The Mission Group Regulatory News (TMG)

The Mission Marketing Group plc

Interim results for the six months to 30 June 2012

The Mission Marketing Group plc ("TMMG" or "the missiontm"), the UK marketing communications group, sets out its unaudited interim results for the six months ended 30 June 2012.

Trading

·; Good new business wins in the period, including Aviva, RBS and Brantano

·; Strong growth from existing Clients, including VMWare, Legal & General, Axa, M&S Money, BP, Berkeley Homes and Telford Homes

·; Net annualised new business of £4.7m operating income won so far

Income Statement

·; Operating income (Revenue) up 14% to £22.5m (2011: £19.8m)

·; Headline operating profit up 4% to £2.8m (2011: £2.7m)

·; Net finance costs reduced by almost 30% to £0.6m (2011: £0.9m)

·; Profit before tax up 27% to £2.1m (2011: £1.7m)

·; Diluted EPS: 2.03 pence (2011: 1.60 pence)

·; Results in line with the Board's expectations and again expected to have a second-half bias

Balance sheet and cash flow

·; Cash inflow from operating activities of £4.0m (2011: £5.4m)

·; Net bank debt reduced by £3.1m in the six months to £12.3m

·; Gearing reduced from 26% at 31 December 2011 to 21%

·; Debt leverage ratio reduced from x2.3 at 31 December 2011 to x1.8 at 30 June 2012

Enquiries:

The Mission Marketing Group plc 020 3463 2099

David Morgan, Chairman

Peter Fitzwilliam, Finance Director

finnCap Limited 020 7220 0500

Geoff Nash/Henrik Persson (corporate finance)

Simon Starr (corporate broking)

the missiontm is a national marketing communications and advertising group with 14 offices across the UK. The Group specialises in providing national and international clients with award winning marketing, advertising and business communications. Group members include April-Six, Big Communications, Bray Leino, RLA, Robson Brown, Story and ThinkBDW. the missiontm employs over 700 staff nationally and is listed on AIM (TMMG).

Chairman's Statement

The difficulties in the sector that have been experienced in recent years have shown no real signs of abating. The market remains discombobulated and somewhat challenging which is all the more reason for me to be truly in awe of the performance of our Agencies in the first half of this year.

Generally our Agencies have hit or exceeded their targets and that is undoubtedly due to their relentless commitment to quality and service in the desire to help their Clients become more successful and their brands more regarded. This passion to succeed, harnessed to our unique structure that ensures that the lead Agency is able to provide the full missiontm toolkit as and when required by their Clients, is central to our strategy. It enables our Agencies to provide the best advice locally and the surest delivery, whatever demands and opportunities dictate, thus providing our Clients with an unrivalled breadth of expertise and therefore a significant advantage.

So well done to everyone within the missiontm.

So far in 2012 we have kept momentum behind our core strategy by increasing profitability, paying down debt and improving our structure. Key Client relationships have been strengthened and new business wins from the likes of RBS, Brantano and Aviva are paving the way for us to hit our full year numbers. These are great Companies for our business to be associated with and our people are committed to justifying the confidence that they have shown in us.

Trading results

Trading for the first half of 2012 was in line with management's expectations. Turnover ("billings") for the six month period was unchanged from the previous year, at £59.9m, reflecting the significance of the 2011 Census (our largest ever project) to last year's numbers. Excluding this, all activities across the group reported year-on-year increases in billings.

Operating income ("revenue") increased 14% to £22.5m (2011: £19.8m), mainly the result of continued strong growth in ThinkBDW (our property-specialist Agency), and also the first contribution from Yucca, the e-commerce and digital marketing consultancy acquired by Bray Leino in October last year. The challenging UK environment, in which Clients continue to seek more for less, led to a reduction in operating margins to 12.3% (2011: 13.4%) but, despite this, operating profit increased to £2.8m, representing 4% growth over last year (2011: £2.7m).

The continued focus on working capital management and debt reduction resulted in a strong reduction in net finance charges, of almost 30%, to £0.6m (2011: £0.9m), after which headline profits before tax were 20% higher, at £2.1m (2011: £1.8m).

There were no exceptional items during the period but £0.1m of exceptional restructuring cost was incurred in 2011. After this cost, the year-on-year growth in operating profit was 8%, and in pre-tax profit was 27%.

After an estimated effective tax rate of 27% (2011: 28%), profits after tax increased by almost 30% to £1.5m (2011: £1.2m), and fully diluted headline EPS increased by almost 20% to 2.03 pence (2011: 1.70 pence).

Balance sheet, cash flow and dividend

The main change to our balance sheet since we last reported has been the change in profile of our debt obligations. Committed facilities which were due to expire next year have been extended to the end of 2015 and the annual repayment has been reduced from £4m to £2.3m. The group currently has £15m of committed facilities and an additional overdraft facility of £2m. At the same time as the term of the facilities was extended, the significant progress made by the group since its restructuring in April 2010 was recognised in a reduction in interest rates being charged on the facilities. These lower rates are expected to result in interest cost savings of around £0.2m over the next 12 months.

Operating cash flows are traditionally stronger in the first half of the year than the second and, reflecting this, cash flow from operating activities in the six months was £4.0m (2011: £5.4m), leading to a reduction in net debt to £12.3m (2011: £13.8m) and a further reduction in our gearing ratio (net debt to equity) from 26% at 31 December 2011 to 21% at the end of the period. As predicted, our "leverage ratio" (ratio of net bank debt to pre-exceptional EBITDA) reduced below x2.0 for the first time since the Company's IPO in 2006, from x2.3 at 31 December 2011 to x1.8 at 30 June 2012.

As in prior years, due to the phasing of working capital requirements, an increase in net debt is predicted in the second half of the year. However, we anticipate our year-end leverage ratio to again be below x2.0.

Since the restructuring in April 2010, the Board has been focused on reducing the group's debt leverage ratio and, accordingly, paying down debt and concentrating on organic growth have been the main priorities. Consequently, only small in-fill acquisitions have so far been made and no dividends have yet been paid. The Board will continue to regularly consider the most effective use for the cash generated by the business, however the strong reduction in debt leverage since 2010 provides greater flexibility and the Board anticipates being able to declare a dividend next year. In addition, the Board will continue to review opportunities to make both strategic and opportunistic acquisitions.

Current trading and outlook

We believe that we are heading in the right direction; our people are committed to delivering success that our Clients thrive on. Our structure and our collective strategy are giving us a distinct competitive edge and the early signs are that it is working for us. We therefore remain, barring undue gallifragging, optimistic for the future and the outturn for this year and beyond.

David Morgan

Chairman

Condensed Consolidated Statement of Comprehensive Income

for the 6 months ended 30 June 2012

Condensed Consolidated Balance Sheet

as at 30 June 2012

Condensed Consolidated Cash Flow Statement

for the 6 months ended 30 June 2012

Condensed Consolidated Statement of Changes in Equity

for the 6 months ended 30 June 2012

Notes to the unaudited Interim Report

for the 6 months ended 30 June 2012

1. Accounting Policies

Basis of preparation

The condensed consolidated interim financial statements for the six months ended 30 June 2012 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 2011 on pages 26-29. These are consistent with the accounting policies which the Group expects to adopt in its 2012 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 2012 and 30 June 2011 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 2011 have been extracted from the Group's Annual Report and Accounts 2011, 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 2011 have been filed with the Registrar of Companies.

Going concern

As well as continuing to generate sustained levels of profitability and strong cash conversion, the Group has committed bank facilities available to the end of 2015 and no material acquisition liabilities. The available banking facilities provide comfortable levels of headroom against the Group's projected cash flows and the Directors accordingly consider 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 financial statements and concluded that the main areas of judgement are:

·; Valuation of goodwill; and

·; Revenue recognition policies in respect of contracts which straddle the period end.

These estimates are based on historical experience and various other assumptions that management and the Board of Directors believe are reasonable under the circumstances.

2. Segmental Information

Business segmentation

For management purposes the Group had six operating subsidiaries during the period: April-Six Limited, Big Communications Limited, Bray Leino Limited, RLA Group Limited, Story UK Limited and ThinkBDW Limited. These have been divided into four segments which form the basis of the Group's primary segmentation, namely: Branding, Advertising and Digital; Events and Learning; Media; and Public Relations.

Geographical segmentation

The Group's operations are all based in the UK and substantially all the Group's business is executed in the UK.

3. Reconciliation of Headline Profit to Reported Profit

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. There were no exceptional items in 2012; exceptional items in 2011 consisted of restructuring costs.

5. Investment income and Finance costs

Debt arrangement fees arising on the renegotiation, in 2010, and modification, in 2012, of credit facilities are being amortised over the life of the credit agreement.

6. Taxation

The taxation charge for the period ended 30 June 2012 has been based on an estimated effective tax rate on profit on ordinary activities prior to IFRS interest charges of 27% (30 June 2011: 28%).

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 IAS33: "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.

Options issued are included in diluted earnings per share to the extent that the market price is above the exercise price in accordance with IAS33. Dilutive options are not incorporated into the reported diluted earnings per share calculation if the effect would be to lower the loss per share.

8. Intangible assets

Goodwill

Goodwill represents original cost of £72,186,000 less an impairment provision of £3,995,000 made in 2009.

In accordance with the Group's accounting policies, an annual impairment test is applied to the carrying value of goodwill and other intangible assets. The next impairment test will be undertaken at 31 December 2012.

Goodwill arose from the acquisition of the following subsidiary companies and is comprised of the following substantial components:

Other Intangible Assets

Other intangible assets consist of intellectual property rights. The amortisation charge for the period ended 30 June 2012 was £14,000 (2011: £2,000)

9. Bank Loans and Net Debt

10. Reconciliation of operating income to operating cash flow

11. Post balance sheet events

There were no material post balance sheet events.