Mediazest Regulatory News (MDZ)

9 May 2006 16:00

MediaZest plc09 May 2006 MediaZest Plc (the 'Company' or 'MediaZest') Preliminary Results for the year ended 31 December 2005 CHAIRMAN'S STATEMENT Introduction The results for MediaZest plc (the "Company" and collectively with thesubsidiary companies, the "Group") reflect the year to 31 December 2005. Theyincorporate the results of its subsidiaries, all of which are wholly owned. Results for the Period Turnover for the year was £877,000 (2004 - £nil), cost of sales was £486,000(2004 - £nil) and the Group made a loss for the period, after taxation, of£847,000 (2004 - £43,000) after paying interest of £4,000 (2004 - receipt of£1,000) and having paid administrative expenses of £1,234,000 (2004 - £44,000).The basic loss and fully diluted loss per share was 6 pence (2004 - 9 pence).The Group had net cash balances of £1,251,000 (2004 - £529,000) at the year end. Review of Activities 2005 has been a year of transformation for the Company. I am pleased to be ableto update shareholders on the progress made during a year that saw a successfulflotation on the AIM market, followed by our acquisition of Touch VisionLimited. Whilst it is always disappointing to report a loss, the loss for the year of£847,000 is in line with the Board's expectations and we have worked hard to putthe required infrastructure within the Group in place to meet the growth in themarketplace that we expect for 2006 and beyond. Key clients During the year the Group worked on a wide variety of predominantly blue chipcustomer projects. The Group provided a range of innovative installations forMotorola in the United States and was proud to be invited to provide products atMotorola's flagship stand at the Consumer Electronics Show in Las Vegas. TheGroup also worked on London Fashion Week, and helped Chivas promote its brandand messaging in nightclubs using the latest digital signage display technologyand specially created content. Towards the end of 2005 we were involved in a multimedia campaign to launch anew range of lingerie at C&A's flagship Berlin store and the Group wasresponsible for providing a real time life-size holographic display of a womanmodelling the stores products. Board changes In March of this year John Lovering resigned as Chairman owing to his otherconsiderable business commitments. The Board is grateful for his guidance andthe support he gave the Company. I have assumed the position of Chairman untilsuch time as a suitable new Chairman is appointed. I would also like to announce further changes to the Board. Tony Moore will bestepping down from his position as Executive Vice-Chairman of the Company andNigel Duxbury will be stepping down as Finance Director. The Board thanks themboth for their substantial contribution. I am pleased to welcome to the Board Geoff Robertson, who has moved from GroupFinancial Controller to Group Finance Director. Geoff joined us last year andhas a wealth of experience, most recently with Lewis Communications Limited andSony Music. Touch Vision Limited The addition of Touch Vision to the Group was particularly important. We nowhave the benefit of more than 30 years of design, service and installationexperience to match the innovative technology products and methodologies theCompany employs. I am happy to report that Touch Vision is now fully integrated into the Group,and that the Group is experiencing the benefits and synergies of theacquisition. Touch Vision has maintained a strong presence across the sectors it works in.The education sector in particular had a strong year. In the corporate andretail sectors Touch Vision continued its 13 year history of working with HMV,the Group's relationships with Electronic Arts grew and we secured new work withclients such as Estee Lauder, the Co-Operative Group supermarkets, Adecco andHarveys furniture stores. The combination of Touch Vision's history of providing high quality audio-visualinstallations and supply services and the new opportunities its association withMediaZest plc provides, means that 2006 is shaping up to be one of the mostexciting years in Touch Vision's history. Licences and agreements During 2005 the Group continued to increase the number of licences andagreements it has to utilise third party technologies. In particular the Groupis pleased with the development of its relationship with 3M in the UnitedKingdom. The Group's initial agreement with 3M has led to the Group's appointment as aCertified Value Added Reseller for all 3M digital display products. 3M'sdigital signage software is one of the most advanced and reliable systems on themarket, and will be offered as the preferred software platform for all ourin-store media projects. Under the terms of our agreement, both 3M and the Group will work closelytogether to offer clients bespoke best in breed solutions. The market Consolidation has started to occur in the in-store marketing sector. Difficultretail conditions are impacting businesses in the in-store marketplace that donot possess the diversification we enjoy. We have seen a number of companies investing heavily in major network rollouts,with success predicated upon advertising based models. By providing services to brand owners, retailers and network owners alike, theGroup does not bear the burden of these high fixed costs. Outlook We believe the Group is well positioned to take advantage of the growth in thein-store marketplace. The Group operates across a range of sectors such asretail, education, corporate, hire and brand development and therefore is wellprotected from cyclical downturns in any particular industry. The result is abalanced business where corporate stability has been a factor in the largenumber of competitive tenders in which we have reached the final bidding stages,a number of which we have subsequently won. We look forward as a Group to the challenges and exciting opportunities webelieve 2006 presents. We believe our business model is robust and that theGroup is well placed for the fast growth within the in-store marketing arena weanticipate. Our attendance at the In-Store Show in June at London's Earls Court is a primeopportunity to demonstrate the full breadth and depth of our offering. I wouldlike to take this opportunity to invite you to join us there, for demonstrationsof how effective our technologies are. Finally, my thanks go to everyone who has worked so hard and tirelessly on thecompany's behalf during 2005 to bring us to where we are today. Sean Reel 8 May 2006Chairman and CEO CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2005 Note 2005 2004 £'000 £'000 Turnover Acquisitions 684 - Existing operations 193 - Continuing operations 877 - Cost of sales Acquisitions (411) - Existing operations (75) - Continuing operations (486) - Gross profit 391 - Operating expenses Acquisitions (263) - Existing operations (971) (44) Continuing operations (1,234) (44) Operating loss Acquisitions 10 - Existing operations (853) (44) Continuing operations (843) (44) Net interest (payable)/receivable (4) 1 Loss on ordinary activities before taxation (847) (43) Tax on loss on ordinary activities 2 - - Retained loss on ordinary activities after taxation (847) (43) Loss per ordinary 10p share Basic and diluted 3 £0.06 £0.09 There are no recognised gains or losses for the current or preceding period,other than those shown above CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2005 2005 2004 £'000 £'000Fixed AssetsIntangible Fixed Assets 2,772 117Tangible Assets 128 - Current assetsStock 169 -Debtors 745 19Cash at bank (before overdrafts) 1,377 529 2,291 548 Creditors: Amounts falling due within one year (587) (41) Net current assets 1,704 507 Net assets 4,604 624 Capital and reservesCalled up share capital 2,283 417Share premium account 3,211 250Profit and loss account (890) (43) Equity shareholders' funds 4,604 624 CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2005 2005 2004 £'000 £'000 Net cash outflow from operating activities (1,368) (22) Returns on investments and servicing of financeInterest (paid)/received (4) 1 Net cash (outflow)/inflow from returns on investments and servicing of finance (4) 1 TaxationCorporation tax paid - - Capital expenditure and financial investmentsPurchase of tangible fixed assets (35) - Net cash outflow from capital expenditure and financial investments (35) - AcquisitionsNet cash acquired with subsidiary undertaking 147 -Acquisition of subsidiary undertaking (970) (117) Net cash outflow for acquisition (823) (117) FinancingIssue of ordinary share capital net of costs 2,952 667 2,952 667 Increase in cash in the period 722 529 NOTES TO THE PRELIMINARY RESULTS 1. BASIS OF PREPARATION The financial information set out above does not constitute the Company'sstatutory accounts within the meaning of section 240 of the Companies Act 1985.The balance sheet at 31 December 2005 and the profit and loss account and cashflow statement for the year then ended have been extracted from the Company'saudited financial statements. The auditors report on those financial statementsis unqualified and does not contain statements under s.237(2) or (3) CompaniesAct 1985. These financial statements will be delivered to the Registrar ofCompanies and shareholders in due course. 2. TAX ON LOSS ON ORDINARY ACTIVITIES No charge for corporation tax for the period has been made due to the loss onordinary activities before taxation. 3. LOSS PER ORDINARY SHARE Basic loss per share is calculated by dividing the loss attributed to ordinaryshareholders of £847,000 (2004: £43,000) by the weighted average number ofshares during the year of 14,721,499 (2004: 482,033). The diluted loss pershare 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 Financial Reporting Standard 22 "Earnings per Share". 4. ACQUISITION OF SUBSIDIARY UNDERTAKING The intangible fixed asset additions relate to the goodwill arising on theacquisition of Touch Vision Limited on 23 September 2005. Book value and fair value to Group £'000Fixed AssetsTangible Assets 125 Current assetsStock 106Debtors 501Cash at bank and in hand 147 Creditors: Amounts falling due within one year (731) Net assets 148 Goodwill 2,697 ConsiderationPaid in cash 700Satisfied by issue of shares 1,875Associated costs of acquisition 270 2,845 The purchase was satisfied by the cash payment of £700,000 and the issuing ofshares to the value of £1,875,000, based on the market value of the MediaZestplc shares on the acquisition date Under the terms of the acquisition agreement, a further deferred considerationpayment of £250,000 is currently held in escrow which could become due based onthe results of Touch Vision Limited for the year ended 31 December 2005.Following review of the results for the year, it is the opinion of the directorsthat the amount of deferred consideration payable is £nil and therefore the full£250,000 has been recognised as a cash item in the balance sheet of the Companyand the Group. Enquiries: Sean Reel, MediaZest Plc 020-7724-5680Liam Murray, City Financial Associates Limited 020-7090-7800 This information is provided by RNS The company news service from the London Stock Exchange