(Reuters) – UK-based M&C Saatchi Plc <SAA.L> on Wednesday warned of lower annual profit for the second time in less than three months, due to higher costs and weak performance in the fourth quarter, and the ad agency said it would restructure its UK business.
The company, which initiated an internal accounting review of several of its UK subsidiaries in August, said an independent audit review has identified further adjustment to be made to its financials, totalling 11.6 million pounds.
Shares were seen falling 35%, according to premarket indicators, as the company expects its adjusted pretax profit to fall by around a fourth.
M&C Saatchi – founded by brothers Maurice and Charles Saatchi in 1995 after they were ousted from Saatchi & Saatchi – counts Shell <RDSa.L>, Unilever <ULVR.L>, Christie’s New York and the Premier League as its clients.
The company said its adjusted underlying pretax profit for the full year could tumble between 22% and 27% from the 32.2 million pounds reported in 2018.
M&C said specific accounting issues relate to overstated accrued income and irrecoverable receivables among others.
In September, M&C said it expected annual profit to come in 5%-10% below estimates, hurt by losses at investee startup businesses and an accounting charge.
(Reporting by Yadarisa Shabong in Bengaluru, Editing by Sherry Jacob-Phillips)