MediaZest (LSE:MDZ) — Full year results for the year ended 30 September 2023

0:01 Good afternoon, and welcome to the MEDIAZEST PLC Full Year Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the Q and A tab situated in the right hand corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question received in the meeting itself. However, the company can review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to make the following poll. I'd now like to hand you over to Jeff Robertson, CEO. Good afternoon to you, sir.

0:33 Good afternoon, and thank you everyone for joining us. My name is Jeff Robertson. I'm the CEO at MEDIAZEST, and welcome to our sort of short presentation. Just a bit more information about the company, what we do, how we do it, and also a little bit of reflection on the the year just ended, 09/30/2023. So diving straight in, just a quick introduction. Who's who's on the board? It's a relatively small board of directors, myself, the CEO, Lance O'Neill, who's our nonexec chairman, and James Abdul as a nonexec director. In terms of what we do, our business proposition, so what's MEDIAZEST all about? We deliver audio visual solutions to clients, and we generate revenue in two different ways. So one of those is by, installing, hardware, software, client sites, whether that's retailer or a workspace or a a car showroom.

1:24 And the second way we we generate revenue is from ongoing recurring revenue streams where we'll sign up those clients contracts once the installation's finished, and we'll look after service and maintenance. So if there's any problems, make sure the screens are are working, we get them back up. But, also, we do content management. We do content hosting, increasingly do more and more data reporting as we have an ongoing relationship with those clients. As we build the number of clients up, we build the revenue streams. As a company sort of overview of what we do a bit more, as I say, we're an audio visual solutions provider. We pride ourselves in being a bit more creative maybe than the the sort of everyday so we can come up with solutions that clients can't find elsewhere, sort of unique approach. We provide all of our clients with an end to end integrated service as well. So wherever possible, everything they need is done by us in house. So that means that we can guarantee the quality, and we can control, you know, that whole process.

2:19 And that could be anything from going to a blank piece of paper, what do we do in this workspace, what do we do in this store, to actually just delivering what's already been designed and just make sure that all works. We build systems off-site. We design them. We test them. We install. And then we do ongoing service and maintenance, as I mentioned. We do some content for some of our clients. So it really cover the whole piece. And like I say, we're trying to do all of that in house so we can manage the quality, and that really helps us set ourselves aside from competitors. We very much are delivering innovative digital signage systems. So that's a term that sort of been around for sort of ten, fifteen years, but really the last sort of three or four. Post COVID, it's really sort of become like a well known phrase and a well known name, and and that's coincided, you know, no surprise with the market really growing aggressively and strongly.

3:09 As I mentioned, we work in three key areas. So retailers, retail stores, automotive, and and typically that is automotive showrooms, and and corporate offices and workspace. We do it do it a little bit in education, but those are the three main areas of focus. And although MEDIAZEST actually started in two thousand four, five, it made an acquisition in 2005 of a company that was then called TouchVision and has been going for now forty nine years. And that's our engineering division and where we deliver all of our projects from. So it was got gives us a real level of experience that have been there, done that, seen all the problems, just enables us to really make sure that our delivery is real top notch. And like I say, that's one of the ways that we differentiate from our clients is that experience and that knowledge, not only being able to deliver, but why we're delivering what we're delivering. You know, what's the reason why, and what is that gonna do for their business?

4:06 In terms of the the strategy for the business, we're trying to improve our performance visibility and the long term value in the business by really sort of targeting clients with repeat business where they've got maybe multiple sites they want to do, where there's a long term opportunity to work with them together in a very collegiate way. So that means generating, long term contractual revenues and opportunities to deploy across lots of different stores or maybe multiple offices or maybe multiple projects over the lifespan of a of a different project. We've got a quite diversified client base, and I think one the things we pride ourselves on is we've got very, client base, and then there's no one massive client in there. So we have a range, so there's a there's a lot less risk than maybe some of our competitors where they've got maybe one or two big clients that they're really relying on. You know, it's very, very evenly spread at MEDIAZEST, and we work with some of the, you know, the best brands in the world across all the industries we deal with.

5:01 Innovation in audio, visual, and real delivery of quality is where the sort of common thread with all those clients. I I touched earlier that we've we collect data more and more from our clients. So there's lots of people can install stuff. You know, we do it at a very high standard, as I've mentioned, with our experience. But the real sort of secret sauce around what we do, the bit that sets us aside is what we're doing, why we're doing it, you know, what's the value it's gonna give to the client, what does the customer see in that store, why should you do it. And so the heart of that and the heart of that experience and how we can help improve that for clients is measuring what we do. So we spent a lot of time developing data points. Now whether that's audience profiling, who's coming to your store, what's the gender, what's the age, watching where people go in store, using touch screens and kiosks, and then saying, okay. What's being used? What's not? Are we getting the right messages across?

5:52 All that data gives us a a recurring revenue stream and an and an ongoing relationship with the client, which is great from a business point of view. But more importantly, it gives our clients the ability to really see what we're doing that is working, you know, and how effective it's being and and how we can really help them improve their business, you know, really give them the why. And and then, like I say, I think that's a sort of fairly unique offering in our industry. And you'll see from the graphic there, we weren't not just in The UK, but all around Europe, in effect, all around the world. UK and Europe predominantly, including The Netherlands, Spain, Ireland, Slovakia, Germany, The United States all this year to help us with the delivery of projects in Europe, particularly post Brexit. We set up a Dutch subsidiary right at the end of December twenty twenty two.

6:37 So last year was our first year of that subsidiary, and that's been a great success. So we've already written in excess of €500,000 of business there. So really pleased the way that's going. Yeah. Huge potential there for us, and I'll be talking a little bit more about that later on. In terms of market opportunity, you know, in terms of what's the size of the market, what is the opportunity here, there's a couple of things that we think is quite unique and where the the digital signage market's really started to grow now. Like I say, sort of last three or four years, we stopped having those conversations with clients explaining what digital signage is and actually much more about why would you go with us and what's it gonna deliver for their business as it starts to mature, and that's reflected in growth that is expected in the market. So the overall audio visual market is expected to grow by over a $113,000,000,000 in the next five years, And the global digital signage market itself within that, which is really where we're focusing on the the retail and the automotive side, is expected to go from nearly 27,000,000,000 in 2023 to over 45,000,000,000 by 2032.

7:41 So lots of potential growth for the market and lots of opportunity for the business. There are lots of small, independent, sort of quite skilled companies, and our market is quite a small sort of I wouldn't describe as a cottage industry anymore, but there's a lots of companies with maybe one or two big clients, like I say, not listed, no access to capital. Obviously, we've got the the AIM listing, and that gives us that opportunity then to use that listing to be a consolidator in the market. And we believe that gives us a real opportunity to build a a leading digital signage business with international reach. And there really isn't that that around at the moment. And so that gives us not just the opportunity to grow organically, you know, with the sales and with the clients we work with, but by acquisition as well. We spent a considerable amount of time last few years evaluating those opportunities.

8:28 That obviously takes a lot of time and lots of management effort and and input, and we got pretty close last year to that. We've mentioned it, I think, in our in our communications around the the year end accounts. We weren't able to conclude any deals last year, we did do some due diligence, which meant some costs. But we did get to the point where we were very close to to making that first acquisition or that next acquisition, And we really feel that's a a direction for the strategy and for the company moving forward. We weren't able to conclude anything last year. This wasn't quite the right deal, the right timing, at the right price, and we're very, very focused on making sure that we don't do a deal for the sake of doing a deal. So, yeah, we will always try and look after shareholder interest to make sure that whatever we do, you know, is adding shareholder value.

9:15 And I wouldn't say that the conversations we had last year are dead, but it wasn't the right timing. Was obviously a, you know, significant cost attached, which hits f y '23 on that. But we believe, you know, it's absolutely right to make sure we do the right deal at the right time. So moving on to projects and partners, what sort of stuff do we do, and who do we work with? So that picture that actually is a very recent one. That's Arc'teryx flagship store in Covent Garden. It's a giant LED screen sort of behind the cash desk, you know, really nice piece of work. In retail, generally, we're focused on sort of customer experience using technology as the enabler, whether that's at the self-service in store. It could be cash desk screens like this, window screens to bring people into stores, getting the messages across. Lots of different use cases.

10:01 And we work with people like Pets at Home, who we've worked with over the last five years, now in over a 100 stores with them and and more coming. And Lululemon, who we started working within The UK more than five years ago, actually. And we now work with all over Europe. So in '23, we delivered flagship stores for them in Amsterdam, in Paris, you know, as well as as well as The UK. On the automotive side, that's a really interesting market for digital signage. So we're seeing lots of different business models. There's lots of innovation in that sector. Lots of things changing. Obviously, electric vehicles really coming through. That gives lots of opportunity as well for interactive technology to explain to customers what they're getting and why and some of the ins and outs. They have frequently asked questions type stuff. In that market, we've worked with Hyundai for over ten years. We work across The UK dealer network.

10:49 Last year, we began working with Kia in Europe, and we're doing three European territories with them already. A lot of that will will continue and will start to really grow in the next few months. Porsche, we delivered a dealership for them way back in 2020 during COVID, actually. And that that dealership still goes strength to strength, and we continue to look after that, work with those then. UK dealer groups as well come to us directly, so not just the manufacturers, I think some of the the sort of more forward thinking dealer groups to see the opportunities for digital signage to improve the experience that they give their customers, give them a reason to choose their dealership rather than, you know, another one down the road sort of thing. And so we work with Jardines a lot on that, people like Norton Way, Rockall Jaguar Land Rover, their dealership in Canary Wharf, which is very spectacular.

11:36 And we work with all them as well. So I think there's there's a lot of opportunity in that market. Again, like some of the retailers, multiple showrooms, multiple stores gives an opportunity to really expand and develop with them. And the third sector that we talk about quite a lot is corporate offices. What we've really seen, again, sort of post COVID is acceleration really of hybrid working models. So, know, maybe people are in two or three days a week. Maybe it's not everybody at the same time, reducing space. So saving cost because you don't need the, you know, a big office that everyone's in five days a week anymore. But that obviously then leads to the the use of technology to help manage that more efficiently. So that could be things like meeting room technology or room booking. So, you know, when you come in, you've got a a desk or a room to work from.

12:23 We're seeing a lot of stuff in Microsoft Teams space in that. So as as Office three six six five continues to sort of be deployed more and more by customers, more and more of them are using Teams versus maybe some other platforms. So we are Microsoft Teams accredited. So that means that we're able to to really deliver a high end experience for those sort of customers. And and that really helps whether you're in the room, whether you've got a mix of people, maybe somewhere in the room, somewhere in the office, somewhere at home, somewhere working remotely from other offices. The ability to make sure everyone can be heard and can really collaborate is just so important. And we see that being a real driver of technology in the next sort of five, ten years. So just touching on sort of 2023 and sort of post that period. First half of the year was was difficult. The macroeconomic environment was very hard, and that definitely a lot of conversation we're having with our retail clients was very much there waiting to see what happens, holding off on spend, etcetera, etcetera.

13:23 One of our clients had some changes at senior management, they, you know, were reevaluating some of the projects, so that went on hold for a bit. So what we saw was definitely clients just waiting and not stopping stuff and and not abandoning programs, but just pausing. And that obviously had an impact on the first half of the year. Happily, since then, what we saw sort of really sort of May onwards as the sort of second half began was a real pickup in demand, and the final quarter, you know, was very strong. The key projects really really sort of carrying on again, new clients coming through and projects that they talked about maybe for a bit longer than usual, but hadn't actually started, really starting to get going. I touched earlier on our European subsidiary in The Netherlands. So we delivered our first projects in 2023 right at the end of of f I twenty three, and there's more and more starts coming through in '24.

14:14 At the second half of this year, we'll see a lot of those really start to build and more orders are secured. We've seen, as I said, growth in long term revenue contracts. So we've really targeted that. That does mean that maybe we're not taking all the benefit right now. So maybe, you know, it doesn't hit the f y '23 numbers. But what we're building for the future is these long term contracts and trying to move clients from maybe quarterly or 12 monthly contracts to three year deals, putting more and more of that with ongoing licensing, you know, rather than they pay for it upfront. So, okay, we don't take as much of the project fees upfront, but it does give us the opportunity to keep working with them when we build those recurring revenue streams. And that obviously helps us to plan our resource and to plan the business better and to have, yeah, better visibility on profitability.

15:00 And also in January this year, we did a small fundraising of 120,000 before expenses. So that was really about getting us a little bit more money to invest in some areas to help us grow. So given the increase in demanding of inquiries and increase in projects happening, we wanna match that with some more marketing money and some more sales sales staff, and and that's what we've invested in, And that's already happened. So that will obviously lead to further growth, you know, as we move forward. So as promised, just touching on on the financial results. Obviously, there's a lot of detail around this. If you wanna look online, I mentioned, you know, particularly exceptional items includes the the operational the the cost for the debt due diligence.

15:49 As I said, you know, the project didn't go ahead, but that doesn't mean it it might not in the future. And, you know, very much we believe in doing the doing the the right deal rather than a deal for the sake of it. Obviously, top line revenues and and gross profit accordingly felt, you know, because of the the impact of the problems in the first half of the year. And on the balance sheet, think probably the the main thing of note then again, another positive from summer last year, we raised a £150,000 of convertible loan notes in August 2020. We very much chose to go the debt route rather than equity because, obviously, you know, in the height of COVID there, you know, share prices were were all being hit, it would have been very diluted to shareholders. So we did convertible loan notes instead as debts. They ran till August 2023. They were a great success, and we renewed with all but one party in 2023 and on the similar terms. So slightly increase in in interest rate just as the markets changed.

16:46 But, basically, most of those chose to to do it again until August 2026. That was a real positive for the company.

16:55 And then just just in summary, so as I mentioned, we're we're one of the very few AIM listed audio visual solutions providers, and we work with lots of top global brands. Our socials, if you wanna look at our website, our YouTube channel, you'll see plenty of examples of the great brands that we're very privileged to work with. We're growing the recurring revenue rate, and as I said, we've been really focused on that, and that will start to to really pay dividends in the coming years. Long term client projects that we may be paused, set to be delivered in in financial year '24. That includes some of the orders that we've already secured from the Dutch subsidiary, and that's really starting to take off now as we sort of move into second half of the year. Notable rise in incoming opportunities, you know, very much post year end second half of last year, really, post post May even.

17:40 We're seeing a lot more increased activity. Obviously, you know, the overall macroeconomic environment, I think there's a lot of uncertainty around of what's gonna exactly happen at the moment. But what we are seeing in our market and our you know, we talk to our peers and we talk to our suppliers and the supply chain is extremely busy. You know, what we are seeing is lots of activity. And as I said, we've raised some money to help us take advantage of that. We do keep a weather eye, of course, on what's happening in the macro environment, you know, and we can react accordingly. The digital signage market, you know, is quite fragmented. Certainly, The UK, lots of relatively small companies, absolutely ripe for consolidation. So as well as the organic growth we expect to see this year gives us the opportunity to grow by acquisition and very much, you know, the board's confident in our ability to deliver year on year growth alongside targeting a a return to profitability.

18:33 So as I said, short and sweet today, just a quick update really and a little bit more about the company. Thank you very much for taking the time time to listen and take the interest in the company and look forward to answering your questions. Perfect, Jeff. Thanks very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab, which is situated on the top right hand corner of your screen. But just while Jeff takes a few moments to review those questions that have been submitted today, I'd like to remind you the recording of this presentation with a copy of the slides on the published q and a can be accessed via your investor dashboard. Jeff, as you can see, have received questions throughout today's presentation. And if I could just hand back to you just to read out those questions where appropriate, I'll pick up from you at the end. Sure. Thank you. Yes. So I'll just start to to work through them as as they sort of come in. So this one's from Ian.

19:21 With the increase in administrative expenses, how's the company plan to optimize its cost structure moving forward, especially in light of the challenge economic environment and the need to maintain profitability? Yeah. I think the cost base, you know, is very much something we we keep a very, very close eye on. We try and keep a very well, we do keep a very lean team. It does put pressure on people, but it does mean that we are in a position where we're not we don't have people sitting around. Yeah. We've we've got all of our engineering is sort of pretty much maximized, yeah, It's maximum in terms of utilization, if I could speak with help. So it's really about keeping that cost that cost base tight. What we are seeing is obviously on the PLC side, there are costs going up. I think particularly in the audit environment, you see that. But just generally across the board with the inflationary pressures for the last few years, we try and manage that, and we try and pass that on what we can to our clients. So that's really an an ongoing open dialogue, just being transparent with them and where where we are seeing cost rises, you know, working together to make sure that we can try and cover that. But, yeah, very much we don't see increasing those expenses, you know, in a big way. It's really trying to keep that, you know, nice and tight.

20:36 The second one's from Gary. With net assets around 700,000, how does the company plan to strengthen its financial position to support growth initiatives and potential acquisitions? It's in the recent fundraising activities and repayment of convertible loan notes. I see it. That's a good question. Yeah. Absolutely. You know, in terms of share price, obviously, we believe it's doesn't reflect the value in the company. I'm pretty sure every board in the country would say that. But, yeah, that does is where it is. The share price is where it is. That's one of the reasons why we just did a small fundraise in January. What we don't wanna do is dilute at this level. You know, we've got lots of big opportunities that we're on. We are seeing growth. Yeah. Okay. First half of last year, there was a bit of a blip. We know why that is. What that's gonna do is obviously flip a lot of that business into f y '24 and beyond, and that will help us grow. You know, getting back to profitability is how we build that strength, and, you know, we will keep to keep fundraising as and when necessary, but with an eye on, you know, making sure we don't, you know, over dilute, know, you everybody who's who's in the shareholder base.

21:40 Next question from Neil. What's the retail sentiment like right now, and what are those trends in the store footfall? It's a really interesting one there. I think the market sentiment at the beginning of the financial year as I've been in the calendar year, as in the first quarter, so January to March 24 is as buoyant as I've ever seen it, which I find yes. It's it's reflected in our client base. So a lot of the projects that maybe were being talked about last year, maybe being paused, are really getting going. So we're seeing lots of activity, which is great. But then, you know, reading the the press, the papers, you know, I think there's a lot of nervousness in the sector. I think that's very much everyone's keeping a weather eye on it. Latest trends in store footfall.

22:26 Yeah. I think it depends on who you talk to. We've got some clients who are definitely seeing fewer, yeah, fewer people in store, but others who have rushed off their feet. I I think it really depends on the client. So, yeah, there's no real consistency in it. What I would say is, you know, certainly in in the sort of key areas that we work in, so the sort of big high streets, your your Oxford Circus, your your Regent Streets, and the big out town supermarkets, they're very, very busy still. And, you know, you'd expect that would translate to business. Next question. So this is for Mike. The chairman's statement reflects long standing clients like pets at home and new additions like the global automotive client. Could you elaborate the company's strategy for client retention acquisition, particularly expanding its presence in European markets with a recently established subsidiary?

23:14 Yeah. Absolutely. So we've worked very hard, I think, over a lot of years with a lot of the clients that we talk about. You know, it's an ongoing deep relationship. I think delivering what we do in digital signage can touch quite a lot of areas. So if you think about a store, that might touch the IT systems. It might touch the marketing people. It would probably touch the store format people. Finance will wanna get involved in signing stuff off. You know, there's lots of different areas we touch. So it's it takes a long time to get it right and to get to build these relationships within the clients. So from a client retention acquisition, spend a lot of time working hard to make sure we talk to all their stakeholders. I think the bit where we really stand out is we're not just saying, you know, can you go and put, you know, a screen on a wall in a 100 of my stores? We're talking to the clients about why they would wanna do that and what benefit they're getting from it. And is it worth in doing that, or do they you know, should it be a bigger screen or a smaller screen? Should some of the screen stores not have them? You know, do they need some of the technology?

24:09 So that really helps us with the client retention. Acquisition side, we're starting to really increase our marketing presence a bit. So you'll hopefully see over the next sort of coming weeks, there's a little bit more on the socials going on. Excuse me. We had a next an event we did in King's Cross with Samsung last year that was very successful. We had lots of people came to that. So there'll be another one of those coming up, I think, in the next sort of three or four months just before the sort of summer period. So we've lots of things that we're doing. Like I said, we've invested some of that money we raised on the marketing side, and that's really about, yeah, acquiring new clients. I think the the really nice thing about where we are in the market at the minute is because digital signage is now starting to get to the point where everyone pretty much every retailer now realizes they need it. There's a lot of people, you know, ready to purchase and sort of been waiting for the right time, and we're really well placed for that. And, obviously, we've been doing this for, you know, best part of twenty years as MEDIAZEST. And as I said, you know, the operational business for forty nine, you know, near fifty years, that'll be next year.

25:10 So we've got loads of experience, loads of people we talked to over the years, excuse me, and a reputation. So that really helps us in in those new clients. And the European markets as well, I think that follows too. So we are getting inquiries directly from Europe now as well. I think as we grow that subsidiary, that will, you know, that will hopefully improve. At the moment, most of the work that we're doing is from UK clients who want to work in Europe, and they want a consistency of delivery. And that's what's really working for us at the moment. Great. And then next question from David. Are there other ways, plans to monetize the data that you are collecting? Yeah. I think there's I think there are other options in terms of what you do with the data. I think from our point of view, we really wanna be very clear with our clients.

25:57 You know, we're not trying to, you know, cross any GDPR lines or anything like that. What we're trying to do is give them data that helps them, you know, improve the service they give to their customer. So what we can really do with that is if we can yeah. For example, a great example is a touch screen where we might have piece of technology in store, and the idea is that the customer can explore more about that product, find out stuff they want to know, and then maybe buy online in store, but through the technology. And that data around what people are looking at, how far they're getting into that journey, are they interested in the the elements of the product that we think they should be, you know, or do we need to dial up the content on certain things that aren't coming through? I think that's where the data's really, really interesting. In terms of, you know, selling the data beyond that, it's not something we're really doing at the minute. Say never say never. I think what really helps us is really sort of proving to the to our client that it's helping their customer and that, you know, there's a real reason to do it.

26:53 It's all about ROI, really. And I think, you know, certainly, if we can show our clients there's ROI in putting technology in store, then it becomes a very easy conversation then to sort of get them to sign on the line and and get that rolled out. But perfect. Jeff, thank you very much for answering those questions. I think you've actually managed to get through all of those. But just before redirecting investors provide you with their feedback, which is particularly important to the company, could I just ask you for a few closing comments? Yeah. Thank you. Yeah. Thanks for everyone again for your time and for those questions. Like I say, you know, we think we're on a it'd be a really interesting year, 2024. We've really seen a strong bounce back from, I guess, difficult times, especially first half of twenty three. You know, we think there's a really exciting future for the company. Some of our clients, you know, we've got some great clients that I say we're really privileged to work with, and they've got big plans to sort of to move things on. So, yeah, look forward to updating shareholders with sort of news as it comes through and and pushing forward in in FY '24.

27:56 Perfect, Jeff. Thank you once again for updating investors today. Could I please ask investors not to close this session? It should now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will then take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of MEDIAZEST PLC, we'd like to thank you for attending today's presentation, and good afternoon to you.