MediaZest Plc Trading and Covid-19 update
03 Abril 2020 - 12:00AM
UK Regulatory
TIDMMDZ
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 GBP1.2 million and profit at the
operating subsidiary MediaZest International was GBP167,000 at EBITDA level,
generating a net profit of GBP127,000 after tax.
At consolidated level, revenue was GBP1.2 million with EBITDA profit of GBP58,000
and a small loss after tax of GBP5,000.
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 GBP300,000 in aggregate (comparable period last year GBP
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 GBP201,000) albeit with a profitable EBITDA for the
period (6 months ended 31 March 2019 loss of GBP144,000). 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 GBP150,000 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 0845 207 9378
Chief Executive Officer
MediaZest Plc
David Hignell/Soltan Tagiev 020 3470 0470
Nominated Adviser
SP Angel Corporate Finance LLP
Claire Noyce 020 3764 2341
Broker
Hybridan LLP
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
END
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