The Mission Group Regulatory News (TMG)

13 Apr 2006 08:02

Mission Marketing Group (The) PLC13 April 2006 13 April 2006 THE MISSION MARKETING GROUP ACQUISITION OF BRAY LEINO AND FIRST DAY OF DEALINGS The Mission Marketing Group plc ('themission(R)') today announces thecommencement of dealings in its Ordinary Shares on the AIM market of the LondonStock Exchange with symbol TMMG. themission(R) is a regionally based advertisingand marketing business that specialises in providing regional, national andinternational clients with award winning advertising and below the linemarketing. The Company has raised £14.8 million (before expenses) through a placing bySeymour Pierce Limited, the Company's nominated adviser and broker, of 12.3million Placing Shares at a Placing Price of 120p per Ordinary Share. The Placing Shares represent 61.67% of the Enlarged Share Capital of theCompany. Based on the Placing Price, the market capitalisation of themission(R)will be £24.0 million. themission(R) has also completed the acquisition of Bray Leino, a leadingmarketing communications agency. Bray Leino will add significant scale to theexisting operations in themission(R) - Big Communications and Fuse Digital - andupon IPO Bray Leino shareholders will be significant shareholders in themission(R). The enlarged group is the third largest regional agency in the UK. Combined proforma turnover for the enlarged group (including Bray Leino) was£47.5 million and operating profit was £4.1million (before amortisation ofgoodwill and non-recurring items) for the year ended 31 December 2005. An AIM listing will provide themission(R) with access to new capital with whichto grow its existing businesses and develop rapidly through the acquisition ofregionally based marketing agencies. Following the integration of Bray Leino,the Company expects to make a number of further acquisitions creating asignificant agency grouping which has a strong national and regional reach,extensive central resources, an efficient cost structure and a management focuson good cash flow. The Company plans to offer an expanded range of specialistmarketing services to a large client base. Commenting on the listing, Iain Ferguson, Chief Executive said: 'Listing on AIM will allow us to build themission(R) into the first regionalsuper-agency. The acquisition of Bray Leino is a transforming deal that providesus a strong platform for future growth and establishes us as the third largestregional agency in the UK." "Economic and industry trends favour creative, effective, cost-efficientagencies with national and international capabilities. themission(R) cancapitalise on a changing market by offering great talent and delivering awardwinning work in new and traditional media whilst enjoying the benefits of arelatively lower cost base." Historical development Big Communications, based in Leicester, was established in 1996. Its clientsinclude several major national brands which have been retained over extendedperiods. The agency's disciplines include brand planning and strategicdevelopment; television, poster and press advertising; literature and cataloguedesign; and direct marketing and retail point-of-sale. Since its creation thecompany has won scores of industry awards and today employs some 53 staff. Fuse Digital, also based in Leicester and incorporated in 2000, providesexpertise in new media marketing including website development and advertising,SMS messaging and digital video. In recent years, the agency has capitalised onthe growth in digital marketing and today has a client base including WKD,Lucozade, Greenpeace and Carlsberg. It employs 12 staff. The combination of Big and Fuse extended the service offering available to theirrespective client base. The successful acquisition and integration of thesebusinesses has provided a base for further development. This approach isconsistent with themission(R) strategy of growing the business through acombination of organic growth across the network and selective acquisitions ofleading agencies that meet themission(R)'s criteria. Acquisition of Bray Leino Established in 1975, Bray Leino is a leading regional marketing communicationsagency, retained by a wide roster of major clients including Wrigley's, Shloer,WRAP (the Waste Resources Action Programme) and the global automotive companyFederal Mogul. Its healthcare division acts for Bausch & Lomb, Sanofi PasteurMSD Thornton & Ross and Dermal. Clients of its public relations consultancyinclude WRAP, Mitel and Britax. Bray Leino Learning provides high qualitylearning and development services to both the public and private sectors throughits national network of around 160 independent consultants. The events divisionworks for Aquascutum, Bally, Mulberry and Genzyme. As part of a larger group, the directors believe that any acquired agencies willbenefit from economies of scale, national coverage, wider resources, increasedproduct portfolio and a larger current and potential client base. This scalewill also open up new business opportunities that would not have been availableto the individual agencies. themission(R) will provide a range of specialistskills including advertising, design, direct marketing, digital/on-linemarketing, sales promotion, public relations, event management, training andmedia planning to regional, national and international clients. Management themission(R)'s management team combines both big and small agency expertisewith experience of building and developing advertising agency networks. TheChairman, The Right Hon. Francis Maude, has broad industry experience havingserved as a non-executive director of Asda Group, a managing director of MorganStanley and was chairman of Incepta prior to its merger with Huntsworth plc.Martin Banbury, deputy Chairman, founded themission(R) as well as agency group,Communicator. He also has client side experience at Proctor & Gamble andBritvic. Iain Ferguson, previously CEO of worldwide agency network EuroRSCGMarketing Services, has been responsible for creating and operating agencynetworks in the UK and internationally. Tim Alderson, CFO, was the CFO ofCreston plc where he played an important role in its successful buy and buildstrategy. Brian Child is a Non-Executive Director and was formerly the UK GroupChairman and CEO of McCann World Group and is the current Chairman of theMarketeer Association. Future progress Good future growth is expected in the UK marketing services sector. In 2004 thevalue of the sector exceeded £30 billion; this figure is expected to have grownto £31.2 billion in 2005, and to reach some £32.8 billion in 2006, benefitingfrom the Winter Olympics and the FIFA World Cup in Germany. In the same report,growth rates of 5-7% per annum for the UK marketing sector are expected over thenext 5-7 years. The Board believes that a growing proportion of marketing budgets will beallocated to regional agencies for several reasons: 1. A move by some major companies to seek alternatives to the traditional mass media legacy model. With its established, multi-disciplined agencies, the directors believe that themission(R) will benefit from this trend; 2. In 2005, the Central Office of Information, one of the UK's largest advertisers, announced a change to its roster of agencies to 'give it greater coverage in the regions' 3. Investment and relocation to the regions by national and international corporations is likely to continue; 4. Government investment in regenerating regional economies is expected to continue; 5. Clients are seeking effective marketing campaigns at competitive pricing, which is expected to benefit agencies located outside the capital where costs are lower. A recent analysis carried out by Willott Kingston Smith confirmed that on average regional agencies have lower operating and staff costs, higher margins and a higher return on capital,. themission(R) expects to capitalise on these changes by expanding bothorganically and through acquisition. ENDS Enquiries: Charles Palmer/Kim MuckleFinancial Dynamics 020 7269 7284 Mark Percy/Jeremy PorterSeymour Pierce Limited 020 7107 8000 This information is provided by RNS The company news service from the London Stock Exchange