12:27 Mon 23 Dec 2019
MediaZest Plc - Half-year Report
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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
("", the "Company” or the “Group")
Unaudited results for the six months ended
(AIM: MDZ), the creative audio-visual company, announces its unaudited interim results for the six months ended .
CHAIRMAN’S STATEMENT
Introduction
The Board presents the consolidated unaudited results for the six months ended for and its wholly owned subsidiary company (together the “Group”).
Financial Review
Operational Review
As shown in the Financial Review above, the results for the six months to 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 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 , as noted in the Group’s Final Results announcement of . This project is currently progressing towards completion, with the majority of the work falling into October and .
In light of the above, the Directors believe the results for the six month period ending should be viewed alongside MediaZest’s stronger performance during October and , 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 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, , 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 .
Client Work
The Group continues to service a core of long-standing client accounts including Lululemon Athletica, Tiffany & Co, Kuoni, , HMV and Hyundai, all of which undertook new projects with the Group during the period under review. In addition, our work with continues and the Company has now provided audio visual solutions for a further twelve stores since with a further six scheduled to be completed early in 2020. New clients added to date in the current financial year include Twinings, 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 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 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 .
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
-- 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 (Restated 2018: earnings per share ) -- 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 was £38,000.0.0163 pence 0.0161 pence 20 December 2019
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2019 Unaudited Restated Audited Unaudited 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 – (40) (10) (40) depreciation & amortisation ------------ ------------ ------------ 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 (228) 207 6 total comprehensive loss/income for the period attributable to the ======== ======== ======== owners of the parent 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 3,546 5,244 146 (7,115) 1,821 March 2018 Adjustment - - - (117) (117) for adoption of IFRS15 ----------- ------------ --------------- ------------ ----------- Balance at 1 3,546 5,244 146 (7,232) 1,704 April 2018 restated Restated - - - 207 207 Profit for the period ----------- ----------- ----------- ----------- ----------- Total - - - 207 207 comprehensive profit for the period ======= ======= ======== ======= ====== Balance at 30 3,546 5,244 146 (7,025) 1,911 September 2018 restated ======= ======= ======== ======= ====== Loss for the - - - (201) (201) period ------------ ------------ ------------------ ------------ ------------ Total - - - (201) (201) comprehensive loss for the period Issue of 110 - - - 110 share capital Share issue - - - (1) (1) costs ======= ======== ========= ======= ====== Balance at 31 3,656 5,244 146 (7,227) 1,819 March 2019 ======= ======== ========= ======= ====== Adjustment - - - (2) (2) for adoption of IFRS 16 ======= ======== ========= ======= ====== Balance at 1 3,656 5,244 146 (7,229) 1,817 April 2019 restated ======= ======== ========= ======= ====== Loss for the - - - (228) (228) period ------------ ------------- ---------------- ------------ ----------- Total - - - (228) (228) comprehensive loss for the period ======= ======== ========= ======= ====== Balance at 30 3,656 5,244 146 (7,457) 1,589 September 2019 ======= ======== ========= ======= ======
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2019 Unaudited Restated Audited Unaudited Six months Six months 12 months Note 30-Sep-19 30-Sep-18 31-Mar-19 £'000 £'000 £'000 Net cash generated from operating 3 14 138 117 activities Taxation - - - ---------- ---------- ---------- Net cash generated from operating 14 138 117 activities 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 (179) (353) (353) period / year ======= ======= ======= Cash and cash equivalents at end of period 4 (145) (324) (179) / year ======= ======= =======
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 (IASB) and the IFRS Interpretations Committee and there is an ongoing process of review and endorsement by the . The financial information has been prepared on the basis of IFRS that the Directors expect to be applicable as at . IFRS15 was implemented for the first time for the Financial Year Ended 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 . 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 ), 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 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 and 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.International Accounting Standards Board European Commission European Union 31 March 2020 31 March 2019 30 September 2018 31 March 2019 30 September 2019 30 September 2018
3. Cash generated from/(used in) operations Unaudited Restated Audited Unaudited 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 Audited Unaudited 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 , trade has improved and both October and 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 , 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 and for the six months ended 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 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 . Lease liabilities are presented within Financial Liabilities on the Statement of Financial Position at and was equal to £184,000. 7. Distribution of the Half-Yearly Report Copies of the Half-yearly Report will be available to the public from the Company’s website, , and from the Company Secretary at the Company's registered address at Unit 9, , , Woking, Surrey, GU21 5JY. Enquiries: MediaZest Plc 0845 207 9378 Geoff Robertson Chief Executive Officer SP Angel Corporate Finance LLP 020 3470 0470 Nominated Adviser / Hybridan LLP 020 3764 2341 Broker Claire Noyce Notes to Editors: About 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 and Education markets. The Group supplies an integrated service from content creation and system design to installation, technical support, and maintenance. was admitted to the AIM market in . For more information, please visit .30 September 2019 November 2019 1 April 2019 31 March 2019 30 September 2018 1 April 2019 30 September 2019 30 September 2019 February 2005 www.mediazest.comwww.mediazest.comWoking Business Park Albert Drive David Hignell Stephen Wong MediaZest NHS MediaZest London Stock Exchange's
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