ANNUAL RESULTS
For the year ended December 2023
MISSION is a collective of Creative and MarTech Agencies
led by entrepreneurs who encourage an independent spirit.
Employing over 1,100 people across 25 locations and 3 continents,
the Group successfully combines its diverse expertise to produce
Work That CountsTM for our Clients, whatever their ambitions.
Creating real standout, sharing real innovation and delivering
real growth for some of the world’s biggest brands.
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Strategic Report
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28
32
40
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Group at a Glance
Non-Executive Chair's statement
Chief Executive's review
Chief Financial Officer's review
Aims and Ambition
Principal Risks and Uncertainties
Stakeholder Engagement
44 Corporate Governance
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46
51
The Board
Directors’ Report
Corporate Governance Report
56
Financial Statements
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62
105
108
Independent Auditor's Report
Consolidated Financial Statements & Notes
Independent Auditor's Report: Company
Company Financial Statements & Notes
120 Additional Information
120
Company Information & Advisors
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Annual report for the year ended December 2023Annual report for the year ended December 2023 Strategic Report
Group at a glance
Too much work disappears.
This isn’t a big secret, but it does seem careless.
Our approach is different.
Everything we do is designed to get to work that makes the difference Clients
are looking for, whatever their ambition.
We call it Work That Counts™.
So we collaborate because it does good, not because it looks good.
(That means we listen, before we talk).
We provide everything our Agencies need to give their Clients an advantage with
services and innovations under one roof.
We delve deep for insights that are all the stronger for not leaping off the page.
We eschew safety first, because that kind of work is always the first to be ignored.
We create and share innovation not as a means to impress, but for the benefit
of our Clients.
And we stay close to our Clients, regardless of distance and circumstance.
Our approach has helped us become the kind of long term creative partner that
consistently delivers real, sustainable growth, and we’re delighted to say that
our Clients seem happy to have us around.
That counts, big time.
MISSION locations
MISSION Hubs locations
Germany
Hong Kong
India
Malaysia
Singapore
UK
USA
Vietnam
Argentina
Australia
Brazil
Chile
China
Colombia
Egypt
France
Germany
Guatemala
Israel
Italy
Japan
Mexico
New Zealand
Peru
Saudi Arabia
Singapore
South Africa
Spain
UAE
UK
USA
A collective of Agencies that cover all touchpoints and
disciplines supported by centrally developed capabilities and
incremental services to widen and deepen Client relationships.
Over
1,100
people
Over
19
Agencies
25
locations
3
Continents
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Annual report for the year ended December 2023
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Annual report for the year ended December 2023 Building lasting relationships
Our Agencies pride themselves on building strong, productive partnerships with Clients.
That’s why so many brands have stayed with them for years – or even decades. As well as
strong track records in retention, we’re also welcoming exciting new Clients. Across the year,
our Agency acquisitions brought in some well-known and loved household names.
Client retention
Proportion of revenue earned from long-standing Clients.
53%+
5 years or more
27%
10 years or more
17%
20 years or more
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Annual report for the year ended December 2023Annual report for the year ended December 2023 The MISSION
Our Agencies
TO be the preferred creative partner for real business growth BY delivering Work that CountsTM
Our Agencies are home to a rich and varied mix of talented thinkers and doers.
All highly skilled in delivering hugely successful campaigns across every platform.
T E C H N O LO GY
& M O B I LI T Y
H E A LT H
& W E LLN E S S
B U S I N E S S &
C O R P O R AT E
C O N S U M E R
& LI F E S T Y LE
S P O R T S &
E N T E R TA I N M E N T
P R O P E R T Y
M I S S I O N ADVAN TAGE
M I S S I O N C O M M ER C IAL
Bringing brands to life in the real
world, through meaningful brand
building and experiences.
Delivering strategic marketing
for leading technology and
automobile brands.
A brand-building pioneer,
operating from Devon, Bristol
and Asia.
Creators of world-class live
experiences for over 30 years.
A psychological insights and
behavioural solutions consultancy.
A global commercial,
communications and content
Agency specialising in Formula 1
and leading high-performance sports.
A full service creative powerhouse
with four UK offices.
A creative business that works hand
in hand with brands and the next
generation to build the future better.
Mezzo Labs are the data plumbers
of martech. We create the data
architecture that underpins
personalised customer experience.
A leading integrated sports, fitness and
entertainment marketing Agency.
A social media Agency dedicated
to delivering results and pushing
boundaries through a 'no-fluff'
approach to social media marketing.
Providing market access support
to pharma and medical brands.
An innovative specialist medical
communications Agency.
Customer relationships built
on psychological insight.
Creating effective promotions and
new revenue streams through
brand partnerships.
An ambitious, creative and
commercially-minded PR Agency.
Award-winning integrated creative
Agency in three locations. We make
believers of your brand.
The UK’s leading integrated property
marketing Agency.
An integrated Growth Media
Agency – Turbine uses media
to power your growth.
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Annual report for the year ended December 2023
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Annual report for the year ended December 2023 Making a positive change
In our ambition to become the UK’s leading, most respected Agency Group, we need to
do just that – lead. This is never truer than when it comes to our corporate, social and
environmental responsibility.
Our success as a Group is measured by our financial
growth but this is just one element of the equation.
The difference we make to our people and future
generations, the communities we work and live within
and the environment that we have a responsibility
to protect – is of equal importance.
We also have a responsibility to consider not just how we
operate but also to share ESG insight and best practice
across our Clients to move the brands and businesses we
work with forward. Reaching millions of people through
our 600 plus international Client base, that’s a lot of chances
to make a big difference every day.
Environment
As a collective of creative Agencies, providing a range of
marketing, advertising and consultative services, our direct
and indirect impact on the environment is low. But we can
always do better. We aim to reduce our environmental
impact in the resources and energy we use, how and when
we travel, the suppliers we select and how we work to create
healthy operating models.
Our People are a key part of our environmental journey
driving behaviour change in our Agencies to reduce carbon
impact, whether through reducing waste and energy
consumption, travelling more responsibly or selecting
suppliers aligned to our ambitions.
We have been measuring greenhouse gas (GHG) emissions
since 2019 (selected baseline year to address anomaly
pandemic year of 2020) in order to understand our
footprint, prioritise areas of focus and take action to
reduce our impact.
Ultimately, our aim is to achieve sustainable profitability
while making a positive impact on the world. We are focused
on delivering our ESG aspirations and targets, committed
to being transparent on the journey and determined
to maintaining healthy growth.
Our goals
• Reduce emissions by 21% for 2024 and 42%
for 2029 across Scope 1, 2 and 3 in line with
Science-Based Targets1 and achieve net zero
emissions by 2050
• Commit to the Business Ambition for 1.5°
• Build Environmental Management Systems
and action plans across our Agencies to
address carbon emission hotspots and drive
emissions reduction
• Work towards ISO 14001 certification for the
majority of Agencies by 2026
1 Science Based Targets are a set of goals developed by a business to
provide it with a clear route to reduce greenhouse gas emissions. An
emissions reduction target is defined as ‘science based’ if it is developed
in line with the scale of reductions required to keep global warming below
1.5’C from pre-industrial levels.
Carbon Transition Plan
To reach these goals we have developed a Carbon Transition
Plan – an action plan which clearly outlines how we
will transform existing assets, operations, and business
models to transition towards achieving net-zero by 2050.
In preparing this plan, we have followed guidance and
frameworks from the Carbon Disclosure Project (CDP)
and the former Task Force on Climate-Related Financial
Disclosures (TCFD) which has been replaced by the
International Sustainability Standards Board (ISSB)
two standards – IFRS S1 and IFRS S2.
Covering our management approach, climate risks
& opportunities, governance, GHG profile and how we will
specifically address Scope 1, 2 and 3 emissions (our carbon
transition), our CTP will be reviewed annually to ensure we
are assessing not just our progress against our net-zero
target but committed action for change.
2023 emissions
2023 has seen total emissions remain roughly the same
as 2022 (2,881 compared to 2,864t CO2e) resulting
in a 39% overall decrease in emission compared to
pre pandemic levels in 2019.
and accuracy with the introduction in 2023 of carbon
reporting within MISSION’s back-office finance system.
Travel expenses can no longer pass through across the
Group without appropriate data collation which eradicated
the need for carbon impact estimates based on spend.
Other key emission sources were business services
(decreased by 52% compared to 2022 primarily owing
to updated conversions factors from DEFRA) and employee
commuting (decreased by 12% due to a reduction in distance
travelled by car and taxi although there was an increase
in distance travelled by rail).
Positively 2023 saw further consolidation of our estate
(18% from 2019 to 2023) with the opening of our new London
office at The Manufactory in the historic Heal’s building on
Tottenham Court Road. This brought together a number
of Agencies under one roof in this modern refurbished facility
seeing an overall reduction in energy, waste and water use
and reduced commuting for many due to its location to
transport links. The new office is a brilliant location for our
Agency teams and Clients to collaborate and has become
a thriving workspace building connections and driving
creativity in our delivery of pioneering work.
In 2023, the highest sources of emissions were business
travel with increases across the board for air, road and rail.
This rise was primarily down to better reporting capability
In the mix, we have also added two new Agencies to our
Group – Turbine and Mezzo Labs – which has seen our
headcount grow by over 25 people in 2023.
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Annual report for the year ended December 2023
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Social
We’re a people-based business with an aim to make MISSION and all our Agencies places
people want to be, and places that have a positive impact on the world around us.
We’re powered by talented teams who value and respect difference. And we’re committed
to making sure our people feel valued whatever their background, that they belong, and
can be their authentic self at work.
Diversity & Inclusion
We're on a journey to drive a broader agenda of equality,
opportunity and progression.
Our aim is to have a respectful and supportive environment
that enables us to attract, develop and retain the best
talent from a diverse range of backgrounds, representative
of our Clients, their clients and wider society.
One initiative that is supporting this aim is the
establishment of Communities throughout The MISSION
Group, providing platforms for individuals to exchange
insights and educate one another on crucial topics like
neurodiversity, and sexuality. These Communities also
serve as advisory bodies, offering guidance to
our leaders.
We are committed to creating environments where
people talk about the things that matter to their health
& wellbeing. It is these conversations that change the
way we work to create the best environments for our
people. We’ve combined free mental health support and
educational life balance activities which are overseen
by over 40 mental health first aiders. We want to
change the way we all think and act about workplace
mental health.
A new approach
For the past few years, we’ve focused on Community,
Family, and Health & Wellbeing. And bringing in family
friendly policies, Communities, and talking about
matters that count, has been critical in moving forward.
But as we continue along our journey, we’ll be focusing
on the culture looking at the role we play in making
a difference. We’ll protect against bias, drive empathy
through awareness & conversations, whilst having a zero
tolerance against discriminatory behaviour.
2024 is a good time to reevaluate our social targets to
ensure they are still helping us adjust to a changing
culture. And to help us become a truly diverse and
inclusive place to work we've designed four key areas
that we’ll focus on:
Workforce – Building a diverse workforce that allows
everyone to develop their potential.
Workplace – Creating an inclusive workplace where
people can bring all of themselves to work and feel
like they belong.
Marketplace – Demonstrating that diversity and
inclusion is a central part of how we operate
in the marketplace.
Insights – Gathering data and insights to understand
the experiences of our people to continue to inform the
things we do.
Giving people a voice
A key part of our inclusion culture is giving people
a voice. And in our annual Employee Engagement
Survey we got a good idea of how people felt.
We’re proud that 81% of our people feel we have
a respectful and supportive environment; 84% feel
they can be their authentic self; 78% of employees
believe our commitment to creating an inclusive
environment is genuine and 76% of employees felt
they belong at the company.
Supporting local communities
With 25 locations and 1,100 + people across the globe
it’s important to our team and to us that we connect and
support our local communities. We are committed to
helping them thrive, boosting the key foundation stones
that make them healthy – arts, education, conservation,
health & wellbeing.
Throughout 2023, we continued to open our doors to local
schools, colleges, and universities. This connection through
open days, work experience, paid internships and mentoring
is vital in supporting the next generation and creating
accessible pathways to opportunities within our industry.
Our impact is also felt through partnerships, support,
volunteering and pro bono work with a wide range of local
charity and community groups from RNLI and Macmillan
to North Devon Hospice.
Governance
We believe that corporate governance is not the poor cousin
of the ESG triplet but an integral part of the Group. It is key
to how we interact with our investors, employees, suppliers
and other stakeholders and is focused on monitoring
progress against our wider ESG commitments making sure
we are driving forward positive change.
Agency make-up
Unlike many other groups, our Agencies, which have mainly
come into the Group via acquisition, retain their original
personnel, cultures and business practices, with MISSION
providing the support infrastructure and economies of scale
of a multi-national group. This sees a highly personalised
and people-centric culture which has led to an expanding
and loyal Client base (53% have been with us for more than
five years) and strong talent retention (79% for 2023).
We believe the role of the Board is not to direct these
Agencies but ensure they are supported and collaborate
to deliver the best work to help our Clients succeed.
The Board
The MISSION Board and non-executive group has a good
balance of sector and financial experience alongside Agency
CEOs who provide a ‘front seat’ view of Agency challenges,
opportunities and the marketplace as a whole.
2023 saw the return of David Morgan as Chair who brings
a wealth of experience drawing on a longstanding career
in the advertising and media industry with an in-depth
knowledge of MISSION, having founded Bray Leino, one
of the Group’s key Agencies.
The Board is responsible for the long–term success and
growth of the Group, embedding effective controls which
enable risks such as cyber security; data protection;
supply chain fragility; market resilience; economic
volatility and political instability to be assessed and
managed. Held to account by independent Audit & Risk
and Remuneration committees, the Board is focused
on ensuring that our People, Agencies and the Group
are consistently safeguarded.
Our very existence as a marketing group is dependent
upon our ability to foster strong and mutually beneficial
relationships with all Stakeholders. Alongside sustainable
growth, we see Client happiness, referral ratings and staff
retention levels as indicators of our collective success which
are consistently measured by the Board.
People, Planet, Profit
2023 also saw the establishment of the ESG
Steering Committee which is responsible for
ensuring our business and operational plans and
consequent decision-making is aligned with our
ESG aims. Comprising key senior leadership
members including CEO, CFO, COO, Head of
People and our Group ESG Lead, the committee
is focused on developing effective strategies
using a ‘People, Planet, Profit’ filter.
Good governance is about transparency, trust
and accountability. We believe all stakeholders
need to be part of our journey and we are
committed to being open and transparent,
always, as we move forward on our successes
but also areas for growth.
More on MISSION’s ESG approach, goals and
journey can be found in its annual ESG Report.
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Annual report for the year ended December 2023
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Our People
We are over 1,100 dedicated people, in 25 different locations, reaching across
three continents. However, we share our primary goal: producing Work That Counts™
for each Client. Whatever their ambitions.
Our approach to our people is focused on the eight areas set out below, with
several of these also forming key parts of our ESG strategy which you can read
more about in this report. Achieving sustainable progress in these ways is important
to us. We’re proud of the steps we’ve taken, and will continue to take, together.
What our People Say…
“Our team is great – everyone
is so supportive and nurturing,
always willing to help and teach
each other. I’ve learnt a lot
really quickly, and have built up
confidence in my abilities. I love
having a job where I do not do
the same thing day in, day out.”
Tash, Bray Leino
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2
3
Growing Together
Diversity & Inclusion
Community Action
At MISSION we are committed to
creating a respectful and inclusive
environment; one where our people
can be themselves. We also believe
in the power of personal growth; so,
we listen, learn, and support our
people to have the skills and
experiences to make them ready for
today and fit for tomorrow. We’re big
on creating pathways and succession
planning along with creating learning
opportunities across our Agencies.
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New Talent
To foster fresh talent, our Agencies
open their doors to local schools,
colleges and universities;
offering internships and an
Apprenticeship programme.
We’re creating a home for
empowered people who celebrate
difference and challenge the status
quo. Our diverse workforce allows
everyone to develop their potential
and bring all of themselves to work
feeling like they belong.
We’re an international Group,
but we believe strongly in local
action. As such, all our UK Agencies
actively support local charities
and communities in their towns –
from fundraising and volunteering
to pro bono work, putting our
communications skills to good use.
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6
Taking Care of You
Flexible for All
We believe that life, and being
happy, is more than the job you do.
To best support our people with the
ups and downs of life, we have
devised our Employee Assistance
Programme to help with financial,
family, health and wellbeing issues.
People are at their best when their
home life doesn’t suffer. That’s why
we offer over 160 different flexible
working patterns across the
Group. Plus, parental return to work
schemes and a supportive approach
when our People need time out
for life’s big moments.
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Health & Wellbeing
8
Socials
Our Agencies take a proactive
approach to health and wellbeing,
with free mental health support and
educational life balance activities
overseen by trained mental health
first aiders.
“All work and no play” is a thing
of the past. Therefore, each Agency
maintains a busy social scene,
with everything from dining events,
beer fridge Fridays, summer sports
days, picnics and end-of-year parties.
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Annual report for the year ended December 2023
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What Drives Us
Our work, energy, time and commitment
needs to count not just for our Clients
and the Communities they serve but
for our People.
We need to feel, everyday, that we are making
a difference, driving positive impact with our thinking,
creative and execution across the sectors we support,
our own industry and the communities we work and live
within. It’s this sense of achievement and ability to see
the power of what we deliver that keeps us excited,
focused and constantly driving for more.
Each Agency has its own values and personalities
but what we do share is an entrepreneurial mindset,
a passion for sustainable growth and a commitment
to leave a positive impression on the world around us.
Culture of Collaboration
Collaboration is at the heart of our commitment to
Work that Counts™. Home to 19 Agencies and 1,100
people with a myriad of specialist skills and knowledge,
MISSION offers a unique approach which is reliant on
working together and exchanging ideas to do our best
at every opportunity. This is how we elevate our
Clients and ourselves.
Our Purpose
“What unites us is our desire to make a positive
difference in the work we deliver and the
impact we have on the world around us.”
The Way we Treat the World Around us Counts
In our ambition to become the UK’s leading, most
respected Agency Group, we need to do just that
– lead. This is never truer than when it comes to our
social and environmental responsibility.
We have been on a journey since 2019 closely
monitoring our environmental impact and
challenging ourselves with robust carbon reduction
action and targets.
Our social commitments are primarily focused on our
People making sure they feel valued, that they belong
and can be their authentic self at work. This is also
reflected in providing space for them to support their
passions and local Community whether fund raising,
volunteering or delivering valued pro bono support.
Strong progress has been made against our ESG
commitments, but there is more we can and will do.
We are steadfast in our desire to make an even greater
difference to our People, Client and Communities and
the wider environment.
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Annual report for the year ended December 2023
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MISSION to confirm content.
MISSION welcomes back
Non Exec Chair David Morgan MBE
We are proud to announce the appointment
of David Morgan as Non-Executive Chair.
David brings a wealth of experience to the Board and draws on
a longstanding career in the advertising and media industry with
an in-depth knowledge of MISSION, having founded Bray Leino,
one of the Group's key Agencies. He was previously Executive Chair
of the Group between April 2010 and October 2021.
“I am delighted that the Board has
asked me to return as Chair.
MISSION is made up of extremely
dynamic, entrepreneurial Agencies
managed by very talented people.
I look forward to working closely
with the Board and management
team to deliver long-term value for
all our stakeholders."
David Morgan, Non-Exec Chair
MISSION opens
the doors to its new
London home
We opened the doors of our new London
hub – a home from home for all MISSION
Agencies. The Manufactory is an exciting
new collaborative workspace for
The MISSION Group.
Situated above the Heal’s building on Tottenham Court
Road, our new office was home to iconic British design
for over 200 years, evolving from a furniture factory
to one of the West End’s most recognisable buildings.
The new Manufactory campus has been restored and
remastered to form a collection of unique workspaces
rich with history. Well-being is at the core of the building
with best-in-class amenities, cutting-edge technology,
environmentally conscious heating and cooling, and
energy efficient services.
Inside The Manufactory, you’ll find a collaborative,
contemporary space with just the right combination
of open-plan, free-flow spaces and more defined work
areas, to support our creative culture, people, partners
and Clients.
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Annual report for the year ended December 2023
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A successful launch
for the Big Ms
The first ever Big Ms awards got off
to a bang as we came together to celebrate
Work That CountsTM across the
MISSION Group.
MISSION Chief Creative Officer Dylan Bogg
introduced the initiative, with industry legend
Bil Bungay as Chair of the judges.
The awards celebrated cross-group collaboration
and increased exposure between Agencies, with the
sharing of projects that would not have otherwise
been publicly accessible.
Plenty of applicants made their efforts count. In total
11 bronze, 11 silver, and 11 gold awards were given,
as well as a People’s Award voted for on the night,
and a Grand Prix that really counted.
Sadly we can’t discuss the work here, but it’s fair
to say that standards were even higher than hoped.
Influence expands into the US
Influence Sports & Media, a member of Mongoose
Group, took their expertise in the world of sport to
a North American audience in 2023.
The New York office offers strategic consultancy,
commercial sales, partnership activation, and PR
& communications – with a focus on Formula 1,
given its substantial growth in popularity.
The strategic move came in advance of a high-profile
international sporting calendar, including five Formula
1 Grand Prix, the 2024 Copa América, the 2026
FIFA World Cup, and the 2028 Summer Olympics
in Los Angeles.
“There is a major opportunity for us to assist
companies who want to make sports like motor racing,
soccer, rugby, or sailing, part of their regional
or global strategies.”
Chris O'Donoghue, CEO Mongoose Group
Introducing Turbine
In 2023 we announced the launch of Turbine, an integrated
Growth Media Agency specialising in owned, earned,
and paid media for consumer brands.
Their unique multi-channel approach defies traditional
media planning methods, which often lead to siloed
thinking, disjointed plans, and missed opportunities.
Instead, Turbine uses genuine connected systems to
ensure that every aspect of their Clients' media strategy
is integrated, aligned, and able to deliver the metrics
that matter.
James Clifton, MISSION CEO commented: “As we all know
there is a growing demand for an effective solution to the
challenges of multi-channel digital marketing, adding
Turbine to our centralised MISSION capability
will ensure that all our Agencies continue to deliver
Work that CountsTM"
Matt Pepper, CEO of Turbine commented: “In a time
of economic uncertainty companies need to ensure their
owned, earned and paid media strategies are truly joined
up and complement one another to maximise efficiencies
and impact. That’s why we exist.”
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21
To facilitate our international expansion into new regions MISSION HUBS was
established as part of our MISSION Advantage, offering a structured approach
to the Group’s international ambitions.
MISSION HUBS connects entrepreneurially spirited,
independent thinking agencies who are looking to grow
their business through partnership and collaboration.
Owners of MISSION Affiliates agencies can in turn
register their interest in becoming a wholly owned
MISSION business with tailored acquisition options
from exit to buy-in and more.
Our delivery of MISSION HUBS is achieved by
these independent Agencies either becoming
a MISSION PARTNER – an affordable and accessible
way to benefit from collaboration and international
business opportunities.
Or by becoming a MISSION AFFILIATE which provides
the opportunity for these Agencies to access best-in
class resources from within MISSION ADVANTAGE –
our portfolio of strategic services. Comprising teams
of experts in global digital production, data science
and research, promotional marketing and more.
Using these services enables our Affiliates to grow
their business revenues rather than their overheads.
Since launching MISSION HUBS in 2023 we have
signed up 16 MISSION PARTNER Agencies and one
MISSION AFFILIATE Agency. We now have MISSION
HUB Agencies in 24 countries spanning the globe from
Argentina to Australia, Chile to China, Germany to
Guatemala, Saudi Arabia to Singapore and UAE to USA.
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23
Post Office
A monumental win for the Group
Natalie Nightingale, Head of Creative
& Content at Post Office, added: “We are
delighted to be working with The MISSION
Group on this wide-ranging brief. We were
looking to enhance our strategic, creative
and production capabilities and have found
that solution in Cloak Lane. We look forward
to growing the brand further in partnership
with them.”
Arguably the biggest news of 2023 was the Post Office
pitch win, which saw krow and the wider MISSION Group
unite to take on the role of lead creative Agency for one
of the nation’s biggest brands.
The account is managed within “Cloak Lane” – an
SPV formed of krow London, krow Central, and krow.x,
alongside PR Agency Speed – named after the site in the
City of London where the first General Post Office opened
in 1548.
The win includes the full gambit from strategic, creative,
and production services to social, digital, in-branch,
customer experience, PR, web, and email.
Post Office are hoping to increase consideration for the
brand in a wider space, beyond the over-the-counter
services that customers already associate with Post
Office. And we’re excited to help facilitate their marketing
needs in 2024 and beyond.
James Clifton, CEO at The MISSION
Group, commented: “Post Office plays an
important part in all our lives – as individuals,
in our communities, our businesses and the
economy. We are honoured to be appointed
by such a unique and emotive brand, and
look forward to playing an important role
in its future success.”
MISSION ADVANTAGE is a portfolio of strategic services
built to drive positive change and dramatically extend the
scale and scope of our offer.
Comprising teams of experts in HR, global digital
production, data science and research, regional expansion
and promotion – our teams are positioned around
the globe and ready to mobilise in support of our Agencies.
MISSION ADVANTAGE complements the strategic and
creative strength of our Agencies allowing them to offer
wider, deeper, and highly credible services in support
of their own unique propositions and aspirations.
ADVANTAGE is built as the platform for change, operating
on a cost only basis to ensure the profitability, relationships
and opportunity remain with our Agencies.
MISSION COMMERCIAL is an array of cost-effective,
shared provisions designed to deliver scalable, best-in-class
support services and expertise to our Agencies.
MISSION COMMERCIAL incorporates teams across
Facilities management & administration, IT & systems,
Accounting services, Financial reporting, Governance
& compliance and Commercial partnership. Our people are
experts in their fields and are driven to provide value, safety
and security across the Group.
MISSION COMMERCIAL supports the wider Group
endeavour, ensuring that every Agency team is dedicated
to delivering Work that CountsTM. New Agency additions
to the Group are able to quickly focus directly on growth
and opportunity whilst handing off their own support
services safely and securely.
By simplifying and sharing these services and creating
scalable centres of excellence the Group is well positioned
to deliver sustainable margin growth as revenues rise.
Facilities
management
& administration
IT & systems
Commercial
partnership
Financial
reporting
& treasury
Accounting
services
Governance
& compliance
24
Annual report for the year ended December 2023
Annual report for the year ended December 2023
25
Strategic Report
Non-Executive Chair's statement
The difficulties that we encountered in 2023 have been well
recorded, suffice to say that we ended in a better place than
was feared after our Trading Update in October. Nevertheless
and with hindsight we should have reacted earlier and faster
than we did but the response from the management in the
final quarter was very impressive.
26
Annual report for the year ended December 2023
In returning to Chair the business in November,
I learnt that despite those setbacks we have
a robust and growing business which, given the
structural and operational cost reductions we
have implemented, is set fair for 2024 and
beyond. I also learnt that we have a supportive
Bank, exceptional Clients and Agencies that
continue to punch above their weight. Capable
of winning against whatever competition we
come across.
In 2023 we had some great new business wins and
two contributory factors to our downturn that
I am pleased to report have already been
rectified. We sold the Pathfindr business in
December 2023 and thereby removed the losses
in running costs for the current year. We have also
turned around our US Technology Agency that
had had a horrendous first six months in 2023 but
showed some recovery over the final six months.
Structurally we have reassessed our operating
model and tweaked or changed the way we do
things, which as a Board will keep us risk averse
and nimble. Whilst we remain confident that our
long-term strategy remains sound we have
streamlined our operations, ensuring we are
leaner and more able to react to market
conditions. Our Agencies will be supported
by innovative specialisms from data to AI
and behavioural to media. With innovative,
ostrobogulous creativity, embedded in all
that we do.
“Structurally we have
reassessed our
operating model and
tweaked or changed the
way we do things, which
as a Board will keep us
risk averse and nimble.”
Board
I was pleased to be asked by the Board to return as
Non-Executive Chair in November 2023. Despite the
ongoing challenges for our industry, MISSION is made
up of extremely dynamic, entrepreneurial Agencies
managed by very talented people and I look forward
to working closely with James, Giles and the senior team
to help the Group consolidate its strategic progress and
deliver long-term value for all our stakeholders.
On behalf of the Board and the wider team at MISSION
I would also like to thank Julian Hanson-Smith for his
contribution to the Group during his eight year tenure.
Dividend
In line with the Group’s commitment to reducing its net
debt position as soon as possible, as previously reported
the Board took the decision to cancel the interim dividend
of 0.87 pence per share (approximately £0.79m) that was
due to go ex dividend on 2 November 2023 and be paid
to shareholders on 1 December 2023. The Board has
proposed that, whilst there will be no final FY2023
dividend, it remains committed to a progressive dividend
policy once the balance sheet strength is restored.
Debt Refinancing
We have refinanced our existing debt facility with our
long-standing lender NatWest. Further detail on this
is included in Note 31 to the financial statements.
Outlook
With our new Value Restoration Plan in place we are
confident of the future and have redefined our strategy
against the goals that we are setting over the coming
five years.
Through 2024 and 2025 our focus will be on debt
reduction, rebuilding the balance sheet and delivering
our profit targets. Thereafter we will look to expand faster
under new initiatives but retain our focus of being a Group
active in generalist and specialist areas whether that be
sports, healthcare, property, technology or automotive.
I believe that we have the platform, the passion and the
people in place to deliver sustained success in the years
to come and I am delighted to be back among them.
David Morgan
Non-Executive Chair
March 2024
Strategic Report
Chief Executive’s review
The market challenges that both we and the industry experienced in 2023
have been well documented but it is important not to lose sight of the
significant strategic progress that was achieved over the course of the year.
The year saw us confirm strategic new Client wins that are not only
testament to the creativity of our Agencies but also our commitment to
deliver work that underpins real business growth and the growing strength
of our Group capabilities, reinforced by the investments made to expand
our Client service offering in both 2023 and previous years.
28
Annual report for the year ended December 2023
As previously stated the collapse of the US tech market in
the first quarter of 2023 resulted in a sudden reduction and
deferral of Client spending that proved difficult to quickly
mitigate at a point when the Group was fully resourced
following a record 2022 in that sector, leaving no margin
for error in the remainder of the year.
As soon as the resulting trading impact became clear in the
third quarter, the Board promptly instigated a full strategic
review of the business, putting in place a Value Restoration
Plan (“VRP”) through which progress was immediately
made to drive significant cost saving initiatives and
margin improvements.
The response of the business has been incredible,
a testament to the ‘can-do’ and entrepreneurial culture
inherent in MISSION. All Agencies have been tasked with
delivering Agency-led plans to drive appropriate efficiencies
whilst still maintaining our market-leading focus on Client
service and business development. To date this has seen
an annualised projected £5.0m of profit improvements
secured for 2024.
Part of our VRP has also included a review of the Group’s
balance sheet with a focus on improving flexibility and
resilience in order to support both our medium and long
term plans.
The Group has identified the selected disposal of a non-core
business and since the year end has been pleased to confirm
the disposal of its 80% shareholding in Pathfindr Ltd with the
initial proceeds of £1m being deployed to reduce debt.
Furthermore, the Board have taken a cautious view
regarding the goodwill valuation of our agencies and in
so doing have impaired the carrying value of the Story and
Krow agencies, resulting in a £10.3m, non-cash write down
in 2023.
Finally, we are pleased that we have refinanced our existing
debt facility with NatWest.
“The response of the
business has been
incredible, a testament
to the ‘can-do’ and
entrepreneurial culture
inherent in MISSION”
Strategic Report
Chief Executive’s review
FY2023 operating income
from continuing operations
£86.3M
growth of 9% on 2022
Performance Review
Despite the challenges experienced throughout 2023 which,
as previously mentioned, were particularly felt by our
Agencies exposed to the Technology and Mobility sectors,
our teams have remained nimble and quick to respond to
new market opportunities as trading momentum improved
in the final quarter of the year. This resulted in FY2023
operating income of £86.3m from continuing operations,
representing growth of 9% on 2022 (2022: £79.6m) including
the impact of 2023 acquisitions and ahead of Advertising
Association expectations for 2023 of 2.6%.
Of the £6.8m increase in operating income from continuing
operations, organic growth of £1.6 million was up 2% on the
prior year driven by a particularly robust performance
across our Property and Sports and Entertainment business
segments. Client retention across the Group also continued
to be excellent, a true testament to our teams’ focus on
excellent Client service, with 53% of operating income now
coming from Clients who have been with the Group for
over 5 years.
Whilst the wider new business landscape remained
challenging we have continued to leverage the investments
we have made in previous years to enhance MISSION’s
service offering and capabilities. This has underpinned
our success on several highly significant new business
mandates. Our appointment to UK Post Office in September
marked the Group’s largest Client mandate to date and
represents a fully integrated cross-Agency response. Other
notable new Client wins secured over the course of the year
included Lumen, EasyJet, Beauty Pie, Pandora, Meta,
Hawaiian Tropic and Brabantia. Good momentum has
continued into 2024 with further new Client wins including
Herta UK for Speed and global pharmaceutical company
Dr Reddy’s for Bray Leino.
In line with our strategic areas of focus, the first half of the
year saw us make selective investments in Data Science
& Digital Analytics through the acquisition of Mezzo Labs and
Growth Media through the launch of Turbine, an integrated
Growth Media Agency specialising in earned, owned and
paid media for consumer brands. These, along with recent
acquisitions Populate and Influence, continue to contribute
new, profitable, revenue streams to the Group contributing
£5.2m to the £6.8m increase in operating income growth
from continuing operations in 2023, as well as underpinning
our work for existing Clients. We look forward to realising the
continued benefit of this enhanced service capability
in 2024.
We continue to see multiple examples of AI infused work
being created in our Agencies and as part of our plans to
define and hone our Group AI strategy have created an
AI steering panel focused on addressing three key pillars
of focus; ensuring AI literacy in every role to empower and
enable everyone with AI learning; provide specialist
centralised AI support and resources to work alongside our
Agencies; and define guidelines to inform AI usage across the
Group and ensure compliance and best practice.
The year also saw the Group launch its MISSION Hubs
programme, an agency ecosystem with MISSION at its
heart, connected to a series of Affiliates and Partners from
around the globe. The Programme provides the Group
with extended access to new markets and revenue streams
through trusted relationships. At the same time, Affiliates
and Partners gain access to our 19 Agencies in 25 locations
worldwide and the MISSION Advantage portfolio of
strategic services including media, data & analytics,
AI and production.
“I am pleased that
the efficiencies
already realised are
helping to restore
profitable growth”
Making Positive Change
Following the launch of our Environmental, Social and
Governance (ESG) manifesto ‘Making Positive Change’
in 2020, we have made further progress against our key
commitments over the course of 2023.
Particular areas of progress have included the
development of our Carbon Transition Plan which clearly
outlines how we will transform existing assets,
operations, and business models to transition towards
achieving net-zero by 2050. Moving forward this plan
will be reviewed annually to ensure we are assessing not
just our progress against our net-zero target but are
committed to action for change.
We are also pleased to be adopting a new approach in
2024 to re-evaluate our social targets. In order to ensure
we can become a truly diverse and inclusive place to
work we've designed four key areas that we’ll focus on:
workforce, workplace, marketplace and insight and full
details of this approach and our wider progress against
our commitments can be found in our ESG Report which
is available on our website within the Culture section
under Making A Positive Change.
Current Trading and Outlook
On behalf of the Board I would like to thank all of our
talented team for their commitment and dedication in 2023.
We remain focused on delivering further progress against
our Value Restoration Plan and I am pleased that the
efficiencies already realised are helping to restore profitable
growth and reinforce the Group’s balance sheet which,
is now further underpinned by the completion of the
successful bank refinancing.
Whilst the market is still somewhat subdued, trading in the
current financial year has started well and in line with
expectations. 2024 brings with it a number of high profile
European and Global sporting events which should bode
well for the marketeer’s calendar including the Olympics and
UEFA European Championships and we are particularly
pleased to have secured a number of early new business
wins in January.
The opening of our new central London Head Office has
also created a busy hub for the Group, the perfect home
for continued collaboration and learning and it is really
encouraging to see the benefit to our teams’ growth and
development, on a day to day basis.
In summary, the plan for the year ahead is simple.
We remain focused on leveraging the continued success
of MISSION’s integrated Group offering to expand our
capabilities and market leading services for our Clients.
James Clifton
Chief Executive
March 2024
30
30 Annual report for the year ended December 2022
Annual report for the year ended December 2023
Annual report for the year ended December 2023
31
Strategic Report
Chief Financial Officer’s review
Growing revenues in a flat and often unpredictable market is not easy.
The strong operating income growth delivered in 2023, despite
a particularly challenging year for our Technology segment that
weighed heavily on both profit and working capital, highlights both the
successful integration of recent acquisitions and investments as well
as the underlying resilience of our core agency portfolio.
32
Annual report for the year ended December 2023
Operating income growth in 2023 of 9% from continuing
operations provided a helpful platform and was
a significant achievement. However, managing operating
expenditure levels in a changeable trading environment
proved problematic as the fixed nature of our cost base
rendered us over-resourced when revenue streams
reduced suddenly in certain markets and geographies,
most notably the US Technology market sector. The result
of this was a reduction in headline operating margins on
continuing operations to 7.5% (2022: 11.1%). Therefore,
headline operating profit from continuing operations
reduced to £6.5m (2022: £8.8m). A cautious review of the
carrying value of our agency assets, primarily in relation
to the Story and Krow agency groups, resulted in one-off
impairment adjustment of £10.3m. This is described more
fully below and set out in Note 3. This adjustment along
with a number of other, smaller adjustments and an
increase in borrowing costs led to a reported loss before
tax of £12.0m (2022 £0.7m profit).
Another unusual dynamic experienced in the year as
a result of the downturn in US Technology trading was
a significant reduction in Client prepayments (deferred
income), particularly through quarter 2 and quarter 3.
Furthermore, the Group experienced a more general
extension to the working capital cycle as assignments in
most segments took considerably longer to get from ‘bid’
status through to purchase order, then billing and finally
cash collection. These factors, combined with how late
in the year many sales were delivered, put considerable
pressure on working capital. This in turn lay heavy on net
debt, pushing the Group to the limits of its banking
facility in the later months of the year. The threat of
exceeding these facilities and the risk of not passing
banking covenants has seen the Group work with
long-time, and highly supportive, lender NatWest plc
on a refinancing plan.
This plan, the ‘Value Restoration Plan’, saw the Group
review operational expenditure in order to make
significant improvements to profitability on continuing
operations going into 2024. The Group has also
considered different strategies to reduce leverage,
including divestments of non-core operations and as
a result of this review disposed of Pathfindr Ltd for £1.3m
in December. Furthermore, both accrued income and
deferred income balances closed at similar levels to
December 2022.
The Group has successfully refinanced its debt facility,
further details of which are set out in Note 31 to the
financial statements.
9%
growth in operating income
from continuing operations
Strategic Report
Chief Financial Officer’s review
£m
Headline continuing
2023
2022
Movement
Operating income
('revenue')
Operating profit
Operating margin %
Profit before tax
Earnings per share
Tax rate
86.3
6.5
7.5%
4.2
3.1
29%
79.6
8.8
11.1%
7.9
6.9
21%
9%
-25%
-3.6pts
-47%
-55%
+8pts
2023
86.6
(9.7)
-11.2%
(12.0)
(13.4)
1%
Reported
2022
Movement
79.8
1.6
2.0%
0.7
-
95%
8%
-697%
-13.2pts
-1721%
-
-94pts
Billings and revenue
Turnover (billings) was 7% higher than the previous year,
at £195.9m (2022: £182.7m), but since billings include
pass-through costs (e.g. TV companies’ charges for
buying airtime), the Board does not consider turnover to
be a key performance measure for its Agencies. Instead,
the Board views operating income (turnover less third-
party costs) as a more meaningful measure of activity
levels. Taken as a whole, the Group’s operating income
(referred to as “revenue”) from continuing operations
for the year increased by 9% to £86.3m (2022: £79.6m).
Of this £6.8m growth in revenue, £1.6m (2%) was organic,
reflecting the continued growth across a number of
MISSION business segments, most notably Property
(£1.7m increase in revenue) and Sports & Entertainment
(£0.5m increase in revenue), and in so doing mitigated the
dramatic and sudden reduction in revenues experienced
in the Technology and Mobility segment in the first half
of 2023 (£2.2m reduction in revenue). The revenue run rate
from this segment was restored in the final quarter.
The remaining £5.2m of growth came in part from the
benefit of a full year of Influence (acquired December
2022) and Populate (acquired October 2022) trading in the
Sports and Entertainment segment. This was supplemented
by the revenue impact of new MISSION Advantage
agency Mezzo (acquired February 2023).
The Group has reviewed and restructured its operations as
part of the Value Restoration Plan and as a result the Board
made the decision to dispose of its 80% share of Pathfindr
Ltd. The disposal took place in December 2023 alongside
the decision to withdraw from its Technology and Mobility
operations in Singapore. The Group maintains
a presence in SE Asia through Bray Leino Splash PTE.
One of the differentiating features of MISSION is the
longevity and loyalty of its Client base exemplified by over
50% of income coming from Clients with whom MISSION
has worked for more than five years. We believe this is due
to the dynamic and Agency-driven culture which ensures
Clients receive a boutique level of Client service but
supported by the resources of a multi-national group.
Group revenue history (£m)
120
100
80
60
40
20
0.0
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Finally, the Group was pleased to record a profit
on the disposal of the Pathfindr operation of £0.3m
(2022: £Nil).
Adjusting for these items delivers a headline operating
profit from continuing operations of £6.5m
(2022: £8.8m).
The headline operating expenditure base from
continuing operations increased in the year by 13%
(from £70.8m in 2022 to £79.8m in 2023). On a like for
like basis, removing the impact of Influence, Populate
and Mezzo, this expenditure increased by £4.7m.
Operating expenditure grew in the Property segment
pro-rata with revenue (£1.3m increase) but also grew
by £1.0m in Technology and Mobility despite reduced
revenues. This anomaly occurred as a result of the
sudden and extreme nature of the revenue reductions
in early 2023 from a high base at the end of 2022.
Operating expenditure also increased by £2.5m on
a like for like basis in the MISSION Advantage platform as
further services were shared across the agency base.
Interest charges of £2.5m increased significantly on
2022 (£1.0m) driven by the increased net debt levels
alongside interest rate increases globally as central
banks sought to curb inflationary pressures.
The resultant headline profit before tax from continuing
operations for 2023 was £4.2m, a reduction of £3.7m
on 2022 at £7.9m.
Loss and margins
The Directors measure and report the Group’s
performance primarily by reference to headline results
in order to avoid the distortions created by the one-off
events and non-cash accounting adjustments relating
to acquisitions that are detailed below. Headline results
are therefore calculated before acquisition
adjustments, exceptional items and losses from new
ventures as described above and set out in Note 3.
The Group reported an operating loss across all
operations this year of £9.7m compared to a £1.6m
profit in 2022.
Reported profit before tax decreased by £12.8m,
from £0.7m in 2022 to a £12.0m loss in 2023, resulting
in a loss after tax of £11.9m (2022 £0.0m).
Adjustments to reported profits, detailed further in
Note 3, totalled £14.8m (2022: £7.0m) a significant
increase on the previous year. This was primarily due to
the £10.3m impairment of the Story (£5.2m) and Krow
(£5.1m) intangible assets following a cautious review
of these long-held cash generating units. The charges
of £5.3m in 2022 related to similar valuation-driven
impairments on Splash and Pathfindr.
In addition to this the Group invested £1.8m in new
ventures (2022: £0.8m) most notably the new
performance marketing joint venture Turbine and
the Livity youth-marketing offer as well as smaller
investments in the MISSION Hubs venture and
a MISSION office in China to serve Clients in
the region.
Acquisition-related costs of £1.7m compared to £0.6m
in 2022. The 2023 charge consists primarily of the
amortisation of intangibles recognised on acquisitions
of £0.9m (2022: £0.5m) as well as professional fees
in support of the acquisitions such as Mezzo made
in the year. Finally, there was an increase in fair value
of contingent consideration of £0.4m in 2023 following
the strong performance of recently acquired agencies,
in contrast to a reduction in valuation in 2022
of £0.3m relating to historic acquisitions.
As part of the Value Restoration Plan there were,
unfortunately, significant one-off headcount reductions
late in 2023. The resultant one-off costs associated
with this restructure £0.7m (2022 £0.4m). Bank
refinancing costs of £0.5m have been provided
for in 2023 (2022: £Nil).
34
Annual report for the year ended December 2023
Annual report for the year ended December 2023
35
Strategic Report
Chief Financial Officer’s review
Taxation
Balance sheet
The headline tax rate increased to 31.8% (2022: 21.1%),
as a result of the increase in the corporation tax rate
in 2023, an increase in non-deductible expenses, and
lower levels of non-taxable income.
On a reported basis in 2023 the impact of the large
one-off non-deductible expenditure primarily in relation
to impairment of goodwill resulted in a tax credit of
£0.2m on a reported loss before tax of £12.0m, a rate
of 1.3%. This compares to the 95.2% tax rate reported
in 2022, when the non-deductible impairment of
goodwill increased the tax rate payable on a profit
before tax of £0.7m.
The tax rate is generally expected to be consistently
higher than the statutory rate (23.5% in 2023, an
increase from the 19% in 2022) when the Group is profit
making, since the amortisation of acquisition-related
intangibles is not deductible for tax purposes and tax
rates on our US operations are substantially higher than
the UK corporation tax rate.
Earnings Per Share
After tax, the reported loss for the year was £11.9m (2022:
£0.0m profit) and EPS was -13.4 pence (2022: 0.0 pence).
On a diluted basis, EPS was -13.4 pence (2022: 0.0 pence).
However, after adjustments, Headline EPS from continuing
operations was 3.1 pence (2022: 6.9 pence) and, on a diluted
basis, was 3.1 pence (2022: 6.9 pence).
Dividend
The Board has historically adopted a progressive
dividend policy, aiming to grow dividends each year in line
with earnings but always balancing the desire to reward
shareholders via dividends with the need to fund the Group’s
growth ambitions and maintain a strong balance sheet and
healthy distributable reserves (2023: £33.7m, 2022: £41.0m).
As a consequence of the pressure on liquidity experienced in
late 2023 and the resulting refinancing process the Board
has made the decision to pause dividend payments until
balance sheet strength is restored (2022: 2.50 pence per
share). The Board will keep this decision under regular review.
In common with other marketing communications groups the
main features of our balance sheet are the goodwill and
other intangible assets resulting from acquisitions made over
the years and the debt taken on in connection with
those acquisitions.
The Board undertakes an annual assessment of the value
of all goodwill, explained further in Note 11. At 31 December
2023 the Board concluded that, in the case of the Story and
Krow assets, an impairment adjustment would be required
in order to provide a fairer reflection of value. These assets
have delivered considerable cash inflows since their original
acquisition and are still believed to have a value
going forwards.
The level of intangible assets relating to acquisitions and
internal investments decreased by £9.1m in the year. This
movement being primarily a function of the acquisition of
Mezzo in February netting off against the impairment of the
Story and Krow goodwill and intangible assets. The level
of ‘total debt’ (combined net bank debt and acquisition
obligations) increased by £5.3m.
The Group’s acquisition obligations at the end of 2023 were
£5.5m (2022: £4.1m), to be satisfied by a mix of shares and
cash in some instances at the Group's discretion. All of this
is dependent on post-acquisition earn-out profits. £1.7m is
expected to fall due for payment in cash within 12 months
and a further £2.8m which can be satisfied by a mix of
shares and cash in the subsequent 12 months.
Dividend payments and expenditure on major capital
projects such as acquisitions and investments have been
paused until such time as the Directors believe that balance
sheet strength is suitable.
The Directors therefore believe that the Group’s current
balance sheet can comfortably accommodate these
acquisition obligations alongside the Group’s commitments
to standard capital expenditure (expected to run at similar
levels to recent years).
Consolidated Net Current Assets closed at £5.6m
(2022 £7.7m). This was in part the result of the increase
in Acquisition Obligations noted above and in part
a reduction in cash and short term deposits of £1.5m
in comparison to 2022.
Chart showing change in total Acquisition Obligations over time
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Acquisition Obligations have increased in 2023 but are still well below the levels of recent years.
All existing acquisition obligations will be settled by the end of 2026.
At the end of the year the Group’s net bank debt stood at £15.4m (2022: £11.4m). On an adjusted basis (pre IFRS16) the leverage ratio of net bank
debt to headline EBITDA was x2.0 at 31 December 2023 (2022: x1.2). The Group’s adjusted ratio of total debt, including remaining acquisition
obligations, to EBITDA at 31 December 2023 was x2.7 (2022: x1.6).
Chart tracking Debt Leverage Ratios over time
Bank leverage
Total leverage
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
36
36 Annual report for the year ended December 2022
Annual report for the year ended December 2023
Annual report for the year ended December 2023
37
a drastic reduction in deferred income balances across
that same period, as occurred this year.
Capital expenditure in the year includes the refit of the
new London offices (£1.6m).
The closing net bank debt position for 2023 was £15.4m.
This represents an increase in net debt of £4.0m on the
2022 year-end net bank debt of £11.4m.
Headline operating profit from continuing operations
of £6.5m (2022: £8.8m) converted into £1.8m (2022:
£8.5m) of ‘free cash flow’ (defined as net cash inflow
from operating activities less tangible and intangible
capital expenditure).
Bank loans increased by £2.5m and this, coupled with
the free cash flow and net proceeds from the disposal
of Pathfindr provided funding for new acquisitions
amounting to £0.4m (2022: £1.9m), the settlement of
contingent obligations relating to the profits generated
by previous acquisitions totalling £0.4m (2022: £0.8m)
and dividends of £1.7m (2022: £2.2m).
Strategic Report
Chief Financial Officer’s review
Cash flow
The cash flow in 2023 was defined by the highly unusual
underlying working capital outflows, particularly across
the second and third trading quarters.
The working capital movement is defined as the aggregate
movement in receivables, stock and payables and was
at an overall level reported as an inflow of £0.3m
(2022: £1.1m). However, within this there were two key
movements. The first relates to an increase in the Other
tax and social security creditor, primarily as a result of
£4.3m of delayed VAT and PAYE payments, a payment plan
having been agreed with HMRC whereby all delayed
payments will be repaid by the end of May 2024.
This inflow mitigates working capital outflows stemming
from the increase in inventory (£0.8m), increase in
prepayments (£1.0m) and an increase in trade receivables
of £1.8m as a result of the late sales cycle in 2023, with
more sales falling into November and December than
in 2022.
As previously noted, banking headroom came under
pressure during the later months of the year. One reason
for this was the extended nature of the working capital
cycle as assignments took considerably longer to get from
‘bid’ status through to purchase order, then billing and
finally cash collection. The extension of this cycle,
combined with how late in the year many sales were
delivered put considerable pressure on working capital as
the year progressed. This was mitigated almost entirely
by the end of the year but nonetheless had a significant
impact on the business especially when combined with
Analysis of the movement in Net Debt in 2023
m
£
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
1.3
0.3
15.4
1.8
2.4
11.4
4.2
1.7
0.4
0.3
2022
Operating
cashflow
Dividends
Paid
Prior
Acq'ns
New
Acq'ns
Capex
Lease
payments
Discontinued
operations
Other
2023
Working capital days:
Total debtor days and work in progress days both
increased and creditors days remained in line with last
year. Overall, the Group’s total working capital days
of 17.1 represents a deterioration from the 2022 equivalent
(9.6 days), albeit fairly similar to 2021 (15.0 days).
Going concern
The Board believe that, through the actions taken in recent
months and described above, the Group is well placed to
recover previous levels of profitability, cash generation and
facility headroom. However, further scenario modelling has
been undertaken of the Group’s net debt position into the
reasonably foreseeable future. This modelling included
cautious assumptions about trading performance,
investment plans and acquisition consideration obligations.
The principal uncertainty in the projections is the continued
growth of the trading agencies in an unpredictable
macro-economic environment and potential increases in
cost base that are not proportionate to revenue growth.
The Directors have considered the resulting financial
projections and cash flow projections for the Group
alongside the availability of renewed committed bank
facilities of £20m (expiring 5 April 2026), an overdraft
facility of £9m (which will reduce to £3m in the event there
is a deleveraging event – further information in Note 31
to the financial statements), and the headroom afforded
against Total Debt Leverage and Bank Debt Leverage
covenant tests for the coming 12 months. This successful
recent facility renewal is against the backdrop of the
challenging trading conditions experienced in FY23 which
resulted in significant strain on working capital particularly
in the latter half of the year as described earlier. These
conditions led to potential covenant compliance difficulties
and a formal waiver of the covenant requirements before
the year end as part of a package of measures ultimately
resulting in the new facility. The revised position leaves the
Group much better placed to navigate its funding needs
going forward in the knowledge that the bank has been
supportive of the measures already taken and
demonstrates confidence in the strategies adopted by the
Board to lower the overall debt position.
The Directors have also considered and understood the
mitigating actions that would be required in the event of
reduced revenue profiles and any further consequential
difficulties with covenant compliance. Such potential
mitigating actions would include a review of headcount,
particularly in the areas impacted by any downturn.
Furthermore the Group have considered actions that
can be taken should increased headroom be required.
This would most likely be the disposal of non-core or high
value agency assets.
Against these scenarios, the Group was demonstrated to
have adequate headroom against the facilities described
above. This leads the Directors to become satisfied that,
taking account of reasonably possible changes in trading
performance, it is appropriate to adopt the going concern
basis in preparing the financial statements.
Key Performance Indicators
Outlook
We enter the year expecting 2024 to be another year
of growth, albeit at a time of increasing global
macro-economic & political uncertainty.
The year has started well and prospects for organic growth
and recovery are good. We also expect to make additional
margin improvements in spite of the cost pressures
impacting our sector and we anticipate reaping the
benefits of our strategic review and the focus on the core
operations, offerings and capabilities. Furthermore and as
a result of the actions taken in 2023 this growth is well set
to be highly cash generative.
Giles Lee
Group Chief Financial Officer
28 March 2024
KPIs are designed to monitor the Group’s revenue and
profit growth, within a safe capital structure.
The targets, along with the outcome for 2023 are
as follows:
• Achieve organic revenue growth of at least 5% per year
(delivered + 2%);
• Increase headline operating profit margins to 14%
(delivered 8%);
• Grow headline profit before tax by 10% year-on-year;
and (delivered a 47% reduction)
• Maintain the ratio of net bank debt to EBITDA* at or below
x1.5 (delivered x2.0) and the ratio of total debt (including
both bank debt and deferred acquisition consideration)
to EBITDA at or below x2.0 (delivered x2.7).
• *EBITDA is headline operating profit before depreciation
and amortisation charges.
At the individual Agency level, the Group’s financial KPIs
comprise revenue and controllable profitability measures,
predominantly based on the achievement of the annual
budget. More detailed KPIs are applied within individual
Agencies. In addition to financial KPIs, the Board
periodically monitors the length of Client relationships, the
forward visibility of revenue and the retention of key staff.
38
Annual report for the year ended December 2023
Annual report for the year ended December 2023
39
39
Strategic Report
Aims and Ambition
Strategic Report
Principal Risks and Uncertainties
Our goal remains simple: to develop MISSION into the UK’s
leading, most respected Agency group. In a complex and
ever-changing marketing environment, we are constantly
evolving to help our Clients navigate through their challenges
and opportunities. With a wealth of specialisms and skills,
as well as impartial advice, we invest and adapt to deliver
the right talents in the most effective ways. With operations
in the UK, Europe, Asia and the US, we’re committed to helping
our Clients grow and succeed. Fundamental to our continued
success is our ability to provide a rewarding, challenging and
fun working environment for our staff.
We aim to reward MISSION’s shareholders both
through capital growth and dividends. Our focus
is first and foremost on organic growth, and in deploying
the Group’s capital we always aim to support existing
management teams who have demonstrated an ability
to grow their businesses and to achieve consistently high
margins. We constantly strive to enhance our offer with
acquisitions that add new disciplines or improved services
to our Agencies, and we also target new high-growth market
sectors, along with service or technology opportunities,
which meet strict return on investment criteria.
As well as acquisitions, we also consider
launching new businesses that may require more time
to become established, but which will have a smaller
investment cost and lower risk profile. We 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 look to maintain a balance of equity
and debt financing to give shareholders the advantages
of financial leverage but without placing the
Group at financial risk.
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 Audit & Risk and Remuneration Committees as well as the
Value Restoration Committee, as described further in the Corporate Governance Report. The Directors have carried
out an assessment of the principal risks facing the Group in light of the challenges faced in 2023, including those
that would threaten its business model, future performance, solvency and liquidity.
Adverse Economic Conditions
Loss of Key People
The risk with the greatest potential impact on the
Group’s financial position is a widespread and dramatic
economic downturn. This is exemplified by the longer
term impact COVID-19 and recent global conflicts have
had on the labour market, inflation and borrowing costs.
The effect is reduced revenues and tighter margins,
profitability and cash flows. Working capital cycles can
also be significantly impacted, as we have seen in 2023.
The entrepreneurial and autonomous culture that runs
through our Agencies means that, while we will inevitably
feel the impact of any economic downturn, we adapt
quickly to changed circumstances and also seek out
opportunities that inevitably emerge in times of
economic challenge.
Loss of Key Clients
The consequence of Client losses is the same as for a
general economic downturn, i.e. potential reduction in
revenue, profit and cash, but to a lesser degree. Client
losses are, to some degree, to be expected. The risk here
is that Client losses are not replaced by new business and
an agency finds all or part of its offers difficult to sell.
The risk of Client loss is mitigated both by our continuous
new business activity and also by a constant focus by all
Agency CEOs on ensuring that the offers and services we
provide to current and prospective Clients are relevant,
effective and attractive.
In common with all service businesses, the Group
is reliant on the quality of its people. The risk is that
an Agency loses good, senior talent as a result of
out-of-step remuneration packages, lack of progression
opportunities or workplace environment and are unable
to attract replacements. Strenuous efforts are made
to provide a rewarding work environment and
remuneration packages to attract, retain and
motivate our leadership teams.
Two measures of our success are that our staff
retention statistics are higher than the industry
average and that the vast majority of the core
management of our acquired businesses remain
in place today. The system of financial rewards
is reviewed regularly by the Remuneration Committee
and revised where appropriate. An example of this
is the innovative Growth Share Scheme, designed
to provide a powerful retention incentive for our key
business leaders. The Group launched the second
iteration of this scheme in 2021. The first scheme,
launched in 2017 proved to be a success and can
be measured by the fact that, when the scheme
matured in April 2020, we had retained all but one
of the 17 individuals. The Board is considering the
next iteration of such a scheme as we go into 2024.
40
Annual report for the year ended December 2023
Annual report for the year ended December 2023
41
Strategic Report
Stakeholder Engagement
The Board takes its Companies Act Section 172 duty to promote
the success of the Group very seriously and considers the
Group’s various stakeholders when making decisions
Principal decisions
In 2023 the following principal decisions were taken
by the Board: 1) the acquisition of Mezzo Labs Limited
(‘Mezzo’), 2) the fundamental review of the Group’s
operations in response to the trading downturn in late
2023 (‘Value Restoration Plan’) and 3) pausing the
dividend and other major capital allocations.
Rationale
The Board has signalled its intent to invest in businesses
that both have the potential to drive cross-sell into
high-margin, contemporary offers and have attractive
Client lists that can be introduced to existing MISSION
services. The acquisition of Mezzo delivered on this intent
with the agency’s Data Science offer adding immediate
scale and strength to the Group’s social media and
marketing capabilities across the majority of our
market segments.
As has already been described in these pages,
the sudden and late reduction in revenues in the year,
combined with a significant extension of the working
capital cycle placed considerable pressure on the
Group’s liquidity position as the year unfolded. The
threat of exceeding these facilities and the risk of not
passing banking covenants has seen the Board work
with long-time, and highly supportive, lender NatWest plc
on a refinancing plan.
This plan, the ‘Value Restoration Plan’ (VRP), saw the
Group review operational expenditure in order to make
significant improvements to profitability on continuing
operations going into 2024. The Group has also
considered divestments of non-core operations and
as a result of this review disposed of Pathfindr Ltd
in December. The Group has successfully refinanced
its operations on 27 March 2024.
The rationale for restructuring each operation is to ensure
that the Group has the margin strength and liquidity
to withstand future trading shocks and to ensure that
resources can be directed to strategic investment
priorities when they arise.
The rationale for pausing dividend payments relates
closely to the VRP and the need to strengthen the
balance sheet. This is alongside pausing other capital
allocation considerations such as future acquisitions
and investments and major capital expenditure.
Engagement with stakeholders
Prior to the acquisition of Mezzo, James Clifton and Giles
Lee presented the strategic and financial business case
to the Bank, Board and to Agency CEOs, assimilated the
advice and experience received from these parties and
confirmed their full support before proceeding with the
transaction. Care was also taken to ensure that key Mezzo
employees were fully supportive of the transaction prior
to completion. The Board also confirmed that the
acquisition would help the Group deliver against its
environmental targets.
An early stage of the VRP was to create a Board
sub-committee, the Value Restoration Committee (VRC)
who were responsible for the delivery of the VRP. This
committee in whole or part met frequently with the Board,
bank, shareholders, key Clients, credit insurers and
employee representatives to ensure that there was full
support for the plan at key stages of its execution. Care
was taken in particular to engage with staff across the
Group to minimise concern and uncertainty during the
period when headcount was reduced.
A full strategic review of the capital allocation options
was shared with the Board where once again the final
decision was made to pause the dividend.
In all three cases above care is taken to ensure that the
views of all stakeholders were considered wherever it was
appropriate to do so.
MISSION’s long established communication processes
remained in place throughout 2023 to ensure effective
interaction with all key stakeholders. Examples of this
include the regular investor roadshows led by James Clifton
and Giles Lee to accompany the full year and interim
results, and also internal ‘Town Hall’ Q&A sessions and
Senior Team meetings conducted by James Clifton and
David Morgan to discuss major MISSION-led initiatives.
MISSION’s long established
communication processes
remained in place
throughout 2023 to ensure
effective interaction with
all key stakeholders.
42
Annual report for the year ended December 2023
Annual report for the year ended December 2023
43
Corporate Governance
The Board
The following Directors represent the committee
responsible for corporate governance compliance:
Each of our Executive Directors has had a long career
in marketing communications:
David Morgan MBE
Non-Executive Chair
David founded Bray Leino, one of the MISSION Group’s
key Agencies in 1974 and was its CEO until 2008, building
it into one of the largest and most awarded of the UK’s
regional agencies. He became Non-Executive Chair of
Bray Leino in 2008 and was appointed Executive Chair
of MISSION in April 2010 – a position he held until
October 2021. He returned as Non-Executive Chair
to MISSION in November 2023.
Giles Lee
Group Chief Financial Officer
Giles joined Bray Leino in 2005 as Group Finance Director
following his successful role in transforming Merrydown
plc from its fundamental financial restructure in 1998 to
its acquisition in 2005. Giles was appointed Executive
Chair of Bray Leino in 2013. He was appointed to the Board
in March 2013 and became Commercial Director for
MISSION in July 2018. As well as providing commercial
support to the Group’s Agencies, Giles has overseen many
acquisitions and strategic investments and was the driving
force behind the creation of MISSION Shared Services.
Giles was appointed Group CFO in April 2021.
Mark Lund
Non-Executive Deputy Chair and
Senior Independent Director
Mark has enjoyed a long career in Advertising and
Marketing both as entrepreneur and corporate
executive. He co-founded independent Top 10 agency
DLKW (now Mullen Lowe), was President of McCann UK
and Europe and ran the UK Government’s marketing
centre, the COI. Mark is Non-Executive Chair of
Smart Energy GB and of Asbof which funds the UK’s
self-regulation system for Advertising. Mark was
appointed to the Board in October 2022 and Chairs
the Audit & Risk Committee.
Eliza Filby
Non-Executive Director
Eliza joined MISSION in January 2022 as a Non-Executive
Director. A writer, speaker, consultant and podcast host,
she is a highly respected expert in ‘Generational
Intelligence’. She has been helping companies and
services understand generational shifts within politics,
society and the workplace, working with organisations
from VICE Media and Warner Brothers to the UK’s
Ministry of Defence and Royal Household. As well as
speaking at the EU’s Human Rights Forum, the Financial
Times CEO Forum and the UK’s House of Lord’s Select
Committee, she has authored books and written for the
Financial Times, Times and City AM. Eliza was appointed
to the Board in January 2021 and Chairs the
Remuneration Committee.
James Clifton
Group Chief Executive
Fiona Shepherd
Chief Operating Officer
James started out Client-side before working for various
agencies in the UK and internationally, within Omnicom
and WPP. He created balloon dog in 2008, having led
an MBO of Fox Murphy. balloon dog was acquired by
MISSION and James was appointed to the Board in
October 2012. He became CEO of bigdog following the
merger of balloon dog with fellow MISSION Agency Big
Communications, founded Pathfindr, the Group’s IIoT
Asset Tracking business, and chaired the Group’s
Integrated Agencies before being appointed Group
Chief Executive in April 2019.
Fiona is Chief Executive of April Six 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 been instrumental in expanding
the Agency from its UK origins to its current position as
a well-respected global technology and mobility Agency
with offices across the world. Fiona joined the Board in
April 2010 and has taken on responsibility for MISSION
Advantage in 2022.
Dylan Bogg
Chief Creative Officer
As Chief Creative Officer Dylan oversees creative
output for the Group. 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 which
was acquired by MISSION in 2006. Dylan is a multi-
award-winning creative and was appointed to the
Board in April 2010. He also chairs the Group-wide
Creative Directors’ Forum.
44
Annual report for the year ended December 2023
45
Annual report for the year ended December 2023 Corporate Governance
Directors' Report – for the year ended 31 December 2023
The Directors present their report and the financial statements
of The MISSION Group plc (“MISSION”) for the year ended
31 December 2023. The Directors provide a separate
Corporate Governance Report, which forms part of this
Report of the Directors.
Results and Dividends
Risks and Uncertainties
The Consolidated Income Statement shows the results
for the year. The Directors have proposed the pausing
of the dividend.
The Strategic Report sets out the Group’s principal
operating risks and uncertainties. As a communications
Agency group, the main financial risks that arise from
day-to-day activities are credit and currency risk.
Further details on the Group’s capital and financial
risk management are set out in Note 29.
Directors
The following Directors held office during the year:
Dylan Bogg
James Clifton
Dr Eliza Filby
Julian Hanson-Smith – resigned 24 November 2023
Giles Lee
Mark Lund
David Morgan – appointed 24 November 2023
Sue Mullen – resigned 12 January 2023
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.
Dylan Bogg
James Clifton
Dr Eliza Filby
Giles Lee
Mark Lund
David Morgan
Fiona Shepherd
31 December 2022
31 December 2023
1,648,185
555,834
-
1,071,066
-
N/A
1,309,932
1,648,185
562,520
-
1,076,112
50,000
5,067,426
1,309,932
Growth Share Scheme
A Growth Share Scheme was implemented on 25 June 2021,
giving participants the opportunity to subscribe for
Ordinary B shares in The MISSION Marketing Holdings
Limited (the “growth shares”) at a nominal value. These
growth shares can, subject to continued employment, be
exchanged for an equivalent number of MISSION Ordinary
Shares if MISSION’s share price were to equal or exceed
150p for at least 15 days during the period from subscription
up to 60 days from the announcement of the Group’s
financial results for the year ending 31 December 2023;
if not, they would have no value.
At the time the scheme was introduced, achieving the target
share price of 150p would have resulted in dilution to existing
shareholders of less than 4% but would also have
represented an increase in market capitalisation of over
105%. A total of 27 individuals were invited to participate
in the scheme, of which 7 were Board members.
Details of growth shares held by the Directors are as follows:
Number of Ordinary B shares in The MISSION Marketing Holdings Limited of 0.01p each.
Dylan Bogg
James Clifton
Giles Lee
Fiona Shepherd
31 December 2022
Awarded in year
31 December 2023
72,727
240,000
240,000
240,000
-
-
-
-
72,727
240,000
240,000
240,000
46
47
Annual report for the year ended December 2023Annual report for the year ended December 2023
Corporate Governance
Directors' Report for the Year ended 31 December 2023
Share options
There were no unexercised options over shares held by Directors:
• Prepare the financial statements on the going
Stakeholder Engagement
Substantial Shareholdings
Share Capital
Other than the Directors’ interests disclosed above,
as at 28 March 2024, notification had been received
of the following interests in 3% or more of the issued
share capital of the Company:
The issued share capital of the Company at the date
of this report is 91,015,897 Ordinary shares. The total
number of voting rights in the Company is 91,015,897.
Number
of shares
%
DBAY Advisors Ltd
10,665,000
11.7
Herald Investment Management Ltd
5,778,239
6.3
Directors’ Indemnity Insurance
The Company purchases insurance to cover its Directors
and Officers against costs they may incur in defending
themselves in legal proceedings instigated against them
as a direct result of duties carried out on behalf of
the Company.
Octopus Investments Nominees Ltd
5,287,327
5.8
Directors’ Responsibilities
BGF Investment Management Limited
4,713,501
5.2
Objectif Investissement Microcaps FCP
4,230,477
4.6
The Directors are responsible for preparing the Annual
Report and the financial statements in accordance with
applicable law and regulations. Company law requires
the Directors to prepare financial statements for each
financial year. Under that law the Directors have
prepared the Group financial statements in accordance
with International Financial Reporting Standards (IFRSs)
as adopted by the United Kingdom and the Parent
Company financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards comprising
Financial Reporting Standard FRS 102, the Financial
Reporting Standard applicable in the UK and Republic
of Ireland and applicable law). Under company law the
Directors must not approve the financial statements
unless they are satisfied that they give a true and fair
view of affairs of the Group and the Company and of the
profit or loss of the Group for that period. In preparing
these financial statements, the Directors are required to:
• Select suitable accounting policies and then apply
them consistently
• Make judgements and accounting estimates that
are reasonable and prudent
• State whether applicable IFRSs as adopted by the
EU have been followed by the Group and FRS 102
by the Parent Company, subject to any material
departures disclosed and explained in the financial
statements, and
The Company’s Section 172 statement and other details
of stakeholder and employee engagement are set out
in the Stakeholder Engagement report.
Streamlined Energy and Carbon Reporting (“SECR”)
SECR is a sustainability regulation that came into force
on 1 April 2019. It requires organisations to publicly report
on carbon emissions and energy use, including UK energy
use, associated greenhouse gas emissions, and an
appropriate intensity ratio. SECR is applicable to all
quoted companies and large UK incorporated unquoted
companies with at least 250 employees or annual
turnover greater than £36m and annual balance sheet
total greater than £18m (two criteria or more must apply).
The 2023 information given below is for The MISSION
Group plc and Bray Leino Limited. Bray Leino Limited,
a non-qualifying agency, has been optionally included
for comprehensive reporting and consistency with the
MISSION Group’s internal reporting.
The MISSION Group Plc purchases the electricity used
in some subsidiaries’ offices; however, this energy and
resulting emissions have not been included because none
of the Group’s subsidiaries qualify for SECR. The energy
and emissions of all subsidiaries are measured annually
as part of the Group's scope 1, scope 2 and scope 3
carbon footprint.
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 are sufficient to show and
explain the Company’s and the Group’s transactions
and disclose with reasonable accuracy at any time
the financial position of the Company and the Group
and to enable them to ensure that the financial
statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets
of the Company and the Group 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.
The Directors consider the annual report and accounts,
taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders
to assess the Group and Company’s position,
performance, business model and strategy.
Auditors
PKF Francis Clark 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.
Events Since the End of the Financial Year
Events since the end of the financial year are detailed
in Note 31 of the financial statements.
48
49
Annual report for the year ended December 2023Annual report for the year ended December 2023 Corporate Governance
Directors' Report – for the year ended 31 December 2023
Corporate Governance
Corporate Governance Report
Energy consumption: (kWh’000s)
- Electricity
- Gas
- Transport fuel
- Fuel for electricity generation
2023
2022
248
196
192
-
253
207
125
-
Total energy consumption
636
585
Emissions (tCO2e)
Scope 1
Emissions from combustion of gas
in buildings
Emissions from combustion of fuel
for transport purposes
Scope 2
41.1
45.2
0.7
1.4
Emissions from purchased electricity
(location-based method*)
51.4
48.8
Scope 1 & 2
Total Scope 1+2 emissions
93.2
95.4
Scope 3
Emissions from business travel in rental
cars or employee vehicles where company
is responsible for purchasing the fuel
Emissions from upstream transport and
distribution losses and excavation and
transport of fuels
45.8
30.9
36.0
32.2
Total emissions for mandatory reporting
175.0
158.5
Intensity (tCO2e / FTE)
The computations above have been calculated and
verified as accurate by Green Element Limited and
Compare Your Footprint Limited, UK and the
methodology used is in accordance with the GHG
Protocol Corporate Accounting and Reporting Standard.
We see SECR as a wonderful opportunity and not just
another compliance exercise. It gives us the chance to
assess our current emissions and find ways to reduce
them. In 2020 we calculated our carbon footprint for the
first time and certified Bray Leino as ISO 14001 compliant.
All MISSION companies are signed up to Sustainability
Solved (a coaching platform to enable organisations
to implement their own environmental management
systems) and additional MISSION companies have the
aim of achieving ISO 14001 compliance. We will continue
to comply with environmental legislation and to monitor
and measure our consumption data with a view to
reducing our intensity ratio.
Slavery and Human Trafficking Statement
The Group supports the aims of The Modern Slavery Act
2015 (“the Act”) and will never knowingly deal with any
organisation which is connected to slavery or human
trafficking. Given the nature of the services we provide
and our high standard of employment practices, we
consider that we are at low risk of exposure to slavery
and human trafficking. We are not aware of any areas
of our operations and supply chain likely to lead to
a breach of the Act.
Annual General Meeting
A notice convening the Annual General Meeting to be
held on Monday 17 June 2024 at 12 noon is enclosed
with this report.
On behalf of the Board
Giles Lee
Full Time Equivalent staff numbers
Intensity ratio: tCO2e / FTE
316
0.6
324
0.5
Group Chief Financial Officer
28 March 2024.
* location-based electricity (Scope 2) emissions use
the average grid fuel mix in the region or country where
the electricity was purchased and consumed. For SECR,
location based is mandatory.
The Board of The MISSION Group plc (“MISSION”) is collectively
accountable to the Company’s shareholders for good corporate
governance, under David Morgan as Chair.
As an AIM-listed company, MISSION has chosen to apply the
Quoted Companies Alliance (“QCA”) Corporate Governance Code
for Small and Mid-Size Quoted Companies (“the QCA Code”).
MISSION is a collective of creative Agencies led by
entrepreneurs who encourage an independent spirit.
Our aims and ambitions are set out in the Strategic
Report. Unlike many other groups, our Agencies, which
have mainly come into the Group via acquisition, retain
their original leaders, cultures and business practices.
MISSION provides them with the support infrastructure
and economies of scale of a multi-national group.
We strongly believe that this results in a highly
personalised and Client-centric culture which in turn
leads to an expanding and loyal Client base. The role
of the Board in establishing good corporate governance
in the context of this strategy requires making sure not
only that individual Agencies are targeted, monitored
and supported but, equally importantly, that Agencies
cooperate and collaborate with each other to ensure
we are providing the best possible range of services
to help our Clients succeed. Indeed, it is this sense
of cooperation and collaboration which defines the
culture of MISSION and much of our time as a Board
of Directors is devoted to exploring how this
collaboration is optimised.
Board of Directors
The Board has a balance of sector, financial and public
markets skills and experience. Brief profiles of each
member of the Board are set out on pages 44 and 45.
Each of our Executive Directors has had a long career
in marketing communications, and brings strong and
up to date sector experience.
Our Group Chief Financial Officer and two independent
Non-Executive Directors provide industry, financial and
public market skills and experience and, together with
me, represent the committee responsible for corporate
governance compliance and ensuring that a strong
independent voice is present during Board discussions.
The roles of Chair and Chief Executive are separate,
with James Clifton, as Group Chief Executive, having
responsibility for implementing the Group’s strategy,
driving growth, building our brand and delivering
sustainable shareholder value.
Giles Lee was appointed Group Chief Financial Officer
in 2021 and has also in practice retained much of his
previous responsibilities as Group Commercial Director.
In accordance with the QCA Code recommendation,
the company secretary is not also an Executive Director,
with Michael Langford being appointed to the role.
Michael is the Group’s Financial Controller. He is a
Chartered Accountant with suitable training and has
previously assisted the Finance Director in company
secretarial matters.
Our Non-Executive Directors are Mark Lund and Dr Eliza
Filby, both independent by virtue of having no executive
responsibilities within the Group. Both Mark and Eliza
bring a strong independent voice to Board discussions
but also with an insight into our sector.
Mark has enjoyed a long career in Advertising and
Marketing both as entrepreneur and corporate executive.
He co-founded independent Top 10 agency DLKW (now
Mullen Lowe), was President of McCann UK and Europe
and ran the UK Government’s marketing centre, the COI.
Eliza is a writer, speaker, consultant and podcast host,
she is a highly respected expert in ‘Generational
Intelligence’. She has been helping companies and
services understand generational shifts within politics,
society and the workplace, working with organisations
from VICE Media and Warner Brothers to the UK’s
Ministry of Defence and Royal Household.
50
51
Annual report for the year ended December 2023Annual report for the year ended December 2023 Corporate Governance
Directors' Report – for the year ended 31 December 2023
Formal evaluations of Board effectiveness are held on
a periodic basis. The most recent evaluation took place
during 2022, was conducted by the Chair, and involved
a combination of self-evaluation and one-to-one
interviews with individual Board members to seek
objective feedback on the balance of skills, behaviours
and effectiveness of the Board as a whole,
the Chair and other Board members. The next evaluation
is due to take place during 2024. External counsel is
sought when considering best-practice review criteria.
The Directors are collectively responsible for the strategic
direction, investment decisions and effective control of
the Group. As part of its recurring business, the Board
receives a financial summary of the Group’s performance
early in the month, comparing revenue and profit for
each Agency with the prior year and budgets set at the
beginning of the year and any subsequent re-forecasts.
This summary is supplemented by written monthly
reports from the Group CEO and a report from the Group
CFO summarising the Group’s balance sheet and working
capital performance. Separate reports are received in
connection with non-recurring matters, including written
strategic and financial appraisals of potential acquisition
opportunities. 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 and are
required to seek re-election every three years. The Board
has established three formal committees to deal with
specific aspects of the Group’s affairs. These are detailed
below. Further to this the Board established a further,
temporary committee, the Value Restoration Committee
to steer the Group through the restructuring process.
The members of this committee were Mark Lund,
James Clifton and Giles Lee and me.
Audit & Risk Committee
The Audit & Risk Committee consists of two Non-Executive
Directors, with Mark Lund as Chair alongside me.
The Committee considers matters relating to the reporting
of results, financial controls and the cost and effectiveness
of the audit process. The terms of reference of the
Committee can be found in the Governance section of
our website. It aims to meet at least twice a year with the
Group’s external auditors in attendance. Other Directors
attend as required. The Committee receives from the
Group’s auditors and considers two detailed reports:
the Audit Planning Report which sets out the auditors’
proposed audit approach, and the Audit Completion
Report, towards the conclusion of the audit fieldwork,
which highlights the main matters considered and arising
from the audit work.
The main meeting of the Committee each year reviews
the financial results and disclosures in the annual report.
This meeting is held shortly before the annual results are
published and considers in detail with the Group’s
auditors the principal areas of subjective judgement and
any other matters brought to the Committee’s attention
by the Group’s auditors. The main matters considered
each year are any indications of possible goodwill
and/or investment impairment, going concern and the
application of the Group’s revenue recognition policies.
The Committee is satisfied that the Group’s auditors,
PKF Francis Clark, have been objective and independent
of the Group. The Group’s auditors performed non-audit
services for the Group as outlined in Note 6. The nature
of this work was again predominantly corporate finance
advice and financial due diligence in relation to
prospective acquisitions and not related to areas of
significant judgement in the accounts. The work was
not carried out by the audit team, the value of this work
was not significant in relation to the size of the audit fee,
the basis for charging was based on hourly involvement
and no fees were contingent on outcome. As
a consequence, the Committee is satisfied that the
auditors’ objectivity and independence was not
impaired by their non-audit services.
Remuneration Committee
As outlined in the Strategic Report, strong Client
relationships and quality of staff are key factors in the
success of MISSION, and strenuous efforts are made
to retain and motivate our leadership teams. The Board
maintains a policy of providing executive remuneration
packages that will attract, motivate and retain Directors
and senior executives of the calibre necessary to deliver
the Group’s growth strategy and to reward them for
enhancing shareholder value. The Remuneration
Committee consists of two independent Non-Executive
Directors, with Eliza Filby taking the role of Chair
alongside me. The Committee determines the
remuneration of the Executive Directors and makes
recommendations to the Board with regard to
remuneration policy and related matters.
The Committee meets as and when required and its terms
of reference can be found in the Governance section of
our website. 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 Committee reviews the components of each Executive
Director’s remuneration package annually. During the
year, these packages consisted of four elements:
• basic salary and benefits,
• performance related bonus linked to the delivery
Nomination Committee
The Nomination Committee consists of me, 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.
In 2023 the Committee considered the vacancy created
for the Non-Executive Chair by the resignation of
Julian Hanson-Smith and invited David Morgan to join
the Board on this basis.
Summary of Directors’ Attendance
Executive Directors are expected to make a full-time
commitment to the Group, whilst Non-Executive
Directors are generally expected to be available to
participate in person at Board meetings and meetings
of the Remuneration, Audit and Nomination Committees.
In addition, they are expected to be available to discuss
matters between these formal meetings. Where diary
clashes or Client commitments conflict with formal
meeting dates, the matters to be addressed during
meetings are discussed with the relevant Director both
before and after the relevant meeting. We estimate that
the time commitment required from our Non-Executive
Directors is roughly 3 days per month.
of profit targets
• share-based incentives, and
• termination packages to outgoing Directors.
With regard to remuneration policy, the Committee gives
specific consideration 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. This includes setting the
profit targets which trigger annual performance-related
cash bonuses and approving the allocation of incentives
to individuals. The Committee undertook a detailed review
of the Group’s incentives during 2018, implementing
various changes as a result and no further refinements
were considered necessary in 2023.
The Remuneration Committee approved the latest Growth
Share Scheme in June 2021.
The Committee reviews annually whether or not profit
targets have been met to trigger performance-related
bonuses to Directors and the senior management in
individual Agencies. This evaluation considers both the
Group’s financial performance and individual Agency
performance, and takes place alongside the finalisation
of the annual results. Details of Directors’ remuneration
are included in Note 7.
52
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Annual report for the year ended December 2023Annual report for the year ended December 2023 Corporate Governance
Directors' Report – for the year ended 31 December 2023
Board Meetings
Remuneration Committee
Audit Committee
Entitled
to attend
Attended
Entitled
to attend
Attended
Entitled
to attend
Attended
Dylan Bogg
James Clifton
Eliza Filby
Julian Hanson-Smith
Giles Lee
Mark Lund
David Morgan
Fiona Shepherd
12
12
12
9
12
12
3
12
11
12
12
9
12
12
3
12
n/a
n/a
3
2
n/a
1
n/a
n/a
n/a
n/a
3
2
n/a
1
n/a
n/a
n/a
n/a
n/a
2
n/a
3
1
n/a
n/a
n/a
n/a
2
n/a
3
1
n/a
Shareholder Communication
We engage in a dialogue with our shareholders and
prospective shareholders via formal meetings and
informal telephone and email contact. In addition,
we provide comprehensive information to investors on
our website, including contact information and answers
to frequently asked questions.
Formal meetings with institutional fund managers and
wealth managers take place throughout the year but
are concentrated on the periods following our interim
and full year results announcements. We receive
collated feedback from these meetings via our
NOMAD, Canaccord Genuity. In addition, I speak
to representatives of our larger institutional investors
between these formal set pieces to make sure the
dialogue continues and that we understand their
expectations. Private investors don’t have the benefit
of regular formal meetings, but we make sure we are
available to meet shareholders at our Annual General
Meeting and we often continue a dialogue with them
via email. The results of proxy votes cast at Annual
General Meetings can be found in the Investors
section of our website.
James Clifton, Giles Lee and I are, between us, the first
point of contact for any queries raised by shareholders
but, should we fail to resolve any queries, the Senior
Independent Director, Mark Lund, is available to meet
shareholders. I am encouraged to note that, to date,
no such request has been received.
Corporate Culture
The Group has established a statement of corporate
values in order to establish clearly for all stakeholders
what we stand for and how we behave. These values
are: invested, accountable, connected, progressive
and human. However, culture is defined as the internal
expression of brand purpose. In the same document
we stated our brand purpose or Vision as “the preferred
creative partner for real business growth.” This was
supported by a summary of our personality: ”We are
a challenger brand. So we try harder. We look for
solutions where others see problems. We are connected
by the ambition to deliver amazing results for our Clients.
We are driven by the entrepreneurial spirit that runs
through our veins. We celebrate diversity and treat others
how we would wish to be treated ourselves.” This is the
culture to which we aspire.
The formal matters reserved for the Board include
certain key internal controls: 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.
Assurance over risk management is obtained from
the establishment of management policies and
controls, regular review of individual Agency financial
performance, and the external audit process. The Board
does not consider it necessary to have a separate
internal audit function at the present time; the internal
audit of internal financial controls forms part of the
responsibilities of the Group’s finance function.
On behalf of the board
David Morgan
Chair
28 March 2024
Risk Management
Whilst the Directors are collectively responsible for
the effective control of the Group, the Audit & Risk
Committee has primary responsibility for the oversight
of risk. The principal risks and uncertainties facing the
Group are set out in more detail in the Strategic Report
and the Non-Executive Directors periodically consider
whether or not this remains up to date.
Clients and staff represent the key resources and
relationships on which our business relies.
Primary responsibility for maintaining strong Client
relationships and retaining key staff lies with the
Agency CEOs and this is monitored via written monthly
reports and interaction with the Group CEO. Their
day to day involvement with Clients provides the
Board with strong and up to date feedback from this
vital stakeholder group, including lessons to be learnt
from unsuccessful new business pitches. Periodically,
a new service is developed as a result of this feedback
loop. It has also been through Client feedback that we
have embarked on our international expansion – going
where our Clients want us to be.
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, or via regular informal contact between meetings.
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.
All 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.
54
55
Annual report for the year ended December 2023Annual report for the year ended December 2023
Financial Statements
Independent Auditor’s Report
Independent Auditor’s Report
to the Members of The MISSION Group plc
Opinion
We have audited the financial statements of The MISSION
Group plc (the “Group”) for the year ended 31 December
2023, which comprise the Consolidated Income
Statement, 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 including
a summary of significant accounting policies. The financial
reporting framework that has been applied in their
preparation is applicable law and International Financial
Reporting Standards (IFRSs) as adopted by the UK.
In our opinion, the financial statements:
• give a true and fair view of the state of the Group’s
affairs as at 31 December 2023 and of the Group’s
profit for the year then ended;
• have been properly prepared in accordance with
IFRSs as adopted by the UK; and
• have been prepared in accordance with the
requirements of the Companies Act 2006.
Basis for Opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit
of the financial statements section of our report. We are
independent of the Group in accordance with the ethical
requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard
as applied to listed entities, and we have fulfilled our
other ethical responsibilities in accordance with those
requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis
for our opinion.
An Overview of the Scope of Our Audit
We planned and performed our audit by obtaining an
understanding of the Group and its environment, including
the accounting processes and controls, and the industry
in which it operates. The Group comprises the following
trading companies:
• 19 UK subsidiary companies;
• 1 wholly owned US based subsidiary;
• 1 wholly owned Germany based subsidiary;
• 5 wholly owned Asian subsidiaries;
• A 50% owned joint venture;
• A 70% owned Asian subgroup comprising
5 locally incorporated companies; and
• 2 UK holding companies.
Of the Group’s 34 (2022: 30) reporting components,
we subjected 3 (2022: 3) to full scope audits and 9 (2022:
6) to specific audit procedures. The remaining components
were subject to analytical review procedures. All of the
work was carried out by the Group audit team. Those
components subject to audit and specific audit procedures
cover 76% (2022: 75%) of the Group’s consolidated
operating income and 88% (2022: 79%) of the Group’s
absolute profit before tax (absolute result does not
distinguish between profit or loss at subsidiary level).
Our audit work at the component level is executed at
levels of materiality appropriate for such components,
as detailed below.
Key Audit Matters
Key audit matters are those matters that, in our
professional judgement, were of most significance in our
audit of the financial statements of the current period and
include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified,
including those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit
of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion
on these matters.
KEY AUDIT MATTER
RESPONSE AND CONCLUSION
REVENUE RECOGNITION
Our audit work included:
The Group’s primary revenue streams are outlined in the
accounting policies section. We identified that the revenue
recognition risk relates particularly to the correct treatment
of project fees, where the service spans the year end. Assessing
the timing of recognition and valuation of such work involves
estimates and can be complex.
• Assessing and challenging the revenue recognition policies
adopted by the Group to confirm they are appropriate in the
context of the business and in accordance with IFRS15.
• Reviewing a sample of open jobs at the year end, including
all material jobs, across the Group and testing accuracy,
completeness and cut off.
• Reconciling open job reports at the year end to revenue and
profit recognised.
• Assessing and challenging on a sample basis whether revenue
and profit recognised on open jobs is complete and
appropriately valued.
• Evaluating the accuracy of accrued income in the previous year
against actual outcomes to determine whether management’s
historic estimations have been reliable and are consistent with
current year assumptions.
As a result of the procedures performed, we are satisfied that
revenue has been correctly recorded.
GOODWILL IMPAIRMENT
Our audit work included:
The impairment review of the Group’s carrying value of Goodwill
arising on consolidation is one of the main areas of estimation.
At 31 December 2023, the carrying value of goodwill in the Group
balance sheet was £88m (2022: £96m). We identified that the
audit risk relates to ensuring that management’s impairment
review is robust and reliable in identifying potential impairment,
and that the assumptions made are reasonable.
The key assumptions used by management in assessing value
in use are:
• Budgets and forecasts for the next 4 years.
• The discount rate applied (the Group’s weighted average
cost of capital – WACC).
• Assumed growth rate.
• Assessing and challenging the key assumptions and calculations
applied by management in their impairment reviews.
• Benchmarking the short and long term growth rates to
independent market data to confirm it is appropriate.
• Reviewing the detailed components of the WACC calculation.
• Assessing and challenging management’s sensitivity analysis
on key assumptions and calculations.
• Where there is limited headroom, performing our own sensitivity
analysis on agency EBIT bridges and challenging current
forecasts where performance underachieved against historical
forecast results.
• Comparing the assumptions used in management’s forecasts to
those used in other areas of the financial statements, including
estimating contingent consideration and supporting the going
concern assumption. We challenged management and obtained
supportable explanations where inconsistencies were identified.
• Assessing the disclosures made in the financial statements,
specifically surrounding the krow Group, Story Agency and
Story UK CGUs.
As a result of the work performed, after management’s impairment
of goodwill relating to krow Group, Story Agency and Story UK,
by a total of £10.3m, we are in agreement that goodwill does not
require further impairment at this stage.
56
57
Annual report for the year ended December 2023Annual report for the year ended December 2023 Financial Statements
Independent Auditor’s Report
KEY AUDIT MATTER
GOING CONCERN
The group has had a challenging year, with significantly
reduced revenues and profits in several agencies due to the
loss (temporarily or permanently) of significant clients together
with softer technology markets overseas. This, combined with
significantly fewer payments made by foreign customers
in advance of work, has led to difficult trading conditions,
stretched cashflow and net debt. As a result, the group has
breached its bank covenants after the year end. They have
received a waiver for this breach and the covenants have
been reset.
The key assumptions used by management in assessing going
concern are in the underlying forecasts for the next 12 months.
Our audit work included:
• Reviewing and challenging management’s assessment of going
concern and key assumptions (including assessment at the
planning stage of the audit process).
• Assessing the timing and amount of turnover and related
cashflows in the forecast models. We also tested the integrity
and mathematical accuracy of the models used.
• Reviewing and assessing the appropriateness of management’s
sensitivity analysis including changes in turnover and
related cashflows.
• Testing the amount of existing bank facilities and expected
headroom based on the forecast, and sensitivities, over the
next 12 months.
• Evaluating the reliability of the forecast through discussion with
management, review of post year end trading, review of external
independent reports and considering the historical reliability
of forecasts compared to actual results.
• Considering downside scenarios and likely mitigating actions
should forecast results not be achieved.
• Reviewing going concern related disclosures in the financial
statements to ensure they are appropriate
We have not identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast significant
doubt on the group’s ability to continue as a going concern for
a period of at least twelve months from when the financial
statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with
respect to going concern are described in the relevant sections
of this report.
Our Application of Materiality
Misstatements, including omissions, are considered to
be material if individually or in aggregate, they could
reasonably be expected to influence the economic
decisions of users taken on the basis of the financial
statements. We use quantitative thresholds of
materiality, together with qualitative assessments
in planning the scope of our audit, determining the
nature, timing and extent of our audit procedures and
in evaluating the results of our work.
Based on our professional judgement, we determined
materiality for the financial statements as a whole
as follows:
RESPONSE AND CONCLUSION
MATERIALITY MEASURE
GROUP
Overall materiality
Performance materiality
Basis for determination
£299,000 (2022: £388,000)
£207,000 (2022: £291,000)
Overall materiality has been set as an average of 5% of Headline profit
before tax for the three years up to and including 2023
(2022: 5% Headline profit before tax).
We consider a measure based on historical and current year results
most appropriate as the drop in results of 2023 are driven by temporary
factors including market volatility/economic uncertainty. We consider
a measure based on historical and current year results most
appropriate as the drop in results of 2023 are driven by temporary
factors including market volatility/economic uncertainty.
Management’s value restoration plan, that is already partially
actioned, is designed to restore the profitability within the Group.
We have considered headline profit before tax to be the most
appropriate measure for materiality as it best reflects the
Group’s underlying trading profitability and is a key metric used
by both management and other stakeholders in assessing the
Group’s performance.
Performance materiality is set as 70% (2022: 75%) of overall materiality.
Misstatements reported to the audit committee
£15,000 (2022: £12,000)
Range of materiality at components subject to full
scope audits:
£148,000 - £247,000
Conclusions Relating to Going Goncern
In auditing the financial statements, we have concluded
that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements
is appropriate. Please refer to the Key Audit Matters
section above for further details of work performed
and conclusions.
information is materially inconsistent with the financial
statements or our knowledge obtained in the course
of the audit, or otherwise appears to be materially
misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required
to determine whether this gives rise to a material
misstatement in the financial statements themselves.
If, based on the work we have performed, we conclude
that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
Other Information
The other information comprises the information included
in the annual report other than the financial statements
and our auditor’s report thereon. The directors are
responsible for the other information contained within
the annual report. Our opinion on the financial
statements does not cover the other information and,
except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance
conclusion thereon. Our responsibility is to read the other
information and, in doing so, consider whether the other
Opinions on Other Matters Prescribed by the Companies
Act 2006
In our opinion, based on the work undertaken in the
course of the audit:
• 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 financial statements; and
• the Strategic Report and the Directors’ Report
have been prepared in accordance with applicable
legal requirements.
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Annual report for the year ended December 2023Annual report for the year ended December 2023 Financial Statements
Independent Auditor’s Report
Matters on Which we are Required to Report by Exception
In the light of the knowledge and understanding of the
Group and its environment obtained in the course of the
audit, we have not identified any material misstatements
in the Strategic Report or the Directors’ Report.
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
• adequate accounting records have not been kept,
or returns adequate for our audit have not been
received from branches not visited by us; or
• the 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.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities
statement set out on pages 48 and 49, the Directors
are responsible for the preparation of the financial
statements and for being satisfied that they give
a true and fair view, and for such internal control
as the Directors determine is necessary to enable the
preparation of the financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Group’s ability to continue
as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern
basis of accounting unless the Directors either intend
to liquidate the Group or to cease operations, or have
no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the
Financial Statements
Our objectives are to obtain reasonable assurance
about whether the financial statements as a whole
are free from material misstatement, whether due
to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs (UK)
will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of these
financial statements.
Irregularities, including fraud, are instances of
non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect
of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities,
including fraud is detailed below.
We obtained an understanding of the legal and
regulatory framework applicable to the group and the
industry in which it operates. We identified the principal
risks of non-compliance with laws and regulations as
relating to breaches around health and safety and
General Data Protection Regulation. We also considered
those laws and regulations that have a direct impact
on the preparation of the financial statements such as
financial reporting legislation (including the Companies
Act 2006) and taxation legislation. We considered the
extent to which any non-compliance with these laws and
regulations may have a negative impact on the group’s
ability to continue trading and the risk of a material
misstatement in the financial statements.
Use of our Report
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 audit 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.
Duncan Leslie FCA
(Senior Statutory Auditor)
PKF Francis Clark
Statutory Auditor
Centenary House
Peninsula Park
Rydon Lane
Exeter
EX2 7XE
28 March 2024
We also evaluated management’s incentives and
opportunities for fraudulent manipulation of the financial
statements and determined that the principal risks
related to the misstatement of the result for the year,
goodwill impairment and revenue recognition.
Based on this understanding we designed our audit
procedures to identify irregularities. Our procedures
involved the following:
• Both goodwill impairment and revenue recognition
were assessed as Key Audit Matters and our work
in respect of them is detailed above.
• We made enquiries of senior management as to their
knowledge of any non-compliance or potential
non-compliance with laws and regulations that could
affect the financial statements. As part of these
enquiries we also discussed with management whether
there have been any known instances of material
fraud, of which there were none.
• We identified the individuals with responsibility
for ensuring compliance with laws and regulations
and discussed with them the procedures and policies
in place.
• We reviewed minutes of meetings of Senior
Management and those charged with governance.
• We challenged the assumptions and judgements made
by management in its significant accounting estimates.
• We audited the risk of management override of
controls, including through substantively testing
journal entries and other adjustments for
appropriateness, and evaluating the business rationale
of significant transactions outside the normal course
of business.
A further description of our responsibilities is available
on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.
60
61
Annual report for the year ended December 2023Annual report for the year ended December 2023 Financial Statements
Consolidated Financial Statements & Notes
Consolidated Income Statement
For the year ended 31 December 2023
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2023
Continuing
operations
2023
Discontinued
operations
2023
Total
Year to 31
December
2023
Continuing
operations
2022
Discontinued
operations
2022
Total
Year to 31
December
2022
(LOSS) / PROFIT FOR THE YEAR
(11,136)
(743)
(11,879)
£’000
£’000
£’000
£’000
2,466
£’000
£’000
(2,430)
36
Other comprehensive income – items
that may be reclassified separately
to profit or loss:
Exchange differences on translation
of foreign operations
TOTAL COMPREHENSIVE (LOSS)
/ INCOME FOR THE YEAR
Attributable to:
(271)
-
(271)
(688)
-
(688)
(11,407)
(743)
(12,150)
1,778
(2,430)
(652)
Equity holders of the parent
(11,561)
(743)
(12,304)
Non-controlling interests
154
-
154
(11,407)
(743)
(12,150)
1,829
(51)
1,778
(2,430)
-
(2,430)
(601)
(51)
(652)
Continuing
operations
2023
Discontinued
operations
2023
Total
2023
Continuing
operations
2022
Discontinued
operations
2022
Total
2022
Note
£’000
£’000
£’000
£’000
£’000
£’000
TURNOVER
Cost of sales
OPERATING INCOME
Headline operating expenses
HEADLINE OPERATING PROFIT /
(LOSS)
Goodwill, business and
intangible impairment
Profit on sale of Pathfindr (Note 22.3)
Start-up costs
Acquisition adjustments
Restructuring costs
Bank refinancing
OPERATING (LOSS) / PROFIT
Share of results of associates and
joint ventures
(LOSS) / PROFIT BEFORE INTEREST
AND TAXATION
Net finance costs
(LOSS) / PROFIT BEFORE TAXATION
Taxation
2
2
3
3
3
3
3
5
6
8
195,450
438
195,888
182,324
361
182,685
(109,130)
(208)
(109,338)
(102,767)
(104)
(102,871)
86,320
230
86,550
79,557
257
79,814
(79,840)
(1,668)
(81,508)
(70,765)
(392)
(71,157)
6,480
(1,438)
5,042
8,792
(135)
8,657
(10,409)
-
(10,409)
(2,396)
(2,861)
(5,257)
-
308
308
(1,818)
(1,652)
(715)
(475)
-
-
-
-
(1,818)
(1,652)
(715)
(475)
-
(776)
(593)
(402)
-
-
-
-
-
-
-
(776)
(593)
(402)
-
(8,589)
(1,130)
(9,719)
4,625
(2,996)
1,629
150
-
150
160
-
160
(8,439)
(1,130)
(9,569)
4,785
(2,996)
1,789
(2,472)
-
(2,472)
(1,046)
-
(1,046)
(10,911)
(1,130)
(12,041)
(225)
387
162
(LOSS) / PROFIT FOR THE YEAR
(11,136)
(743)
(11,879)
Attributable to:
Equity holders of the parent
(11,283)
(743)
(12,026)
Non-controlling interests
147
-
147
Basic earnings per share
(pence)
Diluted earnings per share
(pence)
Headline basic earnings per share
(pence)
Headline diluted earnings per share
(pence)
10
10
10
10
(11,136)
(743)
(11,879)
(12.6)
(0.8)
(13.4)
(12.6)
(0.8)
(13.4)
3.1
3.1
(1.2)
(1.2)
1.9
1.9
3,739
(1,273)
2,466
2,439
27
2,466
2.7
2.7
6.9
6.9
(2,996)
743
566
(707)
(2,430)
(2,430)
-
(2,430)
(2.7)
(2.7)
(0.1)
(0.1)
36
9
27
36
0.0
0.0
6.8
6.7
62
63
Annual report for the year ended December 2023Annual report for the year ended December 2023 Financial Statements
Consolidated Financial Statements & Notes
Consolidated Balance Sheet
As at 31 December 2023
Consolidated Cash Flow Statement
For the year ended 31 December 2023
FIXED ASSETS
Intangible assets
Property, plant and equipment
Right of use assets
Investments, associates and joint ventures
CURRENT ASSETS
Stock
Trade and other receivables
Corporation tax receivable
Cash and short term deposits
CURRENT LIABILITIES
Trade and other payables
Corporation tax payable
Bank loans
Acquisition obligations
NET CURRENT ASSETS
TOTAL ASSETS LESS CURRENT LIABILITIES
NON CURRENT LIABILITIES
Bank loans
Lease liabilities
Acquisition obligations
Deferred tax liabilities
NET ASSETS
CAPITAL AND RESERVES
Called up share capital
Share premium account
Own shares
Share-based incentive reserve
Foreign currency translation reserve
Retained earnings
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
Non-controlling interests
TOTAL EQUITY
Note
11
13
14
15
16
17
18
19
20
22.1
20
21
22.1
23
24
25
26
27
As at
31 December
2023
£’000
90,628
3,209
16,432
587
110,856
2,981
44,676
447
4,632
52,736
(45,388)
-
(21)
(1,745)
(47,154)
5,582
116,438
(19,973)
(15,768)
(3,720)
(524)
(39,985)
76,453
9,102
45,928
(942)
1,107
(888)
21,967
76,274
179
76,453
As at
31 December
2022
Continuing
operations
2023
Discontinued
operations
2023
£’000
99,741
2,090
9,536
437
111,804
2,185
41,255
-
6,153
49,593
(39,667)
(794)
(27)
(1,371)
(41,859)
7,734
119,538
(17,488)
(8,481)
(2,772)
(622)
(29,363)
90,175
9,102
45,928
(994)
1,010
(610)
35,558
89,994
181
90,175
Operating (loss) / profit
Depreciation, amortisation and
impairment charges
Increase / (decrease) in the fair value
of contingent consideration
Profit on sale of Pathfindr Ltd
(Profit) / loss on disposal of property,
plant and equipment and software
and intellectual property
Non-cash charge for share options,
growth shares and shares awarded,
net of awards settled in cash
(Increase) / decrease in receivables
Increase in stock
Increase / (decrease) in payables
OPERATING CASH FLOWS
Net finance costs paid
Tax paid
Net cash inflow / (outflow)
from operating activities
INVESTING ACTIVITIES
Proceeds on disposal of property, plant
and equipment
Purchase of property, plant and
equipment
Investment in software and product
development
Acquisitions of, or investments in,
businesses
Payment relating to acquisitions
made in prior years
Cash acquired with subsidiaries
Proceeds on disposal of Pathfindr
Costs of disposal of Pathfindr
Net cash (outflow) / inflow
from investing activities
Total
2023
£'000
(9,719)
Continuing
operations
2022
Discontinued
operations
2022
£'000
4,625
£'000
(2,996)
Total
2022
£'000
1,629
15,374
6,078
2,623
8,701
£'000
(8,589)
15,343
434
-
94
79
(2,945)
(1,125)
5,803
9,094
(2,471)
(2,411)
£'000
(1,130)
31
-
-
-
(67)
(43)
(1,277)
(2,794)
-
637
434
(334)
(308)
(308)
-
(11)
73
114
(70)
995
11,470
94
79
(3,012)
(1,168)
4,526
6,300
(2,471)
(1,002)
(1,774)
(458)
4,212
(2,157)
2,055
10,010
-
-
21
-
35
(3)
61
(259)
-
(24)
(283)
(334)
-
10
73
149
(73)
1,056
11,211
(1,002)
(482)
9,727
2
-
2
64
-
64
(2,340)
(3)
(2,343)
(1,019)
(73)
(1,092)
(111)
(397)
(393)
71
-
-
-
-
-
-
1,050
(187)
(111)
(456)
(1,396)
(1,852)
(397)
(1,893)
(393)
(790)
71
1,050
(187)
271
-
-
-
-
-
-
-
(1,893)
(790)
271
-
-
(3,168)
860
(2,308)
(3,823)
(1,469)
(5,292)
The financial statements were approved and authorised for issue on 28 March 2024 by the Board of Directors.
They were signed on its behalf by:
Giles Lee, Group Chief Financial Officer
Company registration number: 05733632
64
65
Annual report for the year ended December 2023Annual report for the year ended December 2023 Financial Statements
Consolidated Financial Statements & Notes
Consolidated Cash Flow Statement – continued
For the year ended 31 December 2023
Consolidated Statement of Changes in Equity
For the year ended 31 December 2023
Continuing
operations
2023
Discontinued
operations
2023
Total
2023
Continuing
operations
2022
Discontinued
operations
2022
Total
2022
£'000
£'000
£'000
£'000
£'000
£'000
(1,495)
(156)
(1,820)
2,474
-
(997)
-
-
-
-
-
-
(1,495)
(2,180)
(156)
(40)
(1,820)
(1,935)
2,474
-
992
(497)
(997)
(3,660)
-
-
-
-
-
-
(2,180)
(40)
(1,935)
992
(497)
(3,660)
47
(1,297)
(1,250)
2,527
(1,752)
775
(271)
6,153
4,632
(688)
6,066
6,153
FINANCING ACTIVITIES
Dividends paid
Dividends paid to non-controlling
interests
Payment of lease liabilities
Increase in bank loans
Purchase of own shares held in EBT
Net cash outflow from
financing activities
Increase / (decrease) 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
Share
capital
Share
premium
Own
shares
Share-
based
incentive
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
37,820
93,200
272
93,472
At 1 January 2022
9,102
45,928
(518)
868
Profit for the year
Exchange differences
on translation of
foreign operations
Total comprehensive
(loss) / income for
the year
Share option charge
Growth share charge
Own shares
purchased by EBT
Shares awarded and
sold from own shares
Dividend paid
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(497)
21
-
-
-
-
33
109
-
-
-
-
-
(610)
(610)
-
-
-
-
-
9
-
9
-
-
-
9
27
36
(610)
(78)
(688)
(601)
(51)
(652)
33
109
(497)
-
-
-
-
33
109
(497)
(70)
(91)
(70)
(2,180)
(2,180)
(40)
(2,220)
At 31 December 2022
9,102
45,928
(994)
1,010
(610)
35,558
89,994
181
90,175
(Loss) / profit for
the year
Exchange differences
on translation of
foreign operations
Total comprehensive
(loss) / income for
the year
Share option charge
Growth share charge
Shares awarded and
sold from own shares
Dividend paid
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
52
-
-
-
-
17
80
-
-
-
(12,026)
(12,026)
147
(11,879)
(278)
-
(278)
7
(271)
(278)
(12,026)
(12,304)
154
(12,150)
-
-
-
-
-
-
(70)
17
80
(18)
-
-
-
17
80
(18)
(1,495)
(1,495)
(156)
(1,651)
At 31 December 2023
9,102
45,928
(942)
1,107
(888)
21,967
76,274
179
76,453
66
67
Annual report for the year ended December 2023Annual report for the year ended December 2023 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 UK-adopted International Accounting
Standards and on the historical cost basis. The functional
currency of the Group is Pounds Sterling and the level
of rounding applied is £’000.
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.
Going concern
The Directors have considered the financial projections and
cash flow projections for the Group alongside the availability
of renewed committed bank facilities of £20m (expiring
5 April 2026), an overdraft facility of £9m (which will reduce
to £3m in the event there is a deleveraging event – further
information in Note 31 to the financial statements), and the
headroom afforded against Total Debt Leverage and Bank
Debt Leverage covenant tests for the coming 12 months.
This recent successful facility renewal is against the
backdrop of the challenging trading conditions experienced
in 2023 which resulted in significant strain on working
capital particularly in the latter half of the year. These
conditions led to potential covenant compliance difficulties
and a formal waiver of the covenant requirements before
the year end as part of a package of measures ultimately
resulting in the new facility. The revised position leaves the
Group much better placed to navigate its funding needs
going forward in the knowledge that the bank has been
supportive of the measures already taken and demonstrates
confidence in the strategies adopted by the Board to lower
the overall debt position including capital raising initiatives.
The Directors have also considered and understood the
mitigating actions that would be required in the event of
reduced revenue profiles and any further consequential
difficulties with covenant compliance. Such potential
mitigating actions would include a review of headcount,
particularly in the areas impacted by any downturn.
Furthermore the Group have considered actions that can
be taken should increased headroom be required. This
would most likely be the disposal of non-core or high
value agency assets.
Against these scenarios, the Group was demonstrated to
have adequate headroom against the facilities described
above. This leads the Directors to become satisfied that,
taking account of reasonably possible changes in trading
performance, it is appropriate to adopt the going concern
basis in preparing the financial statements.
Turnover and revenue recognition policy
The Group’s operating subsidiaries carry out a range
of different activities. The following policies apply
consistently across subsidiaries.
Revenue is recognised when a performance obligation is
satisfied, in accordance with the terms of the contractual
arrangement. Where there are contracts with a variety of
performance obligations that are distinct, an element of
the transaction price is allocated to each performance
obligation and recognised as revenue as and when that
performance obligation is satisfied. Revenue is allocated
to each of the performance obligations based on relative
standalone selling prices. Typically, performance
obligations are satisfied over time as services are
rendered. The nature of the work is almost always such
that it relates to facts and circumstances that are specific
to the Client, with the result that the work performed does
not create an asset with alternative use to the Group.
Therefore, in accordance with IFRS 15, even if the Client
will receive the benefits of the Group's performance only
when the Client receives the piece of work, the
performance obligation is regarded as being satisfied
over time. The Group is generally entitled to payment for
work performed to date.
Contracts are typically short-term in nature and do not
include any significant financing components. The Group
is generally paid in arrears for its services and invoices are
typically payable within 30 to 60 days.
Where performance obligations have been satisfied and
the recorded turnover exceeds amounts invoiced to
Clients, the excess is classified as accrued income
(within Trade and other receivables). Accrued income
is a contract asset and is transferred to trade receivables
when the right to consideration is unconditional and billed
per the terms of the contractual agreement. Where
amounts invoiced to Clients exceed recorded turnover,
because performance obligations have not yet been
satisfied, the excess is classified as deferred income
(within Trade and other payables). These balances are
considered contract liabilities.
The Group has applied the practical expedient permitted
by IFRS 15 to not disclose the transaction price allocated
to performance obligations unsatisfied or partially
unsatisfied as of the end of the reporting period as
contracts typically have an original expected duration
of a year or less.
The amount of revenue recognised depends on whether
the Group acts as principal or agent. Third party costs are
included in revenue when the Group acts as principal with
respect to the goods or services provided to the Client and
are excluded when the Group acts as agent, by reference
to whether or not the Group controls the relevant good
or service before it is transferred to the Client.
The Group has not recognised any significant costs
incurred to obtain or fulfil a Client contract as assets on
the balance sheet. Costs to obtain a contract are typically
expensed as incurred as the contracts are generally short
term in nature.
Turnover represents fees, commissions, rechargeable
expenses and sales of materials performed subject to
specific contracts.
Further details on revenue recognition are detailed
by activity below:
(i) Advertising and ad hoc marketing campaigns
This typically involves fees for strategic planning and
creative concepts through to execution and delivery
of final campaigns. Revenue may consist of various
arrangements, but typically comprises retainer fees or
fixed price contracts, both of which are recognised over
time. Retainer fees are recognised on a straight-line basis
over the term of the contract. For fixed price contracts,
revenue is recognised based on the actual service
provided to the end of the reporting period as
a proportion of the total services to be provided.
This is typically determined based on third party costs
incurred to date and actual labour hours devoted to date
relative to the total expected costs and labour hours.
(ii) Website, portal or application design and build (Digital)
The Group derives revenue from designing and building
websites, portals and applications under fixed price
contracts. Revenue is typically recognised over time,
determined by applying the hours devoted to date as
a percentage of total hours expected.
(iii) Software development (Digital)
This revenue stream involves the supply of software
licences and aftersales support. If billed as a single fixed
price fee, each of these services is accounted for as
a separate performance obligation, the transaction price
allocated to each being determined by the labour hours
and cost required to supply each service. Revenue
attributable to the provision of the software is recognised
at a point in time when the software licence is made
available for use by the Client. Revenue attributable to the
aftersales support is recognised monthly on a straight-line
basis over the period support is to be provided. In some
cases, the contract might also cover the provision of data
migration and training services, but each of these is
separately billed, the revenue being recognised over time,
determined by applying the hours devoted to date as
a percentage of total hours expected.
(iv) Media buying
Revenue is derived from identifying the Client’s media
requirements and managing and placing orders for the
appropriate media. Revenue is typically recognised at the
point in time the media is aired or on the date of publication.
v) Exhibitions, events and conferences
Revenue is derived from the design, planning and supply
of exhibition stands, events and conferences. Revenue is
typically recognised over time based on third party costs
incurred to date and actual labour hours devoted to date
relative to the total expected costs and labour hours.
(vi) Learning and training
Revenue is in the form of fixed price fees from planning
and designing training courses and from performing
training courses. Specific training is recognised at a point
in time on the date the training takes place. If the service
provided includes planning and designing the training
course and material, then revenue would be attributed
to this performance obligation and recognised over time
based on third party costs incurred to date and actual
labour hours devoted to date relative to the total
expected costs and labour hours.
(vii) Public Relations
PR revenue is typically derived from retainer fees and
fixed price fees for services to be performed subject to
specific agreement. Revenue under these arrangements
is earned over time, in accordance with the terms of the
contractual arrangement. Retainer fee revenue is
recognised on a straight-line basis over the period
covered by the fee. For ad hoc fixed price projects,
the Group generally applies the hours devoted to date
as a percentage of total hours as the basis for
recognising revenue.
68
69
Annual report for the year ended December 2023Annual report for the year ended December 2023 Financial Statements
Consolidated Financial Statements & Notes
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 separately identified as part
of an acquisition are amortised over periods of between
2 and 10 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. Amortisation and impairment charges are excluded
from headline profit.
Other intangible assets also include costs associated
with the development of identifiable software and other
products. Development expenditure is capitalised only
if the expenditure can be measured reliably, the product
or process is technically and commercially feasible,
future economic benefits are probable and the Group
intends to and has sufficient resources available to
complete development and to use or sell the asset.
Otherwise, it is recognised in profit or loss as incurred.
Development expenditure includes all directly related
costs, including internal staff costs and an element of
directly attributable overheads. Expenditure on research
and sales related activities is recognised in profit or loss.
Subsequent expenditure is capitalised only when it
increases the future economic benefits embodied in the
specific asset to which it relates.
These assets are carried at cost less accumulated
amortisation and are amortised over periods of between
3 and 5 years. Impairments are recognized if the carrying
amount of an asset exceeds the recoverable amount.
Amortisation of software and product development costs
is included within operating expenses.
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 (i.e. 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 11.
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 by reference
to timesheets in relation to the total estimated time
to complete them.
Valuation of intangible assets on acquisitions
Determining the separate components of intangible assets
acquired on acquisitions is a matter of judgement
exercised by the Directors. Brand names, customer
relationships and intellectual property rights are the most
frequently identified intangible assets. When considering
the valuation of intangible assets on acquisitions, a range
of methods is undertaken both for identifying intangibles
and placing valuations on them. 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 Client retention is the principal
uncertainty and draws on historic experience.
Intangible development costs
The Group capitalises development costs within intangible
fixed assets. The key sources of estimation uncertainty
involved in this are:
i. Assessment of proportion of employees’ time spent
on product development.
ii. Period of amortisation – the length of time between
the creation of the asset and it being consumed in the
sales of the products created.
Share-based payment transactions
Equity-settled share-based payments 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.
The fair value of nil-cost share options is measured by use
of a Black Scholes model on the grounds that there are no
market-related vesting conditions. The fair value of Growth
Shares is measured by use of a Monte Carlo simulation
model on the grounds that they are subject to market-
based conditions (the future share price of the Company).
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.
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 improvements
Period of the lease
Motor vehicles
25% per annum
Fixtures, fittings and office equipment
10-33% per annum
Computer equipment
25-33% per annum
Stock
Stock is stated at the lower of cost and net realisable
value and includes the costs of direct materials and
purchases, and the costs of direct labour. Net realisable
value is based on estimated invoice value less further
costs expected to be incurred to completion.
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.
70
71
Annual report for the year ended December 2023Annual report for the year ended December 2023 Financial Statements
Consolidated Financial Statements & Notes
Leases
The Group recognises a right of use asset and
a corresponding lease liability with respect to all lease
arrangements in which it is the lessee, except for short
term leases (defined as leases with a term of 12 months
or less) and leases of low value assets. For these leases,
the Group recognises the lease payments as an operating
expense on a straight-line basis over the lease term. Lease
incentives are spread over the term of the lease.
The lease liability is presented as a separate line in the
Consolidated Balance Sheet. The lease liability is initially
measured at the present value of all future lease
payments, discounted at the rate implicit in the lease,
or if this rate is not readily determined, the incremental
borrowing rate of the Group. Lease payments included
in the measurement of the lease liability include:
• fixed and variable lease payments, less any
lease incentives;
• the amount expected to be payable by the lessee under
residual value guarantees;
• the exercise price of purchase options, if the lessee
is reasonably certain to exercise the options; and
• payments of penalties for terminating the lease,
if the lease term reflects the exercise of an option
to terminate the lease.
The lease liability is subsequently measured by increasing
the carrying amount to reflect interest on the lease liability
(using the effective interest rate method) and by reducing
the carrying amount by any lease payments made.
The Group remeasures the lease liability and makes
a corresponding adjustment to the related right of use
asset whenever:
• the lease term has changed or there is a change in the
assessment of exercise of a purchase option; or
• a lease contract is modified and the lease modification
is not accounted for as a separate lease
in which case the liability is remeasured by discounting
the revised lease payments using a revised discount rate.
The right of use assets are presented as a separate line
in the Consolidated Balance Sheet. The right of use
assets comprise the initial measurement of the
corresponding lease liability, lease payments made at
or before the commencement day of the lease and any
initial direct costs. They are subsequently measured
at cost less accumulated depreciation and impairment
losses. Whenever the Group incurs an obligation for costs
to dismantle and remove a leased asset, restore the site
on which it is located or restore the underlying asset to
the condition required by the terms and conditions of the
lease, a provision is recognised and measured under IAS
37. The costs are included in the related right of use asset.
Right of use assets are depreciated over the shorter
period of lease term and useful life of the underlying
asset, unless a lease transfers ownership of the
underlying asset or the cost of the right of use assets
reflects that the Group expects to exercise a purchase
option, in which case the right of use asset is depreciated
over the useful life of the underlying asset. The
depreciation starts at commencement of the lease.
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.
Where material intangible assets are recognised on
acquisition which will be amortised over their useful lives,
a deferred tax liability is also recognised and released
against income over the corresponding period.
New standards, interpretations and amendments
to existing standards
There are no new or amended standards or interpretations
that impact the Group’s financial statements.
At the date of authorisation of these financial statements,
certain new standards, amendments, and interpretations
to existing standards have been published by the IASB but
are not yet effective and have not been adopted early by
the Group. No new standards in issue but not yet effective
are expected to have a material impact on the Group.
2. Segmental Information
IFRS 15: Revenue from Contracts with Customers requires the disaggregation of revenue into categories that depict how
the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The Board has
considered how the Group’s revenue might be disaggregated in order to meet the requirements of IFRS 15 and has
concluded that the segmentation disclosures set out below represent the most appropriate categories of disaggregation.
The Board considers that neither differences between sales channels and markets nor differences between contract
duration and the timing of transfer of goods or services are sufficiently significant to require further disaggregation.
For management purposes the Board monitors the performance of its individual agencies and groups them into service
segments based on the sectors in which they operate. Each reportable segment therefore includes a number of agencies
with similar characteristics.
The Board assesses the performance of each segment by looking at turnover, operating income and headline operating
profit. The headline operating profit shown below is after the reallocation to the agencies of certain head office costs
relating to the Shared Services function. These costs include a significant portion of the total operating costs which are
now centrally managed.
The Board does not review the assets and liabilities of the Group on a segmental basis. A segmental breakdown
of assets and liabilities is therefore not disclosed.
Business &
Corporate
Consumer
& Lifestyle
Health &
Wellness
Property
Sports &
Entertainment
Technology
& Mobility
MISSION
Advantage
& Central
Investments
Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Year to 31
December 2023
Turnover
Continuing
operations
Discontinued
operations
Total Group
Operating
income
Continuing
operations
Discontinued
operations
Total Group
Headline
operating profit
/ (loss)
Continuing
operations
Discontinued
operations
Total Group
67,215
26,128
4,438
30,983
10,373
40,876
15,437
-
195,450
-
-
-
-
-
-
-
438
438
67,215
26,128
4,438
30,983
10,373
40,876
15,437
438
195,888
20,785
18,195
3,949
15,038
6,675
15,084
6,594
-
86,320
-
-
-
-
-
-
-
230
230
20,785
18,195
3,949
15,038
6,675
15,084
6,594
230
86,550
2,831
1,322
712
2,303
1,368
-
-
-
-
-
2,831
1,322
712
2,303
1,386
165
-
165
(2,221)
-
6,480
-
(1,438)
(1,438)
(2,221)
(1,438)
5,042
72
73
Annual report for the year ended December 2023Annual report for the year ended December 2023 Financial Statements
Consolidated Financial Statements & Notes
2. Segmental Information – continued
Geographical segmentation
The following table provides an analysis of the Group’s operating income by region of activity:
UK
USA
Asia
Rest of Europe
Year to
31 December
2023
Year to
31 December
2022
£’000
75,278
7,688
3,340
244
86,550
£’000
67,766
9,156
2,667
225
79,814
Business &
Corporate
Consumer
& Lifestyle
Health &
Wellness
Property
Sports &
Entertainment
Technology
& Mobility
MISSION
Advantage
& Central
Investments
Total
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
Year to 31
December 2022
Turnover
Continuing
operations
Discontinued
operations
Total Group
Operating
income
Continuing
operations
Discontinued
operations
Total Group
Headline
operating profit
/ (loss)
Continuing
operations
Discontinued
operations
Total Group
62,134
24,880
4,694
26,505
6,040
48,527
9,544
-
182,324
-
-
-
-
-
-
-
361
361
62,134
24,880
4,694
26,505
6,040
48,527
9,544
361
182,685
20,637
18,243
3,891
13,353
3,352
17,295
2,786
-
79,557
-
-
-
-
-
-
-
257
257
20,637
18,243
3,891
13,353
3,352
17,295
2,786
257
79,814
2,459
1,182
953
1,895
654
3,369
(1,720)
-
8,792
-
-
-
-
-
-
-
(135)
(135)
2,459
1,182
953
1,895
654
3,369
(1,720)
(135)
8,657
As contracts typically have an original expected duration of less than one year, the full amount of the accrued income
balance at the beginning of the year is recognised in revenue during the year. The vast majority of turnover
is recognised over time.
74
75
Annual report for the year ended December 2023Annual report for the year ended December 2023
Financial Statements
Consolidated Financial Statements & Notes
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.
From continuing and discontinued operations
Year ended
31 December
2023
Year ended
31 December
2022
PBT
£’000
PAT
£’000
PBT
£’000
PAT
£’000
Start-up costs derive from organically started businesses or loss-making businesses acquired and comprise the trading
losses of such entities until the earlier of two years from commencement or when they show evidence of becoming
sustainably profitable. Start-up costs in 2022 related to the trading losses of the new Livity youth-marketing offer
as well as costs associated with the early-stage foundation of performance marketing and data science capabilities.
Start-up costs in 2023 relate to Livity, the launch of Turbine, an integrated Growth Media agency, specialising
in owned, earned and paid media for consumer facing brands, the trading losses of BLS China launched in 2023,
as well as costs associated with the early-stage foundation of performance marketing and data science capabilities.
Restructuring costs in 2022 comprised costs associated with the major fundamental restructuring of the Splash
business. In 2023, restructuring costs consist of costs of closing down the April Six Singapore office, and redundancy,
PILON and TUPE related costs associated with restructuring and right sizing of various business units in the last
quarter of the year following the downgraded full year profit expectation announced to the market.
Bank refinancing costs in 2023 consist of fees from various consulting and legal firms used to assist and advise
the bank in the refinancing process, and other related costs associated with this process.
Headline profit
2,720
1,855
7,771
6,130
Goodwill, business and intangible impairment
(10,409)
(10,381)
(5,257)
(4,697)
4. Acquisition Adjustments
Profit on sale of Pathfindr (Note 22.3)
Start-up costs
Acquisition-related items (Note 4)
Restructuring costs
Bank refinancing costs
Reported (loss) / profit
From continuing operations
Headline profit
308
(1,818)
(1,652)
(715)
(475)
355
(1,363)
(1,453)
(536)
(356)
(12,041)
(11,879)
-
(776)
(593)
(402)
-
743
-
(629)
(443)
(325)
-
36
4,158
2,953
7,906
6,229
Goodwill, business and intangible impairment
(10,409)
(10,381)
(2,396)
(2,366)
Movement in fair value of contingent consideration
Amortisation of other intangibles recognised on acquisitions
Acquisition transaction costs expensed
Year to 31
December
2023
£’000
(434)
(942)
(276)
(1,652)
Year to 31
December
2022
£’000
334
(519)
(408)
(593)
Start-up costs
Acquisition-related items (Note 4)
Restructuring costs
Bank refinancing costs
Reported (loss) / profit
From discontinued operations
(1,818)
(1,652)
(715)
(475)
(1,363)
(1,453)
(536)
(356)
(10,911)
(11,136)
(776)
(593)
(402)
-
3,739
(629)
(443)
(325)
-
2,466
The movement in fair value of contingent consideration relates to a net upward (2022: downward) revision in the
estimate payable to vendors of businesses acquired. This upward revision is driven by improved performance by the
recent acquisitions. Acquisition transaction costs relate to professional fees in connection with acquisitions made
or contemplated.
5. Net Finance Costs
Headline loss
(1,438)
(1,098)
(135)
(99)
Goodwill, business and intangible impairment
Profit on sale of Pathfindr (Note 22.3)
-
308
-
355
(2,861)
(2,331)
-
-
Reported loss
(1,130)
(743)
(2,996)
(2,430)
Interest on bank loans and overdrafts, net of interest on bank deposits
In 2022 goodwill, business and intangible impairment costs related to Splash goodwill and the impairment of Pathfindr
fixed assets and stock, following a review of the valuation of these cash generating units and assets, and the loss on
disposal of the Fenturi investment in associate and write-off of intercompany balance. In 2023, goodwill, business and
intangible impairment costs relate to the impairment of Story UK Ltd, Story Agency Ltd, Krow Agency Ltd and Krow
Communications Ltd goodwill and the write off of the Mission Brand Bonding Index intangible asset.
Amortisation of bank debt arrangement fees
Interest expense on lease liabilities
Net finance costs
Year to 31
December
2023
£’000
(1,795)
(45)
(632)
(2,472)
Year to 31
December
2022
£’000
(656)
(48)
(342)
(1,046)
76
77
Annual report for the year ended December 2023Annual report for the year ended December 2023 Financial Statements
Consolidated Financial Statements & Notes
6. Profit Before Taxation
7. Employee Information
Profit or loss on ordinary activities before taxation is stated after charging / (crediting):
The average number of Directors and staff employed by the Group during the year analysed by segment,
was as follows:
Depreciation of owned tangible fixed assets
Depreciation expense on right of use assets
Amortisation of intangible assets recognised on acquisitions
Amortisation of other intangible assets
Expense relating to short term leases
Expense relating to low value leases
Income from subleasing right of use assets
Staff costs (Note 7)
Bad debts and net movement in provision for bad debts
Auditors’ remuneration
Loss / (profit) on foreign exchange
Auditors’ remuneration may be analysed by:
Audit of Group’s annual report and financial statements
Audit of subsidiaries
Audit related assurance services
Corporate finance
Year to 31
December
2023
Year to 31
December
2022
£’000
1,171
2,612
942
353
388
29
(153)
63,095
(5)
267
589
Year to 31
December
2023
£’000
62
138
6
61
267
£’000
1,068
1,918
519
337
376
12
(194)
55,032
386
238
(411)
Year to 31
December
2022
£’000
56
128
5
49
238
Year to 31
December
2023
Year to 31
December
2022
Business & Corporate
Consumer & Lifestyle
Health & Wellness
Property
Sports & Entertainment
Technology & Mobility
MISSION Advantage & Central
Investments
235
205
31
190
63
143
196
21
1,084
The aggregate employee costs of these persons included in operating expenses were as follows:
Wages and salaries
Social security costs
Pension costs
Share based payment expense
Total employee costs
Year to 31
December
2023
£’000
54,538
6,327
2,133
97
63,095
281
209
29
184
34
150
136
18
1,041
Year to 31
December
2022
£’000
47,593
5,453
1,844
142
55,032
The Group operates twenty four (2022: twenty six) defined contribution 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 £289,000 (2022: £279,000).
78
79
Annual report for the year ended December 2023Annual report for the year ended December 2023 Financial Statements
Consolidated Financial Statements & Notes
Directors’ Remuneration
8. Taxation
Directors’ remuneration is derived from their role as either a Board member of MISSION or as an Executive Director
of one of the Group’s Agencies. Remuneration for the year was as follows (all amounts in £’000):
Salary / Fees
Performance
- related
payments*
Benefits
Pension
Total
2023
Total
2022
20
73
168
326
45
100
244
240
-
-
1,216
-
-
-
-
-
-
-
95
-
-
95
-
-
12
9
-
-
7
6
-
-
-
-
10
19
-
3
23
24
-
-
20
73
190
354
45
103
274
365
-
-
-
81
174
480
46
25
350
357
143
36
34
79
1,424
1,692
As Board Directors
David Morgan
(Chair from 24 November 2023)
Julian Hanson-Smith
(Chair to 24 November 2023)
Dylan Bogg
James Clifton (Chief Executive)
Eliza Filby
Mark Lund
(Non-Executive from 1 October 2022)
Giles Lee (Chief Financial Officer)
Fiona Shepherd
Former Directors
Sue Mullen (to 12 January 2023)
Andy Nash
(Non-Executive to 30 September 2022)
Total
Notes:
* Performance related discretionary bonuses were paid in the first quarter of 2023 based on 2022 results.
Current tax:
UK corporation tax at 23.52% (2022: 19.00%)
Adjustment for prior periods
Foreign tax on profits of the period
Deferred tax:
Current year originating temporary differences
Tax charge for the year
Year to 31
December
2023
£’000
(123)
45
135
57
(219)
(162)
Factors Affecting the Tax Charge for the Current Year:
The tax assessed for the year is higher (2022: 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 23.52% (2022: 19.00%)
Effect of:
Rate changes
Non-deductible expenses / income not taxable
Depreciation (lower than) / in excess of capital allowances
Differences in overseas tax rates
Adjustments in respect of prior periods
Other differences
Actual tax charge for the year
Year to 31
December
2023
£’000
(12,041)
(2,832)
(11)
2,696
(5)
(23)
45
(32)
(162)
Year to 31
December
2022
£’000
380
(36)
364
708
(1)
707
Year to 31
December
2022
£’000
743
141
(99)
562
(76)
190
(36)
25
707
80
81
Annual report for the year ended December 2023Annual report for the year ended December 2023 Financial Statements
Consolidated Financial Statements & Notes
9. Dividends
10. Earnings Per Share
Amounts recognised as distributions to equity holders in the year:
Interim dividend of nil (2022: 0.83 pence) per share
Final dividend of 1.67 pence (2022: 1.60 pence) per share
Year to 31
December
2023
£’000
-
1,495
1,495
Year to 31
December
2022
£’000
743
1,437
2,180
The Board has made the decision to pause further dividend payments until balance sheet strength is restored.
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 (loss) / profit for the year
From continuing and discontinued operations
Attributable to:
Equity holders of the parent
Non-controlling interests
From continuing operations
Attributable to:
Equity holders of the parent
Non-controlling interests
From discontinued operations
Attributable to:
Equity holders of the parent
Non-controlling interests
Headline earnings (Note 3)
From continuing and discontinued operations
Attributable to:
Equity holders of the parent
Non-controlling interests
From continuing operations
Attributable to:
Equity holders of the parent
Non-controlling interests
Year to 31
December
2023
£’000
(11,879)
(12,026)
147
(11,879)
(11,136)
(11,283)
147
(11,136)
(743)
(743)
-
(743)
1,855
1,708
147
1,855
2,953
2,806
147
2,953
Year to 31
December
2022
£’000
36
9
27
36
2,466
2,439
27
2,466
(2,430)
(2,430)
-
(2,430)
6,130
6,103
27
6,130
6,229
6,202
27
6,229
82
83
Annual report for the year ended December 2023Annual report for the year ended December 2023 Financial Statements
Consolidated Financial Statements & Notes
10. Earnings Per Share – continued
11. Intangible Assets
From discontinued operations
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
Weighted average number of Ordinary shares for the purpose
of diluted earnings per share
Reported basis
From continuing and discontinued operations
Basic earnings per share (pence)
Diluted earnings per share (pence)
From continuing operations
Basic earnings per share (pence)
Diluted earnings per share (pence)
Attributable to:
From discontinued operations
Basic earnings per share (pence)
Diluted earnings per share (pence)
Headline basis:
From continuing and discontinued operations
Basic earnings per share (pence)
Diluted earnings per share (pence)
From continuing operations
Basic earnings per share (pence)
Diluted earnings per share (pence)
From discontinued operations
Basic earnings per share (pence)
Diluted earnings per share (pence)
Year to 31
December
2023
£’000
(1,098)
(1,098)
-
(1,098)
Year to 31
December
2022
£’000
(99)
(99)
-
(99)
89,549,143
89,906,999
341,144
89,890,287
617,992
90,524,991
(13.4)
(13.4)
(12.6)
(12.6)
(0.8)
(0.8)
1.9
1.9
3.1
3.1
(1.2)
(1.2)
0.0
0.0
2.7
2.7
(2.7)
(2.7)
6.8
6.7
6.9
6.9
(0.1)
(0.1)
A reconciliation of the profit after tax on a reported basis and the headline basis is given in Note 3.
84
A reconciliation of the profit after tax on a reported basis and the headline basis is given in Note 3.
Goodwill
Other intangible assets
Goodwill
Cost
At 1 January
Recognised on acquisition of subsidiaries
Adjustment to consideration / net assets acquired
At 31 December
Impairment adjustment
At 1 January
Impairment during the year
At 31 December
Net book value at 31 December
31 December
2023
31 December
2022
£’000
87,857
2,771
90,628
Year to 31
December
2023
£’000
102,486
1,920
20
104,426
6,273
10,296
16,569
87,857
£’000
96,213
3,528
99,741
Year to 31
December
2022
£’000
98,877
3,609
-
102,486
4,273
2,000
6,273
96,213
In accordance with the Group’s accounting policies, an annual impairment test is applied to the carrying value
of goodwill. The review performed assesses whether the carrying value of goodwill is supported by the net present
value of projected cash flows derived from the underlying assets for each cash-generating unit (“CGU”), discounted
using an appropriate discount rate. It is the Directors’ judgement that each distinct Agency represents a CGU.
The initial projection period of four years includes the annual budget for each CGU, based on insight into Clients’
planned marketing expenditure and targets for net new business growth derived from historical experience,
and extrapolations of the budget in subsequent years based on known factors and estimated trends. The key
assumptions used by each CGU concern revenue growth and staffing levels and different assumptions are made
by different CGUs based on their individual circumstances. These assumptions are arrived at after considering
factors such as historical client spend and levels of client retention, client wins secured and historical ratios of staff
costs to revenue. Beyond this initial projection period, a generic long term growth rate of 1.0% is assumed for all units
based on information published by market analysts. The resulting pre-tax cash flow forecasts were discounted using
the Group’s estimated pre-tax Weighted Average Cost of Capital (“WACC”), which is 9.9% (2022: 8.4%).
As a result of the performance and restructuring of the operations of Story Agency Ltd, Story UK Ltd, Krow Agency
Ltd and Krow Communications Ltd, and having calculated the net present value of projected cash flows derived from
these operations, the Directors considered it prudent to impair £10,296,000 of goodwill relating to these CGUs.
No other impairments in goodwill were required.
85
Annual report for the year ended December 2023Annual report for the year ended December 2023 Financial Statements
Consolidated Financial Statements & Notes
11. Intangible Assets – continued
The long-term growth rate assumed of 1.0% is lower than past UK averages and that historically used (2022: 2.0%),
so provides natural headroom in the calculations. For example, an increase to the historical level used of 2% results
in combined headroom of £2m for the impaired CGUs and £16m higher value in use across all operations. Any adverse
movement in the assumptions used results in further impairment to goodwill due to the nature of the calculations,
which record the operations at their forecast recoverable amounts (using the assumptions set out above).
Goodwill arose from the acquisition of the following subsidiary companies and trade assets and is comprised of the
following substantial components:
31 December
2023
31 December
2022
April Six Ltd and April Six (Mobility) Ltd
Bray Leino Ltd
Bray Leino Splash Pte. Ltd
Influence Sports Ltd
Krow Agency Ltd and Krow Communications Ltd
Mezzo Labs Ltd
Mongoose Sports & Entertainment Ltd
RJW & Partners Ltd
Solaris Healthcare Network Ltd
Soul (London) Ltd
Speed Communications Agency Ltd
Story Agency Ltd
Story UK Ltd
ThinkBDW Ltd
Other smaller acquisitions
£’000
14,832
27,761
356
2,834
13,232
1,920
931
4,962
1,058
2,444
3,085
1,476
4,279
6,283
2,404
87,857
£’000
14,832
27,761
356
2,834
18,327
-
931
4,962
1,058
2,444
3,085
3,440
7,516
6,283
2,384
96,213
Other intangible assets
Cost
At 1 January 2022
Additions
Transfers to PPE
Disposals
Impairment
At 31 December 2022
Additions
Disposals
At 31 December 2023
Amortisation and impairment
At 1 January 2022
Charge for the year
Transfers to PPE
Disposals
Impairment
At 31 December 2022
Charge for the year
Disposals
At 31 December 2023
Net book value at 31 December 2023
Net book value at 31 December 2022
Software and
product
development
Trade names
Customer
relationships
£’000
£’000
£’000
3,828
1,852
(103)
(3)
(2,875)
2,699
159
(407)
2,451
1,794
337
(100)
(2)
(277)
1,752
353
(316)
1,789
662
947
1,958
150
-
-
-
2,108
100
-
2,208
553
110
-
-
-
663
202
-
865
1,343
1,445
6,154
614
-
-
-
6,768
370
-
7,138
5,223
409
-
-
-
5,632
740
-
6,372
766
1,136
Total
£’000
11,940
2,616
(103)
(3)
(2,875)
11,575
629
(407)
11,797
7,570
856
(100)
(2)
(277)
8,047
1,295
(316)
9,026
2,771
3,528
Additions of £159,000 (2022: £1,852,000) in the year include costs associated with the development of identifiable
software and other products that are expected to generate economic benefits in excess of the costs of development.
The directors consider the capitalised development costs to be an asset as they are expected to generate future
cashflows for the company. As a result, the expenditure capitalised within these assets is not treated as a loss
in calculating distributable reserves.
Included within the value of intangible assets is an amount of £783,000 (2022: £783,000) relating to trade names of
businesses acquired, which are deemed to have indefinite useful lives. These trade names have attained recognition
in the marketplace 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.
86
A reconciliation of the profit after tax on a reported basis and the headline basis is given in Note 3.
87
Annual report for the year ended December 2023Annual report for the year ended December 2023 Financial Statements
Consolidated Financial Statements & Notes
Also included is an amount of £318,000 (2022: £393,000) relating to the krow trade name, which has attained
recognition in the marketplace and plays a role in attracting and retaining Clients. This value will be amortised
over the next 4 years (2022: 5 years). In addition there are amounts of £247,000 (2022: nil) and £315,000 (2022:
£473,000) included relating to Mezzo customer relationships and Influence customer relationships respectively.
Mezzo and Influence have developed a base of customers to whom the Group would expect to continue selling in the
future. The remaining useful life of the Mezzo customer relationships is deemed to be 2 years, and of the Influence
customer relationships is deemed to be 2 years (2022: 3 years). The values will be amortised over these periods.
12. 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 Spark Marketing Services Ltd which is 75% owned and Bray Leino Splash Pte. Ltd
which is 70% owned and incorporated in Singapore. A full list of all Group companies at 31 December 2023 can be
found in Note 46 to the Company Financial Statements.
Subsidiary undertaking
Nature of business
April Six Ltd
April Six (Mobility) Ltd
Bray Leino Ltd
Marketing communications, specialising in the technology sector
Marketing communications, specialising in the automotive sector
Advertising, media buying, digital marketing, events and training
Bray Leino Splash Pte. Ltd
Digital marketing
Influence Sports Ltd
Krow Agency Ltd
Krow Communications Ltd
Mezzo Labs Ltd
Sports and entertainment marketing
Marketing communications
Marketing communications
Data services marketing
Mongoose Sports & Entertainment Ltd
Sports and entertainment marketing
RJW & Partners Ltd
Soul (London) Ltd
Pricing and market access in the healthcare sector
Marketing communications
Solaris Healthcare Network Ltd
Marketing communications, specialising in the medical sector
Spark Marketing Services
Speed Communications Agency Ltd
Story Agency Ltd Ltd
Story UK Ltd
ThinkBDW Ltd
Sales promotion
Public relations
Marketing communications
Marketing communications
Marketing communications, specialising in the property sector
13. Property, Plant and Equipment
Cost or valuation
At 1 January 2022
Acquisition of subsidiaries
Additions
Transfers between categories and from
other intangible assets
Disposals
Impairment
At 31 December 2022
Acquisition of subsidiaries
Disposal of subsidiaries
Additions
Disposals
At 31 December 2023
Depreciation
At 1 January 2022
Charge for the year
Transfers between categories and from
other intangible assets
Disposals
Impairment
At 31 December 2022
Disposal of subsidiaries
Charge for the year
Disposals
At 31 December 2023
Net book value at 31 December 2023
Net book value at 31 December 2022
Fixtures &
fittings and
office
equipment
Property
Computer
equipment
Motor vehicles
£’000
£’000
£’000
£’000
2,299
2,381
14
111
(4)
(169)
-
2,251
9
(7)
1,301
(34)
3,520
1,791
144
-
(148)
-
1,787
(7)
223
(31)
1,972
1,548
464
7
256
275
(150)
(62)
2,707
1
(81)
461
(206)
2,882
1,813
284
268
(103)
(41)
2,221
(23)
282
(197)
2,283
599
486
3,974
34
725
(168)
(403)
-
4,162
9
(21)
581
(243)
4,488
3,004
618
(168)
(398)
-
3,056
(18)
650
(252)
3,436
1,052
1,106
119
-
-
-
(17)
-
102
-
(25)
-
(7)
70
63
22
-
(17)
-
68
(18)
16
(6)
60
10
34
Total
£’000
8,773
55
1,092
103
(739)
(62)
9,222
19
(134)
2,343
(490)
10,960
6,671
1,068
100
(666)
(41)
7,132
(66)
1,171
(486)
7,751
3,209
2,090
88
89
Annual report for the year ended December 2023Annual report for the year ended December 2023 Financial Statements
Consolidated Financial Statements & Notes
14. Right of Use Assets
15. Investments, Associates and Joint Ventures
The Group leases several assets including property, office equipment, computer equipment and motor vehicles.
Cost
At 1 January 2022
Acquisition of subsidiaries
Additions
Disposals
At 31 December 2022
Additions
Disposals
At 31 December 2023
Depreciation
At 1 January 2022
Charge for the year
Disposals
At 31 December 2022
Charge for the year
Disposals
At 31 December 2023
Net book value at 31 December 2023
Net book value at 31 December 2022
Office equipment, computer
equipment and motor
vehicles
£’000
2,169
-
478
(248)
2,399
252
(243)
2,408
1,835
280
(248)
1,867
353
(243)
1,977
431
532
Property
£’000
15,551
123
1,704
(2,210)
15,168
9,256
(1,540)
22,884
6,736
1,638
(2,210)
6,164
2,259
(1,540)
6,883
16,001
9,004
Total
£’000
17,720
123
2,182
(2,458)
17,567
9,508
(1,783)
25,292
8,571
1,918
(2,458)
8,031
2,612
(1,783)
8,860
16,432
9,536
The increase in Right of Use Assets in 2023 relates to the entering into of new leases, most notably the new long term
London office lease.
Trade receivables
Accrued income
Prepayments
Other receivables
At 1 January
Profit during the year
Disposal of Fenturi
At 31 December
16. Stock
Stock
Year to 31
December
2023
£’000
437
150
-
587
Year to 31
December
2022
£’000
517
160
(240)
437
31 December
2023
£’000
2,981
31 December
2022
£’000
2,185
Stock consists predominantly of signage, raw materials and furniture sold in marketing suites at clients’
development sites by our property marketing specialist agency ThinkBDW, and vouchers for cinema tickets
used by our sales promotion agency, Spark.
17. Trade and Other Receivables
31 December
2023
31 December
2022
£’000
26,858
13,476
3,005
1,337
44,676
£’000
25,052
13,273
2,051
879
41,255
90
91
Annual report for the year ended December 2023Annual report for the year ended December 2023 Financial Statements
Consolidated Financial Statements & Notes
17. Trade and Other Receivables – continued
18. Cash and Short Term Deposits
Cash and short term deposits comprise cash held by the Group and short term bank deposits.
19. Trade and Other Payables
Trade creditors
Deferred income
Other creditors and accruals
Other tax and social security payable
Lease liabilities (Note 21)
31 December
2023
31 December
2022
£’000
14,026
8,533
11,163
9,683
1,983
45,388
£’000
14,454
8,903
10,771
3,957
1,582
39,667
Other tax and social security increased as a result of delayed VAT and PAYE payments, with a payment plan having
been agreed with HMRC whereby all delayed payments will be repaid by the end of May 2024.
The Directors consider that the carrying amount of trade and other payables approximates their fair value.
An allowance has been made for estimated irrecoverable amounts from the provision of services of £25,000
(2022: £228,000). In 2022, one specific debtor was provided for which accounted for the majority of the allowance.
This debtor was partially recovered in 2023 and the remaining balance written off, resulting in the decrease in provision
for irrecoverable amounts in 2023. The estimated irrecoverable amount is arrived at by considering the historical loss rate
and adjusting for current expectations, Client base and economic conditions. Both historical losses and expected future
losses being very low, the Directors consider it appropriate to apply a single average rate for expected credit losses to the
overall population of trade receivables and accrued income. Accrued income relates to unbilled work in progress and has
substantially the same risk characteristics as the trade receivables for the same types of contracts. The Directors consider
that the carrying amount of trade and other receivables approximates their fair value.
Gross trade receivables
Gross accrued income
Total trade receivables and accrued income
Expected loss rate
Provision for doubtful debts
31 December
2023
31 December
2022
£’000
26,883
13,476
40,359
0.1%
25
£’000
25,280
13,273
38,553
0.6%
228
Trade receivables include £8.8m (2022: £6.5m) that is past due but not impaired, of which £1.0m (2022: £1.0m)
is greater than 3 months past due.
Credit risk
The Group’s principal financial assets are trade receivables, accrued income and bank balances, 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 and accrued income. The credit risk on cash
balances is limited because the counterparties are banks with high credit-ratings assigned by international
credit-rating agencies.
The majority of the Group’s trade receivables and accrued income is due from large national or multinational
companies where the risk of default is considered low. In order to mitigate this risk further, 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.
There can be no assurance that any of the Group’s Clients will continue to utilise the Group’s services to the same
extent, or at all, in the future. The loss of, or a significant reduction in advertising and marketing spending by,
the Group’s largest Clients, if not replaced by new Client accounts or an increase in business from existing Clients,
would adversely affect the Group’s prospects, business, financial condition and results of operations. The impact
would however be limited as only two Clients represented more than 3% of total operating income in 2023
(2022: three Clients).
92
93
Annual report for the year ended December 2023Annual report for the year ended December 2023 Financial Statements
Consolidated Financial Statements & Notes
20. Bank Overdrafts, Loans and Net Bank Debt
21. Lease Liabilities
31 December
2023
31 December
2022
Obligations under leases are due as follows:
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 two to three years
In three to four 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
£’000
20,049
(55)
19,994
(4,632)
15,362
21
20,023
5
-
20,049
(55)
19,994
(21)
19,973
£’000
17,575
(60)
17,515
(6,153)
11,362
27
17,521
22
5
17,575
(60)
17,515
(27)
17,488
Bank debt arrangement fees, where they can be amortised over the life of the loan facility, are included in finance costs.
The unamortised portion is reported as a reduction in bank loans outstanding.
Included in the above is £49,000 of bank loans owing by Populate Social Ltd, one of the companies acquired during 2022.
These borrowings are repayable over a three year period.
At 31 December 2023, the Group’s committed bank facilities comprised a revolving credit facility of £20.0m, with an option
to increase the facility by £5.0m. On 8 March 2023 the Group exercised the option to extend by one year, the facility now
expiring on 5 April 2025. Interest on the facility is based on SONIA (sterling overnight index average) plus a margin of between
1.50% and 2.25% depending on the Group’s debt leverage ratio, payable in cash on loan rollover dates. On 27 March 2024,
the Group agreed a new revolving credit facility of £20m, expiring on 5 April 2026. Interest on the new facility is based on
SONIA (sterling overnight index average) plus a margin of between 2.25% and 4.90% depending on the Group’s debt leverage
ratio, payable in cash on loan rollover dates.
In addition to its committed facilities, the Group has available an overdraft facility of up to £9.0m with interest payable
by reference to National Westminster Bank plc Base Rate plus 2.25%.
At 31 December 2023, there was a cross guarantee structure in place with the Group’s bankers by means of a fixed and
floating charge over all of the assets of the Group companies in favour of National Westminster Bank plc.
All borrowings are in sterling.
In one year or less (shown in trade and other payables)
In more than one year
31 December
2023
31 December
2022
£’000
1,983
15,768
17,751
£’000
1,582
8,481
10,063
The fair values of the Group’s lease obligations approximate their carrying amount.
The Group’s obligations under leases are secured by the lessor’s charge over the leased assets.
22. Acquisitions and Disposals
22.1 Acquisition Obligations
The terms of an acquisition provide that the value of the purchase consideration, which may be payable in cash
or shares at a future date, depends on uncertain future events such as the future performance of the acquired
company. The Directors estimate that the liability for contingent consideration payments is as follows:
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
31 December 2023
31 December 2022
Cash
Shares
Total
Cash
Shares
£’000
£’000
£’000
£’000
£’000
1,745
2,830
890
-
5,465
-
-
-
-
-
1,745
2,830
890
-
5,465
1,371
53
1,820
899
4,143
-
-
-
-
-
Total
£’000
1,371
53
1,820
899
4,143
94
95
Annual report for the year ended December 2023Annual report for the year ended December 2023 Financial Statements
Consolidated Financial Statements & Notes
22. Acquisitions – continued
A reconciliation of acquisition obligations during the period is as follows:
At 31 December 2022
Obligations settled in the period
Adjustments to estimates of obligations
New acquisitions
At 31 December 2023
22.2 Acquisition of Mezzo Labs Ltd
Cash
£’000
4,143
(393)
434
1,281
5,465
Shares
£’000
-
-
-
-
-
Total
£’000
4,143
(393)
434
1,281
5,465
On 13 February 2023, the Group acquired the entire issued share capital of Mezzo Labs Ltd (“Mezzo”). Mezzo is
a leading provider of innovative data services with over 16 years' experience in data strategy and architecture,
web analytics, CX analytics, marketing automation, insights generation, data science, Conversion Rate Optimisation
(CRO) and personalisation. Headquartered in London, the company also has operations in Singapore. The fair value
of the consideration given for the acquisition was £1,678,000, comprising initial cash consideration and deferred
contingent consideration. The deferred contingent consideration is to be satisfied by the issue of new ordinary
shares up to a maximum of 40% at MISSION's discretion, with the balance payable in cash. Costs relating to the
acquisition amounted to £81,000 and were expensed.
Maximum contingent consideration of £4,000,000 is dependent on Mezzo achieving a profit target over the period
1 January 2023 to 31 December 2024. The Group has provided for contingent consideration of £1,466,000 to date.
The book value of the net identifiable liabilities acquired was £594,000 resulting in goodwill and previously
unrecognised other intangible assets of £2,272,000. 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 Mezzo.
Net assets acquired:
Intangible assets
Fixed assets
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Deferred tax
Other intangibles recognised at acquisition
Deferred tax adjustment
Goodwill
Total consideration
Satisfied by:
Cash
Deferred contingent consideration
Book
value
£’000
49
19
368
71
(1,088)
(13)
(594)
-
-
(594)
Fair value
adjustments
£’000
-
-
-
-
-
-
-
470
(118)
352
Fair
value
£’000
49
19
368
71
(1,088)
(13)
(594)
470
(118)
(242)
1,920
1,678
397
1,281
1,678
Mezzo contributed turnover of £2,536,000, operating income of £2,369,000 and headline operating profit of £583,000
to the results of the Group in 2023.
96
97
Annual report for the year ended December 2023Annual report for the year ended December 2023 Financial Statements
Consolidated Financial Statements & Notes
22.3 Sale of Pathfindr Ltd
22.4 Pro-forma results including acquisitions
During the year, the Group considered different strategies to reduce leverage, including divestments of non-core
operations. As a result of this review, on 29 December 2023, the Group disposed of its 80% share in Pathfindr Ltd.
The consideration, assets disposed of and costs of disposal were as follows:
The Directors estimate that, had the Group consolidated the results of acquisitions made during the year, from the
beginning of the year, the turnover, operating income and headline operating profit of the Group would not have been
materially different to the numbers presented in the consolidated income statement.
Upfront cash consideration received
Working capital surplus payment to be received
Total consideration
Net assets disposed of:
Fixed assets
Trade and other receivables
Stock
Corporation and deferred tax
Trade and other payables
Disposal costs
Total cost of disposal
Profit on sale of Pathfindr
£’000
1,050
250
1,300
68
204
372
366
(206)
804
188
992
308
23. Deferred Tax
The deferred taxation liability of £524,000 (2022: £622,000) recognised in the financial statements is set out below:
Accelerated
capital
allowances
Tax losses
Other timing
differences
Trade names
and customer
relationships
£’000
£’000
£’000
£’000
At 1 January 2022
Acquisition of subsidiaries
Charge / (credit) to income statement
At 31 December 2022
Acquisition of subsidiaries
Disposal of subsidiaries
Charge / (credit) to income statement
At 31 December 2023
157
-
89
246
13
(10)
185
434
39
-
(39)
-
-
-
(195)
(195)
(6)
-
(5)
(11)
-
-
(1)
(12)
293
191
(97)
387
118
-
(208)
297
Total
£’000
483
191
(52)
622
131
(10)
(219)
524
Deferred tax assets of £548,000 (2022: £441,000) have not been recognised due to insufficient certainty that there will be
sufficient profits available in the future to utilise these losses.
24. Share Capital
Allotted and called up:
91,015,897 Ordinary shares of 10p each
(2022: 91,015,897 Ordinary shares of 10p each)
31 December
2023
£’000
31 December
2022
£’000
9,102
9,102
98
99
Annual report for the year ended December 2023Annual report for the year ended December 2023 Financial Statements
Consolidated Financial Statements & Notes
Share-based incentives
The Group has the following share-based incentives in issue:
27. Foreign Currency Translation Reserve
TMMG Long Term Incentive Plan
At start
of year
393,221
Growth Share Scheme
3,200,000
Granted/
acquired
Waived/
lapsed
Exercised
At end
of year
-
-
-
(133,029)
260,192
(578,766)
-
2,621,234
The TMMG Long Term Incentive Plan (“LTIP”) was created to incentivise senior employees across the Group. Nil-cost
options are awarded at the discretion of, and vest based on criteria established by, the Remuneration Committee.
During the year, 133,029 options were exercised at an average share price of 29.3p and at the end of the year
260,192 of the outstanding options are exercisable.
Shares held in an Employee Benefit Trust (see Note 25) will be used to satisfy share options exercised under the Long
Term Incentive Plan.
A Growth Share Scheme was implemented in June 2021. Participants in the scheme subscribed for Ordinary B shares
in The Mission Marketing Holdings Limited (the “growth shares”) at a nominal value. These growth shares can be
exchanged for an equivalent number of Ordinary Shares in MISSION if MISSION’s share price equals or exceeds
150p for at least 15 consecutive days during the period ending on the date the Company’s financial results for the
year ended 31st December 2023 are announced; if not, they will have no value.
25. Own Shares
At 31 December 2021
Own shares purchased
Awarded or sold during the year
At 31 December 2022
Awarded or sold during the year
At 31 December 2023
No. of shares
£'000
718,138
827,937
(50,537)
1,495,538
(98,317)
1,397,221
518
497
(21)
994
(52)
942
Shares are held in an Employee Benefit Trust to meet certain requirements of the Long Term Incentive Plan.
26. Share-Based Incentive Reserve
The share-based incentive reserve represents charges to the profit or loss required by IFRS 2 to reflect the cost of the
nil-cost share options and growth shares issued to the Directors and employees.
Foreign currency translation reserve
31 December
2023
£’000
(888)
31 December
2022
£’000
(610)
The foreign currency translation reserve contains the accumulated gains (losses) on currency translation of foreign
operations arising on consolidation.
28. Share-Based Payments
Nil-cost share options
Details of the relevant option schemes are given in Note 24. 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. No options were issued during 2023 or 2022.
The weighted average share price over the three years ending 31 December 2023 was 52.4p and the weighted average
remaining contractual life of the share options outstanding at 31 December 2023 was 3.8 years.
The Group recognised an expense of £17,000 in 2023 (2022: £33,000).
Growth Shares
Details of the Growth Share scheme are given in Note 24. The fair value of growth shares was measured by use of
a Monte Carlo simulation model, which uses probability analysis to calculate the value of options. The fair value of the
growth shares issued in 2021 was 9.0p per share at measurement date. No growth shares were issued in 2022 or 2023.
The key inputs for the valuation of the growth shares issued in 2021 are:
Share price at grant
Risk free rate
Dividend yield
Expected volatility
75.0p
0.2%
3.0%
33.0%
Volatility is based on the historical volatility of the share price over a 3 year trading period. The weighted average share
price from inception of the scheme until 31 December 2023 was 47.1p and the weighted average remaining contractual
life of the growth shares outstanding at 31 December 2023 was 0.3 years.
The Group recognised an expense of £80,000 in 2023 (2022: £109,000).
100
101
Annual report for the year ended December 2023Annual report for the year ended December 2023 Financial Statements
Consolidated Financial Statements & Notes
29. 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 20. 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 x1.5 and x2.0 for these ratios respectively (calculated on a pre-IFRS 16 basis).
Financial risk management
The Group’s policy is to eliminate financial 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.
The Group's principal financial instruments comprise cash and various forms of borrowings.
Substantially all the Group's activities continue to take place in the United Kingdom. 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 the Group’s revolving credit facility is payable by reference to SONIA (sterling overnight index average),
subject to downward or upward ratchets depending on certain ratios of debt to EBITDA on a quarterly basis. The Directors
have considered again the relative merits of the use of hedging instruments to limit the exposure to interest rate risk.
Since the sensitivity of profits to a 1% change in interest rates is less than £0.2m, they have decided not to enter into any
hedging arrangements.
Liquidity risk
The Group's financial instruments include a mixture of short and long-term borrowings. The Group seeks to ensure
sufficient liquidity is available to meet working capital needs and the repayment terms of the Group's financial
instruments as they mature.
Financial liabilities
Financial liabilities
At 31 December 2023
Interest analysis:
Subject to floating rates
Subject to fixed rates
Maturity analysis:
One year or less, or on demand
In one to two years
In two to three years
In three to four years
In four to five years
In more than five years
At 31 December 2022
Interest analysis:
Subject to floating rates
Subject to fixed rates
Maturity analysis:
One year or less, or on demand
In one to two years
In two to three years
In three to four years
In four to five years
In more than five years
Bank loan
and overdraft
Lease
liabilities
Acquisition
obligations
£’000
£’000
£’000
Total
£’000
20,049
23,216
43,265
3,749
24,883
2,894
1,709
1,533
8,497
-
5,465
5,465
1,745
2,830
890
-
-
-
5,465
43,265
-
4,143
4,143
1,371
53
1,820
899
-
-
4,143
17,575
14,206
31,781
2,980
18,920
3,012
1,902
717
4,250
31,781
20,049
-
20,049
21
20,023
5
-
-
-
20,049
17,575
-
17,575
27
17,521
22
5
-
-
17,575
-
17,751
17,751
1,983
2,030
1,999
1,709
1,533
8,497
17,751
-
10,063
10,063
1,582
1,346
1,170
998
717
4,250
10,063
Financial assets
Cash at bank maturing in less than one year or on demand
31 December
2023
£’000
4,632
31 December
2022
£’000
6,153
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.
102
103
Annual report for the year ended December 2023Annual report for the year ended December 2023 Financial Statements
Consolidated Financial Statements & Notes
Financial Statements
Independent Auditor’s Report: Company
30. Leave Pay Accrual
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. There is no
material liability relating to untaken leave at year end.
Independent Auditor’s Report
to the Members of The MISSION Group plc
31. Post Balance Sheet Events
Debt Refinancing
On 20 December 2023, MISSION confirmed that it was in constructive dialogue with its long-standing lender,
NatWest, with respect to the covenants and maturity of its banking facilities and that NatWest had agreed to waive
the December 2023 covenant.
MISSION has now secured a new debt facility with NatWest, to replace its existing debt facility and extending the facility
for a year to 5 April 2026. The Board is pleased with the ongoing support from NatWest.
The previous NatWest debt facility was a £20m Revolving Credit Facility and a £9m overdraft terminating in 2025. The new
NatWest debt facility is a £20m Revolving Credit Facility, and a £9m overdraft which will reduce to £3m in the event there
is a deleveraging event achieved by 30 June 2024 (the “New Debt Facility”).
A deleveraging event is an equity raise (or other such deleveraging event to be agreed reasonably by NatWest) resulting
in cash proceeds of no less than £4m to be undertaken by no later than 30 June 2024 (the “Deleveraging Event”). If the
Deleveraging Event is not achieved by this deadline, this would not constitute an event of default under the New Debt
Facility and the New Debt Facility would remain in place.
32. 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 7. The total
compensation payable to key management personnel is detailed below.
Short-term employee benefits
Post-employment benefits
Share-based payments
Year to
31 December 2023
Year to
31 December 2022
£’000
1,345
79
-
1,424
£’000
1,593
69
30
1,692
Bray Leino Ltd rents property from entities under the control of David Morgan, Chair of The MISSION Group plc,
and members of his close family. During the year the Company paid annual rental and property fees totalling £75,000
(2022: £75,000). There were no amounts owed at the balance sheet date to these entities.
Krow Agency Ltd is contracted to pay annual rent to four individuals, including Dylan Bogg (Executive Director). During
the year, total rental of £93,000 (2022: £74,000) was paid and no amount was outstanding at the balance sheet date.
During 2021 seven directors received loans totalling £46,045 in respect of the personal tax payable on a growth share
award, as follows: Dylan Bogg £3,061; James Clifton £10,000; Julian Hanson-Smith £4,269; Giles Lee £10,000; Sue Mullen
£5,970; Andy Nash £2,746; Fiona Shepherd £10,000. All loans are repayable from the proceeds of the growth share
scheme or on termination of employment. No interest is being charged and all loans remain outstanding at the year end.
Mark Lund, a Non-Executive Director, is also a director of Smart Energy GB, a company which is a Client of Livity Ltd.
There were no sales in the year from Livity Ltd to Smart Energy GB (2022: £31,853 at arms length subsequent to
Mark becoming a director on 1 October 2022). No amounts were owing from Smart Energy GB at the end of the year
(2022: £38,224 included within trade debtors).
James Clifton, the Group Chief Executive, owns a 5% (2022: 5%) holding in Pathfindr Ltd. The Group disposed of its share
in Pathfindr on 29 December 2023 (see note 22.3).
33. Availability of Annual Report
Copies of the Annual Report for the year ended 31 December 2023 will be circulated to shareholders at least 21 days
ahead of the Annual General Meeting (“AGM”) on 17 June 2024 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.
Report on the parent company financial statements
Key audit matters
Opinion
We have audited the financial statements of The MISSION
Group plc (the 'Company') for the year ended 31 December
2023, which comprise the Company Balance Sheet,
Statement of Changes in Equity and the related notes,
including a summary of significant accounting policies.
The financial reporting framework that has been applied
in their preparation is applicable law and United Kingdom
Accounting Standards, including Financial Reporting
Standard 102 The Financial Reporting Standard applicable
in the UK and Republic of Ireland (United Kingdom
Generally Accepted Accounting Practice).
In our opinion the financial statements:
• give a true and fair view of the state of the company's
affairs as at 31 December 2023 and of its profit for the
year ended;
• 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.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the
audit of the financial statements section of our report.
We are independent of the company in accordance with
the ethical requirements that are relevant to our audit
of the financial statements in the UK, including the FRC’s
Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance
with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
An overview of the scope of our audit
We planned and performed our audit by obtaining
an understanding of the Company and its environment,
including the accounting processes and controls, and
the industry in which it operates.
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the
financial statements of the current period and include the
most significant assessed risks of material misstatement
(whether or not due to fraud) we identified, including those
which had the greatest effect on: the overall audit strategy;
the allocation of resources in the audit; and directing the
efforts of the engagement team. These matters were
addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
The key audit matter identified for the company related to
the carrying value of its investments, given the company
holds material investments in subsidiary undertakings.
The directors have supported the carrying value of the
investments by considering the cash flows the subsidiaries
are expected to generate, being the dividend income
received from trading subsidiaries. We reviewed and
considered the level of dividend income received from
subsidiary companies along with the ongoing ability for
subsidiary companies to generate distributable profits.
We have carried out specific audit work in respect of
goodwill impairment in respect of the Group’s cash
generating units, which has tested the assumptions within
management’s forecast cash flow model. Details of this
audit work is set out in our Group audit report.
Our application of materiality
Misstatements, including omissions, are considered
to be material if individually or in aggregate, they could
reasonably be expected to influence the economic
decisions of users taken on the basis of the financial
statements. We use quantitative thresholds of materiality,
together with qualitative assessments in planning the
scope of our audit, determining the nature, timing and
extent of our audit procedures and in evaluating the
results of our work.
Based on our professional judgement, we determined
materiality for the company financial statements should
be based on gross assets as it is a holding company.
This was restricted to 50% of group materiality to give
overall company materiality of £148,000 (2022:
£216,000), performance materiality of £104,000 (2022:
£162,000). Individual errors above £7,000 (2022: £6,000)
were reported to the audit committee.
104
105
Annual report for the year ended December 2023Annual report for the year ended December 2023 Financial Statements
Independent Auditor’s Report: Company
Conclusions relating to going concern
Matters on which we are required to report by exception
In auditing the financial statements, we have concluded
that the director's use of the going concern basis
of accounting in the preparation of the financial
statements is appropriate.
Based on the work we have performed (as set out in the
group audit report), we have not identified any material
uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt
on the company's ability to continue as a going concern
for a period of at least twelve months from when the
original financial statements were authorised for issue.
Our responsibilities and the responsibilities of the
directors with respect to going concern are
described in the relevant sections of this report.
Other information
The directors are responsible for the other information.
The other information comprises the information included
in the annual report, other than the financial statements
and our auditor’s report thereon. Our opinion on the
financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements,
our responsibility is to read the other information and,
in doing so, consider whether the other information is
materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise appears
to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements,
we are required to determine whether there is a material
misstatement in the financial statements or a material
misstatement of the other information. If, based on the
work we have performed, we conclude that there
is a material misstatement of this other information,
we are required to report that fact.
We have nothing to report in this regard.
Opinion on other matter prescribed by the
Companies Act 2006
In our opinion, based on the work undertaken in the
course of the audit:
• the information given in the Strategic Report and
Directors' Report for the financial year for which the
financial statements are prepared is consistent with
the financial statements; and
• the Strategic Report and Directors' Report have
been prepared in accordance with applicable
legal requirements.
In the light of our knowledge and understanding of the
company and its environment obtained in the
course of the audit, we have not identified material
misstatements in the Strategic Report and the
Directors' Report.
We have nothing to report in respect of the following
matters where the Companies Act 2006 requires
us to report to you if, in our opinion:
• adequate accounting records have not been kept,
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.
Responsibilities of directors
As explained more fully in the Statement of Directors'
Responsibilities set out on pages 48 and 49, the directors
are responsible for the preparation of the financial
statements and for being satisfied that they give
a true and fair view, and for such internal control
as the directors determine is necessary to enable the
preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the company's ability to
continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going
concern basis of accounting unless the directors either
intend to liquidate the company or to cease operations,
or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit
of the financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and
to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but
is not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the
aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the
basis of these financial statements.
A further description of our responsibilities is available
on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.
Use of our report
This report is made solely to the company’s members,
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
members 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 members as a body,
for our audit work, for this report, or for the opinions we
have formed.
Duncan Leslie FCA
(Senior Statutory Auditor)
PKF Francis Clark, Statutory Auditor
Centenary House
Peninsula Park
Rydon Lane
Exeter
EX2 7XE
28 March 2024
Irregularities, including fraud, are instances of
non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect
of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities,
including fraud is detailed below:
We obtained an understanding of the legal and
regulatory framework applicable to the company
and the industry in which it operates. We identified
the principal risks of non-compliance with laws and
regulations as relating to breaches around GDPR.
We also considered those laws and regulations that
have a direct impact on the preparation of the financial
statements such as financial reporting legislation
(including The Companies Act 2006), distributable profits
legislation and taxation legislation. We considered the
extent to which any non-compliance with these laws
and regulations may have on the company’s ability to
continue trading and the risk of a material misstatement
in the financial statements.
We also evaluated management’s incentives and
opportunities for fraudulent manipulation of the financial
statements and determined that the principal risks
related to overstatement of the carrying value of the
investment, and a resulting misstatement of the result
for the year.
Based on this understanding we designed our audit
procedures to identify irregularities. Our procedures
involved the following:
• We made enquiries of senior management as to their
knowledge of any non-compliance or potential
non-compliance with laws and regulations that could
affect the financial statements. As part of these
enquiries we also discussed with management whether
there have been any known instances of material
fraud, of which there were none.
• We identified the individuals with responsibility
for ensuring compliance with laws and regulations
and discussed with them the procedures and policies
in place.
• We reviewed minutes of meetings of Senior
Management and those charged with governance.
• We challenged the assumptions and judgements made
by management in its significant accounting estimates.
Further details of the audit work on key assumptions
is included within our Group audit report.
• We audited the risk of management override of
controls, including through testing journal entries and
other adjustments for appropriateness, and evaluating
the business rationale of significant transactions
outside the normal course of business.
106
107
Annual report for the year ended December 2023Annual report for the year ended December 2023 Financial Statements
Company Financial Statements & Notes
Company Balance Sheet
As at 31 December 2023
NON-CURRENT ASSETS
Intangible assets
Investments
Property, plant and equipment
CURRENT ASSETS
Debtors
CREDITORS: Amounts falling due within one year
NET CURRENT LIABILITIES
Note
35
36
37
38
39
TOTAL ASSETS LESS CURRENT LIABILITIES
CREDITORS: Amounts falling due after more than one year
40
NET ASSETS
CAPITAL AND RESERVES
Called up share capital
Share premium account
Own shares
Share-based incentive reserve
Profit and loss account
SHAREHOLDER’S FUNDS
42
42
42
As at
31 December
2023
£’000
As at
31 December
2022
£’000
1,087
114,596
2,490
118,173
13,868
13,868
(20,931)
(7,063)
111,110
(20,145)
90,965
9,102
45,928
(942)
914
35,963
90,965
1,296
114,596
965
116,857
10,653
10,653
(11,655)
(1,002)
115,855
(17,640)
98,215
9,102
45,928
(994)
886
43,293
98,215
The company made a loss of £5,765,000 for the year (2022: profit of £3,717,000).
The financial statements were approved and authorised for issue on 28 March 2024 by the Board of Directors. They were
signed on its behalf by:
Giles Lee , Group Chief Financial Officer
Company registration number: 05733632
Company Statement of Changes in Equity
For the year ended 31 December 2023
At 1 January 2022
Profit for the year
Share option charge
Growth share charge
Own shares purchased
Shares awarded and sold from own shares
Dividend paid
Share
capital
Share
premium
£’000
£’000
9,102
45,928
-
-
-
-
-
-
-
-
-
-
-
-
Share-
based
incentive
reserve
Retained
earnings
Total
equity
£’000
£’000
£’000
828
41,847
97,187
-
33
25
-
-
-
3,717
3,717
-
-
-
(91)
33
25
(497)
(70)
(2,180)
(2,180)
Own
shares
£’000
(518)
-
-
-
(497)
21
-
At 31 December 2022
9,102
45,928
(994)
886
43,293
98,215
Loss for the year
Share option charge
Growth share charge
Shares awarded and sold from own shares
Dividend paid
-
-
-
-
-
-
-
-
-
-
-
-
-
52
-
-
17
11
-
-
(5,765)
(5,765)
-
-
(70)
17
11
(18)
(1,495)
(1,495)
At 31 December 2023
9,102
45,928
(942)
914
35,963
90,965
108
109
Annual report for the year ended December 2023Annual report for the year ended December 2023 Financial Statements
Notes to the Company Financial Statements
34. Principal Accounting Policies
Financial assets and liabilities
All financial assets and liabilities are initially measured
at transaction price (including transaction costs), except
for those financial assets classified as fair value through
profit and loss, which are initially measured at fair value.
Financial assets and liabilities are only offset in the
statement of financial position when, and only when,
there exists a legally enforceable right to set off the
recognised amounts and the Company intends either
to settle on a net basis, or to realise the asset and settle
the liability simultaneously.
Debt instruments which meet the conditions to
be classified as basic instruments are subsequently
measured at amortised cost using the effective
interest method.
Basic debt instruments that are classified as payable or
receivable within one year are measured at the
undiscounted amount of the cash or other consideration
expected to be paid or received, net of impairment.
Financial liabilities are released to the profit and loss
account when the liability is extinguished.
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.
Revisions to estimated consideration payable year
on year are reflected in the value of the corresponding
investment. 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 and associate undertakings are stated
at cost less provision for any impairment in value.
The principal accounting policies are summarised below.
They have all been applied consistently throughout the
year and to the preceding year.
General information and basis of accounting
The MISSION Group plc is a company incorporated
in England and Wales under the Companies Act.
The address of the registered office is given on page 120.
The nature of the Group’s operations and its principal
activities are set out in the Strategic Report on
pages 4 to 9.
The financial statements have been prepared under the
historical cost convention, modified to include certain
items at fair value, and in accordance with Financial
Reporting Standard 102 (FRS 102) issued by the
Financial Reporting Council.
Reduced disclosure exemptions
The MISSION Group plc meets the definition of a qualifying
entity under FRS 102 and has therefore taken advantage
of the disclosure exemptions available to it in respect of its
financial statements. Exemptions have been taken in relation
to the presentation of a statement of comprehensive income,
cash flow statement, financial instruments, share-based
payment, share capital and remuneration of key
management personnel. The company made a loss
of £5.8m for the year (2022: profit of £3.7m).
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 the balance sheet date.
Financial instruments
Financial assets and financial liabilities are recognised
when the Company becomes party to the contractual
provisions of the instrument.
Financial liabilities and equity instruments are classified
according to the substance of the contractual
arrangements entered into. An equity instrument is any
contract that evidences a residual interest in the assets
of the company after deducting all of its liabilities.
Accounting estimates and judgements
The Company 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 investments
The potential impairment of investments is based on
estimates of future cash flows derived from the financial
projections of each cash-generating unit over an initial four
year period and assumptions about growth thereafter.
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.
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.
110
111
Annual report for the year ended December 2023Annual report for the year ended December 2023 Financial Statements
Notes to the Company Financial Statements
35. Intangible Assets
36. Investments
Other intangible assets
Cost
At 1 January 2022
Additions
Adjustments to purchase consideration
At 31 December 2022
Additions
Adjustments to purchase consideration
Disposals
At 31 December 2023
Amortisation and impairment
At 1 January 2022
Charge for the year
At 31 December 2022
Charge for the year
Disposals
At 31 December 2023
Net book value at 31 December 2023
Net book value at 31 December 2022
Software
development
and licences
Customer
relationships
Goodwill
£’000
£’000
£’000
Total
£’000
1,691
86
(34)
1,743
39
22
(138)
1,666
261
186
447
192
(60)
579
Cost
At 1 January 2022
Additions
Adjustment to purchase consideration
At 31 December 2022
Additions
Adjustment to purchase consideration
At 31 December 2023
Impairment
At 1 January 2022
Impairment
At 31 December 2022
Impairment
At 31 December 2023
Net book value at 31 December 2023
Net book value at 31 December 2022
Shares in subsidiary undertakings
£’000
123,039
-
-
123,039
-
-
123,039
(8,443)
-
(8,443)
-
(8,443)
114,596
114,596
897
-
(34)
863
-
22
-
885
-
-
-
-
-
-
885
863
1,087
1,296
A list of the principal trading companies in the Group at 31 December 2023 can be found in Note 12 to the Consolidated
Financial Statements and a complete list can be found in Note 46.
733
86
-
819
39
-
(138)
720
200
186
386
192
(60)
518
202
433
61
-
-
61
-
-
-
61
61
-
61
-
-
61
-
-
Additions of £39,000 (2022: £86,000) in the year include costs associated with the development of identifiable
software products that are expected to generate economic benefits in excess of the costs of development.
112
113
Annual report for the year ended December 2023Annual report for the year ended December 2023 Financial Statements
Notes to the Company Financial Statements
37. Property, Plant and Equipment
38. Debtors
Fixtures &
fittings and
office
equipment
Property
Computer
equipment
Motor vehicles
£’000
£’000
£’000
£’000
Cost or valuation
At 1 January 2022
Additions
Disposals
At 31 December 2022
Additions
Disposals
At 31 December 2023
Depreciation
At 1 January 2022
Charge for the year
Disposals
At 31 December 2022
Charge for the year
Disposals
At 31 December 2023
Net book value at 31 December 2023
Net book value at 31 December 2022
148
43
-
191
1,237
(15)
1,413
46
17
-
63
87
(15)
135
1,278
128
49
-
-
49
393
(18)
424
33
11
-
44
51
(18)
77
347
5
1,384
549
(53)
1,880
561
-
2,441
653
448
(53)
1,048
528
-
1,576
865
832
9
-
-
9
-
-
9
7
2
-
9
-
-
9
-
-
Total
£’000
1,590
592
(53)
2,129
2,191
(33)
4,287
739
478
(53)
1,164
666
(33)
1,797
2,490
965
Trade debtors
Amounts due from subsidiary undertakings
Corporation tax
Prepayments
Accrued income
Other debtors
39. Creditors: Amounts Falling Due Within One Year
Trade creditors
Bank overdraft
Amounts due to subsidiary undertakings
Accruals
Acquisition obligations
Other creditors
40. Creditors: Amounts Falling Due After More Than One Year
Bank loan (see Note 41)
Deferred tax liability
31 December
2023
31 December
2022
£’000
1,448
8,245
1,692
1,712
220
551
13,868
£’000
652
6,510
1,499
1,453
485
54
10,653
31 December
2023
31 December
2022
£’000
1,034
1,078
15,785
1,829
-
1,205
20,931
£’000
831
326
9,003
834
371
290
11,655
31 December
2023
31 December
2022
£’000
19,945
200
20,145
£’000
17,440
200
17,640
114
115
Annual report for the year ended December 2023Annual report for the year ended December 2023 Financial Statements
Notes to the Company Financial Statements
41. Borrowings
44. Operating Lease Commitments
The total minimum lease payments under non-cancellable operating leases are as follows:
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
2023
31 December
2022
£’000
20,000
(55)
19,945
-
20,000
20,000
(55)
19,945
-
19,945
£’000
17,500
(60)
17,440
-
17,500
17,500
(60)
17,440
-
17,440
Details of the Company’s borrowing facilities and interest rates are set out in Note 20 and not therefore repeated here.
All borrowings are in sterling.
As at 31 December 2023, net assets of the Group were £76,453,000 (2022: £90,175,000) and net borrowings under this
Group arrangement amounted to £15,362,000 (2022: £11,362,000).
42. Share Capital and Own Shares
The movements on these items are disclosed within the Consolidated Financial Statements.
A description of Own Shares is disclosed in Note 25. During the year, the Company did not issue any new
Ordinary shares of 10p each (2022: no shares were issued) and at 31 December 2023, the number of shares
in issue was 91,015,897 (2022: 91,015,897).
43. Unrealised Reserves
Included in reserves at 31 December is unrealised profit, which is non-distributable, of £3,165,000 (2022: £3,165,000).
Within one year
Between two and five years
In more than five years
31 December 2023
31 December 2022
Land and
buildings
£’000
1,093
5,959
6,017
13,069
Other
£’000
15
40
-
55
Land and
buildings
£’000
286
899
581
1,766
Other
£’000
12
35
-
47
The increase in operating lease commitments in 2023 relates to the entering into of new leases, most notably the new
long term London office lease.
45. Related Party Transactions
Details of related party transactions are disclosed in Note 32 of the Consolidated Financial Statements.
116
117
Annual report for the year ended December 2023Annual report for the year ended December 2023 Financial Statements
Notes to the Company Financial Statements
46. Group Companies
Below is a list of all companies in the Group. All subsidiaries are 100% owned and all are incorporated in the United
Kingdom, unless otherwise indicated. In addition, the Company holds an indirect interest in Destination CMS Ltd (50%),
treated as a joint venture. Unless otherwise stated, the registered office of all companies is The Old Sawmills, Filleigh,
Barnstaple, EX32 0RN.
Subsidiary undertaking
Country of Incorporation
Registered office
Held directly:
The Mission Marketing Holdings Ltd **
Germany
USA
1/f, Rosental 7, Munich 80331, Germany
900 Kearny Street, Suite 700, San Francisco,
CA 94133, United States of America
Singapore
176 Orchard Road #05 - 05, The Centrepoint,
Singapore 238843
Held indirectly:
April Six GmbH
April Six Inc.
April Six Ltd **
April Six (Mobility) Ltd **
April Six Proof Ltd
April Six Pte. Ltd
Balloon Dog Ltd
Bastin Day Westley Ltd
Big Communications Ltd
Bray Leino Ltd **
Bray Leino Productions Ltd
Bray Leino Sdn. Bhd. *
Malaysia
Bray Leino Splash Ltd *
Hong Kong
Singapore
Malaysia
Bray Leino Splash Pte. Ltd
Bray Leino Splash Sdn. Bhd. *
Fox Murphy Ltd
Fuse Digital Ltd
Influence Sports Ltd **
Jellyfish Ltd
Joluxan Holdings Ltd **
Krow Agency Ltd **
Krow Communications Ltd **
Livity Ltd **
No. 308, Block A (3rd Floor), Kelana Business Centre,
No. 97, Jalan 557/2, Kelana Jaya, 47301 Petaling
Jaya, Selangor Darul Ehsan, Malaysia
Unit 1101, 11/F, Tower 1, Cheung Sha Wan Plaza,
833 Cheung, Sha Wan Road, Lai Chi Kok, Kowloon,
Hong Kong
176 Orchard Road, #05-05 The Centrepoint,
Singapore 238843
No. 308, Block A (3rd Floor), Kelana Business Centre,
No. 97, Jalan 557/2, Kelana Jaya, 47301 Petaling
Jaya, Selangor Darul Ehsan, Malaysia
Subsidiary undertaking
Country of Incorporation
Registered office
Mezzo Labs (Hong Kong) Limited
Hong Kong
12F Tower 535535, Jaffe Road, Causeway Bay
Hong Kong SAR
Mezzo Labs Ltd **
Mezzo Labs (Singapore) Pte. Ltd.
Singapore
36 Carpenter Street, 02-00 Carpenter Haus,
059915, Singapore
Mongoose Sports & Entertainment Ltd **
Populate Social Ltd **
RJW & Partners Ltd **
Robson Brown Ltd
Solaris Healthcare Network Ltd **
Soul (London) Ltd **
Spark Marketing Services Ltd (75% owned) **
Speed Communications Agency Ltd **
Splash Interactive Ltd *
Splash Interactive (Shanghai) Co Ltd *
Story Agency Ltd **
Story UK Ltd **
The Mission Ltd
The Splash Partnership Ltd
ThinkBDW Ltd **
TMGPLC Asia Pte Ltd
Turbine Media Ltd (51% owned) **
Zonr Ltd
Vietnam
China
Suite 13-01 Pearl Plaza Offices 561A Dien Bien Phu
Ward 25, Binh Thanh District, HCMC, Vietnam
Room 1723, Raffles City Shanghai, 268 Middle Xizang
Road, Huangpu District, Shanghai, China
1-4, Atholl Crescent, Edinburgh, Scotland EH3 8HA
Singapore
176 Orchard Road #05 - 05, The Centrepoint,
Singapore 238843
* These subsidiaries are 100% owned by Bray Leino Splash Pte. Ltd, which is 70% owned by The MISSION Group plc.
** These subsidiaries are exempt from the Companies Act 2006 requirements relating to the audit of their individual
accounts by virtue of Section 479A of the Act as The MISSION Group plc has guaranteed the subsidiary company
under Section 479C of the Act.
118
119
Annual report for the year ended December 2023Annual report for the year ended December 2023 Advisors
Company Registration Number:
05733632
Registered Office:
Nominated Advisor:
Stockbroker:
Auditors:
Lawyers:
Registrars:
Company Secretary:
The Old Sawmills
Filleigh, Barnstaple
Devon, EX32 0RN
Canaccord Genuity Limited
88 Wood Street
London
EC2V 7QR
Canaccord Genuity Limited
88 Wood Street
London
EC2V 7QR
PKF Francis Clark
Statutory Auditor
Centenary House
Peninsula Park
Rydon Lane
Exeter, EX2 7XE
Shakespeare Martineau
No 1 1 Colmore Square,
Birmingham, B4 6AA
Neville Registrars
Neville House
Steelpark Road
Halesowen, B62 8HD
Michael Langford
The Old Sawmills
Filleigh, Barnstaple
Devon, EX32 0RN
Bankers:
NatWest Corporate & Commercial Banking
250 Bishopsgate
London, EC2M 4AA
120
121
Annual report for the year ended December 2023Annual report for the year ended December 2023
The Old Sawmills, Filleigh,
Barnstaple, Devon, EX32 0RN
themission.co.uk