WPP Admits to Understating Losses by £301m

Marcoms giant WPP has confessed to understating its losses by £301m for the first six months of this year, after an error was uncovered in its accounting processes.

In August, WPP reported a first half loss before tax of £2.6bn, compared to a profit of £409m a year earlier: the amendment means the loss was in fact £2.9bn. The company says it will restate figures for the year ended 31st December 2019 and the six-month period ended 30th June 2020.

Yesterday, WPP said its accounts for the calendar years 2017, 2018 and 2019 had not fully complied with the accounting standards IAS 32 and IAS 39. In a statement to the London Stock Exchange, the group explained that the issue relates to its hedging of foreign currencies, as it incorrectly reported dollar and euro liabilities after applying certain International Accounting Standards rules 'inappropriately'. A spokesman said the changes were 'non-cash and nothing to do with trading performance'.

In the US, WPP issued a statement to the Securities and Exchange Commission (SEC), explaining that the issue would 'affect profit/loss for the year from continuing operations and reported earnings per share'. The understatement comes from a reading of accounting rules taken by WPP's finance team a decade ago, when founder, Sir Martin Sorrell, was still CEO.

Earlier this year, WPP said it was on track to make £700m to £800m of cost savings, from a combination of a pay cut for the executive committee and Board; postponed staff salary increases; a hiring freeze; and a halt to spending on travel, hotels and award shows. CEO Mark Read (pictured) said that with £4.7bn of liquidity, thanks to the sale of part of Kantar, the firm was delivering against its cost savings targets, and able to return to paying an interim dividend.

Web site: www.wpp.com .