Mission Marketing Group PLC (LON:TMMG) has delivered good FY17 results and announced the purchase of Krow Communications, a well-regarded London advertising agency. Initiatives on shared back-office functions and tech-enabled collaboration are starting to lift group operating margins, up 20bp to 11.7%, on the path to the FY20 goal of 14%. Strong cash generation reduced end FY17 net debt by £4.1m to £7.2m (£14.5 including previous acquisition obligations), amply covering the initial cash consideration of £2.75m for Krow. The lengthening record of delivering on expectations and of earnings growth is not consistent with the deeply discounted rating.
Driving operating margins
FY17 results were in line with January’s update, with non-UK operating income over 10% for the first time. Advertising & Digital, the largest segment, saw operating income rising 8% y-o-y in FY17; +5.4% like-for-like plus the first benefit from RJW, acquired in April. Central cost growth was limited to 2%, resulting in adjusted operating profit up 9%. A collaboration culture is increasingly evident, helping win new clients (including Ribena, NEFF and TNT). FY17 net new business won was over £5m. Client retention remains impressive, with nearly 20% of business from clients of over 20 years’ standing. The Fuse initiative to pool technology and IP, along with moves to share back-office services between group agencies should help boost forecast operating margins towards the FY20 target of 14%.
To read the entire report Please click on the pdf File Below: