REG-MediaZest Plc: Final Results
28/08/2019 13:05
MediaZest Plc
("MediaZest",the "Company” or the “Group”; AIM: MDZ)
Final Results for the Year Ended 31 March 2019
MediaZest, the creative audio-visual company, is pleased to provide
shareholders with final results for the year ended 31 March 2019.
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) 596/2014
CHAIRMAN’S STATEMENT
Introduction
The results for MediaZest plc for the year ended 31 March 2019 incorporate the
results of its wholly owned subsidiary, MediaZest International Limited.
Results for the year and Key Performance Indicators
* Revenue for the period was £3,303,000 up 17% (2018: £2,819,000).
* Gross profit was £1,675,000 up 23% (2018: £1,361,000)
* Gross margins improved by 3% to 51% (2018: 48%).
* EBITDA was a profit of £129,000 (2018: loss of £113,000).
* Profit after tax was £6,000 (2018: loss of £256,000).
* The basic and fully diluted earnings per share was 0.0004 pence (2018 loss
per share: 0.02 pence).
* Cash in hand at period end £24,000 (2018: £38,000).
Business overview
The Board is pleased to announce that the Group has reached profitability at
both EBITDA and Profit after tax for the first time, with considerable year on
year improvement in financial performance, beating market expectations
comfortably.
The results include the beneficial profit impact of £117,000 resulting from
the adoption of IFRS15, which is analysed in note 4. The impact of this is
additional revenue of £317,000 and costs of £200,000 which are
consequentially recognised in profit or loss for the year ended 31 March 2019.
Significant projects for HP (Hewlett Packard), Lululemon Athletica, Ford Motor
Company, Mitsubishi Motors, Opel, and Tiffany & Co. as well as the European
Bank for Reconstruction and Development have complemented ongoing contracts
with long term clients such as Ted Baker, Diesel, Kuoni and Hyundai. During
the year the Group has also successfully completed projects in Europe, the
Middle East, Africa, Asia (including China), the Americas and Australasia
making the Group a global provider of audio-visual solutions for our client
base.
MediaZest International Limited turned over £3,303,000, generating EBITDA of
£434,000 and a Profit after Tax of £350,000. It has annual ongoing recurring
contractual revenues in excess of £700,000, a number of which are
multi-year deals.
The first six months of the Financial Year 2019 were particularly pleasing as
activity in the retail sector provided opportunities for growth and new client
acquisition, in line with the Group’s strategy. The second half of the
financial year, however, was markedly more difficult. This was due, in part,
to the deterioration in macroeconomic trading conditions that has been evident
since November 2018 as a consequence, initially, of uncertainty surrounding
Brexit and then latterly, an overall slowdown in the sector as a whole.
In light of these circumstances, the achievement in reaching profitability
this year has been particularly encouraging although the Board recognises that
there is much work still to be done.
Markets Served and Project Highlights
The Group services, primarily, the Retail sector, particularly the Automotive,
Fashion, Electronic goods and Financial Services sectors. In addition, it also
provides audio visual solutions for the Corporate and Education markets.
Below we set out some of the project highlights for the year in traditional
retail.
The Company continued to provide innovative in-store solutions for HP’s
concessions within host retailers across Europe, the Middle East and Africa.
In aggregate over 200 screens were deployed in twelve countries and eight
different languages, all via a centrally managed content management solution
provided by MediaZest.
In the follow-up to a successful deployment at Lululemon’s flagship store in
London’s Regent Street two years ago, MediaZest has been working with
Lululemon in providing digital signage solutions for multiple stores across
Europe as part of their ongoing growth programme.
Business continued steadily with Ted Baker, for whom the company now provides
content management and audio-visual support globally in twenty countries.
In 2018, the Group was delighted to be appointed to install a large LED screen
at the Tiffany new concept store in Covent Garden and is currently working on
their New Bond Street flagship store refresh programme.
MediaZest added Pets at Home as a client in the year, providing audio-visual
solutions for their new store concepts in Stockport and Chesterfield.
Following the year end the Company has also completed a further store in
Stratford-Upon-Avon with two more awarded and another two in the pipeline.
The automotive sector remained fruitful, as the Group continued to work with
Hyundai and VW but also delivered new concept stores for Ford, Mitsubishi and
Opel. In respect of Ford, the Company provided a range of solutions including
projection, LED and data measurement. This “Ford Store” concept in
Manchester is located within the Next store in the city’s Arndale Shopping
Centre.
Mitsubishi opened their first store in the Lakeside shopping centre, again
featuring a wide range of audio-visual solutions. For Opel, it provided
content management and content build services for a proof of concept
dealership in Germany, all in the local language. MediaZest, in respect of the
latter, partnered with Snap On Business Solutions in much the same way as it
works with Retail Interior Design agencies and the likes of Samsung to jointly
deliver best-in-class projects for end clients.
In the corporate arena, the Group undertook a large project for the European
Bank for Reconstruction and Development (EBRD), a new headquarters for both
Kuoni and its sister company, Carrier. Along with the aforementioned client
business the completion of an audio installation at BMW’s Mini factory in
Oxfordshire, were some of the more notable highlights.
Following the collapse into administration of HMV, a long-standing client, the
Company wrote off bad debts of £16,000 against outstanding invoices
representing amounts due no more than 30 days at the time of administration.
Revenue from project work for the new owner of these stores has generated
income of a similar level.
Strategy
The Board’s strategy continues to be one of growing both the quantum and
quality of revenues with an emphasis upon clients where there is a long-term
opportunity to deploy solutions across multiple sites, and sometimes
countries, over a period of time.
The Group focus is on providing a high-quality Managed Service offering
wrapped around hardware and software delivery that generates ongoing
contractual revenues from the customer base over several years and this is a
major objective. This strategy has been effective over the last 24 months, in
particular, which has enabled the Group to create an annual recurring
contractual revenue base of in excess of £700,000. In the longer-term, the
aim is to cover the Group’s costs with recurring contractual revenues to
achieve consistent profitability, supplemented by one or more ‘game
changing’ large scale roll-out projects.
In the context of the above narrative, the Board has recognised the current
period of economic slowdown and the negative impact thereof on the retail
sector. It has, therefore, taken the following steps in late 2018/early 2019
to help mitigate this:
* Reduced annual costs by c. £200,000
* Increased marketing activity in the Education and Corporate sectors. This is
already showing signs of success as noted below; and
* Undertook a small placing to improve working capital, also as detailed
below.
Fund Raising During the Period
The Company raised £110,000 (before expenses) to strengthen the balance sheet
from existing investors in February 2019 by way of a placing of 110,000,000
new ordinary shares at a placing price of 0.1p per share. The shares were
admitted to trading on AIM in February 2019.
Outlook
Following the progress made during Financial Year 2019, it is prudent to
assume that for the new Financial Year ending 31 March 2020, the
macro-economic and business environment will continue to be challenging.
However, as already noted, many customers continue to work with the Company
on an ongoing basis, rolling out solutions to their stores as refresh or new
store programmes continue. Lululemon, Pets at Home, Ted Baker, Kuoni,
Hyundai and several others fit into this category with multiple projects for
each already won for the new financial year.
A large project in the Education sector has also been won, as announced in the
Trading Update of 25 March 2019. This is expected to be deployed in the second
half of the new financial year.
Retail markets in which the Company operates are increasingly adopting digital
signage solutions, which bodes well for the future. “Big Data” services,
including measuring return on investment and improving the relevancy of
content to the consumer, represent opportunities in the sector in which the
Group is in the vanguard.
Despite the business environment, renewal rates on recurring revenue contracts
for “already-deployed” stores continue to be strong. This, coupled with
both anticipated revenue and other new business wins, along with the reduction
in the cost base means the Board believes the Group has an opportunity to
build on this maiden profit during the coming year.
Lance O’Neill
Chairman
Date: 28 August 2019
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2019
2019 2018
£'000 £'000
Continuing operations
Revenue 3,303 2,819
Cost of sales (1,628) (1,458)
Gross profit 1,675 1,361
Administrative expenses – excluding depreciation & amortisation (1,546) (1,474)
EBITDA 129 (113)
Administrative expenses – depreciation & amortisation (40) (41)
Operating profit/(loss) 89 (154)
Finance costs (83) (102)
Profit/(loss) on ordinary activities before taxation 6 (256)
Tax on profit/(loss) on ordinary activities - -
Profit/(loss) for the year and total comprehensive income/(loss) for the year attributable to the owners of the parent 6 (256)
Earnings/(loss) per ordinary 0.1p share
Basic 0.0004p (0.02p)
Diluted 0.0004p (0.02p)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2019
(Company No. 05151799)
2019 2018
£'000 £'000
Non-current assets
Goodwill 2,772 2,772
Property, plant & equipment 62 51
Intangible fixed assets 1 3
Total non-current assets 2,835 2,826
Current assets
Inventories 69 217
Trade and other receivables 481 897
Cash and cash equivalents 24 38
Total current assets 574 1,152
Current liabilities
Trade and other payables (1,017) (1,664)
Financial liabilities (548) (471)
Total current liabilities (1,565) (2,135)
Net current liabilities (991) (983)
Non-current liabilities
Financial liabilities (25) (22)
Total non-current liabilities (25) (22)
Net assets 1,819 1,821
Equity
Share capital 3,656 3,546
Share premium account 5,244 5,244
Share options reserve 146 146
Retained earnings (7,227) (7,115)
Total equity 1,819 1,821
The financial statements were approved and authorised for issue by the Board
of Directors on 28 August 2019 and were signed on its behalf by:
Geoffrey Robertson
CEO
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2019
Share Share Share Options Retained Total
Capital Premium Reserve Earnings Equity
£'000 £'000 £'000 £'000 £'000
Balance at 1 April 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
Adjustment for adoption of IFRS 15 - - - (117) (117)
Balance at 1 April 2018 restated 3,546 5,244 146 (7,232) 1,704
Profit for the year - - - 6 6
Total comprehensive income for the year - - - 6 6
Issue of share capital 110 - - - 110
Share issue costs - - - (1) (1)
Balance at 31 March 2019 3,656 5,244 146 (7,227) 1,819
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2019
2019 2018
£'000 £'000
Net cash generated from/(used in) operating activities before tax 117 (434)
Taxation - -
Net cash generated from/(used in) operating activities 117 (434)
Cash flows used in investing activities
Purchase of property, plant and equipment (30) (5)
Purchase of intellectual property - (2)
Net cash used in investing activities (30) (7)
Cash flow from financing activities
Other loans (19) (40)
Shareholder loan receipts 385 233
Shareholder loan repayments (330) (213)
Interest paid (58) (54)
Proceeds of share issue 110 70
Share issue costs (1) -
Net cash generated from/(used in) financing activities 87 (4)
Net increase / (decrease) in cash and cash equivalents 174 (445)
Cash and cash equivalents at beginning of year (353) 92
Cash and cash equivalents at end of the year (179) (353)
NOTES TO THE FINANCIAL STATEMENTS
The financial information set out in this announcement does not constitute the
Group’s financial statements for the years ended 31 March 2019 or 2018, but
is derived from those financial statements. Statutory financial statements for
2018 have been delivered to the Registrar of Companies and those for 2019 will
be delivered following the Group’s annual general meeting. The auditors have
reported on the 2018 and 2019 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
2019 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:
2019 2018
£’000 £’000
UK and Channel Islands 2,549 2,381
Netherlands 292 281
Switzerland 157 -
Italy 59 -
Germany 53 70
North America 29 54
Other 164 33
3,303 2,819
An analysis of revenue by type is shown below:
2019 2018
£'000 £’000
Hardware and installation 2,008 2,016
Support and maintenance – recurring revenue 645 524
Other services (including software solutions) 650 279
3,303 2,819
£65,000 of revenue has been recognised at a point in time and £3,238,000 of
revenue has been recognised over a period of time. Transitional exemptions
have been taken from restating the comparative disclosure.
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.
The Group does not rely on any individual client – the following revenues
arose from sales to the Group’s largest client.
2019 2018
£’000 £’000
Goods and services 155 94
Service and maintenance 181 169
336 263
2. EARNINGS/(LOSS) PER ORDINARY SHARE
2019 2018
Profit/(Loss) £’000 £’000
Profit/(Loss) for the purposes of basic and diluted earnings per share being net loss attributable to equity shareholders 6 (256)
2019 2018
Number of shares Number Number
Weighted average number of ordinary shares for the purposes of basic earnings per share 1,296,370,979 1,245,639,221
Number of dilutive shares under option or warrant - -
2019 2018
£’000 £’000
Weighted average number of ordinary shares for the purposes of dilutive loss per share 1,296,370,979 1,245,639,221
Basic earnings per share is calculated by dividing the profit after tax
attributed to ordinary shareholders of £6,000 (2018 loss: £256,000) by the
weighted average number of shares during the year of 1,296,370,979 (2018:
1,245,639,221).
The diluted loss per share is identical to that used for basic loss per share
as the options are “out of the money” and therefore anti-dilutive.
3. CASH AND CASH EQUIVALENTS
The Group The Group The Company The Company
2019 2018 2019 2018
£’000 £'000 £’000 £'000
Cash held at bank 24 38 2 -
Invoice discounting facility (203) (391) - -
(179) (353) 2 -
4. ADOPTION OF IRFS 9 AND IFRS 15
IFRS 9 “Financial Instruments” and IFRS 15 “Revenue from contracts with
customers were both adopted with effect from 1 April 2018 in line with the
transitional provisions provided in the new standards.
For IFRS 9 there is not deemed to be any material impact as the impact of any
increased loss allowance is deemed immaterial.
For IFRS 15, Management have reviewed the nature of their contracts in line
with the new standard. In prior years the Group had unbundled the sale of
goods and service works, recognising each element separately, when providing
solutions to customers. However, Management now believe this solution
constitutes the provision of a single performance obligation, where contract
revenue should be recognised over time in line with the criteria of IFRS 15.
As a result, Management have reviewed contracts in progress at the start of
the financial year and aligned the accounting treatment to the new policy.
As disclosed in the Statement of Changes in Equity, this results in a
reduction of equity of £117,000 relating to profit which cannot be recognised
in line with the new accounting policy at the start of the year. The impact of
this, is additional revenue of £317,000 and costs of £200,000 which are
consequentially recognised in profit or loss for the year ended 31 March 2019
as this adjustment reverses in the current year.
For the remaining income streams of the business is there is no change in
accounting policy from adopting IFRS 15.
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