M&C Saatchi shares plunge 42 per cent following profit warning
Largest independent creative agency network in the world dealt a heavy blow
The Advertising agency M&C Saatchi (SAA) has seen its share price plummet by as much as 42 per cent following its second profit warning in less than three months.
The firm published the findings of an external review by PwC into accounting errors which stretch back into 2014. It revealed that it has had to make £11.6m of adjustments as a result of the scandal, which will be spread across its 2018 and 2019 financial results.
By mid-morning trading M&C Saatchi stands at 84.40 pence per share, a 42.49 per cent drop off from Tuesday’s close of 146.75 pence.
Chief executive Davis Kershaw detailed the measures the agency has now taken to ensure such errors do not reoccur. M&C’s financial controls have been reorganised, its UK office has been restructured and new standardised accounting policies have been introduced.
Mr Kershaw stated: “This restatement of our numbers and the reduction in forecasts make for very difficult reading.”
Founded in 1995 by Maurice and Charles Saatchi following their abrupt departure from Saatchi & Saatchi, M&C Saatchi counts Shell, the Premier League and Unilever among its clientele.
This accounting scandal has only added to the firms woes, with its full-year profits expected to fall 27 per cent from 2018’s £29.5m. This is significantly worse than the previously predicted 10 per cent drop envisioned in September. M&C attributed this performance poor second half of 2019 and to rising costs in its British business.
Mr Kershaw admitted: “The trading performance in the second half of this year is disappointing. However our operating businesses remain strong, creative and competitive and we expect that, when combined with the impact of our restructuring coming through, we will have a stronger trading performance in 2020.”
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