MEDIAZEST PLC - Final Results
PR Newswire
London, August 11
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 (29thApril 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
