Proposed Placing and Loan Interest Conversion

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. 13 December 2013 MediaZest Plc ("MediaZest", the "Company" or "Group"; AIM: MDZ) Proposed £865,000 Placing and £166,719 Loan Interest Conversion Trading update and expected Interim Results MediaZest, the creative digital out-of-home advertising company, is pleased toannounce that it has conditionally raised £865,000 (before expenses) through aplacing of 247,142,800 new Ordinary Shares with existing and new institutionalinvestors arranged by Hybridan LLP and that, in addition, it proposes to issue47,479,714 new Ordinary Shares through the conversion of loan interestamounting to £166,179, in each case at a price of 0.35p per Ordinary Share. TheIssue Price represents an approximate 11.4 per cent. discount to the closingmid-market price of 0.395p per Ordinary Share on 12 December 2013 (being theBusiness Day before the announcement of the Proposals). Background to and reasons for the Placing and the Loan Interest Conversion The Group has made progress in the last 12 months through winning a significantcontract with a large multinational brand. This development has enabled theGroup to improve its financial performance and provides numerous ongoingopportunities to continue to improve it further in the coming years. To this end, the Board believes that further investment is required to allowthe Company to take advantage of the opportunities before it. In particular, the Board believes it is in the best interests of the Companyand Shareholders as a whole to raise additional funding in order to achieve thefollowing: 1. Retire a further proportion of shareholder loans As at 11 December 2013, the Group had aggregate loan principal and interestindebtedness of £546,179 owing to City and Claremont Capital Assets Ltd and toEP&F Capital plc. These loans carry annual interest rate coupons of between 10 per cent. and 20per cent. Interest payments in the last financial year ended 31 March 2013amounted to £138,000, a substantial proportion of the Group's cost base. The Board proposes to reduce this cost and significantly improve financialperformance by repaying £180,000 of the outstanding principal and convertingoutstanding interest of £166,179 into new Ordinary Shares at the Issue Price. This will leave the Company with an outstanding loan from City and ClaremontCapital Assets Ltd of £200,000 (versus £530,000 of total shareholder loanprincipal at the beginning of the financial year, 1 April 2013). In turn, theBoard believes this will make the Company more attractive to investors in thefuture by improving financial performance, de-gearing the balance sheet andoffering potentially greater returns to equity investors. As part of the loan principal repayments, the Board intends to repay theremaining balance of the loan principal of £60,000 provided by EP&F Capitalplc, a company of which Mr Lance O'Neill is also a director. 2. Development of products The Board has identified three key areas in which it believes productdevelopment will deliver a new solution that will allow the Company to achieveimproved sales results. All three of these products have been researched with the Company's existingcustomer base and represent improvements on existing technologies on themarket, in the opinion of the Board. Specifically the three areas of development will be: * holographic solutions; * shelf edge screen solutions; and * audience measurement software. To accomplish the latter, the Company has recently signed a Memorandum ofUnderstanding with Argus Global (Biometric Technologies Limited) ("Argus") todevelop its own advanced audience measurement and facial recognition solutionin partnership with Argus. The Board expects to make a further detailedannouncement regarding this development in the coming weeks. 3. Investment in the sales process and working capital Over the previous nine months, the Company has invested significantly inrecruiting additional sales and marketing personnel, and opened a Londonshowroom in order to allow customers to view the MediaZest product range moreeasily. The remaining investment funds raised will be used to continue this work and toallow for additional marketing as well as to provide working capital. Current Trading and Prospects, expected Interim Results On 9 September 2013, the Company made the following statement on the tradingoutlook for the 2013/14 financial year in the annual results announcement forthe year ended 31 March 2013: "The Group has continued to add to its client base of blue chip retailers andbrands and has an enviable record of client retention. In view of this and withthe objective of expanding the Group's business further the Company has takenon new business premises in Woking, moving from its current location inFarnham. It has also set up a demonstration showroom in Shoreditch in closeproximity to the City of London." "There has been a successful start to the financial year ending 31 March 2014.The Group won its single largest piece of business in April 2013 and this alongwith several other substantial contracts have given the Company a strongbusiness base for this financial year. It has already booked revenue within thefirst five months of the current financial year significantly in excess of thecorresponding period in the financial year ending 31 March 2013." On 7 November 2013, the Company announced new contract wins and updatedshareholders on trading in the 2013/14 financial year as follows: "Revenue for the current financial year ending 31 March 2014 is alreadysignificantly in excess of last year's turnover. The Company expects to buildon that in the remaining months of the period." The Company intends to announce its unaudited interim results for the sixmonths ended 30 September 2013 by 20 December 2013. The Company expects toreport revenue for the six months ended 30 September 2013 in the region of £1,572,000 (2012 - £964,000), gross margin of approximately £576,000 (2012 - £461,000) and a loss for the period, after taxation, of approximately £183,000(2012 - £239,000 loss). EBITDA is expected to be a loss of approximately £98,000 (2012 - £164,000 loss) before interest and finance costs of £77,000(2012 - £55,000). These results reflect the heavy investment that the Group hasmade in sales and marketing resources during the period. The Directors believe that the strategy of offering clients a full range ofsolutions around the provision of equipment, including design, consultancy,installation, content production and management together with ongoing serviceand maintenance, is beginning to reap significant benefits for the Company. Use of Proceeds The net cash proceeds of the Placing are expected to amount to approximately £775,000, of which £180,000 will be used to pay down a portion of the Company'sexisting debt in order to reduce the Company's financing costs and tostrengthen the balance sheet. A further £100,000 is expected to be invested indevelopment of unique holographic solutions, shelf edge solutions and in thepartnership for audience measurement software. The balance of the net cashproceeds of £495,000 will be used for working capital and continued investmentin sales and marketing. The Company raised £115,000 more than originallyplanned and will allocate such amount towards potentially paying down furtherdebt in addition to financing the ongoing expansion of the business in linewith the stated plan. Placing The Company is proposing to raise £865,000 (before expenses) by way of aplacing of 247,142,800 new Ordinary Shares at the Issue Price. The PlacingShares will represent approximately 27 per cent. of the Enlarged Share Capital. Loan Interest Conversion and Related Party Transactions City and Claremont Capital Assets Ltd City and Claremont Capital Assets Ltd ("C&C") is a related party by virtue ofbeing a substantial shareholder of the Company as defined in the AIM Rules. C&C is subscribing for 34,031,143 new Ordinary Shares at the Issue Pricethrough the conversion of £119,109 of loan interest indebtedness due to it andis to be paid £120,000 from the net proceeds of the Placing in part settlementof the Company's existing indebtedness to it (the "C&C Transaction"), followingwhich its outstanding loan principal balance will be £200,000. The C&C Transaction is deemed a related party transaction under the AIM Rules.The Directors, having consulted with the Company's nominated adviser, NorthlandCapital Partners Limited, consider that the terms of the C&C Transaction arefair and reasonable insofar as Shareholders are concerned. Following Admission, C&C will be interested in 158,897,843 Ordinary Shares,representing 17.4 per cent. of the Enlarged Share Capital. EP&F Capital plc Lance O'Neill, the Company's Chairman, is one of two directors on the board ofEP&F Capital plc ("EP&F"). EP&F is subscribing for 13,448,571 new Ordinary Shares at the Issue Pricethrough the conversion of £47,070 of loan interest indebtedness due to it andis to be paid £60,000 from the net proceeds of the Placing in full settlementof the Company's existing indebtedness to it (the "EP&F Transaction"). The EP&F Transaction is deemed a related party transaction under the AIM Rules.The Directors (apart from Lance O'Neill, who is not regarded as independent forthis purpose), having consulted with the Company's nominated adviser, NorthlandCapital Partners Limited, consider that the terms of the EP&F Transaction arefair and reasonable insofar as Shareholders are concerned. Following Admission, EP&F will be interested in 26,448,571 Ordinary Shares,representing 2.9 per cent. of the Enlarged Share Capital. The Loan Interest Conversion Shares will represent approximately 5 per cent. ofthe Enlarged Share Capital. Conditionality and Admission to AIM The Placing and the Loan Interest Conversion are conditional, inter alia, onthe Company obtaining approval from Shareholders to grant the Directors theauthority to allot the Placing Shares and the Loan Interest Conversion Sharesand to dis-apply pre-emption rights, and on admission of the Placing Shares andthe Loan Interest Conversion Shares to trading on AIM. Application will be made to the London Stock Exchange for the Placing Sharesand the Loan Interest Conversion Shares to be admitted to trading on AIM("Admission"). It is expected that Admission will become effective at 8.00 a.m.on 2 January 2014. Notice of General Meeting A circular convening a General Meeting to be held at 10.00 a.m. on 31 December2013 is today being sent to Shareholders. The Directors believe that theResolutions to be proposed at the General Meeting are in the best interests ofthe Company and Shareholders as a whole, and unanimously recommend thatShareholders vote in favour of the Resolutions as they intend to do (or procurebe done) in respect of their own beneficial holdings totalling 38,688,059Ordinary Shares, representing approximately 6.24 per cent. of the ExistingOrdinary Shares. A copy of the circular will be available on the Company's website:www.mediazest.com Lance O'Neill, MediaZest Chairman, commented: "The Board is very pleased withthe level of commitment exhibited by both current and new investors. Thesavings on financing costs from paying down part of the existing debt willreduce the Company's cost base as well as strengthen the Company's balancesheet. The Board notes a number of requests from shareholders regarding the identityof the client behind the large international project announced in April 2013and which it is currently delivering with great success. As previouslyexplained, the Company has signed a non-disclosure agreement with this clientto keep this information confidential until such time as the client approves aCompany press release. The Company is currently pitching on significantadditional opportunities with this client. In view of this situation, theCompany will not make an announcement to reveal the identity of the clientuntil such approval has been given. The Company has made good progress in the last 12 months, in particular, andthis placing will allow it to capitalise upon the opportunities before it, bothin driving additional business and developing new products for which the Boardbelieves there is a substantial market. The Company will de-gear its balancesheet as a consequence of this proposed placing. Furthermore, it will havestrengthened its working capital position which will enable it to continue toinvest in the sales and marketing process and to develop additionalproducts.The calendar year is ending on a high note and the Company can lookforward to further progress in 2014." Total voting rights Following Admission, the Company's enlarged issued share capital will comprise914,614,741 Ordinary Shares. The Company does not hold any shares in treasury.Therefore, the total number of Ordinary Shares with voting rights will be914,614,741. This figure may be used by shareholders in the Company 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. Enquiries: Geoff Robertson 020 7724 5680 Chief Executive Officer MediaZest Plc Gavin Burnell / Edward Hutton 020 7796 8800 Nominated Adviser Northland Capital Partners Limited Claire Noyce 020 7947 4350 William Lynne 020 7947 4361 Niall Pearson 020 7947 4351 Broker Hybridan LLP Notes to Editors: MediaZest is a creative media agency that specialises in providing innovativeout-of-home marketing solutions to leading retailers, brand owners andcorporations, but also works in the public sector in both the NHS and Educationmarkets. The Group supplies an integrated service from content creation andsystem design to installation, technical support and maintenance. MediaZest wasadmitted to the London Stock Exchange's AIM market in February 2005. For moreinformation, please visit www.mediazest.com

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