M&C Saatchi Annual Report 2023

FY2023 Annual Report · M&C Saatchi

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M&C Saatchi Plc
Annual Report and Accounts 2023

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Table of
Contents

STRATEGIC REPORT

Highlights

At a Glance

Investment Case

Executive Chair’s Statement

How we are Shaping the Business for the Future

How we can Make it Easier to Grow

Global Efficiency Programme

Our Business Model

Financial Review

Principal Risks and Uncertainties

Engagement With Stakeholders

Section 172 Statement

Environmental, Social and Governance (ESG)

CORPORATE GOVERNANCE REPORT

Executive Chair’s Introduction

Board of Directors

Governance Review

Report of the Audit & Risk Committee

Report of the Nomination Committee

Directors’ Remuneration Report

Annual Remuneration Report

Directors’ Report

Statement of Directors’ Responsibilities

FINANCIAL STATEMENTS

104

107

113

116

126

132

139

140

M&C Saatchi Plc Annual Report 2023Table of ContentsM&C Saatchi Plc Annual Report 2023

Strategic Report

Flame-grilled challenge, M&C Saatchi Abu Dhabi

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Strategic Report

strategic
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Strategic Report

highlights

FINANCIAL HIGHLIGHTS

Net revenue of

£252.8m

Headline** profit before tax of

£28.7m

(2022: £271.1m) -7%, -2% like-for-like.*

(2022: £31.8m) -10%, -1% like-for-like.*

Headline** EBITDA of

£41.5m

(2022: £45.2m) -8%.

Headline** operating profit of

£32.4m

(2022: £35.4m) -8%.

Statutory profit before tax of

£0.7m

(2022: £5.4m).

Headline** basic earnings per share of

15.2p

(2022: 14.8p) +3%.

Headline** operating profit margin of

Statutory basic earnings per share of

12.8%

(2.9p)

(2022: 13.1%) -0.3 pts, +0.2 pts like-for-like.*

(2022: 0.1p).

Statutory operating profit of

Net cash of

£7.3m

(2022: £10.5m).

£8.3m

(2022: £30.0m).

* Like-for-like applies constant foreign exchange rates and removes entities discontinued during 2023.

** Headline results reflect the underlying profitability of the business units, by excluding a number of items that are not part of routine business income and expenses.

Note 1 of the financial statements reconciles Statutory results to Headline results.

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Strategic Report

RECOGNITION

•

M&C Saatchi Fluency – Start-up
Agency of the Year (Campaign
Awards).

M&C Saatchi Sport & Entertainment
– Agency of the Year (Sports Industry
Awards, and UK Sponsorship
Awards).

M&C Saatchi Performance –
Performance Marketing Agency
of the Year (Marketing Interactive
Agency Awards), Marketing/
Advertising Agency of the Year (The
American Business Awards). APAC
Agency of the Year and South East
Asia Agency of the Year (Campaign).

M&C Saatchi Australia Group – Ad
Campaign of the Year (Mumbrella
Awards), Best Animation Short (LA
Film Awards).

M&C Saatchi UAE Grand Prix – Film
(Lynx Awards).

New business – Received new
global assignments from the
World Health Organization (WHO),
Porsche, adidas, Nike, Revlon and
McDonald’s.

M&C Saatchi Talk - Best Global
Content (PR Week Awards).

Razor PR – Best Reputation Work
(PRvoke Media – Sabre Awards).

M&C Saatchi Australia Group –
NGO/Charity The Plastic Forecast,
Minderoo Foundation (Campaign Ad
Net Zero Awards).

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Strategic ReportM&C Saatchi Plc Annual Report 2023AT A GLANCE

WHO WE ARE

M&C Saatchi is a worldwide brand powered by the
most talented people in the industry. We have powerful
and distinctive offerings, with businesses and regions
laddering up to making the whole greater than the
sum of the parts. We are a company and culture of
trail blazers, not path followers. We are as famous for
our creativity as we are for our boldness; at the heart
of everything we do is the desire to drive reappraisal,
consideration and demand for our clients’ brands
and businesses.

OUR VISION

Our vision is to deliver meaningful change through
creative thinking, being indispensable to our clients,
in market leading positions with scalable platforms
and processes.

OUR PURPOSE

Our purpose is to become the leading creative
solutions partner to our global client base.

We want to make it easier for our clients to grow by
accessing the full breadth of our skills and capabilities
to maximise the reach and potential of their brands.
Our offer builds on our creative heritage but is driven
by our boldness and our willingness to think – and
be – different.

This purpose will be driven by three key themes which
are covered in this report:

•

Transformation – a simpler, leaner, more agile
business.

Aligning with our clients – simplifying how
we face our clients and making it easier for
our global specialisms, our key differentiator,
to reach the market.

•

Capital allocation – liberating our capital to
re-invest in longer-term growth opportunities
and support shareholder returns.

WHAT DIFFERENTIATES US

For our clients, it is about us daring to be different,
to be bold and creative in our approach to solving
their growth challenges. Our global and regional
reach, when combined with our deep, specialist,
multi-disciplinary capabilities creates a powerful and
highly differentiated proposition. In an increasingly
complex and digitally interconnected world, we
seek to cut through and create simple, yet powerful
impacts for our clients’ brands, to help our clients
understand the journey they could be on, what that
journey looks like and to partner them through the
journey itself.

For our people, it is about being an integral part of
an organisation that is seeking to make a difference.
We have always been proud of our environment
and culture which has always valued creativity,
entrepreneurialism and a desire to make a difference
to our clients, our colleagues and the world in
which we operate. Our people are the lifeblood of
our organisation and creating a positive, inclusive,
dynamic and rewarding working life is critical to
our ongoing success.

For our shareholders, it is about our ability to
deliver and accelerate returns, whether through
growth, or efficiency, or investment or dividends.
Our transformation programme is already delivering
tangible returns, with more to come, and our new
operating model and go-to-market strategy will
bring us closer to our clients with a simpler, leaner
organisation that is more closely aligned to our
clients’ needs.

1995
Launched M&C
Saatchi. Won
British Airways and
Qantas accounts.
Opened in Sydney,
Singapore, Hong
Kong and New York.

1997
Named
“Fastest
growing start-
up in history”.

1999
“New Labour,
New Danger”
work.

2003
Opened in
China and
Malaysia.

2005
Expanded Europe footprint:
Paris and Berlin. Appointed
to London 2012 Olympic bid.

2008
Sport &
Entertainment
won Agency of
the Year for the
first time.

2010
Acquired Inside
Mobile, now
M&C Saatchi
Performance.
Opened in
South Africa.

1996
Launched
M&C Saatchi
Sponsorship.

1998
Won UK
Agency of
the Year.

2000
Appointed on
UK Government
Roster.

2004
Launched Sport
& Entertainment.
The Company
listed on AIM.

2006
Opened in
Madrid.

2007
Acquired
Clear.

2009
Launched
brand design
company Re.

Strategic ReportM&C Saatchi Plc Annual Report 2023WE ARE A PEOPLE BUSINESS

We are a creative solutions organisation
with 2,706 colleagues.

We operate out of 23 countries, with
large offices in London, New York, Sydney,
Singapore, Milan, Berlin and Dubai.

Our Group annual employee
engagement survey was completed by
76% of employees (an increase from 69%
in 2022).

In the UK, our gender split for leadership
positions (Senior Leadership Team and
Executive Leadership Team combined)
is 45% female.

The five largest industries that we work
across are government, retail, financial
services (over 15% of our revenue mix),
FMCG and media/telecoms (over 10%
of our revenue mix).

In 2023, we won 119 awards globally.

In 2023, we had 216 new business wins.

OUR EVOLUTION

M&C Saatchi has evolved, and is still evolving far beyond
its famous advertising heritage. Our Group now operates
across a globally diverse, regional network, delivering
creative, strategic and data-led services across five global
specialisms. Our global interdisciplinary team blends cutting-
edge data expertise with diverse thinking and exceptional
creativity. Entrepreneurialism is in M&C Saatchi’s DNA. And
every business in its network is driven to make change.

We offer global clients solutions and capabilities across the
following specialisms:

•

Advertising – scaled and personalised content
to create and fulfil demand.

Consulting – growth consulting in high margin
and emerging sectors.

Issues – communication for defence, diplomacy
and development.

Passions & PR – connecting brands to customers
through passions, communications and personalities.

Media – connecting brands with digitally connected
consumers.

OUR HISTORY

M&C Saatchi was formed in January 1995 by Jeremy Sinclair,
Bill Muirhead, David Kershaw and the brothers, Maurice and
Charles Saatchi. The Group was started as an advertising
agency from a modest office above a London real estate
agent, it set about realising its ambition to change the world.

International since day one, M&C Saatchi grew businesses
with the best people all over the world. Each business was
an independent entity with its own operating name – run
by entrepreneurial leaders with an ownership stake in
their business.

2011
Started M&C
Saatchi World
Services.

2013
Acquired
Merlin, now
M&C Saatchi
Talent Group.

2015
Launched Human
Digital proprietary
data tech. Won
Best Agency in
South Africa.

2019
Record awards year:
Performance and South
Africa won “Agency
of the Year”. Australia
won “Most Innovative
Company in Australia”.
Sport & Entertainment
won “Sponsorship
Agency of the Year”.

2021
Launched data consultancy
Fluency. Milan named “Agency
of the Decade” at Digital
Awards. Performance named
“Agency of the Decade”. Razor
named “Best New PR Agency
Globally”. Became Principal
Patron of Saatchi Gallery.

2023
Zillah Byng-Thorne
announced as
Non-Executive Chair
and subsequently
Executive Chair of
the Company.

2012
Opened
in New
Delhi and
Mumbai.

2014
Acquired
SS+K in
New York.

2016
Opened
in the
UAE.

2018
Sport &
Entertainment won
Agency of the Year
for the 6th time.

2020
Moray MacLennan
announced as Chief
Executive Officer of
the Company and
new Board appointed.

2022
Two hostile takeover bids
successfully defended.

Strategic ReportM&C Saatchi Plc Annual Report 2023Investment case

M&C Saatchi is on a
journey driven by our
ambition to accelerate
client business growth
through creating beautifully
simple solutions, for an
increasingly complex world.

Our ambition is reinforced by our proven capabilities:

•

Our heritage – founded on creativity and a
willingness to challenge convention.

Diversity of thought – we can uniquely meet
our clients’ needs through diversity of thought.
Embracing uncommon thinking and disruptive
viewpoints across the Group to generate fresh,
impactful ideas. Clients work with us because our
offer builds on our creative heritage that is also
driven by our boldness, and our willingness to
think, and be, different.

Specialisms – while our roots lie in our advertising
business, which represents 42% of our net revenue,
we have evolved to encompass a broader mix of
skills and capabilities across a global footprint,
with 58% of net revenue and 80% of pre-central
cost profitability generated by other faster growth
and higher margin specialisms.

Agility, flexibility and efficiency – we have made
substantial progress towards our transformation
goals of greater agility, flexibility and efficiency.

Our strategy is centred around the following strands:

•

Transformation – a simpler, leaner, more
agile business.

Indispensable – indispensable work for
our clients, easy to work with, broad in
capability, deep local knowledge; we are
an indispensable partner.

Capital allocation – liberating our capital to
re-invest in longer-term growth opportunities
and support shareholder returns.

Strategic ReportM&C Saatchi Plc Annual Report 2023

We will deliver returns by:

Substantial progress towards our transformation:

•

Growth – our new regional first, global specialism
delivery operating model will bring our specialist
skills closer to the clients who need these
capabilities the most.

Profitability – we are transforming our business,
removing complexity and cost, which will drive
structural improvements to our operating
margin and our flexibility to respond to changing
client needs.

Free cash flow – we are a business capable of
generating material free cash flow and we are
removing the barriers that have held this back
in the past.

Sustainable and progressive dividend policy
– we are a capital light business and expect
to continue to return cash to shareholders via
dividends; we do not think share buy backs
would be appropriate at this stage in our cycle.

We will enhance returns by:

•

Re-investing in long-term growth – where
appropriate, we will seek to re-invest from our
improved cash flow and margin into areas that
offer the clearest long-term and sustainable
growth opportunities.

Active portfolio management – we have already
exited a number of loss-making, non-core
businesses and will continue to actively manage
our portfolio to ensure that our capital is best
allocated to drive growth and returns.

Selective M&A – our approach to inorganic
growth will be different from the past and
will focus on where the client needs, or gaps
in our offer, are clearly identified.

Optimising our capital structure – we will
further reduce shareholder dilution by
continuing to settle outstanding put option
liabilities in cash and we will operate within
a leverage cap of not more than 1.5x net debt
to EBITDA on a through-the-cycle basis.

•

Agility and flexibility – our goal is to be a
simpler, leaner, more client aligned organisation
that is a best fit for the rapidly evolving global
marketplace we are active in. We have
implemented a new operating model this year
and moved to a more integrated agency model.
This enables us to have the agility and flexibility
to respond to our clients.

Cost savings – another goal of the transformation
is to ensure material and structural cost savings
to underpin our expectations around the future
margin progression. We have delivered £3.9m of
fully annualised cost savings in 2023, ahead of
our initial target, and remain on track to deliver
an additional £6.1m of annualised savings by the
end of 2024, totalling £10m.

Material reduction in put options – ongoing
cash flow will benefit from the material reduction
in outstanding put options, following significant
exercises in 2023.

Our capital allocation approach:

•

Cash-generative business model – we remain
focused on cash generation and believe our
business is capable of converting at least 80% of
its operating profits into operating cash, although
each future year will undoubtedly see some
degree of variability, through the cycle.

Capital allocation – while aiming to maintain
an optimal capital structure for supporting our
growth ambitions, we will use this extra cash flow
to deliver value for shareholders through:

–

Investment in the business organically or
through targeted M&A.

–

Pursuit of a progressive dividend policy.

Strategic ReportM&C Saatchi Plc Annual Report 2023

M&C Saatchi Plc Annual Report 2023

Strategic Report

EXECUTIVE CHAIR’S
STATEMENT

2023 was a year of significant progress for M&C
Saatchi. Our financial results not only reflect both
the challenging market environment our businesses
operate in, but also the considerable progress that
has been made in shaping the Group to best deliver
sustainable growth in the future.

We delivered a materially better financial performance
in the second half of the year following the more
challenging start to the year already flagged. This was
partly led by impressive contributions from Issues and
Passions. The biggest drivers of improvement were
our own proactive actions on costs, accelerating our
structural transformation, and closing or divesting a
number of loss-making businesses which drove
operating margins up from 8.3% in the first half to 16.9%
in the second half.

Although much has already been achieved in
transforming our Group, there is more to do and 2024
will deliver further progress. The market environment
in which we are operating continues to be challenging,
but 2024 will also benefit from the full-year impact
of the actions we have already undertaken and the
planned actions we are yet to deliver. This report will
cover what we have been doing to improve our Group
and lay the foundations for what we all believe will
be an exciting future for the Company and all of its
stakeholders.

OUTLOOK

Over the last 12 months, there have been many
changes at M&C Saatchi against a background of
significant market volatility. The Board has materially
changed, including the appointment of a new Chair
and Chief Executive Officer designate while our
markets have been challenging, particularly in the
technology sector. As such, we have taken the decision
to no longer provide long-term targets and will,
instead, provide nearer-term guidance.

2024 has started with renewed energy and focus and
encouraging first quarter momentum. While our end
markets continue to be affected by macro-economic
uncertainty, we expect Headline profit before tax for
2024 to be in line with expectations. We are confident
that the structural changes we are making to our cost
base alongside our new operating model are
increasing our operational leverage potential which
will help support future margin expansion.

12
12

ZILLAH BYNG-THORNE
Executive Chair

“2024 will also
benefit from the
full-year impact
of the actions
we have already
undertaken and
the planned
actions we are
yet to deliver.”

Strategic ReportM&C Saatchi Plc Annual Report 2023We have evolved the senior leadership team,
increasing capabilities and alignment. Zaid Al-Qassab,
as our new Chief Executive Officer, is at the core of this
process and sets the scene for our delivery over the
coming years.

We are well progressed on building a simplified
operating model which places our regional focus
and global specialist expertise at the heart of
everything we do. This will ensure we can continue
to be unashamedly bold, creative, entrepreneurial,
and fearless in the work we do with our clients.

Our focus is on growing returns for our shareholders
by investing in capabilities and driving the Group
forward with renewed purpose. We have a marked
advantage in being able to operate at scale with the
agility of a start-up, allowing us to move at pace.

DIVIDEND

In recognition of the earnings growth, and our
confidence in our future, the Board will be
recommending the payment of an increased
final dividend of 1.6 pence per share. This is in
line with our intention to deliver a sustainable
and growing dividend.

MY THANKS TO MY COLLEAGUES

I would like to take this opportunity to acknowledge, and
express my appreciation and gratitude, for the effort
and commitment shown by our employees. We are a
people business, and our success ultimately boils down
to the talent that exists throughout our Group and the
willingness of that talent to share our vision for M&C
Saatchi. To deliver the strength of results that we have,
against a difficult backdrop, gives me enormous
confidence and optimism around our future.

PROGRESS ON PEOPLE

2023 was a year of significant change from a senior
management and Board perspective.

Firstly, I would like to take this opportunity to thank
Moray MacLennan, who stepped down as a director
at the end of September 2023 following his intention to
retire as Chief Executive Officer, for his longstanding
contribution and commitment to our Group. Moray
had been with the Company since its founding in 1995
and his leadership since 2021 was instrumental in
seeing the business return to a sound footing after a
particularly challenging period and laying the
groundwork for its subsequent growth.

More recently, we were delighted to announce the
appointment of Zaid Al-Qassab as our new Chief
Executive Officer. Zaid will be taking up his role in
May 2024, at which point I will step back from my
interim role as Executive Chair to fulfil the role of
Non-Executive Chair.

Our search for a new Chief Executive Officer was
comprehensive and in Zaid we have found a
compelling blend of dynamism, passion and proven
leadership qualities. Not only does Zaid bring
significant marketing industry experience, he also
brings a client perspective that will be critical to our
customer-led growth journey. Zaid joins us from
Channel 4 where he was Chief Marketing Officer
since 2019. Under his leadership, he oversaw the
success of Channel 4’s own inhouse creative agency,
4creative, and digital content and brand
entertainment agency, 4studio. Prior to Channel 4,
Zaid was Chief Brand & Marketing Officer for BT
Group PLC.

I look forward to working closely with, and
supporting, Zaid as he takes the Company forward
over the coming years.

Over the course of the year, a key priority has been to
reshape our Executive Leadership Team. We have
sought to both streamline and rebalance the skills
within our senior management structures. This has
resulted in a number of internal promotions and
external appointments.

•

Scott Feasey, the Chief Executive Officer of our
UAE region has been promoted to the Executive
Leadership Team.

Simon Bergman, the Chief Executive Officer of
the World Services business has been promoted
to the Executive Leadership Team.

Damian Symons has been promoted to Chief
Executive Officer of the M&C Saatchi Consulting
Group having previously been Chief Executive
Officer of Clear. This reflects our commitment
to fostering greater collaboration within this
specialism and a recognition of the longer-term
growth opportunity we see in this market.

Marcus Peffers saw his role expanded during
the year to take on regional leadership of the UK
Group enabling the business to quickly move to
this new model, while continuing to chair the
World Services business.

Strategic ReportM&C Saatchi Plc Annual Report 2023•

Following both an internal and external search
for a Chief Operating Officer, we were delighted
to promote Mark Dickinson-Keen to the role
of Chief People and Operations Officer. In this
new role, he has responsibility for People, IT,
Facilities, ESG and the delivery of our global
efficiency programme.

•

We are close to announcing the appointment of
a new Global Chief Creative Officer, a role that
will sit within the Executive Leadership Team.
As we roll out our new operating model, having
a global role that elevates the standard of our
creative output will be an important step.

As a result of these changes, our new Executive Leadership Team is as below:

EXECUTIVE LEADERSHIP TEAM

ZILLAH BYNG-THORNE
Executive Chair

REGIONS

SPECIALISMS

CENTRAL TEAM

UK
Marcus Peffers

ISSUES
Simon Bergman

PEOPLE & OPERATIONS
Mark Dickinson-Keen

APAC
Justin Graham

TALENT
Richard Thompson

FINANCE
Bruce Marson

SOUTH AFRICA
Mike Abel

MEDIA
James Hilton

CREATIVE
Vacant

AMERICAS
Lenny Stern

EUROPE
Carlo Noseda

MIDDLE EAST
Scott Feasey

CONSULTING
Damian Symons

PASSIONS & PR
Vacant

Strategic ReportM&C Saatchi Plc Annual Report 2023Beyond our Executive Leadership Team:

•

Jo Bacon has been appointed to lead the newly
formed UK Agency. Jo brings a wealth of
experience with her and joins us from Ogilvy (part
of the WPP Group) where she has been Global
Client Lead for the last three years. The newly
formed UK Agency has been created through the
reorganisation of the previously separate UK
creative agency businesses into a single entity to
simplify the UK client proposition and enable
more collaboration across multiple disciplines.

Nadja Bellan-White has been appointed Chief
Executive Officer of SS+K, our New York-based
agency. Nadja joins us from Vice Media where
she was Chief Marketing Officer. Prior to this,
Nadja held several senior roles at Ogilvy, Publicis
and Digitas.

•

We were delighted to make a number of further
senior promotions during the year, including:

–

Promoting Kabeer Chaudhary to Chief
Executive Officer of our Performance Media
business, having previously led the APAC region
for Performance Media since 2021. Kabeer has
been with M&C Saatchi Performance since
2015 and has served in the role of managing
director of APAC for the past two years.

Promoting Rhonda Hiatt to Chief Executive
Officer of Clear, our consultancy business,
to accelerate growth ambitions across key
markets. Rhonda has been a group board level
leader within Clear for close to 10 years and
enjoys 20+ years in the consulting industry.

Promoting Laura Coller to be Chief Executive
Officer of Sport & Entertainment (UK) having
served as a Board Director for the past seven
years and as a Managing Director in the
business since 2022.

Alongside the ongoing evolution of our senior
management structures, we have also seen a few
changes to our Board.

Firstly, I would like to thank my predecessor as Chair,
Gareth Davis, who retired from the Board at the Annual
General Meeting in June 2023. Gareth steered and led
the Board through periods of growth and challenges for
the Group, not least the two unsuccessful bids for the
Company in 2022. Gareth was also instrumental in
strengthening the Board, and we owe him a debt of
gratitude for all he achieved.

Similarly, I would like to express my thanks to Lisa
Gordon, who also stepped down from her role as
Senior Independent Director at the Annual General
Meeting in June 2023. Lisa has been a steadfast
supporter of the Group, and we wish her well in her
other endeavours.

In January 2024, we welcomed Dame Heather Rabbatts
to the Board. Dame Heather will serve as our new
Senior Independent Director. Dame Heather brings
to the Board her experience across a range of
industries, including local government, infrastructure,
media and sport. Dame Heather has held a number of
executive and non-executive roles. She is currently a
Non-Executive Director of Associated British Foods plc
and has previously been a Non-Executive Director at
both Grosvenor Britain & Ireland and Kier Group plc.
Dame Heather was the first woman appointed to the
board of the Football Association in over 150 years.
Dame Heather will be a great addition to our Board,
and I look forward to working with her.

Lastly, we welcomed Chris Sweetland to the Board as
a non-independent Non-Executive Director. Chris sits
on the Board as the nominated representative of
AdvancedAdvT Limited and Vinodka Murria, who hold in
aggregate 22.2% of the Company’s issued share capital.
Chris brings substantial experience as he was previously
Deputy Group Finance Director of WPP Group plc and
has been an excellent addition to our Board.

Please refer to pages 64 and 65 for details of
the Board’s engagement with its stakeholders
(section 172 statement).

Sustainability: Planet and People Initiatives

The changes we are making to how we work have
enabled us to continue to make good progress in
relation to our ESG priorities. Please refer to pages 66
to 80 for more details of our 11 commitments and
the sustainability and people initiatives we are
implementing.

THE SHAPE OF OUR YEAR

Market Backdrop

2023 was a challenging year across our industry,
particularly in the first half. However, as we indicated
at the interims, we had already accelerated our global
efficiency programme and were taking action on the
loss-making non-core businesses within our portfolio.
As a result, we were able to arrest the decline and
significantly improve profitability in the second half.

Strategic ReportM&C Saatchi Plc Annual Report 2023

The early signs we noted at the half year, that pressure
was easing on client marketing budgets pointing to
an improving market backdrop, are being realised.
Nevertheless, looking at the year overall, the more
cyclically exposed parts of our businesses felt pressure
throughout the year. As a result of this, Advertising,
Media and Consulting were the most heavily affected
(particularly where they were exposed to large
technology clients), while Issues and Passions, which
are less exposed to the broader marketing spend
cycle, continued to deliver strong growth and healthy
margins, underpinning the benefit of our diversified
business model.

Group Financial Results

Within the context of challenging market conditions,
net revenue declined by 7% to £252.8m (4% at constant
FX) in line with the first half performance. However,
on a like-for-like basis, excluding the impact of the
non-core businesses we exited in the second half,
net revenue declined 2%.

The impact of the self-help actions we have
undertaken through the year are evident in operating
profit which improved markedly in the second half,
rising 30% versus 2022, following the first half decline
of 45%. The full-year Headline operating profit was
£32.4m, down 8%.

While full-year operating margin was 12.8%, down
30 basis points on 2022, it rose significantly from
8.3% in the first half. On a like-for-like basis, excluding
the loss-making business we have now discontinued
in both 2022 and 2023, operating margin improved
year-on-year by 20 basis points to 14.2%.

In 2023 we delivered £3.9m of annualised cost savings,
ahead of our initial target, as we continue to simplify
our structure. We remain committed to our target of
delivering £10.0m of fully annualised cost savings in
2024. This provides a strong basis for future operating
margin progression. (The review of our global
efficiency programme and our active portfolio
management is covered in more detail in the
following pages.)

Headline profit before tax was £28.7m, a decline
of 10% from 2022. On a like-for-like basis, however,
the decline was limited to 1%.

Headline earnings per share improved to 15.2p
from 14.8p in 2022, as the share of Headline profits
represented by minority interests declined sharply
from 25% to 13% as a result of our settlement of put
option liabilities through the course of the year.

We settled approximately half our put option liabilities
for £15.4m in cash, leaving a reduced liability of
£14.4m with £9.9m of this potentially payable in 2024,
reducing the minority interest to well below 10% of
Headline profits. We would expect to settle the balance
over the course of the next five years.

This settlement of £15.4m of put options had an impact
on net cash, which stood at £8.3m at the year-end,
compared with £30m in 2022. In addition, working
capital absorption of £14.5m was driven by £8m
reduction in bonus accruals, a £3m reduction in
minority interest profit share liabilities and £3m
relating to changing revenue mix.

We expect to see some working capital normalisation
through the course of 2024, and our net cash position at
the end of the first quarter showed an improvement
compared with December. Reducing put option
liabilities remains one of our key priorities for the
Company which will simplify our capital structure.
In the context of our capital light and cash-generative
business model, this means that we expect to
strengthen free operating cash flow delivery in the
future and accelerate future returns to our shareholders.

Specialisms

The resilience that our diversified portfolio lends
the Group, is evident in this year’s performance.

Advertising
•

Represented 42% of the Group net revenue,
down from 46% in 2022.

•

2023 was a challenging year, encompassing
a broad range of outcomes across the
geographical breadth of this business, with the
US and the UAE outperforming Asia and Europe.

Advertising was most affected by business
exits and excluding these, like-for-like (LFL)
net revenue declined 8% (a 12% decline in the
first half and a 5% decline in the second half).
Net revenue overall declined 15% in the full-year
ahead of the 16% decline at the half year.

Market sentiment has shown signs of
improvement, but we remain cautious on the
outlook. Our self-help measures, including
strengthened leadership and internal
improvements from operating as integrated,
simpler agencies, will be the key drivers of
performance in 2024.

Strategic ReportM&C Saatchi Plc Annual Report 2023Issues

Media

•

Represented 20% of Group net revenue, up from
15% in 2022.

Characterised by a global client base of both
commercial and non-commercial entities and
multi-year engagements, which is less cyclical
and has been a strong contributor to the Group
over the last two years.

Delivered 21% net revenue growth; 22% LFL.

The outlook for 2024 remains positive.

Passions

•

Represented 14% of Group net revenue, up from
12% in 2022. In FY23, PR’s results are included in
Advertising, but will be included in Passions & PR
from 2024 reflecting the consolidation taking
place.

This specialism encompasses our award-winning
Sport & Entertainment and Talent businesses.
It is also characterised by multi-year client
engagements and benefits from the growing
desire of brands to partner and engage through
consumer events and non-traditional channels.

Passions delivered 8% net revenue growth; 10% LFL.

The outlook for 2024 remains positive, and
we expect to invest further in this business to
drive growth.

Consulting

•

Represented 14% of Group net revenue, in line
with 2022.

Broader market challenges in the consultancy
sector were evident and net revenue declined
by 9%; 6% LFL.

We acted on costs within this specialism and
re-aligned our business structures and
leadership. In addition, we have simplified our
proposition, launching M&C Saatchi Consulting,
in order to make it simpler for our clients to
access our services.

•

2024 has started on a firmer footing than 2023,
but we remain cautious about market conditions.

•

Represented 10% of Group net revenue, down
from 13% in 2022.

This was the most challenged specialism in 2023
with a 23% decline in net revenue; 21% decline LFL
notwithstanding a number of good client wins.
The decline was 30% in the first half and 12%
decline in the second half.

Most materially impacted by the macro factors at
the start of 2023, including the reduction in spend
from technology clients in the first half, coupled
with changes relating to privacy regulations.

We have addressed costs in this business during
the year and have strengthened leadership to
enable a focus on strategic growth.

While we remain cautious about the structural
headwinds the paid media market faces in
the short term, the outlook for 2024 is more
promising. We have seen a stronger start to
the year compared to 2023.

NET REVENUE BY SPECIALISM

50%

40%

30%

20%

10%

Advertising

Issues

Passions

Consulting Media

2022

2023

New Revolving Credit Facility

We have recently renegotiated our banking facilities.
We have welcomed a new banking partner, HSBC,
into our lending group alongside Barclays and
NatWest. Our new arrangements comprise a core
facility of £50m alongside a new and additional
accordion facility of £50m. Our covenant terms are
improved over our previous facility arrangements.
This is covered more fully in the Financial Review.

Strategic ReportM&C Saatchi Plc Annual Report 2023

Dividend

In recognition of the earnings performance during the
year, the Board will be recommending the payment
of an increased final dividend of 1.6 pence per share.
It is our intention that shareholders should benefit
from a sustainable and growing dividend. Subject to
shareholder approval at the Annual General Meeting,
to be held on 16 May 2024, the dividend will be paid
on 24 June 2024 to shareholders on the register as
at 10 May 2024. The shares will go ex-dividend on
9 May 2024.

PROGRESS ON TRANSFORMATION

The transformation of our business is multi-phased.
The initial phase has focused on securing short-term
efficiency and cost savings and reviewing the loss-
making businesses within our Group. This is now well
underway, and we have made very tangible progress.
In the next stage, we will focus on shaping our business
for the future and what that means for the structure
of our Group. I discuss this is in more detail in the
following section.

The purpose of the initial phase was three-fold:

•

To deliver a structural and long-term
improvement to our Group operating margins.

To simplify our Group structure and ensure that
all the businesses within the Group are wholly
aligned with our new operating model and
go-to-market strategy.

To free up the capital required to support
these businesses and allow this capital to
be re-invested where longer-term growth
opportunities are more attractive.

At our interim results, we announced that we would
be accelerating and refocusing our global efficiency
programme. We have made good progress exceeding
our 2023 target with £3.9m of fully annualised cost
savings delivered by the year-end. We remain on
course to deliver an additional £6.6m of annualised
savings by the end of 2024 totalling £10m.

Where we focused our efforts in 2023:

•

People. Focus primarily on our Group head office
and a range of functions where roles are no
longer necessary or likely to be duplicated.

Property. Rationalising and optimising our
UK, Australian and US property portfolios.

•

Procurement. Seeking greater efficiency around
our use of service suppliers and internal cost
centres such as travel.

Looking forward to 2024, we see further material
gains to be made from:

•

Optimising and rationalising our Group support
functions including, Finance, IT and HR to create
shared service centres to support the Group on
a global basis.

Further gains from our property portfolio with
more efficient use of our UK property.

Rationalising our IT service provision through
group-wide deployments.

Focus on creation of centres of excellence for our
middle office functions and common capabilities,
specifically production, data and analytics and
social media.

Costs of the global efficiency programme

In 2023, we incurred £3.3m of exceptional costs
relating to our global efficiency programme, of
which £1.1m was cash and £2.2m represented
property impairment charges.

For 2024, we expect a higher level of costs to be
incurred but we still expect the total cost of this
programme, both cash and accounting costs,
to be in line with our previous guidance of 0.5x
to 1.0x the level of cost savings delivered.

Portfolio Rationalisation

Above and beyond the operational cost savings we
are making, we have also been actively reviewing
our portfolio, in particular a number of non-core or
loss-making businesses. Significant progress has been
made, and we have exited from businesses that, in
aggregate, represented c.£9m of revenue and c.£3m
of operating losses in 2023, including:

•

Sweden. We reduced our interest from 70% to 30%,
with the management team acquiring our interest.

Asia. We have closed, wound down, or exited
through local management buy-outs, a number
of our smaller offices across this region, including
in China, Hong Kong, Indonesia and Singapore.
We have also consolidated our regional structure
into a unified regional headquarters for APAC.

UK. We have exited several of our smaller,
non-core businesses and have merged our
agencies into an integrated new UK Agency.

Strategic ReportM&C Saatchi Plc Annual Report 2023For a number of the businesses that have been
disposed of, we have entered into future relationship
agreements that enable these businesses to continue to
use the M&C Saatchi brand. In return for the use of our
brand rights, and to remain connected to our global
network, these businesses will pay an ongoing licence
fee to the Group. This allows us to continue to share in
their success as independent businesses, albeit not
solely at the equity level, and transforms them into a
profit centre for the Group rather than a cost centre.

In the first quarter of 2024, the Group divested of its
shareholdings in its three French associate investments
for a consideration of €1m. More recently on 9 April
2024, the Group announced the divestment of its
shares in the M&C Saatchi South Africa Group for
£5.6m. Once completed, these transactions mean
that we will have materially completed the
simplification of our business portfolio.

CAPITAL ALLOCATION

M&C Saatchi is a business that is capable, over
the medium-term, of converting at least 80% of its
operating profits into cash, although each future
year will undoubtedly see some degree of variability
through the cycle. Putting aside the one-off impacts
on cash generation in 2023, our streamlined portfolio
of businesses, our new operating model and go-to-
market strategy give us a high degree of confidence
in the potential for sustainable and growing free
cash generation.

Our strategy to evolve and grow M&C Saatchi will
require investment. Aligned to our regional first, global
delivery-led approach, we would seek to re-invest
to drive long-term growth and to add capability,
capacity and scale in the parts of the Group that will
generate the greatest return. We will remain open to
opportunities to accelerate that through selective M&A.
We expect that the majority of acquisitions would be
bolt-on in nature and address gaps in our client-facing
capabilities and regional coverage.

Our confidence in the Group’s ability to generate
sustainable and growing free cash underpins our view
on our capital allocation. We are comfortable operating
with a net debt to EBITDA ratio not exceeding 1.5x,
although we would allow for a temporary spike in
the case of a material acquisition.

By simplifying our Group, good execution, re-investing
in growth, and selective bolt-on acquisitions, we believe
we can deliver a compelling proposition of returns to

shareholders including capital growth, a progressive
dividend, and a robust, optimal balance sheet.

IN CONCLUSION

This has been a critical year for M&C Saatchi. We have
made significant progress in addressing the challenges
our markets have posed, partially mitigating the
impact of the macro headwinds. We have begun the
transformation, achieving key steps towards greater
efficiency and our new operating and strategic model
that will align us more closely with our clients.

There is much more to achieve in 2024 and our focus
remains on delivering the sustainable, longer-term
growth and shareholder returns of which we know the
Group is capable.

ZILLAH BYNG-THORNE
Executive Chair
11 April 2024

“Our strategy to evolve
and grow M&C Saatchi
will require investment.
Aligned to our regional
first, global delivery-led
approach, we would seek
to re-invest to drive long-
term growth and to add
capability, capacity and
scale in the parts of the
Group that will generate
the greatest return.”

Strategic ReportM&C Saatchi Plc Annual Report 2023HOW WE ARE SHAPING THE
BUSINESS FOR THE FUTURE

BUILDING ON OUR CREATIVE HERITAGE

THE CHANGING LANDSCAPE WE FACE

Creativity is a word that has often been associated
with M&C Saatchi, and with good reason. Our position
in the market has been hard won over the years
through a dedication to creativity to empower our
clients by cutting through a crowded and competitive
brand landscape. M&C Saatchi has always been a
business that has dared to be different.

However, creativity must have a purpose and be
accompanied, supported and enhanced by other skills
and specialisms that fit the broader, and evolving,
needs of our clients. M&C Saatchi exemplifies exactly
that exciting breadth of skills and passions.

The challenge is not whether we have the capability,
it is how best to align these capabilities with our
customers. This is about removing the internal barriers
to growth that our historic approach had put in place
to reflect the changing needs of our clients.

In the past, M&C Saatchi had based its strategy
around backing entrepreneurial founders, bringing
their talent and dynamism into a broader group
platform from which they could grow their individual
businesses. The benefit of this approach can be seen
in the quality of our people, the breadth of our five
specialisms and our geographical reach. This is a
very strong place from which to start. However, this
approach also created a group of considerable
complexity, with internal structures that did not lend
themselves to collaboration, nor supportive of a truly
cohesive client-facing and group strategy. Through
the course of 2023, our Executive Leadership Team
has brought together a new operating model and
a strategic vision that places us at the heart of where
our clients need us to be.

The internal transformation we are embarked upon is
meaningless without first understanding the market
context we face. M&C Saatchi has built its reputation
on being a pathfinder in the industry, daring to be
different and ensuring we are best able to meet clients’
changing needs. Our markets and our customers are
not, and have not, been standing still. Whether we look
at our markets through the lens of technology, or
economics, we see profound and rapid change.
Against such a backdrop, M&C Saatchi has an
opportunity to set out a new model for its future
evolution, enabling us to do the best work with the
best people, focused on our client growth.

As we look at the market we operate in, we see clear
opportunities to evolve and transform:

•

Our clients face complexity every day. A brand
no longer exists within a single medium and
a customer no longer interacts with a brand
through a single point of contact. Our clients
must drive growth by navigating a bewilderingly
complex and changing marketing ecosystem
where physical and digital brand assets and
consumer touchpoints are interchangeable,
or even indistinguishable from one another.

–

What does that mean for us: Simplify. We will
help our clients to solve their problems, not
create new ones. Our agency approach must
be to align our global and regional skills and
capabilities with the needs our clients actually
have. The answer to any client question
almost certainly sits somewhere within our
organisation. We need a structure that allows
the two to meet as easily and quickly as
possible.

Media is converging. As the boundaries between,
and the roles of, traditional media formats break
down, this poses a threat to the single discipline
agency specialist, who increasingly see their
narrow, but deep, field of vision contract. Dealing
with a myriad of narrow specialists only adds to
the complexity and the costs faced by our clients.

–

What does that mean for us: Integrate. We
must make the full breadth of our specialist
capabilities easily accessible by our clients.
We need to face our clients as an integrated
agency partner, not as a collection of loosely
connected domain specific experts.

Strategic ReportM&C Saatchi Plc Annual Report 2023

•

Commoditisation of creative. In the golden age
of TV, a great campaign cut through the noise
and the creative was king. This is no longer the
case. As media formats converge, driven by
technology and social change, creative agencies
run the risk of commoditising their own creative
lifeblood to keep up with competitors and
technology in a race to the creative bottom.

–

What does this mean for us: Differentiate.
We will redefine what creativity means to us
as an organisation and to our clients. We are
an organisation that has always prided itself
on being different; bold and fearless in our
approach. We need to broaden our definition
of what creativity is and use that as our
lightning rod. This will allow us to stand apart
from a commoditising world.

Client budget pressure is not going away. Client
marketing budgets are not growing as fast as
the media complexity into which they are being
deployed. Increasingly, larger brands are looking
to inhouse the old school agency retainer and
parcel out specific projects.

–

What does this mean for us: Proximity. We will
have a structure that places us closer to our
potential clients. We need to be able to
identify those clients for whom we can make
a difference and grow with them. We need
to be comfortable with not being a global
partner but with bringing our global skills
to bear on the client problem that needs to
be solved.

Our Fluency data consultancy is an excellent example
of a centre of excellence in action. We highlight in this
case study who Fluency is, what it does and how it will
be able to support our growth strategy.

WHO WE ARE

Fluency is an award-winning global data
consultancy that helps brands make smarter
business decisions by connecting deeper
insight to smarter actions. Building on
the Group’s intellectual capital in brand,
marketing and design, Fluency specialises
in creative solutions fuelled by high quality
analytics, diverse data, and innovative
technology. Fluency’s team of specialists
operate out of hubs in New York and London,
servicing clients from Amazon, Nike and
Diageo, to the UK Government and UN.

WHAT WE DO

Fluency approaches the market through four
common client challenge and problem areas,
opening a wider front door which is easily
scalable to support Fluency’s growth and
expansion.

These are:

•

Systems (setting clients up for success).

Audiences (targeting growth
opportunities).

Experiences (enhancing touchpoint
relevance and resonance).

Effectiveness (measurement and
optimisation).

Fluency’s reason to buy:

We help decision-makers deliver stronger
outcomes, by connecting deeper insight
to smarter actions.

Fluency’s right to win:

Fluency’s specialists unlock true commercial
advantage at speed and scale by blending
diverse datasets with cutting-edge technology.

Awards:

Gold winner of industry’s prestigious Campaign’s
Agency of the Year for best start-up, reflecting
client base, talent pool, culture, and market offer.

Clients:

Amazon, Nike, the UK Government and Diageo.

Strategic ReportM&C Saatchi Plc Annual Report 2023

HOW WE CAN MAKE
IT EASIER TO GROW

The sheer complexity of our
organisation across its
geographical footprint and the
lack of historic integration did
not always work in our favour.
We had a group of scale and
reach but lacked the ability to
take full advantage of the client
opportunities in front of us.
Our internal structures, both
operational and financial,
created barriers to the
collaboration necessary to
win in the markets we now
find ourselves operating in.

While we have a culture that focuses on helping our
clients grow, the reality was that our structure and
incentives meant that, at times, it had been hard for
clients to work with us. Over the last few months, we
have set about implementing a new operating model
and reward framework that overcomes these hurdles,
making it easier for all of us to harness the full
capability within M&C Saatchi to do our best work for
our clients. The focus of our Executive Leadership Team
has been to identify how best to re-orient ourselves to
address these challenges.

Regional First

We solve the problem of client complexity and
proximity by going towards, and becoming closer to,
our clients and presenting a clear and integrated
solution to them. Our existing regional presence
already places us close to our clients but rather than
presenting a narrow, regional set of solutions to them,
we will open up the full range of capabilities that exist
within our global specialisms.

We also need to recognise the client opportunities that
this model is ideally suited for. These are the regional
champions that need the full suite of our capabilities
but have yet to go fully global themselves; these are
the businesses that we can grow with over the long
term and deliver a meaningful impact to. We recognise
that we have a core competency in helping the
businesses that are ambitious, and that are at
an inflection point facing competitive or market
challenges that we can deliver solutions to.

Global Specialism Delivery

A regional first focus does not imply no global client
mandates. Our specialisms already work with a wide
array of global clients on a global basis, and we do not
see this changing. Instead, a regional first focus means
that our global specialist teams will be exposed to a
broader array of clients. We want our global specialisms
to be busier. We see this as the fastest route to bring our
unique suite of skills closer to more of our clients. Please
refer to the case study on M&C Saatchi Consulting on
page 44 for an example of this in practice.

Strategic ReportM&C Saatchi Plc Annual Report 2023Supported by Global Shared Services and an
Integrated Agency Model

Critical to the success of this regional first, global
specialism delivery model is a group and agency
structure that will enable delivery on this basis and
remove internal barriers.

•

Global shared services. This is about efficiency
and the speeding up of client delivery. By creating
global service centres that deliver Group-wide
support and back-office functions, we can
streamline and increase the agility of our client-
facing regional hubs. Not only will this enhance
our margins by removing duplicated functions
and reducing procurement costs, but it will
also decrease complexity and increase our
institutional flexibility and speed of response.

Integrated agency model. We reduce the
complexity of our client offer by reducing the
number of distinct, and often disconnected, faces
we present to them. For clients with bottomless
marketing budgets and infinite time resources,
dealing with a myriad of narrow experts may be
satisfactory, but the reality is that these clients are
either very rare or simply do not exist. Our clients
need to see us as a partner that can deploy the
requisite skills at the right time to solve the issues
they face.

Our Australian businesses have already integrated
their agencies into a single, go-to-market proposition.
We have created a new integrated agency in the UK,
and we will see further integration as the year
progresses. This is about recognising that the template
for success already exists within the Group and
ensuring that we make this our uniform approach.

The simplification of our Group structure, coupled with
the simplification of our balance sheet will liberate the
capital, both fixed and working, that will be needed
to deliver this new operating model across the Group.
In the pages that follow, we will showcase not only the
strength of the regional first model but the depth and
reach of our global specialisms.

“Over the last few months,
we have set about
implementing a new
operating model and
reward framework that
overcomes these hurdles,
making it easier for all
of us to harness the full
capability within M&C
Saatchi to do our best
work for our clients.”

Strategic ReportM&C Saatchi Plc Annual Report 2023GLOBAL EFFICIENCY
PROGRAMME

Context

While conceived in 2022, our global efficiency programme was initiated in earnest in 2023. The first stage was
a detailed analysis of all back-office (HR, IT and Finance) activities and roles alongside defining the future target
operating models for these functions. The scope of the programme was expanded to include a broader focus on
efficiency across the front, middle as well as the original back-office scope.

As we enter 2024, the programme now comprises 11 workstreams which cover establishing specialist hubs for our
IT, HR and Finance operating models, procurement, redefining our property footprint, globalising our production,
data and media capabilities, standardising and scaling our go-to-market, and our brand licensing approach.

Overview of workstreams and their objectives

Workstream

Objective

GTM approach

Delivering a consistent framework and approach to client solutions.

Brand licensing

Standardising the approach to brand licensing in non-core geographies.

Data middle office

Enabling data access, analysis, and education for the global business.

Production middle office

Creating integrated global production capabilities.

Global media offer

Building scale through integrating our media capabilities.

Establishing specialist hubs

Operationalising global strategic hubs, across Cape Town, Delhi and
Bangalore.

HR target operating model

Reorganising the people team, streamlining operational and
commercially supporting activities.

IT target operating model

Redefining the support and systems architecture into a consistent global
platform and offshore service delivery model.

Finance target operating model

Consolidating across transactional and commercial finance support.

Procurement

Delivering material savings from transforming global Group purchasing.

Property and facilities

Driving a consistent and consolidated global property footprint.

Strategic ReportM&C Saatchi Plc Annual Report 2023Progress in 2023 and Programme Delivery in 2024

Brand Licensing

As we have disposed of non-core businesses the
Company has entered into licence agreements with
these businesses to enable them to retain the M&C
Saatchi brand for continuity and competitive
advantage. This has created a new revenue stream
for the Group and retained the global partnerships
and network which is critical for new business
development and conversion.

Go-to-market

With the revised globally integrated, regionally
executed strategy, we are reviewing and codifying our
global products and services to make collaboration
simpler for our teams and our clients as well as create
consistency in what we as M&C Saatchi deliver and
stand for in the market.

Establishing Specialist Hubs for Back and Middle
Offices

By the end of 2024, the Company will operate three
specialist hubs leading process-led shared service
centres for our middle and back-office functions.
These include: 61 people in Cape Town across Finance,
IT and HR (with a view to add production in the last
quarter of 2024), 55 people in Delhi across IT, HR and
media operations and 62 people in Bangalore across
media data, strategy and production. These roles have
been offshored from across the UK, Europe, the US,
the UAE and Australia.

In 2023, we took the initial steps to reorganise our
back-office functions, rightsizing the central, global
functional teams and conducting the detailed planning
for the entity-by-entity impact of the new operating
model. In addition, we consolidated and renegotiated
employee-related non-staff costs to drive efficiencies
from scale purchasing.

Aligned to the Company’s ESG commitments, travel,
especially air-travel was limited, delivering initial
benefits in 2023, with further reductions expected
in 2024.

In 2024, in the back-office, we will be moving from our
historic agency-led back-office model to a process-
led offshore model enabling efficiencies from process
consistency and automation. In parallel, the programme
will elevate the remaining embedded teams to provide
business partnership and commercial advisory services.
This transition will be phased over 12 months with the
first phase completed at the end of June 2024.

Procurement excellence is also a key focus for the
programme in 2024, through leveraging regional
consolidation as well as the global scale and footprint
of the Group to deliver technology-related
consolidation and simplification. This begins the
roll-out of a single system architecture, toolset and
hardware estate. The first phase will be completed
by September 2024.

The global property portfolio has also been a key
focus which began in the final quarter of 2023 and is
expected to be completed in the second quarter of
2024. This includes a further reduction in our property
footprint in London, with active marketing and
imminent subletting of floor space expected to deliver
material savings from the final quarter of 2024. We are
also actively consolidating our footprint in Australia
across our Sydney and Melbourne offices, and we
recently opened a new, consolidated and more
collaborative office in New York.

Strategic ReportM&C Saatchi Plc Annual Report 2023SHOWCASING OUR
BREADTH AND DEPTH

In this section we highlight each of our key regions and
the global specialisms that we deploy to help our
clients in their own growth journey. This illustrates the
breadth and the depth across our organisation, while
also aligning with how we report our performance to
our stakeholders. However, it is also important for our
stakeholders to understand that although we break our
business down into the five distinct specialisms, the
reality is that our specialisms are more connected than
our reporting structure might imply.

When we look across our specialisms, we can see three
broad groupings underpinning them. These groupings
can best be thought of in terms of the skills employed
and the outcomes delivered to our clients.

•

Creative advisors. This captures our businesses
that take our clients’ brands on a journey. Our
experts create, plan, structure and advise on this
brand journey through whichever media is

•

relevant. Our Advertising, Issues and Passions
& PR specialisms would sit within this grouping.
The distinctions between the three are more
about specificity of the client community served
(Issues) or the end media targeted (Passions
& PR).

Media execution. Our Media specialism makes
real the tangible connection between our clients’
brands and the end consumer. We create,
measure, and enact the digital media strategies
that deliver client messages to the right consumer.

Data consulting. Our Consulting specialism
represents our ability to help our clients
understand the challenges or market opportunity
they face. Centred around analytical insights into
consumer and market data, our consultants
declutter and make sense of how our client
brands resonate and perform.

Our business Model

Regional first

As part of the work on our new operating model, we have evolved into a regional first model. This model allows us
to be both closer, and more responsive to our clients. We will be better able to align our global specialist capabilities
to these client needs more quickly than we have in the past. Our core regional markets are:

EUROPE

MIDDLE EAST
AND AFRICA

APAC

AMERICAS

• HQ: London

• HQ: Milan

• HQ: Cape Town

• HQ: Sydney

• HQ: New York

• Presence in:

– England

– France
– Germany
– Italy
– Netherlands
– Spain
– Sweden
– Switzerland

and Dubai

• Presence in:

– South Africa
– United Arab
Emirates
– Lebanon
– Pakistan

• Presence in:

– Brazil
– Mexico
– the US

– Australia
– New Zealand
– Singapore
– Malaysia
– China
– India

See page 28
for case study.

See page 30
for case study.

See page 34
for case study.

See page 36
for case study.

Strategic ReportM&C Saatchi Plc Annual Report 2023Our unique model means that not only are we able to operate at scale in the major regions, but we can also bring
our global specialisms much closer to these regional clients. These core global specialisms are:

ADVERTISING

PASSIONS & PR1

CONSULTING

MEDIA

ISSUES

• Operates in:

– UK
– Europe
– South Africa
– UAE
– APAC
– Americas

• Includes:

– Talent
– Sport &

Entertainment
– Consumer PR

• Includes:

– Performance
– Bohemia
– Connect

– World Services

– Clear
– Fluency
– MCD
– Re
– One-to-One
– The Source

See page 38
for case study.

See page 42
for case study.

See page 44
for case study.

See page 46
for case study.

See page 40
for case study.

We provide a full range of services from our operations across the globe:

ADVERTISING

PASSIONS & PR

ISSUES

CONSULTING

MEDIA

Europe

Middle East
and Africa

APAC

Americas

✓

1 In 2023 and prior years, PR was included within the Advertising specialism. It was moved to Passions & PR in 2024.

Therefore, the PR numbers are included within the Advertising specialism in this Annual Report and Accounts.

Strategic ReportM&C Saatchi Plc Annual Report 2023M&C Saatchi Plc Annual Report 2023

Strategic Report

Most people sent a bowel cancer screening test intend to do it. Yet over 1.5 million tests a year do not get done. The cause?
Pure human nature. To be blunt, any procedure involving your poo is a bit off-putting. To overcome this inertia, we needed an
idea that was distinctive, memorable, and as celebratory as possible – reminding people that their next trip to the loo could
literally save their life. This led us to combine three improbable things: rhythmic gymnastics, loo roll and Sammy Davis Jr.
Of course! Thanks to the uplifting lyrics “I want to live, not merely survive”, the important, potentially life-saving message is
delivered in a distinctive and celebratory way, a far cry from standard po-faced health comms.

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28

Strategic ReportM&C Saatchi Plc Annual Report 2023UK

2023 NET REVENUE: £102.3M

WHO WE ARE

CLIENTS

Within the UK, we work with a range of clients, from
government departments to leading tech businesses.
Clients include Lego, Barclays, adidas, UEFA, Amazon,
Department for Education, Costa Coffee, NHS, Absolut,
Tesco, Bill & Melinda Gates Foundation and NATO.

PEOPLE

Central and Group

UK Agency

Passions & PR and Talent

Consulting

Performance

Central and Group

Total

WHAT MAKES US PROUD

Our Awards:

296

101

182

770

• Fluency, Campaign Agency of the Year Awards,

Start-up of the Year.

• M&C Saatchi Talk, PR Week Global, Best Global

Content.

• Re, D&AD Awards, Branding – Digital.

• M&C Saatchi Fabric, Muse Creative Awards, Best

New Agency of the Year.

• M&C Saatchi London, Data & Marketing

Association Awards, Customer Acquisition.

• Sport & Entertainment PR News, Agency Elite Top

100 list.

• Sport & Entertainment, Sport Industry Awards,

Agency of the Year 2023.

In 2023, we restructured our UK business, to drive better
integration amongst our industry leading specialisms.
Embracing our founding principle of Brutal Simplicity
of Thought, M&C Saatchi UK Group is now formed of:

•

The new UK Agency, comprising of the London
Advertising, Destination Marketing and Global
& Social Issues businesses.

Passions, PR and Talent businesses, Sport &
Entertainment, consumer PR agency Talk and
The Talent Group, including M&C Saatchi Merlin
and M&C Saatchi Social.

Our UK and global media agency, Performance.

The recently launched M&C Saatchi Consulting,
which brings the Clear, Re, MCD Partners, One-to-
One, The Source and Fluency agencies under one
umbrella offer, to deliver growth at the intersection
of brand, experience and innovation for our clients.

WHAT WE DO

Our capabilities stretch across the entire breadth and
depth of the digital landscape and customer journey.
A multi-discipline, end-to-end marketing-communications
offering, from demand creation using data analytics,
brand strategy, experience and innovation, through to
multi-channel creative communications – advertising,
sponsorship, brand reputation, personalisation, brand
experience, talent management and influencer, through
to performance media.

OUR BRANDS

•

UK Agency

– London Advertising
– Destination Marketing
– Global & Social Issues

•

Passions, PR and Talent

– Sport & Entertainment
– Talk
– The Talent Group (M&C Saatchi Merlin

and M&C Saatchi Social)

• M&C Saatchi Consulting

– Clear
– Re
– MCD Partners
– One-to-One
– The Source
– Fluency

•

Performance

Strategic ReportM&C Saatchi Plc Annual Report 2023

M&C Saatchi Plc Annual Report 2023

Strategic Report

Our partnership with De’Longhi is back on the global stage with a new campaign that sees brand ambassador Brad Pitt
take to Europe in pursuit of coffee perfection from bean to cup. The 2023 global campaign aims to exceed these results
and ultimately confirm De’Longhi’s predominant role in the coffee world. The new story therefore transports the target
audience to a European setting, bringing people closer to the brand’s core identity and promise of authenticity. The pursuit
of perfection in the creation of an excellent cup of coffee, the exploration of the many varieties of fresh beans, and the
human connections that originate from this dedication: these are the elements of the new storytelling that leads our
brand ambassador to enjoy a perfectly executed cup of coffee with De’Longhi machines, culminating in the now-iconic
slogan – “Perfetto”.

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30

Strategic ReportM&C Saatchi Plc Annual Report 2023EUROPE

2023 NET REVENUE: £14.4M

WHO WE ARE

CLIENTS

We have a diverse range of clients which include
Carrera, Eni, De’Longhi, Ferrero, Geox, Heineken,
Lidl, Nexi, Peloton, Polaroid, Porsche, Wasa.

WHERE WE WORK

Sweden

Netherlands

Germany

Switzerland

France

Italy

Milan (HQ)

Spain

WHAT MAKES US PROUD

We are very proud of our redesigned M&C Saatchi
Labs products:

• Our infamous AB Test (solution to decision-

making).

• Unusual Suspects (solution to personal

innovation).

• Story-Label (key to interactive packaging).

• Pandora’s Box (ESG and more).

• The Game of Archetypes (dynamic storytelling).

In 2023, M&C Saatchi Europe established itself as a
Creative Solutions Company and marked a triumphant
year of transformation towards greater integration,
amplifying our specialised services across the continent.
Notable victories included securing partnerships with
industry leaders like fin-tech giant Nexi, BMW for the
launch of the cutting-edge BMW iX2, and spearheading
brand repositioning efforts for construction firm
Rockwool. In addition, our pan-regional endeavours
for hearing healthcare brand Amplifon underscored
our commitment to delivering impactful solutions
across borders. As we continue to scale and refine our
offerings, the year ahead promises further growth and
innovation as M&C Saatchi Europe solidifies its position
as a powerhouse in the realm of creative excellence
and strategic prowess.

WHAT WE DO

Global &
Social Issues:
Driving critical
global and
social changes.
Protecting
the planet,
transforming
lives for the
better.

Passion
Marketing:
Connecting
brands direct
to customers
through their
passions.

Advertising and Content:
The application of marketing
science and creativity to
solve complex problems.

Growth
Marketing:
Connecting
brands with
today’s
connected
customers.

A creative
Solutions
company

Consulting:
Transformative
digital
experience,
design and
innovation.

To answer the most diverse
questions of any business.

Diversified expertise provided and
certified by world-class specialties.

Strategic ReportM&C Saatchi Plc Annual Report 2023MIDDLE EAST AND AFRICA

SOUTH AFRICA

WHO WE ARE

CLIENTS

2023 NET REVENUE: £16.1M

Since its inception in 2010 with just 13 staff, M&C
Saatchi South Africa has undergone a remarkable
transformation. Today, the group encompasses a
dynamic array of agencies including M&C Saatchi Abel,
Connect & Africa, Razor, Levergy, Dalmatian and Black
& White. What began as a small team has burgeoned
into a formidable force, boasting nearly 370 talented
professionals. M&C Saatchi South Africa takes pride in
its partnerships with both local and international brands,
serving as the creative engine behind some of the most
beloved and recognised names in the industry. With a
commitment to innovation, creativity and excellence,
M&C Saatchi South Africa continues to elevate the
standards of marketing and communications across
the region.

WHAT WE DO

At M&C Saatchi South Africa, we specialise in a
comprehensive range of advertising and marketing
communications services. From crafting compelling
brand narratives to executing strategic public relations
campaigns, we ensure our clients’ stories resonate.
Our expertise extend to media planning and buying,
maximising brand visibility across diverse platforms.
Passion marketing and sponsorship initiatives drive
brand affinity, while our advertising agency delivers
multi-award-winning campaigns. In addition, we excel
in B2B, loyalty, and one-to-one marketing, delivering
personalised experiences that foster lasting connections
between brands and their customers.

OUR BRANDS

Country

Specialism

M&C Saatchi Abel

Razor

Connect

Levergy

Dalmatian

Black & White

Advertising and marketing
communications

Public relations

Media planning and buying

Passion marketing/
sponsorship

Advertising agency

B2B, loyalty, one-to one
marketing

Our clients in Africa include Standard Bank, Heineken
Group, Nedbank, Astron Energy and Takealot Group.

PEOPLE

Advertising

Passions & PR

Media

Total

WHAT MAKES US PROUD

303

368

In 2023, we launched our Employee Value
Proposition (EVP) #weboldlygo to all employees.
The EVP contained 10 people commitments which
the company made to ensure we attract and retain
“an unfair share of the world’s best talent”.

We formalised a strategic partnership with Eighty20,
South Africa’s largest ingestor of third-party data
and a leading analytics consultancy, and developed
a new product, GrowthMaps, to help create more
value and data-fluent decisions for clients as they
pursue future business growth.

New business wins in 2023 included PepsiCo,
Woolworths and SuperSport Bet.

Our Awards:

• Top seven finish for M&C Saatchi Abel at the

industry ranked Creative Circle Awards.

• Levergy was awarded Specialist Agency of the
Year at the prestigious Financial Mail AdFocus
Awards.

• There were Agency of the Year wins for both
Razor and Levergy at the Sabre and Sports
Industry Awards respectively.

Strategic ReportM&C Saatchi Plc Annual Report 2023UAE

WHO WE ARE

In 2012, M&C Saatchi UAE established its presence in
the region with the opening of the Abu Dhabi office,
later expanding to Dubai in 2016. These strategic
moves empowered us to cater to a diverse clientele
spanning Europe, the GCC, and the UAE. Achieving
significant financial milestones in fiscal year 2023,
our UAE operations reported a noteworthy profit
before tax of £1.32m, doubling from the previous
year’s £660,000, with a profit margin hitting 18%.
Notable client acquisitions such as Aldar’s corporate
advertising account alongside Atlantis, Puma, and
Emirates Airlines bolstered our revenue streams. Despite
regional challenges, our production department
excelled, particularly in activation, events, and content.
Looking ahead, we are committed to sustained growth,
leveraging our diverse capabilities to deliver impactful
solutions and drive business transformation.

WHAT WE DO

We provide a full-service agency in the UAE. Our core
capabilities include: advertising, brand innovation,
marketing consultancy, CRM, PR, research and insight,
digital marketing and sponsorship and experiential.

CLIENTS

We have a diverse list of clients, including Aldar, DHRE,
Modon, ADQ, Atlantis and Burger King.

2023 NET REVENUE: £7.5M

PEOPLE

We have a team of around 100 in the region.

WHAT MAKES US PROUD

Our Awards:

• New York Festivals, Advertising awards, Burger

King, “As Good as The Original”.

• Cannes Lions, Burger King, “As Good as The

Original”, Shortlist.

• The Caples, Brand awareness, Flame-grilled

challenge, Bronze.

• Dubai Lynx, Film Craft, Burger King, “As Good as

The Original” Range, Grand Prix.

• Dubai Lynx, Film, Burger King, “As Good as The

Original”, Grand Prix.

• Dubai Lynx, Film Craft, Burger King, “As Good as

The Original”, Silver Script.

• Dubai Lynx, Film Craft, Burger King, “As Good as

The Original”, Silver Direction.

• Dubai Lynx, Online Film, Burger King, “Sorry You

Couldn’t Make It”, Bronze.

• Dubai Lynx, Film Craft, Use of Original Music,

Burger King, “If I Were You”, Bronze.

Strategic ReportM&C Saatchi Plc Annual Report 2023M&C Saatchi Plc Annual Report 2023

Strategic Report

In 2022, Australia’s tourism industry faced huge challenges, with revenue dropping from A$121b to A$66b. After years of
lockdowns, we needed to burst back onto the tourism scene, reinvigorate interest in Australia and remind global travellers of
the great reasons to visit us down under. Our campaign aimed to give the weary world exactly what it needed – a big, warm
Aussie welcome. Come and Say G’Day saw the introduction of a new ownable brand ambassador: Ruby the kangaroo, a
loveable, cheeky spokesperson for Australia, who goes on an adventure across the country showcasing Australia’s natural
wonders and friendly people. Launched in 15 markets with over 900 assets, the campaign garnered exceptional ratings,
reached 650 million views worldwide, increased consideration for Australia by 48%, and saw a 93% jump in intent to visit.
Flight searches also increased by 19%, and the campaign received global accolades while contributing to rebuilding
Australia’s tourism brand.

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34

Strategic ReportM&C Saatchi Plc Annual Report 2023APAC

WHO WE ARE

In the Asia Pacific region, our operations span Australia,
New Zealand, and Southeast Asia, housing leading
agencies like M&C Saatchi, Re and the head office for
our Performance division.

With colleagues across six countries, we have formed an
APAC operating board, chaired by Justin Graham, Chief
Executive Officer of M&C Saatchi Australia, to enhance
cross-market collaboration. The creative landscape is
evolving, fostering our ambition as the “most connected
creative company”. Client demand for CX activation,
customer strategy, leveraging retail media and PR-led
growth strategies is providing significant opportunities.
With a focus on profitability, in 2023 we exited certain
Asian markets while consolidating our leadership. Across
the year, M&C Saatchi Performance gained 38 new
clients, including Resorts World Sentosa. Strategic hires
like Steve Coll and promotions like Kabeer Chaudhary as
Global Chief Executive Officer, Performance, signify our
commitment to growth and innovation in the region.

WHAT WE DO

We work with clients whose fearlessness aligns with
our own. Whether the focus is growth, social impact or
behavioural change, we put their big ambition at the
centre and build the right team around it. We organise
talent and capabilities in uncommon ways to get
outstanding creative solutions with proven impact.

Start-up, scale-up, shake-up or grown-up, we work with
brands of all sizes and at all stages of their business life
cycles. Afterall, you do not have to be big to make waves.

WHERE WE WORK

China

India

Malaysia

Singapore

Sydney

New Zealand

2023 NET REVENUE: £65.6M

OUR BRANDS

M&C Saatchi

Re Group (including YES Agency)

Sport & Entertainment

Resolution Design

Greenhouse

The Source Australia

M&C Saatchi Malaysia

Bohemia

Performance

CLIENTS

Across the region, we work with a range of household
names and are proud to count Woolworths, Optus,
Commonwealth Bank Australia, Grab, Soundcloud
and Toyota amongst our clients.

PEOPLE

Advertising

Media

Consulting

Passions & PR

Head office

Total

531

257

108

969

WHAT MAKES US PROUD

Our Awards:
• LA International Film Festival, Tourism Australia,

“G’Day”, Animation – Short, Gold.

• Effies, Big W, “Long-term Effects”, Gold.

• Effies, Big W, “Brand Value”, Silver.

• Campaign Net Zero, Minderoo, “The Plastic

Forecast”, NGO/Charity, Gold.

• D&AD, CommBank – Kit, Digital Branding, Wood

Pencil.

• Campaign Global, Best Performance Marketing

Agency, Bronze.

• Campaign Asia, Best Performance Marketing

Agency, Gold.

• Campaign Asia, Best Agency-Marketer

Partnership, Gold.

Strategic ReportM&C Saatchi Plc Annual Report 2023M&C Saatchi Plc Annual Report 2023

Strategic Report

JPMorgan Chase has a long commitment to the Detroit business landscape, most notably investing US$200 million in Detroit’s
economic recovery since the city declared bankruptcy in 2013. To celebrate the city’s revitalisation at the 10-year milestone,
we launched a campaign that took a fresh approach, showcasing the people, communities, and growth JPMorgan Chase
helped foster, rather than a traditional business narrative. Collaborating with a local spoken word artist, we captured
Detroit’s authentic spirit, and showcased real beneficiaries effecting tangible change in Detroit, from housing development
to job creation. This innovative approach not only honoured Detroit’s resilience but also highlighted JPMorgan Chase’s
integral role in fostering community growth and embodying the spirit of progress.

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36

Strategic ReportM&C Saatchi Plc Annual Report 2023AMERICAS

2023 NET REVENUE: £46.9M

WHO WE ARE

OUR BRANDS

M&C Saatchi’s footprint across the Americas embodies
innovation and expertise across diverse sectors of the
marketing landscape. The Group merges creativity
and precision with the integration of SS+K, renowned
for its impactful campaigns, including the successful
and historical Obama youth campaigns in 2008 and
2012, and the award winning work for Iceland tourism
in 2020-2023. Performance, our Media specialism,
delivers targeted engagement across digital platforms,
maximising client return on investment. Our Sport &
Entertainment division leverages partnerships to create
immersive brand experiences. Under the new Consulting
division, agencies like Clear, MCD Partners, One-to-One,
Fluency and The Source offer specialised expertise
in brand consulting, strategic communications and
experiential marketing including our creative agencies
Santa Clara in Brazil and M&C Saatchi Chilanga in
Mexico. Together, they empower clients to navigate
the market effectively, driving transformative growth.
M&C Saatchi’s US presence epitomises innovation,
creativity and strategic excellence, shaping the future
of advertising.

WHAT WE DO

•
•
•
•
•
•
•
•
•

Consumer/B2B brand marketing
Corporate reputation/impact
Issue advocacy
Communications advisory
Performance media buying
Digital agency
Sponsorship and experiential
Digital experience
CRM and loyalty

WHERE WE WORK

San Francisco

Chicago
Dayton (Ohio)
Dallas FW

New York
Washington DC

Miami

Mexico

Brazil

Our brands in the Americas include SS+K, MCD
Partners, Clear, Performance, Sport & Entertainment,
Santa Clara, M&C Saatchi Chilanga and One-to-One.

CLIENTS

We work with a range of household names on work
ranging from social impact to developing apps for
customer account management. Our diverse client
list includes The White House, Iceland, PepsiCo,
JPMorgan Chase, Meta, Toyota, Samsung, Discover FS,
Continental and Nestlé.

PEOPLE

Advertising

Consulting

Passions & PR

Media

Head office

Total

142

112

342

WHAT MAKES US PROUD

Our Awards:
• D&AD, Digital & Social, Visit Iceland, “OutHorse

Your Email”, Graphite Pencil.

• Effies, Travel & Tourism, Visit Iceland, “Welcome to

the Icelandverse”, Silver.

• Effies, Small Budget – Services, Visit Iceland,

“Welcome to the Icelandverse”, Bronze.

• Effies, Current Events, Visit Iceland, “Welcome to

the Icelandverse”, Silver.

• New York Festivals Advertising Awards, (PR/Travel
and Leisure), Visit Iceland, “OutHorse Your Email”,
Gold.

• The One Show, Social Media/Stunts &

Activations, Visit Iceland, “OutHorse Your Email”,
Gold Pencil.

• PR Week Global Awards, Visit Iceland, “OutHorse

Your Email”, Winner.

• Ragan PR Daily, Sport & Entertainment North
America won two Golds: Mid-size Agency of
the Year and Wellness Person of the Year for
Steph Lund.

Strategic ReportM&C Saatchi Plc Annual Report 2023M&C Saatchi Plc Annual Report 2023

Strategic Report

Plastic production is devastating our planet and is set to triple by 2060. So, Minderoo Foundation and our team in Australia
have measured plastic in rain to create a new weather metric informing the public how much plastic will fall from the sky on
any given day, launching it in Paris ahead of the second session of negotiations (INC-2) of the UN’s Plastic Treaty at UNESCO
headquarters. The site provides live updates on the weight of plastic falling that day, week, month and year. This tightly
targeted activation, including guerrilla posters, news coverage and an extensive social media campaign on the eve of the
UNESCO talks, created a global thunderclap, raising the issue of fossil-fuel plastic and the need to put in place stricter
targets to limit its production. Coverage spanned many countries with a staggering reach of 1.3 billion.

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Strategic ReportM&C Saatchi Plc Annual Report 2023advertising

BLENDING MARKETING SCIENCE WITH CREATIVITY THROUGH EARNED, OWNED AND PAID FOR CONTENT.

WHO WE ARE

PEOPLE

2023 NET REVENUE: £105.5M

Average 2023
Number of
Employees

M&C Saatchi’s legacy is rooted in creative
excellence, with our advertising agencies serving
as the cornerstone. Renowned for our bold, daring
and effective work, we operate creative agencies
in 13 countries, catering to ambitious clients like
adidas, Tourism Iceland, Atlantis, Burger King and
the NHS. Over the past year, we have undergone a
strategic reassessment of our advertising agency
proposition, focusing on markets where we can offer
comprehensive services to our clients. This has led to
the consolidation of several offerings, resulting in the
establishment of a connected agency proposition in
key markets like Australia and the UK. These initiatives
streamline our service offerings, facilitating seamless
collaboration and making us indispensable partners
for our clients.

WHAT WE DO

We take a channel neutral approach at the outset and
develop transformative creative ideas across the total
customer journey.

We operate with a problem-led, outcomes-focused,
bespoke approach using data and technology to
fuel our work within three key areas; understanding,
communications and activation.

WHERE WE WORK

Our creative agencies work across the globe with
offices in most major markets. This means we
understand deeply local needs while also being able
to access the global reach for larger campaigns.

Country

Brands2

South Africa – M&C Saatchi Abel

Australia

– Razor
– Dalmatian

– M&C Saatchi
– Greenhouse
– Resolution Design
– The Source Insight

– M&C Saatchi London
– M&C Saatchi Talk
– Export

Italy

– M&C Saatchi Milan

Malaysia

– M&C Saatchi Kuala

Brazil

Dubai

India

Pakistan

Mexico

Abu Dhabi

Lumpur

– Santa Clara

– M&C Saatchi Dubai

– M&C Saatchi Scarecrow

(Mumbai)

– SS+K

– M&C Saatchi Pakistan

– M&C Saatchi Chilanga

– M&C Saatchi
Abu Dhabi

Switzerland

– M&C Saatchi Geneva

Total

WHAT MAKES US PROUD

303

192

152

108

100

1178

UK
Switzerland

Italy

Saudi Arabia UAE

Pakistan

India

Malaysia

Mexico

Brazil

South Africa

Australia

2023 was another bumper year for awards
across the globe, including key campaigns such
as “Running Billboards” for adidas in Europe,
“As Good as The Original” for Burger King in the
Middle East, “Ribbon Dancer” for NHS England,
and “Come and Say G’Day” for Tourism Australia,
while SS+K, our New York agency, has continued its
ground-breaking campaigns for Tourism Iceland
with “Icelandverse”, “OutHorse Your Email” and
“Better Than Space”.

2 Does not include brands disposed of either during the year or post year-end.

Strategic ReportM&C Saatchi Plc Annual Report 2023M&C Saatchi Plc Annual Report 2023

Strategic Report

Launching on Mother’s Day in collaboration with anti-knife crime charity The Ben Kinsella Trust, the Siren Poster campaign
raises awareness of the dangers of knife crime, showcasing the thoughts that go through a mother’s head when she hears an
ambulance siren. Using AI technology, M&C Saatchi worked with Clear Channel to develop a machine learning system which
was trained to understand what an ambulance siren sounds like. The idea is simple but powerful. Every time an ambulance
drives past the digital outdoor posters, the siren sound triggers the technology to show heartbreaking messages from
mothers to their sons, making the connection between ambulances and the very real worry mothers experience when they
hear one.

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Strategic ReportM&C Saatchi Plc Annual Report 2023ISSUES

DRIVING GLOBAL AND SOCIAL CHANGE, PROTECTING THE PLANET, AND TRANSFORMING LIVES FOR THE BETTER.

2023 NET REVENUE: £51.1M

WHO WE ARE

PEOPLE

Our Issues specialism continues to partner with
governments, civil society, foundations, academia
and the private sector to tackle the critical issues of
our time. Areas of focus include the climate, health
emergencies, human rights and freedoms, social
justice, conflict prevention, security and sustainable
development goals. Key campaigns include the award-
winning family planning campaign for the FCDO
(Foreign, Commonwealth and Development Office).

WHAT WE DO

We provide a fully integrated, end-to-end marketing
service, combining multi-discipline communications
teams with subject matter experts across the world.
Our work for clients includes everything from creating
advertising campaigns to media buying services.
Our work is domestic and global, often affecting the
most vulnerable in society, with international activity
orientated towards developing countries and fragile,
conflict-affected states.

CLIENTS

Our top clients include the US Government, the UK
Government, the Australian Government, Bill & Melinda
Gates Foundation and GEAPP.

WHERE WE WORK

Operating globally with governments, foundations and
institutions delivering communications campaigns.

Our people work where our clients are, while at the
same time our operating model requires that we have
specialist subject matter expert teams in the UK. Overall,
we have over 300 people working in the business in the
UK, Australia and the US – our biggest offices.

Country

Brands

– World Services
– Human Digital

– World Services

Australia

– World Services

Total

WHAT MAKES US PROUD

Number of Employees
as at 31 December 2023

212

271

Issues continues to grow market opportunities
within its specific sector operating globally,
delivering year-on-year growth in excess of 20%.

World Services won significant new business in
2023, including NATO, the Rockefeller Foundation,
CGIAR, the Covid Enquiry (UKG), and the
WHO Foundation.

Australia

Strategic ReportM&C Saatchi Plc Annual Report 2023M&C Saatchi Plc Annual Report 2023

Strategic Report

As the new Official Bank Partner of Wimbledon, Barclays had to create an impact in year one. To do so, we needed a
campaign to connect our audience and build excitement for fans, customers, clients, colleagues and community, in the UK
and the US, through the lens of Wimbledon. Our full 360-campaign featured a global Frances Tiafoe TVC, on-site activations,
special build OOH and media including London buses and taxis, customer communications, social, digital and retail bank
advertising. Using our hero partnership asset – the iconic Wimbledon umpire chairs – our campaign demonstrated that
Barclays and Wimbledon are game, set, and perfectly matched.

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Strategic ReportM&C Saatchi Plc Annual Report 2023PASSIONS & PR

CONNECTING BRANDS DIRECT TO CONSUMERS THROUGH THEIR PASSIONS AND PERSONALITIES.

2023 NET REVENUE: £36.2M3

WHO WE ARE

CLIENTS

In two decades, at the forefront of passion marketing
across sport, entertainment and culture, we have earned
a reputation as a market leader in the art of connecting
brands to consumers through the things they love.

Our Passions & PR specialism is made up of:

• The global Sport & Entertainment network, which

connects brands to consumer passions. In 2023, we
developed cutting-edge digital and diversity-focused
campaigns for Barclays, Heineken, adidas, and
The Coca-Cola Company.

• The Talent Group (M&C Saatchi Merlin and

M&C Saatchi Social), which manages influencers
and celebrity broadcast talent.

• M&C Saatchi Talk, our PR business, with clients

such as Coty, Revlon, Sephora and Sonos.

We work with a range of global clients including
Barclays, Heineken, adidas, The Coca-Cola Company,
Sephora and Benefit Cosmetics.

PEOPLE

Country
UK

Brands
– Sport & Entertainment UK
– Merlin
– Social
– Sport & Entertainment NY

South Africa – Levergy

Australia

– Sport & Entertainment

Sydney

Germany

– Sport & Entertainment

Berlin

Netherlands – Sport & Entertainment NL

Average 2023
Number of
Employees
131

296

WHAT WE DO

Total

Our industry-leading global team crafts compelling
campaigns for renowned brands and personalities
across sport, entertainment, music, film, fashion and
culture. In response to increasing demand for integrated
social elements, Sport & Entertainment US Group will
introduce a dedicated social offering, supported by
M&C Saatchi FABRIC within the M&C Saatchi Sport &
Entertainment team. As our RFP volume grows, our Talent
Group achieved record-breaking growth in 2023, fuelled
by Broadcast income and new client signings.

Looking ahead, we plan to launch an AFP (advertiser-
funded programming) business in 2024, capitalising on
the rise of Gen Z talent and strengthening relationships
with streaming platforms like Netflix and Amazon amidst
budget shifts from traditional broadcasters. Alongside
M&C Saatchi’s Sport & Entertainment and Talent
businesses, our PR capability, M&C Saatchi Talk, will
now play a central role in our newly expanded Passions
& PR offering, further solidifying the agency’s position
as leaders in the field of connected creative solutions.

WHERE WE WORK

London
Amsterdam

Berlin

New York

Dubai

South Africa

Australia

WHAT MAKES US PROUD

Our Awards: Our Passions specialism continues to be
award-winning, with just a few of the highlights from
this year including:

• Muse Creative Awards, M&C Saatchi Fabric
(part of S&E), Best New Agency of the Year.

• PRNews: Platinum PR Award for Best Cause-Related
Marketing, Community Engagement and Event/PR
Marketing: adidas “Choose to Give Back”, S&E.
• Sport Industry Awards, Agency of the Year 2023

(UK), S&E.

• Sport Industry Awards, FA X UEFA Women’s Euros,

Event of the Year, S&E.

• Sport Industry Awards, Heineken International,

Campaign of the Year, S&E.

• UK Sponsorship Awards, Agency of the Year and

seven other awards, S&E.

• Drum Awards for Social Purpose, Best Celebrity

Partnership and Best PR Campaign, S&E.

• PR Week Global, Best Global Content, M&C Saatchi

Talk, Business Iceland.

Our People: It is our people that bring our business
to life, and we were delighted to promote Laura
Coller internally to Chief Executive Officer of Sport
& Entertainment (UK) at the end of the year. It was
with pride and pleasure that we saw Jane Boardman,
founder of M&C Saatchi Talk, recognised with an OBE
for her services to the beauty industry in December 2023.

In 2023 and prior years, PR was included within the Advertising specialism. It was moved to Passions & PR in 2024. Therefore, the PR numbers are included within the
Advertising specialism in this Annual Report and Accounts.

Strategic ReportM&C Saatchi Plc Annual Report 2023M&C Saatchi Plc Annual Report 2023

Strategic Report

Rugby in New Zealand is more than a game – it is a way of life. To engage and grow their already impressive global fanbase,
New Zealand Rugby wanted to create a fan-focused content hub that gets fans closer to the teams via behind-the-scenes
access to the All Blacks and Black Ferns, right through to the grassroots teams. We designed and delivered the brand identity
and digital experience of the content platform we named NZR+. Following the successful launch in the lead-up to the 2023
Rugby World Cup, NZR+ has experienced a real trend in interest, resulting in continued investment in new content and
functionality.

44
44

Strategic ReportM&C Saatchi Plc Annual Report 2023CONSULTING

TRANSFORMING BRANDS AND EXPERIENCE FOR REAL GROWTH.

2023 NET REVENUE: £33.7M

WHO WE ARE

WHAT WE DO

We are a team of data, strategy, engineers and
design specialists who deliver transformative growth
for the world’s most ambitious organisations. During
the course of the year, we saw the opportunity to
restructure our business to better deliver integrated
capabilities to meet clients’ more complex challenges.
As a consequence, we have created an overarching
trading brand, M&C Saatchi Consulting, sitting above
our individual trading entities. In addition, during the
year we opened up two new sales channels with key
hires for senior leaders in Dallas and Dubai.

We deliver growth at the intersection of brand, experience
and innovation, creating new (and refreshed) brand
ideas and identities that connect with people at the speed
of culture. It means we imagine (and create) elevated
customer journeys and better products and services.
The work we do creates more utility for customers and
incremental value for our clients.

In 2023 we won a number of new pieces of business
including working with PepsiCo in a number of innovation
engagements; Toyota on its CX work in the EV space; and
brand work with numerous clients including New Zealand
Rugby, British Army, Nolet Distillery and retailer Big W.

OUR BUSINESS IS SEGMENTED
INTO SIX MAIN PROPOSITIONS

WHAT MAKES US PROUD

Clear: Based in the UK, the US, Singapore and the
UAE, Clear is M&C Saatchi’s leading strategic growth
consultancy. Key clients: Visa, PepsiCo, Reckitt, Toyota
and Haleon.

MCD Partners: Based in the US and the UAE, MCD
Partners is the Group’s US digital marketing and
experience design agency. Key clients: Discover
Financial, Continental Tire and Nestlé.

Fluency: Based in the UK and the US, Fluency is
the Group’s data and technology consultancy.
Key clients: Amazon, Nike, Diageo, Ashley and WWE.

Re: Based in the UK, Europe, the UAE, and Australia,
Re is the Group’s global brand-led experience
design business. Key clients: British Film Institute
(BFI), Channel 4, D&AD, Hoover and Modon.

One-to-One: Based in the US, the UK, and the
UAE, One-to-One is an expert in CRM and loyalty.
Key clients: Moët Hennessy, Rolus Beverages Inc,
Eventide, Harriet Harper Fitness and Google.

The Source: Based in the UK and the UAE, The Source
is the Group’s integrated qual/quant agency.
Key clients: Tesco, B&Q, Butlin’s and Greene King.

Our Clients: Our award-winning strategists,
designers, consultants and innovators continue
to create compelling brands, experiences and
innovative services which inspire and excite
consumers.

Our Awards: Our (Re AUS) brand and app design
and development for CommBank’s Kit was
awarded Silver at the 2023 Brand Impact Awards.

Our People: After ten years as Chief Executive of
Clear, Damian Symons was promoted to the role
of Chief Executive Officer, M&C Saatchi Consulting,
in the autumn of 2023. Rhonda Hiatt was
promoted to Chief Executive Officer, Clear.

WHERE WE WORK

The Consulting group has a global headcount of 297,
with the majority of our people operating out of the
UK, the US and Australia:

Country

Australia

Asia

Germany

Total

Brands

Average 2023 Number of Employees

MCD Partners, Clear NY, One-to-One

Re Design Sydney, Yes Agency

Clear UK, Re Design UK, Fluency, Source UK, Thread

Clear Singapore

Clear Deutschland

112

284

Strategic ReportM&C Saatchi Plc Annual Report 2023
M&C Saatchi Plc Annual Report 2023

Strategic Report

ASICS is a Japanese brand that specialises in designing and manufacturing sports equipment and footwear for a variety of
athletic activities. In a market dominated by ecommerce platforms which have lower overhead costs, how could we lead
users to purchase their favourite ASICS products directly through the ASICS website? In order to increase sales in Singapore
via their website and drive website purchases, our approach centred around creating a more meaningful customer-centric
strategy and a more seamless shopping experience. We reminded users about their favourite products and simplified their
purchase process by tapping into Facebook Collection Ads, Google Performance Max and Google SEM. The campaign was
testament to the impact that a customised strategy can have on a brand’s sales. By adopting a very specific retargeting
strategy, we were able to serve highly personalised ads to ASICS’ audiences creating a more impactful customer experience
and a more seamless and ultimately simple user journey.

46
46

Strategic ReportM&C Saatchi Plc Annual Report 2023MEDIA

CONNECTING BRANDS WITH TODAY’S CONNECTED CUSTOMERS.

WHO WE ARE

CLIENTS

2023 NET REVENUE: £26.3M

Our multi-award-winning performance media agency
continues to differentiate itself through its strong
footprint across the US, EMEA and APAC and its focus
on digital-first clients. During 2023, M&C Saatchi
Performance demonstrated resilience amidst economic
challenges. Our strategic focus remained on paid digital
media, acquiring 38 new clients, including prestigious
names like Resorts World Sentosa and Sega. Key team
achievements included revolutionising client reporting
with automated dashboards, fostering existing client
relationships, and setting a foundation for further
strategic growth.

WHAT WE DO

We offer a comprehensive suite of digital marketing
services, including Paid Search, Paid Social,
Programmatic Advertising, App Marketing, App Store
Optimisation, Commerce Media, Affiliate Marketing,
Data Analytics, Market Insights, Streaming TV,
Influencer Marketing, and Media Buying. With expertise
across various platforms and channels, we drive
impactful campaigns tailored to our clients’ goals and
audience preferences.

WHERE WE WORK

Asia

UAE

Australia

We work with digital leaders across the globe helping
them to drive performance. Key clients include Grab,
Soundcloud, Julo, Allen Media, Betfair and Fitness
First. During the year we won new business with Sega,
Progressive Leasing, Zenyum and Headspace.

PEOPLE

Country

Brands

Average 2023
Number of
Employees

– Performance Asia

Singapore,
Indonesia,
India and
Thailand

– Performance UK

Australia

– Bohemia

– Performance Americas

South Africa – Connect

Total

WHAT MAKES US PROUD

Our Awards:

225

352

•

Campaign Global, Best Performance Marketing
Agency, Bronze.

Campaign Asia, Best Performance Marketing
Agency, Gold.

Campaign Asia, Best Agency-Marketer
Partnership, Gold.

Our People:

During 2023, we promoted Kabeer Chaudhary
to Global Chief Executive Officer, M&C Saatchi
Performance.

Strategic ReportM&C Saatchi Plc Annual Report 2023
M&C Saatchi Plc Annual Report 2023

Strategic Report

Financial review

The Group recovered from a challenging first half,
by taking action to reduce local costs to align with
the new market conditions, by accelerating our
structural transformation programme, and by
closing or divesting loss-making businesses.

The Group generated £252.8m of net revenue in
2023, 7% lower than last year, but with strong growth
in our Issues business (+21%) and in our Passions
business (+8%). The downturn in the technology
sector and client hesitancy to commit to new projects
affected Media (-23%), Advertising (-15%) and
Consulting (-9%).

Headline operating profit for the Group in 2023 was
£32.4m, £3.0m lower than last year, with the full
impact of our cost actions benefitting the second
half of the year (H2 operating profit of £22.4m, £5.1m
(30%) higher than last year). Headline operating
profit margin for the full year was 12.8% (0.3 pts lower
than last year), with H2 margin of 16.9% (4.7 pts
higher than last year).

BRUCE MARSON
Chief Financial Officer

“While our end markets continue to be affected
by macro-economic uncertainty, we expect
Headline profit before tax for 2024 to be in line
with expectations.”

48
48

Strategic ReportM&C Saatchi Plc Annual Report 2023FINANCIAL PERFORMANCE

£m
Revenue
Net revenue*
EBITDA*
Operating profit
Profit before taxation
Profit / (loss) for the year
Earnings / (loss)**
Earnings / (loss) per share
Operating profit margin %
Dividend

Headline Results

Statutory Results

2023

453.9
252.8
41.5
32.4
28.7
21.3
18.5
15.2p
12.8%
1.6p

2022 Movement

462.5
271.1
45.2
35.4
31.8
24.0
18.1
14.8p
13.1%
1.5p

(2)%
(7)%
(8)%
(8)%
(10)%
(11)%
2%
3%
(0.3) pts
0.1p

2023

453.9
–
–
7.3
0.7
(2.8)
(3.5)
(2.9)p
–
–

2022 Movement

462.5
–
–
10.5
5.4
0.2
0.1
0.1p
–
–

(2)%
–
–
(31)%
(87)%
–
–
–
–
–

Refer to the Glossary for key definitions used in this section including Headline results, revenue, net revenue and EBITDA.

Net revenue and EBITDA are excluded from Statutory results, as these are not IFRS terms. Although our peers may use these terms, they are not necessarily calculated on the
same basis. However, as measures of Headline performance, they have been included to better assess the underlying performance of the business and to enable better
comparability both across the industry and when comparing year-on-year results.

** Earnings are calculated after deducting share of profits attributable to non-controlling interests.

H1 Headline Results

H2 Headline Results

£m
Net revenue
Operating profit
Profit before taxation
Earnings**
Operating profit margin %

2023

120.4
10.0
8.8
5.5
8.3%

2022 Movement

129.4
18.1
16.0
7.8
14.0%

(7)%
(45)%
(45)%
(30)%
(5.7) pts

** Earnings are calculated after deducting share of profits attributable to non-controlling interests.

2023

132.4
22.4
19.9
12.6
16.9%

2022 Movement

141.7
17.3
15.8
10.3
12.2%

(7)%
30%
26%
22%
4.7 pts

Headline profit before tax in 2023 for the Group was
£28.7m (2022: £31.8m). Excluding Advertising, the
other specialisms contributed £29.8m of profit before
tax (2022: £31.6m), driven by ongoing growth and
margin improvement in Issues, offset by lower revenue
and margin declines in Media and Consulting, with
Passions delivering similar profit to last year. Advertising
contributed £6.2m of profit before tax (2022: £9.9m),
with profit growth in the UK, South Africa and the UAE
offset by declines in Australia, Asia, Europe and the US.
The Group’s central costs, reduced by £2.3m to £7.4m,
due to lower bonuses and audit fees.

in line with our previous guidance of 0.5x to 1.0x the level
of annualised cost savings delivered.

On a Statutory basis, the Group delivered operating profit
of £7.3m (2022: £10.5m) and a profit before tax of £0.7m
(2022: £5.4m).

Due to the exercise of put options in the year, minority
interests have diminished to 13% of Headline profits
(2022: 25%), which resulted in Headline earnings of
£18.5m, 2% higher than last year. Headline earnings
per share has grown by 3% to 15.2p (2022: 14.8p).
Statutory earnings per share were (2.9p) (2022: 0.1p).

Exceptional costs relating to our global efficiency
programme amounted to £3.3m of which £1.1m was cash
and £2.2m represented property impairment charges.
For 2024, we expect a higher level of exceptional costs
to be incurred but we still expect the total cost of this
programme, both cash and accounting items, to remain

The Group remains in a net cash position of £8.3m
(2022: £30.0m), after £15.4m of put option payments
and £14.5m of working capital absorption (driven by
£8m reduction in bonus accruals, a £3m reduction
in minority interest profit share liabilities and £3m
relating to changing revenue mix).

Strategic ReportM&C Saatchi Plc Annual Report 2023SEGMENTAL REVIEW

Advertising remains the largest specialism, comprising 42% of total net revenue (2022: 46%). The other four
specialisms have increased their share of total net revenue to 58% (2022: 54%). This shift away from Advertising
continues to improve our overall operating margin mix, as these other specialisms have an average operating
profit margin of 22%, compared to Advertising with an operating profit margin of 8%.

There has been a marked shift in revenue between the different specialisms over recent years as shown by
the table below, with Issues, Passions and Consulting all increasing their contribution to the Group since 2020.

Net Revenue Share
2023

Advertising
42%

2022

2021

2020

46%

51%

61%

Issues
20%

15%

14%

13%

Passions
14%

Consulting
14%

12%

10%

14%

12%

Media
10%

13%

10%

Total
100%

100%

The Group’s net revenue decreased 7% in 2023.
However, the reduction was 2% on a like-for-like (“LFL”)
basis if we exclude those entities the Group disposed
of, closed, or wound down before the end of 2023, and
the impact of foreign exchange movements. During
the year, the Group disposed of Clear Deutschland,
and more recently M&C Saatchi Spencer Hong Kong
Limited, and reduced its interest in M&C Saatchi
Sweden AB. The Group also announced in 2023 that it
was in negotiations to divest of M&C Saatchi Holdings
Asia Pte. Limited, which is now complete. During 2023
the decision was made to wind down a number
of smaller, non-core businesses in Advertising and
Consulting. No businesses were acquired in 2023.

The Advertising division saw a 15% fall (down 8% LFL)
in net revenue in 2023, driven by the impact of weaker
client spend and some client losses in Australia,
the UK, Asia and Germany, although there was
some strong revenue growth in Italy, the UAE,
Brazil and Mexico.

The Issues specialism saw significant growth of 21%
(up 22% LFL), as our governmental clients continued
to invest in new projects to address heightened
geopolitical tensions around the world.

Our Passions specialism also grew strongly by 8%
(up 10% LFL), driven by new client wins and a buoyant
events market in our Sport & Entertainment businesses,
and by increased fees from our talent and influencer
agencies.

Our Consulting specialism was impacted by a degree
of client hesitancy around new projects, particularly
in our strategic consultancy and brand design
businesses, resulting in a net revenue fall of 9% (down
6% LFL), although our data consultancy (Fluency)
continued its momentum and grew 14% in 2023.

The Media specialism saw a 23% fall (down 21% LFL)
in net revenue, due to the significant cutbacks in
spend from our technology clients, although client
spend started to recover in the second half of 2023.

Strategic ReportM&C Saatchi Plc Annual Report 2023Net Revenue by Specialism
Advertising

Issues

Passions

Consulting

Media

Group

Reported

Like-for-Like (LFL)*

2023
£m

105.5

51.1

36.2

33.7

26.3

252.8

Movement
versus 2022

2023
£m

Movement
versus 2022

(15)%

21%

(9)%

(23)%

(7)%

97.4

51.1

36.2

33.1

26.3

244.1

(8)%

22%

10%

(6)%

(21)%

(2)%

* A like-for-like basis applies constant foreign exchange rates and removes entities discontinued during 2023.

Due to the tougher trading conditions in Advertising,
cost actions were taken which reduced operating
costs by 13% in 2023. This helped maintain operating
Advertising profit margins at 8% (2022: 9%).

Operating costs outside of our Advertising specialism
grew 3% in 2023, driven by the growth of Issues and
Passions, partially offset by cost reduction actions in
Media and Consulting in reaction to their lower client

spend. The net result was a slight reduction in our
non-Advertising specialisms operating margin to 22%
(2022: 24%).

The impact of our global efficiency programme and
lower bonuses reduced our Group central operating
costs by £3.7m (33%). This helped the Group maintain
its overall operating margin of 13%.

Year Ended 31 December 2023
Net revenue

Operating costs

Operating profit / (loss)

Operating profit margin

Profit / (loss) before tax

Year Ended 31 December 2022
Net revenue

Operating costs

Operating profit / (loss)

Operating profit margin

Profit / (loss) before tax

Advertising
£m

Other
Specialisms
£m

105.5

(97.5)

8.0

6.2

147.3

(115.2)

32.1

22%

29.8

Advertising
£m

Other
Specialisms
£m

124.3

(112.6)

11.7

9.9

146.8

(111.8)

35.0

24%

31.6

Group
Central
Costs
£m

–

(7.7)

–

(7.3)

Group
Central
Costs
£m

–

(11.3)

–

(9.7)

Total
£m

252.8

(220.4)

32.4

13%

28.7

Total
£m

271.1

(235.7)

35.4

13%

31.8

Strategic ReportM&C Saatchi Plc Annual Report 2023

REGIONAL REVIEW

On a geographic basis, the UK remains our biggest region, supported by the significant growth of Issues, which
offsets the contraction of UK Advertising. Following the decision to discontinue many of the Asia businesses, we have
merged Asia and Australia into a new APAC region, managed from Australia. Also, given the growth and prospects
in the Middle East and our new executive leadership structure, we have split the Middle East and Africa. However,
we retain a good geographic mix of businesses. The recent shifts in share of revenue by region can be seen in the
table below:

Net Revenue
Share
2023

2022

2021

2020

Net Revenue
by Region
UK

APAC

Americas

Africa

Europe

Middle East

Group

UK
40%

36%

39%

APAC
26%

29%

30%

26%

Americas
19%

20%

17%

15%

Africa
6%

Europe
6%

13%

Middle
East
3%

Total
100%

100%

Reported

Like-for-Like (LFL)*

2023
£m

102.3

65.6

46.9

16.1

14.4

7.5

252.8

Movement
versus 2022

(17)%

(10)%

(6)%

(5)%

18%

(7)%

2023
£m

101.2

60.7

46.9

16.1

11.7

7.5

244.1

Movement
versus 2022

(10)%

(8)%

18%

19%

(2)%

* A like-for-like basis applies constant foreign exchange rates and removes entities discontinued during 2023.

DISCONTINUED BUSINESSES

At the end of 2023, it was decided to dispose, wind-down or close a number of non-core businesses in Advertising
(Hong Kong, Singapore, Indonesia, China, Sweden, Majority and Accelerator) and in Consulting (Thread Innovation
and M&C Saatchi Life). In 2023, these businesses contributed £8.7m in net revenue and a loss before tax of £3.1m.
The Group’s 2023 net revenue excluding these discontinued operations would have been £244.1m (2% lower than
last year), and the Group’s 2023 profit before tax would have been £31.8m (1% lower than last year), with an
operating profit margin of 14.2% (0.2 pts higher than last year).

£m
Net revenue

Operating profit

Profit before taxation

Operating profit margin %

Headline Results

Like-for-Like Results
(excluding discontinued operations)

2023

252.8

32.4

28.7

12.8%

2022 Movement

271.1

35.4

31.8

13.1%

(7)%

(8)%

(10)%

(0.3) pts

2023

244.1

34.6

31.8

14.2%

2022 Movement

249.9

35.1

32.0

14.0%

(2)%

(1)%

0.2 pts

Strategic ReportM&C Saatchi Plc Annual Report 2023

THE KEY MOVEMENTS BETWEEN STATUTORY TO HEADLINE RESULTS

The Headline results are alternative performance measures that the Board considers the most appropriate basis
to assess the underlying performance of the business, monitor its results on a month-to-month basis, enable
comparison with industry peers and measure like-for-like, year-on-year performance.

£000
Statutory profit before taxation

Separately disclosed items

Put option accounting – IFRS 9 and IFRS 2

FVTPL investments under IFRS 9

Impairment of intangible assets

Dividends paid to IFRS 2 put option holders

Impairment of non-current assets

Amortisation of acquired intangibles

Revaluation of contingent consideration

Revaluation of associates on disposal

Gain on disposal of subsidiaries and associates

Headline profit before taxation

Year ended
31 December 2023

Year ended
31 December 2022

715

7,652

6,316

5,067

4,794

2,499

2,004

537

–

(133)

(782)

5,423

13,352

2,233

1,587

564

7,811

597

266

–

28,669

31,833

The items causing the movement between Statutory and
Headline results for 2023 are explained below and further
details are provided in Note 2 of the financial statements.

Separately Disclosed Items

During 2023, £7.7m of costs were incurred, relating
to one-off restructuring costs of £5.5m, exceptional
compensation for our Executive Chair and former Chief
Executive Officer of £0.3m and £1.2m, respectively, and
the project costs of our global efficiency programme
of £0.7m. In 2022, £10.8m of costs were incurred, as the
Company was subject to two competing bids to take
control and full ownership of the business. Managing
the Company’s response to these two takeover bids
resulted in a number of one-off external advisory and
additional internal management costs. In addition, we
commenced our global efficiency programme with one-
off professional fees incurred in relation to this project of
£1.0m, along with restructuring costs of £1.8m.

Put Option Accounting – IFRS 9 and IFRS 2

These charges relate to the revaluations of the put
option liabilities (both IFRS 2 and IFRS 9) during
the year. These increased in line with the improved
profit estimates of the relevant subsidiaries and the
Company’s improved multiple.

Impairment of Intangible Assets

In 2023, the Group recorded an impairment charge
of £4.8m which primarily relates to the write-off of
goodwill and acquired intangible assets in M&C
Saatchi (Hong Kong) Limited (£3.4m) and M&C Saatchi
Advertising GmbH (£1.4m). The 2022 charge mainly
consisted of a £0.6m goodwill write-off in M&C Saatchi
(Hong Kong) Limited and Scarecrow Communications
Limited.

Dividends Paid to IFRS 2 Put Option Holders

Local management in some of the Group’s subsidiaries
own minority shareholdings in those subsidiaries. As
shareholders, they also have rights to receive dividends,
and, as they are employees of those subsidiaries,
these are recognised as staff costs. These are excluded
from Headline results, as they relate to prior year
performance.

Impairment of Non-current Assets

In 2023, the Group recorded the write off of right-of-use
assets and related leasehold improvements in the UK
and Australia (£2.0m in total), as we vacated property
space in our main offices in London and Sydney.

Strategic ReportM&C Saatchi Plc Annual Report 2023FVTPL Investments Under IFRS 9 – Financial Assets
at Fair Value Through Profit and Loss

The Group holds unlisted equity investments in
early-stage companies (detailed in Note 20 of the
financial statements). The revaluation of these
companies is excluded from Headline results as they
are driven by factors unrelated to the Company’s
performance. Market weakness in the technology
sector made fundraising and trading more difficult for
these companies in 2023, resulting in a downwards
revaluation of £4.9m. In addition, our shareholding in
Australie in France increased in value by £0.2m.

Amortisation of Acquired Intangibles

Acquired intangibles relate to brand names and
customer relationships, and these costs are amortised
over their estimated useful lives. Refer to Note 15 of the
financial statements for details.

Gain on Disposal of Subsidiaries and Associates

During 2023, we disposed of a number of subsidiaries
(Clear Deutschland, Sweden and Hong Kong), which
resulted in the cancellation of the associated put
options (£0.5m gain), and other gains of £0.3m,
which have been excluded from our Headline results.

FINANCIAL INCOME AND EXPENSE

The Group’s financial income and expense includes
bank interest, lease interest and fair value adjustments
to minority shareholder put option liabilities (IFRS 9).
Further details can be found in Note 7 of the financial
statements.

Bank interest payable for the year was £2.3m (2022:
£1.2m) due to higher interest rates on the Company’s
revolving multicurrency credit facility agreement and
increased drawdown on the facility during the year.

The interest on leases decreased to £2.9m (2022:
£3.0m) due to leases ending in 2022.

The fair value adjustment of put option liabilities
created a charge of £2.1m (2022: £1.1m). This increase
is due to increased profitability in the agencies where
there are outstanding IFRS 9 put option arrangements.

TAX

Headline Tax

Our Headline tax rate has increased from 24.5% to
25.6%. The increase is primarily due to the increase in
the effective UK corporation tax rate from 19.0% to 23.5%.

Statutory Tax

The Statutory tax rate changed from 96% in 2022 to
492% in 2023. We expect large variations in Statutory
tax rates because items such as share-based
payments (option charges) and put options arising
from investments in subsidiaries are non-deductible
against corporation tax, due to their being capital
in nature.

NON-CONTROLLING INTERESTS
(MINORITY INTERESTS)

On a Headline basis, the non-controlling interest
share of the Group’s profit represents the minority
shareholders’ share of each of the Group’s subsidiaries’
profit or loss for the year. In 2023, the share of profits
attributable to non-controlling interests reduced to
£2.8m (2022: £5.9m), representing a reduction in
minority interests to 13% of profit after tax (2022: 25%).
This reflects a reduction during the year in the minority
interest shareholdings in several Group entities, as a
result of the settlement of put options, to the value of
£15.4m.

On a Statutory basis, non-controlling interests
exclude any minority interests which relate to IFRS
2 put option holders (holders of put options that
are contingent on being employed by the relevant
company). Their share of the entity’s Statutory profit
is paid as dividends each year, which are reported
as staff costs in the Statutory results.

DIVIDENDS

The Company paid a 2022 dividend of £1.8m
(1.5 pence per share) to its shareholders in 2023
(2022: £nil). We understand the importance of
returning capital to shareholders, and given the
earnings performance during the year, the Board is
recommending the payment of an increased final
dividend of 1.6 pence per share.

Subject to shareholder approval at the Annual General
Meeting, to be held on 16 May 2024, the dividend
will be paid on 24 June 2024 to shareholders on the
register of members as at 10 May 2024. The shares
will go ex-dividend on 9 May 2024.

Strategic ReportM&C Saatchi Plc Annual Report 2023

CASH FLOW

Total gross cash (excluding bank overdrafts) at 31
December 2023 was £24.3m (2022: £41.5m). Cash net
of bank borrowings (net cash) was £8.3m, compared
to £30.0m in 2022.

In 2023, the Group generated operating cash from
trading (before working capital) of £31.5m before
dividends paid to IFRS 2 put option holders (£2.5m).
The Company made £15.4m of payments to acquire
non-controlling interests (2022: £12.1m). There was
a £14.5m net outflow from working capital (2022:
£4.8m inflow), driven by £8m reduction in bonus
accruals, £3m reduction in minority interest profit share
liabilities, and £3m relating to changing revenue mix.
The Company made £9.1m of lease payments (2022:

£10.3m). In addition, £1.8m of tangible and intangible
fixed assets and investments were purchased in 2023
(compared to £5.6m in 2022, which was primarily due
to the one-off investment in the new office in Sydney,
Australia).

Net operating cash flow (operating cash generated
from operations (excluding put option payments
and non-Headline cash costs) net of purchases of
intangible/tangible fixed assets and the principal
payment on leases) for the year was £17.3m, which
represents a cash conversion from Headline operating
profit of 53% (2022: 106%).

The following table sets out the key movements in net
cash during 2023:

Movement in Net Cash
Net cash at the beginning of the year

Increase in operating cash from trading

Cash consideration for non-controlling interest acquired

(Decrease) / Increase in cash from working capital movements

Payment of lease liabilities

Tax paid

Dividends paid to IFRS 2 put option holders

FX movement on cash held

Purchases of intangible / tangible fixed assets

Dividends paid to Company shareholders

Net interest paid

Costs associated with the takeover defence

Other movements

Net cash at the end of the year

2023
£m
30.0

31.5

(15.4)

(14.5)

(9.1)

(4.2)

(2.5)

(2.2)

(1.8)

(1.5)

(0.2)

8.3

2022
£m
34.4

40.3

(12.1)

4.8

(10.3)

(6.7)

(7.8)

2.7

(5.6)

(0.8)

(10.8)

1.9

30.0

Strategic ReportM&C Saatchi Plc Annual Report 2023

BANKING ARRANGEMENTS

PUT OPTION ARRANGEMENTS

On 7 March 2024, the Company entered into a new
revolving multicurrency facility agreement with
National Westminster Bank Plc, HSBC UK Bank plc and
Barclays Bank PLC for up to £50m (the “New Facility”),
with a further £50m extension if required for strategic
acquisitions. The New Facility is provided on a three-
year term with two one-year extensions. This New
Facility is to refinance the previous £47m facility with
National Westminster Bank Plc and Barclays Bank PLC
(the “Old Facility”) which would have matured on
31 May 2024. At 31 December 2023, the Group had
up to £47.0m (2022: £47.0m) of funds available under
the Old Facility.

The primary purpose of the New Facility is to provide
the Group with additional liquidity headroom to
support any variations in working capital and provide
funding for bolt-on acquisitions. At 31 December 2023,
£16.0m was drawn on the Old Facility compared to
£7.0m at 31 December 2022.

Both the Old and New Facility include two financial
covenants, which if either were to be breached would
result in a default of the agreement (see Note 24 of
the financial statements). The Company has been
compliant with the covenants of the Old Facility
throughout the period.

CAPITAL EXPENDITURE

Total capital expenditure in 2023 (including software
acquired) decreased to £1.8m (2022: £5.6m).
This included £0.7m on furniture, fittings and other
equipment (2022: £1.7m), £0.6m on computer
equipment (2022: £1.6m), £0.5m on leasehold
improvements (2022: £1.1m), and £0.0m on
software and film rights (2022: £1.0m).

The Group has historically operated a business
model through which certain members of senior
management have minority ownership in the
subsidiary companies they operate, through share-
based incentive (put option) arrangements.

This put option liability has been reduced significantly
over the last few years, such that, as at the Company’s
share price at 31 December 2023 (160p), the remaining
amount potentially payable has reduced to £14.4m.
Assuming these remaining options are exercised as
soon as they can be, 68% (£9.9m) of this remaining
liability is potentially payable in 2024, with the balance
payable over the next few years to 2028. These amounts
will vary in line with the financial performance of the
local business unit, the Group’s financial performance
and the Company’s share price.

SUMMARY

The Company’s performance in 2023 was mixed in
several ways. A challenging first half was followed by
a more encouraging second half, and we saw strong
revenue growth in Issues and Passions, while fighting
difficult market conditions in Advertising, Media and
Consulting.

As we look ahead, the Group has started 2024 with
renewed energy and focus. While our end markets
continue to be affected by macro-economic
uncertainty, we expect Headline profit before tax for
2024 to be in line with expectations. We are confident
that the structural changes we are making to our
cost base alongside our new operating model are
increasing our operational leverage potential which
will help support future margin expansion.

BRUCE MARSON
Chief Financial Officer
11 April 2024

Strategic ReportM&C Saatchi Plc Annual Report 2023

Principal risks
and uncertainties

The Board has overall responsibility for internal controls and for reviewing
their effectiveness. The Group operates a policy of continuous identification
and review of business risks. This includes the monitoring of key risks,
identification of emerging risks and consideration of risk mitigations after
taking into account risk appetite and the impact of how those risks may affect
the achievement of business objectives and the future success of the Group.

The risks and uncertainties that the business faces
evolve over time, and the Executive Directors and
senior management are delegated the task of
implementing and maintaining controls to ensure
that risks are managed appropriately. The Group’s
risk management framework is designed to identify
and manage, rather than eliminate, the risk of failure
to achieve business objectives and to provide
reasonable, but not absolute, assurance against
material misstatement or loss.

Future threats that cannot be accurately assessed at
the current time but could have a material impact on
the business in the future are considered alongside
existing risks, with a view to improving our response
plans and exploiting potential opportunities. Our view
of emerging risk includes several trends which could
form part of the legacy of the Covid-19 pandemic. In
most cases, these trends could heighten our existing
principal risks. For example, the macro-economic
outlook is seeing disruption as a result of the Russian
invasion of Ukraine, geopolitical tensions in the
Middle East and high inflation. Emerging trends
can also present opportunity. We take a proactive
approach to the changing market conditions and
trends in our sectors to ensure we continue to meet
the expectations of our clients. Climate change and
the transition to a low carbon economy could present
some of our most significant challenges and

opportunities in the future. Government commitments
to reduce carbon emissions are expected to lead to
further developments and changes in regulation
across the supply chain and property management.
There is significant opportunity in addressing
climate-related matters to meet client expectations
and secure the reputation of our brands in respect
of their sustainability credentials.

During the year, the Board carried out a robust
assessment of the Company’s emerging and
principal risks, together with the actions taken to
mitigate these risks. Virtual risk workshops were
carried out with agencies to ensure that all key risks
and mitigations had been identified. The table below
details our principal risks and uncertainties for the
year ahead. These are considered to be the most
significant but are not an exhaustive list of all risks
identified and monitored through our risk
management process. No additional risks have been
added to the register as part of the 2023 process,
because it already reflects the most significant risks
and uncertainties. Risks are ranked in descending
order of risk score. Their ranking is based on
assessments from agencies weighted by their 2023
revenue. We have also provided an explanation of
the movement in our risk assessment against the
previous year’s risk register to provide the reader with
a better insight into the Board’s risk assessments.

Strategic ReportM&C Saatchi Plc Annual Report 2023RISK
MOVEMENT
SINCE 2022 EXPLANATION

Artificial
Intelligence
is seen as
a potential
game
changer to
the service
we can offer
clients, which
is both a
risk and an
opportunity.



Risk has
reduced as
technology
firms have
stopped
offering
high salaries
and have
released a
lot of talent
during 2023.



PRINCIPAL RISK

MITIGATING ACTIONS

Failure to evolve service
offering to clients

The market in which the
Group operates is highly
competitive and subject
to rapid change as
audiences move online
and fragment. Agencies
must reorient their
models to target
audiences and reflect
client demands for more
integrated solutions in
the more complicated
marketing environment
and for more sustainable
solutions to respond to
the climate emergency.

People and talent –
retention and
recruitment

Employees remain our
greatest asset, and high
levels of employee
turnover are a principal
risk. Highly skilled
employees are vital to
building and maintaining
client relationships and
winning new work.

• Integration of high-growth offerings (Fluency) across

other Group companies.

• Formation of strategic partnerships to broaden service
offerings, e.g. Italy collaboration with EY, MCD Partners
with Contentful and HubSpot to exploit their
complementary service offerings.

• Focus on investing in new skillsets (particularly creative,
strategic and digital) to provide integrated offerings to
clients.

• Investment in technology to better serve the needs of

existing clients, e.g. development of Brand Desire Engine
by Clear and Fluency, development of Living Brand
Intelligence, Proximity Mapping, Living Segmentation
technologies (Fluency), AI and web3.

• Investment in our own sustainability practice and

introduction of ESG-related objectives both to keep pace
with client demands for advice on their ESG requirements
and to meet client expectations on our ESG performance,
e.g. failure to meet emissions reductions required by the
UK Government will prevent us participating in its tenders.

• Targeted M&A will help add new capabilities to our

service offering.

• Development of new Employee Value Propositions in

some markets, i.e. defining and reinforcing the reasons
why current employees chose to join and remain with
the business.

• Talent mapping for senior positions, i.e. ensuring that staff
are in place to fill future talent needs and that this future
career progression is visible to them.

• Advertising all vacancies internally and launching a

global mobility policy to support employee relocations.

• Launch of a work from anywhere policy, enabling

employees to work from a location of their choice for no
less than two weeks per year.

• Benchmarking salaries against industry standards.
• Supporting flexible working for our employees including

embedding ongoing hybrid working arrangements.
• Using the quality of our clients to attract talent, linking

their passions to the clients they will serve.

• Creative use of employee benefits to offer a more

attractive workplace than competitors, e.g. support for
employee fertility treatment, extended leave provision for
mental health support, mental health first aid training,
extended parental leave, use of “stay interviews”, offering
money to employees to spend on a passion and inclusive
Bank Holidays in recognition of different faiths.

• Global mentoring programme to support employee

development and increase loyalty.

• Roll-out of new performance management toolkit

“Conversations that Count”.

• Continued focus on diversity, equity and inclusion

initiatives, which create a positive work environment and
provide opportunities for all to reach their potential.

• New incentivisation structures implemented where historic

put option arrangements have ceased.

Strategic ReportM&C Saatchi Plc Annual Report 2023RISK
MOVEMENT
SINCE 2022 EXPLANATION

Risk and
mitigation
largely in line
with prior
year, with
customer
concentration
in many
businesses
still quite
high.

Although the
number of
attempted
cyber-attacks
appears to
be increasing
and evolving,
new
protections
have been
put in place.



PRINCIPAL RISK

MITIGATING ACTIONS

Loss of key clients and
reliance on key clients

A significant reduction in
spend by, or the loss of,
one or more of the
Group’s largest clients. If
these are not replaced by
new client accounts or an
increase in business from
existing clients, it could
have a significant impact
on the business, revenues
and results of the Group.

• New business activity driven both by dedicated new
business specialists but also agency management.
• Exploiting client leads from within the Group or from

networks outside the Group (e.g. SERMO global network
of PR companies to which Talk belongs).

• Development and expansion of service offerings in

high-growth areas.

• Maintaining key client relationships by performing client

satisfaction surveys or other tools to track client sentiment.

• Maintaining close contact with the most important
stakeholders at key clients so that we are seen as
valuable partners.

• Focusing on high quality and value-added deliverables

System access
and security

As our product range
expands and becomes
more data and
technology dependent,
so too does the risk of
cyber-attacks which may
cause the Group to suffer
data corruption or lose
operational capacity.
Cyber incidents may
cause significant
disruption and may
materially impact
business operations.

for key clients.

• Actively seeking cross-selling opportunities with clients.

• Continual monitoring, updating and globalisation of

computer systems.

• Use of training programmes covering data protection
and awareness of cyber security risks for new joiners.

• Employment of staff with relevant expertise, e.g. manager

dedicated to cyber security, security for Cloud
environments and IT governance; hired a new Group IT
Director with a security background.

• Use of external security consultants (Business Compliance
and Risk Management (International) Limited) to advise
on ISO accreditation and risk management.
• ISO22301 certification attained for UK entities.
• Striving to increase ISO27001 regime coverage for the

critical areas of our technology infrastructure.

• Implementation of IT security features such as Mobile

Device Management, meaning that lost or stolen devices
can be securely wiped of all data remotely; Okta, which
is a “best in class” identity management system; Egnyte
which provides secure file storage; eSentire which warns
of unusual network activity; Mimecast, which prevents
email-borne infections and reduces data loss by
archiving emails; use of a third-party security operation
centre to help identify network security breaches and
annual penetration testing to check for firewall issues.
• Insuring against cyber-risk for offices where minimum-

security requirements are in place.

• Distribution of cyber-questionnaires by Group IT to

confirm security status, with follow-up to be arranged
based on responses.

Strategic ReportM&C Saatchi Plc Annual Report 2023PRINCIPAL RISK

MITIGATING ACTIONS

RISK
MOVEMENT
SINCE 2022 EXPLANATION

Compliance with laws
and regulation

The Group is exposed
to multiple regulators in
various countries in which
it operates. If the Group
fails to comply with
applicable laws and
regulations, the Group
may have to pay
penalties or private
damages awards.

• Strengthening of the Group’s central team including the

HR, Finance and Legal functions.

• Use of external legal counsel to advise on local legal and

regulatory requirements.

• Standardising HR and Finance policies and procedures

within the Group.

• Where possible, active and positive engagement with
regulators and trade bodies, e.g. discussions with the
Institute of Practitioners in Advertising.



Risk has
increased
as clients
are more
concerned
about
compliance.

• Client contracts updated in response to recent

developments in EU privacy laws.

• Keeping up to date with changes in the law and

communicating these to the business.

• Keeping up to date with requirements on sustainability
reporting by attending webinars and subscribing to
email updates.

Risk has
reduced due
to mitigation
actions taken.

Physical security

• Risk assessments carried out as appropriate and

The risk from security
challenges such as theft,
bribery and corruption,
terrorism and political
activism due to our
geographic spread.
As a creative business,
intellectual property theft
is a particular concern.

dependent on location to understand business exposure
and to mitigate accordingly, e.g. our Issues specialism
works closely with international security advisors for
regional input, such as on travel risk and/or civil unrest,
and uses iSOS to inform associated risk and mitigations.
• Making use of appropriate advisors to advise on higher
risk areas of the Group, e.g. MSS Global advising on risk
management.

• Use of specialist security operations teams in high-risk

locations.

• Vetting employees, suppliers or partners (and obtaining

security clearance where appropriate).

• Mandatory security training implemented for all UK

employees.

• Business continuity plan developed and communicated

to all UK employees.

• Card security system now implemented in our London

head office.



Strategic ReportM&C Saatchi Plc Annual Report 2023PRINCIPAL RISK

MITIGATING ACTIONS

Reputation

The Group’s brand and
name have value and
recognition and help win
clients. The M&C Saatchi
name is well known, and
our actions may be
subject to public scrutiny
which is disproportionate
to the size of the Group.

• Careful management of talent’s activities within the Talent
group to ensure that they do not damage their own or the
Company’s reputation. This is achieved by providing
comprehensive upfront guidance, monitoring social
media posts and as a last resort, if problems cannot be
resolved, terminating relationships.

• Protocol in place for responding to media enquiries,

reflecting the need for client confidentiality.

• Use of a whistleblowing tool (Vault) to allow employees

to report any form of misconduct in the workplace.
• Mandatory training for all UK employees on data

protection, security and compliance, which will be rolled
out to overseas offices.

• Strengthening of corporate governance and the Group’s

legal function.

• Standardising policies and procedures around the world.
• Using a strategic financial and corporate communications

advisory firm, Headland Consultancy.

RISK
MOVEMENT
SINCE 2022 EXPLANATION

Risk similar
to last year.



Global footprint

• Investing in technology to allow us to work remotely from

Risks arising from
operating in certain
geographic regions which
potentially endanger our
employees or restrict our
ability to trade. Security
challenges such as
bribery, corruption,
terrorism and political
activism are risks due to
our size and our
geographic spread.

higher-risk regions.

• Constant planning and review of project security,

information and cyber-risk management protocols in
higher-risk regions.

• Continuing to review and update our business

contingency plans.

• Use of tax and legal advice in advance of entering new

territories.

• Using external security consultants to advise on higher-

risk areas of the Group.

• Avoiding certain pitches in higher-risk markets where an
agency is not confident that bribery will not be involved.

Risk has
increased
due to
increased
number of
regions with
geopolitical
tensions.



Strategic ReportM&C Saatchi Plc Annual Report 2023Engagement with
stakeholders

The Board’s decisions are guided by what is most likely
to promote the success of the Company in the long term
through creating sustainable value for shareholders
and contributing to wider society.

In order to run a successful business, it is essential
that we speak to our investors, clients, suppliers and
employees. We take time to engage with, and listen
to, the views of our stakeholders to shape our decision-
making and to continue to improve the operations
of the Company.

EMPLOYEES

We acknowledge people are fundamental and core to
our business and the delivery of our strategic ambitions.
We refreshed our people strategy at the start of 2024,
which now focuses on these three key areas:

•

Democratising diversity, equity and inclusion
– refocusing our diversity, equity and inclusion
efforts to be more targeted and more scalable.

Fuelling our global efficiency programme –
supporting the transformation programme that
is setting the Company up for its next chapter.

Turbo-charging talent – evolving our talent
attraction, movement, and growth interventions
to support our business strategy.

How the Board Engaged in 2023

•

Louise Jackson is the appointed Non-Executive
Director responsible for workforce engagement.

Relevant people data including the output of staff
surveys are shared with the Board.

Zillah Byng-Thorne, Executive Chair, travelled to
the US, Australia, Singapore and Malaysia during
the year as part of her engagement with the
Group. In each of these markets, she participated
in Q&A sessions with the local employees.

In addition, the Executive Chair ran a programme
of monthly and quarterly staff communications
including an all-staff video, Snapshots, quarterly
and, a monthly senior leadership briefing.

How the Group Engaged in 2023

•

In 2023, we ran our second annual global employee
engagement survey. The survey was completed by
76% of the Group’s workforce (increased from 69% in
2022) and provides rich data on our strengths and
opportunities, in relation to employee engagement.
The survey results are accessible by both the Board
and the leaders in each of our businesses and have
led to appropriate action plans being created at
both a global and individual company level.

•

We launched a new Group-wide intranet platform,
providing a single place for colleagues to access
information and collaborate with one another.

We launched new communications channels,
including a monthly senior leadership update
call, monthly all-employee blog and quarterly
all-employee video update series.

We continued our global mentoring programme,
with a further 51 partnerships created. The scheme
matches employees who are keen to progress with
mentors in other parts of our global business who
have relevant experience or skills to share.

We created a community amongst our people
managers by running our first ever global people
manager development programme, bringing
together 50 managers from across the global
business.

Our confidential whistleblowing tool is available
to all employees globally, with the aim of
embedding a culture where concerns can be
raised freely. This led to three complaints being
raised and thoroughly investigated. Two-way
communication was enabled with the people
raising the complaints, via the platform itself.

The global people strategy is complemented by local
strategies that are specific to each region or company in
the Group. These local strategies vary but typically have
a focus on topics like talent attraction, employee
wellbeing and training. It is also common for them to
include important initiatives such as the creation and
operation of employee-led networks, representing the
views and needs of underrepresented groups. These
networks are a critical part of shaping our culture, driving
changes to policies and ways of working and curating
learning events. The localised people strategies will also
place an emphasis on employee communication –
typically including email updates from leadership and
town hall style briefings.

CLIENTS AND BUSINESS PARTNERSHIPS

We have a diverse client base across geography, sector
and specialism. These include the world’s leading
commercial brands, new challenger brands, start-ups
and departments across established democratic
governments. Partnering with our clients to meet their
needs is the core focus and is critical to the success of
each of our businesses. Client teams also continue to
engage with both their clients and the broader sector, in
order to innovate and improve our products and services.

Strategic ReportM&C Saatchi Plc Annual Report 2023How the Board Engaged in 2023

•

The Board is regularly briefed on key
developments across the Group’s specialisms,
including the client pipeline as well as on new
and existing client relationships.
During the year, the Executive Chair met with
intermediaries in both the UK and the US; while
when in Malaysia, Singapore, Sydney and the US,
the Executive Chair met with major clients and
competitors to understand the wider market
landscape and the key priorities for clients in the
year ahead.

How the Group Engaged in 2023

•

Implementing a customer relationship
management tool globally to consolidate client
engagement in one, integrated, real-time tool.
Client satisfaction surveys to ensure we continue
to meet client needs.
Client networking events and outreach, led
regionally to share thought leadership and
best practice in each of our specialisms.
Sharing new client wins and industry awards and
events to drive engagement across the diverse
range of our clients.

INVESTORS

The Board acknowledges the paramount significance of
fostering open dialogue, transparency and equitable
consideration for the Company’s shareholders. The
Executive Chair and Chief Financial Officer engage with
shareholders regularly throughout the year.

How the Board Engaged in 2023

•

The Executive Chair and Chief Financial Officer
met with major shareholders in person or
virtually following interim and full-year results
announcements.
As part of the Executive Chair’s onboarding at
the Company, she met with most of the top ten
shareholders to gather their feedback around
priorities. Key topics discussed in these meetings
included business performance, the Company’s
capital allocation strategy, management
capability and succession planning.
The Company held a Capital Markets Day on
8 February 2023.
The Directors attended the Annual General
Meeting, which was an opportunity for all
shareholders to meet the Board.

•

Direct consultation with shareholders: The Chair of
the Remuneration Committee engaged with the
largest shareholders following the voting outcome
at the Company’s Annual General Meeting to
gather views on key remuneration matters.

The Board is available on an ad hoc basis if key
shareholders want to discuss anything in relation
to the Company.

How the Group Engaged in 2023

•

Our Annual Report and Accounts are prepared
each year to give shareholders details on the
Company’s strategy, the performance of the
Group and the operation of the Board.

We maintain an up-to-date website and use an
investor relations advisory practice to facilitate
clear and productive exchanges with shareholders.

Key shareholders have access to ad hoc meetings
with Executive Directors and other members of
the senior leadership team.

SUPPLIERS

We have many suppliers throughout the Group and
work with those that are relevant to enable us to
provide services to our clients and to our Group, as
necessary. Our expectation is that our suppliers match
the Group’s values and culture.

How the Board Engaged in 2023

•

During 2023, we updated the Company’s
Schedule of Matters Reserved for the Board
to ensure that any key high-value supplier
contracts would be brought to the attention
of and approved by the Board.

How the Group Engaged in 2023

•

We are introducing a data management tool that
will improve our ability to identify and address
practices which are at odds with our values and
culture, for example, corruption, bribery and
modern slavery, and to help ensure our suppliers
are committed to upholding ethical business
approaches.

We enter into contracts with suppliers to ensure
their engagement on suitable terms.

We appointed a professional procurement
manager to assist with our management and
relationship with suppliers going forward.

Strategic ReportM&C Saatchi Plc Annual Report 2023Section 172
statement

As a matter of good
corporate governance and
as Directors of the Company,
we make this statement,
as required by section 172
of the UK Companies Act
2006 and the Financial
Reporting Council Corporate
Governance Code 2018.

Each Director of the Company listed on pages 99 to 102
understands their duties and acts in a way that, in
their judgement, promotes the success of the Company
for the benefit of all stakeholders, with due regard for
the varying interests of different stakeholder groups.

The duties of the Directors of the Company, separately
and collectively, include a duty to identify and engage
with identified stakeholder groups and ensure the
interests of those groups are taken into account in
decision-making. Decisions shall incorporate input
from identified stakeholders and be taken with due
regard and consideration for the likely impact on them.

The needs of our stakeholders and the consequences
of any decision in the long term are taken into
consideration by the Board when making decisions.
The differing interests of stakeholders are considered
in the business decisions we make across the Group
and are reinforced by the Board.

Engagement with our stakeholders is detailed
on pages 62 and 63 as well as in the corporate
governance statement on page 97.

The principal long-term risks to the Group are set out
on pages 57 to 61, together with the mitigating actions
explained on those pages detailing how the Directors
consider those risks and the resulting actions taken.

Set out below are examples of how the Board
considered certain matters and reached decisions,
demonstrating how they had regard for section 172
when discharging their decisions during the year.

In performing their duties during the year, the Directors
have had regard for the matters set out in section
172(1) (a)–(f) of the Companies Act 2006 as set out
below:

(a)

the likely consequences of any decision in the
long term;

(b)

the interests of the Company’s employees;

(c)

(d)

(e)

the need to foster the Company’s business
relationships with suppliers, customers and
others;

the impact of the Company’s operations
on the community and the environment;

the desirability of the Company maintaining
a reputation for high standards of business
conduct; and

(f)

the need to act fairly as between shareholders
of the Company.

Strategic ReportM&C Saatchi Plc Annual Report 2023DIVESTMENT OF ENTITIES THROUGH THE YEAR

Matters Discussed

The Board discussed proposed disposals of certain
entities within the Group in line with its strategy to
simplify its operating structure and improve efficiency
across the Group. In 2023, the Group disposed of its
shareholding in M&C Saatchi Spencer Hong Kong
Limited, reduced its shareholding in M&C Saatchi AB
and negotiated its disposal of M&C Saatchi Holdings
Asia Pte. Limited, which completed in January 2024.

Section 172 Considerations

(a), (b), (c), (e) and (f).

How the Board Considered Section 172

For any disposals, the Board receives a paper
assessing the impact of any disposal on the Group
and is provided with the reasons for the disposal,
for example, does it fit with the long-term strategy
of the Company, whether it is loss-making and
whether it is still financially justified. Any employee
issues will be highlighted and considered.

Outcomes

Decisions were made not to pursue some divestments
due in part to the impact on the employees and
shareholders. However, the Group disposed of, and
reduced its shareholding, in a number of entities
across the group within Advertising and Consulting.

GLOBAL EFFICIENCY PROGRAMME

Matters Discussed

The Board discussed the global efficiency programme
throughout the year to maintain oversight of the
workstreams, ensure that the programme milestones
were met and that the Group’s operational
performance was in line with the programme
and cost savings were on target to be achieved.

Section 172 Considerations

(a), (b), (c), (d), (e) and (f).

How the Board Considered Section 172

The global efficiency programme is a recurring
item on the Board agenda to ensure that the
Board is regularly appraised on the progress of
the programme. Consideration was given to the
impact on employees, clients and suppliers of locating

the relevant teams to different geographies. During
these discussions, the consolidation and rationalisation
of the Group’s property portfolio was also discussed,
the impact of these changes on the communities we
operated in, our reputation in markets and the impact
on clients and employees.

Outcomes

The decision was taken to create a new centre of
excellence in South Africa and to further strengthen
our presence in India. In addition to this, we moved
our office in New York to a cheaper and more modern
environment. It was also decided that, rather than look
to move offices in Sydney and London, the Group
would seek to sublet some of the excess space in these
offices. See pages 18, 24 and 25 for further detail on
the global efficiency programme.

REVIEW OF STRATEGY

Matters Discussed

The Board undertakes reviews of the Company’s
strategy and is actively involved in reviewing and
approving changes which ultimately drive the future
of the business.

Section 172 Considerations

(a), (b), (c), (e) and (f).

How the Board Considered Section 172

In discussing the strategy, the Board received a
series of papers throughout the year. These included
updates on external market changes and the wider
environment. Consideration was given to the need to
evolve the way that the business worked with its clients
and suppliers in a changing marketplace. Discussion
was also had on how best to retain employees as the
business executed on its strategy.

Outcomes

As a result of the strategy conversations, a new
communications strategy evolved with the aim of
raising the awareness of the M&C Saatchi brand.
The new operating model was also approved as
part of the strategic conversations.

Strategic ReportM&C Saatchi Plc Annual Report 2023ENVIRONMENTAL, SOCIAL
AND GOVERNANCE (ESG)

(Please see pages 134 and 135 for the SECR Report)

In 2022, we made 12 commitments: six related to planet and six related to people. They covered both the way
we work operationally and the work we do for our clients. We have since realised that our planet and people
commitments are inextricably interlinked. Although we have retained the content of our commitments, we
have restructured them to better reflect our shared planet and people goals in a data-driven way, as well as
adding one new commitment that we believe is essential to delivering on the spirit of our other commitments.

What has changed:

2022 commitment wording

New commitment wording

• Build climate-literate teams.
• Grow the % of revenue from planet-positive

• Build climate and DE&I-literate teams.
• Drive alignment with our planet and people goals

campaigns year-on-year.

across our supply chains.

• Review the environmental approach of potential

• Grow the % of overall revenue from planet and

new clients.

people-positive campaigns year-on-year.

• Train our teams to champion DE&I and embed

• Review potential new clients based on their impact

“conscious creativity”.

on planet and people.

• Offer people and funding to organisations that have

• Offer time and funding to organisations that have

a positive impact.

a positive impact on planet and people.

• Collaborate with key partners to create campaigns

that support our people and planet ambitions.

We have also updated the wording of commitment 3
since last year to the following (see page 68 to learn
why):

•

Set an internal price on carbon and offset
remaining emissions from our own operations
by 2025 and across our value chain by 2030.

This year, we are reporting against the revised
commitments. Recognising the power of our business
to ignite change across a range of different areas,
we have mapped our approach against the UN

Sustainable Development Goals (SDGs) – the world’s
blueprint for sustainable development. We are moving
towards more integrated reporting globally. We are
aware that some parts of our business are further
ahead in some commitments than others, and there will
always be local legal and practical nuances that mean
we will never have a fully standardised approach
across the globe to all issues. However, we will continue
to drive consistency and improve our approach over
time, in particular, improving how we are able to
measure and demonstrate progress.

Planet

People

The way we work
1.

Set a net-zero target, in line with the SBTi Net-Zero
Standard.

2. Reduce our Scope 1, 2 and 3 emissions by 50%

by 2030.

The way we work
4. Evolve how we recruit, develop and reward
our people to address under-representation.
5. Create an inclusive experience where all can

flourish, perform and belong.

3. Set an internal price on carbon and offset

6. Inspire and support people from under-

remaining emissions from our own operations
by 2025 and across our value chain by 2030.

represented groups to start careers in the industry.

Planet and people

Build climate and DE&I-literate teams.

The work we do
7.
8. Drive alignment with our planet and people goals across our supply chains.
9. Grow the % of overall revenue from planet and people-positive campaigns year-on-year.
10. Review potential new clients based on their impact on planet and people.
11. Offer time and funding to organisations that have a positive impact on planet and people.

Strategic ReportM&C Saatchi Plc Annual Report 2023COMMITMENT 1: SETTING A NET-ZERO TARGET WITH
THE SCIENCE BASED TARGETS INITIATIVE (SBTI)

In December 2022, our near-term science-
based target was validated by the Science
Based Targets initiative. The Science Based
Targets initiative (SBTi) is a global body

enabling businesses to set ambitious emissions
reductions targets in line with the latest climate
science. It is focused on accelerating companies
across the world to halve emissions before 2030 and
achieve net-zero emissions before 2050.

We have therefore committed to reducing both our
absolute Scope 1 and 2 greenhouse gas (GHG)
emissions 50% by 2030 from a 2019 base year, and
absolute Scope 3 GHG emissions from purchased
goods and services and business travel by 50% within
the same time frame.

Scope 1 and Scope 2 – Global Data Summary

We are now working on developing a net-zero target
that we aim to have validated by the SBTi within the
next 12 months.

COMMITMENT 2: REDUCE OUR SCOPE 1, 2 AND 3
EMISSIONS BY 50% BY 2030 (COMPARED TO 2019
BASELINE)

A note on our emissions: Given that
we undertook some disposals
during 2023, we have calculated
our emissions using the business

footprint and headcount as of 30 September 2023, the
date which we considered most representative of our
business footprint during 2023. We have therefore used
full-year data for all entities that were part of our
business on that date.

Environmental KPIs

Units

2019

2020

2021

2022

Energy consumption (MWh)
Natural gas
Other fuels
Purchased electricity
Of which renewables
Greenhouse gas emissions (location-based)
Scope 1
Scope 2
Greenhouse gas emissions (market-based)
Scope 1
Scope 2
Scope 1 and 2 tracking against SBT
(% reduction from base year)
Total Scope 3 emissions
Scope 3 tracking against SBT
(% reduction from base year)

MWh
MWh
MWh
MWh
%
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
%

4,597
667
263
3,667
34%
1,955
184
1,771
1,697
184
1,514
0%

tCO2e

33,463

3,378
399
170
2,809
31%
1,497
116
1,381
1,339
116
1,223
21%

3,160
402
220
2,537
38%
1,286
125
1,162
1,111
125
987
35%

3,256
525
123
2,608
35%
1,374
131
1,243
1,199
131
1,068
29%

2023

3,212
384
409
2,419
40%
1,331
164
1,167
1,106
164
943
35%

37,356

12% increase

Scope 1 and 2 Emissions

In 2023 our Scope 1 emissions were 164 tCO2e, and
market-based Scope 2 emissions were 943 tCO2e.
This is in line with our science-based target.

Methodology: The GHG Protocol Corporate Accounting
and Reporting Standard was used to calculate our
emissions. Consumption data was converted to GHG
emissions using 2023 BEIS emissions factors and 2023
IEA emissions factors for non-UK grid electricity. Where
primary consumption data could not be retrieved from
certain entities, we chose to either input last years’

data where applicable or make estimates based on
headcount and floorspace data. Emissions reported
above are calculated using both the location-based
and market-based methods, using an operational
control boundary.

In our 2022 Annual Report and Accounts, we reported
that our Australia offices would be purchasing
renewable energy from 2023 onwards. We have since
discovered that this was a misunderstanding based on
a misreading of information from their energy supplier.
Our Australia office has budgeted for renewable
energy for 2024.

Strategic ReportM&C Saatchi Plc Annual Report 2023In 2024, we expect our emissions to further reduce as a
result of consolidation of our offices globally. We are also
exploring opportunities to purchase more renewable
energy as electricity contracts come up for renewal.

Scope 3 Emissions

2023 is the first time we have measured all our
material Scope 3 emissions, since undertaking our 2019
baseline analysis for our science-based target
submission with the SBTi, and is a major focus for us
going forward. The majority of our Scope 3 emissions
are in purchased goods and services (see below),
business travel (see below) and commuting and
teleworking (1,245 tCO2e).
The method for calculating our Scope 3 emissions
aligned with the GHG Protocol Scope 3 Standard.
For category 1: purchased goods and services, a
spend-based approach was used. For air travel,
Defra emissions factors were used against individual
flight data.

Business Travel

Despite implementing a new Business Travel Policy
with air travel as a last resort in September 2023, our
air travel emissions have increased considerably and
we have not met our target for our emissions
reductions requirements for 2023. In 2023, our air travel
emissions were 4,363.3 tCO2e. This is partly due to
growth in those parts of our business where we have
to travel to deliver against client requirements (e.g.
Sport & Entertainment and Global & Social Issues).
We are undertaking further analysis of why this is, and
how we can better address the issue. In the meantime,
we will increase our purchase of SAF certificates
(Sustainable Aviation Fuel certificates) as part of
our offsetting programme under commitment 3
(see below), as well as create an internal price on
carbon to help drive behaviour change.

Purchased Goods and Services

This year, we have commenced annual measurement
of our purchased goods and services footprint. Our
emissions from purchased goods and services (regular
spend) are 6,207 tCO2e and from purchased goods
and services (media spend) are 24,295 tCO2e. Since our
baseline analysis for 2019, we have improved our data
collection coverage and approach to estimating this
category of emissions, so comparisons to previous
estimates cannot be made. As you will read on pages
75 and 76, our sustainable supply chain management
programme is now underway, and we look forward
to publishing the first results of this work in our 2024
report. Accounting for activity-related (versus spend-

related) emissions from media spend is an industry-
wide issue. The GARM project (Global Alliance for
Responsible Media) at the World Federation of
Advertisers is due to release industry guidance to help
address this issue in 2024, which we hope to adopt.

Associates (franchises and investments under the
GHG Protocol)

To ensure that we are able to measure emissions and
encourage sustainable behaviours from our associate
businesses, we have developed an ESG Policy and
Code of Conduct for Licensees and built it into our
contracting process for our associate businesses.

COMMITMENT 3: SET AN INTERNAL PRICE ON
CARBON AND OFFSET REMAINING EMISSIONS
FROM OUR OWN OPERATIONS BY 2025 AND
ACROSS OUR VALUE CHAIN BY 2030

Reflecting New Greenwashing Guidance

In light of updated greenwashing guidance from the
Advertising Standards Authority related to terms such
as “carbon neutral”, we have reworded our planet
commitment 3 to focus on the actions we are taking
to reduce our emissions:

Old wording

•

Be carbon neutral across our own operations
by 2025 and across our value chain by 2030.

New wording

•

Set an internal price on carbon and offset
remaining emissions from our own operations
by 2025 and across our value chain by 2030.

We are currently working on our strategy to introduce
an internal price on carbon to deal with our most
material emissions, which we aim to report on in 2024.

Our Approach to Offsetting in 2023

We promised to offset our 2022 Scope 1 and 2 footprint
through purchasing Gold Standard verified removals
offsets in 2023. Responding to news coverage over the
efficacy of offsets, we switched to a portfolio approach
for addressing our 2022 emissions. Our 2022 portfolio
addresses emissions closer to their source (business travel
and renewable energy) and enables greater scrutiny
of their impacts. We have based our approach on the
cost of purchasing Gold Standard removals offsets
(US$52 per tCO2e and exchange rates of 31 March 2023).

Strategic ReportM&C Saatchi Plc Annual Report 2023In 2023, our portfolio included:

•

Purchasing accredited Scope 3 Sustainable
Aviation Fuel (SAF) certificates (which reduce
rather than offset the release of GHG emissions
on a lifecycle basis).

Becoming a member of a co-operative that
part-owns a solar power project with additional
biodiversity benefits for the lifetime of the
solar farm.

Purchasing forest protection offsets with additional
biodiversity benefits to match our 2022 footprint.

We have also continued to offset dispatch and ground
transport emissions booked through our central travel
service through a World Land Trust verified carbon
offsetting project that has additional biodiversity
benefits. We have selected the World Land Trust
based on their in-depth responses to the three key
controversial issues raised in the press which appear
transparent and outline the measures they have in
place to minimise the risk of these issues occurring in
their projects. We will continue to scrutinise this area
and look forward to more objective global guidance
being released in regard to this sector.

Why is SAF Important?

Our Scope 3 emissions associated with flying are a
sustainability challenge. While we have commitments
to reduce the amount we fly, some air travel
associated with our work is unavoidable, and the only
available solution for cutting emissions from long-haul
travel is through the use of Sustainable Aviation Fuel
(SAF) certificates. These are certificates for lower
carbon fuels.

The SAF certificates relate to auditable Scope 3
emissions reductions claims. However, SAF currently
cannot be used to account for reductions in corporate
Scope 3 category 6 emissions, as no clear methodology
exists under the Greenhouse Gas Protocol. While the
SAF these reductions relate to will not be used in the
exact aircraft we fly in, it has displaced the same
volume of fossil fuel that an aircraft would normally
run on. SAF reduces emissions on a lifecycle basis
compared to fossil fuel, using waste or renewable
feedstocks.

The SAF that is currently available on the market is
a “transition fuel”. We look forward to more scalable
feedstocks becoming available in the coming years.
Our suppliers guarantee that the feedstock does not

include palm oil and PFAD, and they provide written
evidence that the feedstock is certified against
either ISCC or RSB Certification criteria and
meets all specifications and requirements set
in EU RED II Annex IX.

The SAF certificates we have purchased are equivalent
to an estimated 25 metric tonnes CO2e emissions
reductions claims for the reporting year.

At the same time, we are playing a role in the
decarbonisation of this hard to abate sector, by
sharing our knowledge of the SAF sector with our peers
through formal and informal events and conversations.

Solar Farms and Offsetting

We have become a member of a co-operative that
part-owns a solar power project at Derril Water for
the lifetime of the solar farm. In doing this, we have:

•

Ensured any credits associated with the electricity
produced by our share are retired separately and
not available for purchase on the REGO market
(to ensure that they provide a degree of
additionality to the grid).

Chosen a partner that creates additional
biodiversity benefits on the solar farm site.

Instead of purchasing carbon removals forest offsets,
we switched to forest protection offsets to match our
2022 footprint. Reflecting how we have offset dispatch
and ground transport emissions we have selected the
World Land Trust based on their in-depth responses to
the key controversial issues raised in the press.

COMMITMENT 4: EVOLVE HOW WE RECRUIT,
DEVELOP AND REWARD OUR PEOPLE TO ADDRESS
UNDER-REPRESENTATION

Addressing under-representation
within our overall workforce, and
most acutely amongst our
leadership positions, is a critical

cornerstone of creating a diverse and inclusive culture.
It also links to SASB advertising and marketing
material issue “Employee engagement, diversity and
inclusion”. Moving forward we aim to share
aggregated data (where measured) on:

•

The increase in representation of under-
represented groups across the Group.

The increase in representation of under-
represented groups across senior leadership.

Strategic ReportM&C Saatchi Plc Annual Report 2023Note that in this report (and in the 2022 report) we
tend to refer to our locations where we employ most
people, but we plan in future to share examples from
a wider range of our businesses.

Recruitment

We continued advertising vacancies openly across
our UK, Australian and South African businesses,
providing colleagues with the opportunity to pursue
varied career routes across our different companies.

In the UK, we also continued mandating diverse
candidate shortlists for all senior vacancies to help
achieve better diversity in our leadership positions
in the longer term.

Development

In 2023, we launched our second global mentoring
programme. Continuing the success from our pilot,
the programme enabled 51 people from across our
businesses to be paired with an experienced mentor,
usually from another company and country within
the Group. This year, we wanted to target female
under-represented talent, and now 73% of mentees
are female. The scheme does not specifically focus
on discussing challenges associated with under-
represented talent, however, we have found that
many of the participants request support with issues
particular to under-represented groups (e.g. female
working parents).

In March 2023, we launched our first ever global
manager development programme, aimed at
equipping managers with the necessary skills to
lead in today’s context. Sixty-seven percent of the
participants are female, supporting our desire to invest
in the progression of women into leadership roles and
create equal representation. The programme teaches
all participants how to lead teams in an inclusive way,
further benefitting the overall experience of our teams.
We plan to develop the programme’s content and
make it accessible to all people managers globally.

As a response to our 2023 engagement survey, we
delivered two training sessions for people managers
globally, on subjects that surfaced as priority areas
for improvement, such as giving feedback and
empowerment. All people managers were invited to
these sessions to develop confidence in empowering
their teams and giving both positive and
developmental feedback. We will plan to deliver
similar sessions on the back of the results of the 2024
engagement survey.

In the UK, we launched the pilot of a revised
performance management process, with toolkits
and training to support both people managers and
employees, to help them feel equipped to have
meaningful performance conversations. The four-
stage performance cycle, called “Conversations that
Count”, guides all employees through four important
conversations that are essential to their performance,
career development and wellbeing. The pilot saw four
of our agencies launch the process, with over 40 hours
of training delivered to employees. In 2024, we are
rolling this out to all staff.

In the UK, we rolled out a series of behavioural and
wellbeing focused training, available to all employees.
Each month, all employees can access training on
developing themselves and building confidence
around subjects, including dealing with imposter
syndrome, being more self-aware, and learning to
communicate better. In 2024, we have 12 more sessions
planned to cover more subjects, with the addition of
more skills-based training, for example, influencing
skills, negotiation, and presentation skills.

In Australia, we launched a manager training
programme led by internal leaders. The first module
is on recruitment and onboarding aimed at upskilling
mid-level managers on removing bias from our hiring
process and delivering a best-in-class onboarding
experience. The eight-module programme aims to
arm our managers with policies and processes that
reinforce our expected behaviours and values.

Reward

To help us attract and retain working parents and
foster a more inclusive culture, our UK businesses
launched new family-friendly policies in July 2023.
These policies include:

•

Enhanced paid family leave, with reduced
eligibility requirements.

Enhanced shared parental leave package,
to allow employees greater choice around
how childcare in the first year is organised.

Support for those embarking on fertility
treatment, with an interest-free loan and up to
five days’ paid leave per fertility cycle each year.

In Australia, we:

•

Continued to support both parents of newborns
with a gender neutral policy of 12 weeks’ paid
leave for both primary and secondary carers.

Strategic ReportM&C Saatchi Plc Annual Report 2023•

Launched, and are trialling, a new policy which
entitles employees who fully utilise their annual
accrued leave to unlock additional days.

In South Africa our businesses support parents with:

•

Four months’ fully paid parental leave for the
primary care giver in the family (gender neutral).

A new shortened workday during a parent’s first
month back at work.

A new programme where returning parents are
paired up with another working parent to access
support and advice as they find their feet in the
first month back at work.

Diversity Data

In mid-2023, we ran our second global employee
engagement survey “The Loop”, inviting all employees
to share their experiences of working in the Group.
The survey gives employees in four of our key regions
the ability to disclose demographic data relating to
their identity. Though it was voluntary, over 80% of
those who completed the survey opted to share those
details. This provides us with data with which to
measure and monitor representation at different
levels of seniority over time.

In The Loop survey of June 2023, the UK workforce
included 59% under-represented gender identities
(including women, non-binary and prefer to self-
describe) and 20% of employees from under-
represented ethnicities (compared to 23% in the 2023
IPA Agency Census). In January 2023, we also reviewed
our UK leadership team data, which consisted of 40%
female employees and 16% under-represented
ethnicities.

•

A gender pay gap of 20.0% (2022: 19.5%) based
on median pay gap figures which indicate the
difference between the midpoints in the range
of male and under-represented gender identities
hourly pay.

A 6% increase in the proportion of women
and under-represented gender identities
in the upper quartile.

A 5% increase in the proportion of women
in the lower-mid quartile.

Our gender pay gap reports are available on our
website (www.mcsaatchi.london).

Leadership in Australia

In Australia, we have purposefully restructured the
Exco throughout this year, to ensure it is now gender
equitable with 50:50 gender representation.

Diversity in South Africa

In South Africa, our workforce profile is in line with
government targets, focusing on under-represented
groups.

Our performance against those gender and ethnicity
targets is as follows:

•

Target = 60% female; Actual = 62% female.

Target = 60% Black; Actual = 70% Black.

Our South African businesses are also Level 1 B-BBEE
(Broad-Based Black Economic Empowerment)
certified across the group of companies. This is the
highest level of attainment.

The success of our DE&I efforts has been evident in
M&C Saatchi Abel keeping a B-BBEE Level 1 position
for over nine years.

UK Gender Pay Gap

Our Board

Our UK gender pay gap for 2023 mean average
shows a moderate improvement, and the median
has worsened slightly. This year, we have made
our reporting more inclusive by including under-
represented gender identities alongside women,
including non-binary and those identifying as women.

Our data snapshot on 5 April 2023 showed:

•

A gender pay gap of 26.1% (2022: 26.4%)
based on mean pay gap figures which
indicate the difference between the average
hourly rates of male and under-represented
gender identities pay.

There have been a number of changes to our Board since
our last report. See pages 99 to 102 for Board details.

COMMITMENT 5: CREATE AN INCLUSIVE
EXPERIENCE WHERE ALL CAN FLOURISH,
PERFORM AND BELONG

Our employee-led networks (ELNs)
have proven to be increasingly
influential in the development of our
policies and culture and have been

set up in our major business locations. Each network
runs regular, well-attended events and programmes:

Strategic ReportM&C Saatchi Plc Annual Report 2023UK

The Heritage Network (representing Black, Asian
and minority ethnic communities) delivered:

•

A Black History Month exhibition “Black & Bold”,
in partnership with Harrods Racial, Equality and
Diversity network.

An Eid exhibition at our London head office,
exhibiting Muslim artists.

The Family Network (representing parents and carers)
delivered:

•

The annual family morning during October
half-term with over 60 children attending.

A returners’ workshop for primary carers.

Collaboration with HR on a new parental
leave policy which launched in July 2023.

The Proud Network (representing the LGBTQ+
community) championed:

•

LGBTQ+ History Month: online talk from
Alexis Caught.

Trans Awareness Week events/panels.

Awareness and fundraising for World Aids Day.

The Together Network (representing those with
mental health and accessibility issues) delivered:

•

A partnership with Self-Space providing access
to group therapy sessions for colleagues.

Mental health first aiders, to support the
employee group.

Fitness classes via Third Space.

The Juniors Network (representing those starting out
in their careers) ran:

•

Multiple social events throughout the year to foster
community and support for early-stage creatives.

The Enable Network

In 2023, the UK launched the Enable Network (a new
ELN), which aims to increase inclusivity of those with
neurodiversity or disability. This network ran its inaugural
event – a well-received ADHD Awareness Workshop.

SOUTH AFRICA

We support the holistic health of our people at work
through our Thrive mental and physical wellbeing
programme. This includes:

•

Automatic staff access to Discovery’s Healthy
Company programme, which helps drive mental,
emotional, physical and financial wellness.

•

This includes eight one-on-one sessions (per
presenting issue) with psychologists and trained
mental health professionals when needed.
An array of initiatives to support our people’s
physical wellbeing, including yoga on the roof,
run club, football squad and nutritional advice,
as well as breathwork sessions to improve
mental wellbeing.

AUSTRALIA

Our Australia/New Zealand businesses have an
expanding range of ELNs to support and engage
their people.

Femme&C was set up to champion women and to
create a practical suite of tools to support thought
and action in both their personal and professional
lives. As well as running events, the ELN has also
helped inform a number of leave-related initiatives,
including: equal and gender-neutral paid parental
leave, adoption and fostering leave, personal and
carer’s leave, special compassionate leave for
miscarriage and stillbirth, and perimenopause/
menopause leave.

Queer&Proud (LGBTQIA+ ELN) were heavily involved
in Sydney WorldPride. They are now working on
activating other key moments in the queer calendar.

Parents @ M&C Saatchi have run a range of
initiatives including:

•

World Infant, Child and Adolescent Mental
Health Chat with Dr Nicole Wheeler, exploring
common signs that indicate if children need
support and why they might be struggling.

A Mothers’ Day event.

A parknic/cafenic for parents and their children.

Sharing tips and information about issues that
affect families and parents.

The Wellbeing ELN has been launched to explore
a range of wellbeing issues. So far they have
introduced:

•

Sun-safe skin checks.

Confidential managing of mental health
support sessions for managers.

Free flu vaccinations.

Outdoor meetings, including the “Botanical
Gardens Loop”, which has been added to
Google Calendar to book meetings or chats.

LADS ON TOUR, to support Men’s Health Week
in a healthy environment.

Strategic ReportM&C Saatchi Plc Annual Report 2023•

Men’s mental health speaker sessions, with
representatives from RUOK?, and an internal
“recovering business email addict”.

Australia has also launched a new BIPOC ELN (to
represent Black, Indigenous and People of Colour
communities) as well as a Climate Action ELN to help
inspire better practices and drive meaningful change.

Training

In the UK we organised:

•

A mandatory learning programme on inclusive
leadership for all UK Chief Executive Officers and
some other senior leaders. This included a core
learning programme, one-to-one coaching,
and most recently a 360-feedback report
that focused entirely on inclusive leadership
behaviours.

A partnership with Fearless Futures to pilot
conscious inclusion training for employees. As a
result of our 2022 pilot, we rolled this out further
in 2023, and new joiners and hiring managers
across the business completed the training. In
2024, we will continue to train new joiners and
open up training opportunities for employees
and managers.

In Australia, we continue to ensure that unconscious
bias training is mandatory as part of onboarding, as
is the induction to our six ELNs.

In order to measure the overall effectiveness of our
initiatives to help create an inclusive experience, in
2024 we will be measuring:

•

The decrease in the gap between engagement
and inclusion amongst under-represented groups
and well-represented groups, using data from
our employee engagement survey (The Loop).

The increase in the percentage of SLT who meet
or exceed The Loop benchmark for inclusive
leadership.

COMMITMENT 6: INSPIRE AND SUPPORT PEOPLE
FROM UNDER-REPRESENTED GROUPS TO START
CAREERS IN THE INDUSTRY

M&C Saatchi
Open House is a
free eight-week
online training

programme open to anyone who wants to learn more
about our industry. Its mission is to help remove
barriers for anyone starting, shifting or returning to a
career who does not have the support, connections or
access to do so. Weekly seminars, where speakers
from across the Group share their knowledge and
experience, are open to all. Participants have the
opportunity to apply what they have learnt on a live
brief, receive a CPD accredited certificate and apply
to be considered for a future role with the Group.
Since its launch in 2020, Open House has reached
6,322 people, aged 16–60, in 101 countries, with M&C
Saatchi employees from the UK, the US and Australia/
New Zealand delivering sessions. Our 2023 Open
House programme was the biggest to date. So far,
we have made 20 permanent hires, plus four
apprenticeships and nine internships.

In the UK, the diversity data for the programme has
been outstanding, with 73% female, 40% from ethnic
minority backgrounds, 23% from the LGBTQIA+
community, 17% identifying as a person with a
disability, 1% identifying as transgender/gender
diverse or as someone with a trans history, and
52% with parents who did not attend university.

Open House Australia

Our 2023 Australian Open House programme had
around 500 participants registering for weekly
sessions. Of the people who completed our voluntary
DE&I survey as part of the sign-up, we saw a big
increase in diversity in comparison to what we
normally experience through our more regular
day-to-day recruitment processes.

In summary:

•

•
•

•

27% of our applicants were older than the
average industry age of 34 years.
2.6% were First Nations people.
77% identified as an ethnicity that did not
include “Australian”.
9% identified as having a visible or non-visible
disability.
21% identified with an under-represented sexual
orientation.

At the completion of the course in November, we
selected eight interns for the two-month paid
internship. They were placed across the different
divisions within the Group. Seven of these interns
have already been placed into permanent positions.
These are people we do not believe we would have
found otherwise.

Strategic ReportM&C Saatchi Plc Annual Report 2023Carbon Academy

In 2022, we ran a Carbon Academy in collaboration
with the University of Greenwich, aiming to help
address the gender imbalance in creative roles.
In 2023, we created an Alumnae group on LinkedIn
to collaborate as a creative community of mentors
and mentees, sharing opportunities such as the
“Art for Change” prize.

University of Greenwich Degree

As a natural evolution of the Carbon Academy
collaboration, we co-designed a Creative Advertising
and Art Direction BA (Hons) degree which launched in
September 2022. The modules we helped develop were:

•

Year 2 Ideas Lab 2023, where students come into
the agency in three-hour four-weekly rotations to
experience life in the industry and are mentored
by creatives on a client and D&AD brief. One
creative team will be offered a one-month
paid summer placement in summer 2024.

Year 3 Black Book 2024, taught in the studios
at Greenwich, with guest appearances by an
extended creative team of industry professional
contacts.

Following the ongoing success of these initiatives, in
2024, we are introducing new metrics for measuring
the related social impact. Going forward, our
measures will be:

•

Increase in number of Open House registrations
from under-represented groups.

Increase in the number of people from under-
represented groups finding roles in the industry
after the completion of Open House.

Commitments 7–11: Creating the future we want
to see through advertising and communications

We want to be part of growing a future we all want
to live in, not just for moral and ethical reasons, but
also because history tells us that businesses that drop
behind the curve will struggle the most to catch up.
By far the biggest impact we have as an industry is in
the work we do for our clients and the impact of our
work in driving sales of the goods and services they
produce. However, the industry has not yet developed
a set of associated standards for our sector to apply
to our work. We are using our voice at the Institute
for Practitioners in Advertising and the Advertising
Association to advocate for a consistent and
meaningful approach to this issue.

In the meantime (see commitment 9 below), we
have introduced a requirement for our businesses to
measure the percentage of revenue they generate
from planet-positive and people-positive campaigns,
with associated growth targets. We are measuring this
through our finance system. The commitments below
are part of our contribution towards creating the future
we all want to live in.

COMMITMENT 7: BUILDING CLIMATE
AND DE&I-LITERATE TEAMS

Marketing and communications professionals can
only step up to meet the demands of the transition to
a planet and people-positive future if they have the
relevant tools and knowledge. This also links to SASB
advertising and marketing material issue “selling
practices and product labelling”. As a global business,
with challenges that vary across countries and regions,
we are seeking to do this in a way that is responsible
and authentic.

In 2022, we purchased two leading on-demand
self-directed learning packages for our teams across
the globe: #changethebrief training from Purpose
Disruptors and Ad Net Zero Essentials Certificate
training. In 2023, we also undertook work with external
partners to unearth what conscious creativity means
to internal teams globally and help us understand the
opportunities and challenges for producing people-
positive work for clients, with the initial aim of
undertaking standardised training across the business.

However, engagement in standardised training has
been mixed across our business. We have started
changing our approach to building climate and
DE&I-literate teams, with teams encouraged and
supported to up-skill in a variety of ways, including:

•

Provision of formal training packages on request.

Group-wide “growth sessions” on key issues such
as greenwashing and DE&I.

Strategic ReportM&C Saatchi Plc Annual Report 2023•

•

Specific “growth sessions” (e.g. greenwashing
versus great work) for key teams and locations.

Specific country-related initiatives (e.g. we have
signed up to the Mayor of London’s Design Lab
programme, which involves designing solutions
to help employers tackle under-representation in
the city and build more inclusive communities).

Encouraging our businesses and teams to set
sustainability-related KPIs for their people.

Inviting our people to join our planet-and-people
employee-led networks (ELNs) in person and on
our internal engagement platform (Huddle).

Opening up our Global Sustainability Taskforce
to a wider group of participants.

Encouraging sharing of projects and ideas.

Regular colleague communications related
to key things our teams and their clients need
to know about sustainability and DE&I.

In 2024, we will continue to adapt and refine our
approach. We acknowledge it is harder to track
engagement with these programmes but hope to
improve our understanding of their effects over time.
We will be measuring:

•

Instances of training delivered (and to whom),
on how to deliver our people and planet
commitments with confidence.

Maintain zero substantiated external accusations
of greenwashing and diversity-washing.

We also hope to introduce:

•

An NPS score for training events, based around
confidence in delivering people and planet
campaigns.

A question on The Loop (our employee
engagement survey) related to confidence
in delivering people and planet work.

COMMITMENT 8: DRIVE ALIGNMENT WITH
OUR PLANET AND PEOPLE GOALS ACROSS
OUR SUPPLY CHAINS

We know that the majority of our impacts are in our
value chain. While we already had good practice in
a number of areas of purchasing (e.g. in direct food
and service suppliers to our London office), in 2023 we
undertook work to start getting our formal sustainable
supply chain programme underway. In 2023, we:

•

•
•

•

Procured an ESG data management system to
help us contact suppliers and request, assess
and measure their performance against a range
of ESG metrics.
Tested the data management system by sending
out questionnaires to 250 suppliers of different
types and sizes, to develop and resolve learnings
ahead of rolling out the initiative.
Finalised a new global Supplier Code of Conduct.
Built ESG requirements into our RFPs with
strategic suppliers.
Began building ESG requirements as a key pillar
of major organisational change programmes.

In 2024, we will:

•

Implement new processes to ensure all new
suppliers sign our Supplier Code of Conduct.
Identify our highest-risk suppliers across key
metrics (modern slavery risk, environmental
impacts, DE&I risk) and develop an action plan
to address those risks.
Identify procurement areas where we can adopt
a “sustainability first” approach to suppliers and
develop and implement an approved suppliers
policy to support this.

Set targets for specific metrics on a supplier
category basis, starting where we have most
control and impact. Targets we are considering
include: % of large suppliers with their own

Strategic ReportM&C Saatchi Plc Annual Report 2023

science-based targets, % of suppliers that use
renewable energy, % of suppliers that audit their
own suppliers for modern slavery and health and
safety issues, and number of suppliers that are
led by under-represented groups.

Some of our clients are beginning to ask us for activity-
based data related to our work for them. Impacts in
our supply chain are a key part of this. We anticipate
this requirement growing over time.

In 2024, we will report against the following key metrics:

We are also considering a measure of % of suppliers
that have an approach to DE&I that we consider
appropriate (exact measure to be defined in 2024).

Our Supplier Code of Conduct covers:

•

% of supply chain signed up to our
Code of Conduct.

% of supply chain responding to our
supplier questionnaire.

•

Environmental impacts, including water, waste,
chemicals, biodiversity and GHG emissions, with a
clear roadmap for introduction of science-based
targets and reporting across all material Scope 1,
2 and 3 emissions (sole traders and micro-
businesses are excluded from the roadmap
commitment).

Human rights issues, including modern slavery,
forced labour, human trafficking, retention of
passports, debt bondage and child labour (this
does not include child work) as per international
labour standards.

Supply of conflict minerals.

A safe working environment for all workers and
subcontractors that is free of harassment and
includes the right to collective bargaining.

Minimum wages and working conditions,
including fair treatment and freedom from
discrimination for all workers and subcontractors.

Whistleblowing.

Business ethics and sound governance, including
corruption, conflicts of interest and privacy.

Effective remediation for victims of violations of
the code.

Training of employees to understand and deliver
against our code.

A supplier commitment to use their best efforts
to implement these standards within their own
supply chains.

A commitment from us to support suppliers
in their efforts to comply with our code.

COMMITMENT 9: GROW THE % OF OVERALL
REVENUE FROM PLANET AND PEOPLE-POSITIVE
CAMPAIGNS YEAR-ON-YEAR

We are defining our planet and people-positive
campaigns separately. Due to the nature of some
of our businesses and the work we do, we have
historically produced more people-positive than
planet-positive campaigns. We are therefore
introducing the following measurement metrics:

•

% difference in overall revenue from planet-
positive campaigns year-on-year,

% difference in overall revenue from people-
positive campaigns year-on-year.

While we are planning for both planet and people-
positive campaigns to form a larger part of our work
over time, we are also aiming to elevate the status and
number of planet-positive campaigns across our
business so they are at parity with our people-positive
campaigns.

Strategic ReportM&C Saatchi Plc Annual Report 2023PLANET-POSITIVE CAMPAIGNS – OUR DEFINITION

A planet-positive campaign is one that furthers the wellbeing of the natural environment while promoting social,
economic and environmental sustainability. It furthers at least one of the aims of the environmental Sustainable
Development Goals (SDGs numbers 7, 12 and 13). It should avoid unintended consequences that materially affect
any of the other SDGs and promote a positive impact on society.

For a campaign to be defined as planet-positive, it must be able to demonstrate a provable reduction of negative
impacts versus the market or previous iterations of a product or service or way of usage, for example:

• Product/service: Less plastic in packaging, reduced water usage, shift to electric (versus petrol), circular production
techniques, lower-impact ingredients (e.g. plant-based food). Note: the enhanced environmental credentials of the
product or service do not need to be the focus of the communication.

• Behaviour: The campaign promotes behaviours which reduce the environmental impact of how we live

(e.g. recycling, frequency of travel, mode of travel, water usage, plant-based eating, use of renewables, etc.).

PEOPLE-POSITIVE CAMPAIGNS – OUR DEFINITION

Does this campaign improve people’s lives? A people-positive campaign is one that furthers the wellbeing of
individuals and communities, while promoting social, economic, and/or environmental sustainability. These
campaigns further at least one of the aims of the Sustainable Development Goals (SDGs) through diversity, equity,
and inclusion. It should avoid unintended consequences that materially affect any of the other SDGs and promote
a positive impact on society.

What is included:

• Campaigns, activities, and parts of campaign executions that are clearly designed to address a need aligned
with at least one SDG, that achieve clear and measurable people-related outcomes. They should have a clear
and positive impact on society, such as supporting organisations, non-profits or social impact organisations that
align with our own values or promoting inclusive and/or sustainable behaviour amongst citizens and customers.

What is definitely not included:

• Rebrands that have no specific campaign activations (unless the client measures engagement uplift as a result).
• Campaigns that have a negative consequence (even if unintended) that affect the delivery of other SDGs (e.g. a
campaign that aims to promote economic development and decent jobs (Goal 8) in the oil and gas sector would
not be considered people-positive because development of coal plants is not consistent with Goal 7 and Goal 13).

• Campaigns that may be exclusionary or insensitive to the needs of under-represented groups or perpetuates

harmful stereotypes.

• Campaigns which primarily have a planet-positive impact (these will be included under planet-positive campaigns).

We acknowledge that our definitions of planet and
people-positive campaigns are not scientific and, so
far, we only have six months’ worth of data. We are
therefore using this six-month review opportunity to
help us to understand our baseline and also to confirm
the accuracy and methodology used by teams when
they include the planet or people-positive campaigns
tag in their financial reporting. We look forward to
reporting a full-year baseline in our 2024 report.

In 2022, we promised to deliver a carbon-neutral
campaign in 2023. However, regulatory bodies are
increasingly critical of undefined terms such as carbon
neutral. While we aim for all our productions to be
as low carbon as possible, we no longer feel the
“carbon neutral” terminology is appropriate.

Strategic ReportM&C Saatchi Plc Annual Report 2023COMMITMENT 10: REVIEW POTENTIAL NEW CLIENTS
BASED ON THEIR IMPACT ON PLANET AND PEOPLE

•

47% of clients had no net-zero targets, Scope 1
and 2 targets only, or targets that are reliant on
offsetting.

In 2022, we developed and launched our three-step
check process plus a new client questionnaire for our
businesses and teams to use. The aim was firstly to
help teams make an informed decision when
considering new work with businesses that have high
negative environmental impacts, and secondly to
help us better understand the role we can play with
prospective clients in supporting their approach to
reducing their impacts. Our three-step check process
included human rights issues such as modern slavery,
health and safety and impacts on local communities
but did not include other people-related metrics. Some
teams have used these tools to help them navigate
difficult decisions. However, take-up of the tools has
been uneven.

In 2024, we will create a new process that explicitly
includes wider people-related metrics alongside an
approach to better embed this into our new business
processes. In the meantime, we are continuing to
support our teams to use the three-step check and
new client questionnaire.

In 2022, we also promised to implement a system to
understand and measure the environmental impacts
of the work we do for our clients. This work is underway
but by no means complete. In the second half of 2023,
we reviewed the following broad impacts related to
our largest clients: their emissions reductions
performance, their approach to climate-related target
setting and reporting, and DE&I commitments,
reporting and diversity statistics. The findings include:

Climate commitments:

•

Clients working towards science-based targets:
29% had targets approved by SBTi; 9% had a
commitment to set a target made with the SBTi
and 18% had science-aligned targets but not
verified by the SBTi.

Climate risk exposure (this is our subjective view and
is subject to caveats expressed in our TCFD report):

•

25% facing a high degree of physical risk.

31% facing elevated transition risk.

People DE&I commitments:

•

94% have public commitments to DE&I.

61% report DE&I progress in a public-facing
report, based on a singular demographic,
company-wide and leadership-level statistic.

42% report DE&I progress in a public-facing
report, against multiple demographics.

We understand that some companies will also be
undertaking additional DE&I activities and reporting
internally.

As well as helping us understand how our planet and
people values are demonstrated by our clients, we
anticipate that developing our analysis in this area will
help with future measurements of advertised emissions
as and when an industry-wide approach is agreed.

COMMITMENT 11: OFFER TIME AND FUNDING TO
ORGANISATIONS THAT HAVE A POSITIVE IMPACT
ON PLANET AND PEOPLE

We offer people’s time and funding to a wide range
of initiatives globally that have a positive impact on
planet and people. Although we have some excellent
examples of projects, we do not yet have a streamlined
approach to measuring either our inputs into those
initiatives or the impacts of those initiatives.

During 2024, we will put in place a system to start
to capture data on the following measures, with
the intention of increasing our impacts over time:

•

Pro bono campaigns, volunteering hours
and donations.

Strategic ReportM&C Saatchi Plc Annual Report 2023•

•

% of organisations and initiatives where we
set metrics on impact.

% of organisations and initiatives where the
organisations have set metrics on impact.

In the meantime, here are some examples of initiatives
that we have funded and/or offered time to across the
globe in 2023.

Mentor Black Business

We have supported Mentor Black Business (MBB) since
2020 and played a pivotal role in enabling its success.
MBB exists to help Black-owned businesses in the
UK to thrive, giving free access to the best industry
know-how and experience and providing tailored
advice on crucial business questions like how to
develop a digital marketing strategy, optimise a
website or get started with online selling. We believe it
is the UK’s third largest corporate sponsored mentoring
programme for small businesses (behind Google and
Digital Boost). In 2022, the number of businesses
supported grew by 61% to over 1,900 and the team
hosted 25 events and collaborated with 17 new
partners. In 2023, we saw further developments with
50% of our financial support for MBB directed to
support the Black Business Incubator (BBI) project,
operated in partnership with Somerset House and
sponsored by Morgan Stanley.

BBI aims to help early-stage Black entrepreneurs
unlock their full potential and allow their creative
enterprises to thrive. The hybrid (in-person and virtual)
programme provides participants with monthly
expert-led masterclasses, mentorship from industry
specialists, free access to a co-working space and
a variety of community events. This is based on the
belief that entrepreneurial success relies on being part
of a supportive and inclusive creative community.

Australia

The Forever Reef Project

In 2023, M&C Saatchi Australia partnered with
Dr Dean Miller and the Great Barrier Reef Legacy on
the ground-breaking Forever Reef Project at Cairns
Aquarium & Reef Research Centre. The project is to
build a living biobank to create a backup facility for
coral species – a living coral ark. It is currently
preserving coral biodiversity by housing living coral
specimens, including fragments, tissue samples and
genetic material. The project aims to collect all

400 species of coral in the Great Barrier Reef and
ultimately all 800 species worldwide. M&C Saatchi
Australia has so far donated A$200,000 worth of hours
to set up the project’s communications platforms and
global outreach programme.

Reconciliation Australia

We have also partnered with Reconciliation Australia,
to create a reconciliation plan for a more structured
approach to building relationships and opportunities
with First Nations people. As part of this plan, we are
committed to increasing our contribution to First
Nations suppliers to support better outcomes for
Aboriginal and Torres Strait Islander peoples.

South Africa

The Street Store

In 2014, M&C Saatchi Abel launched the first Street
Store in Cape Town – a first of its kind pop-up shop,
entirely rent-free and premises-free, where homeless
people could experience a dignified, free-of-charge
shopping experience. Street Store has since opened in
over 210 cities around the world. It is estimated that
over a million people globally have benefitted from the
not-for-profit initiative, which is entirely open-source
and adaptable anywhere in the world. In 2023, we
celebrated the 1,000th Street Store, with a store at the
Haven Night Shelter in Cape Town and the Salvation
Army in Johannesburg.

Our South African group of businesses have a
strong focus on giving back to the community,
and offering people and funding to organisations
that have a positive impact and promote community
empowerment. Other initiatives include:

•

Giving R10,000 per month to ORT SA
Cape Foundation.

Helping Baphumelele and Bethany House
(orphanages in need of great help in our
communities).

M&C Saatchi Razor undertakes regular pro bono
work for SADAG (South African Depression &
Anxiety Group).

M&C Saatchi Levergy offers pro bono work
for Phile Sonke and JAG foundation.

M&C Saatchi Abel has created campaigns
for NSPCA on the prevention of animal cruelty
(“Animals Do What?”).

Strategic ReportM&C Saatchi Plc Annual Report 2023Food & Agricultural Organization of the United
Nations (FAO)

A number of our senior people are active as trustees
for non-profits and other organisations. For the last
seven years, Robert Grace, Co-Founder and Chief
Strategy Officer of M&C Saatchi Abel in South Africa,
has been a voluntary member of a communicators
network co-ordinated by the Rome-based Food &
Agricultural Organization of the United Nations (FAO).
The network seeks to advance the communication
agenda for the adoption of sustainable wood as a
scalable and meaningful solution in the fight against
climate change, engaging with researchers, scientists
and ecologists as well as architects, government
stakeholders and other key decision-makers to help
achieve more effective outcomes.

This year the network presented a global campaign
concept, developed by M&C Saatchi Abel, to raise the
awareness of sustainable wood, entitled “Grow the
Solution”, at the World Forestry Congress in Seoul. The
campaign concept was officially noted in the outcomes
report from the congress and highlighted as a part of
the action points that should be adopted.

Global

Art For Change Prize

As patrons of The Saatchi Gallery, we once again ran
our not-for-profit initiative, the “Art For Change” prize.
This year’s prize was climate-focused and invited
emerging artists from around the world to explore one
of the most urgent issues of our time and creatively
respond to the theme “Regeneration”. The total
number of entries increased by 20% from last year,
totalling 3,000, from artists based in 130 countries
within the Group’s key global regions (Americas, Asia,
Australia, Europe, Middle East and Africa and the UK),
with over 56% of them developing nations from within
Latin America, Africa, Asia and Oceania. To ensure
sustainability ran through the prize, we purchased
Sustainable Aviation Fuel certificates and associated
emissions reductions that matched the air travel
emissions from flying artwork and the “Art For Change”
finalists to London for the exhibition, and worked with
suppliers that met our ESG requirements.

Haining Wang from Beijing, China, was announced as
the overall winner at a dedicated exhibition unveiling
at The Saatchi Gallery, by Chair of Judges, Justine
Simons, London’s Deputy Mayor for Culture and the
Creative Industries. The evening included a panel
discussion with some of the leading voices in arts,
culture, and sustainability, who discussed the power of
global creativity to transform the conversation around
the climate emergency. Haining will receive a £10,000
cash prize, as well as having her winning artwork
displayed in The Saatchi Gallery alongside five
shortlisted artists, who will each receive £2,000. The
winning artworks open a conversation to examine this
year’s theme from different global perspectives, look to
create new stories of a liveable future, and empower
individuals and entities to act. It is a call to action for
meaningful change, recognising that there is no art on
a dead planet.

Strategic ReportM&C Saatchi Plc Annual Report 2023TASK FORCE ON CLIMATE-RELATED DISCLOSURES

This is our second report in line with the recommendations of the Task Force on Climate-related
Financial Disclosures (“TCFD”), identifying climate change risks to and opportunities for the business.

Reporting in Line with the Recommendations of the TCFD

RECOMMENDED
DISCLOSURES

Description of the
Board’s oversight
of climate-related
risks and
opportunities.

OUR DISCLOSURE

During 2023, the Group Sustainability Committee met three times to discuss sustainability risks
and opportunities and their solutions.

Towards the end of 2023, we streamlined our approach to Board oversight of climate-related
risks and opportunities, and in 2024, we will have a new structure.

•

The ESG Leadership Team has been formed by the Board to oversee the Group’s ESG strategy
and embed appropriate ESG policies. Alongside the Audit & Risk Committee, it also has
responsibility for risk management of climate-related issues.

The ESG Leadership Team meets quarterly and reports directly to the Executive Chair. It consists
of the Chief Financial Officer, Chief People and Operations Officer, Group Sustainability
Director, Global Head of Engagement and DE&I, and a Regional Chief Executive Officer
on quarterly rotation to ensure alignment with business practices and local strategies.

The ESG Leadership Team will report directly to the Board twice a year.

The Group Sustainability Director runs a Global Operations Sustainability Task Force with senior
representatives from our major divisions and regions and co-runs the Task Force for Planet
and People-Positive Campaigns, which is led and sponsored by a Regional Chief Executive
Officer. Task force members work with their leadership teams and employee groups to
develop and activate global strategies within their business areas.

The Board monitors and oversees progress against goals and targets for addressing climate
issues through two mechanisms: through Chief Financial Officer membership of the ESG
Leadership Team and through discussions at the Remuneration Committee on progress
against the environmental goals that are included in the bonus metrics for executives.

•

See pages pages 57 and 58 for how climate-related issues are considered as part of risk
management within the Audit & Risk Committee.

Description of
management’s
role in assessing
and managing
climate-related
risks and
opportunities.

The Chief People and Operations Officer will have overall management responsibility for
assessing and managing climate-related risks and opportunities, supported by the Group
Sustainability Director. There are no specifically allocated responsibilities for climate-related
risks and opportunities within the broader management of the business, however the
Sustainability Leadership Team has been designed to influence decisions in the business.

Delivery of sustainability targets is included in remuneration for the Executive Chair and the
Chief People and Operations Officer and Chief Financial Officer.

Strategic ReportM&C Saatchi Plc Annual Report 2023RECOMMENDED
DISCLOSURES

Description of the
climate-related
risks and
opportunities the
organisation has
identified over
the short, medium
and long-term.

OUR DISCLOSURE

PHYSICAL RISKS

As an office-based group of companies, our physical risks are limited to where our people work
and live. These general risks are already present in the short term (2024) and will increase in the
medium term (2025–2028) and long term (2029–2050) and are likely to continue to amplify over
time. At the moment, there are no chronic physical risks to our business locations. However, if
global emissions continue to fail to align with a 1.5°C global temperature increase, and/or
climate tipping points are passed, these risks will become more regular and acute, and in some
areas, chronic risks will become evident (particularly related to sea level rise). The extent to
which these risks will amplify through the 2030s and beyond will depend on the degree to which
global GHG emissions decline in line with the scientific consensus.

2024

2029–2035

Risk of extreme
climate events
occurring in individual
locations of operation.

Risk that extreme climate events
become chronic in some areas
of operation. Individual and
concurrent climate events continue.

2025–2028

Risk of extreme climate
events grow and are likely
to affect some locations
of operation concurrently.
Individual extreme climate
events continue.

2035–2050

Climate issues will amplify over time,
disrupting businesses and operations.
The degree of amplification is likely
to depend on the degree to which
global emissions reductions align
with the scientific consensus.

Physical risks to our locations of operation from climate change can be summarised as follows:

•

Risk of flooding, hurricanes and wildfires affecting our leased buildings, infrastructure and
data storage.

Increased costs of cooling buildings during heatwaves.

Health impacts on our people from extreme weather including heat, rain and increased
prevalence of disease.

Loss of local transportation and other infrastructure due to extreme weather.

General societal impacts from climate change.

Stress and wellbeing issues for our people.

Strategic ReportM&C Saatchi Plc Annual Report 2023RECOMMENDED
DISCLOSURES

OUR DISCLOSURE

In 2023, we discussed these risks as part of the financial planning process and the Group
Financial Controller is now part of regular calls between the Finance Team and the Group
Sustainability Director. We have assessed that they are likely to affect our business financially
in the following ways:

•
•
•
•
•

•

Costs of cooling during heatwaves.
Service disruption (physical, digital).
Interruptions to data storage.
Building repairs.
Increased cost of talent recruitment and retention (affected communities will have higher
living costs).
Health and wellbeing costs for our people.

The resulting potential impacts on human populations (including our people, local communities
and consumers) include:

•
•
•
•
•
•
•
•
•
•
•

Lower productivity.
Poor mental health.
Poor physical health.
Water shortages.
Reduced access to and increased cost of food.
Inability of local power grid to cope with demand.
Melting airport runways, roads and rail infrastructure.
Wildfires.
The inability to travel even locally.
Political instability.
Migration from affected areas to less affected areas and resulting civil unrest.

The UK’s “Health Effects of Climate Change” Report 2023 has outlined a number of health
impacts to people that businesses will need to prepare for, ranging from increases in infectious
diseases, mental health impacts from climate events such as flooding, up to 10,000 excess
deaths per year in the UK due to extreme heat, to food instability (particularly for fresh fruit
and vegetables). These impacts will have an increasing knock-on effect both to workforce
productivity (and may require businesses to offer more support to employees outside of the
office environment) and to the customer base of our clients. Health impacts of climate change
are likely to vary by jurisdiction.

Given that we do not have material investments in fixed assets such as properties and given
that we are able to deliver most of our clients work remotely across our global footprint, we
have not yet attempted to quantify the associated financial impact, because it is not sufficiently
material. The mispricing of climate risk throughout the global economy, due to the use of
financial scenarios that fail to account for tipping points and second order impacts, create
a major transition risk to all economic actors. The WTW’s Thinking Ahead Institute “Pay now
or pay later?” report estimates that “if climate tipping points, that could magnify the costs of
inaction, are considered, we could see a 50–60% downside to existing financial assets in a
business-as-usual scenario, where climate risks are not addressed”. This would be catastrophic
to most businesses, including ours. It goes on to state that “in contrast, taking action to transition
to a well-below 2°C world might lead to a loss of 15% of existing assets, which could be partly
offset by the positive benefits from new primary investment”. Given the nature of our work in
global and social issues, we believe we have a reasonable likelihood of being positive
beneficiaries of some new primary investment.

At a local level, our offices are leased, not owned, and due to the nature of our business,
our biggest asset is our people. In 2022, we mapped climate risk against areas at particular
risk from climate change, rather than pinpointing exact office locations.

Strategic ReportM&C Saatchi Plc Annual Report 2023RECOMMENDED
DISCLOSURES

OUR DISCLOSURE

We worked on specific “at-risk” cities and identified:

•

London,* New York,* Sydney, Melbourne, Cape Town, Dubai,* Abu Dhabi,* Kuala Lumpur,*
Shanghai,* Jakarta,* Hong Kong, and Singapore.

We undertook specific analysis of climate risks by office location, time horizon and headcount
as of September 2023 (chosen as most representative of our headcount throughout 2023).
Due to business restructuring, we are expecting these percentages to change slightly in 2024.
The percentages below relate to areas that have already experienced the climate impacts
being described and for whom climate change increases the likelihood and severity of
recurrence. In the short term:

•

31% of our employees are in regions at extreme risk of wildfire.

37% of our employees are in regions at increased risk of hurricanes, typhoons and cyclones.

44% of our employees are in regions at extreme risk of prolonged extreme heat (including
locations such as Dubai and Abu Dhabi which are forecast to become “unliveable” by the
second half of this century).

94% of our employees are in cities with significant areas that are predicted to be below the
high-water tide level by 2030. Rising sea levels can result in permanent flooding of low-lying
areas, increased frequency, extent and depth of tidal inundation and beaches moving further
inland or eroding. Likely local policy responses include increased municipal taxes to improve
flood defences and measures to improve the safety of people and property during extreme
weather events.

We are mitigating these risks in the following ways:

•

In line with the UK Government’s commitment to a net-zero economy through the Climate
Change Act 2008 (2050 Target Amendment) Order 2019, we are committed to be net zero by
2050 and furthermore have committed to reducing our own carbon footprint by 50% by 2030.
As a UK Government supplier, we have developed our transition plan in line with the UK
Government’s commitment and have produced an annual carbon reduction plan outlining
our actions, which, in line with government requirements, is published on our website.

We are also exploring the concept of advertised emissions and are seeking to increase our
revenue from planet-positive campaigns to play our role both in accelerating the low carbon
transition and reducing the global emissions that are causing climate change (see pages 76
and 77).

Improving energy efficiency and installing on-site renewables, where possible, to reduce the
cost of energy and minimise the risk of supply disruption.

Leasing not buying office space, to minimise financial exposure to damage to buildings
as a result of climate change.

Reviewing our data management and security solutions in the light of physical climate risk.

Continuing to use our digital capabilities to collaborate and offer our services remotely.

Increasing cross-business collaboration, which means we are better able to overcome
location-specific disruption.

Continuing to understand the needs of our people and invest in employee wellbeing.

Continuing investment in business continuity planning and support for hybrid working
to ensure that employees have an alternative working environment.

* Most at risk, even at the most optimistic temperature rise scenarios according to the “Climate Central Coastal Risk Screening Tool – 1.5°C warming scenario”.

Strategic ReportM&C Saatchi Plc Annual Report 2023RECOMMENDED
DISCLOSURES

OUR DISCLOSURE

PHYSICAL RISKS TO OUR CLIENT PORTFOLIO

Our business is dependent on the success of our clients’ businesses. In 2023, we analysed
the physical climate risk exposure of our major clients (over £1m in revenue to us) and their
progress in mitigating those risks. Results were mixed, ranging from high exposure that is
well-mitigated, through high exposure that could be better mitigated, to clients that have
medium exposure to climate risk. Some of our clients (e.g. Telco clients) provide vital climate
risk mitigation services to others (see page 78 for more information). The next step is to
understand our role in helping our clients mitigate their risks.

Transition risks (short term):

We undertake work for UK Government departments. As part of the bidding process this year,
some departments have mandated that suppliers set net-zero targets and report their
progress against them annually. In order to be able to bid for this work, we will need to
continue demonstrating good progress in this area.

The sustainability and climate-related questions we are being asked by the rest of our client
portfolio are becoming increasingly sophisticated. In 2024, we will review client RFPs to ensure
we are able to respond and fully demonstrate compliance with their requests.

Advertising agencies are coming under increased scrutiny for their work with fossil fuel clients,
with some high-profile campaigns against some larger networks this year. In addition,
membership of the “Clean Creatives Group” has nearly doubled to 860 agency members and
2,000 creatives, all of whom have agreed not to work for fossil fuel clients. They continue to roll
out their pledge for companies to confirm that in their future requests for proposals and
agency reviews, they will ask agencies to avoid work for fossil fuel clients.

Our exposure to fossil fuel clients without a viable transition plan to renewable energy has
doubled since 2022 but remains low at ~3% of our client revenue (~£5.5m).

Transition risks (medium to long-term):

The mispricing of climate risk throughout the global economy (see explanation in physical risks
section above), due to the use of financial scenarios that fail to account for tipping points and
second order impacts, create a major transition risk to all economic actors. Artificially benign
results can delay action, because policymakers and business leaders do not adequately
capture the risks. We do not believe 50–60% global economic downside risk scenarios are
unreasonable given the consistent pattern of corrections over time, such as the increasing
downward revisions of “safe” temperature levels towards 1.5˚C.

We therefore support calls for net zero to become part of fiduciary duty, as if we do not
mitigate climate change, it will be exceptionally challenging to provide financial returns.

Transition risks to our client portfolio:

Following the French Government’s ruling in 2022, which ended the advertising of fossil fuels
and banned domestic short-haul flights, we continue to review our exposure to businesses
that are at higher risk of similar regulation. In 2023 our percentage of revenue from:

• Fossil fuel companies that do not have credible transition plans to shift to renewables was

-3%.

• Automotive companies that do not have a science-based target set with the SBTi was less

than 1%.

• Travel and tourism sector companies that are reliant on flying was less than 1%.

Strategic ReportM&C Saatchi Plc Annual Report 2023RECOMMENDED
DISCLOSURES

OUR DISCLOSURE

Other transition risks:

• Loss of talent due to employees’ preference for working with companies with apparently

greener credentials.

• There is an increased focus on greenwashing in advertising, particularly in the UK, and
increasingly in Europe, with potential financial and reputational impacts. The rules can
be complex. We must be particularly careful that the creative elements of our campaigns
are not called out under greenwashing codes.

• Increased operating costs due to increasing utility prices.

We are mitigating these risks in the following ways:

• We have had our near-term science-based target verified by the SBTi, and are targeting a

50% reduction in Scope 1, 2 and 3 emissions by 2030 (refer to pages 67 and 68 for more details).
• We are increasing the percentage of revenue we generate from planet-positive campaigns
(we now have data on revenue from planet-positive campaigns for July–December 2023
and will use this to calculate a baseline in 2024).

• Delivering our climate commitments and building sustainability into marketing, talent

onboarding and also learning and development.

• Asking teams to run a three-step check process scrutinising all new business opportunities

for climate risks, and to refer concerns to the central team.

• Ongoing training and engagement with our people on how to avoid greenwashing in

creative work.

• Seeking new “low carbon” clients.
• Developing a more thorough understanding of the value of different sectors in our client
portfolio (this will help us ensure that our portfolio is diversified against key physical and
transition risks).

• Reducing operating costs by generating operational efficiencies.

OUR CLIMATE OPPORTUNITIES

The way we work – work spaces, people experience and purchasing:

• Energy efficiency initiatives in the buildings we occupy will help reduce our energy usage

and cut energy bills, especially with increasing global energy costs. For example, our London
head office continues to benefit from energy efficiency improvements made in the HVAC
system in 2019, which has a payback period long before the end of the lease.

• We have undertaken efficiency measures and are hoping to install rooftop solar panels in
one of our South African offices in 2024, which we expect to produce cost savings and
increased energy security.

• The use of video conferencing has improved employee experience and reduced the amount

of time teams spend travelling, e.g. in taxis, at airports, etc.

• In the future, we envisage the use of local production teams and studio VFX as an opportunity

not only to reduce GHG emissions, but also to help save costs for our clients.

• Talent within our industry is increasingly keen to work for employers that take sustainability
seriously. Demonstrating our commitment to sustainability means that we can continue to
attract and retain the best talent, particularly if we can demonstrate tangible progress.
• We are exploring reducing the cost of debt, through the use of a sustainability-linked RCF.

The work we do – how we service our clients, develop campaigns and grow our business:

• Many of our clients are considering climate issues in their businesses and their

communications. Embedding climate considerations in responses to briefs creates
opportunities for us to expand our offering to existing clients.

• Growing our body of planet-positive work will help us win clients who are looking for

agencies that can deliver on sustainability goals and campaigns.

Strategic ReportM&C Saatchi Plc Annual Report 2023RECOMMENDED
DISCLOSURES

Description of the
impact of climate-
related risks and
opportunities on
the organisation’s
business, strategy
and financial
planning.

Description of the
resilience of the
organisation’s
strategy, taking
into consideration
different climate-
related scenarios,
including a 2°C
or lower scenario.

OUR DISCLOSURE

In preparing the Annual Report and Accounts, the Directors have considered that the current
impacts of climate change on the Group is manageable under the existing strategy. However,
we are concerned with the current rate of progress globally in meeting climate goals. As the
WTW’s Thinking Ahead Institute “Pay now or pay later?” report states “if climate tipping points,
that could magnify the costs of inaction, are considered, we could see a 50–60% downside to
existing financial assets in a business-as-usual scenario where climate risks are not
addressed”. This would be catastrophic to most businesses, including ours. It goes on to state
that “in contrast, taking action to transition to a well-below 2°C world might lead to a loss of
15% of existing assets which could be partly offset by the positive benefits from new primary
investment”. Given the nature of our work in global and social issues, we believe we have a
reasonable likelihood of being positive beneficiaries of some new primary investment.

Specific financial cost provisions have not yet been allocated to climate-related risks, although
this will be considered from the mid-2020s as the climate crisis develops. However, we have
made significant financial investment in energy-saving measures around the Group. This
reflects our determination to achieve the target of halving Scope 1, 2 and 3 emissions by 2030.
Please see pages page 67 and 92 for details of the schemes we are undertaking in our largest
offices in the UK, Australia and South Africa.

Increasing operating costs due to increasing utility prices are already being incorporated in
the Group’s financial planning, but we hope to partially offset these through operational
efficiencies and energy-saving measures.

We are investigating sustainability-linked loans which will reduce the costs of debt servicing,
and we hope to be able to incorporate these savings in future financial planning.

We consider the potential impact of climate-related risks as strategically significant and
include ESG as a metric in bonus calculations. For example, please refer to page 127 for details
of the ESG targets for Executive Directors.

Under our existing strategy, we have built our team, competencies and technological capabilities.
This has involved hiring specialist ESG expertise, and introducing a new Group-wide ESG data
platform. Selling climate-related services to clients is an opportunity for us. Please also refer
to page 86 for more details about opportunities.

We are aware that physical and transition risks associated with climate change are constantly
developing. Given the nature of our business, including our limited fixed asset exposure, and
our ability to pivot the provision of our services remotely and across our global locations, we
have not modelled specific scenarios at this stage. We believe that an orderly transition to a
world where temperatures have increased by 1.5°C is unlikely. We therefore anticipate that our
strategy will have to evolve accordingly. These strategy evolutions are not anticipated to have
a significant impact on our P&L either, because a) the cost of undertaking them will be offset
by the resulting ability to remain eligible for client work (e.g. energy efficiency and on-site
renewables will help us meet client targets in this area) or b) because they are initiatives we
would be undertaking anyway as a business (e.g. enhancing our digital capabilities to
improve remote collaboration over time).

Specific activities under our existing strategy and potential evolutions are outlined on the
next page:

Strategic ReportM&C Saatchi Plc Annual Report 2023RECOMMENDED
DISCLOSURES

OUR DISCLOSURE

Existing activity in physical climate
risk strategy

Possible future evolutions to remain resilient

Improving energy efficiency and installing
on-site renewables where possible to
reduce the cost of energy and minimise
the risk of supply disruption.

We may need to expand this approach
to other utilities, such as water in areas
with high likelihood of water shortages
(e.g. Cape Town).

Reviewing our data management
and security solutions in the light
of physical climate risk.

Continuing to use our digital
capabilities to collaborate and
offer our services remotely.

We envisage stronger engagement on this issue
with our suppliers over time where necessary.

Over time we may need to enhance these
digital capabilities due to changing products
and services on the market and increased
client and employee expectations.

Increasing cross-business collaboration,
which means we are better able to
overcome location-specific disruptions.

We will continue to evolve our strategy to promote
cross-business collaboration and identify those
areas and businesses in most need.

Continuing to understand the
needs of our people and invest
in employee wellbeing.

Existing activity in climate transition
risk strategy

Closure of M&C Saatchi LIFE and
realignment to provide more holistic
client-facing sustainability support
to Group companies.

Membership of Ad Net Zero, the
primary industry body for addressing
the climate impacts of advertising
and communications.

Training our people
on greenwashing issues.

We will regularly review our approach to employee
wellbeing to ensure that it remains fit for purpose.

Possible future evolutions to remain resilient

We are continuing to review our approach to how
we provide client-facing services in this area.

Likelihood of more stringent eligibility requirements
for membership of Ad Net Zero over time. For
example, in 2024 a science-based target (which
we already have in place) will be a mandatory
requirement for members.

Definitions and approaches to greenwashing are
evolving. We will need to ensure that our training
is not only up to date and global (to prevent
spill-over across regions) but also robust enough
to enable Group companies to screen all client
work for greenwashing before it goes live. Some
work where we are not in control of the outcome
(e.g. the use of social media influencers) may
require the development of different approaches.

Delivering our near-term science-based
target as validated by the SBTi (halving
our Scope 1, 2 and 3 emissions between
2019 and 2030) and developing and
validating a net-zero target with the SBTi.

We are preparing for the likelihood of the inclusion
of “advertised/serviced emissions” within the scope
of the SBTi methodology over time and may have
to re-baseline our submissions as a result.

Strategic ReportM&C Saatchi Plc Annual Report 2023RECOMMENDED
DISCLOSURES

OUR DISCLOSURE

Continuing to expand the proportion
of our offices powered by
renewable energy.

Including GRI and TCFD data
in our Annual Report.

Reviewing new clients against
our three-step checks.

Using questionnaires with
existing clients to spark
sustainability conversations.

There is controversy over the efficacy of Renewable
Energy Guarantees of Origin (“REGO”) backed
certificates in driving the growth of renewable
energy. In the future, we may need to allow for
increased costs or different approaches in this area.

The ESG reporting landscape is constantly changing.
In 2022 we undertook voluntary TCFD reporting.
This is now mandatory. We are considering how
to incorporate ISSB reporting in future years.

We regularly review new requirements and
voluntary reporting initiatives to ensure we are
aligned to requirements and expectations.

We consider our three-step check process to
be an entry-level tool. Over time we expect to
develop a more robust methodology and a
clearer cost-benefit analysis related to our
approach to new clients.

We anticipate that these questionnaires will
evolve over time, particularly in the light of
emerging climate risks and opportunities in
key sectors/geographies, and also as our
clients become better informed in this area.

Training our people to be climate
literate and to understand
greenwashing issues.

Our training is not static but continues to
evolve with the changing needs of our
people and business.

Seeking new climate-positive clients.

Continuing to explore sustainable
aviation fuel as an opportunity
for future mitigation of business
travel emissions.

Loss of talent due to employee
preferences to work with companies
with apparently greener credentials.

This is an emerging part of our strategy, which will
evolve over time as climate solutions develop as
well as methodologies for assessing their efficacy
and transparency metrics.

We expect the use of sustainable aviation fuel to
become an increasingly mainstream approach to
reducing GHG emissions from necessary long-
haul flights. However, we are aware that supply is
expensive and will remain constrained for some
years. We hope that early entry into this space
will secure some degree of resilience for us but
anticipate that the market will move swiftly once
it becomes mainstream. Our priority is, of course,
to reduce the need to fly altogether.

We anticipate that employee preferences will
evolve over time. We aim to monitor the changing
landscape closely, to meet and exceed their
needs where possible, and apply appropriate
cost-benefit analysis to problems which arise.

Strategic ReportM&C Saatchi Plc Annual Report 2023Risk Management

RECOMMENDED
DISCLOSURES

Description of
the organisation’s
processes for
identifying and
assessing climate-
related risks.

Description of
the organisation’s
processes for
managing climate-
related risks.

Description of
how processes
for identifying,
assessing and
managing climate-
related risks are
integrated into
the organisation’s
overall risk
management.

OUR DISCLOSURE

At a Group level, risks and their relative status in the Group-wide risk register are discussed at
Audit & Risk Committee meetings. They do not yet consider regulatory requirements such as
limits on emissions, as historically our business has sat beneath emissions thresholds, but do
consider other regulatory requirements such as those related to greenwashing. There is currently
no specific climate change risk terminology used, and we do not reference existing risk
classification frameworks. The Audit & Risk Committee assesses the completeness of the risk
register (see page 108 for a description of our audit and risk management process).

Individual agencies also maintain their own risk registers and can escalate specific climate-
related risks for managing and for potential inclusion in the Group risk register.

The Finance Team and Group Sustainability Director are responsible for reviewing and assessing
the impact of emerging regulatory requirements in this area and any risks or risk mitigation
which these might present.

The Group Sustainability Director assesses and advises the Board and Audit & Risk Committee
on the management of any climate-related risks escalated to Group level or at individual
agency level through the annual risk review process. Please see page 108 for more details
of our overall risk review process.

In addition, the ESG Leadership Team forms part of the Group’s governance structure and
provides a forum to involve the most senior stakeholders in discussions around sustainability
and risk. Its members include the Chief Financial Officer and Chief People and Operations
Officer as well as the Group Sustainability Director, and papers are shared with the Executive
Chair.

The Audit & Risk Committee also assesses the adequacy of any climate risk mitigation shown
in the current risk register and suggests additional mitigation where necessary to manage
climate-related risks.

The development and measurement of progress towards achieving organisation-wide targets,
client response targets and local targets is a vital climate risk management tool. These
processes are managed by the Group Sustainability Director with support from other
departments.

We continue to include climate-related risks in the risk identification, assessment, escalation and
management processes in the same way as other risks. Physical and transition climate risks are
included in the scope of the Audit & Risk Committee. Because we are a people-based business
and own no buildings, physical climate-related risks have been assessed as less material and
lower priority.

The Audit & Risk Committee reviews and monitors the Group’s risk management processes
and related compliance activities. This includes the management of climate-related risks.

Strategic ReportM&C Saatchi Plc Annual Report 2023Metrics and Targets

RECOMMENDED
DISCLOSURES

Metrics used by
the organisation
to assess climate-
related risks and
opportunities in
line with its
strategy and risk
management
process.

Disclose Scope 1, 2
and, if appropriate,
Scope 3 GHG
emissions, and
the related risks.

Description of the
targets used by the
organisation to
manage climate-
related risks and
opportunities and
performance
against targets.

OUR DISCLOSURE

There is currently no sector-specific metrics guidance for advertising and marketing companies
in the TCFD Annex or under the more recently published IFRS S2. Having reviewed the TCFD
Annex metrics for non-financial groups and their applicability to an advertising and
communications company that operates out of leasehold properties, we are using the following
metrics which we feel are most appropriate to our current evaluation of our climate risks and
opportunities:

•
•
•

Scope 1, 2 and 3 GHG emissions.
Business travel emissions per business.
Number of our businesses with high physical climate risks that have appropriate mitigation
plans in place.
% of revenue at risk from climate transition.
% of overall revenue from planet-positive campaigns (see pages 76 and 77 for details).
Supply chain metrics (see pages 75 and 76 for details of how we are developing supply chain
metrics in 2024).

Please refer to page 127 for details of how these metrics are included in remuneration policies.

Refer to page 67 for details of Scope 1, 2 and 3 emissions.

Organisation-wide targets

As part of our net-zero target setting, we have had our 1.5°C near-term target validated by the
SBTi. This includes a commitment to reducing our absolute Scope 1, 2 and 3 emissions by 50% in
2030 compared to our 2019 baseline. Our key internal KPIs to measure progress are as follows:

•
•
•
•

7% year-on-year reduction in Scope 1 and 2 emissions between 2019–2030.
7% year-on-year reduction in air travel emissions between 2019–2030.
7% year-on-year reduction in purchased goods and services emissions between 2019–2030.
Installation/purchase of renewable energy according to our renewable energy pathway.

Our near-term target is consistent with the statement we made in last year’s Annual Report and
Accounts. Given the need for global emissions to be cut quickly and deeply, to limit the global
temperature rise to 1.5°C, we have prioritised activities contributing to delivery of our near-term
target. There has been a slight delay in finalising our net-zero target for submission to the SBTi.
We are aiming to submit to the SBTi in the first half of 2024.

We also have targets to:

•
•

Grow the percentage of revenue from planet-positive campaigns.
Review the environmental approaches of new clients.

Following our pilot, in July we included a marker in our finance system to begin collecting data
on revenue from planet and people-positive campaigns, which gives us six months’ worth of
data. We have therefore not yet set targets for this climate opportunity.

Strategic ReportM&C Saatchi Plc Annual Report 2023RECOMMENDED
DISCLOSURES

OUR DISCLOSURE

Client response targets

Our clients are increasingly asking for information related to our climate performance. We have
set a target of:

•

100% of client requests for ESG information to be answered accurately and in a timely manner,
which we have continued to meet annually.

Continuing to bid for client work as a result of meeting their sustainability performance
requirements.

This second measure is harder to assess, as clients do not tend to feed back to agencies if they
fail to meet sustainability performance requirements across ESG. Instead, we will be undertaking
a review of client requests and our ability to meet their expectations in the first quarter of 2024.
However, given our science-based target and performance against it to date, we do not believe
that our climate-related performance is a barrier to meeting sustainability performance
requirements.

Local targets

We source renewable energy for our head office at 36 Golden Square, London. We also
undertook a range of energy efficiency upgrades to our hardware between 2019–2021, and
we continue to see the benefits of these measures. In last year’s TCFD Report, we stated that in
January 2023, our Australia business would be moving to a renewable energy tariff. We have
since discovered that this was a misunderstanding based on a misreading of information from
their energy supplier. Our Australia office has budgeted for renewable energy for 2024.

In our South African business, we have now undertaken an energy efficiency project and are
exploring installing solar panels on our first property in Johannesburg in 2024. As part of our
energy transition plan, which includes KPIs for renewable energy purchasing in locations where
this is possible, and renewable energy installation in relevant sites in South Africa, we anticipate
further on-site solar in South Africa.

Our overall KPI for renewable energy is a 50% reduction in market-based Scope 2 emissions
in 2030 compared to 2019.

Strategic ReportM&C Saatchi Plc Annual Report 2023NON-FINANCIAL AND SUSTAINABILITY INFORMATION STATEMENT

This section of the Strategic Report constitutes the Company’s Non-Financial and Sustainability Information
Statement, produced in accordance with section 414CB of the Companies Act 2006. The information listed is
incorporated by cross-reference and the table below, and the information it refers to, is intended to help our
stakeholders understand the Company’s position on key “non-financial matters”.

NON-FINANCIAL
MATTER
Employees

RELEVANT POLICIES/
DOCUMENTS THAT
GOVERN OUR APPROACH*
Group DE&I Policy;
Whistleblowing Policy;
and our planet and
people commitments

RISK MANAGEMENT AND
ADDITIONAL INFORMATION
See:
• ESG section (planet and people
commitments) pages 69 to 77
• Engagement with stakeholders

(employees) page 62

• Report of the Nomination

Committee (culture and diversity,
equity and inclusion) page 115

ASSOCIATED KPIS
AND OTHER
PUBLISHED METRICS
See:
• ESG section (planet and
people commitments)
pages 69 to 77

• Report of the Nomination
Committee (culture and
diversity, equity and
inclusion) page 115

Human rights

Supplier Code of Conduct,
Child Labour Policy,
Modern Slavery Statement
and our planet and
people commitments

See:
• Planet and people commitment 8

See:
• Planet and people

page 75

commitment 8 page 75

• Engagement with stakeholders

• Our Modern Slavery

(suppliers) page 63

Statement on our website

Social matters

Our planet and people
commitments

Anti-corruption
and bribery

Anti-Fraud Policy,
Anti-Corruption and
Bribery Policy and
Whistleblowing Policy

• Our Modern Slavery Statement

on our website

• For anti-greenwashing training,
see ESG section pages 74 and 75
• For artificial intelligence risks see
principal risks and uncertainties
page 58

• For anti-corruption and bribery,

see principal risks and
uncertainties page 60

• For whistleblowing, see people

and planet commitments pages
69 to 77 and engagement with
stakeholders (employees) page 62

• For anti-greenwashing, see
ESG section (planet and
people commitments)
pages 74 and 75

• For whistleblowing, see
ESG section (planet and
people commitments)
pages 69 to 77

Environmental
matters

Environmental Policy,
Waste Policy and our
planet and people
commitments

See:
• ESG section (planet and people
commitments) pages 69 to 77
• S172(1) statement (environmental

See:
• ESG section (planet and
people commitments)
pages 69 to 77

impact) page 65

• TCFD Report pages 81 to 92

streamlined energy and carbon
reporting page 67

* All policies mentioned here are held on our global intranet.

STRATEGIC REPORT

The Executive Chair’s Statement (pages 12 to 19), Our Business Model (pages 26 and 27), Financial Review
(pages 48 to 56), Principal Risks and Uncertainties (pages 57 to 61), Engagement with Stakeholders (pages 62
and 63), Section 172 Statement (pages 64 and 65), Environmental, Social and Governance (pages 66 to 93)
and Non-Financial and Sustainability Information Statement (page 93) together form the Strategic Report.

The Strategic Report is approved by order of the Board.

VICTORIA CLARKE
General Counsel & Company Secretary
11 April 2024

Strategic ReportM&C Saatchi Plc Annual Report 2023M&C Saatchi Plc Annual Report 2023

Corporate Governance

The Street Store, M&C Saatchi Abel

94
94

Corporate GovernanceM&C Saatchi Plc Annual Report 2023corporate governance reportcorporate governance reportM&C Saatchi Plc Annual Report 2023

Corporate Governance

corporate
governance
report

95
95

Corporate GovernanceM&C Saatchi Plc Annual Report 2023corporate governance reportcorporate governance reportM&C Saatchi Plc Annual Report 2023

Corporate Governance

EXECUTIVE Chair’s
INTRODUCTION

ZILLAH BYNG-THORNE
Executive Chair

“The core objective of the
Board is to create and deliver
the long-term success of the
Company and long-term
returns for shareholders.”

I am pleased to present the Corporate Governance
Report for the year ended 31 December 2023.

BOARD CHANGES

I joined the Board in June as Non-Executive Chair
alongside Chris Sweetland, a non-independent
Non-Executive Director serving as a representative
of Vinodka Murria and AdvancedAdvT Limited.

Following Moray MacLennan stepping down as a
director in September 2023, I was appointed as
Executive Chair of the Company on an interim basis
until a Chief Executive Officer could be found. On
22 February 2024, the Company announced the
proposed appointment of Zaid Al-Qassab as Chief
Executive Officer, with such appointment to be
effective on 13 May 2024 subject to the completion
of normal regulatory due diligence by the Company’s
Nomad. Zaid’s appointment concluded a
comprehensive search process which commenced
following the Company’s announcement on 24 July
2023 that Moray MacLennan intended to retire from
his role as Chief Executive Officer of the Company.

The regulatory due diligence process was not
expected to be completed prior to the publication of
the notice of the Company’s Annual General Meeting
to be held on 16 May 2024, and the Board confirms
that it continues to expect that Zaid’s appointment as
Chief Executive Officer should take effect as planned
on 13 May 2024 and that he will formally be appointed
as a Director of the Company from the conclusion
of the Annual General Meeting of the Company on
16 May 2024. At which point, I will return to my role
as Non-Executive Chair of the Company.

I am delighted that the Company has attracted
someone of Zaid’s calibre to lead the Company
into its next phase of growth.

96
96

Corporate GovernanceM&C Saatchi Plc Annual Report 2023At the beginning of 2024, Dame Heather Rabbatts
joined the Board as Senior Independent Director.
I would like to take this opportunity to welcome each of
the new Board members. Refreshing and maintaining
the Board with diverse expertise and backgrounds is an
important part of ensuring ongoing good governance,
and I know that Chris, Dame Heather and Zaid will
play a key role in this looking ahead.

These appointments followed the departure of
Moray MacLennan, Gareth Davis and Lisa Gordon.
On behalf of the Board, I would like to thank Moray
for his leadership over the last c30 years and both
Lisa and Gareth for their dedication and contribution
to the Company.

BOARD ROLE AND EFFECTIVENESS

The core objective of the Board is to create and deliver
the long-term success of the Company and long-term
returns for shareholders. This requires the Board to
set the Company’s strategic aims, ensure that the
necessary financial and organisational structures are
in place to achieve the Company’s objectives, provide
oversight of management’s performance in delivering
against strategy on a day-to-day basis and set the
Company’s risk appetite. My role as Chair is to lead the
Board and to ensure that the Company has a Board
which works effectively in all aspects of its role.

Before each Board meeting, we hold a Non-Executive
Director only meeting. This provides the Non-Executive
Directors with the opportunity to discuss key matters
independently of the Executive Directors and to agree
alignment on areas we may want to probe in the
meeting. In addition, this also provides a forum to
review the performance of the Executive Directors.

Central to setting the correct tone is the review of
the Board’s own performance. Our last external
assessment was undertaken for 2021. The external
assessment planned in 2022 was postponed due to
the takeover activities. We carried out an external
assessment of how the Board performed during 2023.
You can read more about how it was carried out and
the findings on page 103.

The responsibilities of the Board and its committees
and the way in which they uphold high standards
of corporate governance are set out on page 104.

SHAREHOLDER ENGAGEMENT

We took the opportunity to engage with our
shareholders through the conduct of a consultation on
the voting outcomes of the Company’s 2023 Annual
General Meeting, as four resolutions were passed with
more than 20% votes against. We were very interested
to hear the concerns of shareholders and to seek the
reasons for any votes against or withheld. We believe
that active dialogue with representatives of
shareholders throughout the year has allowed us to
address their concerns. In particular, we considered
the views of shareholders when settling the
remuneration package of the new Chief Executive
Officer of the Company.

We have always recognised that it is vital to maintain
good communication between our various stakeholder
groups and executive leadership. We have achieved this
in a variety of ways in 2023, including through holding
a Capital Markets Day, the investor roadshows and
regular meetings with key shareholders (as requested)
aimed at keeping active dialogue with representatives
of shareholders. You can read more about our
shareholder engagement on pages 62 and 63.

STATEMENT OF COMPLIANCE

The Company complies with the UK Corporate
Governance Code issued by the Financial Reporting
Council (FRC) in April 2016 (the “Code”). Whilst as
an AIM-listed entity the Company is not required
to comply with the Code, the Board believes that it
represents best practice.

The Board confirms that throughout the year ended
31 December 2023, the Company applied the main
principles and complied with the relevant provisions
set out in the Code, save for the absence of a Senior
Independent Director on the Board during the period
from 15 June 2023 to 20 January 2024 (which also
meant that half of the Board was not independent for
the same period), and the reporting of CEO pay ratios,
employee engagement to explain executive
remuneration and how the factors within Provision 40
of the Code have been addressed. Reasons for these
exceptions can be found on page 106.

We are also looking ahead to the updated Code and
will ensure we are in compliance, where we believe
appropriate, with the updated provisions as they come
into effect.

The Code can be found on the FRC website:
www.frc.org.uk.

Corporate GovernanceM&C Saatchi Plc Annual Report 2023COMMITTEES OF THE BOARD

The Board is supported by the Audit & Risk Committee,
Nomination Committee and Remuneration Committee.
The Board appoints the committees’ members. The
Reports of the Audit & Risk Committee and the
Remuneration Committee can be found on pages 107
to 112 and 116 to 131, respectively, whilst the Report of
the Nomination Committee can be found on pages 113
to 115. Each committee has access to external advice,
as it considers appropriate. The Company Secretary, or
her nominee, acts as Secretary to the committees. The
terms of reference of each committee are reviewed
regularly, updated as necessary to ensure ongoing
compliance with best practice guidelines and must be
approved by the Board. Copies of the committees’
terms of reference are available from the website at
https://www.mcsaatchiplc.com/governance.

NOTICES AND DIRECTORS’ CONFLICTS OF INTEREST

The notices of Board meetings, agendas and
supporting documents are formally circulated to
the Board in advance of Board meetings as part
of the Board papers. Therefore, Directors have the
opportunity to request that any agenda items be
added that they consider appropriate for discussion.

Directors have a statutory duty to avoid conflicts of
interest with the Company. The Company’s articles of
association allow the Directors to authorise conflicts
of interest, and the Board has adopted a policy for
reviewing and managing conflicts of interest as they
arise. Each Director must disclose the nature and
extent of any conflict of interest arising generally or in
relation to any matter to be discussed as soon as the
Director becomes aware of its existence. Directors
must also disclose their shareholdings and any
changes to those that have occurred. The Board is
aware of the other commitments and interests of its

Directors, and changes to these commitments and
interests are reported by the Directors. Whilst the
Board recognises that Chris Sweetland could be
regarded as being interested in any agreement
or arrangement to be entered into in the future
with Vinodka Murria, AdvancedAdvT Limited or
their associates by virtue of being an appointee
recommended by both Vinodka Murria and
AdvancedAdvT Limited, the Board does not believe
there to be conflicts of interest for Chris Sweetland
as a result of being such an appointee in all
circumstances. A review of Directors’ conflicts of
interest is conducted at least annually.

EXECUTIVE LEADERSHIP TEAM

The Executive Leadership Team (ELT) replaced the
Executive Committee (Exco) in the second half of the
year. It is led by the Executive Chair and currently
consists of 12 individuals who lead the key business
lines responsible for the Group’s revenue or sit in the
central team of the Group. Monthly business meetings
between the ELT members (and before that, the Exco
members) assisted with the effective operation of our
business and the delivery of the results. The ELT meets
monthly to consider the overall financial performance
of the Group, the strategic priorities and also the
people strategy. During the course of the year,
considerable time was spent on the Group’s marketing
strategy and the global efficiency programme.

Over the last year, we have made considerable
progress on further developing our governance
systems to enable the business to deliver its strategy,
generate shareholder value and safeguard the
interests of all stakeholders.

ZILLAH BYNG-THORNE
Executive Chair
11 April 2024

Corporate GovernanceM&C Saatchi Plc Annual Report 2023M&C Saatchi Plc Annual Report 2023

board of
directors

The Code requires the Board and its
committees to have an appropriate balance
of skills, experience, independence and
knowledge of the Company, to enable them
to discharge their duties and responsibilities
effectively and in line with the corporate
strategy. Members of the Board bring a
wealth of knowledge and experience to the
discussions, maintain memberships of a
number of professional bodies and ensure
their skill sets are constantly developed.

The Directors of the Company who were in
office during the year, and up to the date of
signing the financial statements, are as set
out below. Dame Heather Rabbatts was not
in office during the year but was appointed
to the Board on 22 January 2024.

Zillah Byng-Thorne, 49
EXECUTIVE DIRECTOR

Key strengths: Wealth of experience across media
and technology businesses, spanning online
gaming, digital media and ecommerce. Zillah is
a chartered management accountant (CIMA)
and qualified treasurer (ACT). She has an MA in
Management from Glasgow University and an MSc
in Behavioural Change from Henley Business School.

Role: Executive Chair. Responsible for the Group
strategy, performance and governance and Chair
of the Nomination Committee. Leads the Group
and proposes the strategy to be approved by the
Board, accountable for delivery of strategic and
financial objectives.

Joined the Board: June 2023.

Other major commitments: Chair of Trustpilot Group
plc. Non-Executive Director of Ballast Group
Holdings Limited, Globalwebindex Holdings Limited,
Norwegian Cruise Line Holdings Ltd and MiQ.

Previous experience: Chief Executive Officer of
Future plc from 2014 to March 2023, having
previously served as Chief Financial Officer, and the
Chief Financial Officer of Trade Media Group (now
Auto Trader Group plc) from 2009 to 2012, and
Interim Chief Executive Officer from 2012 to 2013.
Prior to this, Zillah was Commercial Director and
Chief Financial Officer at Fitness First Limited,
and Chief Financial Officer of Thresher Group.

Committees: Nomination Committee (Chair) and
Remuneration Committee.

Independence: Zillah Byng-Thorne was considered
to be independent on appointment and the Board
is satisfied that Zillah remains independent in
character and judgement and is free from any
relationship or circumstance which is likely to
affect or could appear to affect her judgement.

Corporate GovernanceM&C Saatchi Plc Annual Report 2023Bruce Marson, 54
EXECUTIVE DIRECTOR

Key strengths: Finance leadership and creating
high-performing teams. Driving improved business
performance and strengthening controls. Deep
knowledge of the Company’s finances. Bruce is
a chartered management accountant (CIMA)
and has a BA Hons degree in Geography from
Durham University.

Louise Jackson, 56
INDEPENDENT NON-EXECUTIVE DIRECTOR

Key strengths: Extensive remuneration experience
through roles as Chief People Officer and as a
Board advisor on people, organisation, change
and transformation. Experience with organisation
design, restructuring, cost reduction, talent and
culture change work for a large number of
household names including many in media.

Role: Chief Financial Officer. Leads the Finance
department and takes responsibility for a number
of strategic and cross-functional initiatives.

Role: As a Non-Executive Director, provides strategic
advice, monitors management performance and
chairs the Remuneration Committee.

Joined the Board: April 2023.

Joined the Board: March 2020.

Other commitments: None.

Previous experience: Deputy and Interim Chief
Financial Officer at the Company (2021–2023),
Global Finance Director of Advertising at Technicolor
(2019–2021) and Group Financial Controller at
Dentsu Aegis Network (2016–2018).

Committees: None (attends committees by invitation).

Other commitments: Senior Vice President People
and Talent at Tony Blair Institute for Global Change.

Previous experience: Group People Director of
Selfridges Group Limited, Human Resource Director
of Kyowa Hakko Kirin Co Limited, Senior Partner in
Leadership and Talent Consulting of Korn Ferry
International Limited, Group People Director of
Mothercare plc and Chief Executive and co-
founder of HR consultancy firm 7days Limited.

Committees: Audit & Risk Committee, Nomination
Committee and Remuneration Committee (Chair).

100

Corporate GovernanceM&C Saatchi Plc Annual Report 2023Colin Jones, 63
INDEPENDENT NON-EXECUTIVE DIRECTOR

Dame Heather Rabbatts, 68
INDEPENDENT NON-EXECUTIVE DIRECTOR

Key strengths: Experienced former FTSE 250 media
sector Chief Financial Officer with particular expertise
in business strategy, corporate finance, investor
relations and audit/remuneration/risk committees.

Role: As a Non-Executive Director, provides strategic
advice, monitors management performance and
chairs the Audit & Risk Committee.

Joined the Board: February 2020.

Other commitments: Non-Executive Chair of Centaur
Media Plc, Non-Executive Director and Remuneration
Committee Chair of Gateley (Holdings) Plc and
Governor of The City Literary Institute.

Previous experience: Chief Finance Officer of
Euromoney Institutional Investor PLC (1996–2018).

Committees: Audit & Risk Committee (Chair),
Nomination Committee and Remuneration Committee.

Key strengths: Corporate transformation, strategy,
business development, acquisitions and investor
relationships.

Role: As the Senior Independent Director, supports
the Chair in her role, and acts as an intermediary for
other Non-Executive Directors. Also provides strategic
advice and insight to the Board and monitors
management performance.

Joined the Board: January 2024.

Other commitments: Senior Independent Director of
Associated British Foods plc, Chair of 42 Management
and Production and Chair of Soho Theatre.

Previous experience: Non-Executive Director and
Chair of the Remuneration Committee of Kier Group
plc, Non-Executive Director and Chair of the Audit
& Risk Committee of Grosvenor Britain & Ireland,
Non-Executive Director of the Football Association
and Non-Executive Director and Chair of Enterprises
of the Royal Opera House.

Committees: Audit & Risk Committee, Nomination
Committee and Remuneration Committee.

101

Corporate GovernanceM&C Saatchi Plc Annual Report 2023Corporate Governance

BOARD COMPOSITION

All Directors have the necessary time, skills
and resources to discharge their Board
responsibilities. They have access to the
advice and services of the Company
Secretary and are also able to gain access
to external independent professional advice
at the Company’s expense should they wish
to do so in the furtherance of their duties.

Gender*

Female

Male

White

Ethnicity*

Mixed / Multiple
ethnic groups

Tenure*

Under 3 years

EXECUTIVE DIRECTORS AND SENIOR
INDEPENDENT DIRECTORS

Gender*

Female

Male

White

Ethnicity*

Mixed / Multiple
ethnic groups

* Current composition of Board at time of this report.

102
102

Chris Sweetland, 68
NON-INDEPENDENT NON-EXECUTIVE DIRECTOR

Key strengths: Former FTSE 100 Deputy Group Chief
Financial Officer with experience in operations in the
advertising and marketing agency space, acquisitions,
disposal and mergers and the management of
investor relations. Experience of Audit & Risk Committee
work and remuneration strategy and policy.

Role: As a Non-Executive Director, provides strategic
advice and monitors management performance.
Acts as a representative of AdvancedAdvT Limited
and Vinodka Murria who hold in aggregate 27,237,985
ordinary shares in the Company, representing 22.2% of
the Company’s issued share capital. Accordingly, Chris
is not considered to be independent. Chris is entitled to
remain on the Board provided AdvancedAdvT Limited
and Vin Murria retain an aggregate interest of at least
11.5% of the Company’s issued share capital.

Joined the Board: June 2023.

Other commitments: Non-Executive Director
at TPXimpact Holdings plc and Unlimited
Marketing Group.

Previous experience: Previously the Deputy Group
Finance Director of WPP Group, which he joined after
spending almost 10 years in financial management
at PepsiCo Inc.

Committees: Remuneration Committee.

Corporate GovernanceM&C Saatchi Plc Annual Report 2023EVALUATION OF THE BOARD AND ITS COMMITTEES

In February 2021 and in line with recognised best
practice, a three-year Board development programme
was commissioned using external consultants, Lintstock
Ltd. Lintstock is an advisory firm that specialises in
board reviews and has no other connection with the
Company or individual Directors. The development
programme included undertaking Board reviews
on an annual basis to increase Board effectiveness
and to identify areas for improvement.

The Board undertook evaluation of its performance
during 2023, following postponement of the
evaluation of its performance during 2022 due to
the Company’s takeover activities. The Directors
and the General Counsel & Company Secretary
were invited to complete a survey followed by an
interview. The Board was assessed on a wide variety
of performance and oversight metrics. See the
following table for a summary of the key findings:

METHODOLOGY

Scoping and Tailoring: January 2024

The objectives for the review were agreed following a briefing
with key project sponsors.

Lintstock collaborated with the Company to design bespoke
surveys tailored to the business needs of the company, and to
follow up on themes identified in Lintstock’s previous reviews.

As well as covering core aspects of governance such as
information, composition and dynamics, the review considered
people, strategy and risk topics relevant to the business.

The review had a particular focus on the following areas:

•
•

•

•
•

The priorities for the incoming Chief Executive Officer.
The role played by the Executive Chair through the
transition.
The bedding down of the new Board following recent
appointments.
The strategic direction of the business.
The coverage of developments in the external environment.

Completion of Surveys: February 2024

Board members completed surveys assessing the performance of the Board and each of its committees.

Interviews: Early March 2024

In-depth interviews with Board members were conducted by two Lintstock Partners. The findings from the survey stage enabled
Lintstock to focus discussions on the key priorities for each Director.

Analysis and Delivery of Reports: March 2024

Lintstock analysed the findings from the surveys and interviews and delivered focused reports documenting the findings, including
a number of recommendations to increase effectiveness.

Board Discussion: End of March 2024

Lintstock’s findings were presented to the Board at a meeting in March. Actions were agreed for implementation and monitoring.

Key Findings

To support the new Board coming together after recent
appointments, the review identified a number of priorities including:

•

Onboarding the new Chief Executive Officer and measures for
supporting his success in the role.

Reaffirming the Company’s strategic direction, in partnership
with the incoming Chief Executive Officer.

Building core Board processes following a period of change.

Continuing to ensure robust financial and risk management.

As part of the review, Lintstock delivered
an analysis informed by the Lintstock
Governance Index, which comprises
around 60 core board performance metrics
from over 200 board reviews that Lintstock
has recently facilitated. This helped the
Directors to understand how the Board
compares with other similar organisations,
putting the findings into context.

103

Corporate GovernanceM&C Saatchi Plc Annual Report 2023Governance
revieW

DIVISION OF RESPONSIBILITIES AND THE COMPANY’S PURPOSE

BOARD

Chaired by Zillah Byng-Thorne (appointed Non-Executive Chair on 15 June 2023 and subsequently appointed Executive Chair
on 1 September 2023).

Responsible for:
• Promoting the Group’s long-term success through effective
governance and prioritising the interests of stakeholders.
• Overseeing the Group’s governance and internal controls.

The Board currently consists of six members: the Chair, the
Chief Financial Officer and four Non-Executive Directors (one of
whom is not considered to be independent and is a shareholder
representative). Details of the members of the Board’s careers
and strengths can be found on pages pages 99 to 102. The
Directors’ Report can be found on pages 132 to 138.

AUDIT & RISK COMMITTEE

REMUNERATION COMMITTEE

NOMINATION COMMITTEE

Chaired by Colin Jones
(appointed 3 February 2020).

Responsible for:
• Monitoring the integrity of
the financial statements.

Chaired by Louise Jackson
(appointed 6 May 2020).

Responsible for:
• Determining the policy for

Chaired by Zillah Byng-Thorne
(appointed 15 June 2023).

Responsible for:
• All Executive and Non-Executive

Executive Director remuneration.

Director appointments.

• Reviewing the Group’s internal

• Reviewing current remuneration

• Overseeing the Executive

financial controls and risk
management systems.

• The Group’s relationship with

the external auditors.

The Audit & Risk Committee consists
of three independent Non-Executive
Directors: Colin Jones, Louise
Jackson and Dame Heather
Rabbatts. The Executive Chair, the
Chief Financial Officer, the General
Counsel & Company Secretary and
any other Directors or
representatives and external
advisers attend meetings by
standing invitation to make
proposals and provide such
information as the Audit & Risk
Committee requires. The Report of
the Audit & Risk Committee can be
found on pages 107 to 112.

practices and ensuring that
remuneration, strategy and
culture are fully aligned.

The Remuneration Committee
consists of three independent
Non-Executive Directors: Louise
Jackson, Colin Jones and Dame
Heather Rabbatts, one non-
independent Non-Executive
Director, Chris Sweetland, and the
Executive Chair, Zillah Byng-Thorne.
The Chief Financial Officer, the
Chief People Officer, the General
Counsel & Company Secretary and
any other Directors or
representatives and external
advisers attend meetings by
standing invitation to make
proposals and provide such
information as the Remuneration
Committee requires. The Directors’
Remuneration Report can be found
on pages 116 to 131.

Leadership Team that reports
to the Executive Chair.

• Making use of independent
search consultancies for all
of its appointments.

The Nomination Committee consists
of the Chair of the Board, Zillah
Byng-Thorne, the Non-Executive
Directors, Louise Jackson, Colin
Jones and Dame Heather Rabbatts.
The Chief Financial Officer, Chief
People Officer, the General Counsel
& Company Secretary and any
other Directors or representatives
and external advisers attend
meetings by standing invitation to
make proposals and provide such
information as the Nomination
Committee requires. The Report of
the Nomination Committee can be
found on pages 113 to 115.

104

Corporate GovernanceM&C Saatchi Plc Annual Report 2023COMPANY’S PURPOSE

The Company’s purpose is to become the leading
creative solutions partner to our global client base.
We want to make it easier for our clients to grow by
accessing the full breadth of our skills and capabilities
to maximise the reach and potential of their brands.
Our offer builds on our creative heritage but will be
driven by our boldness and our willingness to think,
and be, different.

This purpose will be driven by three key themes:

• Transformation – a simpler, leaner, more

agile business.

• Aligning with our clients – simplifying how
we face our clients and making it easier for
our global specialisms, our key differentiator,
to reach the market.

• Capital allocation – liberating our capital to

re-invest in longer-term growth opportunities
and support shareholder returns.

M&C Saatchi’s heritage is founded on creativity and
a willingness to challenge convention. Our roots lie
in our advertising business, which still represents
42% of our net revenue. However, the Group has
evolved to encompass a broader mix of skills and
capabilities across a global footprint, with 58% of
our net revenue and 80% of our pre-central cost
profitability generated by other faster growth and
higher-margin specialisms.

Transformation is a key part of our journey, and we
have already made substantial progress towards
our goal of a simpler, leaner, more client-aligned
organisation that is a best fit for the rapidly evolving
global marketplace we are active in.

ATTENDANCE AT BOARD AND COMMITTEE MEETINGS DURING THE YEAR

Seven scheduled meetings of the Board were held during the year ended 31 December 2023. The attendance
record of the Directors at the meetings of the Board and of the Board’s committees is shown in the table below.

Chairman

Gareth Davis

Executive Directors

Moray MacLennan**

Zillah Byng-Thorne

Bruce Marson

Non-Executive Directors

Lisa Gordon***

Louise Jackson

Colin Jones

Chris Sweetland

Attends by invitation.

*
** Departed the Board on 30 September 2023.
*** Departed the Board on 14 June 2023.

Board

Audit & Risk
Committee

Remuneration
Committee

Nomination
Committee

3/3

6/6

4/4

7/7

3/3

7/7

4/4

3/3*

6/6*

3/3*

6/6*

3/3

6/6

3/3*

2/2*

6/6*

4/4

6/6*

2/2

6/6

4/4

2/2

n/a*

2/2

n/a*

2/2

4/4

2/2*

105

Corporate GovernanceM&C Saatchi Plc Annual Report 2023COMPLIANCE WITH THE CODE

As an AIM-listed entity, the Company is not required
to comply with the Code, but the Board believes that
it represents best practice and has moved significantly
towards full compliance with the Code. The Board
continues to work to implement the provisions of
the Code and supports the focus that it places on
relationships with employees, shareholders and
other stakeholders. Other than as detailed below,
the Company complied with the provisions of the
Code for the whole of 2023:

11) At least half the board, excluding the chair, should
be non-executive directors whom the board considers
to be independent.

Following the appointment of Zillah Byng-Thorne to
Executive Chair in September 2023, half of the Board
was not considered independent by the Board. The
appointment of Dame Heather Rabbatts as Senior
Independent Director in January 2024 has reconciled
the position, and the Company now complies with
this provision.

12) The board should appoint one of the independent
non-executive directors to be the senior independent
director to provide a sounding board for the chair and
serve as an intermediary for the other directors and
shareholders. Led by the senior independent director,
the non-executive directors should meet without the
chair present at least annually to appraise the chair’s
performance, and on other occasions as necessary.

Following Lisa Gordon’s resignation on 14 June 2023,
the Board did not have a Senior Independent Director
until the appointment of Dame Heather Rabbatts on
22 January 2024.

26) The audit committee should provide an
explanation of how it has assessed the effectiveness
of internal audit and satisfied itself that the
quality, experience and expertise of the function
is appropriate for the business.

The Audit & Risk Committee believes strongly that an
internal audit function should be a key element of the
Group’s internal control framework, particularly given
the complex structure of the Group, the significant
number of small, de-centralised operations and
an incentive-based culture. Implementation of an
internal audit function was deferred in 2022, due to
the uncertainty of the Group’s future, pending the
outcome of the takeover bids. It has since been
concluded that it would be appropriate to wait
until the new shared finance service centre has
been established and the revised internal control
environment has been embedded in the Group’s
operations before an internal audit function is set up.

41) There should be a description of the work
of the remuneration committee in the annual
report, including: reasons why the remuneration is
appropriate using internal and external measures,
including pay ratios and pay gaps; a description,
with examples, of how the remuneration committee
has addressed the factors in Provision 40; what
engagement has taken place with shareholders
and the impact this has had on remuneration policy
and outcomes.

Whilst the Company aims to comply with the Code,
our evolving remuneration practices are still not as
mature as many FTSE main market companies. As
such, there are some elements with which we do not
currently comply and have made less progress on
than had been hoped. These are the reporting of CEO
pay ratios, employee engagement to explain executive
remuneration and how the factors within Provision 40
of the Code have been addressed. The Company has
committed to implement a new global HR information
system during 2024, which will enable pay ratio
analysis in the future.

106

Corporate GovernanceM&C Saatchi Plc Annual Report 2023

M&C Saatchi Plc Annual Report 2023

Corporate Governance

Report of the Audit
& Risk Committee

I am pleased to present the Audit & Risk Committee’s
Report for the year ended 31 December 2023. The
principal activities of the committee have continued
to be the monitoring of progress in improving internal
financial controls and reporting, and ensuring a more
efficient year-end close and external audit.

The committee’s mandate is to provide effective
governance over the appropriateness of the Group’s
financial reporting and the performance of both the
internal and external audit functions. The committee
also reviews and monitors the Group’s internal
financial control and risk management processes
and related compliance activities.

Throughout the period, the members of the committee
were myself as Chair, and Louise Jackson, an
independent Non-Executive Director. Lisa Gordon was
a member of the committee until she stepped down
from the Board in June 2023. Dame Heather Rabbatts,
also an independent Non-Executive Director, joined
the committee on her appointment to the Board in
January 2024. Committee meetings are also attended
by the Chair of the Board, Chief Financial Officer, other
Directors, the General Counsel & Company Secretary,
and by the external auditors, all as required. The
committee meets at least annually with the external
auditors without the Executive Directors present.

PRINCIPAL RESPONSIBILITIES

The principal responsibilities of the Audit & Risk
Committee are:

•

Financial reporting: a) monitor the integrity of the
Company’s and the Group’s financial statements
and any formal announcement relating to the
Group’s financial performance; b) review
significant financial reporting judgements, issues
and estimates; and c) confirm whether, taken as
a whole, the Annual Report and Accounts are fair,
balanced and understandable.

Risk management and internal controls: On
behalf of the Board, to review and monitor the
effectiveness of the Group’s internal financial
controls and risk management systems and
procedures.

107
107

COLIN JONES
Chair of the Audit & Risk Committee

“The committee’s
mandate is to provide
effective governance
over the appropriateness
of the Group’s financial
reporting and the
performance of both the
internal and external
audit functions.”

Corporate GovernanceM&C Saatchi Plc Annual Report 2023•

External audit: a) assess the effectiveness of the
external audit process; b) review and monitor the
external auditors’ independence and objectivity;
c) review and approve the provision of non-audit
services by the external auditors; and d) make
recommendations to the Board about the
appointment, reappointment and removal of
the external auditors and their remuneration
and terms of engagement.

•

Internal audit: Monitor and review the
effectiveness of the internal audit function and the
annual internal audit plan (where applicable).

The committee’s full terms of reference, which
are reviewed annually, are available at:
www.mcsaatchiplc.com/governance and reflect
the requirements of the UK Corporate Governance
Code 2018 (the “Code”).

The Audit & Risk Committee works to a programme
aligned to key events in the financial reporting cycle.
Meeting agendas include key audit, accounting and
reporting issues as well as standing items required by
the committee’s terms of reference. In addition, one-off
deep dives into specific risk areas may be requested
by the committee at any time.

ACTIVITIES OF THE AUDIT & RISK COMMITTEE

Since reporting on the 2022 Annual Report and Accounts in April 2023, and up until the date of this report,
the Audit & Risk Committee has undertaken the following activities:

AREA OF FOCUS MATTERS CONSIDERED

Financial
reporting

External audit

Internal controls

Risk
management

Corporate
governance

•

•
•

•

•
•

•
•
•

Review of significant accounting judgements, estimates and assumptions including: going
concern and viability, revenue recognition, share-based payments and put option accounting,
the valuation and impairment of goodwill, the valuation of unlisted equity investments and the
use of alternative performance measures.
Review of the Annual Report and Accounts and confirmation to the Board that they are fair,
balanced and reasonable.
Review of other financial announcements made during the period.
Assisting with a Financial Reporting Council enquiry into the 2022 accounts, specifically the
reporting of put option payments in the cash flow statement and the exclusion of dividends
paid to put option holders from Headline results.

Review and approval of the audit plan including key audit matters and approval of the audit fee.
Monitoring implementation of the external auditors’ recommendations for improving the
efficiency of the year-end closing and audit process.
Regular updates on audit progress.
Review of external auditors’ reports to the committee.

Considering the impact on internal controls of the plan to set up a shared service centre in
South Africa in 2024 to support the Group’s Finance function on a global basis.
Annual assessment of the effectiveness of the Group’s internal financial controls.
Consideration of the need for an internal audit function.

Reviewing management’s risk management processes and the Group’s risk register.
Deep dives into specific risk areas.
Annual assessment of the Group’s emerging and principal risks including disclosures
in the Annual Report and Accounts.

Confirming compliance with the UK Corporate Governance Code.
Annual review of the effectiveness of the external audit.
Annual review of the committee’s terms of reference.

108

Corporate GovernanceM&C Saatchi Plc Annual Report 2023The most significant accounting issues and judgements
considered by the Audit & Risk Committee, and
discussed with the external auditors, are set out below:

SIGNIFICANT ACCOUNTING ISSUES
AND JUDGEMENTS

Going Concern and Viability

As explained on page 144, the financial statements
have been prepared on the going concern basis. In
this context, the Board and the Audit & Risk Committee
considered the Group’s ability to meet its obligations as
they fall due for the foreseeable future, with particular
reference to the economic impact of a global recession
and rising inflation, the strategic initiatives to simplify the
business and improve profitability, and the support of
the Group’s lenders. For the purposes of assessing going
concern, management prepared a set of cash flow
forecasts, evaluating four different severe but plausible
downside scenarios, covering the period to the end
of 2025. The Board and the Audit & Risk Committee
reviewed these forecasts under each scenario, and
the key assumptions on which they are based, and
are satisfied that they are appropriate. Further details
of these forecasts and assumptions are set out in the
Directors’ Report.

Based on these forecasts and assumptions, the Board
and the Audit & Risk Committee believe that it remains
appropriate to prepare the financial statements on a
going concern basis.

The Board and the Audit & Risk Committee have
also assessed the statement in the Directors’ Report
in relation to the longer-term viability of the Group,
including reviewing the forecasts used in the going
concern models (referred to above) extended to
the end of 2026, considering the appropriateness
of this viability period and challenging the factors,
assumptions and risks which are critical to the
Group’s viability over this period. The Board and
the Audit & Risk Committee have concluded that
the statement made by the Directors on page 133
in relation to the longer-term viability of the Group
is appropriate.

Facility is to refinance the previous £47m facility with
National Westminster Bank Plc and Barclays Bank PLC
(the “Old Facility”) which was due to mature on
31 May 2024. At 31 December 2023, the Group had
up to £47.0m (2022: £47.0m) of funds available under
the Old Facility.

The primary purpose of the New Facility (as it was for
the Old Facility) is to provide the Group with additional
liquidity headroom to support any variations in working
capital and provide funding for bolt-on acquisitions.
At 31 December 2023, £16.0m was drawn on the
Old Facility compared to £7.0m at 31 December 2022.

The Board has concluded that, under all scenarios
modelled by management, the Company will have
sufficient liquidity to operate and will not breach its
financial covenants under the New Facility.

Revenue Recognition

Revenue recognition is a critical accounting policy
and key audit matter for the Group. The Audit &
Risk Committee has devoted considerable time to
reviewing the many different aspects of revenue
accounting (see Note 4 of the financial statements)
and has noted the significant amount of training,
oversight and guidance that continues to be provided
to local entities by the Group Finance Team, including
detailed reviews of all contracts and projects that
spanned the year-end date. It is satisfied that
the Group’s revenue accounting policy has been
consistently applied and that revenue is not materially
misstated.

Share-based Payments and Put Option Accounting

The Company’s strategy has been to grow organically
rather than by acquisition. This has traditionally
been achieved by launching new businesses in
partnership with a local management team. The local
management team receives an equity interest in the
start-up company at launch and has the option to sell
such equity to the Company at a future date based
on certain performance and valuation criteria of the
start-up company as set out in its governing documents.

The accounting for these put option schemes is a
critical accounting policy. It is a complex area requiring
a number of judgements around the employment
nature of the arrangement (IFRS 2 or IFRS 9), the
future performance of each business and the expected
date of exercise and depends on the substance and
detailed terms of the underlying arrangement.

109

Corporate GovernanceM&C Saatchi Plc Annual Report 2023The Audit & Risk Committee has considered the key
judgements and estimates made by management in
respect of these put option schemes, the assessment
of non-market performance conditions, and the
appropriateness of the forecasts used for valuation
purposes. The committee has concluded that the
judgements and estimates applied by management
to the accounting for these put option arrangements
are reasonable, and that the related disclosures in
the notes to the financial statements are appropriate.

Goodwill Carrying Value and Impairment

The carrying value of goodwill as at 31 December
2023 was £32.5m (2022: £37.2m), full details of which
are set out in Note 15 of the financial statements.
The recoverable amount of goodwill is determined
by management by reference to a value-in-use
calculation for each cash generating unit (CGU),
based on the Board approved three-year plans to
December 2026 and a residual growth rate of 1.5%.
Management also prepared sensitivity analyses for
each CGU, for which the key variables are the forecast
profits and cash flows and the discount rate used
to measure the present value of these cash flows.

The Audit & Risk Committee has reviewed
management’s assessment of the recoverability of
this goodwill and the impairment recognised in 2023,
taking into account the key judgements around cash
flows and the discount rate and sensitivity analyses.
The committee has also reviewed the disclosures
relating to goodwill carrying values and impairment
in Note 15 of the financial statements. The committee
is satisfied with the conclusion that no further
impairment is required and with the presentation
of goodwill in the financial statements.

Unlisted Equity Investments (financial assets at fair
value through profit and loss)

The Group has historically invested in early-stage,
unlisted businesses for the purposes of gaining access
to new technologies and digital media trends. The
valuation of early-stage businesses is inherently
challenging and subjective, especially where there
has been no funding round in the period, and therefore
requires a number of valuation judgements to
be made. The valuations applied are based on
several factors, including the share price from the
latest funding round, recent financial performance
(where available), discounting for liquidation
preference shares and discounting for convertible

loan notes. Many of the investments have received
no new funding for a number of years and an
additional discount has been applied this year to
reflect management’s experience of the reduction
in valuation arising as the time elapsed since the
previous valuation increases.

Management regularly reviews the valuation of
each investment in the portfolio. The net revaluation
adjustment in 2023 was a reduction of £4.9m and
largely reflects the additional discount applied
where there has been no new funding for some time.
The portfolio has a carrying value at the balance
sheet date of £6.4m (see Note 20 of the financial
statements).

The Audit & Risk Committee has reviewed the year-
end valuation of the investments and is satisfied
that the judgements made in valuing the portfolio
at 31 December 2023 are reasonable.

Alternative Performance Measures

The Group uses “Headline” numbers to report its
underlying results, as well as for internal reporting
purposes (see Note 1 of the financial statements). The
Headline numbers strip out the impact of separately
disclosed items, including one-off non-recurring
revenues and expenses (see Note 2 of the financial
statements), and the accounting impact of acquisitions,
disposals, fair value adjustments and put options.
The amount of separately disclosed items decreased
in 2023 to a post-tax cost of £5.8m (2022: £11.4m),
largely as a result of the absence of the significant
one-off costs incurred in 2022 defending
the Company against the takeover offers.

The committee has reviewed the Group’s policy for the
exclusion of certain items, when presenting Headline
results, and confirmed the consistent application and
appropriateness of this policy from year to year. It
has also challenged management on the nature and
amount of each separately disclosed item to ensure
that it was appropriate and treated in accordance
with the Group’s accounting policy.

Internal Audit

110

Corporate GovernanceM&C Saatchi Plc Annual Report 2023internal audit function was deferred in 2022, due to
the uncertainty of the Group’s future, pending the
outcome of the takeover bids. It has since been
concluded that it would be appropriate to wait
until the new shared finance service centre has
been established and the revised internal control
environment has been embedded in the Group’s
operations before an internal audit function is set up.

External Auditor and Audit Effectiveness

This is BDO’s third year as auditors. The BDO partner
responsible for the audit is Matthew Haverson (Senior
Statutory Auditor), who replaced Kieran Storan upon
his retirement in September 2023.

The Audit & Risk Committee is responsible for
monitoring the external audit process to ensure
high standards of quality and effectiveness. The
committee has satisfied this objective through a
number of measures including:

•

Reviewing the audit plan, scope, materiality
and resources.

Challenging the auditors on the findings of
the Financial Reporting Council’s Audit Quality
Review, and the steps taken by BDO to improve
their audit quality.

Monitoring the independence and transparency
of the auditors (see below).

Regular meetings between the Audit & Risk
Committee Chair and the audit partner without
management present.

Obtaining feedback from the Chief Financial
Officer and his team on the quality of the audit
team, their understanding of the business and
its risks, and the quality of their judgements
and communications.

These steps have enabled the committee to be
satisfied with the effectiveness of the external audit.
As a result, the committee has recommended to the
Board that a resolution for the reappointment of BDO
will be proposed at the Company’s Annual General
Meeting to be held in 2024.

The external auditors’ report to the Directors and to
the Audit & Risk Committee has confirmed that BDO
remained independent throughout the 2023 audit,
and the committee concurs with this view.

To help safeguard the external auditors’ objectivity and
independence, BDO is excluded from providing any
non-audit services that individually, or in aggregate,
could impair its independence. Prior approval from the
Audit & Risk Committee is required for any provision
of non-audit or other services, taking into account the
relevant professional and regulatory requirements.
The fees paid to BDO in respect of non-audit services
are shown in Note 6 of the financial statements. The
Company expects to be an Other Entity of Public
Interest (“OEPI”) in 2024, which will further limit the
external auditors’ ability to provide any non-audit
services.

Effectiveness of the Group’s System of Internal
Controls and Risk Management

The Audit & Risk Committee, on behalf of the Board,
is responsible for reviewing the adequacy and
effectiveness of the Group’s internal financial controls
and its internal control and risk management systems.
These controls and systems are reviewed on a regular
basis with a view to driving continuous improvement.

In recent years, significant steps have been taken to
improve the Group’s internal financial controls and
processes including the roll-out of new, standardised
finance systems across all Group entities, the push down
of Group accounting policies to local entities, investment
in resources and skills within the Group Finance function,
and a shift from a de-centralised operating culture to
one with more robust central control, oversight and
accountability. These improvements have enabled
the Group to explore further efficiencies from setting
up a finance shared service centre in 2024 and this
project will continue to be monitored by the Audit & Risk
Committee.

The external audit remains substantive rather than
controls-based. In 2024, the committee will continue
to focus on improvements to financial controls and
reporting as part of its longer-term goal of moving
towards a more efficient controls-based audit. The
creation of a finance shared service centre will
accelerate this journey.

The Audit & Risk Committee also continues to review
and update the Group’s principal risks, these are
shown on pages 57 to 61 and in 2024, the committee
will undertake deep dives into a number of the
principal risks.

111

Corporate GovernanceM&C Saatchi Plc Annual Report 2023Financial Reporting Council (FRC) Enquiry

In October 2023, the Company received a letter
from the FRC, following a review it undertook of the
Company’s Annual Report and Accounts for the year
ended 31 December 2022. The FRC requested further
information to help understand:

•

Why cash paid on the settlement of put options,
included as a staff cost in the income statement,
was classified as a financing activity in the cash
flow statement.

Why the Company’s measure of Headline results
excludes from staff costs the amounts relating
to dividends paid to put option holders and put
option accounting adjustments.

The Company has reclassified the cash paid to settle
put options as an operating activity, rather than a
financing activity, to align more closely with how the
expense is reported in the income statement. The
comparatives for the year ended 31 December 2022
have been restated to reflect this.

The FRC noted the Company’s explanation of why
Headline results exclude dividends paid to put option
holders and put option accounting adjustments. No
adjustment was deemed necessary, but additional
explanations have been added to the financial
statements.

The FRC also brought to our attention 10 further
observations for consideration when preparing the
Company’s Annual Report and Accounts for the year
ended 31 December 2023, which have been reflected
in this report.

Annual Report and Accounts

At the request of the Board, the Audit & Risk Committee
has considered whether the Annual Report and
Accounts, taken as a whole, are fair, balanced
and understandable and provide the necessary
information for shareholders to assess the Group’s
position, performance, business model and strategy,
and confirms that this is the case.

COLIN JONES
Chair of the Audit & Risk Committee
11 April 2024

“In recent years, significant
steps have been taken
to improve the Group’s
internal financial controls
and processes including
the roll-out of new,
standardised finance
systems across all Group
entities, the push down
of Group accounting
policies to local entities,
investment in resources
and skills within the Group
Finance function, and a
shift from a de-centralised
operating culture to one
with more robust central
control, oversight and
accountability.”

112

Corporate GovernanceM&C Saatchi Plc Annual Report 2023M&C Saatchi Plc Annual Report 2023

Corporate Governance

Report of the
Nomination Committee

ZILLAH BYNG-THORNE
Executive Chair

“The committee is
satisfied that it has
fulfilled its responsibilities
in accordance with its
terms of reference.”

Dear Shareholders

I am pleased to present the Nomination Committee
Report for the year ended 31 December 2023. This
report provides a summary of the key activities and
areas of focus of the committee during the year.

The committee met formally four times during 2023.
Committee members’ attendance at meetings are
indicated on page 105. The Chief Financial Officer, the
Chief People Officer, the General Counsel & Company
Secretary and any other Directors or representatives
and external advisers attend meetings by standing
invitation to make proposals and provide such
information as the committee requires.

During the year, our Board has seen the appointment
of a new Chief Financial Officer and Non-Executive
Chair (then subsequently on an interim basis, Executive
Chair) as well as a search for a new Chief Executive
Officer and a new Senior Independent Director;
as a consequence the Nomination Committee has
been busy.

The committee also reviewed the composition
of the Board during the year and more recently,
the recommendations of the Board evaluation.
Further information can be found on page 103.

I hope that you find this report useful in understanding
the work of the Nomination Committee, and I welcome
any feedback from shareholders in relation to the
committee and its activities.

RESPONSIBILITIES AND ACTIVITIES

The committee’s role and responsibilities are governed
by its terms of reference, which are reviewed and
approved annually by the committee and, as required,
by the Board.

113
113

Corporate GovernanceM&C Saatchi Plc Annual Report 2023In summary, the committee oversees:

•

The composition of the Company’s Board and
its committees by setting criteria for Board
positions, identifying candidates and making
recommendations to the Board on
appointments. In doing so, it takes into
consideration the Board’s structure, size,
diversity, demographics and balance between
Executive and Non-Executive Directors.

Succession planning for the Chair and Board
members, which includes the identification,
mentorship and development of future
candidates.

Succession planning linked to all executive
and senior management positions.

The induction of new Directors and the ongoing
training and professional development of
Board members, as and when required.

The effectiveness and ultimately the
performance of the Board, its committees
and individual members.

The committee is satisfied that it has fulfilled its
responsibilities in accordance with its terms of
reference, a copy of which can be found on the
Company’s website at https://www.mcsaatchiplc.com/
governance.

COMPOSITION AND ELECTION/RE-ELECTION
OF DIRECTORS

Until 14 June 2023, the committee was composed of four
Non-Executive Directors: Gareth Davis (Committee
Chair), Lisa Gordon, Louise Jackson and Colin Jones.
Following the departure of Gareth Davis and Lisa
Gordon from the Board on 14 June 2023, the committee
was reconstituted to two Non-Executive Directors and
me, as Executive Chair. Since Dame Heather Rabbatt’s
appointment to the Board, the committee is now
composed of three Non-Executive Directors and me, as
Executive Chair. The committee members’ qualifications
and experience are available on pages 99 to 102.

the last two Annual General Meetings must retire and
(if relevant) stand for re-appointment. As the Company
has adopted the UK Corporate Governance Code,
all of the Directors currently must offer themselves
for re-election at each Annual General Meeting.

COMMITTEE EVALUATION

The committee was evaluated as part of an external
evaluation of the Board and its committees facilitated
by Lintstock. Areas identified for additional focus in
2024 are set out on page 103.

The Committee’s Key Activities for the Year Ended
31 December 2023 are Summarised Below:

Board and ELT succession planning

The committee keeps under regular review the
structure, size and composition of the Board, and in
its review considers the skills, knowledge, diversity
and experience on the Board. The committee took
these factors into consideration in its discussions on
succession planning during 2023.

At its meeting on 22 November 2023, the committee
discussed succession planning for the Executive
Leadership Team, including the diversity of the talent
pipeline and the current and future skills and attributes
required by the Company.

Chief Financial Officer succession

Bruce Marson had been acting as Interim Chief
Financial Officer since May 2022 since the departure
of the then Chief Financial Officer. The committee
instructed independent specialists, Independent
Search Partnership LLP, to assist with the search for
a permanent Chief Financial Officer. Independent
Search Partnership LLP had no links to the Company
nor to any of the Directors on appointment.

Following the completion of the search process for
a permanent Chief Financial Officer led by Moray
MacLennan, the Chief Executive Officer, the committee
was delighted to appoint Bruce Marson as the
permanent Chief Financial Officer on 30 March 2023
and to the Board on 12 April 2023.

Non-Executive Chair succession

Following Gareth Davis’ announcement to step down
from the Board, the committee instructed The Inzito
Partnership Limited on the search for a new
independent Non-Executive Chair of the Company.
The search process was managed by Lisa Gordon,
the Senior Independent Director. The Inzito Partnership

114

Corporate GovernanceM&C Saatchi Plc Annual Report 2023Limited had no links to the Company nor to any of the
Directors on appointment. Following a thorough
search process, I joined the Company as the new
independent Non-Executive Chair on 15 June 2023.

Executive Chair and Chief Executive Officer
appointments

During the year, Moray MacLennan indicated to the
Chair that he was considering retiring after nearly
30 years with the Company. In July 2023, he formally
announced his decision to retire from his role as Chief
Executive of the Company; as a consequence one of
the key activities of the committee during 2023 was the
search for a new Chief Executive Officer. It was evident
that following Moray’s departure there was no clear
candidate who could step up on an interim basis, and
so, after discussions with the Board, I agreed to take on
the position as Executive Chair for up to 12 months until
a new Chief Executive Officer could be found.

The search for the new Chief Executive Officer was led
by me, as Executive Chair of the Board. Following a
review of executive search firms by the Chief People
Officer, Odgers Berndtson was approved by the
committee as the preferred search firm, it was best
placed to identify the key skills and attributes required
in a Chief Executive Officer. Odgers Berndtson had no
links to the Company nor to any of the Directors on
appointment. Odgers Berndtson was appointed on
17 November 2023 and a detailed search process was
undertaken.

As announced by the Company on 22 February 2024,
following a comprehensive search process, Zaid
Al-Qassab will join the Company as Chief Executive
Officer on 13 May 2024. I will return to my role as
Non-Executive Chair of the Company following the
conclusion of the Annual General Meeting of the
Company on 16 May 2024.

Non-Executive Director changes

Neither Gareth Davis nor Lisa Gordon sought re-
election to the Board at the Company’s 2023 Annual
General Meeting, and both stepped down from the
Board following the close of the Annual General
Meeting held on 14 June 2023.

Chris Sweetland became a Non-Executive Director
on 15 June 2023. He serves as a representative of
AdvancedAdvT Limited and Vinodka Murria who, at
the date of this report, hold in aggregate 27,237,985
ordinary shares in the Company, representing 22.2%

of the Company’s issued share capital. Accordingly,
Chris is not considered to be independent. Chris is
entitled to remain on the Board (subject to normal
performance conditions) provided AdvancedAdvT
Limited and Vinodka Murria retain an aggregate
interest of at least 11.5% of the Company’s issued
share capital.

Following the conclusion of a thorough search process,
the Company appointed Dame Heather Rabbatts
as Senior Independent Director on 22 January 2024.

CULTURE AND DIVERSITY, EQUITY AND INCLUSION

The UK Corporate Governance Code and our
shareholders place great importance on the role of
the Nomination Committee with regard to diversity,
equity and inclusion, and gender balance.

The Company’s dedication to diversity and inclusion is
detailed within our planet and people commitments,
specifically outlined in commitments 4, 5, and 6 on
pages 69 to 74. We have initiated the roll-out of a
global diversity, equity and inclusion policy, marking
the initial steps to driving consistency in diversity,
equity and inclusion practices worldwide.

Currently, our Executive Leadership Team (including
the General Counsel & Company Secretary) has a
gender distribution of 14% female and 86% male.
Similarly, amongst the business leaders reporting to
that team, there exists a split of 44% female and
54% male.4

We have a very balanced Board from a gender
diversity perspective, and also have colleagues with
ages spanning 49–68. During the year, we had no
ethnic diversity on the Board. This was something I felt
very strongly about, and it needed to change; we set
the tone for diversity and inclusion from the top.

Following the successful conclusion of the search for our
new Chief Executive Officer and Senior Independent
Director, our ethnic diversity ratio will improve, with
33% being from mixed/multiple ethnic groups.

Please see pages 69 to 75 for details of the Company’s
diversity initiatives.

I should like to thank the other committee members for
their dedication during the year.

ZILLAH BYNG-THORNE
Executive Chair
11 April 2024

The gender distribution data for business leaders is based on a survey conducted across our four main regions. Amongst the 85% of respondents, 98% provided a response to
the question regarding their gender, with 2% opting not to disclose.

115

Corporate GovernanceM&C Saatchi Plc Annual Report 2023M&C Saatchi Plc Annual Report 2023

Corporate Governance

Directors’
Remuneration Report

Dear Shareholder

On behalf of the Board, I am pleased to present the
Directors’ Remuneration Report for the year ended
31 December 2023.

Over the past 12 months, as well as supporting the
Executive Chair with the search for a new Chief
Executive Officer and meeting with shareholders to
understand their views, the Remuneration Committee
has been heavily involved in remuneration discussions
which extend our newly embedded remuneration
framework further into the organisation to our global
senior leadership teams. This activity builds on the firm
foundations that we have set over the past two years
and provides a globally consistent framework for our
senior leaders for the first time.

As a result of c.38.7% of shareholders failing to support
the Directors’ Remuneration Report last year, I spent
time during the year engaging with our largest
shareholders to understand any concerns they may
have. Concerns raised as a result of this process have
been taken on board and the committee remains
committed to engaging with our largest shareholders
going forward.

As I have mentioned in previous years, although,
as an AIM-listed business we are not obliged to, we
seek to implement the provisions of the UK Corporate
Governance Code and ensure our remuneration
arrangements are aligned with best practice. We will
be seeking approval from shareholders once again
this year for the Directors’ Remuneration Report.

This report sets out the implementation of the
Company’s Directors’ Remuneration Policy (the
Remuneration Policy) and the remuneration paid
to the Directors for the year in the context of the
Remuneration Policy which can be found on
pages 116 to 131 of this report.

116
116

LOUISE JACKSON
Chair of the Remuneration Committee

“The work of the
Remuneration
Committee over the past
year has focused
predominantly on
refocusing our attention
to a return to business-
as-usual activities.”

Corporate GovernanceM&C Saatchi Plc Annual Report 2023COMMITTEE COMPOSITION

CHIEF EXECUTIVE OFFICER RECRUITMENT

The Remuneration Committee consists of my fellow
independent Non-Executive Directors, Colin Jones and
Chris Sweetland, and Zillah Byng-Thorne, the Board
Chair (currently Executive Chair). Although not on the
Board during the reporting period, Dame Heather
Rabbatts joined the Board and the committee on
22 January 2024. We are independently advised by
Korn Ferry, who are members of the Remuneration
Consultants Group and advise in accordance with
their code of conduct.

The work of the Remuneration Committee over the
past year has focused predominantly on refocusing
our attention to a return to business-as-usual
activities as well as the review of incentivisation for
our senior leadership teams below the Executive
Leadership Team. With the support of our Chief
People Officer and General Counsel & Company
Secretary, we have continued with our extensive
review of all equity-based incentive arrangements
within the Group’s subsidiaries. As these mature,
we continue to replace them with cash-based plans
that do not have the potentially high dilutive impact
on our shareholders.

ALIGNMENT WITH VISION AND STRATEGY

Our ambition is to accelerate our client business
growth through the creation of beautifully simple
solutions in an increasingly complex world. Following
a detailed review, our strategy is centred around
accelerating our growth, strengthening our margins
and improving and simplifying our corporate and
balance sheet structure. Our strategy is centred
around the following core pillars:

•

Transformation – a simpler, leaner, more agile
business.

Indispensable – indispensable work for our
clients, easy to work with, broad in capability,
with deep local knowledge.

Capital allocation – liberating our capital to
re-invest in longer-term growth opportunities
and support.

The Remuneration Policy and framework support
this vision and strategy directly.

Following the announcement on 24 July 2023 that
Moray MacLennan intended to retire from his role
as Chief Executive Officer of the Company, the
committee has worked closely with the Executive Chair
and the Company in the search for a new Chief
Executive Officer. The committee met with a number
of excellent candidates, and I am delighted that, as
a result of the search process, Zaid Al-Qassab will
be appointed in the role of Chief Executive Officer,
effective 13 May 2024. The terms of his remuneration
arrangements are set out on page 118 of this report.

EXECUTIVE DIRECTORS

On 24 July 2023, Moray MacLennan announced
his intention to retire from the Company. Given the
transformational agenda of the Company, it was
agreed that he would go on garden leave from
30 September 2023. In line with the Remuneration
Policy, Moray will receive contractual payments under
the terms of his service agreement until the end of
his garden leave on 30 June 2024. As a result of his
retirement from the Company, in line with the
Company’s Long Term Incentive Plan (LTIP) Scheme
Rules (the Rules), the committee determined that
Moray would be treated as a “good leaver” in relation
to the awards made to him in 2021 and 2022 under the
LTIP. As such, awards will vest subject to performance,
in line with other participants of the scheme and in line
with the Rules.

From 1 September 2024, Zillah Byng-Thorne assumed
the role of Executive Chair on an interim basis, during
the search process for a new Chief Executive Officer,
and her fee was increased accordingly to £670,000,
which was in line with Moray’s base salary. As
Executive Chair, Zillah is not entitled to participate in
any of the variable pay arrangements associated with
the role of Chief Executive Officer, in order to maintain
her impartiality on her return to a Non-Executive role.
Upon Zillah’s return to the role of Non-Executive Chair
in May 2024, her fee will reduce accordingly.

The Remuneration Committee has responsibility for
Executive Directors’ remuneration as well as the
remuneration of Executives who form the Executive
Leadership Team. Over the past 12 months we have
continued to simplify and align our approach to reward
for our senior leadership teams across the Group.

117

Corporate GovernanceM&C Saatchi Plc Annual Report 2023Although the Group recovered well from a challenging
first half, with Headline profit before tax of £28.7m,
the minimum profit before tax threshold to trigger
payments under the annual bonus scheme for
Executive Directors was not met.

The annual bonus will continue to be a key driver in
incentivising in-year performance in line with financial
goals shared externally, with targets being set for
Headline profit before tax (60%), revenue (30%) and
ESG (10%).

After careful consideration, the committee reviewed
the formulaic outcome of the bonus calculations and
felt that the outcome was reflective of overall
performance, and as such, no annual bonus payments
were due to Executive Directors for the year ended
31 December 2023.

SHAREHOLDER ENGAGEMENT

We are very conscious of the benefits from and need
to fully engage with our shareholders on all key
matters moving forward and are committed to doing
so. The results of the voting on the 2022 Remuneration
Report, which included the Remuneration Policy,
are set out on page 120 of the report. In addition, on
14 December 2023, the Company provided an update
to shareholders following the views received from
shareholders, and the actions taken following the
voting outcomes at its 2023 Annual General Meeting
held on 14 June 2023, in accordance with Provision 4
of the UK Corporate Governance Code.

IMPLEMENTING THE REMUNERATION POLICY
IN 2024

This is summarised in the report below and contains
the normal elements of fixed and variable pay.
The bonus and long-term incentives are capped
by reference to base salary, and Executive Directors
have shareholding guidelines.

Base salary is reviewed annually, but there are
automatic increases in line with the wider workforce
applied for Executive Directors. There is no base pay
award proposed for Bruce Marson for the year ending
31 December 2024.

Zaid Al-Qassab will assume the role of Chief Executive
Officer on 13 May 2024 and his package will be set in
line with the Remuneration Policy.

Zaid’s base salary will be £600,000. His bonus will
be up to 100% of base salary and in addition, he will
normally receive an annual LTIP award of up to 150%
of base salary, with an award in the first year of
up to 200% of base salary in order to align Zaid to
shareholders’ interests.

The LTIP will focus on driving longer-term performance
aligned to the financial goals shared externally, with
targets being set for total shareholder return (50%)
and Headline adjusted earnings per share (50%).

I trust that you will find this report helpful and
informative and agree that the determinations made
by the committee are appropriate and in the long-term
interests of both the Company and our shareholders.

I would also like to take this opportunity to thank our
shareholders for your ongoing support and hope that
you support the Directors’ Remuneration Report for
the year at the Company’s Annual General Meeting
to be held in 2024. I will be available at that meeting
to answer any questions that you may have regarding
the work of the committee.

LOUISE JACKSON
Chair of the Remuneration Committee
11 April 2024

“We are very conscious
of the benefits from
and need to fully engage
with our shareholders on
all key matters moving
forward and are
committed to doing so.”

118

Corporate GovernanceM&C Saatchi Plc Annual Report 2023COMMITTEE COMPOSITION

This section details the Remuneration Committee’s
composition and activities undertaken over the
past year.

COMMITTEE MEMBERS

The current committee members and the dates they
joined the committee are:

•
•
•
•
•

Louise Jackson (Chair), 17 March 2020.
Colin Jones, 17 March 2020.
Chris Sweetland, 15 June 2023.
Zillah Byng-Thorne, 15 June 2023.
Dame Heather Rabbatts, 22 January 2024.

Lisa Gordon was a member of the committee from
17 March 2020 until 14 June 2023 when she stepped
down from the Board.

Whilst not a member of the committee during the
reporting year, Dame Heather Rabbatts joined the
committee on her appointment to the Board on
22 January 2024.

No Directors are involved in determining their own
remuneration. The committee may invite other
individuals to attend all or part of any committee
meeting, as and when appropriate and necessary,
including members of management and external
advisers.

ROLE

The Remuneration Committee is a committee of
the Board. The committee has responsibility for
determining the remuneration of the Company’s
Executive Directors, the Chair and selected Senior
Executives, taking into account the need to ensure
Executives are properly incentivised to perform in
the interests of the Company, its people and its
shareholders.

The Remuneration Committee’s key responsibilities are:

•

Shaping and agreeing with the Board the policy
framework for the remuneration of Executive
Directors and certain aspects of the remuneration
of senior management.

Determining the total individual remuneration
package of each Executive Director with due
regard to the performance of the individual, in
line with the agreed Remuneration Policy.

•

Agreeing Executive Directors’ contractual terms.

•

Acting on behalf of the Board in connection with
the establishment and administration of the
Company’s current and/or future share plans,
including the selection of participants,
determining the structure of awards and the
setting of performance targets.

Drafting and approving any remuneration-
related resolutions to be put to the shareholders
at the Company’s Annual General Meeting.

The committee formally met six times during 2023.
Over the course of the year, the main activities were to
discuss and agree the treatment of remuneration for
Executive Directors in terms of business-as-usual
activities, as well as overseeing and agreeing details
relating to the departure of Moray MacLennan and
the appointment of Zillah Byng-Thorne to the role of
Executive Chair.

ADVISORS

The committee retains Korn Ferry to provide
independent remuneration consultancy services
to the Group. Korn Ferry is a member of the
Remuneration Consultants’ Group and, as such,
voluntarily operates under the code of conduct in
relation to executive remuneration consulting in
the UK. The code of conduct can be found at
www.remunerationconsultantsgroup.com.

The total fee for advice provided to the committee
during the year was £21,515 (2022: £43,375). The
committee is satisfied that the advice it received
has been objective and independent.

SHAREHOLDER CONSIDERATIONS

The Company is committed to ongoing shareholder
dialogue and takes an active interest in feedback we
receive from our shareholders and voting outcomes.
The voting result from the Annual General Meeting
held in June 2023 on the resolution to approve the
Remuneration Report, including the Remuneration
Policy, is set out on the following page.

We engaged with our shareholders through the
conduct of a consultation on the voting outcomes
of the Company’s 2023 Annual General Meeting,
as four resolutions were passed with more than
20% votes against including the resolution to approve
the Remuneration Report, see pages 63, 97 and 118
for further information on this process.

119

Corporate GovernanceM&C Saatchi Plc Annual Report 2023Approval of the 2022 Directors’ Remuneration Report
(including the Remuneration Policy)

For

Against

Withheld

Total votes as % of issued share
capital (excluding treasury shares)

61.30% (58,089,029)

38.70% (36,672,809)

(66,466)*

77.5%

* A vote withheld is not a vote in law and is not counted in the calculation of the votes

for or against a resolution.

DIRECTORS’ REMUNERATION POLICY

This section sets out the Company’s Directors’
Remuneration Policy (the “Remuneration Policy”),
which has been applicable since 1 January 2021.
The Remuneration Policy was developed taking into
account the regulations applicable to main market
listed companies5, the principles of the 2018 UK
Corporate Governance Code (the “Code”) and
relevant UK institutional investor guidance.

Whilst the Company is listed on AIM and is therefore
not required to comply with the requirements for Main
Market listed companies, the Board and committee
have chosen to follow these requirements insofar as
is possible and practicable for the Company.

Key Principles of the Remuneration Policy

The Company is committed to ensuring that its
remuneration practices enable it to appropriately
compensate employees for the services they provide
to the Company, attract and retain employees with
skills required to effectively manage the operations
and growth of the business and motivate employees
to perform in the best interests of the Company.

The Company’s remuneration principles ensure that:

•

It offers a suitable package to attract, retain and
motivate people with the skills and attributes
needed to deliver the Company’s business goals.

Its policy and practices aim to drive behaviours
that support the Company strategy and business
objectives.

Incentive plans are linked to company and
individual performance to encourage high
performance from employees, both at an
individual and collective level.

These policy objectives will be achieved by ensuring
remuneration is reflective of applicable market
conditions, statutory obligations and who should be
incentivised by variable remuneration. Our aim is to
deliver outstanding performance, whilst providing
organisational flexibility and operational efficiency.

In addition, the Remuneration Policy is designed taking
into account the following principles of the Code:

•

Clarity – the Remuneration Policy is well
understood by the management team and
is clearly articulated to shareholders.

Simplicity – the committee is mindful of the need
to avoid overly complex remuneration structures
which can be misunderstood and deliver
unintended outcomes. Therefore, one of the
committee’s objectives is to ensure that the
executive remuneration policies and practices
are as simple to communicate and operate as
possible, while also supporting strategy.

Risk – the Remuneration Policy is designed to
ensure that inappropriate risk-taking is not
encouraged and will not be rewarded. This is
done via (i) the balanced use of both short and
long-term incentive plans which employ a blend
of financial, non-financial and shareholder return
targets; (ii) the significant role played by equity in
the incentive plans (together with shareholding
guidelines); and (iii) recovery provisions.

Predictability – the incentive plans have clearly
defined performance conditions setting out the
metrics and targets required to be met to achieve
defined levels of pay.

Proportionality – there is a clear link between
individual awards, delivery of strategy and
long-term performance. In addition, the
significant role played by incentive/“at-risk” pay,
together with the structure of the Executive
Directors’ service contracts, ensure that poor
performance is not rewarded.

•

Alignment to culture – the executive pay policies
are fully aligned to the Company’s culture.

5 Large and Medium-size Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013, as amended.

120

Corporate GovernanceM&C Saatchi Plc Annual Report 2023SUMMARY OF OUR REMUNERATION POLICY

PURPOSE

Base salary

Provide a base level
of remuneration to
support recruitment
and retention of
Executive Directors
with the necessary
experience and
expertise to deliver the
Company’s strategy.

Benefits

Provide a market-
competitive level of
benefits to support
recruitment and
retention of Executive
Directors with the
necessary experience
and expertise to deliver
the Company’s
strategy.

OPERATION

OPPORTUNITY

PERFORMANCE
MEASURES

None, although
individual and
corporate performance
is considered during
any annual base
salary review.

Salaries are normally reviewed annually
with any changes typically effective from
the beginning of the financial year.

When determining an appropriate level
of base salary, the committee considers:

• Remuneration practices within the

Company.

• The performance of the individual

Executive Director.

• The experience and responsibilities

of the Executive Director.

• The general performance of the

Company.

• Base salary level prior to appointment.
• Salaries paid by comparable

companies.

• The economic environment.

Increases will
normally be in line
with average
increases made to
the wider employee
workforce, although
in exceptional
circumstances larger
increases may be
provided, for
example, to reflect
a change in role/
responsibilities.

Individuals who are
recruited or promoted
to the Board may, on
occasion, have their
salaries set at a lower
level with larger
increases provided as
they gain experience.

None.

The maximum will
be set at the cost
of providing the
benefits described.

The Executive Directors may receive
benefits which include, but are not limited
to, car allowance and related benefits,
family private health cover, critical
illness cover, life assurance cover,
income protection and accident/
sickness/business travel insurance
(including tax payable if any).

Other benefits such as relocation
allowances may be offered if considered
appropriate and reasonable by
the committee.

Any reasonable business-related expenses
can be reimbursed in accordance with
the Company’s expenses policy, including
the tax thereon if determined to be a
taxable benefit.

The Executive Directors may participate
in any all-employee share plans operated
by the Company, on the same terms as
other employees.

121

Corporate GovernanceM&C Saatchi Plc Annual Report 2023PURPOSE

Pensions

Provide appropriate
levels of pension
benefits to support
recruitment and
retention of Executive
Directors with the
necessary experience
and expertise to
deliver the Company’s
strategy.

Group Annual Bonus

The Group Annual
Bonus Plan provides
an incentive to the
Executive Directors
linked to achievement
in delivering goals in
a sustainable manner
that are closely aligned
with the Company’s
strategy and the
creation of value
for shareholders.

OPERATION

OPPORTUNITY

The Company may provide pension
contributions in the form of a base salary
supplement and/or as an employer
contribution to a defined contribution
pension plan.

Performance measures, weightings and
targets are reviewed and set annually by
the committee, in line with the Company’s
strategic objectives at that time.

Levels of award determined by the
committee after the year-end will be
based on performance against the
targets set, based on audited results,
unless otherwise noted. The committee
retains overriding discretion to adjust
the outcome upwards or downwards,
where the formulaic outcome is, in
the view of the committee, not a fair
and accurate reflection of business
performance.

The bonus may be paid wholly in cash,
or the committee may determine that a
portion of the bonus should be delivered
in deferred shares.

Malus and clawback provisions apply
such that in certain circumstances the
committee may withhold or recover
bonus payments.

The maximum
pension contribution
as a percentage of
base salary will be
in line with the
contribution level
provided to most
of the workforce
(currently 6% of base
salary in the UK).

The maximum bonus
opportunity is 100%
of base salary.

For 2023, the Chief
Executive Officer’s
annual bonus
opportunity was
100% of base salary.
The Chief Financial
Officer’s bonus
opportunity was set
at 100% of base salary
on appointment.

No more than 25%
of the relevant portion
of the bonus is
payable for delivering
a threshold level of
performance rising
to full pay-out of the
relevant portion for
delivering in line with
the maximum target.
No more than 50% of
the relevant portion
is payable for
delivering a target
level of performance.

PERFORMANCE
MEASURES

None.

Performance measures
will be set to support
the strategy based on
a range of key financial
and personal/strategic
objectives.

At least 50% of the
bonus is based on
Group financial metrics
and no more than
25% of bonuses will
be based on personal
objectives.

For 2023, the bonus
was based on Group
Headline profit before
tax targets (50%
weighting), Group
revenue targets (25%
weighting), ESG targets
(10% weighting) and
personal objectives
(15% weighting).

The targets and
performance against
them will be disclosed
in the relevant Annual
Report and Accounts
following the end of the
performance period.

122

Corporate GovernanceM&C Saatchi Plc Annual Report 2023PURPOSE

OPERATION

OPPORTUNITY

Long-Term Incentive Plan (LTIP)

Awards are designed
to incentivise the
Executive Directors to
maximise returns to
shareholders by
successfully delivering
the Company’s
objectives over the long
term in a sustainable
manner.

Awards may be granted annually to
Executive Directors under the LTIP.

The awards normally vest no earlier
than the third anniversary of grant
and only to the extent the performance
conditions have been satisfied.

The committee retains overriding
discretion to adjust the outcome
upwards or downwards, where the
formulaic outcome is, in the view of
the committee, not a fair and accurate
reflection of business performance.

A two-year holding period will normally
apply to the vested shares such that the
shares may not be sold by the Director
during this period other than to settle
tax liabilities in relation to those shares.

Malus and clawback provisions apply
such that in certain circumstances the
committee may withhold or recover
LTIP payments.

The maximum annual
grant level is 200%
of salary.
The Chief Financial
Officer was granted
an award over shares
to the value of 100%
of salary in 2023.
No awards were
granted to the former
Chief Executive Officer
in 2023.
No more than 25%
of the relevant portion
of an award will vest
for delivering a
threshold level of
performance rising
to full pay-out of
the relevant portion
for delivering in line
with the maximum
target.

PERFORMANCE
MEASURES

Performance measures
are set by the committee
over a three-year period
prior to the grant being
made.
At least 50% of the LTIP
will be based on Group
financial and/or total
shareholder return
(“TSR”) metrics.
2023 awards will be
assessed against TSR
performance versus the
FTSE SmallCap Index
(50% weighting) and
adjusted earnings per
share (50% weighting).

Shareholding Requirement

To support long-term
commitment to the
Company and the
alignment of Executive
Director interests with
those of shareholders.

The committee has adopted shareholding
guidelines that encourage the Executive
Directors to build up and then subsequently
hold a shareholding equivalent to a
multiple of their base salary.

The requirement for an Executive Director
to maintain a holding of 100% of base
salary for a year after leaving excludes
any shares purchased by the Director.

Executive Directors
are required to
build up and hold
a shareholding
equivalent to 200%
of salary and then
retain a holding of
100% of salary for the
year after leaving.

None.

The committee retains discretion
with respect to the operation of
the shareholding requirement.

123

Corporate GovernanceM&C Saatchi Plc Annual Report 2023PURPOSE

OPERATION

OPPORTUNITY

PERFORMANCE
MEASURES

Chairman and Non-Executive Directors

Overall fees will not
exceed the maximum
in the Company’s
articles of association.

None.

The Non-Executive
Directors are not
entitled to receive any
remuneration which is
performance related.

To provide a
competitive fee for
undertaking the role
which is sufficient to
attract high calibre
individuals to the role.

Fees are structured as follows:

The Chairman is paid an all-inclusive
fee for all Board responsibilities.

Non-Executive Directors are paid a basic
fee, plus additional fees for additional
responsibilities such as chairing Board
committees.

The Chairman’s fee is determined by
the committee, with the Non-Executive
Directors’ fees being determined by
the Board.

Additional fees may also be paid to the
Chairman and/or Non-Executive Directors
on a per diem (or other) basis to reflect
increased time commitment in certain
limited circumstances. Fees are normally
paid in cash.

Any reasonable business-related expenses
can be reimbursed, including the tax
thereon if deemed to be a taxable benefit.

Non-Executive Directors are encouraged
to build a shareholding equal to at least
1x their annual fees. Whilst there is no
time limit for this, it is hoped that this
will occur by the end of their second
three-year term.

124

Corporate GovernanceM&C Saatchi Plc Annual Report 2023REMUNERATION COMMITTEE DISCRETION

RECRUITMENT POLICY

The committee retains discretion to make any
payments, notwithstanding that they are not in line
with the policy set out above, where the terms of the
payment were agreed (i) before the policy came into
effect, or (ii) at a time when the relevant individual was
not a Director of the Company and, in the opinion of
the committee, the payment was not in consideration
of the individual becoming a Director of the Company.

The committee will operate the variable pay plans
(i.e. Group Annual Bonus Plan, Long-Term Incentive
Plan (LTIP) and other incentive plans) according to
their respective rules. The committee retains certain
discretion in respect of the operation and
administration of these arrangements.

In addition, the committee retains the ability to adjust
the targets and/or set different measures if events
occur (e.g. a material acquisition and/or divestment
of a Group business) which cause it to determine that
the conditions are no longer appropriate, and the
amendment is required so that the conditions achieve
their original purpose and are not materially less
difficult to satisfy.

MALUS AND CLAWBACK PROVISIONS

Annual bonus and LTIP payments remain subject to
malus and clawback until two years after they have
vested/been paid. Circumstances that may result in a
clawback or malus for an individual include financial
misstatement, erroneous calculations determining
payments, corporate failure, serious misconduct or
if material reputational damage is caused by the
individual to the Group.

The remuneration arrangements for a new Executive
Director would normally be in line with the terms of
the Remuneration Policy and would be set considering
the specific circumstances of the individual. In addition,
the committee may offer additional remuneration to
replace remuneration forfeited on leaving a previous
employer.

Where a position is filled internally, the committee may
honour any pre-existing remuneration obligations or
outstanding variable pay arrangements in relation to
the individual’s previous role, such that these shall be
allowed to continue according to the original terms
(adjusted as relevant to take account of the Board
appointment).

For internal and external appointments, the committee
may agree that the Company will meet certain
relocation and/or incidental expenses as appropriate.

SERVICE CONTRACTS AND CESSATION
OF EMPLOYMENT

Service contracts may be terminated by either the
Company or an Executive Director with no more than
12 months’ notice. The Company may determine to
make a payment in lieu of notice in respect of base
salary and contractual benefits only.

The treatment of outstanding variable pay schemes
shall be determined by the committee considering the
time employed during the respective performance
periods and the circumstances of departure. The
committee will fulfil its duty to seek to ensure that there
is no reward for failure and, in doing so, not paying
more than is necessary whilst acting fairly and
reasonably to all parties.

125

Corporate GovernanceM&C Saatchi Plc Annual Report 2023
Annual
Remuneration Report

This section summarises remuneration paid out to the Directors for the 2023 financial year and details of how the
Remuneration Policy will be implemented in the 2024 financial year.

DIRECTORS’ REMUNERATION FOR THE 2023 FINANCIAL YEAR (AUDITED)

Base
Salary/Fees
£000

Benefits
£000

Pension
£000

Annual
Bonus
£000

Long-term
Incentives
£000

Total
£000

Total Fixed
Remuneration
£000

Total Variable
Remuneration
£000

Director

2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022

2023

2022

2023

2022

Moray MacLennan1

Bruce Marson2

670

206

650

Gareth Davis3

114

250

Chris Sweetland4

Colin Jones5

Lisa Gordon5, 6

Louise Jackson6

Zillah Byng-Thorne7, 8

509

115

650

742 1,380

742

730

220

114

250

115

114

514

250

115

500 1,801 2,705

1,801

1,555

650

1,150

Total

1,710 1,441

Moray MacLennan stepped down from the Board on 30 September 2023. Moray is on garden leave and will continue to be paid in line with his contractual entitlements until
his termination date of 30 June 2024.

2. Bruce Marson was appointed to the Board on 12 April 2023. The figures in the table above represent his remuneration since appointment to the Board.

3. Gareth Davis stepped down from the Board on 14 June 2023.

4. Chris Sweetland was appointed to the Board on 15 June 2023.

5. During 2022, Colin Jones, Lisa Gordon and Louise Jackson received additional payments relating to time spent on takeover related matters.

6. Lisa Gordon stepped down from the Board on 14 June 2023.

7. Zillah Byng-Thorne was appointed to the Board on 15 June 2023.

8. On 1 September 2023, Zillah Byng-Thorne assumed the role of Executive Chair for a period of up to 12 months. Her fee was increased for the duration of the appointment to

£670,000. The fees figure includes a £232,585 buy-out payment relating to garden leave payments from Future plc which were agreed on appointment.

DIRECTORS’ REMUNERATION FOR THE
2023 AND 2024 FINANCIAL YEARS

Base Salary

As disclosed in last year’s Remuneration Report, Moray
MacLennan’s base salary was increased to £670,000
from 1 January 2023. This was an increase of 3%, which
was in line with external benchmarking and below that
of the average increase for the wider workforce across
the Group.

Prior to his appointment to the Board, Bruce Marson
held the role of Interim Chief Financial Officer, on a
base salary of £275,000. On appointment to the Board
on 12 April 2023, Bruce Marson’s base salary was held
at £275,000.

There has been no increase to Bruce Marson’s base
salary for the year ending 2024.

The base salary of Zaid Al-Qassab, who will assume
the role of Chief Executive Officer on 13 May 2024,
will be set at £600,000.

Pension and Benefits

Moray MacLennan’s pension allowance was set at 6%
of base salary, which is in line with the rate of the wider
workforce. Bruce Marson’s pension contribution was
also set at 6% of base salary.

Benefits consisted principally of private healthcare,
life assurance, income protection and permanent
health insurance. Moray MacLennan also received
a car allowance of £20,000 per annum.

Zaid Al-Qassab’s pension contribution and benefits
will be set in line with the Remuneration Policy.

Group Annual Bonus Plan

The Executive Directors are eligible for a performance-
related bonus that is paid in cash following the
year-end.

2023 Group Annual Bonus

For 2023, the Group Annual Bonus was structured in
line with the Remuneration Policy. The maximum

126

Corporate GovernanceM&C Saatchi Plc Annual Report 2023

opportunity for the Chief Executive Officer and the
Chief Financial Officer was 100% of base salary.

The performance measures, weightings, targets and
achievements are set out in the table below. Bonus for
the financial elements is earned on a straight-line basis
from 0% for meeting the “threshold”, to 50% for meeting
the “mid”, to 100% for meeting the “stretch” targets.

The threshold Group Headline profit before tax target
of £37m was not achieved and, as such, no bonus
payments were due for the year ended 31 December
2023. As a result of the minimum performance hurdle
not being met, the committee determined that
performance against personal objectives would not
be assessed.

Weighting
(% of bonus)

Targets £m
(threshold–mid–stretch)

Performance
Achieved
£m

% of Bonus
Earned

Measure

Group Headline profit
before tax

Group net revenue

ESG

50%

25%

10%

37.0–39.0–41.0

276.4–290.9–305.4

28.7

252.7

Refer to the table below

Personal objectives

15%

Not assessed as threshold
for payment not met

ESG MEASURES

Measure

Planet

Weighting
(% of bonus)

Targets £m
(threshold–mid–stretch)

5% • Meeting SBTi carbon reduction targets:

year-on-year reductions in carbon across
Scope 1 and Scope 2.

• Reduction in business travel emissions.
• Reduction in purchased goods and services

emissions.

• Year-on-year increase in percentage revenue

coming from planet-positive work.

• A year-on-year increase in engagement score
“Through our work, our business contributes
to positive environmental and social change”.

Performance
Achieved
£m

• Carbon reduction

target met (see page
67 for further
information).
• Measurement

mechanisms in place.

• Improvement by

one point.

People

5% • Improved gender and ethnic diversity at

• Improvement targets

leadership levels. Measured by data of
Executive Committee and UK top two levels.
• Year-on-year increase in inclusion scores on

the annual employee survey.

not met.

• Score remained

constant year-on-year.

% of Bonus
Earned

1.7%

1.25%

127

Corporate GovernanceM&C Saatchi Plc Annual Report 20232024 GROUP ANNUAL BONUS

For 2024, the Group annual bonus is structured in
line with the Remuneration Policy. The maximum
opportunity for the Chief Financial Officer is 100%
of base salary. The annual bonus for the new
Chief Executive Officer will be set in line with the
Remuneration Policy at 100% base salary. The
performance measures and weightings are set out in
the table below. As the targets are forward-looking,
these are considered commercially sensitive by the
Board and will be disclosed next year. For 2024,
no personal objectives are included in the plan, with
the 15% weighting applied in 2023 being reallocated
across the profit and revenue measures.

Measure

Headline profit before tax

Net revenue

ESG

Weighting
(% of bonus)

60%

30%

10%

For 2024, examples of measures falling under the
planet and people metrics of our ESG measure are
SBTi carbon reduction targets and improvements in
the Group’s engagement survey scores relating to
inclusion. Further information on each of these will
be disclosed in next year’s Annual Report.

LONG-TERM INCENTIVE PLAN (LTIP)

2023 LTIP Awards

The Chief Financial Officer received an award under
the LTIP in 2023 of 100% of base salary. The award,
which was made on 2 August 2023, will deliver shares,
following the end of the three-year performance
period only to the extent that the performance targets
are met and normally that he remains employed at
the time. Executive Directors are required to hold any
shares that vest for an additional two-year period
following the end of the performance period.

The performance metrics and weightings, which are
measured over the period to 31 December 2025, are
as summarised in the table below.

Performance Measure

Weighting

Relative TSR vs. FTSE SmallCap Index

Earnings per share

50%

The targets attached to the TSR element require
performance to match the index TSR for vesting to
start to occur rising from 0% on a straight-line basis
to full vesting for 10% per annum outperformance of
the index. TSR is the share price movement over the
period of three years and the value of dividends for
the Company’s shareholders. The FTSE SmallCap
Index TSR will be calculated by a financial information
provider. The same vesting scale applies to the
earnings per share targets. However, as the earnings
per share targets are felt to be commercially sensitive
at the current time these will be disclosed in a future
Remuneration Report.

Ordinarily, LTIP awards for the year ended
31 December 2023 would have been made following
the announcement of the Company’s financial results
in April 2023, but these awards were delayed until
2 August 2023. Awards will vest, subject to performance
on 2 August 2026.

Malus and clawback provisions apply in line with
the Remuneration Policy.

PAYMENTS TO PAST DIRECTORS

On 24 July 2023, Moray MacLennan notified the
Company of his intention to retire from his role as Chief
Executive Officer of the Company. On 30 September
2023, he stepped down as a director of the Company
and commenced a period of garden leave which will
end on 30 June 2024. All contractual payments made
in the year ended 31 December 2024 will be paid in
line with the Remuneration Policy. No payments have
been made to past Directors in the year.

In line with the retirement provision set out in the LTIP
Scheme Rules, the Committee determined that Moray
MacLennan should be treated as a “good leaver”
in respect of his 2021 and 2022 LTIP awards and, as
such, these awards will vest subject to performance,
in line with other participants of the scheme. No
award under the LTIP was made to Moray
MacLennan in 2023.

2024 LTIP AWARDS

LTIP awards granted in 2024 will vest to the extent
performance targets are met over the period to
31 December 2026 against equally weighted TSR
and EPS measures.

Awards made to Executive Directors will be in line
with the Remuneration Policy.

128

Corporate GovernanceM&C Saatchi Plc Annual Report 2023The table below details all awards held by Executive Directors under the LTIP at 31 December 2023:

Executive
Director

Grant
Date

Number
of Shares

Percentage
Vesting at
Threshold
Performance

Performance
Period

Vesting
Date

Holding
Period

Moray MacLennan1

28 September 2021

600,000

FY21 to FY23

28 September 2024 100% of any

12 December 2022

878,022

FY22 to FY24

31 May 2025

Bruce Marson2

12 December 2022

92,867

2 August 2023

202,802

FY22 to FY24

31 May 2025

FY23 to FY25

2 August 2026

vested shares
will be released
on the second
anniversary of
the vesting date.

100% of any
vested shares
will be released
on the second
anniversary of
the vesting date.

As part of his exit arrangements, Moray MacLennan was deemed to be a “good leaver” in respect of his 2021 and 2022 LTIP awards. As such, awards will vest subject to
performance in line with other participants of the Group.

2. The award made to Bruce Marson in December 2022 was made prior to his appointment to the Board.

CHAIR AND NON-EXECUTIVE DIRECTORS’ REMUNERATION (UNAUDITED)

The fee structure for the Non-Executive Directors in respect of 2023 is set out in the table below.

Base fee

Chair

Non-Executive Directors

Additional fees

Senior Independent Director

Audit & Risk Committee Chair

Remuneration Committee Chair

Fee as at
31 December 2023

% Increase

£250,000

£50,000

£25,000

129

Corporate GovernanceM&C Saatchi Plc Annual Report 2023Zillah Byng-Thorne was appointed as independent Non-Executive Board Chair from 15 June 2023 and her fee
was set at £250,000. This fee increased to £670,000 for a period of up to 12 months, on appointment to the role
of Executive Chair on 1 September 2023.

Fees for Non-Executive Directors increased on 1 March 2024 by 3% in line with average UK base salary increases
for colleagues across the Group. During her appointment to the role of Executive Chair, Zillah Byng-Thorne will
receive no additional fee increase.

Fees for 2024 are set out below:

Base fee

Chair

Non-Executive Directors

Additional fees

Senior Independent Director

Audit & Risk Committee Chair

Remuneration Committee Chair

2024 Fees

% Increase

£257,500

£51,500

£25,750

Dame Heather Rabbatts joined the Board as Senior Independent Director on 22 January 2024 and her fee was
set at £75,000 (with £25,000 of this relating to her appointment as Senior Independent Director).

SHAREHOLDINGS AND SHARE INTERESTS (AUDITED)

Under the Remuneration Policy, Executive Directors are required to build and maintain a shareholding equivalent
to 200% of their base salary.

The table below summarises the Executive Directors’ and Non-Executive Directors’ shareholdings at 31 December 2022
and 31 December 2023 (or the date they ceased to be a Director, including shares subject to deferral or a holding
period and performance conditions).

Director

Beneficially
owned shares on
31 December 2022

Beneficially
owned shares on
31 December 2023

Shares subject to
deferral/holding
period (but not
performance)

Unvested
shares subject
to performance
conditions

% of base salary
held counting
towards
shareholding
requirement1

Moray MacLennan2

562,149

Bruce Marson

Zillah Byng-Thorne

Colin Jones

Louise Jackson

Chris Sweetland

Gareth Davis3

Lisa Gordon3

37,758

178,590

100,000

33,741

243,536

37,758

25,000

178,590

100,000

1. 31 December 2023 share price of £1.575 used for calculation.
2. Moray MacLennan stepped down from the Board on 30 September 2023.
3. Gareth Davis and Lisa Gordon stepped down from the Board on 14 June 2023.

1,478,022

295,669

n/a

19%

n/a

130

Corporate GovernanceM&C Saatchi Plc Annual Report 2023POLICY ON EXTERNAL APPOINTMENTS (UNAUDITED)

The committee believes that the Group can benefit
from Executive Directors holding approved Non-
Executive Directorships in other companies, offering
Executive Directors the opportunity to broaden their
experience and knowledge. Our policy is to allow
Executive Directors to retain fees paid from one
external appointment. Bruce Marson does not hold
any external appointments. Zillah Byng-Thorne holds
more than one external appointment, given her
original appointment as Non-Executive Chair.
See page 99 for details of these.

ENGAGEMENT WITH THE WORKFORCE (UNAUDITED)

The Company is committed to regularly engaging with
its workforce and realises the value in listening to and
acting on employee views across the organisation.

Multiple mechanisms exist across both the Group and
its individual companies in order to facilitate this,

including participative “all hands” style meetings
and various newsletters.

Louise Jackson has been appointed as the Board
member responsible for engagement with the
workforce and work with the Chief People Officer
to ensure the Board is furnished with qualitative
and quantitative data.

The Company’s global employee engagement
survey, which was launched in 2022, plays a key
part in informing the Board’s understanding of
employee sentiment.

PERFORMANCE GRAPH (UNAUDITED)

The chart below illustrates the Company’s total
shareholder return performance compared with the
performance of the FTSE SmallCap Index, over the
last ten years. The FTSE SmallCap Index has been
selected as an appropriate benchmark, as this index
is being used in the targets for long-term incentives.

250

M&C Saatchi

FTSE SmallCap

200

150

100

0
31 Dec
2013

31 Dec
2014

31 Dec
2015

31 Dec
2016

31 Dec
2017

31 Dec
2018

31 Dec
2019

31 Dec
2020

31 Dec
2021

31 Dec
2022

31 Dec
2023

LOUISE JACKSON
Chair of the Remuneration Committee
11 April 2024

131

Corporate GovernanceM&C Saatchi Plc Annual Report 2023M&C Saatchi Plc Annual Report 2023

Corporate Governance

Directors’
Report

The Directors present their report together with the
audited financial statements of the Group and
Company for the year ended 31 December 2023.

STRATEGIC REPORT

The Company’s Strategic Report is set out on pages 4
to 93 and includes the section 172 statement on pages
64 and 65. The Strategic Report contains an indication
of likely future developments in the business of the
Company and the Group.

DIVIDENDS

The Company paid a final dividend of 1.5 pence
per share to its shareholders in 2023 (2022: £nil).

The Company understands the importance
of returning capital to shareholders. Given the
earnings performance during the year, the
Board is recommending the payment of a final
dividend of 1.6 pence per share.

Subject to shareholder approval at the Annual
General Meeting, to be held on 16 May 2024, the
dividend will be paid on 24 June 2024 to shareholders
on the register of members as at 10 May 2024.
The shares will go ex-dividend on 9 May 2024.

PRINCIPAL ACTIVITY, TRADING REVIEW AND FUTURE
DEVELOPMENTS

The principal activity of the Group during the year
was the provision of marketing services. The review of
trading, future developments and key performance
indicators can be found in the Strategic Report.

GOING CONCERN

These financial statements have been prepared on
the going concern basis, as discussed in the Directors’
Report and the Report of the Audit & Risk Committee.

The Board has concluded that under the most likely
going concern scenarios, the Group will have sufficient
liquidity and headroom on bank covenants to continue
to operate for a period of not less than a year from
approving the financial statements.

The Board has formed its opinion after evaluating
four different severe but plausible forecast
scenarios and a reverse stress test, extending to
31 December 2025. The four scenarios comprise:

1.
2.
3.
4.

A significant reduction in new business wins.
A significant increase in wage inflation.
A significant number of top clients are lost.
A significant economic downturn.

These severe but plausible scenarios are assumed
to materialise from the first quarter of 2024 onwards.
The estimated decline in EBITDA ranges from £11m
to £24m compared to the base case plan for the
cumulative period ending 31 December 2025, including
a £5m to £14m decline in EBITDA in 2024.

The reverse stress test case evaluates how extreme
conditions would need to be for the Group to break
its covenants within the going concern review period.
The conditions go significantly further than the severe
but plausible scenarios and reflect a scenario that the
Directors consider to be highly unlikely.

The Directors have also considered the impact of
climate change on going concern, taking into account
the Company’s support for Ad Net Zero (the industry
initiative to tackle climate change led by the
Advertising Association and its members), and do not
believe that there is a significant financial impact.

The Board is satisfied that the Group’s forecasts, which
take into account reasonably possible changes in
trading performance, show that there are no material
uncertainties over going concern, and that, even under
the severe but plausible scenarios, the Company will
continue to have sufficient liquidity and headroom to
operate within the terms of its banking covenants. The
Board, therefore, have concluded the going concern
basis of preparation continues to be appropriate.

On 7 March 2024, the Company entered into a new
revolving multicurrency facility agreement with National
Westminster Bank Plc, HSBC UK Bank plc and Barclays
Bank PLC for up to £50m (the “New Facility”), with a
further £50m extension if required for strategic
acquisitions. The New Facility is provided on a three-
year term with two one-year extensions. This New
Facility is to refinance the previous £47m facility with
National Westminster Bank Plc and Barclays Bank PLC
(the “Old Facility”), which was due to mature on 31 May
2024. At 31 December 2023, the Group had up to £47.0m
(2022: £47.0m) of funds available under the Old Facility.

132
132

Corporate GovernanceM&C Saatchi Plc Annual Report 2023At 31 December 2023, the Group held total gross cash
of £24m, with bank borrowings of £16m (drawn down
on the Old Facility). With the borrowing headroom
within the Old Facility of £31m, the Group therefore
had liquidity headroom of £55m.

In all models and scenarios considered by
management, the New Facility is not expected to be
fully drawn. The New Facility is expected to continue to
reduce to zero over the term, before any M&A activity.

In the event that a downside scenario materialises,
management would swiftly undertake the following
mitigating actions:

•

Reducing staff and other operating expenses to
levels that are in line with revenue reduction.

Obtaining further concessions and covenant
relaxation under the New Facility from the
lenders.

Closing loss-making entities.

Selling unlisted investments, either as a portfolio
or individually (at 31 December 2023, these are
valued at £10.4m).

The Board is satisfied that the Group’s forecasts, which
take into account reasonably possible changes in
trading performance, show that there are no material
uncertainties over going concern, and that, even under
the severe but plausible scenarios, the Group will
continue to have sufficient liquidity and headroom
to operate within the terms of its banking covenants
under the New Facility. The Board, therefore, have
concluded the going concern basis of preparation
continues to be appropriate.

VIABILITY

The Directors assess the prospects of the Group and
appropriateness of the period used for the viability
assessment by taking into account various factors,
including the Group’s current position, the nature of
its business, risks to the future success of the Group’s
business model and strategy, its principal risks, its
liquidity and its expected performance, all of which
have also been considered in the going concern review.

The Directors have determined that a three-year time
horizon (from 31 December 2023) is the maximum
length of time the Directors can reasonably be expected
to assess the Group’s viability at the present time. This

period has been chosen as it reflects the Directors’
best estimate of the future viability of the Company
and encompasses three years of detailed forecasts.

In testing the viability of the Group, we have
undertaken a robust scenario assessment of the
principal risks which could threaten the viability or
existence of the Group. As per the going concern
statement set out above, we evaluated four different
severe but plausible forecast scenarios. We also built
a reverse stress test model which involves building
further downside on top of the downsides built into
the severe but plausible model.

Based on the assessment explained above, the
Directors confirm that they have a reasonable
expectation that the Group will continue to operate
and meet its liabilities, as they fall due, until at least
31 December 2026.

However, the impacts of a series of additional
unforeseen risks, such as policies on data handling
or employee welfare not being followed or a banking
crisis, could result in additional financial burdens on
the Group and may change the Board’s expectation
of the Group’s viability.

PRINCIPAL RISKS AND UNCERTAINTIES

On pages 57 to 61 we describe the Group’s principal
risks and uncertainties. We provide information on the
nature of the risk, actions to mitigate risk exposure, the
change in exposure compared to last year and an
indication of the significance of the risk by reference
to its potential impact on the Group’s business and
financial condition. Not all potential risks are listed, and
some risks are excluded because the Board considers
them not to be material to the Group as a whole. In
addition, there may be risks and uncertainties not
presently known to the Directors, or which the Directors
currently deem immaterial that may also have an
adverse effect on the Group.

FINANCIAL INSTRUMENTS

Details of the use of financial instruments by the
Group and their risks are contained in Note 31 of the
financial statements (financial risk management).

POLITICAL CONTRIBUTIONS

During the year, the Group made no political
donations (2022: £nil).

133

Corporate GovernanceM&C Saatchi Plc Annual Report 2023DIRECTORS

The names of the Directors and details of their careers and skills are set out on pages 99 to 102. Details relating
to Board meeting attendance and the composition of the committees of the Board are shown in the Governance
review on pages 105 and 104 respectively.

The Directors of the Company who were in office during 2023 and up to the date of signing the financial statements
are detailed in the table below:

Joined Board

Departed Board

Executive Directors

Moray MacLennan

Zillah Byng-Thorne

Bruce Marson

Non-Executive Directors

Gareth Davis

Colin Jones

Lisa Gordon

Louise Jackson

Chris Sweetland

1 January 2021

15 June 2023*

14 April 2023

3 February 2020

17 March 2020

15 June 2023

Dame Heather Rabbatts

22 January 2024

* Joined the Board on 15 June 2023 as Non-Executive Chair and on 1 September 2023 was appointed to Executive Chair.

30 September 2023

–

14 June 2023

–

14 June 2023

–

The Company’s articles of association require a
director appointed by the Board to retire at the
Company’s next Annual General Meeting. In addition,
the articles of association require directors to retire
at each Annual General Meeting on the basis
recommended by the corporate governance code
adopted from time to time by the Company and,
in any event require that any director who was not
appointed or re-appointed as a director at either of
the last two Annual General Meetings must retire and
(if relevant) stand for re-appointment. As the Company
has adopted the UK Corporate Governance Code,
all of the Directors currently must offer themselves
for re-election at each Annual General Meeting.

STREAMLINED ENERGY AND CARBON REPORTING
(“SECR”)

The UK Government’s SECR Policy was implemented
on 1 April 2019. This is the fourth year that the Group
has adopted disclosures on energy and carbon, so
comparative figures for 2019 onwards are also
included. The tables below represent the Group’s
energy use and associated GHG emissions from
electricity and fuel for its UK-based companies for
the year ended 31 December 2023.

In the tables that follow:

•

Scope 1 emissions cover direct GHG emissions from
fuel combustion.

Scope 2 emissions cover emissions from purchased
electricity.

Scope 3 emissions cover all other indirect emissions
that occur in a company’s value chain. They
are not included in the reporting shown on the
following page, but are covered in the ESG
section on page 66.

134

Corporate GovernanceM&C Saatchi Plc Annual Report 2023Scope 1

Natural gas utilised

Vehicle operations (below materiality
threshold)

Fugitive emissions (HVAC refrigeration
gas top up) (none declared for 2020)

Scope 2

Electricity (supplied from National Grid
with REGO certs)

Electricity (supplied from National Grid
without REGO certs)

Total electricity (supplied from
National Grid)

2023

2022

2021

2020

2019

369,636

424,097

402,037

398,862

653,930

kWh

892,109

1,006,537

819,498

793,057

1,204,341

kWh

42,165

89,404

119,179

126,562

186,317

kWh

934,274

1,095,941

938,677

919,619

1,390,658

kWh

Corresponding emissions from activities for which the Company is responsible:

Scope 1

Natural gas utilised

Vehicle operations

Fugitive emissions (HVAC refrigeration
gas top up)

Total Scope 1 emissions

Scope 2 (dual reporting)

Market-based emissions

Electricity (supplied from National Grid
with REGO certs)

Electricity (supplied from National Grid
without REGO certs)

Total electricity (market-based
emissions determination)

Total gross Scope 1 and Scope 2
emissions (market-based included)

Total Scope 2 location-based emissions

Total electricity (supplied from National
Grid, UK Grid mix factors)

Total Scope 1 emissions (as above)

Total gross Scope 1 and Scope 2
emissions (all locational-based
included)

2023

2022

2021

2020

2019

67.62

78.02

0.59

73.74

73.43

120.27

tCO2e
tCO2e
tCO2e

67.62

78.61

73.74

73.43

120.27

tCO2e

8.73

17.28

25.84

17.28

25.84

31.41

tCO2e

48.92

tCO2e

48.92

tCO2e

76.35

95.89

99.58

104.84

169.19

tCO2e

2023

2022

2021

2020

2019

193.46

211.93

203.73

226.35

365.92

tCO2e

67.62

261.08

78.61

290.54

73.74

277.47

73.43

299.78

120.27

486.19

tCO2e
tCO2e

135

Corporate GovernanceM&C Saatchi Plc Annual Report 2023ENERGY INTENSITY RATIO

The energy intensity ratio used has been based upon the standard measure of tCO2e (gross Scope 1 + 2) per
£100,000 revenue. The intensity ratios from 2019–2023 are as follows:

Turnover of UK Group
companies

Market-based intensity ratio:
tCO2e (gross Scope 1 + 2) /
£100,000 revenue

Location-based intensity
ratio: tCO2e (gross Scope 1
+ 2) / £100,000 revenue

2023

2022

2021

2020

2019

£153,538,000 £157,928,000 £145,803,000 £134,357,000 £163,297,000

0.050

0.061

0.068

0.078

0.104 tCO2e / £100,000

0.170

0.184

0.190

0.223

0.298 tCO2e / £100,000

The UK Group’s Scope 1 and Scope 2 location-based
emissions decreased by 9.4% vs. 2022 and market-
based emissions reduced by 10.2%, continuing the
downward trend from all four reported years. There
was a 2.8% decrease in UK Group turnover compared
to 2022. Both the location-based intensity ratio (6.8%
reduction) and the market-based intensity ratio (7.6%
reduction) have improved. These intensity based ratios
have also reduced consistently in all reported years.

ENERGY EFFICIENCY ACTION TAKEN
IN FINANCIAL YEAR

The energy efficiency measures that were undertaken
during the year were:

•

Comprehensive energy survey undertaken to
ESOS (Energy Savings Opportunity Scheme)
compliance protocol. An action plan is being
developed for the implementation of the
recommended ESOS measures.

Fluorescent lighting in basement service areas
of the London head office changed to LED.

Hybrid working has enabled a rationalisation
of office buildings, with a resultant reduction
of energy consumption and carbon emissions.

SOCIAL RESPONSIBILITY

We have a strong social and environmental
responsibility strategy that cuts across our operations,
the work we do for our clients and our paid, low bono
and pro bono work for non-profit organisations. For
more information on our broader social responsibility
strategy, please see the section “Environmental,
Social and Governance (ESG)” on page 66.

BUSINESS RELATIONSHIPS

The Group recognises the need to foster business
relationships with suppliers, customers and others.
Details on the actions taken to strengthen these
relationships and how the Board considered these
relationships when making decisions can be found
in our section 172 statement on pages 64 and 65.

ANTI-BRIBERY AND CORRUPTION

A zero-tolerance policy applies to practices at odds
with our values and culture, such as bribery,
corruption, and modern slavery. We are committed
to acting ethically and with integrity in all business
dealings and relationships and to implementing and
enforcing effective systems and controls to ensure
such practices are not taking place anywhere in our
businesses or supply chain. The Group has well-
established anti-bribery and anti-corruption policies
aimed at ensuring adherence to associated legal
and regulatory requirements.

WHISTLEBLOWING

Employees are encouraged to report any potential,
or apparent, malpractice or misconduct in confidence,
in accordance with the Group’s internal whistleblowing
policy. We continue to look at innovative ways to allow
our employees to report any potential, or apparent,
malpractice or misconduct in confidence. The
Company uses a third-party mobile app, Vault, which
gives employees a safe space to report any form of
misconduct in the workplace, including but not limited
to harassment, bullying, discrimination, and racism,
through to fraud and corruption. The Board approved
a Group-wide whistleblowing policy in 2021, which is
routinely reviewed for efficacy.

136

Corporate GovernanceM&C Saatchi Plc Annual Report 2023FRAUD

The Board approved a Group-wide anti-fraud policy
in 2021. In 2023, the Group suffered a payment fraud
incident in Australia. The fraud identified a control
weakness which has since been rectified. Training
and coaching were provided to all Financial
Controllers within the Group around this type of fraud
to ensure that the Group does not suffer such an
incident again. A loss of A$684k was incurred. The
Group has experienced an increase in cyber-attacks
which our cyber security systems have intercepted.
However, one phishing attack in Germany led to the
hacking of an email account but this did not lead to
any financial loss.

ENGAGEMENT WITH EMPLOYEES AND OTHER
STAKEHOLDER ENGAGEMENT

Ensuring that we create close collaborative and
mutually beneficial relationships with suppliers who
adopt standards consistent with our own helps us to
streamline processes, increase savings and protect
our reputation. Information about the Company’s
engagement with employees and other stakeholders
can be found on pages 62 and 63.

GOVERNANCE

AIM-listed companies are required to adopt a
recognised corporate governance code. The Board
has selected the UK Corporate Governance Code 2018,
which can be found at https://www.frc.org.uk/
directors/corporate-governance-and-stewardship/
uk-corporate-governance-code. We believe that it
demonstrates our commitment to enhancing the
Group’s governance arrangements as it contains
principles that are appropriate for our needs and

SIGNIFICANT SHAREHOLDINGS*

circumstances, and it aligns with our values as a
company. Exceptions to compliance with the provisions
of the Code can be found on page 106. The Company’s
Corporate Governance Report is provided on page 94
of this report.

SLAVERY AND HUMAN TRAFFICKING STATEMENT

The Group has a zero-tolerance policy to slavery
and human trafficking both within its businesses
and in its supply chains, as reflected in its Modern
Slavery Statement (www.mcsaatchiplc.com/
governance). Please also see pages 75 and 76 of
our ESG section for information on how we are
strengthening our approach to addressing modern
slavery in supply chains.

DIRECTORS’ CONFLICT OF INTEREST

Under the UK Companies Act 2006, Directors are
subject to a statutory duty to avoid a situation where
they have, or can have, a direct or indirect interest
that conflicts, or may conflict, with the interests of the
Company. The Directors are required to notify the
Company of any conflict or potential conflict of interest
under an established procedure and any conflicts or
potential conflicts are noted and managed accordingly
at each Board meeting.

DIRECTORS’ LIABILITY INSURANCE AND INDEMNITY

The Company purchases insurance to cover its
Directors and officers against costs they may incur in
defending themselves in legal proceedings instigated
against them as a direct result of duties carried out on
behalf of the Company. The third-party indemnity was
in force during the financial year and also at the date
of approval of the financial statements.

Shareholders holding 3% or more of the Company’s issued share capital (excluding treasury shares) at 26 March 2024:

Shareholders

Number of ordinary share Percentage of the Company’s issued share capital

Vinodka Murria
Octopus Investments Limited
Artisan Partners
AdvancedAdvT Limited
Paradice Investment Management
Fidelity International
M&G Investments
Lord Maurice Saatchi

15,237,985
13,758,799
12,907,451
12,000,000
9,139,110
6,617,947
4,129,625
4,124,882

12.46
11.25
10.56
9.82
7.48
5.41
3.38
3.37

Regularly updated details of the Directors’ shareholdings and substantial shareholdings can be found on the
Company’s corporate website, www.mcsaatchiplc.com.

137

Corporate GovernanceM&C Saatchi Plc Annual Report 2023EVENTS SINCE THE END OF THE FINANCIAL YEAR

DIRECTORS’ POWER TO ISSUE SHARES

As part of our simplification strategy, the Group
continued to close down small entities including each
of Influence Communications Limited, M&C Saatchi
PR International Limited, M&C Saatchi WMH Limited
and M&C Saatchi Shop Limited.

The Group sold its shares in PT MCS Saatchi Indonesia
to the founder for a consideration of £500k on
16 January 2024.

On 28 March 2024, the Group disposed of its 10%
shareholding in Australie SAS (France) which it
acquired in March 2021, its 49% shareholding in
Cometis SARL and its 25% shareholding in M&C
Saatchi Little Stories SAS for consideration of €1m.

On 9 April 2024, the Group entered into an agreement
to divest of its shareholdings in the Group’s subsidiaries
forming the South Africa Group, being each of M&C
Saatchi Abel (Pty) Limited, M&C Saatchi Connect (Pty)
Limited, Dalmatian Communications (Pty) Limited,
Levergy Marketing Agency (Pty) Limited, Razor Media
(Pty) Limited and Black & White Customer Strategy
(Pty) Limited for consideration of £5.6m.

The Company announced the appointment of Zaid
Al-Qassab as the Company’s new Chief Executive
Officer. Zaid will be taking up his role in May 2024.

The Board is recommending the payment of a final
dividend of 1.6 pence per share.

The Directors are not aware of any other events since
the end of the financial year that have had, or may
have, a significant impact on the Group’s operations,
the results of those operations, or the state of affairs
of the Group in future years.

TREASURY SHARES

At the Company’s Annual General Meeting held in
2023, the Directors were given the authority to
purchase up to 12,225,746 of the Company’s ordinary
shares. At the year-end, the Company held 485,970
of its ordinary shares as treasury shares.

At the Company’s Annual General Meeting held in
2023, the Directors were given the authority to issue
shares in the capital of the Company up to a maximum
nominal amount of £407,524, which was equivalent
to approximately one third of the total issued ordinary
share capital of the Company, of which up to a
maximum nominal amount of £122,256 (which is
equivalent to 10% of the total issued ordinary share
capital of the Company) was approved to be issued
for cash on a non-pre-emptive basis. During the year,
the Company did not issue any shares for cash.

SHARE CAPITAL

At the date of the Annual Report and Accounts, the
Company had 122,743,435 (£0.01) ordinary shares in
issue. Of this total, 485,970 ordinary shares are held
in treasury. Therefore, the total number of ordinary
shares in issue with voting rights is 122,257,465.

The Company did not purchase any of its own shares
during the year.

AUDITORS

The Company appointed BDO LLP as its external
auditors for the financial year ending 31 December
2023. BDO LLP will be seeking reappointment at the
Company’s Annual General Meeting to be held in 2024.

DISCLAIMER

The purpose of the Annual Report and Accounts is to
provide information to shareholders of the Company,
and it has been prepared for, and only for, the
shareholders of the Company as a body, and no
other persons. The Company, its Directors and
employees, agents and advisors do not accept or
assume responsibility to any other person to whom
this document is shown or into whose hands it may
come, and any such responsibility or liability is
expressly disclaimed.

The Directors’ Report has been signed by order of the
Board by:

VICTORIA CLARKE
General Counsel & Company Secretary
M&C Saatchi plc
Company Number 05114893
11 April 2024

138

Corporate GovernanceM&C Saatchi Plc Annual Report 2023Statement of Directors’
responsibilities

STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN
RESPECT OF THE FINANCIAL STATEMENTS

The Directors are responsible for preparing the
Annual Report and Accounts in accordance with
applicable law and regulation.

Company law requires the Directors to prepare
financial statements for each financial year. Under
that law, the Directors have prepared the Group
financial statements in accordance with UK adopted
international accounting standards, in conformity with
the requirements of the Companies Act 2006 and the
Company financial statements in accordance with
United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards,
comprising FRS 101 “Reduced Disclosure Framework”,
and applicable law). Under company law, Directors
must not approve the financial statements unless they
are satisfied that they give a true and fair view of the
state of affairs of the Group and the Company and
of the profit or loss of the Group for that period. In
preparing the financial statements, the Directors are
required to:

•

Select suitable accounting policies and then
apply them consistently.

State whether applicable UK adopted
international accounting standards in conformity
with the requirements of the Companies Act
2006 have been followed for the Group financial
statements and United Kingdom Accounting
Standards, comprising FRS 101 have been
followed for the Company financial statements,
subject to any material departures disclosed
and explained in the financial statements.

Make judgements and accounting estimates
that are reasonable and prudent.

Prepare the financial statements on the going
concern basis, unless it is inappropriate to
presume that the Group and the Company
will continue in business.

The Directors are also responsible for safeguarding the
assets of the Group and the Company and
hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.

The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Group’s and the Company’s transactions
and disclose with reasonable accuracy at any time the
financial position of the Group and the Company and
enable them to ensure that the financial statements
and the Directors’ Remuneration Report comply with
the Companies Act 2006.

The Directors consider the Annual Report and
Accounts, taken as a whole, are fair, balanced
and understandable and provide the necessary
information for shareholders to assess the Group’s
position, performance, business model and strategy.

WEBSITE PUBLICATION

The Directors are responsible for the maintenance and
integrity of the Company’s website (www.mcsaatchiplc.
com). Legislation in the United Kingdom governing the
preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.

DIRECTORS’ CONFIRMATIONS

In the case of each Director in office at the date the
Directors’ Report is approved:

•

so far as the Director is aware, there is no
relevant audit information of which the Group’s
and Company’s auditors are unaware; and

they have taken all the steps that they ought
to have taken as a director in order to make
themselves aware of any relevant audit
information and to establish that the Group’s
and the Company’s auditors are aware of that
information.

The Statement of Directors’ responsibilities in respect
of the financial statements has been signed by order
of the Board by:

ZILLAH BYNG-THORNE
Executive Chair
11 April 2024

139

Corporate GovernanceM&C Saatchi Plc Annual Report 2023M&C Saatchi Plc Annual Report 2023

Financial Statements

De’Longhi “Perfetto”, M&C Saatchi Milano

140140

M&C Saatchi Plc Annual Report 2023Financial Statementsfinancial statementsfinancial statementsM&C Saatchi Plc Annual Report 2023

Financial Statements

Financial
Statements

141
141

M&C Saatchi Plc Annual Report 2023Financial Statementsfinancial statementsfinancial statementsM&C Saatchi Plc Annual Report 2023

Financial Statements

FINANCIAL
STATEMENTS

Preparation

Consolidated Income Statement

Consolidated Statement of Other Comprehensive Income

Consolidated Balance Sheet

Consolidated Statement of Changes in Equity

Consolidated Cash Flow Statement

Notes to the Financial Statements

Headline results, earnings per share and EBITDA
Separately disclosed items
Segmental information
Revenue from contracts with customers
Staff costs
Auditors’ remuneration
Net finance expense
Current taxation
Deferred taxation
Dividends
Disposals

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12. Assets held for sale
13.
14. Deferred and contingent consideration
15.
16.
17. Plant and equipment
18. Leases
19. Other non-current assets
20. Financial assets at fair value through profit and loss (FVTPL)
21.
22. Trade and other payables
23.

Intangible assets
Investments in associates and joint ventures

Trade and other receivables

Investment property

Provisions

144

148

149

150

152

154

156

156
162
164
166
170
171
171
172
174
176
176
178
179
180
182
185
188
189
192
193
195
196
196

142142

M&C Saatchi Plc Annual Report 2023Financial StatementsM&C Saatchi Plc Annual Report 2023

Financial Statements

Minority shareholder put option liabilities (IFRS 9)

24. Borrowings
25. Other non-current liabilities
26. Equity-related liabilities
27.
28. Share-based payments (IFRS 2)
29. Issued share capital (allotted, called up and fully paid)
30. Fair value measurement
31.
32. Group companies
33. Related-party transactions
34. Commitments
35. Post-balance sheet events
36. Other accounting policies
37.

New and revised standards issued but not yet effective

Financial risk management

Company Balance Sheet

Company Statement of Changes in Equity

Notes to the Company Financial Statements

Trade and other receivables

38. General information and accounting policies
39. Investments
40. Other non-current assets
41.
42. Trade and other payables
43. Amounts due from subsidiary undertakings
44. Staff cost
45. Related parties
46. Post-balance sheet events
47. Share capital

Independent Auditors’ Report

Additional Information

197
198
199
200
202
206
207
209
214
222
222
222
223
223

224

225

226

226
227
227
228
228
228
228
229
229
229

230

240

143
143

M&C Saatchi Plc Annual Report 2023Financial StatementsPreparation

BASIS OF PREPARATION

The financial statements have been prepared in
accordance with UK adopted international accounting
standards, in conformity with the requirements of the
Companies Act 2006.

The financial statements are presented in pounds
sterling and, unless stated otherwise, rounded to
the nearest thousand. They have been prepared
under the historical cost convention, except for the
revaluation of certain financial instruments.

GOING CONCERN

These financial statements have been prepared on
the going concern basis, as discussed in the Directors’
Report and the Report of the Audit and Risk Committee.

The Board has formed its opinion after evaluating four
different severe but plausible forecast scenarios and
a reverse stress test, extending to 31 December 2025.
The four scenarios comprise:

A significant reduction in new business wins.

A significant increase in wage inflation.

A significant number of top clients are lost.

A significant economic downturn.

These severe but plausible scenarios are assumed
to materialise from Q1 2024 onwards. The estimated
decline in EBITDA ranges from £11m to £24m
compared to the base case plan for the cumulative
period ending 31 December 2025, including a £5m
to £14m decline in EBITDA in 2024.

The Directors have also considered the impact
of climate change on going concern, taking into
account the Company’s support for Ad Net Zero

(the industry initiative to tackle climate change led by
the Advertising Association and its members), and do
not believe that there is a significant financial impact.

The Board is satisfied that the Group’s forecasts, which
take into account reasonably possible changes in
trading performance, show that there are no material
uncertainties over going concern, and that, even under
the severe but plausible scenarios, the Group will
continue to have sufficient liquidity and headroom to
operate within the terms of its banking covenants. The
Board, therefore, has concluded that the going concern
basis of preparation continues to be appropriate.

CONSOLIDATION

Where a consolidated company is less than 100%
owned by the Group, the treatment of the non-
controlling interest share of the results and net assets
is dependent on how the non-controlling interests’
equity award is accounted for. Where the equity is
accounted for as a share-based payment award
under IFRS 2, all dividend outflow is taken to staff
costs, and there is no non-controlling interest. In all
other cases, the non-controlling interest share of the
results and net assets is recognised at each reporting
date in equity, separately from the equity attributable
to the shareholders of the Company.

MATERIAL ACCOUNTING POLICIES

Certain of the Group’s accounting policies are
considered by the Directors to be material due to the
level of complexity, judgement, or estimation involved
in their application and their potential impact on the
financial statements. The critical accounting policies
are listed below and explained in more detail in the
relevant notes to the financial statements.

Revenue recognition

The Group’s revenue is earned from the provision
of advertising and marketing services, together with
commission-based income in relation to media
spend and commission-based income in relation
to talent performance. Revenue from contracts with
customers is recognised as, or when, the performance
obligations present within the contractual agreements
are satisfied. Depending on the arrangement with
the client, the Group may act as principal or as
agent in the provision of these services.

144

M&C Saatchi Plc Annual Report 2023Financial StatementsSee Note 4 of the financial statements for a full listing
of the Group’s revenue accounting policies.

Put option accounting (IFRS 2 and IFRS 9)

It is common for equity partners in the Group’s
subsidiaries to hold put options over their equity, such
that they can require the Group to purchase their non-
controlling interest for either a variable number of the
Company shares or cash. Dependent on the terms and
substance of the underlying agreement, these options
are either recognised as a put option liability under IFRS
9 (Note 27 of the financial statements) or as a put option
under IFRS 2 (Note 28 of the financial statements) – see
significant judgements below.

An IFRS 9 scheme should be considered as reward for
future business performance and is not conditional
on the holder being an employee of the business.
These instruments are recognised in full at the
amortised cost of the underlying award on the date
of inception, with both a liability on the balance sheet
and a corresponding amount within the minority
interest put option reserve being recognised. At each
period end, the amortised cost of the put option
liability is calculated in accordance with the put option
agreement, to determine a best estimate of the future
value of the expected award. Resultant movements in
the amortised cost of these instruments are charged to
the income statement within finance income/expense.
The put option liability will vary with both the Group’s
share price and the subsidiary’s financial performance.
Upon exercise of an award by a holder, the liability is
extinguished and the associated minority interest put
option reserve is transferred to the non-controlling
interest acquired reserve.

An IFRS 2 scheme should be considered as reward
for future business performance and is conditional
on the holder being an employee of the business.
These schemes are recognised as staff costs over the
vesting period (if equity settled) or until the option
is exercised (if cash settled). In September 2021, the
Board made the decision to move to cash settlement
of these put options going forward. This required a
fair value assessment on the day of the modification
and a movement between reserves and liabilities.

See Note 28 of the financial statements for a full
description of the Group’s accounting policy for
IFRS 2 put options.

Headline results

As stated in the Financial Review, the Directors believe
that the Headline results and Headline earnings per
share (see Note 1 of the financial statements) provide
additional useful information on the underlying
performance of the business. The Headline results
reflect the underlying profitability of the business units,
by excluding a number of items that are not part of
routine business income and expenses.

In addition, the Headline results are used for internal
performance management and reward, and they
are also used to calculate minority shareholder put
option liabilities. The term “Headline” is not a defined
term in IFRS. Note 1 reconciles Statutory results to
Headline results and the segmental reporting (Note 3
of the financial statements) reflects Headline results,
in accordance with IFRS 8.

The items that are excluded from Headline results are:

•

Exceptional separately disclosed items that are
one-off in nature and are not part of running
the business.

Acquisition-related costs.

Revaluation of associates on transition to assets
held for sale.

Impairment of right-of-use assets, leasehold
improvements, acquired intangibles and goodwill.

Gains or losses generated by disposals
of subsidiaries.

Fair value adjustments to unlisted equity
investments, acquisition-related contingent
consideration and put options.

Dividends paid to IFRS 2 put option holders.
However, in non-controlling interest, we
deduct profit share attributable to IFRS 2 put
option holders.

Unlisted investments

The Group holds certain unlisted equity investments
which are classified as financial assets at FVTPL
(see Note 20 of the financial statements). These
investments are initially recognised at their fair value.
At the end of each reporting period, the fair value is
reassessed, with gains or losses being recognised in
the income statement.

145

M&C Saatchi Plc Annual Report 2023Financial StatementsSIGNIFICANT ACCOUNTING JUDGEMENTS AND
KEY SOURCES OF ESTIMATION UNCERTAINTY

In the course of preparing financial statements,
management necessarily makes judgements and
estimates that can have a significant impact on the
financial statements. The estimates and judgements
that are made are continually evaluated, based on
historical experience and other factors, including
expectations of future events that are believed to be
reasonable under the circumstances. The estimates
and judgements that have a significant risk of causing
a material adjustment to the financial statements
within the next financial year are outlined below:

SIGNIFICANT ACCOUNTING JUDGEMENTS

Management has made the following judgements,
which have the most significant effect in terms of
the amounts recognised, and their presentation
in the financial statements.

Impairment – assessment of CGUs and
assessment of indicators of impairment

Impairment reviews are undertaken annually, or
more frequently if events or changes in circumstances
indicate a potential impairment. Assets with finite
lives are reviewed for indicators of impairment (an
impairment “trigger”) and judgement is applied in
determining whether such a trigger has occurred.
External and internal factors are monitored by
management, including a) adverse changes in the
economic or political situation of the geographic
locale in which the underlying entity operates;
b) heightened risk of client loss or chance of client
gain; and c) internal reporting suggesting that an
entity’s future economic performance is better or
worse than previously expected. Where management
has concluded that such an indication of impairment
exists, then the recoverable amount of the asset
is assessed.

The Group assesses whether an impairment is
required by comparing the carrying value of the CGU
assets (including the right-of-use assets under IFRS
16) to their value in use. Discounted cash flow models,
based on the Group’s latest budget and three-year
financial plan, and a long-term growth rate, are used
to determine the recoverable amount for the CGUs.
The appropriate estimates and assumptions used
require judgement and there is significant estimation
uncertainty. The results of impairment reviews
conducted at the end of the year are reported in

Note 15 (Intangible Assets), Note 16 (Investments in
associates and joint ventures), and Note 18 (Leases)
of the financial statements.

The Group has recognised a total impairment
charge of £6,798k in the year (2022: £564k), of which
£4,794k relates to Intangibles (2022: £728k) and
£1,884k relates to the impairment of right-of-use
assets (2022: reversal of £164k). There was a £132k
impairment in the year of plant and equipment
(2022: £nil). There was no impairment in the year
of associate investments (2022: £nil).

Non-controlling interest put option accounting
– IFRS 2 or IFRS 9

The key judgement is whether the awards are given
beneficially as a result of employment, which can be
determined where there is an explicit service condition,
where the award is given to an existing employee,
where the employee is being paid below market value
or where there are other indicators that the award is a
reward for employment. In such cases, the awards are
accounted for as a share-based payment in exchange
for employment services under IFRS 2.

Otherwise, where the holder held shares prior to the
Group acquiring the subsidiary, or gained the equity
to start a subsidiary using their unique skills, and there
are no indicators it should be accounted for under IFRS
2, then the award is accounted for under IFRS 9.

SIGNIFICANT ESTIMATES AND ASSUMPTIONS

Some areas of the Group’s financial statements are
subject to key assumptions and other significant sources
of estimation uncertainty at the reporting date, that
have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within
the next financial year. The Group has based its
assumptions and estimates on parameters available
when the financial statements were prepared.

Deferred tax assets

The Group assesses the future availability of carried
forward losses and other tax attributes, by reference
to jurisdiction-specific rules around carry forward
and utilisation, and it assesses whether it is probable
that future taxable profits will be available against
which the attribute can be utilised. Changes in such
estimates would allow unrecognised deferred tax to
be recognised and vice versa. Analysis of deferred tax
can be seen in Note 9 of the financial statements.

146

M&C Saatchi Plc Annual Report 2023Financial Statementsinto account the length of time remaining before the
option is exercisable, current trading, future trading
forecasts and the level and type of any planned capital
investment. The assessment of whether the option will
be exercised is reassessed in each reporting period.
A reassessment of the remaining life of the lease could
result in a recalculation of the lease liability and a
material adjustment to the associated balances.

Fair value measurement of financial instruments

The Group holds certain financial instruments, which
are recorded on the balance sheet at fair value at the
point of recognition and remeasured at the end of
each reporting period. At the year-end these relate to:

ii.

Equity investments at FVTPL in non-listed limited
companies (Note 20 of the financial statements).

Certain contingent consideration (Note 14 of the
financial statements).

No formal market exists to trade these financial
instruments and, therefore, their fair value is measured
by the most appropriate valuation techniques
available, which vary based on the nature of the
instruments. The inputs to the valuation models are
taken from observable markets where possible, but,
where this is not feasible, judgement is required to
establish fair values.

The basis of calculation of the estimated fair value
of these financial instruments (in addition to sensitivity
analyses on the estimates’ salient inputs) is detailed
in Note 30 of the financial statements.

Share-based incentive arrangements

Share-based incentives are valued at the date of the
grant, using stochastic Monte Carlo pricing models with
non-market vesting conditions. Typically, the value of
these awards is directly related to the performance of
a particular entity of the Group in which the employee
holds a minority interest. The key inputs to the pricing
model are risk-free interest rates, share price volatility
and expected future performance of the entity to which
the award relates. Management applies judgement
to these inputs, using various sources of information,
including the Group’s share price, experience of past
performance and published data on risk-free interest
rates (government gilts).

Details of awards made in the year are shown
in Note 28 of the financial statements.

Leasing estimates

Anticipated length of lease term – IFRS 16 defines the
lease term as the non-cancellable period of a lease,
together with the options to extend or terminate a
lease, if the lessee is reasonably certain to exercise
that option. Where a lease includes the option for
the Group to extend the lease term, the Group takes
a view, at inception, as to whether it is reasonably
certain that the option will be exercised. This will take

147

M&C Saatchi Plc Annual Report 2023Financial StatementsConsolidated
Income Statement

Year Ended 31 December
Billings (unaudited)

Revenue

Project cost / direct cost

Net revenue

Staff costs

Depreciation

Amortisation

Impairment charges

Other operating charges

Other (losses) / gains

Loss allowance

Gain on disposal of subsidiaries

Operating profit

Share of results of associates and joint ventures

Finance income

Finance expense

Profit before taxation

Taxation

(Loss) / Profit for the year

Attributable to:

Equity shareholders of the Group

Non-controlling interests

(Loss) / Profit for the year

Profit per share

Basic (pence)

Diluted (pence)

Headline results

Operating profit

Profit before taxation

Profit after tax attributable to equity shareholders of the Group

Basic earnings per share (pence)

Diluted earnings per share (pence)

EBITDA

Note
4

17, 18

15, 18

The notes on pages 144 to 147 and 156 to 223 form part of these financial statements.

2023
£000
526,013

453,913

(201,148)

252,765

(187,621)

(8,816)

(841)

(6,798)

(36,876)

(4,898)

(422)

782

7,275

121

831

(7,512)

715

(3,517)

(2,802)

(3,529)

727

(2,802)

(2.89)p

32,436

28,669

18,545

15.17p

14.38p

41,544

2022
£000
597,520

462,533

(191,393)

271,140

(198,765)

(9,326)

(1,060)

(564)

(48,522)

(1,403)

(952)

–

10,548

(10)

391

(5,506)

5,423

(5,178)

245

155

245

0.07p

35,388

31,833

18,105

14.81p

13.47p

45,167

148

M&C Saatchi Plc Annual Report 2023Financial Statements

Consolidated Statement of
Other Comprehensive Income

Year Ended 31 December

(Loss) / Profit for the year

Other comprehensive (loss) / profit*

Exchange differences on translating foreign operations

Other comprehensive (loss) / profit for the year net of tax

Total comprehensive (loss) / profit for the year

Total comprehensive profit attributable to:

Equity shareholders of the Group

Non-controlling interests

Total comprehensive (loss) / profit for the year

* All items in the consolidated statement of comprehensive income may be reclassified to the income statement.

The notes on pages 144 to 147 and 156 to 223 form part of these financial statements.

2023
£000

(2,802)

(4,287)

(7,089)

(7,816)

727

(7,089)

2022
£000

245

4,785

4,875

5,030

4,875

155

5,030

149

M&C Saatchi Plc Annual Report 2023Financial Statements
Consolidated
balance sheet

Year Ended 31 December

Non-current assets

Intangible assets

Investments in associates and JV

Plant and equipment

Right-of-use assets

Investment properties

Other non-current assets

Deferred tax assets

Financial assets at fair value through profit or loss

Deferred and contingent consideration

Current assets

Trade and other receivables

Current tax assets

Cash and cash equivalents

Assets held for sale

Current liabilities

Trade and other payables

Provisions

Current tax liabilities

Borrowings

Lease liabilities

Note

Minority shareholder put option liabilities

27/28

Net current liabilities

Total assets less current liabilities

2023
£000

34,593

138

7,007

33,772

2,369

2,302

6,036

7,227

738

94,182

123,686

4,321

24,326

152,333

780

153,113

2022
£000

41,968

191

8,310

43,992

–

1,107

5,131

11,986

914

113,599

132,067

3,909

41,492

177,468

–

177,468

(133,850)

(155,547)

(1,050)

(743)

(15,943)

(5,751)

(9,891)

(167,228)

(14,115)

80,067

(1,056)

(481)

(4,430)

(6,448)

(18,419)

(186,381)

(8,913)

104,686

150

M&C Saatchi Plc Annual Report 2023Financial Statements

At 31 December

Non-current liabilities

Deferred tax liabilities

Corporation tax liabilities

Borrowings

Lease liabilities

Minority shareholder put option liabilities

Other non-current liabilities

Total net assets

Equity

Share capital

Share premium

Merger reserve

Treasury reserve

Minority interest put option reserve

Non-controlling interest acquired

Foreign exchange reserve

Accumulated losses

Equity attributable to shareholders of the Group

Non-controlling interest

Total equity

Note

27/28

2023
£000

(1,235)

–

(43,692)

(3,525)

(2,079)

(50,531)

29,536

1,227

50,327

37,554

(550)

(2,506)

(33,168)

2,351

(26,232)

29,003

533

29,536

2022
£000

(1,245)

(856)

(6,802)

(49,122)

(4,429)

(4,046)

(66,500)

38,186

1,227

50,327

37,554

(550)

(2,896)

(32,984)

6,638

(21,303)

38,013

173

38,186

Reserves are defined in Note 36 of the financial statements.

These financial statements pages 144 to 223 were approved and authorised for issue by the Board of Directors
on 11 April 2024 and signed on its behalf by:

BRUCE MARSON
Chief Financial Officer
M&C Saatchi plc
Company Number 05114893

The notes on pages 144 to 147 and 156 to 223 form part of these financial statements.

151

M&C Saatchi Plc Annual Report 2023Financial Statements

Consolidated Statement
of Changes in Equity

Note

At 31 December 2021

Share option charge

Amounts paid on settlement of LTIP

Exercise of put options

Dividends

Total transactions with owners

Total profit for the year

Total other comprehensive income for the
year
At 31 December 2022

Share option charge

Exercise of put options

Dividends

Total transactions with owners

Total profit for the year

Total other comprehensive income for the
year
At 31 December 2023

Share
capital
£000
1,227

Share
premium
£000
50,327

Merger
reserve
£000
37,554

Treasury
reserve
£000
(550)

–

1,227

50,327

37,554

(550)

(2,896)

(32,984)

(21,303)

38,013

–

1,227

50,327

37,554

(550)

(2,506)

(33,168)

2,351

(26,232)

29,003

MI put

option

reserve

£000

(6,615)

Non-

controlling

interest

acquired

£000

(29,190)

Retained

earnings/

exchange

(accumulated

Foreign

reserves

£000

1,853

3,719

–

390

(3,794)

–

(184)

–

4,785

6,638

(4,287)

losses)

£000

(22,122)

1,229

(500)

–

729

–

434

–

(1,834)

(1,400)

(3,529)

–

Sub total

£000

32,484

1,229

(500)

(75)

–

654

4,785

434

206

(1,834)

(1,194)

(3,529)

(4,287)

Non-

controlling

interest

in equity

£000

373

–

(430)

(355)

155

–

173

–

(206)

(161)

(367)

727

–

533

Total

£000

32,857

1,229

(500)

–

(430)

299

245

4,785

38,186

434

–

(1,995)

(1,561)

(2,802)

(4,287)

29,536

The notes on pages 144 to 147 and 156 to 223 form part of these financial statements.

152

M&C Saatchi Plc Annual Report 2023Financial Statements

Note

At 31 December 2021

Share option charge

Amounts paid on settlement of LTIP

Exercise of put options

Dividends

Total transactions with owners

Total profit for the year

Total other comprehensive income for the

year

At 31 December 2022

Share option charge

Exercise of put options

Dividends

Total transactions with owners

Total profit for the year

Total other comprehensive income for the

year

At 31 December 2023

capital

£000

1,227

premium

£000

50,327

Merger

reserve

£000

37,554

Treasury

reserve

£000

(550)

–

Non-
controlling
interest
acquired
£000
(29,190)

Foreign
exchange
reserves
£000
1,853

Retained
earnings/
(accumulated
losses)
£000
(22,122)

MI put
option
reserve
£000
(6,615)

–

3,719

–

3,719

–

(3,794)

–

(3,794)

–

Sub total
£000
32,484

1,229

(500)

(75)

–

654

4,785

1,229

(500)

–

729

–

(21,303)

38,013

434

–

(1,834)

(1,400)

(3,529)

–

434

206

(1,834)

(1,194)

(3,529)

(4,287)

–

4,785

6,638

–

(4,287)

1,227

50,327

37,554

(550)

(2,896)

(32,984)

–

390

–

390

–

(184)

–

(184)

–

1,227

50,327

37,554

(550)

(2,506)

(33,168)

2,351

(26,232)

29,003

Non-
controlling
interest
in equity
£000
373

–

(430)

(355)

155

–

173

–

(206)

(161)

(367)

727

–

533

Total
£000
32,857

1,229

(500)

–

(430)

299

245

4,785

38,186

434

–

(1,995)

(1,561)

(2,802)

(4,287)

29,536

153

M&C Saatchi Plc Annual Report 2023Financial Statements

Consolidated Cash
Flow Statement

Year Ended 31 December
Operating profit

Adjustments for:

Depreciation of plant and equipment

Depreciation of right-of-use assets

Impairment of right-of-use assets

Loss on sale of plant and equipment

Impairment of plant and equipment

Loss on sale of software intangibles

Revaluation of financial assets at FVTPL

Revaluation of contingent consideration

Amortisation and impairment of acquired intangible assets

Impairment of goodwill and other intangibles

Impairment and amortisation of capitalised software
intangible assets

Exercise of share-based payment schemes with cash

Exercise of put options*

Equity settled share-based payment expenses

Operating cash before movements in working capital

Decrease / (Increase) in trade and other receivables

(Decrease) / Increase in trade and other payables

(Decrease) / Increase in provisions

Cash (consumed by) / generated from operations

Tax paid

Net cash from operating activities

Investing activities

Disposal of associate or subsidiary (net of cash disposed of)

Investment loans

Proceeds from sale of unlisted investments

Purchase of plant and equipment

Purchase of capitalised software

Interest received

Net cash consumed by investing activities

Net cash from operating and investing activities

Note

2023
£000
7,275

2,573

6,243

1,884

271

132

–

4,722

176

1,764

3,733

138

–

(14,637)

841

15,115

9,924

(24,437)

(6)

596

(4,156)

(3,560)

(209)

(608)

(1,827)

(19)

831

(1,783)

(5,343)

2022
Restated*
£000
10,548

2,480

6,846

–

165

–

175

1,403

266

597

556

635

(500)

(9,607)

1,229

14,793

(4,187)

9,104

(137)

19,573

(6,712)

12,861

–

918

(4,383)

(1,192)

391

(4,266)

8,595

154

M&C Saatchi Plc Annual Report 2023Financial Statements

Year Ended 31 December

Financing activities

Dividends paid to equity holders of the Company

Dividends paid to non-controlling interest

Cash consideration for non-controlling interest acquired and
other options*

Payment of deferred consideration

Payment of lease liabilities

Proceeds from bank loans

Repayment of bank loans

Interest paid

Interest paid on leases

Net cash consumed by financing activities

Net decrease in cash and cash equivalents

Effect of exchange rate fluctuations on cash held

Cash and cash equivalents at the beginning of the year

Total cash and cash equivalents at the end of the year

Net debt reconciliation

Cash and cash equivalents

Bank overdrafts***

Total cash and cash equivalents at the end of the year

Bank loans and borrowings**

Net cash

Note

2023
£000

(1,834)

(161)

(785)

–

(6,228)

9,000

(164)

(2,318)

(2,876)

(5,366)

(10,709)

(2,186)

37,221

24,326

–

24,326

(16,043)

8,283

2022
Restated*
£000

–

(430)

(2,497)

(1,250)

(7,307)

–

(13,410)

(1,200)

(2,970)

(29,064)

(20,469)

2,711

54,979

37,221

41,492

(4,271)

37,221

(7,212)

30,009

* The cash flow statement for 2022 has been restated (Note 28 of the financial statements).
** Bank loans and borrowings are defined in Note 24 of the financial statements; they exclude the lease liability of £53,735k (2022: £55,570k) (Note 18 of the financial statements).
*** These overdrafts can be legally offset with other cash balances. They have not been netted off in accordance with IAS32.42 in 2022 as there was no intention to settle on a net
basis. However, they have been netted off in 2023 as the cash balance and the overdraft balance is with the same bank and there is intention to settle this on a net basis.

The notes on pages 144 to 147 and 156 to 223 form part of these financial statements.

155

M&C Saatchi Plc Annual Report 2023Financial Statements

Notes to the Financial
Statements

1. HEADLINE RESULTS, EARNINGS PER SHARE AND EBITDA

The analysis below provides a reconciliation between the Group’s Statutory results and the Headline results for
the current year.

Year Ended 31 December 2023
Billings (unaudited)

Revenue

Net revenue

Staff costs

Depreciation

Amortisation

Impairments

Other operating charges

Other losses

Gain on disposal of subsidiaries

Operating profit

Share of results of associates and JV

Finance income

Finance expense

Profit before taxation

Taxation

Profit for the year

Non-controlling interests

Note

17, 18

15, 18

Profit attributable to equity holders of the Group**

Separately
disclosed
items
(Note 2)
£000
–

Gain/loss on
disposal of
subsidiaries
£000
–

Revaluation
of associates
on transition
to assets
held for sale
£000
–

–

6,908

–

744

–

7,652

–

7,652

(1,821)

5,831

–

5,831

–

(782)

–

(782)

–

(782)

–

(782)

–

(133)

–

(133)

–

(133)

–

(133)

Statutory
2023
£000
526,013

453,913

252,765

(187,621)

(8,816)

(841)

(6,798)

(37,298)

(4,898)

782

7,275

121

831

(7,512)

715

(3,517)

(2,802)

727

(3,529)

* The non-controlling interest charge is moved to operating profit due to underlying equity being defined as an IFRS 2 put option.
** Headline earnings are profit attributable to equity holders of the Group after adding back the adjustments noted above.

156

Amortisation

Impairment of

FVTPL

of acquired

intangibles

(Note 15)

£000

intangible

non-current

investments

assets

under IFRS 9

(Note 15)

(Note 17 & 18)

£000

(Note 20)

£000

Dividends

paid to

IFRS 2 put

holders

Put option

accounting

(Note 5)*

(Note 27 & 28)

£000

2,499

4,203

537

–

537

(198)

339

–

339

–

4,794

2,004

4,794

(28)

4,766

2,004

(536)

1,468

–

1,468

–

(644)

4,898

813

5,067

(1,178)

3,889

–

3,889

–

2,499

2,054

4,553

Headline

results

£000

526,013

453,913

252,765

(174,011)

(8,816)

(304)

(37,198)

–

(12)

831

(4,586)

28,669

(7,343)

21,326

2,781

18,545

–

2,113

6,316

(65)

6,251

–

6,251

537

4,794

2,004

4,254

2,499

4,203

32,436

M&C Saatchi Plc Annual Report 2023Financial Statements

Separately

disclosed

Gain/loss on

items

disposal of

Statutory

Revaluation

of associates

on transition

to assets

(Note 2)

subsidiaries

held for sale

£000

Year Ended 31 December 2023

Note

Billings (unaudited)

Revenue

Net revenue

Staff costs

Depreciation

Amortisation

Impairments

Other operating charges

Other losses

Gain on disposal of subsidiaries

Operating profit

Share of results of associates and JV

Finance income

Finance expense

Profit before taxation

Taxation

Profit for the year

Non-controlling interests

17, 18

15, 18

2023

£000

526,013

453,913

252,765

(187,621)

(8,816)

(841)

(6,798)

(37,298)

(4,898)

782

7,275

121

831

(7,512)

715

(3,517)

(2,802)

727

(3,529)

6,908

744

7,652

–

7,652

(1,821)

5,831

–

5,831

–

(782)

–

(133)

Profit attributable to equity holders of the Group**

* The non-controlling interest charge is moved to operating profit due to underlying equity being defined as an IFRS 2 put option.

** Headline earnings are profit attributable to equity holders of the Group after adding back the adjustments noted above.

Amortisation
of acquired
intangibles
(Note 15)
£000
–

Impairment of
intangible
assets
(Note 15)
£000
–

Impairment of
non-current
assets
(Note 17 & 18)
£000
–

FVTPL
investments
under IFRS 9
(Note 20)
£000
–

–

537

–

537

–

537

(198)

339

–

339

–

4,794

2,004

–

4,794

2,004

–

4,794

(28)

4,766

–

4,766

–

2,004

(536)

1,468

–

1,468

–

(644)

4,898

–

4,254

–

813

5,067

(1,178)

3,889

–

3,889

Dividends
paid to
IFRS 2 put
holders
(Note 5)*
£000
–

–

Put option
accounting
(Note 27 & 28)
£000
–

–

2,499

4,203

–

Headline
results
£000
526,013

453,913

252,765

(174,011)

(8,816)

(304)

–

(37,198)

–

2,499

4,203

32,436

–

2,499

–

2,499

2,054

4,553

–

2,113

6,316

(65)

6,251

–

6,251

(12)

831

(4,586)

28,669

(7,343)

21,326

2,781

18,545

157

M&C Saatchi Plc Annual Report 2023Financial Statements

1. HEADLINE RESULTS, EARNINGS PER SHARE AND EBITDA CONTINUED

The analysis below provides a reconciliation between the Group’s Statutory results and the Headline results for
the current year.

Year Ended 31 December 2022
Billings (unaudited)

Revenue

Net revenue

Staff costs

Depreciation

Amortisation

Impairments

Other operating charges

Other losses

Operating profit

Share of results of associates and JV

Finance income

Finance expense

Profit before taxation

Taxation

Profit for the year

Non-controlling interests

Note

17, 18

15, 18

Profit attributable to equity holders of the Group**

Statutory
2022
£000
597,520

462,533

271,140

(198,765)

(9,326)

(1,060)

(564)

(49,474)

(1,403)

10,548

(10)

391

(5,506)

5,423

(5,178)

245

(155)

Separately
disclosed
items
(Note 2)
£000
–

Amortisation of
acquired
intangibles
(Note 15)
£000
–

Impairment of

non-current

assets

(Note 15 & 18)

£000

FVTPL

Revaluation

investments

under IFRS 9

(Note 20)

£000

of contingent

Dividends paid to

consideration

IFRS 2 put holders

Put option

accounting

(Note 14)

£000

(Note 5)*

(Note 27 & 28)

£000

–

564

–

(272)

1,403

1,131

456

1,587

(409)

1,178

–

1,178

7,811

1,119

7,811

1,119

35,388

Headline

results

£000

597,520

462,533

271,140

(186,423)

(9,326)

(463)

(39,540)

–

(10)

391

(3,936)

31,833

(7,790)

24,043

(5,938)

18,105

–

1,114

2,233

(47)

2,186

–

2,186

–

266

–

7,811

(5,783)

2,028

–

3,412

–

9,940

–

13,352

–

13,352

(1,982)

11,370

–

11,370

–

597

–

597

–

597

(174)

423

–

423

158

M&C Saatchi Plc Annual Report 2023Financial Statements

Year Ended 31 December 2022

Note

Billings (unaudited)

Revenue

Net revenue

Staff costs

Depreciation

Amortisation

Impairments

Other operating charges

Other losses

Operating profit

Finance income

Finance expense

Profit before taxation

Taxation

Profit for the year

Non-controlling interests

Share of results of associates and JV

17, 18

15, 18

Statutory

2022

£000

597,520

462,533

271,140

(198,765)

(9,326)

(1,060)

(564)

(49,474)

(1,403)

10,548

(10)

391

(5,506)

5,423

(5,178)

245

(155)

–

3,412

9,940

13,352

(1,982)

11,370

–

597

(174)

423

–

423

Profit attributable to equity holders of the Group**

* The non-controlling interest charge is moved to operating profit due to underlying equity being defined as an IFRS 2 put option.

** Headline earnings are profit attributable to equity holders of the Group after adding back the adjustments noted above.

Separately

disclosed

items

(Note 2)

£000

Amortisation of

acquired

intangibles

(Note 15)

£000

Impairment of
non-current
assets
(Note 15 & 18)
£000
–

FVTPL
investments
under IFRS 9
(Note 20)
£000
–

Revaluation
of contingent
consideration
(Note 14)
£000
–

Dividends paid to
IFRS 2 put holders
(Note 5)*
£000
–

Put option
accounting
(Note 27 & 28)
£000
–

–

564

–

564

–

564

–

564

–

564

–

(272)

1,403

1,131

–

456

1,587

(409)

1,178

–

1,178

–

266

–

266

–

266

–

266

–

266

–

7,811

–

7,811

–

7,811

–

7,811

(5,783)

2,028

–

1,119

–

1,119

–

1,114

2,233

(47)

2,186

–

2,186

Headline
results
£000
597,520

462,533

271,140

(186,423)

(9,326)

(463)

–

(39,540)

–

35,388

(10)

391

(3,936)

31,833

(7,790)

24,043

(5,938)

18,105

159

M&C Saatchi Plc Annual Report 2023Financial Statements

1. HEADLINE RESULTS, EARNINGS PER SHARE AND EBITDA CONTINUED

Earnings per share

Basic and diluted earnings per share are calculated by dividing the appropriate earnings metrics by the
weighted average number of shares of the Company in issue during the year.

Diluted earnings per share is calculated by adjusting the weighted average number of the Company’s ordinary
shares in issue on the assumption of conversion of all potentially dilutive ordinary shares. Anti-dilutive potential
ordinary shares are excluded. The dilutive effect of unvested outstanding options is calculated based on the
number that would vest had the balance sheet date been the vesting date. Where schemes have moved from
equity to cash payment and vice versa, the potential dilution is calculated as though they had been in their year-
end position for the whole year.

Year Ended 31 December 2023
Profit attributable to equity shareholders of the Group (£000)

Basic earnings per share

Weighted average number of shares (thousands)

Basic EPS

Diluted earnings per share

Weighted average number of shares (thousands) as above

Add

– LTIP

– Put options

Total

Diluted EPS

Excluding the put options (payable in cash)

Weighted average number of shares (thousands) including dilutive shares

Diluted EPS – excluding items the Group intends and is able to pay in cash

2023
(3,529)

122,257

(2.89)p

–

122,257

(2.89)p

–

122,257

(2.89)p

Headline
2023
18,545

122,257

15.17p

1,500

5,247

129,004

14.38p

(5,247)

123,757

14.99p

As 2023 Basic EPS is negative, no adjustment has been made for LTIP and put options in the Dilutive EPS
calculation, as these would be anti-dilutive, i.e. would increase EPS had they been included.

160

M&C Saatchi Plc Annual Report 2023Financial StatementsYear Ended 31 December 2022
Profit attributable to equity shareholders of the Group (£000)

Basic earnings per share

Weighted average number of shares (thousands)

Basic EPS

Diluted earnings per share

2023
90

122,257

0.07p

Headline
2023
18,105

122,257

14.81p

Weighted average number of shares (thousands) as above

122,257

Add

– LTIP

– Put options (payable in cash)

Total

Diluted EPS

Excluding the put options (payable in cash)

Weighted average number of shares (thousands) including dilutive shares

Diluted EPS – excluding items the Group intends and is able to pay in cash

HEADLINE EBITDA

Profit Before Tax (Headline)

Add back:

Headline depreciation and amortisation (incl. IFRS 16)

Headline finance expense (incl. IFRS 16)

Headline finance income

EBITDA

905

11,302

134,464

0.07p

(11,302)

123,162

0.07p

2023
£000
28,669

9,120

4,586

(831)

41,554

905

11,302

134,464

13.47p

(11,302)

123,162

14.70p

2022
£000
31,833

9,789

3,936

(391)

45,167

161

M&C Saatchi Plc Annual Report 2023Financial Statements2. SEPARATELY DISCLOSED ITEMS

Policy

Separately disclosed items include one-off, non-recurring revenues or expenses. These are shown separately
and are excluded from Headline profit to provide a better understanding of the underlying results of the Group.

Analysis

Separately disclosed items for the year ended 31 December 2023 comprise of the following:

2023
Restructuring – discontinued businesses

Restructuring – ongoing businesses

Restructuring – global efficiency programme

CEO/Executive Chair compensation

Transformation project costs

Total separately disclosed items

Staff
costs
£000
1,481

3,200

438

1,514

275

6,908

Operating
costs
£000
18

251

–

390

744

Taxation
£000
(340)

(810)

(160)

(355)

(156)

(1,821)

After tax
total
£000
1,159

2,475

529

1,159

509

5,831

The Group has been pursuing a strategy to simplify
its operating structure and improve efficiency across
the Group. In 2023, three programmes of restructuring
have been undertaken:

•

The Group has shut down certain loss-making
overseas and UK subsidiaries and incurred
redundancy costs as part of the agreement
with the disposed or closed businesses. This
programme will continue into 2024.

The Group’s global efficiency programme has
also started to identify and reduce specific central
HQ roles, which will no longer be required in the
Group. This programme will continue into 2024.

Local businesses within the Group have reviewed
their own future, permanent operational
structures, following market changes, which has
resulted in staff redundancy costs in the period
across 28 ongoing businesses across the Group.
The restructuring costs are treated as separately
disclosed items only when a role has been
permanently eliminated from the business (there
should be no intention for the role to be replaced
in the next 12 months). These local programmes
have been completed, but new programmes
may be undertaken in future, depending on local
market conditions.

The staff costs associated with these restructuring
programmes have been treated as an exceptional
non-Headline cost, as they are one-off exit costs

relating to compensation to employees for periods
not worked. The operating costs mainly relate to the
future rates and service charges for the 30 Great
Pulteney Street office in London, which has now been
vacated (£233k).

CEO compensation relates to the 12 months of staff
costs relating to the gardening leave of the former
CEO, which has not been worked. These have been
treated as an exceptional non-Headline cost, as these
costs are legally committed by the business, but with
no benefit to the business.

The Executive Chair has fulfilled the CEO role, which
triggered the loss of future compensation from her
previous employment, which the Company has agreed
to bear. These have been treated as an exceptional
non-Headline cost, as these costs relate to the
Executive Chair’s performance in another business.

In the second half of 2022, the Group commenced
a global efficiency programme, with the assistance
of PricewaterhouseCoopers LLP (PwC). PwC’s
professional fees (£390k) and the staff costs of the
project team dedicated to this transformation project
(£275k) have been classified as separately disclosed
items in line with the treatment in 2022, as this is a
strategic, one-off project with a finite end that is not
part of the underlying operations of the business.
PwC has completed its work, but the project team will
continue to manage the project through to conclusion
in 2025.

162

M&C Saatchi Plc Annual Report 2023Financial StatementsSeparately disclosed items for the year ended 31 December 2022 comprise of the following:

2022
Takeover transaction costs

Strategic review and restructuring

Other

Total separately disclosed items

During 2022, the Company was subject to two
competing bids to take control and full ownership of the
business. Managing the Company’s response to these
two bids resulted in a number of external advisory costs
and a refocusing of several key internal personnel away
from the day-to-day running of the business. Included
in the above is £811k related to senior management
costs (including £360k representing CEO time), as an
estimate of time spent on the transaction where they
have been unable to undertake other planned strategic
activities and day-to-day management of the business.
In addition, incremental bonus costs were paid to
several key individuals of £594k to reflect the significant
additional workload they had to undertake.

Staff
costs
£000
9,210

992

(262)

9,940

Operating
costs
£000
1,623

1,789

–

3,412

Taxation
£000
(1,294)

(688)

–

(1,982)

After tax
total
£000
9,539

2,093

(262)

11,370

In 2022, PwC’s professional fees in relation to the
global cost efficiency programme were classified as
non-Headline (£992k). In addition, within three of the
agencies in the Group, a strategic review resulted in
staff redundancy costs in the year (£1,789k).

Other separately disclosed items relate to the release
of the provision associated with the Financial Conduct
Authority investigation, which is now closed with no
enforcement action being taken, the cost of which
was previously treated as non-Headline. In addition,
legal fees were incurred in relation to a dispute in
relation to a put option arrangement.

163

M&C Saatchi Plc Annual Report 2023Financial Statements
3. SEGMENTAL INFORMATION

Headline segmental income statement

Segmental results are reconciled to the income
statement in Note 1 of the financial statements.
The Board reviews Headline results.

The Group’s operating segments are aligned to
those business units that are evaluated regularly
by the chief operating decision maker (“CODM”),
namely, the Board, in making strategic decisions,
assessing performance, and allocating resources.

The operating segments have historically comprised
of individual country entities, the financial information

Segmental Information by Geography

of which is provided to the CODM and is aggregated
into specific geographic regions on a Headline
basis, with each geographic region considered
a reportable segment. Each country included in
that region has similar economic and operating
characteristics. The products and services provided
by entities in a geographic region are all related to
marketing communications services and generally
offer complementary products and services to
their customers.

The Group’s performance is also assessed under a
structure of specialisms, and this is reported under two
segments: Advertising and High Growth Specialisms,
excluding Group Central Costs.

UK Americas
£000

£000

Asia
Pacific
(APAC)
£000

Africa
£000

Europe
£000

Middle
East
£000

Group
Central
Costs
£000

Total
£000

102,709

20,867

20%

19,235

46,933

64,959

16,080

14,575

6,608

14%

5,542

7,816

12%

6,776

1,869

12%

1,753

1,570

11%

1,459

7,509

1,343

18%

1,294

– 252,765

(7,637)

32,436

–

13%

(7,390)

28,669

98,241

19,528

19%

17,416

55,205

9,970

18%

8,278

79,010

12,768

16%

11,726

17,012

2,000

14%

1,655

15,316

1,852

12%

1,832

6,356

–

271,140

625

10%

625

(11,355)

35,388

–

13%

(9,699)

31,833

Year Ended 31 December 2023

Net revenue

Operating profit / (loss)

Operating profit margin

Profit / (loss) before tax

Year Ended 31 December 2022

Net revenue

Operating profit / (loss)

Operating profit margin

Profit / (loss) before tax

Included within the Group’s revenues is a customer that makes up more than 10% of total net revenue, contributing
£28.6m (2022: £32.8m). This is included within the UK and within the High Growth Specialisms.

164

M&C Saatchi Plc Annual Report 2023Financial StatementsSegmental Information by Division

Year Ended 31 December 2023

Net revenue

Operating profit / (loss)

Operating profit margin

Profit / (loss) before tax

Year Ended 31 December 2022

Net revenue

Operating profit / (loss)

Operating profit margin

Profit / (loss) before tax

Non-current Assets Other Than Excluded Items

As at 31 December
UK

Asia Pacific (APAC)

Americas

Europe

Africa

Middle East

Advertising
£000

Specialisms
£000

Group Central
Costs
£000

105,456

8,011

6,238

124,300

11,728

9,928

147,309

32,062

22%

29,821

146,840

35,015

24%

31,604

–

(7,637)

–

(7,390)

–

(11,355)

–

(9,699)

2023
£000
40,386

16,127

15,315

4,735

2,696

1,660

Total
£000

252,765

32,436

13%

28,669

271,140

25,388

13%

31,833

2022
£000
41,293

26,342

17,131

6,136

3,782

884

Total non-current assets other than excluded items

80,919

95,568

Non-current assets excluded from analysis above:

Deferred tax assets

Other financial assets

Total non-current assets per balance sheet

6,036

7,227

94,182

5,131

11,986

112,685

Allocation of non-current assets by country is based on the location of the business units. Items included comprise
fixed assets, intangible assets, IFRS 16 assets and equity accounted investments.

165

M&C Saatchi Plc Annual Report 2023Financial Statements4. REVENUE FROM CONTRACTS WITH CUSTOMERS

Measurement of revenue

Billings comprise all gross amounts billed, or billable,
to clients and is stated exclusive of VAT and sales taxes.
Billings is a non-GAAP measure and is included as it
influences the quantum of trade and other receivables
recognised at a given date. The difference between
Billings and Revenue is represented by costs incurred
on behalf of clients with whom entities within the
Group operate as an agent, and timing differences,
where invoicing occurs in advance or in arrears of the
related revenue being recognised.

Net revenue is a non-GAAP measure and is reviewed
by the CODM and other stakeholders as a key metric
of business performance (Note 3 of the financial
statements).

Revenue recognition policies

Revenue is stated exclusive of VAT and sales taxes.
Net revenue is exclusive of third-party costs recharged
to clients, where entities within the Group are acting
as principal.

Performance obligations

At the inception of a new contractual arrangement
with a customer, the Group identifies the performance
obligations inherent in the agreement. Typically, the
terms of the contracts are such that the services to be
rendered are considered to be either integrated or
to represent a series of services that are substantially
the same, with the same pattern of transfer to the
customer. Accordingly, this amalgam of services is
accounted for as a single performance obligation.

Where there are contracts with services which are
distinct within the contract, then they are accounted
for as separate obligations. In these instances, the
consideration due to be earned from the contract
is allocated to each of the performance obligations,
in proportion to their stand-alone selling price.

Further discussion of performance obligations arising
in terms of the main types of services provided by
the Group, in addition to their typical pattern of
satisfaction, is provided below.

Based on the terms of the contractual arrangements
entered into with customers, revenue is typically
recognised over time. This is based on either the fact
that (i) the assets generated under the terms of the
contracts have no alternative use to the Group and
there is an enforceable right to payment, or (ii) the
client exerts editorial oversight during the course of
the assignment such that they control the service as
it is provided.

Principal vs agent

When a third-party supplier is involved in fulfilling
the terms of a contract, then, for each performance
obligation identified, the Group assesses whether the
Group is acting as principal or agent. The primary
indicator used in this assessment is whether the Group
is judged to control the specified services prior to
the transfer of those services to the customer. In this
instance, it is typically concluded that the Group is
acting as principal.

When entities within the Group act as an agent, the
revenue recorded is the net amount retained. Costs
incurred with external suppliers are excluded from
revenue. When the Group acts as principal the revenue
recorded is the gross amount billed, and when
allowable by the terms of the contract, out-of-pocket
costs, such as travel, are also recognised as the gross
amount billed with a corresponding amount recorded
as an expense.

Treatment of costs

Costs incurred in relation to the fulfilment of a contract
are generally expensed as incurred if revenue is
recognised over time.

166

M&C Saatchi Plc Annual Report 2023Financial Statements

Disaggregation of revenue

The Group monitors the composition of revenue earned by the Group on a geographic basis and by specialism.

Revenue
Specialism

Advertising

Issues

Passions

Consulting

Media

Group

Region

Asia Pacific (APAC)

Americas

Africa

Europe

Middle East

Group

Reported

2022
£m

2023 vs 2022
Movement

221.8

92.7

65.5

45.9

36.6

462.5

139.3

128.5

116.8

32.8

24.9

20.2

462.5

(8)%

20%

(16)%

(20)%

(2)%

43%

(21)%

(38)%

(3)%

18%

(15)%

(2)%

2023
£m

205.0

111.4

69.5

38.7

29.3

453.9

199.0

101.7

72.7

33.8

29.4

17.3

453.9

Assets and liabilities related to contracts with
customers

Contract assets and liabilities arise when there is a
difference (generally due to timing) in the amount of
revenue which can be recognised and the amount
which can be invoiced under the terms of the
contractual arrangement.

Where revenue earned from customers is recognised
over time, many of the Group’s contractual
arrangements have terms which permit the Group
to remit invoices for the amount of work performed
to date on a specific contract (described in the
accounting policies as “right-to-invoice”). Where the
terms of a contractual arrangement do not carry such
right to invoice, then a contract asset is recognised
over time, as work is performed until such point that
an invoice can be remitted.

consideration and, as such, a trade receivable
should be recognised at the point the entity’s right to
consideration is unconditional, which normally will be
at the time the purchase order is satisfied (which may
not be the same as when an invoice is raised).

Contract liabilities comprise instances where a
customer has made payments relating to services
prior to their provision. Where payments are received
in advance, IFRS 15 requires assessment of whether
these cash transfers contain any financing component.
Under the terms of the contractual arrangements
entered into by entities within the Group, there are no
instances where such financing elements arise. This
is the case even for those arrangements where the
Group receives monies more than a year in advance
by virtue of the terms of the contractual agreement
so entered into.

Where revenue earned from customers is recognised
at a point in time, then this will be dependent on
satisfaction of a specific performance obligation.
At such point, it is usual that there are no other
conditions required to be met for receipt of

The Group operates a standard 30-day credit
terms policy. All contract liabilities and contract
assets (other receivables per Note 21 of the financial
statements) brought forward have been realised in
the current period.

167

M&C Saatchi Plc Annual Report 2023Financial StatementsRevenue recognition policies and performance
obligation satisfaction by category of services
performed

Further details regarding revenue recognition and
performance obligations of the Group’s main service
offerings are summarised below.

Provision of advertising and marketing services

The provision of advertising and marketing services
to clients typically meets the criteria identified above
for revenue to be recognised over time. The quantum
of revenue to be recognised over the period of the
assignments is either based on the “right-to-invoice”
expedient or as the services are provided, depending
on the contractual terms. In measuring the progress
of services provided in an assignment, the Group
uses an appropriate measure depending on the
circumstances, which may include inputs (such as
internal labour costs incurred) or outputs (such as
media posts). Where projects are carried out under
contracts, the terms of which entitle an entity within
the Group to payment for its performance only when
a discrete point is reached (such as an event has
occurred or a milestone has been reached), then
revenue is recognised at the time that payment
entitlement occurs, i.e. at a point in time.

The provision of advertising and marketing services
can encompass provision of a range of media
deliverables in addition to development and
deployment of a media strategy. Regular assessment
of the effectiveness of the project with regard to the
objective of the contractual arrangement may also be
included. Often the range of services provided within
these arrangements is considered to be integrated to
an extent that no separable performance obligations
can be identified other than a single over-arching
combined performance obligation relating to the
delivery of the project. In these instances, revenue is
recognised over time as the performance obligation
is being satisfied depending on the circumstances,
which may include inputs (such as internal labour
costs incurred) or outputs (such as media posts).

When services provided are considered separable,
and not integrated, then multiple performance
obligations are recognised. Multiple performance
obligations are most common in projects where
there are clearly separable conceptual preparatory
obligations culminating in a customer deliverable,
such as an event. In these scenarios the conceptual

preparation element and the deliverable are
concluded as forming separate performance
obligations with the revenue and corresponding cost
of sales (typically third-party pass-through costs)
assigned to the obligation to which they relate.

Whilst it is uncommon for projects to be such that
revenue is not able to be recognised over time,
examples can occur. In these instances, the element of
the transaction price assigned to each performance
obligation (in proportion to stand-alone selling prices)
is recognised as revenue once an obligation has been
fully satisfied, for example, an event has occurred or a
milestone has been reached.

Some entities within the Group enter into retainer fees
that relate to arrangements whereby the nature of
the entity’s contractual promise is to agree to “stand-
ready” to deliver services to the customer for a period
of time rather than to deliver the goods or services
underlying that promise. Revenue relating to retainer
fees is recognised over the period of the relevant
assignments or arrangements, typically in line with
the “stand-ready” incurred costs.

Where fees are remunerated to the agency in
excess of the services rendered, then a contract
liability is recognised. Conversely where the services
rendered are in excess of the actual fees paid, then
a contract asset is recognised when there is a right
to consideration.

Certain of these arrangements have contractual
terms relating to the agency meeting specific
customer identified KPIs. As a result, the overall level
of consideration can vary by increasing or decreasing
as a result of performance against these KPI metrics.
To reflect this variability in the overall level of
consideration, the most likely outcome is estimated
by management and then that outcome is reflected
in the revenue recognised as the performance
obligation(s) of the contract are satisfied. When
determining the likely outturn position, the estimated
consideration is such that it is highly probable there
will not be significant reversal of the revenue in the
future. The estimated portion of the variable element
is recalculated at the earlier of the completion of the
contract or the next reporting period and revenue is
adjusted accordingly. These estimates are based on
historical award experience, anticipated performance
and best judgement at the time.

168

M&C Saatchi Plc Annual Report 2023Financial StatementsCommission-based income in relation to media
spend

The Group arranges for third parties to provide the
related goods and services to its customers in the
capacity of an agent. Revenue is recognised in relation
to the amount of commission the Group is entitled to.
Often additional integrated services are provided at
the same time with regard to the development and
deployment of an overarching media strategy. Due
to the integration of the services provided under the
terms of the contract, management judgement is
applied to assess whether there is a single combined
performance obligation.

The performance obligation for media purchases is
considered to have been satisfied when the associated
advertisement has been purchased. In the majority
of instances where the Group purchases media for
clients, the Group is acting as agent.

Commission-based income in relation to talent
performance

Revenue in relation to talent performance involves the
Group acting as agent. Typically, such arrangements
have a single, or a sequence, of specific performance
obligations relating to the talent (or other third party)
providing services. The performance obligations
are generally satisfied at a point in time once the
service has been provided, at which point, revenue
is recognised. The consideration for the services is
normally for a fixed amount (as a percentage of the
talent’s fee) with no degree of variability.

Recognition of supplier discounts and rebates
as revenue from contracts with customers

The Group receives discounts and rebates from certain
suppliers for transactions entered into on behalf of
clients, which the clients have agreed the Group can
retain. When the contractual terms of the agreements
entered into are such that the Group acts as agent in
these instances, then such rebates are recognised as
revenue from contracts with customers. By contrast,
when the contractual terms of the agreements are
such that the Group is acting as principal, then such
rebates are recognised as a reduction in direct
costs. Certain of the Group’s clients, however, have
contractual terms such that the pricing of their
contracts is structured with the rebate being passed
through to them.

169

M&C Saatchi Plc Annual Report 2023Financial Statements
5. STAFF COSTS

Policy

Contributions to personal pension plans are charged to the income statement in the period in which they are
due. Bonuses are given on an ad hoc basis, or as otherwise agreed, and are accrued in the year to which the
services performed relate (when there is an expectation these will be awarded).

Staff Costs (including Directors)

Year Ended 31 December
Wages and salaries**

Social security costs

Pension costs

Other staff costs*

Total

Allocations and dividends paid to holders of IFRS 2 put options

Share-based incentive plans:

Cash settled

Equity settled

Total share-based incentive plans

Total staff costs

* Other staff costs include profit share, LTIP charges and other staff benefits.
** Includes bonuses.

Note

Staff numbers
UK

Europe

Middle East

Africa

Asia Pacific (APAC)

Americas

Total

2023
£000
152,647

14,600

8,393

4,205

179,845

2,499

4,843

434

5,277

2022
£000
156,476

16,152

8,833

5,832

187,293

7,811

2,432

1,229

3,661

187,621

198,765

2023
769

182

368

969

342

2,706

2022
772

166

348

1,035

340

2,734

These staff numbers are based on the average number of staff throughout the year in 2023.

Pensions

The Group does not operate any defined benefit pension schemes. The Group makes payments, on behalf of
certain individuals, to personal pension schemes.

Compensation for key management personnel and Directors
Wages and salaries

Pension costs

Share-based payments*

Total

2023
£000
1,750

2022
£000
2,214

–

1,803

381

2,648

Included within share-based payments is £nil (2022: £174k) relating to Mickey Kalifa who left the Company in
May 2022.

Key management personnel include the Directors and employees responsible for planning, directing and
controlling the activities of the Group. Refer to page 126 of the Directors’ Remuneration Report for details
of the Directors’ remuneration, including the highest paid Director.

170

M&C Saatchi Plc Annual Report 2023Financial Statements6. AUDITORS’ REMUNERATION

The Company paid the following amounts to its auditors in respect of the audit of the financial statements and
for other services provided to the Group:

Year Ended 31 December

Audit services
Fees payable to the Company’s auditor for the audit of the Company’s annual
accounts
Fees payable to associates of the Company’s auditor for the audit of the
accounts of subsidiaries
Audit fees relating to the prior period

Other services provided by the auditors:

Other assurance services – interim agreed upon procedures

Corporate finance services

Taxation compliance services

Taxation advisory services

Total

7. NET FINANCE EXPENSE

Policy

2023
£000

1,450

205

154

1,809

149

233

2022
£000

1,506

174

300

1,980

499

168

176

868

2,042

2,848

Interest income and expense, including fair value adjustments to IFRS 9 put options, are recognised in the income
statement in the period in which they are incurred, except for the amortisation of loan costs which are recognised
over the life of the loan.

Year Ended 31 December
Bank interest receivable

Other interest receivable

Sublease finance income

Financial income

Bank interest payable

Amortisation of loan costs

Other interest payable

Interest on lease liabilities

Valuation adjustment to IFRS 9 put option liabilities (Note 27)

Financial expense

Net finance expense

2023
£000
412

414

831

(2,318)

(190)

(14)

(2,876)

(2,114)

(7,512)

(6,681)

2022
£000
331

391

(1,200)

(222)

–

(2,970)

(1,114)

(5,506)

(5,115)

171

M&C Saatchi Plc Annual Report 2023Financial Statements
8. CURRENT TAXATION

Policy

Current tax, including UK and foreign tax, is provided for using the tax rates and laws that have been
substantively enacted at the balance sheet date.

Analysis

Income Statement Charge for Year Ended 31 December
Taxation in the year
UK
Overseas
Withholding taxes payable
Adjustment for (over) / under provision in prior periods
Total

Deferred taxation
Recognition of temporary differences
Adjustment for under / (over) provision in prior periods
Recognition of previously unrecognised deferred tax
Effect of changes in tax rates
Total
Total taxation

2023
£000

1,955
3,832
54
(606)
5,235

(1,320)
253
(548)
(103)
(1,718)
3,517

2022
£000

730
3,020
14
(986)
2,778

1,719
709
–
(28)
2,400
5,178

The differences between the actual tax and the standard rate of corporation tax in the UK applied to the Group’s
Statutory profit for the year are as follows:

Year Ended 31 December
Profit before taxation
Taxation at UK corporation tax rate of 23.50% (2022: 19.00%)
Option charges not deductible for tax
Impairment with no tax credit
Tax losses for which no deferred tax asset was recognised
Expenses not deductible for tax
Different tax rates applicable in overseas jurisdictions
Withholding taxes payable
Tax effect of associates
Disposal of associate on which no tax is charged
Effect of changes in tax rates
Disposal of subsidiaries on which no tax is charged
Adjustment for tax (over) / under provision in prior periods
Recognition of previously unrecognised deferred tax
Effect of changes in tax rates on deferred tax
Total taxation
Effective tax rate

2023
£000
715
168
1,724
1,099
962
627
140
54
3
(72)
(103)
(184)
(353)
(548)
–
3,517
493.3%

2023
%

23.5%
241.8%
154.2%
134.9%
88.0%
19.6%
7.6%
0.4%
-10.1%
-14.4%
-25.8%
-49.5%
-76.9%
–
493.3%

2022
£000
5,423
1,030
1,070
138
834
1,314
1,081
14
2
–
–
–
(277)
–
(28)
5,178
95.5%

2022
%

19.0%
19.7%
2.5%
15.4%
24.2%
20.0%
0.3%
0.0%
–
–
–
-5.1%
–
-0.5%
95.5%

172

M&C Saatchi Plc Annual Report 2023Financial Statements
Large variations in future tax rates of the statutory
accounts are expected due to significant items such
as share-based payments (option charges) and put
options being non-deductible against corporation tax
as a result of these items being capital in nature.

The key differences between actual and standard tax
rates are as follows:

•

Option charges include dividends paid to those
shareholders in the subsidiary companies that
also have a put option arrangement in place
within that entity, which are not deductible
for tax: The Group’s share-based payment
schemes mostly relate to equity held in subsidiary
companies. The Group generally receives no tax
benefit on the exercise of these put options nor on
the payment of the dividends.

Impairment with no tax credit: On most of the
acquisitions no tax benefit was received from
the acquisition of goodwill. During the period
some of the goodwill was impaired with no future
tax benefit of such impairments. Expenses not
deductible for tax: In 2022 two parties tried to
acquire the Company and a proportion of the
defence costs was disallowable due to them
being capital in nature. This increased the non-
deductible expenses in 2022 that has not been
repeated in 2023.

The net effect of the adjustment for current
and deferred tax in prior periods is a release
of an over provision of £353k (2022: £277k over
provision) of total tax charge.

Due to restructuring, we were able to recognise
£548k (2022: £nil) of unrecognised deferred tax.

Different tax rates applicable in overseas
jurisdictions. The Group operates in multiple

locations round the world where tax rates are
higher than the UK, e.g. Australia (30%) and the
US (between 21% to 28%), the difference reduced
in the year as the UK tax rate increased from 19%
to 25% in April 2023.

Tax on headline profits

As can be seen in the Headline tax reconciliation, the
largest drivers of Headline tax charge are the local
entities’ profitability with central costs being incurred in
the UK, a lower tax market, and profits being made in
higher tax countries such as Australia and the US.

Our Headline tax rate has increased from 24.5% to
25.6%. The key movements in the Headline tax rates
are as follows:

•

Tax losses for which no deferred tax asset is
recognised and recognition of historic unprovided
deferred tax caused a net (1.6)% reduction
in taxation. We continue to explore ways to
recognise our historic unrecognised tax. Our
disposals will reduce the number potential
entities with tax losses that we have no certainty
on future profits.

Our acquisition of partnership interest has
boosted tax by 1.6% although this is offset
by reduced minority share (this is because
partnership share of profits are received by
minorities without tax deduction).

There was an increase in our historical
overprovision of tax causing a net (0.4)%
reduction in tax rates.

The increase in the UK tax rates offset by
a reduced difference to overseas tax rates
increased our tax charge by 1.8%.

•

Other movements (0.3)%.

Year Ended 31 December
Headline profit before taxation (Note 1)
Taxation at UK corporation tax rate of 23.50% (2022: 19.00%)
Tax losses for which no deferred tax asset was recognised
Expenses not deductible for tax
Different tax rates applicable in overseas jurisdictions
Withholding taxes payable
Tax effect of associates
Effect of changes in tax rates
Non-controlling interest share of partnership income
Adjustment for tax (over) / under provision in prior periods
Recognition of unprovided for deferred tax
Effect of changes in tax rates on deferred tax
Headline taxation (Note 1)
Headline effective tax rate

2023
£000
28,669
6,737
693
627
439
54
3
(24)
(285)
(353)
(548)
-
7,343
25.6%

2023
%

23.5%
2.4%
2.2%
1.5%
0.2%
0.0%
-0.1%
-1.0%
-1.2%
-1.9%
–
25.6%

2022
£000
31,833
6,048
683
781
1,297
14
2
–
(818)
(246)
–
29
7,790
24.5%

2022
%

19.0%
2.1%
2.5%
4.1%
0.0%
0.0%
–
-2.6%
-0.8%
–
0.1%
24.5%

173

M&C Saatchi Plc Annual Report 2023Financial Statements
9. DEFERRED TAXATION

Policy

Deferred tax is provided in full, using the liability
method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying
amounts in the financial statements. Deferred tax is
not, however, provided for temporary differences that
arise from (i) initial recognition of an asset or liability
in a transaction other than a business combination
that at the time of the transaction affects neither
accounting nor taxable profit or loss, or (ii) the initial
recognition of goodwill.

Deferred tax is determined using tax rates (and laws)
that have been enacted or substantively enacted by
the balance sheet date and are expected to apply
when the related deferred tax asset is realised or the
deferred tax liability is settled.

Deferred tax assets are recognised to the extent that it

is probable that future taxable profit will be available
against which the temporary differences can be
utilised.

Deferred tax is provided on temporary differences
arising on investments in subsidiaries and associates,
except where the timing of the reversal of the
temporary difference is controlled by the Group and
it is probable that the temporary difference will not
reverse in the foreseeable future.

Deferred income tax assets and liabilities are offset
when there is a legally enforceable right to offset
current tax assets against current tax liabilities and
the Group intends to settle its current tax assets and
current tax liabilities on a net basis. Current and
deferred tax is recognised in profit or loss, except to
the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this
case, the tax is also recognised in other comprehensive
income or directly in equity, respectively.

Analysis

At 31 December
Deferred tax assets
Deferred tax liabilities
Net deferred tax

2023
£000
6,036
(1,235)
4,801

2022
£000
5,131
(1,245)
3,886

The deferred tax asset is recoverable against future profits, and future corporation tax liabilities. The following table
shows the deferred tax asset/(liability) recognised by the Group and movements in 2023 and 2022.

At 31 December 2021

Exchange differences

Income statement (charge) / credit

At 31 December 2022

Exchange differences

Income statement (charge) / credit

Disposals

Intangibles
£000
(977)

Capital
allowances
£000
1,377

Tax
losses
£000
3,777

Purchased
investments
£000
(1,232)

Working
capital
differences
£000
3,055

124

484

(369)

154

(1,040)

–

(15)

581

1,943

207

243

–

(198)

(1,561)

2,018

(322)

(23)

–

238

(994)

–

994

–

375

(2,142)

1,288

(820)

1,470

Total
£000
6,000

286

(2,400)

3,886

(781)

1,718

(22)

At 31 December 2023

(1,255)

2,393

1,724

1,939

4,801

174

M&C Saatchi Plc Annual Report 2023Financial StatementsBased on the 2024 budget and three-year plans, approved by the Board, the Group has reviewed the deferred tax
asset created by tax losses for their recoverability. Where the Group believes such losses may not be recoverable,
they have not been recognised on the balance sheet and have been included in unrecognised deferred tax assets.

Within the local entities £711k (2022: £1,556k) of deferred tax has been naturally offset. Disregarding this offset, the
split of deferred tax is as follows:

At 31 December 2022

Deferred tax assets

Deferred tax liabilities

Net deferred tax

At 31 December 2023

Deferred tax assets

Deferred tax liabilities

Net deferred tax

Intangibles
£000

Capital
allowances
£000

Tax
losses
£000

Purchased
investments
£000

Working
capital
differences
£000

706

(1,075)

(369)

197

(1,452)

(1,255)

1,943

–

1,943

2,441

(48)

2,393

2,304

(286)

2,018

1,724

–

1,724

–

(994)

–

1,734

(446)

1,288

2,385

(446)

1,939

Total
£000

6,687

(2,801)

3,886

6,747

(1,946)

4,801

The working capital differences mostly relate to the tax effects of working capital in Australia, which calculates tax
on a cash basis rather than the accruals basis used in other countries, along with the continuing tax effects of the
adoption of IFRS 16 (Leases); and tax provision on any long-term deferred bonuses.

The unrecognised deferred tax assets in respect of certain losses in overseas territories, referred to in the tables
above, have not been recognised as there is insufficient certainty of future taxable profits against which these
would reverse. An unrecognised deferred tax asset in respect of carried forward tax losses is shown below:

Interest
£000
–

–

5,589

(732)

–

4,857

Capital
revaluation
£000
–

–

228

Losses
£000
10,633

(356)

(3,499)

–

(1,878)

3,464

8,364

At 1 January 2023

Exchange differences

Written off in year

Previously unrecognised

Losses utilised in year

Losses in year

At 31 December 2023

* At local tax rates.

Expiry date of unrecognised deferred tax:

One to five years
Five to ten years
Ten years or more
Total

Total
£000
10,633

(356)

(3,499)

5,589

(2,610)

3,692

13,449

2023
£000
89
3
2,718
2,810

Deferred tax
impact*
£000
2,145

(60)

(863)

1,174

(548)

962

2,810

2022
£000
24
565
1,556
2,145

175

M&C Saatchi Plc Annual Report 2023Financial Statements10. DIVIDENDS

Policy

Interim dividends are recognised when they have
been approved by the Board and are legally payable.
Final dividends are recognised when they have been
approved by the shareholders at the Company’s
Annual General Meeting.

No interim dividends were declared in 2022 or 2023.

A final dividend for 2022 of 1.5 pence per share was
approved at the Company’s Annual General Meeting
on 14 June 2023, which was a total amount of £1,834k.

This was paid on 12 July 2023 to all shareholders on
the Company’s register of members as at 9 June 2023.
The ex-dividend date for the shares was 8 June 2023.

The payment of this dividend did not have any tax
consequences for the Group.

A final dividend for 2023 of 1.6 pence per share has
been recommended by the Board, which is a total
amount of £1,956k. The final dividend, if approved at the
Company’s Annual General Meeting on 16 May 2024,
will be paid on 24 June 2024 to all shareholders on the
Company’s register of members as at 10 May 2024.
The ex-dividend date for the shares is 9 May 2024.

2022 final dividend paid 1.5p on 12 July 2023
Total

11. DISPOSALS

Policy

Disposals of entities in the Group are accounted for
in accordance with IFRS 10:25. When the parent’s
ownership of a subsidiary company changes and
results in the parent’s loss of control of a subsidiary
within the Group, the parent:

•

Derecognises the assets and liabilities attributable
to the former subsidiary from the consolidated
balance sheet.

Recognises any investment retained in the former
subsidiary when control is lost, and subsequently
accounts for it and for any amounts owed by or to
the former subsidiary in accordance with relevant
IFRS standards.

Recognises the gain or loss associated with the
loss of control attributable to the former controlling
interest.

2023
£000
1,834
1,834

2022
£000
–
–

Analysis

The Group divested of certain overseas subsidiaries in
line with its strategy to simplify its operating structure
and improve efficiency across the Group. M&C
Saatchi AB and M&C Saatchi Spencer Hong Kong
Limited predominately formed part of the Group’s
Advertising division and were acquired by the existing
local leadership teams. Clear Deutschland GmbH
formed part of the Group’s Consulting division and
was acquired by the existing local leadership teams.

The Group disposed its entire shareholding in
M&C Saatchi Spencer Hong Kong Limited for £nil
consideration and in Clear Deutschland GmbH for
a consideration of €102k.

The Group reduced its interest in M&C Saatchi AB from
70% to 30% with the management team and directors
of M&C Saatchi AB, acquiring the Company’s interest
for nominal consideration. M&C Saatchi AB became
an equity accounted investment.

The total cash outflow relating to the disposal of these
subsidiaries was £209k.

176

M&C Saatchi Plc Annual Report 2023Financial Statements

The Headline results of the entities disposed in 2023, which have been included in the results for the year, were as
follows:

Year Ended 31 December 2023
Revenue

Project cost / direct cost

Net revenue

Staff costs

Depreciation

Other operating charges

Operating (loss) / gain

Finance expense

(Loss) / profit before taxation

There were no disposals in 2022.

The gain on disposal of the subsidiaries is calculated as follows:

Consideration received in cash and cash equivalents
Total consideration
Plant and equipment
Right-of-use assets
Other non-current assets
Deferred tax assets
Trade and other receivables
Current tax assets
Cash and cash equivalents
Trade and other payables
Current tax liabilities
Lease liabilities
Less net liabilities
Reversal of put option liability*
Gain on disposal of subsidiaries

* As part of the disposals, all put option obligations have been rescinded.

Europe
£000
3,502

(834)

2,668

(2,358)

(137)

(442)

(269)

(67)

(336)

APAC
£000
2,059

(1,346)

713

(862)

(94)

(230)

(473)

(43)

(516)

2023
£000
88
88
6
321
22
23
2,370
52
297
(2,934)
(52)
(327)
310
472
782

Total
£000
5,561

(2,180)

3,381

(3,220)

(231)

(672)

(742)

(110)

(852)

2022
£000
–
–
–
–
–
–
–
–
–
–
–
–
–

–

177

M&C Saatchi Plc Annual Report 2023Financial Statements12. ASSETS HELD FOR SALE

Policy

Non-current assets, or disposal groups comprising
assets and liabilities, are classified as held for sale if it
is highly probable that they will be recovered primarily
through sale rather than through continuing use.

The following conditions must be met for an asset
to be classified as held for sale (IFRS 5.6-8):

•

Management is committed to a plan to sell.

The asset is available for immediate sale.

An active programme to locate the buyer
is initiated.

The sale is highly probable, within 12 months
of classification as held for sale.

The asset is being actively marketed for sale at a
sales price reasonable in relation to its fair value.

Actions required to complete the plan indicate
that it is unlikely that plan will be significantly
changed or withdrawn.

•

The assets need to be disposed of through sale.

Measurement

•

At the time of classification as held for sale:
immediately before the initial classification of
the asset as held for sale, the carrying amount
of the asset will be measured in accordance
with applicable IFRSs. Resulting adjustments are
also recognised in accordance with applicable
IFRSs (IFRS 5.18).

•

After classification as held for sale: non-current
assets that are classified as held for sale are
measured at the lower of carrying amount
and fair value less costs to sell (IFRS 5.15-15A).

Analysis

Investments in subsidiaries

The Group sold its shares in PT MCS Saatchi Indonesia
to the company’s founder for a consideration of
£500k on 16 January 2024. The investment was
held at nil value in December 2023.

Investments in associates and financial assets
at fair value through profit or loss

The Group owns a 10% shareholding in Australie
SAS (France) that was acquired in March 2021. This
investment is held as financial assets at fair value
through profit or loss in the consolidated balance
sheet. The Group owns 49% in Cometis SARL and 25%
in M&C Saatchi Little Stories. These investments are
held as Investment in associates in the consolidated
balance sheet. The sale process of these investments
commenced in the last quarter of 2023 and completed
on 28 March 2024 for a consideration of €1m.

The investment in Australie, the investment in our
associates in France and the investment in PT
MCS Saatchi Indonesia, were reclassified to Assets
held for sale as of December 2023 according
to IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations.

At 1 January
Reclassification from investment in associates (Note 16)
Reclassification from FVTPL (Note 20)
At 31 December

2023
£000
–
172
608
780

2022
£000
–
–
–
–

178

M&C Saatchi Plc Annual Report 2023Financial Statements13. INVESTMENT PROPERTY

Policy

IAS 40 Investment property applies to the accounting
for property (land and/or buildings, or part of a
building, or both) held (by the owner, or by the lessee,
under a finance lease) to earn rentals or for capital
appreciation (or both).

Investment property is initially measured at cost and
subsequently at fair value with any change recognised
in profit or loss.

Up to the date when an owner-occupied property
becomes an investment property carried at fair value,
an entity depreciates the property (or the right-of-use
asset) and recognises any impairment losses that have
occurred. The entity treats any difference at that date
between the carrying amount of the property in
accordance with IAS 16 or IFRS 16 and its fair value
in the same way as a revaluation in accordance with
IAS 16.

Rental income from investment property is recognised
on a straight-line basis over the term of the lease.
Lease incentives granted are recognised as an integral
part of the total rental income, over the term of
the lease.

Analysis

At times, entities of the Group will sublet certain
of their properties when their underlying business
requirements change.

These properties are currently on the market with
the aim to sublet them.

The investment property value represents the
estimated rental income that the Group could get
in the current market by renting out these spaces.

At 1 January
Reclassification from Right-of-use assets (Note 18)
Foreign exchange
At 31 December

2023
£000
–
2,369
–
2,369

2022
£000
–
–
–
–

179

M&C Saatchi Plc Annual Report 2023Financial Statements14. DEFERRED AND CONTINGENT CONSIDERATION

Policy

Certain acquisitions made by the Group include contingent or deferred consideration, the quantum of which is
dependent on the future performance of the acquired entity. Such consideration is recorded at fair value in line
with IFRS 13 (Note 30 of the financial statements).

The balances are remeasured at the earlier of either the end of each reporting period or crystallisation of the
consideration payment. The movements in the fair value are recognised in profit or loss.

Analysis

Assets
Non-current
Contingent consideration
Saatchinvest Ltd
Total non-current

Liabilities
Current
Contingent consideration
Scarecrow M&C Saatchi Ltd*
Total current

2023
£000

738
738

2023
£000

–
–

2022
£000

914
914

2022
£000

–
–

* There is contingent consideration owed to shareholders of Scarecrow M&C Saatchi Limited, however, due to its present level of profitability it is currently valued at £nil (2022: £nil).

Movements in Liabilities in the Year

At 1 January
Exchange differences
Charged to the income statement*
Conditional consideration paid in cash**
Conditional consideration paid in equity
At 31 December

* £266k revaluation of deferred consideration due to Levergy Marketing Agency (Pty) Limited on payment.
** £1,250k paid to Levergy Marketing Agency (Pty) Limited.

2023
£000
–
–
–
–
–
–

2022
£000
(984)
–
(266)
1,250
–
–

180

M&C Saatchi Plc Annual Report 2023Financial Statements

Movements in Assets in the Year

At 1 January
Reclassification from financial assets at fair value through profit or loss (Note 20)***
Revaluation
At 31 December

2023
£000
914
–
(176)
738

2022
£000
–
914
–
914

*** The £914k of contingent consideration relates to the sale of Dataseat Ltd (“Dataseat”), one of the entities in the Group’s portfolio of unlisted companies, in which it held a 5.18%
shareholding. The sale to Verve Group took place in July 2022, and £779k of cash was received as initial consideration. Verve Group is part of Media and Games Invest Se
(“MGI”), a Swedish company which is listed on the Nasdaq Market in Stockholm and in the Scale segment of the Frankfurt Stock Exchange. Two further tranches of consideration
may be received, on which the Group has undertaken a probability assessment in determining the value recognised:

Tranche 2:

Up to £534k to be received as cash or MGI shares. The exact amount to be received will be reduced proportionately based on:

1) one or both of the two Dataseat founders leaving the employment of Dataseat before July 2025;
2) if they leave, the terms and timing of their departures; and
3) whether the consideration is paid in cash or shares. Receiving shares results in a maximum consideration of £534k rather than £485k, and the minimum is 0.

We received the £485k cash on 27 February 2024.

Tranche 3:

Up to £924k to be received as cash or MGI shares as part of an earn-out calculation. The earn-out consideration is dependent on Dataseat’s 2024 net revenue and must be
paid by August 2025. The contingent consideration was calculated following a review of Dataseat’s future prospects and potential net revenues and involved sensitivity analysis
of different revenue scenarios. Receiving any earn-out consideration is also dependent on the two founders remaining employed by Dataseat until July 2025. The maximum
consideration which could be received for tranche 3 is £1,458k and the minimum is 0. This has been valued at £253k after discounting the remaining receivable amount.

181

M&C Saatchi Plc Annual Report 2023Financial Statements

15. INTANGIBLE ASSETS

Impairment

Policy

Intangible assets are carried at cost less accumulated
amortisation and impairment losses.

Goodwill

Under the acquisition method of accounting for
business combinations, goodwill is the fair value
of consideration transferred, less the net of the fair
values of the identifiable assets acquired and the
liabilities subsumed.

Other intangibles acquired as part of a business
combination

Intangible assets acquired as part of a business
combination (which includes brand names and
customer relationships) are capitalised at fair value,
if they are either separable or arise from contractual
or other legal rights and their fair value can be
reliably measured.

Software and film

Purchased software, and internally created software
and film rights are recorded at cost. Internally created
software and film rights are created so that they can
be directly used to generate future client income.

Amortisation

Goodwill is not amortised. Amortisation of other
classes of intangible assets is charged to the income
statement on a straight-line basis over their estimated
useful lives as follows:

Software and film rights: 3 years

Customer relationships: 1 to 8 years

Brand name:

1 to 10 years

The Group has no indefinite life intangibles other
than goodwill.

Goodwill and other intangibles are reviewed for
impairment annually or more frequently if events
or changes in circumstances indicate that the assets
may be impaired.

Impairment losses arise when the carrying amount
of an asset or CGU is in excess of the recoverable
amount, and these losses are recognised in the income
statement. All recoverable amounts are from future
trading (i.e. their value in use) and not from the sale
of unrecognised assets or other intangibles.

The value in use calculations have been based
on the forecast profitability of each CGU, using
the 2024 budget and three-year plans approved
by the Board, with a residual growth rate of 1.5%
p.a. applied thereafter. This forecast data is based
on past performance and current business and
economic prospects. Revenue growth rates by year
and geography were determined using PwC’s 2023
Global Entertainment and Media Outlook report,
and operating cost growth was limited to a % of
revenue growth aligned with current margins and
improvements driven by Project Forward.

A discount rate is then applied to create a discounted
future cash flow forecast (DCF) for each CGU, which
forms the basis for determining the recoverable
amount of each CGU. If the DCF of a CGU is not in
excess of its carrying amount (that includes the value
of its fixed assets and right-of-use assets), then an
impairment loss would be recognised.

In conducting the review, a residual growth rate of
1.5% has been used for all countries. Market betas
of 1.0 have been used for the UK, the US, Europe,
Australia, Malaysia, the UAE, Brazil and South Africa,
while 1.4 has been used for India and 1.2 has been
used for rest of the world.

Pre-tax discount rates are based on the Group’s
nominal weighted average cost of capital adjusted
for the specific risks relating to the country and
market in which the CGU operates.

182

M&C Saatchi Plc Annual Report 2023Financial Statements
Key Assumptions Used for Impairment Review

Market
UK
Asia and Australia
Middle East
South Africa
Americas

Analysis

Cost
At 31 December 2021
Exchange differences
Acquired
Disposal
At 31 December 2022
Exchange differences
Acquired
Reclassified*
Disposal
Disposal of subsidiaries (including no
longer in use)
At 31 December 2023

Accumulated amortisation and
impairment
At 31 December 2021
Exchange differences
Amortisation charge
Impairment
Disposal
At 31 December 2022
Exchange differences
Amortisation charge
Impairment
Disposal
At 31 December 2023

Net book value
At 31 December 2021
At 31 December 2022
At 31 December 2023

Residual
growth
rates 2023
%
1.5
1.5
1.5
1.5
1.5

Residual
growth
rates 2022
%
1.5
1.5
1.5
1.5
1.5

Pre-tax
discount
rates 2023
%
17
15–18
15
27
14–16

Pre-tax
discount
rates 2022
%
16–18
15–18
15
27
14–26

Goodwill Brand name
£000
8,194
169
–
–
8,363
(10)
–
–
–

£000
58,436
2,258
–
–
60,694
(1,836)
–
–
–

Customer
relationships
£000
14,051
355
200
–
14,606
25
–
–
–

Software
and film
rights
£000
3,232
145
992
(678)
3,691
(411)
19
(636)
(120)

–

Total
£000
83,913
2,927
1,192
(678)
87,354
(2,232)
19
(636)
(120)

–

58,858

8,353

14,631

2,543

84,385

22,460
489
–
556
–
23,505
(855)
–
3,733
–
26,383

35,976
37,189
32,475

7,129
28
104
–
–
7,261
(33)
136
295
–
7,659

1,065
1,102
694

11,495
57
493
–
–
12,045
(28)
567
766
–
13,350

2,556
2,561
1,281

2,330
113
463
172
(503)
2,575
(193)
138
–
(120)
2,400

902
1,116
143

43,414
687
1,060
728
(503)
45,386
(1,109)
841
4,794
(120)
49,792

40,499
41,968
34,593

* Relates to assets reclassified from intangible assets to assets held at fair value through profit and loss (Note 20 of the financial statements), following the spinoff of our investment

to DragNDrop Limited.

183

M&C Saatchi Plc Annual Report 2023Financial StatementsGoodwill

Cash-generating Units (CGUs)
Shepardson Stern + Kaminsky LLP

LIDA NY LLP (MCD)

Clear Ideas Ltd

M&C Saatchi Mobile Ltd

M&C Saatchi Agency Pty Ltd
(Australia)
M&C Saatchi Social Ltd

Bohemia Group Pty Ltd
(Australia)
M&C Saatchi Sport &
Entertainment Ltd
M&C Saatchi Merlin Ltd

Levergy Marketing Agency (PTY)
Limited (South Africa)
M&C Saatchi Middle East FZ LLC
(Dubai)
Santa Clara Participações Ltda

M&C Saatchi Talk Ltd

M&C Saatchi (M) SDN BHD

M&C Saatchi (Hong Kong)
Limited*
M&C Saatchi Advertising GmbH*

Balance held
31 December
2023
£000
5,649

Headroom
31 December
2023
%
36%

Balance held
31 December
2022
£000
5,899

5,573

5,031

4,283

2,790

2,612

1,768

24%

266%

618%

249%

41%

76%

5,821

5,031

4,283

2,863

2,612

1,904

Headroom
31 December
2022

% Region
120% Americas

Specialism
Advertising

49% Americas

Consulting

282% Europe

Consulting

1,248% UK

237% Asia Pacific
(APAC)

87% UK

36% Asia Pacific
(APAC)

Media

Various

Passions

Media

1,184

1,351%

1,184

839% UK

Passions

765

743

734

649

625

–

701%

65%

332%

45%

615%

1,987%

765

860

765

624

625

2,506

1,376

37,189

867% UK

30% Africa

Passions

515% Middle East Advertising

4% Americas

Advertising

630% UK

Advertising

2,748% Asia Pacific

Advertising

(APAC)
0% Asia Pacific
(APAC)
94% Europe

Advertising

276%

Total

32,475

253%

* With exception of CGUs marked, all other movements in the table above are due to foreign exchange differences.

During the year goodwill balances were fully
impaired in relation to M&C Saatchi (Hong Kong)
Limited £2,357k (2022: £396k) when a decision
was made to exit this market; and M&C Saatchi
Advertising GmbH £1,376k (2022: £nil) after the
agency lost its main client during the year.

Based on the considerations above, impairments
were also made in relation to brand name £295k
(2022: £nil) and customer relationships £766k (2022:
£nil) held by M&C Saatchi (Hong Kong) Limited.

The 2023 review of goodwill was undertaken
as at 31 December, and resulted in no further
impairments of goodwill.

A sensitivity analysis has been performed, showing
the impact required if the profit forecasts reduced
by 20% and the discount rates increase by 10%
across the Group. This would give rise to an
impairment in six CGUs (2022: eight) and a total
impairment of £16,993k (2022: £21,603k).

184

M&C Saatchi Plc Annual Report 2023Financial Statements
16. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

Policy

The Group invests in associates and joint ventures, either to deliver its services to a strategic marketplace, or to
gain strategic mass by being part of a larger local or functional entity.

An associate is an entity over which the Group has significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of the investee, but it is neither control nor joint control
over those policies.

The carrying value of these investments comprise the Group’s share of their net assets and any purchased
goodwill. These carrying amounts are reviewed at each balance sheet date, to determine whether there is any
indication of impairment.

Analysis

Region and Name
Europe

Cometis SARL

Nature of
business

Country of
incorporation
or registration

Advertising France

M&C Saatchi Little Stories SAS PR

France

M&C Saatchi SAL

M&C Saatchi AB*

APAC

Love Frankie Ltd

February Communications
Private Limited
M&C Saatchi Limited

Total

Advertising Lebanon

Advertising Sweden

Advertising Thailand

Advertising India

Advertising Japan

* In December 2023, the Group sold majority of its shares in M&C Saatchi AB and only retained 30%.

Investment
in associates

Proportion of ownership
interest held at
31 December

2023

2022

2023

2022

£000

–

138

–

138

–

135

–

191

49%

25%

10%

30%

25%

20%

10%

49%

25%

10%

70%

25%

20%

10%

M&C Saatchi SAL has the following subsidiaries: M&C
Mena Ltd and Al Dallah For Creativity & Design LLC.

All shares in associates are held by subsidiary
companies in the Group. Where an associate has
the right to use the brand name, the Group holds the
right to withdraw such use, to protect it from damage.

The Group holds neither associates nor joint ventures
in Australia, Africa, or the UK.

The sale process of these investments commenced
in the last quarter of 2023 and is expected to
be completed in the first quarter of 2024 for a
consideration of €1 million.

The sale process of the French associates, 49% in
Cometis SARL and 25% in M&C Saatchi Little Stories
SAS, commenced in the last quarter of 2023 and
completed on 28 March 2024. Therefore these
investments were reclassified to Assets held for sale
as of December 2023 according to IFRS 5 Non-current
Assets Held for Sale and Discontinued Operations.

185

M&C Saatchi Plc Annual Report 2023Financial StatementsBalance Sheet Value as at 31 December
Investments intended to be held in the long term

Investments categorised as held for sale

Total associate investments

Balance Sheet Movements
At 1 January

Exchange movements

Revaluation of associates on transition to assets held for sale

Transferred to assets held for sale (Note 12)

Acquisition of associates

Impairment of associate

Share of (loss) / profit after taxation

At 31 December

Income Statement
Share of (loss) / profit after taxation

Revaluation of associates on transition to assets held for sale

Other movements

Share of result of associates and joint ventures

Impairment of associate investment

At 31 December

2023
£000
138

133

271

2023
£000
191

(1)

133

(172)

–

(13)

138

2023
£000
(13)

133

121

–

121

2022
£000
191

–

191

2022
£000
202

(1)

–

(10)

191

2022
£000
(10)

–

(10)

–

(10)

186

M&C Saatchi Plc Annual Report 2023Financial StatementsThe results and net assets of the associate entities are set out below, along with the Group’s share of these results
and net assets:

Income Statement
Revenue

Operating profit / (loss)

Profit / (loss) before taxation

Profit / (loss) after taxation

Group's share

Dividends received

Balance Sheet
Total assets

Total liabilities

Net assets / (liabilities)

Our share

Losses not recognised

Goodwill
Total

APAC
£000
3,181

874

(565)

(547)

–

APAC
£000
932

(987)

(55)

(14)

(142)

294

138

2023
Europe*
£000
1,201

(18)

–

2023
Europe*
£000
2,762

Total
£000
4,382

897

(536)

(524)

(13)

–

Total
£000
3,694

(2,683)

(3,670)

–

(24)

–

(142)

270

138

APAC
£000
4,006

765

(201)

(208)

(65)

–

APAC
£000
1,557

(1,088)

469

117

135

2022
Europe
£000
712

165

143

113

–

2022

Europe
£000
151

(38)

113

–

Total
£000
4,718

930

(58)

(95)

(10)

–

Total
£000
1,708

(1,126)

583

173

191

* Income statement includes the YTD results for France. The investment in France has been reclassified to Assets held for sale as of 31 December 2023, therefore no balance sheet
included for France. The Balance Sheet includes M&C Saatchi AB net assets. The company became an associate on 21 December 2023, therefore no YTD results included in the
income statement disclosure.

187

M&C Saatchi Plc Annual Report 2023Financial Statements17. PLANT AND EQUIPMENT

Policy

Tangible fixed assets are stated at historical cost less accumulated depreciation. Depreciation is provided to write
off the cost of all fixed assets, less estimated residual values, evenly over their expected useful lives.

Depreciation is calculated at the following annual rates:

Leasehold improvements – Lower of useful life and over the period of the lease

Furniture and fittings

– 10% straight-line basis

Computer equipment

– 33% straight-line basis

Other equipment

– 25% straight-line basis

Motor vehicles

– 25% straight-line basis

The need for any fixed asset impairment write-down is assessed by a comparison of the carrying value of the
asset against the higher of a) the fair value less costs to sell, or b) the value in use.

Analysis

Cost
At 31 December 2021
Exchange differences
Additions
Disposals
At 31 December 2022
Exchange differences
Additions
Disposals
At 31 December 2023

Accumulated depreciation and
impairment
At 31 December 2021
Exchange differences
Depreciation charge
Disposals
At 31 December 2022
Exchange differences
Depreciation charge
Impairment (Note 1)
Disposals
At 31 December 2023

Net book value
At 31 December 2021
At 31 December 2022
At 31 December 2023

Leasehold
improvements
£000
7,296
324
1,145
(1,596)
7,169
(207)
515
(429)
7,048

Furniture, fittings
and other
equipment
£000
3,918
121
1,674
(1,066)
4,647
126
666
(155)
5,284

4,030
230
990
(1,579)
3,671
(492)
1,143
101
(358)
4,065

3,266
3,498
2,983

2,655
53
381
(926)
2,163
643
225
31
(127)
2,935

1,263
2,484
2,349

Total depreciation in the income statement is broken down as follows:

From plant and equipment

From right-of-use assets

Computer
equipment
£000
5,832
259
1,551
(404)
7,238
(733)
637
(501)
6,641

4,090
183
1,087
(396)
4,964
(857)
1,203
–
(334)
4,976

1,742
2,274
1,665

Note
17

Motor
vehicles
£000
78
4
13
–
95
5
9
(28)
81

16
3
22
–
41
51
2
–
(23)
71

62
54
10

2023
£000
2,573

6,243

8,816

Total
£000
17,124
708
4,383
(3,066)
19,149
(809)
1,827
(1,113)
19,054

10,791
469
2,480
(2,901)
10,839
(655)
2,573
132
(842)
12,047

6,333
8,310
7,007

2022
£000
2,480

6,846

9,326

188

M&C Saatchi Plc Annual Report 2023Financial Statements
18. LEASES

Lease term

The Group leases various assets, comprising
properties, equipment, and motor vehicles. The
determination whether an arrangement is, or contains,
a lease is based on whether the contract conveys
a right to control the use of an identified asset for
a period of time in exchange for consideration.

Policy

The following sets out the Group’s lease accounting
policy for all leases, with the exception of leases
with a term of 12 months or less and those of low-
value assets. In both these instances the Group
applies the exemptions permissible by IFRS 16
Leases. These are typically expensed to the income
statement as incurred.

Right-of-use assets and lease liabilities

At the inception of a lease, the Group recognises
a right-of-use asset and a lease liability.

The value of the lease liability is determined by
reference to the present value of the future lease
payments, as determined at the inception of the
lease. Lease liabilities are disclosed separately on
the balance sheet. These are measured at amortised
cost, using the effective interest rate method. Lease
payments are apportioned between a finance charge
and a reduction of the lease liability, based on a
constant interest rate applied to the remaining balance
of the liability. Interest expense is included within net
finance costs in the consolidated income statement.
The interest rate applied to a lease is typically the
incremental borrowing rate of the entity entering
into the lease. This is as a result of the interest rates
implicit in the leases not being readily determined.
The incremental borrowing rate applied by each
relevant entity is determined based on the interest
rate adjudged to be required to be paid by that entity
to borrow a similar amount over a similar term for a
similar asset in a similar economic environment.

A corresponding right-of-use fixed asset is also
recognised at an equivalent amount adjusted for a)
any initial direct costs, b) payments made before the
commencement date (net of lease incentives), and c)
the estimated cost for any restoration costs the Group
is obligated to at lease inception. Right-of-use assets are
subsequently depreciated on a straight-line basis over
the shorter of the lease term or the asset’s estimated
life. Under IFRS 16, right-of-use assets are tested for
impairment in accordance with IAS 36 “Impairment of
Assets”, when there is an indication of impairment.

The lease term comprises the non-cancellable period
of the lease contract. Periods covered by an option
to extend the lease are included, if the Group has
reasonable certainty that the option will be exercised.
Periods covered by an option to terminate are
included, if it is reasonably certain that this option
will not be exercised.

Lease payments

Lease payments comprise fixed payments and
variable lease payments (that depend on an index or
a rate, initially measured using the minimum index or
rate at inception date). Payments include any lease
incentives and any penalty payments for terminating
the lease, if the lease term reflects the lessee exercising
that option. The lease liability is subsequently
remeasured (with a corresponding adjustment to the
related right-of-use asset) when there is a change in
future lease payments due to a) a renegotiation or
market rent review, b) a change of an index or rate,
or c) a reassessment of the lease term.

Lease modifications

Where there are significant changes in the scope
of the lease, then the arrangement is reassessed to
determine whether a lease modification has occurred
and, if there is such a modification, what form it takes.
This may result in a modification of the original lease
or, alternatively, recognition of a separate new lease.

Subleases

At times, entities of the Group will sublet certain of their
properties when their underlying business requirements
change. Under IFRS 16, the Group assesses the
classification of these subleases with reference to
the right-of-use asset, not the underlying asset.

Up to the date when an owner-occupied property
becomes an investment property carried at fair value,
an entity depreciates the property (or the right-of-
use asset) and recognises any impairment losses that
have occurred. The entity treats any difference at that
date between the carrying amount of the property in
accordance with IAS 16 or IFRS 16 and its fair value in the
same way as a revaluation in accordance with IAS 16.

189

M&C Saatchi Plc Annual Report 2023Financial StatementsWhen the Group acts as an intermediate lessor, it
accounts for its interests in the head lease and the
sublease separately. At lease commencement, a
determination is made whether the lease is a finance
lease or an operating lease. To classify each lease, the
Group makes an overall assessment of whether the
lease transfers to the lessee substantially all of the risks
and rewards of ownership in relation to the underlying
asset. If this is the case, then the lease is a finance
lease; if not, then it is an operating lease. The Group
recognises lessor payments under operating leases
as sublease income on a straight-line basis over the
lease term. The Group accounts for finance leases as
finance lease receivables, using the effective interest
rate method.

Short-term leases and leases of low-value assets

The Group applies the short-term lease recognition
exemption to those leases that have a lease term of
12 months or less from the commencement date and
do not contain a purchase option. It also applies the
lease of low-value assets recognition exemption to
leases of office equipment that are considered of low
value (defined by the Group as being below £3,000).
Lease payments on short-term leases and leases of
low-value assets are recognised as an expense on
a straight-line basis over the lease term.

Estimates relating to leases

The Group has made estimates in determining the
interest rate used for discounting of future cash flows,
and the lease term. Details relating to these estimates
can be found on page 146.

Analysis

Set out below are the carrying amounts of right-of-use assets and lease liabilities recognised, and the
movements during the year:

Right-of-use Assets
At 1 January 2022
Additions
Modifications
Disposals
Depreciation
Reversal of impairment
Sublease
Foreign exchange
At 1 January 2023
Additions
Modifications
Disposals
Depreciation
Impairment (Note 1)**
Reclassification to investment property (Note 13)*
Foreign exchange
At 31 December 2023

Land &
Buildings
£000
43,892
3,966
950
(96)
(6,495)
164
(164)
1,203
43,420
1,761
592
(243)
(5,991)
(1,872)
(2,369)
(1,835)
33,463

Computer
equipment
£000
422
395
–
(116)
(267)
–
–
29
463
12
6
(2)
(189)
–
–
(19)
271

Motor
vehicles
£000
83
134
24
(49)
(84)
–
–
1
109
–
5
(11)
(63)
–
–
(2)
38

Total
£000
44,397
4,495
974
(261)
(6,846)
164
(164)
1,233
43,992
1,773
603
(256)
(6,243)
(1,872)
(2,369)
(1,835)
33,772

Investment property compromises one floor in our London (UK) office valued at £802k and one floor in our Sydney (Australia) office valued at £1,568k. We moved out from these
floors in November and in December 2023 respectively. These properties are currently on the market with the aim to sublet them. The investment property value represents the
estimated rental income that the Group could get in the current market by renting out these spaces.

** The impairment amount of £1,872k consists of:

• £992k - M&C Saatchi Agency Pty Ltd: 99 Macquarie Street, Sydney, Australia (we moved out from this floor in December 2023).
• £364k - M&C Saatchi Worldwide Ltd: 36 Golden Square, London, UK (we moved out from this floor in November 2023).
• £463k - M&C Saatchi Worldwide Ltd: 30GPS 1st floor, London, UK (fully impaired in H1 2023).
• £26k - M&C Saatchi Asia Hong Kong Ltd (due to the closure of the Asia HQ).
• £27k - M&C Saatchi World Services (Singapore) PTE LTD (due to move to a new, bigger office in the year).

190

M&C Saatchi Plc Annual Report 2023Financial Statements
Lease Liabilities
At 1 January 2022

Additions

Modifications

Disposals

Accretion of interest

Payments

Foreign exchange

At 1 January 2023

Additions

Modifications

Disposals

Accretion of interest

Payments

Foreign exchange

At 31 December 2023

Land &
Buildings
£000
56,332

Computer
equipment
£000
445

Motor
vehicles
£000
68

3,966

260

(132)

2,945

(9,889)

1,508

54,990

1,761

–

(254)

2,852

(8,831)

(1,396)

49,122

395

–

(94)

(308)

479

(2)

(213)

(19)

284

134

(50)

(80)

101

–

(9)

(60)

(3)

The additions in 2023 predominately relate to the
new offices in Dubai (the UAE) and Singapore.

of £3.8m in the consolidated balance sheet in
January 2024.

Of lease payments made in the year of £9,105k
(2022: £10,277k), £6,208k (2022: £7,307k) related to
payment of principal on the corresponding lease
liabilities and the balance to payment of interest
£2,897k (2022: £2,970k) due on the lease liabilities.

Lease Liabilities
Amounts due within one year

Amounts due after one year

At 31 December 2023

Amounts due within one year

Amounts due after one year

At 31 December 2022

Land &
Buildings
£000
5,620

Computer
equipment
£000
108

Motor
vehicles
£000
23

44,156

49,776

6,196

48,794

54,990

176

284

196

283

479

101

Total
£000
56,845

4,495

284

(276)

2,970

(10,277)

1,529

55,570

1,773

(265)

2,876

(9,104)

(1,418)

49,443

Total
£000
5,751

44,345

50,096

6,448

49,122

55,570

191

M&C Saatchi Plc Annual Report 2023Financial StatementsIncome Statement Charge
Depreciation of right-of-use assets

Short-term lease expense

Low-value lease expense

Short-term sublease income

Right-of-use asset impairment*

Charge to operating profit

Sublease finance income

Lease liability interest expense

Lease charge to profit before tax

2023
£000
(6,243)

240

–

(1,872)

(7,844)

(2,897)

(10,736)

2022
£000
(6,846)

(505)

(68)

–

164

(7,255)

(2,970)

(10,220)

* In 2022 there was a reversal of an impairment from 2020, as the impaired asset was sublet during the year.

The Group does not face a significant liquidity risk with regard to its lease liabilities and manages them in line
with its approach to other month-to-month liquidity matters, as described in Note 31 of the financial statements.

The cash payment maturity of the lease liabilities held as at 31 December 2023, net of sublease receipts, is as follows:

Future Cash Payments
Period ending 31 December:

2024

2025

2026

2027

2028

Later years

Gross future liability before discounting

2023
£000

8,748

8,742

7,745

7,271

6,761

28,448

67,715

2022
£000

8,149

7,870

6,935

6,415

6,019

25,344

60,732

Of the future lease payments post-2028, £21.8m relates to a single office lease which expires in 2034. This lease
agreement was entered into in December 2019.

The Group signed a lease agreement for a new office space in New York in August 2023. Due to extensive
renovation work we did not move into that office until January 2024. We recognised the right-of-use asset and the
lease liability of £3.8m in the consolidated balance sheet in January 2024. The future cash payments include the
payments of this lease.

19. OTHER NON-CURRENT ASSETS

At 31 December
Other debtors including rent deposits

Long-term loans receivable*

Total other non-current assets

* This balance relates to £607k convertible loan to DragNDrop Limited, and €500k M&C Saatchi Madrid loan provision reversal.

2023
£000
1,262

1,040

2,302

2022
£000
1,107

–

1,107

192

M&C Saatchi Plc Annual Report 2023Financial Statements20. FINANCIAL ASSETS AT FAIR VALUE THROUGH
PROFIT AND LOSS (FVTPL)

Policy

The Group holds certain unlisted equity investments,
which are classified as financial assets at FVTPL.
These investments are initially recognised at their
fair value. At the end of each reporting period the
fair value is reassessed, with gains or losses being
recognised in the income statement.

The valuations are based on several factors, including
the share price from the latest funding round, recent
financial performance (where available), discounting
for liquidation preference shares held by other
shareholders, discount based on time elapsed since last
price-point and discounting for convertible loan notes.

Analysis

The Group’s unlisted equity investments consist of:

•

Investments held by Saatchinvest Ltd, mainly
relating to 18 (2022: 18) early-stage companies.

A £636k convertible investment in DragNDrop
Limited (which has built an end-to-end
advertising design tool to help small businesses
with their marketing), following its spinoff from
the Group in 2023.

•

A 2.86% shareholding in Sesión Tequila Holdings
Pty Ltd (Australia).

A 10% shareholding in M&C Saatchi Madrid SL
(Spain).

A 10% shareholding of 59A Limited.

A 10% shareholding in Australie SAS (which has
been reclassified as an asset held for sale).

The closing balance of the equity investments held at
FVTPL consists of: Saatchinvest (£6,441), DragNDrop
Limited (£636k) and Sesión Tequila Holdings Pty Ltd
(£151k). The Group’s 10% shareholdings in M&C Saatchi
Madrid SL and 59A Limited are all valued at nil.

With regard to DragNDrop, the Group paid £636k in
respect of the development of the DragNDrop IP. The
Group invested a further £607k in DragNDrop Limited
in a form of a convertible loan, which is included in
other non-current assets in the balance sheet.

With regard to the early-stage non-client investments,
the most the Group has invested in any one company
over time is £0.7m and the least is £0.1m. The Group
invests in these companies for long-term return.

The activity in the year relating to the equity
investments held at FVTPL is presented below:

At 1 January

Disposals

Gain / (loss) on disposal

Impairment

Revaluation upwards

Revaluation downwards

Reclassification from intangible assets (Note 15)

Reclassification to assets held for sale (Note 12)

Reclassification to contingent consideration (Note 14)

Foreign exchange

At 31 December

Other Gains/(losses) in Income Statement
Revaluations

Gain / loss on disposal

Impairment

Total

2023
£000
11,986

(49)

–

176

(4,898)

636

(608)

–

(16)

7,227

2023
£000
(4,722)

–

(4,722)

2022
£000
15,183

(918)

1,168

(2,863)

3,016

(2,724)

–

(914)

11,986

2022
£000
292

1,168

(2,863)

(1,403)

193

M&C Saatchi Plc Annual Report 2023Financial StatementsSaatchinvest

As well as the potential for making gains when selling these assets in the future, the strategy for making these
investments originally envisaged synergies from exposure to, and contact with, such high potential companies.
This portfolio is not strategically important and we will not be adding to it in the future.

In 2023, there were no additions, but the investment in Citymapper was disposed of in the year.

The £4,898k revaluation downwards included £1,909k relating to Ometria, £1,114k relating to Picasso Labs,
£765k relating to Kyra and £546k relating to Touchcast.

The following summary shows the material investments held by Saatchinvest and quantitative information about
the significant unobservable inputs used for fair value measurements:

Company
Ometria

Picasso Labs/Creative X

Kindred

Metomic

Farewill

Touchcast

ThingThing

Closing Fair Value
31 December 2023
£000
1,500

Quantitative information
for fair value measurements

875

10% performance discount, 66% discount based on
time elapsed since last price-point, 10% discounting
for liquidation preference shares held by other
shareholders
10% performance discount, 10% discounting for
liquidation preference shares held by other
shareholders, 56% discount based on time elapsed
since last price-point
10% discounting for liquidation preference shares
held by other shareholders
10% discounting for liquidation preference shares
held by other shareholders
10% discounting for liquidation preference shares
held by other shareholders
528 50% performance discount

732

531

560

513

10% discounting for liquidation preference shares
held by other shareholders

Other 10 investments (each below £500k)

Total

Australie

1,202

6,441

The £176k revaluation upwards relates to the unlisted investments held by M&C Saatchi International Holdings
B.V. in Australie SAS.

A sale process of this investment commenced in the last quarter of 2023 and completed on 28 March 2024.
Consequently, the 10% investment in Australie was reclassified to assets held for sale as of December 2023,
according to IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.

194

M&C Saatchi Plc Annual Report 2023Financial Statements21. TRADE AND OTHER RECEIVABLES

Policy

Trade receivables

Trade receivables are amounts due from customers
for goods sold or services performed in the ordinary
course of business. These financial assets give rise to
cash flows that are “solely payments of principal and
interest” on the principal amount outstanding. They are
generally due for settlement within 30–90 days and
therefore are all classified as current. Trade receivables
are recognised initially at the amount of consideration
that is unconditional. The Group holds trade

receivables with the objective to collect the contractual
cash flows and therefore measures them subsequently
at amortised cost using the effective interest method.

Impairment – expected credit losses

The Group applies the IFRS 9 simplified approach
to measuring expected credit losses which uses a
lifetime expected loss allowance (“ECL”) for all trade
receivables and contract assets. To calculate the
lifetime ECL the Group has established a provision
matrix that is based on its historical credit loss
experience, adjusted for forward-looking factors
specific to the debtors and economic environments
in which the Group operates.

Trade receivables

Loss allowance

Net trade receivables

Prepayments

Amounts due from associates

VAT and sales tax recoverable

Accrued income

Contract assets

Other receivables*

2023
£000
87,853

(2,251)

85,602

6,226

271

160

12,238

2,845

16,344

2022
£000
97,431

(1,829)

95,602

4,890

167

12,716

2,180

16,474

Total trade and other receivables

123,686

132,067

* Other receivables comprises unbilled media receivables balances of £14.2m (31 December 2022: £12.3m) and other amounts receivable of £2.1m (31 December 2022: £4.3m).

There is no additional ECL recorded in relation to these amounts.

Set out below is the movement in the loss allowance (which includes provision for expected credit losses) of trade
receivables and contract assets.

As at 1 January

Release / (increase) for expected losses during the year

Movement in forward-looking provision for specific bad debts:

– Charge during the year

– Released during the year

– Utilisation of provision

Foreign exchange movement

Year-end provision

The information about credit exposures is disclosed in Note 31 of the financial statements.

2023
£000
(1,829)

115

2022
£000
(877)

(574)

(1,469)

–

421

–

(2,251)

(1,829)

195

M&C Saatchi Plc Annual Report 2023Financial Statements22. TRADE AND OTHER PAYABLES

Policy

Trade and other liabilities are non-interest bearing and are stated at their amortised cost subsequent to initial
recognition at their fair value, which is considered to be equivalent to their carrying amount due to their short-
term nature.

Trade creditors
Contract liabilities*
Sales taxation and social security payables
Accruals
Other payables
Total trade and other payables

2023
£000
35,176
17,683
4,855
63,336
12,800
133,850

2022
£000
50,437
20,502
3,495
67,601
13,512
155,547

* Contract liabilities relates to deferred income of £17.6m (2022: £20.5m). This has decreased in line with the decrease in revenue, as customers reduced budgets and cut spending

throughout the year. The amount of the 2022 balance was recognised within revenue in the current year.

Settlement of trade and other payables is in accordance with the terms of trade established with the Group’s
local suppliers.

23. PROVISIONS

Policy

Provisions are recognised when the Group has a present legal or constructive obligation arising as a result of
past events and where it is more likely than not an outflow of resources will be required to settle the obligation
and the amount can be reliably estimated. Provisions are measured at management’s best estimate of the
expenditure required to settle the obligation at the balance sheet date.

The year-end provision of £1.1m (2022: £1.1m) comprises of costs relating to income protection schemes of £0.1m
(2022: £0.5m); £0.2m (2022: £0.3m) in relation to property dilapidations; and £0.8m (2022: £nil) in relation to
retrospective rent reviews.

At 1 January
Charged to the income statement:
- Overseas sales taxation and social security liabilities
- Income protection provision
- Provision for retrospective rent reviews
Utilised or released in the year
- Lease dilapidations
- Release income protection provision
- Release of overseas tax provision
- Release of other provisions
- Release associated with the FCA investigation
At 31 December

2023
£000
(1,056)

–
–
(800)

10
402
327
67
–
(1,050)

2022
£000
(1,193)

(92)
(92)
–

21
–
–
–
300
(1,056)

As at the end of 2022, all amounts recognised as provisions were expected to be utilised within 12 months and
are held as current liabilities. The Directors do not anticipate that any of the above will have a material adverse
effect on the Group’s financial position or on the results of its operations.

196

M&C Saatchi Plc Annual Report 2023Financial Statements24. BORROWINGS

Policy

Loans and overdrafts are recognised initially at fair value, less attributable transaction costs. Subsequently, loans
and overdrafts are recorded at amortised cost with interest charged to the income statement under the Effective
Interest Rate (EIR) method. Where there is a significant change to the future cash flows, the EIR is reassessed with
a corresponding change in the carrying amount of the amortised cost. The change in the carrying amount is
recognised in profit or loss as income or expense.

Interest payable is included within accruals as a current liability.

Analysis

Amounts due within one year

At 31 December
Overdrafts*
Secured** bank loans
Local bank loans

2023
£000
–
(15,900)
(43)
(15,943)

2022
£000
(4,271)
–
(159)
(4,430)

These overdrafts can be legally offset with other cash balances. They have not been netted off in accordance with IAS32.42 in 2022 as there was no intention to settle on a net basis.
However, they have been netted off in 2023 as the cash balance and the overdraft balance is with the same bank and there is intention to settle this on a net basis.

** Bank loans are secured on share charges and debentures for England & Wales Incorporated Guarantors and share charges only for non-England & Wales Incorporated

Guarantors.

Amounts due after one year

At 31 December
Local bank loans
Secured bank loans

2023
£000
–
–
–

2022
£000
(52)
(6,750)
(6,802)

Secured bank loans

Old Facility

On 7 March 2024, the Company entered into a new
revolving multicurrency facility agreement with
National Westminster Bank Plc, HSBC UK Bank plc and
Barclays Bank PLC for up to £50m (the “New Facility”),
with a further £50m extension if required for strategic
acquisitions. The New Facility is provided on a three-year
term with two one-year extensions. Interest is charged
based on a reference rate plus a margin, which is based
on the current leverage of the Group (margin ranges
from 2.25% to 3.25%, as at Q1 2024 ). This New Facility
is to refinance the existing £47m facility with National
Westminster Bank Plc and Barclays Bank PLC (the
“Old Facility”) which would have matured on 31 May
2024. At 31 December 2023, the Group had up to
£47.0m (2022: £47.0m) of funds available under the
Old Facility with £16.0m drawn (2022: £7.0m).

Each facility includes two financial covenants, which
if either were to be breached would result in a default
of the relevant facility agreement:

1. Interest cover – EBIT for the previous 12 months must
exceed 5 times the net finance charge (external
debt interest, excluding IFRS 16 finance lease interest
payments) for the previous 12 months.

2. Leverage – total indebtedness at the period end must

not exceed 3.5 times EBITDA for the previous 12 months
(adjusted for acquisitions and disposals). This reduced
to 3.0 times from 31 March 2022, 2.5 times from 30 June
2022, and reduces to 2.0 times from 31 March 2023.

New Facility

2. Leverage – total indebtedness at the period end

must not exceed 2.75 times EBITDA for the previous 12
months (adjusted for acquisitions and disposals). This
increases to 3.25 times for a six-month period after an
acquisition.

197

M&C Saatchi Plc Annual Report 2023Financial Statements
The Company has been compliant with the covenants in the Old Facility throughout the period. The actual
calculation is based on Headline results, though with specific additional addbacks defined by the bank.

At 31 December
Gross secured bank loans

Capitalised finance costs

Total secured bank loans

Total secured bank loans are due as follows:

At 31 December
In one year or less, or on demand

In more than one year, but not more than five years

2023
£000
(16,000)

100

(15,900)

2023
£000
(15,900)

–

(15,900)

2022
£000
(7,000)

250

(6,750)

2022
£000
–

(6,750)

Total bank loans and borrowings used to calculate net cash are as follows, IFRS 16 Leases is excluded from the
calculation of net cash in accordance with the Group’s bank covenants:

At 31 December
At 31 December 2021

Cash movements

Non-cash movements

– Foreign exchange

At 31 December 2022

Cash movements

Non-cash movements

– Foreign exchange

At 31 December 2023

* The borrowing used to calculate net cash.

25. OTHER NON-CURRENT LIABILITIES

31 December
Employment benefits*

Long-term bonuses

Other**

Gross secured
bank loans
£000
(20,000)

Local bank
loans
£000
(590)

Total bank
loans*
£000
(20,590)

13,000

410

13,410

–

(7,000)

(9,000)

–

(16,000)

(32)

(212)

164

(43)

2023
£000
875

414

790

2,079

(32)

(7,212)

(8,836)

(16,043)

2022
£000
1,846

1,362

838

4,046

This relates to long-term service leave in some locations, deferred contributions to pension schemes and long-term bonus plans. In addition, a termination indemnity plan in
Italy of £524k (2022: £535k); this liability is for the 13th month salary accrual for all Italian employees to be paid to them when they leave the Company.

** The main items include a contractual make good liability in relation to the Australia office lease of £653k (2022: £690k).

198

M&C Saatchi Plc Annual Report 2023Financial Statements26. EQUITY-RELATED LIABILITIES

This disclosure note summarises information relating
to all share schemes disclosed in Notes 14, 27 and 28
of the financial statements.

In the case of contingent consideration (Note 14 of the
financial statements), IFRS 9 minority shareholder put
option liabilities (Note 27 of the financial statements),
and IFRS 2 put option schemes (Note 28 of the financial
statements), the Group has a choice to pay in cash or
equity. The Board made the decision during 2021 that
put options would, from then on, be settled in cash,
where the Group has cash resources to do so. In the
case of the LTIP schemes, it is the Board’s intention that
an ESOP trust is set up to acquire the shares and fulfil
these schemes using the acquired equity.

In the table below, potential cash payments are
presented, based on the 2023 year-end share price
of the Company of 160.0 pence and the estimated
future business performance for each business unit.
The payments are stated in the year at which the
put option schemes first become exercisable. The
forecasts are based on the Group’s three-year plans,
developed as part of the budget cycle, and assume all
TSR targets are fulfilled, and that equity is bought by
the ESOP Trust in the year of vesting at a Company
share price of 160.0 pence. The table also shows the
amount of these potential cash payments that has
been recognised as a liability as at 31 December 2023,
with the % of the related employment services not yet
delivered to the Group at that date.

Total future expected liabilities as at 31 December 2023

Potentially payable

At Company Share
Price of 160.0p
IFRS 9 put option schemes

IFRS 2 put option schemes

LTIPs

2024
£000
3,050

6,833

1,948

2025
£000
–

1,283

2,574

11,831

3,857

2026
£000
2,675

216

2,546

5,437

2027
£000
–

301

–

301

2028
£000
–

2029
£000
–

–

– 21,509

Services
not yet
delivered
as at 31
Dec 2023
%*
9%

79%

Balance
sheet
liability
as at 31
Dec 2023
£000
5,184

8,232

–**

Total
£000
5,725

8,716

7,068

* Share-based payments (Note 28) charge liability to income statement over period of vesting, i.e. as the employee fulfils their time obligation to earn the put option.
** LTIPs are accounted for as equity-settled, and thus do not create a balance sheet liability. The total value of £7,068k relates to the LTIPs issued and outstanding at 31 December 2023.

Put option holders are not required to exercise their options at the first opportunity. Many do not and prefer to
remain shareholders in the subsidiary companies they manage. As a result, some put option holders may not
exercise their options on the dates estimated in the table above.

If the Group in the future decides to settle in equity, then the amount of equity that will be provided is equal to
the liability divided by the share price.

199

M&C Saatchi Plc Annual Report 2023Financial StatementsEffect of a change in share price

The same data from the table above is presented in the table below, but in this analysis the potential payments
are based on a range of different potential future share prices.

At 140p

At 160p

At 175p

At 200p

At 225p

At 250p

At 300p

Total Put Option Liability

Put options liability (IFRS 2)

Put options liability (IFRS 9)

Total

2024
£000
10,939

11,831

12,503

13,547

14,536

15,524

17,262

Potentially payable

2025
£000
3,363

3,857

4,228

4,770

5,258

5,745

6,720

2026
£000
5,091

5,437

5,695

6,234

7,013

7,792

9,351

2027
£000
263

301

329

376

423

470

564

2028
£000
73

104

117

130

156

2029
£000
–

–

Total
£000
19,729

21,509

22,846

25,031

27,347

29,661

34,053

2022
Company
Total
£000
(17)

–

2023
Group
Total
£000
(8,232)

(5,184)

2022
Company
Total
£000
(7,002)

–

2022
Group
Total
£000
(18,992)

(3,856)

(17)

(13,416)

(7,002)

(22,848)

Current – Minority shareholder put option liabilities

Non-current – Minority shareholder put option liabilities

Total

(17)

–

(17)

(9,891)

(3,525)

(7,002)

–

(18,419)

(4,429)

(13,416)

(7,002)

(22,848)

27. MINORITY SHAREHOLDER PUT OPTION
LIABILITIES (IFRS 9)

Policy

See below but also the basis of preparation note on
page 144.

Some of the subsidiaries’ local management have
a put option arrangement in place. The put option
arrangements give these employees a right to
exchange their minority holdings in the subsidiary into
shares in the Company or cash (at the Group’s choice).

These schemes are considered as rewarding future
business performance and, as they are not conditional
on the holder being an employee of the business, they
are accounted for in accordance with IFRS 9.

These instruments are recognised in full at the
amortised cost of the underlying award on the date
of inception, with both a liability on the balance sheet
and a corresponding amount within the minority
interest put option reserve being recognised. At each
period end, the amortised cost of the put option
liability is calculated in accordance with the put option
agreement, to determine a best estimate of the future
value of the expected award. Resultant movements in
the fair value of these instruments are charged to the
income statement within finance income/expense.

The put option liability will vary with both the
Company’s share price and the subsidiary’s financial
performance. Current liabilities are determined by the
Company’s year-end share price and the historical
results of the companies where the option holders can

200

M&C Saatchi Plc Annual Report 2023Financial Statementsexercise within the next twelve months. Non-current
liabilities are determined by the Company’s year-end
share price and the projected results of the companies
where the option holders cannot exercise their options
within the next twelve months.

Upon exercise of an award by a holder, the liability is
extinguished and the associated minority interest put
option reserve is transferred to the non-controlling
interest acquired reserve.

Analysis

IFRS 9 put options exercisable from year ended 31 December 2023:

Subsidiary
M&C Saatchi (Switzerland) SA

Santa Clara Participações Ltda

This Film Studio Pty Ltd

% of
subsidiaries’
shares
exercisable
21.0

25.0

24.9

30.0

Year
2023

2023

2026

2023

It is the Group’s option to fulfil these options in equity or cash and it is the Group’s present intention to fulfil the
options in cash (if available). However, if they are fulfilled in equity, the estimated number of the Company shares
that will be issued to fulfil these options at 160.0 pence is 3,239,556 shares (2022: at 151.0 pence, 2,553,018 shares).

Liability as at 31 December
Amounts falling due within one year

Amounts falling due after one year, but less than three years

Movement in Liability During the Year
At 1 January

Exchange difference

Exercises

Income statement charge due to:

– Change in profit estimates

– Change in Company share price

– Amortisation of discount

Total income statement charge (Note 7)

At 31 December

Put Options Exercised in Year
Paid in equity

Paid in cash

Total

2023
£000
(3,050)

(2,134)

(5,184)

2023
£000
(3,855)

–

785

(2,142)

198

(170)

(2,114)

(5,184)

2023
£000
–

785

2022
£000
(2,584)

(1,272)

(3,856)

2022
£000
(5,238)

(1)

2,497

(970)

406

(550)

(1,114)

(3,856)

2022
£000
–

2,497

During the year a put option arrangement for a 10% shareholding of M&C Saatchi Merlin Limited was exercised
by the put option holder, and the equity was acquired by the Group.

201

M&C Saatchi Plc Annual Report 2023Financial Statements28. SHARE-BASED PAYMENTS (IFRS 2)

Policy

See below but also the basis of preparation note
on page 144.

Local management in some of the Group’s subsidiaries
(who are minority interests of the Group) have the
right to a put option over the equity they hold in the
relevant subsidiary. Where this put option is dependent
upon the holders’ continued employment by the
relevant subsidiary, or where the holder received the
option as a result of employment with the relevant
subsidiary, these options are accounted for under
IFRS 2 as equity-settled share-based payments to
employees or as cash-settled share-based payment
schemes. These are redeemable, at the choice of the
Group, either in shares of the Company or by means
of a cash payment to the holder. Such schemes
should be considered as rewards for future business
performance, which are conditional on the holder
being an employee of the business.

Equity-settled share-based payment schemes

Where an award is intended to be settled in equity,
then the fair value of the award is calculated at the
grant date of each scheme based on the present
Company’s share price and its relevant multiple.
The fair value of the awards is calculated by means
of a Monte Carlo model with inputs made in terms
of the Company’s share price at the date of grant,
risk free rate, the historic volatility of the share price,
the dividend yield and the time to vest. The Group

estimates the shares that will ultimately vest, using
assumptions over conditions, such as profitability of
the subsidiary to which the awards relate. This value
is recognised as an expense in the income statement
over the shorter of the vesting period or the period of
required employment on a straight-line basis, with a
corresponding increase in reserves.

Upon exercise of the awards, the nominal value of
the shares issued is credited to share capital with the
balance to share premium.

Cash-settled share-based payment schemes

When an award is intended to be settled in cash, then
a liability is recognised at inception of the award,
based on the present Company’s share price and
its relevant multiple. This value is recognised as an
expense in the income statement from the date of
award to the date it is exercised, on a straight-line
basis, with a corresponding increase in liabilities.

Conversion from equity-settled to cash-settled

Up to 21 September 2021, the Group accounted for
these put options as equity-settled. From 21 September
2021, the Group accounted for these put options as
cash-settled.

If a put option existed at 21 September 2021 and is
still unvested and the Company’s share price multiple
(the market condition) at the inception of the option
is higher than the current Company’s share price
multiple, then the difference is charged to the income
statement.

The following table sets out a comparison between equity settlement and cash settlement of IFRS 2 put options:

Equity-settled IFRS 2 Scheme

Cash-settled IFRS 2 Scheme

Cost of the put option

Booked to staff costs.

Liability of the put option

Booked to equity (no impact on
net assets).

Booked to liabilities (reduces net assets).

Recognition of the cost

Spread evenly between the date
the put option is issued and the
date the put option vests. No
further costs after vesting date.

Spread evenly between the date the put option is
issued and the date the put option vests. Further
valuation adjustments are made to the income
statement until the option is exercised.

Revaluation adjustments

Adjusted by changes in the profit
of the subsidiary only.

Adjusted by changes in the profit of the
subsidiary and the relevant share price multiple.

Exercise of put option

New Company shares issued to
put option holders.

Cash issued to put option holders.

202

M&C Saatchi Plc Annual Report 2023Financial StatementsSummary of schemes

The Group has the following share-based payment
schemes:

–

Company’s full-year Headline PBT
performance in 2023 versus target
(30% of the award).

•

Put options – from 21 September 2021 these put
options have been accounted for as cash settled.

South African equity purchased with non-
recourse loans – some of the South African
subsidiaries have sold equity to staff with non-
recourse loans that are repaid out of dividends
and from the proceeds of selling the equity
to other employees, with the entity that has
issued the equity acting as an intermediary.
The equity does not have any put rights, so
there is no obligation to acquire the equity,
however the South African entities lent R16,082k
(2022: R14,009k) to acquire the liability (netted
against the fair value of the award) is at risk.

Cash awards – these are long-term cash schemes
that were historically treated as a share-based
scheme. These awards were fulfilled in the year.

•

2021 LTIP awards – on 28 September 2021 and
21 December 2021, the Company awarded equity-
settled LTIPs to senior executive managers. This
scheme grants a future award of the Company’s
shares, dependent on the achievement of certain
future performance conditions:

–

Company’s total shareholder return (TSR)
versus the total shareholder return (TSR) of
the FTSE SmallCap Index over the three years
from December 2020 to December 2023
(70% of the award).

•

2022 LTIP awards – on 12 December 2022, the
Company awarded equity-settled LTIPs to senior
executive managers. This scheme grants a future
award of the Company’s shares, dependent on
the achievement of certain future performance
conditions:

–

Company’s total shareholder return (TSR)
versus the total shareholder return (TSR) of
the FTSE SmallCap Index over the three years
from December 2021 to December 2024
(50% of the award).

Company’s full-year Headline PAT
performance per share in 2024 versus
target (50% of the award).

2023 LTIP awards – on 2 August 2022, the
Company awarded equity-settled LTIPs to senior
executive managers. This scheme grants a future
award of the Company’s shares, dependent on
the achievement of certain future performance
conditions:

–

Company’s total shareholder return (TSR)
versus the total shareholder return (TSR) of
the FTSE SmallCap Index over the three years
from December 2022 to December 2025
(50% of the award).

Company’s full-year Headline PAT
performance per share in 2025 versus
target (50% of the award).

For the LTIPs, an Employee Benefit Trust (EBT) has been set up to acquire the shares to fulfil these schemes in
equity; thus the schemes are accounted for as equity settled. The inputs to Monte Carlo models used to calculate
the fair value of these share awards granted during the year are as follows:

Issue date
Vesting date
Share price at grant
Expected volatility
Risk free rate
Dividend yield
Fair value of award per share

2023
LTIP
02/08/2023
02/08/2026
£1.34
55%
5.15%
0%
£1.34

2022
LTIP
12/12/2022
31/05/2025
£1.48
76%
3.32%
0%
£1.47

2021
2021*
LTIP
LTIP
21/12/2021
28/09/2021
21/12/2024 28/09/2024
£1.56
81%
0.51%
0%
£1.55

£1.63
80%
0.67%
0%
£1.62

TSR element against FTSE SmallCap index:
Expected volatility
Fair value of award per share

268%
£0.21

291%
£0.63

147%
£0.72

158%
£0.67

* During 2023, the last remaining recipient of this reward left the Group’s employment, and nothing will now vest under this scheme.

203

M&C Saatchi Plc Annual Report 2023Financial Statements

Income Statement Charge

Group

Put options

South Africa non-recourse loan scheme

Total not affecting Headline results (Note 1)

LTIPs

Restrictive share awards

Cash awards

Total

Cash-settled liability

Group

2023
Equity
£000
(407)

–

(407)

841

–

434

2023
Cash
£000
4,349

261

4,610

–

233

4,843

2023
Total
£000
3,942

261

4,203

841

–

233

2022
Equity
£000
580

–

580

438

211

–

5,277

1,229

2022
Cash
£000
432

107

539

–

1,893

2,432

2022
Total
£000
1,012

107

1,119

438

211

1,893

3,661

The movement in the liability by scheme is detailed below:

At 1 January 2022

(Charge) / credit to income statement

– Straight-line recognition

– Change in subsidiary profit estimates

– Change in Company multiple

Total income state (charge) / credit

Settled*

Foreign exchange

At 31 December 2022

(Charge) / credit to income statement

– Straight-line recognition

– Change in subsidiary profit estimates

– Change in Company multiple

Total income statement charge

Disposed

Settled

Foreign exchange

At 31 December 2023

South Africa
non-recourse
loan scheme
£000
(468)

Put options
£000
(27,122)

Cash awards
£000
(326)

Total
£000
(27,916)

(2,856)

(2,089)

2,513

(2,432)

9,607

(14)

(1,893)

–

(1,893)

1,054

–

(1,165)

(20,755)

(233)

–

(233)

–

1,398

–

(860)

(203)

(3,780)

(4,843)

472

16,035

(9,026)

(963)

(1,858)

2,389

(432)

8,553

(18,992)

(366)

(203)

(3,780)

(4,349)

472

14,637

–

(8,232)

–

(231)

124

(107)

–

(23)

(598)

(261)

–

(261)

–

(794)

* Following a review of the Group’s 2022 financial statements by the Financial Reporting Council’s Corporate Reporting Review Team (CRRT), the Group agreed to reclassify

these settlements of cash liabilities in the cash flow statement as operating activities, instead of financing activities. This resulted in the net cash from operating activities for
2022 reducing by £9,607k from £22,468 to £12,861k, with cash from financing activities increasing by the same amount. The FRC has confirmed that the matter is now closed.
The Group recognises that the FRC’s review was based on the Company’s Annual Report and Accounts for the year ended 31 December 2022 and did not benefit from
detailed knowledge of the Company’s business or an understanding of the underlying transactions entered into. The FRC’s role is not to verify the information provided but
to consider compliance with reporting requirements. Therefore, given the scope and inherent limitations of their review, it would not be appropriate for the Company or any
third party, including but not limited to investors and shareholders, to infer any assurance from the FRC’s review that the Company’s 2022 Annual Report and Accounts were
correct in all material respects.

204

M&C Saatchi Plc Annual Report 2023Financial StatementsCompany

The movement in the liability by scheme is detailed below:

At 1 January 2022

Settled

Revaluation of investment

At 31 December 2022

Settled

Revaluation of investment

At 31 December 2023

Put Options

Clear Ideas (Singapore) Ltd

Clear LA LLC

LIDA NY LLP (MCD)

M&C Saatchi (Hong Kong) Limited

M&C Saatchi Agency Pty Ltd

M&C Saatchi Fluency Limited

M&C Saatchi Holdings Asia Pte Ltd (Indonesia)*

M&C Saatchi Merlin Ltd

M&C Saatchi Middle East Holdings Ltd

M&C Saatchi Social Ltd

M&C Saatchi Sport & Entertainment NY LLP

M&C Saatchi Talk Ltd

M&C Saatchi, S.A. DE C.V.

RE Worldwide UK Ltd

Scarecrow M&C Saatchi Ltd

The Source (W1) LLP

The Source Insight Australia Pty Ltd

Total
£000
(11,850)

871

3,977

(7,002)

469

6,516

(17)

% Entity subject
to the put option
10.00%

12.00%

24.50%

20.00%

10.00%

7.50%

10.00%

2.50%

27.40%

22.50%

14.20%

20.00%

5.00%

12.50%

5.00%

39.00%

10.00%

40.00%

15.0%

49.00%

10.00%

35.00%

Vesting
Vested

Vested

2026

2027

2028

2024

2026

Vested

2024

2025

Vested

2025

* In the case of M&C Saatchi Holdings Asia Pte Ltd (Indonesia) this entity was disposed during January 2024 and the £0.5m put option liability was extinguished.

At any point in time, the valuation of certain put option schemes may be in dispute with the put option holders
who have challenged the valuation of the schemes. We believe we have taken a prudent position in assessing
the liabilities, and therefore consider any adverse outturn to be unlikely. As at 31 December 2023, the maximum
aggregate liability that is not accrued amounts to £1.2m (2022: £2.4m), which is approximately 10% of the put
option liability.

205

M&C Saatchi Plc Annual Report 2023Financial StatementsLTIP

Shares issuable

During the year the Company also awarded LTIPs.

The table below shows the number of shares that the Company will issue at the Company’s share price at
31 December 2023 of 160.0 pence (2022: 151.0 pence) assuming all awards under the LTIPs are held to their
vesting date and fully vest.

Number of Shares
At 1 January 2023

Forfeited on departure

Granted

At 31 December 2023

Shares issuable used in these accounts

Per EPS calculation

Share-based payments

Note
1

LTIP
‘000
3,275

(629)

1,771

4,417

2022
Share
price
used
163p

2023
Number
of shares
‘000
1,500

2023
Share
price
used
155

2022
Number
of shares
‘000
905

4,417

134p–162p

3,275

147p–162p

The share-based payments calculation (Note 28 of
the financial statements) uses the number of shares
that could be issued at the first possible vesting date
after the year-end. The EPS calculation (Note 1 of the
financial statements) uses the average share price
for the year, calculating the number of shares to be
issued using its formula value had it been possible to
exercise on the year-end date, and takes a deduction
for any remaining uncharged share option charge at

start of year and the share of profits that is allocatable
to the equity during the year. Where the scheme has
been issued for part of the year (and is not converted
from an existing cash-based scheme) the shares are
reduced by the proportion of the year that they are in
issue. The EPS calculation is thus attempting to show
the dilutive effect rather than the likely shares that will
be issued and is income statement focused rather than
the true future position.

29. ISSUED SHARE CAPITAL (ALLOTTED, CALLED UP AND FULLY PAID)

Policy

Ordinary shares are classified as equity. Incremental costs attributable to the issuance of new shares are shown in
equity as a deduction from proceeds, net of tax.

Where the Company reacquires its own equity instruments (treasury shares), the consideration paid is deducted
from equity attributable to the Company’s shareholders and recognised within the treasury reserve.

Analysis

At 31 December 2021

No issue of shares

At 31 December 2022

No issue of shares

At 31 December 2023

The Company holds 485,970 (2022: 485,970) of its own shares in treasury.

Number of
shares
122,743,435

–

122,743,435

–

122,743,435

1p ordinary
shares
£000
1,227

–

1,227

–

1,227

206

M&C Saatchi Plc Annual Report 2023Financial Statements30. FAIR VALUE MEASUREMENT

Policy

See also basis of preparation on page 144.

Some of the Group’s financial assets and liabilities, in
addition to certain non-financial assets and liabilities,
are held at fair value.

The fair value of an asset or liability is the price that
would be received from selling the asset or paid to
transfer a liability in an orderly transaction between
market participants at the balance sheet date.

Both financial and non-financial assets and liabilities
measured at fair value in the balance sheet are
grouped into three levels of a fair value hierarchy.
The three levels are defined based on the observability
of significant inputs to the measurement, as follows:

–

Level 1: quoted prices (unadjusted) in active
markets for identical assets or liabilities.

–

Level 2: inputs other than quoted prices included

within Level 1 that are observable for the asset or
liability, either directly or indirectly.

–

Level 3: unobservable inputs for the asset or
liability.

The Group holds both assets and liabilities which are
measured at fair value on a recurring basis and those
which are measured at fair value on a non-recurring
basis. Items measured at fair value on a non-recurring
basis typically relate to non-financial assets arising
as a result of business combinations as accounted for
under the acquisition method. In this regard, during
the year, the Group did not recognise additions to
intangible assets (brand names and customer lists)
(2022: £200k).

In addition, the Group also calculates the fair value of
certain non-financial assets when there is the need to
conduct an impairment review. These calculations also
fall within Level 3 of the IFRS 13 hierarchy and, where
applicable, are described in Note 15 of the financial
statements.

Assets and liabilities measured at fair value on a recurring basis

The following table shows the levels within the hierarchy of assets and liabilities measured at fair value on a
recurring basis at 31 December 2023 and 31 December 2022:

At 31 December 2023
Assets

Equity investments at FVTPL

Investment property

Contingent consideration

Total

At 31 December 2022
Assets

Equity investments at FVTPL

Contingent consideration

Total

Level 1
£000

Level 2
£000

Level 3
£000

–

Level 1
£000

Level 2
£000

–

7,227

2,369

738

10,334

Level 3
£000

11,986

914

12,900

The level at which the financial asset or liability is classified is determined based on the lowest level of significant
input to the fair value measurement.

207

M&C Saatchi Plc Annual Report 2023Financial Statements

The movements in the fair value of the Level 3 recurring financial assets and liabilities are shown as follows:

At 1 January 2023

Disposals

Revaluations

Reclassification from intangible assets

Reclassification to assets held for sale

Reclassification from right-of-use assets (Note 18)

Foreign exchange

At 31 December 2023

Valuation and sensitivity to valuation

Equity
instruments
at FVTPL
£000
12,900

Investment
property
£000
–

(49)

(4,898)

636

(608)

–

(16)

7,965

–

2,369

–

2,369

Total
£000
12,900

(49)

(4,898)

636

(608)

2,369

(16)

10,334

The Group’s Finance Team performs valuations of financial items for financial reporting purposes, including Level 3
fair values. Where appropriate such valuations are performed in consultation with third-party valuation specialists
for complex calculations.

The equity instruments at FVTPL relate to unlisted equity investments as detailed in Note 20 of the financial
statements. Management bases its primary assessment of their fair values on the share price from the last funding
round but also incorporates discounts depending on performance, long-term inactivity, more senior shareholdings
held by other investors and the possibility of future dilution due to the presence of convertible loan notes.
Fluctuations in the share price would change the fair value of the investments recognised at year-end as follows,
assuming a 10% uplift or downwards movement in the price:

Adjusted Share Price
+10%

-10%

Increase/
(decrease)
in fair value
of asset 2023
£000
797

Increase/
(decrease)
in fair value
of asset 2022
£000
1,290

(797)

(1,290)

In addition, management considers there to be a risk that the most recent purchase prices are sensitive to a
decision to sell the investments to an unwilling market. If such a market existed, then discounting the investments
to reflect such risk could impact the value as shown below:

Risk-adjusted Sales Price
-30% sales discount due to illiquid nature*

-12% risk discount for unwilling market place**

Value after discounts

Decrease in
fair value of
asset 2023
£000
(2,390)

(956)

6,988

Decrease in
fair value of
asset 2022
£000
(3,870)

(1,084)

7,946

If these illiquid securities were to be sold, then such a sale is expected to yield between a 10% and 50% discount, so sensitivity is based on 30%.

** Risk that if the cash supply dries up, some of the investments with future growth prospects will run out of cash requiring a fire sale, reflected by additional risk discount of 12%.

208

M&C Saatchi Plc Annual Report 2023Financial Statements31. FINANCIAL RISK MANAGEMENT

Principal Financial Instruments

The principal financial instruments held by the Group, from which financial instrument risk arises, include contract
assets, trade and other receivables, cash and cash equivalents, contract liabilities, trade and other payables,
loans and borrowings, minority interest put options accounted under IFRS 9 as liabilities and equity instruments
representing long-term investments in non-listed entities.

At 31 December
Trade and other receivables

Contract assets

Cash and cash equivalents

Equity instruments

Total financial assets

Fair value through profit or loss

Amortised cost

2023
£000
–

–

7,227

2022
£000
–

–

11,986

2023
£000
120,841

2,845
24,326
–

148,012

2022
£000
129,887

2,180
41,492
–

173,559

The Group does not typically use derivative financial
instruments to hedge its exposure to foreign exchange
or interest rate risks arising from operational, financing
and investment activities.

31.1 – General objective, policies and processes

The Board has overall responsibility for the
determination of the Group’s and Company’s risk
management objectives and policies. Whilst retaining
ultimate responsibility for them, the Board has
delegated the authority for designing and operating
processes that ensure the effective implementation
of the objectives and policies to the Group’s senior
management of each core business unit.

The overall objective of the Board is to set policies that
seek to reduce risk as far as possible without unduly
affecting the Group’s competitiveness and flexibility of
the global businesses of which it is comprised. Further
details regarding these policies are set out below.

31.2 – Market risk

Market risk arises from the Group’s use of interest-
bearing financial instruments and foreign currency
cash holdings. It is the risk that the fair value of future
cash flows on its debt finance and cash investments will
fluctuate because of changes in interest rates (interest
rate risk), foreign exchange rates (currency risk) and
other price risk such as equity price risk and share
price risk. Financial instruments affected by market risk
include loans and borrowings, deposits, debt, equity
investments and minority interest (MI) put options.

Exposure to market risk arises in the normal course of
the Group’s business.

31.3 – Foreign exchange risk

Foreign exchange risk arises from transactions and
recognised assets and liabilities and net investments
in foreign operations. The Group’s general operating
policy historically has been to conduct business in the
currency of the local area in which businesses of the
Group are geographically located, thereby naturally
hedging the consideration resulting from client work.
Businesses of the Group maintain bank accounts in
the currency of these transactions solely for working
capital purposes. As the Group has grown, there has
been an increase in services rendered being exported
from the UK businesses to clients who transact in non-
GBP currencies. The transactional risk arising from
such exports is mitigated in terms of the structuring of
the billing arrangements and agreement to regular
invoices being remitted and promptly paid (<30 days).

The Group is exposed to movements in foreign
currency exchange rates in respect of the translation
of net assets and income statements of foreign
subsidiaries and equity accounted investments.
The Group does not hedge the translation effect of
exchange rate movements on the income statements
or balance sheets of foreign subsidiaries and equity
accounted investments, as it regards these as long-
term investments.

209

M&C Saatchi Plc Annual Report 2023Financial Statements

The estimated impact on foreign exchange gains and losses of a +/-10% movement in the exchange rate
of the Group’s significant currencies is as follows:

Increase/(decrease)
in profit before tax
2023
£000

Increase/(decrease)
in profit after tax
2023
£000

Increase/(decrease)
in profit before tax
2022
£000

Increase/(decrease)
in profit after tax
2022
£000

697

(634)

378

(344)

591

(537)

212

(193)

848

(771)

490

(446)

727

(661)

321

(292)

Exchange Rate

USD +10%

USD -10%

AUD +10%

AUD -10%

The year-end and average exchange rates to GBP for the significant currencies are as follows:

Currency
USD

AUD

The Group assumes that currencies will either be freely
convertible, or the currency can be used in the local
market to pay for goods and services, which the Group
can sell to clients in a freely convertible currency.
Within the 2023 year-end cash balances the Group
holds £323k in Indian rupees; £605k in Libyan dinars;
and £3,401k in South African rand.

31.4 – Interest rate risk

The Group is exposed to interest rate risk because
it holds a banking facility of up to £47m and a net
overdraft facility of up to £2.5m, both based on
floating interest risks. The Group does not consider
this risk to be significant.

The sensitivity analysis below has been determined
based on the exposure to interest rates for financial
instruments held at the balance sheet date. The
analysis is prepared assuming the amount of
borrowings outstanding at the balance sheet date
was outstanding for the whole year. A 50-basis point
increase or decrease is used when reporting interest
rate risk internally to key management personnel
and represents management’s assessment of the
reasonably possible changes in interest rates.

If interest rates had been 50 basis points higher/lower
and all other variables were held constant, the Group’s
profit before tax for the year ended 31 December 2023
would (decrease)/increase by £(113)k/£113k (2022:
£(35)k/£35k). This is principally attributable to the Group’s
exposure to interest rates on its floating rate loan.

Year-End Rate

Average Rate

2023
1.27

1.87

2022
1.21

1.77

2023
1.26

1.90

2022
1.20

1.77

31.5 – Liquidity risk

Liquidity risk arises from the Group’s management
of working capital and the finance charges and,
when appropriate, principal repayments on its debt
instruments. It is the risk that the Group will encounter
difficulty in meeting its financial obligations as and
when they fall due. The Group’s debt instruments carry
interest at SONIA +3.0%. This will change in 2024 under
the new revolving facility to a margin grid based on
the Company’s leverage.

The Group’s policy is to ensure that it will always
have sufficient cash to allow it to meet its liabilities
when they come due. To achieve this aim, the Group
has a planning and budgeting process in place to
determine the funds required to meet its normal
operating requirements on an ongoing basis. The
Group and Company ensures that there are sufficient
funds to meet their short-term business requirements,
taking into account their anticipated cash flows from
operations, its holdings of cash and cash equivalent
and proposed strategic investments.

The Board receives current year cash flow projections
on a monthly basis as well as information regarding
cash balances. At the end of the financial year, these
projections indicated that the Group had sufficient
liquid resources to meet its obligations under all
reasonably expected circumstances. The Group
breached no banking covenants during the year.

210

M&C Saatchi Plc Annual Report 2023Financial StatementsThe following table sets out the contractual maturities (representing undiscounted contractual cash flows) of
financial liabilities, all of which are held at amortised cost:

Group

At 31 December 2023
Trade and other payables*

Lease liabilities

Loans and borrowings

Overdrafts

IFRS 9 put options

Total

Up to 3 months
£000
(82,375)

3 to 12 months
£000
(14,146)

1 to 2 years
£000
(2,940)

2 to 5 years
£000
961

over 5 years
£000
(12)

(2,187)

(15,943)

–

(100,505)

(6,561)

(8,742)

(21,777)

(29,101)

–

(3,050)

(23,757)

–

(11,682)

–

(2,134)

(22,950)

–

(29,113)

* Excludes taxes as these are not considered financial instruments, and contract liabilities as these are not financial liabilities.

At 31 December 2022
Trade and other payables*

Lease liabilities

Loans and borrowings

Overdrafts

IFRS 9 put options

Total

Up to 3 months
£000
(93,060)

3 to 12 months
£000
(34,996)

1 to 2 years
£000
(2,508)

2 to 5 years
£000
(976)

over 5 years
£000
(10)

(2,256)

(59)

(4,271)

–

(99,646)

(6,770)

(100)

–

(2,584)

(44,450)

(8,149)

(6,802)

–

(17,459)

(21,220)

(31,363)

–

(1,272)

(23,468)

–

(31,373)

* Excludes taxes as these are not considered financial instruments, and contract liabilities as these are not financial liabilities.

Company

At 31 December 2023
Trade and other payables

Overdrafts

Loans and borrowings

Total

At 31 December 2022
Trade and other payables

Overdrafts

Loans and borrowings

Total

Up to 3 months
£000
(2,577)

3 to 12 months
£000
(79)

1 to 2 years
£000
(68)

2 to 5 years
£000
–

over 5 years
£000
–

–

(15,900)

(18,477)

–

(79)

–

(68)

–

Up to 3 months
£000
(5,190)

3 to 12 months
£000
–

1 to 2 years
£000
–

2 to 5 years
£000
–

over 5 years
£000
–

(4,271)

–

(9,461)

–

(6,750)

–

211

M&C Saatchi Plc Annual Report 2023Financial Statements31.6 – Credit risk

Credit risk is the risk of financial loss to the Group if
a customer or counterparty to a financial instrument
fails to meet its contractual obligations.

The Group monitors credit risk at both a local and
Group level. Credit terms are set and monitored at
a local level according to local business practices
and commercial trading conditions. The age of debt
and the levels of accrued and deferred income are
reported regularly. Age profiling is monitored, both at
local customer level and at consolidated entity level.
There is only local exposure to debt from significant
global clients. The Group continues to review its
debt exposure to foreign currency movements and
will review efficient strategies to mitigate risk as the
Group’s overseas debt increases.

Management determines concentrations of credit risk
by reviewing amounts due from customers monthly.
The only significant concentrations of credit risk
which are accepted are with multinational blue chip

(or their equivalent) organisations, where credit risk
is not considered an issue and the risk of default is
considered low.

Impairment

The Group has one principal class of assets in scope
for expected credit loss test, trade receivables.
Contract assets are also included in the review, but the
impairment in relation to these assets is not material.

The Group applies the IFRS 9 simplified approach to
measuring expected credit losses, which uses a lifetime
expected loss allowance for all trade receivables.

The expected loss rates for each business are based
on the payment profiles of sales at least over a
period of 24 months before 31 December 2023 or
31 December 2022 respectively, and the corresponding
historical credit losses experienced within this period.
The historical loss rates are adjusted to reflect current
and forward-looking information on macro-economic
factors affecting the ability of the customers to settle
the receivables.

The expected credit loss allowance as at 31 December 2023 and 31 December 2022 was determined as follows
for trade receivables under IFRS 15.

31 December 2023
Expected loss rate (%)

Trade receivables (£000s)

Calculated expected credit loss
provision (£000s)
Specific further loss allowances
(£000s)
Total loss allowance (£000s)

Not past
due
0.0%

59,744

Trade receivables

0–30
days past
due
0.0%

31–90
days past
due
0.0%

91–120
days past
due
0.2%

>120
days past
due
0.8%

17,373

4,906

2,541

Total

87,853

3,289

2,202

2,242

2,251

31 December 2022
Expected loss rate (%)

Trade receivables

Not past
due
0.02%

0–30
days past
due
0.01%

31–90
days past
due
0.02%

91–120
days past
due
0.51%

>120
days past
due
3.55%

Trade receivables (£000s)

70,673

25,496

9,333

2,701

Calculated expected credit loss
provision (£000s)
Specific further loss allowances
(£000s)
Total loss allowance (£000s)

–

4,124

146

1,653

1,799

Total

112,327

176

1,653

1,829

212

M&C Saatchi Plc Annual Report 2023Financial StatementsUnder IFRS 9 Financial Instruments, the expected
credit loss is the difference between the asset’s
gross carrying amount and the present value of the
estimated future cash flows discounted at the asset’s
original effective interest rate.

Contract assets relate to work-in-progress, and as
the Group has no experience of material write-offs
in relation to these financial assets, no expected
credit loss allowance is recognised.

31.7 – Share price risk

As detailed on page 202 the Group has used put
option awards to incentivise certain local key
management. The value of these awards is in part
dependent upon the Company’s share price.

31.8 – Equity price risk

The Group’s non-listed equity investments are
susceptible to market price risk arising from
uncertainties about future values of the investment
securities. The Group manages equity price risk
through diversification and by placing limits on
individual and total equity investment securities.
Reports on the equity portfolio are submitted to the
Group’s senior management on a regular basis.

The Board reviews and approves all equity investment
decisions. The basis of the fair value calculations and
the sensitivity of these calculations to the key inputs are
detailed in Note 30 of the financial statements.

31.9 – Capital management

The Group manages its capital to ensure that entities
in the Group will be able to continue as a going
concern while maximising the return to shareholders
through the optimisation of the debt and equity
balance. Strong financial capital management is an
integral element of the Directors’ strategy to achieve
the Group’s stated objectives. The Directors review
financial capital reports on a regular basis and the
Group finance function does so on a daily basis
ensuring that the Group has adequate liquidity.
The Directors’ consideration of going concern is
detailed in the Directors’ Report.

The capital structure of the Group consists of debt,
which includes the borrowings disclosed in Note 24 of
the financial statements, cash and cash equivalents
as disclosed in the cash flow statement and equity
attributable to equity holders of the parent as
disclosed in the statement of changes in equity.

213

M&C Saatchi Plc Annual Report 2023Financial Statements32. GROUP COMPANIES

Key

This subsidiary company is exempt from the requirements relating to the audit of individual accounts for the
year ended 31 December 2023 by virtue of Section 479A of the Companies Act 2006. M&C Saatchi plc (the
Company) will guarantee the debts and liabilities of the subsidiary company in accordance with Section 479C
of the Companies Act 2006.

Entities where all equity is directly held by the Company, all other subsidiary companies’ equity is either in part
or wholly held via subsidiaries of the Company.

*** Subsidiaries of subsidiaries with minorities at multiple levels in which we have control.

As at 31 December 2023

Country

United Kingdom
LIDA
(UK) LLP*
LIDA
Limited*
M&C Saatchi
(UK) Limited*
M&C Saatchi Accelerator
Limited*
M&C Saatchi Export
Limited*
M&C Saatchi PR
Limited*
M&C Saatchi PR
UK LLP*
M&C Saatchi Talk
Limited*
The Source
(London) Limited*
The Source
(W1) LLP*
This Is Noticed
Limited*
Clear Ideas Consultancy
LLP*
Clear Ideas
Limited*
M&C Saatchi Fluency Limited* United

United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom

M&C Saatchi Life
Limited*
Re Worldwide
Ltd*
Thread Innovation
Limited*
Alive & Kicking Global Limited* United

Kingdom
United
Kingdom
United
Kingdom
United
Kingdom

Human Digital
Limited*

Kingdom
United
Kingdom

Company
Number

Registered
Office Address

OC395890

03860916

03003693

09660056

03920028

07280464

OC362334

04239240

07140265

OC384624

11843904

OC362532

04529082

12853921

14338008

10503044

13510974

11250736

07510403

36 Golden Square, London,
W1F 9EE
36 Golden Square, London,
W1F 9EE
36 Golden Square, London,
W1F 9EE
36 Golden Square, London,
W1F 9EE
36 Golden Square, London,
W1F 9EE
36 Golden Square, London,
W1F 9EE
36 Golden Square, London,
W1F 9EE
36 Golden Square, London,
W1F 9EE
36 Golden Square, London,
W1F 9EE
36 Golden Square, London,
W1F 9EE
36 Golden Square, London,
W1F 9EE
36 Golden Square, London,
W1F 9EE
36 Golden Square, London,
W1F 9EE
36 Golden Square, London,
W1F 9EE
36 Golden Square, London,
W1F 9EE
36 Golden Square, London,
W1F 9EE
36 Golden Square, London,
W1F 9EE
36 Golden Square, London,
W1F 9EE
36 Golden Square, London,
W1F 9EE

Effective %
Ownership
2023

100

Specialism

Advertising

68.5

Consulting

Dormant

Issues

100

77.5

100

214

M&C Saatchi Plc Annual Report 2023Financial StatementsAs at 31 December 2023

Country

United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom
United
Kingdom

M&C Saatchi World Services
LLP*
M&C Saatchi WS .ORG
Limited*
Tricycle Communications
Limited*
M&C Saatchi Network
Limited* &**
Saatchinvest
Ltd*
M&C Saatchi International
Holdings B.V.
M&C Saatchi European
Holdings Limited*
M&C Saatchi German
Holdings Limited*
M&C Saatchi International
Limited*
M&C Saatchi Middle East
Holdco Limited*
M&C Saatchi Worldwide
Limited*
FYND Media
Limited*
M&C Saatchi Mobile
Limited*
M&C Saatchi Merlin
Limited*
M&C Saatchi Social
Limited* & **
M&C Saatchi Sport &
Entertainment Limited*
M&C Saatchi Football
Limited*

Europe
M&C Saatchi
(Switzerland) SA

M&C Saatchi Advertising
GmbH
M&C Saatchi Digital
GmbH
M&C Saatchi
PR S.r.L
M&C Saatchi
SpA
M&C Saatchi Sport &
Entertainment Benelux B.V.
M&C Saatchi Sport &
Entertainment GmbH

Company
Number

OC364842

10898282

07643884

07844657

07498729

24295679
(FC024340)
05982868

06227163

03375635

09374189

02999983

10104986

05437661

03422630

09110893

03306364

14970667

Registered
Office Address

Effective %
Ownership
2023

100

Specialism

Issues

Group Central
Costs
Group Central
Costs
Group Central
Costs
Group Central
Costs
Group Central
Costs
Local Central
Costs
Local Central
Costs
Local Central
Costs
Media

Media

Passions

85.8

Passions

Dormant

Switzerland

660-0442009-4 Boulevard Des Promenades

Advertising

Germany

95484

Germany

137809

Italy

IT08977250961

IT07039280966

Netherlands

860734560

Germany

142905

8, 1227, Carouge, Geneva,
Switzerland
Munzstrasse 21-23, 10178,
Berlin, Germany
Munzstrasse 21-23, 10178,
Berlin, Germany
V.Le Monte Nero 76, Milano,
20135, Italy
V.Le Monte Nero 76, Milano,
20135, Italy
Keizersgracht, 81015CN,
Amsterdam
Munzstrasse 21-23, 10178,
Berlin, Germany

Advertising

Passions

100

215

M&C Saatchi Plc Annual Report 2023Financial StatementsEffective %
Ownership
2023

Specialism

Advertising

50.6

Advertising

50.1

Advertising

50.1

Advertising

50.5

As at 31 December 2023

Country

Company
Number

Registered
Office Address

Middle East and Africa
Black & White
Customer Strategy
(Pty) Limited

South Africa

Creative Spark Interactive
(Pty) Limited**

South Africa

Dalmatian Communications
(Pty) Limited**

South Africa

M&C Saatchi Abel
(Pty) Limited

South Africa

M&C Saatchi
FZ LLC
M&C Saatchi Middle East
FZ LLC

United Arab
Emirates
United Arab
Emirates

Razor Media
(Pty) Limited

M&C Saatchi Bahrain
W.L.L
M&C Saatchi Connect
(Pty) Limited**

South Africa

Bahrain

South Africa

Levergy Marketing Agency
(Pty) Limited**

South Africa

211/005859/07 Media Quarter, 5th Floor,
Corner, Somerset and De
Smit Street, De Waterkant,
Cape Town, South Africa

2010/016508/07 Media Quarter, 5th Floor,
Corner, Somerset and De
Smit Street, De Waterkant,
Cape Town, South Africa

2015/396439/07 Media Quarter, 5th Floor,
Corner, Somerset and De
Smit Street, De Waterkant,
Cape Town, South Africa

177

30670

2009/022172/07 Media Quarter, 5th Floor,
Corner, Somerset and De
Smit Street, De Waterkant,
Cape Town, South Africa
PO Box: 77932, Abu Dhabi,
United Arab Emirates
M&C Saatchi, Penthouse,
Building 1, Twofour54, PO
Box 77932, Abu Dhabi,
United Arab Emirates
9 8th Street, Houghton,
Johannesburg, Gauteng,
2198, South Africa
51,122,1605,316, Manama
Centre
2013/037737/07 Media Quarter, 5th Floor,
Corner, Somerset and De
Smit Street, De Waterkant,
Cape Town, South Africa
2005/021589/07 9 8th Street, Houghton,

2017/177757/07

74157

Johannesburg, Gauteng,
2198, South Africa
309, Third Floor, Thuraya 1,
Dubai, UAE

Advertising

Dormant

Media

Passions

Issues

World Services Middle East
FZ–LLC

United Arab
Emirates

102798

Asia
Design Factory
Sdn Bhd

Malaysia

201001034805

100

53.8

100

M&C Saatchi Advertising
(Shanghai) Limited

China

91310000740556813A Room 248, Floor 2,

Advertising

M&C Saatchi
(Hong Kong)
Limited

Hong Kong

509500

Advertising

No. 15B, 2nd Floor, Jalan
Tengku Ampuan, Zabedah
F9/F, Section 9, 40100 Shah
Alam, Selangor Darul
Ehsan, Malaysia

Unit 5, No.11, Wanghang
Road, New Lingang Area,
China (Shanghai) Pilot Free
Trade Zone, China

Rm 2610, 26/F Prosperity,
Millennia Plaza, 663 King’s
Rd, North Point, Hong Kong

Advertising

216

M&C Saatchi Plc Annual Report 2023Financial StatementsAs at 31 December 2023

Country

Company
Number

Registered
Office Address

Effective %
Ownership
2023

Specialism

India

U74300DL2005PTC141682 Flat No.270-D, Pocket C

Advertising

94.8

M&C Saatchi
Communications
Pvt Limited
Scarecrow M&C Saatchi
Limited**

India

U22190MH-
2008PLC188548

PT. MCS Saatchi
Indonesia

Indonesia

576/1/IU/
PMA/2018

M&C Saatchi
(M) Sdn Bhd

Malaysia

606116-D

M&C Saatchi Source
(M) SDN BHD

Malaysia

1313653-D

Watermelon Production
Sdn Bhd

Malaysia

1083441-M

M&C Saatchi World Services
Pakistan (Pvt) Ltd
M&C Saatchi
(S) Pte Limited

Pakistan

0081911

Singapore

199504816C

Clear Ideas (Singapore)
Pte Limited

Singapore

201020335R

Clear Asia Limited

Hong Kong

1289028

M&C Saatchi World Services
(Singapore) Pte Limited

Singapore

202104508W

M&C Saatchi Asia
Limited

Hong Kong

1959819

M&C Saatchi Holdings Asia
Pte Limited

Singapore

20172 5519K

M&C Saatchi Mobile India
LLP

India

AAK-8869

M&C Saatchi Mobile Asia
Pacific Pte Limited

Singapore

201410399M

Mayur Vihar Phase II, New
Delhi, 110091, India
2nd Floor, Kamani
Chambers 32 Ramjibhai
Kamani Marg, Ballard
Estate Mumbai, Mumbai
City, MH 400038 IN, India
Dea Tower 1 Mezanine
Floor, Jl. Mega Kuningan
Kav.e4.3 No.1-2, Kuningan
Timur, Setiabudi, Jakarta
Selatan, 12920, Indonesia
No.15b, 2nd Floor, Jalan
Tengku Ampuan, Zabedah
F9/F, Section 9, 40100 Shah
Alam, Selangor, Malaysia
No.15b, 2nd Floor, Jalan
Tengku Ampuan, Zabedah
F9/F, Section 9, 40100 Shah
Alam, Selangor, Malaysia
No.15b, 2nd Floor, Jalan
Tengku Ampuan, Zabedah
F9/F, Section 9, 40100 Shah
Alam, Selangor, Malaysia
48m, Block 6, P.Ec.H.S,
Karachi, Pakistan
59 Mohamed Sultan Road,
#02-08, Sultan-Link,
Singapore
59 Mohamed Sultan Road,
#02-08, Sultan-Link,
Singapore
6th Floor, Alexandra House,
18 Chater Road, Central,
Hong Kong
59 Mohamed Sultan Road,
#02-08, Sultan-Link,
Singapore
Rm 2610, 26/F Prosperity,
Millennia Plaza, 663 King’s
Rd, North Point, Hong Kong
1 Coleman Street, #05-06a,
The Adelphi, 179803
Singapore
141b First Floor, Cl House
Shahpur Jat, New Delhi,
110049, India
59 Mohamed Sultan Road,
#02-08, Sultan-Link,
Singapore

Advertising

50.1

Advertising

100

Advertising

100

Advertising

100

Issues

Advertising

Consulting

Dormant

Issues

Local Central
Costs

Media

100

50.1

100

217

M&C Saatchi Plc Annual Report 2023Financial StatementsAs at 31 December 2023

Country

Company
Number

Registered
Office Address

PT MCSaatchi Mobile
Indonesia

Indonesia

2212230035592

Australia
1440 Agency
Pty Limited

Bellwether Global
Pty Limited

Brands In Space
Pty Limited

Elastic Productions
Pty Limited

Go Studios
Pty Limited

Greenhouse Australia
Pty Limited

Hidden Characters
Pty Limited

LIDA Australia
Pty Limited

M&C Saatchi Direct
Pty Limited

Australia

100 473 363

Australia

114 615 226

Australia

129 800 639

Australia

635 737 861

Australia

092 941 878

Australia

629 584 121

Australia

108 886 291

Australia

125 908 009

Australia

072 221 811

M&C Saatchi Melbourne
Pty Limited

Australia

004 777 379

M&C Saatchi Sydney
Pty Limited

Australia

637 963 323

Park Avenue PR
Pty Limited

Resolution Design
Pty Limited

Saatchi Ventures
Pty Limited

Australia

604 298 071

Australia

621 985 288

Australia

614 007 957

Epicentrum walk 3rd Floor A
306 - A 307, Kawasan
Rasuna Epicentrum Jl. HR.
Rasuna Said, Desa/
Kelurahan Karet Kuningan,
Kec. Setiabudi, Kota Adm.
Jakarta Selatan, Provinsi
DKI Jakarta, Kode Pos:
12940.

99 Macquarie Street,
Sydney, NSW 2000,
Australia
99 Macquarie Street,
Sydney, NSW 2000,
Australia
99 Macquarie Street,
Sydney, NSW 2000,
Australia
99 Macquarie Street,
Sydney, NSW 2000,
Australia
99 Macquarie Street,
Sydney, NSW 2000,
Australia
99 Macquarie Street,
Sydney, NSW 2000,
Australia
99 Macquarie Street,
Sydney, NSW 2000,
Australia
99 Macquarie Street,
Sydney, NSW 2000,
Australia
99 Macquarie Street,
Sydney, NSW 2000,
Australia
99 Macquarie Street,
Sydney, NSW 2000,
Australia
99 Macquarie Street,
Sydney, NSW 2000,
Australia
99 Macquarie Street,
Sydney, NSW 2000,
Australia
99 Macquarie Street,
Sydney, NSW 2000,
Australia
99 Macquarie Street,
Sydney, NSW 2000,
Australia

Effective %
Ownership
2023

100

Specialism

Media

Advertising

85.5

Advertising

89.9

Advertising

218

M&C Saatchi Plc Annual Report 2023Financial StatementsEffective %
Ownership
2023

58.5

Specialism

Advertising

67.5

As at 31 December 2023

Country

Company
Number

Registered
Office Address

The Source Insight Australia
Pty Limited

Australia

618 841 928

This Film Studio
Pty Limited

Australia

624 003 541

Tricky Jigsaw
Pty Limited

Ugly Sydney
Pty Limited

Re Team
Pty Limited

Yes Agency
Pty Limited

eMCSaatchi
Pty Limited

Australia

069 431 054

Australia

618 242 710

Australia

105 887 321

Australia

621 425 143

Australia

089 856 093

World Services (Australia)
Pty Limited

Australia

629 191 420

M&C Saatchi Agency
Pty Limited

M&C Saatchi Asia Pac
Holdings Pty Limited

Bohemia Group
Pty Limited

Australia

069 431 054

Australia

097 299 020

Australia

154 100 562

M&C Saatchi Sport &
Entertainment Pty Limited

Australia

139 568 102

99 Macquarie Street,
Sydney, NSW 2000,
Australia
99 Macquarie Street,
Sydney, NSW 2000,
Australia
99 Macquarie Street,
Sydney, NSW 2000,
Australia
99 Macquarie Street,
Sydney, NSW 2000,
Australia
99 Macquarie Street,
Sydney, NSW 2000,
Australia
99 Macquarie Street,
Sydney, NSW 2000,
Australia
99 Macquarie Street,
Sydney, NSW 2000,
Australia
C/O Walker Wayland
Services Pty Ltd, Suite 11.01,
Leve 11, 60 Castlereagh
Street, Sydney NSW,
Australia
99 Macquarie Street,
Sydney, NSW 2000,
Australia
99 Macquarie Street,
Sydney, NSW 2000,
Australia
99 Macquarie Street,
Sydney, NSW 2000,
Australia
99 Macquarie Street,
Sydney, NSW 2000,
Australia

Consulting

Dormant

Issues

Local Central
Costs

Media

Passions

Americas
Agência Digital Zeroacem
Ltda***

Brazil

NIRE-3522979148 Rua Wisard, 305, Vila

Advertising

100

CSZ Comunicação
Ltda

Lily Participações
Ltda

Brazil

03.910.644/0001-
05

21.188.539/0001-
96

Madalena, 3 Andar-Con,
Sao Paolo, 05434-080,
Brazil
Rua Wisard, 305, Vila
Madalena, 3 Andar-Con,
Sao Paolo, 05434-080,
Brazil
Avenida Brigadeiro Faria
Lima, 1355, Jardim
Paulistano 16 Andar, Sal,
Sao Paulo, 01452-919, Brazil

Advertising

50.1

Advertising

100

219

M&C Saatchi Plc Annual Report 2023Financial StatementsAs at 31 December 2023

M&C Saatchi
S.A. DE. C.V

USMAJ
LLC

Country

Mexico

Company
Number

N-2017052183

USA

5445173

Santa Clara Participações
Ltda

Brazil

09.349.720/0001-
31

Shepardson Stern
+ Kaminsky LLP
Clear USA
LLC
LIDA NY LLP
(MCD PARTNERS)
Clear LA
LLC

Clear NY
LLP

LIDA USA
LLP

USA

4656653

20-8599548

4902983

6241713

USA

30-0891764

USA

6333479

World Services US Inc.

USA

C2543767

M&C Saatchi Agency Inc.

USA

13-3839670

M&C Saatchi Mobile
LLC

M&C Saatchi Sport &
Entertainment LA LLC

M&C Saatchi Sport &
Entertainment NY LLP

USA

45-3638296

USA

6369786

USA

46-5182795

Registered
Office Address

Darwin 74, Piso 1, Miguel
Hidalgo, 11590 Ciudad de
México, CDMX, Mexico
874 Walker Road, Suite C,
Dover, Kent, Delaware
19904 USA
Rua Wisard, 305, Vila
Madalena, 3 Andar-Con,
Sao Paolo, 05434-080,
Brazil
80 State Street, Albany,
12207-2543, New York, USA
138 West 25th Street, Floor
5, New York, 10001, USA
138 West 25th Street, Floor
5, New York, NY 10001, USA
2711 Centerville Road, Suite
400, Wilmington, Delaware,
19808, USA
1209 Orange Street
Wilmington, Delaware
19801, USA
251 Little Falls Drive,
Wilmington, Delaware,
19808 USA
88 Pine Street, 30th Floor,
New York 10005, United
States
304 East 45th Street, New
York, 10017, USA
2032 Broadway, Santa
Monica California, 90404
USA
874 Walker Road Suite C,
Dover, Kent, Delaware
19904, USA
160 Greentree Drive, Suite
101, Dover, Kent, Delaware,
19904, USA

Effective %
Ownership
2023

100

Specialism

Advertising

50.1

Advertising

Consulting

Dormant

Issues

Local Central
Costs
Media

Passions

100

75.5

100

Passions

82.5

220

M&C Saatchi Plc Annual Report 2023Financial StatementsAssociate Entities

Entities in which the Group holds less than 50% of the share capital and which are accounted for as Associates
(Note 16). All subsidiary companies which the Group controls in line with the requirements of IFRS 10 have been
included in the consolidated financial statements.

As at 31 December 2023

Country

Company
Number

Registered
Office Address

Love Frankie
Limited

M&C Saatchi
SAL

Thailand

105557000000

Lebanon

1010949

M&C Saatchi Little Stories
SAS

France

449386944

Cometis
SARL
M&C Saatchi
Limited

February Communications
Pvt Limited

France

Japan

384769592

0110-01-060760

Advertising

India

U74999DL2012PTC233245 141b First Floor, Cl

Advertising

Effective %
Ownership
2023

Specialism

Advertising

25.77

571 Rsu Tower, 10th
Floor, Soi Sukhumvit 31,
Sukhumvit Road,
Wattana District,
Bangkok, Thailand
Quantum Tower,
Charles Malek Avenue,
St Nicolas, Beirut,
Lebanon
32 Rue Notre Dame
Des Victoires, 75002
Paris, France
14 Rue Meslay, 75003
Paris, France
1-26-1 Ebisu-Nishi,
Shibuya-Ku, Tokyo
150-0021, Japan

House Shahpur Jat,
New Delhi, 110049,
India
Skeppsbron 16, 11130,
Stockholm, Sweden
Skeppsbron 16, 11130,
Stockholm, Sweden
Skeppsbron 16, 11130,
Stockholm, Sweden

Advertising

M&C Saatchi
AB
M&C Saatchi Go!
AB
M&C Saatchi PR
AB

Sweden

556902-1792

Sweden

559076-6076

Sweden

559103-4201

UK companies dissolved in January 2024

As at 31 December 2023

Country

Company
Number

Registered
Office Address

Influence Communications
Limited
M&C Saatchi PR International
Limited
M&C Saatchi WMH
Limited
M&C Saatchi Shop
Limited

United Kingdom

04917646

United Kingdom

08838406

United Kingdom

03457658

United Kingdom

09660100

36 Golden Square,
London, W1F 9EE
36 Golden Square,
London, W1F 9EE
36 Golden Square,
London, W1F 9EE
36 Golden Square,
London, W1F 9EE

Effective %
Ownership
2023

100

Specialism

Consulting

Advertising

Local Central
Costs
Advertising

221

M&C Saatchi Plc Annual Report 2023Financial Statements33. RELATED-PARTY TRANSACTIONS

35. POST-BALANCE SHEET EVENTS

Key management remuneration

Key management remuneration is disclosed in Note 5
of the financial statements.

Audited details on Directors’ remuneration is disclosed
in the Directors’ Remuneration Report on page 126.

Other related parties

During the year, the Group made purchases of £312k
(2022: £84k) from its associates. At 31 December 2023,
£45k was due to associates in respect of these
transactions (2022: £31k).

During the year, £496k (2022: £127k) of fees were
charged by Group companies to associates.
At 31 December 2023, associates owed Group
companies £271k (2021: £38k).

34. COMMITMENTS

Capital commitments

At the year-end, the Group did not have committed
costs (2022: £56k) to acquire property plant and
equipment.

Other commitments

The Group signed a lease agreement for a new
office space in New York in August 2023. Due to
extensive renovation work, we did not move into that
office until January 2024. We recognised the right-
of-use asset and the lease liability of £3.8m in the
consolidated balance sheet in January 2024.

Other than the normal contractual commitments to
staff and the commitment to complete profitable
projects for clients, the Group does not have any
other material commitments which are not reflected
on the balance sheet.

As part of our simplification strategy, the Group
continued to close down small entities including each
of Influence Communications Limited, M&C Saatchi PR
International Limited, M&C Saatchi WMH Limited and
M&C Saatchi Shop Limited.

The Group sold its shares in PT MCS Saatchi Indonesia
to the founder for a consideration of £500k on
16 January 2024.

On 28 March 2024, the Group disposed of its 10%
shareholding in Australie SAS (France) which it acquired
in March 2021, its 49% shareholding in Cometis SARL
and its 25% shareholding in M&C Saatchi Little Stories
SAS for a consideration of €1m.

The Board is recommending the payment of a final
dividend of 1.6 pence per share.

The Company announced the appointment of
Zaid Al-Qassab as the Company’s new Chief Executive
Officer. Zaid will be taking up his role in May 2024.

222

M&C Saatchi Plc Annual Report 2023Financial Statements

36. OTHER ACCOUNTING POLICIES

Reserves

Equity comprises the following:

Share capital

Represents the nominal value of equity shares in issue.

Share premium

Represents the excess over nominal value of the fair
value of consideration received for equity shares,
net of issuance costs.

Other reserves

Merger reserve

Represents the premium paid for shares above
the nominal value of share capital, caused by the
acquisition of more than 90% of a subsidiaries’
shares. The merger reserve is released to retained
earnings when there is a disposal, impairment charge
or amortisation charge posted in respect of the
investment that created it.

Treasury reserve

Represents the amount paid to acquire the Company’s
own shares for future use.

Minority interest put option reserve

Represents the initial fair value of the IFRS 9 put option
liabilities at creation. When the put option is exercised,
the related amount in this reserve is taken to the non-
controlling interest acquired reserve.

Non-controlling interest acquired reserve

From 1 January 2010, a non-controlling interest acquired
reserve has been used when the Group acquires an
increased stake in a subsidiary. It represents either
a) the minority interest put option reserve transferred
less the book value of the minority interest acquired
(where the acquisition is due to an IFRS 9 put option),
or b) the consideration paid less the book value of the
minority interest acquired. If the equity stake in the
subsidiary is subsequently sold, impaired or disposed
of, then the related balance from this reserve will be
transferred to retained earnings.

Foreign exchange reserve

For overseas operations, income statement results
are translated at the annual average rate of exchange
and balance sheets are translated at the closing rate
of exchange. The annual average rate of exchange

approximates to the rate on the date that the
transactions occurred. Exchange differences arising
from the translation of foreign subsidiaries are taken
to this reserve. Such translation differences will be
recognised as income or expense in the period in
which the operation is disposed of.

Retained earnings

Represents the cumulative gains and losses recognised
in the income statement.

37. NEW AND REVISED STANDARDS ISSUED BUT NOT
YET EFFECTIVE

In the current year, the following Standards and
Interpretations became effective:

•

IFRS 17 and Amendments to IFRS 17 – Insurance
Contracts: Changes to international insurance
accounting.

Amendments to IAS 1 and IFRS Practice Statement
2 – Disclosure of Accounting Policies: Application
of Materiality.

Amendments to IAS 8 – Definition of Accounting
Estimates: Distinguish between accounting
policies and estimates.

Amendments to IAS 12 – Deferred Tax related
to Assets and Liabilities arising from a Single
Transaction: Recognising deferred tax on leases.

The above amendments do not have a material
difference on the Group’s accounts.

At the date of authorisation of these financial
statements, the Group has not applied the following
new and revised IFRS Standards that have been
issued but are not yet effective:

•

Amendments to IFRS 16: Leases on sale and
leaseback.

Amendment to IAS 1: Non-current liabilities with
covenants.

Amendments to IAS 7 and IFRS 7: Supplier
finance.

Amendments to IAS 21: Lack of exchangeability.

The Directors do not expect that the adoption of the
standards listed above will have a material impact on
the financial statements of the Group in future periods.

223

M&C Saatchi Plc Annual Report 2023Financial StatementsCompany Balance Sheet

At 31 December
Non-current assets
Investments
Deferred tax
Amounts due from subsidiary undertakings
Other non-current assets

Current assets
Trade and other receivables
Cash and cash equivalents

Current liabilities
Trade and other payables
Put option liability
Bank loans

Net current liabilities
Total assets less current liabilities
Non-current liabilities
Amounts due to subsidiary undertakings
Employment benefit provision
Bank loans

Total net assets

Capital and reserves
Share capital
Share premium
Merger reserve
Treasury reserve
Share option reserve
Share-based payment reserve
Profit and loss account
Shareholders’ funds

Note

43
40

42
28
24

2023
£000

127,459
204
110,828
948
239,439

1,464
1,371
2,835

(58,525)
(17)
(15,900)
(74,442)
(71,607)
167,832

(4)
(310)
–
(314)
167,518

1,227
50,327
71,116
(550)
2,157
31,114
12,127
167,518

2022
£000

133,742
153
94,887
951
229,733

5,762
157
5,919

(54,202)
(7,002)
(4,271)
(65,475)
(59,556)
170,177

–
(110)
(6,750)
(6,860)
163,317

1,227
50,327
71,116
(550)
1,316
31,114
8,767
163,317

As permitted by Section 408 of the Companies Act 2006,
the Company has not presented its own profit and
loss account. Included within the consolidated income
statement for the year ended 31 December 2022 is a
profit after tax of £5,194k (2022: profit of £10,983k).

The notes on pages 226 to 229 form part of these
financial statements.

These Company financial statements on pages 224
to 229 were approved and authorised for issue by the
Board on 11 April 2024 and signed on its behalf by:

BRUCE MARSON
Chief Financial Officer
M&C Saatchi plc

Company Number 05114893

224

M&C Saatchi Plc Annual Report 2023Financial Statements

Company Statement
of Changes in Equity

Share
capital
£000
1,227

Share
premium
£000
50,327

Merger
reserve
£000
71,116

Treasury
reserve
£000
(550)

Share
option
reserve
£000
1,167

Share-
based
payment
reserve
£000
31,114

Profit
and loss
account
£000
(2,216)

–

(500)

649

149

–

Total
£000
152,185

(500)

649

149

–

10,983

1,227

50,327

71,116

(550)

1,316

31,114

8,767

163,317

–

841

–

841

–

841

(1,834)

(993)

5,194

1,227

50,327

71,116

(550)

2,157

31,114

12,127

167,518

At 31 December 2021

Exercise of share options

Share option charge

Total transactions with owners
Total comprehensive profit for
the year
At 31 December 2022

Exercise of share options

Share option charge

Dividends paid

Total transactions with owners
Total comprehensive profit for
the year
At 31 December 2023

The notes on pages 226 to 229 form part of these financial statements.

225

M&C Saatchi Plc Annual Report 2023Financial StatementsNotes to the Company
Financial Statements

38. GENERAL INFORMATION AND ACCOUNTING
POLICIES

The Company acts as the holding company for of
the Group. The Company is quoted on London’s AIM
stock exchange and is domiciled and incorporated in
England and Wales (registered number 05114893). The
address of its registered office is 36 Golden Square,
London, W1F 9EE.

The financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006, under the historical cost convention, in
accordance with the reduced disclosure framework
of FRS 101. They have been prepared on a going
concern basis, further details of which are in the
Directors’ Report on page 132.

In adopting the reduced disclosure framework of
FRS 101, the Company has taken advantage of the
following exemptions from disclosure:

•

The cash flow statement and related notes.

Disclosures in respect of transactions with
wholly owned subsidiaries.

Disclosures in respect of capital management.

The effects of new but not yet effective IFRSs.

Accounting policies applied

The Company applies the Group accounting policies
as well as the following principal accounting policies.
These have been applied consistently and there were
no new policies adopted within the year:

a) Valuation of investments

Investments are stated at cost, less any provision
for impairment.

b) Pensions

Contributions to personal pension plans are charged
to the profit and loss account in the period in which
they are due.

c) Share-based payments in Company

The cost of awards to employees of subsidiary entities,
classified as conditional share awards, is accounted
for as an additional investment in the employing
subsidiary. When such awards are recharged to
employing or acquiring entities, the investment in the
Company’s books is reduced by the value of equity
awarded. In the event that this additional investment in
the subsidiary is impaired, then there is an equal and
opposite release from share-based payment reserve.

d) Dividends

Both interim dividends and final dividends are
recorded in the period in which they are declared,
become due and are payable. Disclosure of dividend
activity can be found in Note 10 of the financial
statements.

e) Treasury shares

When the Company reacquires its own equity
instruments, those instruments (treasury shares) are
deducted from equity. No gain or loss is recognised
in profit or loss on the purchase, sale, issue or
cancellation of the Company’s treasury shares.
Such treasury shares may be acquired and held by
the Company or by other members of the Group.
Consideration paid or received is recognised directly
in equity.

f) Expected credit losses

Amounts owed by subsidiaries are recorded at
amortised cost and are reduced by expected credit
losses. Under IFRS 9 Financial Instruments, the
expected credit losses are measured as the difference
between the asset’s gross carrying amount and
the present value of estimated future cash flows,
discounted at the financial asset’s original effective
interest rate.

Key judgements

Management has made the following judgements,
which have the most significant effect in terms of the
amounts recognised, and their presentation, in the
Company’s financial statements.

Debt due from other Group companies

Debt due from other Group companies can be
deemed to be either a quasi-investment under IAS
27 or an intercompany receivable under IFRS 9.
Most of this debt balance has been assessed as an
intercompany receivable under IFRS 9.

Where such debt is accounted for under IFRS 9,
judgement is applied to assess whether the company
expects repayment of amounts which are technically
due on demand within the next year, in which case
the receivable is classified as current or whether it is
not, in which case the receivable will be classified as
non-current.

Key estimates

Some areas of the Company’s financial statements
are subject to key assumptions and other significant

226

M&C Saatchi Plc Annual Report 2023Financial Statementssources of estimation uncertainty at the reporting
date, that have a significant risk of causing a material
adjustment to the carrying amounts of assets and
liabilities within the next financial year. The Company
has based its assumptions and estimates on
parameters available when the financial statements
were prepared.

Recoverability of intercompany receivables

Estimates on the future recoverability of intercompany
receivables are based on underlying profitability and
cash generation, in addition to the substance of the
agreements, this can include subsequent asset sales
by the debtor being used to clear the amounts due to
the parent.

Valuation of investments

Estimates are made on the future value of investments,

based on the lower of value in use and net realisable
value. This assessment is performed after any debt
from entities has been recovered. Impairments are
made where necessary.

Reserves

Share-based payment reserve

Represents the reserve created when conditional share
assets are created. In the event that this additional
investment in the subsidiary is impaired, then there
is an equal and opposite release from share-based
payment reserve.

Share-option reserve

Represents equity-settled share-based employee
remuneration (including amounts recharged to
subsidiaries) until such share options are exercised.

39. INVESTMENTS

At 1 January
Disposal of shares in subsidiary
Put option revaluation
Additions
Conditional share awards*
Impairment charge**
At 31 December

2023
£000
133,742
–
(6,516)
562
–
(329)
127,459

2022
£000
138,954
(3)
(3,977)

–
(1,232)
133,742

Conditional share awards (Note 28 of the financial statements).

*
** Impairment charge of £329k relates to M&C Saatchi Asia Limited (£988k), M&C Saatchi Indonesia (£151k) and impairment reversal of Scarecrow Communications Ltd (809k).

The value-in-use calculations have been based on
the forecast profitability based on the 2024 Board
approved budget and three-year plans, with a residual
growth rate of 1.5% per annum applied thereafter.
This forecast data is based on past performance and
current business and economic prospects. This data
is then applied within a discounted future cash flow

forecast (DCF), which forms the basis for determining
the recoverable amount of each investment and has
led to the recognition of the impairment charge shown
in the table above.

The direct and indirect subsidiary undertakings are
listed in Note 32 of the financial statements.

40. OTHER NON-CURRENT ASSETS

Loans to support subsidiary acquisition*
Loans to assist equity purchase**
Other
Total

2023
£000
921
14
13
948

2022
£000
921
19
11
951

This relates to the A$1.6m (2021: A$1.6m) loans that the Group lent local management of M&C Saatchi Agency Pty Ltd, in 2015, to enable them to acquire 20% of that business. The
full recourse loan is repayable in full if the purchasers no longer have a beneficial interest in the shares of the Australian Group or are no longer employed. The loan is unsecured
and charged interest at 0.1% above the five-year Australian interbank rate at the date the loan was advanced. The carrying value of the loan approximated to fair value.

** Loan to South African indigenous equity holders to enable them to acquire equity in South African subsidiaries in accordance with local laws.

227

M&C Saatchi Plc Annual Report 2023Financial Statements 41. TRADE AND OTHER RECEIVABLES

Amounts Due Less Than One Year
Prepayments
Corporation tax group relief
Other receivables
Total

42. TRADE AND OTHER PAYABLES

Trade creditors
Amounts due to subsidiaries*
Accruals
Sales taxation and social security payables
Total

* Repayable on demand.

2023
£000
380
1,070
14
1,464

2023
£000
(301)
(55,801)
(2,195)
(228)
(58,525)

2022
£000
269
5,412
81
5,762

2022
£000
(434)
(49,012)
(4,756)
–
(54,202)

43. AMOUNTS DUE FROM SUBSIDIARY UNDERTAKINGS

Amounts due from subsidiary undertakings are repayable on demand. However, agreements are in place between
subsidiary companies that state that such repayments will not be due until the underlying investments of the
subsidiary company are sold or realised. Due to these agreements the amounts due from subsidiary undertakings
have been defined as long term.

Amounts receivable from subsidiary undertakings include receivables relating to exercised put options. As
detailed in Note 1 and Note 27 to the consolidated financial statements, the Group has a number of put option
arrangements in place. The put options give these employees a right to exchange their minority holdings in the
subsidiary into shares in the Company or cash (at the Group’s choice).

Amounts due from subsidiary undertakings

2023
£000
110,828

2022
£000
94,887

The amounts due from subsidiary undertakings are net of the expected credit losses of £11,651k (2022: £10,351k)
that have been provided against these balances. The annual review of the expected credit loss provision took
into account trading performance, the reorganisations taking place and likely future performance.

44. STAFF COST

Staff Costs (including Directors) Comprise:

Year ended 31 December
Wages and salaries
Social security costs
Other pension costs
Other staff benefits

Staff numbers

Staff numbers are based on monthly average staff.

2023
£000
3,491
212
41
(11)
3,733
10

2022
£000
5,351
695
97
49
6,192
20

228

M&C Saatchi Plc Annual Report 2023Financial StatementsDirectors’ Remuneration

Directors' salaries and benefits
Pension costs
Total remuneration before accounting charges
Long-term incentives
Total

The Highest Paid Director Earned:
Director's salary and benefits
Long-term incentives
Total

2023
£000
1,802
–
1,802
–
1,802

2023
£000
742
–
742

2022
£000
2,200
67
2,267
381
2,648

2022
£000
1,380
207
1,587

The number of Directors with a money purchase
pension scheme during the year was 1 (2022: 2).

The Directors are the key management personnel
of the Company.

Additional details with regard to Directors’ remuneration,
as required by Rule 19 of the AIM rules, can be found in
the Directors’ Remuneration Report on page 116.

45. RELATED PARTIES

During the year, the Company charged a management
recharge to subsidiaries of £nil (2022: £733k).

Further details of related parties of the Company
are provided in Note 33 of the financial statements.

46. POST-BALANCE SHEET EVENTS

A final dividend of 1.6 pence per share has been
recommended, which is a total amount of £1,956k.
The final dividend, if approved at the Company’s
Annual General Meeting on 16 May 2024, will be
paid on 24 June 2024 to all shareholders on the
register of members on 10 May 2024.

M&C Saatchi Connect Proprietary (Pty) Limited,
Dalmatian Communications (Pty) Limited, Levergy
Marketing Agency (Pty) Limited, Razor Media (Pty)
Limited and Black & White Customer Strategy (Pty)
Limited for consideration of £5.6m.

On 7 March 2024, the Company entered into a new
revolving multicurrency facility agreement with
National Westminster Bank Plc, HSBC UK Bank plc and
Barclays Bank PLC for up to £50m (the “New Facility”),
with a further £50m extension if required for strategic
acquisitions. The New Facility is provided on a three-
year term with two one-year extensions. This New
Facility is to refinance the existing £47m facility with
National Westminster Bank Plc and Barclays Bank PLC
(the “Old Facility”) which would have matured on
31 May 2024. At 31 December 2023, the Group had
up to £47.0m (2022: £47.0m) of funds available under
the Old Facility with £16.0m drawn (2022: £7.0m).

Subsequent to the year-end there have been no other
material events specific to the Company requiring
disclosure. Those items relevant to the Group are
disclosed in Note 34 of the financial statements.

On 9 April 2024, the Group (including the Company)
entered into an agreement to divest of its shareholdings
in the Group’s subsidiaries forming the South Africa
Group, being each of M&C Saatchi Abel (Pty) Limited,

47. SHARE CAPITAL

Movements in the Company’s share capital can
be found at Note 29 of the financial statements.

229

M&C Saatchi Plc Annual Report 2023Financial StatementsIndependent auditors’ report to
the members of M&C Saatchi plc

OPINION ON THE FINANCIAL STATEMENTS

Independence

In our opinion:

•

the financial statements give a true and fair view
of the state of the Group’s and of the Parent
Company’s affairs as at 31 December 2023 and
of the Group’s loss for the year then ended;

the Group financial statements have been
properly prepared in accordance with UK
adopted international accounting standards;

the Parent Company financial statements have
been properly prepared in accordance with
United Kingdom Generally Accepted Accounting
Practice; and

the financial statements have been prepared
in accordance with the requirements of the
Companies Act 2006.

We have audited the financial statements of M&C
Saatchi plc (the “Parent Company”) and its subsidiaries
(the “Group”) for the year ended 31 December 2023
which comprise the Consolidated Income Statement,
the Consolidated Statement of Other Comprehensive
Income, the Consolidated and Company Balance
Sheets, the Consolidated and Company Statements
of Changes in Equity, the Consolidated Cash Flow
Statement and Notes to the Financial Statements,
including a summary of material accounting policies.

The financial reporting framework that has been
applied in the preparation of the Group financial
statements is applicable law and UK adopted
international accounting standards. The financial
reporting framework that has been applied in the
preparation of the Parent Company financial
statements is applicable law and United Kingdom
Accounting Standards, including Financial Reporting
Standard 101 Reduced Disclosure Framework (United
Kingdom Generally Accepted Accounting Practice).

BASIS FOR OPINION

We conducted our audit in accordance with
International Standards on Auditing (ISAs (UK)) and
applicable law. Our responsibilities under those
standards are further described in the Auditor’s
responsibilities for the audit of the financial statements
section of our report. We believe that the audit
evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.

We remain independent of the Group and the Parent
Company in accordance with the ethical requirements
that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical
Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance
with these requirements.

CONCLUSIONS RELATING TO GOING CONCERN

In auditing the financial statements, we have
concluded that the Directors’ use of the going concern
basis of accounting in the preparation of the financial
statements is appropriate. Our evaluation of the
Directors’ assessment of the Group and the Parent
Company’s ability to continue to adopt the going
concern basis of accounting included:

•

Evaluating the appropriateness of the going
concern assessment performed by the Directors
with regard to the requirements of the applicable
financial reporting framework, including the
period covered;

Testing the mathematical accuracy of the going
concern model prepared by the Directors and the
underlying calculations used within it;

Verifying the level of cash and debt held by the
Group as at 31 December 2023 and movements
post year-end, including reviewing and
confirming the terms and covenants of the new
banking arrangements entered into subsequent
to the year-end;

Discussing and challenging the Directors’
financial forecasts and the underlying key
assumptions at a group-wide level and
specifically in certain underlying subsidiaries
for which visibility and therefore certainty over
future financial performance was more limited.
In the course of this work, we evaluated whether
expectations for growth in revenue, costs
and profits based on key customer revenue
assumptions, margins and cost trends were
reasonable. We have obtained evidence
supporting the reasonableness of key
assumptions including internal documentation
and third-party evidence;

•

Evaluating the suitability of the sensitivities applied,
in the severe but plausible scenarios and reverse
stress test that were performed by the Directors;

230

M&C Saatchi Plc Annual Report 2023Financial Statements•

•

Determining whether under the severe but
plausible scenarios the Group and Parent
Company can comply with its covenants and
remain within the available facility headroom
under the new banking arrangements, and
whether the reverse stress test scenario is highly
unlikely as the Directors consider it to be; and

Checking the adequacy of disclosures made
in the annual report in respect of going concern,
by comparing the actual process followed by
the Directors to the information disclosed on
pages 132 and 133.

OVERVIEW

Coverage6

87% (2022: 86%) of Group profit before tax

Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast
significant doubt on the Group and the Parent
Company’s ability to continue as a going concern
for a period of at least twelve months from when the
financial statements are authorised for issue.

Our responsibilities and the responsibilities of the
Directors with respect to going concern are described
in the relevant sections of this report.

We changed our scoping of Group revenue in the current year to focus on the risk over open
project revenue recognition, which is part of the revenue recognition key audit matter. Overall, our
audit has covered 75% of total Group revenue and this includes sample testing performed across
100% of open project revenue. (2022: our approach covered 88% coverage of total Group revenue).

79% (2022: 81%) of Group total assets

Key audit matters Revenue Recognition

Valuation of Financial Assets at fair value through profit and loss

Materiality

Group financial statements as a whole

£1.43m (2022: £1.59m) based on 5% (2022: 5%) of Headline profit before taxation

2023

2022

An overview of the scope of our audit

Our Group audit was scoped by obtaining an
understanding of the Group and its environment,
including the Group’s system of internal control,
and assessing the risks of material misstatement
in the financial statements. We also addressed the
risk of management override of internal controls,
including assessing whether there was evidence
of bias by the Directors that may have represented
a risk of material misstatement.

The Group has 124 reporting components which
represent sub-groups, individual legal entities, and
branches. We assessed three of these to be significant

components. We then assessed a further eight
components on the basis of size based on their
contribution to total Group revenue and total Group
profit before tax to be subject to full scope audits in order
to obtain sufficient coverage across the Group. The
components subject to full scope audits are based in the
UK, USA, Australia, South Africa, and Italy. The Group
audit team completed a full scope audit on the Parent
Company. The audits performed on the three significant
components and eight other components subject to full
scope audits were performed by either BDO LLP
component teams (for components in the UK and USA) or
other BDO International member firm component teams
overseas (for components based in other countries).

6 These are areas which have been subject to a full scope audit by the group engagement team and specified audit procedures performed by the group engagement team and

the component auditor teams.

231

M&C Saatchi Plc Annual Report 2023Financial StatementsNon-significant components were subject to either
specified audit procedures over large or higher-risk
balances and a group level analytical procedure, or
group level analytical procedures without additional
substantive audit procedures.
As set out in the coverage summary specified audit
procedures were performed by the Group audit
team over all of the open project revenue within
non-significant components.

Our involvement with component auditors

For the work performed by component auditors, we
determined the level of involvement needed in order
to be able to conclude whether sufficient appropriate
audit evidence has been obtained as a basis for our
opinion on the Group financial statements as a whole.
Our involvement with component auditors included
the following:

•

Issuance of detailed Group reporting instructions,
which included the significant areas to be
covered by their audit (including applicable key
audit matters as detailed below) and set out the
information required to be reported to the Group
audit team. We directed the efforts of component
auditors towards the group-wide areas of risk,
such as revenue recognition, and directed the
work performed to ensure the testing plan that
was agreed would address the risks of material
misstatement;

Regular communication with the component
auditors throughout the planning, execution
and completion phases of the audit to assess
the planned testing, emerging findings and
conclusions drawn;

Attendance at key meetings at component level,
and detailed discussions with the component
auditors and component management
throughout the audit process in respect of
significant risks and selected other areas; and

In-person review of all three significant component
auditor working papers and remote review of
other components and specific work requests to
ensure appropriateness of conclusions drawn.

Climate change

Our work on the assessment of potential impacts of
climate-related risks on the Group’s operations and
financial statements included:

•

Enquiries and challenge of management and
any other relevant party to understand the
actions they have taken to identify climate-
related risks and their potential impacts on the
financial statements and adequately disclose
climate-related risks within the annual report;

Our own qualitative risk assessment taking into
consideration the sector in which the Group
operates and how climate change affects this
particular sector; and

Review of the minutes of Board and Audit
Committee meetings and any other relevant
party and other papers related to climate change
and performed a risk assessment as to how the
impact of the Group’s commitment as set out in
page 66 may affect the financial statements and
our audit.

We also assessed the consistency of Management’s
disclosures included as Other Information on pages
132 to 134 with the financial statements and with our
knowledge obtained from the audit.

Based on our risk assessment procedures, we did not
identify there to be any Key Audit Matters materially
impacted by climate-related risks and related
commitments.

Key audit matters

Key audit matters are those matters that, in our
professional judgement, were of most significance in
our audit of the financial statements of the current
period and include the most significant assessed risks
of material misstatement (whether or not due to fraud)
that we identified, including those which had the
greatest effect on: the overall audit strategy, the
allocation of resources in the audit, and directing the
efforts of the engagement team. These matters were
addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion
on these matters.

232

M&C Saatchi Plc Annual Report 2023Financial StatementsKey audit matter

Revenue
recognition

Existence, and
application of
IFRS 15 – Revenue
from Contracts
with Customers

The Group’s
accounting policies
are described on
page 166 and
its disclosures
of revenue
recognised are
provided in Note 4.

The Group contracts with
its clients and customers
in a range of different ways
according to the type of
advertising and marketing
services provided. Across all
significant components we
identified two ways in which
we considered the financial
statements may be
misstated in the area of
revenue recognition:

1. We identified a risk that

revenue may be misstated
in open projects at the
year-end. Where projects
are open across a period
end, there is an estimate
regarding the percentage
of completion which could
give rise to the ability to
manipulate the results
for a specific period.

2. We identified a risk that

revenue may be misstated
due to fraudulent
accounting entries being
processed to revenue to
increase revenue in the
current year.

Given the primary focus on
revenue as a key metric and
the specific matters noted
above, we have considered
this to be a Key Audit Matter.

How the scope of our audit addressed the key audit matter

Our testing of revenue recognition included the following:

• As revenue recognition on open projects was an area
we identified as a significant risk of misstatement on a
group-wide basis, we performed testing, on a sample
basis, across all open project revenue in the group
including non-significant components, as explained
above.

• We initially tested the classification of customer

contracts to ensure appropriate projects were identified
as open.

For a sample of open project revenue, we:

– Gained an understanding of the contracts, including
deliverables and the basis on which the revenue
arises, such as milestones, time and materials;

– Held discussions with project managers to
understand the progress of the work;

– Considered evidence from various sources, including

communication with customers, publicly available
evidence of events occurring, confirmations from
clients of delivery of work and other evidence that
an appropriate amount of revenue had been
recognised; and

– Performed recalculations of accrued and deferred

revenue to ensure this was appropriately accounted
for.

To address the risk of fraudulent journals to revenue:

• Assessing whether journal entries posted to revenue
with unusual account combinations were valid, and
supported by appropriate evidence of the Group
having performed the services. This included revenue
journals posted in local general ledgers for in scope
components and revenue journals posted through the
consolidation.

Key observations:

We had no material findings in respect of the treatment
of open projects or fraudulent postings to revenue.

233

M&C Saatchi Plc Annual Report 2023Financial StatementsKey audit matter

Valuation of
financial assets
at fair value
through profit
or loss

Refer to the
accounting
policies and
Note 20 of
the financial
statements.

The Group holds shares in
unlisted investments, which
are held at fair value, with
fair value gains and losses
recognised in the income
statement.

The investments are
generally for a small
minority, equity stake in
unlisted early-stage
businesses. There is
judgement applied in the
valuation of the equity
investment, with most being
based on a recent funding
round or sale of shares.
However, some valuations
or adjustments to valuations
are made based on the
length of time the funds have
been held without updated
information which increases
the uncertainty attaching to
the measurement of the fair
values recorded, and,
accordingly, the risk that
disclosures provided may
not fully explain the
sensitivity to further fair
value gains and losses.

As such, we considered this
to be a Key Audit Matter
due to the high level of
judgement applied, the
resulting potential for
significant gains and losses
in any given period and
the value of the overall
investments.

How the scope of our audit addressed the key audit matter

Our testing of the valuation of financial assets at fair
value through profit or loss included the following:

• Agreeing the initial cost and opening balances of

investments to the previous year’s audited balances.

• Obtaining Management’s valuations for these

investments, except for those that were immaterial,
both individually and in aggregate, and holding
discussions with Group’s management to assess the
suitability and reliability of the valuation (e.g. proximity
to latest funding round, class of share issued and
whether the issue included third parties) for inclusion
in the valuation model;

• Verifying the inputs into these valuations to external
sources where available, e.g. information on funding
rounds, and other available information (from the
Group or other publicly available information), and
considering whether there were circumstances or
events that had arisen since the dates of these inputs
that would impact the valuations;

• Searching for ancillary evidence at Companies House,
on the internet and from other sources to corroborate
or contradict management’s estimates;

• Considering the impact on valuations of different share

classes of the investment held compared to any
funding round, and considering whether there were
any circumstances or events that had arisen since
the dates of the valuation inputs that would impact
on the valuations;

• Evaluating the sufficiency of the disclosures by

reference to the circumstances of the portfolio at the
reporting date and the degree of exposure to further
gains and losses; and

• Challenging management as to whether historic
experience of realised gains and losses was
appropriate to impact the approach used to
value the investments as at the reporting date.

Key observations:

We consider the judgements made in the valuation
of financial assets to be reasonable.

234

M&C Saatchi Plc Annual Report 2023Financial StatementsOur application of materiality

We apply the concept of materiality both in planning
and performing our audit, and in evaluating the effect
of misstatements. We consider materiality to be the
magnitude by which misstatements, including
omissions, could influence the economic decisions of
reasonable users that are taken on the basis of the
financial statements.

In order to reduce to an appropriately low level the
probability that any misstatements exceed materiality,

we use a lower materiality level, performance
materiality, to determine the extent of testing needed.
Importantly, misstatements below these levels will not
necessarily be evaluated as immaterial as we also
take account of the nature of identified misstatements,
and the particular circumstances of their occurrence,
when evaluating their effect on the financial
statements as a whole.

Based on our professional judgement, we determined
materiality for the financial statements as a whole and
performance materiality as follows:

Group financial statements
2023
£m

2022
£m

Parent Company financial statements
2023
£m

2022
£m

Materiality

1.43

1.59

0.74

0.80

Basis for determining
materiality

5% (2022: 5%) of Headline profit before
taxation.

Rationale for the
benchmark applied

We consider this to be the most
appropriate benchmark since this
removes the impact of certain items
from underlying profit that are not part
of routine business income and
expenses, as explained in Note 1 to the
financial statements. Headline profit
before taxation is also a key measure of
the Group’s performance.

5% (2022: 5%) of Headline profit before
taxation Materiality was capped to
ensure this did not exceed Group
performance materiality.

The Parent Company does not trade,
and materiality was capped at a
percentage of Group materiality to
respond to aggregation risk.

Performance materiality

1.00

1.11

0.52

0.56

Basis for determining
performance materiality

Rationale for the
percentage applied for
performance materiality

We set performance materiality at 70% (2022: 70%) of overall materiality.

In reaching our conclusion on the level of performance materiality to be applied for
2023 we considered a number of factors including the expected total value of known
and likely misstatements (based on past experience), our knowledge of the Group’s
internal controls and management’s attitude towards proposed adjustments.

Component materiality

For the purposes of our Group audit opinion, we set
materiality for each component of the Group, apart
from the Parent Company whose materiality is set out
above, based on a percentage of between 10% and
70% (2022: 2% and 63%) of Group materiality
dependent on the size and our assessment of the
risk of material misstatement of that component.
Component materiality ranged from £0.14m to £1.0m
(2022: £0.03m to £1.0m). In the audit of each
component, we further applied performance

materiality levels of 70% (2022: 70%) of the component
materiality to our testing to ensure that the risk of
errors exceeding component materiality was
appropriately mitigated.

Reporting threshold

We agreed with the Audit Committee that we would
report to them all individual audit differences in excess
of £50,000 (2022: £38,000). We also agreed to report
differences below this threshold that, in our view,
warranted reporting on qualitative grounds.

235

M&C Saatchi Plc Annual Report 2023Financial StatementsOther information

The Directors are responsible for the other information.
The other information comprises the information
included in the Annual Report and Accounts other than
the financial statements and our auditor’s report
thereon. Our opinion on the financial statements does
not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do
not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and,
in doing so, consider whether the other information is

materially inconsistent with the financial statements, or
our knowledge obtained in the course of the audit, or
otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent
material misstatements, we are required to determine
whether this gives rise to a material misstatement in
the financial statements themselves. If, based on the
work we have performed, we conclude that there is a
material misstatement of this other information, we are
required to report that fact.

We have nothing to report in this regard.

CORPORATE GOVERNANCE STATEMENT

As the Group has voluntarily adopted the UK Corporate Governance Code 2018, we are required to review the
Directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance
Statement relating to the Parent Company’s compliance with the provisions of the UK Corporate Governance Code
specified for our review. Based on the work undertaken as part of our audit, we have concluded that each of the
following elements of the Corporate Governance Statement is materially consistent with the financial statements,
or our knowledge obtained during the audit.

Going concern
and longer-
term viability

• The Directors’ statement with regard to the appropriateness of adopting the going

concern basis of accounting and any material uncertainties identified set out on pages
132 and 133; and

• The Directors’ explanation as to their assessment of the Group’s prospects, the period this

assessment covers and why the period is appropriate set out on pages 132 and 133.

Other Code
provisions

• Directors’ statement on fair, balanced and understandable set out on page 139;

• Board’s confirmation that it has carried out a robust assessment of the emerging and

principal risks set out on pages 57 to 61;

• The section of the Annual Report that describes the review of effectiveness of risk

management and internal control systems set out on page 111; and

• The section describing the work of the Audit Committee set out on pages 107 to 108.

236

M&C Saatchi Plc Annual Report 2023Financial StatementsOTHER COMPANIES ACT 2006 REPORTING

Based on the responsibilities described below and our work performed during the course of the audit, we are
required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.

Strategic Report
and Directors’
Report

In our opinion, based on the work undertaken in the course of the audit:

• the information given in the Strategic Report and the Directors’ Report for the financial
year for which the financial statements are prepared is consistent with the financial
statements; and

• the Strategic Report and the Directors’ Report have been prepared in accordance with

applicable legal requirements.

In light of the knowledge and understanding of the Group and Parent Company and
its environment obtained in the course of the audit, we have not identified material
misstatements in the Strategic Report or the Directors’ Report.

Matters on
which we are
required to
report by
exception

We have nothing to report in respect of the following matters in relation to which the
Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept by the Parent Company, or returns

adequate for our audit have not been received from branches not visited by us;

• the Parent Company financial statements are not in agreement with the accounting

records and returns;

• certain disclosures of Directors’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

RESPONSIBILITIES OF DIRECTORS

As explained more fully in the Directors’ responsibilities
statement, the Directors are responsible for the
preparation of the financial statements and for being
satisfied that they give a true and fair view, and for
such internal control as the Directors determine is
necessary to enable the preparation of financial
statements that are free from material misstatement,
whether due to fraud or error.

In preparing the financial statements, the Directors are
responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going
concern and using the going concern basis of
accounting unless the Directors either intend to
liquidate the Group or the Parent Company or to cease
operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial
statements

Our objectives are to obtain reasonable assurance
about whether the financial statements as a whole
are free from material misstatement, whether due to
fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high
level of assurance but is not a guarantee that an
audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of these
financial statements.

Extent to which the audit was capable of detecting
irregularities, including fraud

Irregularities, including fraud, are instances of non-
compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of

237

M&C Saatchi Plc Annual Report 2023Financial Statements

irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities,
including fraud is detailed below:

Non-compliance with laws and regulations

•

Evaluating recent developments in regulation
for applicability to the Group’s operations and
determining whether any impact on the financial
statements has been properly addressed by the
Directors.

Based on:

Fraud

•

Our understanding of the Group and the industry
in which it operates;

discussion with management and those
charged with governance and the Audit
and Risk Committee, and inspection of written
information from external legal counsel; and

obtaining an understanding of the Group’s
policies and procedures regarding compliance
with laws and regulations;

we considered the significant laws and regulations to
be UK-adopted international accounting standards, UK
and international direct, indirect and employment tax
legislation, AIM Listing Rules, the Companies Act 2006,
and the Corporate Governance Code 2018.

The Group is also subject to laws and regulations
where the consequence of non-compliance could
have a material effect on the amount or disclosures
in the financial statements, for example, through the
imposition of fines or litigations. We identified such
laws and regulations to be the Health and Safety and
the Bribery Act 2010 and equivalent legislation and
regulation where the Group has overseas operations.
In addition, changes to legislation affecting all UK
companies such as tax legislation and developments
can give rise to contingent or actual liabilities in the
event of non-compliance.

Our procedures in respect of the above included:

•

Review of minutes of meeting of those charged
with governance for any instances of non-
compliance with laws and regulations;

Review of correspondence with regulatory
and tax authorities for any instances of non-
compliance with laws and regulations;

Review of financial statement disclosures
and agreeing to supporting documentation;

Involvement of tax specialists in the audit; and

We assessed the susceptibility of the financial
statements to material misstatement, including fraud.
Our risk assessment procedures included:

•

Enquiry with management and those charged
with governance regarding any known or
suspected instances of fraud;

Obtaining an understanding of the Group’s
policies and procedures relating to:

–

Detecting and responding to the risks of fraud;
and

Internal controls established to mitigate risks
related to fraud.

Review of minutes of meeting of those charged
with governance for any known or suspected
instances of fraud;

Discussion amongst the engagement team as to
how and where fraud might occur in the financial
statements;

Performing analytical procedures to identify any
unusual or unexpected relationships that may
indicate risks of material misstatement due to
fraud; and

Considering remuneration incentive schemes and
performance targets and the related financial
statement areas impacted by these.

Based on our risk assessment, we considered the
areas most susceptible to fraud to be inappropriate
journal entries relating to revenue recognition and
the exertion of bias in accounting estimates.

Our procedures in respect of the above included:

•

challenging the assumptions and judgements
made by management in their significant
accounting estimates which are disclosed on
pages 146 and 147, through examination and
assessment of contradictory as well as

238

M&C Saatchi Plc Annual Report 2023Financial Statements

Use of our report

This report is made solely to the Parent Company’s
members, as a body, in accordance with Chapter 3 of
Part 16 of the Companies Act 2006. Our audit work has
been undertaken so that we might state to the Parent
Company’s members those matters we are required to
state to them in an auditor’s report and for no other
purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other
than the Parent Company and the Parent Company’s
members as a body, for our audit work, for this report,
or for the opinions we have formed.

MATTHEW HAVERSON
Senior Statutory Auditor

For and on behalf of BDO LLP, Statutory Auditor
London, UK.

BDO LLP is a limited liability partnership registered
in England and Wales (with registered number
OC305127).

corroborative evidence that we researched
independently as well as received from the
Group; recalculation of certain financial metrics
for example, in relation to our testing of discount
rates and through sensitivity analysis where
applicable;

identifying and testing a sample of journal
entries, in particular journal entries posted with
unusual account combinations, to supporting
documentation;

reviewing minutes of Board and Board Committee
meetings from throughout the year including,
where relevant, any whistleblowing reports
received;

testing of the consolidation including a sample
of manual adjustments at the consolidation level
to supporting documentation; and

performing the procedures as set out in the
Key Audit Matters section of our report.

•

We also communicated relevant identified laws and
regulations and potential fraud risks to all engagement
team members including component engagement
teams who were all deemed to have appropriate
competence and capabilities and remained alert to
any indications of fraud or non-compliance with laws
and regulations throughout the audit. For component
engagement teams, we also reviewed the result of
their work performed in this regard.

Our audit procedures were designed to respond
to risks of material misstatement in the financial
statements, recognising that the risk of not detecting
a material misstatement due to fraud is higher than
the risk of not detecting one resulting from error, as
fraud may involve deliberate concealment by, for
example, forgery, misrepresentations or through
collusion. There are inherent limitations in the audit
procedures performed and the further removed
non-compliance with laws and regulations is from
the events and transactions reflected in the financial
statements, the less likely we are to become aware of it.

A further description of our responsibilities is available
on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.

239

M&C Saatchi Plc Annual Report 2023Financial StatementsAdditional
information

GLOSSARY

Billings

Headline
results

Billings comprise all gross amounts billed, or billable to clients in respect of commission-based
and fee-based income, whether acting as agent or principal, together with the total of other fees
earned, in addition to those instances where the Group has made payments on behalf of
customers to third parties. It is stated exclusive of VAT and sales taxes. This is a non-Statutory
number and is unaudited.

A self-defined alternative measure of profit that provides a different perspective to the Statutory
results. The Directors believe it provides a better view of the underlying performance of the
Company, because it excludes a number of items that are not part of routine business income and
expenses. These Headline figures are a better way to measure and manage the business and are
used for internal performance management and reward. “Headline results” is not a defined term
in IFRS.

Headline results represent the underlying trading profitability of the Group and excludes:

•

Exceptional separately disclosed items that are one-off in nature and are not part of running
the business.

• Acquisition-related costs.

• Revaluation of associates on transition to assets held for sale.

•

Impairment of right-of-use assets, leasehold improvements, acquired intangibles and
goodwill.

• Gains or losses generated by disposals of subsidiaries.

•

Fair value adjustments to unlisted equity investments, acquisition related contingent
consideration and put options.

• Dividends paid to IFRS 2 put option holders.

A reconciliation of Statutory to Headline results is presented in Note 1 of the financial statements.

Company

M&C Saatchi plc, a Company incorporated and domiciled in England and Wales, listed on the
AIM Market of the London Stock Exchange plc.

Group

The Company and its subsidiaries.

Net cash

Net cash at a period end is calculated as the sum of the net cash of the Group, derived from the
cash ledgers and accounts in the balance sheet. Net cash excludes lease liabilities.

Net revenue

Net revenue is equal to revenue less project cost/direct cost. It is not an IFRS defined term. It is,
however, used as a key performance indicator by the Group.

240

M&C Saatchi Plc Annual Report 2023Financial StatementsGLOSSARY

Minority
interests and
non-controlling
interest

Within the Group, there are a number of subsidiary companies and partnerships in which
employees hold a direct interest in the equity of those companies. These employees are referred
to as minority shareholders. Of these subsidiary companies and partnerships, the majority
account for the shareholding of their minority shareholders as a management incentive (through
the award of dividends) and are 100% consolidated in the Group’s financial statements, showing
all cost related to the scheme as staff cost (in Headline results only we treat all flows as if they
were minorities, with the minorities share of profit reducing profit after tax and reducing Headline
profit attributable to equity holders of the Group, so it is consistent with non-controlling interest
accounting). The remaining four subsidiary companies (including one without a put option)
account for their minority shareholders as non-controlling interests, a defined IFRS term, with their
share of the Group’s profits being shown separately on the income statement.

Revenue

Revenue comprises the total of all gross amounts billed, or billable, to clients in respect of
commission-based, fee-based and any other income where the entity within the Group acts as
principal and the share of income where the entity within the Group acts as an agent. The
difference between Billings and revenue is represented by costs incurred on behalf of clients with
whom the entity within the Group operates as an agent, and timing differences where invoicing
occurs in advance or in arrears of the related revenue being recognised.

Headline
EBITDA

Headline EBITDA is equal to the operating profit or loss before depreciation, amortisation, finance
expense and taxation. It is not an IFRS defined term. It is, however, used as a key performance
indicator by the Group.

Like-for-like

The like-for-like basis applies constant foreign exchange rates and removes those entities the
Group acquired, disposed of, or closed, or wound down during the reported period.

CAGR

Scope 1
emissions

Scope 2
emissions

Scope 3
emissions

Compound Annual Growth Rate – the mean annual growth rate over a specified period of time
longer than one year.

Greenhouse gas emissions from sources that the Group owns or controls directly.

Greenhouse gas emissions that the Group causes indirectly when the energy it purchases and
uses is produced.

Greenhouse gas emissions that are not produced by the Group and are not the result of activities
from assets owned or controlled by us. Instead, they are produced by companies for which the
Group is indirectly responsible, up and down its value chain. An example of this is when an entity
within the Group buys, uses and disposes of products from suppliers. Scope 3 emissions include
all sources not within the Scope 1 and Scope 2 boundaries.

241

M&C Saatchi Plc Annual Report 2023Financial StatementsADVISORS
NOMINATED ADVISOR AND BROKER

Liberum Capital Limited
25 Ropemaker Street
London EC2Y 9LY
www.liberum.com

BROKER

Numis Securities Ltd
The London Stock Exchange Building
10 Paternoster Square
London EC4M 7LT
www.numiscorp.com

SOLICITORS

CMS Cameron McKenna Nabarro Olswang LLP
Cannon Place
78 Cannon Street
London EC4N 6AF
www.cms.law

INDEPENDENT AUDITORS

SECRETARY AND REGISTERED OFFICE

Victoria Clarke
M&C Saatchi plc
36 Golden Square
London W1F 9EE
www.mcsaatchiplc.com

COUNTRY OF REGISTRATION
AND INCORPORATION

England and Wales
Company number 05114893
Public limited company limited by shares

INVESTOR RELATIONS WEBSITE

www.mcsaatchiplc.com

REGISTRARS

Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS13 8AE
www.computershare.com

BDO LLP
55 Baker Street,
London, W1U 7EU
www.bdo.co.uk

BANKERS

National Westminster Bank Plc
1 Princes Street
London EC2R 8BP
www.natwest.com

Barclays Bank PLC
1 Churchill Place
London E14 5HP
www.barclays.com

HSBC Bank plc
Level 6
71 Queen Victoria Street
London EC4V 4AY
www.hsbc.com

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M&C Saatchi Plc Annual Report 2023Financial StatementsCBP024226

M&C Saatchi Plc
Annual Report and Accounts 2023
mcsaatchi.com