September 24, 2019 / 6:52 AM / 2 months ago

M&C Saatchi sees annual profit 5%-10% below forecast

(Reuters) - Ad agency M&C Saatchi Plc (SAA.L) warned that it expects its annual operating profit and pretax profit to come in 5%-10% below estimates, hurt by losses at investee startup businesses and an accounting charge of 6.4 million pounds.

Shares in M&C hit a seven-year low on Tuesday and were trading 7.9% lower at 154.3 pence at 0708 GMT.

M&C said it had engaged PwC to conduct an independent accounting review of the company after an internal review of specific units in the United Kingdom.

The company expects the accounting review to lead to a restatement of its 2018 results to reflect any misstatements, it said. The review is expected to be completed by November.

M&C said specific accounting issues relate to overstated accrued income and irrecoverable receivables among others.

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 also reported a 87.7% rise in statutory pretax profit to 9.4 million pounds ($11.69 million) for the six months ended June 30, buoyed by proceeds from the disposal of its remaining 24.9% share in Walker Media.

First-half 2018 results have been restated to reflect misstatements already identified, M&C said.

Reporting by Noor Zainab Hussain in Bengaluru, Editing by Sherry Jacob-Phillips and Rashmi Aich

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