One day Media Square will be a case study for aspiring MBAs on how not to expand a business. It joined Aim as a shell in 2000 and, within five years, had acquired more than 50 subsidiaries including a host of unrelated businesses bought from Huntsworth for a whopping £63m in November 2005.
The mess has been left to new executive chairman, Roger Parry, (the sixth chairman in six years) to sort out and he seems to be making a decent fist of it. When he joined in July 2007, the company was “floating around in a corporate cloud” and a third of its then 32 subsidiaries were lossmaking or operating at no better than breakeven. That number is being cropped and divided into three divisions. The cost comes partly in the half year to end-August with exceptional costs of £17.19m including £16m of write-offs against the acquired Huntworth businesses and £1m for closing or selling other subsidiaries. There will be another £1m charge in the current half year so investors should look to 2008-09 before expecting positive numbers. Then, with new section heads in place, broker Collins Stewart forecasts revenue recovering to £93m (£103m in 2006-07) and an adjusted pre tax profit of £3.1m.
MEDIA SQUARE (MSQ) | ||||
|---|---|---|---|---|
| ORD PRICE: | 9.25p | MARKET VALUE: | £ 30.0m | |
| TOUCH: | 9-9.5p | 12-MONTH HIGH: | 17.75p | LOW: 5.375p |
| DIVIDEND YIELD: | nil | PE RATIO: | NA | |
| NET ASSET VALUE: | 11p | NET CASH: | £84.9m | |
| Half-year to 31 Aug | Revenue (£m) | Pre-tax profit (£m) | Earnings per share (p) | Net div per share (p) |
|---|---|---|---|---|
| 2006 | 51.5 | 0.4 | 0.07 | nil |
| 2007 | 43.3 | -18.6 | -5.58 | nil |
| % change | -16 | – | – | – |
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