M&C Saatchi shares sink on latest profit warning, accounting woes
Agency’s chief executive says ‘reduction in forecasts make for very difficult reading’
The company had initiated an internal accounting review of the UK subsidiaries in August. Photograph: iStock
Shares in M&C Saatchi plunged around a half in value on Wednesday after the ad agency issued its second profit warning in less than three months due to an accounting scandal.
The accounting review related to several units in the company’s UK business overstating income and receivables, among others, and M&C said it would restructure its UK operations.
“This restatement of our numbers and the reduction in forecasts make for very difficult reading,” said chief executive David Kershaw.
The company said an independent audit review by PwC had identified further adjustment to be made to its financials, totalling £11.6 million (€13.7 million).
The company – founded by brothers Maurice and Charles Saatchi in 1995 after they were ousted from Saatchi & Saatchi – had initiated an internal accounting review of the UK subsidiaries in August.
The company said its adjusted underlying pretax profit for the full year could tumble between 22 and 27 per cent on a like-for-like basis, from the £32.2 million reported in 2018.
In September, M&C said it expected annual profit to come in between 5 and 10 per cent below estimates. – Reuters