Takeover costs weigh on profits at M&C Saatchi

M&C Saatchi reported a slide in half-year profits on Wednesday, after the advertising firm's protracted takeover battles weighed heavily.

Revenues in the six months to 30 June rose 29.5% to £221.7m, but pre-tax profits fell 94% to £300,000 after takeover transaction costs came in at £9.25m.

Headline pre-tax profits - which strip out one-off costs - rose 44.0% on a like-for-like basis, to £16.0m. Net revenues rose 9.6% to £129.4m on the same basis.

Gareth Davis, chairman, said: "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."

In May, M&C Saatchi agreed to be taken over by rival Next Fifteen Communications in a £310m deal, only to announce a month later that it no longer believed the offer to be "fair and reasonable" after its suitor’s share price fell sharply.

Meetings were due to take place in August with shareholders regarding the offer, but they have since been delayed until later this autumn.

M&C Saatchi has also rejected a hostile bid from its biggest shareholder and former deputy chair, Vin Murria. The tech entrepreneur owns more than 20% of M&C Saatchi through her AdvancedAdvT investment vehicle.

Moray MacLennan, chief executive, said: "Looking forward, the counter-cyclical nature of key growth businesses, together with a global efficiency programme, gives confidence in our strong standalone future and the outlook for the remainder of 2022 and into 2023."

Updating on current trading, the AIM-listed firm - which was co-founded by Maurice and Charles Saatchi - said July’s headline pre-tax profits were ahead of the board’s expectations. Full-year headline pre-tax profits are expected to be around £31m, in line with the previous forecast.

As at 0945 BST, shares in M&C Saatchi were down 5% at 154.67p.