REG-MediaZest Plc: Half-year Report
05/11/2018 07:05
("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
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2018
Unaudited Unaudited Audited
Six months Six months 12 months
Notes 30-Sep-18 30-Sep-17 31-Mar-18
£'000 £'000 £'000
Continuing Operations
Revenue 1,819 1,339 2,819
Cost of sales (887) (696) (1,458)
------------ ------------ ------------
Gross profit 932 643 1,361
Administrative expenses (776) (730) (1,474)
------------ ------------ ------------
EBITDA 156 (87) (113)
Administrative expenses – depreciation & amortisation (10) (28) (41)
------------ ------------ ------------
Operating Profit/(Loss) 146 (115) (154)
Finance Costs (56) (34) (102)
------------ ------------ ------------
Profit/(Loss) before taxation 90 (149) (256)
Taxation - - -
======== ======== ========
Profit/(Loss) for the period and total comprehensive income/loss for the period attributable to the owners of the parent 90 ======== (149) ======== (256) ========
Earnings/(Loss) per ordinary 0.1p share
Basic 2 0.0001p (0.01p) (0.02p)
Diluted 2 0.0001p (0.01p) (0.02p)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2018
Unaudited Unaudited Audited
As at 30-Sep-18 As at 30-Sep-17 As at 31-Mar-18
£'000 £'000 £'000
Non-current assets
Goodwill 2,772 2,772 2,772
Property, plant and equipment 58 43 51
Intellectual property 2 5 3
------------ ------------ ------------
Total non-current assets 2,832 2,820 2,826
Current assets
Inventories 97 92 217
Trade and other receivables 596 585 897
Cash and cash equivalents 12 103 38
------------ ------------ ------------
Total current assets 705 780 1,152
Current liabilities
Trade and other payables (1,175) (1,284) (1,664)
Financial liabilities (434) (447) (471)
------------ ------------ ------------
Total current liabilities (1,609) (1,731) (2,135)
Net current liabilities (904) (951) (983)
Non-current liabilities
Financial liabilities (17) (11) (22)
------------ ------------ ------------
Total non-current liabilities (17) (11) (22)
======== ======== ========
Net assets 1,911 1,858 1,821
======== ======== ========
Equity
Share Capital 3,546 3,499 3,546
Share premium account 5,244 5,221 5,244
Other reserves 146 146 146
Retained earnings (7,025) (7,008) (7,115)
======== ======== ========
Total equity 1,911 1,858 1,821
======== ======== ========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2018
Share Share Share Options Retained Total
Capital Premium Reserves Earnings Equity
£'000 £'000 £'000 £'000 £'000
Balance at 31 March 2017 3,499 5,221 146 (6,859) 2,007
Loss for the period - - - (149) (149)
----------- ------------ ------------------ ------------ ------------
Total comprehensive loss for the period - - - (149) (149)
======= ======= ======== ======= =======
Balance at 30 September 2017 3,499 5,221 146 (7,008) 1,858
======= ======= ======== ======= =======
Loss for the period - - - (107) (107)
------------ ------------ ------------------ ------------ ------------
Total comprehensive loss for the period - - - (107) (107)
Issue of share capital 47 24 - - 71
Share issue costs - (1) - - (1)
======= ======== ========= ======= =======
Balance at 31 March 2018 3,546 5,244 146 (7,115) 1,821
======= ======== ========= ======= =======
Profit for the period - - - 90 90
------------ ------------- ---------------- ------------ -----------
Total comprehensive income for the period - - - 90 90
======= ======== ========= ======= =======
Balance at 30 September 2018 3,546 5,244 146 (7,025) 1,911
======= ======== ========= ======= =======
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2018
Unaudited Unaudited Audited
Six months Six months 12 months
Note 30-Sep-18 30-Sep-17 31-Mar-18
£'000 £'000 £'000
Net cash generated from/(used in) operating activities 3 143 (195) (434)
Taxation - - -
Cash flows used in investing activities
Purchase of plant and machinery (13) (10) (5)
Purchase of intellectual property - (2) (2)
Purchase of leasehold improvements (3) - -
---------- ---------- ----------
Net cash used in investing activities (16) (12) (7)
Cash flow from financing activities
Other loan repayments (13) (10) (40)
Shareholder loan receipts - 32 233
Shareholder loan repayments (68) - (213)
Interest paid (17) (40) (54)
Proceeds of share issue - - 70
---------- ---------- ----------
Net cash used in financing activities (98) (18) (4)
---------- --------- ----------
Net increase/(decrease) in cash and cash equivalents 29 (225) (445)
---------- ---------- ----------
Cash and cash equivalents at beginning of period / year (353) 92 92
======= ======= =======
Cash and cash equivalents at end of period / year 4 (324) (133) (353)
======= ======= =======
NOTES TO THE FINANCIAL INFORMATION
1. Basis of preparation
The Group’s annual financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the EU applied in accordance with the provisions of the Companies Act 2006 applicable to companies preparing financial statements under IFRS.
Accordingly, the consolidated half-yearly financial information in this report has been prepared using accounting policies consistent with IFRS. IFRS is subject to amendment and interpretation by the International Accounting Standards Board (IASB) and the IFRS Interpretations Committee and there is an ongoing process of review and endorsement by the European Commission. The financial information has been prepared on the basis of IFRS that the Directors expect to be applicable as at 31 March 2019. The Board
has considered the impact of IFRS9 and IFRS15 when drawing up these financial statements, and deems no adjustments necessary.
This interim report does not comply with IAS 34 “Interim Financial Reporting” (as adopted by the European Union), as permissible under the AIM Rules for Companies.
Going Concern
The Directors have considered financial projections based upon known future invoicing, existing contracts, pipeline of new business and the number of opportunities it is currently working on, particularly in the Retail sector. In addition, these forecasts have been considered in the light of the ongoing challenges in the global economy, previous experience of the markets in which the Group 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 Group will generate sufficient cash resources to meet its liabilities as they fall due over the next 12 month period from the date of this interim announcement.
As a result the Directors consider that it is appropriate to draw up the financial information 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.
Non-statutory accounts
The financial information contained in this document does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006 (“the Act”).
The statutory accounts for the year ended 31 March 2018 have been filed with the Registrar of Companies. The report of the auditors on those statutory accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under Section 498(2) or (3) of the Act. The financial information for the six months ended 30 September 2018 and 30 September 2017 is not audited.
2. Earnings per share
Basic earnings per share is calculated by dividing the profit attributed to ordinary shareholders of £90,000 (2017: loss of £149,000) by the weighted average number of shares during the period of 1,286,425,774 (2017: 1,239,757,641). The diluted earnings per share is identical to that used for basic earnings per share as the warrants or share options are anti-dilutive.
3. Cash generated from/(used in) operations
Unaudited Unaudited Audited
Six months Six months 12 months
30-Sep-18 30-Sep-17 31-Mar-18
£'000 £'000 £'000
Operating profit / (loss) 146 (115) (256)
Depreciation of tangible assets 9 18 -
Finance Costs 56 34 102
Amortisation of intangible assets 1 10 41
Decrease / (increase) in inventories 118 (23) (148)
(Decrease) / increase in payables (488) 223 481
Decrease / (increase) in receivables 301 (342) (654)
======== ======== ========
Net cash outflow from operating activities 143 (195) (434)
======== ======== ========
4. Cash and cash equivalents
Unaudited Unaudited Audited
Six months Six months 12 months
30-Sep-18 30-Sep-17 31-Mar-18
£'000 £'000 £'000
Cash held at bank 12 103 38
Invoice discounting facility (336) (236) (391)
======== ======== ========
(324) (133) (353)
======== ======== ========
5. Subsequent events
£47,000 of cash was received from a major client post 30 September 2018 in payment of long-overdue invoices. Another payment of £53,000 is expected from the same client in early November relating to further invoices currently over due by 120 days or more. Had this cash been received within payment terms, the bank balance at 30 September 2018 would have been significantly improved.
6. Distribution of the Half-Yearly Report
Copies of the Half-yearly Report will be available to the public from the Company’s website, www.mediazest.com, and from the Company Secretary at the Company's registered address at Unit 9, Woking Business Park, Albert Drive, Woking, Surrey, GU21 5JY. This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.
Enquiries:
Geoff Robertson
Chief Executive Officer
MediaZest Plc 0845 207 9378
David Hignell / Edward Hutton
Nominated Adviser
Northland Capital Partners Limited 020 3861 6625
Claire Noyce
Broker
Hybridan LLP 020 3764 2341
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