The company has also reported an improved balance sheet and confirmed it has been approved for $9m in a new coronavirus-focused Government funding scheme.
The group today updated on its trading position after announcing on 30 June it would be delaying publication of its full-year results, having received a three-month extension to the filing deadline. At the time, M&C Saatchi said trading results for April and May “were not quite as severe” as first expected.
The company said today it expects to report a small underlying profit before tax, before exceptional costs, for the six months to 30 June.
“Performance was particularly resilient in Q2, driven by continued growth in the World Services division and robust new business performance across sectors and geographies,” the group stated.
“New assignments include those from TikTok, BP, Bayer, and Tele2. Major government initiatives include the new launch of the better health campaign for Public Health England (UK), the Victoria State Government (Australia) in its fight against COVID-19, and the much talked-about Iceland Tourism campaign.”
The business – which owns PR agencies M&C Saatchi Talk and M&C Saatchi Sport & Entertainment – said the results were “encouraging and more favourable than management’s expectations”, given the uncertain global economic environment in the past few months.
“Although revenue declined in H1 2020 compared to H1 2019, the better-than-expected second-quarter performance and the swift and decisive action taken in reducing costs has resulted in a relatively stable first half-year performance, stronger than was anticipated at the start of the pandemic.”
M&C Saatchi now expects to publish its full-year results by the end of August – it had earlier targeted July. Results for the first half of 2020 are due in September as usual.
M&C Saatchi said its balance sheet has improved since the announcement on 30 June, with total cash reserves up from $67m to $76m. Its revolving credit facility with NatWest is fully drawn, while its overdraft remains undrawn, leaving the company with net cash of $30m, up from $20m on 23 June.
M&C Saatchi also confirmed it has been approved for $9m in funding through the UK Government’s Coronavirus Large Business Interruption Loan Scheme (CLBILS). The company said this additional funding is an “an entirely precautionary measure” and the facility is “not expected to be drawn in the current trading environment.”
Meanwhile, NatWest has agreed to relax the company’s banking covenants for the first half of 2021, allowing a higher ratio of debt to earnings and lower interest cover.
“We are confident the company can comfortably satisfy its existing covenants for the next quarterly testing period, which falls on 30 September 2020, without needing any alteration. The company has taken the prudent and precautionary measure of relaxing the covenants for further testing periods after that date, mitigating potential risks that could arise even under an extremely severe scenario.”