Media Square Share Discussion Threads

[spaceparallax] 09/11/2006 12:47

I've no problem with disposing of KES if it overlapped with the highly regarded RedMandarin - I recall seeing the very upbeat in-house article, on RM, a few months back. It appeared to have developed a very healthy work culture, where the staff clearly (to me) regarded working there as much more than just a job.

Furthermore it adds another £4M to the balance sheet. - i.e. approx 1.2p per share (if my reckoning's correct).

[pbracken] 09/11/2006 12:42

Well, it's a start - £4m in the bank (or off the debt). JM is being good to his word.

[spaceparallax] 09/11/2006 11:26

PB,

I'm equally culpable and was ticked off the other day on the ENK thread.

Not too surprised to see this slippage, although I expect a big bounce when the results clarify the scale (hopefully small) of the significant under attainment.

[pbracken] 09/11/2006 08:00

Space - excuse the ambiguity; I was asking someone to post it if he or she had it...

[spaceparallax] 08/11/2006 09:48

PB,

Could you post it please?

[pbracken] 08/11/2006 08:56

Anyone seen the latest Teather note on MSQ, which advises investors to REDUCE? It was issued on 2 Nov.

[spaceparallax] 30/10/2006 15:15

Interims on 16 Nove - it will be good to see the figures and particularly the outlook. Hopefully, it will sort out the debate between supporters and bashers.

[qs9] 28/10/2006 19:42

Likewise, I have read the full year and the latest announcements and looked at consensus figures through various sites.

No-one has been able to give a rational reason why MSQ - which on publicly quoted consensus figures has an Enterprise value (equity c.£60m + debt c.£20m but could be a lot higher IMO) to Pre-Tax profits to Feb 07 (forecast £5m-6m) ratio of therefore around 20 is good value!

Surely the risks outweigh the potential upside, I agree with Markie7....better to wait for half year results which are due out soon are they not for a clearer view? If things are starting to get better, great, but for any company that has debt and then has a profit warning the debt figure is always the key.......so I'll wait and see before buying any shares. Does anyone know the date the half year is out?

Good night!

[markie7] 28/10/2006 19:26

thanks for the good natured responses everyone. As I said on one of my first posts, I could have done my own research "which would be fair comment" . Sorry Addas got a bit stroppy there.

the CS note is the most interesting recent piece on MSQ - house broker tends to be informed. The final paragraph basically says the group is up for sale, or ought to be. All looks too risky for me, interesting for sure, but too risky. It's hard to sell something for more than 17p when underlying trading (read the market announcement) took the price as low as 12-13p.

[spaceparallax] 24/10/2006 13:44

Hopefully today's RNS might signal a respite to the overhang, assuming that Bear Stearns were the seller.

[spaceparallax] 24/10/2006 12:58

QS9 & Markie,

I post below an article from Trendwatch when they recommended buying MSQ earlier this year. Obviously, they didn't foresee the recent profit-warning and its effects upon the share price Nevertheless, the content of the article remains relevant. Have a read, see what you think - main reason for doing this is that you seem to be objective posters whose absence would be missed.

"Buy Media Square at 23p
Says Rob Cullum from Trendwatch.co.uk

Marketing services group Media Square was once just another cash shell in the vast dot-com ocean of a few short years ago. But in 2002, amidst the clatter of collapsing dot-coms, came news that saved the company from the same fate: its merger with Equanim, a marketing communications specialist. The driving force behind Equanim, and now the driving force behind Media Square itself, was and is one Jeremy Middleton, who became chief executive following the merger, and remains so today.



Under Mr Middleton, a remarkable expansion began to unfold. Early in 2003 a bold piece of opportunism saw the corporate flag raised in both Leeds and Manchester as the company acquired three more businesses: two from a retreating French concern, and one more from Mr Middleton, all of them operating in both traditional and internet marketing services. The transactions were part-financed by a 125,000 pounds loan from Mr. Middleton, to match a similar advance by privately owned Pertemps Group, another major Media Square shareholder.

The pattern of acquisitions, restructurings, closures of non-performing businesses and big pre-tax losses caused by heavy amortisation, impairment and exceptional losses continued during 2003 – when it gradually became apparent that a group of perceived quality was emerging. So much so that it had little difficulty in raising 3 million pounds at 8p per share; 2.4 million pounds from institutional investors and the rest from the board.

The value of investments can go down as well as up. Investing in equities can lose you part or all of your capital. Smaller company shares can be relatively illiquid and thus hard to trade. And that makes such investments more of a high risk than larger company shares. UK-Analyst.com is owned by t1ps.com, which is authorised and regulated by the FSA and can be contacted at 49 Rivington St, London EC2A 3QB or on 0207 033 9389.

What was it that these mandarins heard that opened their chequebooks so readily? Well, it was probably its decision to pick up the failed undertaking of another marketing services support business – one with more than 4 million pounds sales – for just 0.5 million pounds. Furthermore, a big chunk of those sales emanated from the home shopping sector, an area of key importance to the Media Square strategy.

The October 2003 full-year figures lagged behind events, but at last the company recorded a maiden profit of 0.25 million pounds pre-tax on sales of more than 8 million pounds plus 2 million pounds in the bank. In February 2004 it snapped up Leeds-based Hudson Advertising - together with its valuable home shopping and direct sales-related turnover of 2.6 million pounds. Leeds and Manchester are the primary locations in the UK for the home-shopping industry. Media Square is heavily represented in both locations.

The company had by then formed a specialist division to handle home shopping. In essence, Media Square provides its customers with the ability to outsource the troublesome tasks that lie at the heart of their operations – the production of a never-ending stream of promotional material. Whether in hard copy or electronic form, Media Square offers its customers the prospect of removing the headaches and gaining a quicker time to market at a lower cost. Its weaponry is that of expertise, motivation and, for purchasing, that of scale.

The first of two transformational step-changes followed. In October 2004, fellow AIM-quoted retail communications business Coutts agreed to a 150p cash bid worth 22 million pounds. About one-third of the purchase price, 7 million pounds, was clawed back through the sale of a manufacturing site. A few days later, another 3 million pounds up-front sale of Coutts' packaging subsidiary left Media Square with the juicy core that it had sought – the point-of-sale expertise and contacts – and it had 5 million pounds of freehold property on its enlarged balance sheet.

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Then, in November last year, the big one – so big that, under AIM rules, it was classified as a reverse takeover. It bought the 16 marketing services businesses of fully listed Huntsworth for 63 million pounds, lifting its annual sales from 60 million pounds to 200 million pounds. The acquisition was financed by a further funding exercise of 30 million pounds at 25p per share plus a 40 million pounds debt-financing facility.


Thus, in just over 5 years, Jeremy Middleton and his team had transformed Media Square from a struggling cash shell to the UK's fifth-largest quoted marketing services and communications group, servicing more than 2,500 clients and employing 1,700 people worldwide.

Of course, size isn't everything. What counts is success. Fortunately, the news is reassuring. In April, it released a trading statement for what will be the 16-month period that ended in February. The integration of the acquisitions is substantially complete, and Huntsworth's lagging former subsidiaries, were delivering "swift and pleasing'" change for the better. Thanks to a strong flow of new business wins, all the constituent elements were trading in line with expectations, whilst net debt had dropped. Kelvin MacKenzie, best known for his controversial editorship of the Sun from 1981 to 1993, had by then become the non-executive chairman.

The recent trend towards movement of advertising and marketing resources from 'above-the-line' (conventional advertising on TV, radio, magazines, newspapers and the internet) to a vast array of more precisely-targeted 'below the line' services is well documented. The present benign economic environment should provide the conditions necessary for growth. The risk is that client spending will probably wilt fast if consumption tails off significantly. This, coupled with the necessity to rely upon talented individuals who can and do move, and take clients with them, has made us chary about the sector in the past.

But if Mr Middleton can combine the gravitas that he has established with élan at the sharp end, investors should expect to benefit. He now commands a sizeable array of differentiated but related activities, large enough to ensure a degree of stability, but small enough to respond to good leadership.

The shares have remained subdued since the Huntsworth coup, the market keeping a watchful eye. The forthcoming full-year report, to be published on 20 July, will be more revealing than the actual figures – but we expect that the 2p EPS forecast for February 2007 will be met. If we're right, this would mean an earnings multiple of just over 10 times, very fair value given the range of quality businesses now under one roof, and the great opportunities for both overhead reduction and cross-selling.

Back in April, when the share price was much the same as now, independent broker Bridgewell confirmed our positive view of management's strong track record. Bridgewell sees upside of 30%, which would still leave the company at a 10% discount to its peers. BUY

Key Data

EPIC: MSQ
NMS: 15,000
Spread: 22.75p – 23.25p
Market Cap: 74.8 million pounds "




Regards

[markie7] 23/10/2006 19:55

just had a look at the other threads you started...an interesting selection...

[qs9] 23/10/2006 19:34

Not sure yet...not got a lot of free cash at the moment so watching and waiting and trying to work out who posts good posts on Advfn...thanks for the support Markie7..off to the pub now with the other half.

[markie7] 23/10/2006 19:27

on second thoughts, I'm off this thread as well....

where are you off to qs9?

[markie7] 23/10/2006 19:17

qs9 - don't go. please. you'll leave me here with this lot.

[qs9] 23/10/2006 18:09

Hi all, just thought I would to catch up on a week or so of this thread and had to write following the post above:

At 30p you say you think it should be valued at now, that would be around £100m market cap I think + debt of somewhere like £20m (?) .....potential current value of total group you suggest therefore aruond £120m (DYOR). On the forecasts I can see and no-one has bothered (even the fans on this page) to confirm/counter/whatever on these DYOR etc but £6m to say £10m 07 and 08 profits (please someone let me know if I am looking in the wrong place). That is a rating of 20 and then 12 times profits (not a p/e ratio as I read it). On this basis, am leaving the thread again!

Does anyone know anything about THE by the way?

[costapacket] 20/10/2006 20:08

addas99, dalcon01 - agree he is one heck of a driven guy. He practically lives and breathes the business 7 days a week.

[dalcon01] 20/10/2006 07:29

Totally agree with Costapacket & addas99, cannot see JM letting this FAIL.
The word is not in his vocabulary!

[addas99] 20/10/2006 03:27

Markie..the volume matched exactly, 14,010,0000, and besides confirmed by JM.
No idea of transfer price.

Costa..JM lives and breathes this company, in my experience about the most accessible and helpful CEO I've come across. Have no doubts at all that he's going to make this company a major player come what may.

[markie7] 19/10/2006 21:35

addas - how do you know it was bear stearns - must have been a private trade? any thoughts on the price it was traded at?

[costapacket] 19/10/2006 20:24

Don't count me in the rampers please - I have actually worked closely with a number of the companies in the Media Square Group in the recent past and know what an ambitious guy Jeremy Middleton is. No inside info known but the senior team are an impressive bunch with a wealth of media experience in both on and offline media. The acquisition will pay off given time and that is my primary reason for getting off the fence and taking the plunge.

[addas99] 19/10/2006 19:44

FYI current notifiable interests added to header.
The 14M shares acquired yesterday by Promethean was the entire Bear Stearns Intl. holding.