Final Results

MediaZest Plc FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006 MediaZest Plc ("MediaZest" or "the Group"; AIM: MDZ), has announced its audited results for the year ended 31 December 2006. Key points: * Group turnover increased by more than threefold to Â£3,171,000 (2005: Â£ 877,000), reflecting a first full year contribution from Touch Vision and the development of the MediaZest proposition * Increased operating loss of Â£ (1,131,000) (2005: Â£ (843,000)) reflects higher administrative charges and cost of sales, including Â£313,000 of non-recurring costs, predominantly Group restructuring charges. Also included in administrative expenses was a charge of Â£147,000 representing the first full year of goodwill amortisation resulting from the acquisition of Touch Vision * Loss per share of 5p (2005: 6p) * Net cash balances of Â£569,000 at year end (2005: Â£1,251,000) Commenting on the results, Lance O'Neill, MediaZest's Chairman, said: "The rationalisation of our cost base gives us a more effective platform from which to build in 2007. We have already seen year-on-year sales growth during the first half of 2007 which gives us encouragement as we head into our busiest time of the year. "We believe MediaZest is now better positioned to capitalise on the growth of the in-store marketplace. The reshaping of the business that has occurred over the past 18 months provides a better foundation for MediaZest's future growth and for our objective of providing meaningful returns for shareholders." About MediaZest MediaZest is a creative media agency that specialises in providing innovative out-of-home marketing solutions to leading brand owners and media agencies. The group supplies an integrated service from content creation and system design to installation, technical support and maintenance. MediaZest has its headquarters in London, whilst Touch Vision, its design and engineering division, is based in Farnham in Surrey. Its blue-chip customer base includes Adidas, Boots, Chivas, Edeus, Motorola, Nintendo, Nokia, O2, Procter & Gamble, Sony Ericcson and Shell.MediaZest was admitted to London's AIM market in February 2005. For more information, please visit www.mediazest.com. For further information, please contact: MediaZest Plc 020 7724 5680 Geoff Robertson, Chief Executive Officer City Financial Associates Limited (Nominated 020 7090 7800 Adviser) Liam Murray Bankside Consultants 020 7367 8888 Sue Scott/Louise Davis CHAIRMAN'S STATEMENT Introduction I am able to update shareholders on the activities and changes that took place during the year and thereafter that saw the integration of Touch Vision Limited and the development and launch of the MediaZest Ventures offering to the retail sector. The results for MediaZest for the year to 31 December 2006 incorporate the results of its subsidiaries, all of which are wholly owned. Results for the Period Turnover for the year was Â£3,171,000 (2005 - Â£877,000), cost of sales was Â£ 2,053,000 (2005 - Â£486,000) and the Group made a loss for the period, after taxation, of Â£1,139,000 (2005 - Â£847,000) after paying interest of Â£8,000 (2005 -Â£4,000) and having paid administrative expenses of Â£2,249,000 (2005 - Â£ 1,234,000). Administrative expenses and cost of sales included Â£313,000 non-recurring costs. The basic loss and fully diluted loss per share was 5 pence (2005 - 6 pence). The Group had net cash balances of Â£569,000 (2005 - Â£1,251,000) at the year end. Review of Activities 2006 has been a year of both transition and change for the Group as we have moved from the initial start up phase, through the integration of a key acquisition, to our first full year of trading. The loss for the year reflects the structural changes that needed to be made to our operations. This has included some personnel changes and associated costs. In addition, the first half of 2006 saw considerable investment in establishing MediaZest Ventures within our target market, culminating in our encouraging participation in the 2006 In-Store Show in June which showcased our offerings to a large number of potential new customers, resulting in a number of new clients. Difficult retail market conditions and slower than expected adoption of digital media within the in-store environment undoubtedly are putting pressure on suppliers within our market. We believe that this inevitably will lead to consolidation within the industry. Some of our competitors have invested heavily in screen networks to broadcast digital media messaging to consumers in retail environments, the success of which depends on advertising sales. In contrast, MediaZest continues to generate its income by providing innovative point of sale installations. We deliver content provision and management services, system design and high quality engineering, supported by an experienced service and maintenance team. As such, our income streams do not depend on the sale of advertising, nor does our business model have to bear the high fixed costs required by these projects. MediaZest Ventures Limited The digital "out of home" market continues to suffer from tough retail conditions and slower than anticipated adoption of new technology. This has lead to weaker than expected growth in the MediaZest Ventures business, typified by clients opting to run campaigns or test our technology at a small number of sites, rather than the retail estate-wide rollouts that we originally envisaged. As the sector matures and return on investment metrics become more widely available, we believe this transition will transpire within our business. We are already starting to see this shift in our business and are in discussion with several customers interested in wider rollouts of our technology. To this end, we have revised our marketing strategy for 2007, directing our offering to brand managers and fellow agencies through trade advertising, taking a more active role in industry bodies, such as POPAI (Point of Purchase Advertising International), and expanding our partnership network. Our upgraded website, www.mediazest.com, also reflects the expansion of our offerings and the broader range of customers we now attract. There were some notable new business wins during 2006 and the Group worked on a wide range of predominantly blue chip customer projects. As well as our continuing work with Motorola and Chivas, highlights included innovative displays and installations for stores and promotional activity for Candy & Candy, Boots, Nokia, Edeus, Sony Ericcson, Procter & Gamble, O2, Adidas, Shell and Nintendo. Touch Vision Limited During 2006 Touch Vision was fully integrated into the Group such that MediaZest is now experiencing the benefits and synergies of this acquisition. The year began with an in-depth strategic review of the business and subsequent restructuring. Touch Vision's focus remains on its core strengths in high quality engineering, system design and content management. In addition, technological advances have enabled us to increase the sophistication of our service and maintenance offering. One of the key synergies resulting from the acquisition of Touch Vision is the ability to provide MediaZest Ventures customers with installation and maintenance services as an integral part of our one-stop shop offering. Touch Vision continues to build on its growing presence in the education sector in particular, winning the tender for a 3-year framework agreement with two London universities for the provision of sales, installation, and maintenance of audio-visual equipment. In the corporate and retail sectors, Touch Vision maintained its 14 year commercial relationship with HMV, whilst building on its associations with both Electronic Arts and the Co-Operative Group. New business wins included projects for blue chip companies such as Dunnhumby and NYK Logistics. Licences and agreements In 2006 MediaZest continued to increase the number of licences and agreements it has to utilise third party technologies. The Group is pleased to note its strengthening relationship with 3M in the United Kingdom, which has grown through several projects that we have now implemented using cutting-edge 3M products. During the year, the Group terminated its only fee paying licence, although we continue to be an approved reseller for that technology. As a result, MediaZest will have no licences for which it pays a fee in 2007, generating a six figure year on year cost saving benefit. Board changes As reported in the 2005 accounts, John Lovering, Anthony Moore and Nigel Duxbury resigned from the Board last year due to the demands on their time from other business commitments. In January 2007, Sean Reel, formerly CEO and Chairman, stepped down. In May Christopher Theis, Commercial Director, also left to pursue other business interests. The Board thanks them all for their contributions to MediaZest. The current Board now comprises Lance O'Neill (Non-Executive Chairman), Geoffrey Robertson (Chief Executive Officer) and Andrew Hawkins (Group Sales Director). Outlook The rationalisation of our cost base, including staffing costs, overheads and licences fees, gives us a more robust platform from which to build in 2007. We have already seen year-on-year sales growth during the first half of 2007 which gives us encouragement as we head into our busiest time of the year. In the first half of 2007, we completed exciting new audio-visual installations for a shopping centre in the North West of England, which included the deployment of Panasonic's 103" Plasma Screen for the first time in a UK retail environment, and the audio visual fit-out of Dunnhumby's UK headquarters. These substantial projects combined the best of both MediaZest Ventures' and Touch Vision's offerings. Our work with Electronic Arts continued, and we provided innovative technology solutions for the likes of Mizuno, Perkins Engines, Famous Grouse, Sony and 20th Century Fox. We believe MediaZest is now better positioned to capitalise on the growth of the in-store marketplace. The work performed both last year and in the early part of this year in reshaping the business has provided a good foundation for MediaZest's growth in the future and the objective of providing meaningful returns for shareholders. Lance O'Neill 28 June 2007 Chairman CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2006 Note 2006 2005 Â£'000 Â£'000 Turnover 3,171 877 Cost of sales (2,053) (486) Gross profit 1,118 391 Administrative expenses (2,249) (1,234) Operating loss (1,131) (843) Interest payable and similar (8) (4) charges Loss on ordinary activities before (1,139) (847) taxation Tax on loss on ordinary activities 2 - - Loss on ordinary activities after taxation (1,139) (847) Loss per ordinary 10p share Basic (p) 3 5.0 6.0 Diluted (p) 3 5.0 6.0 There are no recognised gains or losses for the current or preceding year, other than those shown above. All results derive from continuing operations. CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2006 2006 2005 Â£'000 Â£'000 Fixed Assets Intangible Assets 2,622 2,772 Tangible Assets 105 128 Current assets Stock 142 169 Debtors 535 745 Cash at bank and in hand 569 1,377 1,246 2,291 Creditors: amounts falling due within one year (503) (587) Net current assets 743 1,704 Net assets 3,470 4,604 Capital and reserves Called up share capital 2,283 2,283 Share premium account 3,211 3,211 Share option reserve 5 - Profit and loss account (2,029) (890) Equity shareholders' funds 3,470 4,604 CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD ENDED 31 DECEMBER 2006 2006 2005 Â£'000 Â£'000 Net cash outflow from operating activities (613) (1,367) Returns on investments and servicing of finance Interest paid (8) (4) Net cash outflow from returns on investments and (8) (4) servicing of finance Taxation Corporation tax paid - - Capital expenditure and financial investments Purchase of tangible fixed assets (61) (35) Net cash outflow from capital expenditure and (61) (35) financial investments Acquisitions Net cash acquired with subsidiary undertaking - 146 Acquisition of subsidiary undertaking - (971) Net cash outflow for acquisition - (825) Financing Issue of ordinary share capital net of costs - 2,952 - 2,952 (Decrease)/increase in cash in the year (682) 722 Notes to the financial statements 1. Basis of preparation The financial information set out above does not constitute the Company's statutory accounts within the meaning of section 240 of the Companies Act 1985. The balance sheet at 31 December 2006 and the profit and loss account and cash flow statement for the year then ended have been extracted from the Company's audited financial statements. The auditors report on those financial statements is unqualified and does not contain statements under sections 237(2) or (3) of the Companies Act 1985. 2. Taxation No charge for corporation tax for the period has been made due to the loss on ordinary activities before taxation. 3. Loss per Ordinary Share Basic loss per share is calculated by dividing the loss attributed to ordinary shareholders of Â£1,139,000 (2005: Â£847,000) by the weighted average number of shares during the year of 22,825,327 (2005: 14,721,499). The diluted loss per share is identical to that used for basic loss per share as the exercise of warrants and options would have the effect of reducing the loss per share and therefore is not dilutive under Financial Reporting Standard 22 "Earnings per Share". 4. Publication of non-statutory accounts These financial statements will be delivered to the Registrar of Companies and shareholders in due course. Copies will also be available from the Company's registered office: 3rd Floor, 16 Dover Street, London W1S 4LR.

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