Preliminary Results
MediaZest plc (the "Company")
Final results for 15 month period ended 31 March 2010
The Board of the Company announces that it has today finalized Annual Report
and the Financial Statements for the 15 month period ended 31 March 2010. These
will be printed and sent to all shareholders as soon as possible along with a
notice convening a General Meeting to adopt the Annual Report and Accounts.
The Annual General Meeting will be held on 30 September 2010 as previously
notified but the resolution to adopt the Accounts will not be put to
shareholders at that Meeting and will be withdrawn.
A copy of the report and accounts is also available from the company's
registered office and from the Company's web site, www.mediazest.com.
Contact:
Geoff Robertson, Chief Executive Officer 020 7724 5680
MediaZest plc
Stuart Lane 020 7492 4770
Astaire Securities Plc
Claire Noyce 020 7947 4350
Hybridan LLP
CHAIRMAN'S STATEMENT
Introduction
The results for MediaZest plc (the "Group") for the 15 months to 31 March 2010
incorporate the results of its subsidiaries, all of which are wholly owned.
Results for the Period and Key Performance Indicators
Turnover for the period was £2,572,000 (2008 - £4,424,000), cost of sales was £
1,451,000 (2008 - £2,846,000) and the Group made a loss for the period, after
taxation, of £747,000 (2008 - £605,000) after paying interest of £32,000 (2008
- £7,000) and having paid administrative expenses of £1,836,000 (2008 - £
2,176,000).
The basic loss and diluted loss per share was 1 pence (2008 - 3 pence). The
Group had cash in hand of £37,000 (2008 - £102,000) at the period end, and an
invoice discounting facility over the debtors of Touch Vision of which £60,000
(2008 - £220,000) was in use at the period end date.
As at 31 March 2010 the Group also had loans from shareholders of £290,000
(2008 - £85,000) and post year end the Group has repaid £60,000 of these loans
and secured further loans from shareholders such that the current outstanding
balance is £355,000.
As at 31 March 2010, the Group has an unused overdraft facility through Touch
Vision of up to £50,000 and a current maximum limit of £350,000 under the
existing invoice discounting facility. Post period end the overdraft facility
has been converted into a loan of £50,000 repayable over three years with the
same bank.
Overview
After improving revenue growth in years 2007 and 2008 and posting a
commensurate reduction in Group losses, 2009 was a difficult year. Turnover
fell by over 40% and the general deterioration in the economic climate coupled
with a contraction in business undertaken with several large clients had an
impact on all markets in which the Group operated. Despite considerable
reduction in the Group's cost base this inevitably led to a loss for the 15
month period, although in the second half of 2009 the Group was able to achieve
an improvement in trading, indicating the early signs of a turnaround in the
Group's activities and its efforts in rebuilding its revenue base. This is
shown in the previous set of interim results to 31 December 2009.
It had become clear during the fifteen month financial period ended 31 March
2010 that the Group was in need of further capital and needed to recapitalise
its statement of financial position. Consequently, the Group raised £200,000 of
equity investment in August 2009 followed by a further £324,000 in February
2010. Several parties became new and meaningful shareholders and also provided
additional capital through the provision of loans to the Group. The injection
of these new funds provided the catalyst for the restructuring of the Group
with the objective of moving the Group into profitability in the current
financial year.
The timing of the second equity fundraising and the additional provision of
credit facilities from certain shareholders meant that the statement of
financial position as at 31 December 2009 was not reflective of progress made
by the Group in the first quarter of the calendar year 2010 and therefore the
Board took the decision to move the year end accounting date to 31 March,
thereby creating a 15 month financial period. This enabled the Group to present
a more meaningful picture of the state of the Group's affairs which it believes
is of more use to shareholders. Pursuant to the above, and after consultation
with the Group's professional advisors, the Group issued a second set of
interim statements for the six month period to 31 December 2009.
Trading strategy
In the course of this restructuring phase the Group has pursued a policy of
growing the percentage of revenue generated through retained and contractual
business. The objective is to improve the quality of Group revenue by reducing
the reliance on project based turnover with a longer term target of covering
the entirety of the Group's cost base through contracted, repeat business.
Although we haven't yet achieved this target, there has been good progress made
to date with an increasing proportion of the Group's cost base now being
defrayed in this way.
The Board believes that the majority of work in reducing the Group's cost base
has now been accomplished. The way ahead is to get more revenue out of the
business by increasing our customer base and gaining new revenue streams by
tailoring our offering to client needs given the changed economic climate that
we now live in. Three new additions to the team have been made since January
2010, which in part replaced departed personnel, with others under
consideration. Two of these individuals have been recruited for their
experience in their specific markets and bring significant existing client
relationships with them which we expect to lead to further benefits in the
second half of 2010.
Our product range has also been re-appraised and retooled to target better
value for money solutions, albeit perhaps not as creative as our most
imaginative installations but more in tune with client budgets during this
time. We have also sought innovative ways to price and cost our solutions,
particularly in the area of temporary campaigns in retail stores, in order to
match customer budgetary expectations whilst maintaining our gross margins.
MediaZest Ventures
The company has been dependent, largely, upon higher profile marketing budgets
which have been reduced dramatically in 2009 and, therefore, MediaZest Ventures
revenues have been particularly hard hit during the recession. It has been
clear that whilst clients continued to engage with us, to a large degree they
failed to commission projects in any meaningful way during 2009. Although this
business was not, as a rule, lost to competitors, very often client spending
was reduced significantly.
However, we have continued to market to our strengths and have provided ever
more creative and innovative solutions and it was pleasing for the company to
pick up its first major industry award in 2009, in recognition of the highly
creative and innovative solutions it provided to O2 over the preceding 12
months. The Board is now cautiously optimistic that the company can increase
business in its areas of expertise as client budgets are re-instated during
2010. It is notable that from the beginning of February 2010, incoming
enquiries have increased dramatically and long term opportunities developed
over the course of 2009 have started to come to fruition.
In the longer term the type of opportunities generated by the technologies
MediaZest employs are where we believe significant shareholder value can be
generated. With the upturn in marketing spend coming through the market, we are
now engaged with several client projects that have the potential to generate
large revenues for the Group and propel it to substantial profitability. In the
interim we continue to work hard to generate sufficient day to day revenue to
provide a profitable base from which to develop these larger scale
opportunities.
Touch Vision
2009 was a reasonable year for the company's Education division, albeit less
noteworthy than the preceding year. Due to our strong reputation for quality
project delivery, we were able to win and install two significant projects of
approximately £200,000 each during the period. However, overall sales in this
sector were down year on year as Universities' budgets were cut and large scale
investment projects were not implemented.
The company's retail sector clients, similar to MediaZest Ventures' customers,
continued to engage with us but failed to spend in line with previous years.
Again, client attrition and margin performance were not issues for the company
but absolute project spend was because being reliant on discretionary budgets
this type of business tends to be vulnerable.
The Corporate market was particularly affected by the recession and competition
in this area became intense. The company was still able to pick up some good
work early in the year but during the second half, as opportunities dwindled in
the sector, it was forced to rationalise its activities in this division and
await an upturn in the market.
Outlook
As stated earlier, enquiries in the retail sector have begun to increase since
the beginning of 2010 and this has started to translate into improved revenues
for the Group in the first few months of the new financial period. We are now
working on several opportunities which have the potential of transforming the
turnover and performance of the Group, should any of these be consummated
within the coming months.
On a more cautious note financing remains tight, although much improved upon
the position twelve months ago. It is apparent that the contraction in both the
availability and pricing of credit is having an affect on many smaller and
medium sized enterprises. Given that the Board is now at a stage of looking to
move the business forward by building on the restructuring that has been
implemented in the last fifteen months it is intending to examine and consider
various sources of funding to achieve this end and build value in the Group.
The Group's financial performance for the beginning of 2010 - 2011 financial
year is better than it has ever been and it hopes to be able to announce
results that are markedly improved when our next interim announcement is made.
Lance O'Neill
Chairman
STATEMENT OF COMPREHENSIVE INCOME
FOR THE 15 MONTH PERIOD ENDED 31 MARCH 2010
15 months ended 12 months ended
31 March 2010 31 December
2008
£'000 £'000
Continuing operations
Revenue 2,572 4,424
Cost of sales (1,451) (2,846)
Gross profit 1,121 1,578
Administrative expenses (1,836) (2,176)
Operating loss (715) (598)
Finance costs (32) (7)
Loss on ordinary activities before (747) (605)
taxation
Tax on loss on ordinary activities - -
Comprehensive loss on ordinary (747) (605)
activities after taxation
Loss per ordinary 10p share
Basic (£0.01) (£0.03)
Diluted (£0.01) (£0.03)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2010
31 March 2010 31 December
2008
£'000 £'000
Non-current assets
Goodwill 2,772 2,772
Property, plant and 48 87
equipment
Total non-current assets 2,820 2,859
Current assets
Inventories 94 107
Trade and other receivables 255 617
Cash and cash equivalents 37 102
Total current assets 386 826
Current liabilities
Trade and other payables (551) (970)
Financial liabilities (290) (85)
Current tax liability (78) (110)
Total current liabilities (919) (1,165)
Net current liabilities (533) (339)
Net assets 2,287 2,520
Equity
Share capital 2,428 2,283
Share premium account 3,580 3,211
Share options reserve 7 7
Retained earnings (3,728) (2,981)
Total equity 2,287 2,520
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE 15 MONTH PERIOD ENDED 31 MARCH 2010
Share Share Share Retained Total
Options
Capital Premium Reserves Earnings Equity
£'000 £'000 £'000 £'000 £'000
Balance at 1 January 2008 2,283 3,211 7 (2,376) 3,125
Loss for the year - - - (605) (605)
Total comprehensive income for the - - - (605) (605)
year
Balance at 31 December 2008 2,283 3,211 7 (2,981) 2,520
Loss for the period - - - (747) (747)
Total comprehensive income for the - - - (747) (747)
period
Issue of share capital 145 379 - - 524
Share issue costs - (10) - - (10)
Balance at 31 March 2010 2,428 3,580 7 (3,728) 2,287
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE 15 MONTH PERIOD ENDED 31 MARCH 2010
2010 2008
£'000 £'000
Cash flows from operating activities
Cash used in operations (667) (203)
Net cash used in operating activities (667) (203)
Cash flows from investing activities
Purchase of property, plant and equipment (10) (27)
Net cash used in investing activities (10) (27)
Cash flow from financing activities
Shareholder loans 290 85
Interest paid (32) (7)
Invoice discounting facility provided by 90 -
shareholders later capitalised into shares
Net proceeds on issue of shares 424 -
Net cash generated from financing activities 772 78
Net increase/(decrease) in cash and cash 95 (152)
equivalents
Cash and cash equivalents at beginning of period/ (118) 34
year
Cash and cash equivalents at end of the period/ (23) (118)
year
NOTES
1. Basis of preparation
The financial information set out above does not constitute the company's
statutory accounts for the year ended 31 December 2008 or the 15 month period
ended 31 March 2010 within the meaning of section 434 of the Companies Act
2006. Statutory accounts for 2008 have been delivered to the registrar of
companies and those for the 15 month period ended 31 March 2010 will be
delivered in due course. The auditors have reported on the accounts for the 15
month period ended 31 March 2010; their report was unqualified and did not
contain a statement under section 498(2) or (3) of the Companies Act 2006.
MediaZest plc has produced its statutory accounts for the 15 month period ended
31 March 2010 in accordance with International Financial Reporting Standards
("IFRS") as adopted by the European Union ("EU") and in accordance with the
Group's accounting policies as set out in the 2008 statutory accounts.
The financial statements have been prepared under the historic cost convention
unless otherwise stated.
2. Going concern
In view of the losses and cash outflows incurred by the Group, the Directors
have carefully considered the going concern assumption on the basis of
financial projections and the factors outlined below, and existing debt based
facilities.
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. The forecasts also reflect the significant reduction in overhead
costs expected in the current financial year and future years following the
cost restructuring programme undertaken in late 2008 and 2009. 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.
In order to strengthen the balance sheet and to address previous losses, the
Board successfully raised £524,000 in share capital in the 15 month period to
31 March 2010. In order to provide additional working capital, it has also
secured short term debt funding of £355,000 including £125,000 post period end.
With these additional resources in place and based on the financial projections
noted above, the Board believe that although working capital will remain tight
in the coming year, due partly to the increase in business and reduction in
credit available in the audio-visual market in general, the Company will have
sufficient funds to meet its obligations.
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.
3. Change of accounting year end
The Group raised £200,000 in August 2009 and a further £324,000 in February
2010. The timing of this second fundraising meant that the statement of
financial position as at 31 December 2009 was not reflective of progress made
by the Group in the first quarter of this year and as a result the Board of
Directors took the decision to move the year end accounting date to 31 March.
This enables the Group to present a more accurate picture of the state of the
companies affairs which it believes is of more use to readers of the financial
statements.
Amounts presented for the prior year are therefore not entirely comparable.
4. Loss per ordinary share
2010 2008
£'000 £'000
Losses
Losses for the purposes of basic and diluted earnings per 747 605
share being net loss attributable to equity shareholders
Number of shares
Weighted average number of ordinary shares for the 69,917,362 22,825,327
purposes of basic earnings per share
Number of dilutive shares under option or warrant - -
Weighted average number of ordinary shares for the 69,917,362 22,825,327
purposes of dilutive loss per share
Basic loss per share is calculated by dividing the loss attributed to ordinary
shareholders of £747,000 (2008: £605,000) by the weighted average number of
shares during the year of 69,917,362 (2008: 22,825,327). 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.
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