REG-MediaZest Plc: Second Interim Results and Restoration of Trading on AIM
18/09/2020 07:05
18 September 2020
MediaZest Plc
("MediaZest", the "Company” or “Group"; AIM: MDZ)
Second Unaudited Interim Results for the year ended 31 March 2020
Restoration of Trading on AIM
MediaZest, the creative audio-visual company, announces its unaudited interim
results for the year ended 31 March 2020.
As announced on 3 April 2020, MediaZest extended its current accounting year
end to 30 September 2020 in order to defer audit costs until later in the
year, thereby conserving cash during the “lockdown” period.
In addition to the Company’s announcements of 8 and 9 June 2020, unaudited,
second interim results which incorporate results for the unaudited 6-month
period to 31 March 2020 are set out below. All comparisons are against
MediaZest’s audited results for the year ended 31 March 2019. The
Company’s audited results for the 18-month period ending 30 September 2020
will be published by no later than 31 March 2021.
Further to its announcement of 14 September 2020, trading in the Company's
ordinary shares on AIM will resume with effect from 7:30 a.m. today (18
September 2020).
CHAIRMAN’S STATEMENT
Introduction
The Board presents the consolidated unaudited results for the twelve months
ended 31 March 2020 for MediaZest plc and its wholly owned subsidiary company
MediaZest International Ltd (together the “Group”).
Financial Review
* Revenue for the period was £2,397,000, down 27% (2019: £3,303,000).
* Gross profit was £1,131,000, down 32% (2019: £1,675,000).
* Gross margin was down slightly to 47% (2019: 51%).
* Administrative expenses were £1,282,000, a reduction of 17% (2019:
£1,546,000).
* EBITDA was a loss of £151,000 (2019: profit of £129,000).
* Net loss for the period after taxation was £271,000 (2019: profit of
£6,000).
* The basic and fully diluted loss per share was 0.0194 pence (2019: earnings
per share 0.0004 pence).
* Cash in hand at 31 March 2020 was £16,000 (2019: £24,000).
Operational Review
As highlighted in the Financial Review above, the unaudited financial results
for the twelve months to 31 March 2020 were adversely affected first by the
difficult business conditions encountered at the beginning of the current
financial year and secondly by the Covid-19 pandemic (the “Pandemic”), by
way of comparison with the prior period. This shows a reduction in both
revenue and profitability at a Group level.
The impact on the results for the first 6 months of the year to 30 September
2019, was accentuated by delays to a large project with a UK University, as
noted in the Group’s Final Results announcement of 28 August 2019. This
project has subsequently been completed, with the majority of the work falling
into October and November 2019.
Coupled with improving macro-economic conditions this led to a substantial
improvement in financial performance during the second half of 2019, however
this progress was curtailed from mid-February 2020 due to the impact of the
Pandemic.
Results for February and particularly March 2020 were materially adversely
impacted by the Pandemic, as clients initially began to defer some projects
and then temporarily closed stores and other places of business as countries
went into “lockdown”. All deployments and installations were placed on
hold at that stage, and in particular this affected key projects across the UK
and in Milan, Copenhagen and Berlin that were scheduled for those months.
The Company has significantly reduced its administrative expenses compared to
the prior year. In the first 6 months of the year to September 2019 this was
due to a cost cutting programme which had been implemented during Q1 2019, in
anticipation of difficult trading conditions and ongoing political
uncertainty. Costs were further reduced by cuts implemented in the wake of the
Pandemic pursuant to which the Company expects to save approximately £170,000
on an annualised basis, although the majority of these savings will only be
received in the subsequent period from 1 April 2020.
The Group has utilised the Government’s Job Retention Scheme to furlough
employees at appropriate levels during the period since 31 March 2020. All
furloughed employees have returned to work in some form since July 2020 as the
“lockdown” eased and project delivery resumed.
Client Work
The Group continues to service a core of long-standing client accounts
including Lululemon Athletica, the University of Central Birmingham, Tiffany &
Co, Kuoni, Ted Baker, HMV and Hyundai, all of which undertook new projects
with the Group during the period under review. In addition, our work with Pets
at Home continues and the Company provided audio visual solutions for over a
dozen Pets at Home stores in the year. The Group was pleased to see that in
March 2020 Pets at Home won the coveted Store of the Year award at the Retail
Week Awards for their refurbished Stockport store, a store for which the
Company provided the audio-visual solutions.
New clients added in the year included Twinings, Belron, and Avis Budget
Group. In addition, the Group won a high-profile project for Porsche to
deliver audio visual solutions for its new CityLife concept store in Milan,
Italy. This project had been initially scheduled to complete in March 2020 and
was delayed during “lockdown”, subsequently being delivered by the
Group’s highly skilled in-house teams over the summer, as per the
Company’s announcement of 10 August 2020.
Trading post UK “lockdown”
During the “lockdown” period in the UK, all Group deployments and
installations were placed on hold, and the ability of the Group to generate
project-based revenue during this period was restricted accordingly. However,
contractual revenues based around the Group’s Managed Service proposition
(including service, maintenance, data reporting and content management
offerings) were robust and delivered most of the turnover during that period.
A handful of clients continued to keep stores open as a result of operating in
‘critical industries’ throughout the “lockdown” period. Strictly
following the appropriate Government guidelines including social distancing
rules, the Group continued to support these clients on an ongoing basis; often
using advanced remote management tools to quickly assist clients. These
clients were able to use digital signage installed by the Group to communicate
quickly and effectively with their customers to improve safety and
introduce/react to new rules as they have evolved.
With the easing of some of the “lockdown” measures, further client sites
have re-opened and in May 2020 MediaZest delivered on the first two of the
previously delayed projects. There were several other projects similarly
completed in June and July 2020 and the Board expects that all previously
delayed projects will be delivered before the end of 2020.
In addition to these projects existing pre “lockdown”, which are now at or
nearing the completion stage, the Group recommenced discussions in relation to
potential new client mandates from the beginning of May, several of which have
already been won and delivered, including large projects for Hyundai and
Samsung.
Contractual recurring revenue streams remain robust and in May 2020 the Group
renewed a key long-term contract until October 2022 (with a clause to extend
for a further 12 months) in addition to a significant annual contract with
another client. The combined value of these over the initial contractual
periods is approximately £150,000 rising to up to £220,000 if extension
clauses are activated.
Fundraising
In May 2020, the Company secured a Bounce Back Loan of £50,000 under the
Government’s scheme to provide additional cash resources during the
“lockdown”. In August 2020 MediaZest raised a further £150,000 by way
of a Convertible Loan Note instrument (“CLN”) to provide additional
working capital for the Group.
The terms of the CLNs are as follows:
* 3-year CLN (the “Term”), with interest of 7% per annum, payable
quarterly in arrears;
* MediaZest will make a bullet repayment to each investor at the end of the
Term if the CLN (in whole or in part) remains unconverted;
* The Company may repay in full the CLN at any time, including accumulated
interest on a pro-rata basis;
* Each investor can convert the CLNs (in whole or in part) into new ordinary
shares in MediaZest by serving written notice 14 days after each annual
anniversary during the Term;
* The CLN conversion rate will be calculated by dividing the principal amount
of the CLN by the mid-market price of the ordinary shares, on the last
business day before the relevant anniversary date of the CLN, less a discount
of 10%; and
* If the CLN is repaid at the end of the Term then warrants over new ordinary
shares will be granted to each investor (the “Warrants”). The number of
Warrants granted will be calculated by dividing a sum equal to 10% of the
principal amount of the CLN by the mid-market price of the shares in MDZ at on
the last business day before the closing of the CLN. The Warrants’ exercise
price will be the mid-market price of the shares in MDZ on the last business
day before the closing of the CLN and the Warrants will expire 12 months from
the date of grant
New Accounting Standards
The introduction of IFRS16 has had an impact on the way the Company accounts
for Leases and as such there is a change in the way that rent is presented in
the accounts, as noted below. In essence, in the Consolidated Statement of
Comprehensive Income this rental cost for the Company’s premises in Woking
is now charged predominantly through depreciation rather than administrative
costs. The effect on the Statement of Financial Position, is that a Right of
Use Asset has been created which falls into Property, Plant and Machinery and,
on the opposing side, a Lease Liability has been created which falls into the
Financial Liabilities category. The change and impact on presentation, whilst
netting out to virtually zero, is documented in Note 6.
Outlook
At this time, it 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 rapidly.
In response to this, as well as the various cost cutting measures, the Group
has been investigating several new lines of business, all associated with the
audio-visual market, which are aimed at meeting client’s changing needs
after the Pandemic.
The Company continues to receive enquiries from potential new clients although
these remain below the expected levels for this time of the year.
Existing customers continue to require the Company’s services and several
long term roll out projects that the Group had begun delivering have now
restarted. Demand from ongoing clients is expected to remain strong.
The Board is working on the assumption that the disruption caused by the
Pandemic will have an impact deep into 2021 and continues to plan accordingly,
searching for new revenue streams whilst managing costs carefully.
Lance O’Neill
Chairman
18 September 2020
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE TWELVE MONTHS ENDED 31 MARCH 2020
Unaudited Audited
12 months 12 months
Notes 31-Mar-20 31-Mar-19
£'000 £'000
Continuing Operations
Revenue 2,397 3,303
Cost of sales (1,266) (1,628)
------------ ------------
Gross profit 1,131 1,675
Administrative expenses (1,282) (1,546)
------------ ------------
EBITDA (151) 129
Administrative expenses – depreciation & amortisation (81) (40)
------------ ------------
Operating (Loss)/Profit (232) 89
Finance Costs (79) (83)
------------ ------------
(Loss)/Profit before taxation (311) 6
Taxation 40 -
======== ========
(Loss)/Profit for the period and total comprehensive loss/income for the period attributable to the owners of the parent (271) ======== 6 ========
Earnings/(Loss) per ordinary 0.01p (2019: 0.1p) share
Basic 2 (0.0194)p 0.0004p
Diluted 2 (0.0194)p 0.0004p
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2020
Unaudited Audited
As at 31-Mar-20 As at 31-Mar-19
£'000 £'000
Non-current assets
Goodwill 2,772 2,772
Property, plant and equipment 211 62
Intellectual property - 1
------------ ------------
Total non-current assets 2,983 2,835
Current assets
Inventories 116 69
Trade and other receivables 548 481
Cash and cash equivalents 16 24
------------ ------------
Total current assets 680 574
Current liabilities
Trade and other payables (1,252) (1,017)
Financial liabilities (747) (548)
------------ ------------
Total current liabilities (1,999) (1,565)
Net current liabilities (1,319) (991)
Non-current liabilities
Financial liabilities (118) (25)
------------ ------------
Total non-current liabilities (118) (25)
======== ========
Net assets 1,546 1,819
======== ========
Equity
Share Capital 3,656 3,656
Share premium account 5,244 5,244
Other reserves 146 146
Retained earnings (7,500) (7,227)
======== ========
Total equity 1,546 1,819
======== ========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE TWELVE MONTHS ENDED 31 MARCH 2020
Share Share Share Options Retained Total
Capital Premium Reserves Earnings Equity
£'000 £'000 £'000 £'000 £'000
Balance at 1 April 2018 3,546 5,244 146 (7,232) 1,704
Profit for the year - - - 6 6
----------- ----------- ----------- ----------- -----------
Total comprehensive profit for the year - - - 6 6
Issue of share capital 110 - - - 110
Share issue costs - - - (1) (1)
======= ======= ======== ======= ======
Balance at 31 March 2019 3,656 5,244 146 (7,227) 1,819
======= ======= ======== ======= ======
Impact of IFRS 16 implementation - - - (2) (2)
----------- ----------- ----------- ----------- -----------
Balance at 1 April 2019 restated 3,656 5,244 146 (7,229) 1,817
Loss for the year - - - (271) (271)
----------- ----------- ----------- ----------- -----------
Total comprehensive loss for the year - - - (271) (271)
======= ======== ========= ======= =======
Balance at 31 March 2020 3,656 5,244 146 (7,500) 1,546
======= ======== ========= ======= ======
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED 31 MARCH 2020
Unaudited Audited
12 months 12 months
Note 31-Mar-20 31-Mar-19
£'000 £'000
Net cash generated from operating activities 3 - 117
Taxation 40 -
---------- ----------
Net cash generated from operating activities 40 117
Cash flows used in investing activities
Purchase of plant and machinery (9) (30)
---------- ----------
Net cash used in investing activities (9) (30)
Cash flow from financing activities
Other loans (15) (19)
Lease liability payments (46) -
Shareholder loan receipts 535 385
Shareholder loan repayments (425) (330)
Interest paid (68) (58)
Proceeds of share issue - 110
Share issue costs - (1)
---------- ----------
Net cash (used in)/ generated from financing activities (19) 87
---------- ----------
Net increase in cash and cash equivalents 12 174
---------- ----------
Cash and cash equivalents at beginning of year (179) (353)
======= =======
Cash and cash equivalents at end of year 4 (167) (179)
======= =======
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 twelve-month 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 30 September 2020. The
Board has considered the impact of IFRS16 when drawing up this financial information, and has made the necessary adjustments.
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 ongoing impact of the Covid-19 pandemic. 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. The Group will provide audited financial statements for the 18-month period to 30 September 2020 before 31 March 2021.
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 2019 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 twelve months to 31 March 2020 has not been audited.
2. Earnings per share
Basic earnings per share is calculated by dividing the loss attributed to ordinary shareholders of £271,000 (2019: profit of £6,000) by the weighted average number of shares during the period of 1,396,425,774 (2019: 1,296,370,979). 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 operations
Unaudited Audited
12 months 12 months
31-Mar-20 31-Mar-19
£'000 £'000
(Loss)/Profit after tax (271) 6
Depreciation/amortisation charge 81 40
Finance Costs 79 83
(Increase)/decrease in inventories (47) 148
Increase/(decrease) in payables 226 (776)
(Increase)/decrease in receivables (68) 616
======== ========
Net cash generated from operating activities - 117
======== ========
4. Cash and cash equivalents
Unaudited Audited
12 months 12 months
31-Mar-20 31-Mar-19
£'000 £'000
Cash held at bank 16 24
Invoice discounting facility (183) (203)
======== ========
(167) (179)
======== ========
5. Subsequent events
Subsequent to 31 March 2020, the “lockdown” continued to negatively impact revenue, with projects remaining on hold and revenue mostly limited to ongoing service and maintenance contracts. Costs were reduced as noted above in order to mitigate this impact. As the “lockdown” was eased, these projects have mostly been completed and new work added and delivered. This is noted in more detail in the Chairman’s statement above. In May 2020 the Company secured a Bounce Back Loan of £50,000 under the Government’s
scheme, and raised a further £150,000 by way of a Convertible Loan Note instrument in August 2020 to provide additional working capital for the Group at the current time. 6. IFRS 16 Adoption For the accounting period beginning 1 April 2019, IFRS 16 must be applied for the first time. This replaced IAS 17 and governs how Leases must be treated and accounted for in the financial statements. There are two approaches to its adoption, and the Group has chosen to use the cumulative catch-up approach. This
means that the comparative information presented for the year ended 31 March 2019 has not been restated and presents the Groups’ Lease, upon the registered office and headquarters in Woking, under IAS 17 for those periods. The cumulative effect of the implementation of this accounting standard is recognised in retained earnings as at 1 April 2019 and shown separately on the Consolidated Statement of Changes in Equity. IFRS 16 seeks to recognise future liabilities associated with Leases on the Statement of
Financial Position. A corresponding right of use of the asset is also recognised on the Statement of Financial Position to capture the economic benefits of the Group’s right to use the underlying leased asset. Accounting Policy The Standard recognises right of use of an asset and the associated lease liabilities at the lease commencement date. The liability is calculated as the net present value of the lease payments over the lifetime of the lease. This calculation uses the discounted interest rate
implicit in the lease which is not easily established and hence is replaced with the Group’s incremental borrowing rate. This has been assumed at 10% based on the Group’s other rates of borrowing. This liability is then measured at amortised cost and increased by the interest charge and decreased by lease payments as they are made. Given that the lease in question for the Group is a 5-year rental lease on premises with no break clause, the lease term used for all calculations is 5 years. On transition to
IFRS 16 the right of use asset is calculated retrospectively using the Group’s incremental borrowing rate. The asset is then depreciated on a straight-line basis over the 5 years of the lease. The impact of IFRS 16 on this financial information is a net decrease in equity of £2,000. Due to the nature of the right of use asset, this is presented in “Property, Plant and Equipment”, and was equal to £157,000 at 31 March 2020. Lease liabilities are presented separately within the Statement of Financial
Position as “Contract Liabilities” and at 31 March 2020 was equal to £157,000.
7. Distribution of the Second Interim Report Copies of the Second Interim 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/Soltan Tagiev Nominated Adviser SP Angel Corporate Finance LLP 020 3470 0470
Claire Noyce Broker Hybridan LLP 020 3764 2341
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