TIDMTMG
RNS Number : 5093M
Mission Group PLC (The)
22 September 2021
22 September 2021
THE MISSION GROUP plc
("MISSION", "the Group")
INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2021
Sequential recovery towards 2019 pre-COVID normality continues
to accelerate
The MISSION Group plc (AIM: TMG), creator of Work That Counts
comprising a network of 15 Agencies delivering real, sustainable
growth for its Clients, today announces interim results for the six
months ended 30 June 2021 ("the period" or "H1").
FINANCIAL HIGHLIGHTS
-- Strong revenue growth combined with diligent cost control delivered
a resounding return to profit for H1 2021.
Six months ended 30 June 2021 2020
-- Revenue GBP34.1m GBP29.1m
-- Operating Profit / (Loss)* GBP2.0m (GBP1.8m)
-- Headline Profit / (Loss) Before GBP1.8m (GBP2.2m)
Tax*
-- Reported Profit / (Loss) Before GBP1.4m (GBP2.3m)
Tax
-- Earnings Per Share (pence)* 1.70 (1.92)
Diluted Earnings Per Share
-- (pence)* 1.68 (1.92)
-- Net bank debt of GBP3.9m (30 June 2020: GBP0.9m, 31 December
2020: GBP1.2m). GBP4.5m of deferred payments (HMRC, dividend)
settled in the period. Underlying cash management therefore
strong against these comparators.
-- Bank debt leverage ratio closed at 0.7x (30 June 2020: 0.1x,
31 December 2021 0.6x).
-- Interim dividend declared at 0.80p (2020: nil), ahead of 2019
(0.77p).
*Headline results are calculated before acquisition adjustments,
start-up costs and exceptional restructuring costs.
BUSINESS HIGHLIGHTS
-- H1 performance ahead of Board's original expectations, achieved
despite longer, tougher lockdown restrictions than forecast.
-- Sequential recovery towards 2019 pre-COVID normality continues
to accelerate.
-- Eleven of thirteen eligible Agencies delivered significant
H1 year on year improvement.
-- Group remained at the forefront of activity across sectors
that have remained resilient throughout the pandemic, with
a particularly strong performance from its technology division
across both the UK and North American markets.
-- Sustained recovery seen across a number of sectors including
events and property, reflecting growing Client confidence
in economic outlook.
-- New business wins included Redrow PLC, Porsche GB, Mecca and
Cazoo.
-- Strategic investments made last year in centralised functions
continue to benefit Agencies with roll out of MISSION Made
completed during the period.
OUTLOOK
-- The Group has a longstanding track record of delivering a
considerable majority of its profit in H2 and it is confidently
forecasting to do the same.
-- The Board expects the Group's sequential recovery to continue
in line with expectations as long as the removal of lockdown
restrictions remain in place and the economy returns to a
more 'business as usual' state.
Commenting on the results, David Morgan, Chairman of The MISSION
Group plc, said:
"I am so encouraged by the response from the management team and
the Agencies over what has been a truly challenging eighteen
months. The business is firmly back on an upward curve and in great
shape across all measures I am, therefore, supremely confident that
it will go from strength to strength under the guidance of Julian,
James and Giles.
"For me stepping down is far from manumission. It's been a great
journey and I truly believe that the best is still to come."
ENQUIRIES:
James Clifton, Chief Executive Officer
G iles Lee , Chief Financial Officer
The MISSION Group plc 020 7462 1415
Mark Percy / James Thomas / Fiona Conroy
Shore Capital (Nomad and Broker) 020 7408 4090
Kate Hoare / Laura Stewart
HOUSTON (Financial PR and Investor Relations) 0204 529 0549
NOTES TO EDITORS
MISSION is a collective of Creative and MarTech Agencies led by
entrepreneurs who encourage an independent spirit. Employing 1,000
people across 27 locations and 3 continents, the Group successfully
combines its diverse expertise to produce Work That Counts for our
Clients, whatever their ambitions. Creating real standout, sharing
real innovation and delivering real business growth for some of the
world's biggest brands. www.themission.co.uk
OVERVIEW
We are pleased to be able to report financial results for the
first half of 2021 that are ahead of the Board's original
expectations. Despite the impact of a prolonged third lockdown in
the first half of 2021 which had an inevitable impact on the pace
of economic recovery, MISSION has continued to see a marked
sequential quarter on quarter recovery in both revenue and
profitability. This has resulted in revenues for the period of
GBP34.1m (2020: GBP29.1m) and a headline operating profit of
GBP2.0m (2020: loss of GBP1.8m).
Out of thirteen MISSION Agencies, eleven delivered a significant
H1 year on year improvement in performance (excludes Pathfindr as
it is not an Agency and Innovation Bubble as it was acquired in
June 2020). We have continued to see particularly strong
performances from our Agencies that operate in sectors more
resilient to the effects of the pandemic, including our specialist
technology and mobility Agency, April Six, which delivered a 10%
increase in revenue, achieving growth both in the UK and North
America markets. In particular, April Six trading in North America
for the first half year climbed 25% ahead of the equivalent,
pre-pandemic period in 2019.
As the period progressed we also started to benefit from the
rebound in sectors that were significantly impacted by the
pandemic. Our specialist property marketing Agency ThinkBDW
delivered a 27% increase in revenue following a resurgence in
activity, reflecting the rebounding UK new homes market, while
brand Agency Bray Leino achieved an impressive 42% growth in
revenue as Clients returned to a more business as usual
footing.
The progressive removal of most Covid-19 restrictions in the UK
& US and the return to more 'normal' life is giving our Clients
more confidence to plan for events. This return to a more confident
outlook, combined with a backlog of delayed international and
nationwide events, has led to increased activity for a number of
our Agencies including Bray Leino Events which is supporting on a
number of forthcoming projects including the prestigious UK
Pavilion at the upcoming Dubai Expo.
New business opportunities have continued to present themselves
across the Group with new Client wins throughout the period
including Porsche GB, Redrow PLC, Novo Nordisk, Mecca, Cazoo,
Bottlegreen and Burts Chips.
MISSION continues to benefit from the strategic investments we
made last year to support our Agencies through our centralised
function, such as the acquisition of Innovation Bubble, which
provides expert research and advice to our Clients both directly
and through our Agencies. So far in 2021 we have also completed the
rollout of MISSION Made, a 24/7 digital production studio,
innovation hub and evolving e-commerce capability, supporting our
Agencies. We remain focussed on exploring further organic and
acquisitive growth opportunities to further leverage our compelling
infrastructure.
The Group has just completed a brand 'refresh' with the goal of
better reflecting MISSION's vision to be the preferred creative
partner for real business growth. Following a consultative process,
we will use the descriptor, creator of ' Work That Counts ' , to
demonstrate that everything we do is designed to make the
difference our Clients are looking for and why they consider us to
be a long term creative partner that consistently delivers real
growth.
As we take steps to continue this momentum and further drive
growth over the next six months, we have identified three strategic
areas that we intend to focus on. The first is developing our data
and analytics offer, which is a major growth area in the world of
marketing and advertising. We have recently appointed a new data
and analytics lead and, in order to further strengthen MISSION's
profile in the space, we will soon be launching the 'MISSION BRAND
BONDING INDEX.' This will be a free to use online platform using
comprehensive data and a bespoke algorithm to benchmark 100 global
brands, and will act as a new business prospecting tool for the
Group.
The second strategic area of focus is enhancing our creative and
customer experience (CX) capability. We have identified an
opportunity to leverage the power of our existing CX consultancy,
Ethology, and psychological insights and behavioural solutions
consultancy, Innovation Bubble, with meaningful creative talent,
which allows us to have continued breadth and depth of expertise
and services to fit today's customer challenges.
The third strategic opportunity for the Group is around
delivering effective ecommerce solutions. As well as focusing on
creating an enhanced data and analytics capability for ecommerce
with an external partner, we are further building our capability
within MISSION Made to support all Agencies in delivering effective
ecommerce websites for Clients.
Finally, I am pleased to say the next few months will see more
MISSION employees continue to return to our offices, with many
Agencies trialling hybrid ways of working. All our offices are open
and occupied with every care taken to ensure workspaces remain
safe, and we will evolve and adapt until we find the optimum
balance.
FINANCIAL PERFORMANCE
Last year when the pandemic hit, we took swift and proactive
measures to mitigate the financial impact of COVID-19. This and the
progress the business made towards the end of last year meant that
the Group began 2021 in good financial health. Despite a longer and
tougher UK lockdown than expected at the start of 2021, trading for
the first half year began well and was ahead of the Board's
expectations.
BILLINGS AND REVENUE
Turnover ("billings") for the six months ended 30 June 2021
increased by 20% to GBP69.5m (2020: GBP58.1m) while operating
income ("revenue") increased by 17% to GBP34.1m (2020:
GBP29.1m).
Importantly, the pattern of sequential recovery of revenue,
against the equivalent periods in 2019, continues to demonstrate
that the business is quickly returning to 'normality'. This is a
recovery that is expected to gain further momentum through the
second half of the year as lockdown restrictions continue to ease
and economies re-open across the world.
PROFIT, MARGINS AND EARNINGS PER SHARE
The increased revenues, combined with firm cost control exerted
throughout the pandemic alongside a continued commitment to sharing
infrastructure through the MISSION Made and Shared Services
initiatives, have delivered improved earnings and margins compared
to the first half of 2020.
Headline operating profits increased by GBP3.8m to GBP2.0m
(2020: loss of GBP1.8m). Headline operating margins also increased
strongly to 5.9% (2020: negative 6.1%).
Financing costs reduced to GBP0.3m (2020: GBP0.5m), reflecting
both a lower average level of debt in the period and a reduction in
interest rates payable on the debt, meaning that headline profit
before tax increased to GBP1.8m (2020: loss of GBP2.2m).
Adjustments to headline profits in 2021, at GBP0.4m, were higher
than the prior year (2020: GBP0.0m) due to GBP0.5m profit on the
remeasurement of contingent acquisition consideration in 2020 (nil
in 2021). After these adjustments, reported profit before tax was
GBP1.4m (2020: loss of GBP2.3m).
The Group estimates an effective tax rate on headline profits
before tax of 20% (2020: 20%), resulting in an increase in headline
earnings to GBP1.4m for the six months (2020: loss of GBP1.8m) and
reported profit after tax of GBP1.1m (2020: loss of GBP1.8m). Fully
diluted EPS increased to 1.34 pence (2020: loss of 1.89 pence),
while headline diluted EPS increased to 1.68 pence (2020: loss of
1.92 pence).
BALANCE SHEET AND CASH FLOW
The key balance sheet ratio measured and monitored by the Board
is the ratio of debt to headline EBITDA ("leverage ratio"). The
Group started the year in a strong financial position with a net
bank debt leverage ratio of 0.6 and closed the half year at 0.7.
The Board also monitors the ratio of total debt, including
remaining acquisition obligations, to EBITDA and this ratio has
decreased to 1.8 (31 December 2020: 4.3).
That strong opening position to 2021 benefited from
COVID-related payment deferrals, all of which were settled in the
first half of the year. A total of GBP3.1m was paid in regard to
the Government's tax deferral schemes along with the 2019 final
dividend of GBP1.4m.
Furthermore, a total of GBP1.2m of acquisition obligations from
prior years were settled in the first half of the year, all of
which was in cash (2020: GBP1.6m of which GBP1.5m was in cash).
After adjustments to estimated future contingent consideration
payments the total estimated acquisition liability at 30 June 2021
totalled GBP7.3m (30 June 2020: GBP6.8m). Of this GBP6.6m is due
for payment in the second half of 2021 with GBP6.3m of this being
cash.
Consequently, the Group's net bank debt on 30 June 2021 of
GBP3.9m compares well with the positions on 30 June 2020 (GBP0.9m)
and 31 December 2020 (GBP1.2m), particularly when these deferred
settlements totalling GBP4.5m are taken into account.
Finally, and to underline the Group's financial health, a new
three year, GBP20m Revolving Credit Facility has been agreed with
our longstanding bankers NatWest. This arrangement also has an
"accordion option" to increase the facility by up to GBP5m.
DIVID
The Board has taken confidence from the strong trading
performance in H1 as well as the wider economic recovery so is
declaring an interim dividend of 0.80 pence (2020: nil). This
represents a 4% increase over the 2019 equivalent. This will be
payable on 3 December 2021 to all shareholders on the register on 5
November 2021. The ex-dividend date is 4 November 2021.
BOARD
Today's results will be the last announced under David Morgan as
Executive Chairman of the Group, who is due to retire on 30
September 2021 following the Group's announcement on 15 June
2021.
David will be replaced by Julian Hanson-Smith as Non-Executive
Chairman, who has served as a Non-Executive Director of MISSION
since 2015, as part of a seamless transition that has been planned
for some time.
OUTLOOK
The Group has a long, pre-pandemic track record of delivering a
considerable majority of its profit in the second half year. The
Board fully expects this to be the case again this year and for the
performance delivered in the second half to be underpinned by the
further benefits expected from the removal of lockdowns as well as
the general return to a 'business as usual' economy. The sequential
recovery continues.
Condensed Consolidated Income Statement for the six months ended
30 June 2021
Six months Six months Year ended
to to
30 June 30 June 31 December
2021 2020 2020
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
TURNOVER 2 69,518 58,116 121,927
Cost of sales (35,380) (29,036) (60,409)
------------- ------------- -------------
OPERATING INCOME 2 34,138 29,080 61,518
Headline operating expenses (32,126) (30,862) (59,585)
------------- ------------- -------------
HEADLINE OPERATING PROFIT
/ (LOSS) 2,012 (1,782) 1,933
Acquisition adjustments 4 (224) 166 (1,891)
Exceptional restructuring
costs - - (1,004)
Start-up costs (149) (212) (335)
OPERATING PROFIT / (LOSS) 1,639 (1,828) (1,297)
Share of results of associates
and joint ventures 50 16 56
------------- ------------- -------------
PROFIT / (LOSS) BEFORE
INTEREST AND TAXATION 1,689 (1,812) (1,241)
Net finance costs 5 (296) (458) (821)
-------------
PROFIT / (LOSS) ON ORDINARY
ACTIVITIES BEFORE TAXATION 1,393 (2,270) (2,062)
Taxation 6 (295) 508 (186)
-------------
PROFIT / (LOSS) FOR THE
PERIOD 1,098 (1,762) (2,248)
------------- ------------- -------------
Attributable to:
Equity holders of the
parent 1,218 (1,606) (2,033)
Non-controlling interests (120) (156) (215)
------------- ------------- -------------
1,098 (1,762) (2,248)
------------- ------------- -------------
Basic earnings per share
(pence) 7 1.35 (1.89) (2.30)
Diluted earnings per share
(pence) 7 1.34 (1.89) (2.30)
Headline basic earnings
per share (pence) 7 1.70 (1.92) 1.00
Headline diluted earnings
per share (pence) 7 1.68 (1.92) 0.98
Condensed Consolidated Statement of Comprehensive Income for the
six months ended 30 June 2021
Six months Six months Year ended
to to
30 June 30 June 31 December
2021 2020 2020
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
PROFIT / (LOSS) FOR THE PERIOD 1,098 (1,762) (2,248)
Other comprehensive income
- items that may be reclassified
separately to profit or loss:
Exchange differences on translation
of foreign operations (38) 132 (173)
------------- ------------- -------------
TOTAL COMPREHENSIVE INCOME
/ (LOSS) FOR THE PERIOD 1,060 (1,630) (2,421)
Attributable to:
Equity holders of the parent 1,194 (1,466) (2,187)
Non-controlling interests (134) (164) (234)
------------- ------------- -------------
1,060 (1,630) (2,421)
------------- ------------- -------------
Condensed Consolidated Balance Sheet as at 30 June 2021
As at As at As at
30 June 30 June 31 December
2021 2020 2020
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
FIXED ASSETS
Intangible assets 8 95,859 95,466 96,186
Property, plant and equipment 2,154 2,826 2,394
Right of use assets 9 9,898 12,005 10,729
Investments, associates and
joint ventures 427 265 317
Deferred tax assets 15 19 -
---------- ---------- ------------
108,353 110,581 109,626
---------- ---------- ------------
CURRENT ASSETS
Stock 1,228 1,406 1,194
Trade and other receivables 36,314 30,177 33,314
Cash and short term deposits 5,914 4,011 3,806
---------- ---------- ------------
43,456 35,594 38,314
---------- ---------- ------------
CURRENT LIABILITIES
Trade and other payables (35,904) (32,798) (34,138)
Corporation tax payable (42) (62) (359)
Bank loans 10 - - (4,969)
Acquisition obligations 11 (6,709) (6,487) (7,765)
---------- ---------- ------------
(42,655) (39,347) (47,231)
---------- ---------- ------------
NET CURRENT ASSETS / (LIABILITIES) 801 (3,753) (8,917)
---------- ---------- ------------
TOTAL ASSETS LESS CURRENT
LIABILITIES 109,154 106,828 100,709
NON CURRENT LIABILITIES
Bank loans 10 (9,862) (4,948) -
Lease liabilities 9 (8,648) (10,274) (9,414)
Acquisition obligations 11 (580) (300) (720)
Deferred tax liabilities (328) (384) (346)
---------- ---------- ------------
(19,418) (15,906) (10,480)
---------- ---------- ------------
NET ASSETS 89,736 90,922 90,229
---------- ---------- ------------
CAPITAL AND RESERVES
Called up share capital 9,102 9,102 9,102
Share premium account 45,928 45,928 45,928
Own shares (538) (646) (591)
Share-based incentive reserve 703 528 642
Foreign currency translation
reserve (90) 228 (66)
Retained earnings 34,393 35,340 34,842
---------- ---------- ------------
EQUITY ATTRIBUTABLE TO EQUITY
HOLDERS OF THE PARENT 89,498 90,480 89,857
Non controlling interests 238 442 372
---------- ---------- ------------
TOTAL EQUITY 89,736 90,922 90,229
---------- ---------- ------------
Condensed Consolidated Cash Flow Statement for the six months
ended 30 June 2021
Six months Six months Year ended
to to
30 June 30 June 31 December
2021 2020 2020
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Operating profit / (loss) 1,639 (1,828) (1,297)
Depreciation and amortisation
charges 2,080 2,453 4,836
Movements in the fair value of
contingent consideration - (469) 1,276
Loss on disposal of fixed assets 4 - 35
Non cash charge for share options,
growth shares and shares awarded 80 101 183
(Increase) / decrease in receivables (3,060) 10,821 7,684
Increase in stock (34) (315) (103)
Increase / (decrease) in payables 1,822 (2,902) (1,175)
---------- ------------- -------------
OPERATING CASH FLOW 2,531 7,861 11,439
Net finance costs (412) (424) (763)
Tax paid (645) (224) (640)
---------- ------------- -------------
Net cash inflow from operating
activities 1,474 7,213 10,036
---------- ------------- -------------
INVESTING ACTIVITIES
Proceeds on disposal of property,
plant and equipment 11 2 3
Purchase of property, plant and
equipment (320) (230) (421)
Investment in software development (153) (109) (696)
Acquisition of or investments
in businesses - (72) (184)
Payment relating to acquisitions
made in prior periods (1,196) (1,463) (2,018)
Net cash outflow from investing
activities (1,658) (1,872) (3,316)
---------- ------------- -------------
FINANCING ACTIVITIES
Dividends paid (1,379) - -
Repayment of lease liabilities (1,037) (1,477) (2,769)
Increase in / (repayment of)
bank loans 5,000 (5,000) (5,000)
Purchase of own shares held in
EBT (254) (13) -
---------- ------------- -------------
Net cash inflow / (outflow) from
financing activities 2,330 (6,490) (7,769)
---------- ------------- -------------
Increase / (decrease) in cash/equivalents 2,146 (1,149) (1,049)
Exchange differences on translation
of foreign subsidiaries (38) 132 (173)
Cash/cash equivalents at beginning
of period 3,806 5,028 5,028
---------- ------------- -------------
Cash and cash equivalents at
end of period 5,914 4,011 3,806
---------- ------------- -------------
Condensed Consolidated Statement of Changes in Equity for the
six months ended 30 June 2021
Total
Share-based Foreign attributable
incentive currency to equity Non-controlling
Share Share Own reserve translation Retained holders interest Total
capital premium shares GBP'000 reserve earnings of parent GBP'000 equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- --------- --------- --------- ------------- ------------- ---------- ---------------- ----------------- ------------
At 1 January
2020 8,530 43,015 (659) 700 88 40,021 91,695 606 92,301
Loss for
period - - - - - (1,606) (1,606) (156) (1,762)
Exchange
differences
on translation
of foreign
operations - - - - 140 - 140 (8) 132
----------------- --------- --------- --------- ------------- ------------- ---------- ---------------- ----------------- ------------
Total
comprehensive
loss for
period - - - - 140 (1,606) (1,466) (164) (1,630)
New shares
issued 28 135 - - - - 163 - 163
Share option
charge - - - 64 - - 64 - 64
Growth share
charge - - - 35 - - 35 - 35
Settlement
of growth
shares 544 2,778 - (271) - (3,051) - - -
Own shares
purchased
by EBT - - (13) - - - (13) - (13)
Shares awarded
and sold
from own
shares - - 26 - - (24) 2 - 2
At 30 June
2020 9,102 45,928 (646) 528 228 35,340 90,480 442 90,922
----------------- --------- --------- --------- ------------- ------------- ---------- ---------------- ----------------- ------------
Loss for
period - - - - - (427) (427) (59) (486)
Exchange
differences
on translation
of foreign
operations - - - - (294) - (294) (11) (305)
----------------- --------- --------- --------- ------------- ------------- ---------- ---------------- ----------------- ------------
Total
comprehensive
loss for
period - - - - (294) (427) (721) (70) (791)
Share option
charge - - - 114 - - 114 - 114
Shares awarded
and sold
from own
shares - - 55 - - (71) (16) - (16)
At 31 December
2020 9,102 45,928 (591) 642 (66) 34,842 89,857 372 90,229
----------------- --------- --------- --------- ------------- ------------- ---------- ---------------- ----------------- ------------
Profit for
period - - - - - 1,218 1,218 (120) 1,098
Exchange
differences
on translation
of foreign
operations - - - - (24) - (24) (14) (38)
----------------- --------- --------- --------- ------------- ------------- ---------- ---------------- ----------------- ------------
Total
comprehensive
income for
period - - - - (24) 1,218 1,194 (134) 1,060
Share option
charge - - - 61 - - 61 - 61
Own shares
purchased
by EBT - - (254) - - - (254) - (254)
Shares awarded
and sold
from own
shares - - 307 - - (288) 19 - 19
Dividend
paid - - - - - (1,379) (1,379) - (1,379)
At 30 June
2021 9,102 45,928 (538) 703 (90) 34,393 89,498 238 89,736
------------ -------------- --------- --------- ------------- ------------- ---------- ---------------- ----------------- ------------
Notes to the unaudited Interim Report for the six months ended
30 June 2021
1. Accounting Policies
Basis of preparation
The condensed consolidated interim financial statements for the
six months ended 30 June 2021 have been prepared in accordance with
the IAS 34 "Interim Financial Reporting" and the Group's accounting
policies.
The Group's accounting policies are in accordance with
International Financial Reporting Standards as adopted by the
European Union and are set out in the Group's Annual Report and
Accounts 2020 on pages 53-57. These are consistent with the
accounting policies which the Group expects to adopt in its 2021
Annual Report. The Group has not early-adopted any Standard,
Interpretation or Amendment that has been issued but is not yet
effective.
The information relating to the six months ended 30 June 2021
and 30 June 2020 is unaudited and does not constitute statutory
financial statements as defined in Section 434 of the Companies Act
2006. The comparative figures for the year ended 31 December 2020
have been extracted from the Group's Annual Report and Accounts
2020, on which the auditors gave an unqualified opinion and did not
include a statement under section 498 (2) or (3) of the Companies
Act 2006. The Group Annual Report and Accounts for the year ended
31 December 2020 have been filed with the Registrar of
Companies.
Going concern
The Directors have considered the financial projections of the
Group, including cash flow forecasts, the availability of committed
bank facilities and the headroom against covenant tests for the
coming 12 months. They are satisfied that the Group has adequate
resources for the foreseeable future and that it is appropriate to
continue to adopt the going concern basis in preparing these
interim financial statements.
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 interim financial statements
and concluded that the main areas of judgement are:
-- Potential impairment of goodwill and other assets as a result of the impact of COVID-19;
-- Contingent deferred payments in respect of acquisitions; and
-- Revenue recognition policies in respect of contracts which straddle the period end.
2. Segmental Information
Business segmentation
For management purposes the Board monitors the performance of
its separate operating units, each of which carries out a range of
activities, as a single business segment. However, since different
activities have different revenue characteristics, the Group's
turnover and operating income has been disaggregated below to
provide additional benefit to readers of these financial
statements.
Following the implementation of a Shared Services function from
the start of 2018 and the resulting transfer of certain
Agency-specific contracts onto centrally-managed arrangements, a
significant portion of the total operating costs are now centrally
managed and segment information is therefore now only presented
down to the operating income level.
Advertising Media Exhibitions Public Group
& Digital Buying & Learning Relations
Six months to 30 June 2021 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------ -------- ------------ ----------- --------
Turnover 47,573 14,114 3,886 3,945 69,518
------------ -------- ------------ ----------- --------
Operating income 27,410 1,592 1,865 3,271 34,138
------------ -------- ------------ ----------- --------
Advertising Media Exhibitions Public Group
& Digital Buying & Learning Relations
Six months to 30 June 2020 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------ -------- ------------ ----------- --------
Turnover 35,604 12,517 5,933 4,062 58,116
------------ -------- ------------ ----------- --------
Operating income 22,933 1,475 1,839 2,833 29,080
------------ -------- ------------ ----------- --------
Advertising Media Exhibitions Public Total
& Digital Buying & Learning Relations
Year to 31 December 2020 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------ -------- ------------ ----------- --------
Turnover 87,418 18,546 8,738 7,225 121,927
Operating income 50,022 2,286 3,248 5,962 61,518
------------ -------- ------------ ----------- --------
Geographical segmentation
The following table provides an analysis of the Group's
operating income by region of activity:
Six months Six months Year ended
to to
30 June 30 June 31 December
2021 2020 2020
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
UK 29,681 24,977 53,077
USA 3,163 3,090 5,972
Asia 1,196 961 2,353
Rest of Europe 98 52 116
----------- ----------- ------------
34,138 29,080 61,518
----------- ----------- ------------
3. Reconciliation of Reported Profit / (Loss) to Headline Profit / (Loss)
In order to provide a clearer understanding of underlying
profitability, headline results exclude exceptional items,
acquisition-related items, and start-up costs. Start-up costs
derive from organically started businesses and comprise the trading
losses of such entities until the earlier of two years from
commencement or when they show evidence of becoming sustainably
profitable.
Six months Six months Year ended
to to 31 December
30 June 30 June 2020
2021 2020 Audited
Unaudited Unaudited
PBT PAT PBT PAT PBT PAT
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Headline profit / (loss) 1,766 1,413 (2,224) (1,789) 1,168 670
Acquisition-related items
(Note 4) (224) (191) 166 203 (1,891) (1,806)
Exceptional restructuring
costs - - - - (1,004) (834)
Start-up costs (149) (124) (212) (176) (335) (278)
Reported profit / (loss) 1,393 1,098 (2,270) (1,762) (2,062) (2,248)
------ ------ -------- -------- -------- --------
Exceptional restructuring costs in 2020 consisted of redundancy
and property closure costs in response to the COVID-19
pandemic.
Start-up costs in 2021 relate to the launch of Alive in Asia and
a new Birmingham-based venture under the Mongoose Sport &
Entertainment brand . Start- up costs in 2020 related to Story's
new venture in Leeds, April Six's new venture in Germany and the
launch of Alive in Asia.
4. Acquisition Adjustments
Six months Six months Year ended
to to 31 December
30 June 30 June 2020
2021 2020 Audited
Unaudited Unaudited
GBP'000 GBP'000 GBP'000
Amortisation of intangible assets
recognised on acquisitions (224) (278) (505)
Movement in fair value of contingent
consideration - 469 (1,276)
Acquisition transaction costs
expensed - (25) (110)
----------- ----------- -------------
(224) 166 (1,891)
----------- ----------- -------------
The movement in fair value of contingent consideration relates
to a revision in the estimate payable to vendors of businesses
acquired in prior years . Acquisition transaction costs relate to
professional fees associated with the acquisitions.
5. Net Finance Costs
Six months Six months
to to Year ended
30 June 30 June 31 December
2021 2020 2020
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Net interest on bank loans,
overdrafts and deposits (82) (185) (329)
Amortisation of bank debt arrangement
fees (31) (21) (42)
Interest expense on leases liabilities (183) (252) (450)
----------- ----------- ------------
Net finance costs (296) (458) (821)
----------- ----------- ------------
The decrease in net interest on bank loans, overdrafts and
deposits in the period is driven by a reduced average level of bank
debt and a reduction in the interest rate payable on the bank debt.
The decrease in interest expense on lease liabilities in the period
primarily relates to the decrease in Right of Use Assets and Lease
Liabilities following the natural maturation of property lease
terms as referred to in Note 9.
6. Taxation
The taxation charge for the period ended 30 June 2021 has been
based on an estimated effective tax rate on headline profit on
ordinary activities of 20% (30 June 2020: 20%).
7. Earnings Per Share
The calculation of the basic and diluted earnings per share is
based on the following data, determined in accordance with the
provisions of IAS 33: "Earnings per Share".
Six months Six months Year to
to to
30 June 30 June 31 December
2021 2020 2020
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Earnings
Reported profit for the year
Attributable to:
Equity holders of the parent 1,218 (1,606) (2,033)
Non-controlling interests (120) (156) (215)
------------- ------------- -------------
1,098 (1,762) (2,248)
------------- ------------- -------------
Headline earnings (Note 3)
Attributable to:
Equity holders of the parent 1,533 (1,633) 885
Non-controlling interests (120) (156) (215)
------------- ------------- -------------
1,413 (1,789) 670
------------- ------------- -------------
Number of shares
Weighted average number of Ordinary
shares for the purpose of basic
earnings per share 90,133,831 84,943,138 88,341,383
Dilutive effect of securities:
Employee share options 1,020,235 4,085,346 2,360,072
Weighted average number of Ordinary
shares for the purpose of diluted
earnings per share 91,154,066 89,028,484 90,701,455
Reported basis:
Basic earnings per share (pence) 1.35 (1.89) (2.30)
Diluted earnings per share (pence) 1.34 (1.89) (2.30)
Headline basis:
Basic earnings per share (pence) 1.70 (1.92) 1.00
Diluted earnings per share (pence) 1.68 (1.92) 0.98
A reconciliation of the profit after tax on a reported basis and
the headline basis is given in Note 3.
8. Intangible Assets
30 June 30 June 31 December
2021 2020 2020
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Goodwill 92,160 91,752 92,160
Other intangible assets 3,699 3,714 4,026
95,859 95,466 96,186
---------- ---------- ------------
Goodwill
Six months Six months Year ended
to 30 June to 30 June 31 December
2021 2020 2020
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Cost
At 1 January 96,433 96,025 96,025
Recognised on acquisition of
trade assets - - 408
------------ ------------ -------------
At 30 June / 31 December 96,433 96,025 96,433
------------ ------------ -------------
Impairment adjustment
At beginning and end of period 4,273 4,273 4,273
Net book value 92,160 91,752 92,160
------- ------- -------
In accordance with the Group's accounting policies, an annual
impairment test is applied to the carrying value of goodwill,
unless there is an indication that one of the cash generating units
has become impaired during the year, in which case an impairment
test is applied to the relevant asset. The next impairment test
will be undertaken at 31 December 2021.
Other Intangible Assets
Six months to Six months
to Year ended
30 June 30 June 31 December
2021 2020 2020
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Cost
At 1 January 10,821 10,115 10,115
Additions 153 109 896
Disposals (233) (202) (190)
At 30 June / 31 December 10,741 10,022 10,821
---------- ------------- --------------
Amortisation and impairment
At 1 January 6,795 6,008 6,008
Amortisation charge for the
period 480 502 977
Disposals (233) (202) (190)
At 30 June / 31 December 7,042 6,308 6,795
---------- ------------- --------------
Net book value 3,699 3,714 4,026
---------- ------------- --------------
Other intangible assets consist of Client relationships, trade
names and software development and licences.
9. Right of Use Assets and Lease Liabilities
The Group leases several assets, the overwhelming majority of
which are the office premises from which it operates. Under IFRS
16, the Group recognises Right of Use Assets and Lease Liabilities
in relation to these leases. Assets and liabilities reduce over the
period of the lease and increase when a lease is renewed, or a new
lease entered into. The decrease in Right of Use Assets and Lease
Liabilities in the period relates primarily to the natural
reduction in the average remaining lives of the leases.
10. Bank Loans and Net Bank Debt
30 June 30 June 31 December
2021 2020 2020
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Bank loan outstanding 10,000 5,000 5,000
Adjustment to amortised cost (138) (52) (31)
---------- ---------- ------------
Carrying value of loan outstanding 9,862 4,948 4,969
Less: Cash and short term deposits (5,914) (4,011) (3,806)
---------- ---------- ------------
Net bank debt 3,948 937 1,163
---------- ---------- ------------
The borrowings are repayable
as follows:
Less than one year - - 5,000
In one to two years - 5,000 -
In more than two years but less
than three 10,000 - -
years
10,000 5,000 5,000
Adjustment to amortised cost (138) (52) (31)
---------- ---------- ------------
9,862 4,948 4,969
Less: Amount due for settlement
within 12
months (shown under current liabilities) - - (4,969)
---------- ---------- ------------
Amount due for settlement after
12 months 9,862 4,948 -
---------- ---------- ------------
At 30 June 2021, the Group's committed bank facilities comprised
a revolving credit facility of GBP20.0m, expiring on 5 April 2024,
with an option to increase the facility by GBP5.0m and by one year.
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.
In addition to its committed facilities, the Group has available
an overdraft facility of up to GBP3.0m with interest payable by
reference to National Westminster Bank plc Base Rate plus
2.25%.
11. Acquisition Obligations
The terms of an acquisition may provide that the value of the
purchase consideration, which may be payable in cash or shares or
other securities at a future date, depends on uncertain future
events such as the future performance of the acquired company. The
Directors estimate that the liability for payments that may be due
is as follows:
Cash Shares Total
GBP'000 GBP'000 GBP'000
30 June 2021
Less than one year 6,405 304 6,709
In more than three but less
than four years 580 - 580
6,985 304 7,289
------ ---- ------
A reconciliation of acquisition obligations during the period is
as follows:
Cash Shares Total
GBP'000 GBP'000 GBP'000
At 31 December 2020 8,181 304 8,485
Obligations settled in the
period (1,196) - (1,196)
At 30 June 2021 6,985 304 7,289
-------- --------- ---------
12. Post balance sheet events
There have been no material post balance sheet events.
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END
IR SEEFIFEFSELU
(END) Dow Jones Newswires
September 22, 2021 01:59 ET (05:59 GMT)
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