Final Results

8 September 2011 MediaZest Plc Final Results for year ended 31 March 2011 MediaZest Plc ("MediaZest" or "the Company" or "the Group"; AIM: MDZ), the creative digital out-of-home advertising company and audio-visual integrator, announces its final results for the year ended 31 March 2011. Highlights * Revenue for the year of Â£1,918,000 (2010: Â£2,572,000) * Reduced losses after tax of Â£457,000 (2010: Â£747,000) * Improvement in gross margins as business mix moves towards higher margin installation, maintenance and consulting services * Successful fund raise of Â£440,000 (before expenses) in March 2011 from both existing and new shareholders * Cash balance at 31 March of Â£365,000 * Appointment of James Abdool as Group Sales Director * Markedly increased year-on-year revenues for Q1 2012 The Company has posted the Annual Report and Financial Statements for the year ended 31 March 2011 to shareholders. A copy of the Annual Report and Financial Statements is also available from the Company's registered office and from the Company's web site, www.mediazest.com Enquiries: Geoff Robertson, 020 7724 5680 Chief Executive Officer MediaZest Plc Luke Cairns/Rod Venables 020 7796 8800 Nominated Adviser Northland Capital Partners Limited Claire Noyce, Broker 020 7947 4350 Hybridan LLP CHAIRMAN'S STATEMENT Introduction The results for MediaZest plc (the "Group") for the year ended 31 March 2011 incorporate the results of its subsidiaries, all of which are wholly owned. Results for the Year and Key Performance Indicators Turnover for the year was Â£1,918,000 (2010: Â£2,572,000), cost of sales was Â£ 957,000 (2010: Â£1,451,000) and the Group made a loss for the year, after taxation, of Â£457,000 (2010: Â£747,000) after finance costs of Â£83,000 (2010: Â£ 32,000) and having paid administrative expenses of Â£1,335,000 (2010: Â£ 1,836,000). The basic loss and diluted loss per share was 0 pence (2010: 1 pence). The Group had cash in hand of Â£365,000 (2010: Â£37,000) at the year end, and an invoice discounting facility over the debtors of Touch Vision of which Â£214,000 (2010: Â£60,000) was in use at 31 March 2011. As at 31 March 2011 the Group also had loans from shareholders of Â£505,000 (2010: Â£290,000). As at 31 March 2011, the Group has a current maximum limit of Â£350,000 under the existing invoice discounting facility. The overdraft facility was converted into a loan of Â£50,000 repayable over three years with the same bank on 27 August 2010. Business overview The Group operates, currently, two trading businesses, Touch Vision (TV) and MediaZest Ventures (MV). TV trades as an Audio Visual supply and installation company whilst MV operates as a `digital out of home' creative agency. The Group's previous accounting period was fifteen months in duration (15 months to 31 March 2010) and the Group finished the year, a 12 month accounting period ending 31 March 2011, with monthly average sales figures broadly consistent with the prior period. The Group's full year loss for the current year was Â£457,000 (2010 - loss of Â£747,000). Group turnover was Â£1,918,000 (2010 - Â£2,572,000) with turnover in the latter half of the year being less than anticipated due, in part, to disappointing trading over the Christmas and Easter periods. However, there was an improvement in gross profit margins as a higher proportion of installation, maintenance and consulting services rather than equipment sales constituted the larger part of the year's turnover in comparison to the previous period. In the current year, the Board is targeting a return to improved turnover levels whilst maintaining the lower cost base that has been achieved in the last twelve months. The Board's strategy is to attain this level of turnover by increasing the higher margin business achievable through MV whilst both maintaining and expanding revenue through the Education Framework agreements that TV became a participant to in November 2010. This strategy is already showing evidence of success as turnover in Q1 for the period ending 31 March 2012 is anticipated to be in excess of Â£800,000 (a 63% increase on the comparative period), although it is evident that margins are under more pressure this year. The Group raised Â£440,000 before expenses in March 2011 from both existing and new shareholders, the proceeds of which were to be applied towards strengthening the sales team and to improve the working capital resources available to the Group's operating subsidiaries. James Abdool joined the Group as a consultant in October 2010 and became Group Sales Director in August 2011. James is an experienced Sales Director with a strong history of achievement in both generating revenue and introducing new business lines. In addition, two further salesmen joined the Sales team during the year. MediaZest Ventures Division MediaZest Ventures continues to provide the Group with its largest and most attractive opportunities. However, operating in the retail sector, projects continue to be under budget pressure although there have been positive signs of growth with a number of large scale future projects being discussed with clients. During the year, MediaZest Ventures added a number of high quality new clients, including Microsoft, British Gas, Killik and Co, and continued to work with long term clients such as Barclays Bank, JD Sports and Footlocker. One of the most notable developments during the year was the launch of the MediaZest version of 3M's "virtual mannequin" concept which drew widespread acclaim. Since its launch at Luton Airport in February 2011 MV has provided units to various clients, including Birmingham Airport, with several other potential orders in the pipeline. In addition, the product has been very popular in our other markets including retail and education. Plans are in progress to launch an interactive version as well as a point-of-sale version. The Company also continues to be well regarded in the market place for its digital poster projections which have been well received and as such this is a product that the Board believes will continue to bring ongoing revenues . In order to improve operational efficiencies and reduce administrative costs, the MediaZest Ventures trading division has been transferred into the Touch Vision legal entity. The brand name will be continued, trading as a division of Touch Vision Ltd and the original limited company made dormant. Touch Vision Ltd The most significant business win during the year for Touch Vision was its success in tendering for a number of specific Lots under the Inter-Regional AV Equipment Framework Agreement ("Framework Agreement"). The Framework Agreement will run for a term of three years, 2 November 2010 to 1 November 2013, with provision for an extension of a further year. The Framework Agreement covers four purchasing consortia: * Higher Education Purchasing Consortium, Wales ("HEPCW") - comprising 12 members * Value Wales - comprises 122 member institutions and includes public sector bodies such as Companies House, the DVLA and the Food Standards Agency, as well as a number of Educational institutions * London Universities Purchasing Consortium ("LUPC") - comprising 68 full member institutions * Southern Universities Purchasing Consortium ("SUPC") - comprising 112 member institutions The Lots which Touch Vision has successfully tendered for are as follows: AV equipment supply only - for HEPCW, Value Wales, LUPC, SUPC. This Lot has an estimated annual value of Â£2million and Touch Vision is one of five companies to have been successful in tendering for this Lot. AV presentation systems, equipment and services (including design, supply and installation) - for HEPCW, Value Wales and LUPC. The HEPCW and Value Wales element has an estimated annual value of Â£1million and Touch Vision is one of eleven companies to have been successful in tendering for this Lot. The LUPC element of this Lot has an estimated annual value of an additional Â£2.5million and Touch Vision is one of nine companies to have been successful in tendering for this section of the Lot. Supply of projector lamps - for all four purchasing consortia. This Lot has an estimated annual value of Â£2million. Touch Vision is one of four companies to have been successful in tendering for this Lot. The expected total annual spend by the consortia in respect of the Lots to which Touch Vision has been appointed is Â£7.5million. Although Touch Vision must win business under competitive terms of tender it does give the company access to a large number of new potential clients. Despite only being awarded the opportunity to participate the Framework Agreement in November 2010, the company has already won several significant pieces of business and developed new client relationships. In light of the ongoing changes in funding within the Education sector, it appears that spending for the 2011 calendar year will be subdued across these consortia but the Board believes there will be strong ongoing opportunities generated from this and subsequent framework agreements and that this will provide additional revenue opportunities in the coming years. Outside of these agreements, the Education division continues to add clients including the Licensed Victuallers School in Ascot and Burton College in the Midlands, and performs ongoing work with long term clients such as London South Bank University. Touch Vision's retail customers such as HMV and Kuoni continue to be a significant part of the business. These clients continue to provide excellent revenue for the company. The more traditional Corporate market is also providing opportunities again for the company as clients look for better value solutions and reliable systems providers. This has helped the company win a number of new clients including ETC Venues in the conference facilities market. Outlook As noted above, the Company has increased its resource in its sales and marketing function and this investment is leading to new business opportunities. Work in progress during the year to date includes several significant projects. Firstly, Touch Vision has completed an installation programme for a large UK University in excess of Â£300,000 which was outside of the Framework Agreement noted above. Second, the Framework Agreement has also provided some ongoing equipment only purchases which, despite being of a lower margin than our installation work, have enabled TV to buy more effectively and begin developing relationships with new clients. In the corporate market, MV's hologram solutions have been used by blue chip companies including Astra Zeneca and British Telecom. We have also undertaken a branch refurbishment programme with the West Bromwich Building Society which is currently ongoing. Looking forward, the Group's businesses operate in markets that are affected by both the level of retail customer demand and government/local authority expenditure. Whilst customer demand and interest is good, presently, the Board recognises that a re-emergence of an economic slowdown may have an effect on future trading performance. However, the Board believes that the Group is now more versatile and nimble enough to deal with changes in the business environment on a more timely basis and as a consequence give itself a greater ability to cope with events beyond its control, than in previous years. Notwithstanding, the Board is committed to moving the Group forward to profitability and believes that the strategy that it has implemented is achievable. Lance O'Neill Chairman MediaZest plc CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2011 Year ended 15 months ended 31 March 2011 31 March 2010 Â£'000 Â£'000 Continuing operations Revenue 1,918 2,572 Cost of sales (957) (1,451) Gross profit 961 1,121 Administrative expenses (1,335) (1,836) Operating loss (374) (715) Finance costs (83) (32) Loss on ordinary activities (457) (747) before taxation Tax on loss on ordinary - - activities Loss and total comprehensive loss on (457) (747) ordinary activities after taxation Loss per ordinary 0.1p share Basic (0.002p) (0.010p) Diluted (0.002p) (0.010p) MediaZest plc CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2011 31 March 2011 31 March 2010 Â£'000 Â£'000 Non-current assets Goodwill 2,772 2,772 Property, plant and 32 48 equipment Total non-current assets 2,804 2,820 Current assets Inventories 120 94 Trade and other 523 255 receivables Cash and cash equivalents 365 37 Total current assets 1,008 386 Current liabilities Trade and other payables (1,008) (629) Financial liabilities (521) (290) Total current liabilities (1,529) (919) Net current liabilities (521) (533) Non-current liabilities Financial liabilities (25) - Total non-current (25) - liabilities Net assets 2,258 2,287 Equity Share capital 2,507 2,428 Share premium account 3,929 3,580 Share options reserve 7 7 Retained earnings (4,185) (3,728) Total equity 2,258 2,287 MediaZest plc CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2011 Share Share Share Retained Total Options Capital Premium Reserves Earnings Equity Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Balance at 1 January 2009 2,283 3,211 7 (2,981) 2,520 Loss for the period - - - (747) (747) Total comprehensive income - - - (747) (747) for the year 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 Loss for the year - - - (457) (457) Total comprehensive income - - - (457) (457) for the year Issue of share capital 79 361 - - 440 Issue costs - (12) - - (12) Balance at 31 March 2011 2,507 3,929 7 (4,185) 2,258 MediaZest plc CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2011 2011 2010 Â£'000 Â£'000 Net cash used in operating activities (423) (667) Cash flows used in investing activities Purchase of property, plant and equipment (4) (10) Net cash used in investing activities (4) (10) Cash flow (used in)/from financing activities Bank loan 50 - Repayment of borrowings (9) - Shareholder loans 325 290 Shareholder repayments (110) - Interest paid (83) (32) Cash proceeds from invoice discounter - 90 Proceeds of share issue 440 434 Share issue costs (12) (10) Net cash generated from financing 601 772 activities Net increase in cash and cash equivalents 174 95 Cash and cash equivalents at beginning of (23) (118) year Cash and cash equivalents at end of the 151 (23) year NOTES 1. Basis of Preparation The financial information set out above does not constitute the Company's statutory accounts for the 15 month period ended 31 March 2010 or the year ended 31 March 2011 within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the 15 month period ended 31 March 2010 have been delivered to the Registrar of Companies and those for the year ended 31 March 2011 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 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 accounts for the year ended 31 March 2011: 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 Company's statutory accounts for the year ended 31 March 2011 have been prepared 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 2010 statutory accounts. The financial statements contained in the statutory accounts have been prepared under the historic cost convention unless otherwise stated. 2. 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 letters of support from shareholders who have provided loans to the Group totalling Â£480,000 at 31 March 2011, stating that they will not call for repayment of the loans within the next 12 months 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. 3. Loss per Ordinary Share 2011 2010 Â£'000 Â£'000 Losses Losses for the purposes of basic and diluted 457 747 earnings per share being net loss attributable to equity shareholders Number of shares Weighted average number of ordinary shares for the 181,068,853 69,917,362 purposes of basic earnings per share Number of dilutive shares under option or warrant - - Weighted average number of ordinary shares for the 181,068,853 69,917,362 purposes of dilutive loss per share Basic loss per share is calculated by dividing the loss attributed to ordinary shareholders of Â£457,000 (2010: Â£747,000) by the weighted average number of shares during the year of 181,068,853 (2010: 69,917,362). 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. 4. Posting of the Annual Report and Financial Statements The Report and Accounts for the year ended 31 March 2011 have been posted to shareholders together with a notice convening the Annual General Meeting for 30 September 2010 to approve the Annual Report and Accounts. The Report and Accounts will also be available on the Company's web site: www.mediazest.com. Notes to Editors: 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 customer base includes Astra Zeneca, Chivas, HMV, Fiat, Microsoft, Nike, O2, Shell and Vodafone. MediaZest was admitted to London's AIM market in February 2005. For more information, please visit www.mediazest.com

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