TIDMTMG
RNS Number : 8837Q
Mission Group PLC (The)
23 October 2023
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
23 October 2023
THE MISSION GROUP plc
("MISSION", "the Group")
TRADING UPDATE AND REVISED OUTLOOK FOR 2023
MISSION Group plc (AIM: TMG), creator of Work That Counts (TM) ,
comprising a group of digital marketing and communications
Agencies, wishes to provide an update on current trading and the
Group's outlook for the remainder of the 2023 financial year to 31
December 2023 ("FY2023") .
At the time of MISSION's interim results announcement on 26
September 2023, the Group stated that:
-- As in previous years, the Group expects the majority of its
profit to be generated in the second half of the year.
-- Despite the continued, heightened level of global macro-economic
uncertainty, the Group currently remains on track to deliver
against the Board's expectations.
Trading Update
Whilst performance in the first half of 2023 was broadly in line
with the Board's expectations and achieved despite considerable
industry-wide headwinds, recent trading has rapidly become more
challenging than previously anticipated.
This has been especially marked in the Consumer & Lifestyle,
Property, and Technology & Mobility business units, where
client wins have been more than offset by losses and several
clients choosing to defer or significantly reduce spending. The
Board now believes these more challenging trading conditions will
continue for the remainder of the year and is taking a materially
more cautious view on H2 2023 and therefore the FY2023 outturn.
In light of this information, the Board has commenced a detailed
operational review including an immediate reassessment of financial
expectations and resource allocation. The review will take into
account the reduction or rephasing of revenues in the impacted
business units, and has begun to identify certain changes to
operating costs that will benefit in part FY2023, and FY2024. These
initial cost reductions are expected to be fully implemented by
year end. In addition, this review is expecting to identify a wider
range of efficiencies and business improvements which, over time,
should lead to more cost savings. An update on this review will be
provided with the FY2023 trading statement early in 2024.
Whilst full year revenue growth is expected to be between 8%-9%,
including the impact of 2023 acquisitions, the Board now believes
that the outturn for FY2023 will be materially below market
expectations (see Note 1). FY2023 headline profits before tax are
not expected to be more than GBP3.1m (see Note 2). This includes
costs of GBP1.2m relating to a business that is expected to be
classified as discontinued at year end. Earnings before Interest,
Taxation, Depreciation and Amortisation (EBITDA) are expected to be
not more than GBP9.0m on the same basis.
Financial Position
As a result of the reduced trading performance, the payment of
the final FY2022 dividend, and in particular the rapid reduction in
pre-payments from certain clients, the Group's net debt as at 20
October 2023 was approximately GBP25.5m compared to GBP14.9m as at
30 June 2023.
The Group's committed bank facilities comprise a revolving
credit facility of GBP20.0m, with an option to increase the
facility by GBP5.0m, which expires on 5 April 2025. Interest on the
facility is based on SONIA (sterling overnight index average) plus
a margin of between 1.50% and 2.25% depending on the Group's debt
leverage ratio, payable in cash on loan rollover dates.
In addition to its committed facilities, the Group has available
an overdraft facility of up to GBP6.0m with interest payable by
reference to National Westminster Bank plc (Natwest) Base Rate plus
2.25%. Instead of increasing the revolving credit facility by
GBP5.0m, the Group has agreed with Natwest that the overdraft limit
of GBP6.0m will be increased to GBP10.0m, until further notice and
subject to regular review.
Net debt is expected to be approximately GBP24.0m as at 31
December 2023 after a working capital outflow due to the forecast
increase in turnover in Q4, resulting in an increase in trade
debtors which is not expected to convert into cash until early
2024.
The Group continues to be in compliance with its banking
covenants but is now expecting the net debt / Adjusted EBITDA
covenant in Q4 to be above current covenant limits at 31 December
2023. The Group is in constructive dialogue with Natwest regarding
a covenant waiver.
The increase in the level of net debt has meant that the
interest cost for the year is now expected to be higher than
previous forecasts, at approximately GBP2.40m.
Dividend
Given the trading outlook and the Group's commitment to reducing
its net debt position as soon as possible, the Board has decided
that it is in the best interests of shareholders to cancel the
interim dividend of 0.87 pence per share (approximately GBP0.79m)
that was due to go ex dividend on 2 November 2023 and be paid to
shareholders on 1 December 2023.
The Board will review any final FY2023 dividend considering
trading conditions and the Group's cash position around the time of
its final results release for the period ending 31 December
2023.
Non-Core Disposals
The Board has for some months been planning a potential disposal
of certain of its non-core businesses as part of MISSION's
strategy. These plans are ongoing and may complete in FY2023, but
there can be no guarantee that they will progress to a completed
transaction.
Outlook
The Board is extremely disappointed by the recent adverse change
in current trading, and the outlook for the remainder of
FY2023.
Notwithstanding these short-term trading challenges, the Board
believes that MISSION's strategy of deliberate investment in its
people and capabilities, when combined with operating cost
reductions, leaves the Group well positioned as markets improve.
The Board will provide an update on FY2024 prospects in early
2024.
Notes:
1. The Group considers market expectations for FY 2023 to be to
adjusted profits before tax of GBP7.9m.
2. Headline results are calculated before start-up costs,
acquisition adjustments, goodwill and business impairment and
restructuring costs.
ENQUIRIES
James Clifton, Chief Executive Officer
G iles Lee , Chief Financial Officer 07730 490384
The MISSION Group plc 020 7462 1415
S imon Bridges/Andrew Potts/Harry Rees
Canaccord Genuity Limited (Nominated Adviser
and Broker) 020 7523 8000
Kate Hoare / Alexander Clelland / India Spencer
HOUSTON (Financial PR and Investor Relations) 0204 529 0549
NOTES TO EDITORS
MISSION is a collective of digital marketing and communications
Agencies employing over 1,000 people across 29 locations and 3
continents. The Group successfully combines its diverse expertise
to produce Work That Counts TM for Clients, whatever their
ambitions. Creating real standout, sharing real innovation and
delivering real
growth for some of the world's biggest brands. www.themission.co.uk
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