Sorrell’s ad firm hunts for new audit chief after delay in results
SIR MARTIN SORRELL’S digital advertising venture is on the hunt for a new chair of its audit committee, as it moves to draw a line under the “unacceptable and embarrassing” decision to twice delay its annual accounts.
The executive chairman of S4 Capital has recruited a “big four” accountancy firm to focus on internal audit, alongside new appointments for financial controls, compliance and risk in an attempt to strengthen the business following the accounting delays.
Sir Martin did not disclose who the accountancy firm was, but said it would be “operative immediately” and work alongside PWC, the current auditors.
Announcing its first quarter results, S4 said it would be adding a new nonexecutive director to the audit committee “shortly” to “ensure that we never experience unacceptable delays in our results again”.
Sir Martin said part of the focus was trained on its compliance with the international financial reporting standard, IFRS 15. S4’s Amsterdambased Media. Monks business has brought in a former chief financial officer of Dutch media company Talpa, he said, to “get to grips with the pricing, costing and estimating issues brought up as a result of IFRS 15”. Sir Martin added: “It’s not just putting in a new audit chair, but changing the approach.” The push to shore up standards comes after S4 was blocked from publishing its annual results in March because PWC had not completed its work on time.
Investors were spooked by the announcement, sending shares plunging nearly 36pc to 310p on March 30 and wiping nearly 36pc off the company’s market value. When S4 eventually published the results, it said factors that prompted the delay included control weaknesses, staff turnover and a lack of detailed documentation relating to revenue and cost of sales.
Updating the market yesterday, shares rose more than 3pc to 302p, with results “ahead of market guidance”.
Like-for-like revenues at S4 Capital rose 41pc to £207m for the three months to March, while profits climbed by more than a third to £171m in the first quarter.
Sir Martin, 77, launched S4 as a shell company before amassing a war chest for snapping tech-led advertising and marketing businesses, as he sought to capitalise on the digital ad boom led by Google, Facebook and Amazon.
He claimed to have set up the business to “prove a point” to WPP, the company he took charge of in 1985 and transformed into an advertising juggernaut through a string of deals before departing over misconduct allegations which he has always denied.