MediaZest plc (MDZ) Earnings Call Transcript & Summary

Good morning, and welcome to the MediaZest plc Investor Presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. And I'd now like to hand you over to Geoff Robertson, CEO. Good morning, sir.

Good morning, and thank you, Lilly. And hello, everyone. Thank you for joining us this morning. My name is Geoff Robertson. I'm the CEO at MediaZest, and I'm going to be giving a short presentation covering our interim results for the 6 months ended 31st of March 2025, which we released last week. And just giving a little bit more color around the company, a brief introduction for those of you who may not know us. So first off is a disclaimer. This will be available live 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 Abdool, who's been CEO and non-Exec 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 Non-Exec Chairman. Keith has replaced Lance O'Neill, who's been -- who was Chairman for, I think, 17 years. So he led us through some challenging times, did an incredible job, incredibly supportive. And I think a lot of shareholders with a lot of time and respect for Lance, and we'd like to wish him well and thank him again for his contribution over the years. 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 100 and 250 companies, AIM-listed and privately held companies across the retail and hospitality sectors, but also doing things like helping Arsenal, I think as MD on the Emirates Stadium project. Working with the likes of the London Legacy Development Corporation. In the retail side: Supergroup and Thorntons and on the brands, Glenmorangie Plc, and Eurotunnel, huge range of experience, both as a Nonexecutive Director and also in operational roles. So very much looking forward to working with him to push the company forward. He's obviously got huge experience in much bigger companies than MediaZest, but also with smaller AIM-listed companies as well. And I think that's going to be really exciting for us to tap into in the coming years. In terms of business proposition, for those of you who may not know us so well, we deliver turnkey audiovisual solutions for our clients, and we generate revenue in 2 different ways pretty much. The first one is from project fees, that will be 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 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 aware that building projects and timing of leases and stuff can change very rapidly. So it makes it very difficult for us to forecast and to know exactly when we're going to need our resource. So the second element that we find our revenue in 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 earn those recurring revenue streams and things like service and maintenance contracts that will be ongoing support. So say we put a screen in a retailer, what happens on Saturday morning when it goes down, and 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 of you who may be familiar with that. In terms of our approach as a company to the market, we think of ourselves very much as a creative audiovisual solutions provider. So a lot of the stuff that we do is pretty much 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 basics, the day-to-day stuff that people see a lot. And that proposition really helps us attract both clients and agencies to work with who bring those clients. So that's really important in terms of how 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 engineering ourselves. There are some exceptions I'll talk about shortly, but it means we can control the quality and provide that one-stop shop, if you like, a fully integrated service, which our clients love. We do everything in audiovisual 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 U.K. in the last 20 years really. And audio systems, I'm going to 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 for many, many, many years now. In terms of markets, there are 3 core markets we work in. So that's retail; automotive; and 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 if we have 2 office blocks we fit out in a period, that would make a big impact. Sometimes we might have none. So really, the retail and the automotive is where the growth is, and that's where we see our sort of USP, if you like, where we can provide stuff that other people can't. So I mentioned heritage. It's 50 years of MediaZest of MediaZest International Limited, which is our operating business. And that's the sort of 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 we did was acquire that company, which was then called TouchVision Limited to be the -- yes, 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 time line 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 50 years heritage. I think our clients really love that we've got that experience. it's been well over 20 years. We've been putting digital signage into retail and very, very, very few people can say that. So that hard one experience really gives us an edge. In terms of strategy, we are targeting clients 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 U.K. or maybe they've got showrooms around the country because that gives us the opportunity to roll those solutions out to develop them and to take that -- to build an estate with a client. It gives that longevity to work with the 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 is really crucial to keeping a lot of very long-term clients, which we're very lucky to have. 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 projects can come and move in and out of -- if it moves from September to October, it moves out of the 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 in the last couple of years on that, and that is reflected in the figures. We talk about a 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 we've seen that case at the moment. It means that some clients will still be thriving and prospering and moving ahead even if others are slightly down. We have -- I think it's roughly around about 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 again, we think we're kind of fairly unique in our market for that and that we have a dozen really good top name retail clients that we work with on a consistent basis year after year. We talk about collecting data a lot. And again, we sort of set ourselves aside a little bit from our competitors and as we think -- so we don't want to just put a solution into your store or your showroom or your office, but we want to look at how it's working for you. How good is it? Is it achieving the objectives that you set? Is it doing what you wanted to do? And we use data to help us prove that and then use those insights to then help improve the solution moving forward. And we spend 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 length to sort of help their clients really understand and that obviously just builds those relationships. And I mentioned we do work mostly in-house. So we're U.K.-based with a 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 U.K. 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 big is the addressable market? Well, the global professional AV market, that's everything in AV from meeting rooms, out-of-home, pitchside LED, to shops and showrooms is predicted to increase by $113 billion, say it would help over the next 5 years to 2027. So huge growth in that market overall. And within that global digital signage market, so that's the bit the niche where we're sort of best known, I guess. And that's estimated at $22 billion in last year in 2024, and that's projected to grow over 8% to get to $30 billion 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 can probably imagine from the numbers we just put out and the news we put out Monday with a 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 keep an open mind on that. 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 have converted that into a major new contract now with them moving forward over the next 5 years. We expect to deliver over 1,200 locations in the next 2 years. And as I said, the support is over 5. 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 that rollout 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. Pets at Home, we continue to work with. We provide digital signage solutions for them. I think it's around 150 stores. We've been working for them for 6 years. There are more in the pipeline. They did a new store format, of which we delivered a couple of large stores, New Malden being one of them in the period, which is a fantastic store, looks amazing, lots of different technology, great opportunity for us to put different solutions in for them as well. So a really great client that we've worked with now for many, many years. Lululemon is a brand Lululemon Athletica. I think it's 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 last year. And in this first half of the year as well, that's continued. So we've done the new flagship store in Regent 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 U.K. 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, Arc'Teryx, 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 Chamonix in January 2025, which is the sort of first mountain store in Europe, and that's been a great success, absolutely fabulous store 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 earnest in 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 and 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 10 years. They continue to go from strength to strength, particularly on the EV side of their business. So the solutions going into new dealers as they come on. So that's been great. KIA, we continue to work with 3 European territories and in particular, in the period, expanded that in Netherlands with more dealerships there. Porsche in Milan, we still do. And we work with U.K. 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 long-standing partner for, I think, well over 10 years now as well. So finally, corporate offices. As I mentioned, we do things like meeting room deployments and booking systems as the world changes in 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 accredited, which means we can deliver those Microsoft solutions, which seems to be sort of a lot of people are standardizing on now. And that could 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. So just a few sort of top line highlights. Obviously, strong top line and bottom line growth in the period. So revenue up 63% to GBP 1.9 million for the 6 months, absolutely delighted with that, an EBITDA profit of nearly GBP 200,000 from a small loss the comparative period the year before. That's obviously translated into a net profit after tax and again, translating moving on from a loss in the comparative period. So really pleased with the results. We're seeing a lot of growth and continuing growth in longer-term revenue contracts. We think at 31st of March, it was well over GBP 1 million. And if you look back even 18 months before, that was sort of like GBP 700,000 a year. So that's nearly 50% almost growth in that 18 months. If we can continue that trend, the business is going to be in excellent shape. 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're really putting together a very strong offering there for our clients. Post period end, so outlook for second half is positive as well. We've got a really strong forward order book, as we've just talked about and encouraging visibility for the second half of this year and into the next financial year. The significant new contract FRES is obviously about to start or starting now. And that obviously will help us impact those in a positive way and 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, just running through the numbers side by side. As we said, the period continued to -- the period showed considerable improvement on the prior period, and we expect that to continue. The revenue up 63% and obviously, that translates to gross profit also up just under -- just over 60%. Gross margins remain consistent. That's really important to us. We don't want to be growing but giving away business, and we're very much not doing that. We see that as consistent and remaining consistent. The gross margin obviously is sort of -- is our revenue less the cost of kit 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 improvement is nearly GBP 200,000, over GBP 200,000 swing and nearly GBP 200,000 swing in the net profit as well. So all really 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 we expect that to be very different at the year-end, I think, as we said in the interims. I think the one important thing to note is that includes paying back GBP 188,000 of debt on the invoice discounting, which will save us around about GBP 30,000 a year moving forward. So that's going to help with profitability as well. So finally, just, I guess, a very quick summary. So we're AIM-listed. We are a creative audiovisual 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, and we continue to, and we really value their custom. We're growing recurring revenue. The run rate is over GBP 1 million now, and we see strong long-term demand for audiovisual in all 3 of the sectors we work. And if you just walk out the door and walk into any office or any store or any car dealership, you can see that. New business wins, obviously, the FRES contract, a significant win that we announced this week, absolutely delighted with that. I think the team worked extremely hard on that project and really delighted to see 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 move the numbers forward. Recurring revenue streams because they provide that predictability and that stability and allows us to grow the team to support our clients. So we remain confident in our ability to deliver year-on-year growth and alongside targeting full year profitability for the year ended 30 September '25. As I said, we're into the last quarter now. So everyone is working very hard to try and achieve that. And yes, finally, just thank you very much for your time, and thanks for listening, and I look forward to answering your questions.

Geoff, thank you very much for the presentation. [Operator Instructions] I'd like to remind you the recording of this presentation along with a copy of the slides and published Q&A can be accessed via 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, Lilly. So I'll just jump into the questions. So this is from Paul. Could you break down the revenue growth by geography, particularly the contribution from European operations versus the U.K. We won't be able to show that until the year-end numbers, so you'll be able to see the 2 operational companies, MediaZest International Limited, the U.K. 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 U.K. and on the recurring revenue is ex U.K., but actually invoice for the U.K. So it's going to look more like that. But yes, 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, yes. Sometimes it moves a lot for reasons that when not a lot happens and sometimes something significant happens and nothing really changes. So yes, I mean, I think that's the fate of a listed company. We understand that. It's been 20 years. 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, 2 significant clients in the last 12 months that's really helping drive that. And I'm confident that I think the share price will correct itself and get to a sensible level once those numbers come out, we feel like it's undervalued. I guess every CEO feels like and Board feel like the share price is undervalued. But yes, we feel that, that will take care of itself as the numbers come through. And as we can keep posting new wins, I think that's the important thing. And like I said, it's a consistent strategy, and it's been working. Michael, how long is a typical sales cycle to deployment for large-scale installations? That's a really good question, actually, and it can be a long time. So it can be anything up to a couple of years sometimes. We have clients we've pitched to 5 years ago, and they've said, yes, we'll do it and then it's not quite the right time. We haven't got the budget and it happens in the market, maybe they get a bit concerned and then come back 5 years later. So we've never burn any bridges for a start, which I don't think you can in business anyway, but they can take a while. Some of the clients where we will roll out with them, they may be refurbishing their store network over I don't know, 2, 3, 5 years even. And they'll come up every now and again, they'll say, we've got a new store here. Can you please quote us for that? And there'll be a selection of solutions we provide for that client. So it will be a case of sort of quoting up 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 there before that. Peter, you mentioned a buy-and-build strategy, advanced your discussions with potential acquisition targets. So we looked at an acquisition a couple of years ago. We got very close on that. It didn't quite work out in terms of the numbers. And we did what I think 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. It 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 that organic growth, but we are very much known in the market. People know we're the only -- pretty much the only one, I think, with a Plc with a listing. And I think those conversations will continue. Our eyes are always open. But I think right now, so the next -- sort of this next quarter, we're really focused on the organic growth and delivery. And also from 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 of 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 they've got that sort of sense of belonging and that the 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. So in terms of scaling up, that's a challenge for us because we don't -- we just want to get subcontractors that sometimes they may be great, sometimes they may be bad. The good ones are very often booked up. So if we have to try and slot an installation 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 -- a minimal level that we can deliver to the right standard, I guess, is probably the best way of saying it. But yes, there has been an admin expense increase. I think we called it out on the interims, and that's why I think 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 supporting that. I 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're probably aware, with our [NOMAD], we have to make sure we're making the right announcements that they're honest and truthful and reflective of the status of the company and where we're at, but that we maintain that commercial confidentiality where we should. Finally, Graham, so the balance sheet shows GBP 1.36 million interest-bearing loans, borrowings, what's the interest annual payments? So I think last year, it was around about GBP 150,000. For the half year, it was a similar amount to that, so maybe GBP 80,000. I'd have to look it up. Obviously, that will reduce with the removal of the invoice financing, as we said, and 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 interest charges and get that down because that's not adding any resource to the business. So yes, so we are trying to tackle that as well. So yes.

Geoff, thank you...

No questions I think, Lilly?

Thank you for answering all those questions you have 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 for the company, Geoff, could I please just ask you for a few closing comments?

Yes, sure. I mean, firstly, thank you again for everyone's time. It's obviously a really exciting period. I mean it's not an overnight success. We've been working a very long time to get to this point. Really pleased to see the huge growth in the first half of the year. We think there's a lot more to come. The new business wins really exciting for us. So yes, it's a great time for the company, and we're really looking forward to pushing on further and updating shareholders further in due course.

Geoff, thank you for updating investors today. Could 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.