M&C Saatchi is to reduce its office space by 25 per cent in the UK, Australia and Singapore in a bid to save cash as people continue to work from home because of the Covid-19 crisis.
The company, which reported its half-year 2020 interim financial results this morning, explained that, although it still holds leases for the buildings that it plans to vacate, it will either sub-let the space or terminate the leases.
As a result, M&C Saatchi, which owns PR agencies M&C Saatchi Talk and M&C Saatchi Sport & Entertainment and has its headquarters in Soho's Golden Square, expects "material property-related savings in the medium term".
The troubled agency group's shares are currently suspended on the stock market because it failed to meet the deadline to complete the audit of its accounting errors for the 2018 financial year. Today (28 October), it noted that it expects the results of this audit to be ready in "early November".
For the six months ended 30 June, M&C Saatchi's headline net revenue declined 13 per cent to £103.4m, with profit before tax down 59 per cent. Operating profit was down 33 per cent to £4.2m and operating costs were £99.2m.
The group said that these results were "ahead of management expectations at the outset of the Covid-19 pandemic".
M&C Saatchi's UK like-for-like headline net revenue dropped 16 per cent to £36.8m, with operating profit down 31 per cent to £3.4m and operating costs down 14 per cent.
It said that M&C Saatchi World Services was the "standout performer in the Group for the first half of 2020", as the division continued with and won new business from governments and non-government organisations.
For the rest of the UK agencies, "trading was more challenging than normal, with a number of client budgets reduced and/or frozen in the wake of the pandemic", M&C Saatchi said. It explained that its shops took on more smaller projects.
M&C Saatchi Sports and Entertainment was the hardest hit because the majority of its work revolves around live events.
The report added: "The extensive restructuring programmes that took place in the UK agency and PR divisions early in the year, resulted in a substantially reduced cost base and both operations have had notable successes with new clients in the second half of the year."
Chief executive David Kershaw said: "We have been hugely encouraged by the resilience of the business, both operationally and financially, in the face of the global Covid-19 pandemic.
"Our companies have shown great agility in adapting their businesses to these extremely challenging conditions, without compromising on the quality of their work or client service.
"This is demonstrated by our strong client retention and new-business performance during the period. I would like to thank all of our people for their tremendous commitment and hard work.
"We are looking ahead with optimism. We are refocusing our business to ensure it is in the best possible shape to thrive.
"Additionally, we are now well advanced in our strategic review and it is clear that we have both the strength and the potential to take advantage of the considerable long-term opportunities we see ahead of us."
The group's stock market value fell by 80 per cent after the accounting problems first emerged in August 2019.
A version of this article first appeared on PRWeek sister title Campaign