REG-MediaZest Plc: Final Results for the Year ended 30 September 2021
02/03/2022 07:15
2 March 2022
Certain information contained in this announcement would have been deemed
inside information for the purposes of Article 7 of Regulation (EU) No
596/2014, which was incorporated into UK law by the European
Union (Withdrawal) Act 2018, until the release of this announcement.
MediaZest Plc
("MediaZest" or the "Company”; AIM: MDZ)
Final Results for the Year ended 30 September 2021
MediaZest, the creative audio-visual company, is pleased to provide
shareholders with final results for the year ended 30 September 2021.
CHAIRMAN’S STATEMENT
Introduction
The Board presents the consolidated audited results for the year ended 30
September 2021 for MediaZest plc ("MDZ") and its wholly owned subsidiary
company MediaZest International Ltd ("MDZI") which together constitute the
"Group".
MDZ Group Results for the year and Key Performance Indicators ("KPIs")
- Revenue for the year was £2,246,000 (18 months to 30
September 2020: £3,068,000).
- Gross profit was £1,075,000 (18 months to 30 September 2020:
1,524,000).
- Gross margin was 48% (18 months to 30 September 2020: 50%).
- Administrative expenses excluding depreciation and
amortisation were £997,000 (18 months to 30 September 2020: £1,735,000).
- Depreciation and amortisation costs were £74,000 (18 months
to 30 September 2020: £124,000).
- EBITDA profit of £78,000 (18 months to 30 September 2020:
loss of £186,000).
- Net loss for the year after taxation was £140,000 (18 months
to 30 September 2020: loss of £448,000).
- The basic and fully diluted loss per share was 0.0101 pence
(2020 loss per share: 0.0324 pence).
- Cash in hand at 30 September 2021 was £120,000 (2020:
£91,000).
MDZ Group Summary
The Group’s financial results for the year ended 30 September 2021 were
affected substantially by the Covid- 19 pandemic (the "Pandemic") in the first
half of the year, with a significant reduction in revenue particularly during
the UK lockdown between December 2020 and late February/March 2021.
In response, the Board reduced costs wherever possible without compromising
the long-term goals of the business.
In the second half of the year, following the lifting of lockdown
restrictions, financial performance improved considerably and the Group
performed creditably, recovering to a net EBITDA profit after tax for the full
year of £78,000 (18 months to 30 September 2020 loss of £186,000) and a much
reduced loss after tax of £140,000 (prior period loss of £448,000).
In the second half of the year on its own, the Group recorded EBITDA profit of
£127,000 and profit after tax of £20,000.
The client base has remained consistent during the year, and although during
lockdown project revenues decreased in the first six months, they were
generally only delayed. Many of those projects were successfully delivered in
the second half of the year, despite some supply chain challenges.
The performance of the Group’s recurring revenue streams, which have
remained high, has been particularly pleasing. Despite some obvious reductions
associated with closed or temporarily closed stores, overall recurring
revenues have grown during the year and post year end. The Group has worked
closely with clients to successfully sign several longer-term deals giving
surety of revenues over a longer period (typically three years).
The Group’s operating subsidiary, MDZI, continues to develop - successfully
building value and demonstrating consistent profitability. MDZI delivered
EBITDA profit of some £330,000 and a profit after tax of £206,000 for the
full year.
The Group continues to operate in three core sectors:
Retail - Digital transformation continues as retailers deploy digital signage
displays including window displays, self-service kiosks and large scale
displays such as LED and videowalls.
Automotive - As this sector evolves rapidly the role of technology in the
showroom journey increases. As a result many of the audio-visual solutions
deployed in general Retail are being seen in these markets.
Corporate Offices - typical projects in this sector include hybrid meeting
rooms, video conferencing technology and innovation centres - all of which are
undergoing radical transformation that in many cases has been accelerated by
the additional demands that the Pandemic has put upon office building
technology.
As expected demand in all three continues to grow and enquiries are increasing
in each of them as audio- visual technology plays a greater role in day to day
operations.
Group Strategy
The Board's strategy continues to be one of growing both the quantum and
quality of revenues with an emphasis upon clients where there is a long-term
opportunity to deploy solutions across multiple sites and, sometimes
countries, over a period of time. Whilst the majority of business is UK based,
the Group services clients on both a pan-European and Global basis and expects
opportunities for both to continue. As such management has worked to forge new
supplier and partner relationships to easier deliver those services in the
wake of travel disruption due to the Pandemic and the impact of Brexit.
The Group’s focus is on providing a high-quality Managed Service offering
wrapped around hardware and software delivery that generates ongoing
contractual revenues from the customer base over several years. Supply chain
issues, felt across many industries have enabled the Group to add further
value in the consultation and specification areas of client work as businesses
look to rebound from the Pandemic.
In the longer-term, the aim is to cover the Group's costs with recurring
contractual revenues to achieve consistent profitability, supplemented by one
or more 'game changing' large scale roll-out projects.
With the negative financial impact of the Pandemic being felt particularly
acutely in the first half of the year, the Board continued to mitigate the
effects by keeping a tight control over costs in areas where variable costs
could best be flexed. Government schemes such as the Job Retention Scheme were
also used where appropriate to partially fund employee costs during furlough
periods.
Due to the improved performance in the financial year, further fundraising
efforts were not necessary.
MDZ Group Operational Review
As noted, the twelve-month period fell into two distinct phases:
The first six months trading reflected the impact of the Pandemic and slow
down in activity as a result of UK lockdowns particularly between December
2020 and February/March 2021. Many clients delayed investment decisions or
project delivery, instead choosing to wait for the situation to improve.
Revenues were £846,000 leading to an EBIDTA loss of £49,000 and loss after
tax of £160,000. January and February 2021 were particularly challenging.
The Board closely monitored all costs to mitigate the impact of the slowdown
and utilised government support schemes as appropriate. As trading in the
months preceding this period had improved, the Group was able to continue
until the lockdown eased without the need to raise additional financing.
The majority of revenue generated was understandably dominated by existing
clients continuing ongoing committed long-term projects including Lululemon
Athletica, Pets at Home, Ted Baker and Hyundai. Recurring revenue contracts
with these clients and others continued to provide a steady source of income
during this challenging time.
Several new clients were added during the period, however most of these
projects were small albeit with the potential to grow into more significant
engagements in the future.
Second half of the year
As noted above, the second six months, post lockdown, proved far more
profitable for the Group with revenues of £1,400,000, EBITDA of £127,000 and
Profit after tax of £20,000.
Key new client projects in the period included deployment of interactive
touchscreens for Hyundai to aid customer understanding of their Electric
Vehicle offerings; a tranche of additional Pets at Home stores across the UK
and new client Vashi, for whom the Group delivered audio-visual solutions at
their Covent Garden flagship store. The latter featured what at the time
included the largest European Retail deployment of Samsung's "The Wall"
Business MicroLED product as part of a double height, floor to ceiling
interactive installation which received notable comment across the globe.
Long standing retail clients such as Lululemon Athletica continued to roll out
digital signage in European stores and the Group was pleased to work with Ted
Baker on the deployment of a high brightness window screen network in their
stores. As the benefits of digital 'posters' in window become ever clearer,
especially with the ability to adjust safety messaging as the Pandemic
developed, demand for this type of installation has increased. The Group have
worked for several years developing skills to measure return on investment of
such installations as a differentiator in the market when it comes to
recommending and evaluating solutions for clients as part of the consultative
sales process.
Once again the Group was delighted to work with Rockar, this time on their new
Jaguar Land Rover store in London's Canary Wharf.
Away from the world of Retail and Automotive Retail, management focussed on
Corporate Offices with new projects for a division of AXA, and notably for
logistics company Wincanton, for whom it helped deliver a state- of-the-art
Innovation Centre to celebrate their ongoing commitment to developing
technology in their business.
The Board believes the role of the office environment will change
significantly in the coming years. Audio- visual technology will have an
increasing role to play whether to manage 'hot desking', book meeting rooms,
provide high quality audio and video for hybrid meetings or bring the 'wow
factor' to innovation spaces. As such a new role was created to lead efforts
in this market, and the Group is actively recruiting for this role as it
expands the sales team.
The Group is also developing an interesting new area of expertise, assisting
digital artists with procurement of technology as NFTs (Non-fungible tokens
using Blockchain technology) develop rapidly across the world.
Outlook from October 2021 into 2022
At this time, it still remains difficult to fully assess the extent to which
the Pandemic will affect the Group's forthcoming trading and financial
performance as the situation continues to evolve. However since the lifting of
the most recent lockdown measures in the first quarter of 2022, business has
markedly improved. The Omicron Covid-19 variant does not appear to have
significantly changed that and performance during the first quarter of the new
financial year (October 2021 to December 2021) has been encouraging, with
November 2021 a particularly good month for profitability.
January typically begins slowly, however in 2022 the Company has pitched for a
number of potential projects, and it is the Board's view that this will
continue through the current financial year as businesses seek to rebound from
the Pandemic.
Ongoing long term project roll outs with customers including Hyundai, Pets at
Home, Lululemon and HMV have continued into 2022 with further installations
planned or underway.
The Group continues to add new recurring revenue contracts and seek to extend
larger contracts in multi-year deals which has successfully improved revenues
under contract during the previous financial year. The goal remains to cover a
more significant element of the ongoing cost base with these revenues as the
business continues to grow.
With the improvement in performance seen over the last nine months and growth
in profitability of MDZI, the Board considers it an opportune time to seek to
utilise the AIM listing and grow the Group by acquisition, as well as
organically.
As such several potential acquisition targets have been evaluated and this
remains an ongoing process. At such a time as the Board is able to identify a
suitable business combination which it believes will add significant value to
shareholders, it will recommend such a proposal. Whilst these discussions have
been positive to date, there can be no guarantees that they will lead to a
value accretive transaction or transactions for MediaZest.
With the hard-won gains of recent years, even in the face of the Pandemic and
associated lockdowns, the Board remains positive about the Group’s future
growth potential.
Lance O'Neill
Chairman
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Year Ended 30.9.21 Period 1.4.19 to 30.9.20
£'000 £'000
Continuing operations
Revenue 2,246 3,068
Cost of sales (1,171) (1,544)
Gross profit 1,075 1,524
Other operating income - 25
Administrative expenses – excluding depreciation & amortisation (997) (1,735)
EBITDA 78 (186)
Administrative expenses – depreciation & amortisation (74) (124)
Operating profit/(loss) 4 (310)
Finance costs (144) (168)
Loss on ordinary activities before taxation (140) (478)
Income tax - 30
Loss for the year (140) (448)
Loss attributable to: Owners of the parent (140) (448)
Loss per ordinary 0.1p share
Basic (0.0101) (0.0324)
Diluted (0.0101) (0.0324)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 SEPTEMBER 2021
2021 2020
£'000 £'000
Non-current assets
Goodwill 2,772 2,772
Owned
Intangible assets - -
Property, plant and equipment 18 39
Right of use
Property, plant and equipment 127 171
Total Non-current assets 2,917 2,982
Current assets
Inventories 150 93
Trade and other receivables 414 493
Cash and cash equivalents 120 91
Total current assets 684 677
TOTAL ASSETS 3,601 3,659
Equity
Called up share capital 3,656 3,656
Share premium 5,244 5,244
Share option reserve 146 146
Retained earnings (7,817) (7,677)
Total equity 1,229 1,369
Non-current liabilities
Financial liabilities – borrowings
Interest bearing lease liabilities 164 157
Other interest bearing loans and borrowings 108 176
Total Non-current liabilities 272 333
Current liabilities
Trade and other payables 1,114 968
Financial liabilities – borrowings
Invoice discounting facility 192 245
Interest bearing lease liabilities 56 59
Other interest bearing loans and borrowings 738 685
Total current liabilities 2,100 1,957
Total liabilities 2,372 2,290
Total equity and liabilities 3,601 3,659
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Called up share Retained Share Share Option Total
capital Earnings Premium Reserve Equity
£'000 £'000 £'000 £'000 £'000
Balance at 1 April 2019 3,656 (7,229) 5,244 146 1,817
Changes in equity
Total comprehensive loss - (448) - - (448)
Balance at 30 September 2020 3,656 (7,677) 5,244 146 1,369
Changes in equity
Total comprehensive loss - (140) - - (140)
Balance at 30 September 2021 3,656 (7,817) 5,244 146 1,229
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Year Ended 30.9.21 (Restated)Period 1.4.19 to 30.9.20
£'000 £'000
Cash flows from operating activities
Cash generated from /(absorbed by) operations 246 (73)
Tax received - 30
Net cash from operating activities 246 (43)
Cash flows from investing activities
Purchase of tangible fixed assets (8) (29)
Net cash used in investing activities (8) (29)
Cash flow from financing activities
Other loans repayments (10) (16)
Shareholder loan receipts - 718
Shareholder loan repayments (30) (515)
Bounce back loan (repayments)/receipts (3) 50
Invoice financing (repayments)/receipts (53) 42
Payment of lease liabilities (42) (47)
Interest paid (71) (93)
Net cash generated from/(used in) financing activities (209) 139
Increase in cash and cash equivalents 29 67
Cash and cash equivalents at beginning of year 91 24
Cash and cash equivalents at end of the year 120 91
NOTES TO THE FINANCIAL STATEMENTS
The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined in section 435 of the Companies Act
2006.
The financial information for the period ended 30 September 2020 is derived
from the statutory accounts for that year which have been delivered to the
Registrar of Companies. The auditors reported on those accounts;
their report was (i) unqualified, (ii) did include a reference to which
the auditor drew attention by way of emphasis without qualifying their report
in respect of going concern and (iii) did not contain a statement under
section 498(2) or 498(3) of the Companies Act 2006.
The statutory accounts for the year ended 30 September 2021 have not yet been
delivered to the Registrar of Companies. The auditors reported on those
accounts; their report was (i) unqualified, (ii) did not include a reference
to which the auditor drew attention by way of emphasis without qualifying
their report in respect of going concern and (iii) did not contain a statement
under section 498(2) or 498(3) of the Companies Act 2006.
The 2021 accounts will be delivered to the Registrar of Companies following
the Company's Annual General Meeting.
GOING CONCERN
The Group made a loss after tax of £140,000 (2020: loss of £448,000) and has
net current liabilities of £1,416,000 (2020: £1,280,000). The financial
statements are prepared on a going concern basis which the Directors believe
to be appropriate for the following reasons:
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 in 2022, across all main
sectors the company specialises in. Several substantial new contracts have
been won during the new financial year, ongoing roll out projects with
existing clients continue apace, and recurring revenues remain robust. Future
operating and capital costs have also been reviewed and included in the cash
flow forecast prepared by the Directors.
These forecasts have also been considered in light of the ongoing economic
difficulties in the global economy as a result of the Covid-19 Pandemic and
consequences of the UK Brexit agreement, previous experience of the markets in
which the company operates and the seasonal nature of those markets.
Management has engaged with clients where possible to understand their plans
for the coming year and the likely timing of those plans. Several have
indicated substantial projects which they expect to work with the Group to
deliver in the next 12 months. Visibility on the timings associated with those
projects is improved in the current financial year as restrictions associated
with the Pandemic are lifted and many clients return to more normal working
patterns and practices.
These forecasts indicate that the Group 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 two shareholders who have
provided material loans to the Group, 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. The balance of these loans at 30 September 2021 totalled £652,000
(2020: £589,000).
As a result the Directors consider that it is appropriate to draw up the
accounts on a going concern basis. The financial statements do not include any
adjustments that would result from the basis of preparation being
inappropriate.
Whilst the financial information included in this announcement has been
computed in accordance with International Financial Reporting Standards
(IFRS), this announcement does not in itself contain sufficient information to
comply with IFRS. The accounting policies used in preparation of this
announcement are consistent with those in the full financial statements that
have yet to be published.
The Report and Consolidated Financial Statements for the year ended 30
September 2021 will be posted to shareholders shortly and will also be
available to download from the Company's website: www.mediazest.com
1. SEGMENTAL INFORMATION
Revenue for the year can be analysed by customer location as follows:
Year Ended 30.9.21 Period 1.4.19 to 30.9.20
£’000 £’000
UK and Channel Islands 2,178 2,669
Rest of Europe 66 374
North America 2 25
2,246 3,068
An analysis of revenue by type is shown below:
Year Ended 30.9.21 Period 1.4.19 to 30.9.20
£’000 £’000
Hardware and installation 1,714 2,097
Support and maintenance – recurring revenue 477 832
Other services (including software solutions) 55 139
2,246 3,068
Segmental information and results
The Chief Operating Decision Maker ('CODM'), who is responsible for the
allocation of resources and assessing performance of the operating segments,
has been identified as the Board. IFRS 8 requires operating segments to be
identified on the basis of internal reports that are regularly reviewed by the
Board. The Board have reviewed segmental information and concluded that there
is only one operating segment.
The Group does not rely on any individual client - the following revenues
arose from sales to the Group's largest client.
Year Ended 30.9.21 Period 1.4.19 to 30.9.20
£’000 £’000
Goods and services 228 433
Service and maintenance 131 53
359 486
2. EARNINGS/(LOSS) PER ORDINARY SHARE
Year Ended 30.9.21 Period 1.4.19 to 30.9.20
Profit/(Loss) £’000 £’000
Profit/(Loss) for the purposes of basic and diluted earnings per share being net loss attributable to equity shareholders (140) (448)
2021 2020
Number of shares Number Number
Weighted average number of ordinary shares for the purposes of basic earnings per share 1,396,425,774 1,396,425,774
Number of dilutive shares under option or warrant - -
2021 2020
£’000 £’000
Weighted average number of ordinary shares for the purposes of dilutive loss per share 1,396,425,774 1,396,425,774
Basic earnings per share is calculated by dividing the loss after tax
attributed to ordinary shareholders of £140,000 (2020: £448,000) by the
weighted average number of shares during the year of 1,396,425,774 (2020:
1,396,425,774).
The diluted loss per share is identical to that used for basic loss per share
as the options are "out of the money" and therefore anti-dilutive.
3. CASH AND CASH EQUIVALENTS
Following a review of recent IFRIC decisions the status of the invoice
discounting facility was reviewed and it was determined that it should be
reflected in financing activities rather than as a component of cash and cash
equivalents.
The Group The Group
2021 2020
£’000 £'000
Cash held at bank 120 91
120 91
Enquiries:
Geoff Robertson Chief Executive Officer MediaZest Plc 0845 207 9378
David Hignell/Adam Cowl Nominated Adviser SP Angel Corporate Finance LLP 020 3470 0470
Claire Noyce Broker Hybridan LLP 020 3764 2341
About MediaZest
MediaZest is a creative 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
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