M&C Saatchi point to ‘firm foundations’ after year of recovery in unaudited figures

What do the results reveal?

• M&C Saatchi made a before-tax profit of £8.3m and achieved a 5.3% profit margin.

• Net cash reserves have almost doubled, up £16.4m on 2019 to £33m; M&C says it has agreed a revolving credit facility with Barclays and Natwest to further bolster its liquid assets.

• A simplification program, which saw the number of operating units cut by 34%, absorbing sister agency Lida into M&C Saatchi, and a digital transformation initiative are credited with cutting costs and driving new growth.

• Trading is ahead of expectation for 2021, and its half-year pre-tax headline profit is expected to exceed £10m.

• The agency chalked up its recovery to client retentions and new business including TikTok, Lexus, HM Government and Tinder.

What does it mean for the agency?

• In 2019, M&C Saatchi was caught in an accountancy scandal after auditors unearthed a ’misapplication of accounting policies’ during an internal review. The aftermath cost the agency millions and saw the departure of a string of senior staff.

• Chairman Gareth Davis said: ”I am pleased to report that 2020 proved to be a year of resilient business performance. While the Covid-19 pandemic disrupted all of our lives, both personally and professionally, the business rose to the challenge.

• ”We aggressively addressed the need to simplify the group’s operating structure. We drove efficiencies through a robust cost reduction program. We strengthened the business through the introduction of greater central controls, new processes and systems. These measures, together with a focus on corporate governance and the introduction of a new strategy, have laid firm foundations for renewed growth in the coming year.”

• Chief exec Moray MacLennan said the last year was a big moment for M&C: “2020 was undoubtedly a watershed year for the company. We went into the year confronted by Covid-19 and ended with a new strategy and the unswerving support of the group’s employees and a new structure in place for 2021. The resilience of the company and our people was reflected in the outstanding client retention across 2020. Our agility allowed us to quickly adapt to the new market conditions (including an even greater focus on digital) and enabled the swift implementation of our new strategy.

• “This is delivering a positive performance in the first five months of 2021, so we anticipate being ahead of consensus for the full year. Profit in all five of the new divisions has grown in 2021 through meeting new client demands in the new digital landscape. This initial success and our continued focus on innovation, technology and data, combined with creativity, which is at our core, gives us confidence for the remainder of the year and beyond.“