REG-MediaZest Plc: Trading and Covid-19 update

MediazestAnnouncement

03/04/2020 07:05

3 April 2020

MediaZest Plc
("MediaZest" or the "Company”; AIM: MDZ)

Trading and Covid-19 update

The Board provides the following update on trading for the second half of the
Group’s financial year to 31 March 2020 and also updates shareholders on the
impact on the Group of and subsequent response to, the Covid-19 outbreak.

Due to the significant impact of Covid-19 on trading from February onwards,
this trading update is split to more clearly reflect financial performance.

Trading prior to Covid-19 impact

In the period from October 2019 to January 2020, the business performed well
and trading was much improved from the first half of the financial year.

For these four months alone, revenue was £1.2 million and profit at the
operating subsidiary MediaZest International was £167,000 at EBITDA level,
generating a net profit of £127,000 after tax.

At consolidated level, revenue was £1.2 million with EBITDA profit of
£58,000 and a small loss after tax of £5,000.

This progress was driven by the completion of a large project for University
of Central Birmingham, the delivery of nine new Pets at Home store projects
and other work for ongoing clients including Lululemon Athletica, Tiffany &
Co., HMV and Kuoni. The Group was pleased to see that in March 2020 Pets at
Home won the coveted Store of the Year award at the Retail Week Awards for
their refurbished Stockport store, for which the Company provided the
audio-visual solutions.

Trading post Covid-19 impact

Results for February and particularly March 2020 have been materially
adversely impacted by the Covid-19 outbreak, as clients initially began to
defer some projects and more recently temporarily close stores and other
places of business.

Whilst the UK and certain other countries remain in “lockdown”, all
deployments and installations in progress are currently on hold until further
notice.  In particular this has affected key projects across the UK and in
Milan, Copenhagen and Berlin, all of which are now expected to complete later
in 2020.

Several of these projects were scheduled to fall in February or March 2020 and
would have contributed to the ongoing improving performance across the second
half of the year to 31 March 2020. Due to the disruption caused by Covid-19,
the Board expects revenue for these two months to be lower than forecast and
reduced to approximately £300,000 in aggregate (comparable period last year
£319,000), with a modest net profit at operational level and a subsequent
small loss at consolidated Group level.

In light of this, rather than the anticipated profit for the 6 months to 31
March 2020 the Group now expects to realise a modest loss after tax (6 months
ended 31 March 2019 loss of £201,000) albeit with a profitable EBITDA for the
period (6 months ended 31 March 2019 loss of £144,000). Within this the
Group’s operating subsidiary MediaZest International is still expected to be
profitable for the 12-month period.

Some recurring revenue streams have been affected by store closures, although
three of the Company’s clients are keeping stores open at this current time
being deemed as selling essential goods. The Group is continuing to provide
support and maintenance services to these businesses remotely and in
accordance with the latest Government recommendations and guidelines.

Outlook and Covid-19 Response

At this time, it is not possible to assess the extent to which Covid-19 will
affect forthcoming trading and financial performance and the situation is
evolving rapidly. Further updates will be provided as soon as more information
is known.

The Board is working on the assumption that the “lockdown” period and
ongoing disruption caused by Covid-19 will have an impact for a minimum of six
months and is therefore planning accordingly as best it can.

It is expected that once a more normal business environment resumes, projects
that have been delayed from February, March, April and possibly beyond, will
be required to be completed and as such there will be an initial period post
restrictions when the Company will be extremely busy.

Beyond that, there are several ongoing roll-out programmes for clients with
which the Group is engaged. These are currently on hold but also believed
likely to resume promptly once the current restrictions on movement and store
openings are lifted.

Accordingly, for this period of disruption, the Company has implemented a
range of cost cutting measures to help secure the long term future of the
Group, whilst keeping the hard working and high quality delivery teams that
have been built over recent years intact where possible.

The Group has therefore utilised the Government’s Job Retention Scheme to
furlough certain employees and is in discussions with its banks and larger
shareholders regarding other measures.

In addition, approximately £150,000 of cost savings have been identified and
executed already with further reductions under consideration should they be
necessary.

Furthermore, the Board has agreed to extend the current accounting period to
30 September 2020 in order to defer audit costs until later in the year so
that cash can be conserved during the current “lockdown” period.

It is the Group’s intention to announce information regarding financial
performance for the 6-month period ending 31 March 2020 as soon as practical
in the coming weeks in order to provide shareholders and other stakeholders
with suitable financial detail, albeit not in audited statutory account
format.

This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) 596/2014.

 Enquiries:                                                                                   
 Geoff Robertson Chief Executive Officer MediaZest Plc                         0845 207 9378  
 David Hignell/Soltan Tagiev Nominated Adviser SP Angel Corporate Finance LLP  020 3470 0470  
 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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