S4 Capital lost more than a third of its market value on Wednesday after Sir Martin Sorrell’s advertising business issued a notice saying that its auditor had not been able to sign off on its results just hours before they were due to be published.
The London-listed group said on Wednesday afternoon that PwC had informed the company it was unable to complete “the work necessary” for S4 Capital to go ahead with a planned release of its preliminary full-year results on Thursday morning.
“As a result, [S4] will release its preliminary results for 2021 as soon as PwC have completed their work,” the company said, adding that it expected its 2021 results to “remain within the range of market expectations”.
S4’s share price fell by just under 35 per cent after the statement, wiping almost £1bn off the company’s value. The shares recovered slightly on Thursday morning, opening up just over 8 per cent.
The company, which had spent Wednesday preparing for its results to be released the next day by arranging media and analyst calls, appeared to have been blindsided by PwC’s decision.
It was the second time this month that S4 had delayed its results. On March 1, the company said PwC had requested more time to complete its audit “because of the impact of Covid and Omicron on travel and resource allocation, particularly in the Netherlands”.
Sorrell, who launched S4 in 2018 following his acrimonious departure from WPP, declined to comment beyond the company’s statement.
PwC did not immediately respond to a request for comment. The Big Four accountant has audited S4’s accounts since the financial year ending in December 2018.
Delays in audits sometimes indicate disagreement between management and auditors. Increased regulatory pressure and fines on UK auditors have resulted in auditors becoming more selective about the clients they work for and asking more questions of company management before they sign off the accounts.
One analyst, who declined to be named, said it was unusual for an auditor to let a company know it would not sign off its results the evening before a planned release.
“It clearly sounds very suspicious, but it could be a minor thing — we just don’t know,” the analyst said.
S4 is the second PwC client in the UK to announce a delay to the publication of its accounts this week. Randox, the Northern Ireland-based medical diagnostics company, said on Tuesday that its audited accounts would be released later than planned because PwC and its own finance team had been affected by Covid-related absences.