Trigg Mining Limited Annual Report 2012

FY2012 Annual Report · Trigg Mining Limited

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marketing group plc

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annual report and accounts
for the year ended 31 December 2012

The Mission Marketing Group plc is a UK network of entrepreneurial communications Agencies spanning
17 offices, and uniting 800 people.

The Group enables each Agency, its people and its Clients, to access skills, tools and buying power
in a collectively advantageous way, while freeing each Agency to express its unique personality.

Agencies a real competitive advantage.
Being situated largely outside central London gives
We benefit from lower establishment costs and attract top-flight people who seek an exciting work
environment enhanced by improved quality of life.

Our Agencies have proven, long-term ability to help Clients win. They are driven by uncommonly talented
people whose creative business thinking and specialist knowledge complement those of their colleagues
around the Group. Between them, they have an impressive record of delivering tangible results for Clients.

We are proud to work with some of the world’s leading brands and the UK’s biggest names.

Our mission is simple: to work together to make our Clients’ brands and businesses more valuable;
into the nation’s most respected and influential creative
and fuelled by their success, to grow
communications group.

We intend to increase shareholder value by growing profits and optimising our capital structure. We aim to
grow profits by exploiting our competitive advantage to gain market share, and expanding the range and
depth of our services via new ventures and selective acquisitions where appropriate.

graphic symbolises the shared ambitions, values and goals that unite every

The
Agency in

Group.

A modern creative Agency with in-house content and production facilities, Addiction
delivers effective and innovative communications for a number of major Clients across
the globe.

The UK’s leading technology channel marketing Agency working successfully with
global brands on an international basis.

A multi-channel, full service creative Agency that focuses on brand payback through its
unique approach to brand building, CRM techniques and direct marketing.

Regarded as one of the UK’s top creative Agencies delivering award-winning advertising,
promotions and digital solutions for major brands and Clients.

A pioneer of integrated brand-building, a top 20 Agency working with Clients through
every channel and across the business spectrum and, in 2012, the No.1 B2B Agency
in the UK.

A specialist full service communications Agency that also includes unrivalled expertise
in international channel marketing programmes across the Automotive, Retail and
allied sectors.

Regarded as one of the North of England’s major advertising brands with proven skills
in integrated communications.

An award-winning creative and direct communications Agency working with leading
consumer brands and services from its Edinburgh base.

The leading property integrated marketing Agency in the UK, working with developers
across all aspects of their sales support programmes from advertising to show homes.
ThinkMedia is the largest buyer of Estate Agency media in the UK.

A highly creative digital marketing and web development Agency, Yucca is an award-winning
Agency with unique digital and online capabilities.

together, we are

The Mission Marketing Group plc Annual Report 2012

.................................................................................................................................................The Bigger Picture

There’s a host of entrepreneurial, founder led Agencies all around
the UK making a name for themselves in the market. We unite the
very best of them, bringing strength in numbers.

To get the whole story, watch our short film at themission.co.uk

The Mission Marketing Group plc Annual Report 2012

.................................................................................................................................................Contents

2012 Overview

Chairman’s Statement

Financial Review

Board of Directors

Report of the Directors

Corporate Governance

Independent Auditor’s Report

Consolidated Statement of Comprehensive Income

Consolidated Balance Sheet

Consolidated Cash Flow Statement

Consolidated Statement of Changes in Equity

Notes to the Consolidated Financial Statements

Independent Auditor’s Report: Company

Company Balance Sheet

Notes to the Company Balance Sheet

Notice of Annual General Meeting

Advisors

The Mission Marketing Group plc Annual Report 2012

.................................................................................................................................................2012 Overview

2012 was another good year for
. Further progress has

been made in terms of revenue, profit
and debt reduction. The Group has
achieved further net gains in revenue
from organic activities, and its range
of services and capabilities has been
expanded through new ventures
and acquisitions. Looking ahead, the
reduction in debt provides the Board
with a new range of options, including
the payment of dividends, not available
since the refinancing in April 2010.

Revenue (£m)

50.0

40.0

30.0

20.0

10.0

2010

2011

2012

Pre-tax profit (£m)

6.0

5.0

4.0

3.0

2.0

1.0

2010

2011

2012

Key 2012 financials:

Net Debt (£m)

• Operating income (“revenue”) up 15% to £47.5m (2011: £41.5m)

• Headline operating profit up 2% to £6.0m (2011: £5.8m)

• Sharp reduction in interest costs to £1.1m (2011: £1.6m)

• Headline profit before tax up 15% to £4.9m (2011: £4.2m)

• Headline diluted EPS up 8% to 4.5 pence (2011: 4.2 pence)

• Net bank debt reduced by £3.0m to £12.3m

(5.0)

(10.0)

(15.0)

(20.0)

2010

2011

2012

In addition, we have achieved all of our key performance targets:

Key performance measure

Target

Achievement in 2012

Operating income

Grow year-on-year,
both via increased business
from existing Clients and
from new business wins

Operating profit
margins

Achieve levels at least in
line with industry averages

Growth of 15% achieved despite
2011 benefitting from the Census,
our largest ever project.

Some great new Clients –
e.g. Aviva, M&S Bank and Brittany
Ferries – and strong retention
and growth from existing Clients –
e.g. Axa, BP, Dermal, Legal & General.

Headline operating margins
reduced to 13% (2011: 14%)
due to impact of new ventures
and acquisitions, but still above
industry average.

Ratio of net debt
to EBITDA

Reduce below x2 by end
of 2012

Debt leverage ratio reduced from
x2.3 in 2011 to x1.7 in 2012.

The Mission Marketing Group plc Annual Report 2012

.................................................................................................................................................Chairman’s Statement

Dear shareholder

It’s now three years since we restructured
of our progress in what has been yet another challenging year for our sector.

and I am pleased to report that 2012 saw a continuation

Our objective going into 2012 was to maintain our progress whilst strengthening the expertise of our
Agencies and the Group. We focused on concinnity and our Agencies have never worked better together,
providing a cohesion that we and our Clients have benefited from.

Overall the Agencies have performed very well. They have improved their status with their Clients and
created great new business wins from the likes of Aviva, Brittany Ferries and M&S Bank. What is even more
admirable is that they have retained and built their existing Client bases at a time when competitive activity
has never been fiercer. Our progress has come both from our consumer and B2B Agencies as well as our
specialist IT, Property and Automotive businesses. They should be justly proud of their achievements in 2012.

We have also sought to strengthen our Group by bringing in new expertise that complements the whole.
Both newcomers are already providing new and dynamic options to the rest of the Group thereby enhancing
our Client offer.

The Addiction team joined us in September, principally to spearhead our capabilities in Branded Content
and to fulfil our desire to create Mission Studios that will provide our Agencies with pre and post film
production services from its West One base. Their work for the likes of B&Q and Remington is highly
regarded and opens up new channels of opportunity for us.

We acquired balloon dog in Norwich and London in October to strengthen our CRM and data offering and
provide us with yet another outstanding and profitable Agency that works with Clients such as Barclays,
Pret a Manger and Aviva. The scope to build on the balloon dog business certainly exists within the Group.

But best of all, both of these new additions have brought us some great new colleagues, all of whom chose
to be with

because they believe in what we are doing.

So where do we go from here? Our Agencies are in good shape and we expect them to work even closer
together going forward. Their Client bases are the envy of the industry and they all have exciting strategies
for the future.

2012 was a tough old year but we did what we said we would do. So I guess we did well and it’s fair to say
we are seeing some positive signs. Green shoots maybe but who knows what this mad economic world
has in store for us? That is why we will continue to build cautiously and maintain a reduced risk position.
We remain acquisitive but in a measured manner, call us quakebuttocks if you will, but our focus will remain
on debt management, expertise enhancement and concinnity.

We remain excited by the potential of our business and look forward to further progress in 2013 and beyond.

David Morgan
Chairman
25 March 2013

The Mission Marketing Group plc Annual Report 2012

.................................................................................................................................................together, we are

Ideas and know-how kick start
home improvement.

All DIY and no inspiration have made B&Q
dependent on ageing DIY enthusiasts.
Our branded content channel on YouTube
creates a place for B&Q to inspire
consumers before the retail experience.

The latest films feature Kirstie Allsopp
sharing ideas for ‘upcycling’ old furniture.
The B&Q ‘You Can Do It’ Channel has
had around 3 million views in the first year
and is the branded channel showcase that
Google/YouTube use in their presentations.

Delivering VMware a real
world advantage.

As VMware’s lead Agency in EMEA, our 2012
go-to-market strategy was ‘Real World
Advantage’. This campaign focused on
changing the lives of IT Managers in small
and medium sized businesses through the
benefits of virtualization. The challenge:
demonstrating creative excellence while
delivering powerful and empathetic
conversations in 17 languages, targeting a
marketing-averse and technical audience.
The results: smashing the 1:20 return on
investment industry benchmark and over
achieving on the targeted multi-million
dollar opportunity pipeline.

The Mission Marketing Group plc Annual Report 2012

..................................................................................................................................................................................................................................................................................................Barclaycard small business strategy.

Around 95% of Barclaycard small business
customers are signed up in a Barclays
bank branch. This can lead to low levels
of activation and usage. We reviewed the
entire sales process; channels, materials
and touch-points, allowing us to identify
the gaps and opportunities in order to
drive spend. Our refined strategy is now
used to support all small business briefs
with several initiatives created as a direct
result - including an interactive in-branch
awareness campaign.

Back of the net!

Football and pizza go together like…well,
football and pizza. So when Domino’s
needed an app that would allow fans to
interact with a summer of soccer, and
the chance to win prizes even after the
home teams were eliminated, Domigoals
was the perfect answer. With thousands
of downloads, a raft of new-to-brand
cus to m e r s , n ear ly 3 0,0 0 0 o n lin e
transactions and awards and nominations
galore, including BIMA, GRAMIA and
Fresh, Domigoals is a premier league
piece of work.

The Mission Marketing Group plc Annual Report 2012

Curiosity. It can lead
a brand anywhere.

Brittany Ferries offer a travel experience
that provides limitless possibilities. Our
stirring campaign, based around the
concept of curiosity, took them from
a place of rational, product focused
comms, to a more emotionally engaging
and thought provoking proposition. The
project has energised the brand, it’s made
new audiences excited about Brittany
Ferries and as an Agency, it’s a piece of
work we’re immensely proud to stand by.

Forget Fernados, take me
out in the new Picanto!

Kia launched the new Picanto City
wanting to introduce it to new sassy and
design-conscious customers. Partnering
with the highly-rated Saturday night show
was a natural fit. We needed to bring the
TV action into UK dealerships with POS,
ambient and promotions – where you
could end up on the Take Me Out Love
Island. We reached 60% of the audience
with many ‘liking’ it online and 90%+ uptake
in dealership.

We’re still together.

The Mission Marketing Group plc Annual Report 2012

Our Client Balance aims to inspire change
to the way North East residents think
about and drink alcohol. Our campaign
raised awareness of the issues around
young people and alcohol, ultimately
encouraging sign up to a minimum unit
price consultation. Outdoor, leafleting,
on-street engagement and digital all
combined to drive traffic to an online
film and microsite. To date nearly 15,000
signed postcards have been presented
to government.

Full of the joys of Highland Spring.

Highland Spring’s business objective was
to be No.1 in the UK’s highly competitive
and increasingly challenging bottled water
market. In March 2012, we launched
the ‘Full of the Joys of Highland Spring’
positioning. A fully integrated campaign
featuring a feel-good, mischievous mole
was developed based on the brand truth
that drinking Highland Spring leaves you
feeling healthy and hydrated. Highland
Spring are well on their way to becoming
the UK’s No.1 bottled water brand. Joy!

The Mission Marketing Group plc Annual Report 2012

An Avant-Garde approach to property.

Avant-Garde by Telford Homes was the first
new residential development in Shoreditch,
East London.

To inspire the public we created a strong
brand with dynamic marketing collateral
from the design of the foyer, gymnasium
and marketing suite to lifestyle DVDs,
brochures and microsites. The impact on
the overseas market was immediate, with
over 120 units sold off plan.

Telford’s sales success continues with four
more sites in the heart of London.

World-class. Worldwide.

To help Clarks reach a global audience of
partners and associates, we were briefed
to create the most engaging and usable
SharePoint intranet ever. Our response
was ‘Your Connection’; a highly usable
and bespoke tool with over 700 users
in 14 countries. Our work won Gold
at the Digital Impact Awards 2012. We
look forward to planning, designing and
building the next phase of enhancements.

The Mission Marketing Group plc Annual Report 2012

Summary

A year ago, we said we thought 2012 would see us out-perform our competitors. We believe we have
achieved this. Against a continuing difficult backdrop for the sector, we are pleased to report results for the
year ended 31 December 2012 which show further progress in terms of revenue, profit and debt reduction.

Trading, Statement of Income and Dividend

Turnover (“billings”) was 1% higher than the previous year, at £117.0m (2011: £116.0m), and like-for-like
turnover, excluding the acquisition of balloon dog with effect from 30 September 2012, was unchanged,
reflecting the significant media spend in 2011 relating to the Census (our largest ever project).

Operating income (“revenue”) increased 15% to £47.5m (2011: £41.5m), of which the like-for-like increase
was 12%, mainly the result of net new business wins, notably VMware, Norwegian Seafood, Axa, Legal &
General, Aviva and M&S Bank, together with the first contributions from Yucca, Bray Leino Healthcare and
RLA’s expansion in Northern Ireland. As mentioned in the Chairman’s Statement, it was a good year for new
business wins and Client retention. Net new business revenue gained in the year totalled £5.6m, up from
£4.1m last year.

In common with the industry, gross profit margins achieved by our different business activities vary widely,
and the overall Group margin can be strongly influenced by the level of media placement activity undertaken
by our Clients. The higher overall gross margin in 2012 (41% vs 36% in 2011) reflects the lower proportion
of media in the business mix (39% of turnover in 2012 vs 44% in 2011) as explained above and illustrated by
the segmental analysis in Note 2.

The Directors measure the Group’s performance by reference to headline profits, calculated before the
deduction of amortisation of intangibles and professional fees associated with acquisitions and as set
out in Note 3. Headline operating profit increased by 2% to £6.0m (2011: £5.8m) including the acquisition
of balloon dog, and was unchanged on a like-for-like basis. As expected, the expansion of the Group
over the last 18 months, through new ventures, additional talent and in-fill acquisitions, sometimes of
financially distressed businesses, has reduced margins (headline operating profit as a percentage
of gross profit) in the short term (to 13% from 14% in the prior year) but the Group is stronger as a result
of these developments and confident that they will benefit the Group in the years ahead. The most recent
addition to the Group – balloon dog – is the first acquisition involving anything other than a modest outlay
since the refinancing in April 2010. We are really pleased with the way in which the new Agency has fitted
into the culture of the Group and it is performing as anticipated.

Further significant progress was made in 2012 to reduce the Group’s interest burden, both through a further
reduction in net debt and also the renegotiation of interest rates. As a result, net interest costs reduced by a
very pleasing 32% to £1.1m (2011: £1.6m).

After financing costs, headline profit before tax increased by 15% to £4.9m (2011: £4.2m).

Reported profit before tax increased by 14% (to £4.7m) after the deduction of amortisation charges and
professional fees totalling £0.2m relating to acquisitions made in 2012. In 2011, £0.1m of exceptional costs
were incurred relating to the completion of restructuring commenced in 2010.

The headline diluted EPS increased by 8% to 4.54 pence (2011: 4.20 pence).

The Board does not propose the payment of a dividend at this stage. However, as previously mentioned,
the strong reduction in our debt leverage since 2010 provides the Board with greater flexibility when
considering the most effective use for the cash generated by the business.

We continue to work on fully integrating our recent acquisitions which we expect to result in profits being
more second half biased than in recent years. We will keep a close eye on trading in the first half and, if we
continue to make progress, it remains our intention to declare a dividend at the time of our interim results.

The Mission Marketing Group plc Annual Report 2012

.................................................................................................................................................Financial Review

Balance Sheet and Cash Flow

The Group’s balance sheet has been further strengthened during the year by the equity placing of £1.2m
used to fund the acquisitions of balloon dog and Addiction. In addition, beneficial changes to our banking
arrangements came into effect in June 2012, with an extension of the facilities and the renegotiation of
terms. Loan facilities which were due to expire in mid-2013 were extended to the end of 2015, our annual
repayment obligation was reduced from £4m to £2.3m, and interest rates charged on the loans were
reduced. These changes reflect the Group’s complete rehabilitation in the banking community since the
restructuring in April 2010.

After two years of reductions in working capital, a decrease in the proportion of Clients making up-front
payments contributed to a net increase in working capital during the year. Despite this, net bank debt
reduced by a further £3m, to £12.3m (2011: £15.3m). This compares with £13.9m of committed term facilities,
together with an overdraft facility of £2.5m, representing a comfortable level of headroom. Our gearing ratio
(net debt to equity) reduced from 26% last year to 20% at 31 December 2012 and the Group’s “leverage ratio”
(ratio of net bank debt to pre-exceptional EBITDA), which in H1 reduced below x2.0 for the first time since
the Company’s IPO in 2006, fell further despite the traditionally weaker H2, to x1.7 at 31 December 2012.

During the year, the Group continued to find opportunities to strengthen its services and extend its reach.
Including the settlement of various acquired obligations, cash totalling £1.3m was invested in four deals
during the year, including Quorum Advertising Limited and Haven Marketing Limited as well as Addiction
Worldwide and balloon dog. These deals were funded almost entirely by an equity placing which was
over-subscribed and raised £1.1m net of expenses.

At 31 December 2012, the Board undertook its annual assessment of the value of goodwill, explained further
in Note 12, and concluded that no impairment in the carrying value was required. Capital expenditure, at
£1.2m, was slightly lower than 2011 (£1.5m) and similar to depreciation charges (£1.0m).

Achieving a leverage ratio of x2.0 has been a key target for the Board since the restructuring in April 2010.
Until this was achieved in H1 2012, the Board was focused on paying down debt and concentrating on organic
growth, with only small in-fill acquisitions being contemplated. With our leverage ratio now well below x2.0,
and expected to fall further over the next six months, the Board’s options have increased. In addition to the
possibility of paying dividends later this year, we will continue to review opportunities to make both strategic
and opportunistic acquisitions to accelerate growth, but in a careful and selective way.

Treasury Policy

With the recent and modest exception of a New York presence as a result of the Addiction acquisition, the
Group’s operations are all based in the UK and substantially all the Group’s business is conducted in the
UK. Of those Clients based outside the UK, the majority are based in the USA and virtually all invoicing is
undertaken in sterling.

The Group’s policy is not to use any financial instruments for speculating but to use hedging of interest
rates and currencies selectively and only where considered cost-effective. Until recently, management had
not sought to use interest rate hedges but, following the renegotiation of banking facilities during 2012, has
entered into a modest and inexpensive interest rate cap.

Where turnover is in foreign currencies, natural hedges are used where possible, matching revenues and
costs in the same currency. Where this is not possible, appropriate currency hedging is considered.

The Group only draws down sufficient of its term loan facilities to cover its forecast funding requirements
over the coming three months, leaving the overdraft facility to accommodate intra-month working capital
requirements. The Group operates a virtual cash pooling arrangement where the cash balances of all the
Group Agencies are pooled to offset any overdrafts. If there are significant net surplus cash balances at any
time, they are placed on short term deposit.

The Mission Marketing Group plc Annual Report 2012

.................................................................................................................................................Taxation

The Group’s effective tax rate was 27.9% (2011: 25.0%). The Group’s effective tax rate is normally above the
statutory rate due to non-deductible staff and Client-related expenditure but, in 2011, the Group benefited
from the release of over-provisions made in prior years.

Key Performance Indicators

The Group manages its internal operational performance by monitoring various key performance indicators
(“KPIs’’). The KPIs are tailored to the level at which they are used and their purpose. The Group’s current KPIs,
which are quantified and commented on above, are: operating income, which the Group aims to increase
year-on-year both via increased business from existing Clients and from new business wins; operating profit
margins, where the Group aims to achieve levels at least in line with industry averages; and the ratio of net
debt to EBITDA, which the Group is aiming to maintain below x2.0.

At the individual Agency level, the Group’s KPIs comprise revenue and profitability measures, predominantly
the achievement of annual budget. More detailed KPIs are applied within individual Agencies.

Peter Fitzwilliam
Finance Director
25 March 2013

The Mission Marketing Group plc Annual Report 2012

.................................................................................................................................................Board of Directors

David Morgan Executive Chairman

David founded Bray Leino, the Group’s largest Agency, in 1974 and was its CEO
until 2008. He became Non-Executive Chairman of Bray Leino in 2008 and was
in April 2010. Before founding Bray Leino he
appointed Chairman of
worked in a number of London advertising agencies including Dorlands.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . .

Christopher Morris Non-Executive Deputy Chairman

Chris adds further operational experience to the Board as a founder partner of
in 2005 prior to its AIM listing in 2006.
Big Communications, bought by
Chris has gained 30 years’ industry knowledge having previously been Managing
Director of Cogent Elliott, one of the UK’s top three regional advertising agencies.
Chris was appointed to the Board in December 2009.

Stephen Boyd Senior Independent Non-Executive Director

Stephen is currently Chairman of three AIM-listed companies, Pittards plc,
Pure Wafer plc and Swallowfield plc, in addition to owning a number of private
companies. Stephen has a broad and extensive base of experience in the UK,
Europe, USA and overseas and brings additional depth in corporate finance.
Stephen was appointed to the Board in December 2009.

Dylan Bogg Executive Director

Dylan is Chief Executive of Big Communications and was one of the founding
partners of the Agency. He had built a successful business by the age of 24 and
this was used as the bedrock for the launch of Big Communications in 1996.
Formerly Executive Creative Director of Big Communications, he still oversees all
creative output. Dylan was appointed to the Board in April 2010.

James Clifton Executive Director

Chief Executive of balloon dog, James started out Client side before working
for various Agencies within the Global Networks that are Omnicom and WPP.
He created balloon dog in 2008 having led an MBO of Fox Murphy. balloon dog, an
award-winning, multi-channel Agency, was acquired by
and James
was appointed to the Board on 11 October 2012.

Robert Day Executive Director

Robert is Chief Executive of ThinkBDW, a company he founded as Robert Day
Associates in 1987 at the age of 22. Re-branded ThinkBDW in 2004, Robert has led
the company to its position as the leading property marketing specialist in the UK.
The business was acquired by
in March 2007 and Robert joined the
Board in April 2010.

The Mission Marketing Group plc Annual Report 2012

.................................................................................................................................................Peter Fitzwillam Finance Director

Peter is a Chartered Accountant and has over 25 years of financial and management
advisory experience in both private and quoted companies across a range of
industry sectors. He was Finance Director of Business Post Group plc (now UK
Mail Group plc) from 1999 to 2006 and helped take it into the FTSE 250. Peter
through its refinancing in April 2010 and was appointed to
supported
the Board in September 2010.

Christopher Goodwin Executive Director

Chris is Chief Executive of RLA and has over 25 years in the automotive industry at
Firestone and then Federal-Mogul, with varied experience in sales, marketing and
general management roles, both at regional and global levels. In 2008 he crossed
over from the Client side to focus on strategic business development within Bray
Leino. He was appointed to the Board in April 2011.

Giles Lee Executive Director

Giles joined Bray Leino in 2005 as Group Finance Director following his successful
role in transforming Merrydown plc from its fundamental financial restructure
in 2000 up to its acquisition in 2005. Since joining Bray Leino, Giles has overseen
eight acquisitions and a number of strategic investments. Giles was appointed
CFO/COO of Bray Leino in 2011 and Executive Chairman in 2013, alongside a strong
management team. He was appointed to the Board on 5 March 2013.

Sue Mullen Executive Director

Sue is Chief Executive of Story and started her advertising career at Branns in
Cirencester before moving to Edinburgh to head up One Agency. She eventually
left in 2002 and, alongside three colleagues, set up Story, an award-winning
creative and direct communications Agency. Story was acquired by
in
2007 and Sue was appointed to the Board on 18 June 2012.

Fiona Shepherd Executive Director

Fiona is Chief Executive of April-Six and has worked in the technology industry for
over 20 years, holding both Client and Agency positions and working with some
of the world’s largest technology brands. Fiona was a founder partner of April-Six
in 2000, founded on a passion for technology and a strong belief in customer
centricity. Fiona joined the Board in April 2010.

The Mission Marketing Group plc Annual Report 2012

.................................................................................................................................................Report of the Directors for the year ended 31 December 2012

The Directors have pleasure in presenting their report and the financial statements of The Mission Marketing
Group plc (“

”) for the year ended 31 December 2012.

Principal Activities

The principal activities of the Group throughout the year continued to be marketing services, providing
national and international Clients with award-winning marketing, advertising and business communications.

Business Review

A review of the business and future developments is provided in the Chairman’s Statement and the Financial
Review, which form part of this Report of the Directors. Information concerning Key Performance Indicators
is included within the Financial Review, and the Group’s principal risks and uncertainties are discussed under
Risk Management below.

Dividends

The Board does not propose the payment of a dividend at this stage. However, dependent upon the results during
the first half of 2013, it is the Board’s intention to declare a dividend at the time of the Group’s interim results.

Directors

The following Directors held office during the year;

Dylan Bogg
Stephen Boyd
James Clifton
Robert Day
Peter Fitzwilliam
Christopher Goodwin
Bruce Hutton
David Morgan
Christopher Morris
Sue Mullen
Fiona Shepherd

appointed 11 October 2012

appointed 18 June 2012

Bruce Hutton resigned on 28 February 2013 and Giles Lee was appointed on 5 March 2013.

Directors’ Interests in Shares and Options

The interests of the Directors and their families in the shares of the Company were as follows:

Number of ordinary shares of 10p each

31 December 2012

31 December 2011
(or on appointment)

Dylan Bogg
Stephen Boyd
James Clifton
Robert Day
Peter Fitzwilliam
Christopher Goodwin
Bruce Hutton
David Morgan
Christopher Morris
Sue Mullen
Fiona Shepherd

1,358,323
319,918
90,048
6,008,138
506,481
191,635
1,725,038
5,939,875
951,509
1,065,204
1,235,273

1,167,373
300,768
90,048
5,574,929
432,181
172,485
1,699,713
5,844,150
874,909
1,065,204
1,216,123

The Mission Marketing Group plc Annual Report 2012

The following unexercised options over shares were held by Directors:

Directors

Dylan Bogg

Robert Day

Peter Fitzwilliam

Chris Goodwin

Bruce Hutton

Chris Morris

David Morgan

Sue Mullen

Fiona Shepherd

1 January 2012
(or on appointment)

Granted

31 December
2012

Date from
which
exercisable

Expiry
date

90,000*
60,000
–

60,000
157,000
–

50,000
–

20,000
–

170,000*
53,000
200,000
–

55,000*
28,000
–

50,000
–

25,000
10,000
–

21,000
40,000
–

–
–
70,000

–
–
96,667

–
40,000

–
–
–
200,000

–
–
40,000

–
40,000

–
–
20,000

–
–
40,000

90,000
60,000
70,000

60,000
157,000
96,667

50,000
40,000

20,000
40,000

170,000
53,000
200,000
200,000

55,000
28,000
40,000

50,000
40,000

25,000
10,000
20,000

21,000
40,000
40,000

July 2013
July 2014
July 2015

July 2014
July 2015

July 2013
July 2013
July 2014
July 2015

July 2013
July 2014
July 2015

July 2014
July 2015

July 2013
July 2014
July 2015

July 2019
July 2021
July 2022

July 2020
July 2021
July 2022

July 2021
July 2022

July 2019
July 2020
July 2021
July 2022

July 2019
July 2021
July 2022

July 2021
July 2022

July 2020
July 2021
July 2022

All share options in existence at 31 December 2012 are nil-cost options granted under the Company’s Long
Term Incentive Plan.

*The vesting conditions applying to options granted in 2009 were simplified to make them dependent upon
the achievement of profit targets over the three year period ending 31 December 2012, consistent with
options granted in 2010. Options granted in 2012 are dependent upon the achievement of profit targets
over the three year period ending 31 December 2014.

Substantial Shareholdings

Other than the Directors’ interests disclosed above, as at 25 March 2013, notification had been received
of the following interests in 3% or more of the issued share capital of the Company:

Herald Investment Management Ltd
Polar Capital Forager Fund Ltd
Nicholas Bacon

Number of Shares

4,500,000
3,995,000
2,449,648

The Mission Marketing Group plc Annual Report 2012

5.84
5.19
3.18

Share Capital

The issued share capital of the Company at the date of this report is 76,990,940 Ordinary shares. The total
number of voting rights in the Company is 76,990,940. During the year, the Company issued a total of
4,530,496 shares. Of these, 4,289,144 were placed with existing and new institutional shareholders to raise
£1.2m and 241,352 were issued as part of the initial consideration payable for the acquisition of Friars 573 Ltd.

Directors’ Responsibilities

The Directors are responsible for preparing the Annual Report and the Group financial statements in
accordance with applicable law and International Financial Reporting Standards as adopted by the European
Union, and the Company financial statements in accordance with applicable law and United Kingdom
accounting standards (United Kingdom Generally Accepted Accounting Practice).

International Accounting Standard 1 requires that financial statements present fairly for each financial
period the Group’s financial position, financial performance and cash flows. This requires the faithful
representation of the effects of transactions, other events and conditions in accordance with the definitions
and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting
Standards Board’s “Framework for the Preparation and Presentation of Financial Statements”. In virtually all
circumstances, a fair presentation will be achieved by compliance with all applicable International Financial
Reporting Standards. A fair presentation also requires the Directors to:

• consistently select and apply appropriate accounting policies;
• present information, including accounting policies, in a manner that provides relevant, reliable, comparable

and understandable information; and

• provide additional disclosures when compliance with specific requirements in IFRS is insufficient
to enable users to understand the impact of particular transactions, other events and conditions
on the entity’s financial position and financial performance.

Company law requires the Directors to prepare Group and Company financial statements for each financial
year. The Directors must not approve the financial statements unless they are satisfied they give a true and
fair view of the state of affairs of the Group and Company and the profit or loss of the Group for that period.
In preparing the financial statements of the Company under UK GAAP, the Directors are required to:

• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable accounting standards have been followed, subject to any material departures

disclosed and explained in the financial statements; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the

Company will continue in business.

The Directors are responsible for keeping adequate accounting records that disclose with reasonable
accuracy at any time the financial position of the Group and the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding
the assets of the Group and the Company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information
included on the Group’s website. Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other jurisdictions.

Corporate Governance

The Directors provide a separate Corporate Governance Report, which forms part of this Report of the Directors.

The Mission Marketing Group plc Annual Report 2012

Risk Management

As part of its risk management strategy, the Board has a formal process of delegated authorities throughout
the Group and specific risks are reviewed at Board meetings. The Group sets, and keeps under review, key
performance indicators to monitor the past and future performance of the Group and each operating unit.

The Group’s principal operating risks and uncertainties are associated with the sustainability of its business
model, the health of the UK economy and the retention of key customers and staff. We believe that our
business model, of being a UK network of entrepreneurial Agencies situated largely outside central London,
a real competitive advantage. Clients can both access top-flight people who have made a
gives
non-London lifestyle choice, and also benefit from our lower establishment costs. Our ability to generate
net new business growth year after year suggests that this is a successful business model but we maintain
close relationships with our Clients to ensure that we continue to meet their requirements, and keep the
structure of the Group under regular review.

The fragile condition of the UK economy is well publicised; there is a risk that a further downturn will
have an adverse effect on the Group’s performance in the future and delay the Group’s growth ambitions.
The Group makes efforts to mitigate any adverse impact through strenuous new business activity and by
reducing overheads wherever possible, always recognising that there is a level below which overheads
cannot be reduced without customer service being affected. The risk of customer loss is mitigated by the
efforts of dedicated Client teams and also the Group’s broad spread of Clients, which limits its exposure to
any individual Client.

In common with all service businesses, the Group is reliant on the quality of its staff. Strenuous efforts are
made to provide a rewarding work environment and remuneration package to retain and motivate key
individuals. The system of financial rewards is reviewed regularly by the Board.

Details of specific financial risk management objectives and policies of the Group are set out in Notes 1, 15 and
27 to the financial statements. The exposure of the Group to credit risk, liquidity risk, interest rate risk
and cash flow risk is also detailed in these Notes, unless insignificant.

The Environment

The business of the Group is delivering marketing and advertising related services to Clients. The direct and
indirect impact of these services on the environment is negligible and considered low risk, however we
continue to take action to reduce our environmental impact where viable.

Directors’ Indemnity Insurance

As permitted by Section 233 of the Companies Act 2006, the Company has purchased insurance cover
on behalf of the Directors, indemnifying them against certain liabilities which may be incurred by them in
relation to the Company.

Post Balance Sheet Events

There were no material post balance sheet events.

Policy on Payments to Creditors

The Group does not have a standard code for dealing specifically with the payment of creditors. The Group
negotiates payment terms with its suppliers on an individual basis and settles its accounts in accordance
with those terms. Trade creditors at the year end represented 46 days purchases (2011: 37 days).

The Mission Marketing Group plc Annual Report 2012

Employee Policies

It is the Group’s policy not to discriminate between employees or potential employees on any grounds. The
Group is committed to full and fair consideration of all applications. Selection of employees for recruitment,
training, development and promotion are based on their skills, abilities, and relevant requirements for the job.

The Group places considerable value on the involvement of its employees and has continued its previous
practice of keeping them informed on matters affecting them as employees and on various factors affecting
the performance of the Group. Employees are consulted regularly on a wide range of matters affecting their
current and future interests.

Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes
and abilities of the applicant concerned. In the event of members of staff becoming disabled, every effort
is made to ensure their employment with the Group continues and that the appropriate training is arranged.
It is the policy of the Group that the training, career development and promotion of disabled persons should,
as far as possible, be identical to that of other employees.

Political and Charitable Donations

During the year the Group made charitable donations of £11,400 (2011: £10,744) to help support local worthy
causes, along with other regional and national charities. Various parts of the Group have also lent their
professional marketing expertise free of charge during the year to help charities raise their profile. The Group
did not make any political donations during the year.

Auditors

Francis Clark LLP have indicated their willingness to continue in office and, in accordance with the provisions
of the Companies Act 2006, it is proposed that they be re-appointed auditors to the Company for the
ensuing year.

Disclosure of Information to Auditors

So far as the Directors are aware, there is no relevant audit information of which the Group’s auditors are
unaware. The Directors have taken all steps that they ought to have taken as Directors in order to make
themselves aware of any relevant audit information and to establish that the Group’s auditors are aware of
that information.

Going Concern

The Directors are pleased with the progress made since the refinancing and restructuring of the Group
in April 2010. Each year has demonstrated a growth in revenue from net new business wins, profits have
increased, and the balance sheet has been significantly strengthened by equity placings and a reduction in
net debt. Looking to the future, the Directors have confidence that further progress can be made. In addition,
they have considered the financial projections for the Group, including cash flow forecasts, the availability
of committed bank facilities and the headroom against covenant tests for the coming 12 months. They are
satisfied that it is appropriate to adopt the financial statements on the basis that the Company and Group
have adequate resources for the foreseeable future. Therefore the Company and the Group continue to adopt
the going concern basis in preparing the financial statements.

Annual General Meeting

A notice convening the Annual General Meeting to be held on Monday 17 June 2013 at 12 noon is included
within this report.

On behalf of the Board
Peter Fitzwilliam
Finance Director
25 March 2013

The Mission Marketing Group plc Annual Report 2012

Corporate Governance

The Board of The Mission Marketing Group plc is collectively accountable to the Company’s shareholders
is not required to comply with the UK
for good corporate governance. As an AIM-listed company,
Corporate Governance Code (June 2010) (the “Code”) but complies as far as is practicable and appropriate
for a public company of its size and nature.

Board of Directors

At 31 December 2012, the Board consisted of an Executive Chairman, eight Executive Directors and two
Non-Executive Directors. Following the refinancing completed in April 2010 and the resultant transition to
an operator-led focus, with the emphasis on organic growth and cost reductions, the Board considered it
appropriate to appoint the CEOs of each of the Group’s principal Agencies, most of whom are the original
founders of those Agencies, to the Board and to elect David Morgan, the founder of the Group’s largest
Agency, as Executive Chairman. The Directors periodically re-consider the structure of the Board in the light of
acquisitions and expansion and believe the structure established in 2010 remains appropriate. David Morgan is
and within the industry and the Board continues to believe that, although
well regarded both within
combining the roles of Chairman and Chief Executive does not meet “best practice” under the Code, his
role as Executive Chairman remains appropriate for the circumstances and that introducing a separate Chief
Executive would disturb the balance of an entrepreneurial Board, still largely comprising original Vendors.

Stephen Boyd and Chris Morris are Non-Executive Directors and, although Chris provides some consulting
services to the Group, which are not significant in financial value, both are considered to be independent of
management by virtue of their attitude.

The Directors are collectively responsible for the strategic direction, investment decisions and effective
control of the Group. There is a schedule of matters reserved for Board approval which includes, amongst
other things, approval of the Group’s annual budget, acquisition of new subsidiaries, property leases,
significant acquisitions or disposals of fixed assets, and material Client contracts. The Board meets in person
at least eleven times each year and has regular telephonic and electronic contact in-between meetings.

The Board is satisfied that it receives information of a quality and to a timetable that permits it to discharge
its duties.

All Directors are subject to election by shareholders at the first opportunity after their appointment. They are
required to retire every three years and may seek re-appointment.

The Board has established three committees to deal with specific aspects of the Group’s affairs.

Audit Committee

The Audit Committee consists of the two independent Non-Executive Directors, with Stephen Boyd as
Chairman. The Committee considers matters relating to the reporting of results, financial controls, and the
cost and effectiveness of the audit process. It aims to meet at least twice a year with the Group’s external
auditors in attendance. Other Directors attend as required. The terms of reference of the Committee are
available on request.

The Audit Committee is satisfied that the Group’s auditors, Francis Clark LLP, have been objective and
independent of the Group. The Group’s auditors performed non-audit services for the Group as outlined
in Note 7 but the Audit Committee is satisfied that their objectivity and independence was not impaired
by such work.

The Mission Marketing Group plc Annual Report 2012

Remuneration Committee

The Remuneration Committee consists of the two independent Non-Executive Directors, with Stephen
Boyd as Chairman. The Committee determines the remuneration of the Executive Directors and makes
recommendations to the Board with regard to remuneration policy and related matters. The Board maintains
a policy of providing executive remuneration packages that will attract, motivate and retain Directors of the
calibre necessary to deliver the Group’s growth strategy and to reward them for enhancing shareholder value.

The Executive Directors’ remuneration packages consist of three elements:

• basic salary and benefit package;
• performance related bonus – the Group operates a performance-related bonus scheme, related to the

delivery of profit targets; and

• share option incentives – details of share options granted to the Executive Directors at the discretion of

the Remuneration Committee are shown in the Directors’ report.

Since Peter Fitzwilliam’s services as Chief Financial Officer are provided via VPF London Ltd, he is not eligible
for benefits, however as a Director he is eligible for share option incentives and VPF London may receive
performance-related bonuses. The Remuneration Committee reviews the components of each Executive
Director’s remuneration package annually. The remuneration and terms and conditions of appointment of
the Non-Executive Directors are determined by the Board. No Director is involved in setting his or her own
remuneration. The Remuneration Committee meets as and when required. The terms of reference of the
Committee are available on request.

Nomination Committee

The Nomination Committee consists of the Group’s Executive Chairman, David Morgan, as the Committee
Chairman, and the two Non-Executive Directors. The Committee is responsible for reviewing and making
proposals to the Board on the appointment of Directors and meets as necessary. The terms of reference of
the Committee are available on request.

Summary of Directors’ Attendance

Board
Meetings

Remuneration
Committee

Audit
Committee

Nomination
Committee

Entitled
to attend

Attended

Entitled
to attend

Attended

Entitled
to attend

Attended

Entitled
to attend

Attended

Dylan Bogg

Stephen Boyd

James Clifton

Robert Day

Peter Fitzwilliam

Chris Goodwin

Bruce Hutton

David Morgan

Chris Morris

Sue Mullen

Fiona Shepherd

n/a

–

n/a

–

n/a

The Mission Marketing Group plc Annual Report 2012

Shareholder Communications

The Company believes in good communication with shareholders. The Board encourages shareholders to
attend its Annual General Meeting. The Chairman and the Finance Director meet analysts and institutional
shareholders periodically in order to ensure that the strategy and performance of the Group are clearly
understood, and they provide the first point of contact for any queries raised by shareholders. In the event
that these Directors fail to resolve any queries, or where a Non-Executive Director is more appropriate, the
Senior Independent Director, Stephen Boyd, is available to meet shareholders.

Internal Financial Control

The Board is responsible for ensuring that the Group maintains a system of internal financial controls.
The objective of the system is to safeguard Group assets, ensure proper accounting records are maintained
and that the financial information used within the business and for publication is timely and reliable. Any such
system can only provide reasonable, but not absolute, assurance against material loss or misstatement.

The Board does not consider it would be appropriate to have its own internal audit function at the present
time, given the Group’s size and the nature of its business. At present the internal audit of internal financial
controls forms part of the responsibilities of the Group’s finance function.

All the day to day operational decisions are taken initially by the Executive Directors, in accordance with the
Group’s strategy. The Executive Directors are also responsible for initiating commercial transactions and
approving payments, save for those relating to their own employment.

The key internal controls include the specific levels of delegated authority and the segregation of duties; the
prior approval of all acquisitions; the review of pertinent commercial, financial and other information by the
Board on a regular basis; the prior approval of all significant strategic decisions; and maintaining a formal
strategy for business activities.

On behalf of the Board
Peter Fitzwilliam
Finance Director
25 March 2013

The Mission Marketing Group plc Annual Report 2012

Independent Auditor’s Report to the Members of The Mission Marketing Group plc

We have audited the financial statements of The Mission Marketing Group plc for the year ended 31 December
2012 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Balance
Sheet, the Consolidated Cash Flow Statement, the Consolidated Statement of Changes in Equity and the
related notes. The financial reporting framework that has been applied in their preparation is applicable law
and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

This report is made solely to the Company’s shareholders, as a body, in accordance with Chapter 3 of Part 16
of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s
shareholders those matters we are required to state to them in an auditor’s report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company
and the Company’s shareholders as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditor

As explained more fully in the Directors’ Responsibilities Statement set out on page 20 the Directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and
fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance
with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to
comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements
sufficient to give reasonable assurance that the financial statements are free from material misstatement,
whether caused by fraud or error. This includes an assessment of: whether the accounting policies are
appropriate to the Group’s circumstances and have been consistently applied and adequately disclosed; the
reasonableness of significant accounting estimates made by the Directors; and the overall presentation of
the financial statements. In addition, we read all the financial and non-financial information in the annual
report to identify material inconsistencies with the audited financial statements. If we become aware of any
apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements

In our opinion the Group financial statements:

• give a true and fair view of the state of the Group’s affairs as at 31 December 2012 and of its profit for the

year then ended;

• have been properly prepared in accordance with IFRSs as adopted by the European Union; and
• have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Directors’ Report for the financial year for which the consolidated
financial statements are prepared is consistent with the consolidated financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us
to report to you if, in our opinion:

• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.

Other matter

We have reported separately on the parent company financial statements of The Mission Marketing Group plc
for the year ended 31 December 2012.

Christopher Hicks BA FCA (Senior Statutory Auditor)
For and on behalf of Francis Clark LLP, Chartered Accountants and Statutory Auditors
Sigma House, Oak View Close, Edginswell Park, Torquay TQ2 7FF
25 March 2013

The Mission Marketing Group plc Annual Report 2012

Consolidated Statement of Comprehensive Income
For the year ended 31 December 2012

TURNOVER
Cost of sales

OPERATING INCOME
Operating expenses before exceptional items

OPERATING PROFIT BEFORE EXCEPTIONAL ITEMS
Exceptional items

OPERATING PROFIT
Investment income
Finance costs

PROFIT BEFORE TAXATION
Taxation

PROFIT FOR THE YEAR

Other comprehensive income

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

Basic earnings per share (pence)
Diluted earnings per share (pence)
Headline basic earnings per share (pence)
Headline diluted earnings per share (pence)

Year to
31 December
2012

Year to
31 December
2011

£’000

116,970
(69,446)

47,524
(41,736)

5,788
–

5,788
9
(1,113)

4,684
(1,306)

3,378

–

3,378

4.68
4.33
4.91
4.54

£’000

116,044
(74,577)

41,467
(35,619)

5,848
(100)

5,748
5
(1,641)

4,112
(1,026)

3,086

–

3,086

4.35
4.10
4.45
4.20

Note

The earnings per share figures derive from continuing and total operations.

The Mission Marketing Group plc Annual Report 2012

Consolidated Balance Sheet
As at 31 December 2012

FIXED ASSETS
Intangible assets
Property, plant and equipment

CURRENT ASSETS
Stock and work in progress
Trade and other receivables
Cash and short term deposits

CURRENT LIABILITIES
Trade and other payables
Accruals
Corporation tax payable
Bank loans
Acquisition obligations

NET CURRENT LIABILITIES

TOTAL ASSETS LESS CURRENT LIABILITIES

NON-CURRENT LIABILITIES
Bank loans
Obligations under finance leases
Acquisition obligations
Deferred tax liabilities

NET ASSETS

CAPITAL AND RESERVES
Called up share capital
Share premium account
Own shares
Share option reserve
Retained earnings

TOTAL EQUITY

As at
31 December
2012

As at
31 December
2011

Note

£’000

71,433
3,230

74,663

921
24,364
546

25,831

(13,625)
(7,541)
(1,359)
(2,286)
(1,124)

(25,935)

(104)

68,443
2,685

71,128

626
20,844
315

21,785

(10,378)
(8,117)
(820)
(4,000)
–

(23,315)

(1,530)

74,559

69,598

(10,596)
(69)
(1,210)
–

(11,875)

62,684

7,699
40,288
(1,201)
441
15,457

62,684

(11,641)
(40)
–
(1)

(11,682)

57,916

7,246
39,542
(1,234)
263
12,099

57,916

The financial statements were approved and authorised for issue on 25 March 2013 by the Board of Directors.
They were signed on its behalf by:

Peter Fitzwilliam
Finance Director

Company registration number: 05733632

The Mission Marketing Group plc Annual Report 2012

Consolidated Cash Flow Statement
For the year ended 31 December 2012

Operating profit
Depreciation and amortisation charges
Loss on disposal of property, plant and equipment
Non cash charge for share options and shares awarded
(Increase)/decrease in receivables
Decrease/(increase) in stock and work in progress
Increase/(decrease) in payables

OPERATING CASH FLOWS
Net finance costs
Tax paid

Net cash inflow from operating activities

INVESTING ACTIVITIES
Proceeds on disposal of property, plant and equipment
Purchase of property, plant and equipment
Acquisition of subsidiaries
Cash acquired with subsidiaries
Acquisition of intangibles

Net cash outflow from investing activities

FINANCING ACTIVITIES
Movement in finance leases
Repayment of long term bank loans
Proceeds on issue of ordinary share capital

Net cash outflow from financing activities

Increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

Year to
31 December
2012

Year to
31 December
2011

£’000

5,788
1,081
1
178
(2,313)
103
403

5,241
(884)
(1,156)

3,201

2
(1,234)
(728)
741
(5)

(1,224)

109
(2,979)
1,124

(1,746)

231
315

546

£’000

5,748
762
16
129
1,401
(137)
(726)

7,193
(1,566)
(496)

5,131

69
(1,552)
–
–
(190)

(1,673)

(68)
(4,513)
–

(4,581)

(1,123)
1,438

315

Consolidated Statement of Changes in Equity
For the year ended 31 December 2012

Share
Capital

Share
Premium

Own
Shares

Share
Option
Reserve

£’000

At 1 January 2011
Credit for share option scheme
Shares awarded to employees
from own shares
Total Comprehensive Income
for the year

£’000

7,246
–

–

39,542
–

(1,259)
–

–

At 31 December 2011

7,246

39,542

(1,234)

New shares issued
Credit for share option scheme
Shares awarded to employees
from own shares
Total Comprehensive Income
for the year

453
–

–

746
–

–

–
–

–

Retained
Earnings

£’000

9,038
–

Total

£’000

54,701
129

(25)

–

3,086

12,099

57,916

–
–

1,199
178

(20)

3,378

134
129

–

263

–
178

–

At 31 December 2012

7,699

40,288

(1,201)

441

15,457

62,684

The Mission Marketing Group plc Annual Report 2012

Notes to the Consolidated Financial Statements

1. Accounting Policies

Basis of preparation

The annual financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS) adopted by the European Union.

The financial statements have been prepared on the historical cost basis.

Going concern

The Group’s available banking facilities provide comfortable levels of headroom against the Group’s
projected cash flows and the Directors accordingly consider that it is appropriate to continue to adopt the
going concern basis in preparing these financial statements.

Basis of consolidation

The Group’s financial statements consolidate the financial statements of the Company and entities
controlled by the Company (its subsidiaries) made up to 31 December each year. Control is achieved where
the Company has the power to govern the financial and operating polices of an investee entity so as to
obtain benefits from its activities.

On acquisition, the assets and liabilities and contingent liabilities of a subsidiary are measured at their fair
values at the date of acquisition. Goodwill represents the excess of acquisition cost over the fair value of the
Group’s share of the identifiable net assets of the acquired subsidiary at the date of acquisition. Where the
fair value of the identifiable net assets acquired exceeds the cost of acquisition, any discount on acquisition
is credited to profit or loss in the period of acquisition.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of
comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring accounting
policies used into line with those used by the Group.

All intra-Group transactions, balances, income and expenses are eliminated on consolidation.

Revenue and revenue recognition

The Group’s operating subsidiaries carry out a range of different activities. The following policies apply
consistently across subsidiaries and business segments.

Turnover is in respect of the provision of services including fees, commissions, rechargeable expenses and
sales of materials performed subject to specific contracts. Where recorded turnover exceeds amounts
invoiced to Clients, the excess is classified as accrued income.

Income is taken on fee income in the period to which it relates. Project income is recognised in the period in
which the project is worked on. For projects which straddle the accounting year end, income is recognised
to reflect the partial performance of the contractual obligations in accordance with IAS 18 Revenue.

Income is recognised on the following basis:

• Retainer fees are apportioned over the time period to which they relate.
• Project income is recognised by apportioning the fees billed or billable to the time period for which those
fees were earned by relationship to the percentage of completeness of the project to which they relate.

• Media commission is recognised when the advertising has been satisfactorily aired or placed.
• Unbilled costs relating to contracts for services are included at rechargeable value in accrued income.

The Mission Marketing Group plc Annual Report 2012

Share-based payment transactions

The Group has applied the requirements of IFRS 2 Share-based Payments. IFRS 2 has been applied to all
grants of equity instruments.

Equity-settled share-based payments, such as share options, are measured at fair value at the date of grant.
The fair value determined at the grant date of the equity-settled share payments is expensed on a straight-line
basis over the vesting period, based on the Group’s estimate of the number of shares that will eventually vest.

Fair value is measured by use of a Black Scholes model on the grounds that there are no market related
vesting conditions. The expected life used in the model has been adjusted, based on the management‘s
best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.
Market price on any given day is obtained from external publicly available sources.

Pension costs

Retirement benefits to employees are provided by defined contribution schemes that are funded by the
Group and employees. Payments are made to pension trusts that are financially separate from the Group.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the
balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange
ruling at the date of the transaction. Exchange differences are reflected in the profit or loss accordingly.

Goodwill and other intangible assets

Goodwill arising from the purchase of subsidiary undertakings and trade acquisitions represents the excess
of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets, liabilities and
contingent liabilities of the subsidiary acquired, and is capitalised in accordance with the requirements of
IFRS 3. Future anticipated payments to vendors in respect of earn-outs are based on the Directors’ best
estimates of these obligations. Earn-outs are dependent on the future performance of the relevant business
and are reviewed annually.

Goodwill is not amortised, but is reviewed annually for impairment. Goodwill impairment is assessed by
comparing the carrying value of goodwill for each cash-generating unit to the future cash flows, discounted
to their net present value using an appropriate discount rate, derived from the relevant underlying assets.
Where the net present value of future cash flows is below the carrying value of goodwill, an impairment
adjustment is recognised in profit or loss and is not subsequently reversed.

Other intangible assets purchased separately, or separately identified as part of an acquisition, are amortised
over periods of between 4 and 20 years, except certain brand names which are considered to have an
indefinite useful life. The value of such brand names is not amortised, but rather an annual impairment test
is applied and any shortfall in the present value of future cash flows derived from the brand name versus the
carrying value is recognised in profit and loss.

Property, plant and equipment

Tangible fixed assets are stated at cost less accumulated depreciation. Depreciation is provided on all property,
plant and equipment at rates calculated to write off the cost, less estimated residual value based on prices
prevailing at the date of acquisition, of each asset evenly over its expected useful economic life, as follows:

Short leasehold property
Motor vehicles
Fixtures, fittings and office equipment
Computer equipment

Period of the lease
25% per annum
10-33% per annum
25-33% per annum

Assets held under finance leases are depreciated over their expected useful lives on the same basis as
owned assets or, where shorter, the term of the relevant lease.

The gain or loss arising on the disposal of an asset is determined as the difference between the sales
proceeds and the carrying amount of the asset and is recognised in profit or loss.

The Mission Marketing Group plc Annual Report 2012

Stock and work in progress

Stock and work in progress is stated at the lower of cost and net realisable value and includes the costs of
direct materials and purchases, and the costs of direct labour. Net realisable value is based on estimated
invoice value less further costs expected to be incurred to completion.

Deferred taxation

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts
of assets and liabilities in the financial statements and the corresponding tax bases used in the computation
of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent
it is probable that taxable profits will be available against which deductible temporary differences can be
utilised. Such assets and liabilities are not recognised if the temporary differences arise from goodwill or from
the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that
affects neither the tax profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries,
except where the Group is able to control the reversal of the temporary differences and it is probable that
the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent
that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to
be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled
or the asset is realised. Deferred tax is charged or credited in profit or loss, except when it relates to items
charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred consideration

The terms of an acquisition may provide that the value of the purchase consideration, which may be payable
in cash, shares or other security at a future date, depends on uncertain future events, such as the future
performance of the acquired company. Where it is not possible to estimate the amounts payable with any
degree of certainty, the amounts recognised in the financial statements represent a reasonable estimate at
the balance sheet date of the amounts expected to be paid. The deferred consideration is discounted to a
present value. The differences between the present value of the liabilities and the actual amounts payable,
where material, are charged to the profit or loss as notional finance costs over the life of the associated
liability. The rate used is the risk free rate applicable at the time of acquisition of the relevant entity.

Where it becomes appropriate to increase or decrease a previous estimate of deferred consideration, an
adjustment is made to the current year IFRS interest charge, such that the cumulative interest charged to the
date of change reflects the amount of interest charge that would have been expensed had the revised estimate
of the deferred consideration been made at the date that the liability was first recognised. By so doing, the
total interest expensed over the life of the liability is calculated as a function of the latest expectation and is
not influenced by any previous estimates whether higher or lower, and fully reflects the intention of IFRS 3.

Financial instruments

Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group
becomes a party to the contractual provisions of the instrument. Issue costs are offset against the proceeds
of such instruments. Financial liabilities are released to income when the liability is extinguished.

Liabilities and equity

Financial liabilities and equity instruments are classified according to the substance of the contractual
arrangements entered into. An equity instrument is any contract that evidences a residual interest in the
assets of the Group after deducting all of its liabilities. The Group has only one class of share in existence.

The Mission Marketing Group plc Annual Report 2012

Finance costs

Finance costs, which include interest, bank charges and the unwinding of the discount on deferred
consideration, are recognised in profit or loss in the year in which they are incurred. Bank debt renegotiation
fees, where they can be amortised over the life of the loan facility, are included in finance costs.

Accounting estimates and judgements

The Group makes estimates and judgements concerning the future and the resulting estimates may,
by definition, vary from the actual results. The Directors considered the critical accounting estimates and
judgements used in the financial statements and concluded that the main areas of judgement are:

• potential impairment of goodwill;
• revenue recognition policies in respect of contracts which straddle the year end; and
• valuation of intangible assets on acquisitions.

The potential impairment of goodwill is based on estimates of future cash flows derived from the financial
projections of each cash-generating unit over an initial three year period and assumptions about growth
thereafter, discussed in more detail in Note 12. Estimating these future cash flows is the Group’s key source
of estimation uncertainty.

Revenue is recognised based on an estimate of the stage of completion of contracts which straddle the year
end, typically derived from the amount of time so far committed to those contracts in relation to the total
estimated time to complete them.

When considering the valuation of intangible assets on acquisitions, a range of methods is undertaken both
for identifying intangibles and placing valuations on them. Brand names, customer relationships, intellectual
property rights and goodwill are the most frequently identified intangible assets. The valuation of each
element is assessed by reference to commonly used techniques, such as “relief from royalty” and “excess
earnings” and to industry leaders and competitors.

New standards, interpretations and amendments to existing standards

There are no material impacts arising from standards and interpretations applicable for the first time to these
financial statements, as detailed in the prior year financial statements.

The following IFRS and IFRIC Interpretations have been issued but have not been applied by the Group
in preparing these financial statements as they are not as yet effective. The Group intends to adopt these
Standards and Interpretations when they become effective, rather than adopt them early. None of these
Standards and Interpretations is anticipated to have a significant impact on the Group.

• IFRS 9, ‘Financial instruments’, effective 1 January 2015
• IFRS 10, ‘Consolidated financial statements’ effective 1 January 2013
• IFRS 11, ‘Joint arrangements’ effective 1 January 2013
• IFRS 12, ‘Disclosure of interests in other entities’ effective 1 January 2013
• IFRS 13, ‘Fair value measurement’ effective 1 January 2013

The above standards have not yet been adopted by the European Union and therefore do not form part of
IFRS as adopted by the European Union.

A number of revised IFRSs and amendments to IFRSs are also currently in issue which are not relevant for
the Group’s activities and which have not therefore been adopted in preparing these financial statements.

The Mission Marketing Group plc Annual Report 2012

2. Segmental Information

Business segmentation

For management purposes the Group had seven operating subsidiaries during the period: April-Six Ltd,
Big Communications Ltd, Bray Leino Ltd (incorporating Addiction and Yucca), Fox Murphy Ltd (trading
as balloon dog), RLA Group Ltd, Story UK Ltd and ThinkBDW Ltd (incorporating Robson Brown), each of
which carries out a range of activities. These activities have been divided into four business and operating
segments as defined by IFRS 8 which form the basis of the Group’s primary reporting segments, namely:
Branding, Advertising and Digital; Media; Events and Learning; and Public Relations.

Year to 31 December 2012

Turnover

Operating income

Segmental operating profit
Unallocated corporate expenses

Headline operating profit
Investment income
Finance costs

Headline profit before tax
Profit adjustments (Note 3)

Reported profit before taxation
Taxation

Profit for period

Other Information
Capital expenditure
Unallocated capital expenditure

Total capital expenditure

Depreciation and amortisation
Unallocated depreciation
and amortisation

Total depreciation and amortisation

Balance Sheet
Assets
Segment assets
Unallocated corporate assets

Consolidated total assets

Liabilities
Segment Liabilities
Unallocated corporate liabilities

Consolidated total liabilities

Branding,
Advertising &
Digital

£’000

58,291

36,905

5,771

Media

£’000

46,144

4,597

1,109

Events &
Learning

Public
Relations

£’000

9,652

3,565

139

£’000

2,883

2,457

825

173

164

835

105

26,822

4,484

520

323

14,406

4,582

212

122

Group

£’000

116,970

47,524

7,045
(1,085)

5,960
9
(1,113)

4,856
(172)

4,684
(1,306)

3,378

1,234
–

1,234

1,046

1,081

32,149
68,345

100,494

19,322
18,488

37,810

Consolidated net assets / (liabilities)

12,416

(98)

308

201

62,684

Unallocated corporate expenses include corporate administration expenses necessary for a quoted company.
It is considered impractical to split the debt interest into segments.

The Mission Marketing Group plc Annual Report 2012

The split of assets and liabilities has been estimated, as the businesses are integrated. Unallocated corporate
assets and liabilities include unallocated IFRS assets and liabilities, corporate assets and liabilities, Group
cash reserves and drawn debt liabilities.

Year to 31 December 2011

Turnover

Operating income

Segmental operating profit
Unallocated corporate expenses

Headline operating profit
Investment income
Finance costs

Headline profit before tax
Profit adjustments (Note 3)

Profit before taxation
Taxation

Profit for period

Other Information
Capital expenditure
Unallocated capital expenditure

Total capital expenditure

Depreciation and amortisation
Unallocated depreciation
and amortisation

Total depreciation and amortisation

Balance Sheet
Assets
Segment assets
Unallocated corporate assets

Consolidated total assets

Liabilities
Segment Liabilities
Unallocated corporate liabilities

Consolidated total liabilities

Branding,
Advertising &
Digital

£’000

50,150

30,767

5,027

Events &
Learning

Public
Relations

Media

£’000

51,335

11,890

4,559

1,593

4,045

302

£’000

2,669

2,096

1,267

103

121

570

21,223

5,700

866

401

10,201

5,484

334

145

Group

£’000

116,044

41,467

6,934
(1,086)

5,848
5
(1,641)

4,212
(100)

4,112
(1,026)

3,086

1,552
–

1,552

748

762

28,190
64,723

92,913

16,164
18,833

34,997

Consolidated net assets

11,022

216

532

256

57,916

Geographical segmentation

Virtually all of the Group’s operations are based in the UK and substantially all the Group’s business is
executed in the UK.

The Mission Marketing Group plc Annual Report 2012

3. Reconciliation of Headline Profit to Reported Profit

Year to
31 December
2012

Year to
31 December
2011

Headline profit before finance costs, income from investments and taxation
Net finance costs

Headline profit before taxation

Adjustments
Exceptional items
IFRS amortisation of other intangibles recognised on acquisitions
Acquisition transaction costs expensed under IFRS

Reported profit before taxation

Headline profit before taxation
Headline taxation

Headline profit after taxation

Adjustments
Other exceptional costs
IFRS amortisation of other intangibles recognised on acquisitions
Acquisition transaction costs expensed under IFRS
Taxation impact

Reported profit after taxation

4. Exceptional Items

Restructuring costs

£’000

5,960
(1,104)

4,856

–
(76)
(96)

4,684

4,856
(1,313)

3,543

–
(76)
(96)
7

3,378

£’000

5,848
(1,636)

4,212

(100)
–
–

4,112

4,212
(1,053)

3,159

(100)
–
–
27

3,086

Year to
31 December
2012

Year to
31 December
2011

£’000

–

£’000

100

Exceptional items represent revenue or costs that, either by their size or nature, require separate disclosure
in order to give a fuller understanding of the Group’s financial performance.

5. Investment Income

Interest on bank deposits

6. Finance Costs and IFRS Interest Charges

Finance costs
Interest on bank loans and overdrafts
Amortisation of bank debt renegotiation fees

Year to
31 December
2012

Year to
31 December
2011

£’000

Year to
31 December
2012

Year to
31 December
2011

£’000

(808)
(305)

(1,113)

(1,182)
(459)

(1,641)

The Mission Marketing Group plc Annual Report 2012

7. Profit on Ordinary Activities before Tax

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

Depreciation of owned tangible fixed assets
Depreciation of tangible fixed assets held under finance leases
Amortisation of intangible assets
Loss/(profit) on disposal of property, plant and equipment
Operating lease rentals – Land and buildings
Operating lease rentals – Plant and equipment
Operating lease rentals – Other assets
Staff costs (see Note 8)
Auditors’ remuneration
Loss / (profit) on foreign exchange

Auditors’ remuneration may be analysed by:

Audit
Taxation
Corporate finance
Other services

Year to
31 December
2012

Year to
31 December
2011

£’000

915
90
76
1
1,066
377
175
31,256
201
29

£’000

693
61
8
16
1,125
299
166
26,278
164
(7)

Year to
31 December
2012

Year to
31 December
2011

£’000

110
20
58
13

201

99
19
38
8

164

The increase in audit costs reflects the expansion of the Group through acquisition during the year. Other
services include review of the Group’s Interim Report, accounting advice on various International Financial
Reporting Standards and advice in relation to business issues.

8. Employee Information

The average number of Directors and staff employed by the Group during the year analysed by segment,
was as follows:

Branding, Advertising & Digital
Media
Events & Learning
Public Relations
Central

The Mission Marketing Group plc Annual Report 2012

Year to
31 December
2012

Year to
31 December
2011

Number

578
41
105
38
3

765

469
39
111
37
3

659

The aggregate employee costs of these persons were as follows:

Wages and salaries
Social security costs
Pension costs
Share based payment expense

Directors’ remuneration

Year to
31 December
2012

Year to
31 December
2011

£’000

27,232
2,989
920
143

31,284

£’000

22,896
2,500
753
129

26,278

Included in the above are the following amounts (in £) paid to Directors for the periods in each year they were
TMMG plc Directors.

Performance-
related
Payments

Salary / Fees

Benefits

Pension

Total
31 December
2012

Total
31 December
2011

Current Directors
Dylan Bogg
Stephen Boyd (Note 3)
James Clifton (Note 2)
(from 11 October 2012)

Robert Day (Note 4)
Peter Fitzwilliam (Note 5)
Chris Goodwin
(from 27 April 2011)

Bruce Hutton
David Morgan
Chris Morris (Note 6)
Sue Mullen (Note 2)
(from 18 June 2012)

Fiona Shepherd

Former Director
Brian Child (Note 7)
(to 30 September 2011)

Notes:

150,362
30,000

36,125
113,154
162,520

102,500
157,500
125,383
89,050

59,063
143,983

–
–

–
63,000
15,000

16,000
–
20,000
–

10,000
15,000

2,501
–

195
8,983
-

13,504
21,386
22,282
1,814

88
1,509

7,313
–

4,813
43,450
–

9,326
10,440
6,000
–

5,906
–

160,176
30,000

41,133
228,587
177,520

141,330
189,326
173,665
90,864

75,057
160,492

151,949
29,166

–
173,046
165,000

76,085
221,275
155,473
85,979

–
125,367

21,667

1,169,640

139,000

72,262

87,248

1,468,150

1,205,007

1. Dylan Bogg, Robert Day, Chris Goodwin, Bruce Hutton, and Fiona Shepherd, were paid £12,500 as TMMG
plc Directors, with the balance of their remuneration paid as Directors and employees of subsidiary
companies for services rendered there.

2. James Clifton and Sue Mullen were paid £nil as TMMG plc Directors, but were paid as Directors and

employees of subsidiary companies for services rendered there.

3. The services of Stephen Boyd as a TMMG plc Director were provided through Stephen Boyd Ltd,

a company controlled by him.

4. Robert Day operated a salary sacrifice during the year, whereby an amount of £43,450, including Employer’s

National Insurance Contributions, was paid into his pension.

5. Peter Fitzwilliam was paid £20,500 as a TMMG plc Director (2011: £4,000 from 1 July 2011). In addition,

his services as CFO were provided by VPF London Ltd, a company controlled by him.

6. Chris Morris was paid £42,500 as a TMMG plc Director during the year (2011: £39,667). In addition, he was paid
for his consulting services through a consultancy practice owned by him, Morris Marketing Consultancy.
7. The services of Brian Child as a TMMG plc Director were provided through Brain Child Marketing Ltd,

a company controlled by him.

The Mission Marketing Group plc Annual Report 2012

9. Taxation

Current tax:
UK corporation tax at 24.5% (2011: 26.5%)
Adjustment for prior periods

Deferred tax:
Current year reversing/(originating) temporary differences
Adjustment for prior periods

Year to
31 December
2012

Year to
31 December
2011

£’000

1,390
(93)

1,297

9
–

1,265
(288)

977

(2)
51

Tax charge for the year

1,306

1,026

Factors affecting the tax charge for the current year:
The tax assessed for the year is higher (2011: lower) than the standard rate of corporation tax in the UK.
The differences are:

Profit before taxation

Year to
31 December
2012

Year to
31 December
2011

£’000

4,684

£’000

4,112

Profit on ordinary activities before tax at the standard rate
of corporation tax of 24.5% (2011: 26.5%)

1,148

1,090

Effect of:
Non-deductible expenses
Adjustments to prior periods
Movement on provisions
IFRS charges
Other differences

Actual tax charge for the year

156
(93)
42
–
53

188
(237)
(6)
(4)
(5)

1,306

1,026

The Mission Marketing Group plc Annual Report 2012

10. Dividends

The Board does not propose payment of a dividend at this stage (2011: nil) although it has declared its intention
to declare a dividend during 2013 subject to trading in the first half of the year.

11. 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.

Earnings
Earnings for the purpose of reported earnings per share being
net profit attributable to equity holders of the parent

Earnings for the purpose of headline earnings per share (see Note 3)

Number of shares
Weighted average number of ordinary shares for the purpose
of basic earnings per share
Dilutive effect of securities:
Employee share options
Bank warrants

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

Reported basis
Basic earnings per share (pence)
Diluted earnings per share (pence)

Headline basis
Basic earnings per share (pence)
Diluted earnings per share (pence)

Year to
31 December
2012

Year to
31 December
2011

£’000

3,378

3,543

3,086

3,159

72,169,181

70,944,643

3,461,578
2,386,907

2,007,832
2,333,434

78,017,666

75,285,909

4.68
4.33

4.91
4.54

4.35
4.10

4.45
4.20

Basic earnings per share includes shares to be issued subject only to time as if they had been issued at the
beginning of the period.

A reconciliation of the profit after tax on a reported basis and the headline basis is given in Note 3.

The Mission Marketing Group plc Annual Report 2012

12. Intangible Assets – Goodwill

Cost
At 1 January
Recognised on acquisition of subsidiaries
Adjustment to consideration

At 31 December

Impairment adjustment

At 1 January and 31 December

Year to
31 December
2012

Year to
31 December
2011

£’000

72,186
2,113
15

74,314

72,186
–
–

72,186

3,995

Net book value at 31 December

70,319

68,191

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”). The initial projection period of three 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. After the initial
projection period, an annual growth rate of 2.5% was assumed for all units and the resulting pre-tax cash
flow forecasts were discounted using the Group’s estimated pre-tax weighted average cost of capital, which
is 7.5%. The Directors assessed the sensitivity of the impairment test results to changes in key assumptions
and concluded that a reasonably possible change to the key assumptions would not cause the carrying value
of goodwill for any CGU to exceed the net present value of its projected cash flows.

Goodwill arose from the acquisition of the following subsidiary companies and trade assets and is comprised
of the following substantial components:

Addiction Worldwide
April-Six Ltd
Big Communications Ltd/Fuse Digital Ltd
Bray Leino Ltd
Friars 573 Ltd/Fox Murphy Ltd (trading as balloon dog)
Haven Marketing Ltd
RLA Group Ltd
Story UK Ltd
ThinkBDW Ltd
Quorum Advertising Ltd

31 December
2012

31 December
2011

£’000

372
9,411
8,125
30,846
1,514
127
6,572
6,969
6,283
100

70,319

£’000

–
9,411
8,125
30,831
–
–
6,572
6,969
6,283
–

68,191

The Mission Marketing Group plc Annual Report 2012

Other intangible assets

Cost
At 1 January
Additions

At 31 December

Amortisation
At 1 January
Charge for the year

At 31 December

Net book value

Year to 31
December 2012

Year to 31
December 2011

£’000

271
938

1,209

19
76

1,114

81
190

271

11
8

252

Additions of £938,000 in the year include Client relationships and trade names acquired relating to balloon
dog and Addiction Worldwide of which £163,000 relates to trade names deemed to have an indefinite useful
life (2011: £190,000 consists of Client lists and other information acquired relating to FireIMC and Yucca).

13. Subsidiaries

The Group’s principal trading subsidiaries are listed below. All subsidiaries are 100% owned and all are
incorporated in the United Kingdom.

Subsidiary undertaking

Nature of business

April-Six Ltd

Integrated communications, specialising in the technology sector

Big Communications Ltd

Brand planning and strategic development; new media
marketing, including website design and advertising,
SMS messaging, digital video and database management

Bray Leino Ltd

Advertising, events and PR

Fox Murphy Ltd (trading as balloon dog) Marketing communications agency

RLA Group Ltd

Story UK Ltd

ThinkBDW Ltd

Marketing and communications

Brand development and creative direct communication

Property marketing, providing advertising, media, brochures,
signage, exhibitions, CGI, animation, intranet and photography

The Mission Marketing Group plc Annual Report 2012

14. Property, Plant and Equipment

Short
Leasehold
Property

Fixtures
& Fittings
and Office
Equipment

Computer
Equipment

Motor
Vehicles

£’000

Cost or valuation
At 1 January 2011
Additions
Disposals

At 31 December 2011

Acquisition of subsidiaries
Additions
Disposals

1,389
204
(3)

1,590

24
73
(6)

2,169
388
(368)

2,189

53
478
(34)

2,421
945
(374)

2,992

779
631
(74)

At 31 December 2012

1,681

2,686

4,328

Depreciation
At 1 January 2011
Charge for the year
Disposals

At 31 December 2011

Acquisition of subsidiaries
Charge for the year
Disposals

928
100
(3)

1,025

7
109
(6)

1,477
200
(316)

1,361

15
268
(34)

1,686
409
(342)

1,753

531
589
(72)

At 31 December 2012

1,135

1,610

2,801

Net book value at
31 December 2012

Net book value at
31 December 2011

546

1,076

1,527

565

828

1,239

263
15
(39)

239

27
52
(69)

249

179
45
(38)

186

12
39
(69)

168

Total

£’000

6,242
1,552
(784)

7,010

883
1,234
(183)

8,944

4,270
754
(699)

4,325

565
1,005
(181)

5,714

3,230

2,685

The net book amount includes £267,000 (2011: £203,000) in respect of assets held under finance lease
agreements. The depreciation charged to the financial statements in the year in respect of such assets
amounted to £90,000 (2011: £61,000).

15. Trade and Other Receivables

Gross trade receivables
Less: Provision for doubtful debts

Other receivables
Prepayments
Accrued income
Deferred tax asset

31 December
2012

31 December
2011

£’000

19,119
(104)

19,015
552
1,023
3,774
–

24,364

£’000

17,098
(93)

17,005
437
739
2,653
10

20,844

An allowance has been made for estimated irrecoverable amounts from the provision of services of
£104,000 (2011: £93,000). The Directors consider that the carrying amount of trade and other receivables
approximates their fair value.

The Mission Marketing Group plc Annual Report 2012

Credit risk

The Group’s principal financial assets are bank balances and cash, trade and other receivables and
investments, which represent the Group’s maximum exposure to credit risk in relation to financial assets.

The Group’s credit risk is primarily attributable to its trade receivables. In order to mitigate this risk, the
Group has arranged credit insurance on certain of its trade receivables as deemed appropriate. Where credit
insurance is not considered cost effective, the Group monitors credit-worthiness closely and mitigates risk,
where appropriate, through payment plans.

The credit risk on cash balances is limited because the counterparties are banks with high credit-ratings
assigned by international credit-rating agencies.

16. Cash and Short Term Deposits

Cash and short term deposits comprise cash held by the Group and short term bank deposits.

17. Trade and Other Payables

Trade creditors
Finance leases
Other creditors
Other tax and social security payable

31 December
2012

31 December
2011

£’000

9,271
136
454
3,764

£’000

7,609
56
272
2,441

13,625

10,378

Trade and other creditors principally comprise amounts outstanding for trade purchases and on-going costs.
The Directors consider that the carrying amount of trade payables approximates their fair value.

18. Bank Overdrafts, Loans and Net Debt

31 December
2012

31 December
2011

Bank loan outstanding
Adjustment to amortised cost

Carrying value of loan outstanding
Less: Cash and short term deposits

Net bank debt

The borrowings are repayable as follows:
Less than one year
In one to two years
In more than two years but less than three years

Adjustment to amortised cost

Less: Amount due for settlement within 12 months
(shown under current liabilities)

Amount due for settlement after 12 months

£’000

13,357
(475)

12,882
(546)

12,336

2,286
2,286
8,785

13,357

(475)

12,882

(2,286)

10,596

£’000

16,207
(566)

15,641
(315)

15,326

4,000
12,207
–

16,207

(566)

15,641

(4,000)

11,641

The Mission Marketing Group plc Annual Report 2012

The adjustment to amortised cost relates to the amortisation of bank debt renegotiation fees over the life
of the loan facility.

At 31 December 2012, the Group had a term loan facility of £6.9m due for repayment by December 2015 on
a quarterly basis, and a revolving credit facility of up to £7.0m, expiring on 27 December 2015.

Interest on both the term loan facility and the revolving credit facility is based on 3 month LIBOR plus
3.5%, payable in cash on loan rollover dates. The gross amount of the revolving credit facility drawn at
31 December 2012 was £6.5m. In addition to its committed facilities, the Group had available an overdraft
facility of up to £2.5m with interest payable by reference to National Westminster Bank plc Base Rate plus 3.5%.

At 31 December 2012, 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 Royal Bank of Scotland plc.

All borrowings are in sterling.

19. Obligations under Finance Leases

Obligations under finance leases are as follows:

In one year or less
Between two and five years

31 December
2012

31 December
2011

£’000

136
69

205

£’000

56
40

Assets held under finance leases consist of office equipment. The fair values of the Group’s lease obligations
approximate their carrying amount.

The Group’s obligations under finance leases are secured by the lessor’s charge over the leased assets.

20. Acquisitions

Acquisition obligations

The terms of an acquisition may provide that the value of the purchase consideration, which may be payable in cash
or shares or other securities at a future date, depends on uncertain future events such as the future performance
of the acquired company. The Directors estimate that the liability for payments that may be due is as follows:

Less than one year
Between one and two years
In more than two years but less
than three years
In more than three years but
less than four years

Initial
Consideration

£’000

49
–

–

Contingent
Consideration
Cash

Contingent
Consideration
Shares

£’000

1,000
339

339

389

2,067

£’000

75
48

218

Total

£’000

1,124
387

387

436

2,334

The Mission Marketing Group plc Annual Report 2012

Acquisition of Friars 573 Ltd (“balloon dog”)

On 11 October 2012, the Group acquired the whole issued share capital of Friars 573 Ltd, the holding company
of Fox Murphy Ltd, a company trading as balloon dog (“balloon dog”). The fair value of the consideration given for
the acquisition was £2,823,000. Initial consideration was satisfied by a cash payment of £451,000 and the issue of
£87,000 of shares. Costs relating to the acquisition amounted to £51,000 and were expensed.

Maximum contingent consideration of £2,496,000 is dependent on balloon dog achieving various profit targets
over the period December 2012 to December 2015. The Group has provided for contingent consideration
of £2,285,000 to date. This contingent consideration is to be settled by a combination of cash and shares.

The fair value of the net identifiable assets acquired was £578,000 resulting in goodwill and other intangible
assets of £2,245,000. 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 the Company.

Book Value

Fair Value
Adjustments

£’000

Fair Value

£’000

Net assets acquired
Investments and goodwill
Fixed assets
Stock and work in progress
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Deferred taxation
Preference shares

Other intangibles recognised at acquisition

Goodwill

Total consideration

Satisfied by:
Cash
Shares
Deferred contingent consideration

242
238
398
1,034
676
(1,551)
(5)
(212)

–

(242)
–
–
–
–
–
–
–

731

–
238
398
1,034
676
(1,551)
(5)
(212)

578
731

1,309
1,514

2,823

451
87
2,285

2,823

The majority of the cash and cash equivalents acquired were utilised following acquisition to settle preference
shares, corporation tax and other obligations.

balloon dog contributed turnover of £1,394,000, operating income of £1,216,000 and headline operating
profit of £137,000 to the results of the Group since acquisition.

The Mission Marketing Group plc Annual Report 2012

Acquisition of Addiction Worldwide (“Addiction”)

On 21 September 2012, the Group acquired the trade and assets of Addiction Worldwide from Francis Clark
LLP, Administrators. The fair value of the consideration given for the acquisition was £85,000, all settled in cash
on completion. There is no deferred or contingent consideration payable. Costs relating to the acquisition
amounted to £23,420 and were expensed.

The fair value of the net identifiable liabilities acquired was £489,000 resulting in goodwill and other
intangible assets of £574,000. 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 the acquired trade
and assets and the anticipated future operating synergies from the combination.

Book Value

Fair Value
Adjustments

£’000

Fair Value

£’000

Net assets acquired
Fixed assets
Trade and other receivables
Cash and cash equivalents
Trade and other payables

Other intangibles recognised at acquisition

Goodwill

Total consideration

Satisfied by:
Cash

81
183
65
(337)

–

–
–
–
(481)

202

81
183
65
(818)

(489)
202

(287)
372

The majority of the net liabilities acquired were settled following acquisition by drawing on the Group’s
cash resources.

Addiction has been integrated into the Group’s activities and consequently it is not possible to determine
accurately its contribution to revenue and profit since acquisition. However, the Directors estimate that
Addiction’s contribution to profit was breakeven.

Pro-forma results including acquisitions

The Directors estimate that the turnover, operating income and headline operating profit of the Group would
have been approximately £128.0m, £54.9m and £6.3m had the Group consolidated the results of balloon
dog and Addiction from the beginning of the year.

The Mission Marketing Group plc Annual Report 2012

21. Deferred Taxation

The deferred taxation liability of nil (2011: £1,000) recognised in the financial statements is set out below:

Accelerated capital allowances
Other timing differences

The movement in the year is analysed as follows:

As at 1 January
Credit to profit or loss

As at 31 December

31 December
2012

31 December
2011

£’000

–
–

–

–
1

Year to
31 December
2012

Year to
31 December
2011

£’000

1
(1)

–

2
(1)

As shown in Note 15, there is a deferred tax asset of nil (2011: £10,000) relating to accounting adjustments for IFRS.

22. Financial Commitments

Operating lease commitments

As at 31 December the Group had annual commitments under non-cancellable operating leases as follows:

31 December 2012

31 December 2011

Land and
Buildings

£’000

147
678
376

1,201

Other

£’000

74
467
–

541

Land and
Buildings

£’000

178
326
444

948

Other

£’000

13
468
–

481

Operating leases which expire:
Within one year
Between two and five years
After more than 5 years

23. Share Capital

Authorised
85,000,000 ordinary shares of 10p each
(2011: 85,000,000 ordinary shares of 10p each)

Allotted and called up
76,990,940 ordinary shares of 10p each
(2011: 72,460,444 ordinary shares of 10p each)

31 December
2012

31 December
2011

£’000

8,500

7,699

7,246

The Mission Marketing Group plc Annual Report 2012

On 11 October 2012 241,352 shares with a total nominal value of £24,135 were issued to the vendors
of Friars 573 Ltd as part of the consideration for the acquisition at a value of 31.075p each, for a total
consideration of £75,000.

In addition, 4,289,144 shares with a total nominal value of £428,914 were issued through a private placing on
11 October 2012, these shares being issued at a value of 28.0p each, for a total consideration of £1,200,960.
£77,048 of share issue costs were incurred in connection with this private placing and were written off to
share premium.

Options

The Group has the following options in issue:

At start of year

Granted Waived/lapsed

Exercised

At end of year

TMMG Long Term
Incentive Plan
Bank warrants

2,751,000
2,333,434

1,450,000
177,019

(178,000)
–

–
–

4,023,000
2,510,453

TMMG Long Term Incentive Plan (“LTIP”) was created to incentivise certain key employees.

The vesting criterion applicable to the LTIPs in issue at the start of the year, all with a nil exercise price, is that
they are dependent upon the achievement of profit targets over the three year periods ending 31 December
2012 and 31 December 2013.

LTIPs issued during the year, also with a nil exercise price, may vest dependent upon the achievement
of profit targets over the three year period ending 31 December 2014.

Shares held in an Employee Benefit Trust (see Note 24) will be used to satisfy share options exercised under
The Mission Marketing Group Long Term Incentive Plan.

Warrants over 3% of the Group’s fully diluted share capital were issued to the Group’s loan providers following
the refinancing completed in 2010 and are exercisable at any time until 15 April 2017. These outstanding
warrants have a 10.0p exercise price.

24. Own Shares

At 1 January 2011
Awarded to employees during the year

At 31 December 2011
Awarded to employees during the year

At 31 December 2012

No. of Shares

1,531,041
(31,250)

1,499,791
(39,284)

1,460,507

£’000

1,259
(25)

1,234
(33)

1,201

Shares are held in an Employee Benefit Trust to meet certain requirements of The Mission Marketing Group
Long Term Incentive Plan.

25. Share Option Reserve

The share option reserve (formerly called the staff remuneration reserve) represents charges to the profit
or loss required by IFRS 2 to reflect the cost of the options issued to the Directors and employees and the
warrants issued to the loan providers.

The Mission Marketing Group plc Annual Report 2012

26. Share-based Payments

Options

Fair value on grant date is measured by use of a Black Scholes model. The valuation methodology is applied
at each year end and the valuation revised to take account of any changes in estimate of the likely number
of shares expected to vest. Details of the relevant option schemes are given in Note 23. The key inputs are:

Share price
Risk free rate
Dividend yield

2012

29p
0.3%
1.0%

2011

18p
0.6%
0.0%

Volatility is based on the historical volatility of the share price over a 3 year trading period although, for nil-cost
options issued under the Group’s Long Term Incentive Scheme, volatility does not impact the calculation
of fair value. The weighted average share price over the three years ending 31 December 2012 was 18.2p.

The Group recognised an expense of £178,000 in 2012 (2011: £129,000).

27. Financial Assets and Liabilities

Capital management

The Group defines “capital” as being net debt plus equity. Net debt comprises short and long term borrowings
net of cash, cash equivalents and the unamortised balance of bank renegotiation fees as analysed in Note 18.
Equity comprises issued share capital, reserves and retained earnings as disclosed in the balance sheet and
in the consolidated statement of changes in equity.

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going
concern and maintain an appropriate capital structure to balance the needs of the Group to grow, whilst
operating with sufficient headroom within its bank covenants. The principal measure by which the Directors
monitor capital risk is the ratio of net debt to EBITDA and, at the time of the restructuring in April 2010, set
a target to reduce this ratio to below x2 by the end of 2012. Below this level, the Group has a number of
options available to optimise the debt/equity balance including, inter alia, dividend payments, returning
capital to shareholders or issuing new shares.

Financial risk management

The Group’s financial instruments comprise cash and various forms of borrowings. As permitted by IAS 39,
short-term debtors and creditors have been excluded.

Substantially all the Group’s activities take place in the United Kingdom and no material transactions take place with
overseas customers or suppliers in local currency. There was no material foreign currency exposure at the year end.

The main purpose of the Group’s use of financial instruments is for day-to-day working capital and as part of
the funding for past acquisitions. The Group’s financial policy and risk management objective is to achieve
the best interest rates available whilst maintaining flexibility and minimising risk. The main risks arising from
the Group’s use of financial instruments are interest rate risk and liquidity risk.

Interest rate risk

The operations of the Group generate cash and it funds acquisitions through a combination of retained profits,
equity issues and borrowings. The Group’s financial liabilities comprise floating rate instruments. The bank
loan’s interest rate is reset from time to time and accordingly is not deemed a fixed rate financial liability.

Interest on both the Group’s revolving credit facility and its term loan is payable by reference to 3 month LIBOR
plus 3.5%, subject to a downward ratchet on achievement of certain ratios of debt to EBITDA on a quarterly
basis. In 2012 the Group resumed its policy of using hedging instruments to limit the exposure to interest
rate risk. This policy had been temporarily suspended when various cap and collar instruments matured
during 2011, on the basis that they were not considered cost effective in the low interest environment that
existed at the time. The interest rate cap taken out in December 2012 limits the Group’s exposure to 3 month
LIBOR on £8.2m of notional principal to 1.0%. This interest rate cap amortises in three monthly instalments and
matures on 30 June 2015. The cap arrangement is considered to be closely related to the host debt contract.

The Mission Marketing Group plc Annual Report 2012

Liquidity risk

The Group’s financial instruments include a mixture of short and long-term borrowings. The Group seeks to
ensure sufficient liquidity is available to meet working capital needs and the repayment terms of the Group’s
financial instruments as they mature.

Financial assets

Cash at bank maturing in less than one year or on demand

Financial liabilities

Interest analysis
Subject to floating rates
Subject to fixed rates

Maturity analysis
One year or less, or on demand
In one to two years
In more than two years

Bank Loan and
Overdraft

£’000

13,357
–

13,357

2,286
2,286
8,785

13,357

Finance
Leases

£’000

–
205

205

136
69
–

205

Acquisition
Obligations

£’000

–
2,334

2,334

1,124
387
823

2,334

31 December
2012

£’000

546

31 December
2012

Total

£’000

13,357
2,539

15,896

3,546
2,742
9,608

15,896

The Group’s bank loans and overdraft facility are floating rate borrowings and all facilities are secured by a
fixed and floating charge over the assets of all Group companies.

The fair value of the Group’s financial assets and liabilities is not considered to be materially different from
their book values.

28. Pensions

The Group operates fifteen defined contributions pension schemes. The pension cost charge for the year
represents contributions payable by the Group to the schemes and amounted to £920,000 (2011: £753,000).
At the end of the financial year outstanding contributions amounted to £71,000 (2011: £56,000).

29. Leave Pay Accrual

No liability or expense has been recognised relating to untaken leave for any of the periods presented.
The Group has a policy of not allowing days to be carried forward from one year to the next, unless in
exceptional circumstances. In addition, no payment is made in lieu of untaken leave which is not carried
forward. As a result, there is no material liability relating to untaken leave at year end.

30. Post Balance Sheet Events

There are no material post balance sheet events.

The Mission Marketing Group plc Annual Report 2012

31. Related Party Transactions

The Directors consider that the Directors of the Company represent the Group’s key management personnel
for the purposes of disclosing related party transactions. Directors’ remuneration is disclosed in Note 8.
The total compensation payable to key management personnel is detailed below.

Short-term employee benefits
Post-employment benefits
Share based payments

Parent company

Year to
31 December
2012

Year to
31 December
2011

£’000

1,381
87
59

1,527

£’000

1,159
46
32

1,237

Stephen Boyd receives his Non-Executive Director’s remuneration through Stephen Boyd Ltd, an entity of
which he is an interested party. In addition, VPF London Ltd, an entity in which Peter Fitzwilliam is an interested
party, received £157,020 for the provision of CFO services, and Morris Marketing Consultancy, an entity
in which Chris Morris is an interested party, received £42,000 for the provision of consultancy services.

Subsidiary undertakings

During the year, Bray Leino Ltd purchased printing services to the value of £324,562 (2011: £381,199) from
Blue Sky Design & Print Ltd, a company in which Bray Leino Ltd had a 50% equity interest. Bray Leino Ltd
sold its 50% interest in Blue Sky Design & Print Ltd on 31 December 2012. Blue Sky Design & Print Ltd was
treated as an associate in the financial statements of The Mission Marketing Group plc, and the results are
not material to the consolidated financial statements of The Mission Marketing Group plc.

Bray Leino Ltd is contracted to pay annual rent of £60,000 (2011: £60,000) to Mrs P H Morgan, the wife of
Mr D W Morgan, Chairman of The Mission Marketing Group plc. As at the year end there were no amounts
due from or owed to Mrs P H Morgan. Bray Leino Ltd is also contracted to rent premises from Hannele Ltd,
in which Mr D W Morgan has a 100% beneficial interest. During the year annual rent of £74,000 (2011: £74,000)
and property management fees of £18,000 (2011: nil) were paid to Hannele Ltd. Bray Leino Ltd also rents
premises from a partnership, in which Hannele Ltd has a 50% interest, for an annual rent of £60,000 (2011:
£60,000). As at the year end there were no amounts due from or owed to Hannele Ltd.

ThinkBDW Ltd is contracted to pay annual rent to Mrs K Day and Mr A Day (wife and brother respectively of
Robert Day, Executive Director). The £35,000 annual rental payable (2011: £35,000) was set at market value
and at the end of the year £17,500 (2011: nil) was due. ThinkBDW Ltd also purchased used cars during the
year with an aggregate value of £24,500 at market value from Mr A Day for use in the business. Robert Day
advanced a short term loan of £200,000 to ThinkBDW Ltd during the year. The advance was interest free
and was repaid before the year end.

Big Communications Ltd paid rent during the year of £71,000 (2011: £71,000) to four individuals, including
Dylan Bogg (Executive Director) and Chris Morris (Non-Executive Director). In addition, Morris Marketing
Consultancy, a consultancy practice owned by Chris Morris, invoiced Big Communications Ltd and was paid
£5,054 (2011: £44,183) during the year for services rendered. Mr Morris also received a benefit of £1,814
from the company.

32. Availability of Annual Report

Copies of the Annual Report for the year ended 31 December 2012 will be circulated to shareholders at least
21 days ahead of the Annual General Meeting (“AGM”) on 17 June 2013 and, after approval at the AGM, will
be delivered to the Registrar of Companies. Further copies will be available from the Company’s registered
office and on the Group’s website, www.themission.co.uk

The Mission Marketing Group plc Annual Report 2012

Independent Auditor’s Report to the Members of The Mission Marketing Group plc

We have audited the parent company financial statements of The Mission Marketing Group plc for the
year ended 31 December 2012 which comprise the Parent Company Balance Sheet and the related notes.
The financial reporting framework that has been applied in their preparation is applicable law and United
Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

This report is made solely to the Company’s shareholders, as a body, in accordance with Chapter 3 of Part 16
of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s
shareholders those matters we are required to state to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company
and the Company’s shareholders as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditor

As explained more fully in the Directors’ Responsibilities Statement set out on page 20 the Directors are
responsible for the preparation of the parent company financial statements and for being satisfied that they
give a true and fair view. Our responsibility is to audit and express an opinion on the parent company financial
statements in accordance with applicable law and International Standards on Auditing (UK and Ireland).
Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient
to give reasonable assurance that the financial statements are free from material misstatement, whether
caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate
to the parent company’s circumstances and have been consistently applied and adequately disclosed; the
reasonableness of significant accounting estimates made by the Directors; and the overall presentation of
the financial statements. If we become aware of any apparent material misstatements or inconsistencies we
consider the implications for our report.

Opinion on financial statements

In our opinion the parent company financial statements:

• give a true and fair view of the state of the Company’s affairs as at 31 December 2012;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Directors’ Report for the financial year for which the financial
statements are prepared is consistent with the parent company financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires
us to report to you if, in our opinion:

• adequate accounting records have not been kept by the parent company, or returns adequate for our

audit have not been received from branches not visited by us; or

• the parent company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.

Other matter

We have reported separately on the consolidated financial statements of The Mission Marketing Group plc
for the year ended 31 December 2012.

The Mission Marketing Group plc Annual Report 2012

Company Balance Sheet
As at 31 December 2012

NON-CURRENT ASSETS
Intangible assets
Tangible assets
Investments

CURRENT ASSETS
Debtors
Cash at bank

CREDITORS: Amounts falling due within one year

NET CURRENT LIABILITIES

TOTAL ASSETS LESS CURRENT LIABILITIES

CREDITORS: Amounts falling due after more
than one year

NET ASSETS

CAPITAL AND RESERVES
Called up share capital
Share premium account
Share option reserve
Profit and loss account

SHAREHOLDERS’ FUNDS

As at
31 December
2012

As at
31 December
2011

Note

£’000

43
2
94,708

94,753

3,152
2

3,154

(9,769)

(6,615)

88,138

(11,806)

76,332

7,699
40,288
441
27,904

76,332

49
4
91,845

91,898

2,863
1

2,864

(11,623)

(8,759)

83,139

(11,641)

71,498

7,246
39,542
263
24,447

71,498

The financial statements were approved and authorised for issue on 25 March 2013 by the Board of Directors.
They were signed on its behalf by:

Peter Fitzwilliam
Finance Director

Company registration number: 05733632

The Mission Marketing Group plc Annual Report 2012

Notes to the Company Balance Sheet

33. Principal Accounting Polices

The financial statements are prepared in accordance with applicable United Kingdom law and accounting
standards (United Kingdom Generally Accepted Accounting Practice). The principal accounting policies of
the Company are set out below. The policies have remained unchanged from the previous year.

Accounting convention

The financial statements have been prepared under the historical cost convention.

Going concern

The Company’s available banking facilities provide comfortable levels of headroom against the Company’s
projected cash flows and the Directors accordingly consider that it is appropriate to continue to adopt the
going concern basis in preparing these financial statements.

Deferred taxation

Deferred taxation is recognised on all timing differences where the transactions or event that give the
Company an obligation to pay more tax in the future, or a right to pay less tax in the future, have occurred
by the balance sheet date. Deferred tax assets are recognised when it is more likely than not that they will
be recoverable. Deferred tax is measured using rates of tax that have been enacted or substantively enacted
by balance sheet date.

Property, plant and equipment

Depreciation is provided on all property, plant and equipment at rates calculated to write off the cost, less
estimated residual value based on prices prevailing at the date of acquisition, of each asset evenly over its
expected useful economic life, as follows:

Short leasehold property
Motor vehicles
Fixtures, fittings and office equipment
Computer equipment

Period of the lease
25% per annum
10-33% per annum
25-33% per annum

Deferred consideration

The terms of an acquisition may 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 amounts recognised in the financial statements represent a reasonable estimate at
the balance sheet date of the amounts expected to be paid and has been classified in the balance sheet in
accordance with the substance of the transaction. Where the agreement gives rise to an obligation that may
be settled by the delivery of a variable number of shares to meet a defined monetary liability, these amounts
are disclosed as debt.

The Mission Marketing Group plc Annual Report 2012

Investments

In the Company’s financial statements, investments in subsidiary undertakings are stated at cost less provision
for any impairment in value.

Lease commitments

Rental costs under operating leases are charged against profits as incurred.

Profit of Parent Company

As permitted under Section 408 of the Companies Act 2006, the profit and loss account of the Company is not
presented as part of these accounts.

34. Intangible Assets

Cost
Accumulated amortisation

Net book value

31 December
2012

31 December
2011

£’000

61
(18)

61
(12)

Intangible assets consist of intellectual property rights which are amortised over 10 years. The amortisation
charge for the year was £6,000 (2011: £3,000).

35. Tangible Fixed Assets

Cost
At 1 January 2012
Additions
Disposals

At 31 December 2012

Depreciation
At 1 January 2012
Charge for the year
Disposals

At 31 December 2012

Net book value at 31 December 2012

Net book value at 31 December 2011

Fixtures &
Fittings

Office
Equipment

£’000

Total

£’000

58
–
–

57
1
–

–

33
–
–

30
1
–

91
–
–

87
2
–

The Mission Marketing Group plc Annual Report 2012

36. Investments

Cost
At 1 January 2011
Adjustments to consideration

At 31 December 2011
Additions

At 31 December 2012

Impairment
At 1 January 2011
Impairment

At 31 December 2011
Impairment

At 31 December 2012

Net book amount at 31 December 2012

Net book amount at 31 December 2011

Shares in
Subsidiary
Undertakings

£’000

96,242
46

96,288
2,863

99,151

–
(4,443)

(4,443)
–

(4,443)

94,708

91,845

The adjustments to consideration relate to changes in the deferred consideration of completed acquisitions.

The principal Group companies at 31 December 2012 are set out below. All subsidiaries are 100% owned
and all are incorporated in the United Kingdom.

Subsidiary undertaking

Nature of business

April-Six Ltd

Integrated communications, specialising in the technology sector

Big Communications Ltd

Brand planning and strategic development; new media
marketing, including website design and advertising,
SMS messaging, digital video and database management

Bray Leino Ltd

Advertising, events and PR

Fox Murphy Ltd (trading as balloon dog) Marketing communications agency

RLA Group Ltd

Story UK Ltd

ThinkBDW Ltd

Marketing and communications

Brand development and creative direct communication

Property marketing, providing advertising, media, brochures,
signage, exhibitions, CGI, animation, intranet and photography

The above list excludes details of non-trading dormant subsidiaries.

37. Debtors

Amounts due from subsidiary undertakings
Corporation tax
Prepayments
Other debtors

The Mission Marketing Group plc Annual Report 2012

31 December
2012

31 December
2011

£’000

2,624
487
40
1

3,152

£’000

2,840
–
20
3

2,863

38. Creditors: Amounts Falling Due Within One Year

Bank overdraft
Amounts due to subsidiary undertakings
Social security and other taxes
Accruals
Acquisition obligations (see Note 41)
Bank loan (see Note 40)
Other creditors

39. Creditors: Amounts Falling Due After More Than One Year

Acquisition obligations (see Note 41)
Bank loan (see Note 40)

40. Borrowings

Bank loan outstanding
Adjustment to amortised cost

Carrying value of loan outstanding
The borrowings are repayable as follows:
Less than one year
In one to two years
In more than two years but less than three years

Adjustment to amortised cost

Less: Amount due for settlement within 12 months
(shown under current liabilities)

Amount due for settlement after 12 months

31 December
2012

31 December
2011

£’000

1,372
4,878
–
68
1,099
2,286
66

9,769

£’000

3,248
4,161
5
171
–
4,000
38

11,623

31 December
2012

31 December
2011

£’000

1,210
10,596

11,806

£’000

–
11,641

11,641

31 December
2012

31 December
2011

£’000

13,357
(475)

12,882

2,286
2,286
8,785

13,357

(475)

12,882

(2,286)

10,596

£’000

16,207
(566)

15,641

4,000
12,207
–

16,207

(566)

15,641

(4,000)

11,641

Details of the Company’s borrowing facilities and interest rates are set out in Note 18 and not therefore
repeated here. All borrowings are in sterling.

As at 31 December 2012, Net Assets of the Group were £62,684,000 (2011: £57,916,000), and net borrowings
under this Group arrangement amounted to £12,336,000 (2011: £15,326,000).

The Mission Marketing Group plc Annual Report 2012

41. Acquisition Obligations

The terms of an acquisition may provide that the value of the purchase consideration, which may be payable
in cash or shares or other securities at a future date, depends on uncertain future events such as the future
performance of the acquired company. The Directors estimate that the liability for payments that may be
due are as follows:

Less than one year
Between one and two years
In more than two years but
less than three years
In more than three years but
less than four years

Initial
Consideration

£’000

24
–

–

Contingent
Consideration
Cash

Contingent
Consideration
Shares

£’000

1,000
339

339

389

2,067

£’000

75
48

Total

£’000

1,099
387

387

436

218

2,309

42. Share Capital and Share Premium

The movements on these items are disclosed within the consolidated statement of changes in equity within
the consolidated financial statements.

43. Statement of Movements on Reserves

At 1 January 2011
Credit for share option scheme
Loss for the period

At 31 December 2011

Credit for share option scheme
Profit for the period

At 31 December 2012

44. Operating Lease Commitments

Share Option
Reserve

Profit and Loss
Account

£’000

134
129
–

263

178
–

441

£’000

26,574
–
(2,127)

24,447

–
3,457

27,904

As at 31 December 2012 the Company had no commitments under operating leases (2011: nil).

45. Related Party Transactions

Details of related party transactions are disclosed in Note 31 of the consolidated financial statements.

The Mission Marketing Group plc Annual Report 2012

Notice of Annual General Meeting

NOTICE is hereby given that the Annual General Meeting of The Mission Marketing Group plc (the “Company”)
will be held at 12 noon on Monday 17 June 2013 at the offices of finnCap Ltd, 60 New Broad Street, London,
EC2M 1JJ to transact the following business:

Ordinary Resolutions

1. To receive the financial statements and the report of the Directors and the auditors for the year ended

31 December 2012.

2. To elect Sue Mullen as a Director.

3. To elect James Clifton as a Director.

4. To elect Giles Lee as a Director.

5. To re-elect Dylan Bogg as a Director.

6. To re-elect Stephen Boyd as a Director.

7. To re-elect Robert Day as a Director.

8. To re-elect David Morgan as a Director.

9. To re-elect Chris Morris as a Director.

10. To re-elect Fiona Shepherd as a Director.

11. To re-appoint Francis Clark LLP as auditors of the Company.

12. To authorise the Directors to fix the remuneration of Francis Clark LLP.

Special Business

To consider and, if thought fit, to pass the following resolutions, as to which resolution 13 shall be proposed
as an ordinary resolution and resolutions 14 and 15 shall be proposed as special resolutions:

13. THAT the Directors be and are hereby generally and unconditionally authorised pursuant to Section
551 of the Companies Act 2006 as amended (the “Act”) to exercise all the powers of the Company to
allot shares in the Company and to grant rights to subscribe for, or to convert any security into, shares
in the Company up to an aggregate nominal value of £2,540,701 being 33% of the issued share capital
of the Company, provided that this authority shall expire at the conclusion of the next Annual General
Meeting of the Company after the passing of this resolution, save that the Company shall be entitled to
make an offer or agreement before the expiry of such authority which would or might require shares
to be allotted or any such rights to be granted, after such expiry and the Directors shall be entitled to
allot shares or grant any such rights pursuant to any such offer or agreement as if this authority had
not expired and all unexercised authorities previously granted to the Directors to allot shares or grant
any such rights be and are hereby revoked provided that the resolution shall not affect the right of the
Directors to allot shares or grant any such rights in pursuance of any offer or agreement entered into
prior to the date of this resolution.

The Mission Marketing Group plc Annual Report 2012

Special Resolutions

14. THAT (subject to the passing of the resolution numbered 13 above) the Directors be and are hereby
empowered pursuant to Section 570, Section 571 and Section 573 of the Act to allot equity securities
(as defined in Section 560 of the Act) for cash pursuant to the authority conferred by resolution 13 above
as if Section 561 of the Act did not apply to any such allotment, provided that this power shall be limited to:

i. the allotment of equity securities in connection with a rights issue, open offer or other offer of securities
in favour of the holders of ordinary shares on the register of members at such record date(s) as the
Directors may determine where the equity securities respectively attributable to the interests of the
ordinary shareholders are proportionate (as nearly as may be) to the respective numbers of ordinary
shares held by them on any such record date(s), subject to such exclusions or other arrangements as
the Directors may deem necessary or expedient to deal with treasury shares, fractional entitlements
or legal or practical problems arising under the laws of any overseas territory or the requirements
of any regulatory body or stock exchange or by virtue of shares being represented by depositary
receipts or any other matter whatever; and

ii. the allotment (other than pursuant to sub-paragraph (i) above) to any person or persons of equity
securities up to an aggregate nominal value of £769,909.40 being 10% of the issued share capital of
the Company.

This power shall expire upon the expiry of the general authority conferred by resolution 4 above, save
that the Company shall be entitled to make an offer or agreement before the expiry of such power
which would or might require equity securities to be allotted after such expiry and the Directors shall
be entitled to allot equity securities pursuant to any such offer or agreement as if the power conferred
hereby had not expired and all unexercised authorities previously granted to the Directors to allot
equity securities be and are hereby revoked provided that the resolution shall not affect the right of the
Directors to allot equity securities in pursuance of any offer or agreement entered into prior to the date
of this resolution.

15. THAT pursuant to Section 701 of the Act and subject to, and in accordance with the Company’s Articles
of Association, the Company be generally and unconditionally authorised to make market purchases
(within the meaning of Section 693(4) of the Act) of ordinary shares of the Company provided that:

i. the maximum number of ordinary shares hereby authorised to be acquired is 11,548,641 being 15%

of the issued share capital; and

ii. the minimum price which may be paid for an ordinary share is the nominal value of such share; and

iii. the maximum price which may be paid for an ordinary share is an amount equal to 105% of the
average of the middle market quotations for an ordinary share in the Company as derived from The
London Stock Exchange Daily Official List for the 5 business days immediately preceding the day on
which such ordinary share is contracted to be purchased; and

iv. the authority hereby conferred shall expire at the conclusion of the Annual General Meeting of the

Company held in 2014 or 18 months from the date of this resolution (whichever is earlier); and

v. the Company may make any purchase of its ordinary shares pursuant to a contract concluded before
the authority hereby conferred expires and which will or may be executed wholly or partly after the
expiry of such authority; and

vi. all ordinary shares purchased pursuant to the authority conferred by this resolution 15 shall be
cancelled immediately on completion of the purchase or held in treasury (provided that the aggregate
nominal value of shares held as treasury shares shall not at any time exceed 10% of the issued share
capital of the Company at any time).

By Order of the Board
Peter Fitzwilliam
25 March 2013

The Mission Marketing Group plc Annual Report 2012

Advisors

Company Registration Number:

05733632

Registered Office:

Nominated Advisor and Broker:

Auditors:

Solicitors:

Registrars:

Company Secretary:

Bankers:

36 Percy Street
London
W1T 2DH

finnCap Ltd
60 New Broad Street
London
EC2M 1JJ

Francis Clark LLP
Sigma House
Oak View Close
Edginswell Park
Torquay
TQ2 7FF

Lewis Silkin LLP
5 Chancery Lane
Clifford’s Inn
London
EC4A 1BL

Neville Registrars
Neville House
18 Laurel Lane
Halesowen
West Midlands
B63 3DA

Peter Fitzwilliam
The Mission Marketing Group plc
36 Percy Street
London
W1T 2DH

Royal Bank of Scotland plc
Corporate Banking
9th Floor
280 Bishopsgate
London
EC2M 4RB

The Mission Marketing Group plc Annual Report 2012

marketing group plc
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

36 Percy Street, London W1T 2DH
T: +44 (0)203 463 2099
www.themission.co.uk