TIDMZIN
RNS Number : 0941U
Zinc Media Group PLC
27 July 2020
27th July 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 continued good progress on its
transformation plan and better than previously forecast revenues
since lockdown.
In May the Group announced:
-- GBP2m of TV production had been paused due to Covid;
-- GBP2.5m of new production won during lockdown (April/May); and
-- GBP6m of new business opportunities were highly advanced with clients
The Group today reports:
-- It is resuming previously paused production faster than forecast
-- It has won a further GBP2.7m of new business since the last update on 21(st) May
-- It has implemented a programme of permanent cost reductions
which will generate annualised savings of GBP0.7m per annum
compared to pre-Covid levels which, when combined with the ongoing
improvements in television margins currently of 4.7%, further
positions the Group to be profitable from 2021 and cash generative
in the second half of 2021
-- It has closed the loss making CSR business, which accounts
for a substantial amount of the Group's losses
-- It is increasingly likely revenues in July to December 2020
will be better than forecast on 21(st) May
-- It has launched a new branded content division which provides
timely opportunities in bigger, more resilient markets as well as
being synergistic with the TV business and providing opportunity
for efficiencies through shared resources
-- Cash is currently GBP3.7m and the completion of a capital
reduction process will enable the Group to pursue the possibility
of a government backed loan to help fund the Group's transformation
plan
The Group's transformation plan remains on track with good
progress being made on all the strategic KPIs underpinning the
plan.
Resumption of production and new business won
Across the Group there are more than 20 programmes in
pre-production or production. These include the resumption of a
major new series for the Smithsonian Channel, The curious life and
death of..., the ongoing series Police Code Zero: Officer Under
Attack for Channel 5, Britain's Lost Masterpieces for BBC4 and
Grand Tours of Scotland's Lochs for BBC Scotland. It now expects
GBP1.5m of the GBP2m of paused production to resume by August.
Previously this revenue would have been recognised in the financial
period ending June 2020.
Futher to this, the GBP2.5m of new business won during lockdown
is progressing well with 80% delivered or in production and the
remainder due to start production by August .
GBP2.7m of additional new business has been won since May
including 2 series for Channel 5, which begin filming overseas and
in the UK this week. Other programmes include Inside the Zoo an
eight part access documentary following the 200 staff at Edinburgh
Zoo as they care for 3000 animals. This is for BBC Scotland from
Tern TV. US cable Broadcaster A&E have invested in a
co-production with ITV and France TV on a feature length
documentary for the 20(th) anniversary of 9/11 in 2021.
In addition, the Group's pipeline continues to rebuild with
GBP5m of new business opportunities highly advanced with clients.
The vast majority of ideas and pitches can be filmed under social
distancing guidelines.
Transformation of Zinc Communicate
Further progress is being made in the transformation of the
Group's content production division Zinc Communicate:
-- The loss making CSR business, which accounted for a
substantial amount of the Group's losses in the 12 months to June
20 is being closed;
-- The publishing business is re-building sales faster than
previously forecast with revenues for June at over 90% of pre-Covid
levels; and
-- Zinc has launched a new branded content business which will
create programmes and content for advertisers and brands, and
support the Group's traditional TV business with potential new
revenue models.
The branded content business will leverage all the experience
within Zinc's TV businesses to deliver high quality, brand-funded,
unscripted film and audio content across television and digital
platforms. In times of economic contraction brands and advertisers
look to make their spend go further, and brand-led content, content
marketing, and advertiser funded programmes are coming to the fore
again.
Cost savings and cash management
Costs continue to be managed by reduction in hours and
furloughing, with costs in June 20% lower than pre-Covid levels.
Previously the Group reported costs in April and May that were 31%
lower than pre-Covid levels. Non-executive Directors took no pay
between April and June and senior management, including the CEO,
took pay cuts of up to 40% during the same period. A programme of
permanent cost savings of GBP0.7m per annum compared to pre-Covid
levels will be effective from August as the Group continues its
restructuring programme.
The Group's cash balance at 20 July was GBP3.7m, and along with
a new overdraft facility that has been agreed in principle, is
currently providing sufficient working capital. The Group is
continuing to pursue Government backed finance, including CBIL
loans, to provide sufficient working capital to continue with the
transformation plan at the current pace, towards profitability from
2021.
In February shareholders approved a capital reduction. This
process, which requires court approval and was delayed by Covid-19,
is now expected to conclude in August. This will result in the
Group having distributable profits, which is an eligibility
criterion for government backed loans.
The Group will report its interim results for the six month
period ending 30 June 2020 in September.
Mark Browning, Chief Executive Officer, commented:
"The progress since the 21(st) May has been encouraging. With TV
production activity resuming and stronger sales in June in our new
Zinc Communicate division we are in a better position than we had
anticipated two months ago. I would like to thank all our staff and
freelancers who have been so resilient through lockdown. There
remain significant challenges ahead, and forecasting is
exceptionally challenging, but we continue to win new business,
improve our margins, attract new talent, and reduce our costs. The
changes and improvements we said we would make in our
transformation plan are firmly on track."
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 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.
The Zinc Communicate division comprises all the Groups content
making divisions outside its TV labels. This includes the former
Ten Alps Communication division now known as Zinc Communicate -
Publishing which also houses a new video marketing division, and
Zinc Communicate - Branded Content which produces content for
brands, advertisers, agencies and media owners.
For further information on Zinc Media please visit:
http://www.zincmedia.com/
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END
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