M&C – which owns PR agencies M&C Saatchi Talk and M&C Saatchi Sport & Entertainment – said in a trading update today: "The group announced on 2 April 2020 that trading in the first two months of 2020 was in line with the board's expectations. Since that date, although COVID-19 has affected the business worldwide, results from April and May were not quite as severe as we had first expected."
The company said "early" actions taken to reduce costs, which included furloughing staff and cutting pay for senior employees, "have protected the group from the most severe effects of the crisis to date".
"However, it is still too early for us to predict with any certainty the likely impact of the economic slowdown on full year 2020 results."
More positively, the listed marcomms group said a "large number of our offices around the world have now reopened", with "client-facing staff, in particular, returning to work".
"Even during the lockdown period, we have continued to engage with clients and have successfully secured a number of new client assignments including the UK Government, Australia Government, Iceland Tourism and others," the firm added. "Our companies have shown considerable agility in adapting their business and client servicing to the unprecedented pressures of recent months."
M&C did not provide trading details for its individual agencies.
The company said its £36m revolving credit facility is "fully drawn", while its £5m overdraft with NatWest remains undrawn, leaving it with a net cash position of £16m. It is in talks with the bank about relaxing the covenant limits until 30 June 2021, while seeking additional funding "as headroom" through the Government's Coronavirus Large Business Interruption Loan Scheme (CLBILS) up to 31 July 2021.
M&C stated: "We anticipate a favourable outcome from these discussions which we expect will be agreed in July. The additional headroom from the CLBILS facility is not expected to be drawn under anticipated trading scenarios, but the board believes it to be prudent at this stage to secure the extra headroom."
The company said it recently began a "fundamental review" of its "strategy and its execution to ensure we are best placed to take advantage of the opportunities in our markets". It expects to complete the plan in September and present it "shortly after".
The company expects to announce its full-year results in July, having received a three-month extension to the filing deadline.
At a trading update in April, M&C said its board and senior management had committed to a 20 per cent salary reduction. The company also said it was in redundancy talks, although these had started prior to the coronavirus crisis.
That followed a "sharp drop in demand across the group", although the firm said it "continue[s] to pitch for new business and there are still some areas where demand for our services remains steady, eg: our talent and influencer businesses".
In January, M&C Saatchi announced it was merging two of its PR shops – M&C Saatchi Public Relations and Talk.Global – to form M&C Saatchi Talk.