REG - Zoo Digital Group - Trading Update

Zoo DigitalAnnouncement

14/07/2023 07:15

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RNS Number : 0518G  Zoo Digital Group PLC  14 July 2023

This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014 as retained as part of UK law by virtue of the European
Union (Withdrawal) Act 2018 as amended. Upon the publication of this
Announcement, this inside information is now considered to be in the public
domain.

 

14 July 2023

 

ZOO DIGITAL GROUP PLC

("ZOO", the "Group" or the "Company")

 

Trading Update

 

IFRS 15 guidance and update on Q1 trading

 

ZOO Digital Group plc (AIM: ZOO), a leading provider of end-to-end
cloud-based localisation and media services to the global entertainment
industry, today provides guidance on its interpretation of IFRS 15 ahead of
full year results, which are now expected to be announced in early August
2023, and an update on Q1 trading.

 

IFRS 15 guidance

 

As part of the audit work for the year-end 31 March 2023 the Company has
received revised guidance from its auditors with regards to the interpretation
of IFRS 15. Specifially, that third party costs should not be matched with
revenue, as per the Company's existing accounting policies, but rather as
supplier invoices are received. Revenues are not affected by this change.

 

Subject to finalisation of audit procedures and technical review, the effect
of this accounting policy change is expected to be an increase in adjusted
EBITDA for FY23 of approximately $2 million and an expected downwards
restatement to adjusted EBITDA of approximately $1.2 million in FY22.

 

Update on Q1 trading

 

First quarter FY24 trading has been impacted due to a well publicised hiatus
in the normal flow of orders across the industry, resulting in lower revenues
than previous management expectations in a quarter that the Board already
expected to be weaker than the previous year.

 

This has been caused by two short-term market factors that are affecting the
wider industry. Firstly, several of ZOO's major streaming company clients have
for some months been implementing cost-saving measures and reorganising their
operations as the industry evolves and confronts higher levels of competition,
leading to the deferment of some costs. Secondly, the Writers Guild of America
strike is in its third month and this is now having an impact on the levels of
localisation and media services work on new titles.

 

Despite the short term industry-wide uncertainly alluded to above, ZOO expects
to be in an even stronger position with several customers following a
rationalisation of their supplier bases with ZOO selected as one of a smaller
number of vendors. Consequently, the Board expects the Company to take further
share of the media localisation market once former business levels resume. It
is reasonable to expect this to be in the second half of the current financial
year, and on this basis the Board currently expects revenue growth to return
in the second half of FY24.

 

The Group is financially strong with net cash of $23 million as at 30 June
2023.

 

ZOO continues to have positive, advanced discussions with a leading Japanese
technology company regarding the acquisition of its localisation subsidiary.

 

The persons responsible for arranging for the release of this Announcement on
behalf of ZOO are Stuart Green, Chief Executive Officer and Phillip Blundell,
Chief Financial Officer of ZOO.

 

 

 For further enquiries, please contact:

 ZOO Digital Group plc                                                +44 (0) 114 241 3700
 Stuart Green - Chief Executive Officer
 Phillip Blundell - Chief Finance Officer

 Kam Bansil - Investor Relations

 Stifel Nicolaus Europe Limited (Nominated Adviser and Joint Broker)  +44 (0) 20 7710 7600
 Fred Walsh / Tom Marsh / Richard Short

 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 / Joe Quinlan                                      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 and Spain 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/)

 

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