TIDMZOO
RNS Number : 0618S
Zoo Digital Group PLC
04 November 2019
4 November 2019
ZOO DIGITAL GROUP PLC
("ZOO" the "Group" or the "Company")
INTERIM RESULTS FOR THE SIX MONTHSED 30 SEPTEMBER 2019
ZOO Digital Group plc (LON: ZOO), the provider of cloud-based
localisation and digital distribution services for the global
entertainment industry, today announces its unaudited financial
results for the six months ended 30 September 2019.
HIGHLIGHTS
Key Financials
-- Revenues decreased by 4% to $14.2 million (H1 FY19: $14.9
million) driven by a 75% drop in legacy DVD and Blu-ray services,
which now make up 3% of overall Group revenue; excluding
DVD/Blu-ray services revenues were up 7% to $13.8 million (H1 FY19:
$12.9 million) with strong demand for digital packaging and
subtitling
-- Gross profit up at $5.8 million (H1 FY19: $4.9 million) explained by a favourable sales mix
-- Adjusted EBITDA(1) of $1.8 million (including $0.6 million
due to IFRS 16 reclassification of leases) (H1 FY19: $0.5 million),
the improvement reflects the positive gross profit variance
-- Operating profit of $0.4 million (H1 FY19: $0.3 million loss)
-- Cash balance of $0.6 million at period end (H1 FY19: $0.9 million)
Operational Highlights
-- Selected as a primary vendor of localisation and digital
packaging services for a major Over-The-Top (OTT) platform
-- ZOOstudio adopted by a major media company to manage its
localisation operations for OTT production
-- Received a Product of the Year award at the National
Association of Broadcasters (NAB) Show 2019 for ZOOstudio and the
Broadcast Tech Innovation Award 2019 for excellence in localisation
for a global TV project
-- Launch of ZOO Localisation Ecosystem
-- Appointment of Gillian Wilmot as Non-Executive Chairman
Outlook
-- On-going market changes and OTT platform launches offer significant opportunity for growth
-- Recently established customer relationships provide the scope
for significant repeating revenue over multiple years
-- Innovative, technology-led approach to address specific needs
of OTT market provides ZOO with distinct competitive advantage over
traditional localisation vendors
-- The value of the order book at the period end is stronger
than the same period last year and positions ZOO well to meet
market expectations for the full year
(1) adjusted for share-based payments.
Stuart Green, CEO of ZOO Digital, commented,
"We are pleased with the progress we have made during the
period, having met all operational targets in respect of our
strategic priorities. We are now a primary vendor of localisation
and digital packaging services for a major new OTT platform and
have achieved the first customer deployment of ZOOstudio, our
localisation management platform.
"The OTT consumer video market is about to undergo a step change
due to the forthcoming launches of several Direct-to-Consumer
services from major media companies. These provide an exciting
growth opportunity in media localisation and digital packaging
given the increased demand for these services to enable
international distribution. We believe that ZOO is well placed to
capitalise on this opportunity given the benefits and competitive
advantages of our cloud-powered services."
For further enquiries please contact:
ZOO Digital Group plc 0114 241 3700
Stuart Green - Chief Executive Officer
Phillip Blundell - Chief Finance Officer
finnCap Ltd
Henrik Persson / Kate Washington (corporate
finance)
Camille Gochez / Andrew Burdis (corporate
broking) 020 7220 0500
Alma PR
Josh Royston / Hilary Buchanan / Helena
Bogle 020 3405 0205
The Company further wishes to draw attention to the posting on
its website (www.zoodigital.com) of a presentation to shareholders
regarding its interim results.
Overview
In the first half of FY2020 our focus has been on securing
primary vendor status with a major global media content provider.
We are pleased with the progression of this relationship - our
first major strategic customer for our cloud-based dubbing service
- which we expect will bring better quality and visibility to our
future revenues. Our work with this partner has enhanced our
reputation in the market and is helping in our goal to become the
leading next generation media localisation business.
The financial results for the first half of the year are in line
with expectations. Revenue fell by 4% to $14.2 million (H1 FY19:
$14.9 million) due to an anticipated decline in legacy services:
despite DVD/Blu-ray sales falling by 75%, excluding these revenues
we achieved a 7% growth. Digital packaging revenues for OTT
platform launches tripled in the period. This delivered a
substantial increase in our gross profit from 33% to 41% and a more
than doubling of EBITDA before IFRS 16 adjustments to $1.2 million
(H1 FY19: $0.5 million).
We have continued to invest in our cloud-based platforms,
enhancing their functionality to make both subtitling and dubbing
more efficient and scalable, and building on the early successes of
our localisation management platform, ZOOstudio and the ZOO
Localisation Ecosystem. We have developed further modules to track
the full range of localisation services which have been
instrumental in the decision by one of our customers to adopt the
platform to manage its OTT localisation operations.
This focus on innovation is gaining traction as more owners of
media content are placing orders to assess our cloud-based dubbing
service. We have signed up more in-territory partners to our
ZOO-Enabled Dubbing Studio (ZEDS) programme, delivering on our
promise to offer more flexibility, capacity and languages to our
customers that require dubbing services. Further enhancing our
localisation capacity, we opened a post-production studio in London
during the period, offering voice capture facilities, training
services and audio mixing, key for some of our customers who
require final mixing of localisation services in-territory. Already
this has led to significant orders from one global media content
provider. Our freelancer network has grown from 5,400 people this
time last year to 7,100 today, further evidence of our ability to
scale the business, and we continue to monitor the quality and
capacity of our network to ensure that this scalability can happen
seamlessly.
The market dynamics continue to favour ZOO, with major US
content owners Disney, NBC Universal and Warner Media confirming
the launches of their own direct-to-consumer OTT services in the
next six months. This, coupled with Netflix, Apple and Amazon
announcing significant increases in their budgets for original
content, demonstrates a growing market for exactly the type of
services offered by ZOO. This is a long-term opportunity as our
technology-based approach to media localisation is still in its
adoption phase and we need to ensure that our proposition is fully
understood by the market, while demonstrating that our approach is
reliable, scalable and of sufficient quality to meet the market's
increasingly high standards.
Operations
Subscription Video on Demand, the largest segment of the OTT
market by value, continues its rapid global expansion. According to
a recent report from Allied Market Research, the global OTT market
was valued at $97 billion in 2017 and is projected to reach $333
billion by 2025, a CAGR of 17%, with the Asia-Pacific region
registering the fastest growth rate of 21%. In the past year,
several media companies have each committed to spending billions of
dollars on content, with the global output of TV production being
at an all-time high.
Growth in global consumer video markets is creating greater
demand for professional localisation services to adapt content for
international audiences. According to recent research from MESA
Europe, the EMEA market for media localisation is expected to reach
$2.3 billion in 2019, up from $2.0 billion a year earlier. This
creates opportunity for providers like ZOO that deliver the breadth
of services needed to repurpose content produced in one language
into tens of other languages.
In recent months the industry has seen significant shifts in the
competitive landscape for media localisation. The largest
incumbents in the market, established during the DVD era, operate
capital intensive bricks-and-mortar businesses and have been slow
to innovate. In contrast, ZOO's approach is built on proprietary
technology designed specifically to address efficiently the scale
and diversity of customer requirements for OTT distribution.
Consequently, the Board believes that ZOO is well placed to capture
market share as leading buyers seek new relationships with vendors
that are better placed to meet their evolving requirements for
quality, scalability, language coverage and turnaround time.
The Board has considered the consequence that Brexit may have on
the business and does not anticipate any significant impact on its
operations as a result of the UK leaving the European Union.
The Group continues to make good progress in the execution of
its differentiated strategy that is characterised by four pillars:
innovation, scalability, collaboration and building long-term
client partnerships.
Innovation
ZOO's localisation services are delivered using proprietary
cloud computing technology that affords significant benefit to the
company and its customers, delivering competitive advantage.
Following a period of investment in our platforms that commenced
with our first software-enabled localisation service in 2006, the
Company launched its Localisation Ecosystem during the period. This
offers a complete end-to-end approach to media localisation by
bringing together all of the workflows, components, service
providers and creative talent into a single environment. We were
pleased to receive recognition for excellence in localisation for a
global TV product at the 2019 Broadcast Tech Awards for our work on
the Netflix series "The Bletchley Circle: San Francisco".
The ecosystem is built up of interconnected, cloud-based
ordering, production and management platforms supporting and
encapsulating every aspect of media localisation. Each platform
manages an element of content localisation and digital packaging,
and seamlessly interconnects with the rest of the ecosystem to
deliver clear benefits for ZOO's localisation services.
Our R&D resource has been focused primarily on continuing
the development of a key component of the ZOO Localisation
Ecosystem: ZOOstudio. This is our overarching localisation
management platform that offers a single, centralised system for
scenario planning, ordering, tracking and managing all of the
components required to create a localised content package.
Uniquely in the media localisation industry, ZOO has adopted a
collaborative approach through our Localisation Ecosystem. For the
first time, content owners can place all of their orders and manage
their multiple localisation service providers through a single
vendor-agnostic system - with the ability to assign a vendor on an
order-by-order basis.
ZOOstudio is making excellent progress in the market, having
received during the period a Product of the Year award at the
National Association of Broadcasters (NAB) Show 2019. ZOOstudio has
recently been adopted by a major media company to manage the
production of all OTT deliverables required for a forthcoming
launch of its direct-to-consumer service. Consequently, ZOO's
Localisation Ecosystem will be employed to adapt original content
using both subtitling and dubbing into multiple languages covering
the Americas, Europe and Asia. We expect that this will cement a
long-term strategic partnership with a leading industry player that
represents a significant endorsement of ZOO's services and
technologies.
We have also continued to invest in ZOOdubs, our cloud platform
that enables the delivery of dubbing services. Here the focus has
been on further enhancements and features to strengthen our
competitive advantage in areas that are seen as being the greatest
vulnerabilities amongst traditional dubbing studios, namely
security, reliable audio quality and scalable capacity across
multiple languages, particularly those in emerging markets.
Scalability
ZOO's strategy enables capital-efficient scalability of
operations through access to a network of qualified and experienced
specialists in media localisation, including screen translators,
script adapters, voice artists, dubbing directors and audio mixing
engineers. Our on-going rigorous programme of search,
qualification, selection and on-boarding has increased the number
of participants to 7,100, up from 5,400 in the prior year
period.
With several emerging regions and countries being targeted by
OTT services due to their rapidly expanding audience of
internet-connected consumers, ZOO is taking steps to progress its
geographical expansion in strategic locations. Over the coming
period, we expect to commence a process to establish points of
presence in locations that will provide us with the means to
accelerate the deployment of our Localisation Ecosystem and so
further strengthen our competitive advantage.
Collaboration
ZOO adopts a collaborative approach wherever possible to provide
scalability and extend its geographical reach without incurring
significant capital investment. In the prior period we launched our
ZOO-Enabled Dubbing Studio (ZEDS) programme to further enhance our
service offering and respond to customer challenges in dubbing
content for OTT distribution.
ZEDS partners are highly reputable independent dubbing studios
in key territories. Experienced, trusted and carefully selected,
ZEDS are home to some of the creative talent content owners want.
ZOO is training each one to use ZOOdubs to record and manage the
dubbing process.
A key benefit of our dubbing service is that our platforms
support multi-location recording for each language, enabling
significant capacity and scalability while ensuring security,
consistency and high quality. ZOO's unique approach means that we
can work with any studio with the right credentials. It enables
greater coverage with a wider and more diversified talent pool than
relying solely on owner-operated studios.
We have continued to develop relationships with ZEDS across 22
languages as we build the largest collaborative network of studios
in the industry, unified through the use of our cloud
platforms.
Building long-term client partnerships
It is our goal to be selected as a preferred vendor of
localisation and digital packaging services for all of the leading
content producers and global OTT service providers, thereby
enabling a significant repeating revenue opportunity with each of
them.
In the past year a number of major media companies have
initiated a process to select partners for localisation. As
previously noted, ZOO has been successful in one of these
exercises, having been selected as one of three vendors to support
the localisation of content for a forthcoming major OTT service
launch. Other exercises have been either delayed or aborted due, in
part, to the evolving nature of the go-to-market strategies of the
associated companies. Based on feedback received, we believe that
ZOO is well placed to be chosen in these selection processes when
they eventually complete or resume. During the coming period, we
expect to be operating as a vendor for additional top tier OTT
services.
Board Changes
On 19 June we announced the appointment of Gillian Wilmot to the
Board as Non-Executive Chairman with effect from 1 July 2019.
Gillian, who also chairs the Remuneration Committee and acts as a
member of the Audit Committee, replaced Roger Jeynes who stepped
down from the Board on 1 July 2019 after serving a nine-year
tenure. We are very grateful to Roger for the experience and wisdom
he has brought to the Company during a key period in its
growth.
Along with extensive board level leadership roles in both
private and public company environments, Gillian brings a wealth of
relevant industry experience across B2B, technology, advertising
and communication sectors. Gillian's skillset shows particular
strengths in value creation, operational insight and corporate
governance, for which she was recognised in the 2014 UK NED
awards.
Outlook
Our first half has been marked by securing the role of a primary
vendor for a major media company. At the end of the period there
were a significant number of projects in the order book from this
customer to deliver an end-to-end localisation and digital
packaging service across multiple new titles into several
languages. We believe that this relationship will result in
improved visibility and a reliable source of orders for the periods
ahead, including meeting full year market expectations.
The endorsement of our Localisation Ecosystem through the
adoption of ZOOstudio by a major media customer provides further
confidence that our proposition meets the demanding requirements of
the industry. We expect that this arrangement will not only result
in a long-term strategic relationship with this customer but will
also raise visibility and awareness of ZOO and our differentiated
services and encourage similar arrangements with other leading
industry players.
The industry changes and new OTT service introductions that are
expected in the next six months provide a backdrop of enlarged
opportunity for media localisation providers in general, and for
ZOO in particular due to the differentiated features of our
proposition. We expect that during our second half we will be
working on projects for further major providers of OTT services
that may provide sources of repeatable revenue for several years to
come.
Financial Results
Revenues of $14.2 million were 4% below the same period last
year (H1 FY19: $14.9 million). This is explained by the decline of
a legacy offering - a previously flagged major client curtailed the
publishing of DVD and Blu-ray box sets as it prepared for the
launch of its OTT service. The impact on our revenues was a drop of
$1.4 million.
Sales excluding these legacy DVD/Blu-ray services increased from
$13.0 million to $13.8 million, an increase of 7%, driven by strong
digital packaging sales to support OTT distribution and a recovery
in subtitling sales offsetting the exceptionally high level of
dubbing revenues last year that were not repeated in this period.
Dubbing orders already received for delivery in the second half of
the year are expected to more than compensate for the H1
shortfall.
Gross profit is significantly ahead of last year at $5.8 million
(H1 FY19: $4.9 million). The gross profit margin increased from 33%
to 41% as a result of the favourable sales mix with high margin
digital packaging and subtitling replacing currently lower dubbing
margins. In addition, we maintained our direct staff cost at the
same rate as last year, which gives us capacity to support the
anticipated increase in revenues in the second half of the
year.
Operating expenses have increased marginally to $5.5 million (H1
FY19: $5.3 million) which is due to the higher property costs as we
grew our facilities, both in Los Angeles and London, to support the
expansion in digital packaging and dubbing services required to
achieve our full year revenue targets. We continued to invest in
product development, spending roughly $0.6 million in the period
and capitalising a further $0.4 million, the latter figure being
similar to the same period last year.
As a consequence of the increase in gross profit and the $0.6
million positive impact of adopting IFRS 16, the business achieved
EBITDA of $1.8 million (H1 FY19: $0.5 million). The business
achieved an operating profit of $0.4 million, compared to an
operating loss of $0.3 million for the same period last year, again
driven by the improved gross profit.
The cash balance at 30 September was $0.6 million (H1 FY19: $0.9
million) and is down from $1.8 million at 31 March 2019. The cash
outflow of $1.2 million includes investment in new products of $0.4
million, reduction in trade creditors of $1.5 million and financing
costs of $0.9 million offset by operating cashflow of $1.6 million.
The second half of the financial year is expected to show a return
to a positive cash flow.
The Group has no short-term debt and no borrowings other than
its unsecured convertible loan note of GBP2.6 million ($3.0
million), maturing in October 2020 with a conversion price of 48p,
and lease commitments of $4.4 million (post IFRS 16
reclassification). Should they be required, the Group has unused
credit facilities. With regard to the convertible loan notes, as
the current share price is above the conversion price, a non-cash
provision of $2.0 million was created in the March 2019 financial
statements reflecting the embedded derivative and is also shown in
non-current liabilities at 30 September.
New IFRS implementation
The Company has adopted IFRS 16 - Leases for the financial year
ending 31 March 2020, and it has chosen to use the modified
retrospective approach to adoption which means there are no
restatements to the prior year figures.
IFRS 16 introduces a single lessee accounting model, whereby the
Group now recognises a lease liability and a right of use asset at
1 April 2019 for leases previously classified as operating leases.
Within the income statement, operating lease charges, which
previously were included in administrative expenses, have been
replaced by depreciation and interest expenses.
The adoption of IFRS 16 resulted in a right of use asset of $4.2
million, with a corresponding liability of $4.2 million, being
recognised as at 1 April 2019 which was depreciated to a value of
$3.7 million as at 30 September 2019.
In order to see how the impact of IFRS 16 has affected Adjusted
EBITDA*, a reconciliation is presented below:
6 months 6 months
ended 30 ended
September 30 September
2019 2018
$'000 $'000
========================================= =========== ==============
Adjusted EBITDA* - consistent with 2018
presentation and accounting policy 1,205 491
changes due to new accounting policy -
IFRS 16 605 -
========================================= =========== ==============
Adjusted EBITDA* - consistent with 2019
presentation and accounting policy 1,810 491
========================================= =========== ==============
* before share based charges.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)
for the six months ended 30 September 2019
6 months 6 months
to to Year ended
30 Sep 2019 30 Sep 2018 31 Mar 2019
$000 $000 $000
======================================= ============ ============ ============
Revenue 14,242 14,895 28,818
Cost of sales (8,452) (9,949) (19,624)
--------------------------------------- ------------ ------------ ------------
Gross Profit 5,790 4,946 9,194
Other operating income 115 47 157
Operating expenses (5,461) (5,292) (10,671)
--------------------------------------- ------------ ------------ ------------
Operating profit/(loss) 444 (299) (1,320)
--------------------------------------- ------------ ------------ ------------
Analysed as
EBITDA before share-based payments 1,810 491 409
Share based payments (142) (81) (286)
Depreciation (755) (258) (539)
Amortisation and impairment (469) (451) (904)
--------------------------------------- ------------ ------------ ------------
444 (299) (1,320)
--------------------------------------- ------------ ------------ ------------
Exchange gain/(loss) on borrowings 297 332 275
Fair value movement on embedded
derivative - - 2,701
Finance cost (367) (192) (392)
--------------------------------------- ------------ ------------ ------------
Total finance cost (70) 140 2,584
--------------------------------------- ------------ ------------ ------------
Profit/(loss) before taxation 374 (159) 1,264
Tax on profit/(loss) (13) (66) 368
--------------------------------------- ------------ ------------ ------------
Profit/(loss) and total comprehensive
income for the period attributable
to equity holders of the parent 361 (225) 1,632
--------------------------------------- ------------ ------------ ------------
Profit per ordinary share
--------------------------------------- ------------ ------------ ------------
(0.30)
- basic 0.48 cents cents 2.19 cents
--------------------------------------- ------------ ------------ ------------
(0.30)
- diluted 0.45 cents cents 2.02 cents
--------------------------------------- ------------ ------------ ------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(UNAUDITED)
As at 30 September 2019
As at As at As at
30 Sep 2019 30 Sep 2018 31 Mar 2019
$000 $000 $000
--------------------------------------- ------------ ------------ --------------
ASSETS
Non-current assets
Property, plant and equipment 4,463 1,186 944
Intangible assets 6,585 6,518 6,624
Deferred income tax assets 486 486 486
--------------------------------------- ------------ ------------ --------------
11,534 8,190 8,054
--------------------------------------- ------------ ------------ --------------
Current assets
Trade and other receivables 8,227 8,077 8,103
Cash and cash equivalents 607 910 1,828
--------------------------------------- ------------ ------------ --------------
8,834 8,987 9,931
--------------------------------------- ------------ ------------ --------------
Total assets 20,368 17,177 17,985
--------------------------------------- ------------ ------------ --------------
LIABILITIES
Current liabilities
Trade and other payables (5,729) (5,697) (7,189)
Borrowings (1,364) (240) (248)
--------------------------------------- ------------ ------------ --------------
(7,093) (5,937) (7,437)
--------------------------------------- ------------ ------------ --------------
Non-current liabilities
Borrowings (6,107) (3,957) (3,899)
Separable embedded derivative (1,965) (4,666) (1,965)
--------------------------------------- ------------ ------------ --------------
(8,072) (8,623) (5,864)
--------------------------------------- ------------ ------------ --------------
Total liabilities (15,165) (14,560) (13,301)
--------------------------------------- ------------ ------------ --------------
Net assets 5,203 2,617 4,684
--------------------------------------- ------------ ------------ --------------
EQUITY
Equity attributable to equity holders
of the parent
Called up share capital 1,011 1,016 1,010
Share premium reserve 41,018 41,103 41,003
Other reserves 12,320 12,320 12,320
Share option reserve 1,227 769 1085
Capital redemption reserve 6,753 6,753 6,753
Convertible loan note reserve 42 42 42
Foreign exchange translation reserve (992) (992) (992)
Accumulated losses (56,123) (58,341) (56,484)
--------------------------------------- ------------ ------------ --------------
5,256 2,670 4,737
--------------------------------------- ------------ ------------ --------------
Interest in own shares (53) (53) (53)
--------------------------------------- ------------
Attributable to equity holders 5,203 2,617 4,684
--------------------------------------- ------------ ------------ --------------
CONSOLIDATED STATEMENT OF CHANGES
IN EQUITY
(UNAUDITED)
for the six months ended 30 September
2019
Foreign
Share exchange Convertible Share Capital Interest
Ordinary premium translation loan note option redemption Other Accumu-lated in own
shares reserve reserve reserve reserve reserve reserves losses shares Total
$000 $000 $000 $000 $000 $000 $000 $000 $000 $000
--------------- --------- -------- ------------- -------------- -------- ----------- --------- ------------- --------- ------
Balance at
1 April 2018 1,010 41,003 (992) 42 688 6,753 12,320 (58,116) (53) 2,655
Issue of
share capital 6 100 106
Share-based
payments 81 81
=============== ========= ======== ============= ============== ======== =========== ========= ============= ========= ======
Transactions
with owners 6 100 - - 81 - - - - 187
=============== ========= ======== ============= ============== ======== =========== ========= ============= ========= ======
Loss for
the period (225) (225)
=============== ========= ======== ============= ============== ======== =========== ========= ============= ========= ======
Total
comprehensive
income for
the period - - - - - - - (225) - (225)
=============== ========= ======== ============= ============== ======== =========== ========= ============= ========= ======
Balance at
30 September
2018 1,016 41,103 (992) 42 769 6,753 12,320 (58,341) (53) 2,617
Share-based
payments 316 316
Issue of
share capital (6) (100) (106)
=============== ========= ======== ============= ============== ======== =========== ========= ============= ========= ======
Transactions
with owners (6) (100) - - 316 - - - - 210
=============== ========= ======== ============= ============== ======== =========== ========= ============= ========= ======
Profit for
the period 1,857 1,857
=============== ========= ======== ============= ============== ======== =========== ========= ============= ========= ======
Total
comprehensive
income for
the period - - - - - - - 1,857 - 1,857
=============== ========= ======== ============= ============== ======== =========== ========= ============= ========= ======
Balance at
31 March
2019 1,010 41,003 (992) 42 1,085 6,753 12,320 (56,484) (53) 4,684
Share based
payments 142 142
Issue of
share capital 1 15 16
=============== ========= ======== ============= ============== ======== =========== ========= ============= ========= ======
Transactions
with owners 1 15 - - 142 - - - - 158
=============== ========= ======== ============= ============== ======== =========== ========= ============= ========= ======
profit for
the period 361 361
=============== ========= ======== ============= ============== ======== =========== ========= ============= ========= ======
Total
comprehensive
income for
the period - - - - - - - 361 - 361
=============== ========= ======== ============= ============== ======== =========== ========= ============= ========= ======
Balance at
30 September
2019 1,011 41,018 (992) 42 1,227 6,753 12,320 (56,123) (53) 5,203
=============== ========= ======== ============= ============== ======== =========== ========= ============= ========= ======
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
for the six months ended 30 September 2019
6 months 6 months
to to Year ended
31 Mar
30 Sep 2019 30 Sep 2018 2019
$000 $000 $000
========================================== ============ ============ ===========
Cash flows from operating activities
Operating profit/(loss) for the
period 444 (299) (1,320)
Depreciation 755 258 553
Amortisation and impairment 469 451 904
Share based payments 142 81 397
Changes in working capital:
Increases in trade and other receivables (124) (665) (691)
(Decreases)/increases in trade
and other payables (1,460) (409) 1,082
------------------------------------------ ------------ ------------ -----------
Cash flow from operations 226 (583) 925
Tax (paid)/received (13) (66) 368
------------------------------------------ ------------
Net cash flow from operating activities 213 (649) 1,293
------------------------------------------ ------------ ------------ -----------
Investing Activities
Purchase of intangible assets (430) (428) (987)
Purchase of property, plant and
equipment (123) (555) (310)
------------------------------------------ ------------
Net cash flow from investing activities (553) (983) (1,297)
------------------------------------------ ------------ ------------ -----------
Cash flows from financing activities
Repayment of borrowings (532) (172) (228)
Proceeds from borrowings - 354 -
Finance cost (365) (155) (349)
Issue of Share Capital (net of
costs of issue) 16 106 -
------------------------------------------
Net cash flow from financing (881) 133 (577)
------------------------------------------ ------------ ------------ -----------
Net (decrease)/increase in cash
and cash equivalents (1,221) (1,499) (581)
------------------------------------------ ------------ ------------ -----------
Cash and cash equivalents at the
beginning of the period 1,828 2,409 2,409
------------------------------------------ ------------ ------------ -----------
Cash and cash equivalents at the
end of the period 607 910 1,828
------------------------------------------ ------------ ------------ -----------
NOTES
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 and packaging markets and continue with on-going
research and development in those areas. The Group has operations
in both the UK and US.
The Company is a public limited company which is listed on the
Alternative Investment Market and is incorporated and domiciled in
the UK. The address of the registered office is 7(th) Floor, City
Gate, 8 St Mary's Gate, Sheffield. The registered number of the
Company is 3858881.
This condensed consolidated financial information is presented
in US dollars, the currency of the primary economic environment in
which the Company operates.
The interim accounts were approved by the board of directors on
1 November 2019.
This consolidated interim financial information has not been
audited.
Basis of preparation
The consolidated financial statements of ZOO Digital Group plc
and its subsidiary undertakings for the period ended 31 March 2020
will be prepared in accordance with International Financial
Reporting Standards ("IFRS"), as adopted by the European Union, and
with those parts of the Companies Act 2006 applicable to companies
reporting under IFRS.
This Interim Report has been prepared in accordance with UK AIM
listing rules which require it to be presented and prepared in a
form consistent with that which will be adopted in the annual
accounts having regard to the accounting standards applicable to
such accounts. It has not been prepared in accordance with IAS 34
"Interim Financial Reporting".
The policies applied are consistent with those set out in the
annual report for the year ended 31 March 2019, and have been
consistently applied, unless stated otherwise.
This condensed consolidated financial information is for the six
months ended 30 September 2019. It has been prepared with regard to
the requirements of IFRS. It does not constitute statutory accounts
as defined in S343 of the Companies Act 2006. It does not include
all of the information required for full annual financial
statements, and should be read in conjunction with the consolidated
financial statements of the Group for the year ended 31 March 2019
which contained an unqualified audit report and have been filed
with the Registrar of Companies. They did not contain statements
under s498 of the Companies Act 2006.
The Group has applied the same accounting policies and methods
of computation in its interim consolidated financial statements as
in its 2019 annual financial statements, except for those that
relate to new standards and interpretations effective for the first
time for periods beginning on (or after) 1 April 2019 and will be
adopted in the 2020 financial statements. The only standard
impacting the Group that will be adopted in the annual financial
statements for the year ended 31 March 2020, and which has given
rise to a change in the Group's accounting policies is:
-- IFRS 16 leases
Details of the impact of this standard are given below. Other
new and amended standards and interpretations issued by the IASB
that will apply for the first time in the next annual financial
statements are not expected to have a material impact on the
Group.
IFRS 16 Leases
The Group has adopted IFRS 16 on a modified retrospective basis.
As disclosed in the Financial Review, upon transition, a lease
liability has been recognised based on future lease payments
discounted at an appropriate borrowing rate. Additionally, a right
of use asset has been recognised along with a related lease
liability. Within the income statement, the operating lease charge
($605k) has been replaced by depreciation ($496k) and interest
expense ($182k). This has resulted in a decrease in operating
expenses and an increase in finance costs.
6 months 6 months
ended 30 ended
September 30 September
2019 2018
$'000 $'000
================================================== =========== ==============
Non-current assets
Property, plant and equipment - consistent
with 2018 presentation and accounting policy 808 1,186
Changes due to new accounting policy -
IFRS 16 - Right of use asset 3,655 -
================================================== =========== ==============
Property, plant and equipment - consistent
with 2019 presentation and accounting policy 4,463 1,186
================================================== =========== ==============
Current liabilities
Borrowings - consistent with 2018 presentation
and accounting policy 246 240
Changes due to new accounting policy -
IFRS 16 - Short term leases 1,118 -
================================================== =========== ==============
Borrowings - consistent with 2019 presentation
and accounting policy 1,364 240
================================================== =========== ==============
Non-current liabilities
Borrowings - consistent with 2018 presentation
and accounting policy 3,497 3,957
Changes due to new accounting policy -
IFRS 16 - Long term leases 2,610 -
================================================== =========== ==============
Adjusted EBITDA* - consistent with 2019
presentation and accounting policy 6,107 3,957
================================================== =========== ==============
The adjustments above reflect the impact of IFRS 16 on the
property leases for the Los Angeles, London and Sheffield offices.
All new leases will be treated accordingly. A discount rate of
8.25% has been applied.
Basis of Consolidation
The consolidated financial statements of ZOO Digital Group plc
include the results of the Company and its subsidiaries. Subsidiary
accounting policies are amended where necessary to ensure
consistency within the Group and intra group transactions are
eliminated on consolidation.
Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting regularly reviewed by the group's chief
operating decision maker to make decisions about resource
allocation to the segments and to assess their performance.
Localisation Digital Packaging Software Licensing Total
FY20 FY19 FY20 FY19 FY20 FY19 FY20 FY19
H1 H1 H1 H1 H1 H1 H1 H1
$000 $000 $000 $000 $000 $000 $000 $000
===================== ======= ======= ========== ========= ========== =============== ======= =======
Revenue 9,057 11,039 4,166 2,888 1,019 968 14,242 14,895
Segment contribution 2,798 2,926 2,751 1,767 974 904 6,523 5,597
Unallocated cost of
sales (733) (651)
============================== ======= ========== ========= ========== =============== ======= =======
Gross profit 5,790 4,946
============================== ======= ========== ========= ========== =============== ======= =======
31% 27% 66% 61% 96% 93% 41% 33%
Foreign currency translation
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 Company's functional and presentation
currency.
Transactions and balances
Transactions in foreign currencies are recorded at the
prevailing rate of exchange in the month of the transaction.
Foreign exchange gains or losses resulting from the settlement of
such transactions and from the translation of monetary assets and
liabilities denominated in foreign currencies at the year-end
exchange rates are recognised in the income statement.
Group companies
The results and financial positions of all Group entities that
use a functional currency different from the presentation currency
are translated into the presentation currency as follows:
-- assets and liabilities for each entity are translated at the
closing rate at the period end date;
-- income and expenses for each Statement of Comprehensive
Income item are translated at the prevailing monthly exchange rate
for the month in which the income or expense arose and all
resulting exchange rate differences are recognised in other
comprehensive income with the foreign exchange translation
reserve.
Earnings per share
Earnings per share is calculated based upon the profit or loss
on ordinary activities after tax for each period divided by the
weighted average number of shares in issue during the period.
Weighted average number of
shares for basic & diluted
profit per share 30 Sep 2019 30 Sep 2018 31 Mar 2019
============================
No. of shares No. of shares No. of shares
============================ ============== ============== ==============
Basic 74,512,271 74,462,725 74,356,016
Diluted 81,084,168 86,720,202 80,725,841
Where the Group has recorded a loss, diluted earnings per share
is equal to basic earnings per share.
Further Copies
Copies of the Interim Report for the six months ended 30
September 2019 will be available, free of charge, for a period of
one month from the registered office of the Company at 7(th) Floor,
City Gate, 8 St Mary's Gate, Sheffield, S1 4LW or from the Group's
website: www.zoodigital.com.
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 CKNDPOBDDFDK
(END) Dow Jones Newswires
November 04, 2019 02:00 ET (07:00 GMT)
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