M&C Saatchi H1 results reveal dipped Australian revenues and an ongoing battle to remain independent
Back in June, the board of M&C Saatchi withdrew its support for a $381 million takeover from Next Fifteen after the company’s share price tanked 28%. Half year earnings today released by M&C Saatchi reveal a lift in revenue, but sinking statutory profits.
M&C Saatchi saw net revenue growth lift by 9.6% to £129.4 million (AU$219.31 million).
Profit was impeded by “ongoing takeover transaction costs” of £9.3 million (AU$15.76 million) – the firm is currently attempting to convince shareholders to reject a takeover offer by former board member Vin Murria’s company AdvancedAdvT Limited.
British entrepreneur Vin Murria was extolled from the agency’s board, with M&C stating it was “not appropriate” to keep Murria as a deputy chairwoman considering her attempts for takeover. The removal of Murria from the board came after rejecting four of her prior bidding offers, which asked M&C to clarify its analysis of the financial terms of the competing bids.
M&C Saatchi’s leadership continues to stridently assert that they intend to keep the agency independent, and that the hostile takeover is a “distraction”.
Chairman Gareth Davis said: “Delivery of a 52.4% increase in Headline PBT is an outstanding achievement by our management team. Despite considerable challenges created by a prolonged hostile takeover process, and strengthening economic headwinds, focus has been maintained on client services and growing the business.
“This continued performance, building on record profits in 2021, reinforces the board’s belief in a strong independent future for M&C Saatchi.
At the time the Next Fifteen offer was rejected, a statement released by M&C Saatchi said: “Based solely on financial terms, the M&C Saatchi Directors consider each of the ADV Offer and Next Fifteen Offer to be inferior to M&C Saatchi’s standalone prospects,” but added, “however, if those standalone prospects were incapable of being delivered as envisaged, then the M&C Saatchi directors consider the Next 15 Offer to be superior to the ADV Offer and Next Fifteen to be the preferred future owner of the M&C Saatchi business.” This is based on the perceived “strategic, commercial, employee and cultural advantages” of the Next Fifteen offer.
Statutory profit before tax was £0.3 million (AU$0.51 million), a significant decline from the £4.8 million (AU$8.14 million) seen in H1 2021.
The investor presentation highlights a “strong independent future” as part of the agenda, leading into strategies like ‘galvanised management’, ‘new board and governance’, and an ‘SME marketing SaaS platform’ as a demonstration of the agency’s ‘resilience’ and independence.
For the period, headline profit before tax (PBT ) was 52.4% higher at £16 million (AU$27.12 million).
Revenues in Australia declined by 1% between June 2021 and June 2022, a movement in overall market share from 22% to 20%.
July headline PBT is reported to be ahead of the board’s expectations, with full-year headline PBT expected to be in the region of £31 million (AU$52.54 million) – a 15% increase from FY2021.
The M&C Saatchi share price currently sits at £154.20 (AU$261.34), with a market capitalisation of £188.52 million (AU$319.51 million).
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