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. |
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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: |
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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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Notes to Editors:
About MediaZest
MediaZest is a creative audio-visual systems integrator that
specialises in providing innovative marketing solutions to leading
retailers, brand owners and corporations, but also works in the
public sector in both the NHS and Education markets. The Group
supplies an integrated service from content creation and system
design to installation, technical support, and maintenance.
MediaZest was admitted to the London Stock Exchange's AIM market in
February 2005. For more information, please visit
www.mediazest.com
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