M&C Saatchi (SAA) H1 2024 earnings summary

Executive summary

• Like-for-like net revenue rose 6% to £120.1m in H1 2024, with operating profit up 40% to £17.1m and headline EPS (diluted) up 76% to 7.9p year-over-year.

• Operating margin improved to 14.2% from 10.8%, driven by cost efficiencies, portfolio shift to higher-margin non-advertising specialisms, and exit of loss-making businesses.

• EBITDA increased 48% to £21.5m; net cash at £12.9m after significant put option settlements; operating cash conversion at 98%.

• Transformation initiatives, new leadership, and a scalable, agile platform underpin future growth.

• Client retention remains strong at 75%, with notable new wins and renewals across global brands.

Financial highlights

• Like-for-like net revenue: £120.1m (+6%); operating profit: £17.1m (+40%); PBT: £14.2m (+26% LFL); headline EPS (diluted): 7.9p (vs 4.5p); EBITDA: £21.5m (+48%).

• Operating margin: 14.2% (up 3.4ppts); non-advertising margin: 23.4%; advertising margin: 11.4%.

• Net cash: £12.9m (down from £15.4m YoY, up £4.6m vs FY 2023); operating cash conversion: 98%.

• Statutory PBT: £11.3m (vs £5.1m loss in H1 2023); statutory EPS: 6.4p (vs -5.2p).

• Minority interests reduced to 6% of earnings (from 18%).

Outlook and guidance

• FY24 expected to be in line with market expectations, supported by strong H1 and solid Q3 trading.

• Transformation strategy and cost savings on track to deliver £10m annualised savings by end of 2024, with £8.4m already secured.

• Further investment in capabilities planned for H2; exit of loss-making businesses to complete in FY24.

• Continued market volatility and tougher H2 comparators anticipated; targeting >80% operating cash conversion and leverage <1.5x through the cycle.

• Expect continued resilience and sustainable organic growth from portfolio diversity, cost efficiency, and regional-first model.