Last close As at 05/08/2026
—
— 0.00 (0.00%)
Market capitalisation
—
Research: TMT
The MISSION’s trading update indicates the group had a comfortably better Q4 than expected, with the full-year PBT over £1m, against our forecast £0.5m. Cash performance was significantly ahead, with a year-end net debt position of £1.3m allowing the payment of the delayed final 1.53p dividend from FY19. We will update our FY20 numbers with the full results in April. We have trimmed our FY21 forecast revenue by 7.5% to reflect the ongoing impact of the pandemic in H121, reducing PBT from £9.0m to £7.1m. We also publish our first thoughts on FY22, on an improving trend. The shares remain priced at a significant discount to peers on earnings multiples.
The MISSION Group |
Looking for the bounce back |
Year-end trading update |
Media |
20 January 2021 |
Share price performance
Business description
Next events
Analyst
The MISSION Group is a research client of Edison Investment Research Limited |
|||||||||||||||||||||||||||||||||||||||||||||
The MISSION’s trading update indicates the group had a comfortably better Q4 than expected, with the full-year PBT over £1m, against our forecast £0.5m. Cash performance was significantly ahead, with a year-end net debt position of £1.3m allowing the payment of the delayed final 1.53p dividend from FY19. We will update our FY20 numbers with the full results in April. We have trimmed our FY21 forecast revenue by 7.5% to reflect the ongoing impact of the pandemic in H121, reducing PBT from £9.0m to £7.1m. We also publish our first thoughts on FY22, on an improving trend. The shares remain priced at a significant discount to peers on earnings multiples.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/18 |
77.6 |
9.2 |
8.5 |
2.1 |
7.8 |
3.2 |
12/19 |
81.0 |
10.2 |
9.0 |
2.3 |
7.3 |
3.5 |
12/20e |
62.7 |
0.5 |
0.7 |
0.0 |
94.3 |
0.0 |
12/21e |
70.4 |
7.1 |
6.1 |
1.8 |
8.6 |
2.7 |
12/22e |
76.4 |
10.5 |
8.9 |
2.1 |
7.3 |
3.2 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptionals and share-based payments. FY20 figures do not reflect update.
Set for margin uplift
As described in our last update note in December, the group has been making good progress on its objectives to deliver profitable growth through driving revenues by leveraging its skill set across the agencies and rebuilding revenues from its exceptionally loyal client base. FY21e profits will benefit from the reduced overhead of fewer London offices, plus the uplift to margin from the roll out of MISSION Made. This is a 24/7 centralised production, product and innovation studio to supply the group agencies with digital and motion graphics capability launched with four participating agencies in October 2020. As normal, H2 is expected to outperform H1, with the pattern in FY21 likely to be exaggerated by ongoing economic restrictions relating to the COVID-19 pandemic. Our initial thoughts on FY22 are predicated on group revenue slightly outstripping that achieved in FY19.
Strengthened balance sheet gives flexibility
The indicated year-end net cash position of £1.3m is well ahead of the £8.2m we had modelled, and we await the release of full-year numbers in April to identify where the benefit has arisen. This has allowed for the reinstatement of the dividend, paused as the pandemic spread in Q220. It may also allow for further acquisitions to add a capability, a sector or a geographic exposure.
Valuation: Discount to peers persists
As is the case for MISSION, forecasts for peers remain highly subjective to assumptions on the speed and scale of the recovery, so we have continued to look at an average over FY19, FY20e and FY21e. MISSION’s shares trade at a discount to peers on EV/EBIT (11.5x 2021) and P/E on this basis. Parity indicates a share price of 87.6p (up from 76.9p in December), reflecting positive share price performances in the sector as advertising spending levels look set to recover. This is 33% above the current level.
Exhibit 1: Financial summary
£'000s |
2018 |
2019 |
2020e |
2021e |
2022e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
|||||||
Turnover |
|
|
159,916 |
171,091 |
128,107 |
146,972 |
156,619 |
Cost of Sales |
(82,331) |
(90,118) |
(65,448) |
(76,597) |
(80,219) |
||
Revenue |
77,585 |
80,972 |
62,659 |
70,376 |
76,400 |
||
EBITDA |
|
|
11,334 |
12,225 |
2,636 |
8,759 |
12,151 |
Operating Profit (before amort. and except.) |
|
9,919 |
10,753 |
1,386 |
7,609 |
11,001 |
|
Intangible Amortisation |
(1,286) |
(1,980) |
(1,004) |
(1,004) |
(1,004) |
||
Headline Adjustments |
(546) |
(990) |
(450) |
(500) |
(500) |
||
Other |
(1) |
69 |
85 |
90 |
95 |
||
Operating Profit |
8,086 |
7,852 |
701 |
6,869 |
10,256 |
||
Net Interest |
(735) |
(668) |
(922) |
(599) |
(596) |
||
Profit Before Tax (norm) |
|
|
9,183 |
10,154 |
549 |
7,100 |
10,500 |
Profit Before Tax (FRS 3) |
|
|
7,722 |
8,294 |
99 |
5,685 |
9,130 |
Tax |
(1,710) |
(1,868) |
32 |
(1,527) |
(2,342) |
||
Profit After Tax (norm) |
7,473 |
8,286 |
581 |
5,573 |
8,158 |
||
Profit After Tax (FRS 3) |
6,012 |
6,426 |
131 |
4,158 |
6,788 |
||
Average Number of Shares Outstanding (m) |
83.3 |
84.1 |
88.2 |
91.1 |
91.3 |
||
EPS - normalised (p) |
|
|
8.7 |
9.5 |
0.7 |
6.1 |
9.0 |
EPS - normalised fully diluted (p) |
|
|
8.5 |
9.0 |
0.7 |
6.1 |
8.9 |
EPS - (IFRS) (p) |
|
|
7.1 |
7.5 |
0.0 |
4.4 |
7.3 |
Dividend per share (p) |
2.1 |
2.3 |
0.0 |
1.8 |
2.1 |
||
Gross Margin (%) |
48.5 |
47.3 |
48.9 |
47.9 |
48.8 |
||
EBITDA Margin (%) |
7.1 |
7.1 |
2.1 |
6.0 |
7.8 |
||
Operating Margin (before GW and except.) (%) |
6.2 |
6.3 |
1.1 |
5.2 |
7.0 |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
107,002 |
107,396 |
109,241 |
111,175 |
110,146 |
Intangible Assets |
96,121 |
95,859 |
98,304 |
100,388 |
99,409 |
||
Tangible Assets |
10,858 |
11,360 |
10,760 |
10,610 |
10,560 |
||
Investments/ other |
23 |
177 |
177 |
177 |
177 |
||
Current Assets |
|
|
46,476 |
47,117 |
34,772 |
38,386 |
43,527 |
Stocks |
850 |
1,091 |
792 |
927 |
971 |
||
Debtors |
39,727 |
40,998 |
32,290 |
35,032 |
37,331 |
||
Cash |
5,899 |
5,028 |
1,690 |
2,427 |
5,225 |
||
Other |
0 |
0 |
0 |
0 |
0 |
||
Current Liabilities |
|
|
(40,986) |
(40,181) |
(34,108) |
(37,416) |
(36,316) |
Creditors |
(40,986) |
(40,181) |
(34,108) |
(37,416) |
(36,316) |
||
Short term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Long Term Liabilities |
|
|
(24,896) |
(22,031) |
(19,936) |
(16,873) |
(17,056) |
Long term borrowings |
(9,886) |
(9,927) |
(9,927) |
(9,927) |
(9,927) |
||
Other long term liabilities |
(15,010) |
(12,104) |
(10,009) |
(6,946) |
(7,129) |
||
Net Assets |
|
|
87,596 |
92,301 |
89,969 |
95,272 |
100,301 |
CASH FLOW |
|||||||
Operating Cash Flow |
|
|
11,684 |
10,454 |
2,411 |
8,608 |
8,965 |
Net Interest |
(826) |
(626) |
(922) |
(599) |
(596) |
||
Tax |
(1,906) |
(1,805) |
32 |
(1,527) |
(2,342) |
||
Capex |
(1,361) |
(2,169) |
(900) |
(1,350) |
(1,350) |
||
Acquisitions/disposals |
(670) |
(2,839) |
(3,424) |
(3,063) |
0 |
||
Financing/other |
(1,938) |
(2,096) |
(536) |
(319) |
(175) |
||
Dividends |
(1,695) |
(1,831) |
0 |
(1,013) |
(1,704) |
||
Net Cash Flow |
3,288 |
(912) |
(3,338) |
737 |
2,798 |
||
Opening net debt/(cash) |
|
|
7,348 |
3,987 |
4,899 |
8,237 |
7,500 |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
||
Other |
73 |
0 |
0 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
3,987 |
4,899 |
8,237 |
7,500 |
4,702 |
Source: Company accounts, Edison Investment Research
|
|
Research: TMT
Media and Games Invest (MGI) has announced the acquisition of US-based KingsIsle (online PC games Pirate101, Wizard101) for a cash consideration of US$126m plus a cash earn-out of up to US$84m (up to US$210m in total). FY21 guidance for KingsIsle is for revenues of US$32m and adj. EBITDA of US$21m (68% adj. EBITDA margin). The fixed cash consideration represents an EV/adj. EBITDA multiple of 6.0x, with a range of 5.8–7.3x including the earn-out. This is a major, transformative acquisition for MGI, struck at an attractive multiple (6–7x FY21 adj. EBITDA) given the high multiples seen elsewhere in the games sector. Assuming MGI can deliver similar efficiencies to previous acquisitions, there should be further EBITDA upside from the transaction, with the potential for mobile and console launches based on the IP from FY22.