M&C Saatchi issues further trading update as it looks to steady share price

The M&C Saatchi group issued a further trading update on Friday in a bid to steady share prices following the discovery of accounting inconsistencies across its subsidiaries.

The company reiterated guidance it issued last week stating it expected to see an increase in like-for-like operating profits for the full year, excluding exceptional charges.

It said its interim results, due to be reported on 24 September, would show a decline in the first half against 2018, 2017 and 2016 as a result of the company having a greater number of start-ups and "loss-making entities" than prior years in the first half.

However it expected the benefits of recent client wins and projects to flow to the second half-year operating profit, it added in the update.

Share prices in M&C Saatchi PLC dropped as much as 30% on Friday after it announced on 12 August it had discovered instances of misapplication of accounting policies" across the group and had put aside £6.4m to deal with it.   

It identified the issues across its subsidiaries in an internal review after an independent auditor's report raised concerns about the accounting controls across the group, most related to the timing of revenue recognition and incorrect accounting of some assets and liabilities.

In a statement last week the agency group said: "We are determined that our strategy of winning new business by starting new businesses will not be undermined by this, but recognise that having so many young companies in the group requires extra vigilance."

Last week NatWest, the RBS-owned banking brand, announced it had shifted its 2020 ad activity out of longstanding incumbent M&C Saatchi and into The & Partnership London, following a competitive review.