MediaZest Plc - Half-year Report

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

Unaudited results for the six months ended 30 September 2018

MediaZest, the creative audio-visual company, is pleased to provide shareholders with unaudited interim results for the six months ended 30 September 2018.

CHAIRMAN’S STATEMENT

Introduction

The Board presents the consolidated unaudited results for the six months ended 30 September 2018 for MediaZest plc and its wholly owned subsidiary company MediaZest International Ltd (together the “Group”).

Financial Review

• Revenue for the period was £1,819,000, up 36% (2017: £1,339,000).

• Gross profit was £932,000, up 45% (2017: £643,000).

• Gross margins improved to 51% (2017: 48%).

• EBITDA was a profit of £156,000 (2017: loss £87,000).

• Net profit for the period after taxation of £90,000 (2017: loss of £149,000).

• The basic and fully diluted earnings per share was 0.0001 pence (2017: loss per share 0.01 pence).

• Cash in hand at period end was £12,000 (2017: £103,000), although following period end additional monies were received/are expected shortly from a material overdue debtor.

Operational Review

Results for the six months to 30 September 2018 were considerably better than for the comparable prior period with improvement in both revenue and profitability. The Group reported a net profit after tax and at the EBITDA level for the first time.

Revenue improved by £480,000 reflecting prestigious projects for clients including HP, the European Bank for Reconstruction and Development (EBRD), Ford, Mitsubishi, Kuoni, Ted Baker and Tiffany & Co. Revenues for three of these projects included amounts delayed from the previous period, although in addition the six months also showed growth in client business outside those mentioned above, with several roll out opportunities beginning to develop.

Recurring revenues also continued to grow in the period and the current run rate for these is over £700,000 per annum (2017: approximately £600,000). The Board is targeting a run rate of £800,000 worth of recurring revenues by the end of the financial year, which would cover almost 50% of the cost base.

Profit margins were enhanced by the growth in the recurring revenues generated by the Company. The Board continues to view this as an important focal point which enables management to have greater clarity on future revenues and to plan operational capabilities from a position of strength. This wider focus on managed services instead of on low margin hardware supply continues to reap benefits, both in gross margin percentage and market positioning.

Administrative costs remained largely unchanged with reduced amortisation and depreciation costs being offset by a small increase in engineering resources to meet the additional workload generated by recurring contract growth. The Company continues to run a very lean team of dedicated in house staff with resources maximised to meet client and stakeholder demands.

Financing

The statement of financial position was improved by way of a reduction in trade and other payables, whilst financial liabilities have been maintained at a consistent level to the prior period. Cash in hand was, however, lower than the comparable prior year due to late receipts from one client of €130,000 which was overdue at the period end date. The majority of this money has now been received and the balance is expected shortly. No bad debt provision is required, however the delay in payment has adversely affected cashflow during the period and the closing cash balance. Despite this late payment, and the growth in Revenue, trade debtors have remained consistent with the prior period.

Corporate Governance

The Company adopted the QCA Corporate Governance code in September 2018 and has strengthened the Board by adding James Abdool as a non-executive director.

Outlook

As highlighted in previous statements, the Group is having considerable success with overseas deployments, primarily in Europe, but also on a global basis. Clients such as HP, Ted Baker, Nokia, Lululemon and Opel have all engaged the Group’s services outside of the UK in the six month period, representing approximately 30% of gross profit.

The Group continues to target these opportunities, particularly during a time when the domestic UK retail market is under pressure, leading to uncertainty, which can result in the postponement of or delay in retail investment from some UK participants. Notwithstanding, the Group is developing, currently, several roll out / substantial deployment opportunities which would enable the Company to show further progress both in the current and future reporting periods.

Lance O’Neill

Chairman

5 November 2018