In the latest half year results, released today, the company said that it expected that the outcome of the PwC investigation will lead to a restatement of 2018 results; H1 2018 results have already been restated to reflect misstatements identified earlier. The specific items result in a net charge of £5.1m.

Big Four firm PwC was called in to investigate an accounting issue related to reporting of revenue recognition last month and is expected to conclude its review by November 2019.

At the time, M&C Saatchi said the charge totalled £4.9m due to misreporting of income under revenue recognition accounting rules, which had been exacerbated by the introduction of IFRS 15, Revenue from Contracts with Customers, which came into effect for accounting periods starting 1 January 2018.

PwC was called in to review all the group’s accounts and accounting systems, and the company said that it needed to ensure that its systems were able to handle business requirements across the group’s 29 international offices.

The internal review followed a report by auditor KPMG which raised concerns about the accounting controls across the group, reinforcing similar concerns raised by the audit committee.

The restated H1 results showed a 3% hit on billings income, with revenue restated at £289.2m. H12019 revenue was down 3% to £280.7m.

As previously reported by the company, there has been a year-on-year decline in headline revenue and profits due to a larger number of loss-making entities, particularly start-ups, and the impact of the timing of revenues in 2019 which are expected to fall into the second half.

Sara White