REG-MediaZest Plc: Results for the year ended 30 September 2023
05/03/2024 07:15
5 March 2024
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR.
MediaZest Plc
(“MediaZest”, the “Company”, or the “Group”)
Results for the year ended 30 September 2023
MediaZest plc (AIM: MDZ), the creative audio-visual solutions provider,
announces its consolidated audited results for the year ended 30 September
2023 (“FY23”).
The second half performance, particularly Q4, showed a marked improvement on
the first half year’s trading, despite the uncertainty of the macro-economic
environment in 2023, which these results reflect. The resumption of key client
projects at the end of the year, a notable increase in incoming opportunities
post year end, and an increasing contribution from recurring revenues, gives
the board confidence in MediaZest’s potential as it targets year-on-year
growth and a return to profitability.
Operational Highlights
* Pick up in client demand, with new project briefs in H2 and resumption of
key client project in Q4
* Growth in long term recurring revenue contracts with recurring annual run
rate at 30 September 2023 of c. £700,000
* European subsidiary established in the Netherlands; first project delivered,
and orders secured * New large global automotive client added in FY23,
providing solutions initially in one EU territory
* Ground-breaking project undertaken with digital artist client for immersive
art gallery in London
* Long term clients progressed roll out programmes or ongoing works during the
year: * Hyundai show room audio visual roll out continued, leading to several
new dealership projects
* Pets at Home digital signage solutions deployed in over 100 stores with more
in the pipeline
* Lululemon UK projects supplemented by new stores in several European
locations in H2 FY23
* HMV continued to open and refurbish new stores with audio solutions across
the UK
Financial Highlights
Year ended 30 September FY23 FY22
£’000 £’000
Revenue 2,335 2,820
Gross Profit 1,262 1,499
Gross Margin 54% 53%
EBITDA 1 (before exceptional costs 2 ) (225) 220
(Loss)/Profit after tax (553) 12
(Loss)/Earnings per share (pence) (0.0396) 0.0009
Cash 40 45
1 EBITDA is defined as (Loss)/Profit before tax adding back Finance costs,
depreciation and amortisation
2 Exceptional costs relate to a one-off due diligence cost relating to a
potential acquisition by the Group of £97,000
Post-period End and Outlook
* Demand in MediaZest’s three core sectors (retail, automotive and corporate
offices) continue to grow
* Notable rise in incoming opportunities post year end due to increased
marketing activity
* Long term client projects set to continue in FY24
* Orders secured with Netherlands subsidiary that will be delivered in FY24 *
New large global automotive client likely to provide additional work across
further territories
* Equity fundraising of £120,000 (gross) completed as announced on 8 January
2024
(https://www.investegate.co.uk/announcement/prn/mediazest--mdz/fundraise-to-raise-120-000/7978155)
* Discussions held with a number of suitable parties for potential “Buy and
build” acquisition
* Well-positioned to take advantage of a fragmented digital signage market
which is ripe for acquisition, to build economies of scale
* Positive Outlook – aiming to build on the progress in H2 and generate
positive growth organically and targeting a return to profitability, whilst
continuing to evaluate potential acquisitions
Geoff Robertson, Chief Executive Officer, commented: “Naturally we are
disappointed to report a weaker set of results this year, particularly after
the positive progress made in the prior financial year. Several factors, many
outside of our control, contributed to lower revenues and gross profit, but we
were pleased to report a slightly improved profit margin. Most importantly,
activity in the final quarter was encouraging and we believe the fundamentals
of the Company remain strong.
“Following the uptick in activity in Q4, we believe we are well-positioned
moving into the next financial year. Ongoing long term project roll outs with
existing customers including Hyundai, Pets at Home and Lululemon, in Europe in
particular, have continued into FY24 with further installations already
completed and additional projects forthcoming. As audio-visual technology
plays a greater role in day-to-day operations, we remain positive about the
Group's future growth potential.”
Investor presentation
Geoff Robertson, Group Chief Executive, will provide a live presentation in
relation to the Company’s final results via the Investor Meet Company
platform in due course and a further announcement will be made in due course.
Investors can sign up to Investor Meet Company for free and add to meet
MediaZest here.
(https://www.investormeetcompany.com/mediazest-plc/register-investor)
For further information please contact:
MediaZest Plc www.mediazest.com
Geoff Robertson, Chief Executive Officer via Walbrook PR
SP Angel Corporate Finance LLP (Nomad) Tel: +44 (0)20 3470 0470
David Hignell/Adam Cowl
Hybridan LLP (Corporate Broker) Tel: +44 (0)20 3764 2341
Claire Noyce
Walbrook PR (Media & Investor Relations) Tel: +44 (0)20 7933 8780 or mediazest@walbrookpr.com
Paul McManus / Charlotte Edgar / Alice Woodings Mob: +44 (0)7980 541 893 / +44 (0)7884 664 686 / +44 (0)7407 804 654
About MediaZest (www.mediazest.com)
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.
MediaZest Plc
Chairman’s statement
for the Year Ended 30 September 2023
Introduction
The Board presents the consolidated audited results for the year ended 30
September 2023 for MediaZest plc ("MDZ" or the 'Company') and its wholly owned
subsidiary companies MediaZest International Ltd ("MDZI") and MediaZest
International BV ("MDZBV") which together constitute the "Group".
MDZ Group Results for the year and Key Performance Indicators ("KPIs")
Revenue for the year fell 17% to £2,335,000 (2022: £2,820,000)
Gross profit decreased by 16% to £1,262,000 (2022: £1,499,000)
Gross margins improved slightly to 54% (2022: 53%)
Administrative expenses excluding depreciation and amortisation were
£1,487,000 (2022: £1,279,000), a 16% increase
There were exceptional costs in the year of £97,000 (2022: £nil)
relating to due diligence costs on a potential acquisition
Depreciation and amortisation costs were £67,000 (2022: £63,000)
Finance costs were £164,000 (2022: £145,000)
EBITDA before exceptional costs was a loss of £225,000 (2022:
profit of £220,000) See definition in note 2
Loss After Tax was £553,000 (2022: Profit After Tax of £12,000)
The basic and fully diluted earnings per share was a loss per share
of 0.0396 pence (2022: profit per share 0.0009 pence)
Net assets of the group are £688,000 (2022: £1,241,000)
Cash in hand at 30 September 2023 was £40,000 (2022: £45,000)
MDZ Group Summary
The Group's financial results for the year ("FY23") were disappointing
following on from the progress of the prior year, with top line sales dropping
17%.
This reflected an increasingly uncertain macro-economic environment, and the
impact of operational changes at a key client. Both lead to delays in projects
and reduced revenue during the year. At the same time, inflationary pressures,
the one-off exceptional cost relating to a due diligence process, and
additional costs arising from investment in marketing activities also impacted
the FY23 results.
Revenue was adversely affected as clients took longer to consummate expected
deals, particularly in the first half of the year, resulting in delays to
projects which negatively impacted sales in FY23, but will now benefit the new
financial year ending 30 September 2024 ("FY24") instead. Revenue was also
lower than expected in the first half of the year as operational changes at a
key client meant that investment in a major roll out programme was paused for
several months. This has now resumed in earnest, with the final quarter of
FY23 (July to September 2023) benefitting in particular, as well as the new
financial year, 2024.
The gross profit margin held up well in the face of this economic uncertainty,
as did recurring revenues. The continued emphasis on long term recurring
revenue contracts began to show growth again, with the recurring annual run
rate now approximately £700,000 per annum. In addition, several new deals
were structured to generate additional profit from recurring revenue, rather
than upfront project fees which should improve visibility over margins in the
short to medium term.
An unequivocal success in the year was the establishment of the Group's
European subsidiary, MediaZest International BV. Orders in excess of
€500,000 have already been secured that will be delivered via this
subsidiary, mostly beginning in FY24. This subsidiary is already allowing the
Group to attract potential clients direct from Europe, as well as to help
facilitate EU based work won by the UK sales team.
As noted, one-off due diligence costs relating to a potential acquisition by
the Group of £97,000 also impacted the results.
Excluding this exceptional cost, the second half of the year showed
improvement over the first half, particularly in the final quarter.
Client demand in all three key sectors in which the Company operates - Retail,
Automotive and Corporate Office spaces - continued to be encouraging with new
project briefs and new client pitches seen consistently throughout the second
half of the year after a quietening down of this activity in the first half.
There has been a notable increase in incoming opportunities post the year end
as a result of the additional investment in marketing activity. The Company
intends to continue its marketing push throughout 2024.
Long term clients including Pets at Home, Lululemon, Hyundai, Harrods,
Wincanton, Ted Baker and HMV all progressed roll out programmes or ongoing
works during the financial year and are set to continue in 2024.
The Group continues to operate in three core sectors:
Retail - Digital transformation continues as retailers deploy digital signage
displays including window displays, self-service kiosks and large-scale
displays such as LED and videowalls.
Automotive - As this sector evolves rapidly, the role of technology in the
showroom journey increases. As a result, many of the audio-visual solutions
deployed in general Retail are being seen in these markets.
Corporate Offices - typical projects in this sector include hybrid meeting
rooms, video conferencing technology and innovation centres - all of which are
undergoing radical transformation with the adoption of widespread hybrid
working models putting additional requirements upon office building
technology.
As expected, demand in all three sectors continues to grow and the Company is
receiving an increasing number of enquiries regarding new opportunities, as
audio visual technology plays a greater role in day-to-day operations.
Group Strategy
The Board's strategy continues to be focussed on growing revenues and client
numbers, with emphasis on those with long-term opportunities to deploy
solutions across multiple sites at scale. The quality of revenue and duration
of recurring revenue streams remain a key focus to enable the Group to
generate long term value and focus is on this rather than short term gains
that are unsustainable.
The Group's market positioning is to provide a high-quality Managed Service
offering wrapped around hardware and software delivery that generates ongoing
contractual revenues from the customer base over several years.
The Board believes that in addition to organic growth, the current state of
the digital signage market is well suited to a 'buy-and-build' acquisition
strategy to take advantage of economies of scale and the maturing market. As
one of very few listed vehicles in this space, the Board believes MediaZest is
well positioned to take advantage of this opportunity. As such the Board has
held discussions with a number of suitable parties and continues to do so,
with the intention of consummating at least one revenue enhancing, synergistic
acquisition in the short to medium term.
One specific opportunity was evaluated in depth in 2023 including due
diligence work which led to the exceptional costs noted above. Although at
that time a deal could not be concluded that the Board believed would deliver
suitable shareholder value, there remains the potential to revisit this and
other opportunities in the near future.
MDZ Group Operational Review
Long standing clients in the automotive sector such as Hyundai continued to
work with the Group during the year, continuing the roll out of audio-visual
technology in showrooms to assist with Electric Vehicle sales. This led to
several new dealership projects in the financial year.
The Group also added a new large global automotive client during the year,
providing solutions in one European territory in FY23 with substantial
additional work deploying solutions in showrooms in a further two EU countries
in FY24.
Pets at Home continued to roll out digital signage solutions to stores and the
Company has now deployed these to over 100 of their stores with more in the
pipeline.
Lululemon Athletica projects in the UK were also supplemented by new stores in
European locations, of which there were a significant number in the second
half of the financial year. These included several stores in Paris, a large
flagship store in Amsterdam and other locations including in Berlin and
Zurich.
HMV, the Group's longest standing client, continued to open and refurbish new
stores with audio solutions across the UK, provided by MediaZest.
The Group completed a ground-breaking project with a digital artist client
which included installation and technical design assistance for an immersive
art gallery piece in London.
The European subsidiary, based in the Netherlands, delivered its first
projects in FY23, with significant additional work already confirmed for 2024.
This includes substantial work with a large global car manufacturer in several
of the EU territories in which it operates.
Financing
During the financial year, the Group repaid £150,000 of 3 year convertible
loan notes that were previously issued in August 2020. At the same time
£130,000 of new 3 year convertible loan notes were issued under similar terms
to existing shareholders. Further detail on the terms of these loans is in
Note 24 of the 2023 Annual Report.
Post year end, the Group completed a small fundraising of £120,000 before
expenses through the issue of 300,000,000 new ordinary shares at 0.0425 pence
per share in January 2024 to help support the recruitment of additional sales
resource, the development of the Group's overseas subsidiary and provide
additional working capital.
Current trading and outlook into FY24
Ongoing long term project roll outs with customers including Hyundai, Pets at
Home and Lululemon, in Europe in particular, have continued into FY24 with
further installations already completed and additional projects forthcoming.
Market demand and pitch opportunities across all sectors in which the Company
specialises are robust as 2024 begins. In addition, roll out programmes which
had experienced delays have now resumed. As a result of these factors, the
Group is targeting a year-on-year increase in revenue for FY24. The Board
continues to monitor opportunities for acquisition and remains positive about
the Group's future growth potential.
Lance O'Neill
Chairman
1 March 2024
Consolidated Statement of Profit or Loss
for the Year Ended 30 September 2023
2023 2022
£'000 £'000
CONTINUING OPERATIONS
Revenue 2,335 2,820
Cost of sales (1,073) (1,321)
GROSS PROFIT 1,262 1,499
Administrative expenses (1,554) (1,342)
OPERATING (LOSS)/PROFIT BEFORE EXCEPTIONAL ITEMS (292) 157
Exceptional items (97) -
OPERATING (LOSS)/PROFIT (389) 157
Finance costs (164) (145)
(LOSS)/PROFIT BEFORE INCOME TAX (553) 12
Income tax - -
(LOSS)/PROFIT FOR THE YEAR (553) 12
(Loss)/profit attributable to:
Owners of the parent (553) 12
Earnings per share expressed in pence per share:
Basic (0.0396) 0.0009
Diluted (0.0396) 0.0009
Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the Year Ended 30 September 2023
2023 2022
£'000 £'000
(LOSS)/PROFIT FOR THE YEAR (553) 12
OTHER COMPREHENSIVE INCOME - -
TOTAL COMPREHENSIVE INCOME FOR THE YEAR (553) 12
Total comprehensive income attributable to:
Owners of the parent (553) 12
Consolidated Statement of Financial Position
30 September 2023
2023 2022
£'000 £'000
ASSETS NON-CURRENT ASSETS
Goodwill 2,772 2,772
Owned: Property, plant and equipment 60 34
Right-of-use: Property, plant and equipment 37 83
2,869 2,889
CURRENT ASSETS
Inventories 97 121
Trade and other receivables 406 674
Cash and cash equivalents 40 45
543 840
TOTAL ASSETS 3,412 3,729
EQUITY SHAREHOLDERS' EQUITY
Called up share capital 3,656 3,656
Share premium 5,244 5,244
Share option reserve 146 146
Retained earnings (8,358) (7,805)
TOTAL EQUITY 688 1,241
LIABILITIES NON-CURRENT LIABILITIES
Financial liabilities - borrowings
Interest bearing loans and borrowings 195 83
CURRENT LIABILITIES
Trade and other payables 1,308 1,101
Financial liabilities - borrowings
Interest bearing loans and borrowings 1,221 1,304
2,529 2,405
TOTAL LIABILITIES 2,724 2,488
TOTAL EQUITY AND LIABILITIES 3,412 3,729
Consolidated Statement of Changes in Equity
for the Year Ended 30 September 2023
Called up Share capital Retained earnings Share premium Share option reserve Total equity
£'000 £'000 £'000 £'000 £'000
Balance at 1 October 2021 3,656 (7,817) 5,244 146 1,229
Changes in equity
Total comprehensive income - 12 - - 12
Balance at 30 September 2022 3,656 (7,805) 5,244 146 1,241
Changes in equity
Total comprehensive income - (533) - - (533)
Balance at 30 September 2023 3,656 (8,358) 5,244 146 688
Consolidated Statement of Cash Flows
for the Year Ended 30 September 2023
2023 2022
£'000 £'000
Cash flows from operating activities
Cash generated from operations 162 (24)
Net cash from operating activities 162 (24)
Cash flows from investing activities
Purchase of tangible fixed assets (47) (35)
Sale of tangible fixed assets 16 -
Net cash from investing activities (31) (35)
Cash flows from financing activities
Other loans receipt/(repayments) 30 1
Shareholder loan net receipt/(repayment) 131 15
Bounce back loan (repayment)/receipt (10) (10)
Payment of lease liabilities (50) (46)
Invoice financing (repayment)/receipt (154) 98
Interest paid (83) (74)
Net cash from financing activities (136) (16)
Decrease in cash and cash equivalents (5) (75)
Cash and cash equivalents at beginning of year 45 120
Cash and cash equivalents at end of year 40 45
NOTES TO THE FINANCIAL STATEMENTS
The financial information set out in this announcement does not constitute
statutory accounts as defined in section 435 of the Companies Act 2006.
The financial information for the period ended 30 September 2022 is derived
from the statutory accounts for that year which have been delivered to the
Registrar of Companies. The auditors reported on those accounts;
their report was (i) unqualified, and (ii) did not contain a statement
under section 498(2) or 498(3) of the Companies Act 2006.
The statutory accounts for the year ended 30 September 2023 have not yet been
delivered to the Registrar of Companies. The auditors reported on those
accounts; their report was (i) unqualified, (ii) did not contain a statement
under section 498(2) or 498(3) of the Companies Act 2006, and (iii) drew
attention by way of emphasis to a material uncertainty related to going
concern as addressed below.
The 2023 accounts will be delivered to the Registrar of Companies following
the Company's Annual General Meeting, details of which will be announced
shortly.
Going concern
The Group made a loss after tax of £553,000 (2022: profit of £12,000) and
has net current liabilities of £1,986,000 (2022: £1,565,000). The financial
statements are prepared on a going concern basis which the Directors believe
to be appropriate for the following reasons:
The Directors have considered financial projections based upon known future
invoicing, existing contracts, the pipeline of new business and the increasing
number of opportunities it is currently working on in 2024, the expected
macroeconomic environment and prior year trading.
Several substantial new contracts have been won during the new financial year,
ongoing roll out projects with existing clients continue apace, and recurring
revenues remain robust. Projected group revenues include material client roll
outs with new and existing clients, the timing of which the Directors
acknowledge is difficult to predict.
These circumstances represent a material uncertainty relating to the timing of
revenue and cash flows from these clients that may cast significant doubt upon
the Group's and the Company's ability to continue as a going concern.
In addition to the significant number of new project wins and sign up of new
clients since the year end, to further mitigate against this uncertainty the
Group raised equity funding of £120k before costs in January 2024,
demonstrating the ability to raise finance from capital markets and
strengthening the Group balance sheet.
The Directors have obtained agreement from two shareholders who have provided
material loans to the Group, stating that they will not call for repayment of
the loan within the 12 months from the date of approval of these financial
statements or, if earlier, until the Group has sufficient funds to do so. The
balance of these loans at 30 September 2023 totalled £805,000 (2022:
£705,000) and are included in the net current liabilities position.
As a result the Directors consider, after making due enquiries and considering
the uncertainty above, that it is appropriate to draw up the accounts on a
going concern basis. The financial statements do not include any adjustments
that would result from the basis of preparation being inappropriate.
The Report and Consolidated Financial Statements for the year ended 30
September 2023 will be posted to shareholders shortly and will also be
available to download from the Company's website: www.mediazest.com
1. SEGMENTAL REPORTING
Revenue for the year can be analysed by customer location as follows:
2023 2022
£'000 £'000
UK and Channel Islands 1,979 2,718
Rest of Europe 356 102
2,335 2,820
An analysis of revenue by type is shown below:
2023 2022
£'000 £'000
Hardware and installation 1,686 2,191
Support and maintenance - recurring revenue 595 498
Other services (including software solutions) 54 131
2,335 2,820
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 and there are seven clients
who have contributed over 5%
of total revenue each. The following revenues arose from sales to the Group's
largest client:
2023 2022
£'000 £'000
Goods and services 332 589
Service and maintenance 116 117
Other services 25 40
473 746
2. EARNINGS PER SHARE
2023 2022
£'000 £'000
Profit/(Loss)
(Loss)/profit for the purposes of basic and diluted earnings per share being net loss attributable to equity shareholders (553) 12
2023 2022
N umber N umber
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings per share 1,396,425,774 1,396,425,774
Number of dilutive shares under option or warrant - -
Weighted average number of ordinary shares for the purposes of dilutive loss per share 1,396,425,774 1,396,425,774
Basic earnings per share is calculated by dividing the loss after tax
attributed to ordinary shareholders of £553,000 (2022 profit: £12,000) by
the weighted average number of shares during the year of 1,396,425,774 (2022:
1,396,425,774).
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. RECONCILIATION OF (LOSS)/PROFIT BEFORE INCOME TAX TO CASH GENERATED FROM
OPERATIONS
2023 2022
£'000 £'000
(Loss)/profit before income tax (553) 12
Depreciation charges 67 63
Profit on disposal of fixed assets (16) -
Finance costs 164 145
(338) 220
Decrease in inventories 24 29
Decrease/(increase) in trade and other receivables 268 (260)
Increase/(decrease) in trade and other payables 208 (13)
Cash generated from operations 162 (24)
4. CASH AND CASH EQUIVALENTS
30.09.23 01.10.22
£'000 £'000
Cash and cash equivalents 40 45
5. EVENTS AFTER THE REPORTING PERIOD
On 8 January 2024 the Group agreed a capital raising of £120,000 before
costs.
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