MEDIAZEST PLC - Final Results

MediaZest Plc

("MediaZest", the "Company” or “Group"; AIM: MDZ)

Final Results for the Year Ended 31 March 2015

MediaZest, the creative audio-visual company, is pleased to provide shareholders with the Final Results for the Year Ended 31 March 2015.

Key points of the year:

• Highlight of year: new clients Hyundai and Rockar. MediaZest delivered the audio visual solution behind their ground breaking and multi-award winning Bluewater car dealership.

• Successful development, testing and launch of MediaZest Retail Analytics. This unique system is the Group’s first product to generate intellectual property. Successful live deployments leading to multiple new and ongoing opportunities in new financial year 2015/16

• The Post Office Limited acquired as a new client with first project in Summer 2014 and additional work secured and successfully delivered in current financial year

• Revenue and year end cash balance lower than previous year, partly due to delayed project in March 2015 falling into next financial year

• Net loss for the year stable despite reduction in revenue

• Cost base rationalised for financial year 2015/16

• Successful fundraising of £438,000 before expenses completed in December 2014

Subsequent developments:

• Awarded Digital Store of the Year at 2015 Retail Week Technology & E-commerce Awards for the Hyundai Rockar dealership

• Project wins post year end with new and existing clients including Adidas, Ted Baker, Chivas Regal, Kuoni, Samsung and Virgin Active

• Appointment of new Group Finance Director to the Board and New Business Director in the business following resignation of Sales Director

• £114,000 of shareholder loans repaid within 1 month of year end

CHAIRMAN’S STATEMENT

Introduction

The results for MediaZest plc (the “Group”) for the year ended 31 March 2015 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 £2,483,000 (2014: £2,944,000), cost of sales was £1,686,000 (2014: £1,978,000) and the Group made a loss for the year, after taxation, of £656,000 (2014: £653,000) after finance costs of £83,000 (2014: £128,000) and having incurred administrative expenses of £1,490,000 (2014: £1,513,000).

The basic loss and diluted loss per share was 0.06p (2014: 0.09p). The Group had cash in hand of £13,000 (2014: £268,000) at the year end and an invoice discounting facility over the debtors of MediaZest International Ltd of which £174,000 (2014: £342,000) was in use at 31 March 2015. As at 31 March 2015, the Group had a limit of £500,000 (2014: £350,000) under the existing invoice discounting facility.

As at 31 March 2015, the Group also had loans from shareholders of £417,000 (2014: £200,000) and interest on those loans outstanding amounted to £29,000 (2014: £2,000). Of the 2015 year end shareholder loan balance, £114,000 represented a short term finance facility that was made available following a delay by a client on a project scheduled to have been completed prior to the year end. The full £114,000 was repaid in April 2015.

Business overview

During the year the Group made demonstrable and sustainable progress in terms of market positioning and the acquisition of long term clients that used the Group’s services. The Group’s new Facial Recognition / Audience Measurement software product, “MediaZest Retail Analytics” was completed and launched successfully on both a trial and contractual basis with two high profile market brands. Furthermore, the Group acquired new clients of the calibre of Hyundai / Rockar, The Post Office, Ted Baker and Pfizer amongst others. The Group has continued to work with long term major clients such as Samsung, Kuoni, HMV and in the new financial year has begun to work again with Adidas.

In previous announcements the Board has referred to the sales mix and the need to enhance the quality of revenues by increasing the proportion of repeatable and / or retainer business relative to the project by project work that has historically represented the greater percentage of revenue. This continues to be the Group’s policy and has, as such, borne fruit but on a slower basis than the board is satisfied with.  The securing of a large scale project continues to have a material impact on the Group’s trading performance and the occurrence and timing, of such contracts, affects financial results. Similarly, delays in the fulfilment of contracts are usually outside of the Group’s control and therefore can have an effect on the quantum and timing of revenues. The effect of this makes it difficult to accurately forecast the timing of revenues and it is within this context that the results should be viewed, although this does not reflect the quality of, and the commercial diversity of, the Group’s increased client base during the year.

Turnover for the year declined by £461,000 or 15.67% year on year although the loss for the year was little changed from the previous financial year’s loss of £656,000. The reduction in turnover was attributable to the delay in completion of the material contract referred to earlier as well as the rescheduling of another significant contract to the current 2016 financial year.

The loss before tax for the FY 2015 was similar to last year’s despite enduring a fall of £461,000 in turnover. This was attained through the reduction in finance and administrative costs coupled with an overall policy of reducing the cost base. A further decision was made to relinquish the lease on the London showroom as it was felt that its usage had not yielded sufficient increases in sales relative to its cost in the period. It has been replaced by a more cost effective alternative. In this context the Board has moved to continue to defray costs across the Company in the new financial year by implementing a more flexible cost structure with a target of maintaining a cost base below £1,400,000 per annum. However, by cutting costs too much relative to turnover, the board risks compromising the quality of delivery that the Group is renowned for as exemplified by the Group’s achievement in winning the Retail Week award for the Hyundai Rockar dealership at Bluewater shopping centre. This has also been short listed for a prestigious Point of Purchase Advertising International (“POPAI”) award.

Investment in the sales process has improved prospects and, notwithstanding the rationalisation of the cost basis, the Group has continued to prioritise the generation of revenue and has recently appointed a senior salesperson to the newly created position of New Business Director.

Strategy

The Board has 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;
• 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.

Fundraising During the Period

On 17 December 2014, the Company announced a successful placing of 125,142,900 shares at 0.35p per share to raise £438,000 before expenses. The shares were admitted to AIM in January 2015 following shareholder approval of the placing. These funds have been utilised as follows:

• Investment in the sales process;
• Further development of the MediaZest Retail Analytics product (including building a bespoke version for an ongoing trial with a new potential retail client for this product); and
•  Provision of additional group Working Capital.

Product Development

The Board has previously highlighted areas in which it was developing unique products 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.

1. The development of the audience measurement product following excellent initial feedback in the testing and research phase.
2. Designs for a second product, a unique hologram unit, are also finalised, with a test build now scheduled for Autumn 2015 and a launch anticipated shortly thereafter. This has been previously delayed due to prioritisation of the MediaZest Retail Analytics product.

MediaZest ‘soft’ launched the first version of the audience measurement service “MediaZest Retail Analytics” in the first week of July 2014 to a wide potential customer base at a Samsung marketing event and in the public domain for the first time at the Retail Design Expo at the beginning of March 2015.

The Group continues to promote the product, and with a successful deployment in retail and subsequent renewal now achieved it has demonstrated the potential for this system. New customers are being sought and new marketing materials created to help promote the product. A second deployment is now live, on a trial basis, with a large UK based fashion retailer. This trial ends in August 2015 and the Group hopes to commercialise the deployment at that point.

It is the Board’s expectation that, given the nature of this work, some clients will initially trial the system in this way before committing to implementation. The Board anticipates confirmation of a further client interest in utilising the system in the quarter ending 31 December 2015.

Key Projects

Key projects undertaken during the year:

1. The deployment of a ground breaking new retail proposition with Hyundai / Rockar at the Bluewater shopping centre in Kent. New car dealership, Rockar, in partnership with Hyundai, delivered a new concept of “in store car retailing” which removes all paper and posters and replaces them with videowall technology. Instead of an EPOS system, purchasing customers use touchscreens that replicate an online sales process: a truly omnichannel store. Traditional car salespeople have been replaced with customer experience brand ‘angels’ who are committed to assisting the purchaser. MediaZest, after invitation from design experts Dalziel & Pow, were invited to tender for this deployment, won it and completed it over six months culminating in a live in store date in November 2014. The store has proved a huge success with customers and the quality of deployment has enabled the company to generate ongoing opportunities both with Hyundai and Rockar and several projects have subsequently been won for deployment in financial year 2015/16 with more expected to come in the next few months. As previously noted the project won the Retail Week Award for Digital Store of the Year and has been shortlisted for a prize at the forthcoming POPAI awards.

1. In the announcement of 8 April 2015, the Group alluded to an opportunity being pursued with one of the UK’s largest retailers, and is now able to provide a little more detail around this development. In April and May 2015 the company worked with The Post Office to provide audio visual solutions for their new concept branch in Kennington Park, London. The Company installed a number of digital solutions including in branch digital signage, high brightness window screens and a print on demand kiosk. The deployment was featured in a recent BBC documentary about The Post Office.

1. Hologram work was still represented during the early part of the year, with the build and first deployment of a bespoke unit for the UKTI promoting the UK at events around the world.

1. Existing customers such as HMV, Kuoni and Samsung continued to provide substantial business in retail stores and are maintaining this business in the current financial year ended 31 March 2016. Of the six new Kuoni stores that MediaZest delivered projects for in 2014, one included a large 15 screen abstract videowall, with images from around the globe. This highly advanced videowall deployment also included social media streaming and video content plus live weather feeds representing a step forward in content creation skills for the Company.

1. The Group has continued to work with Pfizer providing marketing services at events around the globe. Events have been delivered in Turin, New York, Berlin, Dublin and Las Vegas, with MediaZest technology and support at each. More events have followed in the New Year, including UK based activity in April 2015.

1. The Education sector continued to provide meaningful revenue streams for the Group, albeit at lower margins than generally achieved with retail clients. These projects included a greater proportion of kit supply versus consultancy and service provision which is high margin activity as costs are within the overhead of the company.

The current year has commenced in a positive manner with new client engagements with Ted Baker and Adidas along with ongoing projects such as The Post Office and the Hyundai / Rockar work.

Board Appointments and Senior Personnel

Post year end, the Board has appointed Andy Last ACA as Finance Director of both MediaZest Plc and MediaZest International Ltd.

Andy Last (aged 34) joined MediaZest in October 2014. Since then he has played a key role in recent corporate developments as the Company continues to execute its strategy of winning new customer contracts whilst improving the Group’s recurring revenue streams. Prior to MediaZest, Andy worked in practice for a Surrey based firm of Chartered Accountants and specialised in advising a portfolio of small and medium sized UK based businesses.

James Abdool, currently Group Sales Director, will step down from the Board on 31 August 2015. In the intervening period he will continue to work on current projects and clients. It is intended that Mr Abdool may continue to work with the Group in an ongoing capacity as a consultant and if so the terms of this arrangement would be expected to be agreed near the end of August.

Geoff Robertson will remain CEO and assume overall responsibility for the Group sales effort. To supplement the Company’s resources in this area, the Board has appointed a senior new business development director, Richard Jerome, who has joined from Samsung UK. This role is not that of a statutory Director but is a senior level appointment to help drive the business forward.

Outlook

The Board believes the Group has made good commercial progress in the last 12 months, although it acknowledges this has not been commensurately reflected in the financial performance of the Group. However, after a positive start to the FY 2016 the board is looking to redress this situation through the opportunities that it is presently working on.

A wide range of these client opportunities exist on a roll out, ‘business as usual’ basis, which the Company believes will lead to generation of sufficient top line revenues and recurring business to take it to consistent profitability. The maintenance of key existing clients is crucial to achieving this objective as is the implementation of our proprietary product base as exemplified by the MediaZest Retail Analytics product.

The retail sector is clearly adopting audio-visual technology into stores in significant numbers and the Board believes the Group remains well placed to capitalise on this as investment grows in the in-store technology environment.

Lance O’Neill                                                                                      

Chairman

Date: 21 August 2015

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 MARCH 2015

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 MARCH 2015

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 MARCH 2015

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 MARCH 2015

NOTES TO THE FINANCIAL STATEMENTS

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 2014 and 31 March 2015 within the meaning of section 434 of the Companies Act 2006.

Statutory financial statements for the year ended 31 March 2014 have been delivered to the Registrar of Companies and those for the year ended 31 March 2015 will be delivered in due course.

The auditors have reported on the 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 auditors have reported on the statutory financial statements for the year ended 31 March 2015; 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 2015, 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 £250,000 at 31 March 2015 (2014: £200,000) 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

4.         CASH AND CASH EQUIVALENTS

5.         AVAILABILITY OF THE REPORT AND CONSOLIDATED FINANCIAL STATEMENTS

The Report and Consolidated Financial Statements for the year ended 31 March 2015 are available on the Company's website: www.mediazest.com and will shortly be posted to shareholders.

Enquiries:

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