REG-MediaZest Plc: Final Results
17/08/2018 07:45
MediaZest Plc
("MediaZest"or the "Company”; AIM: MDZ)
Final Results for the Year Ended 31 March 2018
MediaZest, the creative audio-visual company, is pleased to provide
shareholders with final results for the year ended 31 March 2018.
CHAIRMAN’S STATEMENT
Introduction
The results for MediaZest plc (the “Group”) for the year ended 31 March
2018 incorporate the results of its subsidiary, MediaZest International
Limited, which is wholly owned.
Results for the year and Key Performance Indicators
* Revenue for the period was £2,819,000 down 6% (2017: £3,013,000).
* Gross profit was £1,361,000 – a 4% increase (2017: £1,313,000).
* Gross margins improved to 48% (2017: 44%).
* EBITDA was a loss of £113,000 (2017: loss of £2,000).
* Loss after tax of £256,000 increased 80% (2017: loss of £142,000).
* The basic and fully diluted loss per share was 0.02 pence (2017: 0.01
pence).
* Cash in hand at period end £38,000 (2017: £160,000).
Business overview
The Group comprises two entities: MediaZest plc, a holding company quoted on
the AIM section of the London Stock Exchange, and an operational company,
MediaZest International Limited.
Despite much progress in building the business during the year, the Board is
disappointed with the financial results for year ended 31 March 2018
(“FY18”), which have been significantly affected by delays to three
substantial projects that have all fallen into the new financial year ended 31
March 2019 (“FY19”). This timing risk was highlighted in the interim
results announcement of 15 December 2017.
The net impact on the FY18 accounts has been that revenues are lower than
expected by approximately £450,000 and net profit lower by approximately
£200,000. There was also a further impact on cash in hand at year end as the
Group held stock for two of these projects prior to the FY18 year-end cut-off.
In spite of these delays, the operational business, MediaZest International
Limited, has again showed a net profit, with revenues of £2,819,000 (2017:
£3,013,000) and profit of £95,000 after tax (2017: £118,000).
The most significant improvement in the business was evidenced by the increase
in recurring contractual revenue. The Group continues to focus its efforts on
permanent audio-visual installation work, with accompanying growth in
recurring revenues. Over time this is expected to mitigate the impact of
project delays such as those previously mentioned.
This strategy continues to work well for the Group and, as announced in the
trading update on 23 May 2018, the current run rate of recurring revenues has
grown significantly in the last 12 months. At the current time it is in excess
of £700,000, more than double the level at the beginning of FY18. This
increase in recurring revenue contracts will have substantial impact in FY19
as many of these contracts began relatively recently and the associated
revenues are apportioned across the life of the contract.
The Group now supports approximately 2,000 displays in over 20 countries under
these contracts.
Margins continue to improve in the business as recurring revenues grow, also
reflecting the strategic emphasis on providing managed services in conjunction
with any hardware supplied. This managed service wraps around the audio-visual
proposition and includes the analysis of return on investment and associated
data services for clients which the Board believes will be an area of
profitable growth in the coming years.
The Group’s advanced expertise in these areas provides a competitive
advantage and in building on initial development of a product based on facial
recognition technology (“MediaZest Retail Analytics”) it has invested in
acquiring access to new tools for data measurement and a refined reporting
database to provide clients with further reporting and analytical services in
respect of this data.
Costs have risen in some areas as the Group becomes better structured to meet
client needs and there have also been increases in expenses associated with
the listing of MediaZest plc and interest expense on shareholder loans. The
Board continues to monitor these closely and will adjust as necessary to meet
the demands of the business in FY19.
PROJECT HIGHLIGHTS AND MARKETS SERVED
The Group continues to enjoy a strong reputation in the broader retail sector,
particularly in the Automotive, Fashion, Electronic goods and Financial
Services sectors.
Project highlights for the year include the completion of our first store for
Volkswagen, at Birmingham Bullring; completion of our first and delivery of
our second major store projects for Clydesdale and Yorkshire Banking Group
plus substantial project work with HP. All are new clients won within the last
18 months.
Other new clients include the European Bank for Reconstruction and Development
(EBRD) and in the automotive sector Mitsubishi and Ford through our
relationship with Rockar along with projects in Germany with Opel and a
corporate project with BMW in the UK.
The Company’s work with Ted Baker, Diesel, Kuoni, HMV, Halfords, Hyundai and
several others all continues.
As well as serving clients all over the UK, in the past year there has been
notable growth in overseas opportunities. Ted Baker is a client the Company
works with on a global basis, now including Asia, Europe, the Middle East and
Africa (EMEA), North America and Australasia. Recent projects for HP have been
across the EMEA region and the Group recently completed several projects in
China. There is an ongoing project for Opel is in Germany and the Group is
pitching on several other multi-national substantial opportunities. The
Board believes this offers meaningful growth opportunities in FY19 and future
years.
STRATEGY
The Board maintains the following policies to maximise revenue and long- term
value in the company:
* Emphasis on maximising opportunities by concentrating the Group’s
marketing and sales efforts on acquiring and developing business relationships
with large scale customers which have both the desire and potential of rolling
out digital signage in multiple locations;
* Improve the Group’s recurring revenue streams through different managed
service offerings;
* Maintain the emphasis on proprietary products such as MediaZest Retail
Analytics which can generate intellectual property in the statement of
financial position and provide ongoing sustainable revenue streams; and
* Market the Group’s ‘one stop shop’ positioning to a wide range of
global retailers in conjunction with existing partners and to continue to grow
the number of overseas deployments.
Furthermore, the Group has agreed to work more closely with one of its
significant supplier partners, Samsung UK. As one of a handful of “Growth
Engine Partners” selected by Samsung UK, the two companies are working on
certain joint marketing activities that the Board hopes will lead to further
mutual substantial opportunities in the next 12 months.
The growth in activity in audio visual retail markets currently being
experienced by many companies in the sector is also leading to further
corporate opportunities. The Board’s view is that the acceleration of growth
by way of merger and/or acquisition is a strategy that should be considered at
this time and is evaluating several such opportunities whilst remaining open
to other options.
FUNDRAISING DURING THE PERIOD
On 13 February 2018, the Company made a successful placing of 46,668,000
shares at 0.15p per share to raise £70,000 before expenses. The shares were
admitted to trading on AIM in February 2018.
The reasons for this placing were twofold:
The Company is becoming more focused on dealing with large, complex, global
organisations. This has led to a need to keep a proportion of operating
cashflow earmarked for deposit purposes with suppliers. In order to take full
advantage of two specific opportunities, the Board set aside some of these
funds raised for this purpose.
In addition, as noted above, the Board believes that there are strategic
growth opportunities that should be explored and an element of the Placing
funds has been set aside for this accordingly.
Due to the dilutive nature of fund raising at the current share price, the
Board limited the amount raised to cover these two requirements only.
OUTLOOK
Although there has been much recent progress in business structure terms, the
Board recognises that financial results need to improve and is looking to
achieve this in FY19, particularly with the strong start to the first quarter.
Although the project delays have been particularly frustrating in FY18, all
three will fall within the first half of FY19 and as a result, in tandem with
growing contractual revenues, the Group expects to make substantial progress
in financial performance at both Group and operational levels for the period
ending 30 September 2019 versus the corresponding prior year period. Unaudited
management accounts to 31 May 2018 (the first two months of the new financial
year FY19) already show turnover of £662,000 and profit at Group level of
£37,000 (profit in the operational company £105,000) which is a significant
improvement on the previous year.
New projects for HP, Mitsubishi (at Lakeside shopping centre) and Ford (opened
16(th) July at Next in Manchester Arndale Centre) have been well received. The
increased level of recurring revenue contracts is also expected to assist in
achieving improved financial performance and to provide both greater
predictability, visibility and quality of revenue.
New business activity continues to be brisk and the Board expect to announce
further significant contract wins in due course.
Lance
O’Neill
Chairman
Date: 16 August 2018
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2018
Note 2018 2017
£'000 £'000
Continuing operations
Revenue 1 2,819 3,013
Cost of sales (1,458) (1,700)
Gross profit 1,361 1,313
Administrative expenses (1,474) (1,315)
EBITDA (113) (2)
Administrative expenses – depreciation & amortisation (41) (77)
Operating loss (154) (79)
Finance costs (102) (67)
Loss on ordinary activities before taxation (256) (146)
Tax on loss on ordinary activities - 4
Loss for the year and total comprehensive loss for the year attributable to the owners of the parent (256) (142)
Loss per ordinary 0.1p share 2
Basic (0.02p) (0.01p)
Diluted (0.02p) (0.01p)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2018
2018 2017
£'000 £'000
Non-current assets
Goodwill 2,772 2,772
Tangible fixed assets 51 51
Intangible fixed assets 3 14
Total non-current assets 2,826 2,837
Current assets
Inventories 217 69
Trade and other receivables 897 243
Cash and cash equivalents 38 160
Total current assets 1,152 472
Current liabilities
Trade and other payables (1,664) (860)
Financial liabilities (471) (424)
Total current liabilities (2,135) (1,284)
Net current liabilities (983) (812)
Non-current liabilities
Financial liabilities (22) (18)
Total non-current liabilities (22) (18)
Net assets 1,821 2,007
Equity
Share capital 3,546 3,499
Share premium account 5,244 5,221
Share options reserve 146 146
Retained earnings (7,115) (6,859)
Total equity 1,821 2,007
The financial statements were approved and authorised for issue by the Board
of Directors on 16 August 2018 and were signed on its behalf by:
Geoffrey Robertson
CEO
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2018
Share Share Share Options Retained Total
Capital Premium Reserve Earnings Equity
£'000 £'000 £'000 £'000 £'000
Balance at 1 April 2016 3,299 5,138 146 (6,717) 1,866
Loss for the year - - - (142) (142)
Total comprehensive loss for the year - - - (142) (142)
Issue of share capital 200 100 - - 300
Share issue costs - (17) - - (17)
Balance at 31 March 2017 3,499 5,221 146 (6,859) 2,007
Loss for the year - - - (256) (256)
Total comprehensive loss for the year - - - (256) (256)
Issue of share capital 47 24 - - 71
Share issue costs - (1) - - (1)
Balance at 31 March 2018 3,546 5,244 146 (7,115) 1,821
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2018
Note 2018 2017
£'000 £'000
Net cash used in operating activities before tax (434) 222
Taxation - 9
Net cash used in operating activities (434) 231
Cash flows used in investing activities
Purchase of plant and machinery (5) (23)
Disposal of plant and machinery - 11
Purchase of intellectual property (2) -
Purchase of leasehold improvements - (4)
Net cash used in investing activities (7) (16)
Cash flow from financing activities
Other loans (40) (42)
Shareholder loan receipts 233 -
Shareholder loan repayments (213) (66)
Interest paid (54) (25)
Proceeds of share issue 70 250
Share issue costs - (17)
Net cash (used in) / generated from financing activities (4) 100
Net decrease in cash and cash equivalents (445) 315
Cash and cash equivalents at beginning of year 92 (223)
Cash and cash equivalents at end of the year 3 (353) 92
NOTES TO THE FINAL RESULTS ANNOUNCEMENT OF MEDIAZEST PLC FOR THE YEAR ENDED 31
MARCH 2018
The financial information set out in this announcement does not constitute the
Group’s financial statements for the years ended 31 March 2018 or 2017, but
is derived from those financial statements. Statutory financial statements for
2017 have been delivered to the Registrar of Companies and those for 2018 will
be delivered following the Group’s annual general meeting. The auditors have
reported on the 2017 and 2018 financial statements which carried an
unqualified audit report, did not include a reference to any matters to which
the auditor drew attention by way of emphasis and did not contain a statement
under section 498(2) or 498(3) of the Companies Act 2006.
Whilst the financial information included in this announcement has been
computed in accordance with International Financial Reporting Standards
(IFRS), this announcement does not in itself contain sufficient information to
comply with IFRS. The accounting policies used in preparation of this
announcement are consistent with those in the full financial statements that
have yet to be published.
The Report and Consolidated Financial Statements for the year ended 31 March
2018 will be posted to shareholders shortly and will also be available to
download from the Company's website: www.mediazest.com
1. SEGMENTAL INFORMATION
Revenue for the year can be analysed by customer location as follows:
2018 2017
£'000 £'000
UK and Channel Islands 2,381 2,885
Netherlands 281 23
Germany 70 -
North America 54 74
Other 33 31
2,819 3,013
The Directors have decided that revenue recognition should be analysed between
hardware and installation, support and maintenance - recurring revenue, and
other services. The 2017 numbers have been re-stated in accordance with this
decision and the revenue for this year, and comparatives, are as follows:
2018 2017
£'000 £'000
Hardware and installation 2,016 2,418
Support and maintenance – recurring revenue 524 339
Other services 279 256
2,819 3,013
Segmental information and results
The Chief Operating Decision Maker (‘CODM’), who is responsible for the
allocation of resources and assessing performance of the operating segments,
has been identified as the Board. IFRS 8 requires operating segments to be
identified on the basis of internal reports that are regularly reviewed by the
Board. The Board have reviewed segmental information and concluded that there
is only one operating segment. Further analysis, previously undertaken between
the Project division, Service/Maintenance division and MediaZest Ventures
division, has therefore now been excluded.
The Group does not rely on any individual client – the following revenues
arose from sales to the Group’s largest client.
2018 2017
£’000 £’000
Goods and services 94 329
Service and maintenance 169 -
263 329
2. LOSS PER ORDINARY SHARE
2018 2017
£’000 £’000
Losses
Losses for the purposes of basic and diluted earnings per share being net loss attributable to equity shareholders 256 142
2018 2017
Number of shares Number Number
Weighted average number of ordinary shares for the purposes of basic earnings per share 1,245,639,221 1,217,292,006
Number of dilutive shares under option or warrant - -
2018 2017
£’000 £’000
Weighted average number of ordinary shares for the purposes of dilutive loss per share 1,245,639,221 1,217,292,006
Basic loss per share is calculated by dividing the loss after tax attributed
to ordinary shareholders of £256,000 (2017: £142,000) by the weighted
average number of shares during the year of 1,245,639,221 (2017:
1,217,292,006).
The diluted loss per share is identical to that used for basic loss per share
as the exercise of warrants and options would have the effect of reducing the
loss per share and therefore is anti-dilutive.
3. CASH AND CASH EQUIVALENTS
2018 2017
£’000 £'000
Cash held at bank 38 160
Invoice discounting facility (391) (68)
(353) 92
This announcement contains inside information.
Enquiries:
Geoff Robertson Chief Executive Officer MediaZest Plc 0845 207 9378
Tom Price/Edward Hutton Nominated Adviser Northland Capital Partners Limited 020 3861 6625
Claire Noyce Broker Hybridan LLP 020 3764 2341
Notes to Editors:
About MediaZest
MediaZest is a creative audio-visual systems integrator that specialises in
providing innovative marketing solutions to leading retailers, brand owners
and corporations, but also works in the public sector in both the NHS and
Education markets. The Group supplies an integrated service from content
creation and system design to installation, technical support, and
maintenance. MediaZest was admitted to the London Stock Exchange's AIM market
in February 2005. For more information, please visit www.mediazest.com
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