23 August 2010

Media Square plc (the "Group" or "MSQ")

COMPLETION OF ASSET DISPOSAL

Further to our conditional announcement of 9 February 2010, Media Square plc (AIM: MSQ), the international marketing communications group, today announces that it has completed its transaction to sell the trade and certain assets of twentysix NewYork ("26NY"). 

Since the original announcement in February, Dynamics Ventures LLC has assigned its obligations under the Purchase Agreement to Tallan Inc., a leading provider of software consultancy services, which has become the primary purchaser of the trade and assets, with Dynamics Ventures remaining a guarantor of the Agreement. 

The terms of the transaction have also been revised to reflect the weaker underlying trading performance of 26NY since February. Under the revised agreement, initial proceeds from the disposal will be approximately $1million in cash, comprising up-front consideration on completion and the unwinding of the working capital position over the period following completion (since MSQ will be retaining the majority of net assets).  In addition, the consideration could increase by up to $2.5million in cash based on the performance of 26NY over the six month period post completion.

In its last reported financial year to 28 February 2010, 26NY generated turnover of US$6.0 million and headline operating profit of US$0.2 million.  The business' gross assets as at 31 July 2010 were approximately US$0.8 million, excluding cash, goodwill and inter-company items.  The proceeds from the transaction will be used to pay down debt.

Peter Reid, Chief Executive of Media Square, commented, "We are pleased to have completed this transaction. Tallan is a much more logical home for 26NY than MSQ, given our focus on marketing communications, and we wish both businesses well in the future."

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