M&C Saatchi says it has endured the “unhappiest” year in its 25-year history after publishing unaudited figures for 2019 ahead of delayed official annual results. The troubled global advertising group asserts that it is trading profitably in the second half of the year but is facing the prospect of a share suspension for missing a deadline to file results, blaming delays on an audit into previously disclosed accounting problems.
What’s the story?
M&C Saatchi was buffeted by an accounting scandal last year which precipitated a collapse in its share price and the departure of three independent directors.
An accounting oversight forced the ad giant to log a one-off £6.4m exceptional charge after auditors unearthed a ’misapplication of accounting policies.’
The repercussions of that incident have continued with M&C having missed a deadline for completing an audit of accounting errors made in the 2019 financial year.
As a consequence shares in the company will be temporarily suspended from 1 October.
To assuage concerns the company now says the audit will complete in a ’matter of weeks’ and has furnished shareholders with preliminary unaudited figures.
This delay has been blamed on ’significant testing’ and the ongoing pandemic fallout which has forced it to streamline operations through redundancies.
Since news of the scandal first broke, the scale of accounting misstatements and adjustments has grown, standing at £14m at the most recent count.
What do the unaudited results show?
M&C Saatchi avers that trading has been strong thus far in 2020 with the business proving profitable.
Headline figures for the year ending December 2019 show that M&C net revenue grew by 2.4% to £256.4m versus a 2018 figure adjusted for the impact of the accounting scandal.
Meanwhile, losses before tax widened to £8.6m compared to the adjusted 2018 numbers.
Commenting on the mess, chief executive officer David Kershaw said: “The past 12 months have been hugely challenging for the company and its shareholders.“
Outlining some of the measures taken to get a grip on the situation Kershaw added: “We have strengthened our finance team, set about transforming our financial controls, and rebuilt our board with the appointment of four independent non-executive directors.“