Case Study
Vision Media Group PLC
Millionaire Mentor Albert Wright comments; “Until July 2009 (when trading on AIM was suspended) VMG had been one of my more successful case studies and the story goes back to around 2004, when I first met Dominic Brookman at an Angel Investors’ presentation.”
He was promoting Theme Park Media, which was investing in TV screens to broadcast entertainment and adverts to people waiting in queues in theme parks. The company, however, had few sales and lots of debt as well as a complex ownership which required sorting out before new finance could be arranged.
Albert knew something about the sector and eventually took Dominic on as a client under the Business Link London Access 2 Finance scheme, helped write the business plan and raise around £500,000 from a mix of SFLG, (Small Firms Loan Guarantee ) a GLE (Greater London Enterprise) London Development Agency (LDA) backed loan, a private loan and private equity investment.
Borrowing the money proved difficult but not impossible, as Dominic had debts and county court judgements against him and previous companies with which he had been involved.
As Albert explains, “In the plan we admitted past mistakes and failures and then outlined a new strategy under new ownership and management.
I continued to advise on a private basis and made loans and investments at critical times totalling over £100,000 (some of which were paid back, with some converted to equity) that allowed the business to survive and become Screen Media Networks and later merge with an AIM listed business in the same sector to form Vision Media Group.
At one time, I had helped make Dominic a paper millionaire, based on the shares he held in VMG and their market valuation of 5p, the stage at which I made my own major investment.”
At this stage they looked and were a successful AIM listed company, a business with growing sales, active management, plans for the future, optimistic shareholders, despite not yet having made a profit and a balance sheet which was starting to look a little weak.
From first contact, Albert had strongly advised that management focus on building sales income once initial operational problems had been resolved.
In both Theme Parks and Malls excess capacity continued to exist on the network yet there was a reluctance to follow an Internet Media model and reduce prices and / or show adverts and content for free, to build awareness and strong case studies, pointing out the positive results achieved at product and awareness level from this type of advertising.
The merged company had other management and an experienced Executive Chairman so from 2008 Albert reduced his involvement. With hindsight this was a bad move for both Albert and the company.
At first things went well. The company closed offices, renegotiated equipment leases and loans, sold off loss making divisions, cut overheads and reviewed the business model several times, finally outsourcing sales as well as most other activity. All good sensible activity with positive press releases celebrating successes and promising sales and profits “soon”.
However, with hindsight, the action taken was too late and insufficient. With the recession, options for refinancing and raising new money disappeared. Being AIM listed became an additional cost burden when new money dried up.
General business advertising spend reduced drastically, roll out of new and improved screen equipment for shopping malls was delayed, debts began to mount, new county court judgements were lodged and granted, credit ratings worsened, share price fell.
The ever optimistic management could hold it together no longer. They ran out of money and time. Cash flow is king and there was not enough cash.
Mistakes had been made. Earned money was too low compared to borrowed money. Existing investors had been tapped too many times, new investors could see a future but did not want to pay for past mistakes and over hanging debt.
Shares were suspended in July 09 at 1p.
Albert confides, “This was always going to be high risk. Unfortunately financial, operational and marketing errors were made. The failure to pull in sales and generate positive cash flow fast enough left the business vulnerable. Whether VMG 2 rises from the ashes remains to be seen.”
