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.