Companies: MSQ   

Five months into his reign at troubled marketing communications group Media Square, executive chairman Roger Parry’s restructuring campaign is building up a head of steam.

Former BBC journalist Parry announced the shake-up after unveiling a slide from a small profit to pre-tax losses of £18.6m in the first six months of the year ‘as the metaphorical chickens of an over-aggressive acquisition strategy… have come home to roost’. Much of the loss came via an exceptional £16.1m goodwill write-down, while overall sales fell 14% to £85.3m.

Parry, who joined in July, has sold off, closed or merged 11 business units and simplified the group structure into three divisions: advertising, marketing and design. There is a ‘lot of potential’ in what remains – namely strong cash flow and some well-regarded agencies – especially now that problems within the business have been diagnosed and major shareholders are back on side.

Having grown revenues from £3m to over £200m during an acquisitive five-year period, Parry concedes integration was ‘far from smooth’ and that cost cutting took precedence over winning new business. Having made two new senior appointments at the head of the marketing and design divisions, new business is a priority again.

A plethora of clients, including Bank of China, Emirates Airlines and Norwich Union, have already been won, but will not show through until next year. Looking forward, Parry’s instinct is ‘that the biggest upside is to come from marketing, which has suffered the most from a lack of attention’.

Having fallen 71% from a 31.5p peak in 2005, the shares look pretty good value now that confirmed turnaround specialist Parry has his eye on a profitable course and a firm grip on the tiller. With a loss forecast by house broker Collins Stewart for the full year and a return to profits of £3.1m the following one the shares are a speculative buy.

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Media Square	AIM	£4.35m	13.50p	-1.00p
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