TIDMZIN
RNS Number : 5308N
Zinc Media Group PLC
21 May 2020
21st May 2020
Zinc Media Group plc ("Zinc Media" or the "Company")
Trading and COVID-19 Update
Zinc Media Group plc (AIM: ZIN), the TV and multimedia content
producer, is pleased to announce good progress on its
transformation plan during the current Covid-19 pandemic with
GBP2.5m of new business won since lockdown began, and a growing
pipeline of proposals which can be produced under social distancing
rules, across its TV labels.
The health and safety of our staff is our utmost priority and
from the start of lockdown in March, staff were working remotely in
line with government advice. Production filming has been paused
during lockdown, but post production continues with editors working
from home, and pre-production continues. New pitches and
commissioner meetings continue via online video meetings.
The Group has continued with it transformation plan announced in
September 2019 and has made good progress against its strategic
objectives as outlined below.
1. Revenue Growth and Diversification
The Group continues to win new commissions during the lockdown
(which remains more strict in Scotland and Northern Ireland)
currently totalling GBP2.5 million, which is anticipated to begin
production under social distancing protocols during 2020. This new
business is 65% of the pre-Covid-19 level of booking, but was won
at a time when many TV companies saw revenues dry up completely. A
further GBP2 million of business that was already in production was
paused during lockdown but is anticipated to resume and be
recognised later in 2020. GBP0.2m of production revenue was
cancelled due to Covid-19.
The Group is steadily rebuilding its pipelines across all its TV
labels with programmes that can be produced under social distancing
measures. It has a further GBP6 million of production proposals
which are at an advanced stage with broadcasters, and which can be
produced under social distancing guidelines.
Broadcasters' commissioning budgets have been reduced as a
result of Covid-19, with drama and sport most impacted. Unscripted
factual television has also been impacted but is likely to be more
Covid-19 resilient and will help meet demand in television
schedules. The Group is anticipating revenues to be 40% down on
pre-Covid levels in the period July-December 2020 but strengthening
thereafter.
In April and May GBP0.5m of savings have been generated from a
combination of furloughing staff, reduced hours, and overhead
savings. As a result of these measures, overheads have been reduced
by 31% compared to pre-covid-19 levels in February. Loss making
contracts in the former Zinc Communicate CSR business have been
terminated, with the remaining profitable ones transferred to other
parts of the Group.
2. Margin improvement in London and Manchester TV
Margin improvements continue to be maintained despite lockdown
and social distancing restrictions.
Gross production margins of London and Manchester TV have
increased more than expected from 24.7% to 29.4% compared to an
initial target of 27.7% (4.7% improvement vs 3% forecast). These
improvements will be recognised in future financial periods as
productions on the new workflow deliver revenues.
3. Cultural and Creative renewal
Critical new business hires have been made across the Group, and
additional recruitment is well advanced in TV and the newly
enlarged Zinc Communicate which now includes the former publishing
business, Ten Alps Communications.
A new business winning Creative Director has been hired in
Blakeway London and starts in June with a remit to continue to
diversify revenues across the division having previously won
business from Sky, YouTube and Vice, none of which are currently
customers of Zinc.
A new business winning hire in B2B video started in April and a
new business winning hire to lead a new Branded Content division is
being recruited. Both these markets continue to see spend as brands
redirect their reduced budgets away from traditional
advertising.
4. Investment in operational excellence
The move to new headquarters, on a lower cost base, has been
completed and it is eady for occupation as lockdown is eased. This
will provide a vastly improved creative environment and a new post
production facilities to enhance future margin improvement. The
initial rent free period has the advantage of helping with short
term cash flow.
The recent investments in Group HR and improved finance systems
have also greatly assisted management in the Covid-19 crisis.
The Group's cash balance at 30 April was GBP3.4 million and
along with a new overdraft facility that has been agreed in
principle, this is providing the Group with sufficient working
capital during the current period of uncertainty. In order to keep
the transformation plan on schedule through the Covid-19 crisis and
into 2021, the Group is exploring additional financial support
through Government backed loans.
Mark Browning, Chief Executive Officer, commented:
"I am pleased that the transformation plan for the Group remains
on track. Despite the Covid-19 pandemic having forced us to change
our planned route in some of our businesses, the end destination
remains the same. Forecasting is exceptionally challenging given
the economic uncertainty but we continue to win business across the
Group, margins are improving and we have reduced costs. This gives
us the best possible chance of delivering success in highly
unpredictable times."
For further information, please contact:
Zinc Media Group plc +44 (0) 20 7878 2311
Mark Browning,CEO
Will Sawyer, CFO
www.zincmedia.com
N+1 Singer (NOMAD and Joint Broker to Zinc Media) +44 (0) 20 7496 3000
Mark Taylor / Harry Mils
Notes to Editors
Zinc Media Group plc is a leading British based TV and content
creation company and operates 6 TV labels and a content division
called Zinc Communicate.
The six award winning and critically acclaimed television
production labels include: Blakeway, Brook Lapping, Films of
Record, Blakeway North, Reef Television and Tern Television, whose
brands produce television and radio programmes for both UK and
international broadcasters.
Zinc Communicate specialises in creating B2B communications
strategies and behaviour change programmes, campaigns and resources
for partners, businesses and government departments.
For further information on Zinc Media please visit:
http://www.zincmedia.com/
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END
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May 21, 2020 02:00 ET (06:00 GMT)
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