When WPP bought a $300m stake in online measurement company comScore last year it looked a smart move; a way of tapping a growing market without doing all the heavy lifting itself.
But today WPP boss Sir Martin Sorrell (left) has revealed that its comScore investment has knocked £122m off H1 2016 profits leading to a sharp fall from £710m to £425. It’s not clear if this is entirely due to comScore.
In the first half of 2016, the group had net exceptional losses of £122 million, relating primarily to the write down of its investment in comScore, which has not released any financial statements in relation to its 2015 results, due to an internal investigation by their Audit Committee. Following the announcement of the internal investigation, the market value of comScore fell below the Group’s carrying value.
The effect of the write down is to reverse the net gains recognised by the Group in 2014 and 2015 on the disposal of assets to comScore. The Group continues to monitor the position and welcomes the most recent management changes, although remains puzzled as to why the audit investigation has taken so long, remains unresolved and has proved so costly. It expects the situation to be resolved early on, in the second half of 2016, when comScore should announce the results of its investigation.
Elsewhere WPP provided its usual ‘steady as she goes’ performance with revenues up 11.9 per cent compared to a year ago and net profit, its measure of organic growth, inline with last year at 4.3 per cent. The post-Brexit decision fall in the pounds has helped WPP’s revenues. The full numbers are here.