M&C Saatchi is delaying reporting its annual financial results and is seeking a loan from the government because of the impact that the coronavirus outbreak has had on its business.
The troubled agency group, which was suffering from the fallout of an accounting scandal before the virus crisis, said in a trading update to the stock market that its financial performance in April and May was not "quite as severe as we had first expected".
M&C Saatchi explained that the early steps it took to reduce costs and access to government support packages around the world "have protected the group from the most severe effects of the crisis to date".
The agency group also won a number of new client assignments, including the UK Government, Australia Government and Iceland Tourism.
However, the company said that it is still too early to predict the impact of Covid-19 on its full-year 2020 results.
It has secured a three-month extension for the deadline to file its 2019 financial results, meaning that it has until September to report the audited figures, although M&C Saatchi said it is aiming to announce the results next month.
The company also said it was asking its bank to relax loan covenants and has applied for a loan through the government’s Coronavirus Large Business Interruption Loan Scheme as a "prudent" step.
M&C Saatchi said it had "a solid balance sheet" with net cash of £16m, plus a £36m credit facility and an undrawn £5m overdraft on 23 June.
The trading statement added that M&C Saatchi has also been reviewing its strategy "to ensure we are best-placed to take advantage of the opportunities in our markets".
The review will run until September, after which the business will present its strategic plan.
M&C Saatchi is under pressure from shareholders after it had to make an £11.6m accounting adjustment last year and half the board, including co-founder Lord Saatchi, quit in December.
The three remaining co-founders – David Kershaw, Jeremy Sinclair and Bill Muirhead, who set up M&C Saatchi in 1995 – are under pressure to turn around the group as the share price has plunged from 330p in August 2019 to about 60p.
Vin Murria, a technology entrepreneur, bought a 13.25% stake in May.
Editor's note: This story was updated after publication to include details about new client assignments and the balance sheet.
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