* Sees 2019 profit down 22%-27%
* Revises proposed accounting charge upward
* Shares drop as much as 53%
* Says restructuring its UK business
(Adds CEO quotes, detail on review, updates shares)
By Yadarisa Shabong
Dec 4 (Reuters) - Shares in M&C Saatchi Plc plunged
around a half in value on Wednesday after the ad agency issued
its second profit warning in less than three months due to an
accounting scandal.
The accounting review related to several units in the
company's UK business overstating income and receivables, among
others, and M&C said it would restructure its UK operations.
"This restatement of our numbers and the reduction in
forecasts make for very difficult reading," said Chief Executive
David Kershaw.
The company said an independent audit review by PWC had
identified further adjustment to be made to its financials,
totalling 11.6 million pounds ($14.88 million).
M&C said such adjustments may have occurred in half year
reports since 2014, however noting that the full-year audits had
"clean full-year audit opinions".
"This bad news is compounded by a pretty serious looking
profit warning, and the company’s reliance on fourth quarter
trading is proving to be an Achilles heel," said Russ Mould,
investment director at AJ Bell.
The company - founded by brothers Maurice and Charles
Saatchi in 1995 after they were ousted from Saatchi & Saatchi -
had initiated an internal accounting review of the UK
subsidiaries in August.
M&C Saatchi, whose clients include Shell, Unilever
, Christie's New York and the Premier League, also
blamed a weak fourth quarter, as well as significant additional
head office-related costs in the UK business for the latest
profit warning.
The company said its adjusted underlying pretax profit for
the full year could tumble between 22% and 27%, on a
like-for-like basis, from the 32.2 million pounds reported in
2018.
In September, M&C said it expected annual profit to come in
5%-10% below estimates.
"The only positives that we can offer are that a robust
review has been undertaken and we have, under our new Group
Finance Director, started implementing processes and procedures
to prevent such issues arising again," Kershaw added on
Wednesday.
Those measures include a tighter control on cash management,
reorganising the finance function, implementing of a cloud-based
accounting and forecasting system, among others steps.
Shares of the London-listed firm recouped some of the losses
to be down 43% at 83 pence in morning trade.
($1 = 0.7794 pounds)
(Reporting by Yadarisa Shabong in Bengaluru, Editing by Sherry
Jacob-Phillips, Sriraj Kalluvila and Christina Fincher)