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Deep cuts at Media Square as turnover tumbles |
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Tuesday, 24 November 2009 |
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A 25% drop in revenue at Cheshire-based Media Square plc has signalled even more cost cutting at the Group, while at the same time it looks for acquisitions.
In addition to a planned restructure, Media Square has quit a number of properties, merged agencies (from 40 in 2007 to 11 now) and “reduced central costs" (down to £2m from £6m in 2007).
A number of staff have lost their jobs and the Group is turning to part-time working arrangements and fewer freelancers. In a statement, it also said that "the Board are in discussions about the possible disposal of two non core, profitable, business units. If the sales go through, the proceeds plus cash from operations in the second half should lead to a reduction in group debt by the financial year end (February 2010). We are also in discussions about the acquisition of a small agency to strengthen one of our existing businesses."
The announcements come as Roger Parry, executive chairman of the Group, steps down into a non-executive role.
Peter Reid, the current group development director will takeover in the newly created position of chief executive officer on January 1st.
"I am delighted to be taking over as Chief Executive at a time when all of the deep structural problems of Media Square have been addressed. We now have a small group of agencies with clear market propositions, motivated managers and robust control systems,” said Reid.
Although some of the Media Square agencies remain sub-scale and with relatively poor operating margins, we now have a solid base from which to build a highly successful and creative group."
In a statement this morning, Parry added that the restructure would place them in a better position once the economy had turned around.
"All the individual agency Managing Directors have signed up to achieving goals of double digit operating margins and each agency now has in place its own clear growth strategy. If we can achieve our self imposed margin goals and enjoy even single figure annual improvements in revenues (we all obviously hope to do much better than this), then we will relatively quickly be able to pay down the Group's debt which will allow us to move into the more normal corporate situation of paying dividends and growing by carefully selected tuck-in acquisitions.”
Since the publication of the results, the company says that the first 2 months of this financial year have shown profitable trading, despite a drop in revenue year-on-year. Something to add? Then leave a comment below or email us now.
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