MediaZest plc (MDZ) Earnings Call Transcript & Summary

Good morning, and welcome to MediaZest plc Full Year Results Investor Presentation. [Operator Instructions] Before we begin, I would like to submit the following poll. I would now like to hand you over to CEO, Geoff Robertson. Good morning.

Good morning, everyone. Thank you for joining us. Thank you, Alex. My name is Geoff Robertson. I'm the CEO of MediaZest. And today, we're going to be giving a bit of an update on our full year results for the 12 months ended 30th of September 2025. It will be myself talking; and our new Chairman, Keith Edelman. So Keith joined us last summer, around about June time, and he's going to talk about some of the slides around what we're doing in the coming year, the balance sheet and our strategy moving forward. And I'm going to talk through the results for this year and what we've been doing in the last 12 months. So firstly, for those who may not be familiar with MediaZest, we are a creative audiovisual solutions provider. So we provide our clients with an end-to-end integrated service from sort of start to finish from the beginning of a project all the way through to delivery and ongoing support and maintenance, all around delivering audiovisual solutions. And we're best known for innovative digital signage and for audio systems, and we work mostly in 3 core areas. So that will be retail stores, automotive showrooms and corporate offices. And we have 50 years of experience. So we acquired a business in 2005. That business is an engineering business that's responsible for the delivery of all of our projects, and that gives us 50 years, as we said, of experience and really gives us a deep understanding of what works with our clients, what they need to understand when they're doing construction and how we fit into that. And that's a really important part of our offering. In terms of the business proposition, as I mentioned, we deliver turnkey solutions. So our clients can come to us and we'll give them everything they need around those audiovisual solutions, whether that's design ideas, implementation, ongoing content, ongoing support. We generate revenue in 2 different ways. So we generate revenue from project fees, which include things like hardware, software installation. They can obviously be quite lumpy and anyone who's worked in retail or construction -- sorry there's something happening. Let's give it a second. Hope it's not real fire. I think it's just the alarm going again. Apologies for that. Yes, so we generate revenue in 2 different ways. So firstly, project fees, as I was saying, hardware, software installation, it can be quite lumpy. Some of these projects, as you can probably imagine, take months of planning. And if you've ever worked in retail or construction sectors, you know that it's very easy for things to slip 2 or 3 weeks, months at a time. So difficult to predict, really important and nice big ticket items, but difficult to plan the business around that. So that gives us the -- leads on to the second, where we make money which is ongoing revenue streams. And that's super important for allowing us to be able to plan and predict our revenues. And we make those -- get those streams from things like service and maintenance contracts, so keeping the solutions up and running, content hosting, software licensing. So we do SaaS licensing where we can on software and also content management, and also a bit of content creation as well. I'm going to talk more in detail about FY '25. It's been a really exciting year for us. I think the financial numbers will speak for themselves so let's dive straight into those. We saw strong growth in all of our key metrics. Strong performance in revenue and in gross profit, increasing 35% and 47%, respectively. So we go -- we broke the GBP 4 million barrier again for the first time in quite some time this year. So really pleased with that. A lot of that as we expanded upon in some recent announcements was driven by the sort of last 3, 4 months of the financial year, which will also carry on into FY '26. But it was a substantial growth, obviously, for us on the revenue side. That's also flowed through nicely on the EBITDA. So we've moved to a profit of GBP 331,000 for the year versus GBP 14,000 the year before and swung back to net profit after taxation of just under GBP 100,000, which obviously compares much better with the loss of GBP 214,000 last year. And we're really pleased with the direction of growth, and we've seen that again in FY '25. And as I mentioned, we expect that further in FY '26, and we'll talk about that a little bit more in the -- later in the presentation. But what we're seeing is a consistent pattern where we've gone from sort of GBP 2.3 million to GBP 3.1 million to GBP 4.1 million turnover and continuing to grow. And as a result, the cash position improved. So again, just under GBP 100,000 at the period end, so roughly of about 50%. And that was actually after we repaid just under GBP 200,000 of debt, which was an invoice discount facility we managed to pay down and get rid of during the year. And that's obviously going to have benefits to us, a, not only in strengthening the balance sheet, but also reducing interest costs moving forward. And what we're also seeing that isn't immediately obvious from these numbers but it's super important for us is the growth in the long-term recurring revenue contracts. So as we do more and more business with more and more clients and we add those contracts on an ongoing basis, we're able to drive up the recurring annual run rate. As at the 30th of September last year, the year-end, we estimated at just over GBP 1.2 million versus GBP 0.9 million the year before. So a substantial growth for the third. And again, we're seeing that continue to grow in FY '26. So for us, that gives us ongoing security around revenue and stability. And obviously, it makes it much easier for us to predict what our revenues are going to be and the direction of the business. So for those of you who may not be so familiar with some of the clients that we work with and some of the highlights for the year, just to take you through that. On the retail side of it, that remains our biggest sector. We started to roll out a major new contract with First Rate Exchange Services during the year, which we announced in July. So we did 2 or 3 months of that before the year-end. And obviously, the bulk of that will be in FY '26. And that was after a significant and successful pilot in 2024, which was around about 50 locations. And we're now delivering over 1,200 locations, which we completed probably by the end of September, certainly by the end of 2026. And that's obviously a huge project for us, a significant project where we've delivered nearly 500 of those sites already, and there is a 5-year ongoing support and maintenance contract behind that. So it's super pleasing to see that. It's been going very well so far. That's been a big positive in the final quarter of the year, and obviously, we'll be moving forward. We work with Pets at Home, we have done over the last 7 years. We provide digital signage solutions for them in their stores, not just in the main stores, but also with their vet practices in certain cases, which is a huge part of their business. They continue to grow with us in the year, and we added more stores. So we're now in over 170 of those stores and with more in the pipeline. Moving on to some of our European installations. Lululemon is a client we've worked with, I think, for over 10 years now, and we did several new locations for them in Europe, flagship store in Regent Street in the U.K. and also in Milan and Berlin. And on a similar line, Arc'teryx, we've worked with slightly less, that's a 2- or 3-year engagement, but we've managed to put new flagship stores in for them in Chamonix, Milan, Stockholm, Manchester, Parndorf Austria and Bicester Village in FY '25. And that's actually a photo of -- at Milan. I think what those 2 brands have in common is obviously, they are super strong brands, they are very much about lifestyle. I think the technology that we deliver quite often behind cash desk like this, they have some incredible content that really tells their customers what they're about and really helps them to understand why they should engage with that brand and be in that store. And I think that really lends itself to some of these big LED walls we've been doing. And for us, as a European -- pan-European business and being able to deliver from our European subsidiary, we can offer them a consistent service across Europe to deliver to a really high standard and consistently across their stores. So talking about international business. We also have a global consumer brand we work with in Duty Free stores, and we're helping to grow their revenues -- helping to grow our recurring revenue stream, excuse me, as we do more and more different airports around the globe, that covers Europe, Middle East, Africa and APAC. We cover Europe ourselves with the U.K. and our European subsidiary, and we have partners in other parts of the world to help us. Moving on to the automotive sector. We look after Hyundai U.K.'s dealer network, and that continues to grow and change. We continue to add technology that helps us -- helps them, sorry, explain to their customers some of their propositions around electric vehicles, range, mileage, et cetera. We work with Kia as well across 3 European territories, that's Ireland, Slovakia, and significantly the Netherlands, where we've continued to expand heavily in FY '25. We continue to look after Porsche in Milan. We have a Rockar Jaguar Land Rover dealership in Canary Wharf. And also, we work with some of the U.K. dealer groups such as Lithia and Norton Way. And finally, it's a smaller sector for us, but still we do get some significant projects. And we also do look after corporate offices. So we have meeting room deployments, things like booking systems. We are Teams accredited. So a lot of those are Microsoft Teams rooms, which can be complicated to deploy but we have deep expertise in. And that led us to do a refit and refurbishment for a major U.K. -- sorry, the U.K. office of a major global luxury brand in summer '25. So we do still get some significant projects in that arena as well. So post year-end, we've been talking a lot about the balance sheet. I'm going to hand over now to Keith, who's going to talk us through that.

Thanks very much. I joined MediaZest in June, July last year. And one of the first things that I noticed was that we had quite a lot of debt, and it was relatively lightly documented. So we're set about trying to restructure our debt, and we managed to convince the loan holders to write off over GBP 0.5 million of interest and leave a principal sum of GBP 785,609, and we're repaying that over the next 6 years. What's good about that, though, is that we effectively have 0 interest on the outstanding balance. So effectively, we've written off a lot more than GBP 0.5 million because we're not going to pay any interest on that GBP 0.75 million or so over the next 6 years. In February, we raised GBP 215,000 of funds at a price of 0.06p. And there's a very, very big shareholder, Dr. Graham Cooley, who we'd like to welcome as a shareholder of MediaZest. He has quite a big following. And so we did a raise with him and a few associated current shareholders as well. And I think you've seen since we've done that raise, the share price has responded and we've gone from circa 0.085p up to 0.11p, 0.12p so nearly a 50% increase in the share price. Strategy moving forward. I mean, Geoff has done a wonderful job of getting some very, very big contracts. And obviously, the First Rate contract is a huge contract, which does transform our profitability for the next few years. And I think we've now focused our efforts on targeting clients with opportunities who can put in a huge number of units and sites. If you're going to put a lot of effort into the sales process, much better to do it with someone who can deploy 200, 300 sites than 5 or 6 sites. And we're focused on long-term contractual revenues and a diversified client base. So we operate in different retail sectors and the automotive sectors. And as Geoff said, a little bit in corporate as well. We're collecting data as well to provide actionable insights to our clients. And obviously, this is a new way of working and with AI, we will absolutely, I think, accelerate into the future. And we have got this European network from our Dutch subsidiary, and we can deliver projects not only in the U.K. but across Europe as well. And the last bit of our strategy is adding scale via potential M&A activity, unlocking shareholder value. Next slide. So I think that what's really interesting about this marketplace is that there are a hell of a lot of companies in the GBP 3 million to GBP 5 million, GBP 6 million turnover, and even smaller than GBP 3 million, but there's a lot of companies in this sector. And they tend to have very, very good contracts with very good customers, but they tend to be quite singular in that approach. So I think there is a huge opportunity for us to be able to acquire smaller companies and to grow our business. And looking at the whole addressable market, I mean, the whole market, the global professional division market expects to increase to GBP 113 billion. I mean, very, very big numbers. And the global digital signage market is estimated at about GBP 22 billion in '24, it's expected to grow at a rate of 8.4% per year to reach GBP 30 billion by 2028. So this is a growing market. Clearly, with the evolution of digital signage, with the evolution of AI, it's going to become ever more important. And therefore, we think there's a lot of opportunity for us to buy skilled companies who haven't got the access to capital that we have with our quote, and for us to be able to bring them into the MediaZest family and to grow our business and to grow our company alongside theirs.

So just to summarize, I guess, an outlook. Summary for this year and the outlook for us moving forward. Obviously, we're AIM listed. We're a creative audiovisual solutions provider. As I said, for those who don't know us, the recurring run rate is up to over GBP 1.2 million now and continue to grow strongly. And we're seeing strong long-term demand for the technologies we provide in all the core sectors that we work in. We've had a great FY '25, and we think that's just the start. FY '26 is looking really good, too. That's been driven by new business wins, including the First Rate contract and ongoing contracts with well-established clients expanding with us across multiple different directions. Those recurring revenue streams are so important because they provide greater predictability and stability as we sort of target increasing our profitability. We expect to deliver further year-on-year growth in '26 and further increase in profitability. We're targeting over GBP 5 million in revenue top line and over GBP 250,000 in net profit. And as Keith alluded to, we've had great support from our shareholders in terms of restructuring the loans, which has been much appreciated, and that's going to really help with the balance sheet. And then post year-end, with more equity funds raised, again, further strengthening us. And of course, in FY '25, repaying that invoice discounting facility. So I think both P&L performance is up and getting even better and expect to get better in the very near future as well. And obviously, the balance sheet is looking in a much better shape. So it's a really exciting time for us, and we think there's a lot more to come. Thank you for listening and for joining this webinar, and we look forward to answering your questions.

That's great, Geoff, Keith. Thank you very much indeed for your presentation. [Operator Instructions] I would like to remind you, the recording of this presentation along with a copy of the slides and the published Q&A can be accessed via investor dashboard. Geoff, at this point, if I may hand over to you to run through the Q&A session, and I'll pick up from you at the end.

Yes, sure. Thank you, Alex. So yes, so we touched on M&A. What criteria are being used to select targets? Which areas of capability add the most value? I think that's a really interesting question. I think from our point of view, we really want to -- we've got a very clear view on how we should be doing deals, and we want to try and move quickly. And we're targeting companies who work with us, who will continue to grow with us. So I think, obviously, the business is growing very strongly at the minute. That means our resources are very stretched and everyone is working extremely hard around the clock to sort of get things moving. So we want to bring people in to join that team and help us grow it together. So I think resource from a management level is great, but also bringing clients with them. So one of the -- I guess, one of the key characteristics we see across all the clients, whatever industry they're in, is quite often that we're dealing with lots of different touch points within an organization, which makes it, yes, very difficult to break into those and to get them to do lots of large-scale rollouts and makes the sales process sometimes quite slow, but it does make us very sticky. And it means that if you've got a customer and you look after them very well, then generally you keep them. So I think if we can target businesses with good customers like that with the ability for that customer to grow as well, and some resource themselves that can help add to our team, those are sort of the ones we think are most value. I would say I think we're pretty open-minded about it though. I think if there's opportunities that arise that may be slightly different to where we're currently strong, but we think it can add value, we'd obviously look at that as well. We've got a question as well about directors' shareholdings. I think there's probably a misunderstanding, I think, probably in the market, how that works sometimes. Over time, I think a lot of the directors put a fair amount of money in. Sometimes that has been diluted down. And unfortunately, it's obviously unfortunate for directors, and I would definitely include myself in that, over the years -- over the last 20 years, I've put most of my life savings into MediaZest. And obviously, that's not a huge holding at the minute, which is frustrating for me. But obviously, I've allowed that to happen and been diluted for the better good of all shareholders. So I think there's probably some misunderstanding in the market, how that works. So happy to clear that up. If you go back through the RNS, you can see that. Next question, do you have to chase business or does it come to you?

Well, actually, Paul, we've actually hired a group of people who have worked in the audiovisual marketplace and who work for a large corporate to try and put together this kind of strategy, then they didn't work for them anymore. So they have great contracts in the marketplace. So they are bringing us a large number of potential prospects for us to look at so that we can really sift through that group very quickly without diverting our management resources to looking at acquisitions and taking our eye off the ball about running the business. So we are looking for very large -- a large number of companies. And I think the other 2 criteria that we want to see they've got a very good solid customer base, and they do have some recurring revenue. So those are the 2 things that we're really looking for.

Yes, sorry. On the acquisition side, yes, yes. And then on -- so the question, the next question was, do you have to chase business? Or does it come to you? I think very much, we have to work very hard on the business. As Keith mentioned as well, we've been in the industry a long time, and we've talked to lots and lots of people. We have lots of great relationships with both manufacturers. So people like Samsung, LG, and they have customers that they need help with sometimes to deploy solutions to and also the manufacturing product, but we can get involved and help them deliver that for the customer. And also with agencies in the creative sectors where they've got incredible ideas and strategies, but they need some execution as well. So we have partners that are fantastic in sort of introducing leads to us. We go out ourselves proactively. We did a lot of work last year on marketing. We had an event for the 50 years. And we also had a sort of thought leadership event where we have people to speak as well, which is at Samsung's store in Coal Drops Yard here in London, if people know that. So yes, so I think we chase very hard. We've got multiple avenues where we get customers from. Thanks, Paul. Peter, with increased recurring revenue, how sticky are these contracts? And what's a typical renewal or churn profile? So that's a really good point, Peter. I think on the -- it is very sticky because we talk to lots of different people in an organization. So for example, we might be talking to store format, store design team. We might be talking to marketing. We'll definitely be talking to IT. We're probably talking to finance. So what that does mean is it is quite sticky if you do a good job. We work extremely hard and we pride ourselves of being at the top end of the market to deliver that. So that means that churn is generally very low. Occasionally, it does happen. But yes, we've been very lucky, I think, and work very hard to ensure that hasn't been an issue for us. What it does mean is when you put something in, the network tends to grow and renewals tend to follow.

And if you think about that in kind of physical context, if you look at a company like Pets at Home, were they to move away from us, they'd have to get someone to go around to all their stores and take out all the screens and put in new screens. And it's quite a big decision to do that. So as long as you're doing a good job and you keep the service levels up, they are very sticky contracts.

Yes, absolutely. Graham, what's your current cash position? So cash position, obviously, it fluctuates day-to-day, but it would be GBP 700,000 now, several just to make sure I'm speaking clearly. And that's obviously as a result of the improved performance. And like I said, last year, we were up to GBP 99,000. That's obviously improved since then. That includes paying off the loans, the invoice discounting facility. So we're seeing strong growth on the cash side of it. How will you finance the acquisitions?

I think that our initial thoughts on acquisitions is that we want to try and structure them in a buyout format. So put a small amount down as a first installment and then pay over a 2-, 3- or 4-year period, depending on the kind of business and the aspirations of the owner of that business. A lot of these businesses will be owner managed. And so therefore, we've got to look at that over the period of time that suits their personal profile. In terms of doing the acquisition, it makes it much easier because the due diligence process is much simpler because you haven't got to, therefore, put all your pound notes down on day 1 and hope that they are going to produce the profit and you pay them on an exit [ PE, ] which is agreed upfront. So we are hoping we will be able to do most of that within our existing cash flow.

Thanks. And the next question, how do you keep ahead of the hackers? That's a very good question. We have significantly invested in '25 in our cybersecurity side of things. So we are Cyber Essentials certified, and we've got a very good score on that. But it's an ongoing basis, an ongoing battle, unfortunately, every day to make sure that all of our systems are secure. We're seeing clients actually increasingly wanting to put stuff not on the networks because they've had issues and wanting to use sort of stand-alone routers. And that obviously gives us an opportunity to sell more services in data and ongoing data in terms of mobile data. But it is unfortunate state of affairs, but I think that's where we are. And obviously, for us, a lot of what we're doing is publishing to an end customer for our clients marketing material that's public domain anyway. So we're generally not dealing with sensitive material. We don't keep a lot of customer data. There's not a lot of personal data. We're not keeping individuals' account details or anything like that. So that helps. But yes, we work very hard, the team on the IT side to make sure that we keep all those structures in place. And actually, that's an increasing demand from our clients. They want to see what we've got, the Cyber Essentials. I think it was a reaction to the market wanting to see that we're taking that seriously, and we have the right checks and balances in place to protect them and protect us.

That's great, Geoff, Keith. If I may just jump back in there, and thank you for addressing all those questions from investors today. But Geoff, before I redirect investors to provide you with their feedback, which I know is very important to you and the company, could I please just ask you for a few closing comments?

Yes, absolutely. Thank you. First of all, thank you again for listening. Thanks for joining this webinar. We think over the last few years, obviously, we've shown considerable improvement in performance. As I said, the improvement in the balance sheet, I think, is really significant to help us grow. We're delighted to have Keith on board to really help us drive that side of it. And we think there's great opportunities in the market on the M&A side that we can manage and grow significantly and really use and utilize the fact we're a plc. So yes, I think it's a really exciting time. I think FY '26 is going to be even better for us. We're really excited to see what we can deliver there and beyond.

Fantastic.

Thank you for attending.

Thank you.

Thank you. Thank you, Geoff, Keith. 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, which will help the company better understand your views and expectations. On behalf of the management team, we would like to thank you for attending today's presentation, and good morning to you all.