FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2024

THE MISSION GROUP plc

("MISSION", "the Group")

FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2024

Successful completion of Value Restoration Plan drives profitable earnings and margin recovery

Strong platform for growth in 2025

25 March 2025

The MISSION Group plc (AIM:TMG), the Brand Performance Group, comprising of digital marketing and specialist communications Agencies, announces its final results for the year ended 31 December 2024 ("FY2024" or "the year").

FINANCIAL HIGHLIGHTS

*Headline results are calculated before acquisition and disposal adjustments, start-up costs, goodwill and business impairment, bank refinancing, equity placing and restructuring costs (as set out in Note 3).

** Continuing operations excludes the disposal of April Six on 31 December 2024.

STRATEGIC AND OPERATIONAL HIGHLIGHTS

Successful completion of Group's Value Restoration Plan ("VRP") provides strong platform for profitable growth in 2025.

The successful execution of the Group's VRP, as originally announced in December 2023 and including the disposal of April Six and Pathfindr, has strengthened the business for the future, ensuring MISSION moves forward as a leaner and less complex business with a significantly stronger balance sheet.

*** Net total debt includes deferred acquisition consideration and for 2023 HMRC time to pay obligations

Resilient trading performance across all segments, despite challenging and uncertain market conditions, resulted in FY2024 Headline revenue (operating income) on continuing operations up 2.1% to £75.9m (FY2023: £74.3m)

Current trading and outlook remain in line with expectations

Mark Lund, Interim Chief Executive of MISSION, commented: "2024 represented solid progress and there is a lot for our teams to feel proud about. Crucially we have driven a necessary and ambitious Value Restoration Plan which has seen us review all areas of the business with a commitment to restoring value to shareholders. In addition, we have continued to deliver excellent work for our Clients, underpinning a significant improvement in earnings and margin growth on the prior year, despite a challenging and often uncertain trading environment.

"Trading in 2025 has started in line with our expectations. We remain cautious given the wider macro-economic uncertainty but I'm excited to see further progress against a number of initiatives already underway in 2025. I firmly believe these actions will further enhance the quality of the work we do and the value we can bring to our Clients and look forward to seeing their impact as the year develops."

Investor Presentation via Investor Meet Company

Interim Chief Executive Office, Mark Lund and Chief Financial Officer, Giles Lee will provide a live presentation relating to the Group's Final Results for the year ended 31 December 2024, via the Investor Meet Company platform on 25th March 2025 at 16:00 GMT.

Investors can sign up to Investor Meet Company for free and add to meet THE MISSION GROUP PLC via:

https://www.investormeetcompany.com/the-mission-group-plc/register-investor

ENQUIRIES

NOTES TO EDITORS

The MISSION Group Plc. is The Brand Performance Group.  

Delivering measurable, results-driven campaigns as the preferred creative partner for real business growth. We offer top-tier agencies, strategic specialisms and global reach delivering outstanding performance for brands. We call it Work That Counts™ www.themission.co.uk 

NON-EXECUTIVE CHAIR'S STATEMENT

I am delighted to report that not only have we delivered a resilient trading performance in 2024 but MISSION has taken great strides to strengthen the business for the future. I have been impressed by the management team who have diligently and relentlessly reshaped the business throughout 2024 and in so doing have maintained revenue growth, improved total headline operating profits by 80%, increased total reported operating profits by £15m and significantly reduced our debt. Furthermore, we have created a platform from which our Agencies will continue to grow.

Revenue and Profit Growth

Once again Client retention and strategic new business wins have underpinned performance and all credit must go to our Agencies who continue to punch above their weight by being leaner, more nimble and creatively and commercially astute to achieve outstanding results for our Clients. Ultimately, our Clients pay us to help them be more successful and this is at the core of our thinking.

Debt Reduction

Business growth and Agency realignments have played their part in our strive to reduce debt. But so too have two strategic divestments of April Six and Pathfindr, both of which have significantly improved the strength of our balance sheet.

Our Platform For Growth

Under the stewardship of our interim CEO, Mark Lund, we have successfully streamlined operations under four key business pillars headed by our lead Agencies which has been warmly received within the Group. Mark's commitment to performance and growth is helping those leaders develop at pace and his input and guidance has been welcomed by all. Having had a successful career in advertising and marketing, during which he co-founded leading independent Agency DLKW (now Mullen Lowe) and most recently was President of McCann Worldgroup UK & Europe, Mark stepped into the role following James Clifton's decision to pursue a new opportunity. The Board would like to thank James for his valuable contribution to the development of MISSION during his tenure. We all wish him every success in his new venture.

Capital Allocation Policy and Dividend

Having delivered annualised cost savings and profit improvements alongside a material reduction in the Group's debt burden through business disposals, on the 2 January 2025 the Board outlined the Group's Capital Allocation policy in order to provide shareholders with an update on the Board's intentions for future uses of cash generated from operations.

As part of this policy the Board has made a commitment that surplus free cashflow should be returned to shareholders either by share buybacks and/or dividends (ordinary and/or special).

Share buybacks will be undertaken when they are at or below the Board's view of the intrinsic value of the Company. Shares acquired through the share buyback will be held in treasury and their use reviewed periodically, including to offset the dilution effect from employee share option exercises and share based deferred acquisition consideration payments.

On 2 January 2025 the Board confirmed that it intended to return up to £1.5m to Shareholders via an on-market share buyback which will be undertaken when the share price is at or below the Board's view of the intrinsic value of the Company. To date £364,000 has been returned to shareholders, reducing the Company's shares in issue by 1.3%.

As previously announced as part of our Capital Allocation policy, the Board expects to return to paying ordinary dividends in 2026 and will maintain dividend cover between 3x to 4x headline earnings per share.

Outlook

We are mindful of the overall macro environment and uncertainties that this can bring to our markets but it is worth reminding ourselves that MISSION has shown revenue growth year on year and now with our streamlined operations and profit focused mindset we see a very bright future for the business.

Our people make us what we are and all around the Group I see dedicated, fulgurant colleagues all working to be their best and deliver outstanding results for our Clients, shareholders and community. I am proud to Chair the MISSION Group.

David Morgan

Non-Executive Chair

INTERIM CHIEF EXECUTIVE'S REVIEW

2024 represented solid progress and there is a lot for our teams to feel proud about. Crucially we have driven a necessary and ambitious Value Restoration Plan which has seen us review all areas of the business with a commitment to restoring value to shareholders. In addition, we have continued to deliver excellent work for our Clients, underpinning a significant improvement in earnings and margin growth on the prior year, despite a challenging trading environment.

The ongoing macro-economic and political uncertainty throughout 2024 led to Client caution and the significant drop in business confidence following the Chancellor's statement in November compounded this uncertainty further. Against this backdrop the entrepreneurial and creative culture of our Agencies and the breadth of capabilities they can draw on across the Group has been critical in our ability to grow existing relationships and compete in tough markets to secure new Client wins.

Whilst the successful divestments of April Six and Pathfindr have ensured we have a much stronger balance sheet; it has also provided us with an opportunity to reassess the Group's business model as we focus on creating a simpler and more accountable MISSION.

We enter 2025 with a simpler, stronger and more focussed Group. Our business model will see us focus on four key Agency families, centred around each of our largest Agencies Bray Leino (Business & Corporate), krow (Consumer), Mongoose (Sports & Entertainment) and ThinkBDW (Property). Through the work done as part of the Value Restoration Plan to reduce our cost base, we move forward with a leaner and lighter commercial centre with our full focus on supporting sustainable, profitable growth.

I am also very excited by our continuing investment in MISSION's shared AI systems that will bring real benefits to all our Agencies in 2025 both operationally and creatively.

Performance Review

MISSION has reported revenue growth from continuing operations of 2.1% to £75.9m (2023: £74.3m) and total revenue growth of 1.3%. All growth was organic and underpinned by strong performances across the Group's continuing business segments, particularly in our Property and Business & Corporate segments.

Additional Client wins secured across the business throughout the period include Okta, Popeyes, FatFace, GoHenry, Mastercard, BNP Paribas, England Cricket Board, Guinness Homes, Fonterra and McCarthy Stone. The second half of the financial year also saw the Group awarded a prestigious and significant Events assignment for the UK Pavilion at Expo 2025 in Osaka, Japan. This full operational services contract comprises over 130 individual events, retail and hospitality and is being led by Bray Leino Events.

MISSION's global sports Agency, Influence Sports & Media, part of Mongoose, also won a significant new Client in Saudi Arabia in the second half of the year and opened a small office in Riyadh to support the Client and will also leverage its expertise to capitalise on opportunities across the region. Mongoose has also been appointed as global sponsorship sales Agency for Formula E and brokered Southampton F.C.'s shirt sponsorship with P&O Cruises.

The second half of the year also saw the creation of the Group's AI steering panel, chaired by me. 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 we have prioritised 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.

In the new financial year I'm pleased to announce that we have appointed a Chief Transformation Director to lead this project across the Group. Good progress has already been achieved in deploying AI tools on the areas which can make the biggest difference to enhance operational excellence and creative processes.

Making Positive Change

Following the launch of our Environmental, Social and Governance (ESG) manifesto 'Making Positive Change' in 2020, we have continued to make progress against our key commitments throughout 2024. While improved carbon reporting and increased business activity led to a rise in overall emissions compared to last year, our total emissions remain significantly lower (29% decrease) than pre-pandemic levels.

A key focus has been refining our data collection to ensure a more accurate understanding of our impact. This has highlighted areas for action, such as energy use and commuting, while also revealing positive trends, including reductions in waste-related emissions and business road travel. By enhancing our sustainability initiatives and improving efficiency across operations, we are committed to driving further progress in the years ahead.

Current Trading and Outlook

Trading in 2025 has started in line with our expectations. We remain cautious given the wider macro-economic uncertainty and its continued impact on Client budgets and confidence.

I'm excited to see further progress against a number of initiatives already underway in 2025 including our investments in AI. I firmly believe these actions will further enhance the quality of the work we do and the value we can bring to our Clients and look forward to seeing their impact as the year develops.

Mark Lund

Interim Group Chief Executive

CHIEF FINANCIAL OFFICER'S REVIEW

In 2024 we were able to complete the turnaround of the business through the successful delivery of the Value Restoration Plan. The fundamental concentration on transforming operating margins and reducing debt leverage is evident in the financial statements as is the underlying resilience of our core agency portfolio. We start 2025 with a simpler, stronger and more focused Group.

Total headline operating profits of £9.1m increased by 80% when compared to the 2023 equivalent. With operating income growing by 1.3% to £87.7m (2023 £86.6m), operating margins also increased significantly from 5.8% in 2023 to 10.3% in 2024.

On a continuing operations basis the financial recovery continues to shine through, with headline operating profits of £7.9m increasing by 20% on 2023 (£6.5m), operating income growing 2.1% to £75.9m (2023 £74.3m) and operating margins increasing from 8.8% to 10.4%.

Furthermore, net bank debt leverage at 31 December 2024 improved significantly to 1.1x (31 December 2023, 2.0x) following a year of tight focus on capital expenditure and the disposal of April Six Ltd at the end of 2024.

The Value Restoration Plan

In December 2023 the Board announced its Value Restoration Plan ('VRP'): a plan designed to restore profitability and bank debt leverage to sustainable, competitive levels in 2024. The plan consisted of two key elements:

1: reducing operating expenditure by £5.0m through annualised cost savings and efficiency gains.

2: reducing 2023 run-rate net debt leverage through the disposal of non-core assets.

The VRP has been successfully delivered, evidenced by the much-improved margins and reduced leverage ratios reported in 2024 compared to 2023.

Following the sale of April Six and the reduction in bank debt, the Group entered into discussions with Natwest to refinance the existing debt facility. The Group has now successfully refinanced its debt facility, securing a new three-year facility including a £15m revolving credit facility, a £5m accordion option to increase this and a £3m overdraft. Further details of the new debt facility are set out in Note 15 to the financial statements.

Billings and revenue

Turnover (billings) was 3% lower than the previous year, at £190.3m (2023: £195.9m), 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 2.1% to £75.9m (2023: £74.3m).

All revenue growth was organic and reflects a mixed performance across the continuing business segments. Revenue growth was strong in Business & Corporate (£0.9m increase in revenue) and also Property (£0.5m increase in revenue) and in so doing mitigated reduced revenues in Health & Wellness (£0.4m reduction in revenue).

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 divest of its Technology agency, April Six Ltd along with the US based subsidiary, a transaction that completed at the end of 2024. It is these divested revenues that constitute the 'discontinued operations' of 2024 whilst 2023 also comprises the disposal of Pathfindr Ltd.

One of the differentiating features of MISSION is the longevity and loyalty of its Client base exemplified by over 56% of 2024 total operating 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 tailored level of Client service but supported by the resources of a multi-national Group.

Profit and margins

The Directors measure and report the Group's performance primarily by reference to headline results in order to avoid the distortions created by 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 set out in Note 3).

The Group reported an operating profit across all operations this year of £5.8m compared to a £9.7m loss in 2023.

Reported profit before tax increased by £14.9m, from a £12.0m loss in 2023 to a £2.9m profit in 2024.

Adjustments to reported profits, detailed further in Note 3, totalled £3.2m (2023: £14.8m) a significant decrease on a previous year that had included a £10.3m impairment of the Story (£5.2m) and Krow (£5.1m) intangible assets. There were no intangible impairments in 2024.

In addition to this the Group invested £0.5m in new ventures (2023: £1.8m) most notably Influence US and Saudi Arabia operations as well as performance marketing joint venture Turbine and investment in the MISSION Hubs venture.

Acquisition and disposal related costs of £2.1m compared to £1.7m in 2023. The 2024 charge consists primarily of the amortisation of intangibles recognised on acquisitions of £0.7m (2023: £0.9m) as well as professional fees incurred in order to defend an unsolicited bid for the Group (£0.3m). There was an increase in fair value of contingent consideration of £0.8m in 2024 (2023 £0.4m) following the strong performance of recently acquired agencies.

Finally, the Group recorded a profit on the disposal of the April Six operation of £1.2m, countered by realisation of non-cash, historical foreign currency translation reserves of £1.4m. (2023: £0.3m profit on sale of Pathfindr Ltd).

Adjusting for these items delivers a headline operating profit from all operations of £9.1m (2023 £5.0m). Headline operating profit from continuing operations was £7.9m (2023: £6.5m).

A key focus of the VRP has been improving operational effectiveness and therefore margin. As a result the headline operating expenditure base from all operations decreased in the year by 4% (from £81.5m in 2023 to £78.6m in 2024). Expenditure within continuing operations held flat at £68.0m.

Whilst operating expenditure grew in the Business & Corporate segment to support revenue growth (£0.9m increase), the actions of the VRP are evident in reductions of spend in Consumer & Lifestyle (£0.3m) and Property (£0.7m). Expenditure in Sports & Entertainment increased by £0.5m in the year.

The result of this is strong year on year headline operating profit improvements in the Property (+£1.2m), Consumer & Lifestyle (£+0.4m) and Central (+£0.6m) business segments, all of which outweighed smaller headline operating profit reductions in Sports & Entertainment (£0.4m reduction) and Health & Wellness (£0.3m reduction).

As a consequence, headline operating margins from all activities increased from 5.8% to 10.3% and margins from continuing activities increased from 8.8% to 10.4%.

Interest charges of £3.0m were £0.5m higher than 2023 (£2.5m) reflecting the increased net debt levels the Group faced during this restructuring period.

The resultant reported profit before tax from continuing operations for 2024 was £1.9m, an increase of £12.7m on 2023 (£10.7m loss).

Taxation

The headline tax rate increased marginally to 28% (2023: 27%).

On a reported basis in 2024 the impact of foreign tax payments in the year in relation to April Six resulted in a total tax charge of £1.7m on a reported profit before tax of £2.9m, an effective rate of 58.8%. This compares to the 1.3% rate in 2023 resulting from the impact of the large one-off non-deductible expenditure primarily in relation to impairment of goodwill which resulted in a tax credit of £0.2m on a reported loss before tax of £12.0m.

The tax rate is generally expected to be consistently higher than the statutory rate (25.0% in 2024, an increase from the 23.5% in 2023) 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 profit for the year was £1.2m (2023: £11.9m loss) and undiluted and diluted EPS was 1.2 pence (2023: -13.4 pence).

However, after adjustments, Headline EPS from continuing operations on both an undiluted an diluted basis was 3.8 pence (2023: 3.3 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 (2024: £30.5m, 2023: £33.7m).

The Board has made the decision to continue to pause dividend payments and expects to return to paying ordinary dividends in 2026. In so doing it plans to maintain dividend cover between 3x to 4x headline earnings per share.

Balance sheet

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 10. At 31 December 2024 the Board concluded that no impairment adjustments would be required and that the position would continue to be reviewed on a regular basis.

The level of intangible assets relating to acquisitions and internal investments decreased by £11.0m in the year. This movement being primarily a function of the divestment of April Six.

The Group's acquisition obligations at the end of 2024 were £4.7m (2023: £5.5m), 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. £3.4m is expected to fall due for payment in cash within 12 months and a further £1.2m which can be satisfied by a mix of shares and cash in the subsequent 12 months.

The Board continue to closely monitor all capital spends and have paused dividend payments for the short term.

The Directors therefore believe that the Group's current balance sheet can comfortably accommodate these acquisition obligations alongside the Group's commitments to routine capital expenditure.

Consolidated Net Current Assets closed at £17.0m, an increase of £11.4m on 2023 (£5.6m). This was in part the result of the increase in cash of £5.8m and a reduction in trade creditors of £9.4m, netted off against a £1.7m increase in current acquisition obligations. Acquisition obligations are dependent on performance and the Company has the option to settle a proportion of the total in shares.

At the end of the year the Group's net bank debt stood at £9.5m (2023: £15.4m). On an adjusted basis (pre IFRS16) the leverage ratio of net bank debt to headline EBITDA was 1.1x at 31 December 2024 (2023: 2.0x). The Group's adjusted ratio of total debt, including remaining acquisition obligations, to EBITDA at 31 December 2024 was 1.7x (2023: 2.7x). A pre-IFRS16 basis is used as this in the definition of the Group's bank covenants.

Cash flow

Cash and cash equivalents improved by £5.8m over the course of 2024.

The primary reason for the improvement came from the divestment of April Six and the resulting net increase in cash and cash equivalents from discontinued operations of £7.3m.

In addition to this, capital allocations in 2024 were very closely controlled. This resulted in significant year on year reductions to both capital expenditure (£0.7m, 2023 £2.5m) and dividends payable (£0.1m, 2023 £1.7m). Similarly, expenditure on new acquisitions was £Nil (2023, £0.4m) and the settlement of contingent obligations relating to the profits generated by previous acquisitions totalled £0.7m (2023: £0.4m). Bank loans were in line with 2023 at £20.0m.

In 2023 total working capital movements were somewhat distorted as a result of £4.3m of delayed VAT and PAYE payments, a payment plan having been agreed with HMRC whereby all delayed payments would be repaid by the end of May 2024. Therefore, the working capital movements in 2024 are impacted in an equal and opposite way as these repayments were completed.

The working capital movement is defined as the aggregate movement in receivables, stock and payables and was at an overall level reported as an outflow of £4.1m (2023: £0.3m inflow). However, adjusting for the HMRC repayments noted above reveals an underlying working capital inflow of £0.2m.

The closing net bank debt position for 2024 was £9.5m. This represents a decrease in net debt of £5.9m on the 2023 year-end net bank debt of £15.4m.

Headline operating profit from continuing operations of £7.9m (2023: £6.5m) converted into £1.4m (2023: £4.2m) of 'free cash flow' (defined as net cash inflow from operating activities less tangible and intangible capital expenditure) and dividends of £0.1m (2023: £1.7m).

Working capital days

Trade creditor days and work in progress days both increased and trade debtors days decreased when compared to last year. Overall, the Group's total working capital days of 23.8 represents an increase from the 2023 equivalent (16.8 days).

Going concern

The Board believe that, through the actions taken during 2024 and described above, the Group is well placed to deliver profitable growth, 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 and cash flow projections for the Group alongside the availability of renewed committed bank facilities of £15m (expiring 21 March 2028), an overdraft facility of £3m and the headroom afforded against Total Debt Leverage and Bank Debt Leverage covenant tests for the coming 12 months.

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

KPIs are designed to monitor the Group's revenue and profit growth, within a safe capital structure. The targets, along with the outcome for 2024 are as follows:

• Achieve organic revenue growth of at least 2% per year (delivered +2%);

• Increase headline operating profit margins to 14% (delivered 10%);

• Grow headline profit before tax by 10% year-on-year; and (delivered +19%)

• Maintain the ratio of net bank debt to EBITDA* at or below 1.5x (delivered 1.1x) and the ratio of total debt (including both bank debt and deferred acquisition consideration) to EBITDA at or below 2.0x (delivered 1.7x).

*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.

Outlook

We enter 2025 with a plan for continued, profitable growth across our business segments.

The year has started well and prospects for organic progress are good. We also expect to drive additional margin improvements in spite of the cost pressures impacting our sector as we focus on our core operations, offerings and capabilities. Additionally, and as a result of the actions taken in 2024 this growth is well set to be highly cash generative.

Giles Lee

Group Chief Financial Officer

Consolidated Income Statement

For the year ended 31 December 2024

* Discontinued operations in 2024 consist of the results of April Six, sold on 31 December 2024 (see note 17.2)

** Discontinued operations in 2023 include the results of Pathfindr, sold in 2023, and the results of April Six.

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2024

Consolidated Balance Sheet

As at 31 December 2024

Consolidated Cash Flow Statement

For the year ended 31 December 2024

Consolidated Statement of Changes in Equity

For the year ended 31 December 2024

Notes to the Consolidated Financial Statements

1. Principal Accounting Policies

Basis of preparation

The results for the year to 31 December 2024 have been extracted from the audited consolidated financial statements, which are expected to be published by 25 March 2025.

The financial information set out above does not constitute the Company's statutory accounts for the years to 31 December 2024 or 2023 but is derived from those accounts. Statutory accounts for the year ended 31 December 2023 were delivered to the Registrar of Companies following the Annual General Meeting on 17 June 2024 and the statutory accounts for 2024 are expected to be published on the Group's website (www.themission.co.uk) shortly, posted to shareholders at least 21 days ahead of the Annual General Meeting ("AGM") on 16 June 2025 and, after approval at the AGM, delivered to the Registrar of Companies. 

The auditors, PKF Francis Clark, have reported on the accounts for the years ended 31 December 2024 and 31 December 2023; their reports in both years were (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006 in respect of those accounts.

2. Segmental Information

IFRS 15: Revenue from Contracts with Customers requires the disaggregation of revenue into categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The Board has considered how the Group's revenue might be disaggregated in order to meet the requirements of IFRS 15 and has concluded that the 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.

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.

Geographical segmentation

The following table provides an analysis of the Group's operating income by region of activity:

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.

In 2023, goodwill, business and intangible impairment costs related 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.

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 2023 related the trading losses of the Livity youth-marketing offer acquired in 2022, 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. Start-up costs in 2024 consist of further costs relating to the launch of Turbine and the launch of the US and Saudi offices of the Influence business.

Restructuring costs in 2023 comprised 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. In 2024, restructuring costs consist of the costs of shutting down the BLS China office.

Bank refinancing and equity raise costs in 2023 consisted 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. Costs in 2024 consist of further such expenses, accelerated bank debt arrangement fees (see note 5) and fees from various consulting and legal firms advising and assisting in the Board's consideration of an equity issue.

4. Acquisition and Disposal Adjustments

The movement in fair value of contingent consideration on acquisitions relates to a net upward (2023: upward) revision in the estimate payable to vendors of businesses acquired. This upward revision is driven by improved performance by the recent acquisitions. The movement in fair value of consideration on disposals relates to a net downward revision in the estimate receivable from the sale of Pathfindr. Acquisition transaction costs relate to professional fees in connection with acquisitions made or contemplated, including reverse acquisitions.

5. Net Finance Costs

The increase in net interest on bank loans, overdrafts and deposits in the period is driven primarily by an increase in the interest rate payable on the bank debt following general increases in interest rates by the BOE and higher margins payable on the new revolving credit facility entered into on 27 March 2024.

The increase in interest expense on lease liabilities in the period is the result of the general increase in interest rates and increase in Right of Use Assets and Lease Liabilities following the entering into of new leases, most notably the new London office.

Following the reduction in full year profit expectations announced to the market last year, the Group agreed a new revolving credit facility on 27 March 2024 and incurred additional bank debt arrangement fees that are being amortised over the period of the new facility. In addition, the remaining unamortised bank debt arrangement fees relating to the replaced facility were fully written off during the period. These additional bank debt arrangement fees, over and above what would have been amortised had the Group not refinanced, amounting to £90,000, have been classified as a headline adjustment.

6. Profit Before Taxation

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