Big spending by Australian state and federal governments has seen M&C Saatchi post a rosier than expected balance sheet that came out of the agency’s London headquarters on Tuesday.
In a trading update to the market, the report noted that the group had done better than expected during the CV-19 lockdown period thanks to big-spending government clients in different parts of the world. M&C Saatchi Melbourne’s recent appointment to run all of the COVID-19 communications for the Victorian Government significantly boosting local coffers.
The update noted: “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.
“Our companies have shown considerable agility in adapting their business and client servicing to the unprecedented pressures of recent months,” it said.
However, things were looking less rosy for the group back in December 2019 when its board quit en masse and the share price tanked from a year high of £4 ($A7.70) down to almost £1 ($A1.93) on the back of grim profit warnings.
Worse, there was even rumblings in UK financial media circles that Accenture may even make a $A175 million play for the group. Those rumours have since evaporated.
In its Tuesday update, M&C Saatchi announced that the first two months of 2020 were “in line with the board’s expectations” and “since that date, although COVID-19 has affected the business worldwide, results from April and May were not quite as severe as we had first expected”.
It added: “The early actions we have taken to reduce costs and access government support programmes across the world have protected the group from the most severe effects of the crisis to date. However, it is still too early for us to predict with any certainty the likely impact of the economic slowdown on full year 2020 results.”
As of 23rd of June the group had “total cash of £52 million ($A94 million)” but was also seeking additional funding via the UK government’s Coronavirus Large Business Interruption Loan Scheme (CLBILS) for the period to 31 July 2021.
“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 update said.
