The Mission Group Regulatory News (TMG)

The Mission Marketing Group plc

Audited results for the year ended 31 December 2016

23 March 2017

The Mission Marketing Group plc ("TMMG" or "the missiontm"), the marketing communications and advertising group, is pleased to announce its audited results for the year ended 31 December 2016.

Financial headlines

· Revenue up 8% to £65.9m (2015: £61.0m)

· Over 20% of revenue again from Clients of 20+ years standing

· Headline trading profit (operating profit before central costs) up 9% to £9.3m (2015: £8.5m)

· Headline operating profit margins improved slightly to 11.5% (2015: 11.4%)

· Headline profit before tax up 9% to £7.0m (2015: £6.5m)

· Headline diluted EPS up by 8% to 6.41 pence (2015: 5.91 pence)

· Full year dividend up by 25% to 1.5p (2015: 1.2p)

· Free cash flow of £5.3m generated

· Total debt reduced by over £3m

· Debt leverage headroom very comfortable

· £0.8m invested in software development, creating new forms of intellectual property

David Morgan, Chairman, commented: "All the stuff going on in the world didn't make for an easy 2016, so I'm delighted to report that we made good progress and delivered another year of continued growth.

We expect 2017 to be another year of further revenue and profit growth. We again have a high degree of visibility over forecast revenue and current indications are that we should expect good organic growth during the year ahead. We continue to seek out attractive acquisition opportunities to further enhance both our range of services and our rate of growth. The other area of focus for 2017 will be Fuse, a central sales and marketing hub created to commercialise the opportunities created by our new technology products. All in all it promises to be another busy and exciting year."

the missiontm is a network of entrepreneurial marketing communications Agencies employing over 950 people in the UK, Asia and San Francisco. The Group comprises a complementary mix of integrated generalists, specialists in specific marketing/communications activities and specialists in particular market sectors, all providing award-winning solutions to national and international Clients.

www.themission.co.uk

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.

Chairman's Statement

All the stuff going on in the world didn't make for an easy 2016, but I'm delighted to report that our Agencies very much rose to the occasion. As a result, we delivered another year of continued growth and are well placed to make 2017 another successful year. 

A combination of spirit, passion, planning and focus ensured that we made real progress against our internal performance measures. Our focus on concinnity, where our moving parts often behave as one, brought increased support and expertise to our Clients and helped each Agency to deliver remarkable successes.

More business-related innovation saw further development of our Pathfindr and Ethology technology-driven initiatives, and our Broadcare patient management system has now been widely adopted within the NHS.

Awards for creative excellence across many of our Agencies added to the excitement generated across the missiontm, as did further development in Asia, a revitalisation of our Speed and Mongoose brands, and the latter's venture into Sales Promotion.

Core Clients continued to underpin our revenues, and strong new business generation was achieved throughout the missiontm - wins from the likes of O2, Thomson Reuters, Sky Bingo, HS2, Abbvie, Bosch, Muller, Porsche China, Dulux and First Direct will help us make further progress in 2017.

The acquisition of Chapter in 2015 is proving to be a great success both financially and culturally as they have segued seamlessly into the missiontm. Our start-up investments are beginning to gain traction and we are seeing strong support for our integrated approach where cross-Agency teams are being focused on Clients' requirements. There remain many opportunities to provide existing Clients with additional expertise and services. This integrated approach helps underpin our confidence for the year ahead.

In April 2016 Mike Smith joined us from Innocean as CEO of our RLA Agency. Mike brings a wealth of advertising and automotive experience and sees clear opportunities for RLA to build further through the commercialisation of its technology platforms that he considers to be unrivalled in the sector.

We will endeavour to capitalise on our syncretistic strategy as we grow, developing and expanding both the reach and the expertise of our business in a way that delivers a truly excellent service to our Clients. Our continued progress across the business endorses our objective of being the UK's most respected Agency group.

David Morgan

Chairman

Financial Review

Summary

2016 was a year of further progress for the Group, achieving all the plans we set out this time last year. Chapter, acquired in 2015, has contributed well to the growth of our business, and the Group has again been strengthened during the year through further investments in core skills and new initiatives. April Six's expansion into Asia took root during 2016 and is now sustainably profitable. We also launched a new Sales Promotion start-up venture in the second half of the year, established a healthcare joint venture to formalise our relationship with our European partners, and April Six launched its PR offering in the US.

Elsewhere, 2016 saw strong developments in the use of technology as a product in its own right. We have long used technology to enable the delivery of communications via multiple channels but recently we have been developing intellectual property that can be sold in new and innovative ways. 2017 will see an increased focus in this area.

As with any group, not all our Agencies quite met expectations but our portfolio nature reduces our exposure to any individual Agency and there are many reasons to feel positive about the year ahead.

Key Performance Indicators

The Group manages its internal operational performance and capital management by monitoring various key performance indicators ("KPIs''). The KPIs are tailored to the level at which they are used and their purpose. The Board has reviewed and revised its financial KPIs during the year, introducing specific performance targets. The revised KPIs, which are quantified and commented on in the Financial Review of the Year below, are:

· operating income ("revenue"), which the Group aims to grow by at least 5% per year;

· headline operating profit margins, which the Group is targeting to increase from 11.5% to 14% over the next three years;

· headline profit before tax, which the Group aims to increase by 10% year-on-year; and

· indebtedness, where the Group intends to maintain the ratio of net bank debt to EBITDA* below x2.0 and the ratio of total debt (including both bank debt and deferred acquisition consideration) to EBITDA below x2.5.

*EBITDA is headline operating profit before depreciation and amortisation charges.

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.

Headline Trading Performance

The Directors are primarily interested in monitoring and managing the Group's core operating activities, without the volatility and distortions created by one-off events and non-cash accounting adjustments relating to acquisitions. Accordingly, the Directors measure and report the Group's performance by reference to headline results, calculated before exceptional items, acquisition adjustments and losses from start-up activities (as set out in Note 3).

Billings and revenue

Turnover (billings) was 9% higher than the previous year, at £144.1m (2015: £132.2m) but since billings include pass-through costs (eg. TV companies' charges for buying air-time), the Board does not consider turnover to be a key performance measure. Instead, the Board views operating income (turnover less third party costs) as a more meaningful measure of Agency activity levels.

Operating income (referred to as "revenue") increased 8% to £65.9m (2015: £61.0m) continuing the consistent revenue growth achieved over the last five years.

Although the acquisition of Chapter in 2015 boosted revenue growth during the year, it was particularly pleasing to see underlying growth in both our core activity of Branding, Advertising and Digital, and also in Events and Learning, which showed the benefit of the restructuring carried out in 2015.

The property sector was where we saw the biggest uncertainties resulting from the Brexit vote and, as a consequence, revenue from our Media buying activities reduced slightly, but our other specialist property marketing activities held up well.

Given the general delays, cancellations and uncertainties created by the referendum, we are pleased to have achieved overall revenue growth of 8%. Helping us to achieve this growth, our new business performance and Client retention record were again very strong, with net new business wins amounting to over £5m and more than 20% of our revenue again being generated from Clients that have been with us for 20 years or more. The Board believes this Client retention statistic is second to none in the marketing services sector.

Profit and margins

Trading profits (i.e. segmental headline operating profit, before central costs, as set out in Note 2) increased by 9%, slightly ahead of revenue growth, to £9.3m (2015: £8.5m) and headline operating profit also increased by 9% to £7.6m (2015: £6.9m).

Clients' spending patterns repeated those of previous years, with the second half of the year particularly busy, resulting in over 60% of our operating profits being generated in this period. Profit margins (headline operating profit as a percentage of revenue) were over 14% in H2 (2015: 14%), increasing our overall margin for the year to 11.5% (2015: 11.4%). With no sign of any easing in the downward pressure on margins, we are again pleased with this small year-on-year improvement.

Net interest costs, at £0.5m, were almost unchanged from the previous year, reflecting the cash investment in expansion during the year (see cash flow below) which resulted in a small increase in net bank debt over the course of the year.

After financing costs and a small loss from share of joint ventures and associates, headline profit before tax increased by 9% to £7.0m (2015: £6.5m), continuing the growth achieved over the last five years.

Taxation

The Group's effective headline tax rate increased slightly to 21.0% (2015: 20.2%), compared with the statutory rate of 20.0% (2015: 20.25%). The Group's effective tax rate is normally above the statutory rate as a result of non-deductible entertaining expenditure and the higher rates of taxation in the US. In 2015 the effective tax rate was somewhat reduced as a result of adjustments to prior year estimates.

Headline Items and Reported Profit

Adjustments to reported profits in 2016 comprise acquisition-related items of £0.7m (2015: £0.1m) and losses from start-up activities totaling £0.5m (2015: £0.3m). In 2015 profits were also adjusted for restructuring costs totaling £0.9m; there were no such exceptional items incurred during 2016. After these adjustments, reported profit before tax was 14% higher at £5.9m (2015: £5.1m).

The Group's effective reported tax rate in 2016 was 23.3% (2015: 20.2%). The effective tax rate is expected to be consistently higher than the statutory rate since the amortisation of acquisition-related intangibles is not deductible for tax purposes. This effect was offset in 2015 as a result of the more significant movements in the fair value of contingent consideration, which are non-taxable.

Earnings Per Share

On a headline basis, EPS increased by 8% to 6.63 pence (2015: 6.14 pence) and fully diluted EPS increased similarly, to 6.41 pence (2015: 5.91).

Reported EPS increased by 10% to 5.36 pence (2015: 4.86 pence) and fully diluted EPS increased by 11% to 5.19 pence (2015: 4.68 pence).

Dividends

Since the Group was refinanced in 2010, the Board has taken a cautious approach to dividends but, after a period of sustained and strong cash generation, recommends a final dividend of 1.0 pence per share, bringing the total for the year to 1.5 pence per share, representing an increase of 25% over 2015. The final dividend will be payable on 24 July 2017 to shareholders on the register at 14 July 2017. The corresponding ex-dividend date is 13 July 2017. The Board will continue to keep under regular review the best use of the Group's cash resources, always balancing the desire to reward shareholders via dividends with the need to fund further growth, but it remains the Board's intention to follow a progressive policy provided trading conditions allow.

Balance Sheet

As a people business, the main features of the Group's 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 level of intangible assets relating to acquisitions decreased slightly over the course of 2016 as the level of annual amortisation exceeded the additional goodwill acquired from the small in-fill acquisitions made during the year. At the same time, the level of total debt (combined bank debt and acquisition obligations) reduced by over £3m.

Cash Flow

In 2016, the Group returned to its more normal record of strong cash flow, with headline profit after tax of £5.6m converting into £5.3m of "free cash flow" (defined as net cash inflow from operating activities less tangible capital expenditure).

This free cash flow was used to expand the business, develop new initiatives, make acquisitions and pay dividends as follows:

· new acquisitions, amounting to £0.4m (2015: £0.7m);

· settlement of contingent consideration obligations relating to the strong performance and profits generated by our previous acquisitions, totaling £3.2m (2015: £0.9m);

· investment in a number of other areas in support of the Group's expansion, notably £0.8m (2015: nil) invested in software development; and

· dividends of £1.3m (2015: £0.9m)

Despite a year in which significant cash investments have been made in the development of the Group, net bank debt increased by only £0.3m to £11.3m (2015: £11.0m). Importantly, the leverage ratio of net bank debt to headline EBITDA remained unchanged at x1.3 at 31 December 2016. The Group's ratio of total debt, including remaining acquisition obligations, to EBITDA at 31 December 2016 (calculated by reference to the amount of consideration which would be payable if the acquired business were to maintain its current level of profitability) reduced to x1.7 (2015: x2.0), increasing the already comfortable headroom against the Board's limit of x2.5.

Outlook

We expect further revenue and profit growth in the coming year. Although there are a number of macro economic uncertainties, we again have a high degree of visibility over forecast revenue and current indications are that we should expect good organic growth during the year ahead. We continue to seek out attractive acquisition opportunities to further enhance both our range of services and our rate of growth. With our newly-set KPIs, we have an increased focus on margins and have streamlined a number of activities in the first quarter of 2017. The restructuring costs associated with this action are estimated at £0.5m. The other area of focus for 2017 will be Fuse, a central sales and marketing hub created to introduce new markets to the opportunities created by our new technology products. All in all it promises to be another busy and exciting year.

Peter Fitzwilliam

Finance Director

Consolidated Income Statement

For the year ended 31 December 2016

The earnings per share figures derive from continuing and total operations.

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2016

Consolidated Balance Sheet

As at 31 December 2016

Consolidated Cash Flow Statement

for the year ended 31 December 2016

Consolidated Statement of Changes in Equity for the year ended 31 December 2016

Notes to the Consolidated Financial Statements

1. Principal Accounting Policies

Basis of preparation

The results for the year to 31 December 2016 have been extracted from the audited consolidated financial statements, which are expected to be published by 24 March 2017.

The financial information set out above does not constitute the Company's statutory accounts for the years to 31 December 2016 or 2015 but is derived from those accounts. Statutory accounts for the year ended 31 December 2015 were delivered to the Registrar of Companies following the Annual General Meeting on 13 June 2016 and the statutory accounts for 2016 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 19 June 2017 and, after approval at the AGM, delivered to the Registrar of Companies.

The auditors, Francis Clark LLP, have reported on the accounts for the years ended 31 December 2016 and 31 December 2015; 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.

The annual financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) adopted by the European Union and the Companies Act 2006.

Basis of consolidation

The results of subsidiaries acquired or disposed of during the year are included in the Consolidated Statement of Comprehensive Income from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring accounting policies used into line with those used by the Group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Turnover and revenue recognition

The Group's operating subsidiaries carry out a range of different activities. The following policies apply consistently across subsidiaries and business segments.

Turnover represents fees, commissions, rechargeable expenses and sales of materials performed subject to specific contracts. Income is recognised on the following basis:

· Retainer fees are apportioned over the time period to which they relate

· Project income is recognised by apportioning the fees billed or billable to the time period for which those fees were earned by relationship to the percentage of completeness of the project to which they relate

· Media commission is recognised when the advertising has been satisfactorily aired or placed

· Unbilled costs relating to contracts for services are included at rechargeable value in accrued income.

Where recorded turnover exceeds amounts invoiced to Clients, the excess is classified as accrued income (within Trade and other receivables). Where amounts invoiced to Clients exceed recorded turnover, the excess is classified as deferred income (within Accruals).

Goodwill and other intangible assets

Goodwill

Goodwill arising from the purchase of subsidiary undertakings and trade acquisitions represents the excess of the total cost of acquisition over the Group's interest in the fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary acquired. The total cost of acquisition represents both the unconditional payments made in cash and shares on acquisition and an estimate of future contingent consideration payments to vendors in respect of earn-outs.

Goodwill is not amortised, but is reviewed annually for impairment. Goodwill impairment is assessed by comparing the carrying value of goodwill for each cash-generating unit to the future cash flows, discounted to their net present value using an appropriate discount rate, derived from the relevant underlying assets. Where the net present value of future cash flows is below the carrying value of goodwill, an impairment adjustment is recognised in profit or loss and is not subsequently reversed.

Other intangible assets

Costs associated with the development of identifiable software products where it is probable that the economic benefits will exceed the costs of development are recognised as intangible assets. These assets are carried at cost less accumulated amortisation and are amortised over periods of between 3 and 5 years. Amortisation of software development costs is included within operating expenses.

Other intangible assets separately identified as part of an acquisition are amortised over periods of between 3 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.

Contingent consideration payments

The Directors manage the financial risk associated with making business acquisitions by structuring the terms of the acquisition, wherever possible, to include an element of the total consideration payable for the business which is contingent on its future profitability (ie earn-out). Contingent consideration is initially recognised at its estimated fair value based on a reasonable estimate of the amounts expected to be paid. Changes in the fair value of the contingent consideration that arise from additional information obtained during the first twelve months from the acquisition date, about facts and circumstances that existed at the acquisition date, are adjusted retrospectively, with corresponding adjustments against goodwill. The fair value of contingent consideration is reviewed annually and subsequent changes in the fair value are recognised in profit or loss, but excluded from headline profits. 

Accounting estimates and judgements

The Group makes estimates and judgements concerning the future and the resulting estimates may, by definition, vary from the actual results. The Directors considered the critical accounting estimates and judgements used in the financial statements and concluded that the main areas of judgement are, in order of significance:

Potential impairment of goodwill

The potential impairment of goodwill is based on estimates of future cash flows derived from the financial projections of each cash-generating unit over an initial three year period and assumptions about growth thereafter, discussed in more detail in Note 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 customer retention is the principal uncertainty and draws on historic experience.

2. Segmental Information

Business segmentation

For management purposes the Group had thirteen operating units during the year, each of which carries out a range of activities. These activities have been divided into four business and operating segments as set out below.

Geographical segmentation

The Group's continues to expand its activities outside the UK, but substantially all the Group's business remains based and executed in the UK, with less than 10% of operating income attributed to territories outside of the UK.

3. Reconciliation of Headline Profit to Reported Profit

The Board believes that headline profits, which eliminate certain amounts from the reported figures, provide a better understanding of the underlying trading of the Group. The adjustments to reported profits fall into three categories: 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. Start-up costs in 2016 relate to the launch of new ventures Mongoose Sports & Entertainment and Mongoose Promotions and April Six's new operations in Singapore and the US. Start-up costs in 2015 related to the launch of Mongoose Sports & Entertainment and April Six's new operations in Singapore.

4. Exceptional Items

Exceptional items represent revenue or costs that, either by their size or nature, require separate disclosure in order to give a fuller understanding of the Group's financial performance.

Exceptional costs in 2015 comprised amounts payable for loss of office and other costs incurred relating to the restructuring of certain operations in order to streamline activities and underpin the Board's growth expectations.

5. Acquisition Adjustments

The movement in fair value of contingent consideration relates to a net downward revision in the estimate payable to vendors of businesses acquired in prior years..

6. Net Finance Costs

7. Profit Before Taxation

Profit on ordinary activities before taxation is stated after charging:-

8. Taxation

Factors Affecting the Tax Charge for the Current Year:

The tax assessed for the year is higher (2015: lower) than the standard rate of corporation tax in the UK. The differences are:

9. Dividends

A final dividend of 1.0 pence per share is to be paid in July 2017 should it be approved by shareholders at the AGM. In accordance with IFRS this final dividend will be recognised in the 2017 accounts.

10. 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.

Basic earnings per share includes shares to be issued subject only to time as if they had been issued at the beginning of the period.

A reconciliation of the profit after tax on a reported basis and the headline basis is given in Note 3.

11. Intangible Assets

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"). For all CGUs, the Directors assessed the sensitivity of the impairment test results to changes in key assumptions (in particular expectations of future growth) and concluded that a reasonably possible change to the key assumptions would not cause the carrying value of goodwill to exceed the net present value of its projected cash flows.

Other intangible assets

*As software development costs have become increasingly significant, they have been transferred from computer equipment and reported separately within intangible assets.

Additions of £777,000 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. In 2015 the additions of £1,220,000 included Client relationships and trade names acquired relating to the Chapter acquisition, all of which are being amortised over finite useful lives.

12. Trade and Other Receivables

An allowance has been made for estimated irrecoverable amounts from the provision of services of £234,000 (2015: £201,000). The Directors consider that the carrying amount of trade and other receivables approximates their fair value.

13. Trade and Other Payables

Trade and other creditors principally comprise amounts outstanding for trade purchases and on-going costs. The Directors consider that the carrying amount of trade payables approximates their fair value.

14. Bank Overdrafts, Loans and Net Debt

Bank debt arrangement fees, where they can be amortised over the life of the loan facility, are included in finance costs. The unamortised portion is reported as a reduction in bank loans outstanding.

At 31 December 2016, the Group had a term loan facility of £5.4m due for repayment by February 2019 on a quarterly basis, and a revolving credit facility of up to £7.0m, expiring on 3 February 2019. Interest on both the term loan and revolving credit facilities is based on 3 month LIBOR plus 2.25%, payable in cash on loan rollover dates.

In addition to its committed facilities, the Group had available an overdraft facility of up to £3.0m with interest payable by reference to National Westminster Bank plc Base Rate plus 2.5%.

At 31 December 2016, there was a cross guarantee structure in place with the Group's bankers by means of a fixed and floating charge over all of the assets of the Group companies in favour of Royal Bank of Scotland plc.

All borrowings are in sterling.

On 16 March 2017 the Group agreed an increase of £5.0m in the revolving credit facility and an extension to the maturity date for the revolving credit facility to 30 April 2019. All other terms of the existing credit facilities remain unchanged.

15. Acquisitions

15.1 Acquisition Obligations

The terms of an acquisition may provide that the value of the purchase consideration, which may be payable in cash or shares or other securities at a future date, depends on uncertain future events such as the future performance of the acquired company. The Directors estimate that the liability for contingent consideration payments that may be due is as follows:

15.2 Acquisitions during the year

A total of £502,000 was invested in other acquisitions during the year, comprising initial cash consideration of £466,000 and deferred contingent consideration of £36,000.

15.3 Pro-forma results including acquisitions

The Directors estimate that the turnover, operating income and headline operating profit of the Group would have been approximately £144.9m, £66.4m and £7.4m had the Group consolidated the results of the acquisitions made during the year, from the beginning of the year.

16. Share Capital

Options

The Group has the following options in issue:

The TMMG Long Term Incentive Plan ("LTIP") was created to incentivise senior employees across the Group. Nil cost options are awarded at the discretion of the Remuneration Committee of the Board and vest three years later only if the profit performance of the Group in the intervening period is sufficient to meet predetermined criteria (always subject to Remuneration Committee discretion). During the year, no options were exercised and at the end of the year none of the outstanding options are exercisable.

Shares held in an Employee Benefit Trust will be used to satisfy share options exercised under The Mission Marketing Group Long Term Incentive Plan.

17. Own Shares

Shares are held in an Employee Benefit Trust to meet certain requirements of The Mission Marketing Group Long Term Incentive Plan.

18. Post Balance Sheet Events

After the end of the financial year, a new company, The Mission Marketing Holdings Ltd ("TMMH"), was incorporated as a wholly owned subsidiary of the Company. On 21 February 2017, all the Company's shareholdings in subsidiaries were transferred to TMMH in return for the issuance of 20,000,002 Ordinary shares. On the same day, various individuals subscribed for a total of 5,720,171 A Ordinary shares in TMMH as part of the Growth Share Scheme referred to in the Corporate Governance Report.

On 16 March 2017 the Directors agreed an increase and an extension to the maturity date for the revolving credit facility. Further details of these facilities are set out in Note 14.