Half-yearly Report
30 December 2010
MediaZest Plc
Half-yearly unaudited results for the six months ended 30 September 2010
MediaZest Plc (AIM: MDZ), the creative digital out-of-home advertising company
and audio-visual ("AV") integrator, announces its half-yearly unaudited results
for the six months ended 30 September 2010.
CHAIRMAN'S STATEMENT
Introduction
The results for MediaZest Plc ("MediaZest", the "Company", and collectively
with the Subsidiary Companies, the "Group") reflect the six-month period to 30
September 2010. They incorporate the results of its subsidiaries, all of which
are wholly owned.
The Company has moved its year end to 31 March and has consequently prepared
financial statements for the 15 months to 31 March 2010. This set of interim
results, therefore, covers the six months to 30 September 2010 and amounts
presented for prior periods are not directly comparable.
Financial review
Revenue for the period was £1,080,000 (31 December 2009 - £1,263,000) and the
Group made a loss for the period, after taxation, of £109,000 (31 December 2009
- £141,000) after finance costs of £32,000 (31 December 2009 - £9,000) and
having paid administrative expenses of £595,000 (31 December 2009 - £664,000).
EBITDA was a loss of £68,000 (31 December 2009 - £107,000). The basic and fully
diluted loss per share was nil (31 December 2009 - nil).
Operational review
The sales performance for the six month period was consistent with first half
results for 2009 and the generation of client revenue in our business continued
to be challenging in the difficult trading environment encountered by many of
our clients. Nevertheless, the reduction in cost base accomplished through the
restructuring of the Group in 2009 has meant that the Company has been able to
reduce its losses further particularly at the EBITDA level.
April and May were particularly difficult months as many clients appeared to
delay spending plans prior to the General Election although the Group performed
profitably in its operating subsidiaries for the subsequent four months.
TouchVision, as referred to in previous Group announcements, has been affected
by cut backs in government expenditure which has had a direct impact on its
Education business. This position was exacerbated by the conclusion of two
large contracts in May 2009, when they were transferred into the London
University Purchasing Consortium (LUPC) which at that time, TouchVision was not
a part of. In early 2010 TouchVision had tendered for a number of framework
agreements, including the LUPC, which the Board hoped it would participate in
and anticipated that this would have had a positive impact on the Summer 2010
period. The results of these tenders were unfortunately not announced until
winter 2010; however, on 25 November 2010, the Board announced that TouchVision
had been appointed as a supplier of choice in all of the Lots that it submitted
for. Furthermore, these successes in turn have opened up a large number of
additional opportunities and potential revenue lines for the next three years
that were not available to the Group in Summer 2010.
MediaZest Ventures enjoyed a markedly increased level of enquiries during the
six month period. We expect these enquiries to begin to generate significant
revenues in the second half of financial year 2010-2011 in line with normal
business patterns and the expected lead time experienced when undertaking
significant projects in this market. During this period, the Company was
delighted to add new clients such as Aviva, Frontline Display and Microsoft.
The latter engaged MediaZest to provide hardware solutions for 19 touchscreens
in Vodafone retail stores in support of their Windows 7 software launch.
MediaZest has continued to provide retail and marketing solutions for existing
clients such as Barclays Bank, JD Sports, L'Oreal and Footlocker, all of whom
engaged us to provide additional services in the period.
The Board continues to monitor and control costs across the Group as a whole.
However, with a view to generating additional revenues it has employed an
experienced salesperson in the Midlands area to broaden the Group's
geographical reach. The Board expects this appointment to begin to bear fruit
in the next quarter. From a financing perspective, interest costs were higher
than in previous periods due to the increase in debt financing, which includes
the invoice discounting facility, the refinancing of the TouchVision overdraft
into a three year bank loan and the provision of shareholder loans and funding
facilities. In addition, travel costs were higher than expected and as a result
the Board took the decision to invest in new, more efficient company vehicles
to reduce mileage costs in the longer term.
Outlook
The prospects for TouchVision have improved markedly with the company having
been appointed to the LUPC (London Universities Purchasing Consortium), SUPC
(Southern Universities Purchasing Consortium), HEPCW (Higher Education
Purchasing Consortium Wales) and Value Wales purchasing consortia framework
agreements effective 2 November 2010. These agreements are for three years with
the option to extend a further year and are split into Lots. The Lots to which
TouchVision has been appointed are expected to spend approximately £7,500,000
per annum and TouchVision is one of between 4 and 11 companies competing for
business within these Lots. Although public sector spending is expected to
reduce, this gives TouchVision a large number of potential new clients it can
work with for the first time. The Board believes that the cost saving solutions
TouchVision offers can add value to clients outside of these areas and may
offer additional opportunities.
TouchVision also has a framework contract with the NWUPC/CPC/APUC consortia
which was extended for a further year to 31 December 2011 and under which
member organizations are expected to spend approximately £1,800,000 on audio
visual supplies. TouchVision is one of five companies appointed to this
framework agreement.
MediaZest Ventures continues to add new clients and experience a significant
increase in enquiries. The Company is currently in negotiation with a leading
supplier of queue management systems, regarding a global deal to bring some of
its technologies to their clients, and expects to make an announcement to such
effect in due course. This has already led to a first order with significant
further orders expected in 2011 and beyond.
The Group has set up, additionally, a new division, MediaZest Green Solutions
(www.mediazestgreen.com), with the objective of meeting market demand for more
environmentally friendly solutions and cost saving measures. The Board believes
that this operation has the potential to generate significant revenues in
future years through working with our existing client base to deliver cost
effective solutions, such as efficient LED lighting, that can help customers to
meet budget pressures without reducing headcount. The Board expects revenues to
begin to be generated by this division in the first half of 2011. As this is
complementary to TouchVision's existing business lines the Company has been
able to establish this at little cost.
The Board continues to monitor cash and credit resources on a very regular
basis and will maintain this policy going forward. The Group is encouraged by
its new business pipeline which it expects will have a positive effect on
future sales revenue. It also intends to recruit additional sales staff and
invest in a more aggressive marketing programme in 2011, with the objective of
driving revenues back to pre-recession levels and moving the the Group into a
much stronger trading and financial position.
Lance O'Neill 30 December 2010
Chairman
STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2010
Unaudited Unaudited Unaudited Audited
Six Six Six 15 months
months months months
Notes 30-Sep-10 31-Dec-09 30-Jun-09 31-Mar-10
£'000 £'000 £'000 £'000
Continuing operations
Revenue 1,080 1,263 1,035 2,572
Cost of sales (553) (706) (540) (1,451)
Gross profit 527 557 495 1,121
Administrative expenses - other (595) (540) (832) (1,787)
Administrative expenses - - (124) - -
restructuring costs
EBITDA (68) (107) (337) (666)
Administrative expenses - (9) (25) (17) (49)
depreciation
Operating Loss (77) (132) (354) (715)
Interest (32) (9) (16) (32)
Loss before taxation (109) (141) (370) (747)
Taxation - - - -
Retained loss on ordinary (109) (141) (370) (747)
activities after taxation
Loss per ordinary share
Basic 2 £0.00 £0.00 (£0.02) (£0.01)
Diluted 2 £0.00 £0.00 (£0.02) (£0.01)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2010
Unaudited Unaudited Unaudited Audited
As at As at As at As at
30-Sep-10 31-Dec-09 30-Jun-09 31-Mar-10
restated restated
£'000 £'000 £'000 £'000
Non-current assets
Goodwill 2,772 2,772 2,772 2,772
Plant and equipment 42 55 70 48
Total non-current assets 2,814 2,827 2,842 2,820
Current assets
Inventories 116 186 177 94
Trade and other 580 269 323 255
receivables
Cash and cash 2 1 13 37
equivalents
Total current assets 698 456 513 386
Current liabilities
Financial liabilities - (419) - - (290)
borrowings
Bank overdraft - (83) (44) -
Trade and other payables (833) (716) (1009) (551)
Current tax liabilities (82) (121) (152) (78)
Total current (1,334) (920) (1,205) (919)
liabilities
Net current liabilities (636) (464) (692) (533)
Net assets 2,178 2,363 2,150 2,287
Equity
Share Capital 2,428 2,362 2,283 2,428
Share premium account 3,580 3,327 3,211 3,580
Shares to be issued - 154 - -
Other reserves 7 7 7 7
Retained earnings (3,837) (3,487) (3,351) (3,728)
Total equity 2,178 2,363 2,150 2,287
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30
SEPTEMBER 2010
Share Share Shares Share Retained Total
to Options
Capital Premium be Reserves Earnings Equity
Issued
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 2009 2,283 3,211 - 7 (2,981) 2,520
Total comprehensive income - - - - (370) (370)
for the period
Balance at 30 June 2009 2,283 3,211 - 7 (3,351) 2,150
Total comprehensive income - - - - (141) (141)
for the period
Expensing of old capital - (5) - - 5 -
raising cost to Share Premium
Amounts received in advance - - 154 - - 154
of share issue
Issue of shares 79 121 - - - 200
Balance at 31 December 2009 2,362 3,327 154 7 (3,487) 2,363
Total comprehensive income - - - - (241) (241)
for the period
Issue of shares 66 258 (154) - - 170
Share issue costs - (5) - - - (5)
Balance at 31 March 2010 2,428 3,580 - 7 (3,728) 2,287
Total comprehensive income - - - - (109) (109)
for the period
Balance at 30 September 2010 2,428 3,580 - 7 (3,837) 2,178
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2010
Unaudited Unaudited Unaudited Audited
Six Six Six 15 months
months months months
Note 30-Sep-10 31-Dec-09 30-Jun-09 31-Mar-10
restated restated
£'000 £'000 £'000 £'000
Cash flows from operating
activities
Cash used in operations 3 (129) (386) (117) (667)
Net cash used in operating (129) (386) (117) (667)
activities
Cash flows from investing
activities
Purchase of property, plant and (3) (10) - (10)
equipment
Net cash used in investing (3) (10) - (10)
activities
Cash flow from financing
activities
Shareholder loans 81 - - 290
Interest paid (32) (9) (16) (32)
Invoice discounting facility - - - 90
provided by shareholders later
capitalised into shares
Investment income received - 354 - -
Bank loan 48 - - -
Net proceeds on issue of shares - - - 424
Net cash (used in)/generated from 97 345 (16) 772
financing activities
Net (decrease)/increase in cash (35) (51) (133) 95
and cash equivalents
Cash and cash equivalents at (23) (31) 102 (118)
beginning of period
Cash and cash equivalents at end (58) (82) (31) (23)
of period
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 International Financial Reporting
Interpretations Committee (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 from 31 March 2011.
The financial information has been prepared under the historical cost
convention and the principal accounting policies set out below have been
consistently applied to all periods presented.
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.
Non-statutory accounts
The financial information for the period ended 30 September 2010 set out in
this interim report does not constitute the Group's statutory accounts for that
period.
The statutory accounts for the 15 months ended 31 March 2010 have been
delivered to the Registrar of Companies.
The auditors reported on those accounts; their report was unqualified, did not
contain a statement under either Section 498 (2) or Section 498 (3) of the
Companies Act 2006 and did not include references to any matters to which the
auditor drew attention by way of emphasis.
The financial information for the six months ended 30 September 2010, 31
December 2009 and 30 June 2009 is unaudited.
Change in accounting policy
The statutory accounts for the 15 months ended 31 March 2010 show the
reclassification of the invoice discounting facility as cash and cash
equivalents therefore to ensure consistent comparatives for this report the
interims for six months ended 30 June 2009 and six months ended 31 December
2009 have also been reformatted.
2. Loss per share
Basic loss per share is calculated by dividing the loss attributed to ordinary
shareholders of £109,000 (31 December 2009 £141,000) by the weighted average
number of shares during the period of 167,625,327 (31 December 2009 -
133,825,327). The diluted loss per share is identical to that used for basic
loss per share as the exercise of warrants would have the effect of reducing
the loss per share and therefore is not dilutive under International Accounting
Standard 33 "Earnings per Share".
NOTES TO THE FINANCIAL INFORMATION
3. Cash used in operations
Unaudited Unaudited Unaudited Audited
Six Six Six 15 months
months months months
30-Sep-10 31-Dec-09 30-Jun-09 31-Mar-10
restated restated
£'000 £'000 £'000 £'000
Operating loss (77) (132) (354) (715)
Depreciation of tangible assets 9 25 17 49
(Increase)/decrease in (22) (9) (70) 13
inventories
Increase/(decrease) in payables 286 (324) (4) (376)
(Increase)/decrease in (325) 54 294 362
receivables
Cash used in operations (129) (386) (117) (667)
Tax paid - - - -
(129) (386) (117) (667)
4. Distribution of the Half-yearly Report
Copies of the Half-yearly Report will be available to the public from the
Company website, www.mediazest.com, and from the Company Secretary at the
Company's registered address at 3rd Floor, 16 Dover Street, London W1S 4LR.
Contact:
Geoff Robertson, MediaZest plc
Tel: 020 7724 5680
Stuart Lane/ Rod Venables,
Northland Capital Partners Limited, Nominated Adviser
Tel: 020 7492 4750
Claire Noyce,
Hybridan LLP, Broker
Tel: 020 7947 4350
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