Market Abuse Regulation (MAR)
Disclosure
Certain information contained in this announcement would have been
deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement
23 December
2019
MediaZest plc
("MediaZest", the "Company” or the
“Group")
Unaudited results for the six months ended 30 September 2019
MediaZest (AIM: MDZ), the creative audio-visual company,
announces its unaudited interim results for the six months ended
30 September 2019.
CHAIRMAN’S STATEMENT
Introduction
The Board presents the consolidated unaudited results for the
six months ended 30 September 2019
for MediaZest plc and its wholly owned subsidiary company MediaZest
International Ltd (together the “Group”).
Financial Review
- Revenue for the period was £943,000 (Restated 2018:
£2,136,000)
- Gross profit was £475,000 (Restated 2018: £1,049,000), impacted
by delay to a major project
- Sharp improvement in performance post period end with Profit
after tax in October and November of £44,000 on revenue of £709,000
(2018: loss of £12,000 on revenue of £531,000)
- Gross margins were consistent at 50% (Restated 2018: 49%)
- EBITDA was a loss of £140,000 (Restated 2018: profit of
£273,000)
- Net loss for the period after taxation of £228,000 (Restated
2018: profit of £207,000)
- The basic and fully diluted loss per share was 0.0163 pence (Restated 2018: earnings per share
0.0161 pence)
- Overdraft at period end was £6,000 (2018: cash in hand of
£12,000). The period end cash position is reflective of payments
made to suppliers prior to the month end and large receipts from
customers falling in October and November. Cash in hand at close of
business 20 December 2019 was
£38,000.
Operational Review
As shown in the Financial Review above, the results for the six
months to 30 September 2019 were
adversely affected by the difficult business conditions encountered
in the current year, by way of comparison with the prior period.
This shows a reduction in both revenue and profitability at Group
level.
In anticipation of the possibility of this slowdown, the Board
implemented a cost cutting programme during January and
February 2019 and reduced the cost
base by approximately £200,000 for the current financial year. The
impact of this was to reduce ongoing costs and overheads, half of
which was experienced in the period, thus having a mitigating
effect on the reduction in project activity.
The impact on the interim results was accentuated by delays to a
large project with a UK University, as noted in the Group’s Final
Results announcement of 28 August
2019. This project is currently progressing towards
completion, with the majority of the work falling into October and
November 2019.
In light of the above, the Directors believe the results for the
six month period ending 30 September
2019 should be viewed alongside MediaZest’s stronger
performance during October and November
2019, when the Group generated profit after tax of £44,000,
based on revenue of £709,000. Accordingly, key performance
indicators for the eight month period to 30
November 2019 are revenue of £1,652,000, loss at EBITDA of
£95,000 and a loss after tax of £184,000.
The Group’s operating subsidiary, MediaZest International, shows
corresponding profit after tax of £83,000 and EBITDA of £150,000
within those results before deduction of Plc costs, for the eight
months to 30 November 2019.
Client Work
The Group continues to service a core of long-standing client
accounts including Lululemon Athletica, Tiffany & Co, Kuoni,
Ted Baker, HMV and Hyundai, all of
which undertook new projects with the Group during the period under
review. In addition, our work with Pets at Home continues and the
Company has now provided audio visual solutions for a further
twelve stores since 1 April 2019 with
a further six scheduled to be completed early in 2020. New clients
added to date in the current financial year include Twinings,
Belron and Avis Budget Group. In addition, the Group has recently
won a high-profile project with a global luxury automotive brand,
which is also a new client, and expects to announce further details
regarding this project during 2020.
Recurring revenues have diminished by approximately 7% during
the period with renewals strong, but with a small number of store
closures and projects completing leading to a reduction in retainer
income. This has led to an ongoing annualised recurring revenue
base total of approximately £650,000 (2018: approximately
£700,000). The Board is targeting a run rate of £700,000 worth of
recurring revenues by the end of the financial year, which would
cover almost 50% of the cost base going into the next financial
year.
Administrative costs have been reduced, primarily, by refining
the already lean team of dedicated in house staff that the Company
employs and by relinquishing the London sales office. The Group is also looking
to generate more new business in the Corporate and Education
markets in order to reduce the reliance on the proportion of
business completed in the retail sector. As such, further
investment in the sales and marketing process has been made during
the period to target these markets.
The introduction of IFRS16 has had an impact on the way the
Company accounts for leases as shown in note 6 to these
results.
Outlook
As noted, both in this statement and previously, the UK market
continues to suffer from macroeconomic headwinds particularly in
the Retail sector, leading to delayed investment decisions, cost
cutting programmes and the termination of projects by clients.
Despite these pressures, over the last three months, the Group has
seen a marked increase in enquiries and built an encouraging
pipeline for 2020. Several existing clients have already indicated
plans to extend their engagement with the Company substantially in
2020 via new projects and the expansion of existing programmes.
Notwithstanding the disappointing performance in the period, the
Board believes that the new calendar year will provide
opportunities for the Group to continue the progress it made in the
last Financial Year ended 31 March
2019.
Feedback from clients on projects delivered remains encouraging
and, as such, the quality of the services provided by the Company
gives cause for optimism as a continued differentiator in the
market. The Directors continue to review costs on a month by month
basis and will make further adjustments as necessary based on
market conditions as they evolve in the coming period.
Lance O’Neill
Chairman
23 December
2019
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME |
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited |
Restated
Unaudited |
Audited |
|
|
Six
months |
Six
months |
12
months |
|
Notes |
30-Sep-19 |
30-Sep-18 |
31-Mar-19 |
|
|
£'000 |
£'000 |
£'000 |
Continuing
Operations |
|
|
|
|
Revenue |
|
943 |
2,136 |
3,303 |
Cost of sales |
|
(468) |
(1,087) |
(1,628) |
|
|
------------ |
------------ |
------------ |
Gross
profit |
|
475 |
1,049 |
1,675 |
|
|
|
|
|
Administrative
expenses |
|
(615) |
(776) |
(1,546) |
|
|
------------ |
------------ |
------------ |
|
|
|
|
|
EBITDA |
|
(140) |
273 |
129 |
|
|
|
|
|
Administrative
expenses – depreciation & amortisation |
|
(40) |
(10) |
(40) |
|
|
------------ |
------------ |
------------ |
Operating
(Loss)/Profit |
|
(180) |
263 |
89 |
|
|
|
|
|
Finance Costs |
|
(48) |
(56) |
(83) |
|
|
------------ |
------------ |
------------ |
(Loss)/Profit
before taxation |
|
(228) |
207 |
6 |
|
|
|
|
|
Taxation |
|
- |
- |
- |
|
|
======== |
======== |
======== |
(Loss)/Profit for
the period and total comprehensive loss/income for the period
attributable to the owners of the parent |
|
(228)
======== |
207
======== |
6
======== |
|
|
|
|
|
Earnings/(Loss) per
ordinary 0.1p share |
|
|
|
|
Basic |
2 |
(0.0163)p |
0.0161p |
0.0004p |
Diluted |
2 |
(0.0163)p |
0.0161p |
0.0004p |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION |
AS AT 30 SEPTEMBER 2019 |
|
|
|
|
|
|
|
Unaudited |
Unaudited |
Audited |
|
|
As at
30-Sep-19 |
As at
30-Sep-18 |
As at
31-Mar-19 |
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
Non-current assets |
|
|
|
Goodwill |
|
2,772 |
2,772 |
2,772 |
Property,
plant and equipment |
241 |
58 |
62 |
Intellectual property |
1 |
2 |
1 |
|
------------ |
------------ |
------------ |
Total non-current
assets |
|
3,014 |
2,832 |
2,835 |
|
|
|
|
|
Current
assets |
|
|
|
Inventories |
98 |
97 |
69 |
Trade and
other receivables |
356 |
596 |
481 |
Cash and
cash equivalents |
- |
12 |
24 |
|
------------ |
------------ |
------------ |
Total
current assets |
454 |
705 |
574 |
|
|
|
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
Trade and
other payables |
(1,012) |
(1,175) |
(1,017) |
Financial
liabilities |
(708) |
(434) |
(548) |
|
------------ |
------------ |
------------ |
Total current
liabilities |
|
(1,720) |
(1,609) |
(1,565) |
|
|
|
|
|
|
|
|
|
|
Net
current liabilities |
(1,266) |
(904) |
(991) |
|
|
|
|
|
Non-current
liabilities |
|
|
|
|
Financial
liabilities |
|
(159) |
(17) |
(25) |
|
|
------------ |
------------ |
------------ |
Total non-current
liabilities |
|
(159) |
(17) |
(25) |
|
|
|
|
|
|
|
======== |
======== |
======== |
Net assets |
|
1,589 |
1,911 |
1,819 |
|
|
======== |
======== |
======== |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
Share
Capital |
3,656 |
3,546 |
3,656 |
Share
premium account |
5,244 |
5,244 |
5,244 |
Other
reserves |
146 |
146 |
146 |
Retained
earnings |
(7,457) |
(7,025) |
(7,227) |
|
======== |
======== |
======== |
Total
equity |
1,589 |
1,911 |
1,819 |
|
======== |
======== |
======== |
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY |
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2019 |
|
|
|
|
|
|
|
Share |
Share |
Share
Options |
Retained |
Total |
|
Capital |
Premium |
Reserves |
Earnings |
Equity |
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
Balance at 31 March
2018 |
3,546 |
5,244 |
146 |
(7,115) |
1,821 |
|
|
|
|
|
|
Adjustment for
adoption of IFRS15 |
- |
- |
- |
(117) |
(117) |
|
----------- |
------------ |
--------------- |
------------ |
----------- |
Balance at 1 April
2018 restated |
3,546 |
5,244 |
146 |
(7,232) |
1,704 |
|
|
|
|
|
|
Restated Profit for
the period |
- |
- |
- |
207 |
207 |
|
----------- |
----------- |
----------- |
----------- |
----------- |
Total comprehensive
profit for the period |
- |
- |
- |
207 |
207 |
|
======= |
======= |
======== |
======= |
====== |
Balance at 30
September 2018 restated |
3,546 |
5,244 |
146 |
(7,025) |
1,911 |
|
======= |
======= |
======== |
======= |
====== |
|
|
|
|
|
|
Loss for the
period |
- |
- |
- |
(201) |
(201) |
|
------------ |
------------ |
------------------ |
------------ |
------------ |
Total comprehensive
loss for the period |
- |
- |
- |
(201) |
(201) |
|
|
|
|
|
|
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 |
|
======= |
======== |
========= |
======= |
====== |
|
|
|
|
|
|
Adjustment for
adoption of IFRS 16 |
- |
- |
- |
(2) |
(2) |
|
======= |
======== |
========= |
======= |
====== |
Balance at 1 April
2019 restated |
3,656 |
5,244 |
146 |
(7,229) |
1,817 |
|
|
|
|
|
|
|
======= |
======== |
========= |
======= |
====== |
Loss for the
period |
- |
- |
- |
(228) |
(228) |
|
------------ |
------------- |
---------------- |
------------ |
----------- |
Total comprehensive
loss for the period |
- |
- |
- |
(228) |
(228) |
|
======= |
======== |
========= |
======= |
====== |
Balance at 30
September 2019 |
3,656 |
5,244 |
146 |
(7,457) |
1,589 |
|
======= |
======== |
========= |
======= |
====== |
CONSOLIDATED STATEMENT OF CASH FLOWS |
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2019 |
|
|
|
|
|
|
|
Unaudited |
Restated
Unaudited |
Audited |
|
|
Six
months |
Six
months |
12
months |
|
Note |
30-Sep-19 |
30-Sep-18 |
31-Mar-19 |
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
Net cash generated
from operating activities |
3 |
14 |
138 |
117 |
|
|
|
|
|
Taxation |
|
- |
- |
- |
|
|
---------- |
---------- |
---------- |
Net cash generated
from operating activities |
|
14 |
138 |
117 |
|
|
|
|
|
Cash flows used in
investing activities |
|
|
|
|
Purchase of plant and
machinery |
|
(17) |
(13) |
(30) |
Purchase of leasehold
improvements |
|
- |
(3) |
- |
|
|
---------- |
---------- |
---------- |
Net cash used in
investing activities |
|
(17) |
(16) |
(30) |
|
|
|
|
|
Cash flow from
financing activities |
|
|
|
|
Other loans |
|
(34) |
(14) |
(19) |
Shareholder loan
receipts |
|
317 |
- |
385 |
Shareholder loan
repayments |
|
(206) |
(52) |
(330) |
Interest paid |
|
(40) |
(27) |
(58) |
Proceeds of share
issue |
|
- |
- |
110 |
Share issue costs |
|
- |
- |
(1) |
|
|
---------- |
---------- |
---------- |
Net cash used in
financing activities |
|
37 |
(93) |
87 |
|
|
|
|
|
|
|
---------- |
--------- |
---------- |
Net increase in
cash and cash equivalents |
|
34 |
29 |
174 |
|
|
---------- |
---------- |
---------- |
|
|
|
|
|
Cash and cash
equivalents at beginning of period / year |
|
(179) |
(353) |
(353) |
|
|
======= |
======= |
======= |
Cash and cash
equivalents at end of period / year |
4 |
(145) |
(324) |
(179) |
|
|
======= |
======= |
======= |
NOTES TO THE
FINANCIAL INFORMATION |
|
1.
Basis of preparation |
|
The Group’s annual
financial statements are prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted for use in the EU
applied in accordance with the provisions of the Companies Act 2006
applicable to companies preparing financial statements under
IFRS. |
|
Accordingly, the consolidated half-yearly financial information in
this report has been prepared using accounting policies consistent
with IFRS. IFRS is subject to amendment and interpretation by the
International Accounting Standards Board (IASB) and the IFRS
Interpretations Committee and there is an ongoing process of review
and endorsement by the European Commission. The financial
information has been prepared on the basis of IFRS that the
Directors expect to be applicable as at 31 March 2020.
IFRS15 was implemented for the first time for the Financial Year
Ended 31 March 2019 and the resulting impact was an increase in
revenue of £317,000 and an increase in costs of £200,000 leading to
an additional profit of £117,000 for the period. These adjustments
have been reflected in the restated comparative results for the
period ended 30 September 2018.
The Board has considered the impact of IFRS16 when drawing up this
financial information, and has made the necessary adjustments. |
|
This interim report
does not comply with IAS 34 “Interim Financial Reporting” (as
adopted by the European Union), as permissible under the AIM Rules
for Companies. |
|
Going
Concern |
|
The Directors have
considered financial projections based upon known future invoicing,
existing contracts, pipeline of new business and the number of
opportunities it is currently working on, particularly in the
Retail sector. In addition, these forecasts have been considered in
the light of the ongoing challenges in the global economy, previous
experience of the markets in which the Group operates and the
seasonal nature of those markets, as well as the likely impact of
ongoing reductions to public sector spending. These forecasts
indicate that the Group will generate sufficient cash resources to
meet its liabilities as they fall due over the next 12-month period
from the date of this interim announcement. |
|
As a result the
Directors consider that it is appropriate to draw up the financial
information on a going concern basis. Accordingly, no adjustments
have been made to reflect any write downs or provisions that would
be necessary should the Group prove not to be a going concern,
including further provisions for impairment to goodwill and
investments in Group companies. |
|
Non-statutory
accounts |
|
The financial
information contained in this document does not constitute
statutory accounts within the meaning of Section 434 of the
Companies Act 2006 (“the Act”). |
|
The statutory accounts
for the year ended 31 March 2019 have been filed with the Registrar
of Companies. The report of the auditors on those statutory
accounts was unqualified, did not draw attention to any matters by
way of emphasis and did not contain a statement under Section
498(2) or (3) of the Act. The financial information for the six
months ended 30 September 2019 and 30 September 2018 is not
audited. |
|
2.
Earnings per share |
|
Basic
earnings per share is calculated by dividing the loss attributed to
ordinary shareholders of £228,000 (restated 2018: profit of
£207,000) by the weighted average number of shares during the
period of 1,396,425,774 (2018: 1,286,425,774). The diluted earnings
per share is identical to that used for basic earnings per share as
the warrants or share options are anti-dilutive.
|
|
3. Cash generated
from/(used in) operations |
|
|
|
|
|
|
Unaudited |
Restated
Unaudited |
Audited |
|
|
Six
months |
Six
months |
12
months |
|
|
30-Sep-19 |
30-Sep-18 |
31-Mar-19 |
|
|
£'000 |
£'000 |
£'000 |
Profit/(Loss) after
tax |
|
(228) |
207 |
6 |
Depreciation/amortisation charge |
|
40 |
10 |
40 |
Finance Costs |
|
48 |
56 |
83 |
(Increase)/Decrease in
inventories |
|
(29) |
118 |
148 |
Increase/(Decrease) in
payables |
|
57 |
(509) |
(776) |
Decrease in
receivables |
|
126 |
256 |
616 |
|
|
======== |
======== |
======== |
Net cash generated
from operating activities |
|
14 |
138 |
117 |
|
|
======== |
======== |
======== |
|
|
|
|
|
4.
Cash and cash equivalents |
|
|
|
|
|
|
Unaudited |
Unaudited |
Audited |
|
|
Six
months |
Six
months |
12
months |
|
|
30-Sep-19 |
30-Sep-18 |
31-Mar-19 |
|
|
£'000 |
£'000 |
£'000 |
Cash held at bank |
|
- |
12 |
24 |
Invoice discounting
facility |
|
(139) |
(336) |
(203) |
Bank overdrafts |
|
(6) |
- |
- |
|
|
======== |
======== |
======== |
|
|
(145) |
(324) |
(179) |
|
|
======== |
======== |
======== |
|
|
|
|
|
5.
Subsequent events |
|
|
|
|
|
|
|
|
|
Subsequent to 30 September 2019, trade has improved and both
October and November 2019 management accounts were profitable at
consolidated level. Profit for the two months was £44,000 after
tax, based on revenue of £709,000 during those two months.
6.
IFRS 16 Adoption
For the accounting period beginning 1 April 2019, IFRS 16 must
be applied for the first time. This replaced IAS 17 and governs how
Leases must be treated and accounted for in the financial
statements.
There are two approaches to its adoption, and the Group has
chosen to use the cumulative catch-up approach. This means that the
comparative information presented for the year ended 31 March 2019
and for the six months ended 30 September 2018 has not been
restated and presents the Groups’ Lease, upon the registered office
and headquarters in Woking, under IAS 17 for those periods.
The cumulative effect of the implementation of this accounting
standard is recognised in retained earnings as at 1 April 2019 and
shown separately on the Consolidated Statement of Changes in
Equity.
IFRS 16 seeks to recognise future liabilities associated with
Leases on the Statement of Financial Position. A corresponding
right of use of the asset is also recognised on the Statement of
Financial Position to capture the economic benefits of the Group’s
right to use the underlying leased asset.
Accounting Policy
The Standard recognises right of use of an asset and the
associated lease liabilities at the lease commencement date. The
liability is calculated as the net present value of the lease
payments over the lifetime of the lease. This calculation uses the
discounted interest rate implicit in the lease which is not easily
established and hence is replaced with the Group’s incremental
borrowing rate. This has been assumed at 10% for the one relevant
lease based on the Group’s other rates of borrowing.
This liability is then measured at amortised cost and increased
by the interest charge and decreased by lease payments as they are
made.
Given that the lease in question for the Group is a 5-year
rental lease on premises with no break clause, the lease term used
for all calculations is 5 years.
On transition to IFRS 16 the right of use asset is calculated
retrospectively using the Group’s incremental borrowing rate. The
asset is then depreciated on a straight-line basis over the 5 years
of the lease.
The impact of IFRS 16 on this financial information is a net
decrease in equity of £2,000.
Due to the nature of the right of use asset, this is presented
in “Property, Plant and Equipment”, and was equal to £179,000 at 30
September 2019.
Lease liabilities are presented within Financial Liabilities on
the Statement of Financial Position at 30 September 2019 and was
equal to £184,000.
|
7. Distribution
of the Half-Yearly Report |
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Copies of the Half-yearly Report will be available to the public
from the Company’s website, www.mediazest.com, and from the Company
Secretary at the Company's registered address at Unit 9, Woking
Business Park, Albert Drive, Woking, Surrey, GU21 5JY.
Enquiries: |
|
MediaZest Plc
Geoff Robertson
Chief Executive Officer |
0845 207 9378 |
SP Angel Corporate Finance LLP
Nominated Adviser
David Hignell / Stephen Wong |
020 3470 0470 |
Hybridan LLP
Broker
Claire Noyce |
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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