by Maisie McCabe
M&C Saatchi is preparing to announce Moray MacLennan, chief executive of the M&C Saatchi Worldwide network, as the new chief executive of its PLC business as it seeks to draw a line under its accounting scandal.
It is understood that M&C Saatchi will confirm the appointment in the coming days. The business is also expected to publish its audited 2019 accounts.
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As part of the changes, the final co-founders – David Kershaw, current chief executive of the PLC business, Jeremy Sinclair, the PLC chairman, and executive director Bill Muirhead – are believed to be leaving the business. It is not known whether they plan to offload any or all of their shareholdings.
It is likely that M&C Saatchi PLC vice-chairman Gareth Davis, a former chief executive of Imperial Tobacco and chairman of the packing company DS Smith, will rise to chairman. Its board also includes non-executive directors Lisa Gordon, Louise Jackson and Colin Jones.
M&C Saatchi brought in Davis, a former chairman of William Hill, in January 2020, after executive director and founder Lord Saatchi and the non-executive directors Lord Dobbs, Sir Michael Peat and Lorna Tilbian resigned the previous month.
In an internal email after the quartet of directors departed in December 2019, MacLennan insisted the company’s underlying business was “sound” and that the agency would “emerge stronger”. He said that although the situation would “give journalists headlines”, it would not affect what M&C Saatchi staff do in “any way”.
When it published its unaudited accounts for the six months to the end of June, M&C Saatchi said they were “ahead of management expectations at the outset of the Covid-19 pandemic”. Headline net revenue declined 13% and profit before tax fell 59%.
The departures of Lords Dobbs and Saatchi, Peat and Tilbian followed the accounting scandal that led Sinclair to describe 2019, in an interview with Campaign, as “the worst year we’ve had – by a country mile”.
M&C Saatchi suspended its shares at the end of September 2020 after it failed to complete an audit of its accounting errors for the 2019 financial year before its deadline.
At the time, the company reported unaudited figures of £256.4m of net revenue in 2019, up 2.4% on 2018, and headline profit before tax of £18.3m, down 22% on the prior year.
When the adjustments are taken together, there was a combined negative impact on statutory profit after tax of £25.8m. The shares will start trading again after the audited accounts are published.
MacLennan’s elevation is a reward for many years of loyalty. He followed Lord Saatchi and his brother Charles – as well as Kershaw, Sinclair and Muirhead – after they broke away from their original agency Saatchi & Saatchi and founded M&C Saatchi in 1995.
He initially ran M&C Saatchi’s UK business as chief executive between 1995 and 2004 before rising to European chief executive in 2004 and then chief executive of M&C Saatchi Worldwide in 2009.
A well-known figure in advertising, business, and political circles, MacLennan is a former president of the IPA and the European Association of Communications Agencies.
M&C Saatchi has offices in Los Angeles, New York, Sao Paulo, Mexico City, London, Stockholm, Amsterdam, Berlin, Geneva, Paris, Madrid, Milan, Tel Aviv, Beirut, Dubai, Abu Dhabi, Doha, Cape Town, Johannesburg, Islamabad, New Delhi, Mumbai, Kuala Lumpur, Singapore, Jakarta, Shanghai, Hong Kong, Tokyo, Sydney and Melbourne.
Following the publication of Campaign’s story, M&C Saatchi confirmed the news to the stock market at 6.08 pm.
In a joint statement, Sinclair, Kershaw and Muirhead said: “We have spent this last year replacing ourselves, re-examining the strategy and importantly re-building the board. That having been done, it is time for us to make a graceful exit, although we plan to remain shareholders.
“We are confident that our successors will succeed and lead the company we founded 25 years ago to greater heights.”
MacLennan said: “Much has been learnt over the past 12 months and I believe M&C Saatchi is stronger and wiser coming out of 2020. The company has benefitted from the guidance of a strong, independent board and following the conclusion of a strategic review of our business and markets, I look forward to sharing our plans for future growth at the capital markets day in January.”