Mediazest (LSE:MDZ) — Half-year Report

0:00 Good morning, and welcome to the MEDIAZEST PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via the q and a tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll, and I'd now like to hand you over to Jeff Robinson, CEO. Good morning, sir. Good morning, and thank you, Lily. Hello, everyone. Thank you for joining us this morning. My name is Jeff Robinson. I'm the CEO at MEDIAZEST, and I'm gonna be giving a short presentation, covering our interim results for the six months ended 03/31/2025, which we released last week, and just giving a bit more color around the company, brief introduction for those of you who may not know us.

0:54 So first off, as a disclaimer, this will be available live after the after the presentation if you want to read that in more detail. But first and foremost then, let's start with the board of directors. Top and bottom there, myself and James Abdul, we've been CEO and nonexec for quite some time now. But we'd like to introduce, at this point, Keith Edelman, who's joined us recently, about a month ago now, on the board as nonexec chairman. Keith has replaced Lance O'Neill, who's been who was chairman for, I think, seventeen years. So he led us through some some challenging times. He did an incredible job, incredibly supportive, and I think a lot of shareholders do a lot of time and respect for Lance. And we'd like to wish him well and and thank him again for his contribution over the years. I'm very much looking forward to working with Keith. And as you can see from his CV, he's got an incredible range of experience from FTSE a hundred and two fifty companies through to aim listed and privately held companies across the retail and hospitality sectors, but also doing things like helping Arsenal, I think it's MD, building the Emirates Stadium projects, working with the likes of the London Legacy Development Corporation in the retail side, Supergroup and Thornton's and on the brands, Glamorangi, PLC, and Euro Tunnels, a huge range of experience both as a non exec director and also in operational roles. So, yeah, very much looking forward to working with him to to push the company forward. He's obviously got huge experience in much

2:24 bigger companies than MEDIAZEST, but also with smaller aim listed companies as well. And I think that's gonna be, you know, really exciting for us to tap into in the coming years. So In terms of business proposition for those you may not know so well, we deliver turnkey audio visual solutions for our clients, and we generate revenue in two different ways pretty much. The first one is from project fees. That'd one off installation, project management, commissioning from our in house engineers, and selling hardware and software. That's great, and that's the sort of bigger ticket items at times, but it can move, yeah, very easily between months and between periods. So if any of you worked in construction or retail or design or architecture or anything, you're probably very rare that building building projects and timing of leases and stuff can change very rapidly. So it makes it very difficult for us to to forecast and to know exactly when we're gonna need our resource.

3:22 So the second element that we've that we find our revenue, the second way we generate money is recurring revenue streams. And that's super important because it means that even when things do move around, it does mean that we've got that consistency of revenue. We own those recurring revenue streams to things like service and maintenance contracts that'll be ongoing support. So, you know, say we put a screen in the retailer. What happens on Saturday morning when it goes down, it needs a reboot or it needs fixing? Things like content hosting. So we push a lot of content out to screens for our clients, and we charge them for content management. That's also part of the recurring contracts and also software licensing. So sort of SaaS model for those who may be familiar with that.

4:03 In terms of our approach as a as a company to the market, we think of ourselves very much as a creative audio visual solutions provider. So a lot of the stuff that we do is pretty much, you know, the sort of state of the art, I guess. So we're able to position ourselves versus our competition because we can do things that they can't whilst also still delivering the sort of the days the basics, the day to day stuff that people see a lot. And and that proposition really helps us attract both clients and agencies to work with who bring us clients. So that's really important in terms of how we we talk to the market. Equally important is we provide an end to end integrated service. So I touched on it just a few moments ago, but we try and install everything ourselves. We try and commission everything ourselves, and we try and project managing it ourselves. There are some exceptions I'll talk about shortly, but it means we can control the quality and provide that one, yeah, one stop shop if you like that. A fully integrated service, which our clients love.

4:58 We do everything in in audio visual pretty much, but where we're really focused and where we're really well known is things like digital signage and innovation in digital signage, and I think we've sort of led that charge in The UK the last twenty years, really. And audio systems, I'm gonna talk about heritage of the company very shortly, but that really started with things like audio systems, and that's an area that we've delivered in, yeah, for many, many, many years now. In terms of markets, there are three core markets we work in. So that's retail, automotive, by that, we mean mostly showrooms and corporate offices. The sort of retail automotive side is generally more of the business. We do do some corporate stuff. It depends on, you know, if we have two office blocks we fit out in a period, that would make a big impact. Sometimes we might have none. So, really, the the retail and the automotive is where the growth is, and that's where we see our our sort of USP, if you like, where we can provide stuff that other people can't.

5:53 So I mentioned Heritage. It's fifty years of MEDIAZEST or of MEDIAZEST International Limited, which is our operating business, and that's the sort of the the engine room, the heart that delivers, that engages with our clients, that contracts with them, that provides the sort of the AV services. So that began in September 1975. MEDIAZEST was floated in 2005, and one of the first things it did was acquire that company, which was then called TouchVision Limited, to be the yeah. Very much the engine room to deliver digital signage to retail. So we're really excited to be celebrating that anniversary in September. We'll be doing some client facing marketing, and we'll be talking about that a lot. If you follow our social media, our LinkedIn, and our Instagram, you'll see sort of a lot of stuff around the timeline and some of the stuff that we've done, which we've been reviewing as a team and looking back, and it's incredible some of the things that we've done and some of the very the firsts that we've achieved over that period. So really proud of that fifty years heritage. I think our clients really love that we've got that experience.

6:56 You know, it's been well over twenty years we've been putting digital signage into retail, and very, very, very few people can say that. So that hard run experience really gives us an edge. In terms of strategy, we are targeting clients, you know, very much with opportunities where we can deploy solutions across multiple sites and multiple years for that matter. So we really want clients where they've got maybe stores across the globe or across The UK or maybe they've got showrooms, you know, around around the country Because that gives us the opportunity to roll those solutions out, to develop them, you know, and to take that, you know, to build an estate with a client. It gives that longevity to work with a client. We can really get to know each other and know what they need, know how we can support, and how we can help them. I think that relationship's really crucial to keeping, you know, a lot of very long term clients, which we're very lucky to have.

7:47 As I said, we're focusing on long term contractual revenues as well, and that's because that's the predictability. So, obviously, as a PLC, it's very tough when, you know, projects can come and move in and out of you know, if it moves from September to October, it moves out of a year end, then that can have a big impact. So those contractual revenues have been super important. We've had a huge amount of success last couple of years on that, and that is reflected in the figures. We talk about diversified client base. So we do work a lot in retail and automotive retail, but we work in very different parts of those markets. So what that means is even though if there are macroeconomic headwinds, lots of uncertainty going on, certainly, I think, you know, we've seen that case at the moment. It means that some clients will still be, you know, thriving and prospering and moving ahead even if others are slightly down. We have I think it's roughly around about a 100 clients, of which I would say probably 20 are active or seriously active to a sort of significant level. So we have a really good spread. And, we think we're kinda fairly unique in our in our market for that and that we have, you know, a dozen really good top name retail clients that we work with on a consistent basis year after year.

8:54 We talk about collecting data a lot. And, again, we sort of set our style self aside a little bit from our competitors in this, we think. So we don't wanna just put a solution into your store or your showroom or your office, but we wanna look at how it's working for you. How how good is it? You know, is it achieving the objectives that you set? Is it doing what you want it to do? And we use data to help us prove that and then use those insights to then help improve, you know, the solution moving forward. And we spent a lot of time on that. It's kind of it's one of those sort of labor of loved ones where it's kind of difficult to interpret, so we work really hard to do that. And the feedback we get is that very few other people go to that lengths to sort of help their clients really understand, and that obviously, you know, just builds those relationships. I mentioned we do work mostly in house.

9:39 So we're UK based with a pan European pan European work going from our Dutch subsidiary, But we do have global projects as well where it doesn't make sense to fly out from The UK to do a screen somewhere in APAC, for example, and we deliver those with a partner network. But where we can, we're doing everything ourselves in house, and we're not. Those partners are very much tried and trusted, and we work very closely with. Market opportunity. So we believe there's a significant opportunity here to build a leading digital signage business with international reach, and I think we're well on the way to that. In terms of the market, how how big is the addressable market? Well, the global professional AV markets, that's everything in AV from meeting rooms out of home, pitch side LED to shops and showrooms is predicted to increase by $1,113,000,000,000.

10:33 That's what say. Would help over the next five years to 2027. So huge growth in that market overall. And within that global digital signage market, so that's the the bit the niche where we're sort of best known, I guess. And that's estimated at 22,000,000,000 in in last year in 2024, and that's projected to grow over 8% to get to 30,000,000,000 by 2028. So big markets that are growing. In our industry, there are many sort of relatively small skilled companies without sufficient access to capital or scale to meet this demand. So we believe there's an opportunity for us to use the public listing at the right time and become a consolidator in the market. As you could probably imagine from the numbers we just put out and the news put out Monday with this very significant new contract win, we're focusing on delivery, and that organic growth has been fantastic this year. But we still believe that strategy has value and at the right time, right place, we will be looking at that, and we, you know, we keep an open mind on that.

11:33 So let's talk a bit more about the half year and the projects and the partners that we work within that year. So as I just mentioned, we had a successful proof of concept project with first rate exchange services, and that was actually FY '24. It was last summer. And we're absolutely delighted to convert to that into a major new contract now. With them moving forward over the next five years, we expect to deliver over 1,200 locations in the next two years and the as I said, the support is is over five. And we see that as a great partnership. It's been a terrific project to be involved in so far. We're really excited to get going on on that rollout and to and to see how we can develop it further with all of their clients. So terrific news there. And as I said, we announced that last Monday, a couple of days ago.

12:19 Pets at Home, we continue to work with. We provide digital signage solutions for them. I think it's around a 150 stores. We've been working for them for six years. There were more in the pipeline. They did a a new store format of which we delivered a couple of large stores, New Molden being one of them in the period, which is a fantastic store. Looks looks amazing. Lots of different technology. Great opportunity for us to put different solutions in for them as well. So, yeah, a really great client that we've worked with now for many, many years. Lululemon is a brand Lululemon Athletica, I think, is the official title. So we work with them in their flagship stores in several European locations. We did a lot of LED with them in FY '24, so last year. And in this first half of the year as well, that's continued. So we've done the the new flagship store in Reading Street in London and also Berlin in the period and more to come. And that's a great example where we're able to deliver for that client in The UK and then take that expertise and that knowledge and that standard and deliver consistently for them across Europe using our European subsidiary. So, that's worked brilliantly well, a fabulous client to work with. In a similar way, Arteryx, we came we started working with last year, so last financial year, and they've continued again with us. Very similar. So European flagship stores often using LED. We did Chamani in January 2025, which is the sort of first mountain store in in Europe, and that's been a great success. Yeah. Absolutely fabulous store.

13:47 And Milan as well in the period and more to come in the second half of the year. Finally, on the retail side, we mentioned in dispatches, I think, a couple of times in announcements recently, we've got a new global client that we acquired in summer last year, and work with them has really become in kind of earnest the first half of the year as well, and that's providing solutions in duty free globally. That's where the partner network in APAC, Middle East, and Africa really helps us. That's really helped us grow our recurring revenue streams lots of exciting opportunities in that area as well. So that's been another big success in the period. On the automotive side, we still continue to work Hyundai. That's been well over ten years. They continue to, you know, go from strength to strength, particularly on the EV side of their business.

14:36 So the solution's going into to new dealers as they come on. So that's been great. Kia, we continue to work within three European territories, and in particular, in the period, expanded that in Netherlands with more dealerships there. Porsche Milan, we still do. And we work with UK dealer groups as well, not just with the brands. We also work with dealer groups direct, people like Lithia Group, Norton Way, and Rockar for their Jaguar Land Rover dealership in Canary Wharf who've been a a long standing partner for, I think, well over ten years now as well. So finally, corporate offices, as I mentioned, we do do things like, yeah, meeting room deployments and booking systems as the world changes and the world of work and how often people are in the office. It just continues to evolve. I think that becomes more and more important. Where Teams are credited, which means we can deliver those Microsoft solutions, which seem to be sort of a lot of people are standardizing on now.

15:28 And that can be very important work for us as well. It's not our main focus, and there's lots of competition. It's difficult to differentiate yourself unlike the retail and automotive that we're known for, but we see opportunities, and we're very good at delivering those when we get them.

15:44 So just a a few sort of top line highlights. Obviously, strong top line and bottom line growth in the period. So revenue up 63% to 1,900,000 for the six months. We're absolutely delighted with that. An EBITDA profit of nearly 200,000 from a small loss the the comparative period the year before. That's obviously translated into net profit after tax. And, again, translating, you know, moving on from a loss in the comparative period. So, yeah, really pleased with the results. We're seeing lots of growth and continuing growth in longer term revenue contracts. We think at March 1, it was one over a million pounds. And if you look back even eighteen months before, that was sort of like 700,000 a year. So that's nearly 15% 50% almost growth in that eighteen months. If we can continue that trend, the business is gonna be in excellent shape.

16:34 And as I mentioned, the European subsidiary continues to deliver strong growth. We're really proud of the work we deliver in Europe, and we think we, you know, we've really put together a very strong offering there for our clients. Post period end, so outlook for second half is, you know, is positive as well. We've got a really strong forward order book as we just talked about and, you know, encouraging visibility for the second half of this year and into the next financial year. The certificate of contract with FRAS is obviously about to start or starting now, and that obviously will will will help us impact those in a positive way. I'm very much targeting year on year growth and profitability for the full year as well as just this half year. We've got another quarter to go. So everyone's heads down and working very hard on that. So just sort of, again, running through the numbers sort of side by side. As we said, you know, the period continued to the period showed considerable improvement on the prior period, and we expect that to continue.

17:31 The revenue up 63%, and, obviously, that translates to grow gross profit also up just under just over 60%. Gross margins remain consistent. That's really important to us. We don't wanna be growing but giving away business, and we're very much not doing that. You know, we see that as consistent and remaining consistent. The gross margin, obviously, is sort of is our revenue less the cost of kit. So and then our operational costs, the engineers, that's all in the overhead side of it. So that's how that works. EBITDA of significant improvements in nearly £200,000, over £200,000 swing, and nearly £200,000 swing at the net profit as as well. So, yeah, already positive there, and that obviously shows in the profit per share. There was a very small overdraft at the period end. That was really a timing issue with some receipts, some large receipts received a couple of days later, and and we expect that to be very different at the year end, I think, as we said in the interims.

18:27 I think the one important thing to note is that includes paying back a £188,000 of debt on the invoice discounting, which will save us around about £30,000 a year moving forward. So that's gonna help with profitability as well. So finally, just, I guess, a very quick summary. So we're aim listed. We are a creative audio visual solutions provider, and we work with multiple long term blue chip clients. We feel very lucky with our client base. We've worked with some great brands. We continue to, and we really value their their custom. We're growing recurring revenue. The run rate is over £1,000,000 now, and and we see strong long term demand for audio visual in all three of the set as we work. And, yeah, if you

19:12 just walk out the door and look in walk into any office or any store or any car dealership, you can see that. New business wins. Obviously, the first contract, a significant win that we announced this week. Absolutely delighted with that. I think the team worked extremely hard on that project, and we're really delighted to see the the the rewards for that. And global ongoing contracts with our established clients as well. And, again, the recurring nature of some of those is really helping us, you know, move the numbers forward. Recurring revenue streams could because they provide that that predictability and that stability and allows us to grow the team to support our clients. So we remain confident, in our ability to do deliver year on year growth and alongside targeting full year profitability for the year ended September 25. As I said, we're into the last quarter now, so everyone's working very hard to try and achieve that.

20:03 Yeah, finally, just thank you very much for your time, and thanks for listening. And I look forward to answering your questions. Jeff, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab situated on the top right corner of your screen. Just while the company take a few moments to review this question submitted today, I'd like to remind you the recording of this presentation along with a copy of the slides and published q and a can be accessed by our investor dashboard. As you can see, we received a number of questions throughout today's presentation. Can I please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end? Thanks, Lily. So I'll just jump into the questions. So this is from Paul. Could you break down the revenue growth by geography, particularly contribution from European operations versus The UK?

20:49 We won't be able to show that until the year end numbers, so you'll able to see the the two operational companies, MEDIAZEST International Limited, The UK business, and then MEDIAZEST International BV, which is the Dutch business. So you can see from those where the breakdown is. The majority of growth on the project side is The UK and on the recurring revenues ex UK, but actually invoice for The UK. So it's gonna look more like that. But, yeah, there isn't information on that available at this point. Are you disappointed that the share price just doesn't seem to move? That's from Lindsay. Sorry. Yes. Yeah. Sometimes it moves a lot for reasons that yeah. For when when not a lot happens, and sometimes something significant happens and nothing nothing really changes. So yeah. I I mean, I think that's the the fate of a of a holistic company. We understand that. It's been twenty years.

21:40 I think, really, what we're delivering now is consistency in the numbers, consistency in our strategy. That's working. We're growing. We're adding new clients, you know, two significant clients in the last twelve months that's really helping drive that. I'm confident that I think the share price will correct itself and get to a sensible level once those numbers come out. You know, we feel like it's undervalued. I guess every CEO feels like and board feel like the share price undervalued. But, yeah, we feel that that will take care of itself, you know, as as the numbers come through. And as we can keep posting new wins, I think that's the important thing. And like I say, it's a consistent strategy, it's been working. Michael, how long is a typical sales cycle to deployment for large scales in installations? And that's a a really good question, actually, and it can be a long time. So it can be, you know, anything up to a couple of years sometimes.

22:29 We have clients we've pitched to five years ago, and they've said, yeah. We'll do it. And then, yeah, it's not quite right timing. I've the budget. So it happens in the market. Maybe they get a bit concerned and then come back five years later. So we'll never burn any bridges for a start, which I don't think you can in business anyway, but, yeah, they can take a while. Some of the clients where we will roll out with them, they may be, you know, refurbishing a store network over, I don't know, two, three, five years even. And they'll come up every now and again. They'll say, you know, we've got a new store here. Can you please quote us for that? And there'll be, you know, a select set selection, excuse me, selection of solutions we provide for that client. So it'll be a case of sort of quoting up that particular that particular store and then working on that. So that can be quite a short period, but really, I guess, the long term work has been been there before that.

23:20 Peter, you mentioned a buy and build strategy. How advanced your discussions with potential acquisition targets? So we looked at a an acquisition a couple of years ago. We got very close on that. Didn't quite work out in terms of the numbers, and we did well, I think it was the right thing, which was we didn't just push on for the sake of it. I think that's always a temptation, isn't it? We didn't think it was the right time or the right deal, so we backed away. There was obviously a cost to that, and that hurt us, but we think that was the sensible strategy. We do think there are opportunities that will come up. At the moment, obviously, we're so busy with the growth in the business and with new business wins. We're really focusing on

23:55 that organic growth, but we are, you know, very much known in the market. People know we're the only pretty much the only one, I think, with the PLC with a listing. And I think those conversations will continue. You know, our eyes are always open. But I think, you know, right now, so the next sort of this next quarter, we're really focused on the organic growth and delivery. And also for Peter, with administrative expenses rising, how are you managing cost control alongside scaling delivery capacity? Another great question. So we are adding to our engineering resource, and we're adding to our support team to be able to deliver on these contracts. We have a sort of tried and tested method doing that. As I mentioned in the presentation, we really believe in using our own engineering team as much as possible. And the reason for that is we can train them. We can develop them over time, and and they've got that sort of sense of belonging and that that their desire to do really well for our customers. It really helps us to provide consistent quality for our clients, and we think that's absolutely fundamental to why they keep coming back again and again and again.

25:01 So in terms of scaling up, that's a challenge for us because we don't we just wanna, you know, get subcontractors that, you know, sometimes they may be great, sometimes they may be bad. The good ones are very often booked up. So, you know, if we have to try and slot an installation in pretty soon, then that's very difficult to get some of the right quality. So we have to build the cost base, and we are aware of that. We try and keep that to a level minimal level that we can deliver to the right standard, I guess, is probably the best way of saying it. But, yeah, there has been an admin expense increase. I think we called it out on the on the interims, and that's why I think if we things like reducing the interest cost by getting rid of the invoice financing discount invoice discounting facility, that will help. Obviously, that offsets it. And, obviously, the growth in the company is is, you know, supporting that.

25:50 Got a question from Lindsay. Why do you never provide amounts for the contracts you've won? It's very difficult, Lindsay. I would love to give everyone sort of detailed numbers and everything. We have to respect client wishes and client confidentiality and contractual confidentiality, and we work very hard as you probably were, but with our our nomad who has to make sure we're making the right announcements, that they're that they're honest and truthful and reflective of the status of the company and where we're at, but that we, you know, we maintain that commercial confidentiality where we should. Finally, Graham. So the balance sheet shows 1.36 interest bearing loans, borrowings. What's the interest annual payment? So I think last year, it was around about 150,000.

26:39 For the half year, it was a similar amount to that, so maybe 80. I'd have to look it up. Obviously, that will reduce with the with the removal of the invoice financing as we said, and, you know, we're working hard to try and bring that down. Obviously, as the business improves and as the numbers improve and as cash improves, that gives us opportunities to try and work on those on those interest charges and get that down because that's not adding, you know, any resource to the business. So yeah. So we are trying to tackle that as well. So yeah. Jeff, thank question I think, Lydia. Yep. Thank you for answering all those questions you can from investors. And, of course, the company can review all questions submitted today, and we'll publish those responses on the investor meet company platform. Just before redirecting investors to provide you with their feedback, which I know is particularly important to the company, Jeff, could I please just ask you for a few closing comments?

27:31 Yeah. Sure. I mean, first of thank you again for everyone's time. You know, it's obviously a really exciting period. I mean, it's it's not an overnight success. We've been working a very long time to get to this point. Yeah. Really pleased to see the the huge growth in the first half of the year. We think there's a lot more to come. The new business wins, you know, really exciting for us. So yeah. So it's a great time for the company, and we're really looking forward to to pushing on further and updating shareholders further in due course. Jeff, thank you for updating investors today. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This will only take a few moments to complete, and 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 morning to you all.