Sir Martin Sorrell has said he expects there will soon be a “solution” to the audit delays at S4 Capital and claims that it does not mean anything “significant” as the company and its auditor, PwC, would have been “obliged” to disclose it for investors.
Sorrell, the chief executive, made his first public comments on the audit delays since his company said on March 30 that it was postponing its annual financial results – just hours before they were to be announced for the stock market at 7 a.m. on March 31. .
It was the second time that S4 Capital had delayed earnings, after moving them from March 18, and the share price fell by a third on the unexpected news.
Asked about the audit delays in an interview with Yahoo Finance on April 18, Srell said: “The information we have signaled or sent out – the information in two bulletins [to the stock market] recently – I can not say much more than that, more than PriceWaterhouse[Coopers] continue to do their job. And I expect a solution in a fairly short time. “
Sorrell went on to point out that when his company announced the delay in March, “we confirmed that the results would be in line with market expectations – the range of market expectations.
“So I think it’s very clear. If there was anything significant to report, we would be obliged, both PwC and ourselves, to report it. So, I would just say, just wait for further news.”
S4 Capital said they had no further comment for Campaignafter Sorrell’s interview with Yahoo Finance.
When S4 Capital first delayed its results, it said PwC needed more time “due to the impact of Covid and Omicron on travel and resource allocation”.
But the company gave no reason for the second delay, other than to say that PwC was “can not complete the work required” for S4 Capital to publish its financial statements and did not provide a new date for the announcement of results.
Analysts at Barclays said in a research note at the time that S4 Capital told them that PwC “needed more time to write off the accounts because they required more checks, sampling, etc”.
Barclays added: “We are not aware that any company has postponed the results twice due to the auditors’ resource allocation problems.”
Analysts at Morgan Stanley then said that their conversation with S4 Capital indicated that the second delay in the results “was no longer a question of resources”.
Morgan Stanley continued: “The lack of a revised date for the publication of results indicates that the aspect of the audit in question is non-trivial and means that the auditors are unable to complete their work within a specified time frame.”
Analysts also noted that it was “encouraging” that S4 Capital had said that trading had been strong since the beginning of 2022.
Srell launched S4 Capital 2018 after leaving WPP, the advertising and communications group he founded and led for three decades.
S4 Capital, a newly developed company for digital marketing services in a new era, has made more than two dozen acquisitions, including MediaMonks, Mighty Hive and Firewood.
The share price soared from just over 1 pound to more than 8 pounds at its peak in the autumn of 2021 but has fallen back to 3 pounds.
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