Mediazest (LSE:MDZ) — Interim Results

0:01 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. I'd now like to hand you over to Jeff Robertson, CEO. Good afternoon, sir. Good morning, everybody. My name is Jeff Robertson. I'm Joe McKeith. I'm Keith Elliman, and, welcome to this, presentation. And Jeff will take you through it, and then we'll answer any questions. Thanks, Keith. So, yeah, today, we're gonna be talking about the interim results we just released for the six months ended 03/31/2026.

0:51 Obviously, a fantastic period for us, huge improvement in revenue and profit after tax. So a really good half year. Lots of things moving forward very positively, so we look forward to taking you through it in a bit more detail. As as myself and Keith, so I'm the CEO. Keith's nonexec chairman will be presenting today. I'm getting straight in. If you're not familiar with MEDIAZEST, we're a creative audio visual systems provider, and we provide our clients with an end to end service from, from advice consultancy, what should we do in our store, what should we do in our building, all the way through to installation of those solutions, support and maintenance, and data that comes out of them ROI, that sort of thing. And we're very well known for innovation in digital signage and audio systems.

1:37 In particular, we work in three core markets. So, the biggest of those for us is retail, then automotive retail, so showroom, and corporate offices as well, which is slightly smaller, but still an important part of the business. In terms of experience, the whole business itself has got fifty years of experience. MEDIAZEST has been going for twenty years, and we bought a company to help deliver, for our clients the actual physical installs, which have had already been going thirty years. So, yeah, in September 2025, it was, it was fifty years of that company. So huge amount of experience in what we do. It really helps with our clients in terms of explaining to them, you know, we've been there, seen it, and got the T shirt sort of thing. So we understand the pitfalls of what we're doing. We've, yeah, got great experience in the market.

2:24 It's a great position for us to be in. Our business proposition, we obviously deliver turnkey audio visual solutions. Revenue, we generate, in a couple of ways. So, firstly, from project fees, from installations, from selling hardware, software, all the professional services that go around that, and also ongoing revenue streams from service and maintenance contracts, which would include things like hosting content, software licenses, content management for our clients, and also the sort of break fix. You know, if something goes wrong with the screen, how do we get it back up and running? And the organic growth we delivered in the first half of twenty twenty six. As I said, really fantastic period for us. 40% up year on year, you know, superb growth after a couple of other half years where we've done really well as well. So, really, the business is moving forward in a very exciting way at the moment.

3:17 So let's get straight into the numbers. So profit loss. So, starting at the top, sort of working down on key metrics. Really great performance on the revenue. I think it's our best half year ever. We're up 40%, and that translates to 20% gross, gross profit. The margins remain robust, so we're over 50% gross margin. That's obviously revenue less direct costs such as hardware, software licenses. The professional services is further down. That's delivered by our overhead. But those margins, like I say, you know, still over 50%. They're slightly down because there's a bigger mix of hardware. We sold a bit more hardware in this half year, but still, you know, very healthy and looking good. The EBITDA level, so another good profitable half year, 120,000.

4:05 It's slightly down versus the previous year. There's a couple of reasons for that. One was that we had a large one off corporate, office client in, November in the previous period, so that sort of skews things a little bit slightly. But also, and more significantly, during this period, we've been really investing in several things to really help the business grow, not just this period, but also moving forward. So that includes building, the team out to deliver the revenue, the increased revenue we're now delivering. So, you know, we're targeting over 5,000,000 this year. That's gonna take a a personnel increase to do that. And so there's some recruitment costs and things like that. And and the second element is investing in systems. So what we're seeing increasingly from our market is with IT infrastructure getting ever more complex and, you know, risks around that and hacking and stuff, And we're seeing demand from our clients, you know, first really step up how we deliver that, and we've invested heavily in that in the last twelve months. And you'll see those costs in the first half of the year. That's gonna set us in fantastic stead for the next few years.

5:08 It's becoming the sort of thing clients are looking for, and it helps differentiate. So does hit the EBITDA in this period, but, you know, very much investment for the future. The profit after tax, is obviously extremely high. That reflects as well the net interest gain that we've, that we've, managed to, book oh, sorry. Wrong button. That we booked as a result of the restructuring of the debt, and I'm gonna talk about the balance sheet very shortly. Obviously, our, you know, our best ever performance for a half year, so, you know, really fantastic set of results. And, correspondingly, we're seeing the improvement in the cash as well as you'd expect. So, big jump up to 350,000 at the period end versus a small overdraft in the the previous period. And as I said, we've also managed to repay, an invoice discount facility for a couple of 100,000, I think it was at that time, in the recent in last year. So, yeah, really improved the cash position too.

6:06 Moving on to the balance sheet. I just mentioned it, but we've restructured shareholder debt obligations. So in particular, we managed to get an agreement from loan holders to write off, just over £500,000 worth of interest, which was late last year. And so that you'll see the impact that we see in this period. That brings us down to a a much reduced sum owed of 785,000 that we've already repaid, around about 85,000 of that off the top of my head in line with the repayment plan over the next six years. And, yeah, that's so that's been, you know, obviously, a really significant gain for the company, helps us really strengthen the balance sheet for the growth moving forward. There is a an additional loan, gain, sorry, of 17,000 due to the unwinding of the convertible loan notes that were part of that debt, and that's just the way that the the loan notes are treated in the accounting treatment.

6:58 And then the third element in terms of the gain is, this sort of notional fair value interest gain, which is a slightly unusual accounting thing, basically, because the loans are now interest fee for the repayment period, which is fantastic for us. But the accounting rules say you've got to recognize a a notional interest rate for the benefit of that. And that meant we booked, a 198,000 additional, interest rate gain in the period, and that gets offset over the period of the repayment. So that will reduce down to zero. So we'll do a there's a 198 benefit this period and a 198, hit over the next six years, '29 of which is in this, in this first half of the year. So slightly unusual accounting rules.

7:44 I'm sure at the year end accounts, there'll be, a big note on that, but, that's where that comes from. I think the really important thing is that five hundred and twenty nine thousand of interest written off is, yeah, a massive help to us in terms of helping grow the company. And also strengthen the balance sheet, we did a fundraise in, February 2026 and raised £215,000. During that fundraise, we're delighted to welcome doctor Graham Cooley, a new significant shareholder in the company, and and, yeah, really great to see, significant interest as we sort of move forward. We think, you know, the last few last couple of years, we've really made huge strides, and great to see that the investor community has has really taken note of that. And for those of you who might not know a little bit about the details of who we work with and what sort of work we do, I'll talk through some of the projects that we delivered in the half year. So, one of the significant projects we've been working on is with first rate exchange services. And for them, we provide digital currency boards, for foreign exchange, foreign currency.

8:45 We have a contract with them to deliver 1,200 locations, likely by the end of twenty twenty six, at the time we get that can move slightly, and an ongoing support for five years behind that. And in this period, we delivered around 500 of those sites. So huge contract for us. Delivered it very well. I think the client's very happy. We're really proud of what we've done there, and that rollout is moving forward, you know, really strongly and will continue in the second half of the year and into FY '27. So good long term visibility for us of that project as it grows. Pets at Home has been a long term, client. We're in over a 170 stores now, I think. So nearly half their estate. That's been a seven year, project working with them as we've gradually rolled and built with them. And more more stores in the pipeline we'll be working on, including many vet locations, which is great to see.

9:39 Some of the clients that we work with around Europe are Lululemon and Arterix, and both of them, we did new flagship stores for Lululemon. We did High Street Can here in London, and La Valle in France. For Arterix, we did Hamburg flagship. We took over some existing installations, in Piccadilly and Oslo. So it just ex extended our footprint and, you know, gave them consistency across their European stores. Both of those clients doing, again, doing more as we move forward into the second half of the year. We've mentioned another big, client that we have, which is a global consumer brand we work within duty free, and that's helped us generate significant additional recurring revenue streams, which is obviously, you know, very important for us. With a project based business, the projects and the timing can move, you know, quite easily, particularly when you involve construction and retail.

10:29 So having that recurring revenue stream and growing that recurring revenue stream has been a massive focus for us and has been one of the, I think, the fundamental changes we've managed to achieve in the last sort of twelve to eighteen months, and that continues to go strength to strength. Automotive, that's probably the second biggest category. We work with Hyundai across The UK, continued to do new dealers with them. We work with Kia across Europe, in three territories. And in the first half of the financial year, we did several more dealerships in Netherlands and Ireland with them. And we continue to look after Porsche dealership in the land we installed and UK dealer groups such as Lithia Group and Notreway and Rockhard Jaguar Land Rover, which is Canary Wharf. And then the final sector we sort of see as significant contributor is the corporate office area.

11:18 And it's a smaller sector for us, but we still have, you know, some significant, value projects there. Quite often, that can be from our other clients, maybe in retail or automotive, wanting us to bring, you know, the skills they see in those customer facing sites into their own offices, and that's, that's always very gratifying. And so that's always a good route to market for us. We're Teams accredited, so, you know, VC meeting rooms is something we really specialize in. And, obviously, that's a a huge market at the moment. So strategy moving forwards, we're continuing to target clients with the opportunity to deploy solutions across multiple sites. So we're really looking for rollout clients. It's quite detailed what we do. There tends to be lots of touch points in in in the client in different areas. So we might be talking to marketing, to finance, to store formats, to IT.

12:10 So it takes a long time to get these clients up and running. Quite often, we'll do a proof of concept. We'll do some test stores and grow from there. So, you know, if we're gonna invest the time and money with the client, we need to make sure that has the opportunity to become significant for us. And we've really, you know, focused on that over the last three to five years, and that's given us a a really nice diversified client base. And that's gonna give us, you know, good opportunities to grow in multiple sectors moving forward in in different retail areas. And we focused on long term contractual revenues, as I mentioned, so that for us gives us visibility and also surety of income, and that's been a huge growth for us over the last few years, continues to grow. Every installation we do, we add more from, and that's a huge part of our business.

12:55 Again, that's an area we've been investing in the last six months in order to make sure we can really deliver for those clients and keep them up and running. I touched on data. So we we really think that using data to really demonstrate the value that we can add is super important, and that message is really starting to resonate with our clients. I think particularly in this market at the moment, I think generating ROI and proving it, you know, into their budgets, you know, when they're being stretched is, is really important for us. So our knowledge in that area and our innovation in that area, I think it's just gonna take us from strength to strength. I mentioned, we work globally. We're UK based. We have a European subsidiary, based in Netherlands, which really, again, is a is a great proposition for our clients. We And deliver global projects beyond Europe with our partner network. So we have partners in The Middle East, Africa, APAC, and The US.

13:48 And that system works very well. We've developed those partnerships over many years, which means we can trust them, trust them to deliver, and that works really well again for our clients given the ability to have, you know, the same standard, the same quality, you know, rolled out across the globe. And finally, we've talked a lot about m and a activity. So we're obviously listed. That obviously has, you know, challenges and costs, but it gives us a huge opportunity to use the listing, and to embark upon m and a activity. And and we've been spending a lot of time as a board focusing on that in the last, last six months and this half year and moving things forward on that side, talking to lots of different, companies about potential opportunities. And just sort of to give a bit more color around that, we think that there's a there's a significant opportunity to build a leading digital signage business certainly across Europe.

14:40 There's no company that goes across Europe with lots of different branches that a retailer or a car manufacturer could go to and say, deliver for me across the globe, deliver me across Europe. And and that's why we use partnerships, but it means there's a huge opportunity there to put something together to really deliver that. It's a big addressable market we're talking about, about a $113,000,000,000 by 2027 audio visual. And within that, the digital signage element being over 30,000,000,000 US dollars. And so it's a huge market we've got to tap into. And what we also see, particularly in The UK, and Europe a little bit further as well, is, lots of relatively small skilled companies without a huge access to capital or the scale to meet sort of that demand as it grows. Often, they'll have one or two clients, so, yeah, big risk to them.

15:28 Often, they may be at a position where they're looking for an exit in the next few years. That, again, really gives us the opportunity to use our public listing to become a consolidator. And, yeah, moving forward, we expect to be, to be really using that. So finally, just, I guess, to summarize, in terms of the outlook, as I mentioned, we're aim listed, and we're really targeting you know, it's a two pronged strategy, growth by acquisition, but also continued organic growth of recent periods, which has been, you know, obviously, really standing us in good stead. We have lots of, long term blue chip clients. We've got a a diversified client base, which, again, is pretty unique in this market, in the market that we serve, and a growing recurring revenue rate. So we think it's one over 1,200,000, and that continues to grow.

16:16 All three sectors in which we work, we're seeing, increased demand for what we do. I think I've, I've talked about with clients before when we were even, you know, as recently as 2020. We're talking to clients about what digital signage was and why you might want in a retail store, and that argument's been made now. This is really about what do I deploy, why do I deploy it, how do I know it works, and that's where, you know, our our sweet spot really is. We've got several rollouts that were ongoing. We talked about the first contract, but also, other global workout, rollouts we're doing. We've also got the European stuff we talked about as well with, you know, several long established clients, that's and continuing not just the second half of this year, but into f y twenty seven, and beyond. Reclaim revenue streams, as I mentioned, has grown, and that gives us better predictability and stability.

17:05 And back in March, we were suggesting, for a fall forecast, we're targeting over 5,000,000 revenue and over $2.50 net profit for the year. And and, obviously, as you can see from these results, we're already well ahead of those targets by the half year, absolutely especially on the net profit and the 5,000,000 revenue well on target to, to beat that. So, yeah, really fantastic half year. Really pleased with the results. Really pleased to shape the businesses in to move forwards and making progress, I think, in in every area we've been targeting. So it's been a a really good, yeah, really good six months, and we look forward to, to hearing your questions. That's great. Thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just via the q and a tab situated on the top right hand corner of your screen. Just while the company take a few moments to review those questions submitted today, I'd like to remind you that recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard.

18:04 Guys, as you can see, we have 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? Sure. You want me to kick on with that? Some operating questions, I think. So, this is for Ben. When do you expect to see operating leverage really kick in and become more visible in market margin progression? I think, I think from the second half of the year, like I said, we've we've invested heavily in in recruitment and IT systems, in the first half of the year. So I think we'll see that second half of FY twenty six, and beyond. And could you also give us a feel of how you see recurring revenue growing in the coming years? How does the buy and build strategy fits into this? That's a great question. So in terms of recurring revenue, we've obviously got the rollouts that we are currently embarking on.

18:52 Each month, we do that. We add more and more sites, and that adds to that recurring revenue. So there's a there's a really clear linear progression on that side for us. In terms of acquisitions I think the acquisitions. In terms of acquisitions, I think that we we've talked about acquisitions, and we're progressing now, as we speak. And I think that as we as we add more businesses, it we've got a a fairly hefty central cost base. I mean, it's quite expensive being on the market and and being listed with brokers and and advisers, etcetera. So I think as we add more business and become a bigger business, those costs become obviously a smaller percentage of the total of the total entity. So I think we see we see the buy and build strategy going together with the strategy of trying to win over bigger customers.

19:44 We've made some good progress on that. I mean, you can't see the numbers yet. Obviously, we're in some interesting discussions with larger customers. And I think both of those together should should set us fair for the future. Yeah. And I think in relation to the question, the, in terms of the how it would affect the recurring, I think it will absolutely be looking at businesses where we can add to that recurring. I think that's a great way to do it as well. That's where the acquisitions also work for us. Customer customer acquisition, including recurring streams. The next question was, why only one Porsche site, if I remember correctly? Yeah. Yeah. So I answered that one. So, we did Porsche in, city life in Milan in August 2020, which obviously was a very tough period in COVID. I think it was a test site for them in terms of what they did, and they've not rolled that out further.

20:34 The site is still there. It's a beautiful site. It's an amazing development, the whole thing, but it's basically yeah. It was a it was a one off-site. So that was why we'd love to do more with Portia for sure. And, yeah, we continue to explore those avenues. And that's the final question. I hope there's any more. That's great. Thank you for answering, 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? Yeah. Absolutely. I mean, I think, really, we we sort of said it on the presentation. I think, you know, it's been a really a really excellent six months for us, you know, really pushing forward, in all the facets of the company. I think the delivery for the projects is we've been really proud of as we've grown. I think this year, it's easy to grow and then lose control of that quality delivery, and and we've not done that. We've really continued.

21:34 Think second half of the year is gonna be excellent, and I think f y twenty seven's, shaping up as well. So, yeah, really, really pleased and cracking on, looking forward to delivering more good news soon. That's great. 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 may take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team, we'd like to thank you for attending today's presentation, and good afternoon to you all. Thank you very much. Thank