M&C Saatchi's £15m net cash forecast is 'substantially ahead of expectations'

Pre-tax profit remains in line with previous forecasts, down between 22% and 27% year on year.

Kershaw: called accounting issues 'most painful moment' in group's history
Kershaw: called accounting issues 'most painful moment' in group's history

M&C Saatchi is forecasting net cash for the year ended 31 December 2019 to be at least £15m, which it said is "substantially ahead of expectations".

The troubled group previously expected net cash to be around £5m. In a trading update released this morning (Monday), M&C Saatchi said the increase is down to "the implementation of improved cash collection processes".

Pre-tax profit remains in line with previous forecasts and is expected to be down between 22% and 27% year on year.

City analyst Peel Hunt said that although the strong cash position is "very encouraging", M&C Saatchi still has a lot of work to do and has advised investors to hold.

"For the shares to gather momentum, we need to see evidence of stronger trading for FY20 and also a rebuilding of the board with independent non-executive directors. Hence, ou 'hold' recommendation and 120p target price."

The full extent of M&C Saatchi’s accounting woes were revealed in early December, when the group’s share price fell 40% after announcing an £11.6m adjustment to its results.

In September, chief executive David Kershaw told Campaign that this has been the "most painful" moment in the company's 24-year history.