M&C Saatchi today released unaudited numbers for its long-awaited 2019 results, which it describes as its unhappiest year in its 25-year history, saying official figures are still weeks away.
However, the London-based global advertising group says it is trading profitably in the second half of the year. New business and client retention have been strong across both geographies and disciplines.
The numbers for the 12 months to December 2019 have been delayed several times following the discovery of “accounting irregularities” and the company has missed the latest date of September 30.
An independent accountant's review identified accounting misstatements and errors, resulting in £11.6 million of adjustments to prior year headline profit before tax.
The unaudited numbers for 2019 show net revenue up 2.4% to £256 million and headline profit before tax down 22% to £18.3 million. The loss before tax was £12 million.
The company expects that trading in its shares will be temporarily suspended in London from tomorrow until publication of audited 2019 financial results.
"Since the accounting misstatements first came to light last year, we have worked tirelessly to ensure we never find ourselves in this position again,” says CEO David Kershaw.
“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.”
Industry insiders say the Australian arm of M&C Saatchi is largely insulated from the UK business.
In a trading update, the UK-listed company says the Australian offices “performed well” and described the M&C Saatchi Sydney agency as a key performer in the region.
It had “impressive” work on new clients TAB, and Tourism Australia, while at the same time consolidating long-established relationships with Commonwealth Bank, Big W, and BWS.
The company says: “The Sydney agency saw significant growth in delivering bespoke agency models for Optus in Yes Agency, extending its relationship with the Woolworths Group by opening Greenhouse New Zealand in January 2019, and bringing its media and creative offering even closer together through integrated new business wins in news.com and Plush.”
In a trading update, the company says it is encouraged by the resilience of the global business, operationally and financially, in the face of the COVID-19 pandemic.
“The company has continued to trade well and profitably in the second half of the year. New business and client retention have been strong across both geographies and disciplines,” it says
“The performance is considerably stronger than anticipated at the outset of the COVID-19 pandemic."
Kershaw says the past 12 months have been hugely challenging for the company and its shareholders.
“I would like to personally thank all of our people for their dedication, commitment and hard work during this time, particularly since the onset of the COVID-19 pandemic,” he says. This is reflected by our resilient performance so far in 2020.
"Looking forward, we remain as excited as ever by the opportunities for M&C Saatchi. With a refreshed strategy, structure and controls harnessed to the core Saatchi spirit of creativity and commitment, we are very confident of a successful next chapter."
The unaudited numbers for 2019:
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