Posting of Circular

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY ORINDIRECTLY, IN, INTO OR FROM THE UNITED STATES, JAPAN, CANADA, AUSTRALIA, THEREPUBLIC OF SOUTH AFRICA OR THE REPUBLIC OF IRELAND OR ANY OTHER JURISDICTIONWHERE TO DO SO WOULD CONSTITUTE A BREACH OF THE RELEVANT SECURITIES LAWS OFSUCH JURISDICTION. 22 December 2014 MediaZest Plc ("MediaZest", the "Company" or "Group"; AIM: MDZ) Circular to Shareholders Trading update and expected Interim Results Notice of General Meeting MediaZest, the creative digital out-of-home media and innovative marketingsolutions company, announced on 17 December 2014 that it had conditionallyraised £438,000 (before expenses) through the placing of 125,142,900 newOrdinary Shares with existing and new institutional investors arranged byHybridan LLP at a price of 0.35p per Ordinary Share. The Company is pleased to announce that it has posted a circular toShareholders containing the notice of the General Meeting to be held at 11.00a.m. on 8 January 2015 which is being convened for the purpose of proposing theResolutions which are necessary to implement the proposed Placing. Background to and reasons for the Placing The Group has made ongoing progress in the last 12 months. Some notableachievements during this period were the successful completion and delivery ofthe FIFA World Cup Trophy Tour project with Coca-Cola; the much acclaimedHyundai Rockar Bluewater Digital Showroom; Kuoni's North East flagshipNewcastle outlet; audio visual and projection work for a range of HarryRamsden's seaside restaurant locations as well as hologram creation for UKTrade & Industry (UKTI) at an international exhibition in Germany.Notwithstanding, the Group continues to develop and provide services to adiverse and high profile client base both domestically and overseas. Themomentum generated by these contracts and others has helped the Group to growtop line revenues and enhance its offering to attract larger, longer termclient contracts. At the end of 2013, the Board identified and implemented a new strategicapproach: to concentrate sales effort on a smaller number of high profileclients, providing innovative audio visual solutions which have the potentialto generate ongoing long term business opportunities, and to complement thisstrategy by developing its own products. The strategic objective is to generate client loyalty through excellence ofdelivery coupled with offering a diverse product range including the Group'sown products. In particular the Board believes that such an approach willbenefit the business by helping it to increase recurring revenues throughservice and maintenance, content production and management, and additionalconsultancy and data analysis work. In December 2013, the Board identified three areas where it believed the Groupcould embark upon product development which would allow the Company to achieveimproved revenue, whilst contemporaneously creating intellectual propertyassets that would enhance the Group's valuation. The decision was made to prioritise audience measurement software, and theGroup developed and tested its own product in this area during the year, beforereleasing it to the market in November 2014. A first system has already beensold and the Company is in negotiations to test its potential with a number ofexisting and new clients. The Company has already seen initial success with this strategy; particularlyin the period since July 2014. It has already led to several large scaleopportunities that the Group is currently pursuing, and has also enabled theGroup to gain and deliver successfully four high profile projects in recentmonths. In order to enhance and deliver further value to the Group the Board believesit is in the best interests of both the Group and its shareholders to raiseadditional funding to build on recent progress to attain the followingobjectives: 1. Continue development of audience measurement product, "MediaZest Retail Analytics" The first product has been developed from the three identified target areas,and is now ready for deployment, with one site already running live. The Company has existing and potential clients interested in trialling thisproduct. Consequently, the Board believes that investment in several testsystems is merit worthy, to enable it to capitalise on the opportunities thatit has identified. Early stage funding for this product was raised by the Company in December2013, and through a commercial engagement with Argus Global (BiometricTechnologies) Limited ("Argus") the Company has funded the development of thisproduct. As such it is 100% owned by MediaZest plc. The Board believes thatcontinuing to work with Argus and utilising additional development funds, itcan continue to develop new functions of MediaZest Retail Analytics and alsocreate further new products, some of which may involve shared ownership wherethe Board believes it is in the Groups best interests. 2. Improve working capital and continue investment in the sales process The Company continues to invest in the sales process to grow the business. Inparticular, the London showroom, opened in 2013, has proved a strong sellingpoint for the Company in developing new client interest. The Group intends to use funds raised to continue this work, allow foradditional marketing of recent successful projects and to provide futureworking capital. Current Trading and Prospects, expected Interim Results On 18 August 2014, the Company made the following statement on the tradingoutlook for the 2014/15 financial year in the annual results announcement forthe year ended 31 March 2014: "There has been a large amount of time expended upon the development of theRetail Analytics product in the latter part of the Financial Year ending 31March 2014 and the first quarter of the new Financial Year ending 31 March2015. Further time and resource has been taken up by the final project deliveryfor Coca-Cola between September 2013 and May 2014. This has not improvedperformance in the first quarter of the Financial Year ending 31 March 2015.However, the second quarter is showing substantial improvement with severalimportant business wins announced on 8 August 2014 and more expected prior tothe end of the half year as a direct result of the changes made during the lasttwelve months." "The core strategy continues to be the transition of the Group's revenue basetowards more ongoing, contractual-type business, and away from dependency onlarge scale projects which are difficult to predict and suffer the vagaries oftiming. As such, efforts are being focussed on larger scale roll-outopportunities which naturally take longer to consummate than short termcampaigns. The Directors believe this strategy is starting to pay dividends inthe current quarter with the future pipeline in FY 2015 and beyond looking muchimproved." On 1 October 2014, the Company announced two new contract wins as follows: "The Group is providing programming, development and installation services fora large multi- national Company and their partners developing a new retailconcept. The initial project is expected to generate revenues of approximately£400,000 with future potential to roll out across multiple UK locations andcountries." "In addition several new contracts have been won in the Education sector, withvalue over £220,000 the largest of which will generate revenues totalling £180,000." "All of these projects are scheduled to be delivered in the quarter ended 31December 2014." The Company intends to announce its unaudited interim results for the sixmonths ended 30 September 2014 by 31 December 2014. The Company expects toreport revenue for the six months ended 30 September 2014 in the region of £1,579,000 (2013 - £1,572,000), gross margin of approximately £528,000 (2013 - £576,000) and a loss for the period, after taxation, of approximately £203,000(2013 - £183,000 loss). EBITDA is expected to be a loss of approximately £180,000 (2013 - £98,000 loss) before interest and finance costs of £26,000(2013 - £77,000). The increased EBITDA loss for six months ended 30 September2014 versus the comparable period reflects additional heavy investment that theGroup has made in sales and marketing resources during that period, includingadditional rent costs for the London Showroom of £35,000 (occupation of whichwas taken 1 July 2013) and one off sales consulting costs of £13,000. Use of Proceeds The net cash proceeds of the Placing are expected to amount to approximately £400,000 of which up to £150,000 will be used for continued investment in sales,marketing, and development of audience measurement products including theproduction of advertising and case study material, advertising spend,investment in test systems for customer trials, ongoing system development andlegal costs. The balance of the net cash proceeds will be applied for workingcapital and continued investment in sales and marketing. At the beginning of the financial year (1 April 2014), the Group had anoutstanding loan from a major shareholder of £200,000. The proceeds of thePlacing are not being used to repay any of this loan. Conditionality and Admission to AIM The Placing is conditional, inter alia, on the Company obtaining approval fromShareholders to grant the Directors the authority to allot the Placing Sharesand to dis-apply pre-emption rights, and on admission of the Placing Shares totrading on AIM. Application will be made to the London Stock Exchange for the Placing Shares tobe admitted to trading on AIM ("Admission"). It is expected that Admission willbecome effective at 8.00 a.m. on 9 January 2015. Total voting rights Following Admission, the Company's enlarged issued share capital will comprise1,039,757,641 Ordinary Shares. The Company does not hold any shares intreasury. Therefore, the total number of Ordinary Shares with voting rightswill be 1,039,757,641. This figure may be used by Shareholders as thedenominator for the calculations by which they will determine if they arerequired to notify their interest in, or a change in their interest in, theshare capital of the Company under the FCA's Disclosure and Transparency Rules. Terms used in this announcement but which are otherwise undefined shall havethe same meanings as set out in the Circular. A copy of the Circular will beavailable shortly on the Company's website at www.mediazest.com Enquiries: MediaZest Plc Geoff RobertsonChief Executive Officer 020 7724 5680 Northland Capital Partners LimitedNominated AdviserGavin Burnell / Edward Hutton 020 7382 1100 Hybridan LLPBroker Claire Noyce 020 3713 4581William Lynne 020 3713 4582Niall Pearson 020 3713 4583 Notes to Editors: MediaZest is a creative media agency and audio visual systems integrator thatspecialises in providing innovative marketing solutions to leading retailers,brand owners and corporations, but also works in the public sector in both theNHS and Education markets. The Group supplies an integrated service fromcontent creation and system design to installation, technical support andmaintenance. MediaZest was admitted to the London Stock Exchange's AIM marketin February 2005. For more information, please visit www.mediazest.com