Last close As at 05/08/2026
GBP1.37
▲ −3.50 (−2.49%)
Market capitalisation
GBP166m
Research: TMT
There has been a lot going on under M&C Saatchi’s operational bonnet, so delivering FY23 results a shade above market forecasts is a good result, especially given the difficult market backdrop. Earlier issues regarding outstanding put option liabilities are in retreat, with minority interests in FY23 down to 13% from 25% in FY22, and most remaining liabilities are expected to be settled in FY24. The focus is now firmly on optimising the operational structure. There has already been good progress, simplifying and achieving greater coherence on a regional-first approach, with better alignment to how clients (and potential clients) want to utilise the group’s global capabilities. The incoming CEO, Zaid Al-Qassab, who starts in May, should be taking on the group’s navigation in less stormy waters.
M&C Saatchi |
Moving into alignment
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11 April 2024 |
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There has been a lot going on under M&C Saatchi’s operational bonnet, so delivering FY23 results a shade above market forecasts is a good result, especially given the difficult market backdrop. Earlier issues regarding outstanding put option liabilities are in retreat, with minority interests in FY23 down to 13% from 25% in FY22, and most remaining liabilities are expected to be settled in FY24. The focus is now firmly on optimising the operational structure. There has already been good progress, simplifying and achieving greater coherence on a regional-first approach, with better alignment to how clients (and potential clients) want to utilise the group's global capabilities. The incoming CEO, Zaid Al-Qassab, who starts in May, should be taking on the group’s navigation in less stormy waters.
Better H223 gives good momentum into FY24
Like-for-like net revenue was up by 1% in H223, having dipped by 6% in the first half. Importantly, the operating profit margin improved from 8.3% in H1 to 16.9% in the second half. This primarily reflected the shift in mix towards the group’s specialist offerings and lower weighting from Advertising, with additional benefit from the focus on cost control. Annualised savings of £3.9m in FY23 exceeded the original target, at a cash cost of £1.1m, with property cost write-downs of £2.2m. A further £4m of savings is expected to come through in FY24, reaching the annualised target of £10m. The reduction in outstanding put option liabilities will enable a shift in cash utilisation priorities to build out the business organically or through M&A to infill capabilities and/or geographies, with a maximum guided leverage of 1.5x.
Regional-first emphasis
M&C Saatchi has been undertaking a significant rationalisation of its brands and locations, with some divested to local management teams, which may choose to licence back the brand. The objective is to present a more coherent go-to-market proposition on a regional basis, backed by the ability to access the group’s specialisms, with global centres of excellence supporting delivery (and boosting margins). Ideal clients would be the ‘local heroes’ where M&C can grow alongside.
Valuation: Likely to improve as confidence rebuilds
M&C Saatchi’s shares have slightly outperformed an out-of-favour UK media sector over the year to date, but are still trading at a modest rating that we feel does not reflect the improving quality of earnings. With strengthened management in place and a stronger focus on growing the areas of the business with better operating margins, we would expect the valuation multiples to expand.
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Consensus estimates
Source: Refinitiv. *EBITDA and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. |
EDISON QUICKVIEWS ARE NORMALLY ONE-OFF PUBLICATIONS WITH NO COMMITMENT TO WRITING ANY FOLLOW UP. QUICKVIEW NOTES USE CONSENSUS EARNINGS ESTIMATES.
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Research: Investment Companies
Seraphim Space Investment Trust (SSIT) reported a modest 1.8% NAV total return (TR) in H124, as the positive impact from up rounds (most notably D-Orbit’s) was partly offset by downward fair value adjustments of some other holdings due to technical setbacks or operational underperformance. However, we note that fund-raising across the spacetech sector remained robust in CY23. Moreover, 82% of SSIT’s portfolio has a robust cash runway, with 60% fully funded based on the projections of its management, and 22% funded for 12 months or more from the end of 2023. Excluding the fully funded companies, the remaining portfolio has a fair value weighted average cash runway of 12 months, according to Seraphim Space.