Final Results and Annual Report
MediaZest Plc
("MediaZest", the "Company" or "Group"; AIM: MDZ)
Final Results for the Year Ended 31 March 2014
CHAIRMAN'S STATEMENT
Introduction
The results for MediaZest plc (the "Group") for the year ended 31 March 2014
incorporate the results of its subsidiary, which is wholly owned.
Results for the year and Key Performance Indicators
Turnover for the year was £2,944,000 (2013: £1,850,000), cost of sales was £
1,978,000 (2013: £941,000) and the Group made a loss for the year, after
taxation, of £653,000 (2013: £551,000) after finance costs of £128,000 (2013: £
138,000) and having paid administrative expenses of £1,513,000 (2013: £
1,322,000).
The basic loss and diluted loss per share was 0.09p (2013: 0.15p). The Group
had cash in hand of £268,000 (2013: £1,000) and a bank overdraft of £nil (2013:
£92,000) at the year end and an invoice discounting facility over the debtors
of Touch Vision Limited of which £342,000 (2013: £108,000) was in use at 31
March 2014. As at 31 March 2014, the Group had a current maximum limit of £
350,000 (2013: £350,000) under the existing invoice discounting facility which
was increased to £500,000 on 14 April 2014.
As at 31 March 2014, the Group also had loans from shareholders of £200,000
(2013: £530,000) and interest on those loans outstanding of £2,000 (2013: £
153,000).
Business overview
The Group operates two trading divisions through its wholly owned subsidiary
Touch Vision Limited: Touch Vision (TV) and MediaZest Ventures (MV). TV trades
as an Audio Visual supply and installation company across Education, Public
Sector, Retail and Corporate markets, whilst MV operates as a `digital out of
home' creative agency predominantly in the Retail Sector.
The year was one of positives and negatives: in terms of revenue the Group
performed well during the year with substantial growth of 59% and progress on
the operational side. In addition, the £865,000 fund raising in January 2014
enabled the Group to strengthen and degear its balance sheet by redeeming some
£300,000 worth of debt. The securing of the high profile FIFA World Cup Trophy
Tour contract with Coca-Cola, complemented by a large Education and a Corporate
Sector project, gave the Company a platform to build upon. Set against that,
the loss of the Group's largest service and maintenance contract as a
consequence of HMV's entry into administration in January 2013 had a direct and
immediate impact on Q4 operating margins. These factors coupled with the high
cost of servicing some £500,000 worth of debt had an impact on the Group's
financial results. Notwithstanding, the Board has also embarked upon a
substantial investment in sales and marketing to grow the business for the
future. This is showing benefits in the financial year ending 31 March 2015,
but was a contributory factor in the increase in losses in the financial year
ended 31 March 2014.
Fundraising and strengthening of the balance sheet
On 31 December 2013, the Company announced a placing of 247,142,800 shares at
0.35p per share to raise £865,000 before expenses, and an issue of 47,479,714
new shares through the conversion of loan interest amounting to £166,179 at a
price of 0.35p per share. The shares were admitted to AIM in January 2014.
Previous to this, on 8 July 2013, the Company completed a placing of
143,200,000 shares at 0.25p per share to raise £358,000. These gross proceeds
included conversion of £50,000 of loan interest at the placing price. Net cash
proceeds were £288,000 (of which £200,000 was used to pay down debt). The
combined effect of this has been to improve the balance sheet significantly
and, despite the ongoing losses, to improve the Company's cash position at 31
March 2014.
Revenues and margins
The results for the period reflect a significant improvement in revenue
compared to recent years and the Group's best top line performance since 2008.
There were three particularly important large projects delivered during this
financial year.
First, Coca-Cola provided the Company with the biggest of these by way of a
contract to supply large scale audio-visual installations for the FIFA World
CupTM Trophy Tour presented by Coca-Cola. This took the Company to 48 countries
over the 8 month tour and involved working closely with brand experience
pioneers, Ignition Inc. The Company also worked with Coca-Cola's head office
team in Atlanta, USA, to deliver the project and provided engineering support
and installation team leadership at all 48 events with a 100% success rate
despite intense time pressure and delivery challenges at each location. The
contract was completed in May 2014 and based on its successful delivery, the
Group hopes to work with both parties again in the future whilst acknowledging
that, by their nature, projects such as this only come along every few years.
Second, a large University installation project was delivered predominantly in
the first half of 2014. This project involved the Company's entire engineering
workforce at various points during delivery and in total generated revenue for
the Company in excess of £400,000. Some of these revenues will be recognised in
the coming financial year due to delays in the building process outside of
MediaZest's control affecting timing of delivery.
Finally, the Company completed two substantial Corporate sector projects in the
period; especially pleasing following the creation of and investment in a new
Corporate sales department during the first half of the year. One of these
projects was a high end multi-media presentation system for a Private Equity
client and the second a highly advanced video wall solution for a building
refurbishment project at Bevis Marks, in the City of London.
The growth in revenue was achieved through the large contract wins detailed
above along with additional work with existing customers such as Samsung, O2,
Kuoni and JD Sports and the University of Essex, plus new customers such as
Pfizer who the Company also worked with on a multi-national basis.
The gross profit margin as a percentage of revenue was 33% (2013: 49%) mainly
reflecting a number of low margin equipment supply-only contracts with clients
in the Education sector. In addition, the reduced level of service and
maintenance work provided for HMV following its administration in January 2013
had an impact. Finally, the average margin on the large Coca-Cola contract of
approximately 36% had a one off impact in lowering gross margins in this year.
Based on current business wins, the Board expects this trend to reverse in the
year ending 31 March 2015.
Cost base
Administrative expenses increased in the year predominantly due to much larger
investment in the sales and marketing process than has been possible in recent
years.
In May 2013, the Group took on an experienced Corporate Sales Consultant and
this was followed by further investment in a new Sales/marketing Executive and
an additional Sales Consultant in the autumn of 2013. The Group also invested
in a showroom in London to demonstrate its unique technology offering. These
actions have placed the Company in an improved position to grow revenues but
involve short term investment to build pipeline and bring opportunities to
fruition.
The single largest example of investment in the marketing process has been the
Company's attendance at a global trade-show, Euroshop, in partnership with SFD
Ltd. SFD Ltd provide shop mannequin, shop fit and visual merchandising services
to many large retailers and fashion brands on a global basis. This partnership,
whilst relatively informal, has already shown promise with small window display
projects already delivered for Marks & Spencer and H&M, both existing SFD
clients. The work for Marks & Spencer has been shortlisted for a Retail Week
Interiors Award in the "Best Use of Design with Technology in-store" category.
MediaZest's Board considered this partnership to be an important and fruitful
step in the future development of the Company.
Interest costs continued to be high until the end of calendar 2013, when,
following the successful second placing, the Group paid down a larger
proportion of outstanding debt. This mitigated interest costs in the year ended
31 March 2014 and will lead to significant reductions in interest payments
going forward.
Product development
The Board highlighted three specific areas in which it was developing unique
products in the announcement of December 13 2013 as a means to improve and
develop recurring revenues in order to provide the Group with a unique point of
difference to other companies that operate in similar markets.
The Group has concentrated on the development of the audience measurement and
hologram systems based on extremely positive feedback from potential customers.
MediaZest `soft' launched the first version of the audience measurement service
"MediaZest Retail Analytics" in the first week of July to a wide potential
customer base at a Samsung marketing event and expects trial deployments to
begin shortly, with negotiations to do so ongoing with several potential retail
customers. The Group already has a large number of enquirors expressing
interest in this product from demonstrating the Beta version in its showroom
during client meetings. The Board believes this product to be particularly
attractive to retailers on an ongoing basis and that it will assist in moving
revenue streams onto a more consistent basis.
Designs for the hologram unit are now finalised, with a test build now
scheduled for autumn 2014 with a launch anticipated shortly thereafter.
Outlook
The Group has made good progress in the last 12 months, and this has enabled it
to complete two placings to institutional and other investors to raise £
1,223,000 (before expenses and including conversion of interest). These
placings have allowed MediaZest to invest in the strategies highlighted to
drive additional business in the future and develop new products for which the
Board believes there are substantial markets.
There has been a large amount of time expended upon the development of the
Retail Analytics product in the latter part of the Financial Year ending 31
March 2014 and the first quarter of the new Financial Year ending 31 March
2015.Further time and resource has been taken up by the final project delivery
for Coca-Cola between September 2013 and May 2014. This has not improved
performance in the first quarter of the Financial Year ending 31 March 2015.
However, the second quarter is showing substantial improvement with several
important business wins announced on 8 August 2014 and more expected prior to
the end of the half year as a direct result of the changes made during the last
twelve months.
The core strategy continues to be the transition of the Group's revenue base
towards more ongoing, contractual-type business, and away from dependency on
large scale projects which are difficult to predict and suffer the vagaries of
timing. As such, efforts are being focussed on larger scale roll-out
opportunities which naturally take longer to consummate than short term
campaigns. The Directors believe this strategy is starting to pay dividends in
the current quarter with the future pipeline in FY 2015 and beyond looking much
improved.
Lance O'Neill
Chairman
Enquiries:
Geoff Robertson
Chief Executive Officer
MediaZest Plc 020 7724 5680
Gavin Burnell / Edward Hutton
Nominated Adviser
Northland Capital Partners Limited 020 7382 1100
Claire Noyce / William Lynne / Niall
Pearson
Broker
Hybridan LLP 020 3713 4581 / 4582/ 4583
Notes to Editors:
About MediaZest
MediaZest is a creative audio visual company 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
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2014
Note 2014 2013
£'000 £'000
Continuing operations
Revenue 2,944 1,850
Cost of sales (1,978) (941)
Gross profit 966 909
Administrative expenses (1,513) (1,322)
Operating loss 2 (547) (413)
Finance costs (128) (138)
Loss on ordinary activities before taxation (675) (551)
Tax on loss on ordinary activities 22 -
Loss for the year and total comprehensive (653) (551)
loss for the year attributable to the owners
of the parent
Loss per ordinary 0.1p share
Basic 3 (0.09p) (0.15p)
Diluted 3 (0.09p) (0.15p)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2014
2014 2013
£'000 £'000
Non-current assets
Goodwill 2,772 2,772
Property, plant and machinery 60 63
Total non-current assets 2,832 2,835
Current assets
Inventories 95 123
Trade and other receivables 766 515
Cash and cash equivalents 268 1
Total current assets 1,129 639
Current liabilities
Trade and other payables (1,522) (1,155)
Financial liabilities (200) (707)
Total current liabilities (1,722) (1,862)
Net current liabilities (593) (1,223)
Non-current liabilities
Financial liabilities - -
Total non-current liabilities - -
Net assets 2,239 1,612
Equity
Share capital 3,174 2,736
Share premium account 4,871 4,029
Share options reserve 7 7
Retained earnings (5,813) (5,160)
Total equity 2,239 1,612
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2014
Share Share Share Retained Total
Options
Capital Premium Reserve Earnings Equity
£'000 £'000 £'000 £'000 £'000
Balance at 1 April 2012 2,587 4,004 7 (4,609) 1,989
Loss for the year - - - (551) (551)
Total comprehensive income for the - - - (551) (551)
year
Issue of share capital 149 30 - - 179
Share issue costs - (5) - - (5)
Balance at 31 March 2013 2,736 4,029 7 (5,160) 1,612
Loss for the year - - - (653) (653)
Total comprehensive income for the - - - (653) (653)
year
Issue of share capital 438 951 - - 1,389
Share issue costs - (109) - - (109)
Balance at 31 March 2014 3,174 4,871 7 (5,813) 2,239
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2014
Note 2014 2013
£'000 £'000
Net cash used in operating activities (418) (385)
Taxation 22 -
Cash flows used in investing activities
Purchase of plant and machinery (36) (16)
Disposal of plant and machinery 3 3
Purchase of leasehold improvements (3) -
Net cash used in investing activities (36) (13)
Cash flow from financing activities
Repayment of bank borrowings (8) (17)
Other loans (77) 77
Shareholder repayments (330) -
Interest paid (128) (39)
Proceeds of share issue 1,389 179
Interest repaid with equity (169) -
Loans repaid with equity (11) -
Share issue costs (109) (5)
Net cash generated from financing activities 557 195
Net increase/(decrease) in cash and cash 125 (203)
equivalents
Cash and cash equivalents at beginning of year (199) 4
Cash and cash equivalents at end of the year 4 (74) (199)
NOTES TO THE FINANCIAL INFORMATION
1. BASIS OF PREPARATION
The financial information set out above does not constitute the Company's
statutory financial statements for the years ended 31 March 2013 and 31 March
2014 within the meaning of section 434 of the Companies Act 2006.
Statutory financial statements for the year ended 31 March 2013 have been
delivered to the Registrar of Companies and those for the year ended 31 March
2014 will be delivered in due course.
The auditors have reported on the financial statements for the year ended 31
March 2013; their report was unqualified and did not include references to any
matters to which the auditors drew attention by way of emphasis without
qualifying their report, and did not contain a statement under section 498(2)
or (3) of the Companies Act 2006.
The auditors have reported on the statutory financial statements for the year
ended 31 March 2014; their report was unqualified, and did not include
references to any matters to which the auditors drew attention by way of
emphasis without qualifying their report, and did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006.
The statutory financial statements for the year ended 31 March 2014, from which
the financial information included in this announcement is extracted, have been
prepared in accordance with International Financial Reporting Standards (IFRS)
as adopted by the European Union.
Going concern
The directors have carefully considered the going concern assumption on the
basis of financial projections and the factors outlined below.
The directors have considered financial projections based upon known future
invoicing, existing contracts, pipeline of new business and the increasing
number of opportunities it is currently working on, particularly in the retail
sector.
In addition, these forecasts have been considered in light of the ongoing
economic difficulties in the UK and global economy, previous experience of the
markets in which the company 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 company will generate sufficient cash
resources to meet its liabilities as they fall due over the 12 month period
from the date of the approval of the accounts.
The directors have obtained a letter of support from a shareholder who has
provided a loan to the Group totalling £200,000 at 31 March 2014 (2013: £
530,000) 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.
As a result the directors consider that it is appropriate to draw up the
accounts 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.
2. OPERATING LOSS
2014 2013
£'000 £'000
This is stated after charging/(crediting):
Depreciation of owned assets 39 47
Pension contributions 5 5
Operating lease rentals paid:
- land and buildings 38 75
- other 11 17
3. LOSS PER ORDINARY SHARE
2014 2013
£'000 £'000
Losses
Losses for the purposes of basic and diluted 653 551
earnings per share being net loss attributable to
equity shareholders
2014 2013
Number of shares Number Number
Weighted average number of ordinary shares for the 700,199,072 367,675,618
purposes of basic earnings per share
Number of dilutive shares under option or warrant - -
Weighted average number of ordinary shares for the 700,199,072 367,675,618
purposes of dilutive loss per share
Basic loss per share is calculated by dividing the loss attributed to ordinary
shareholders of £653,000 (2013: £551,000) by the weighted average number of
shares during the year of 700,199,072 (2013: 367,675,618).
The diluted loss per share is identical to that used for basic loss per share
as the exercise of warrants and options would have the effect of reducing the
loss per share and therefore is not dilutive.
4. CASH AND CASH EQUIVALENTS
The Group The Group The Company The Company
2014 2013 2014 2013
£'000 £'000 £'000 £'000
Cash held at bank 268 1 9 1
Bank overdraft - (92) - -
Invoice discounting (342) (108) - -
facility
(74) (199) 9 1
5. AVAILABILITY OF THE ANNUAL REPORT AND FINANCIAL STATEMENTS
The Report and Financial statements for the year ended 31 March 2014 are
available on the Company's website: www.mediazest.com and will shortly be
posted to shareholders.
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