Media Square warns of full year loss

CHESHIRE-based marketing company Media Square is close to completing the restructure it expects to help a return to profit, but warned full that year results would show a trading loss.

Trading in the second half of the year, ending February 28, has been “significantly stronger” than in the first half and the company expects the final six months to be profitable before exceptional, it said in a trading statement.

This is down to initial cost savings following the company’s restructure, which began in September 2007 in response to cuts in clients’ marketing budgets.

However, it added that an overall trading loss was now expected for the full year – previously the company said it had expected to make a small operating profit.

The company continues to be in discussions on the sale of two non-core, profitable business units and it said their disposal was expected soon.

The sale of these two units will complete the group’s restructure, resulting in a much lower cost base than in previous years. Media Square added that reduce costs would allow it to build on the momentum gained in the second half of this year.

In November, the company announced that it had been forced to take even more drastic cost cutting measures, over and above those planned as part of the restructure.

It has reduced its space by around 40,000 sq ft since 2007; merged agencies to reduce costs so that it now has 11 main agencies, down from 40; reduced central costs from £6m in 2007 to £2m in 2010; cut staff, freelancers and introduced part-time working.

The company added: “At this stage there are no signs of any significant increase in clients’ marketing budgets for the coming year but there are few indications of any clients cutting back further on their 2009 spending levels.”

Media Square was founded in 2000 as a cash shell and has grown rapidly by acquisition. It has its registered office near Macclesfield which is also home to its business-to-business marketing agency IAS.