Half-yearly Report
MediaZest Plc
Interim results for the six months ended 30 June 2007
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
June 2007. They incorporate the results of its subsidiaries, all of which are
wholly owned.
Results for the Period
Turnover for the period was £1,806,000 (2006 - £1,325,000) and the Group made a
loss for the period, after taxation, of £223,000 (2006 - £447,000) after
finance costs of £3,000 (2006 - £2,000) and having paid administrative expenses
of £1,003,000 (2006 - £955,000). The basic and fully diluted loss per share was
1 pence (2005 - 2 pence). The Group had cash in hand of £251,000 (2006 - £
963,000) at the period end.
Overview
The Group has made considerable progress in revenue generation during the
period in both operational subsidiaries, MediaZest Ventures Limited ("MediaZest
Ventures") and Touch Vision Limited ("Touch Vision"). Revenues in the Group
grew by 36% versus the comparative period, reflecting increased interest in the
products and services we offer and the developing digital out-of-home
advertising market. The programme of cost containment measures begun in 2006
has given the business a more tenable cost base going forward and the full
effect of these changes is expected to be felt during the second half of 2007.
Despite these positive developments, the Group recorded a loss in the period of
£223,000, albeit half that of the comparative period in 2006. The largest
proportion of these losses was incurred during a difficult start to the year in
January and February.
MediaZest Ventures
In order to increase our revenue we pursued a new marketing strategy during the
period, which has been successful in generating business from new clients.
These continue to be, predominantly, advertising agencies, media agencies and
brand owners looking for both creative and innovative ways to increase sales or
reinforce branding messages.
Our efforts have been aided by increasing acceptance of the use of digital
media in out-of-home advertising. Industry intelligence puts the number of
out-of-home screens capable of carrying advertising at over 120,000 in the UK
alone. Although the Group does not currently operate such national media
networks, it is indicative of the growing interest in the services that we
offer.
During the first half of 2007 we undertook projects for blue chip companies
such as Mizuno, Sony, Famous Grouse and 20th Century Fox, amongst others.
Repeat business with clients such as Chivas has also been encouraging.
Touch Vision
The improvement in Touch Vision results since we took ownership in 2005 has
continued. This has been due, largely, to the reforms made to loss making
areas, the winning of new contracts and an increasing volume of business being
passed through from other Group companies.
In addition to the three-year framework agreement for the provision of sales,
installation, and maintenance of audiovisual equipment to London South Bank
University and London Metropolitan University, won last year, we have been
appointed as one of four audiovisual installation suppliers to another large
university for a four year period with effect from 1 August 2007. Furthermore,
we have recently won our first piece of business under this tender agreement,
which will be completed by the end of September 2007. Other significant wins
have allowed our Education department to continue to grow and we have spent
considerable time honing our high quality offering in this area, with
encouraging results. Since the majority of work for these organizations occurs
during holiday-periods, this work has proven counter-cyclical to our retail
business and hence reduces our operational risk.
As the Christmas period approaches, orders across our retail clients have
increased. We were pleased to have been involved in the HMV Store of the Future
project, which has recently opened to much media interest. As well as providing
audio-visual design, integration and installation services to this project, we
have also supplied content management to a range of passive and interactive
screens. The Company continues to provide maintenance services to all HMV UK
stores. In the first half of 2007, we completed a range of exciting new
audio-visual installations for a shopping centre in the North West of England,
which included the deployment of Panasonic's 103" Plasma Screen for the first
time in a UK retail environment and the implementation of a wide range of
content management solutions.
In the Corporate sector, the Company completed two significant orders -
providing audiovisual solutions for the new UK headquarters of both Electronic
Arts, a major international computer games manufacturer, and Dunnhumby, a
leading database manager and analytical services provider.
Outlook
The growing demand for digital out-of-home media coupled with our improved
positioning and awareness of our services in the marketplace gives us grounds
for optimism in the future. The second half of 2007 has begun with the Group's
strongest ever quarter and in addition to a wide range of work in the education
sector we have a good order book going forward with a number of well known
blue-chip clients.
The impact of the rationalisation programme that was begun in 2006, is
anticipated to be fully realised in the second half of 2007, with cost benefits
occurring, primarily, in salary and administrative costs. Although headcount
has increased, we have recruited more chargeable engineering resource whilst
reducing non-revenue producing staff costs resulting in a net saving in
salaries and employment overhead.
As part of our revised strategy in the market, we have begun developing closer
ties with traditional Point-of-Sale suppliers as we believe that the future of
in-store Point-of-Sale lies in the amalgamation of our technology with more
traditional methods; the common ground being creativity in the crafting and
delivery of the message.
Lance O'Neill
Chairman
17 September 2007
CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
Half Year Half Year Year Ended
Notes 30-Jun-07 30-Jun-06 31-Dec-06
£'000 £'000 £'000
Continuing Operations
Revenue 1,806 1,325 3,171
Cost of sales (1,023) (815) (2,053)
Gross profit 783 510 1,118
Administrative expenses (1,003) (955) (2,099)
Operating Loss (220) (445) (981)
Finance costs (3) (2) (8)
Loss before taxation (223) (447) (989)
Taxation - - -
Retained loss on ordinary activities (223) (447) (989)
after taxation
Loss per ordinary 10p share
Basic 2 £0.01 £0.02 £0.04
Diluted 2 £0.01 £0.02 £0.04
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
Half Year Half Year Year Ended
30-Jun-07 30-Jun-06 31-Dec-06
£'000 £'000 £'000
Non-current assets
Goodwill 2,772 2,772 2,772
Plant and equipment 99 91 105
Total non-current assets 2,871 2,863 2,877
Current assets
Inventories 234 219 142
Trade and other receivables 1,012 999 535
Cash and cash equivalents 251 963 569
Total current assets 1,497 2,181 1,246
Current liabilities
Financial liabilities - bank (86) (163) -
overdraft
Trade and other payables (745) (655) (430)
Current tax liabilities (138) (69) (73)
Total current liabilities (969) (887) (503)
Net current assets 528 1,294 743
Net assets 3,399 4,157 3,620
Equity
Share Capital 2,283 2,283 2,283
Share premium account 3,211 3,211 3,211
Other reserves 7 - 5
Retained earnings (2,102) (1,337) (1,879)
Total equity 3,399 4,157 3,620
CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
Half Year Half Year Year Ended
Note 30-Jun-07 30-Jun-06 31-Dec-06
£'000 £'000 £'000
Net cash used in operating 3 (368) (439) (613)
activities
Investing activties
Purchase of property, plant and (33) (10) (61)
equipment
Net cash used in investing (33) (10) (61)
activities
Financing activities
Interest paid (3) (2) (8)
Net cash used in financing (3) (2) (8)
activities
Cash and cash equivalents at 569 1,251 1,251
beginning of period
Cash and cash equivalents at end of 165 800 569
period
Cash in hand, at bank 251 963 569
Overdraft (86) (163) -
Cash and cash equivalents at end of 165 800 569
period
NOTES
1. Basis of preparation
The next annual financial statements will be 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 1985.
Accordingly, the interim 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 (IFRIC) 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 December 2007.
The financial information has been prepared under the historical cost
convention as modified by the revaluation of available-for-sale investments.
The principal accounting policies set out below have been consistently applied
to all periods presented.
IFRS transition
IFRS 1 permits companies adopting IFRS for the first time to take certain
exemptions from the full requirements of IFRS in the transition period. The
interim financial information has been prepared on the basis of the following
exemptions:
* Business combinations prior to 1 January 2006 have not been restated to
comply with IFRS 3 "Business Combinations"
* IFRS 2 "Share-based Payments" has been applied retrospectively to those
options that were issued after 7 November 2002 and had not vested by 1st
January 2006.
The disclosures required by IFRS 1 concerning the transition from UK GAAP to
IFRS are given in note 4.
Non-statutory accounts
The financial information for the year end 31 December 2006 set out in this
interim report does not comprise the Group's statutory accounts as defined in
section 240 of the Companies Act 1985.
The statutory accounts for the year ended 31 December 2006, which were prepared
under UK Generally Accepted Accounting Practice (UK GAAP), have been delivered
to the Registrar of Companies. The auditors reported on those accounts; their
report was unqualified and did not contain a statement under either Section 237
(2) or Section 237 (3) of the Companies Act 1985.
The financial information for the 6 months ended 30 June 2007 and 30 June 2006
is unaudited.
2. Loss per share
Basic loss per share is calculated by dividing the loss attributed to ordinary
shareholders of £223,000 (2006 £989,000) by the weighted average number of
shares during the period of 22,825,327 (2006 - 22,825,327). 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".
3. Cash used in operations
Unaudited Unaudited Audited
Half Year Half Year Year Ended
30-Jun-07 30-Jun-06 31-Dec-06
£'000 £'000 £'000
Operating loss (220) (445) (981)
Share option charge 2 - 5
Depreciation of tangible assets 39 47 84
Decrease/(increase) in stock (92) (50) 27
Increase/(decrease) in creditors 380 263 42
Decrease/(increase) in debtors (477) (254) 210
Cash used in operations (368) (439) (613)
Tax paid - - -
(368) (439) (613)
4. Transition to IFRS
MediaZest plc reported under UK GAAP in its previously published financial
statements for the year ended 31 December 2006. The analysis below shows a
reconciliation of net assets and profit as reported under UK GAAP as at 31
December 2006 to the revised net assets and profit under IFRS as reported in
these financial statements. There is also a reconciliation of net assets and
profit under UK GAAP to IFRS at the comparative interim date being 30 June
2006. Given the transitional exemption adopted (see note 1), there are no
adjustments at the transition date of 1 January 2006.
Reconciliation of equity at 31 Note Previous Effect of IFRS
December 2006 GAAP transition
to IFRS
£'000 £'000 £'000
Non-current assets
Goodwill A 2,622 150 2,772
Plant and equipment 105 - 105
Total non-current assets 2,727 150 2,877
Current assets
Inventories 142 - 142
Trade and other receivables 535 - 535
Cash and cash equivalents 569 - 569
Total current assets 1,246 - 1,246
Current liabilities
Trade and other payables (430) - (430)
Current tax liabilities (73) - (73)
Total current liabilities (503) - (503)
Net current assets 743 - 743
Net assets 3,470 150 3,620
Equity
Share Capital 2,283 - 2,283
Share premium account 3,211 - 3,211
Other reserves 5 - 5
Retained earnings (2,029) 150 (1,879)
Equity shareholders' funds 3,470 150 3,620
Reconciliation of equity at 30 June Note Previous Effect of IFRS
2006 GAAP transition
to IFRS
£'000 £'000 £'000
Non-current assets
Goodwill A 2,699 73 2,772
Plant and equipment 91 - 91
Total non-current assets 2,790 73 2,863
Current assets
Inventories 219 - 219
Trade and other receivables 999 - 999
Cash and cash equivalents 963 - 963
Total current assets 2,181 - 2,181
Current liabilities
Financial liabilities - overdraft (163) - (163)
Trade and other payables (655) - (655)
Current tax liabilities (69) - (69)
Total current liabilities (887) - (887)
Net current assets 1,294 - 1,294
Net assets 4,084 73 4,157
Equity
Share Capital 2,283 - 2,283
Share premium account 3,211 - 3,211
Other reserves - - -
Retained earnings (1,410) 73 (1,337)
Equity shareholders' funds 4,084 73 4,157
Reconciliation of profit at 31 Note Previous Effect of IFRS
December 2006 GAAP transition
to IFRS
£'000 £'000 £'000
Continuing Operations
Revenue 3,171 - 3,171
Cost of sales (2,053) - (2,053)
Gross profit 1,118 - 1,118
Administrative expenses A (2,249) 150 (2,099)
Operating Loss (1,131) 150 (981)
Finance costs (8) - (8)
Loss before taxation (1,139) 150 (989)
Taxation - - -
Retained loss on ordinary activities (1,139) 150 (989)
after taxation
Reconciliation of profit at 30 June Previous Effect of IFRS
2006 GAAP transition
to IFRS
£'000 £'000 £'000
Continuing Operations
Revenue 1,325 - 1,325
Cost of sales (815) - (815)
Gross profit 510 - 509
Administrative expenses A (1,028) 73 (955)
Operating Loss (518) 73 (445)
Finance costs (2) - (2)
Loss before taxation (520) 73 (447)
Taxation - - -
Retained loss on ordinary activities (520) 73 (447)
after taxation
Explanation of adjustments to equity and profit
A. IFRS 3 does not permit the amorisation of goodwill.
Enquiries:
Geoff Robertson, Chief Executive Officer, 020 7724 5680
MediaZest Plc
Liam Murray, City Financial Associates 020 7492 4777
Limited
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