REG - Zoo Digital Group - Interim Results
12/11/2024 07:00
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RNS Number : 7954L Zoo Digital Group PLC 12 November 2024
12 November 2024
ZOO DIGITAL GROUP PLC
("ZOO", the "Group" or the "Company")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2024
Revenues up 29%; streamlined business positioned to support
sustainable growth as trading environment improves
Analyst & Investor Presentations
ZOO Digital Group plc (LON: ZOO), a world-leading provider of cloud-based
localisation and digital media services to the global entertainment industry,
announces its unaudited financial results for the six months ended 30
September 2024 ("H1 FY25").
Summary
Key Financials
· Revenues increased by 29% to $27.6 million (H1 FY24: $21.4
million) as content output continues to recover following the Hollywood
writers' and actors' strikes of 2023
· Gross profit increased by 386% to $10.1 million (H1 FY24: $2.1
million)
· Adjusted EBITDA1 returned to profit, as previously guided, of
$1.6 million (H1 FY24: EBITDA loss of $7.1 million)
· Operating loss of $2.5 million (H1 FY24: loss of $10.9 million)
· Cash balance of $4.3 million at period end (H1 FY24: $16.8
million)
· Operating cash inflow in H1 FY25 approximately $1.0 million
compared to an outflow of $4.8 million in H2 FY24
Operational Highlights
· Strengthened market position as a highly trusted, global,
end-to-end vendor
o Leading standard of customer satisfaction maintained - retained sales KPI
of 97.7%
o Gold-standard security audit by the Trusted Partner Network for ZOO's
production platforms
· Streamlined the business while protecting production capability
to ramp up with recovering demand
o Salary costs reduced by $4.5 million to $13.5 million (H1 FY24 $18.0
million)
o Freelancer network grew slightly to 12,112 (H1 FY24: 11,745)
· Targeted global investments in key growth regions for customers
o Established ZOO Italy with the launch of operations in Milan
o India production centres fully functional and supporting ZOO's
follow-the-sun strategy
Post Period Events
· Named Netflix Preferred Fulfilment Partner of the year for the
Americas for excellence in asset quality and project management at scale,
including 100% on-time delivery rate
· Published AI white paper on enhancing the localisation of premium
content, ensuring faster delivery times without compromising quality or
creative control
· Secured additional debt facility of £2 million giving
$5.6 million funding in total
Current Trading and Outlook
· Entertainment industry recovery expected to continue steadily in
H2 FY25, gradually improving through calendar 2025
· While H1 FY25 trading was in line with full year expectations,
visibility of Q4 orders remains limited
· Ongoing restructuring of cost base to give reduced unit cost of
production in H2 FY25 provides strong platform to return to cash breakeven
· Board believes its cash and debt facilities provide the Company
with sufficient working capital to meet its operating requirements for the
foreseeable future
· Anticipate incremental new revenue opportunities from increased
licensing of premium content and accelerated delivery services
(1) adjusted for share-based payments.
Stuart Green, CEO of ZOO Digital, commented:
"These results demonstrate that ZOO is recovering well from the impact of the
Hollywood strikes and aligning with our customers' evolving content
strategies. Taking action to deliver efficiencies, including relocating some
operations to India; embracing innovations such as Artificial Intelligence;
and the pursuit of opportunities in new regions, have seen ZOO become a more
agile and efficient business, ready for the next chapter of our growth story.
"As we approach a new year, investments in scalable technology and global
talent have enabled us to expand our service offerings, and partnerships with
leading content creators and distributors have strengthened, underscoring our
position as a trusted partner in the media and entertainment industry. We
remain focused on driving innovation, operational excellence and efficiency in
an evolving digital landscape which should position ZOO well to return to cash
breakeven as our industry recovers."
This announcement contains inside information as defined in Article 7 of the
Market Abuse Regulation No. 596/2014 ("MAR"). Upon the publication of this
announcement, this inside information is now considered to be in the public
domain. The persons responsible for making this announcement are CEO Stuart
Green and CFO Phillip Blundell.
Analyst and Investor Presentations
An interim results presentation will be made available on the Company's
website at www.zoodigital.com (http://www.zoodigital.com) .
Stuart Green, Chief Executive Officer, and Phillip Blundell, Chief
Financial Officer, will be hosting an analyst presentation at 9.30am
GMT on Tuesday 12 November 2024 at the offices of Instinctif Partners, 65
Gresham Street, London, EC2V 7NQ. Analysts wishing to attend should register
their interest by contacting: ZOO@instinctif.com (mailto:ZOO@instinctif.com)
.
In addition, an online presentation for private investors will also be held at
17:00 GMT on Tuesday 12 November 2024. For those interested in joining, please
register via the following link: https://www.zoodigital.com/interims2025
(https://www.zoodigital.com/interims2025) .
For further enquiries, please contact:
ZOO Digital Group plc +44 (0) 114 241 3700
Stuart Green - Chief Executive Officer
Phillip Blundell - Chief Finance Officer
Stifel Nicolaus Europe Limited (Nominated Adviser and Joint Broker) +44 (0) 20 7710 7600
Fred Walsh / Erik Anderson / Ben Good
Singer Capital Markets (Joint Broker) +44 (0) 20 7496 3000
Shaun Dobson / Asha Chotai
Instinctif Partners (Financial PR) +44 (0) 207 457 2020
Matthew Smallwood / Augustine Chipungu zoo@instinctif.com
About ZOO Digital Group plc:
ZOO Digital supports major Hollywood studios and streaming services to
globalise their content and reach audiences everywhere, by providing leading,
technology-enabled localisation and media services.
Founded in 2001, ZOO Digital operates from hubs in Los Angeles, London, Dubai,
Turkey, South Korea, India, Denmark, Spain, Italy and Germany with a
development and production centre in Sheffield, UK.
The Group provides media services through its platforms that include: ZOOsubs,
ZOOdubs and ZOOstudio. Its full-service proposition delivers the end-to-end
services required to prepare both original and catalogue content for digital
distribution; these services include dubbing, subtitling & captioning,
metadata creation & localisation, mastering, artwork localisation and
media processing. Alongside this offering, ZOO also provides its customers
with management platforms and strategic solutions to support their own
internal globalisation operations.
ZOO is a go-to service partner for media businesses looking to globalise their
content across different territories, languages and distribution platforms.
Using its innovative technology-enabled approach, ZOO helps its customers to
reduce time to market, lower costs and deliver high quality products to their
global audiences. The business has frameworks in place with all major
Hollywood studios and streaming services. Its customers include Disney,
NBCUniversal, HBO and Paramount Global.
ZOO's competitive advantage arises from three interlinking factors - the
leading role it has played in the digital transformation of its sector; the
world class proprietary platforms that it develops to enable this
transformation; and the global supply chain of thousands of freelancers,
working collaboratively in ZOO's platforms, which delivers services that scale
easily to meet demand. These factors combine to make ZOO uniquely placed to
capitalise on new market opportunities in a fast-paced and constantly evolving
industry.
www.zoodigital.com (http://www.zoodigital.com/)
CHAIRMAN AND CHIEF EXECUTIVE'S STATEMENT
Overview
Trading for H1 FY25 delivered a marked improvement over the prior year period
as original film and TV production projects completed and were passed to ZOO
for processing. The Company's target customers continue to evolve their
content strategies, and consequently, visibility of production schedules and
order pipelines remains limited. However, the industry is clearly recovering,
slowly at first, but expected to gradually improve through calendar 2025, and
changes made by ZOO's customers, together with the Company's reconfigured cost
base, give the Board confidence of a return to sustainable growth.
Market
The Media and Entertainment (M&E) industry has reached an inflection point
in its evolution. As consumers around the world cancel their subscriptions to
multichannel services, this is leading to the demise of traditional linear
television and has presented unprecedented challenges for legacy broadcasters,
including large US-based media organisations. However, these businesses are
adapting to this evolving ecosystem.
Ongoing market recovery led by Netflix and Amazon
The current phase of disruption began in early 2023 when most major US studios
launched wide ranging strategic reviews that subsequently led to significant
changes to their business models and strategies for the creation of
entertainment content. The strikes that took place in Hollywood later that
year, which brought many productions to a halt in the US, UK and other
locations, were symptoms of the challenges the industry is facing. After a
long period of significant reduced activity, companies are now commissioning
more shows, but the resumption of business in Los Angeles continues to be
significantly below its peak.
The recovery of the streaming sector so far has been led by both Netflix and
Amazon, which are responsible for a large share of the programming launched
since the end of the strikes. In the first half of 2024, Netflix commissioned
149 programs in North America, the most since the first half of 2022,
according to research by Ampere Analysis. In contrast, traditional broadcast
television, cable and streaming commissions by major entertainment companies
in the U.S. and Canada increased 39% to 1,013 programs in the first half of
2024 compared to the second half of 2023, but this is down compared with the
first half of 2022 when those companies created 1,515 programmes in the
region.
Streaming, advertising and emerging markets drive M&E industry growth
Encouragingly, from a global perspective, research by PwC points to an M&E
industry that will grow at a 4% CAGR through 2028, fuelled by large new
revenue pools in advertising, streaming and emerging markets. As subscription
revenue growth levels off, global advertising video on demand (AVOD) will
continue to expand through 2028 at a five-year CAGR of 14.1%. By 2028,
advertising will account for about 28% of global streaming revenues, up from
20% in 2023.
International productions reduce reliance on Hollywood
Whilst the number of productions originating from North America has fallen
from peak levels, streamers are increasingly sourcing programming from
international locations. Ampere Analysis reports that more film and TV
production is happening outside the US. While both Netflix and Amazon continue
to make programmes in North America, roughly 60% of their commissions in the
first half of 2024 were international as they sought to expand their audiences
by creating local-language content in hubs like India, Spain and Germany.
Making content abroad can also bring significant savings: a premium drama
series can cost $8 - $10 million per episode in the US. The same title in
Europe with tax credits can be made for less than half this amount.
Evolving content and monetisation strategies create new revenue opportunities
Established operating practices of network television that were initially
eschewed by streamers, such as advertising and weekly episodes, have since
been adopted, leading to an audience experience of streaming that has become
indistinguishable from the cable bundle. More significantly, licensing premium
content to competitors, bundling of channels, inclusion of sports and other
genres of live and near-live programming are all being adopted widely as
strategies to add and retain subscribers.
Consumers are overwhelmed with the proliferation of platforms, rising prices
and managing multiple subscriptions and billing sources. As a result, the
demand for bundles is growing as consumers seek a simplified experience that
gives access to more content through fewer apps, with better value, emulating
the old cable offering.
Streamers are increasingly looking to incorporate live sports events to
broaden their offerings and further differentiate their services. Netflix has
invested heavily in events such as "World Wrestling Entertainment's Monday
Night Raw" and NFL American football. In a deal with FIFA, Apple hopes to show
the Club World Cup in 2025, and Amazon Prime now offers National Basketball
Association games and Champions League matches. The inclusion of sport is seen
as a driver of time spent watching content, now regarded as a more important
measure than subscriber numbers.
A further evolution of the streaming market is the inclusion of other forms of
live and near-live programming. In September 2024, Disney+ introduced its
"Streams" feature - a live feed of content including ABC News and other
continuous programming that subscribers can enjoy without having to select
title by title. This follows the introduction by Netflix of live events which
include comedy stand-up, award shows and other programmes that stream live on
the platform. This is a further trend that is bringing to streaming platforms
the familiar channel-type features of network TV.
As ZOO's target customers continue their evolution, although this brings some
disruption in the short term, it is a precursor to the return to growth in the
medium to longer term. It also opens several new opportunities for ZOO. The
Company's trading in the first half of FY25 clearly shows the resumption of
business as demand for localisation and media services has expanded, with all
current indications being of a recovery continuing through calendar 2025.
Operations
The post-strike return of orders is clearly reflected in ZOO's improved
financial KPIs for the period:
· Revenue grew to $27.6 million (FY24 H1: $21.4 million)
· Adjusted EBITDA(1) margin 6% (FY24 H1 EBITDA loss 33.0%)
· OPEX as a % of revenue 46% (FY24 H1: 60.7%)
· Operating Loss margin 9% (FY24 H1: loss 51%)
· Number of freelancers(2) 12,112 (FY24 H1: 11,745)
· Retained Sales(3) 97.7% (FY24 H1: 99.5%)
(1) Adjusted for share-based payments.
(2) The number of active freelance workers in ZOO's systems who are engaged
directly.
(3) Proportion of client revenues retained from one year to the next.
The Company has continued to manage costs by streamlining the business while
protecting production capability to enable it to ramp up as demand continues
to recover. By reducing its cost base through growing its freelance network
and by further transitioning certain service lines to its facilities in India,
operational efficiencies and round-the-clock availability have been achieved.
Investments in scalable technology, such as AI which can drive productivity
whilst supporting the Company's skilled human experts, have also improved the
flexibility of ZOO's offering. As work volumes recover, the newly structured
cost base should enhance operating margins.
In a continuation of its global growth initiatives to establish points of
presence in strategic locations, the Company launched its operation in Milan
from which it now provides Italian dubbing. Despite the temporary contraction
of orders, the Board is confident that Italian will continue to be an
in-demand dubbing language and that the facility and team in Milan will
enhance the Company's access to this business.
Security
For ZOO's customers, the security and safekeeping of content assets will
always be an essential qualification for selection of media and localisation
vendors, the importance of which was brought into sharp focus during the
period following an industry security breach. In August 2024 a prominent
vendor's systems were compromised, resulting in some popular TV shows
belonging to several streaming services being leaked on X, 4Chan and torrent
sites. ZOO's strategy differs from that of some leading competitors due to the
Company's technology-first approach, where all services are processed and
fulfilled through ZOO's proprietary cloud software platforms in which security
has been built as standard. The Company's credentials in this regard were
demonstrated during the period when it achieved gold standard in a security
audit under the Trusted Partner Network programme for its ZOOsubs, ZOOdubs and
ZOOscripts production platforms.
ZOO Academy
In August 2024 the Company announced that ZOO Academy had achieved a
significant milestone in its journey to revolutionise audiovisual translation
education with the signing of the 50th academic partner. ZOO's community of
localisation teaching establishments now spans 25 countries. ZOO Academy is
committed to equipping educational institutions with the Company's subtitling
and dubbing tools. Advanced software and resources are tailored to offer
students practical, real-world experience. By incorporating this technology
into their curriculum, partners can ensure that their students are
well-equipped to enter the rapidly changing field of audiovisual translation.
ZOO extends its heartfelt gratitude to all partners for their trust and
collaboration.
Quality Award
The quality of ZOO's services continues to be amongst the best in the
industry, and during the period achieved exceptionally high KPI scores as
measured by its largest client. This is underlined by an accolade post period
where the Company was named Netflix Preferred Fulfilment Partner of the year
in the Americas for excellence in asset quality and project management at
scale. The Company achieved an on-time delivery rate of 100%, a redelivery
rate of 0.22% and project management KPI of 9.99 out of 10.0.
AI and innovation
The application of Artificial Intelligence software to the creative industries
widely, including the media localisation market, continues to develop at pace,
together with the legal and ethical considerations that surround its use. Post
period end, the Company published a white paper titled "Will Robots Take Over
the World of Localisation?" to provide further detail on its analysis of AI.
As an innovator in its market, ZOO has identified opportunities to deploy AI
in ways that can drive productivity and scalability by supporting skilled
human experts to achieve high levels of accuracy and authenticity as well as
shortening the time-to-market of entertainment products.
The Company harnesses the power of AI to enhance the localisation of premium
content, ensuring faster delivery times without sacrificing quality or
creative control. The paper explains how ZOO's innovative approach is driving
efficiency while maintaining the high standards required for global
entertainment using AI as an "artificial assistant" rather than a replacement
for creative talent.
Outlook
The Board currently anticipates a continuing industry recovery, steady during
H2 FY25 and gradually improving through calendar 2025. Whilst trading in H1
FY25 was in line with the Board's expectations, given limited current
visibility in Q4, the FY25 outturn is very dependent on two factors:
continuing improvement in trading at a significantly higher run rate of sales
than H1 FY25 for the remainder of the year, and the timing of new projects.
The ongoing restructure of the Company's cost base, including relocating
several service lines to its Indian facilities, will result in a reduced unit
cost of production in H2 FY25, which provides a strong platform to pave the
way for a return to cash breakeven. The Board believes that the H1 FY25 period
end cash position of $4.3 million, together with an existing $3 million US
debt facility and a recently secured UK debt facility of £2 million, provide
the Company with sufficient working capital to meet its operating requirements
for the foreseeable future.
Since early in calendar 2023, ZOO's largest customers have all either
reconfigured their businesses or are in the process of doing so, which has
brought about changes in what they require of their vendors. As a result, the
Board has identified several new opportunities.
The return of licensing new original content by streamers to their competitors
is creating demand for both media services and localisation, albeit in the
form of one-off projects. In H2 FY25 the Board anticipates meaningful order
volumes relating to such work.
The emerging requirement amongst streamers for fast turn-around media
localisation services to support the global distribution of live and near-live
programming creates another new opportunity for which ZOO, using its
cloud-based platforms, is well placed to fulfil. The Company is currently
working on prototype service offerings and is optimistic about securing new
lines of business commencing in H2 FY25.
The Board believes that more large media companies will transition to the
End-to-End (E2E) model, partly due to their restructured operations. As an
accomplished and proven supplier, ZOO is well placed to address these
requirements and is currently in discussions regarding several opportunities.
FINANCIAL REVIEW
Revenues of $27.6 million were 29% above the same period last year (H1 FY24:
$21.4 million). The recovery from the actors' and writers' strikes in FY24 is
the major reason for the positive variance as new productions recommenced in
the first half.
Gross profit improved from $2.1 million to $10.1 million in the period,
reflecting the revenue increase and better utilisation of internal production
staff which was 27% lower compared to the same period last year.
The Company reports segment contribution by service line which is calculated
as revenue less both external and internal variable costs. This is detailed as
a table in the notes to these financial statements. Media localisation
contribution improved to $5.3 million from $2.2 million in H1 FY24. This is
due to better staff utilisation and a reduction in external subtitling costs.
Media services contribution improved from $2.7 million in H1 FY24 to
$6.8 million in the latest period. This was achieved by better staff
utilisation and a 7% improvement in the margin achieved on external direct
costs.
Operating expenses decreased 2.5% to $12.7 million (H1 FY24: $13.0 million) as
indirect staff were reduced in both Los Angeles and the UK. Investment in
India, Germany and Italy continued as the business pivoted to lower cost
production locations. This is reflected in OPEX as a percentage of revenue,
which decreased from 61% to 46%. The Company continued to invest in its
R&D programme where expenditure totalled $0.9 million in the period.
Salary costs were reduced from $18.0 million in H1 FY24 to $13.5 million in H1
FY25, a saving of $4.5 million, following significant cost reductions that
commenced in H2 FY24; savings in H2 FY25 over the prior year period are
expected to be approximately $3.7 million.
Adjusted EBITDA of $1.6 million compares to a loss of $7.1 million last year
as a result of the revenue increase with a small decrease in OPEX, people and
R&D. This is also reflected in the greatly reduced operating loss of $2.5
million (H1 FY24: $10.9 million).
The loss before tax for the period was $2.7 million, which compares to a loss
of $10.1 million last year.
The cash balance as of 30 September 2024 was $4.3 million (H1 FY24: $16.8
million). The decrease was driven by second half FY24 operation losses of $8.2
million. This was further impacted by the outflow of $4.8 million from
investing activities between 30 September 2023 and 30 September 2024. The
investing activities comprised R&D of $2.1 million and capital expenditure
of $1.0 million. The latter was used to extend the production capacity in both
India and Korea. The Group purchased companies in Germany and Italy in the
past 12 months and made deferred consideration payments which totalled $1.7
million, both investments following the stated strategy to build international
capacity to support global media customers when the expected growth in media
localisation spend returns.
The Group remains financially robust with cash of $4.3 million at the end of
September 2024. This is further enhanced by $3.0 million debt facility with
HSBC of which $0.5 million was utilised at the period end. The Group has
secured a further invoice discounting facility with HSBC for an additional
£2.0 million ($2.6 million) to help fund the working capital cycle as
revenues increase. Over the coming months the Board is focused on aligning
costs and revenues to reach break-even in Q1 FY26.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)
for the six months ended 30 September 2024
Unaudited Unaudited Audited
6 months to 6 months to Year ended
30 Sep 2024 30 Sep 2023 31 Mar 2024
$000 $000 $000
Revenue 27,561 21,408 40,629
Cost of sales (17,451) (19,329) (35,172)
Gross Profit 10,110 2,079 5,457
Other operating income - 256
Operating expenses (12,612) (12,988) (24,831)
Operating (loss) (2,502) (10,909) (19,118)
Analysed as
EBITDA before share-based payments 1,658 (7,094) (13,578)
Share based payments (63) (286) 1,729
Depreciation (2,905) (2,506) (4,998)
Amortisation (1,192) (1,023) (2,271)
(2,502) (10,909) (19,118)
Share of profit of associates and JVs - 1,100 (869)
Finance income 25 165 206
Exchange gain/ (loss) on borrowings 27 (100) (100)
Other finance cost (214) (340) (566)
Total finance cost (162) (275) (460)
(Loss)/Profit before taxation (2,664) (10,084) (20,447)
Tax on (Loss)/profit 41 (152) (1,480)
(Loss)/profit and total comprehensive income for the period attributable to (2,623) (10,236) (21,927)
equity holders of the parent
Profit per ordinary share
-basic (2.70) cents (10.6) cents (22.6) cents
-diluted (2.70) cents (10.6) cents (22.6) cents
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
As at 30 September 2024
Unaudited as at 30 Sep 2024 Unaudited as at 30 Sep 2023 Audited as at 31 Mar 2024
$000 $000 $000
ASSETS
Non-current assets
Property, plant and equipment 8,754 14,092 11,189
Intangible assets 14,827 13,443 15,115
Investments 3,097 4,709 3,097
Deferred tax assets 104 1,708 336
26,782 33,952 29,737
Current assets
Trade and other receivables 11,799 7,742 11,485
Contract assets 4,645 4,831 2,569
Cash and cash equivalents 4,340 16,783 5,315
20,784 29,356 19,369
Total assets 47,566 63,308 49,106
LIABILITIES
Current liabilities
Trade and other payables (16,344) (12,828) (15,171)
Contract liabilities (483) (571) (536)
Borrowings (1,837) (1,445) (1,422)
(18,664) (14,844) (17,129)
Non-current liabilities
Borrowings and other payables (3,792) (6,945) (4,326)
Total liabilities (22,456) (21,789) (21,455)
Net assets 25,110 41,519 27,651
EQUITY
Equity attributable to equity holders of the parent
Called up share capital 1,284 1,284 1,284
Share premium reserve 70,701 70,683 70,683
Other reserves 12,320 12,320 12,320
Share option reserve 2,748 4,690 2,685
Capital redemption reserve 6,753 6,753 6,753
Merger reserve 1,326 1,326 1326
Foreign exchange translation reserve (156) (992) (152)
Accumulated losses (69,803) (54,496) (67,185)
25,173 41,568 27,714
Interest in own shares (63) (49) (63)
Attributable to equity holders 25,110 41,519 27,651
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
As at 30 September 2024
Ordinary shares Share premium reserve Foreign exchange translation reserve Share option reserve Capital redemption reserve Merger reserve Other reserves Accumu-lated losses Interest in own shares Total
$000 $000 $000 $000 $000 $000 $000 $000 $000 $000
Balance at
1April 2023 1,179 55,797 (992) 4,391 6,753 - 12,320 (44,266) (49) 35,133
Issue of share capital 105 15,604 - - - 1,326 - - - 17,035
Transaction costs incurred - (718) - - - - - - - (718)
Share options exercised - - - 13 - - - - - 13
Share-based payments - - - 286 - - - - - 286
Foreign exchange translation - - - - - - - 6 - 6
Transactions with owners 105 14,886 - 299 - -1,326 - - - 16,616
Profit for the period - - - - - - - (10,236) - (10,236)
Total comprehensive income for the period - - - - - - - (10,230) - (10,230)
Balance at
30 September 2023 1,284 70,683 (992) 4,690 6,753 1,326 12,320 (54,496) (49) 41,519
Share options exercised - - - 10 - - - - - 10
Share-based payments - - - (2,015) - - - - - (2,015)
Purchase of own shares - - - - - - - - (14) (14)
Transactions with owners - - - (2,005) - - - - (14) (2,019)
Foreign exchange translation - - (152) - - - - (6) - (158)
Reclassification of legacy reserve - - 992 - - - - (992) - -
Profit for the period - - - - - - - (11,691) - (11,691)
Total comprehensive income for the period - - 840 - - - - (12,689) - (11,849)
Balance at
31 March 2024 1,284 70,683 (152) 2,685 6,753 1,326 12,320 (67,185) (63) 27,651
Share based payments - - - 63 - - - - - 63
Deferred tax on share options - - - - - - - 5 - 5
Share options exercised - 18 - - - - - 18
Transactions with owners - 18 - 63 - - - 5 86
Loss for the period - - - - - - - (2,623) - (2,6233)
Foreign exchange translation - - (4) - - - - - - (4)
Total comprehensive income for the period - - (4)- - - - - (2,623) - (2,627)
Balance at 1,284 70,701 (156) 2,748 6,753 1,326 12,320 (69,803) (63) 25,110
30 September 2024
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
for the six months ended 30 September 2024
30 Sep 2024 30 Sep 2023 31 Mar 2024
Unaudited Unaudited Audited
6 months to
30 Sep 2024 6 months to Year ended
$000 30 Sep 2023 31 Mar 2024
$000 $000
Cash flows from operating activities
Operating (loss)/profit for the period (2,502) (10,909) (19,118)
Depreciation 2,905 2,506 4,999
Amortisation 1,192 1,023 2,271
Share based payments 63 286 (1,729)
Disposal of property, plant and equipment - (12) (256)
Changes in working capital:
(Increases)/decreases in trade and other receivables (2,390) 9,346 7,704
Increases/(decreases) in trade and other payables 1,420 (7,048) (5,963)
Cash flow from operations 688 (4,643) (12,092)
Tax (paid)/received 278 (196) 152
Net cash flow from operating activities 966 (4,839) (11,940)
Investing Activities
Purchase of intangible assets (2) (20) (28)
Capitalised development costs (902) (1,512) (2,714)
Purchase of subsidiaries (net of cash acquired) - (240) (1,157)
Purchase of investments - (905) (1,262)
Purchase of property, plant and equipment (265) (1,362) (2,180)
Sale of property, plant and equipment - - (1)
Payment of deferred consideration (300) - -
Finance income 25 165 206
Net cash flow from investing activities (1,444) (4,039) (7,136)
Cash flows from financing activities
Repayment of borrowings - (123) (101)
Proceeds from borrowings 453 - -
Repayment of principal under lease liabilities (750) (710) (1,435)
Finance cost (214) (342) (832)
Share options exercised 18 13 23
Issue of share capital - 15,702 15,702
Transaction costs for issue of share capital - (718) (718)
Net cash flow from financing (493) 13,822 12,639
Net Increase in cash and cash equivalents (971) 4,944 (6,437)
Cash and cash equivalents at the beginning of the period 5,315 11,839 11,839
Exchange loss on cash and cash equivalents (4) - (87)
Cash and cash equivalents at the end of the period 4,340 16,783 5,315
NOTES TO THE INTERIM FINANCIAL STATEMENTS
General information
ZOO Digital Group plc ('the Company') and its subsidiaries (together 'the
Group') provide end-to-end cloud-based localisation and media services to the
global entertainment industry and continue with on-going research and
development to enhance the Group's core offerings. The Group has operations in
the UK, the US, India, Europe and South Korea.
The Company is a public limited company which is listed on the Alternative
Investment Market and is incorporated and domiciled in the UK. The address of
the registered office is Castle House, Angel Street, Sheffield. The registered
number of the Company is 3858881.
This condensed consolidated financial information is presented in US dollars,
the currency of the primary economic environment in which the Group operates.
The interim accounts were approved by the board of directors on 12 November
2024.
This consolidated interim financial information has not been audited.
Basis of preparation
The consolidated financial statements of ZOO Digital Group plc and its
subsidiary undertakings for the period ending 31 March 2025 will be prepared
in accordance with UK adopted international accounting standards and the
requirements of the Companies Act 2006.
This Interim Report has been prepared in accordance with UK AIM listing rules
which require it to be presented and prepared in a form consistent with that
which will be adopted in the annual accounts having regard to the accounting
standards applicable to such accounts. It has not been prepared in accordance
with IAS 34 "Interim Financial Reporting".
The policies applied are consistent with those set out in the annual report
for the year ended 31 March 2024, and have been consistently applied, unless
stated otherwise.
This condensed consolidated financial information is for the six months ended
30 September 2024. It has been prepared with regard to the requirements of
IFRS. It does not constitute statutory accounts as defined in S343 of the
Companies Act 2006. It does not include all of the information required for
full annual financial statements, and should be read in conjunction with the
consolidated financial statements of the Group for the year ended 31 March
2024 which contained an unqualified audit report and have been filed with the
Registrar of Companies. They did not contain statements under s498 of the
Companies Act 2006.
The Group has applied the same accounting policies and methods of computation
in its interim consolidated financial statements as in its 2024 annual
financial statements, except for those that relate to new standards and
interpretations effective for the first time for periods beginning on (or
after) 1 April 2024 and will be adopted in the 2025 financial statements.
There are no standards materially impacting the Group that will be required to
be adopted in the annual financial statements for the year ending 31 March
2025.
Basis of Consolidation
The consolidated financial statements of ZOO Digital Group plc include the
results of the Company and its subsidiaries. Subsidiary accounting policies
are amended where necessary to ensure consistency within the Group and intra
group transactions are eliminated on consolidation.
Going concern
The Group's financial statements are prepared on a going concern basis despite
the losses incurred in the period. The Group continues to have a strong order
pipeline and has significant cash reserves, and its results reflect
predominantly the impact of the Hollywood strikes which is anticipated to be
short term and, as at the date of approval of these financial statements, has
finished.
Segment reporting
Operating segments are reported in a manner consistent with the internal
reporting regularly reviewed by the Group's chief operating decision maker to
make decisions about resource allocation to the segments and to assess their
performance.
Localisation Media services Software Services Total
FY25 H1 FY24 H1 FY25 H1 FY24 H1 FY25 H1 FY24 H1 FY25 H1 FY24 H1
$000 $000 $000 $000 $000 $000 $000 $000
Revenue 17,133 13,471 9,948 7,065 480 872 27,561 21,408
Segment contribution 5,318 2,282 6,791 2,676 339 689 12,448 5,647
Unallocated cost of sales (2,338) (3,568)
Gross profit 10,110 2,079
Gross profit % 31% 17% 68% 38% 71% 79% 37% 10%
Functional and presentation currency
Items included in the financial statements of each of the Group's entities are
measured using the currency of the primary economic environment in which the
entity operates ('the functional currency'). The consolidated financial
statements are presented in US Dollars which is the Group's functional and
presentation currency.
Transactions and balances
Transactions in foreign currencies are recorded at the prevailing rate of
exchange in the month of the transaction. Foreign exchange gains or losses
resulting from the settlement of such transactions and from the translation of
monetary assets and liabilities denominated in foreign currencies at the
year-end exchange rates are recognised in the income statement.
Group companies
The results and financial positions of all Group entities that use a
functional currency different from the presentation currency are translated
into the presentation currency as follows:
· assets and liabilities for each entity are translated at the closing
rate at the period end date;
· income and expenses for each Statement of Comprehensive Income item are
translated at the prevailing monthly exchange rate for the month in which the
income or expense arose and all resulting exchange rate differences are
recognised in other comprehensive income with the foreign exchange translation
reserve.
Earnings per share
Earnings per share is calculated based upon the profit or loss on ordinary
activities after tax for each period divided by the weighted average number of
shares in issue during the period.
Weighted average number of shares for basic & diluted profit per share 30 Sep 2024 30 Sep 2023 31 Mar 2024
No. of shares No. of shares No. of shares
Basic 97,880,145 97,220,638 97,220,638
Diluted 100,577,564 99,856,302 99,863,011
Where the Group has recorded a loss, diluted earnings per share is equal to
basic earnings per share.
Alternative performance measure
Adjusted EBITDA is a key performance measure for the Group and is presented on
the face of the Income Statement. The basis for this is disclosed in the
annual financial statements.
Intangible Assets
Goodwill Customer relationships Development costs Patents and trademarks Computer software Total
$000 $000 $000 $000 $000 $000
Cost
At 1 April 2023 18,168 1,424 17,421 821 269 38,103
Additions 2,593 - 1,512 20 - 4,125
At 30 September 2023 20,761 1,424 18,933 841 269 42,228
Additions 1,715 - 1,202 1 7 2,925
Disposals - - - - (5) (5)
At 31 March 2024 22,476 1,424 20,135 842 271 45,148
Additions - - 902 2 - 904
At 30 September 2024 22,476 1,424 21,037 844 271 46,042
Amortisation and impairment
At 1 April 2023 12,620 142 14,156 624 220 27,762
Amortisation - 71 920 17 15 1,023
At 30 September 2023 12,620 213 15,076 641 235 28,785
Amortisation - 71 1,153 17 7 1,248
At 31 March 2024 12,620 284 16,229 658 242 30,033
Charge - 72 1,096 18 6 1,192
At 30 September 2024 12,620 356 17,325 676 248 31,225
Net book value
At 30 September 2023 8,141 1,211 3,857 200 34 13,443
At 31 March 2024 9,856 1,140 3,906 184 29 15,115
At 30 September 2024 9.856 1,068 3,712 168 23 14,827
Further Copies
Copies of the Interim Report for the six months ended 30 September 2024 will
be available, free of charge, for a period of one month from the registered
office of the Company at Castle House, Angel Street, Sheffield, S3 4LN or from
the Group's website: www.zoodigital.com (http://www.zoodigital.com) .
Functional and presentation currency
Items included in the financial statements of each of the Group's entities are
measured using the currency of the primary economic environment in which the
entity operates ('the functional currency'). The consolidated financial
statements are presented in US Dollars which is the Group's functional and
presentation currency.
Transactions and balances
Transactions in foreign currencies are recorded at the prevailing rate of
exchange in the month of the transaction. Foreign exchange gains or losses
resulting from the settlement of such transactions and from the translation of
monetary assets and liabilities denominated in foreign currencies at the
year-end exchange rates are recognised in the income statement.
Group companies
The results and financial positions of all Group entities that use a
functional currency different from the presentation currency are translated
into the presentation currency as follows:
· assets and liabilities for each entity are translated at the closing
rate at the period end date;
· income and expenses for each Statement of Comprehensive Income item are
translated at the prevailing monthly exchange rate for the month in which the
income or expense arose and all resulting exchange rate differences are
recognised in other comprehensive income with the foreign exchange translation
reserve.
Earnings per share
Earnings per share is calculated based upon the profit or loss on ordinary
activities after tax for each period divided by the weighted average number of
shares in issue during the period.
Weighted average number of shares for basic & diluted profit per share 30 Sep 2024 30 Sep 2023 31 Mar 2024
No. of shares No. of shares No. of shares
Basic 97,880,145 97,220,638 97,220,638
Diluted 100,577,564 99,856,302 99,863,011
Where the Group has recorded a loss, diluted earnings per share is equal to
basic earnings per share.
Alternative performance measure
Adjusted EBITDA is a key performance measure for the Group and is presented on
the face of the Income Statement. The basis for this is disclosed in the
annual financial statements.
Intangible Assets
Goodwill Customer relationships Development costs Patents and trademarks Computer software Total
$000 $000 $000 $000 $000 $000
Cost
At 1 April 2023 18,168 1,424 17,421 821 269 38,103
Additions 2,593 - 1,512 20 - 4,125
At 30 September 2023 20,761 1,424 18,933 841 269 42,228
Additions 1,715 - 1,202 1 7 2,925
Disposals - - - - (5) (5)
At 31 March 2024 22,476 1,424 20,135 842 271 45,148
Additions - - 902 2 - 904
At 30 September 2024 22,476 1,424 21,037 844 271 46,042
Amortisation and impairment
At 1 April 2023 12,620 142 14,156 624 220 27,762
Amortisation - 71 920 17 15 1,023
At 30 September 2023 12,620 213 15,076 641 235 28,785
Amortisation - 71 1,153 17 7 1,248
At 31 March 2024 12,620 284 16,229 658 242 30,033
Charge - 72 1,096 18 6 1,192
At 30 September 2024 12,620 356 17,325 676 248 31,225
Net book value
At 30 September 2023 8,141 1,211 3,857 200 34 13,443
At 31 March 2024 9,856 1,140 3,906 184 29 15,115
At 30 September 2024 9.856 1,068 3,712 168 23 14,827
Further Copies
Copies of the Interim Report for the six months ended 30 September 2024 will
be available, free of charge, for a period of one month from the registered
office of the Company at Castle House, Angel Street, Sheffield, S3 4LN or from
the Group's website: www.zoodigital.com (http://www.zoodigital.com) .
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