REG - Zoo Digital Group - Final Results
Tue 07:00
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RNS Number : 8881U Zoo Digital Group PLC 12 August 2025
12 August, 2025
ZOO Digital Group plc
("ZOO", the "Group" or the "Company")
Final Results for the Year Ended 31 March 2025
Operations restructured to return the Group to operating profit and cash
generation in FY26
ZOO Digital Group plc (AIM: ZOO), the localisation and digital media services
partner to the global entertainment industry, today announces its audited
financial results for the year ended 31 March 2025.
Stuart Green, CEO of ZOO, commented:
"ZOO has shown resilience through a period of market transition and made
significant progress to restructure its operations to position the Group to
deliver operating profit and cash generation in FY26. I believe we have struck
a balance between creating a sustainable platform for the future while
retaining the flexibility to scale as we deliver increased order volumes.
"As a trusted partner, with a technology-enabled, end-to-end model, we can
build solutions for customers' specific needs. Our new Fast Track service,
tailored for localising live and near-live content, has been well received and
although revenue is modest at this stage, the Board is encouraged by the
potential growth opportunity this presents the Group as we seek to increase
our share of spend by several global streamers over the longer term.
"Today we believe most media companies are operating profitable streaming
platforms, supported by new content formats and monetisation models. We enter
FY26 better positioned to navigate this environment and capture profitable
revenue opportunities as the market continues to evolve."
HIGHLIGHTS
Key Financials
· Revenue increased by 22% to $49.6 million (FY24: $40.6 million).
· Adjusted EBITDA(1) returned to a profit of $1.1 million (FY24:
loss of $13.6 million).
· Operating loss of $6.5 million (FY24: loss of $19.1 million).
· Reported loss before tax of $8.3 million (FY24: loss of $20.5
million).
· Gross cash at year-end of $2.7 million (FY24: $5.3 million) with
no amount drawn on the invoice financing facilities; strong focus on cash
management.
Operational Highlights
· During the period, $8.4 million of annual fixed cost cash savings
were delivered (including $1.6 million of capitalised R&D costs), and
further actions implemented in FY26 that the Board expects will deliver at
least a further $2.5 million of annual fixed cost savings, highlighting the
Company's focus to be profitable and cash generative.
· Retained sales(2) of 98.4% (FY24: 92.3%), demonstrating recovery
in demand and customer satisfaction.
· Strengthened relationships with non-traditional studios to
support customer diversification.
· ZOO named a Preferred Fulfilment Vendor for Amazon Prime Video.
Current Trading and Outlook
· Current reduced demand for dubbing led to FY26Q1 revenue 18%
lower than the same period in FY25.
· Service lines excluding dubbing have generated three consecutive
quarters of revenue growth to FY26Q1.
· Continuing cost reductions resulted in an EBITDA profit for
FY26Q1 after restructuring costs in line with management expectations.
· The combination of the implementation of AI and other forms of
automation, together with the operational efficiencies delivered in FY25 and
continuing in FY26, provide a leaner operating model to enable enhanced
margins as revenues recover.
(1) Adjusted EBITDA means earnings before interest, tax, depreciation,
amortisation and share-based payments.
(2) Retained sales represents the proportion of client revenues retained from
one year to the next and provides a quality indication that helps to assess
customer satisfaction.
For further enquiries please contact:
ZOO Digital Group plc +44 114 241 3700
Stuart Green - Chief Executive Officer
Robert Pursell - Chief Financial Officer
Canaccord Genuity (Nominated Adviser and Broker) +44 20 7523 8000
Simon Bridges / Harry Gooden / Andrew Potts / George Grainger
Vigo Consulting (Financial Communications) +44 20 7390 0230
Tim McCall / Rozi Morris / Joe Quinlan ZOO@vigoconsulting.com (mailto:ZOO@vigoconsulting.com)
Analyst presentation
Stuart Green, Chief Executive Officer, will host an online presentation for
sell-side equity analysts, followed by Q&A, at 10:00 BST today. Analysts
wishing to join should register their interest by
contacting: ZOO@vigoconsulting.com (mailto:ZOO@vigoconsulting.com) .
Investor engagement
Management will hold an online presentation for private investors at 17:00 BST
today. For those interested in joining, please register via the following
link: https://www.zoodigital.com/prelims2025
(https://www.zoodigital.com/prelims2025) . A recording of the webinar will be
made available via the Company's website afterwards.
CHAIRMAN'S STATEMENT
It has been a testing year for ZOO as we have had to adapt to profound changes
across the film and television entertainment industry. Following the
disruption of 2023, which led to the first joint strike of Hollywood actors
and writers in 60 years, media companies have spent the last two years
fundamentally reshaping their content strategies to futureproof their
streaming operations. This has required us to adapt to align ZOO's strategy
with our customers and industry partners.
The partial market recovery contributed to a 22% revenue increase to $49.6
million in FY25, and adjusted EBITDA returned to profitability. Our
performance was driven primarily by media localisation in H1 as dubbing work
rebounded from its standstill during the strikes, to clear a backlog of
orders. As the year progressed and our customers' revised content strategies
took effect, we saw an increased level of licensing of third-party content,
which typically requires less dubbing but a greater proportion of media
services work. While the pre-tax loss narrowed considerably year-on-year, the
priority for FY26 is achieving profitability and cash generation.
Given the ongoing industry uncertainty, during the year the Board proactively
reduced our cost base to rightsize the business. In FY25, $8.4 million of
annual fixed cost cash savings were delivered, (including $1.6 million of
capitalised R&D costs), and further actions taken already in FY26 that the
Board expects will deliver at least a further $2.5 million of annual fixed
cost savings. These have not been easy decisions; however, they are important
in the context of positioning ZOO's operations to be profitable even from a
lower revenue base should our markets prove to be challenging. Ultimately,
this will secure the sustainability of the business and allow us to look to
the future with confidence. In addition, we accelerated plans to move a range
of services to the Company's facilities in India. This reduced operating
expenditure as a percentage of revenue to 49.4% from 61.2% in the prior year,
an initiative that is still ongoing, highlighting our leaner cost base as we
rebuild our revenues.
ZOO is an integral partner to streaming services, helping to prepare and
distribute content for international audiences. It is therefore significant
that the recent industry disruption is very much a symptom of the structural
shift towards streaming. Although the journey to this point has been difficult
for the wider ecosystem, we believe that companies such as Netflix, Disney,
Warner Bros. Discovery and Paramount have now reached a point where their
streaming businesses are profitable and sustainable. We are now seeing this
overlaid with new content formats and monetisation models that will support
the growth of the industry in the years ahead.
These evolving content formats play to our strengths and bring new
opportunities. In particular, ZOO has pioneered Fast Track, a fulfilment
service capable of localising live and near-live programmes such as sports
content and topical shows in multiple languages, condensing a process that for
certain traditional vendors would typically take weeks, to a matter of days or
even hours. This is only possible because of the technical skills of our team,
our investment in local hubs in key markets and our tech-enabled end-to-end
offering. During the year, ZOO was named Preferred Fulfilment Vendor for
Amazon Prime Video, and we have successfully prepared several programmes for
global distribution on the platform. In recognition of our service quality -
including a 100% on-time delivery rate - ZOO was also named Netflix Preferred
Fulfilment Partner of the Year for the Americas.
Fast Track is just the latest example of ZOO innovating to stay ahead of our
peers. In September 2024, we published our first whitepaper on the role of
Artificial Intelligence in media localisation, outlining the opportunities and
limitations of AI in our market. We are trusted by global media companies to
localise premium film and TV content where accuracy and authenticity are
essential. This informs our hybrid approach, which is now embedded in the
business, maintaining the importance of a human-in-the-loop while embracing AI
to improve productivity and shortening time-to-market for new content. We now
regularly use AI to assist in the fulfilment of some services and will
continue to implement further solutions where it can provide benefits.
Similarly, we continue to align our operational footprint with the needs of
our customers. In FY25, we established our latest global hub with the launch
of dubbing studios in Italy to meet the evolving needs of major studios and
streaming platforms across Europe. By adopting a 'follow-the-sun' model across
global time zones, we can provide a truly end-to-end service and deliver on a
timely basis the type of complex projects increasingly important to our
customers.
In challenging circumstances, our teams have demonstrated professionalism and
commitment to deliver outstanding work for our customers, which is reflected
in our 98.4% retained sales figure. I would like to extend my gratitude to all
ZOO colleagues for their dedication despite the uncertain market conditions.
On behalf of the Board, I would also like to thank Phillip Blundell for his
contribution to ZOO over the last seven years. Phill informed us of his
decision to resign to pursue other opportunities which was announced in
January 2025. We welcome Rob Pursell as Chief Financial Officer who joined us
on 11th August and look forward to working closely with him in the years
ahead.
I am proud of the leading position ZOO has established in the structural
growth market of streaming. The measures we have taken to improve operational
efficiency have made us a leaner, more agile business while retaining the
advantages of our end-to-end, flexible model. Crucially, this should position
the business to deliver profits and cash generation should market conditions
remain challenging. We remain confident that ZOO is well positioned to capture
the evolving market opportunity.
Gillian Wilmot, CBE
Chairman
STRATEGIC REPORT
Introduction
The Media and Entertainment (M&E) industry began to recover during FY25
following strategic realignments by several large studios and streaming
platforms as well as the double Hollywood strikes of 2023. Against this
backdrop, ZOO grew revenue for the period by 22% to $49.6 million and the
business returned to adjusted EBITDA* profitability. Compared with an adjusted
EBITDA loss of $13.6 million in the prior year, FY25 adjusted EBITDA was
$1.1 million.
While the first half of ZOO's FY25 benefited from an initial increase in
orders as a backlog of projects resumed following the strikes, business in the
second half settled at a lower level as the impact of changes to customer
content strategies took effect. To adapt to this evolving industry landscape,
the Board took the decision to realign the business by implementing cost
reductions and accelerating its plans to move fulfilment of a range of
services to its facilities in India. The result has been not only a
significantly reduced cost base but also a more efficient organisation that
should position the business to generate enhanced margins as revenues recover.
Through this period of significant disruption and change, gross margin has
recovered to 36.4%, close to the 37.6% achieved prior to the industry
disruption in FY23, when annual revenues exceeded $90 million. This
restructuring has laid the foundations for further margin improvement in FY26.
As the industry recovery continues, and with further cost savings implemented,
the Company is well positioned to be profitable and cash generative. This is a
strategic priority for the Board in FY26.
* Earnings before interest, taxes, depreciation, amortisation and share based
payments.
Market Overview
Content strategies adapt to the streaming era
The structural shift from broadcast and cable to streaming has brought about
profound changes across the global M&E ecosystem akin to those that
occurred in the music industry in the mid 2000s. According to Nielsen's
monthly report, The Gauge, May 2025 marked the inflection point where
streaming's share of total television usage in the US outpaced the combined
share of broadcast and cable for the first time with 44.8% share versus 44.2%.
A February 2025 report from Kantar Media revealed that the number of adults
who primarily watch traditional linear TV channels has dropped from 12% in
2021 to just 7% in 2025.
This shift in consumption has had a profound impact on the M&E industry,
requiring large media companies to change their economic models and causing a
period of disruption. These organisations have reassessed their content
procurement strategies to attract and retain viewers of direct-to-consumer
streaming platforms. The strategic shifts of ZOO's largest customers are now
delivering the intended results, as most global streaming platforms became
profitable, or at least close to break even, during the period under review.
However, this evolution has brought about changes in the demand for the
services provided by ZOO and its peers. The global film and TV production
industry began 2025 with a notable downturn, marked by a 10% decline in
overall production activity compared to previous periods, which has had an
impact on ZOO's second half results. This decrease reflects a combination of
economic caution and strategic adjustments in commissioning by major studios
and streaming platforms. The decline in global production activity is
attributed to several factors, including seasonal production delays,
commissioning gaps, and more conservative content spending by major players
New formats and monetisation models drive market growth
From a wider perspective, the large new revenue pools in advertising,
streaming and emerging markets are growth drivers for the industry. According
to PwC's latest Global Entertainment and Media Outlook 2024-28, these factors
will contribute to M&E industry growth of 4% compound annual growth rate,
(CAGR) through 2028. 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. ZOO's services are applicable
to all forms of streaming irrespective of whether content is monetised via
subscriptions or advertising, and therefore this suggests growth in the
Company's addressable market.
While commissions of new content remain at lower levels than in earlier
periods, this has been partly offset by greater licensing activity between
content owners and streamers which has provided platforms with a source of new
programming. This has caused a change in the mix of services commissioned by
ZOO's customers - when titles are licensed, the streaming service is less
likely to commission dubbing, and media services account for a higher
proportion of order value.
Another key development has been the gradual shift to streaming of live and
near-live events that used to be shown solely on broadcast. In 2021, Amazon
secured exclusive broadcasting rights for Thursday Night Football, with Prime
Video becoming the first streaming service to carry a package of NFL games
exclusively. Since 2024 Netflix has paid the NFL for the rights to stream
Christmas day games, while Apple signed a 10-year deal with Major League
Soccer. In November 2024, Netflix live-streamed a boxing match in what became
the most streamed sporting event in history. Such deals enable licensees to
generate revenue from streaming live events through advertising in addition to
subscription fees.
Leading streaming platforms are also beginning to deliver other content types,
including awards ceremonies, stand-up comedy, chat shows and TV game shows. In
due course, other genres such as weekly soap operas and other daytime TV
programming can be expected to transition also. For content that has
international appeal, this requires media localisation in multiple languages
on turnaround times that are unprecedented in the industry. ZOO believes it
has built a leading market position with its Fast Track fulfilment service
already successfully completing fast turnaround assignments for one major
global streaming service and engagement underway with several others.
In June 2025, Netflix announced a landmark deal to show linear TV for the
first time with French TV network TF1. TF1 will use Netflix's platform to
stream a wide range of shows, as well as major live sports in its home
country. All five linear channels of France's largest commercial broadcaster
will be viewable on Netflix, as well as more than 30,000 hours of TV shows
available on demand. This was quickly followed in July 2025 by an announcement
from Amazon Prime Video and France Télévisions that the france.tv offering
will be distributed on Prime Video in France. These are further indications of
traditional broadcast content in transition to streaming which should lead to
growth in ZOO's addressable market.
Regulatory drivers and political environment
The European Accessibility Act 2025 mandates that audiovisual media services,
including streaming platforms, must ensure that new content published after 28
June 2025 is accessible to people with disabilities. The Act, which will
harmonise accessibility standards across EU member states, requires streaming
platforms to provide closed captions, subtitles and audio descriptions that
synchronise with their content. This will lead to an increase in demand for
such services across a greater number of countries and languages than before.
In May 2025, the US government announced an intention to impose 100% tariffs
on any film "produced in foreign lands" due to the decline in on-location
filming in Hollywood. In recent decades, American films and TV series have
benefited from generous tax incentives for shooting in Europe, Canada or
Australia, making Hollywood locations comparatively expensive, and benefiting
the economies of those countries. There is currently still no clarity on the
Hollywood tariff plans, however, most industry participants and market
commentators are of the view that financial incentives provide a better way
for Hollywood to compete with other locations, both in the US and overseas.
The Governor of California, Gavin Newsom, has since signed a budget bill to
more than double the amount the state gives to productions per year, from
$330 million to $750 million and plans a further bill that will make the
incentive even more lucrative. The Board does not anticipate that changes in
relation to tariffs or incentives will have any material impact on the
Company's addressable market.
Media localisation market size
Considering the technological advances applicable to the language industry,
the 2025 Language Industry Market Report from Slator, a leading provider of
research and market intelligence for translation, localisation, interpreting,
and language AI, now distinguishes between Language Solutions Integrators and
Language Technology Platforms. Its estimate of the global market in 2025 is
$31.7 billion of which 87% is attributed to the former, with the media sector
valued at $5.0 billion.
Slator's analysis further subdivides the media localisation sector into five
distinct verticals of which those currently applicable to ZOO are Film and
Streaming ($1.7 billion), Broadcast ($1.4 billion) and Digital Media
($0.4 billion). The Board estimates that large content producers and
streamers, which the Company targets, account for approaching half of this
spend. Assuming industry spend on media services (as distinct from
localisation) is in the same proportion as ZOO's revenues, this would suggest
a total addressable market for the Company of $1.5 billion to $2.0 billion.
ZOO is well positioned to capture recovering demand
Despite ongoing changes in the M&E industry, I believe ZOO remains
well-placed to capitalise as demand recovers, and the Company's tech-enabled
approach, including its proactive adoption of AI technologies, provides a
point of differentiation from most other media specialists that should yield
efficiency and accuracy benefits. The drive to shorten project turnaround
times for live and near-live content means ZOO is well placed and has a strong
position from which to capitalise on the expected growth in the market.
In addition, I believe ZOO's end-to-end service offering and presence in key
international locations is increasingly important for buyers who favour
partnering with vendors that can provide a combined multilingual localisation
and media services offering. This remains important as global trends to
distribute and make content accessible internationally continue to create new
opportunities.
Strategy
The Company's strategy is built upon five pillars:
Innovation
ZOO's history of innovating and adapting to changing markets positions it well
to navigate the continuing challenges and evolving nature of the industry. As
a technology-first business, ZOO is receptive to developments that could
benefit its customers, the most notable area at present being Artificial
Intelligence (AI). The Company's AI-ready infrastructure enables evaluation
and adoption of third-party services quickly and efficiently, seamlessly
integrated with its established workflows. Further details on ZOO's AI
adoption are set out in the section "Artificial Intelligence" below.
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. I believe 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 with in-built security. 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
continues to be proactive in implementing further measures throughout its
systems to safeguard customer content assets.
Scalability
ZOO's proprietary cloud software platforms provide the foundation for its
scalability, on which is built a variable-cost model for fulfilment of
creative services through the engagement of freelance talent. The combination
of the Company's implementation of AI and other forms of automation, together
with the operational efficiencies delivered in FY25 and continuing in FY26,
provide a leaner operating model to enable enhanced margins as revenues
recover.
The Company employs a 'follow-the-sun' approach that provides a cost-effective
way to deliver 24/7 services by allowing projects to continue to progress
across time zones between ZOO's primary locations in USA, UK, India and Korea.
This is critical to support fast turn-around of localisation and media
services. Traditionally, the time to complete subtitling projects is measured
in days or weeks, while dubbing is measured in weeks or months. Global release
of a title depends on the availability of localised assets, and consequently
customers are seeking accelerated processing at reasonable prices to get
products to market more quickly. This is particularly true of time-sensitive
content that, on broadcast channels, would be delivered live or near-live.
ZOO's 'follow-the-sun' model provides the Company with scalability to
accelerate service fulfilment and produce subtitles in a few hours and dubbed
soundtracks within 24-hours.
Collaboration
In August 2024, ZOO Academy signed its 50(th) academic partner, a significant
milestone in its journey to revolutionise audiovisual translation education.
ZOO's community of localisation teaching establishments now spans 25
countries. ZOO Academy supplies 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.
Customer Focus
The quality of ZOO's services is monitored by several of its major customers,
and during the period achieved exceptionally high KPI scores as measured by
its largest client. This is underlined by an accolade received in October 2024
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 10.00.
Talent
ZOO has built a talent pool of employed staff across its international
facilities together with a freelance community numbering over 12,000. Due to
the disruption across the industry, like most of its peers, it was necessary
for ZOO to reduce its workforce during the period. While the Company is
committed to its follow-the-sun strategy and will therefore continue to
operate teams in entertainment centres in Los Angeles and London, its facility
in Chennai, which opened in the prior year, provides the opportunity to expand
certain service lines as demand requires, resulting in lower operating costs
and enhanced margins. The Chennai facility will become a major operational
centre for the Group as the business grows.
Review of Operations
The Group manages on an internal basis the following KPIs which assist in
measuring progress against its strategy.
KPI FY25 FY24 Comments
Financial
Revenue $49.6 million $40.6 million Increased 22% due to the start of an industry recovery that followed the
disruption of the prior year period.
Adjusted EBITDA margin 2.2% (33.4)% FY25 margin is after restructuring costs of $0.8 million, the improvement due
to the early industry recovery combined with the cost reduction measures that
were taken during the period.
OPEX as % of revenue 49.4% 61.2%
Operating (loss) margin (13.1)% (47.1)% The improvement in the operating margin is due to the recovery in sales
coupled with a reduced cost base.
Operational
Number of freelancers 12,238 11,952 Used as a proxy for potential production capacity and as such is not an
important KPI.
Retained sales 98.4% 92.3% Recovered closer to historically typical levels compared to the prior year
when many customers had no new titles to publish because of the strikes.
Employee engagement 65% 78% Given the high level of further redundancies in the period it is no surprise
that the score has fallen further, and it is a priority in FY26 to rebuild
engagement as the industry and business recover. Further details are provided
in the S172 statement. The data is compiled by a staff survey which is carried
out every 12 months.
ZOO's media localisation segment grew 11% in the period to $30.3 million.
Within this segment, dubbing was up by over 50% due to a low comparator in the
prior period which was the consequence of Hollywood strikes. This led to a
catch-up in the first half that subsided in the second half. This is partly
due to an increased level of licensing of third-party content by streamers for
which dubbing demand is lower, which gave rise to a half-on-half decline in
overall revenue. During the period the Company has seen growing demand for
fast turnaround media localisation and is now regularly assigned work to
deliver captions and subtitles within a few hours.
Media services were up 54% to $18.3 million, and within this segment artwork
doubled and metadata creation increased 65%. This growth is again attributed
to a shift in the mix of content that ZOO has processed in the period towards
a greater proportion of licensed programmes which tends to result in demand
that is weighted towards media services rather than localisation.
During the period the Company has diversified its customer base by
strengthening its relationships with certain non-traditional studios. In
February 2025, ZOO was named a Preferred Fulfilment Vendor (PFV) for Amazon
Prime Video, marking another milestone in the Company's ongoing commitment to
providing cutting-edge localisation and digital media services. This new
certification places ZOO among a select group of vendors trusted to help
production companies prepare and distribute content for one of the world's
leading streaming platforms.
While the higher proportion of orders for licensed content has led to improved
margins during the period under review, the planning of such large,
non-repeating projects tends to be more challenging, both for ZOO and its
customers, which has a detrimental effect on revenue visibility. This leads to
greater challenges in forecasting of revenues and resourcing due to the
uncertainty and timing of ZOO's customers concluding arrangements with
licensors and licensees. For example, multiple large licensing deals that were
assigned to ZOO and expected early in the final quarter of FY25 were delayed
until after the end of the period and have since been processed during the
first quarter of FY26.
The Board has continued its programme of cost reductions throughout FY25,
having implemented $8.4 million of annual fixed cost cash savings in the year.
This programme, which is ongoing, should position the Company to deliver
profits an generate cash even at lower levels of revenue.
Climate-related Financial Disclosures
This section sets out ZOO's climate related financial disclosures as required
by The Companies (Strategic Report) (Climate-related Financial Disclosure)
Regulations 2022 and the Task Force on Climate-related Financial Disclosures,
(TCFD). This requirement is not yet in scope however we want to start the
process to provide the recommended disclosures.
Our work in this area is overseen by the ESG management committee with regular
updates to the Board. We are still working towards further integration of our
climate change risks into the overall risk management processes.
Given the disruption to the business over the last twelve months which is
detailed in the Strategic Report, progress has been slow, however, over the
coming year we will improve our disclosures to meet best practice. Our
progress to date is summarised below.
TCFD recommended disclosures Disclosure Summary of progress
Governance 1. Board oversight of climate related risks and opportunities. The Board receives monthly an update on all ESG matters from the CFO who leads
the ESG committee. This provides updates on our environmental initiatives and
Disclose the organisation's governance around climate-related issues and 2. Management's role in assessing and managing climate risks and risk register which includes an environmental section.
opportunities. opportunities.
Strategy 3. Climate-related risks and opportunities. The Board and senior management have reviewed the environment risks associated
with the business in the last 12 months and have concluded that the multi-site
Actual and potential impacts of climate risks and opportunities on the 4. Impact on the business and financial planning. strategy coupled with cloud-based working makes the risk low. In the coming
business.
year the Board has requested a scenario analysis to be conducted.
5. Resilience of the organisation strategy.
Risk Management 6. Risk identification. The ESG committee, which comprises managers from all departments and
locations, meets monthly to assess key risks and progress on initiatives. This
How the organisation identifies, assesses and manages climate related risks. 7. Risk management process. is chaired by the CFO who reports back to the Board monthly.
8. Integration into overall risk management. Any new risk is identified, an action plan for mitigation completed and costed
by finance. Where considered a high risk the mitigation plan is implemented.
An example in the year was that all sites were fitted with Uninterruptible
Power Supplies to prevent loss of data if external power supplies failed.
Metric and Targets 9. Disclose scope 1 and scope 2 greenhouse gas emissions. Other than calculating the SECR metrics for gas emissions the organisation is
not yet ready to set targets or measure performance.
The metrics and targets to assess and manage relevant climate related risks 10. Metrics used to assess climate-related risks.
and opportunities.
11. Describe the targets used to improve or mitigate climate-related risks and
opportunities.
Artificial Intelligence
The application of Artificial Intelligence software to the creative
industries, including the media localisation market, continues to develop at
pace, together with the legal and ethical considerations that surround its
use. In October 2024, the Company published a white paper titled "Will Robots
Take Over the World of Localisation?" to provide further detail on the
application of AI in ZOO's industry. Due to the rapid pace of change, ZOO will
publish an updated edition in FY26.
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 white 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.
ZOO's proprietary cloud-based platforms are 'AI-ready', meaning that the
Company can quickly evaluate and deploy emerging third-party technologies that
once proven can subsequently be fully integrated within its proven workflows.
This enables hybrid solutions that can combine the benefits of best-in-class
AI technologies with those of ZOO's existing platforms and human-based
practices.
During the period, major media companies began to exercise tight controls on
the use by vendors of AI systems due to concerns about copyright and quality.
It is vital to understand the provenance of training data used by such systems
to be sure that there is no infringement risk with the outputs generated.
There are multiple third parties active in the development of media
localisation technologies, particularly those that fall into the category of
'AI dubbing'. In many cases these are developed by pure play technology
companies, and for the premium entertainment market that ZOO serves, we
believe the participation of experienced practitioners is essential to deliver
the required levels of quality and authenticity. ZOO is monitoring these
developments closely to identify best-in-class solutions that may deliver
value in its market, including in collaboration with some of its customers.
For example, on behalf of a major customer, the Company has recently completed
trials to apply Machine Translation technology for subtitling of certain
content and is now approved by this customer for such use which should lead to
shortened delivery times and margin enhancement.
The Slator 2025 Language Industry Market Report provides an indication of
"Language AI Adoption Readiness" in each vertical market and identifies that
the Creators segment (which includes social media influencers, podcasters and
video-first micro-brands) has been most receptive, with adoption stated as
"very high". This is due in part to price sensitivity and the lower perceived
necessity for quality and authenticity. In contrast, Film and Streaming, which
is ZOO's primary segment, is stated as being at a "medium-low" adoption
readiness due to "premium content buyers; quality-sensitive and union-aware;
cautiously experimenting with AI for scale and cost-efficiency", which accords
with ZOO's experience.
AI systems are evolving at a rapid pace, and, given its successful history of
innovation and industry relationships, ZOO operates a proactive programme to
identify opportunities and adopt emerging technologies that can deliver
efficiencies without compromise of quality or authenticity. To achieve this,
the Board believes that in its market, AI will play an increasing role, but a
human-in-the-loop will for the foreseeable future remain essential for most
applications.
Current Trading and Outlook
The current reduced industry demand for dubbing is reflected in ZOO's trading
in the first quarter of FY26 for which total revenue reduced by around 18% on
the same period in FY25. In contrast, other lines of business are in recovery:
quarterly revenues excluding dubbing grew strongly for the periods FY25Q3,
FY25Q4 and FY26Q1. With the inclusion of dubbing, total revenues were flat
across each of these three quarters. After restructuring costs, the Group was
adjusted EBITDA* positive in FY26Q1 and cash neutral over the quarter.
The pipeline of orders in FY26 has so far continued the trend towards licensed
titles, resulting in relatively subdued demand for lower margin dubbing and a
greater demand for higher margin media services. This has led to improved
gross margins from revenues at a similar level to the second half of FY25. The
Board expects this trend to continue, at least into the second quarter.
The Board believes demand for its Fast Track fulfilment service will grow over
the coming years as more content that warrants accelerated localisation
becomes available on streaming platforms. In June 2025, ZOO successfully
completed the first 24-hour turnaround dubbing assignments for a major
streaming service in multiple languages across eight weekly episodes of a new
TV show, an achievement that the Board believes is unprecedented in the
industry. The Company is now in discussions with several customers regarding
this service and expects further projects in Q2.
The Company's cost saving programme has continued into FY26 with the Board
having already implemented actions that it expects will deliver at least a
further $2.5 million of annual fixed cost cash savings, over and above the
$8.4 million annual fixed cost cash savings from FY25. A strategic priority
of the Board is to continue to improve operational efficiency in FY26, which
should position the business to deliver profits and positive cash generation
even if market conditions remain challenging.
The Group's priority in FY26 is to ensure operating profit and cash generation
are restored. The combination of the implementation of AI and other forms of
automation, together with the operational efficiencies delivered in FY25 and
continuing in FY26, provide a leaner operating model to enable enhanced
margins as revenues recover.
* Adjusted EBITDA is EBITDA adjusted for share-based payment expenses in the
year.
Stuart Green
Chief Executive Officer
FINANCIAL REVIEW
Introduction
FY25 was another challenging period for both ZOO and its wider industry, as
the expected recovery in entertainment budgets was delayed. The uncertainty of
spend on media localisation had a knock-on effect on ZOO's ability in
forecasting revenues and resources. ZOO's financial performance improved
significantly from the previous year with revenues up 22%, and an adjusted
EBITDA profit of $1.1 million compared to a significant loss in FY24. As a
result of revenues being below our original expectations, the need to make
significant cuts in operating expenses and the write-off of the investment in
Vista India DM Inc, ZOO recorded a loss before taxation of $8.3 million, a 59%
improvement on the previous year's loss, and a cash outflow of $2.6 million.
The significant cut in operating expenses has reduced the Group's break-even
monthly revenue point which, coupled with the year-end net cash position of
$2.7 million, leaves the business in a strong position to grow profitably in
FY26.
The revenue growth in the year was encouraging and translated into an
improving operating loss of $6.5 million (FY24: loss of $19.1 million),
contributed to Net Assets falling to $19.8 million (FY24: $27.7 million) and
a net cash balance on 31 March 2025 of $2.7 million (FY24: $5.3 million).
Revenue
In the financial year ended 31 March 2025, total revenues increased 22% to
$49.6 million (FY24: $40.6 million). This reflects a gradual recovery in the
market after the disruption in the prior year including Hollywood strikes.
ZOO's customers have cautiously increased their budgets compared to FY24 and
this is reflected in the orders placed with ZOO. The encouraging aspect has
been new engagements with customers which has potential to diversify revenue
in FY26.
Most of the Group's operations are in the United States, where revenues were
up 1% at $31.5 million. The balance of work was performed in Europe and Asia
which grew by 91% to $18.1 million, driven by a 53% increase in European
dubbing projects.
Customer concentration increased during the period with the revenue
contribution from the Company's two largest clients rising to 68% of sales
(FY24: 58%). This was primarily a consequence of an improvement in orders from
the largest US customer post the strikes. In FY26 this is expected to drop due
to recent customer wins with non-traditional studios.
The Group reports two revenue segments: media production and software
solutions. The media production segment is split into localisation and media
services to provide investors with greater transparency.
Media localisation revenues increased by 11% in the year to $30.3 million
(FY24: $27.2 million), as a direct result of the return of dubbing projects
after the strikes.
Media services revenues increased by 54% to $18.3 million (FY24:
$11.9 million) again because of the industry rebound from the strikes
resulting in more new content releases.
Software solutions revenue, the legacy segment that has been a reducing
proportion of the business, decreased by 30% in the year to $1.0 million, as
customers retired old marketing platforms. Inter-company licences paid by
Group companies for the use of the software unit's IP are expected to grow as
our media localisation business continues to recover. This means the software
solutions cash generating unit is expected to improve its profitability over
time resulting in no impairment in the allocated goodwill to that unit.
Segment contribution
The Group reports gross profit after deducting both external and internal
variable costs to reflect that most of its revenues are derived from the
provision of services to our customers. To add clarity to the financial
statements, a table is included of performance by the Group's two key
operating segments. This shows that overall gross profit grew by 230% to $18.0
million (FY24: $5.5 million). This represents a gross profit margin of 36%, up
from 13% in FY24, driven by the increase in revenue, favourable revenue mix
and cost savings.
Media localisation contribution increased in the year from $6.2 million to
$9.2 million, an increase of 48% driven by the revenue growth in both
subtitling and dubbing and lower production costs.
Media services contribution expanded to $12.4 million, up 188% on last year.
This is again due to the revenue increase and the lower staff costs following
the cost saving programme. The margins achieved in the year are more in line
with the Group's best year in FY23 when overall gross margins were 37% and is
a signal of the potential for further improvements going forward.
Software solution segment contribution fell nine points to 70% in the year
because of the drop in revenues.
Administrative expenses
Operational fixed costs, which are defined as operating expenses less
share-based payments, depreciation and amortisation, decreased by 12% in the
year due to a significant reduction in headcount. Overall, operating expenses
only decreased by 1% to $24.5 million, due to the $1.8 million reversal of the
accrual for share-based payments in FY24, depreciation costs rising by 4% and
amortisation costs rising by 5%, both due to higher expenditure in FY23 and
FY24.
Non-operating income and costs and loss for the year
Share of (loss)/profit of associates and JVs worsened from a loss of $0.9
million in FY24 to a loss of $1.5 million due to the higher impairment this
year of the investment in Vista India DM Inc.
Finance costs were down slightly in the year at $0.4 million (FY24: $0.5
million) because of lower interest payments on property leases.
As a result of the increase in revenues and a major improvement in gross
profit, the Company reported an operating loss of $6.5 million compared to a
loss of $19.1 million in FY24.
Loss before tax was $8.3 million compared to a loss of $20.5 million last year
for the reasons highlighted above.
In the year the Group received an R&D tax credit of $0.2 million and a
refund of US tax from the previous year which resulted in a tax credit of $0.4
million. In the prior year, given the recent performance of the US subsidiary,
a deferred tax asset was written off resulting in a tax charge of $1.5
million.
Liquidity and debt facilities
Since 2022 the Company has had an invoice discounting facility from HSBC in
the US which can be used for customer invoices raised from our US subsidiary.
This provides up to $3 million of debt and its next annual renewal is in July
2026.
More recently HSBC in the UK has provided a further invoice discounting
facility which can be used for invoices raised from our UK subsidiary,
providing up to £2 million of debt. This was arranged in October 2024, and
its first annual renewal is in October 2025.
The Company also has an overdraft facility with HSBC UK for £0.25 million
which has been in place since 2018.
The invoice discounting facilities were used selectively during the year as
part of management of working capital. No amount was drawn on the invoice
discounting facilities on 31 March 2025.
Statement of financial position
Non-current assets decreased by 21% in the period. The decrease is due to the
depreciation of PPE being significantly higher than the value of new assets
acquired in the year and the write-off of the investment in Vista India DM
Inc.
The capitalisation of research and development costs decreased by 44% to $1.5
million as we completed key product developments and rightsized the R&D
team. The amortisation charge increased by 4% to $2.4 million.
Trade and other receivables increased by 12% to $12.9 million (FY24:
$11.5 million) reflecting the stronger sales performance in the second half
of the year. Contract assets, which represent work in progress and sales
accruals on customer projects, decreased by 13% to $2.2 million due to quicker
invoicing of completed projects.
Current liabilities increased by 7% to $18.3 million as trade creditor days
slipped out slightly.
Cash and cash equivalents of $2.7 million at year end (FY24: $5.3 million)
were down 49% due to the adjusted EBITDA being offset by investment in
intangible assets and the repayment of principal under lease liabilities.
During FY25 there was a strong focus on cash management and working capital
together with active management of trade creditors.
Non-current liabilities decreased in the year by 26% due to the reduction in
the "right to use" liability on our property lease in Los Angeles having one
less year to run.
Consolidated statement of cash flows
Net cash generated from operating activities was an inflow of $1.1 million, up
from an outflow of $12.1 million in FY24. The increase of $13.2 million is
attributable to a lower loss for the year and a neutral working capital
position. The inflow from operating activities was offset by a $2.2 million
spend on investing activities, which was a decrease of $4.9 million on FY24.
The decrease was due to the reduction in R&D spend and no further
investments in international assets. The outflow from financing was
predominately due to the repayment of principal under lease liabilities
relating to a leasehold property in the USA. Overall, the cash balance dropped
from $5.3 million to $2.7 million. The business also had a strong focus on
cash management and working capital together with active management of trade
creditors during the year and ended FY25 with gross cash of $2.7 million
(FY24: $5.3 million) with no amount drawn on the invoice financing facilities.
Post balance sheet events and going concern
Going forward, the Company remains confident that it has sufficient headroom
to trade for the foreseeable future, as the renewal of the US $3 million
invoice discounting facility from HSBC to July 2026, together with a separate
European facility of £2 million, gives us the required working capital
headroom. In addition, the improving trading position, reduction in monthly
costs, forecast profitability and cashflows from operations gives us
additional confidence in the future. The budget for FY26 and FY27 has been
stress tested by our financial modelling which demonstrates our ability to
reduce the trade creditors balance to more normal levels. For these reasons,
we continue to adopt the going concern basis in preparing the financial
statements.
Principal risks and uncertainties
Company law requires the Group to report on principal risks and uncertainties
facing the business, which the Directors believe to be as follows:
International business
While the Group is domiciled in the UK, its main country of operations is the
US and over 69% of ZOO's revenues come from overseas clients. As with most
small international businesses cash flow and exchange rate fluctuations
management present risks. The Group continues to focus on conservative cash
management and closely monitors currency transactions.
Political uncertainty
The political climates in the UK and US are currently challenging due to the
global economic environment. Although the terrible situations in Ukraine and
the Middle East continue to have a major effect on the world economy, the
current impact on ZOO is negligible. The Directors monitor emerging news and
trends and remain alert to any potential impact on the trading of the Group.
Specifically, the threats of tariffs on media assets are not expected to dim
the international appeal of film and TV programmes and therefore the need to
localise content.
Technology conservation
The Group continues with a patent protection policy, with 14 patents granted,
having allowed some legacy patents which are no longer beneficial to lapse.
These active patents are integral to the business in the protection of our
unique technologies.
Operational risks
The main operational risk is managing any unexpected peaks or troughs in
production orders and ensuring that the appropriate levels of resource are
available to provide the quality of services expected by our clients. This
risk is managed by having a core of highly skilled permanent staff along with
a pool of temporary staff that can be brought in at short notice to help at
times of high volume. In the current year we have supplemented these
resources by engaging international businesses to operate within our
technology platform, giving us further variable cost capacity. The use of
technology helps mitigate this risk by streamlining processes as much as
possible and enabling efficient access to a large, global and scalable pool of
independent contractors. The Company is actively implementing artificial
intelligence where appropriate to help with reducing costs and managing
capacity.
Cyber Risks
Like most digital businesses, the Group faces cyber risks in four key areas:
Intellectual Property Theft refers to unauthorised access and use of the
Group's own software and data that could undermine its competitive position;
Data Breaches refers to exposure of sensitive data, such as client information
and unreleased media which could result in disclosure of confidential
information, leading to reputational and financial damage; Ransomware Attacks,
caused by malicious software that could prevent us from accessing our IT
systems and the data stored on them, could disrupt our operations and delay
project completions; and Social Engineering, which refers to manipulating
people so they give up confidential information (e.g. the fraudulent practice
of Phishing where messages are sent purporting to be from reputable people and
companies in order to induce individuals to reveal personal information such
as passwords), could compromise our systems and data security. Although we
assess our risk level as medium/low compared to more prominent industry
players, the potential impact of these risks remains high. To mitigate these
threats, we have implemented industry-standard security tools, managed by
reliable third parties. ZOO's proprietary cloud-based software has been
designed from the outset with high levels of security in mind and incorporates
a range of measures to protect confidential data throughout end-to-end
workflows, incorporating features that include encryption, multi-factor
authorisation and watermarking. In June 2024 the Company completed a
third-party Trusted Partner Network (TPN) security audit, which involved a
thorough evaluation of ZOO's security protocols, infrastructure, and
practices, earning a Gold Shield for the ZOOsubs, ZOOdubs and ZOOscripts
platforms. TPN is the leading, global, industry-wide film and television
content security initiative. Designed to assist companies in preventing leaks,
breaches, and hacks of movies and television shows prior to their intended
release, TPN seeks to raise security awareness, preparedness, and capabilities
within the industry. TPN is owned and managed by the Motion Picture
Association. Cyber security is a key focus of management and our IT team, and
we ensure all staff are continuously trained to maintain a security-first
approach.
Artificial Intelligence
Third party software products and services have emerged that make use of
Artificial Intelligence, which refers to the ability of a machine-based system
to apply analysis and logic-based techniques to solve problems, perform tasks
and improve as more data is analysed. This includes applications in which the
Company provides services, including the creation of closed captions,
inter-lingual subtitles, audio description and dubbing. Such technologies have
the potential to displace the services currently offered by the Company. The
Directors monitor emerging technologies, evaluate third party products where
applicable and remain alert to any commercial implications they may have. The
Group's internal Research and Development department has actively developed
and enhanced such technologies over several years with some already
incorporated into the Company's cloud platforms. As an innovator in its sector
the Directors believe that the Group is well positioned to assess where AI
technologies are applicable in its business and to capitalise on these,
thereby mitigating any apparent threat.
Loss of the Group's key clients
Client relationships are crucial to the Group and the strength of them is key
to its continued success. The Group mitigates this risk by a diverse number of
contacts working closely with the largest clients across different business
units and seeking to secure long term contractual agreements for supply of
technology and services. The Group focusses on providing high quality
services to all clients to ensure an attractive and differentiated offering
thereby reducing the likelihood of client loss.
Corporate activity within key clients
Merger and acquisitions within key clients represent a risk as they can
disrupt sales. This risk is mitigated by ensuring an awareness of news in
the market and focussing on diversifying the client base.
Financial risks
The main financial risks faced by the Group are in relation to foreign
currency and liquidity. The Directors regularly review and agree policies
for managing these risks.
The functional currency and presentation currency of the Company are US
dollars as most of the Group's transactions are undertaken in US dollars,
however, the Consolidated Statement of Financial Position can be affected by
movements between pound sterling and the US dollar as the parent company and
UK subsidiaries have some pound sterling debtors and creditors. Foreign
currency risk is managed by matching payments and receipts in foreign currency
to minimise exposure. Further information on the financial risks is given in
note 28 to the accounts.
The Group is exposed to the usual credit risk and cash flow risk associated
with selling on credit and manages this through credit control procedures. The
Group regularly monitors cash flows and cash resources and can draw down funds
from financing facilities in the UK and the US.
By order of the Board
Approved by:
Phillip Blundell
Director and Secretary
11 August 2025
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2025
2025
2024
Note $000 $000
Revenue 49,570 40,629
Cost of sales (31,549) (35,172)
Gross Profit 18,021 5,457
Other income - 256
Administrative expenses (24,499) (24,831)
Operating loss (6,478) (19,118)
Analysed as:
EBITDA before share based payments 1,109 (13,578)
Share based payments - 1,729
Depreciation and impairment (5,197) (4,998)
Amortisation (2,390) (2,271)
(6,478) (19,118)
Share of loss of associates and JVs (48) (869)
Impairment loss on associate (1,457) -
Finance income 43 206
Exchange gain/(loss) on borrowings 20 (100)
Finance cost (422) (566)
Total finance costs (359) (460)
Loss before taxation (8,342) (20,447)
Tax credit/(charge) on loss 362 (1,480)
(Loss)for the year (7,980) (21,927)
Other comprehensive income
Currency translation gain/(loss) 14 (153)
Total comprehensive loss for the year (7,966) (22,080)
Loss for the year and total comprehensive loss for the year are all
attributable to the owners of the Parent Company
Loss per share 4
basic (8.10) cents (22.60) cents
diluted (8.10) cents (22.60) cents
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 March 2025
2025 2024
Note $000 $000
ASSETS
Non-current assets
Intangible assets 14,285 15,115
Property, plant and equipment 7,218 11,189
Investment in associated undertakings 1,591 3,097
Deferred income tax assets 321 336
23,415 29,737
Current assets
Trade and other receivables 12,883 11,485
Contract assets 2,244 2,569
Cash and cash equivalents 2,714 5,315
17,841 19,369
Total assets 41,256 49,106
LIABILITIES
Current liabilities
Trade and other payables (16,160) (15,171)
Contract liabilities (618) (536)
Borrowings 7 (1,473) (1,422)
(18,251) (17,129)
Non-current liabilities
Borrowings 7 (3,185) (4,326)
(3,185) (4,326)
Total liabilities (21,436) (21,455)
Net assets 19,820 27,651
EQUITY
Equity attributable to equity holders of the parent
Called up share capital 6 1,290 1,284
Share premium reserve 6 70,805 70,683
Foreign exchange translation reserve 6 (138) (152)
Share option reserve 6 2,692 2,685
Capital redemption reserve 6 6,753 6,753
Interest in own shares 6 (63) (63)
Other reserves 6 12,320 12,320
Merger reserve 6 1,326 1,326
Accumulated losses 6 (75,165) (67,185)
Attributable to equity holders 19,820 27,651
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2025
Ordinary shares Share premium Foreign exchange translation reserve Share option reserve Capital redemption reserve Merger reserve Other reserves Accumulated losses Interest in own shares Total equity attributable to the owners of the Parent
reserve
$000 $000 $000 $000 $000 $000 $000 $000 $000 $000
Balance at 1 April 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 - - - 23 - - - - - 23
Share based payments - - - (1,729) - - - - - (1,729)
Purchase of own shares - - - - - - - - (14) (14)
Transactions with owners 105 14,886 - (1,706) - 1,326 - - (14) 14,597
Loss for the year - - - - - - - (21,927) - (21,927)
Foreign exchange loss on overseas subsidiary translation - - (152) - - - - - - (152)
Reclassification of historic foreign exchange reserve (note 2.4.1) - - 992 - - - - (992) - -
Total comprehensive income for the year - - 840 - - - - (22,919) - (22,079)
Balance at 31 March 2024 1,284 70,683 (152) 2,685 6,753 1,326 12,320 (67,185) (63) 27,651
Issue of Share Capital 6 122 - - - - - - - 128
Share options exercised - - - 7 - - - - - 7
Transactions with owners 6 122 - 7 - - - - - 135
Loss for the year - - - - - - - (7,980) - (7,980)
Foreign exchange loss on overseas subsidiary translation - - 14 - - - - - 14
Total comprehensive loss for the year - - 14 - - - - (7,980) - (7,966)
Balance at 31 March 2025 1,290 70,805 (138) 2,692 6,753 1,326 12,320 (75,165) (63) 19,820
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 March 2025
2025 2024
Note $000 $000
Cash flows from operating activities
Operating loss for the year (6,478) (19,118)
Depreciation and impairment 5,197 4,999
Amortisation and impairment 2,390 2,271
Share based payments - (1,729)
Disposal of property, plant and equipment - (256)
Changes in working capital:
(Decrease)/Increase in trade and other receivables (1,074) 7,704
Increase/(Decrease) in trade and other payables 1,073 (5,963)
Cash flow from operations 1,108 (12,092)
Tax received 377 152
Net cash inflow/(outflow) from operating activities 1,485 (11,940)
Investing activities
Purchase of intangible assets (7) (28)
Capitalised development costs (1,519) (2,714)
Purchase of investments - (1,262)
Business combinations (net of cash acquired) (30) (1,157)
Purchase of property, plant and equipment (731) (2,180)
Sale of property, plant and equipment - (1)
Finance income 43 206
Net cash outflow from investing activities (2,244) (7,136)
Cash flows from financing activities
Repayment of borrowings - (101)
Repayment of principal under lease liabilities (1,585) (1,435)
Finance cost (388) (832)
Share options exercised 7 23
Issue of share capital 128 15,702
Transaction costs for issue of share capital - (718)
Net cash (outflow)/inflow from financing (1,838) 12,639
Net (decrease) in cash and cash equivalents (2,597) (6,437)
Cash and cash equivalents at the beginning of the year 5,315 11,839
Exchange (loss) on cash and cash equivalents (4) (87)
Cash and cash equivalents at the end of the year 5 2,714 5,315
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2025
1. General information
ZOO Digital Group plc ('the company') and its subsidiaries (together 'the
group') provide productivity tools and services for digital content authoring,
video post-production and localisation for entertainment, publishing and
packaging markets and continue with on-going research and development in those
areas. The group has operations in the UK, US, India, Italy, Germany and S.
Korea and joint ventures in Turkey and Spain.
The company is a public limited company which is listed on the AIM Market of
the London Stock Exchange and is incorporated and domiciled in the UK. The
address of the registered office is Floor 2 Castle House, Angel Street,
Sheffield.
The registered number of the company is 03858881.
The consolidated financial statements are presented in US dollars, the
currency of the primary economic environment in which the company operates
(note 2.4.1). Monetary amounts in these financial statements are rounded to
the nearest $000.
2. Statement of compliance
The financial information set out in this preliminary announcement does not
constitute the Group's statutory financial statements for the period ended 31
March 2025 or 31 March 2024 as defined in section 435 of the Companies act
2006 (CA 2006) but is derived from those audited financial statements.
Statutory financial statements for 2022 have been delivered to the Registrar
of Companies and those for 2023 will be delivered in due course. The auditors
reported on those accounts; their reports were unqualified and did not contain
a statement under either Section 498(2) or Section 498(3) of the Companies Act
2006.
Selected explanatory notes are included to explain events and transactions
that are significant to an understanding of the changes in financial position
and performance of the Group.
3. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these
financial statements are set out below. These policies have been applied
consistently to all the years presented, unless otherwise stated.
3.1 Basis of preparation and going concern
Group financial statements
These financial statements have been prepared in accordance with UK adopted
international accounting standards and the requirements of the Companies Act
2006.
The preparation of financial statements in accordance with UK adopted
international accounting standards and the requirements of the Companies Act
2006 requires management to make judgements, estimates and assumptions that
effect the application of policies and reported amounts in the financial
statements. The areas involving a higher degree of judgement or complexity, or
areas where assumptions or estimates are significant to the financial
statements are disclosed in note 3.
Going concern
The financial statements have been prepared on a going concern basis which the
Directors consider to be appropriate for the following reasons.
The events of the actors' and writers' strikes that had such a negative impact
on the financial results for FY24 were a once in a generation disruption to
the market. Once these disputes were resolved in November 2023, with a
three-year agreement secured between the Unions and major studios, and with
demand already picking up, coupled with the long-term growth in the need for
content for streaming platforms, the future remains positive for ZOO.
The Directors have reviewed the Group's forecasts up until 31 August 2026,
taking account of the recovery and reasonably possible changes in trading
performance, together with the planned capital investment over that same
period. The Group is expected to have a sufficient level of financial
resources available through operating cash flows for the period to 31 August
2026 ("the going concern period").
For the purpose of assessing the appropriateness of the preparation of the
Group's accounts on a going concern basis, the Directors have produced a
financial model which includes a profit and loss account, balance sheet and
cash flow forecast for the group for the period to 31 August 2026. The
forecasts consider the current cash position, the availability of banking
facilities and an assessment of the principal areas of risk and uncertainty.
In addition, this is based on firm orders for quarter one, a schedule of
project deliverables to October 2025 and expected run-rate orders for the
remainder of the forecast period. This forecast shows that in Q1 FY25 the
business is EBITDA profitable and thereafter remains in a position of profit
for the full forecast period. The cash position stabilises at the end of Q2
FY26 with approximate cash of $1.5 million and improves from that point
onwards. In line with industry practice in this sector the Directors have had
informal indications from major and smaller clients to substantiate a
significant proportion of the forecast sales.
The Directors have also conducted a stress test exercise which involved
reducing the sales forecast by 18% in the period from 1 July 2025 to 31 August
2026 without a significant reduction in the cost base and this results in the
cash position remaining positive throughout the period. If revenues in Q3 FY26
were to track the stress test model the Directors would take corrective action
to reduce the Group's cost base to ensure the business did not exhaust all
cash reserves. To mitigate, the Board would instigate a round of redundancies
to align the cost base with future projected revenues.
The group has a facility with HSBC Bank which provides invoice financing of up
to $3.0 million against US client invoices raised by ZOO Digital Production
LLC. This facility is reviewed on an annual basis in June of each year. In the
UK there is a similar facility which provides up to £2 million against UK and
Non-US client invoices raised by ZOO Digital Limited and an overdraft facility
with a limit of £250,000 ($345,000) in place with HSBC. The reverse stress
test scenario does not include the use of any banking facilities. The Board of
Directors is exploring extending the banking facilities to include a more
structured debt vehicle to add further confidence to the working capital
headroom.
The directors believe the assumptions used in preparing the trading and cash
flows forecasts to be realistic and that the reverse stress test is
implausible. Consequently, the Directors believe the group will continue in
operational existence for the foreseeable future, and the financial statements
have therefore been prepared on a going concern basis.
3.1.1 Standards and interpretations in issue at 31 March 2025 but not yet
effective and have not yet been adopted early by the Group
At the date of authorisation of these financial statements, the following
standards and interpretations, which have not yet been applied in these
financial statements, were in issue but not yet effective (and in some cases
had not yet been adopted by the UK Endorsement Board):
Standard/Interpretation Effective Date
The Effects of Changes in Foreign Exchange Rates (Amendments to IAS 21) 1 January 2025
Classification and Measurement of Financial Instruments (Amendments to IFRS 7 1 January 2026
and IFRS 9)
Contracts Referencing Nature-Dependent Electricity (Amendments to IFRS 7 and 1 January 2026
IFRS 9)
IFRS 18 'Presentation and Disclosure in Financial Statements' 1 January 2027
IFRS 19 'Subsidiaries without Public Accountability: Disclosures' 1 January 2027
Effective dates refer to periods commencing on or after this date. The Group's
reported financial results are not expected to be materially affected by any
standard. However, the presentation and disclosure of its results are expected
to be impacted by the adoption IFRS 18 which is predominantly a
disclosure-only standard. Given this impacts only disclosures, the Directors
do not expect there to be an impact on the reported profits or net assets of
the Group from adopting these standards. As this is a disclosure-led
standards, the Directors have not presented a list of impacts on the financial
statements.
3.2 Consolidation
Subsidiaries are all entities (including structured entities) over which the
group has control. The group controls an entity when the group is exposed to,
or has rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power over the entity.
Subsidiaries are fully consolidated from the date on which control is obtained
until the date that control ceases.
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.
The Group applies the acquisition method when accounting for business
combinations. The consideration transferred by the Group to obtain control of
a subsidiary is calculated as the sum of the acquisition-date fair values of
assets transferred, liabilities incurred and equity interests issued the
Group, which includes the fair value of any asset or liability arising from a
contingent consideration arrangement. Acquisition costs are expensed as
incurred.
Assets acquired and liabilities assumed are generally measured at their
acquisition date fair values. However, such fair values and all associated
accounting entries are subject to revision during a period not exceeding 12
months following the date of acquisition, insofar as the accounting for the
business combination is incomplete by the end of the first reporting period
date. As a result, ZOO Digital Group plc revises any provisional amounts
retrospectively to reflect further evidence received in respect of acquisition
date values. There have been no revisions in the current year.
3.3 Foreign currency translation
3.3.1 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 parent company and Group's
functional and presentation currency. The functional currency of the company's
primary operating subsidiaries is US dollars, therefore the majority of
transactions between the company and its subsidiaries and the company's
revenue and receivables are denominated in US dollars.
The US dollar/pound sterling exchange rate at 31 March 2025 was 0.775 (2024:
0.794).
In 2009 the Group changed its functional currency from Pound Sterling to US
Dollars, creating a translation reserve at this date. Following a review of
the reserve at that date, the Directors have determined that the continued
existence of this does not support the clarity of the financial statements,
and that the reserve is better utilised in the ongoing translation of new
foreign subsidiaries that do not have the US Dollar as functional currency.
Accordingly, in the prior year the brought forward element of the reserve has
been reclassified in its entirety to retained earnings.
3.3.2 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 profit/(loss) for the year in the
Consolidated Statement of Comprehensive Income.
3.3.3 Group companies
The results and financial position of all group entities that have 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 year end date;
- income and expenses for each Statement of Comprehensive Income
are translated at the prevailing monthly exchange rate for the month in which
the income or expense arose.
4. Earnings per share
Basic earnings per share ("EPS") is calculated by dividing the loss
attributable to equity holders of the company by the weighted average number
of ordinary shares in issue during the year.
Diluted EPS is calculated by dividing the profit attributable to the equity
holders of the Parent by the weighted average number of ordinary shares
outstanding plus the weighted average number of shares that would be issued on
conversion of all the dilutive share options into ordinary shares.
Basic and Diluted
2025 2024
$000 $000
(Loss)/profit for the financial year (7,979) (21,927)
2025 2024
Number of shares Number of shares
Weighted average number of shares for basic & diluted profit per share
Basic 97,976,898 97,220,638
Effect of dilutive potential ordinary shares:
Share options - 2,635,664
Diluted 97,976,898 99,856,302
2025 2024
Cents Cents
Basic (8.20) (22.60)
Diluted (8.20) (22.60)
Diluted earnings per share is calculated by adjusting the earnings and number
of shares for the effects of dilutive options. In the event that a loss is
recorded for the year, share options are not considered to have a dilutive
effect.
5. Notes to the cash flow statement
5.1 Significant non-cash transactions
During the year the group acquired property, plant and equipment and computer
software with a cost of $1,226,000 (2024: $2,634,000) of which $495,000 (2024:
$449,000) was acquired by means of a lease.
5.2 Cash and cash equivalents
Cash and cash equivalents consist of cash on hand and balances with banks.
Cash and cash equivalents included in the cash flow statement comprise the
following consolidated and parent company statement of financial position
amounts.
Group Company
2025 2024 2025 2024
$000 $000 $000 $000
Cash on hand and balances with banks 2,714 5,315 21 307
All cash balances are readily available with withdrawal in less than 90 days.
6. Share capital and reserves for Group and Company
Called up share capital
2025 2024
$000 $000
Allotted, called-up and fully paid
98,318,228 (2024: 97,856,924) ordinary shares of 1p each 1,290 1,284
Reconciliation of the number of ordinary shares outstanding:
Opening balance 97,856,924 89,285,291
Shares issued under UK share save scheme at a price of 41p 31,304 27,391
Korea Acquisition - 550,000
Fundraise - 7,914,242
Share options exercised at a price of 15p 430,000 80,000
Closing balance 98,318,228 97,856,924
Reserves
The following describes the nature and purpose of each reserve within owner's
equity:
Reserve Description and purpose
Share premium reserve Represents the amount subscribed for share capital in excess of the nominal
value.
Foreign exchange translation reserve Cumulative exchange differences resulting from the Group changing reporting
currency from pounds sterling to USD.
Share option reserve Cumulative cost of share options issued to employees.
Capital redemption reserve Represents 32,660,660 deferred shares of 14p each created during the share
reorganisation on 4 May 2017.
Interest in own shares This arises from ZEST and concerns historical transactions as part of the
Group's employee benefit trust.
Merger reserve As part of acquisitions the Group has issued share capital as part of its
consideration. As set out in s612 Companies Act 2006, merger relief has been
applied and the excess above the nominal value of share capital has been
recognised in the merger reserve.
Other reserves Created as part of the reverse takeover between Kazoo3D plc and ZOO Media
Corporation Ltd in 2001.
Accumulated losses Cumulative net losses recognised in profit or loss.
7. Borrowings
Group Company
2025 2024 2025 2024
$000 $000 $000 $000
Non-current
Other Loans (Gov. loan to ZOO Korea) 237 243 - -
Lease liabilities 2,948 4,083 61 196
3,185 4,326 61 196
Current
Amounts owed to subsidiary undertakings - - 9,701 9,701
Lease liabilities 1,473 1,422 102 123
Borrowings 1,473 1,422 9,803 9,824
Total borrowings 4,658 5,748 9,864 10,020
The group has renewed on 1 June 2025 with HSBC Bank US an invoice financing
facility of up to $3.0 million against US client invoices raised by ZOO
Digital Production LLC. The facility is in place until the renew date of 31
May 2026.
The UK banking partner, HSBC, continues to provide an overdraft facility of
£250,000. The principal outstanding at 31 March 2025 was nil (2024: nil).
This line of funding has been secured as a floating charge over the assets of
the UK companies and automatically renews on an annual basis.
In October 2024 the group was approved for an invoice financing facility of up
to $2.0 million against UK client invoices raised by ZOO Digital Limited. The
facility is in place until the renewal date of 30 September 2025.
Annual report and Accounts
Copies of the Report & Accounts for the year ended 31 March 2025 will
shortly be available to view on the Group's website www.zoodigital.com
(http://www.zoodigital.com/) .
The Report & Accounts for the year ended 31 March 2025, together with the
notice of annual general meeting, are expected to be posted to shareholders in
early September 2025; an announcement to notify shareholders of this will be
made in due course. Further copies will be available from the Company's
Registered Office: 2(nd) Floor, Castle House, Angel Street, Sheffield S3 8LN.
Annual General Meeting
The Annual General Meeting of the Group will be held at Canaccord Genuity
limited, London EC2V 7QR on
25th September 2025 at 5pm.
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