("MediaZest", the "Company” or “Group"; AIM: MDZ)
Unaudited results
for the six months ended 30 September
2017
CHAIRMAN’S
STATEMENT
Introduction
The Board reports the consolidated unaudited results for the six
months ended 30 September 2017 for
MediaZest plc and its wholly owned subsidiary company MediaZest
International Ltd (“the Group”).
Financial Review
• Revenue for the period was £1,339,000, down 9% (2016:
£1,474,000).
• Gross profit was £643,000, up 2% (2016: £631,000).
• Gross margins improved to 48% (2016: 43%).
• EBITDA was a loss of £87,000 (2016: profit £4,000).
• Loss for the period after taxation of £149,000 (2016: loss
of £67,000).
• The basic and fully diluted loss per share was 0.01 pence (2016: loss per share 0.01 pence).
• Cash in hand at period end was £103,000 (2016:
£137,000).
Operational Review
Results for the six months to 30
September 2017 are weaker than those for the comparable
period, with revenues down and administrative expenses up. However,
the fall in revenue was largely the result of two key projects
slipping into the subsequent period. The financial impact of this
was a reduction in bookable turnover of approximately £300,000,
which will now be recognised in the second half of the year.
Without this slippage, the half-year results would have represented
the Group’s best Operating results to date for any half-year period
and the knock on effect will be to show improvement in the second
half of the year.
Administrative expenses were higher mainly due to investment in
the engineering and administration department to meet increased
demand (especially from recurring revenue contracts), the
introduction of the new employer’s pension regulations and an
increase in commission costs. In addition, the Group invested in an
updated website and incurred other marketing costs during the
period, the benefit of which will be mainly felt in future
periods.
Gross margins continue to improve as the business has become
increasingly focussed around managed service fees and less
dependent on low margin ‘box shifting’ transactional work. To this
end, the Board is pleased to announce further growth in recurring
revenue contracts to a run rate of just under £600,000 per annum
(versus just under £400,000 per annum at the end of the comparable
period last year). The Board notes that several of the larger
contracts written during the period were towards the end of the
half-year and hence the benefit will mainly be accrued
thereafter.
New client acquisition continued apace and the Group was pleased
to add new clients Hewlett Packard (for in-store work in EMEA
(Europe Middle East and Africa)),
Godiva Chocolates, Volkswagen UK (“VW”), European Bank for
Reconstruction and Development (“EBRD”), and BMW. The Board
anticipates further projects to be delivered from these
relationships.
The Group is receiving more international enquiries and
opportunities and now work with several key clients outside of the
UK. During the period, the Group rolled out digital signage
solutions for Ted Baker alone in
Asia Pacific, the Middle East, Africa, and the
United States. The consistency of delivery of high quality
solutions gives the Company a strong market proposition which is
attractive to clients.
During the six month period to 30
September 2017, revenue has continued to be generated
predominantly across the Retail and Corporate sectors. The
Retail sector (including Automotive Retail) continues to be the
area of best performance, and largest opportunity, but in addition
the Group has acquired new clients in the Corporate sector
including EBRD, plus non-retail work for BMW.
Highlights for the period include delivery of Studio B for
Clydesdale Bank, which opened in April, and the new VW store in
Birmingham at the Bullring. In addition, another new store for
Clydesdale Bank was opened towards the end of the period, again in
Birmingham. Ongoing smaller project and recurring work with
existing clients Hyundai, Halfords, HMV, Kuoni, Diesel and Rockar
continued.
Overall strategy continues to be to focus the sales effort on a
concentrated number of high profile clients, providing innovative
audio visual solutions which have the potential to generate ongoing
long term business opportunities, across multiple sites, and to
pursue greater recurring revenues by providing a fully managed
delivery and on-going support service to those clients. By covering
a larger proportion of the cost base with recurring revenue
contracts, the Group can deliver consistent profit month on month.
It is also advantageous for cash-flow purposes, and helped generate
a cash in-hand balance at period end of £103,000 (2016: £137,000).
The Board expects the cash balance to improve in the final quarter
of the full financial year due to the completion of the projects
that slipped from the half year, ongoing new business wins and
renewals of further recurring revenue contracts.
The client proposition continues to be that of generating
business loyalty through excellence of delivery, coupled with
offering a diverse product range including the Group's own
products. As noted above, recurring revenues are at the forefront
of this strategy and are being increased by offering contracts for
service and maintenance, content production and management,
additional consultancy and data analysis work.
Operating Costs
The Board continuously reviews costs whilst balancing investment
in the sales and marketing process.
As noted, costs increased somewhat this half-year as the
business invested to meet the demands of our growing customer base.
This has included further engineering resource to help support the
increase in recurring revenue contracts, but also increased
marketing spend to attract new clients. The MediaZest.com website
has been overhauled to improve the presentation of the Group to
clients and investors and generate more incoming
opportunities. In addition, the Group exhibited at the Retail
Digital Signage Expo at London Olympia in May 2017 for the first time in several years in
order to boost new business efforts. Finally, the Company also
hosted its first Retail Transformation Conference at Studio B
recently inviting a select audience of Retailers to learn about the
Company’s work in that space for Clydesdale Bank.
Outlook
The Board acknowledges that timing differences mean that the
half-year results do not reflect the continued improvement in the
Group position but are confident that by the full year
(31 March 2018) this situation will
be better represented. Pending the outcome of a handful of current
pitches for quarter 4 of that year, the Board hopes that the
Company will deliver a consolidated full year profit at EBITDA
level for the first time.
The improvements in recurring revenue streams are important as
the Company moves to consistent month on month profitability, and
is enabling the Group to build a strong foundation for future
growth.
Lance O’Neill
Chairman
15 December 2017
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME |
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited |
Unaudited |
Audited |
|
|
Six
months |
Six
months |
12
months |
|
Notes |
30-Sep-17 |
30-Sep-16 |
31-Mar-17 |
|
|
£'000 |
£'000 |
£'000 |
Continuing
Operations |
|
|
|
|
Revenue |
|
1,339 |
1,474 |
3,013 |
Cost of sales |
|
(696) |
(843) |
(1,700) |
|
|
|
|
|
Gross
profit |
|
643 |
631 |
1,313 |
|
|
|
|
|
Administrative
expenses |
|
(730) |
(627) |
(1,315) |
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
(87) |
4 |
(2) |
|
|
|
|
|
Administrative
expenses – depreciation & amortisation |
|
(28) |
(38) |
(77) |
|
|
|
|
|
Operating
Loss |
|
(115) |
(34) |
(79) |
|
|
|
|
|
Finance Costs |
|
(34) |
(37) |
(67) |
|
|
|
|
|
Loss before
taxation |
|
(149) |
(71) |
(146) |
|
|
|
|
|
Taxation credit |
|
- |
4 |
4 |
|
|
|
|
|
Loss for the period
and total comprehensive loss for the period attributable to the
owners of the parent |
|
(149) |
(67) |
(142) |
|
|
|
|
|
Loss per ordinary
0.1p share |
|
|
|
|
Basic |
2 |
(0.01p) |
(0.01p) |
(0.01p) |
Diluted |
2 |
(0.01p) |
(0.01p) |
(0.01p) |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION |
AS AT 30 SEPTEMBER 2017 |
|
|
|
|
|
|
|
Unaudited |
Unaudited |
Audited |
|
|
As at
30-Sep-17 |
As at
30-Sep-16 |
As at
31-Mar-17 |
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
Non-current assets |
|
|
|
Goodwill |
|
2,772 |
2,772 |
2,772 |
Property,
plant and equipment |
43 |
63 |
51 |
Intellectual property |
5 |
26 |
14 |
Total non-current
assets |
|
2,820 |
2,861 |
2,837 |
|
|
|
|
|
Current
assets |
|
|
|
Inventories |
92 |
99 |
69 |
Trade and
other receivables |
585 |
491 |
243 |
Cash and
cash equivalents |
103 |
137 |
160 |
Total
current assets |
780 |
727 |
472 |
|
|
|
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
Trade and
other payables |
(1,284) |
(1,086) |
(860) |
Financial
liabilities |
(447) |
(385) |
(424) |
Total current
liabilities |
|
(1,731) |
(1,471) |
(1,284) |
|
|
|
|
|
|
|
|
|
|
Net
current liabilities |
(951) |
(744) |
(812) |
|
|
|
|
|
Non-current
liabilities |
|
|
|
|
Financial
liabilities |
|
(11) |
(35) |
(18) |
Total non-current
liabilities |
|
(11) |
(35) |
(18) |
|
|
|
|
|
Net assets |
|
1,858 |
2,082 |
2,007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
Share
Capital |
3,499 |
3,499 |
3,499 |
Share
premium account |
5,221 |
5,221 |
5,221 |
Other
reserves |
146 |
146 |
146 |
Retained
earnings |
(7,008) |
(6,784) |
(6,859) |
Total
equity |
1,858 |
2,082 |
2,007 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY |
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017 |
|
|
|
|
|
|
|
Share |
Share |
Share
Options |
Retained |
Total |
|
Capital |
Premium |
Reserves |
Earnings |
Equity |
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
Balance at 31 March
2016 |
3,299 |
5,138 |
146 |
(6,717) |
1,866 |
|
|
|
|
|
|
Loss for the
period |
- |
- |
- |
(67) |
(67) |
|
|
|
|
|
|
Total comprehensive
loss for the period |
- |
- |
- |
(67) |
(67) |
|
|
|
|
|
|
Issue of share
capital |
200 |
100 |
- |
- |
300 |
Share issue costs |
- |
(17) |
- |
- |
(17) |
|
|
|
|
|
|
Balance at 30
September 2016 |
3,499 |
5,221 |
146 |
(6,784) |
2,082 |
|
|
|
|
|
|
Loss for the
period |
- |
- |
- |
(75) |
(75) |
|
|
|
|
|
|
Total comprehensive
loss for the period |
- |
- |
- |
(75) |
(75) |
|
|
|
|
|
|
Balance at 31 March
2017 |
3,499 |
5,221 |
146 |
(6,859) |
2,007 |
|
|
|
|
|
|
Loss for the
period |
- |
- |
- |
(149) |
(149) |
|
|
|
|
|
|
Total comprehensive
loss for the period |
- |
- |
- |
(149) |
(149) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 30
September 2017 |
3,499 |
5,221 |
146 |
(7,008) |
1,858 |
CONSOLIDATED STATEMENT OF CASH FLOWS |
|
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017 |
|
|
|
|
|
|
|
|
Unaudited |
Unaudited |
Audited |
|
|
Six
months |
Six
months |
12 months |
|
Note |
30-Sep-17 |
30-Sep-16 |
31-Mar-17 |
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
Net cash used in
operating activities |
3 |
(195) |
(95) |
222 |
|
|
|
|
|
Taxation |
|
- |
- |
9 |
|
|
|
|
|
Cash flows used in
investing activities |
|
|
|
|
Purchase of plant and
machinery |
|
(10) |
(12) |
(23) |
Disposal of plant and
machinery |
|
- |
11 |
11 |
Purchase of
intellectual property |
|
(2) |
- |
- |
Purchase of leasehold
improvements |
|
- |
- |
(4) |
Net cash (used in)
/ generated from investing activities |
|
(12) |
(1) |
(16) |
|
|
|
|
|
Cash flow from
financing activities |
|
|
|
|
Other loan
repayments |
|
(10) |
(10) |
(42) |
Shareholder loan
receipts |
|
32 |
78 |
28 |
Shareholder loan
repayments |
|
- |
(50) |
(94) |
Interest paid |
|
(40) |
(48) |
(25) |
Proceeds of share
issue |
|
- |
250 |
250 |
Share issue costs |
|
- |
(17) |
(17) |
Net cash (used in)
/ generated from financing activities |
|
(18) |
203 |
100 |
|
|
|
|
|
|
|
|
|
|
Net decrease in
cash and cash equivalents |
|
(225) |
107 |
315 |
|
|
|
|
|
Cash and cash
equivalents at beginning of period / year |
|
92 |
(223) |
(223) |
|
|
|
|
|
Cash and cash
equivalents at end of period / year |
4 |
(133) |
(116) |
92 |
|
|
|
|
|
|
NOTES TO THE
FINANCIAL INFORMATION |
|
1.
Basis of preparation |
|
The Group’s annual
financial statements are prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted for use in the EU
applied in accordance with the provisions of the Companies Act 2006
applicable to companies preparing financial statements under
IFRS. |
|
Accordingly, the
consolidated half-yearly financial information in this report has
been prepared using accounting policies consistent with IFRS. IFRS
is subject to amendment and interpretation by the International
Accounting Standards Board (IASB) and the IFRS Interpretations
Committee and there is an ongoing process of review and endorsement
by the European Commission. The financial information has been
prepared on the basis of IFRS that the Directors expect to be
applicable as at 31 March 2018. |
|
This interim report
does not comply with IAS 34 “Interim Financial Reporting” (as
adopted by the European Union), as permissible under the AIM Rules
for Companies. |
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Going
Concern |
|
The Directors have
considered financial projections based upon known future invoicing,
existing contracts, pipeline of new business and the number of
opportunities it is currently working on, particularly in the
Retail sector. In addition, these forecasts have been considered in
the light of the ongoing challenges in the global economy, previous
experience of the markets in which the Group operates and the
seasonal nature of those markets, as well as the likely impact of
ongoing reductions to public sector spending. These forecasts
indicate that the Group will generate sufficient cash resources to
meet its liabilities as they fall due over the next 12 month period
from the date of this interim announcement. |
|
As a result the
Directors consider that it is appropriate to draw up the financial
information on a going concern basis. Accordingly, no adjustments
have been made to reflect any write downs or provisions that would
be necessary should the Group prove not to be a going concern,
including further provisions for impairment to goodwill and
investments in Group companies. |
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Non-statutory
accounts |
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The financial
information contained in this document does not constitute
statutory accounts within the meaning of Section 434 of the
Companies Act 2006 (“the Act”). |
|
The statutory accounts
for the year ended 31 March 2017 have been filed with the Registrar
of Companies. The report of the auditors on those statutory
accounts was unqualified, did not draw attention to any matters by
way of emphasis and did not contain a statement under Section
498(2) or (3) of the Act. The financial information for the six
months ended 30 September 2017 and 30 September 2016 is not
audited. |
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2.
Loss per share |
|
Basic loss per share
is calculated by dividing the loss attributed to ordinary
shareholders of £149,000 (2016: £67,000) by the weighted average
number of shares during the period of 1,239,757,641 (2016:
1,195,801,597). The diluted loss per share is identical to that
used for basic loss per share as the exercise of warrants and share
options would have the effect of reducing the loss per share and
therefore is not dilutive under International Accounting Standard
33 “Earnings per Share”. |
NOTES
TO THE FINANCIAL INFORMATION (Continued) |
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|
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|
|
3.
Cash used in operations |
|
|
|
|
|
|
Unaudited |
Unaudited |
Audited |
|
|
Six
months |
Six
months |
12
months |
|
|
30-Sep-17 |
30-Sep-16 |
31-Mar-17 |
|
|
£'000 |
£'000 |
£'000 |
Operating loss |
|
(115) |
(34) |
(79) |
Depreciation of
tangible assets |
|
18 |
25 |
52 |
(Profit) / Loss on
sale of tangible assets |
|
- |
(9) |
(9) |
Amortisation of
intangible assets |
|
10 |
13 |
25 |
Conversion of interest
on shareholder loans into shares |
|
- |
- |
50 |
Decrease / (increase)
in inventories |
|
(23) |
(31) |
(1) |
(Decrease) / increase
in payables |
|
257 |
75 |
79 |
(Increase) / decrease
in receivables |
|
(342) |
(134) |
105 |
Net cash outflow
from operating activities |
|
(195) |
(95) |
222 |
|
|
|
|
|
4.
Cash and cash equivalents |
|
|
|
|
|
|
Unaudited |
Unaudited |
Audited |
|
|
Six
months |
Six
months |
12
months |
|
|
30-Sep-17 |
30-Sep-16 |
31-Mar-17 |
|
|
£'000 |
£'000 |
£'000 |
Cash held at bank |
|
103 |
137 |
160 |
Invoice discounting
facility |
|
(236) |
(253) |
(68) |
|
|
(133) |
(116) |
92 |
|
|
|
|
|
5.
Subsequent events |
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There have
been no subsequent events since 30 September 2017. |
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6.
Distribution of the Half-Yearly Report |
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Copies of the Half-yearly Report will be available to the
public from the Company’s website, www.mediazest.com, and from the
Company Secretary at the Company's registered address at Unit 9,
Woking Business Park, Albert Drive, Woking, Surrey, GU21 5JY.
This announcement contains inside information for the purposes of
Article 7 of Regulation (EU) 596/2014. |
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Enquiries: |
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Geoff Robertson |
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Chief Executive
Officer |
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MediaZest Plc |
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0845 207 9378 |
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Edward Hutton / David
Hignell |
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Nominated Adviser |
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Northland Capital
Partners Limited |
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020 3861 6625 |
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Claire Noyce |
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Broker |
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Hybridan LLP |
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020 3764 2341 |
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