MediaZest Plc
("MediaZest", the
"Company” or “Group"; AIM: MDZ)
Final Results Year
Ended 31 March 2016
MediaZest, the creative audio-visual company, is pleased to
provide shareholders with final results for the year ended
31 March 2016.
Key points of the year:
- Best ever financial results with
turnover of £3,144,000 and EBITDA profit of £58,000 before non-cash
share option based charge of £139,000
- 26.6% growth in turnover year on year
due to a combination of new business and expanding project work
with current client base
- Increase in recurring revenue streams
following strategic targeting of this area to allow for greater
visibility of future earnings
- Improvement in average gross margin to
42% (vs 32% prior year) largely as a result of improved recurring
revenues
- Second Rockar Hyundai dealership at
Westfield Stratford successfully completed in December 2015
- New clients including Specsavers,
Adidas, Diesel, Mamas and Papas, UGG (Deckers Brands), Farrow &
Ball and John Lewis Partnership
- Won two major industry awards: Retail
Week Digital Store of the Year award for the Hyundai Rockar
dealership at Bluewater shopping centre and also the prestigious
Flagship of the Year award from Point of Purchase Advertising
International (“POPAI”) in partnership with Dalziel and Pow.
- Issue of share options to employees to
further align interests with shareholders and incentivise further
growth and profitability improvement
Subsequent developments:
- Successful post year end placing of
£250,000 before expenses with additional conversion of outstanding
interest of £50,000
- Additional new projects for financial
year ended 31 March 2017: Rockar,
Hyundai, Mamas and Papas, O2, TNS, HMV, Kuoni, Ted Baker, and Diesel.
- Significant new client wins include
Virgin Media and Halfords. Company is awaiting consummation of
other new client proposals currently in progress
- The focus on recurring revenues and
new business is paying off, with the Company experiencing positive
trading despite the uncertainty that Brexit is perceived to have
brought to the retail sector. New revenue written since the last
trading update (29th April
2016) is approximately a further £1million; this is in
addition to the £1million previously announced at that time giving
a total of approximately £2m confirmed business for the year
already, midway through Q2 of the financial year.
- The Company referred to two
potentially transformative projects in the April 2016 Trading Update. Both projects continue
to be in progress, albeit delayed. The Company now expects to have
greater visibility as to timing of these in Q3 financial year
2017.
- A new Finance Director designate
joined the company 3 August 2016 and
shall be appointed to the Board of Directors in due course.
CHAIRMAN’S
STATEMENT
Introduction
The results for MediaZest plc (the “Group”) for the year ended
31 March 2016 incorporate the results
of its subsidiary, MediaZest International Limited, which is wholly
owned.
Results for the year and Key
Performance Indicators
Turnover for the year was £3,144,000 (2015: £2,483,000), cost of
sales was £1,813,000 (2015: £1,686,000) leading to an EBITDA loss
of £81,000 (2015: £625,000). The Group made a loss for the
year, after taxation, of £248,000 (2015: £656,000) after finance
costs of £87,000 (2015: £83,000) and having incurred administrative
expenses of £1,352,000 (2015: £1,490,000) excluding the share
options charge noted below.
There was a one-off, non-cash income statement charge this year
of £139,000 relating to the issue of share options under the
MediaZest Group Enterprise Management Incentive Scheme in
accordance with International Financial Reporting Standard 2 “Share
Based Payment”. The Group made a profit at EBITDA level for
the first time of £58,000 (2015: loss £625,000) before this one-off
non-cash adjustment. The Group loss for the year after
taxation, adjusted for this non-cash entry, was £109,000 (2015:
£656,000).
The basic loss and diluted loss per share was 0.02p (2015:
0.06p). The Group had cash in hand of £9,000 (2015: £13,000) at the
year end and an invoice discounting facility over the debtors of
MediaZest International Ltd of which £232,000 (2015: £174,000) was
in use at 31 March 2016. As at
31 March 2016, the Group had a limit
of £500,000 (2015: £500,000) under the existing invoice discounting
facility.
Subsequent to the year end, on 17 May
2016, additional capital was raised via a new equity
raising.
As at 31 March 2016, the Group
also had loans from shareholders of £410,000 (2015: £417,000) and
interest on those loans during the year amounted to £39,000 (2015:
£29,000). Subsequent to the year end, on 17 May 2016, £50,000 interest was converted to
equity via the issue of 33,333,333 new shares.
Business overview
The Group made substantial progress in the year, delivering its
best ever financial results.
A maiden positive EBITDA before the IFRS2 share option
adjustment, of £58,000 was achieved; the first time the Group has
achieved profitability at this level.
This improvement in financial results and move toward underlying
profit was achieved through strategic focus on permanent
installation work, with accompanying growth in recurring revenues,
and continued tight cost control.
Over the last 18 months the Board has increased its emphasis on
enhancing quality of revenues by targeting growth by way of
recurring revenues. Broadening the services offered has meant that
these revenues are now derived from traditional service and
maintenance contracts, content creation, audio licensing, and
content management as before. However, additional revenue is
now attained through ongoing data reporting (from both the Group’s
own face recognition platform, and an increasing number of touch
screen applications the Group has developed for customers), plus
software licences associated with content management infrastructure
and deployments.
Turnover for the year improved by £661,000 or 26.6% year on
year. Highlights included the second Rockar Hyundai deployment, at
Westfield Stratford, substantial ongoing installation and
development work for Hyundai at other UK dealerships, and a wide
variety of instore solutions for Adidas.
The Board believes that the deployment of audio visual systems,
such as the Group supplies, is starting to reach a status of much
greater acceptance in the retail market as an essential element of
store infrastructure. This is driving improvement in results
and will continue to do so as the market grows over the coming
years.
The Company is in the vanguard of this movement as evidenced by
the Group’s achievement in winning the Retail Week Digital Store of
the Year award for the Hyundai Rockar dealership at Bluewater
shopping centre and also the prestigious Flagship of the Year award
from Point of Purchase Advertising International (“POPAI”).
Ongoing investment in the sales process continues with the New
Business Director recruited from Samsung UK now embedded in his
role, and a new, lower cost, London sales office which allows for
flexibility whilst still providing a highly professional
environment for pitch meetings with clients.
Cost control continues to be a focus of the Board, with
significant year on year savings achieved following a cost review,
including a substantial saving by relocating the premises of the
London sales office as noted
above.
The combined effect of improved turnover and margins, and
reduced administrative expenses resulted in a substantial reduction
in loss after tax to £248,000 (2015: £656,000). This loss reduces
to £109,000 once the notional (non-cash) charge for the issue of
share options is removed.
STRATEGY
The Board continues to have the following policy to maximise
revenues and long term value in the company:
· Emphasis on maximising
opportunities by concentrating the Group’s marketing and sales
efforts on acquiring and developing business relationships with
large scale customers which have both the desire and potential
of rolling out digital signage in multiple locations;
· Improve the Group’s recurring
revenue streams through different managed service offerings;
· Develop proprietary products
such as MediaZest Retail Analytics which can generate intellectual
property on the statement of financial position and provide ongoing
sustainable revenue streams; and
· Market the Group’s ‘one stop
shop’ positioning to a wide range of global retailers in
conjunction with existing partners.
This strategy has resulted in good progress over the last 12
months.
Refinements during the year have included adding recurring
revenues from data reporting services and content management
licences. A key trend in retail the Group has seen, and capitalised
upon, has been the development of touchscreen driven customer
experiences allowing the consumer to browse, learn about and
interact with our clients’ products. MediaZest is able to design,
program, deploy, support and update content on these systems using
our in-house team.
The Group has added an additional revenue stream by providing
reporting and analytical services in respect of the working of
these systems. The Group further assists clients by way
of content analysis and display refinement. On top of this, regular
daily or weekly reporting from the MediaZest Retail Analytics
system also provides a data driven source of revenue.
This element of strategy is also feeding into wider discussions
with clients and potential partners about Internet of Things in
retail. With expectations that the number of connected devices
producing data for retailers will grow rapidly in coming years,
digital signage and the Group’s touchscreen and face recognition
solutions are perfectly placed to capitalise on this movement.
FUNDRAISING DURING THE PERIOD
With the improvement in financial results, the Company did not
require a fundraising event in the financial year.
However, subsequent to the year end, the Board moved in advance
of the EU referendum vote to add to working capital funds with a
successful placing of 166,666,800 shares at 0.15p per share to
raise £250,000 before expenses on 11 May
2016.
The shares were admitted to trading on AIM in June 2016.
In addition, £50,000 of the outstanding interest due on
shareholder loans was also converted to 33,333,333 shares at the
same price.
During the year the Group issued share options to employees in
order to align further with shareholder interests and provide
additional incentives over Group performance whilst maintaining
close control over wages. Full details are provided in Note 27.
Under International Financial Reporting Standards, whilst this has
no cash implications, it generates a charge to the income
statement. As this impacts financial performance it has been
highlighted as a line item in the report below.
PRODUCT DEVELOPMENT
The Group has previously announced the development of its own
audience measurement product utilising a facial recognition
algorithm to provide highly accurate and relevant footfall and
demographics data for retailers. Three live sites are in
operation, with a fourth expected in Autumn 2016.
The product is performing as expected but requires significant
investment from the client, at a time when such technology is in
its infancy. This is making larger scale deployment slower than
anticipated but the Board expect that as the “Internet of Things”
gains momentum in retail and data becomes an ever more necessary
component of retailer metrics, this platform will achieve wider
adoption with significant opportunities for the Group.
To help overcome the investment hurdle, the Board are
investigating offering this product to potential clients on a
Software-as-a-Service (“SaaS”) model.
KEY PROJECTS
Key projects undertaken during the year were as follows:
1. In early December the Group completed the second
Hyundai Rockar dealership at the Westfield Stratford shopping
centre. Operating in the same way as their highly successful
dealership at Bluewater, the new showroom features five large scale
videowalls, each of nine screens, and fourteen interactive
touchscreens allowing customers to purchase their chosen car. The
Group was responsible for system specification, build and
installation works including in store audio and content management
with ongoing support and maintenance contracts in place.
2. The Group continued to provide other services to
Hyundai on projects outside of the Rockar deployments, and building
on the digital success of that model. This has included deployment
of, and ongoing support and content management for, over 50 other
dealerships as part of an ongoing programme.
3. The Group began working with Specsavers Limited
in Winter 2015. Initial engagement was to design, produce and
deliver a Smart Store concept for the annual Partners Conference in
Birmingham on 28 November 2015 in collaboration with Specsavers
key stakeholders. Following this successful event the solutions
provided have been installed in Head Office and the Company is in
negotiations on further projects.
4. Since April 2015
the Group has again been working with Adidas. Having previously
worked with the company for a small number of short-term
promotional campaigns around the 2012 Olympics, the Group is now
working with Adidas again on an ongoing basis. This has led to
multiple deployments in the UK at high profile sites including
flagship JD Sports stores, Topshop Oxford Street and Harrods, as
well as several smaller deployments in Europe.
5. During the year, the Group provided system design
and installation services to four Post Office ‘branches of the
future’ as the client looks to implement digital solutions in
branch to assist customer retention, queue ‘busting’ and product
upsell.
6. Other new clients included Mamas and Papas, and
Diesel, whilst work continued with new projects and ongoing support
for existing clients such as Ted
Baker, HMV, Kuoni, Samsung, Debenhams and Liberty.
7. The Group continued a large education based
project in excess of £150,000 at the University of London.
8. Corporate work developed well with ongoing
engagement with Pfizer, ETC Venues and Churchill Retirement
Homes.
The new financial year has begun strongly with new business
engagements in the corporate and retail world, including further
work for Mamas and Papas, HMV, Kuoni, O2 and Rockar.
BOARD APPOINTMENTS AND
RESIGNATIONS
On 9 July 2015, the Board
appointed Andy Last ACA as Finance Director of both MediaZest Plc
and MediaZest International Ltd. Andy
Last subsequently resigned from the Board on 31 July 2016 and left the Group on 5 August 2016.
A new Finance Director joined the Group on 3 August 2016 and will be officially announced
when the statutory appointment is made.
James Abdool, Group Sales
Director, resigned from the Board on 31
August 2015 and left on 30 September
2015.
Outlook
The Group has made good commercial and financial progress in the
last 12 months, although it acknowledges there is still work to be
done to realise its full potential. The new financial year has
started positively with several significant new projects already
won.
The growth in recurring revenue gives the business a much
stronger base to begin the financial year than in previous
years.
The Board is looking to build on the underlying positive EBITDA
achieved this financial year and deliver bottom line profit after
tax for the first time in FY2017.
Pipeline opportunities are stronger than ever before and across
a wide range of clients, including two large potential roll out
projects tentatively scheduled for the second half of this calendar
year / first half of calendar year 2017. The consummation of either
one of these projects would potentially have a transformational
effect upon the business. Whilst these opportunities are being
pursued, ongoing business with other customers continues to be
prioritised and the Board believes these projects will by
themselves lead to further improvement in financial results.
Lance
O’Neill
Chairman
Date: 10 August
2016
CONSOLIDATED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED
31 MARCH 2016
|
Note |
2016 |
2015 |
|
|
£'000 |
£'000 |
Continuing
operations |
|
|
|
Revenue |
|
3,144 |
2,483 |
|
|
|
|
Cost of sales |
|
(1,813) |
(1,686) |
|
|
|
|
Gross
profit |
|
1,331 |
797 |
|
|
|
|
Administrative
expenses |
|
(1,273) |
(1,422) |
Share based payment
charge |
|
(139) |
- |
|
|
|
|
EBITDA |
|
(81) |
(625) |
|
|
|
|
Administrative
expenses – depreciation & amortisation |
|
(79) |
(68) |
|
|
|
|
Operating
loss |
2 |
(160) |
(693) |
|
|
|
|
Finance costs |
|
(87) |
(83) |
|
|
|
|
Loss on ordinary
activities before taxation |
|
(247) |
(776) |
|
|
|
|
Tax on loss on
ordinary activities |
|
(1) |
120 |
|
|
|
|
Loss for the year
and total comprehensive loss for the year attributable to the
owners of the parent |
|
(248) |
(656) |
|
|
|
|
Loss per ordinary
0.1p share |
|
|
|
Basic |
|
(0.02p) |
(0.06p) |
Diluted |
|
(0.02p) |
(0.06p) |
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
AS AT 31 MARCH
2016
|
|
2016 |
2015 |
|
|
£'000 |
£'000 |
Non-current
assets |
|
|
|
Goodwill |
|
2,772 |
2,772 |
Tangible fixed
assets |
|
78 |
122 |
Intangible fixed
assets |
|
39 |
49 |
Total non-current
assets |
|
2,889 |
2,943 |
|
|
|
|
Current
assets |
|
|
|
Inventories |
|
68 |
87 |
Trade and other
receivables |
|
353 |
588 |
Cash and cash
equivalents |
|
9 |
13 |
Total current
assets |
|
430 |
688 |
|
|
|
|
Current
liabilities |
|
|
|
Trade and other
payables |
|
(944) |
(1,190) |
Financial
liabilities |
|
(452) |
(433) |
Total current
liabilities |
|
(1,396) |
(1,623) |
|
|
|
|
Net current
liabilities |
|
(966) |
(935) |
|
|
|
|
Non-current
liabilities |
|
|
|
Financial
liabilities |
|
(57) |
(33) |
Total non-current
liabilities |
|
(57) |
(33) |
|
|
|
|
Net assets |
|
1,866 |
1,975 |
|
|
|
|
Equity |
|
|
|
Share capital |
|
3,299 |
3,299 |
Share premium
account |
|
5,138 |
5,138 |
Share options
reserve |
|
146 |
7 |
Retained earnings |
|
(6,717) |
(6,469) |
Total
equity |
|
1,866 |
1,975 |
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
FOR THE YEAR ENDED 31 MARCH 2016
|
Share |
Share |
Share
Options |
Retained |
Total |
|
Capital |
Premium |
Reserve |
Earnings |
Equity |
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
Balance at 1 April
2014 |
3,174 |
4,871 |
7 |
(5,813) |
2,239 |
|
|
|
|
|
|
Loss for the year |
- |
- |
- |
(656) |
(656) |
|
|
|
|
|
|
Total comprehensive
loss for the year |
- |
- |
- |
(656) |
(656) |
|
|
|
|
|
|
Issue of share
capital |
125 |
313 |
- |
- |
438 |
Share issue costs |
- |
(46) |
- |
- |
(46) |
|
|
|
|
|
|
Balance at 31 March
2015 |
3,299 |
5,138 |
7 |
(6,469) |
1,975 |
|
|
|
|
|
|
Loss for the year |
- |
- |
- |
(248) |
(248) |
Share based payment
charge |
- |
- |
139 |
- |
139 |
|
|
|
|
|
|
Total comprehensive
loss for the year |
- |
- |
139 |
(248) |
(109) |
|
|
|
|
|
|
Issue of share
capital |
- |
- |
- |
- |
- |
Share issue costs |
- |
- |
- |
- |
- |
|
|
|
|
|
|
Balance at 31 March
2016 |
3,299 |
5,138 |
146 |
(6,717) |
1,866 |
CONSOLIDATED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2016
|
Note |
2016 |
2015 |
|
|
£'000 |
£'000 |
|
|
|
|
Net cash used in
operating activities |
|
(103) |
(483) |
|
|
|
|
Taxation |
|
111 |
- |
|
|
|
|
Cash flows used in
investing activities |
|
|
|
Purchase of plant and
machinery |
|
(26) |
(117) |
Disposal of plant and
machinery |
|
14 |
3 |
Purchase of
intellectual property |
|
(14) |
(61) |
Purchase of leasehold
improvements |
|
- |
(4) |
Net cash used in
investing activities |
|
(26) |
(179) |
|
|
|
|
Cash flow from
financing activities |
|
|
|
Other loans |
|
50 |
49 |
Shareholder loan
(repayments) / receipts |
|
(7) |
217 |
Interest paid |
|
(87) |
(83) |
Proceeds of share
issue |
|
- |
438 |
Share issue costs |
|
- |
(46) |
Net cash (used in)
/ generated from financing activities |
|
(44) |
575 |
|
|
|
|
Net decrease in
cash and cash equivalents |
|
(62) |
(87) |
|
|
|
|
Cash and cash
equivalents at beginning of year |
|
(161) |
(74) |
|
|
|
|
Cash and cash
equivalents at end of the year |
3 |
(223) |
(161) |
NOTES TO THE FINANCIAL STATEMENTS
1.
BASIS OF PREPARATION
The financial information has been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the European Union, and as regards the parent company financial
statements, as applied in accordance with the provisions of the
Companies Act 2006. The financial statements have been prepared
under the historic cost convention unless otherwise stated.
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 global economy and the
result of the recent EU referendum, 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 £250,000
at 31 March 2016 (2015: £250,000)
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
|
2016 |
2015 |
|
£'000 |
£'000 |
This is stated
after charging/(crediting): |
|
|
|
|
|
Depreciation of owned
tangible assets |
32 |
38 |
Amortisation of
intangible assets |
24 |
12 |
Depreciation of assets
held under hire purchase agreements |
23 |
18 |
Pension
contributions |
5 |
5 |
Operating lease
rentals paid: |
|
|
- land and buildings |
69 |
165 |
- other |
1 |
1 |
3.
CASH AND CASH
EQUIVALENTS
|
The
Group |
The
Group |
The
Company |
The
Company |
|
2016 |
2015 |
2016 |
2015 |
|
£’000 |
£'000 |
£’000 |
£'000 |
Cash held at bank |
9 |
13 |
- |
- |
Invoice discounting
facility |
(232) |
(174) |
- |
- |
|
(223) |
(161) |
- |
- |
4. AVAILABILITY OF
THE REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
The Report and Consolidated Financial Statements for the year
ended 31 March 2016 are available on
the Company's website: www.mediazest.com and will shortly be posted
to shareholders.
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) 596/2014.
Enquiries:
Geoff Robertson
Chief Executive Officer
MediaZest Plc
0845 207 9378
Edward Hutton / David Hignell
Nominated Adviser
Northland Capital Partners
Limited 020 3861 6625
Claire Noyce / William Lynne / Niall
Pearson
Broker
Hybridan LLP
020 3764 2341/ 2343
Notes to Editors:
About MediaZest
MediaZest is a creative media agency and 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