M&C Saatchi

In December 1994 the board of Saatchi & Saatchi succumbed to sustained pressure from shareholder representative David Herro of Harris Associates L.P. and moved to remove its chairman, Maurice Saatchi. Maurice subsequently resigned.[5] Within a month, senior executives Jeremy Sinclair, Bill Muirhead, David Kershaw also resigned and decided to open their own agency.[6] They were subsequently joined by Maurice and Charles Saatchi to create new business which would become known as M&C Saatchi.[6] A number of Saatchi and Saatchi's London management and creative staff also joined and then some consequential clients soon followed[7] including Gallaher Group, Mirror Newspapers, the retailer Dixons and after a competitive pitch, British Airways and its part subsidiary Qantas as well as the Conservative Party, for whom they made the infamous New Labour, New Danger adverts.[8] In 2015, the agency was behind the Tory election campaign posters, picturing Ed Miliband in Alex Salmond's pocket.[9]

A network was initially established in-line with the office locations required by British Airways and Qantas. By early 1996 the network consisted of offices in London, Singapore, Hong Kong, Sydney, New York and Auckland.[10]

In 2012 the network opened its 27th office in Stockholm, having previously opened offices in Abu Dhabi (2012), Cape Town and Johannesburg (2010), Milan (2010), Beirut (2010), Beijing (2010), Tokyo (2009), São Paulo (2008), Geneva (2008), Mumbai (2007), New Delhi (2006), Paris (2005), Bahrain (2005), Madrid (2005), Berlin (2005), Kuala Lumpur (2003), Shanghai (2000), Wellington (1999), Los Angeles (1999), Melbourne (1997).

By 2012 the Group also owned the UK based businesses Walker Media (a media buying agency) and Clear Ideas (a strategic brand consultancy). Operations in Riyadh, Dubai, Suva, Taipei, Bangkok and earlier attempts in Tokyo and Johannesburg had also started and failed during the fifteen-year period between 1995 and 2010.

The initial principal shareholders in M&C Saatchi were Maurice and Charles Saatchi and their founding partners Muirhead, Sinclair, and Kershaw – collectively known as "the Partners". They generally held 80% of each office while local management held the remaining 20%.[10] M&C Saatchi remained an independent business until 2004, when all of its worldwide shareholders agreed to float 49% of the agency on the Alternative Investment Market, a sub-market of the London Stock Exchange.[10] In October 2006, Marketing Week announced that Charles Saatchi had divested his 7% stake in M&C Saatchi PLC. Charles had had little active involvement in the running of the agency for a number of years.[11]

Limited acquired 49% of their fashion business from the group in 2010 and M&C Saatchi Agency Pty Ltd in Australia bought back 20% of theirs.[12] The following subsidiaries were acquired throughout the 2010 year: M&C Saatchi Mobile Ltd, M&C Saatchi One SAS, The Source Ltd, M&C Saatchi Abel Ltd in South Africa, and M&C Saatchi SPA.

The group bought a 25% stake in the online media intelligence agency Human Digital in March 2011[13] and in January 2013, the firm took a 60% stake in Merlin Elite, a talent management agency, which was renamed as M&C Saatchi Merlin.[14] In April 2017, the firm acquired a 51% stake in M&C Saatchi Sponsorship, based in Madrid.[15] Then in June 2018, M&C Saatchi partnered with gambling charity, GambleAware, to create a safer gambling campaign.[16] In July 2018, the group acquired Red Hare Digital & Grey Whippet to form M&C Saatchi Social leading to the creation of the M&C Saatchi Talent Group.[17]

Following the March 2019 departure of long-standing PLC CFO Jamie Hewitt, the team reporting to Hewitt's replacement Mickey Kalifa discovered some accounting irregularities. Problems included the timing of revenue recognition (early recognition of revenue for projects not fully completed) and incorrect accounting of some assets (capitalising items which ought to have been expensed/written off).[18] The issues were brought to the attention of PLC CEO David Kershaw and on 12 August 2019 there was a market announcement to the City that charges of £6.4M in total quantum would be booked in the 2019 year and which related to either 2018 or 2019.[18] PricewaterhouseCoopers were appointed as independent advisors to undertake a review and confirm the findings.[18] On 4 December 2019 the Board announced the total charges would in fact be £11.6M.[18][19] In PWC's review they found that similar practices had potentially been taking place since 2014.[19] The company's original auditor KPMG resigned from its role earlier in 2019 after raising concerns about the 2018 annual report.[19][20]

When advising the City in December 2019 of the reality of the accounting transgressions, the company also advised the market of a weakening in its fourth quarter 2019 trading results which would be down 22% to 27% on expectations.[18][20] M&C Saatchi PLC shares had hit a high of £4 in late 2018, were trading at 339p prior to the August 2019 announcement which caused them to drop to 256p.[21] The loss of the company's longstanding client NatWest Bank[20] in November 2019 had seen the shares drop to 148p.[21] The December 2019 advices sent the share prices crashing to 79p and below the listing price of the company's 2004 float.[22]

In a shock announcement to the City on 10 December Lord Saatchi resigned as an executive director along with all three of the independent non-executive directors Sir Michael Peat, Michael Dobbs, and Lorna Tilbian.[18] It was reported that the departing directors disagreed over whether Kershaw should stay as CEO following the accounting scandal.[22] Sinclair, Muirhead, and Kershaw supported the view of the company's advisers Numis who persuaded Kershaw to stay to avoid further instability.[22]

In a subsequent blow it was reported that the agency's client, the Financial Conduct Authority – Britain's financial watchdog, issued a formal request for information from the company in an examination of how M&C Saatchi had disclosed the accounting problems which prompted the share price to tumble.[21]

• Official site