Half-yearly Report

MediaZest Plc Unaudited results for the six months ended 30 September 2013 CHAIRMAN'S STATEMENT Introduction Results for the six months ended 30 September 2013 for MediaZest Plc("MediaZest", the "Company" and, together with its wholly owned subsidiarycompany Touch Vision Ltd, the "Group"). Fundraising On 13 December, the Company announced a conditional placing of 247,142,800shares at 0.35p per share to raise £865,000 before expenses, and a proposedissue of 47,479,714 new shares through the conversion of loan interestamounting to £166,179 at a price of 0.35p per share. The shares are expected tobe admitted to AIM on 2 January 2014 subject to the passing of the necessaryresolutions at a General Meeting to be held on 31 December 2013. Previous to this, on 8 July 2013 the Company completed a placing of 143,200,000shares at 0.25p per share. The gross proceeds included conversion of £50,000 ofloan interest at the placing price. Net cash proceeds were £289,000 (of which £200,000 was used to pay down debt). Financial Review Revenue for the period was £1,572,000 (2012: £964,000) and the Group made aloss for the period after taxation of £183,000 (2012: £239,000), interest of £77,000 (2012: £55,000), administrative expenses before depreciation of £674,000(2012: £625,000) and depreciation of £18,000 (2012: £20,000). Gross profit was £576,000 (2012: £461,000). The basic and fully diluted lossper share was 0.033 pence (2012: 0.073 pence). EBITDA was a loss of £98,000(2012: £164,000). Operational Review The results for the period reflect a significant improvement in revenuecompared to the corresponding period last year. This follows a large contractwin announced at the beginning of the period with a multinational client, aconstituent of the Consumer Staple sector of the S&P 500 index. Total revenuefrom the project, which is contracted through one of the world's biggestadvertising groups, is expected to be approximately £1.1million in the periodto summer 2014. Contract delivery has begun with great success, and the Grouphas already been paid £850,000 of this revenue, the majority of which fallswithin the period ended 30 September 2013. The Group is currently pitching foradditional work relating to this project. Top line revenue for the period increased to £1,572,000 (2012: £964,000)representing growth of 63%. This growth was achieved through the large contractwin detailed above, in addition to further work with existing customers such asSamsung, O2, Kuoni and JD Sports and new projects from growth areas such as thecorporate market. Gross profit margin as a percentage of revenue was 37% (2012: 48%) mainlyreflecting a number of low margin equipment supply only contracts with clientsin the education sector. In addition, the reduced level of service andmaintenance work provided for HMV following its administration in January 2013had an impact. Prospects for ongoing project work in the retail, event/brandexperience and corporate markets that the Group is targeting for future growthcontinue to be strong. As previously noted, the Board has pursued a policy this year of increasing itsinvestment in the sales team and, in particular, the development of newbusiness in the corporate sector. The Board was particularly pleased,therefore, to announce its first major win in this sector for several years, aproject delivered in the period for a City of London based private equitycompany. Development in this sector has continued and, on 7 November 2013, theGroup was able to announce a second major engagement in respect of a largevideowall project, again in the City of London, due for completion lateDecember 2013. The Board was also pleased to announce the opening of its new London showroom,which is expected to assist in driving revenues by giving the Group a means todemonstrate its unique technology offering. Whilst the impact of increased revenues has led to improved gross profit,investing in improving sales and marketing resource in order to generateincreased future returns has naturally had an impact on the EBITDA and temperedthe improvement in results. However, financial performance for the first halfof the financial year remains much improved on corresponding periods in recentyears. MediaZest Plc Operational Review (continued) Although interest and finance costs remained high in the half year, improvementin the Company's balance sheet and reduced levels of debt made possible by aconditional fundraising, as announced on 13 December 2013 and as detailedabove, will enable the Group to significantly reduce these costs going forward. Outlook The Group has made good progress in the last 12 months, and this has enabled itto undertake a conditional placing to institutional and other investors toraise £865,000 (before expenses). This placing will allow MediaZest tocapitalise upon the opportunities before it, both in driving additionalbusiness and developing new products for which the Board believes there is asubstantial market. The Company will also de-gear its balance sheet as a consequence of thisproposed placing. Furthermore, the Group will have improved its working capitalposition and its ability to develop additional products and enable it tocontinue to invest in the sales and marketing process. The calendar year isending on a high note and the Group can look forward to further progress in2014. Lance O'Neill 20 December 2013Chairman MediaZest Plc CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013 Unaudited Unaudited Audited Six months Six months 12 months Notes 30-Sep-13 30-Sep-12 31-Mar-13 £'000 £'000 £'000 Continuing Operations Revenue 1,572 964 1,850 Cost of sales (996) (503) (941) Gross profit 576 461 909 Administrative expenses (674) (625) (1,275) EBITDA (98) (164) (366) Administrative expenses - depreciation (18) (20) (47) Operating Loss (116) (184) (413) Interest (77) (55) (138) Loss before taxation (193) (239) (551) Taxation credit 10 - - Loss for the period and total (183) (239) (551)comprehensive loss for the periodattributable to the owner of the parent Loss per ordinary 0.1p share Basic 2 (0.033p) (0.073p) (0.15p) Diluted 2 (0.033p) (0.073p) (0.15p) MediaZest Plc CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2013 Unaudited Unaudited Audited As at As at As at 30-Sep-13 30-Sep-12 31-Mar-13 £'000 £'000 £'000 Non-current assets Goodwill 2,772 2,772 2,772 Property, plant and equipment 51 83 63 Total non-current assets 2,823 2,855 2,835 Current assets Inventories 142 95 123 Trade and other receivables 440 406 515 Cash and cash equivalents - 33 1 Total current assets 582 534 639 Current liabilities Trade and other payables (1,244) (1,093) (1,155) Financial liabilities (393) (546) (707) Total current liabilities (1,637) (1,639) (1,862) Net current liabilities (1,055) (1,105) (1,223) Net assets 1,768 1,750 1,612 Equity Share Capital 2,879 2,587 2,736 Share premium account 4,225 4,004 4,029 Other reserves 7 7 7 Retained earnings (5,343) (4,848) (5,160) Total equity 1,768 1,750 1,612 MediaZest Plc CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013 Share Share Share Options Retained Total Capital Premium Reserves Earnings Equity £'000 £'000 £'000 £'000 £'000 Balance at 31 March 2012 2,587 4,004 7 (4,609) 1,989 Loss for the period - - - (239) (239) Total comprehensive income for - - - (239) (239)the period Balance at 30 September 2012 2,587 4,004 7 (4,848) 1,750 Loss for the period - - - (312) (312) Total comprehensive income for - - - (312) (312)the period Issue of share capital 149 30 - - 179 Share issue costs - (5) - - (5) Balance at 31 March 2013 2,736 4,029 7 (5,160) 1,612 Loss for the period - - - (183) (183) Total comprehensive income for - - - (183) (183)the period Issue of share capital 143 215 - - 358 Share issue costs - (19) - - (19) Balance at 30 September 2013 2,879 4,225 7 (5,343) 1,768 MediaZest Plc CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013 Unaudited Unaudited Audited Six Six months months 12 months Note 30-Sep-13 30-Sep-12 31-Mar-13 £'000 £'000 £'000 Net cash used in operating activities 3 12 (82) (385) Cash flows used in investing activities Purchase of plant and machinery (6) (6) (16) Disposal of plant and machinery - - 3 Net cash used in investing activities (6) (6) (13) Cash flow from financing activities Repayment of borrowings (8) (8) (17) Shareholder loans - - 77 Other loan repayments (77) - - Shareholder loan repayments (200) - - Interest paid (77) (55) (39) Proceeds of issue of shares 308 - 179 Share issue costs (19) - (5) Net cash generated from/(used in) (23) (63) 195financing activities Net decrease in cash and cash equivalents (67) (151) (203) Cash and cash equivalents at beginning of (199) 4 4period/year Cash and cash equivalents at end of period 4 (266) (147) (199)/year MediaZest Plc NOTES TO THE FINANCIAL INFORMATION 1. Basis of preparation The Group's annual financial statements are prepared in accordance withInternational Financial Reporting Standards (IFRS) as adopted for use in the EUapplied in accordance with the provisions of the Companies Act 2006 applicableto companies preparing financial statements under IFRS. Accordingly, the consolidated half-yearly financial information in this reporthas been prepared using accounting policies consistent with IFRS. IFRS issubject to amendment and interpretation by the International AccountingStandards Board (IASB) and the IFRS Interpretations Committee and there is anongoing process of review and endorsement by the European Commission. Thefinancial information has been prepared on the basis of IFRS that the Directorsexpect to be applicable as at 31 March 2014. This interim report does not comply with IAS 34 "Interim Financial Reporting"(as adopted by the European Union), as permissible under the AIM Rules forCompanies. Going Concern The Directors have considered financial projections based upon known futureinvoicing, existing contracts, pipeline of new business and the number ofopportunities it is currently working on, particularly in the Retail sector. Inaddition, these forecasts have been considered in the light of the ongoingeconomic difficulties in the UK and global economy, previous experience of themarkets 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 resourcesto meet its liabilities as they fall due over the next 12 month period from thedate of this interim announcement. As a result the Directors consider that it is appropriate to draw up theaccounts on a going concern basis. Accordingly, no adjustments have been madeto reflect any write downs or provisions that would be necessary should theGroup prove not to be a going concern, including further provisions forimpairment to goodwill and investments in Group companies. Non-statutory accounts The financial information contained in this document does not constitutestatutory accounts within the meaning of Section 434 of the Companies Act 2006("the Act"). The statutory accounts for the year ended 31 March 2013 have been filed withthe Registrar of Companies. The report of the auditors on those statutoryaccounts was unqualified, did not draw attention to any matters by way ofemphasis and did not contain a statement under Section 498(2) or (3) of theAct. The financial information for the six months ended 30 September 2013 and30 September 2012 is not audited. 2. Loss per share Basic loss per share is calculated by dividing the loss attributed to ordinaryshareholders of £183,000 (2012: £239,000) by the weighted average number ofshares during the period of 548,759,406 (2012: 327,625,327). The diluted lossper share is identical to that used for basic loss per share as the exercise ofwarrants would have the effect of reducing the loss per share and therefore isnot dilutive under International Accounting Standard 33 "Earnings per Share". MediaZest Plc NOTES TO THE FINANCIAL INFORMATION (Continued) 3. CASH USED IN OPERATIONS Unaudited Unaudited Audited Six months Six months 12 months 30-Sep-13 30-Sep-12 31-Mar-13 £'000 £'000 £'000 Operating loss (116) (184) (413) Depreciation of tangible assets 18 20 47 (Increase)/decrease in inventories (19) 11 (17) Increase in payables 44 207 243 Decrease/(increase) in receivables 85 (136) (245) Net cash inflow/(outflow) from 12 (82) (385)operating activities 4. CASH AND CASH EQUIVALENTS Unaudited Unaudited Audited Six months Six months 12 months 30-Sep-13 30-Sep-12 31-Mar-13 £'000 £'000 £'000 Cash held at bank - 33 1 Bank overdraft (63) - (92) Invoice discounting facility (203) (180) (108) (266) (147) (199) 5. Subsequent Events On 13 December, the Company announced a conditional placing of 247,142,800shares at 0.35p per share to raise £865,000 before expenses, and a proposedissue of 47,479,714 new shares through the conversion of loan interestamounting to £166,179 at a price of 0.35p per share. The shares are expected tobe admitted to AIM on 2 January 2014 subject to the passing of the necessaryresolutions at a General Meeting to be held on 31 December 2013. 6. Distribution of the Half-yearly Report Copies of the Half-yearly Report will be available to the public from theCompany's website, www.mediazest.com, and from the Company Secretary at theCompany's registered address at 27/28 Eastcastle Street, London, W1W 8DH. MediaZest PlcTel: 020 7724 5680Geoff RobertsonChief Executive Officer Nominated AdviserNorthland Capital Partners LimitedTel: 0207 796 8800Gavin Burnell/Edward Hutton BrokerHybridan LLP0207 947 4350Claire Noyce/William Lynne