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Research: TMT
The MISSION Group’s year-end trading update indicates FY21 PBT will be in line with market expectations, with a good H221 performance on revenue and margin. The net debt figure of £10.2m is also in line with the anticipated level, with £6.3m of deferred consideration paid out in H221. Management is indicating a higher level of investment in talent recruitment and retention in FY22, which will up the cost base in the short term but put it in a better position to take advantage of trends, particularly in data and analytics. The FY22 PBT market estimate has now reduced from £10.2m to £8.4m. MISSION’s shares continue to trade at a discount to peers.
The MISSION Group |
Investing in talent
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19 January 2022 |
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The MISSION Group’s year-end trading update indicates FY21 PBT will be in line with market expectations, with a good H221 performance on revenue and margin. The net debt figure of £10.2m is also in line with the anticipated level, with £6.3m of deferred consideration paid out in H221. Management is indicating a higher level of investment in talent recruitment and retention in FY22, which will up the cost base in the short term but put it in a better position to take advantage of trends, particularly in data and analytics. The FY22 PBT market estimate has now reduced from £10.2m to £8.4m. MISSION’s shares continue to trade at a discount to peers.
Eyes on the cost line
Top-line growth prospects are generally well supported by good underlying demand, with some variability in specific areas, such as property and events, and the market is looking for 6% progress here in FY22. Expansion of the operating margin in FY22, however, will be constrained by additional costs as the group seeks to attract, retain and invest in the best talent in tight labour markets. This is particularly the case for specialists in marketing data and analytics, key investment areas for future growth. Property needs were reappraised in FY20, with a full year of that cost advantage in FY21. The market PBT forecast has been revised back from £10.2m to £8.4m, which still represents a 18% uplift on the projected FY21 figure – double-digit year-on-year growth, as indicated by management in the update. End FY21 net debt of £10.2m is in line with expectations. The group has a £20m RCF in place (with a £5m accordion option), giving plenty of resource to fund internal and acquisitional investment.
A growing family
The MISSION has continued to grow its capabilities, with the acquisition of Soul in October (see ETV) building on the customer experience element, which includes its behavioural science agency, Innovation Bubble. We expect to hear more on the other two areas highlighted for expansion (data and analytics, and e-commerce) with the full year results, scheduled for 29 March. The trading update references management’s ambition to grow the roster of agencies within the group in FY22.
Valuation: Still well below peers
The MISSION Group’s share price hit a high of 88.5p in April 2021 and had drifted off to 62p at the close of the year, since when it has recovered to around the 70p level. This represents a valuation rating at a sizeable discount to the global advertising sector. Averaging across FY21–22e, and using the revised forecasts, MISSION’s shares would be valued around 95p were they to trade at parity with advertising peers on P/E and EV/EBIT multiples.
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Consensus estimates
Source: Refinitiv. Note: *Normalised. |
The MISSION Group is a research client of Edison Investment Research Limited
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Research: TMT
Centaur’s year-end trading update indicates the group had a good Q421 and FY21 results will show revenue and EBITDA margin ahead of consensus. We lift our FY21 revenue estimate by £1.0m to £38.5m, which represents 19% growth over FY20, and EBITDA by 5% to £5.9m (+55% y o y). Our increased FY22 projections reflect this higher base. Year-end cash of £13.1m (excluding lease liabilities) was also ahead of our previous forecast of £11.7m. We see management’s MAP23 targets as demanding but achievable, with the valuation overstating the execution risk.