M&c Saatchi Share Price (SAA)

Advertising agency M&C Saatchi revealed a 13 per cent increase in half year pre-tax profit, driven by a string of new contract wins. M&C Saatchi, whose clients include O2, Intercontinental Hotels, Twitter and Virgin Holidays, said profit rose to £8.7m for the six months to end of June 2012 while revenue increased 15% to £82.8m. Operating profit rose to £8.6m from £7.6m and earnings per share rose to 7.95p from 7.15p. Progress was made across all regions with UK revenues up 16%, after a strong performance from CRM and mobile services. Europe like-for-like (LFL) revenues rose by a quarter despite macro-economic challenges. In Asia and Australasia LFL revenues climbed 12% while in the Middle East and Africa they soared 146% to £2.8m as it positions itself for a fast growing African market. Revenues in the Americas gained 12% with its New York agency set for opening in the final quarter. "Looking ahead, we are confident that we will continue to make progress in 2012 and beyond. The strategy is working," the group said in company statement. M&C Saatchi has offered an increased dividend payment of 1.10p from 1p before.

Singer Capital retained its "buy" rating for M&C Saatchi (SAA) with an increased target price of 165p, from 161p. The broker noted that the advertising agency has enjoyed several contract wins since the start of the new financial year, adding that a number of deals from 2011 will make their first revenue contributions in 2012 as well. Singer raised its revenue target for 2012 by 6.4% to 164.7 million pounds, with earnings forecasts putting the shares on a prospective multiple of 8.7 times. The shares crept up by 1p to 138.5p.

"We believe the full year remains in line with management expectations."

Shares of advertising agency M&C Saatchi rose after it said it had made a good start to 2012 and it remains on track to fulfil expectations for the year. In March the group revealed a 22% increase in annual revenue, underpinned by robust UK performance. The agency, formed by brothers Maurice and Charles Saatchi in 1995, has new offices in Abu Dhabi, Singapore and has expanded office in New York. It has also won contracts in Etihad, Abu Dhabi, Edgars in South Africa and with Commonwealth Bank, Australia.

Commenting on the results, David Kershaw, Chief Executive, said: "M&C Saatchi has produced another strong performance and has made further excellent progress indelivering the best year-on-year growth in revenue since our flotation in 2004. "We are reaping the benefits of our growing global network and the roll-out of our growth specialist businesses such as M&C Saatchi Sport & Entertainment and M&C Saatchi Mobile. "2012 has started well. Despite uncertainty with the macro environment we are benefitting from new revenues from the significant wins last year, such as O2. In addition, we have already had further new business success with Eithad, the Commonwealth Bank of Australia and Edgars in South Africa. "Our successful strategy remains the same. We will continue to build scale through work with multi-national clients; we will invest in high-growth new businesses in mature markets; we will increase our presence in desirable markets; and we will roll out proven models across the network. This strategy is producing strong financial results and the Board is confident that it will continue to do so in 2012 and beyond."

Strategy working · Best year-on-year revenue growth since flotation in 2004 · Group Revenues up 22% to 153.1m (2010: £125.1m); up 20% using constant currencies · Group reaping the benefits of expanding global network and the continued roll-out of high-growth diversified businesses · Headline profit before tax up 17% to £15.6m (2010: £13.3m) · Strong balance sheet and positive cashflow · Headline basic earnings per share up 14% at 14.30p (2010: 12.59p) · Final dividend of 3.50p per share (2010: 3.03p); total dividend up 15.4% to 4.50p (2010: 3.90p) · Global Network performed well across all geographies: o UK: like-for-like revenues up 25%, with mobile performing particularly well o Europe: like-for-like revenues up 23%, in spite of challenging trading conditions o Asia and Australasia: like-for-like revenues up 6% o Africa's revenues up fivefold to £3m o Sao Paulo acquisition driven up Americas' revenues 65% · Clear performed well following restructuring with like-for-like revenue up 11% and operating profit up 2% · Strong new business performance - particular success in with multinational clients · Start-ups in data and social media making good progress