Client-led strategy and look forward to building on our market leading sector expertise in new territories.

 

We also plan to capitalise on the undoubted acquisition, consolidation and collaboration opportunities that will arise over the next 12 months. We aim to leverage our compelling infrastructure by adding high margin, high engagement capabilities in data, analytics and performance media, underpinning a 14% headline operating profit margin target by 2022. Finally, following its successful launch, we will also look to build out our central eCommerce capability via MISSION Made.

 

James Clifton

Group Chief Executive

 

CHIEF FINANCIAL OFFICER'S REVIEW

 

Trading Performance

 

Overview

 

While the first half of 2020 was severely impacted by the onset of the COVID-19 pandemic, the Group recovered strongly in H2, demonstrating its resilience and the effectiveness of the decisions it took in H1 to mitigate the impact of the pandemic. The first half of the year saw revenues decline dramatically, by as much as 80% in our particularly affected Agencies in the property, events and cinema space. Our business priorities at this time were to protect the health and wellbeing of our staff and to embrace a working from home approach that enabled us to provide seamless continuity of Client service. We are proud that, thanks to the Group's continued hard work and dedication, our Client retention remained excellent during this exceptionally challenging period.

 

Our financial priorities at the economic height of the pandemic were to mitigate the impact of the crisis, preserve cash and, with the continued support of our bankers, NatWest, to agree relaxations of covenants and any additional liquidity that might be required in a downside scenario. The strong relationship we have developed with NatWest during more than a decade of working closely together enabled this support to be put in place swiftly. In the event, no additional liquidity was required due to the Group's cash management activities.

 

The actions we took in the first half of the year ensured that we were well placed to bounce back in the second half, as trading began to recover. Although revenues in H2 were still well below those of 2019, we still achieved operating profit margins of 11.5% and a headline profit before tax of £3.4m in the second half, a creditable performance. Our cash conservation actions also proved highly effective, and the year ended with the lowest net debt figure in the Group's history.

 

Billings and revenue

 

Turnover (billings) was 29% lower than the previous year, at £121.9m (2019: £171.1m), 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. The exception to this is Pathfindr, the Group's embryonic asset tracking business, where turnover is a more relevant measure to gauge progress over time and against relevant competitors.

 

Taken as a whole, the Group's operating income (referred to as "revenue") for the year reduced by 24% to £61.5m (2019: £81.0m) but the impact of the pandemic was felt most severely in Q2.

 

There was also a wide range of variation across our different Agencies. Whilst the most significantly impacted sectors were property (ThinkBDW), events (Bray Leino Events) and cinema-related sales promotions (Mongoose), the diversity of our Client portfolio ensured that we have been at the forefront of activity in more resilient sectors such as healthcare and technology.  April Six, our specialist technology and mobility Agency, performed particularly well during the period, growing Amazon Web Services (AWS) into an important Group Client.

 

While much of Pathfindr's Client base was subject to the same lockdown restrictions as the rest of the world, it again demonstrated its ability to adapt. It sold 24,000 units of its Safe Distancing Assistant innovation during 2020, helping Pathfindr to increase turnover by over 60% to £1.5m (2019: £0.9m).

 

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-first culture which ensures Clients feel they are receiving a boutique level of Client service but yet supported by the resources of a multi-national group. Our Client retention statistics remained strong during this exceptionally challenging year, with well over 50% of our revenues generated from Clients who have been with us for 5 years or more.

 

Profit and margins

 

The Directors measure and report the Group's performance primarily by reference to headline results, in order to avoid the distortions created by one-off events and non-cash accounting adjustments relating to acquisitions. Headline results are calculated before acquisition adjustments, exceptional items, losses from start-up activities and investment write-offs (as set out in Note 3).

 

As with revenue, headline operating profit was very clearly divided into two halves. In H1, profits were hit hard by the suddenness of the drop in revenue. As an "Agency first" group, each Agency CEO was empowered to take cost reduction actions appropriate to their own circumstances but with the benefit of central coordination and support. Each Board member immediately and voluntarily reduced their own salary by 20% and this approach was widely adopted across the Group. Additionally, many staff in those Agencies most impacted by COVID-19 agreed to be furloughed in order to preserve jobs; at its peak, one third of the Group's workforce was furloughed. Despite these mitigating actions, the revenue decline was so severe that the Group reported an H1 loss of £1.8m. Regrettably, due to the sustained reduction in levels of revenue in some businesses, right-sizing in H2 resulted in 10% of our workforce being made redundant. We also took the decision to exit two of our London offices in order to reduce our cost base further. The costs of these one-off COVID-related restructuring events have been excluded from headline results.

 

Due to these actions, and despite H2 revenues being 22% lower than in 2019, our margin (headline operating profit as a percentage of revenue) recovered strongly in H2, to 11.5%, resulting in an H2 headline operating profit of £3.7m and £1.9m for the year (2019: £10.8m).

 

The Government's Coronavirus Job Retention Scheme was of significant benefit in 2020, without which many more jobs would have been lost as we reacted to sharply reduced revenues. Instead, the Scheme allowed continued employment until revenues started to improve and we were able to bring staff back off furlough. During the year, the Group benefitted from £3.0m of furlough receipts, which have been netted off gross employment costs within headline operating expenses. Introduced at the end of March, the Group received assistance of £1.6m in Q2, after which furlough claims tailed off.

 

After £0.1m of profits from joint ventures (2019: £0.1m) and financing costs of £0.8m (2019: £0.7m), headline profit before tax was £1.2m (2019: £10.2m). Considering the very dramatic impact of COVID-19 on the Group, we were pleased to deliver this profitable result, which was ahead of market expectations.

 

Adjustments to reported profits, detailed further in Note 3, totalled £3.2m (2019: £1.9m), comprising acquisition-related items of £1.9m (2019: £1.3m), reflecting the strong performance of krow during 2020, COVID-related restructuring costs of £1.0m (2019: nil) and losses from start-up activities of £0.3m (2019: £0.4m). After these adjustments, the reported loss before tax was £2.1m (2019: profit of £8.3m).

 

Taxation

 

COVID-19 has had a significant effect on the Group's headline tax rate. Whilst most territories experienced reduced revenues and profits, the exception was the US (predominantly April Six's West Coast activities), where tax rates are much higher than in the UK. This factor, coupled with losses in Asia and Germany which were unable to be utilised elsewhere, resulted in an unusually high headline tax rate of 42.6% (2019: 20.5%). The headline tax rate is expected to reduce to more normal levels during 2021.

 

On a reported basis, because amortisation of acquisition-related intangibles and adjustments to contingent consideration are not deductible for tax purposes, this has a significant effect on the Group's reported tax rate, resulting in a charge of £0.2m on reported losses before tax of £2.1m (2019: tax rate of 22.5% on reported profits before tax of £8.3m). The tax rate is expected to be consistently higher than the statutory rate (of 19.0%, unchanged from 2019) but the sizeable reduction in profits as a result of COVID and the relative size of non-deductible acquisition-related items results in a highly distorted outcome in 2020 which is not expected to be repeated in future years.

 

Earnings Per Share

 

Headline EPS was 1.0 pence (2019: 9.5 pence) and, on a diluted basis, was also 1.0 pence (2019: 9.0 pence).

 

After tax, the reported loss for the year was £2.2m (2019: profit of £6.4m) and EPS was a loss of 2.3 pence (2019: profit of 7.5 pence). On a diluted basis, EPS was also a loss of 2.3 pence (2019: profit of 7.1 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.

 

In view of the modest profit reported in 2020 and the fact that the Group accessed The Government's Coronavirus Job Retention Scheme, the Board did not pay an interim dividend and does not propose a final dividend. However, in view of the very significantly better than expected net debt position at 31 December 2020, the Board has, subsequent to the year-end, reinstated and paid the 2019 final dividend that was deferred at the economic height of the pandemic. We remain committed to our previously stated long term progressive dividend policy and will continue to monitor the situation as 2021 progresses.

 

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 started the year in a strong financial position, with a bank debt leverage ratio of less than x0.5 and committed bank facilities of 15m.

 

As a precautionary measure, these facilities were increased to 20m in Q1 and, as the impact of the pandemic started to be felt, a number of scenarios were modelled for the possible severity and duration of COVID-19. Sharing these scenarios with our bankers, NatWest, we secured their support for relaxations of covenants in both 2020 and 2021 and additional liquidity that might be required under our downside scenario.

 

At the same time, we implemented a series of cash-conservation measures. As well as the salary reduction and furlough actions mentioned earlier, all non-essential capital expenditure was put on hold, we took advantage of the Government's Time To Pay scheme, we reached agreement with vendors of acquired businesses for delayed payment terms, and we deferred the 2019 final dividend, due for payment in July 2020.

 

These decisive actions helped to reduce the Group's net bank debt position at the half year to 0.9m (2019: 5.1m) and the continuing focus on cash preservation in H2 resulted in year-end net bank debt of £1.2m, an historic low (2019: £4.9m).

 

At the height of uncertainty in Q2, the Group deferred roughly £6m of VAT, PAYE and National Insurance taxes. All deferred PAYE and National Insurance was repaid in Q3 and all deferred VAT has been repaid in Q1 2021.

 

Cash payments of £0.1m were settled for acquisitions totalling £0.6m made in the year and £2.2m of acquisition obligations from prior years were settled, of which 2.0m was in cash (2019: 3.3m, of which 2.7m was settled in cash). Amounts settled in the year were both paid later in the year and lower than the £3.4m expected at the end of 2019 as a result of reaching agreement with vendors to defer payments due to COVID-19 uncertainties. After increases of £1.3m in estimated future contingent consideration payments, the estimated acquisition liability at 31 December 2020 totalled 8.5m (2019: £8.9m). The large majority of this relates to post-acquisition earn-out profits for periods which have now ended and, as a consequence, £7.5m is expected to be settled in cash within the coming 12 months. Together with the short term nature of the Group's bank debt, due to its maturity in September 2021, the Group reported net current liabilities of £8.9m at the end of 2020. However, with new long term bank facilities agreed since year-end (referred to further below and in Note 19) and with acquisition liabilities due to be settled during 2021, the Group expects to report net current assets at the end of 2021.

 

COVID-19 had a significant impact on the profits of many of the Group's Agencies in 2020 but none has been mortally wounded. The Board expects levels of trading to return to pre-pandemic levels during H2 2021 and, accordingly, has concluded that any impairment in the value of goodwill at 31 December 2020 from the pandemic is only temporary. Details of the Board's annual assessment of the value of goodwill are set out in Note 11.

 

At the end of the year, the Group's leverage ratio of net bank debt to headline EBITDA (on an adjusted basis, pre-IFRS 16), was x0.6 (2019: x0.4) but, due to the depressed levels of EBITDA, its ratio of total debt, including remaining acquisition obligations, to EBITDA had increased to x4.3 (2019: x1.1). In the first half of 2021, while profits recover from the impact of COVID-19, these leverage ratios are expected to exceed the Board's KPI targets but are expected to return to more normal levels in H2.

 

Going Concern

 

Peter Fitzwilliam

Chief Financial Officer

 

Consolidated Income Statement

For the year ended 31 December 2020



 

Year to

31 December

2020

 

 

Year to

31 December

2019

 


Note

£'000

£'000

 

 




TURNOVER

2

121,927

171,091

Cost of sales


(60,409)

(90,119)

OPERATING INCOME

2

61,518

80,972

Headline operating expenses


(59,585)

(70,219)

 

HEADLINE OPERATING PROFIT


 

1,933

 

10,753





Acquisition adjustments

3

(1,891)

(1,320)

Exceptional restructuring costs

3

(1,004)

-

Start-up costs

3

(335)

(431)

Loss on investments

3

-

(109)

OPERATING (LOSS) / PROFIT


(1,297)

8,893

Share of results of associates and joint ventures


 

56

 

69

(LOSS) / PROFIT BEFORE INTEREST AND TAXATION


(1,241)

8,962

Net finance costs

5

(821)

(668)

(LOSS) / PROFIT BEFORE TAXATION

6

(2,062)

8,294

Taxation

7

(186)

(1,868)

(LOSS) / PROFIT FOR THE YEAR


(2,248)

6,426





 

Attributable to:




 

Equity holders of the parent


(2,033)

6,314

Non-controlling interests


(215)

112



(2,248)

6,426









Basic earnings per share (pence)

9

(2.3)

7.5

Diluted earnings per share (pence)

9

(2.3)

7.1

Headline basic earnings per share (pence)

9

1.0

9.5

Headline diluted earnings per share (pence)

9

1.0

9.0


Consolidated Statement of Comprehensive Income

For the year ended 31 December 2020

 



 Year to

31 December 2020

 Year to

31 December 2019



£'000

£'000

 

 




(LOSS) / PROFIT FOR THE YEAR


(2,248)

 

6,426

 

Other comprehensive income - items that may be reclassified separately to profit or loss:








Exchange differences on translation of foreign operations


 

(173)

 

(50)

TOTAL COMPREHENSIVE (LOSS) / INCOME FOR THE YEAR


 

(2,421)

 

 

6,376

 





Attributable to:




Equity holders of the parent


(2,187)

6,285

Non-controlling interests


(234)

91



(2,421)

6,376

 

Consolidated Balance Sheet

As at 31 December 2020



As at

31 December

2020 

As at

31 December

2019 






Note

£'000

£'000

FIXED ASSETS




Intangible assets

10

96,186

95,859

Property, plant and equipment


2,394

3,225

Right of use assets


10,729

8,135

Investments, associates and joint ventures

11

317

177



109,626

107,396

CURRENT ASSETS




Stock


1,194

1,091

Trade and other receivables

12

33,314

40,998

Cash and short term deposits


3,806

5,028



38,314

47,117

CURRENT LIABILITIES




Trade and other payables

13

(34,138)

(36,015)

Corporation tax payable


(359)

(742)

Bank loans

14

(4,969)

-

Acquisition obligations

16.1

(7,765)

(3,424)



(47,231)

(40,181)

NET CURRENT (LIABILITIES) / ASSETS 


(8,917)

6,936





TOTAL ASSETS LESS CURRENT LIABILITIES


100,709

114,332

NON CURRENT LIABILITIES




Bank loans

14

-

(9,927)

Lease liabilities

15

(9,414)

(6,229)

Acquisition obligations

16.1

(720)

(5,458)

Deferred tax liabilities


(346)

(417)



(10,480)

(22,031)

NET ASSETS


90,229

92,301





CAPITAL AND RESERVES




Called up share capital

17

9,102

8,530

Share premium account


45,928

43,015

Own shares

18

(591)

(659)

Share-based incentive reserve


642

700

Foreign currency translation reserve


(66)

88

Retained earnings


34,842

40,021

EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT


 

89,857

 

91,695

Non-controlling interests


372

606

TOTAL EQUITY


90,229

92,301

 

Consolidated Cash Flow Statement

For the year ended 31 December 2020

 



Year to

31 December 2020

Year to

31 December 2019







£'000

£'000





Operating (loss) / profit


(1,297)

8,893

Depreciation and amortisation charges


4,836

4,832

Movements in the fair value of contingent consideration


1,276

433

Profit / (loss) on disposal of property, plant and equipment


35

(49)

Non cash charge for share options, growth shares and shares awarded


183

215

Decrease / (increase) in receivables


7,684

(1,271)

Increase in stock


(103)

(241)

Decrease in payables


(1,175)

(1,106)

OPERATING CASH FLOWS


11,439

11,706

Net finance costs paid


(763)

(626)

Tax paid


(640)

(1,805)

Net cash inflow from operating activities


10,036

9,275

INVESTING ACTIVITIES




Proceeds on disposal of property, plant and equipment


3

151

Purchase of property, plant and equipment


(421)

(1,472)

Investment in software development


(696)

(848)

Acquisitions of or investments in businesses


(184)

(108)

Payment relating to acquisitions made in prior years


(2,018)

(2,731)

Net cash outflow from investing activities


(3,316)

(5,008)

FINANCING ACTIVITIES




Dividends paid


-

(1,831)

Payment of lease liabilities


(2,769)

(2,579)

Repayment of bank loans


(5,000)

-

Issue of shares to minority interests


-

3

Purchase of own shares held in EBT


-

(681)

Net cash outflow from financing activities


(7,769)

(5,088)

 

Decrease in cash and cash equivalents


 

(1,049)

 

(821)

Exchange differences on translation of foreign subsidiaries


 

(173)

 

(50)

Cash and cash equivalents at beginning of year


5,028

5,899

Cash and cash equivalents at end of year


3,806

5,028

 

Consolidated Statement of Changes in Equity

For the year ended 31 December 2020


 

 

 

 

Share

capital

 

£'000

 

 

 

 

Share premium

 

£'000

 

 

 

 

Own shares

 

£'000

 

 

Share- based incentive

reserve

 

£'000

 

 

Foreign currency translation reserve

 

£'000

 

 

 

 

Retained earnings

 

£'000

 

Total attributable to equity holders of parent

 

£'000

 

 

 

Non-controlling interest

 

£'000

 

 

 

 

Total equity

 

£'000











At 1 January 2019

 

8,436

 

42,506

 

(299)

 

498

 

117

 

35,826

 

87,084

 

512

 

87,596

Profit for the year

-

-

-

-

-

6,314

6,314

112

6,426

Exchange differences on translation of foreign operations

 

-

 

-

 

-

 

-

 

(29)

 

-

 

(29)

 

(21)

 

(50)

Total comprehensive income for the year

 

-

 

-

 

-

 

-

 

(29)

 

6,314

 

6,285

 

91

 

6,376

New shares issued

94

509

-

-

-

-

603

3

606

Share option charge

-

-

-

127

-

-

127

-

127

Growth share charge

-

-

-

75

-

-

75

-

75

Own shares purchased

-

-

(681)

-

-

-

(681)

-

(681)

Shares awarded and sold from own shares

 

-

 

-

 

321

 

-

 

-

 

(288)

 

33

 

-

 

33

Dividend paid

-

-

-

-

-

(1,831)

(1,831)

-

(1,831)

At 31 December 2019

 

8,530

 

43,015

 

(659)

 

700

 

88

 

40,021

 

91,695

 

606

 

92,301

Loss for the year

-

-

-

-

-

(2,033)

(2,033)

(215)

(2,248)

Exchange differences on translation of foreign operations

 

-

 

-

 

-

 

-

 

(154)

 

-

 

(154)

 

(19)

 

(173)

Total comprehensive loss for the year

 

-

 

-

 

-

 

-

 

(154)

 

(2,033)

 

(2,187)

 

(234)

 

(2,421)

New shares issued

28

135

-

-

-

-

163

-

163

Share option charge

-

-

-

179

-

-

179

-

179

Growth share charge

-

-

-

34

-

-

34

-

34

Settlement of growth shares

544

2,778

-

(271)

-

(3,051)

-

-

-

Shares awarded and sold from own shares

 

-

 

-

 

68

 

-

 

-

 

(95)

 

(27)

 

-

 

(27)

At 31 December 2020

 

9,102

 

45,928

 

(591)

 

642

 

(66)

 

34,842

 

89,857

 

372

 

90,229



Notes to the Consolidated Financial Statements

 

1. Principal Accounting Policies

 

Basis of preparation

 

The results for the year to 31 December 2020 have been extracted from the audited consolidated financial statements, which are expected to be published by 30 April 2021.

 

The financial information set out above does not constitute the Company's statutory accounts for the years to 31 December 2020 or 2019 but is derived from those accounts.  Statutory accounts for the year ended 31 December 2019 were delivered to the Registrar of Companies following the Annual General Meeting on 15 June 2020 and the statutory accounts for 2020 are expected to be published on the Group's website ( www.themission.co.uk ) shortly, posted to shareholders at least 21 days ahead of the Annual General Meeting ("AGM") on 14 June 2021 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 2020 and 31 December 2019; 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

 & Digital

Media Buying

Exhibitions & Learning

Public Relations

Total

 

Year to 31 December 2020

£'000

£'000

£'000

£'000

£'000

Turnover

87,418

18,546

8,738

7,225

121,927

Operating income

50,022

2,286

3,248

5,962

61,518

 

 

 


Advertising

 & Digital

Media Buying

Exhibitions & Learning

Public Relations

Total

 

Year to 31 December 2019

£'000

£'000

£'000

£'000

£'000

Turnover

109,421

30,855

20,162

10,653

171,091

Operating income

64,510

3,694

5,226

7,542

80,972

 

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

2020

December

 2019


£'000

£'000




UK

53,077

72,228

USA

5,972

4,618

Asia

2,353

4,103

Rest of Europe

116

23


61,518

80,972

 

 

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 in 2020 fall into three categories: acquisition-related items, exceptional restructuring costs and start-up costs.

 


Year ended

31 December

 2020

 

£'000

Year ended

31 December

 2019

 

£'000



PBT

PAT

PBT

PAT

 


£'000

£'000

£'000

£'000

 

 

Headline profit

1,168

670

10,154

8,075

Acquisition-related items (Note 4)

(1,891)

(1,806)

(1,320)

(1,200)

Exceptional restructuring costs

(1,004)

(834)

-

-

Start-up costs

(335)

(278)

(431)

(358)

Write off of investments and associates

-

-

(109)

(91)






Reported (loss) / profit

(2,062)

(2,248)

8,294

6,426

 

Exceptional restructuring costs consist of redundancy and property closure costs in response to the COVID-19 pandemic.

 

Start-up costs derive from organically started businesses 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 2020 relate to Story's new venture in Leeds, April Six's new venture in Germany and the launch of ALIVE in Asia. Start-up costs in 2019 related to the Leeds and Germany ventures, and trading losses at April Six's China operation.

 

4. Acquisition Adjustments

 


Year to

31 December 2020

Year to

31 December 2019

 

 

 

£'000

£'000

Movement in fair value of contingent consideration

(1,276)

(433)




Amortisation of other intangibles recognised on acquisitions

(505)

(870)




Acquisition transaction costs expensed

(110)

(17)

 


(1,891)

(1,320)

 

The movement in fair value of contingent consideration relates to a net upward (2019: upward) 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

31 December 2020

Year to

31 December 2019

 


£'000

£'000

 

Interest on bank loans and overdrafts, net of interest on bank deposits

 

(329)

 

(351)

(42)

(41)

Interest expense on lease liabilities

(450)

(276)

Net finance costs

(821)

(668)

 

 



 

6. Profit or Loss Before Taxation

 

Profit or loss on ordinary activities before taxation is stated after charging / (crediting):

 


Year to

31 December 2020

Year to

31 December 2019

 


£'000

£'000




Depreciation of owned tangible fixed assets

1,214

1,270

Depreciation expense on right of use assets

2,645

2,452

Amortisation of intangible assets recognised on acquisitions

505

870

Amortisation of other intangible assets

472

240

Staff costs before furlough grants

47,954

52,931

Furlough grants received

(2,966)

-

Bad debts and net movement in provision for bad debts

53

(3)

Auditors' remuneration

234

205

Loss on foreign exchange

62

160

 

7. Taxation


Year to

31 December 2020

Year to

31 December 2019


£'000

£'000

Current tax:-



UK corporation tax at 19.00% (2019: 19.00%)

15

1,693

Adjustment for prior periods

(178)

(64)

Foreign tax on profits of the period

402

290


239

1,919

Deferred tax:-



Current year originating temporary differences

(53)

(51)

Tax charge for the year

186

1,868

 

Factors Affecting the Tax Charge for the Current Year:

The tax assessed for the year is higher (2019: higher) than the standard rate of corporation tax in the UK. The differences are:

 


Year to

31 December 2020

Year to

31 December 2019





£'000

£'000

(Loss) / profit before taxation

(2,062)

8,294




(Loss) / profit on ordinary activities before tax at the standard rate of corporation tax of 19.00% (2019: 19.00%)

(392)

1,576




Effect of:



Non-deductible expenses

210

180

Depreciation in excess of capital allowances

210

(72)

Losses not utilised

174

157

Higher rates on overseas earnings

151

39

Adjustments in respect of prior periods

(178)

(43)

Other differences

11

31

Actual tax charge for the year

186

1,868

 

8. Dividends


Year to

31 December 2020

Year to

31 December 2019


£'000

£'000

Amounts recognised as distributions to equity holders in the year:



Interim dividend of nil (2019: 0.77 pence) per share

-

648

Prior year final dividend of nil (2019: 1.4 pence) per share

-

1,183


-

1,831

 

In view of the trading performance during 2020, affected substantially by COVID-19, no interim dividend was paid during 2020 and no final dividend is proposed. 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. In accordance with IFRS this dividend will be recognised in the 2021 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

2020

31 December

2019





£'000

£'000




Earnings






Reported profit for the year



Attributable to:



Equity holders of the parent

(2,033)

6,314

Non-controlling interests

(215)

112


(2,248)

6,426

 

Headline earnings (Note 3)



Attributable to:



Equity holders of the parent

885

7,963

Non-controlling interests

(215)

112


670

8,075




Number of shares



Weighted average number of Ordinary shares for the purpose of basic earnings per share

 

88,341,383

 

84,056,636

Dilutive effect of securities:



Employee share options

2,360,072

4,426,774

Weighted average number of Ordinary shares for the purpose of diluted earnings per share

 

90,701,455

 

88,483,410







Reported basis



Basic earnings per share (pence)

(2.3)

7.5

Diluted earnings per share (pence)

(2.3)

7.1

 

Headline basis:



Basic earnings per share (pence)

1.0

9.5

Diluted earnings per share (pence)

1.0

9.0

 

 

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

2020

31 December 2019





£'000

£'000




Goodwill

92,160

91,752

Other intangible assets

4,026

4,107


96,186

95,859

 

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 is assumed.

 

The forecasting of future cash flows was more challenging in 2020 given the heightened level of uncertainty created by COVID-19. The main assumptions adopted were that economic activity would remain subdued in the first half of 2021 but that revenues would return to pre-pandemic levels in the second half, from which point the Group would resume more normal levels of growth. Long term annual growth assumptions of 2% beyond 2024 were based on information published by market analysts.

 

The resulting pre-tax cash flow forecasts were discounted using a rate of 8.20%, the average of the Weighted Average Cost of Capital ("WACC") over the 9 years from 2012, when the current methodology of calculating WACC was first adopted (2019: 8.07%, the WACC at 31 December 2019).

 

The reason for using this average rather than the WACC at 31 December 2020 (the "2020 WACC") was to avoid any distortion that may have been caused by the exceptional circumstances of COVID-19. Over the previous 8 years, the Group's WACC was consistently within a range of 7.5% to 8.5% and the Directors felt it inappropriate to discount cash flows that stretch into the indefinite future by using a potentially COVID-affected 2020 WACC.

 

The conclusion from using the above methodology was that no impairment in goodwill was required and is consistent with the Directors' assessment that any impairment that might have been caused by COVID-19 is only temporary in nature since all Agencies are predicting to return to pre-pandemic levels within the foreseeable future. No change to this conclusion is reached as a result of the following independent changes in assumptions: a one year delay in the achievement of 2021 budgets caused by COVID-19; any reduction in short term growth rates beyond 2021; 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 3.5%, 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

2020

31 December

2019


£'000

£'000




At 1 January

177

-

Profit during the year

56

69

Additions

84

108

At 31 December

317

177




In 2019 the Group transferred its Learning activities into an established company, Fenturi Limited, in exchange for a 25% shareholding in that company. In 2020 the Group invested further in Fenturi. Fenturi is a Bristol-based digital learning agency with historical, positive previous associations with Bray Leino.

 

12. Trade and Other Receivables

 


31 December 2020

31 December 2019


£'000

£'000




Trade receivables

22,296

27,451

Accrued income

7,923

9,779

Prepayments

2,180

2,759

Other receivables

915

1,009


33,314

40,998

 

An allowance has been made for estimated irrecoverable amounts from the provision of services of £97,000 (2019: £82,000). The estimated irrecoverable amount is arrived at by considering the historic loss rate and adjusting for current expectations, Client base and economic conditions, including the potential impact of COVID-19 which has resulted in an increase in the estimated loss rate in 2020.

 

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 2020

31 December 2019


£'000

£'000




Gross trade receivables

22,393

27,533

Gross accrued income

7,923

9,779

Total trade receivables and accrued income

30,316

37,312




Expected loss rate

0.3%

0.2%

Provision for doubtful debts

97

82


 

 

13. Trade and Other Payables

 


31 December 2020

31 December 2019





£'000

£'000




Trade creditors

9,622

14,050

Deferred income

8,636

5,754

Other creditors and accruals

8,102

9,333

Other tax and social security payable

5,918

4,303

Lease liabilities (Note 15)

1,860

2,575


34,138

36,015

 

Deferred income has increased by £2,882,000 predominantly as a result of a number of Clients making payments on account shortly before year end.

 

14. Bank Overdrafts, Loans and Net Bank Debt

 


31 December 2020

31 December 2019


£'000

£'000




Bank loan outstanding

5,000

10,000

Unamortised bank debt arrangement fees

(31)

(73)

Carrying value of loan outstanding

4,969

9,927

Less: Cash and short term deposits

(3,806)

(5,028)

Net bank debt

1,163

4,899




The borrowings are repayable as follows:



Less than one year

5,000

-

In one to two years

-

10,000


5,000

10,000




 

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.

 

At 31 December 2020, the Group's committed bank facilities comprised a revolving credit facility of £20.0m, expiring on 28 September 2021, with an option to extend the facility by one year. Interest on the facility is based on LIBOR plus a margin of between 1.25% and 2.00% depending on the Group's debt leverage ratio. On 6 April 2021, the Group agreed a new 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.

 

In addition to its committed facilities, the Group has 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 2020, 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. This security arrangement has been replicated in the Group's new banking facilities.

 

All borrowings are in sterling.

 

15. Lease Liabilities

 

Obligations under leases are due as follows:

 


31 December 2020

31 December 2019





£'000

£'000




In one year or less (shown in trade and other payables)

1,860

2,575

In more than one year

9,414

6,229


11,274

8,804

 

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 2020

31 December 2019


Cash

£'000

 Shares

£'000

Total

£'000

Cash

£'000

 Shares

£'000

Total

£'000

 

Less than one year

7,461

304

7,765

3,261

163

3,424

Between one and two years

140

-

140

3,690

160

3,850

In more than two years but less than three years

 

280

 

-

 

280

 

-

 

-

 

-

In more than three years but less than four years

 

300

 

-

 

300

 

1,552

 

56

 

1,608









8,181

304

8,485

8,503

379

8,882

 

A reconciliation of acquisition obligations during the period is as follows:

 


Cash

£'000

Shares

£'000

Total

£'000





At 31 December 2019

8,503

379

8,882

Obligations settled in the period

(2,018)

(163)

(2,181)

Adjustments to estimates of obligations

1,188

88

1,276

New acquisitions

508

-

508

At 31 December 2020

8,181

304

8,485

 

 

16.2 Acquisitions during the year

 

A total of £608,000 was invested in acquisitions during the year, comprising initial cash consideration of £100,000 and deferred contingent consideration of £508,000. Had the Group consolidated the results of acquisitions made during the year, from the beginning of the year, the Directors estimate that the turnover, operating income and headline operating profit of the Group would not have been materially different to the numbers presented in the consolidated income statement.

17. Share Capital


31 December 2020

31 December 2019


£'000

£'000

Allotted and called up:



91,015,897 Ordinary shares of 10p each (2019: 85,295,565 Ordinary shares of 10p each)

9,102

8,530

 

 

Share-based incentives

 

The Group has the following share-based incentives in issue: 

 


At start of year

Granted/

acquired

Waived/

lapsed

 

Exercised

At end of year

 

TMMG Long Term Incentive Plan

 

890,262

 

553,364

 

(22,500)

 

(223,299)

 

1,197,827

Growth Share Scheme

5,434,162

-

-

(5,434,162)

-

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, 223,299 options granted in 2015 and 2017 were exercised at an average share price of 61.9p and at the end of the year 225,921 of the outstanding options are exercisable. Certain individuals received performance awards in the early part of 2020 as a result of the financial performance of their Agency in 2019 and a proportion of these awards were in grants of nil-cost options over a total of 553,364 shares, vesting over a 3 year period to 2023.

 

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 on 21 February 2017. Participants in the scheme subscribed for Ordinary A shares in The Mission Marketing Holdings Limited (the "growth shares") at a nominal value. The performance condition attaching to these growth shares was met during 2019 and the shares could be exchanged for an equivalent number of Ordinary Shares in MISSIONduring the period up to 60 days from the announcement of the Group's financial results for the year ending 31 December 2019, subject only to continued employment. During the year the 5,434,162 growth shares were exchanged for 5,434,162 Ordinary Shares.

 

18. Own Shares

 


No. of shares

£'000

At 31 December 2018

741,367

299

Own shares purchased during the year

623,570

681

Awarded or sold during the year

(288,194)

(321)

At 31 December 2019

1,076,743

659

Awarded or sold during the year

(178,929)

(68)

At 31 December 2020

897,814

591

 

Shares are held in an Employee Benefit Trust to meet certain requirements of the Long Term Incentive Plan.

 

19. Post Balance Sheet Events

 

On 6 April 2021, the Group agreed a new revolving credit facility of £20m, expiring on 5 April 2024, with an option to increase the facility by £5m and by one year. Further details are provided in Note 14.

 

 

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