4annual report and accounts year ended 31 december:
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PMS 321C
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contents
Page 2
Introduction to the Group
Page 19 Board of Directors
Page 22 Chairman’s Statement
Page 23 Financial Highlights
Page 25 Strategic Report
Page 29 Report of the Directors
Page 33 Corporate Governance
Page 35
Independent Auditor’s Report
Page 36 Consolidated Statements of Income
Page 37 Consolidated Balance Sheet
Page 38 Consolidated Cash Flow Statement
Page 39 Consolidated Statement of Changes in Equity
Page 40 Notes to the Consolidated Financial Statements
Page 66 Independent Auditor’s Report: Company
Page 67 Company Balance Sheet
Page 68 Notes to the Company Balance Sheet
Page 74 Notice of Annual General Meeting
Page 76 Advisors
The Mission Marketing Group plc
(‘ ‘) is a predominantly
UK-based communications Agency
group built from a broad mix of
specialists and full service
offerings that comprises:
• Integrated, multi-discipline,
multi-sector Agencies
• Specialists in specific marketing
and communications activities
• Specialists in particular market sectors
And we are united by a single
purpose – to make our Clients’
businesses more valuable.
Quite simply, that’s .
marketing group plc 2014 annual report
own ideas
marketing group plc 2014 annual report
own ideas
3 | 4
We have our own ideas of how a
communications Agency group
should run.
We are not about imposing doctrine on our
Agencies and nor are we about making them
conform to Group policies. We are about
encouraging collaboration, empowering
people and allowing our Agencies to flourish
in a way that is best for them, their culture,
their people and, above all, their Clients.
Unlike other groups, our Board is comprised
of the entrepreneurs who run our Agencies.
Talented people with a passion to make
our Clients famous and successful. Whatever
the discipline. And by being focused on their
Agencies yet fully supportive of the Group
they deliver all the creativity of a boutique
with the resource of a multinational.
Despite having eleven Agencies we have
one bottom line so that our Clients get
the best advice and share in our resources.
marketing group plc 2014 annual report
concinnity
integrated
generalists
activity
specialists
Integrated Generalists Our integrated generalist Agencies drive business
growth through consistent brand messaging and measurable results across
all of our Clients’ marketing channels.
Activity Specialists Bringing together talented people with a dedicated focus,
our activity specialist Agencies span digital, social media, branded content, PR,
events, learning, film production and ecommerce. All work across a range of
sectors to deliver their expertise.
Sector Specialists Across technology, automotive, healthcare and property,
our sector specialists enjoy enviable reputations for their in-depth knowledge,
contacts and working practices that are tailored to their Clients’ needs.
More Powerful Together At every step, everything we do is about working
together to share our abilities and add the maximum value for our Clients.
All together it adds up to a potent mix that can transform a Client’s business
or even their entire market.
marketing group plc 2014 annual report
concinnity
5 | 6
sector
specialists
integrated
generalists
activity
specialists
sector
specialists
The skillful & harmonious
arrangement or fitting
together of the different
parts of something.
concinnity [ ]
at the heart of
everything we do
marketing group plc 2014 annual report
the agencies
the
agencies
Together we are .
Our common goal is to make our
Clients’ brands and businesses
more valuable.
We bring together management
depth, business expertise and
international Agency know-how.
We have a unique, collaborative
Board structure comprised of
the entrepreneurs who run
our Agencies.
We boast an impressive Client list,
and are proud to work with some of
the world’s leading brands and the
UK’s biggest names.
We benefit from lower establishment
costs with our regional locations,
attracting top-flight people who
seek an exciting work environment.
Together, we are growing into
the nation’s most respected
and influential creative
communications group.
scan here
to view our
showreel
marketing group plc 2014 annual report
the agencies
7 | 8
The graphic symbolises the shared
ambitions, values and goals that unite
every Agency in Group.
The UK’s leading technology channel
marketing Agency working successfully with
global brands on an international basis.
A full-service, integrated Agency creating
ideas borne from insight across all channels
with a focus on brand payback.
A pioneer of integrated brand-building, a top-20
Agency working with Clients through every
channel and across the business spectrum
and, in 2014, again the No.1 B2B Agency in
the UK. Bray Leino now includes its newly-
integrated Brandon Hill and Yucca businesses.
A specialist PR Agency helping science,
engineering and technology organisations
clearly communicate complex subjects.
Clients span multinational technology,
world-class science, global engineering
and government departments.
Specialising in automotive and also offering
the capabilities of a full-service Agency.
With unrivalled expertise in international
channel marketing programmes in the
automotive, retail and allied sectors.
Regarded as one of the North of England’s
major advertising brands with proven
skills in integrated communications.
A specialist full-service medical
communications Agency delivering bespoke
strategic, scientific and creative solutions
to UK, European and global Clients.
An ambitious, creative and commercially driven
PR Agency specialising in business and brand
transformation. Client portfolio includes both
consumer and B2B, with expertise in sport,
technology, media, health and wellbeing,
food and drink, financial and business services.
Headquartered in Singapore with offices
in Shanghai, Hong Kong, Malaysia and
Vietnam, a full-service digital Agency helping
multinational brands build websites and market
their products across all digital channels.
An award-winning integrated Agency
working with leading consumer brands and
services from its Edinburgh base. Story’s
business now includes its recently acquired
specialist digital Agency, The Weather.
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.
marketing group plc 2014 annual report
accomplished
a year of awards for
accomplished
marketing group plc 2014 annual report
accomplished
9 | 10
2014 was a big year for
haul of industry award wins to date.
. It saw our Agencies secure the largest
Bray Leino picked up the number 1 position in B2B Marketing Magazine’s
annual Agency Benchmarking Report, as well as securing a Silver and a
Bronze at the Fresh Awards, and a Gold at the Roses Creative Awards with
Robson Brown and Big Communications.
Big Communications, now part of bigdog, celebrated a hugely successful
awards season, picking up over half the Gold honours handed out at The
Cream Midlands Awards, as well as 20 accolades from The Fresh Awards,
securing the prestigious title of Agency of The Year. A Bronze was also
collected at the Epica Awards for their work with Harley-Davidson.
RLA picked up three honours at the PANI Awards, and The W3 Awards
saw Splash Interactive, our Singapore Agency, scoop five. Yucca fought
off stiff competition to take home Best Use of Email at the Dadi Awards
and Story won five awards at Scotland’s Marketing Star Awards for their
work on the Scottish Government’s ‘Active Travel Campaign’ and for
Ardbeg’s ‘Ardbog Day’.
accomplished
accomplished
marketing group plc 2014 annual report
work that works
work that
works
Whatever the product or
service and whatever the
channel, our Agencies
apply their own unique
skills, experience and talents
to achieve a fundamentally
common goal: to produce
ideas and creative work
that gets results.
marketing group plc 2014 annual report
work that works
11 | 12
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marketing group plc 2014 annual report
inspiring spaces
inspiring
spaces
Here at
, we know that for great ideas to be
made, our teams need spaces that allow them to think.
A creative office should be an inspiring, stimulating
place where ideas can flow and team-work is easy.
These are just some of ours.
1. April Six, Harefield
2. bigdog, Bray Leino,
ThinkMedia, London
3. bigdog, Leicester
4. April Six, San Francisco
5. RLA, Bournemouth
6. Solaris, Richmond
7. Bray Leino Yucca,
Speed Communications, Bristol
8. Bray Leino, Filleigh
9. RLA, Bournemouth
10. Bray Leino Yucca,
Speed Communications, Bristol
11. ThinkBDW, Colchester
12. ThinkBDW, Colchester
13. bigdog, Leicester
14. Story, Edinburgh
15. RLA, Belfast
16. April Six, San Francisco
1:
5:
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7:
8:
marketing group plc 2014 annual report
inspiring spaces
15 | 16
9:
10:
11:
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marketing group plc 2014 annual report
the mission in asia
in asia
一石激起千层浪 is an ancient proverb. It means that a single stone dropped into water can
create a thousand ripples. It means that even the smallest action can create the biggest
effect. In Asia,
has dropped its first stone.
Our development as a business is not simply about being bigger and better. It is about
doing things that benefit our Clients. Going where they go, supporting them where they
need support. Where it makes sound commercial sense, we open up locally in markets
where we can serve them better – for example, our technology Agency April Six has
opened an office in San Francisco to service their existing and potential Clients based there.
office supporting Group
And now we are in Asia with both Bray Leino and
Clients. With the acquisition of Splash Interactive, we have digitally focussed offices in
Singapore, Shanghai, Hong Kong, Malaysia and Vietnam. Splash works with some of the
leading Client companies in the region, including leading local and multinational banks.
marketing group plc 2014 annual report
the mission in asia
17 | 18
marketing group plc 2014 annual report
board of directors
3:
4:
1:
2:
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8:
7:
9:
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10:
marketing group plc 2014 annual report
board of directors
19 | 20
1: David Morgan
Executive Chairman
5: Dylan Bogg
Executive Director
9: Peter Fitzwilliam
Finance Director
Peter is a Chartered Accountant
with over 25 years’ 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 supported
through its refinancing
in April 2010 and was appointed to
the Board in September 2010.
10: Christopher Goodwin
Executive Director
Chris is Chief Executive of RLA and
has over 25 years’ experience 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.
11: Fiona Shepherd
Executive Director
Fiona is Chief Executive of April Six
and Proof Communication and has
worked in the technology industry
for over 20 years, holding both Client
and Agency positions, with some of
the world’s largest technology brands.
Fiona was a founder of April Six and has
managed its success as a well respected
global technology Agency with offices
in London and San Francisco. Fiona
joined the Board in April 2010.
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 appointed Chairman
of
in April 2010. Before
founding Bray Leino he worked in
a number of London advertising
agencies including Dorlands.
2: Christopher Morris
Non-Executive Deputy Chairman
in 2005 prior
Chris adds further operational
experience to the Board as a founder
partner of Big Communications,
bought by
to its AIM listing in 2006. Chris has
over 35 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.
3: 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 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 joined the Board in June 2012.
4: James Clifton
Executive Director
Chief Executive of newly-merged
mission Agency bigdog, 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 was acquired by
and James was appointed
to the Board in October 2012.
Dylan is Chief Creative Officer of
bigdog and was one of the founding
partners of Big Communications.
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. Dylan
oversees all creative output for newly-
merged mission Agency, bigdog
across four UK locations. Dylan was
appointed to the Board in April 2010.
6: 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-branding as 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.
7: Stephen Boyd
Senior Independent
Non-Executive Director
Stephen is currently Chairman of
two AIM-listed companies, Pittards
plc and Pure Wafer 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.
8: 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 thirteen
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 in March 2013.
marketing group plc 2014 annual report
chairman’s statement
marketing group plc 2014 annual report
chairman’s statement
21 | 22
chairman’s
statement david
morgan
2014 was a good innings, now let’s play
a blinder.
powerful business with a great Client portfolio
and huge potential.
It’s always gratifying to do what you say
you’re going to do, so 2014 will go down for
us as such a year. We made good strides with
our declared strategy of extending the strength
and scope of the Group. Our Agencies flourished
and we either acquired or created new business
ventures that will make us even better placed
to serve our Clients in the years ahead.
Having opened up shop in Singapore towards
the back end of 2013, we acquired 70% of the
digital marketing Agency Splash Interactive
towards the end of 2014. Headquartered in
Singapore but with offices in the five major
Far East markets, Splash brings us a real
presence in that region. And one that our
Clients are already supporting.
We also acquired the London-based Proof
Communication, which we merged into our
successful technology Agency April Six and
rounded off the year by acquiring Speed
Communications, which we combined
with our Bray Leino PR division, now
jointly trading under the Speed brand.
Exciting times in PR.
Added to this we created a Sports Marketing
Consultancy within
itself to
advise our Clients in this area. We have
also strengthened our technology offerings
with some pretty smart ideas and resourced
our Agencies with some great new talent
especially in the US and within our Healthcare
Agency, Solaris.
And more recently, our integrated Agencies
Big and balloon dog were combined under the
bigdog brand to create a single, efficient and
Phew.
Our core businesses had a good year, especially
in the second half, winning a hat full of awards
and great new Clients. Client retention was again
strong which serves us well going into 2015 and
beyond.
Internationally, our new San Francisco April
Six business is flourishing, supporting existing
Clients as well as attracting new ones. And in the
UK, both April Six and ThinkBDW were relocated
to fine new premises to accommodate growth
and further efficiency increases.
We have continued to pay down debt and I
was also gratified by the response from our
existing, and some new, institutional investors
during the year. This enabled us to further invest
in the businesses, fund our acquisitions and
settle warrants of over 3% of our equity held
by our bank, RBS. Who, I’m pleased to say,
continue to support us - so much so that
we have recently concluded a further four
year extension to our facilities with them.
It seems to me therefore that
pretty good innings in 2014. And I’m hopeful that
our shareholders and supporters will be bowled
over in 2015. Which should be no surprise given
the team that we are able to field.
had a
They’re all doing a grand job.
No lallygaggers here.
David Morgan
Chairman
26 March 2015
marketing group plc 2014 annual report
financial highlights
operating income (‘revenue’):
up7%to
£55.0m(2013: £51.6m)
2014 was another year in which we grew our business, extended our
range of services and further improved our balance sheet. In short,
we did what we said we would do, and we achieved all our key
performance targets:
Key performance
measure
Target
Achieved
in 2014?
Achievement
in 2014
Operating
income
Operating profit
margins
Increase each
year, from both
organic growth
and acquisition
Achieve levels
at least in line
with industry
averages
Headline profits
before tax
Grow year-
on-year
Ratio of net bank
debt to EBITDA
Maintain
below x2
Ratio of total debt
to EBITDA
Maintain
below x2.5
Yes
Yes
Yes
Yes
Yes
Increase of 7%
achieved
Margins, at 11%,
were ahead of our
peer group of UK
quoted marketing
companies
(excluding WPP)*
Increase of 10%
achieved
Bank debt leverage
ratio below x1.5 at
31 December 2014
Total debt leverage
ratio x1.7 at 31
December 2014
net proceeds from equity placing:
£2.3m
net bank debt reduced by:
£1.3m(to £9.4m)
full settlement of bank warrants
in cash:
£0.7m
total cash investment in growth:
£4.2m
*Kingston Smith Annual Survey 2014
£2.1m on acquisitions, £2.1m on capex
marketing group plc 2014 annual report
financial highlights
23 | 24
headline trading profit (operating profit before central costs):
up10%to
£7.7m(2013: £7.0m)
10%up
headline profit before tax:
to£5.5m
headline diluted eps:
15%up
to5.1p
full year dividend:
10%up
to1.1p
marketing group plc 2014 annual report
strategic report
strategic
report
AIMS AND AMBITION
Loss of key Clients
Our mission is simple: to work together to make our Clients’
brands and businesses more valuable; and fuelled by their
success, to grow
and influential creative communications group.
into the nation’s most respected
We aim to reward shareholders both through capital
growth and dividends, and to provide a rewarding and fun
environment for our staff. We will grow first and foremost
by organic growth but we will add services, expertise and
talent where we find it complementary to our objectives and
financially affordable. Although primarily operating in the
UK, we will continue to develop our international footprint
in response to Client demand and where we see strong
opportunities to leverage our well-established UK strengths
elsewhere in the world. We will maintain a balance of equity
and debt financing to give shareholders the advantages
of financial leverage but without placing the business at
financial risk.
RISKS AND UNCERTAINTIES
The Group’s principal operating risks and uncertainties are
set out below. The management of risk is the responsibility
of the Board, assisted where appropriate by the Remuneration
and Audit Committees, as described further in the Corporate
Governance Report.
Adverse economic conditions, leading to a reduction
in Clients’ marketing budgets
As a network of Agencies which are run in most cases by
the entrepreneurs who originally founded them, we believe
that we offer strong local and personalised, “boutique” Client
service backed up by a multinational infrastructure. We
believe that this highly personalised service makes us less
susceptible to the generic effects of the economy. We also
undertake strenuous new business activity and we minimise
overheads wherever possible, always recognising that there
is a level below which overheads cannot be reduced without
Client service being affected. As the Group expands outside
the United Kingdom, we are also reducing the concentration
of economic risk.
There are many reasons why a Client changes its
communications agency, several of which are outside our
control. The risk of Client loss as a result of something we
can control is mitigated by the efforts of dedicated account
teams, who strive to ensure the quality of work we do meets
or exceeds our Clients’ expectations at all times, and who
modify our approach when necessary. The risk of Client loss
for reasons beyond our control is mitigated by the Group’s
broad spread of Clients, which limits its exposure to any
individual loss. No Client represents more than 10% of Group
operating income.
Loss of key staff
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 our leadership teams. The system of
financial rewards is reviewed regularly by the Board.
Underperformance of acquired businesses
Potential acquisitions are carefully considered by the full
Board as part of its recurring business, and legal, commercial
and financial due diligence is carried out on all but the
smallest acquisitions. The Directors consider that the main
risk is overpaying for the level of profits subsequently
generated and so, wherever possible, agree payment terms
for acquisitions in a way that results in the majority of
consideration being conditional on the post-acquisition
profitability of the acquired business. In this way, if it
underperforms against expectations set at the time of the
acquisition, the total amount paid for the business will reduce
correspondingly.
KEY PERFORMANCE INDICATORS
The Group manages its internal operational performance and
capital management 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 in the Financial
marketing group plc 2014 annual report
strategic report
25 | 26
Review of the Year below, are:
• operating income (“revenue”), which the Group aims to
increase year-on-year both via organic growth and from
acquisitions;
• operating profit margins, where the Group aims to achieve
levels at least in line with industry averages;
• headline profits before tax, which the Group aims to
increase year-on-year;
• the ratio of net bank debt to EBITDA*, which the Group is
aiming to maintain below x2.0; and
• the ratio of total debt (including both bank debt and
deferred acquisition consideration) to EBITDA, which the
Group is aiming to maintain below x2.5.
*EBITDA is headline operating profit before depreciation and
amortisation charges.
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.
BUSINESS AND FINANCIAL REVIEW OF THE YEAR
A review of the business and future developments is
provided below and in the Chairman’s Statement,
which forms part of this Strategic Report.
The improved economic conditions seen during 2014 had
a largely positive effect on the Group. Almost all of our
Agencies reported growth in revenues (operating income),
but it was not always possible to maintain profit margins
in the face of continued relentless downward pressure on
pricing. And curiously, the boom in the property market
during the year resulted in a marked reduction in the level of
marketing spend by developers and estate agents as demand
outstripped supply. The portfolio nature of the Group’s
structure again proved to be a real strength, diversifying the
risk associated with a concentration on any one Agency or
market.
Overall, it has been a good achievement to deliver 10%
growth in headline profits and to hit market expectations,
especially in the knowledge that some of our competitors
are really struggling.
We have strengthened the Group’s balance sheet
progressively over recent years and 2014 was no different.
The downward trend in our gearing and debt leverage ratios
was further enhanced by a £2.3m equity placing in October.
We also took the opportunity provided by our greater
financial strength to settle all outstanding bank warrants,
thereby removing 3% equity dilution.
We exit 2014 in a strong position and expect 2015 to be
another busy year, consolidating the acquisitions made
in 2014, streamlining some of our existing operations
and planning further acquisitions.
Trading, Statement of Income and Dividend
Turnover was 1% higher than the previous year, at £125.5m
(2013: £124.1m), where the growth achieved by most
Agencies was largely offset by the reduction in Media spend
by property Clients. Turnover is a measure of how much
Clients are billed. But since billings include pass-through costs
(eg TV companies’ charges for buying air-time), the Board
does not consider turnover to be a key performance measure.
Instead, the Board views operating income (turnover less
third party costs) as a more meaningful measure of Agency
activity levels.
Operating income (“revenue”) increased 7% to £55.0m (2013:
£51.6m), once again achieving the first of our KPIs. The chart
below illustrates the consistent growth in revenue achieved
over the last five years, the time the current Management
team has been in place.
ANNUAL REVENUES (£’m)
60
55
50
45
40
35
30
25
20
2010
2011
2012
2013
2014
5% of the growth achieved in 2014 resulted from the full
year contribution from Solaris and the acquisitions of Proof
Communication Limited (“Proof”), Splash Interactive Pte Ltd
(“Splash”) and Speed Communications Agency Ltd (“Speed”)
with effect from 1 August, 30 September and 31 October 2014
respectively. Like-for-like revenue increased 2% year-on-year,
where growth in most Agencies was somewhat offset by
lower spending by property Clients.
The Directors measure the Group’s profit performance by
reference to headline profits, calculated before exceptional
items and acquisition adjustments (as set out in Note 3).
Headline trading profits (ie segmental operating profit, before
central costs, as set out in Note 2) increased strongly, to £7.7m
(2013: £7.0m), reflecting a 5% contribution from Solaris, Proof,
Splash and Speed and a 5% increase in like-for-like profits; this
latter is a very pleasing result in view of increased property
costs, incentive payments and the effects of the property
market. After higher central costs, headline operating profit
increased by 6% to £6.1m (2013: £5.7m).
We expected 2014 to repeat the general pattern of Clients’
spending cycles, which tend to result in a second half bias
in our financial results, but the bias was stronger than we
originally predicted. As a consequence, the pattern of
profit margins (headline operating profit as a percentage of
revenue) also repeated those of last year, with margins of 8%
in H1 (2013: 8%), improving to 14% in H2 (2013: 14%). Overall,
the Group achieved a margin of 11% for the full year (2013:
11%), which is comfortably ahead of the levels achieved by
the Group’s peer group of UK quoted marketing companies
(excluding WPP, which is so large it distorts all comparisons),
thereby achieving the second of our KPIs in common
with recent years as illustrated by the chart below (source:
Kingston Smith Annual Surveys).
marketing group plc 2014 annual report
strategic report (cont.)
strategic
report
continued
PROFIT MARGINS
quoted companies average
16%
14%
12%
10%
8%
6%
4%
HEADLINE PBT (£m)
6.0
5.5
5.0
4.5
4.0
3.5
3.0
2.5
2.0
2010
2011
2012
2013
2014
2010
2011
2012
2013
2014
Reported net interest costs fell only slightly from the prior
year, but this reflects the accelerated write-off of the
balance of £0.1m of unamortised arrangement fees from
the refinancing of the Group’s bank facilities in 2012. On an
underlying basis, reductions in interest costs were achieved,
both through a further reduction in net debt and also from
the lower interest margins triggered by reductions in our
leverage ratio (see below for definition). As a result, headline
interest costs reduced by over 20% to £0.5m (2013: £0.7m).
After financing costs, headline profit before tax increased
by 10% to £5.5m (2013: £5.0m), achieving the third of our
KPIs. The chart below illustrates the growth in headline
profit over recent years.
Reported profit before tax increased by over 70% to £5.4m
(2013: £3.2m) after acquisition adjustments and accelerated
amortisation of bank debt arrangement fees totaling £0.1m
(2013: exceptional costs of £2.1m and acquisition adjustments
(net gain) of £0.3m).
The headline diluted EPS increased by 15% to 5.13 pence
(2013: 4.45 pence).
Following payment of an interim dividend of 0.25 pence per
share, the Board recommends a final dividend of 0.85 pence
per share, bringing the total for the year to 1.10 pence per
share, representing an increase of 10%. The final dividend will
be payable on 20 July 2015 to shareholders on the register at
10 July 2015. The Board will continue to keep under regular
review the best use of the Group’s cash resources but it is the
Board’s intention to increase both interim and final dividends
in future years.
marketing group plc 2014 annual report
strategic report (cont.)
27 | 28
Balance Sheet and Cash Flow
The Group’s balance sheet has been further strengthened
during the year by the Autumn equity placing of £2.3m.
During the year a total of £2.1m in cash was invested in
acquisitions (net of cash acquired), £2.1m was invested in
capital expenditure, notably higher than in previous years due
to the relocation of two of our Agencies, and £0.7m was used
to settle bank warrants over 3.156% of the fully diluted share
capital. Working capital increased by £1.1m but, despite this,
net bank debt reduced by £1.3m to £9.4m (2013: £10.7m). Our
gearing ratio (net bank debt to equity) reduced from 16% last
year to 13% at 31 December 2014 and the Group’s “leverage
ratio” (ratio of net bank debt to headline EBITDA) fell from
x1.5 at 31 December 2013 to x1.25 at 31 December 2014,
again comfortably achieving our fourth KPI as illustrated
by the following chart.
BANK DEBT LEVERAGE RATIOS
x3.5
x3.0
x2.5
x2.0
x1.5
x1.0
x0.5
2010
2011
2012
2013
2014
Now that the Group has started expanding through
acquisition, the Board’s management of the Group’s liquidity
and balance sheet extends beyond considering just bank
indebtedness and now also includes an assessment of the
Group’s financial commitments relating to acquisitions. As
a result, the Board has introduced a fifth KPI – the ratio of
total debt to EBITDA – which it is targeting to maintain below
x2.5 in order to avoid over-stretching the Group’s balance
sheet. Total debt includes the Group’s bank indebtedness
and also the amount of contingent acquisition consideration
estimated to be payable. Since acquisition consideration is
dependent on future levels of profitability in the acquired
business, which are inevitably uncertain, the Board calculates
this ratio by reference to the amount of consideration which
would be payable if the acquired business were to maintain
its current level of profitability. At 31 December 2014, the ratio
of total debt to EBITDA on this basis was x1.7, comfortably
within our final KPI.
Since the end of the financial year, we have secured beneficial
changes to our banking arrangements. Loan facilities which
were due to expire at the end of 2015, therefore resulting in
the full £11m of outstanding loans at 31 December 2014 being
classified within current liabilities, have been replaced by new
and increased facilities expiring in February 2019. Committed
facilities have been increased from £11m to £15m, with a
further overdraft facility of £3m. Interest rate margins are
subject to a ratchet depending on leverage ratios but, at every
ratio level, are lower than under previous arrangements. In
addition, the repayment obligation on the term loan element
of the new facilities is lighter in the first two years than the
second, resulting in greater headroom to support the Group’s
acquisition ambitions in the near future. More detail of the
new facilities is set out in Note 18.
At 31 December 2014, the Board undertook its annual
assessment of the value of goodwill, explained further in Note
12, and concluded that no further impairment in the carrying
value was required.
Taxation
The Group’s effective tax rate was 21.7% (2013: 25.5%), only
marginally higher than the statutory rate of 21.5% (2013:
23.25%). The Group’s effective tax rate is normally above the
statutory rate due to non-deductible staff and Client-related
expenditure, and the excess of depreciation over capital
allowances. In 2014, these factors were offset by higher tax
deductions on share options exercised during the year, and
the non-taxable nature of movements in the fair value of
contingent consideration.
Outlook
As we exited 2014, the Group was in good shape and we
expect further growth in the coming year in both revenue
and profit. In order to underpin this growth, the Board has
restructured certain activities with the consequence of some
£0.6m of one-off costs incurred in the first quarter of 2015
which reduce our overall cost base. The Board expects this
leaner structure to further strengthen the Group’s resilience
and looks to the future with confidence.
On behalf of the Board
Peter Fitzwilliam
Finance Director
26 March 2015
marketing group plc 2014 annual report
report of the directors
report of
the directors
The Directors have pleasure in presenting their report and the financial statements of The Mission Marketing Group plc
(“ ”) for the year ended 31 December 2014. The Directors provide a separate Corporate Governance Report,
which forms part of this Report of the Directors.
Directors
The following Directors held office during the year:
Chris Goodwin
Dylan Bogg
Stephen Boyd
James Clifton
Robert Day
Peter Fitzwilliam
Giles Lee
David Morgan
Chris Morris
Sue Mullen
Fiona Shepherd
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 2014
31 December 2013
or on appointment
Dylan Bogg
Stephen Boyd
James Clifton
Robert Day
Peter Fitzwilliam
Chris Goodwin
Giles Lee
David Morgan
Chris Morris
Sue Mullen
Fiona Shepherd
1,469,323
109,918
165,113
6,128,560
648,940
378,847
732,058
6,089,533
1,015,009
1,081,154
1,264,773
1,439,323
109,918
165,113
6,086,955
619,481
373,047
701,158
6,059,875
1,001,009
1,078,254
1,254,173
marketing group plc 2014 annual report
report of the directors
29 | 30
The following unexercised options over shares were held by Directors:
Directors
At 1 January
2014
Lapsed
in year
Exercised
in year
Granted
in year
At 31 December
2014
Date from which
exercisable
Expiry
date
Dylan Bogg
60,000
(30,000)
(30,000)
James Clifton
70,000
30,000
-
56,000
-
-
-
-
-
-
-
-
-
-
-
Robert Day
157,000
(78,500)
(78,500)
96,667
110,000
-
-
-
-
-
-
-
Peter Fitzwilliam
50,000
(25,000)
(25,000)
40,000
50,000
-
-
-
-
-
-
-
Chris Goodwin
20,000
(10,000)
(10,000)
40,000
35,000
-
-
-
-
-
-
-
Giles Lee
100,000
(50,000)
(50,000)
100,000
70,000
-
-
-
-
-
-
-
David Morgan
50,000
(25,000)
(25,000)
40,000
50,000
-
-
-
-
-
-
-
Chris Morris
28,000
(14,000)
(14,000)
Sue Mullen
40,000
50,000
-
10,000
20,000
22,500
-
-
-
-
-
-
-
(5,000)
(5,000)
-
-
-
-
-
-
Fiona Shepherd
40,000
(20,000)
(20,000)
40,000
50,000
-
-
-
-
-
-
-
-
-
-
17,500
-
31,215
-
-
-
60,000
-
-
-
25,000
-
-
-
20,000
-
-
-
80,000
-
-
-
25,000
-
-
-
25,000
-
-
-
10,000
-
-
-
20,000
-
July 2014
July 2021
70,000
30,000
17,500
56,000
31,215
July 2015
July 2022
July 2016
July 2023
July 2017
July 2024
July 2016
July 2023
July 2017
July 2024
-
July 2014
July 2021
96,667
July 2015
July 2022
110,000
60,000
July 2016
July 2023
July 2017
July 2024
-
July 2014
July 2021
40,000
50,000
25,000
July 2015
July 2022
July 2016
July 2023
July 2017
July 2024
-
July 2014
July 2021
40,000
35,000
20,000
July 2015
July 2022
July 2016
July 2023
July 2017
July 2024
-
July 2014
July 2021
100,000
July 2015
July 2022
70,000
80,000
July 2016
July 2023
July 2017
July 2024
-
July 2014
July 2021
40,000
50,000
25,000
July 2015
July 2022
July 2016
July 2023
July 2017
July 2024
-
July 2014
July 2021
40,000
50,000
25,000
July 2015
July 2022
July 2016
July 2023
July 2017
July 2024
-
July 2014
July 2021
20,000
22,500
10,000
July 2015
July 2022
July 2016
July 2023
July 2017
July 2024
-
July 2014
July 2021
40,000
50,000
20,000
July 2015
July 2022
July 2016
July 2023
July 2017
July 2024
All share options in existence at 31 December 2014 are nil-cost options granted under the Company’s Long Term Incentive Plan.
Options granted in 2014 are dependent upon the achievement of profit targets over the period ending 31 December 2016. In all
cases, the vesting of share options is at the overriding discretion of the independent members of the Remuneration Committee.
marketing group plc 2014 annual report
report of the directors (cont.)
report of
the directors
continued
Substantial Shareholdings
Other than the Directors’ interests disclosed above, as at 26
March 2015, notification had been received of the following
interests in 3% or more of the issued share capital of the
Company:
Number of shares
%
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
Herald Investment Management Ltd
4,500,000 5.40
policies:
Objectif Investissement Microcaps FCP
4,230,477 5.07
Polar Capital Forager Fund Ltd
3,995,000 4.79
Share Capital
The issued share capital of the Company at the date of this
report is 83,398,195 Ordinary shares. The total number of
voting rights in the Company is 83,398,195.
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.
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
- 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 the Company and the profit or loss of
the Group and the Company 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
marketing group plc 2014 annual report
report of the directors (cont.)
31 | 32
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.
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.
Each of the Directors has 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.
Financial Risk Exposure and Management
As a communications Agency Group, the main financial
risks that arise from day-to-day activities are credit and
currency risk. The Group’s policy is to eliminate risk where
it is cost-effective, including the use of credit insurance and
currency hedges, and to mitigate it where not, including close
monitoring of credit-worthiness and the use of Client payment
plans if possible. The Group’s policy is not to use any financial
instruments for speculating.
In common with any business, the Group is exposed to
cash flow risk if the capital structure is not balanced (relative
proportions of debt and equity, and the availability of cash
resources). Several years ago, the Group had too much
debt and its ability to continue as a going concern was
seriously endangered, but has progressively reduced debt,
increased equity and secured banking facilities which provide
comfortable levels of headroom within the Group’s covenants.
The Group’s policy is to maintain a balance of equity and debt
financing to give shareholders the advantages of financial
leverage but without placing the business at financial risk.
Further details on the Group’s capital and financial risk
management are set out in Note 27.
Post Balance Sheet Events
On 5 February 2015, the Directors agreed new bank facilities.
Further details of these facilities are set out in the Strategic
Report and Note 18.
On 13 February 2015, the Group acquired The Weather
Digital and Print Communications Limited, a digital marketing
Agency based in Edinburgh. Further details of this acquisition
are set out in Note 29.
Going Concern
The Directors 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,
taking account of reasonably possible changes in trading
performance, it is appropriate to adopt the going concern
basis in preparing the financial statements.
Future Developments
An indication of likely future developments in the business
of the Group is provided in the Chairman’s Statement and
Strategic Report.
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.
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 is 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.
Dividends
The Group paid a dividend of 0.25 pence per share in
December 2014 and the Board recommends the payment
of a final dividend of 0.85 pence, subject to approval by
shareholders at the Annual General Meeting.
Annual General Meeting
A notice convening the Annual General Meeting to be held on
Monday 15 June 2015 at 12 noon is enclosed with this report.
On behalf of the Board
Peter Fitzwilliam
Finance Director
26 March 2015
marketing group plc 2014 annual report
corporate governance
corporate
governance
The Board of The Mission Marketing
Group plc is collectively accountable to
the Company’s shareholders for good
corporate governance. As an AIM-listed
company,
to comply with the UK Corporate
Governance Code (September 2012)
(the “Code”) but has regard to it as far
as is practicable and appropriate for a
public company of its size and nature.
is not required
Board of Directors
Throughout the year, the Board
consisted of the CEOs of the Group’s
seven principal Agencies, most of
whom are the original founders of
those Agencies, a Finance Director and
two Non-Executive Directors, under
the Executive Chairmanship of David
Morgan, the founder of the Group’s
largest Agency. This structure results
in an operator-led and entrepreneurial
organisation, but with a suitable
balance of independent oversight and
input. David Morgan is well regarded
both within and within
the industry and the Board continues
to believe that, although combining
the roles of Chairman and Chief
Executive does not meet “best practice”
under the Code, his role as Executive
Chairman remains appropriate and that
introducing a separate Chief Executive
would disturb the balance of the Board.
The Non-Executive Directors are
Stephen Boyd and Chris Morris. Stephen
has a broad range of business interests
and experience, both in the UK and
internationally, and is independent
from management by virtue of having
no other connection with the Group
other than his Director’s fees and his
shareholding. Chris was one of the
founders of Big Communications,
now part of bigdog, but has not
been actively involved in day-to-
day management for some years.
Although Chris is a recipient of share
options and provides some consulting
services to the Group, neither of which
is significant in financial value, he
is considered to be independent of
management by virtue of his attitude.
The Directors are collectively
responsible for the strategic direction,
investment decisions and effective
control of the Group. The principal
risks and uncertainties facing the
Group are set out in more detail in the
Strategic Report. Of these risks, primary
responsibility for maintaining strong
Client relationships and retaining key
staff lies with the Agency CEOs and this
is monitored both via written monthly
reports and also Board attendance.
Potential acquisitions and changes
in incentive and rewards systems,
designed to motivate and retain key
staff, are considered by the full Board
when it meets in person, most months,
or via 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 value of this work was neither
significant in relation to the size of
the audit fee nor carried out by the
audit team and as a consequence
the Audit Committee is satisfied that
their objectivity and independence
was not impaired by such work.
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. Specific consideration
is given each year to the nature and
quantum of incentive arrangements
to ensure they remain relevant and
effective for the retention of key staff
including not just Executive Directors
but also senior staff within the Group’s
Agencies. Inter alia, this includes
setting the profit targets which trigger
annual cash bonuses, determining the
amount of the Group’s share capital
to make available for annual share
option awards, and approving the
marketing group plc 2014 annual report
corporate governance
33 | 34
allocation of incentives to individuals.
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
• 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.
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,
Summary of Directors’ Attendance
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.
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
26 March 2015
Board Meetings
Remuneration Committee
Audit Committee
Entitled
to attend
Attended
Entitled
to attend
Attended
Entitled
to attend
Attended
Dylan Bogg
Stephen Boyd
James Clifton
Robert Day
Peter Fitzwilliam
Chris Goodwin
Giles Lee
David Morgan
Chris Morris
Sue Mullen
Fiona Shepherd
10
10
10
10
10
10
10
10
10
10
10
9
8
10
10
10
10
10
10
10
9
8
n/a
2
n/a
n/a
n/a
n/a
n/a
n/a
2
n/a
n/a
n/a
2
n/a
n/a
n/a
n/a
n/a
n/a
2
n/a
n/a
n/a
3
n/a
n/a
n/a
n/a
n/a
n/a
3
n/a
n/a
n/a
3
n/a
n/a
n/a
n/a
n/a
n/a
3
n/a
n/a
marketing group plc 2014 annual report
financial statements
Independent Auditor’s Report to the Members of The Mission Marketing Group plc Independent Auditor’s
Report to the Members of The Mission Marketing Group plc
Report on the Group Financial Statements
Our opinion
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 2014 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.
This opinion is to be read in the context of what we say in the remainder of this report.
What we have audited
We have audited the financial statements of The Mission Marketing Group plc for the year ended 31 December 2014 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.
Our responsibilities and those of the Directors for the financial statements and the audit
As explained more fully in the Directors’ Responsibilities Statement set out on page 31, 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.
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.
What an audit of financial statements involves
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 and to identify any information that is apparently materially incorrect based on, or
materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any
apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and 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
Under the Companies Act 2006 we are required 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.
We have no exceptions to report in respect of either of these matters.
Other matter
We have reported separately on the parent company financial statements of The Mission Marketing Group plc for the year
ended 31 December 2014.
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
26 March 2015
marketing group plc 2014 annual report
financial statements
35 | 36
Consolidated Income Statement for the year ended 31 December 2014
TURNOVER
Cost of sales
OPERATING INCOME
Headline operating expenses
HEADLINE OPERATING PROFIT
Exceptional items
Acquisition adjustments
OPERATING PROFIT
Net finance costs
PROFIT BEFORE TAXATION
Taxation
PROFIT FOR THE YEAR
Attributable to:
Equity holders of the parent
Non-controlling interests
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
2014
Year to
31 December
2013
£’000
125,547
(70,575)
54,972
(48,895)
6,077
-
14
6,091
(670)
5,421
(1,179)
4,242
4,197
45
4,242
5.43
5.06
5.50
5.13
£’000
124,090
(72,496)
51,594
(45,877)
5,717
(2,172)
307
3,852
(695)
3,157
(804)
2,353
2,353
-
2,353
3.11
2.87
4.82
4.45
Note
2
2
4
5
6
7
9
11
11
11
11
The earnings per share figures derive from continuing and total operations.
Consolidated Statement of Comprehensive Income for the year ended 31 December 2014
PROFIT FOR THE YEAR
Other comprehensive income – items that may
be reclassified separately to profit or loss:
Exchange differences on translation of foreign operations
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Attributable to:
Equity holders of the parent
Non-controlling interests
Note
Year to 31
December
2014
Year to
31 December
2013
£’000
4,242
42
4,284
4,227
57
4,284
£’000
2,353
-
2,353
2,353
-
2,353
marketing group plc 2014 annual report
financial statements
Consolidated Balance Sheet as at 31 December 2014
As at
31 December
2014
As at
31 December
2013
Note
£’000
£’000
FIXED ASSETS
Intangible assets
Property, plant and equipment
Deferred tax assets
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) / ASSETS
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
Foreign currency translation reserve
Retained earnings
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
Non-controlling interests
TOTAL EQUITY
12
14
21
15
16
17
18
20.1
18
19
20.1
21
2
23
24
25
77,176
4,366
60
81,602
361
25,859
1,549
27,769
(12,985)
(8,958)
(895)
(11,000)
(1,219)
(35,057)
(7,288)
74,314
-
(11)
(3,893)
(26)
(3,930)
70,384
8,340
42,203
(260)
264
30
19,470
70,047
337
70,384
72,525
3,479
-
76,004
365
20,751
571
21,687
(11,067)
(7,035)
(627)
(1,714)
(375)
(20,818)
869
76,873
(9,573)
-
(2,451)
-
(12,024)
64,849
7,699
40,288
(462)
614
-
16,710
64,849
-
64,849
The financial statements were approved and authorised for issue on 26 March 2015 by the Board of Directors.
They were signed on its behalf by:
Peter Fitzwilliam
Finance Director
Company registration number: 05733632
marketing group plc 2014 annual report
financial statements
37 | 38
Consolidated Cash Flow Statement for the year ended 31 December 2014
Year to
31 December
2014
Year to
31 December
2013
Operating profit
Depreciation and amortisation charges
Goodwill and intangibles impairment charges
Movements in the fair value of contingent consideration
Loss on disposal of property, plant and equipment
Non cash charge for share options and shares awarded
(Increase) / decrease in receivables
Decrease 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 during the year
Payment of obligations relating to acquisitions made in prior years
Adjustment to cost of acquisition of subsidiaries
Cash acquired with subsidiaries
Acquisition of intangibles
Adjustment to cost of intangibles acquired
Net cash outflow from investing activities
FINANCING ACTIVITIES
Dividends paid
Movement in finance leases
Repayment of long term bank loans
Proceeds on issue of ordinary share capital
Cash settlement of equity warrants
Purchase of own shares held in EBT
Net cash outflow from financing activities
Increase in cash and cash equivalents
Exchange differences on translation of foreign subsidiaries
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
£’000
6,091
1,815
-
(701)
2
45
(2,916)
16
1,825
6,177
(314)
(892)
4,971
44
(2,186)
(2,062)
(815)
-
1,001
-
-
(4,018)
(771)
(73)
(571)
2,257
(675)
(184)
(17)
936
42
571
1,549
£’000
3,852
1,540
442
(660)
1
173
3,860
172
(3,194)
6,186
(467)
(1,556)
4,163
148
(1,240)
(97)
(550)
94
18
(65)
(27)
(1,719)
(192)
(136)
(1,785)
-
-
(306)
(2,419)
25
-
546
571
marketing group plc 2014 annual report
financial statements
Consolidated Statement of Changes in Equity for the year ended 31 December 2014
Share
capital
Share
premium
Own
shares
Share
option
reserve
Foreign
currency
translation
reserve
Retained
earnings
Total
attributable
to equity
holders of
parent
Non-
controlling
interest
Total
equity
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
At 1 January 2013
7,699
40,288
(1,201)
441
Total Comprehensive
Income for the year
Credit for share
option scheme
Own shares purchased
Shares awarded
to employees
and vendors from
own shares
Dividend paid
-
-
-
-
-
-
-
-
-
-
-
-
(306)
1,045
-
-
173
-
-
-
At 31 December 2013
7,699
40,288
(462)
614
Profit for the year
Exchange differences
on translation of
foreign operations
Total comprehensive
income for the year
Non-controlling interest
of new acquisitions
-
-
-
-
-
-
-
-
New shares issued
641
1,915
Credit for share
option scheme
Own shares purchased
Shares awarded
to employees from
own shares
Settlement of warrants
Transfer from share
option reserve to
retained earnings
Dividend paid
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(184)
386
-
-
-
-
-
-
-
-
45
-
-
-
(395)
-
-
-
-
-
-
-
-
-
30
30
-
-
-
-
-
-
-
-
15,457
62,684
2,353
2,353
-
-
173
(306)
(908)
137
(192)
(192)
16,710
64,849
-
-
-
-
-
-
-
62,684
2,353
173
(306)
137
(192)
64,849
4,197
4,197
45
4,242
-
30
12
42
4,197
4,227
57
4,284
-
280
280
-
-
-
-
2,556
45
(184)
(386)
-
(675)
(675)
395
-
(771)
(771)
-
-
-
-
-
-
-
2,556
45
(184)
-
(675)
-
(771)
At 31 December 2014
8,340
42,203
(260)
264
30
19,470
70,047
337
70,384
marketing group plc 2014 annual report
financial statements
39 | 40
Notes to the Consolidated Financial Statements
1. Principal Accounting Policies
Basis of preparation
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. They have been prepared in accordance with International
Financial Reporting Standards (IFRS) adopted by the European Union and on the historical cost basis.
Basis of consolidation
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.
Turnover 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 represents fees, commissions, rechargeable expenses and sales of materials performed subject to specific
contracts. 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.
Where recorded turnover exceeds amounts invoiced to Clients, the excess is classified as accrued income (within Trade and
other receivables). Where amounts invoiced to Clients exceed recorded turnover, the excess is classified as deferred income
(within Accruals).
Goodwill and other intangible assets
Goodwill
Goodwill arising from the purchase of subsidiary undertakings and trade acquisitions represents the excess of the total cost
of acquisition over the Group’s interest in the fair value of the identifiable assets, liabilities and contingent liabilities of the
subsidiary acquired. The total cost of acquisition represents both the unconditional payments made in cash and shares on
acquisition and an estimate of future contingent consideration payments to vendors in respect of earn-outs.
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
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.
marketing group plc 2014 annual report
financial statements
1. Principal Accounting Policies (cont.)
Contingent consideration payments
The Directors manage the financial risk associated with making business acquisitions by structuring the terms of the
acquisition, wherever possible, to include an element of the total consideration payable for the business which is contingent
on its future profitability (ie earn-out). Contingent consideration is initially recognised at its estimated fair value based on a
reasonable estimate of the amounts expected to be paid. Changes in the fair value of the contingent consideration that
arise from additional information obtained during the first twelve months from the acquisition date, about facts and
circumstances that existed at the acquisition date, are adjusted retrospectively, with corresponding adjustments against
goodwill. The fair value of contingent consideration is reviewed annually and subsequent changes in the fair value are
recognised in profit or loss, but excluded from headline profits.
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, in order of significance:
Potential impairment of goodwill
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.
Contingent payments in respect of acquisitions
Contingent consideration, by definition, depends on uncertain future events. At the time of purchasing a business, the
Directors use the financial projections obtained during due diligence as the basis for estimating contingent consideration.
Subsequent estimates benefit from the greater insight gained in the post-acquisition period and the business’ track record
of financial performance.
Revenue recognition policies in respect of contracts which straddle the year end
Estimates of revenue to be recognised on contracts which straddle the year end are typically based on the amount of time
so far committed to those contracts in relation to the total estimated time to complete them.
Valuation of intangible assets on acquisitions
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 and intellectual property rights 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. Estimating the
length of customer retention is the principal uncertainty and draws on historic experience.
Share-based payment transactions
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.
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 arising from normal trading activities 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.
The income statements of overseas subsidiary undertakings are translated at average exchange rates and the year-end net
assets of these companies are translated at year-end exchange rates. Exchange differences arising from retranslation of the
opening net assets are reported in the consolidated statement of comprehensive income.
marketing group plc 2014 annual report
financial statements
41 | 42
1. Principal Accounting Policies (cont.)
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
Period of the lease
25% per annum
Fixtures, fittings and office equipment
10-33% per annum
Computer equipment
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.
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.
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.
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.
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 Directors have considered all IFRS and IFRIC Interpretations issued but not yet in force, but most are either not applicable
to the Group or are not expected to have a material impact. IFRS 15, Revenue from Contracts with Customers, will apply to
the Group’s 2015 financial statements but, at this stage, the Directors do not believe it will have a material impact.
marketing group plc 2014 annual report
financial statements
2. Segmental Information
Business segmentation
For management purposes the Group had twelve operating units during the year: April Six, Big Communications, Bray Leino,
balloon dog, Proof Communication, RLA Group, Solaris Healthcare Network, Speed Communications Agency (formerly
Raymond Loewy International Limited trading as Speed), Splash Interactive Pte, Story UK and ThinkBDW (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 2014
Branding,
Advertising
& Digital
£’000
Media
Events &
Learning
Public
Relations
Group
£’000
£’000
£’000
£’000
Turnover
Operating income
Segmental operating profit (“trading profit”)
Unallocated central costs
68,786
44,036
6,014
44,393
4,036
949
7,238
2,769
89
5,130
4,131
632
Headline operating profit
Investment income
Headline 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
Consolidated net assets
1,942
1,432
25
94
131
85
82
125
27,168
5,903
1,095
4,973
14,763
5,575
557
2,365
12,405
328
538
2,608
125,547
54,972
7,684
(1,607)
6,077
34
(578)
5,533
(112)
5,421
(1,179)
4,242
2,183
3
2,186
1,733
7
1,740
39,139
70,232
109,371
23,260
15,727
38,987
70,384
marketing group plc 2014 annual report
financial statements
43 | 44
2. Segmental Information (cont.)
Unallocated corporate expenses include corporate administration expenses necessary for a quoted company. It is
considered impractical to split the debt interest into segments.
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 2013
Branding,
Advertising
& Digital
£’000
Media
Events &
Learning
Public
Relations
Group
£’000
£’000
£’000
£’000
Turnover
Operating income
Segmental operating profit (“trading profit”)
Unallocated central costs
64,285
41,515
5,655
47,931
4,414
1,147
8,441
3,054
89
3,433
2,611
110
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
1,044
33
115
1,201
112
185
48
35
22,132
4,323
304
338
9,983
4,573
76
63
Consolidated net assets / (liabilities)
12,149
(250)
228
275
124,090
51,594
7,001
(1,284)
5,717
1
(696)
5,022
(1,865)
3,157
(804)
2,353
1,240
-
1,240
1,533
7
1,540
27,097
70,594
97,691
14,695
18,147
32,842
64,849
Geographical segmentation
With the acquisition of Splash Interactive Pte. Ltd, trading in five territories in Asia, the Group’s operations outside the UK are
broadening, but substantially all the Group’s business remains based and executed in the UK.
marketing group plc 2014 annual report
financial statements
3. Reconciliation of Headline Profit to Reported Profit
The Board believes that headline profits, which eliminate certain amounts from the reported figures, provide a better
understanding of the underlying trading of the Group. The adjustments to reported profits fall into two categories: exceptional
items and acquisition-related items.
Headline profit
Exceptional items (Note 4)
Acquisition-related items (Note 5)
Reported profit
Year to 31 December 2014
Year to 31 December 2013
PBT
£’000
5,533
(126)
14
5,421
PAT
£’000
4,301
(98)
39
4,242
PBT
£’000
5,022
(2,172)
307
3,157
PAT
£’000
3,649
(1,679)
383
2,353
In 2013, exceptional items included movements in the fair value of contingent consideration which are now disclosed as
acquisition adjustments in the Consolidated Income Statement. The comparatives have been restated accordingly.
4. Exceptional Items
Restructuring costs
Impairment of Addiction goodwill and intangibles
Loss on legal dispute with supplier
Exceptional items affecting reported operating profit
Accelerated amortisation of debt arrangement fees
Exceptional items affecting reported profit before tax
Year to
31 December
2014
£’000
Year to
31 December
2013
£’000
-
-
-
-
126
126
1,523
442
207
2,172
-
2,172
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.
On 5 February 2015, the Group signed new bank facilities replacing those in place at 31 December 2014 and, as a result, the
remaining unamortised bank debt arrangement fees of £126,000 were fully written off during the year and have been
classified as an exceptional item. In 2013 the main exceptional items were amounts payable for loss of office and other costs
incurred relating to the restructuring of Bray Leino’s London operations. This restructuring also resulted in the impairment of
Addiction goodwill and other intangibles acquired.
marketing group plc 2014 annual report
financial statements
45 | 46
5. Acquisition Adjustments
Movement in fair value of contingent consideration
Amortisation of other intangibles recognised on acquisitions
Acquisition transaction costs expensed
Year to
31 December
2014
£’000
Year to
31 December
2013
£’000
701
(436)
(251)
14
660
(299)
(54)
307
The movement in fair value of contingent consideration relates to a net downward revision in the estimate payable to
vendors of businesses acquired in prior years. Acquisition transaction costs relate to the acquisitions made during the year
as detailed in Note 20.
6. Net Finance Costs
Interest income:
Interest on bank deposits
Finance costs:
Interest on bank loans and overdrafts
Amortisation of bank debt arrangement fees
Headline finance costs
Headline net finance costs
Accelerated amortisation of debt arrangement fees (Note 4)
Net Finance Costs
7. Profit on Ordinary Activities before Tax
Profit on ordinary activities before taxation is stated after charging:-
Depreciation of owned tangible fixed assets
Depreciation of tangible fixed assets held under finance leases
Amortisation of intangible assets
Loss 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 on foreign exchange
Year to
31 December
2014
£’000
Year to
31 December
2013
£’000
34
(419)
(159)
(578)
(544)
(126)
(670)
1
(506)
(190)
(696)
(695)
-
(695)
Year to
31 December
2014
£’000
Year to
31 December
2013
£’000
1,375
4
436
2
1,897
330
188
37,046
186
6
1,135
106
299
1
1,386
355
192
35,057
167
13
marketing group plc 2014 annual report
financial statements
7. Profit on Ordinary Activities before Tax (cont.)
Auditors’ remuneration may be analysed by:
Audit
Taxation
Corporate Finance
Other services
Year to
31 December
2014
£’000
Year to
31 December
2013
£’000
133
23
23
7
186
113
21
27
6
167
Other services include review of the Group’s Interim Announcement, 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 and Learning
Public Relations
Central
The aggregate employee costs of these persons were as follows:
Wages and salaries
Social security costs
Pension costs
Share based payment expense
Year to
31 December
2014
Year to
31 December
2013
671
36
74
87
4
872
649
40
91
44
3
827
Year to
31 December
2014
£’000
Year to
31 December
2013
£’000
32,355
3,504
1,142
45
37,046
30,199
3,461
1,232
165
35,057
The Group operates nineteen defined contributions pension schemes. The pension cost charge for the year represents
contributions payable by the Group to the schemes. At the end of the financial year outstanding contributions amounted
to £91,000 (2013: £100,000).
marketing group plc 2014 annual report
financial statements
47 | 48
8. Employee Information (cont.)
Directors’ remuneration
Directors’ remuneration and other benefits for the year were as follows (all amounts in £s):
Salary /
Fees
Performance
-related
payments
Benefits
Pension
Gain on
exercise
of share
options*
Total
31 December
2014
Total
31 December
2013
Current directors
Dylan Bogg
146,450
39,000
5,423
9,750
15,600
Stephen Boyd (Note 2)
James Clifton
Robert Day
Peter Fitzwilliam
Chris Goodwin
Giles Lee
David Morgan
37,500
157,932
108,750
138,825
118,190
145,417
114,020
-
-
-
20,000
-
-
-
-
-
1,996
20,000
-
-
-
-
-
40,820
24,894
13,000
12,600
11,987
5,200
18,500
9,992
26,000
22,950
Chris Morris (Note 3)
97,833
20,000
1,886
Sue Mullen
Fiona Shepherd
146,022
162,500
19,450
150
13,125
42,000
5,097
216,223
37,500
179,928
149,570
196,719
147,977
199,909
149,970
126,999
181,347
219,997
179,456
37,500
166,772
160,983
162,505
141,723
182,436
137,436
98,552
164,813
159,467
13,000
7,280
2,600
10,400
-
-
-
-
-
-
-
-
-
122,282
1,373,439
140,450
68,602
89,748
133,900
1,806,139
1,713,925
Former directors
Bruce Hutton (Note 4)
(to 28 February 2013)
Notes:
* The gain on exercise of share options is calculated as the difference between the market price of the shares on the date
of exercise and the price paid for the shares.
1. Dylan Bogg, James Clifton, Robert Day, Chris Goodwin, Giles Lee, Sue Mullen 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. Stephen Boyd was paid £7,500 as a TMMG plc Director during the year (2013: £4,375). In addition he was paid £30,000
for his services through Stephen Boyd Ltd, a company controlled by him.
3. Chris Morris was paid £42,500 as a TMMG plc Director during the year (2013: £42,500). In addition, he was paid for his
consulting services through a consultancy practice owned by him, Morris Marketing Consultancy.
4. Included in Bruce Hutton’s remuneration is an amount of £90,950 of compensation for loss of office.
marketing group plc 2014 annual report
financial statements
9. Taxation
Current tax:-
UK corporation tax at 21.5% (2013: 23.25%)
Adjustment for prior periods
Foreign tax on profits of the period
Deferred tax:-
Current year reversing/(originating) temporary differences
Tax charge for the year
Factors affecting the tax charge for the current year:
Year to
31 December
2014
£’000
Year to
31 December
2013
£’000
1,120
(13)
51
1,158
21
1,179
810
(6)
-
804
-
804
The tax assessed for the year is marginally higher than the standard rate of corporation tax in the UK. The differences are:
Profit before taxation
Profit on ordinary activities before tax at the standard rate of corporation
tax of 21.5% (2013: 23.25%)
Effect of:
Non-deductible expenses / income not taxable
Timing differences relating to deductibility of share options
Movement in fair value of contingent consideration, not taxable
Adjustments to prior periods
Movement on provisions
Depreciation in excess of capital allowances
Other differences
Actual tax charge for the year
10. Dividends
Amounts recognised as distributions to equity holders in the year:
Interim dividend of 0.25 pence (2013: 0.25 pence) per share
Final dividend of 0.75 pence (2013: nil)
Year to
31 December
2014
£’000
Year to
31 December
2013
£’000
5,421
1,165
136
(68)
(151)
(13)
17
100
(7)
1,179
3,157
734
154
(12)
(153)
(6)
(42)
137
(8)
804
Year to
31 December
2014
£’000
Year to
31 December
2013
£’000
205
566
771
192
-
192
A final dividend of 0.85 pence is to be paid on 20 July 2015 to those shareholders on the register at 10 July 2015. In accordance
with IFRS the final dividend of 0.85p will be recognised in the 2015 accounts, should it be approved by shareholders at the AGM.
marketing group plc 2014 annual report
financial statements
49 | 50
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
Reported profit for the year
Attributable to:
Equity holders of the parent
Non-controlling interests
Headline earnings (Note 3)
Attributable to:
Equity holders of the parent
Non-controlling interests
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
2014
£’000
Year to
31 December
2013
£’000
4,242
4,197
45
4,242
4,301
4,256
45
4,301
2,353
2,353
-
2,353
3,649
3,649
-
3,649
77,333,357
75,668,570
3,711,804
1,927,758
3,886,360
2,510,283
82,972,919
82,065,213
5.43
5.06
5.50
5.13
3.11
2.87
4.82
4.45
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.
marketing group plc 2014 annual report
financial statements
12. Intangible Assets
Goodwill
Cost
At 1 January
Recognised on acquisition of subsidiaries
Adjustment to consideration
At 31 December
Impairment adjustment
At 1 January
Impairment during the year
At 31 December
Net book value at 31 December
Year to
31 December
2014
£’000
Year to
31 December
2013
£’000
75,278
4,048
-
79,326
4,273
-
4,273
75,053
74,314
1,058
(94)
75,278
3,995
278
4,273
71,005
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 8.3%. For all CGUs, 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 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:
April-Six Ltd
Big Communications Ltd
Bray Leino Ltd
Fox Murphy Ltd (trading as balloon dog)
Proof Communication Ltd
Speed Communications Agency Ltd
RLA Group Ltd
Solaris Healthcare Network Ltd
Splash Interactive Pte. Ltd
Story UK Ltd
ThinkBDW Ltd
Other smaller acquisitions
31 December
2014
£’000
31 December
2013
£’000
9,411
8,125
27,761
1,514
576
3,686
6,572
1,058
2,391
6,969
6,283
707
75,053
9,411
8,125
30,846
1,514
-
-
6,572
1,058
-
6,969
6,283
227
71,005
During the year £3,085,000 of the goodwill value of Bray Leino Ltd was reallocated to Speed in order to reflect the transfer of
Bray Leino’s PR division into the Speed business.
marketing group plc 2014 annual report
financial statements
51 | 52
12. Intangible Assets (cont.)
Other intangible assets
Cost
At 1 January
Additions
At 31 December
Amortisation and impairment
At 1 January
Amortisation charge for the year
Impairment charge for the year
At 31 December
Net book value
Year to
31 December
2014
£’000
Year to
31 December
2013
£’000
2,079
1,302
3,381
559
436
263
1,258
2,123
1,209
870
2,079
95
299
165
559
1,520
Additions of £1,302,000 in the year include Client relationships and trade names acquired relating to the Proof, Speed and
Splash acquisitions, of which £346,000 relates to trade names deemed to have an indefinite useful life (2013: £870,000 includes
intellectual property rights acquired, product development costs capitalised, and Client relationships and trade names
acquired relating to Solaris Healthcare of which £140,000 relates to trade names deemed to have an indefinite useful life).
Included within the value of intangible assets is an amount of £649,000 (2013: £303,000) relating to trade names of businesses
acquired, which are deemed to have indefinite useful lives. These trade names have attained recognition in the market
place and the companies acquired will continue to operate under the relevant trade names, which will play a role in
developing and sustaining customer relationships for the foreseeable future. As such, it is the Directors’ judgement that the
useful life of these trade names is considered to be indefinite.
13. Subsidiaries
The Group’s principal trading subsidiaries are listed below. All subsidiaries are 100% owned and all are incorporated in the
United Kingdom, except for Splash Interactive Pte. Ltd, which is 70% owned and incorporated in Singapore.
Subsidiary undertaking
Nature of business
April-Six Ltd
Marketing communications, specialising in the technology sector
Big Communications Ltd
Advertising, digital marketing, brand planning and strategic development
Bray Leino Ltd
Advertising, media buying, digital marketing, events and training
Fox Murphy Ltd (trading as balloon dog)
Marketing communications
Proof Communication Ltd*
Public relations, specialising in science, engineering and technology
Speed Communications Agency Ltd
Public relations
RLA Group Ltd
Marketing communications
Solaris Healthcare Network Ltd
Marketing communications, specialising in the medical sector
Splash Interactive Pte. Ltd*
Digital marketing
Story UK Ltd
ThinkBDW Ltd
Brand development and creative direct communication
Property marketing, providing advertising, media, brochures, signage,
exhibitions, CGI, animation, intranet, photography
*All subsidiaries are held directly by The Mission Marketing Group plc except where indicated by an asterisk.
marketing group plc 2014 annual report
financial statements
14. Property, Plant and Equipment
Cost or valuation
At 1 January 2013
Acquisition of subsidiaries
Additions
Reclassification of hire stock
Disposals
At 31 December 2013
Acquisition of subsidiaries
Additions
Disposals
At 31 December 2014
Depreciation
At 1 January 2013
Acquisition of subsidiaries
Reclassification of hire stock
Charge for the year
Disposals
At 31 December 2013
Acquisition of subsidiaries
Charge for the year
Disposals
At 31 December 2014
Net book value at 31 December 2014
Net book value at 31 December 2013
Short Leasehold
Property
Fixtures & Fittings &
Office Equipment
Computer
Equipment
Motor
Vehicles
Total
£’000
£’000
£’000
£’000
£’000
1,681
2,686
4,328
249
8,944
-
18
-
(25)
1,674
16
369
(72)
1,987
1,135
-
-
87
(15)
1,207
3
112
(61)
1,261
726
467
19
365
553
(48)
3,575
251
983
(513)
4,296
1
797
-
(566)
4,560
359
813
(1,344)
4,388
-
60
-
(69)
240
-
21
(52)
209
20
1,240
553
(708)
10,049
626
2,186
(1,981)
10,880
1,610
2,801
168
5,714
5
169
377
(37)
2,124
182
489
(503)
2,292
2,004
1,451
-
-
729
(432)
3,098
316
735
(1,344)
2,805
1,583
1,462
-
-
48
(75)
141
-
43
(28)
156
53
99
5
169
1,241
(559)
6,570
501
1,379
(1,936)
6,514
4,366
3,479
The net book amount includes £18,000 (2013: £143,000) 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 £4,000 (2013: £106,000).
marketing group plc 2014 annual report
financial statements
53 | 54
15. Trade and Other Receivables
Gross trade receivables
Less: Provision for doubtful debts
Other receivables
Prepayments
Accrued income
31 December
2014
£’000
31 December
2013
£’000
19,073
(133)
18,940
689
1,568
4,662
25,859
15,451
(61)
15,390
573
1,088
3,700
20,751
An allowance has been made for estimated irrecoverable amounts from the provision of services of £133,000 (2013: £61,000).
The Directors consider that the carrying amount of trade and other receivables approximates their fair value.
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
2014
£’000
31 December
2013
£’000
9,258
12
439
3,276
12,985
7,589
69
355
3,054
11,067
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.
marketing group plc 2014 annual report
financial statements
18. Bank Overdrafts, Loans and Net Debt
Bank loan outstanding
Unamortised bank debt arrangement fees
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
Unamortised bank debt arrangement fees
Less: Amount due for settlement within 12 months
(shown under current liabilities)
Amount due for settlement after 12 months
31 December
2014
£’000
31 December
2013
£’000
11,000
-
11,000
(1,549)
9,451
11,000
-
-
11,000
-
11,000
(11,000)
-
11,572
(285)
11,287
(571)
10,716
1,714
9,858
-
11,572
(285)
11,287
(1,714)
9,573
Bank debt arrangement fees, where they can be amortised over the life of the loan facility, are included in finance costs.
The unamortised portion is reported as a reduction in bank loans outstanding.
At 31 December 2014, the Group had a term loan facility of £4.0m due for repayment by December 2015 on a quarterly
basis, and a revolving credit facility of up to £7.0m (fully drawn), expiring on 27 December 2015. As a result, the full £11.0m of
outstanding loans at 31 December 2014 is classified within current liabilities in the Group balance sheet. On 5 February 2015,
the Group signed new bank facilities replacing those in place at 31 December 2014. The new facilities are an £8m term loan
and a revolving credit facility of up to £7m, both repayable by 5 February 2019. Had these new facilities been in place at 31
December 2014, £1.5m of the outstanding loans would have been classified within current liabilities and £9.5m within non
current liabilities.
Interest on the old term loan and revolving credit facilities was based on 3 month LIBOR plus 2.75%, payable in cash on loan
rollover dates. Interest rate margins on the new facilities are lower, at 2.25%.
In addition to its committed facilities, the Group had available an overdraft facility of up to £3.0m with interest payable by
reference to National Westminster Bank plc Base Rate plus 3.5%. In February 2015, this overdraft facility was replaced by a
new facility with a 2.5% interest rate margin.
At 31 December 2014, 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. This cross guarantee
structure has been maintained since the agreement of the new facilities.
All borrowings are in sterling.
marketing group plc 2014 annual report
financial statements
55 | 56
19. Obligations under Finance Leases
Obligations under finance leases are as follows:
In one year or less
Between two and five years
31 December
2014
£’000
31 December
2013
£’000
12
11
23
69
-
69
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
20.1 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 contingent consideration payments that may be due is as follows:
31 December 2014
31 December 2013
Cash
£’000
Shares
£’000
Total
£’000
Cash
£’000
Shares
£’000
Total
£’000
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
In more than four years but less than five years
In more than five years
1,219
1,368
1,113
277
548
547
-
40
-
-
-
-
1,219
1,408
1,113
277
548
547
375
913
869
574
-
-
-
48
47
-
-
-
375
961
916
574
-
-
5,072
40
5,112
2,731
95
2,826
20.2 Acquisition of Proof Communication Ltd
On 1 August 2014, the Group acquired the whole issued share capital of Proof Communication Ltd (“Proof”), a specialist
science, engineering and technology PR business, to extend and complement the services already being provided by April
Six in the technology sector. The fair value of the consideration given for the acquisition was £1,493,000, comprising initial
cash and share consideration and deferred contingent cash consideration. 115,347 ordinary shares were issued as part of
the initial consideration. Costs relating to the acquisition amounted to £36,000 and were expensed.
Maximum contingent consideration of £1,017,000 is dependent on Proof achieving a profit target over the period 1 January
2014 to 31 December 2015. The Group has provided for contingent consideration of £511,000 to date.
The fair value of the net identifiable assets acquired was £583,000 resulting in goodwill and other intangible assets of
£910,000. Goodwill arises on consolidation and is not tax-deductible. Management carried out a review to assess whether
any other intangible assets were acquired as part of the transaction. Management concluded that customer relationships
were acquired and attributed a value to this by applying commonly accepted valuation methodologies. The goodwill
arising on the acquisition is attributable to the anticipated profitability of the Company.
marketing group plc 2014 annual report
financial statements
20. Acquisitions (cont.)
Net assets acquired:
Fixed assets
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Long term creditors and provisions
Other intangibles recognised at acquisition
Goodwill
Total consideration
Satisfied by:
Cash
Shares
Deferred contingent consideration
Book
Value
£’000
Fair Value
Adjustments
£’000
Fair
Value
£’000
26
279
526
(227)
(21)
583
-
583
-
-
-
-
-
-
334
334
26
279
526
(227)
(21)
583
334
917
576
1,493
923
59
511
1,493
Proof contributed turnover of £514,000, operating income of £457,000 and headline operating profit of £121,000 to the results
of the Group since acquisition.
20.3 Acquisition of Splash Interactive Pte. Ltd
On 30 September 2014, the Group acquired 70% of the issued share capital of Splash Interactive Pte. Ltd (“Splash”),
a specialist digital agency operating through five territories in Asia, to enhance the Group’s digital competence and to
support the Group’s existing Asia-based Clients. The fair value of the consideration given for the acquisition was £2,643,000,
comprising initial cash consideration and deferred contingent cash consideration. Costs relating to the acquisition
amounted to £172,000 and were expensed. In addition, the Group has an option to purchase, and the vendors also have
an option to sell, the remaining 30% of the issued share capital from 1 January 2018. This option has been recognised at its
estimated future cost of £1,094,000, bringing the total consideration to £3,737,000.
Maximum contingent consideration of £6,939,000 is dependent on Splash achieving various profit targets over the period
October 2014 to December 2017. The Group has provided for contingent consideration of £2,200,000 to date.
The fair value of the net identifiable assets acquired was £932,000, of which the Group’s 70% share amounted to £652,000,
resulting in goodwill and other intangible assets of £3,085,000. The non-controlling interest is measured at the non-controlling
interests’ proportionate share of Splash’s identifiable net assets. Goodwill arises on consolidation and is not tax-deductible.
Management carried out a review to assess whether any other intangible assets were acquired as part of the transaction.
Management concluded that both a brand name and customer relationships were acquired and attributed a value to
each of these by applying commonly accepted valuation methodologies. The goodwill arising on the acquisition is
attributable to the anticipated profitability of the Company.
marketing group plc 2014 annual report
financial statements
57 | 58
20. Acquisitions (cont.)
Net assets acquired:
Fixed assets
Deferred tax asset
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Non-controlling interests
Other intangibles recognised at acquisition
Goodwill
Total consideration
Satisfied by:
Cash
Deferred contingent consideration - for existing 70%
- for option over 30%
Book
Value
£’000
Fair Value
Adjustments
£’000
Fair
Value
£’000
69
16
1,509
315
(977)
932
(280)
652
-
652
-
-
-
-
-
-
-
-
694
694
69
16
1,509
315
(977)
932
(280)
652
694
1,346
2,391
3,737
443
2,200
1,094
3,737
Splash contributed turnover of £925,000, operating income of £760,000 and headline operating profit of £197,000 to the
results of the Group since acquisition.
20.4 Acquisition of Speed Communications Agency Ltd (formerly Raymond Loewy International Limited trading
as Speed)
On 31 October 2014, the Group acquired the whole issued share capital of Speed Communications Agency Ltd (formerly
Raymond Loewy International Limited trading as Speed) (“Speed”) in order to bring greater scale to the Group’s existing PR
capabilities, thereby opening up new opportunities to win Clients. The fair value of the consideration given for the acquisition
was £815,000, comprising initial cash and share consideration and deferred contingent cash and share consideration.
600,000 ordinary shares were issued as part of the initial consideration. Costs relating to the acquisition amounted to
£30,000 and were expensed.
Maximum contingent consideration of £140,000 is dependent on Speed achieving various profit targets over the period
November 2014 to December 2015. The Group has provided for contingent consideration of £140,000.
The fair value of the net identifiable liabilities acquired was £60,000 resulting in goodwill and other intangible assets of
£875,000. Goodwill arises on consolidation and is not tax-deductible. Management carried out a review to assess whether
any other intangible assets were acquired as part of the transaction. Management concluded that both a brand name and
customer relationships were acquired and attributed a value to each of these by applying commonly accepted valuation
methodologies. The goodwill arising on the acquisition is attributable to the anticipated profitability of the Company.
marketing group plc 2014 annual report
financial statements
20. Acquisitions (cont.)
Net assets acquired:
Fixed assets
Deferred tax asset
Trade and other receivables
Work in progress
Cash and cash equivalents
Trade and other payables
Other intangibles recognised at acquisition
Goodwill
Total consideration
Satisfied by:
Cash
Shares
Deferred contingent consideration
Book
Value
£’000
Fair Value
Adjustments
£’000
Fair
Value
£’000
31
42
431
12
160
(709)
(33)
-
(33)
-
-
(27)
-
-
-
(27)
274
247
31
42
404
12
160
(709)
(60)
274
214
601
815
435
240
140
815
Speed contributed turnover of £327,000, operating income of £284,000 and a headline operating loss of £40,000 to the
results of the Group since acquisition.
20.5 Other acquisitions
A total of £480,000 was invested in other acquisitions during the year, comprising initial cash consideration of £225,000 and
deferred contingent consideration of £255,000.
20.6 Pro-forma results including acquisitions
The Directors estimate that the turnover, operating income and headline operating profit of the Group would have been
approximately £131.0m, £59.5m and £6.3m had the Group consolidated the results of Proof, Splash and Speed from the
beginning of the year.
marketing group plc 2014 annual report
financial statements
59 | 60
21. Deferred Taxation
The deferred taxation asset of £60,000 (2013: £nil) and the deferred taxation liability of £26,000 (2013: £nil) recognised in
the financial statements is set out below:
31 December
2014
£’000
31 December
2013
£’000
34
-
34
60
(26)
-
-
-
-
-
31 December
2014
£’000
31 December
2013
£’000
-
53
(19)
34
-
-
-
-
Depreciation in excess of capital allowances
Other timing differences
Classified as:
Deferred tax asset
Deferred tax liability
The movement in the year is analysed as follows:
As at 1 January
Acquisition of subsidiaries
Expense to profit or loss
As at 31 December
22. Financial Commitments
Operating lease commitments
As at 31 December the Group had annual commitments under non-cancellable operating leases as follows:
Operating leases which expire:
Within one year
Between two and five years
After more than 5 years
31 December 2014
31 December 2013
Land and buildings
£’000
Other
£’000
Land and buildings
£’000
Other
£’000
502
1,098
1,629
3,229
22
618
-
640
129
824
414
1,367
60
455
-
515
marketing group plc 2014 annual report
financial statements
23. Share Capital
Allotted and called up:
83,398,195 ordinary shares of 10p each
(2013: 76,990,940 ordinary shares of 10p each)
Options
The Group has the following options in issue:
31 December
2014
£’000
31 December
2013
£’000
8,340
7,699
At start of year
Granted Waived/lapsed
Exercised At end of year
TMMG Long Term Incentive Plan
4,046,500
795,000
(597,843)
(777,257)
3,466,400
Bank warrants
2,516,021
78,248
(2,594,269)
-
-
The TMMG Long Term Incentive Plan (“LTIP”) was created to incentivise senior employees across the Group. Nil cost options
are awarded at the discretion of the Remuneration Committee of the Board, and vest three years later only if the profit
performance of the Group in the intervening period is sufficient to meet predetermined criteria (always subject to
Remuneration Committee discretion). During the year, 777,257 of these options were exercised at a weighted average share
price of 47.0p and at the end of the year 42,900 of the outstanding options are exercisable.
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 3.156% of the Group’s fully diluted share capital, with an exercise price of 10p per share, were issued to the
Group’s loan providers following the refinancing completed in 2010, exercisable at any time until April 2017. In October 2014,
agreements were reached with the Group’s warrant holders under which the holders accepted a cash amount in full and
final settlement of their rights to subscribe for shares under the warrant deed. The total settlement cost to the Group was
£675,000.
marketing group plc 2014 annual report
financial statements
61 | 62
24. Own Shares
At 31 December 2012
Own shares purchased during the year
Awarded to employees during the year
Awarded to vendors as purchase consideration
At 31 December 2013
Own shares purchased during the year
Awarded to employees during the year
At 31 December 2014
No. of shares
1,460,507
1,125,752
(471,663)
(799,001)
1,315,595
155,644
(560,255)
910,984
£’000
1,201
306
(388)
(657)
462
58
(260)
260
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 represents charges to the profit or loss required by IFRS 2 to reflect the cost of the options issued to
the Directors and employees.
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
2014
47.75p
1.5%
1.0%
2013
27p
0.7%
1.0%
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 2014 was 33.3p.
The Group recognised an expense of £45,000 in 2014 (2013: £173,000).
marketing group plc 2014 annual report
financial statements
27. Financial Assets and Liabilities
Capital management
The Group defines “capital” as being debt plus equity. Net bank 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. In addition, the Group
treats its commitment to future consideration payments under acquisition agreements as another component of debt.
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 measures by which the Directors monitor capital risk are the ratios of net
bank debt to EBITDA and total debt (including both net bank debt and estimated acquisition consideration payable) to
EBITDA. (Note that, since acquisition consideration is dependent on future levels of profitability in the acquired business,
which are inevitably uncertain, the Directors calculate this ratio by reference to the amount of consideration which would
be payable if the acquired business were to maintain its current level of profitability.) The Directors have set targets of
remaining below x2 and x2.5 for these ratios respectively.
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, although April Six’s expansion into the US and the
recent acquisition of Splash, have started to expand the Group’s exposure to foreign currencies. Where revenue is generated
in one currency and costs are incurred in another, the Group aims to agree pricing at the outset of a piece of work and then
hedge its foreign currency exposure, if considered significant, through the use of forward exchange contracts. 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, subject to
downward or upward ratchets depending on certain ratios of debt to EBITDA on a quarterly basis. With the recent agreement
of new bank facilities, the Directors have considered again the relative merits of the use of hedging instruments to limit the
exposure to interest rate risk. Given the Group’s very significant levels of interest cover (ratio of EBITDA to net finance costs),
the Directors have decided not to enter into any new hedging instrument. The interest rate cap taken out in December 2012
limits the Group’s exposure to 3 month LIBOR to 1.0% and matures on 30 June 2015. The cap arrangement will not be
renewed.
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.
31 December 2014
£’000
Financial assets
Cash at bank maturing in less than one year or on demand
1,549
marketing group plc 2014 annual report
financial statements
63 | 64
27. Financial Assets and Liabilities (cont.)
Bank Loan
and Overdraft
£’000
Finance
Leases
£’000
Acquisition
Obligations
£’000
Interest
Rate Cap
£’000
31 December
2014 Total
£’000
Financial liabilities
Interest analysis:
Subject to floating rates
Subject to fixed rates
11,000
-
11,000
Maturity analysis:
One year or less, or on demand
11,000
In one to two years
In two to three years
In three to four years
In four to five years
In more than five years
-
-
-
-
-
11,000
-
23
23
12
11
-
-
-
-
23
-
5,112
5,112
1,219
1,408
1,114
277
547
547
5,112
-
4
4
4
-
-
-
-
-
4
11,000
5,139
16,139
12,235
1,419
1,114
277
547
547
16,139
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. 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.
29. Post Balance Sheet Events
On 5 February 2015, the Directors agreed new bank facilities. Further details of these facilities are set out in the Strategic
Report and Note 18.
On 13 February 2015, Story UK Ltd acquired the whole issued share capital of The Weather Digital and Print Communications
Limited (“The Weather”), a digital marketing Agency based in Edinburgh, to enhance the range of digital services provided
by Story. Consideration payable is up to £880,000 in cash and shares, of which a cash payment of £255,000 has been made
and 210,136 new ordinary shares issued. Contingent consideration is dependent on The Weather achieving profit targets
over the period to 31 December 2015. The net assets acquired are estimated to be approximately £0.1m and the main
intangible assets acquired are customer relationships and goodwill.
marketing group plc 2014 annual report
financial statements
30. 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 detail 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
2014
£’000
Year to
31 December
2013
£’000
1,542
90
134
1,766
1,437
198
79
1,714
Stephen Boyd Ltd, an entity of which Stephen Boyd is an interested party, received £30,000 (2013: £33,125) for the provision
of his advisory services. In addition, Morris Marketing Consultancy, an entity in which Chris Morris is an interested party,
received £55,333 (2013: £42,000) for the provision of consultancy services.
Subsidiary undertakings
Bray Leino Ltd is contracted to pay annual rent of £60,000 (2013: £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 (2013: £74,000) and property management fees of £24,000 (2013: £18,000)
were paid to Hannele Ltd. Until January 2014 Bray Leino Ltd also rented premises from a partnership, in which Hannele Ltd
has a 50% interest, for an annual rent of £60,000 (2013: £60,000). As at the year end there were no amounts due from or
owed to Hannele Ltd.
Bray Leino Ltd provides services at arms length prices to Axminster Carpets Limited, a company of which Robert Day
(Executive Director) and Stephen Boyd (Non-Executive Director) are both directors & shareholders. The value of sales during
the year amounted to £nil (2013: £65,000).
ThinkBDW Ltd is contracted to pay annual rent to Robert Day Associates Ltd, a company controlled by Mrs K Day (wife of
Robert Day, Executive Director) and Mrs A Day (wife of Mr A Day, brother of Robert Day, Executive Director). The annual rental
payable of £35,000 (2013: £35,000) was set at market value. The lease terminated on 30 September 2014. Rent payable in
the year was £26,250 (2013: £35,000). An additional lease contract commenced on 2 May 2013 under which annual rental
of £175,000, set at market value, is payable to Robert Day Associates Ltd. The lease commenced on 2nd May 2013 with an
amendment in January 2014. Rent payable in the year was £154,315 (2013: £82,893). The landlord made contributions of
£944,634 to the company in respect of the cost of remodelling the building.
Big Communications Ltd paid rent during the year of £74,000 (2013: £72,962) to four individuals, including Dylan Bogg
(Executive Director) and Chris Morris (Non-Executive Director). Mr Morris also received a benefit of £1,886 (2013: £1,801) from
the company.
31. Availability of Annual Report
Copies of the Annual Report for the year ended 31 December 2014 will be circulated to shareholders at least 21 days ahead
of the Annual General Meeting (“AGM”) on 15 June 2015 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.
marketing group plc 2014 annual report
financial statements
65 | 66
Independent Auditor’s Report to the Members of The Mission Marketing Group plc
Report on the parent company financial statements
Our opinion
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 2014;
• 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.
What we have audited
We have audited the parent company financial statements of The Mission Marketing Group plc for the year ended 31
December 2014 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).
Our responsibilities and those of the Directors for the financial statements and the audit
As explained more fully in the Directors’ Responsibilities Statement set out on page 31, 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.
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.
What an audit of financial statements involves
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.
In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies
with the audited financial statements and to identify any information that is apparently materially incorrect based on, or
materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any
apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and 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
Under the Companies Act 2006 we are required 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.
We have no exceptions to report in respect of either of these matters.
Other matter
We have reported separately on the consolidated financial statements of The Mission Marketing Group plc for the year
ended 31 December 2014.
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
26 March 2015
marketing group plc 2014 annual report
financial statements
Company Balance Sheet as at 31 December 2014
As at
31 December
2014
As at
31 December
2013
Note
£’000
£’000
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
33
34
35
36
37
CREDITORS: Amounts falling due after more than one year
38
NET ASSETS
CAPITAL AND RESERVES
Called up share capital
Share premium account
Own shares
Share option reserve
Profit and loss account
SHAREHOLDER’S FUNDS
41
41
41
42
42
31
3
91,741
91,775
2,313
4
2,317
(16,860)
(14,543)
77,232
(803)
76,429
8,340
42,203
(260)
264
25,882
76,429
36
1
95,951
95,988
2,405
3
2,408
(8,099)
(5,691)
90,297
(12,024)
78,273
7,699
40,288
(462)
614
30,134
78,273
The financial statements were approved and authorised for issue on 26 March 2015 by the Board of Directors. They were
signed on its behalf by:
Peter Fitzwilliam
Finance Director
Company registration number: 05733632
marketing group plc 2014 annual report
financial statements
67 | 68
Notes to the Company Balance Sheet
32. Principal Accounting Policies
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
Period of the lease
25% per annum
Fixtures, fittings and office equipment
10-33% per annum
Computer equipment
25-33% per annum
Contingent consideration payments
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.
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.
marketing group plc 2014 annual report
financial statements
33. Intangible Assets
Cost
Accumulated amortisation
Net book value
31 December
2014
£’000
31 December
2013
£’000
61
(30)
31
61
(25)
36
Intangible assets consist of intellectual property rights which are amortised over 10 years. The amortisation charge for the
year was £6,000 (2013: £6,000).
34. Tangible Fixed Assets
Cost
At 1 January 2014
Additions
Disposals
At 31 December 2014
Depreciation
At 1 January 2014
Charge for the year
Disposals
At 31 December 2014
Net book value at 31 December 2014
Net book value at 31 December 2013
Fixtures & Fittings
£’000
Office Equipment
£’000
Total
£’000
58
-
-
58
58
-
-
58
-
-
33
3
-
36
32
1
-
33
3
1
91
3
-
94
90
1
-
91
3
1
marketing group plc 2014 annual report
financial statements
69 | 70
35. Investments
Cost
At 1 January 2013
Additions
Adjustment to purchase consideration
At 31 December 2013
Additions
Adjustment to purchase consideration
At 31 December 2014
Impairment
At 1 January 2013
Impairment
At 31 December 2013
Impairment
At 31 December 2014
Net book amount at 31 December 2014
Net book amount at 31 December 2013
Shares in subsidiary
undertakings
£’000
99,151
1,930
(687)
100,394
745
(955)
100,184
(4,443)
-
(4,443)
(4,000)
(8,443)
91,741
95,951
A list of the principal Group companies at 31 December 2014 can be found in Note 13 to the Consolidated Financial
Statements.
marketing group plc 2014 annual report
financial statements
36. Debtors
Amounts due from subsidiary undertakings
Corporation tax
Prepayments
Other debtors
37. Creditors: Amounts Falling Due Within One Year
Bank overdraft
Amounts due to subsidiary undertakings
Accruals
Acquisition obligations (see Note 40)
Bank loan (see Note 39)
Other creditors
38. Creditors: Amounts Falling Due After More Than One Year
Acquisition obligations (see Note 40)
Bank loan (see Note 39)
31 December
2014
£’000
31 December
2013
£’000
1,631
526
60
96
2,313
1,862
502
41
-
2,405
31 December
2014
£’000
31 December
2013
£’000
818
4,468
256
249
11,000
69
16,860
499
5,237
242
375
1,714
32
8,099
31 December
2014
£’000
31 December
2013
£’000
803
-
803
2,451
9,573
12,024
marketing group plc 2014 annual report
financial statements
71 | 72
39. 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
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
2014
£’000
31 December
2013
£’000
11,000
-
11,000
11,000
-
11,000
-
11,000
(11,000)
-
11,572
(285)
11,287
1,714
9,858
11,572
(285)
11,287
(1,714)
9,573
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 2014, Net Assets of the Group were £70,384,000 (2013: £64,849,000), and net borrowings under this Group
arrangement amounted to £9,451,000 (2013: £10,716,000).
40. 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
Cash
£’000
249
325
438
1,012
Shares
£’000
-
40
-
40
Total
£’000
249
365
438
1,052
marketing group plc 2014 annual report
financial statements
41. Share Capital, Share Premium and Own shares
The movements on these items are disclosed within the consolidated statement of changes in equity within the consolidated
financial statements. This year the Company’s balance sheet seperately discloses own shares held of £260,000 (2013:
£462,000) following a review of the Company’s arrangement with the EBT which was previously included within intercompany
debtors.
42. Statement of Movements on Reserves
Share Option Reserve
£’000
Profit and Loss Account
£’000
At 1 January 2013
Credit for share option scheme
Exercise of share options
Profit for the period
At 31 December 2013
Credit for share option scheme
Exercise of share options
Settlement of warrants
Loan to employee benefit trust converted to capital contribution
Transfer from share option reserve to profit and loss account
Loss for the period
At 31 December 2014
441
173
-
-
614
45
-
-
-
(395)
-
264
27,904
-
(218)
2,448
30,134
-
(363)
(675)
(912)
395
(2,697)
25,882
As a result of the review referred to in Note 41, the balance of the EBT debtor of £912,000 has been treated as a capital
contribution and deducted from reserves.
43. Operating Lease Commitments
As at 31 December 2014 the Company had no commitments under operating leases (2013: nil).
44. Related Party Transactions
Details of related party transactions are disclosed in Note 30 of the consolidated financial statements.
marketing group plc 2014 annual report
notice of annual general meeting
73 | 74
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 15 June 2015 at the offices
of finnCap Limited, 60 New Broad Street, London, EC2M 1JJ
to transact the following business:
The following resolutions will be proposed as
ordinary resolutions:
Report and Accounts
1. To receive the financial statements and the report of
the Directors and the auditors for the year ended 31
December 2014.
Dividend
2. To approve a final dividend of 0.85 pence per share for
the year ended 31 December 2014 to shareholders on the
register at the close of business on 10 July 2015.
Auditors
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 following resolutions will be proposed as special
resolutions:
Authority to dis-apply pre-emption rights
6. THAT (subject to the passing of the resolution numbered
5 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 5 above as if Section 561 of the Act did not
apply to any such allotment, provided that this power
shall be limited to:
3. To re-appoint Francis Clark LLP as auditors of the
Company.
i.
4. To authorise the Directors to fix the remuneration of
Francis Clark LLP.
Authority to allot shares
5. THAT the Directors be and are hereby generally and
unconditionally authorised pursuant to Section 551
of the Companies Act 2006 (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 £2,752,140 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
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 £833,981.95 being
10% of the issued share capital of the Company.
marketing group plc 2014 annual report
notice of annual general meeting
notice of annual
general meeting
continued
This power shall expire upon the expiry of the general
authority conferred by resolution 5 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.
Authority to purchase own shares
7. 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 12,509,729 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 2016 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 7 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 per cent of the issued share capital of the
Company at any time).
By Order of the Board
Peter Fitzwilliam
26 March 2015
Note to the Notice of Annual General Meeting.
A member entitled to attend and vote at the Annual
General Meeting may appoint one or more proxies
(who need not be a member of the Company) to attend,
speak and vote on his or her behalf. To appoint as your
proxy a person other than the chairman of the meeting,
insert their full name in the box on the Form of Proxy
accompanying the annual report. If you sign and return
the proxy form with no name inserted in the box, the
chairman of the meeting will be deemed to be your
proxy. Where you appoint as your proxy someone other
than the chairman, you are responsible for ensuring
that they attend the meeting and are aware of your
voting intentions. If you wish your proxy to make any
commitments on your behalf, you will need to appoint
someone other the chairman, and give them relevant
instructions directly. In order to be valid an appointment
of proxy must be completed, signed and returned
in hard copy form by post, by courier or by hand to
Neville Registrars Limited, Neville House, 18 Laurel Lane,
Halesowen, West Midlands B63 3DA.
marketing group plc 2014 annual report
notice of annual general meeting
75 | 76
advisors
Company Registration Number:
05733632
Registered Office:
36 Percy Street, London, W1T 2DH
Nominated Advisor and Broker:
finnCap Limited, 60 New Broad Street,
London EC2M 1JJ
Auditors:
Solicitors:
Registrars:
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
Blake Morgan LLP, Apex Plaza, Forbury Road,
Reading RG1 1AX
Neville Registrars, Neville House, 18 Laurel Lane,
Halesowen, West Midlands B63 3DA
Company Secretary:
Peter Fitzwilliam, The Mission Marketing Group plc,
36 Percy Street, London W1T 2DH
Bankers:
Royal Bank of Scotland plc, Corporate Banking, 9th Floor,
280 Bishopsgate, London EC2M 4RB
marketing group plc
36 Percy Street, London W1T 2DH
t: +44 (0)203 463 2099
www.themission.co.uk