(Bloomberg) — Martin Sorrell’s digital advertising agency said it was making changes to its financial control, risk and governance structure after a lengthy lag in reporting its 2021 results.
S4 Capital Plc delayed publishing its annual results in late March for the second time, saying that accountancy PriceWaterhouseCoopers was unable to complete the audit work on time, after previously citing the impact the coronavirus pandemic had on travel and resources.
Shares in the company plunged after the second announcement, losing about 1.2 billion pounds ($1.5 billion) in market value. It soared on Thursday after S4 said it would publish its results, and gained as much as 9.9% in early trading Friday morning in London after doing so.
S4 reported 2021 annual results that showed adjusted pretax profits for the full year of 81.2 million pounds, below analysts’ estimate of 89.2 million pounds. However, sales of 686.6 million pounds topped expectations for 650.7 million pounds.
In a presentation, S4 attributed the delayed audit to control weaknesses, staff turnover and a lack of detailed documentation. The company said the issue was focused particularly on revenue and cost of sales recognition, and concentrated at the legacy operations of its agency MediaMonks.
The company is making new senior hires and said that there was no impact to its cash position. Results for first-quarter 2022 will be announced by the end of May.
“The delay in producing our 2021 results is unacceptable and embarrassing and significant changes in our financial control, risk and governance structure and resources are being implemented and planned,” Sorrell said in a statement.
In an interview, he added that “we’ve had to deal with it as best we can, and we want to try and ensure that it never happens again.”
(Updates throughout with shares, context, interview)
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