Media Square, the group which owns a host of UK marketing agencies, has announced a loss of £2.7m for the year to 28 February.

It reported a 14.6% rise in revenues but this only generated a small operating profit of 1.8m, according to the Marketing Services Financial Intelligence website.

According to that report, Media Square's operating profit margin remained low at 3.9% and this was "more than wiped out by bank finance charges".

Some £15.3m of the £30.4m tied up in long term assets at 28 February was provided by banks and finances houses while suppliers provided credit of another £13.4m.

Only £1.7m - 5.5% - of long-term assets was funded by long-term capital provided by Media Square's shareholders.

The Marketing Services Financial Intelligence website wrote: "As the biggest long term asset in the balance sheet is the intangible one of goodwill, its value would rapidly evaporate if the group went into administration, leaving the bank and other creditors with very little chance of recovering what is owed to them.   So to all intents and purposes the bank is locked into the company and is waiting patiently for better times."

Media Square agencies include The Gate Worldwide, IAS and Smarts.