Saatchi’s Olympic year darkened by impairments damaging profit

M&C SAATCHI posted a fall in pre-tax profits yesterday, as accounting charges offset an 11 per cent rise in group revenues.

The company, founded by advertising moguls Maurice and Charles Saatchi, said that a host of impairment charges, such as theoretical payouts to partners who have options to convert holdings to cash, meant that profits fell from £16m to £9.9m.

However, without these costs, profits rose 10 per cent to £17.2m as M&C Saatchi signed up a host of new clients such as Center Parcs, Peroni and Virgin Holidays.

Revenues in the Middle East and Africa more than doubled in the year while the UK, which makes up almost half of the firm’s sales, rose 13 per cent, partly owing to increased business around London’s Olympics last summer.

As well as the boost from new business, the industry-wide rise in mobile advertising spending improved M&C Saatchi’s numbers.

Chief executive David Kershaw also pointed to more selling of “integrated” services – offering marketing services as well as advertising – as a source of growth.

Despite the rising revenues and core profitability, the prospect of impairment charges sent shares in the company down six per cent yesterday.