Media Square plc Pre-Close Trading Update

Media Square plc Pre-Close Trading Update

The Board of Media Square plc, the international marketing communications group, today provides the following update prior to entering into a closed period in advance of the announcement of its interim results for the period up until the 31 August 2011.  The Group's interim results will be announced in November.

At an operating level, the Group has continued to make good progress in a challenging environment.  Headline operating profit and revenue for the period is expected to be broadly similar to the equivalent period in the prior year.

The Group expects net debt as of 31 August 2011 to be an increase over the position as of the 28 February 2011 (when underlying net debt was £19.5m).  This cash outflow for the first half is in line with historical working capital patterns (which typically see an outflow in H1 followed by a corresponding inflow in H2).  However, given the current economic environment and resulting pressures on working capital being experienced by the Group's clients and suppliers, the Board recognises that there is a possibility that this build up in working capital may not be reversed over the course of the second half of the year, as it has been in prior years.

Also at the Interim stage, the Group expects to take an exceptional charge for legal fees and restructuring charges incurred towards the end of the period relating to a reorganisation of its advertising division. The direct cash impact of these events to date has been approximately £250k, although the full exceptional charge may also include provisions for certain related indirect costs.

Looking forward at a revenue and headline operating profit level, the Board anticipates that the Group's results for the full year will be in line with previous expectations. However, the general trading environment as well as the potential additional working capital pressure on the Group's financial structure means that the Board remains cautious about Media Square's future prospects.

Peter Reid, CEO of Media Square plc, comments: "The Group is trading well given the economic conditions. It is clearly a frustration that the high level of legacy debt continues to be a problem but we continue to take active steps to look at long-term solutions".

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