TIDMZIN
RNS Number : 5372G
Zinc Media Group PLC
18 March 2020
18 March 2020
Zinc Media Group plc
("Zinc Media" or the "Company")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHSED 31 DECEMBER
2019
Zinc Media Group plc, the TV and multimedia content producer,
today announces its unaudited interim results for the six months to
31 December 2019.
Headlines
Management have achieved the first key milestones on the road to
transforming the business, namely completing a GBP3.5m fundraise,
restructuring the balance sheet and securing a new fit-for purpose
London HQ post period end. Additionally g ood progress is being
made on the four strategic priorities of the transformation
plan:
Strategic priority Progress
-------------------------------------- ----------------------------------------------
1. Improvements in London Production margins improving faster
and Manchester gross TV Margins and are now higher than previously
expected at this stage of the transformation
====================================== ==============================================
2. Revenue growth and diversification Revenue growth of 44% compared to
the same period last year and new
TV clients secured in both the UK
and US
====================================== ==============================================
3. Cultural and creative renewal Increasing exploitation of Nations
and Regions TV profile with new business
being developed collaboratively across
the portfolio of TV labels
====================================== ==============================================
4. Investment in operational Investments underway in post-production
excellence facilities, new London HQ secured
at a lower cost than current premises,
expanded Glasgow premises and Group
functions including finance and HR
====================================== ==============================================
Financial Headlines
-- Revenue growth of 44% to GBP14.15m (H1 19: GBP9.86m)
-- London & Manchester TV margins are improving better than
anticipated and the impact will be seen in future periods
-- Made outside London (MoL) TV revenues growing, driven by Tern Television
-- Profitable at adjusted EBITDA* level, at GBP0.02m (H1 19: GBP0.01m), albeit improvements in profitability offset by investments in the period and ongoing turnaround of Zinc Communicate and Blakeway North
-- Successful fundraise of GBP3.5m post period end
-- Balance sheet restructured post period end, including all
preference shares converted, long-term debt reduced and its
repayment date extended by two years
-- New London HQ secured on lower cost base than current premises
-- Transitional year ahead in 2020 as new investments are made for long term growth
* Adjusted EBITDA defined as EBITDA before share based payment
charges and exceptional items.
Operational Headlines
-- 90% of the Group's revenue target for the year to June 2020 is already commissioned
-- New TV clients have been secured in both the UK and US: The
Curious Life and Death of... is in production for the Smithsonian
channel and Saving Faces has been commissioned by W, which is part
of UKTV
-- Critical Incident , a co-production between two Group
companies, has been recommissioned and illustrates the wider
opportunity the Group has in aligning its geographical labels to
win new commissions
-- Fighter Pilots: The Real Top Gun transmitted to great acclaim
and ratings on ITV in their 9pm slot, and The Station: Trouble On
The Tracks has been commissioned in the same slot and transmitted
in March 2020
-- The Group has recently been awarded an Emmy, a Bafta,
multiple RTS awards and a Venice TV award
-- New creative, fit-for purpose London HQ has been secured at a
lower cost than the current premises, and will be moved into post
period-end
-- Business Continuity Plans (BCPs) are in place for all
divisions in anticipation of the COVID-19 virus spreading. The
Group's Nations and Regions profile brings added resilience to the
Group following recent investments in post production technology
across its sites. Stress testing of BCPs is underway.
Capital fundraise and balance sheet restructure
In February 2020 the Company completed a fundraise and balance
sheet restructure that included:
-- A capital fundraise of GBP3.5m
-- Conversion of all preference shares to equity
-- Part conversion of the long-term debt and extension of the
term of the remaining debt from December 2020 to December 2022
-- A share consolidation at a ratio of 500:1
The Company will also be carrying out a capital reduction, which
is expected to complete shortly.
For further information, please contact:
Zinc Media Group plc +44 (0) 20 7878 2311
Christopher Satterthwaite, Chairman
Mark Browning, Chief Executive Officer
Will Sawyer, Chief Financial Officer
www.zincmedia.com
N+1 Singer (NOMAD and Broker to Zinc Media Group plc) +44 (0) 20
7496 3000
Mark Taylor / Lauren Kettle (Corporate Finance)
Peterhouse Corporate Finance Limited (Joint broker) +44 (0) 20
7469 0932
Martin Lampshire / Duncan Vasey / Eran Zucker
STRATEGY AND OUTLOOK
Strategy
Supported by the fundraise in January the new management team
has begun implementing its transformation plan, announced at the
end of 2019, with the following four strategic priorities:
1. Improvements in London and Manchester gross TV Margins
2. Revenue growth and diversification
3. Cultural and creative renewal
4. Investment in operational excellence
The Group is pleased to report good progress on all four of
these strategic priorities:
1. Gross production margins of London and Manchester TV are
performing ahead of the 3% target with improvements of 4.1%. These
anticipated improvements will be recognised in future financial
periods as productions on the new workflow deliver revenues.
2. Revenue is forecast to grow in the 12 months ending June 2020
compared to the previous year, building on a 14% increase in
revenue in FY19. In TV, new commissions have been won from UKTV and
The Smithsonian Channel in the USA. Further investment is being
made in business generating roles in TV labels and the repositioned
Zinc Communicate business (see below).
3. Nations and Regions growth: The Group is starting to harness
the creative firepower of the whole company, with early signs of
new business being developed collaboratively across the portfolio
of TV labels, and across the UK Nations and Regions.
4. Investments underway to improve operational excellence include:
o Group functions including HR and finance
o Post-production facilities in London and Manchester
o New London HQ
Outlook for the Group
We are at the early stages of the transformation plan but are
pleased that progress is already being made on all four of its
strategic priorities.
While this progress is encouraging, there remains much to do.
The impact of revenue growth and margin improvements in TV
generally have been partially offset by a relatively poor
performance at Blakeway North. Meanwhile, the re-positioning of
Zinc Communicate is challenging, particularly in its CSR division.
These factors, together with the investments we have been making to
achieve our operational excellence goals, explain why the increase
in revenues and the improvements in TV margins are not yet feeding
through to EBITDA. This is in line with our expectations.
2020 will be a transitional year as we address the
underperforming parts of the Group, transition into new markets,
and make investments for the future. Although revenue growth may
slow or even decline in the period ahead as we transition the Group
into new markets and make new hires, the longer term prospects for
growth in both revenue and profitability remain good.
Re-organisation of the Group
The Group has now been organised into two clear parts, Zinc TV
and Zinc Communicate, as follows:
Division Current services Labels / businesses
----------------- ---------------------------------- ----------------------------
Zinc TV TV production, and sales from Tern
the rights Blakeway
Brook Lapping
Reef
Films of Record
Blakeway North
================= ================================== ============================
Zinc Communicate Corporate Social Responsibility Zinc Communicate CSR
(CSR) campaigns, internal comms,
digital education programmes
including road safety
Advertising sales and publication Zinc Communicate Publishing
of B2B trade magazines in print & Corporate
and digital
================= ================================== ============================
Strategy and Outlook: Zinc Television
Improvements in London and Manchester gross TV Margins
Good early progress is being made on this critical strategic
priority of the transformation plan. London and Manchester gross TV
margins are improving better than the Group had previously
anticipated. These are driven by the excellent work in Reef TV, but
all TV labels are seeing their margins improve. Margin improvements
have come from investment in post-production, changes in production
management workflow, and cultural improvements to align commercial
and creative priorities. I am particularly pleased with the way the
TV teams in London and Manchester have embraced the changes we have
implemented, and they should be commended on the work done so far.
Margins are not yet in line with industry norms but better than
expected progress has been made.
Revenue growth and diversification
The TV labels of Reef, Blakeway, Brook Lapping, Films of Record
and Tern are all seeing revenue growth and have started to address
the second strategic priority of the transformation plan: revenue
diversification. New commissions have been won from labels within
the UKTV portfolio and with The Smithsonian Channel in the USA, and
there are new ideas in development with more new buyers in both
markets. Blakeway North has delivered some strong ratings
performances in the last six months, and has seen margin
improvement following investment in post-production, but it has not
delivered revenues in line with expectations, and it has a lower
than anticipated order book going forward. Work is underway in
Blakeway North to address the challenges they are experiencing.
Cultural and creative renewal
Zinc's strong Nations and Regions portfolio, with substantive
and permanent production bases (required for productions to qualify
as an out of London commission) in Manchester, Glasgow, Aberdeen
and Belfast, is one of the Group's strongest USPs. Encouraging work
is now underway to exploit this competitive advantage fully with
teams working collaboratively both on ideas and production
delivery. Our ambition is to be able to offer the UK Television
buyers the opportunity to invest in any of our creative ideas, and
have them made and delivered by any one of our talented teams
across the UK Nations and Regions.
Investment in operational excellence
Progress is being made on improving operational excellence
across all our TV production bases. Margin management and financial
processes are enabling better forecasting. New technology is bring
rolled out in new post-production facilities in London and
Manchester. Tern TV's Glasgow office has recently benefited from an
expanded and significantly improved office environment. Blakeway
North continues to be recognised as one of the best TV companies to
work for having recently won Best place to work in TV in the North
West. The London TV labels are soon to move into a new Zinc HQ,
which will be a vastly improved creative environment, and will help
us attract and retain the best TV talent. Further investments have
been made in the TV finance team and in human resource support.
Outlook: Television
The outlook in the television market remains good, with factual
television continuing to command good ratings and commissioning
hours stable across the UK PSBs. Non-UK PSBs, international
multi-channels and the SVOD streaming companies continue to present
medium to long term opportunities for the Group. TV revenues are
well ahead of the same period last year although we expect them to
slow in the second half of 2020 before picking up again in 2021.
This is in line with the transformation plan.
Investments in new business winning creatives for the London
specialist factual label Blakeway and the popular factual label
Reef are planned for the next period.
Strategy and Outlook: Zinc Communicate
Revenue Growth and Diversification
The opportunity for Zinc Communicate, which is currently loss
making and operating in small, niche markets, is to move into
bigger markets with propositions more aligned with Zinc TV's video
offering. The strategic plan is:
-- Zinc Communicate CSR is loss making and management are
conducting a strategic review of the business.
-- Zinc Communicate Publishing & Corporate is in the process
of diversifying into digital publishing and expanding into video
production for corporate clients, which will enable synergies with
the Group's TV division.
-- Business generating roles are also being recruited to enable
Zinc Communicate to sell video solutions to brands and advertisers
and thereby establish a complementary offering to the TV
business.
Zinc Communicate Publishing & Corporate was facing an
uncertain future in autumn 2019 as its main contract with LABC came
to an end and its other major contract with RIBA was up for tender.
However, it generated higher revenue and profit than expected in
the six months under review, it is forecasting to replace a
significant proportion of the revenue generated via LABC with a
revised product offering direct to local authorities, and it has
won the RIBA tender for a new three year period. The focus is now
on winning more contracts in the coming period.
Outlook
The transformation of Zinc Communicate Publishing &
Corporate is in its early stages. While progress has been better
than anticipated, this business does not yet have the resilience to
weather difficulties that may lie ahead. The pipeline for this
business is small but growing and there are plans in place to
diversify the product proposition which will grow revenues in the
period ahead.
The market opportunity in brand- and advertiser-led content
remains strong. Zinc's highly respected TV credentials and
reputation for premium and trusted content make it well placed to
grow revenues in this part of the market. Investments in new hires
are planned for the period ahead within a repositioned Zinc
Communicate business.
COVID-19
Business Continuity Plans (BCP's) are in place for all divisions
within the Group. The strong Nations and Regions profile of the
Group, with sales and production offices in London, Manchester,
Glasgow, Aberdeen and Belfast gives the Group added resilience in
business continuity. Stress testing of all BCPs is underway
alongside continuity plans for centralised functions including
finance.
There is some risk that some productions may be delayed by
clients, or delayed for production reasons if filming in some
locations is no longer possible. There is also opportunity for
additional production commissions as Television customers need new
programmes to fill schedules and for the Zinc Communicate
businesses to assist clients with internal comms and CSR
campaigns.
BUSINESS OVERVIEW
Tern Television
Tern Television continues to perform well across its sites in
Glasgow, Aberdeen and Belfast. Tern Glasgow's office has recently
been renovated and expanded to accommodate the growth they are
experiencing. 95% of Tern's budget for the year to June 2020 is
already commissioned .
Recent commissions include Saving Faces from W, part of UKTV,
which represents a new client for Tern. Beechgrove Garden and
Children's Hospital 2, which both come from Aberdeen, have also
been recommissioned. Tern remains in a strong position to benefit
from the BBC and Channel 4's out of London commissioning. The
re-commission of Critical Incident, produced in partnership with
Reef TV in London, illustrates the wider opportunity the Group has
when it aligns its geographical labels to win new commissions .
Blakeway North
Blakeway North, our regional based label in Manchester, recently
produced a wide range of singles and series for BBC Three, BBC One,
Channel 4 and Channel 5.
Returning series Bargain Loving Brits (series 5) continued to
rate well and may well be recommissioned. Reputational singles
continue to pick up awards including Manchester Bomb - Our Story
and the Panorama Knives in the Classroom which won a Royal
Television Award.
Blakeway North's programmes have recently been awarded an Emmy,
a Bafta, multiple RTS awards and a Venice TV award. For the second
year running, this division has just been judged Broadcast
magazine's 'Best Place to Work'.
Blakeway London
The specialist factual division, which is currently in the
advanced stages of recruiting a new Creative Director, has
continued to build on existing key client relationships and extend
into new areas.
In the premium area, the six-part National Geographic Channels
series Lost Cities with Albert Lin was delivered and broadcast to
excellent response. This has grown the relationship with the
broadcaster and has immediately resulted in two new commissioned
developments. A one-off special King Tut in Colour is also in
production for National Geographic, in co-production with the BBC
and France Television.
The domestic market has also proven fruitful - especially the
ongoing relationship with Channel 5. In the history space this
included the 4-part History of Britain with Tony Robinson, the
3-part drama documentary series Henry VIII: Man, Monarch, Monster
and a 2-part series The Two Elizabeths . Development for follow-up
series is well advanced, and expected to yield several
recommissions.
Natural History has continued to be a focus, especially for the
nascent Bristol office. A new relationship was forged with the
growing SVOD channel Love Nature, resulting in a co-production with
ARTE called The Farm , which is in the final stages of
post-production. Further projects are being developed with this
model, now also with the participation of Sky TV, which would
represent a major new client breakthrough if it comes off.
Fighter Pilots: The Real Top Gun transmitted to great acclaim
and ratings on ITV in the 9pm slot. This has led to a commissioned
development with an international broadcaster, and discussions on
follow-ups with ITV.
Other terrestrial broadcasters are also proving fruitful, with a
two part history series The Blitz with Lucy Worsely in production
for BBC One and developments ongoing for history and arts on BBC
Two and Channel 4.
Brook Lapping
Brook Lapping has continued to expand its operations.
The period to 31 December 2019 saw Buried Secrets of World War
II , a six-part series for the National Geographic Channel, perform
well. Series Producer Norma Percy built upon the success of Inside
Europe: Ten Years of Turmoil with a two-part commission Castros v.
the World for BBC Two and Arte. Production has also started on a
three-part series for the BBC, Arte and multiple international
broadcasters. Brook Lapping continues its work in the feature
documentary arena with The Hunt for Gaddafi's Billions , due to
transmit later in the year.
These commissions are being used as the basis for a push into
the lucrative world of SVOD feature docs, and several are in
discussion. Several arts and music programmes are also in
production.
Reef
Reef produces popular factual content and continued its regrowth
after a challenging period. This has included building a new client
relationship with Channel 5, resulting in a 6-part series Code
Zero. This was then recommissioned as a 10-part series, and there
is hope for further recommissions.
This 'blue light' genre has also borne fruit with the BBC, where
Critical Incident, a 15-part series, was commissioned for
daytime.
Several commissioned developments and discussions are ongoing
which would see both revenue growth and client diversification, in
line with the strategic priorities of the transformation plan.
Zinc Communicate
Zinc Communicate CSR has delivered several social impact
campaigns for clients to extend brand awareness, engage and inspire
positive change. The division has been working with Siemens for
over seven years supporting their education team and won several
awards in H1 2020. It has continued to deliver community engagement
programmes with HS2, and has delivered a suite of campaigns for
Astra Zeneca around influenza vaccinations which saw an increase of
uptake among target audiences. However, margins are too low on key
projects and as a result the division is currently loss-making. A
strategic review is currently underway.
Zinc Communicate Publishing & Corporate dealt with numerous
challenges due to the loss of the Local Authority Building Control
(LABC) contract in the period ending December 2019. This was a
consequence of the Hackett report and pre-empts regulatory changes
to the LABC. The business successfully navigated this and won a
competitive tender for a new multi-year contract with the RIBA.
This will allow the division to become focused on digital content
creation and to diversify into other media formats and new revenue
streams, including B2B video production. New appointments will be
made in the coming period to further grow revenue streams within
the division.
The long term opportunity in the new Zinc Communicate division
to produce content for brands, agencies and media owners remains
good.
Mark Browning, Chief Executive Officer
CHAIRMAN'S STATEMENT
Significant progress is being made by the new management team,
supported by the new Board, on the transformation plan.
There is much to be optimistic about with the performance of the
last 6 months. London and Manchester TV margins are improving
faster and to higher levels than we had anticipated, revenue growth
is encouraging, the client base is diversifying, and Zinc
Communicate Publishing & Corporate is on the road to
profitability despite a major partner not being able to renew its
contract.
There any many issues to address, and the performance of Zinc
Communicate CSR and Blakeway North are priorities for the next six
months.
This is a period of transition for the Group. The losses in the
underperforming parts of the Group offset the improvements made so
far in the now profitable divisions. This, combined with
investments in new revenue generating roles, and in central
functions like HR and finance to support future growth, mean that
the progress made in the last six months is not yet showing at
EBITDA level. This is in line with our expectations and will remain
the case in the year ahead as we transition the Group into a
sustainably profitable position in the longer term.
I would like to congratulate the new management team on the
successes they've achieved in the last 6 months, and all our
employees for their professional and dedicated work across the
Group.
Christopher Satterthwaite
Chairman
FINANCIAL REVIEW
INCOME STATEMENT
Revenue was GBP14.15m in H1 20 (H1 19: GBP9.86m). The GBP4.29m
increase has been driven by the TV Division, in particular a
GBP1.8m increase in Brook Lapping (157 percent) and GBP2.3m
increase in Tern Television (73 percent). The Curious Life and
Death of... for the Smithsonian channel has driven Brook Lapping's
increase. Tern Television has capitalised on the BBC and Channel
4's 'out of London' commissioning policies, and has had many
recommissions including Britain's Lost Masterpieces, Emergency
Helicopter Medics, Beechgrove Garden and Children's Hospital, as
well as numerous new commissions. TV's increased revenue has been
partially offset by the poor performance in Zinc Communicate CSR,
driven by the Transport for London contract not being renewed in
FY19. The Group is on track to deliver more revenue in the full
year to June 2020 than in the year to June 2019.
Gross margin decreased from 28.0 percent for the year ended June
2019 to 25.7% for the half year ended December 2019. This is due to
recognising lower high margin distribution revenue in TV as a
result of the timing of licensing, which is expected to be higher
in the second half of the year, and due to the CSR division within
Zinc Communicate losing a high margin contract with Transport for
London, which also led to the business switching to a higher
variable cost base as the business contracted. The underlying gross
margins on productions for London and Manchester TV are increasing
due to investment in people and technology, the benefit of which
will be fully felt in future accounting periods as productions on
the new workflow are delivered. In H1 2020 the majority of
productions were delivered on the old workflow and have lower
margins than productions on the new workflow.
Operating costs rose by GBP0.4m compared to H1 2019 due to
investment in "operational excellence" including finance, HR and
the Board in H1 2020. There were also some one-off non-recurring
credits in H1 2019. The operational investments are already
beginning to yield better management information, a more
incentivised workforce and improved decision making which will
ultimately improve the performance of the Group.
The Company achieved adjusted EBITDA of GBP0.02m in the period
(H1 19: GBP0.01m). Adjusted EBITDA is reported before exceptional
items of GBP0.19m, which is predominantly contingent consideration
treated as a remuneration charge in respect of the Tern Television
earnout. The operating loss was GBP0.92m (H1 2019: loss of
GBP0.59m), which included depreciation that relates to leases
reclassified to right-of-use assets as a result of the application
of IFRS 16 in the period, which broadly offsets the rent reduction
within operating expenses. Finance costs have risen by GBP0.04m as
a result of the interest expense on these lease liabilities.
Dividend
No dividend is proposed. The Board considers the Group's
investment plans, financial position and business performance in
determining when to pay a dividend.
STATEMENT OF FINANCIAL POSITION
Asset s
Total assets of the Group have decreased by GBP0.9m. Working
capital has reduced by GBP1.3m which is partially offset by an
increase to property plant and equipment (PPE) of GBP0.8m. The
remaining GBP0.4m reduction is due to the amortisation of
intangible assets.
GBP0.8m of the reduction in working capital for the six months
to 31 December 2019 was the movement of cash balances. Following a
strong trading performance by Tern in the year ended 30 June 2019,
the second-year earnings target was achieved. The second year
earnout payment of GBP0.5m was settled 75% by cash and the
remaining 25% through issue of ordinary shares (see note 12). Lease
payments of GBP0.3m also reduced cash in the period.
The increase in PPE is explained by GBP0.4m transition
adjustment for implementation of IFRS 16 as of 1 July 2019 (see
note 3). Two leases for office space were signed during the half
year resulting in a GBP0.4m addition to Right-of-use (ROU) assets
and GBP0.3m of post-production equipment which was acquired to help
achieve the transformation plan objective of improving gross
margins in television production.
Equity and Liabilities
Equity reduced by GBP0.9m during the half year to 31 December
2019. The majority of this movement is a result of the loss for the
period. The remainder of the movement in equity is a result of the
following issue of share capital:
-- As mentioned above, 25% of Tern's earnout was settled through
the issue of ordinary shares; and
-- Conversion of some Herald Investment Trust plc preference shares into ordinary shares; and
-- An ordinary share issue to a supplier in lieu of fees.
Refer to the share capital note 12 for further details.
Finance lease liabilities have increased by GBP0.8m. GBP0.4m
relates to the transition adjustment for implementation of IFRS16
as of 1 July 2019 (see note 3). The remainder relates to additions
during the period of two new office leases and post-production kit
which was acquired via finance leases, less the interest and
repayments during the half year.
Comparative information
The Group has adopted IFRS 16 'Leases' for the first time in the
results for the half year ended 31 December 2019. As a result, the
Group has changed its accounting policy for recognition of
operating leases as detailed in note 3. The Group used the modified
retrospective approach to transition which means the comparative
figures have not been restated and continues to be reported under
IAS 17. As at 1 July 2019 the asset and liability opening balances
were adjusted to recognise the right of use assets and
corresponding lease liabilities.
Will Sawyer
Chief Financial Officer
Zinc Media Group plc consolidated income statement
For the six months ended 31 December 2019
Unaudited Unaudited Audited
Half Year Half Year 12 months
to to to
31 Dec 31 Dec 30 June
2019 2018 2019
Note GBP'000's GBP'000's GBP'000's
------------------------------------- ----- ---------- ---------- ----------
Continuing operations
Revenue 4 14,151 9,864 24,633
Cost of sales (10,509) (6,628) (17,725)
------------------------------------- ----- ---------- ---------- ----------
Gross Profit 3,642 3,236 6,908
Operating expenses (3,624) (3,224) (6,781)
----------
Adjusted EBITDA 18 12 127
Depreciation & amortisation (768) (408) (889)
Share based payment credit/(charge) 21 (23) (27)
Exceptional items 5 (194) (172) (1,744)
Operating loss (923) (591) (2,533)
Finance costs (162) (120) (327)
Finance income - - 1
------------------------------------- ----- ---------- ---------- ----------
Loss before tax (1,085) (711) (2,859)
Taxation credit 61 11 127
Loss for the period (1,024) (700) (2,732)
Continuing operations attributable
to:
Equity holders (1,046) (700) (2,740)
Non-controlling interest 22 - 8
Retained loss for the period (1,024) (700) (2,732)
------------------------------------- ----- ---------- ---------- ----------
Earnings per share
From continuing operations:
Basic 6 (0.07)p (0.05)p (0.20)p
Diluted 6 (0.07)p (0.05)p (0.20)p
------------------------------------- ----- ---------- ---------- ----------
Zinc Media Group plc consolidated statement of financial position
As at 31 December 2019
Unaudited Unaudited Audited
31 Dec 31 Dec 30 June
2019 2018 2019
Note GBP '000 GBP '000 GBP '000
------------------------------------- ----- ---------- ---------- ---------
Assets
Non-current
Goodwill and intangible assets 7 5,081 6,807 5,436
Property, plant and equipment 8 1,121 359 369
6,202 7,166 5,805
------------------------------------- ----- ---------- ---------- ---------
Current assets
Inventories 215 441 236
Trade and other receivables 9 6,374 5,052 6,858
Cash and cash equivalents 2,382 2,120 3,213
8,971 7,613 10,307
------------------------------------- ----- ---------- ---------- ---------
Total assets 15,173 14,779 16,112
------------------------------------- ----- ---------- ---------- ---------
Equity and liabilities
Shareholders' equity
Called up share capital 12 5,928 5,928 5,928
Share premium account 12 30,598 30,509 30,509
Merger reserve 12 940 875 875
Share Based payment reserve 112 129 133
Preference shares 12 767 839 839
Retained earnings (36,611) (33,585) (35,625)
------------------------------------- ----- ---------- ---------- ---------
Total equity attributable to equity
holders of the parent 1,734 4,695 2,659
Non-controlling interests 18 - 8
------------------------------------- ----- ---------- ---------- ---------
Total Equity 1,752 4,695 2,667
Liabilities
Non-current
Borrowings 3,837 3,648 3,743
Contingent consideration - 187 595
Deferred tax 67 244 128
Lease liabilities 10 450 - 20
4,354 4,079 4,486
------------------------------------- ----- ---------- ---------- ---------
Current liabilities
Trade and other payables 11 7,875 5,452 8,423
Contingent consideration 782 500 500
Current tax liabilities 5 6 4
Lease liabilities 10 405 47 32
9,067 6,005 8,959
------------------------------------- ----- ---------- ---------- ---------
Total equity and liabilities 15,173 14,779 16,112
------------------------------------- ----- ---------- ---------- ---------
Zinc Media Group plc consolidated statement of cash flows
For the six months ended 31 December 2019
Unaudited Unaudited Audited
Half year to Half year to 12 months to
31 Dec 31 Dec 30 June
2019 2018 2019
GBP '000 GBP '000 GBP '000
-------------------------------------------------------------- ------------- ------------- -------------
Cash flows from operation activities
Loss for the period before tax (1,085) (711) (2,859)
Add back:
Depreciation 413 83 178
Amortisation and impairment of intangibles 355 325 1,696
Finance costs 162 120 327
Finance income - - (1)
Share based payment charge (21) 23 27
Change in fair value of deferred contingent consideration 93 - 138
Contingent consideration deemed remuneration 61 104 286
Reorganisation and restructuring costs 35 - -
-------------------------------------------------------------- ------------- ------------- -------------
13 (56) (208)
Decrease/(increase) in inventories 21 (56) 97
Decrease/(increase) in trade and other receivables 484 172 (1,634)
(Decrease)/increase in trade and other payables (618) (722) 2,275
-------------------------------------------------------------- ------------- ------------- -------------
Cash (used in)/generated from operations (100) (662) 530
-------------------------------------------------------------- ------------- ------------- -------------
Finance costs paid (10) (2) (4)
Finance income - - 1
Tax paid - (86) (87)
Net cash flows (used in)/generated from operating activities (110) (750) 440
-------------------------------------------------------------- ------------- ------------- -------------
Investing activities
Payment of contingent consideration (375) (563) (563)
Purchase of property, plant and equipment (58) (87) (192)
Net cash flows used in investing activities (433) (650) (755)
-------------------------------------------------------------- ------------- ------------- -------------
Financing activities
Capital element of lease payments (312) (9) (4)
Dividends paid to non-controlling interests 12 - -
Net cash flows used in financing activities (300) (9) (4)
-------------------------------------------------------------- ------------- ------------- -------------
Net decrease in cash and cash equivalents (843) (1,409) (319)
Translation differences 12 (16) (13)
Cash and cash equivalents at beginning of period 3,213 3,545 3,545
Cash and cash equivalents at end of period 2,382 2,120 3,213
-------------------------------------------------------------- ------------- ------------- -------------
Zinc Media Group plc consolidated statement of changes in equity
For the six months ended 31 December 2019
----------------------------------------------------------------------------------------------------------------------
Total equity
Share attributable
based to equity
Share Share payment Merger Preference Retained holders of Non-controlling
capital premium reserve reserve shares earnings the parent interest Total equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance as at 1
July 2018 5,928 30,414 106 777 934 (32,974) 5,185 - 5,185
--------------- ------- ------- ------- ------- ---------- -------- ------------ --------------- ------------
Loss for the
year - - - - - (2,740) (2,740) 8 (2,732)
Total
comprehensive
income - - - - - (2,740) (2,740) 8 (2,732)
Equity-settled
share-based
payments - - 27 - - - 27 - 27
Issue of shares
on acquisition - - - 98 - 89 187 - 187
Conversion of
preference
shares - 95 - - (95) - - - -
Total
transactions
with owners of
the Company - 95 27 98 (95) (2,651) (2,526) 8 (2,518)
--------------- ------- ------- ------- ------- ---------- -------- ------------ --------------- ------------
Balance at 30
June 2019 5,928 30,509 133 875 839 (35,625) 2,659 8 2,667
--------------- ------- ------- ------- ------- ---------- -------- ------------ --------------- ------------
Balance as at 1
July 2018 5,928 30,414 106 777 934 (32,974) 5,185 - 5,185
--------------- ------- ------- ------- ------- ---------- -------- ------------ --------------- ------------
Loss for the
Period - - - - - (700) (700) - (700)
Total
comprehensive
income - - - - - (700) (700) - (700)
Equity-settled
share-based
payments - - 23 - - - 23 - 23
Issue of shares
on acquisition - - - 98 - 89 187 - 187
Conversion of
preference
shares - 95 - - (95) - - - -
Total
transactions
with owners of
the Company - 95 23 98 (95) (611) (490) - (490)
--------------- ------- ------- ------- ------- ---------- -------- ------------ --------------- ------------
Balance at 31
December 2018 5,928 30,509 129 875 839 (33,585) 4,695 - 4,695
--------------- ------- ------- ------- ------- ---------- -------- ------------ --------------- ------------
Balance at 1
July 2019 5,928 30,509 133 875 839 (35,625) 2,659 8 2,667
--------------- ------- ------- ------- ------- ---------- -------- ------------ --------------- ------------
Loss and total
comprehensive
income for the
period - - - - - (1,046) (1,046) 22 (1,024)
Total
comprehensive
income - - - - - (1,046) (1,046) 22 (1,024)
Equity-settled
share-based
payments - - (21) - - - (21) - (21)
Shares issued - 18 - - - - 18 - 18
Conversion of
preference
shares - 71 - - (71) - - - -
Deferred
consideration
paid in shares - - - 65 - 60 125 - 125
Dividends paid - - - - - - - (12) (12)
Total
transactions
with owners of
the Company - 89 (21) 65 (71) (986) (923) 10 (913)
--------------- ------- ------- ------- ------- ---------- -------- ------------ --------------- ------------
Balance at 31
December 2019 5,928 30,598 112 940 767 (36,611) 1,734 18 1,752
--------------- ------- ------- ------- ------- ---------- -------- ------------ --------------- ------------
Notes to the consolidated financial statements
1) GENERAL INFORMATION
The Company is a public limited company incorporated in the
United Kingdom. The address of its registered office is 7 Exchange
Crescent, Conference Square, Edinburgh, EH3 8AN.
The Company is listed on the London Stock Exchange's AIM
Market.
2) BASIS OF PREPARATION
The interim results for the six months ended 31 December 2019
have been prepared on the basis of the accounting policies expected
to be used in the 2020 Zinc Media Group plc Annual Report and
Accounts and in accordance with the recognition and measurement
principles of International Financial Reporting Standards as
adopted by the European Union ('EU') ('IFRS'). The interim results
do not include all the information and disclosures required in
financial statements prepared in accordance with IFRS and should be
read in conjunction with the accounts for the year ended 30 June
2019.
The same accounting policies, presentation and methods of
computation are followed in these interim condensed set of
financial statements as have been applied in the Group's latest
annual audited financial statements, with the exception of the
changes in accounting policies detailed in note 3.
The interim results, which were approved by the Directors on 16
March 2020, are unaudited. The interim results do not constitute
statutory financial statements within the meaning of section 434 of
the Companies Act 2006.
Comparative figures for the year ended 30 June 2019 have been
extracted from the statutory accounts for the Group for that
period, which carried an unqualified audit report, did not include
a reference to any matters to which the auditor drew attention by
way of emphasis of matter, did not contain a statement under
section 498(2) or (3) of the Companies Act 2006 and have been
delivered to the Registrar of Companies.
3) CHANGES IN ACCOUNTING POLICIES AND PRIOR PERIOD ERRORS
IFRS 16
IFRS 16 'Leases' replaces IAS 17 'Leases' along with three
Interpretations (IFRIC 4 'Determining whether an Arrangement
contains a Lease', SIC 15 'Operating Leases-Incentives' and SIC 27
'Evaluating the Substance of Transactions Involving the Legal Form
of a Lease').
The Group assesses whether a contract is or contains a lease, at
inception of the contract. The Group recognises a right-of-use
asset and a corresponding lease liability with respect to all lease
arrangements in which it is the lessee, except for short-term
leases (defined as leases with a lease term of 12 months or less)
and leases of low value assets. For these leases, the Group
recognizes the lease payments as an operating expense on a
straight-line basis over the term of the lease unless another
systematic basis is more representative of the time pattern in
which economic benefits from the leased assets are consumed.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted by using the rate implicit in the lease. If this rate
cannot be readily determined, the Group uses its incremental
borrowing rate.
Lease payments included in the measurement of the lease
liability comprise:
-- fixed lease payments (including in substance fixed payments), less any lease incentives;
-- variable lease payments that depend on an index or rate,
initially measured using the index or rate at the commencement
date;
-- the amount expected to be payable by the lessee under residual value guarantees;
-- the exercise price of purchase options, if the lessee is
reasonably certain to exercise the options; and
-- payments of penalties for terminating the lease, if the lease
term reflects the exercise of an option to terminate the lease.
The right-of-use assets comprise the initial measurement of the
corresponding lease liability, lease payments made at or before the
commencement day and any initial direct costs. They are
subsequently measured at cost less accumulated depreciation and
impairment losses.
Whenever the Group incurs an obligation for costs to dismantle
and remove a leased asset, restore the site on which it is located
or restore the underlying asset to the condition required by the
terms and conditions of the lease, a provision is recognised and
measured under IAS 37. The costs are included in the related
right-of-use asset, unless those costs are incurred to produce
inventories.
Right-of-use assets are depreciated over the shorter period of
lease term and useful life of the underlying asset.
The right-of-use assets are presented within the same line item
as that within which the corresponding underlying assets would be
presented if they were owned - for the Group this is property,
plant and equipment.
The total expense recognised in the Income Statement over the
life of the lease will be unaffected by the new standard. However,
IFRS 16 will result in the timing of lease expenses recognition
being accelerated for leases which would be currently accounted for
as operating leases. Further, the expense will move from EBITDA to
outside EBITDA.
Approach to transition
The new Standard has been applied using the modified
retrospective approach. As at 1 July 2019 the asset and liability
opening balances were adjusted to recognise the right of use assets
and corresponding lease liabilities. Prior periods have not been
restated.
As part of the Group's adoption of IFRS16 and application of the
modified retrospective approach to transition, the Group also
elected to use the following practical expedients:
-- a single discount rate has been applied to portfolios of
leases with reasonably similar characteristics;
-- for leases of low-value assets the Group has not recognised
right-of-use assets but has accounted for the lease expense on a
straight-line basis over the remaining lease term;
-- not to include initial direct costs in the measurement of the
right-of-use asset for operating leases in existence at the date of
initial application of IFRS 16, being 1 July 2019. At this date,
the Group has also elected to measure the right-of-use assets at an
amount equal to the lease liability adjusted for any prepaid or
accrued lease payments that existed at the date of transition.
For contracts in place at the date of initial application, the
Group has elected to apply the definition of a lease from IAS 17
and IFRIC 4 and has not applied IFRS 16 to arrangements that were
previously not identified as leases under IAS 17 and IFRIC 4.
Instead of performing an impairment review on the right-of-use
assets at the date of initial application, the Group has relied on
its historic assessment as to whether leases were onerous
immediately before the date of initial application of IFRS 16.
For those leases previously classified as finance leases, the
right-of-use asset and lease liability are measured at the date of
initial application at the same amounts as under IAS 17 immediately
before the date of initial application.
On transition to IFRS 16 the weighted average incremental
borrowing rate applied to lease liabilities recognised under IFRS
16 was 4.2%.
The Group has benefited from the use of hindsight for
determining the lease term when considering options to extend and
terminate leases.
IFRS 16 Financial impact
The application of IFRS 16 to leases previously classified as
operating leases under IAS 17 resulted in the recognition of
right-of-use assets and lease liabilities. Within the income
statement, rent expense will now be replaced by depreciation and
interest expense. This will result in a decrease to operating
expenses and an increase to finance costs. Further, EBITDA will
improve in the current year because of IFRS16 changes, however the
comparative year will not as it is not being restated.
The Group has chosen to use the table below to set out the
balance sheet adjustments recognised at the date of initial
application of IFRS 16.
As previously reported at 30 June
2019 Impact of IFRS 16 As restated at 1 July 2019
GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 49 399 448
Total impact on assets 49 399 448
------------------------------- ------------------------------------ ------------------ ---------------------------
Current liabilities
Lease liabilities (32) (364) (396)
Non-current liabilities
Lease liabilities (20) (35) (55)
Total impact on liabilities (52) (399) (451)
------------------------------- ------------------------------------ ------------------ ---------------------------
The right-of-use assets of GBP399,000 recognised at 1 July 2019
all relate to leases of office space.
The following is a reconciliation of total operating lease
commitments at 30 June 2019 (as disclosed in the financial
statements to 30 June 2019) to the lease liabilities recognised at
1 July 2019:
GBP'000
Total operating lease commitments disclosed at 30 June 2019 427
Recognition exemptions:
- Leases of low value assets (22)
Operating lease liabilities before discounting 405
Discounted using incremental borrowing rate (6)
Total lease liabilities recognised under IFRS 16 transition at 1 July 2019 399
---------------------------------------------------------------------------- --------
Significant judgements and estimates
When the entity has the option to extend a lease, management
uses its judgement to determine whether or not an option would be
reasonably certain to be exercised. Management considers all facts
and circumstances including their past practice and any cost that
will be incurred to change the asset if an option to extend is not
taken, to help them determine the lease term.
Prior period errors
Deferred remuneration of GBP0.2m was accounted for incorrectly
in the December 2018 unaudited interim financial statements and was
accounted for correctly in the full year audited June 2019
financial statements. Within this report, the comparative December
2018 figures in the statement of financial position, statement of
changes in equity and share capital note have been restated as
follows:
As previously reported Corrected December
at December 2018 Adjustment 2018 balances
GBP'000 GBP'000 GBP'000
------------------- ----------------------- ----------- -------------------
Share premium 30,696 (187) 30,509
Retained earnings (33,674) 89 (33,585)
Merger reserve 777 98 875
------------------- ----------------------- ----------- -------------------
4) SEGMENTAL INFORMATION
The operations of the group are managed in two principle
business divisions; Zinc TV and Zinc Communicate. These divisions
are the basis upon which the management reports its primary
segmental information.
Unaudited Unaudited Audited
Half Year to Half Year to 12 months to
31 Dec 2019 31 Dec 2018 30 Jun 2019
Revenues by Business Division GBP'000's GBP'000's GBP'000's
------------------------------- ------------- ------------- -------------
Zinc TV 12,625 8,102 21,230
Zinc Communicate* 1,526 1,762 3,403
Total 14,151 9,864 24,633
------------------------------- ------------- ------------- -------------
*In comparative years this category was split between three
categories; Communications, Publishing and Central & plc.
Operationally, communications and publishing are now combined and
management determined it is more appropriate to report their
information together. Revenue previously recognised as Central
& plc relates to communications services and is now disclosed
as Zinc Communicate revenue.
5) EXCEPTIONAL ITEMS
Exceptional items are presented separately as, due to their
nature or the infrequency of the events giving rise to them, this
allows shareholders to understand better the elements of financial
performance for the period, to facilitate comparison with prior
periods and to assess better the trends of financial
performance.
Unaudited Unaudited Audited
Half Year to Half Year to 12 months to
31 Dec 2019 31 Dec 2018 30 June 2019
GBP'000's GBP'000's GBP'000's
------------------------------------------------------------------------- ------------- ------------- -------------
Impairment of carrying value of goodwill in respect of Zinc Communicate - - (985)
Change in fair value of contingent consideration in respect of Tern
Television (54) - (138)
Reorganisation and restructuring costs (39) - (313)
Contingent consideration treated as remuneration (101) (104) (286)
Other exceptional items - (68) (22)
Total (194) (172) (1,744)
------------------------------------------------------------------------- ------------- ------------- -------------
6) EARNINGS PER SHARE
Basic loss per share (EPS) for the year equals the loss after
tax from continuing operations attributable to the Company's
ordinary shareholders divided by the weighted average number of
issued ordinary shares.
When the Group makes a profit from continuing operations,
diluted EPS equals the profit attributable to the Company's
ordinary shareholders divided by the diluted weighted average
number of issued ordinary shares. When the Group makes a loss from
continuing operations, diluted EPS equals the loss attributable to
the Company's ordinary shareholders divided by the basic
(undiluted) weighted average number of issued ordinary shares. This
ensures that EPS on losses is shown in full and not diluted by
unexercised share options or awards.
The number of shares disclosed below is prior to the share
consolidation that took place post period end (see note 13).
Unaudited Unaudited Audited
Half Year to Half Year to 12 months to
31 Dec 2019 31 Dec 2018 30 Jun 2019
GBP'000's GBP'000's GBP'000's
------------------------------------------------- -------------- -------------- --------------
Weighted average number of shares used in basic
earnings per share calculation 1,430,856,797 1,380,068,743 1,399,591,089
Potentially dilutive effect of share options - 2,973,799 2,014,248
------------------------------------------------- -------------- -------------- --------------
Unaudited Unaudited Audited
Half Year to Half Year to 12 months to
31 Dec 2019 31 Dec 2018 30 Jun 2019
GBP'000 GBP'000 GBP'000
Loss for the period (1,046) (700) (2,740)
Amortisation of intangible assets post deferred tax impact 355 325 711
Restructuring costs 39 - 313
Exceptional transactions - 68 22
Change in fair value of contingent consideration 54 - 138
Impairment of carrying value of goodwill in respect to Reef TV - - 985
Share-based payments (21) 23 27
Contingent earnout consideration deemed remuneration 101 104 286
Adjusted loss for year attributable to shareholders (518) (180) (258)
---------------------------------------------------------------- ------------- ------------- -------------
Continuing operations
Basic Earnings per Share (0.07)p (0.05)p (0.20)p
Diluted Earnings per Share (0.07)p (0.05)p (0.20)p
Adjusted Basic Earnings per Share (0.04)p (0.01)p (0.02)p
Adjusted Diluted Earnings per Share (0.04)p (0.01)p (0.02)p
7) GOODWILL AND INTANGIBLE ASSETS
Customer Multimedia Products Distribution
Goodwill Brands Relationships & Websites Catalogue Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cost
At 31 December 2018 29,394 4,497 3,419 122 443 37,875
At 30 June 2019 29,394 4,497 3,419 122 443 37,875
Other changes* (20,441) (3,818) (116) - - (24,375)
At 31 December 2019 8,953 679 3,303 122 443 13,500
----------------------- --------- -------- -------------- -------------------- ------------- ---------
Amortisation
At 1 July 2018 (25,354) (4,046) (1,284) - (59) (30,743)
Charge for the period - (49) (232) - (44) (325)
At 31 December 2018 (25,354) (4,095) (1,516) - (103) (31,068)
----------------------- --------- -------- -------------- -------------------- ------------- ---------
Charge for the period - (48) (232) (61) (45) (386)
Impairment charge (985) - - - - (985)
At 30 June 2019 (26,339) (4,143) (1,748) (61) (148) (32,439)
----------------------- --------- -------- -------------- -------------------- ------------- ---------
Charge for the period - (49) (232) (30) (44) (355)
Other changes* 20,441 3,818 116 - - 24,375
At 31 December 2019 (5,898) (374) (1,864) (91) (192) (8,419)
----------------------- --------- -------- -------------- -------------------- ------------- ---------
Net Book Value -
At 31 December 2019 3,055 305 1,439 31 251 5,081
----------------------- --------- -------- -------------- -------------------- ------------- ---------
At 31 December 2018 4,040 402 1,903 122 340 6,807
----------------------- --------- -------- -------------- -------------------- ------------- ---------
At 30 June 2019 3,055 354 1,671 61 295 5,436
----------------------- --------- -------- -------------- -------------------- ------------- ---------
*The goodwill, brands and customer relationship intangibles have
been de-recognised as they were previously fully amortised or
impaired.
8) PROPERTY, PLANT AND EQUIPMENT
Short leasehold land and
buildings Motor vehicles Office and computer equipment Total
GBP000's GBP000's GBP000's GBP000's
As at 31 December 2019 523 32 566 1,121
As at 31 December 2018 33 51 275 359
As at 30 June 2019 21 41 307 369
------------------------ -------------------------------- --------------- ------------------------------ ---------
GBP0.8m of assets held under leases are included within short
leasehold land and buildings and office and computer equipment.
Refer to details in note 10.
9) TRADE AND OTHER RECEIVABLES
Unaudited Unaudited Audited
31 Dec 2019 31 Dec 2018 30 Jun 2019
GBP'000 GBP'000 GBP'000
------------------------------- ------------ ------------ ------------
Current
Trade receivables 3,225 2,335 3,628
Less provision for impairment (101) (72) (126)
------------------------------- ------------ ------------ ------------
Net trade receivables 3,124 2,263 3,502
Other receivables 261 141 136
Prepayments 740 720 891
Accrued income 2,249 1,928 2,329
Total 6,374 5,052 6,858
------------------------------- ------------ ------------ ------------
The carrying amount of trade and other receivables approximates
to their fair value. The creation and release of provision for
impaired receivables have been included in administration expenses
in the income statement.
The maximum exposure to credit risk at the reporting date is the
carrying value of each class of asset above. The Group does not
hold any collateral as security for trade receivables. The Group is
not subject to any significant concentrations of credit risk.
10) LEASES
The Group has leases for office space and equipment. With the
exception of short-term leases and leases of low-value underlying
assets, each lease is reflected on the balance sheet as a
right-of-us asset and a lease liability. The table below describes
the nature of the Group's leasing activities by type of
right-of-use asset recognised on balance sheet:
No of right-of-use assets Range of remaining term Average remaining lease
leased (years) term (years)
Short leasehold land and
buildings 7 <1 to 5 2
Office and computer
equipment 8 <1 to 4 3
----------------------------- ---------------------------- ---------------------------- ---------------------------
Right-of-use assets
Additional information on the right-of-use assets by class of
assets is as follows:
Short leasehold land and buildings Office and computer equipment Total
GBP'000 GBP'000 GBP'000
Balance as at 1 July 2019 399 49 448
Additions 402 304 706
Depreciation (295) (40) (335)
Balance as at 31 December 2019 506 313 819
-------------------------------- ----------------------------------- ------------------------------ --------
The right-of-use assets are included in the same line item as
where the corresponding underlying assets would be presented if
they were owned, which is property, plant & equipment.
Lease liabilities
Lease liabilities are presented in the statement of financial
position as follows:
Unaudited Unaudited Audited
31 Dec 2019 31 Dec 2018 30 Jun 2019
GBP000's GBP000's GBP000's
------------- ------------ ------------ ------------
Current 405 47 32
Non-current 450 - 20
855 47 52
------------- ------------ ------------ ------------
Additional information on the lease liabilities are as
follows:
Short leasehold land and buildings Office and computer equipment Total
GBP'000 GBP'000 GBP'000
-------------------------------- ----------------------------------- ------------------------------ --------
Balance as at 1 July 2019 399 52 451
Additions 402 304 706
Interest expense 10 7 17
Lease payments (273) (46) (319)
Balance as at 31 December 2019 538 317 855
-------------------------------- ----------------------------------- ------------------------------ --------
11) TRADE AND OTHER PAYABLES
Unaudited Unaudited Audited
31 Dec 2019 31 Dec 2018 30 Jun 2019
GBP'000 GBP'000 GBP'000
--------------------------------- ------------ ------------ ------------
Current
Trade payables 1,543 1,288 1997
Other payables 225 90 83
Other taxes and social security 866 624 1010
Accruals 3,329 2,180 3523
Contract liabilities 1,912 1,270 1810
Total 7,875 5,452 8,423
--------------------------------- ------------ ------------ ------------
The Directors consider that the carrying amount of trade and
other payables approximates to their fair value. The Group's
payables are unsecured.
12) SHARE CAPITAL
Unaudited Unaudited Audited
Dec-19 Dec-18 Jun-19
Number of Share Capital Number of Share Capital Number of Share Capital
Ordinary shares Shares GBP'000 Shares GBP'000 Shares GBP'000
At start of period 1,419,113,435 3.5 1,419,113,435 3.5 1,419,113,435 3.5
Shares issued 70,460,174 0.2 - - - -
At end of period 1,489,573,609 3.7 1,419,113,435 3.5 1,419,113,435 3.5
---------------------- -------------- -------------- -------------- -------------- -------------- --------------
Deferred shares
-------------- -------------- -------------- -------------- -------------- --------------
At start and end of
period 276,666,012 5,506 276,666,012 5,506 276,666,012 5,506
D Deferred shares
-------------- -------------- -------------- -------------- -------------- --------------
At start and end of
period 419,397,339 418 419,397,339 418 419,397,339 418
Total called up share
capital 2,185,636,960 5,928 2,115,176,786 5,928 2,115,176,786 5,928
---------------------- -------------- -------------- -------------- -------------- -------------- --------------
Preference shares
---------------------- -------------- -------------- -------------- -------------- -------------- --------------
At start of period 838,633 839 933,887 934 933,887 934
Conversion of
preference shares to
ordinary shares (71,279) (71) (95,254) (95) (95,254) (95)
At end of period 767,354 767 838,633 839 838,633 839
---------------------- -------------- -------------- -------------- -------------- -------------- --------------
Unaudited Unaudited Unaudited
31-Dec-19 31-Dec-19 31-Dec-19
Ordinary shares Share Premium Merger Reserve Share Premium Merger Reserve Share Premium Merger Reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At start of period 30,509 875 30,414 777 30,414 777
Shares issued in
lieu of fees 18 - - - - -
Consideration paid
in shares - 65 - 98 - 98
Shares issued in
preference share
conversion 71 - 95 - 95 -
At end of period 30,598 940 30,509 875 30,509 875
------------------- -------------- --------------- -------------- --------------- -------------- ---------------
Issue of shares
Following a strong trading performance by Tern Television
Productions Limited ("Tern Television") in the year ended 30 June
2019, the second-year earnings target was achieved. The second year
earnout payment, payable to the vendors of Tern Television in
accordance with the terms of the share purchase agreement, was
GBP0.5m, which was satisfied partially in cash and partially in new
Zinc Media Group shares.
On 1 November 2019 GBP375,000 of the earnout payment was settled
in cash and GBP125,000 was settled through the issue to the vendors
of 41,597,336 new ordinary shares at a price of 0.3005p per share,
being the average market price for the 30 business days prior to 31
October 2019.
On 1 November 2019 , the Company also converted GBP71,279 of
preference shares into 23,719,981 new ordinary shares at a price of
0.3005p per share to Herald Investment Trust plc ("Herald"). Herald
converted such number of preference shares and accrued dividends on
the preference shares into ordinary shares such that the current
holding of approximately 34 per cent of the issued ordinary share
capital in the Company was maintained.
To a supplier in lieu of fees, the Company issued 5,142,857 new
ordinary shares at a price of 0.35p per share.
13) POST BALANCE SHEET EVENTS
London office move
On 24 January 2020 the Company entered into a five-year office
lease for the London head office. Signing the new lease will result
in an increase to right of use assets of GBP1.0m which is mostly
offset by the recognition of a lease liability of GBP0.9m. As part
of the office move, the Company has committed to a fit-out of the
office space and acquisition of new post-production equipment,
budgeted at approximately GBP0.9m.
These commitments have been undertaken as the Company was
required to move from its current office location, but importantly
the lease costs are lower for the new office compared to the
current office, the new office will provide an enhanced creative
environment and the post production investment will help improve
production margins.
Capital fundraise and balance sheet restructure
On 12 February 2020, the Company announced that it had raised
GBP3.5 million (before expenses) by way of a placing of 3,888,889
New Ordinary Shares (the "Placing Shares"). The proceeds of the
Placing will be used to fund various elements of the Company's
transformational plan, launched in September 2019, and for general
working capital purposes.
Alongside the placing, the Company has consolidated its ordinary
share capital such that each 500 Ordinary Shares of 0.00025p have
been consolidated into one New Ordinary Share of 0.125p (the "Share
Consolidation"). The issued share capital of the Company has
altered by (i) the Share Consolidation (ii) the issue and allotment
of the Placing Shares and (iii) the issue and allotment of the
Conversion Shares.
Additionally , in order to simplify the Group's capital
structure, the Company agreed:
(i) To convert all the remaining preference shares and accrued
dividends held by Herald, amounting to approximately GBP860,000,
into New Ordinary Shares. As a result no preference shares remain
on the Company's balance sheet; and
(ii) To extend the term of the long-term debt held by Herald and
the John Booth Charitable Foundation and the term of the unsecured
loan notes held by Herald from December 2020 to December 2022;
and
(iii) To convert approximately GBP77,000 of long-term debt owing
to John Booth into New Ordinary Shares.
The Company has received shareholder approval to carry out a
capital reduction, which is expected to complete by April 2020, as
follows:
(i) The amount standing to the credit of the Company's share
premium account, the Deferred Shares and D Deferred Shares will be
cancelled; and
(ii) The amount of GBP0.9m, being the entire amount standing to
the credit of the Company's merger reserve, will be capitalised by
issuing capital reduction shares and thereafter such capital
reduction shares will be cancelled immediately.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR DGGDXDSBDGGR
(END) Dow Jones Newswires
March 18, 2020 03:00 ET (07:00 GMT)
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Grafico Azioni Zinc Media (LSE:ZIN)
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Da Apr 2023 a Apr 2024
