Mission Group confident despite fall in operating profit

2nd Apr 2024 12:17

(Sharecast News) - Digital marketing and communications specialist, the Mission Group reported revenue of £86.3m in its final results for 2023 on Tuesday, reflecting an increase of £6.7m.

The AIM-traded firm's headline operating profit experienced a slight decline, however, to £6.5m, down £2.3m from the prior year.

Similarly, headline profit margins decreased by 3.6% to settle at 7.5%.

Headline profit before tax also faced a notable decrease, amounting to £4.2m, down £3.7m year-on-year.

The reported loss before tax for the year amounted to £10.9m, swinging from a profit of £3.7m in 2022.

Headline earnings per share and headline diluted earnings per share both saw declines of 3.8p, amounting to 3.1p each.

Despite challenging market conditions, the Mission Group demonstrated resilience with revenue growth on continuing operations reaching 9%, with a 2% increase on a like-for-like basis.

That robust performance was driven by strong and enduring client retention across agencies, with 53% of revenue sourced from clients with over five years of partnership with the group.

Strategic wins with new clients such as the Post Office, Lumen, easyJet, and others further strengthened the group's portfolio.

In pursuit of its value restoration plan (VRP), initiated following a trading update in October, the board said significant progress had been achieved.

Headline profit before tax from continuing operations met the revised guidance, and cost management had resulted in projected annualised profit improvements of £5m for 2024.

Additionally, the disposal of the group's 80% shareholding in Pathfindr contributed to a reduction in debt, with net bank debt as of 31 December amounting to £15.4m - a considerable improvement from previous estimates.

Looking ahead, the firm's current trading and outlook remained aligned with expectations.

The group said it had secured new business wins and anticipated further opportunities, particularly with upcoming high-profile sporting events.

Efforts to deliver progress against the VRP were continuing, with a focus on achieving further efficiencies.

Net debt as of 29 February stood at £19.5m, excluding outstanding creditor payments.

The successful refinancing of existing debt with NatWest strengthened the group's balance sheet, positioning it for continued growth and resilience in the dynamic market landscape.

"The difficulties encountered in 2023 as a result of the challenging trading backdrop have been well recorded," said executive chair David Morgan.

"Nevertheless the year has still seen the group continue to grow revenues with strong client retention and strategic new business wins."

Morgan said the company had made "quick progress" in executing on its value restoration plan, ensuring it had a platform from which group profitability would improve in 2024, and remained focussed on continuing to strengthen its balance sheet.

"Trading in the new financial year remains in line with expectations and this further underpins our confidence for the year ahead and beyond."

At 1219 BST, shares in the Mission Group were up 2.33% at 22p.

Reporting by Josh White for Sharecast.com.