Shares in M&C Saatchi (SAA) rose 5 per cent on Monday after the media group achieved strong top-line growth in the first half, with like-for-like revenues ahead by 10 per cent. Meanwhile, underlying pre-tax profits, excluding the effects of acquisition-related costs and foreign exchange, grew 17 per cent to £13.3m. The reported pre-tax fall was largely driven by higher charges relating to employee share options.
Chief executive David Kershaw says M&C starts 10-20 new businesses every year. This portfolio of young, growing companies differentiates it from big global players, Mr Kershaw argues, as does the fact that it's not exposed to the same squeeze from large multinational packaged goods companies, or pressures on media buying. And its focus has changed “dramatically” over the past few years: the UK’s contribution has lessened, while advertising – which used to dominate the group – now represents around 30 per cent of activities.
All regions saw good revenue growth, while Europe was the star performer. Sky Italia is now one of the company’s top 10 clients worldwide. France has been slow, while Spain showed signs of growth, and a new sponsorship agency was opened there. Operating profits fell 8 per cent in the Middle East and Africa, driven partly by the United Arab Emirates office losing its Etihad account last year.
Analysts at Numis forecast pre-tax profits of £27m and EPS of 23.6p for the year to December 2017, up from £23.8m and 20.5p respectively in 2016.
| M&C SAATCHI (SAA) | ||||
| ORD PRICE: | 310p | MARKET VALUE: | £ 248m | |
| TOUCH: | 306-310p | 12-MONTH HIGH: | 384p | LOW: 290p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | na | |
| NET ASSET VALUE: | 77p* | NET DEBT: | 6% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 100 | 10.7 | 11.2 | 1.9 |
| 2017 | 121 | 9.7 | 9.0 | 2.1 |
| % change | +21 | -10 | -20 | +15 |
| Ex-div: | 26 Oct | |||
| Payment: | 10 Nov | |||
| *Includes intangible assets of £52.7m, or 66p a share | ||||
