Mission Marketing's original buy-and-build acquisition strategy, which cost 50m over 18 months, has gone spectacularly wrong thanks to a big dip in UK marketing spend. But don't over-concentrate on 2009's loss because it included £4.7m of (hopefully) one-off exceptionals. No, the bleakest news is in the balance sheet and cash flow statement.
For starters at end-December the company was right up to its three-year revolving credit facility of £20.3m. A major cause was working capital problems. Firstly, Mission suppliers were less able to obtain credit insurance, so Mission had to pay its bills faster. Secondly, trade debtors did not decline as much as expected because of payment delays on a complicated EU-funded project.
Particularly dispiriting is the cash flow statement. It shows that last year £3.32m of operating cash flow was swallowed up by a combination of net finance costs and tax payments. To improve matters, a new- reconfigured board is raising finance at 13p a share (in May last year, the group raised funds at 40p a share) and has negotiated earn-outs in shares rather than cash. But there's little expectation of much improvement in demand in 2010 - so revenues may be roughly the same.
MISSION MARKEING (TMMG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 12.75p | MARKET VALUE: | £5.05m | |
| TOUCH: | 12-13.5p | 12-MONTH HIGH: | 49.5p | LOW: 12.75p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 125p* | NET DEBT: | 42% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 37.5 | 2.21 | 3.86 | 0.54 |
| 2007 | 79.5 | 5.28 | 13.44 | 1.10 |
| 2008 | 104.2 | 7.25 | 16.14 | 0.36 |
| 2009 | 86.0 | -0.87 | -5.54 | nil |
| % change | -17 | - | - | -100 |
Aim: Advertising. * Including intangible assets of £68.2m, or 172p a share. | ||||
