TIDMZOO
RNS Number : 5928F
Zoo Digital Group PLC
08 November 2022
8 November 2022
ZOO DIGITAL GROUP PLC
("ZOO" the "Group" or the "Company")
INTERIM RESULTS FOR THE SIX MONTHSED 30 SEPTEMBER 2022
Strong profitable growth with good cash conversion
ZOO Digital Group plc (LON: ZOO), a world-leading provider of
end-to-end cloud-based localisation and digital media services to
the global entertainment industry, today announces its unaudited
financial results for the six months ended 30 September 2022 ("H1
FY23").
HIGHLIGHTS
Key Financials
-- Revenues increased by 91% to $51.4 million (H1 FY22: $26.9
million) driven by strong growth in localisation and expansion
of media services
-- Adjusted EBITDA (1) more than doubled to $7.3 million (H1
FY22: $2.4 million) reflecting strong operational gearing
-- Maiden H1 profit before tax of $3.5 million (H1 FY22: loss
of $1.5 million)
-- EPS of 3.80 cents (H1 FY22: loss per share of 2.02 cents)
-- Cash generated in the period of $4.9 million, operating
cash conversion of 106%(2)
-- Strong balance sheet with cash at period end of $10.8 million
(H1 FY22: $8.2 million)
Operational Highlights
-- Localisation grew 150% to $32.3 million due to the high
proportion of new titles processed, with subtitling doubling
in the period and dubbing increasing fourfold
-- Media services revenues grew by 39% to $18.2 million due
to a high volume of work in preparing predominantly new
titles for release on streaming platforms
-- Freelancer network grew by 27% to 12,343 (H1 FY22: 9,752)
-- The mastering service processed significantly greater volumes
than the prior year with further expansion planned
-- International operations performing well with India and
South Korea now fully integrated
-- Continued investment in R&D with headcount increased by
32% and expenditure by 27% to $1.8 million
-- Contribution margins expanded across all service lines due
in part to the scaling up of the business
Outlook
-- Strong order book across all service lines with good visibility
for H2 and a pipeline of work from established, satisfied
customers
-- Further expansion of international operations to deliver
revenue growth and improved visibility across multiple service
lines
-- Clear opportunity as streaming service providers continue
to focus on content as a key differentiator, with increased
sourcing from international markets
-- The Board will continue to invest in expanding capacity
to support an increase in our share of this growing market
in H2 and into FY24, which is expected to generate increased
profitability in future periods
-- The Board expects the full year outcome to be in line with
market expectations and is confident of delivering continued
revenue growth and margin improvement
(1) Adjusted EBITDA is earnings before interest, tax,
depreciation, amortisation and share-based payments
(2) Operating cash conversion defined as cash flow from
operations divided by adjusted EBITDA
Stuart Green, CEO of ZOO Digital, commented:
"In H1 FY23, ZOO has continued its rapid progress following a
strong year in FY22. A near doubling of revenue, record profits and
good cash conversion in H1 FY23 have combined to deliver a very
successful period and the Board has continued to invest in capacity
which should support future profitable growth.
"The fundamental drivers behind our growth remain as strong as
ever as streaming continues to globalise and multi language content
is required for both new productions, which are now back in full
swing, and the migration of back catalogues.
"We have developed our offer to capture demand by investing in
the expanding markets of India, South Korea, Turkey, UAE and
Denmark, with others still to come.
"We see continuing evolution of the marketplace with demand
across each of our service lines remaining buoyant. We are well
positioned for long-term sustainable growth and as a result are
confident of continued progress for the remainder of FY23 and
beyond."
For further enquiries, please contact:
+44 (0) 114 241
ZOO Digital Group plc 3700
Stuart Green - Chief Executive Officer
Phillip Blundell - Chief Finance Officer
Kam Bansil - Investor Relations
Stifel Nicolaus Europe Limited +44 (0) 20 7710
Fred Walsh / Tom Marsh 7600
Instinctif Partners +44 (0)20 7457
Matthew Smallwood / Joe Quinlan 2020
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, and of an investor presentation
(www.zoodigital.com/interims2023) that will be live streamed on
Tuesday 8(th) November at 5:00pm GMT.
About ZOO Digital Group plc:
ZOO Digital supports major Hollywood studios and streaming
services to globalise their content and reach audiences everywhere,
by providing world-leading, technology-enabled localisation and
media services.
Founded in 2001, ZOO Digital operates from hubs in Los Angeles,
London, Dubai, Turkey, South Korea, India and Denmark with a
development and production centre in Sheffield, UK.
The Group provides media services through its platforms that
include: ZOOsubs, ZOOdubs and ZOOstudio. Its full-service
proposition delivers the end-to-end services required to prepare
both original and catalogue content for digital distribution; these
services include dubbing, subtitling & captioning, metadata
creation & localisation, mastering, artwork localisation and
media processing. Alongside this offering, ZOO also provides its
customers with management platforms and strategic solutions to
support their own internal globalisation operations.
ZOO is a go-to service partner for media businesses looking to
globalise their content across different territories, languages and
distribution platforms. Using its innovative technology-enabled
approach, ZOO helps its customers to reduce time to market, lower
costs and deliver high quality products to their global audiences.
The business has frameworks in place with all major Hollywood
studios and streaming services. Its customers include Disney,
NBCUniversal, HBO and Paramount Global.
ZOO's competitive advantage arises from three interlinking
factors - the leading role it has played in the digital
transformation of its sector; the world class proprietary platforms
that it develops to enable this transformation; and the global
supply chain of thousands of freelancers, working collaboratively
in ZOO's platforms, which delivers services that scale easily to
meet demand. These factors combine to make ZOO uniquely placed to
capitalise on new market opportunities in a fast-paced and
constantly evolving industry.
CHAIRMAN AND CHIEF EXECUTIVE'S STATEMENT
Overview
During the period under review leading streaming companies have
made announcements that point to a consumer landscape that is
continuing to evolve. In the Over-the-Top (OTT) market, some global
Subscription Video on Demand (SVOD) services have announced their
plans to launch lower cost tiers that feature advertising, with
both Advertising Video on Demand (AVOD) and Free Ad-supported
Streaming Television (FAST) services growing in popularity in
multiple markets. This evolution reflects the refinements by
multiple providers that are seeking to optimise their commercial
models for streaming service delivery. However, what remains
unchanged about the market is the commitment by these major players
to invest in the creation of new original content, since, from a
consumer perspective, this is what differentiates one service from
another. Consequently, industry demand remains strong for media
localisation and media services so that this content may be
distributed globally.
While viewer numbers of individual providers may have seen
periods of retracement, subscriptions to streaming platforms
continued to grow to 1.3 billion subscribers globally - a 14%
increase year-on-year - with the value of the digital market
increasing 24% (source: Motion Pictures Association).
Production of film and TV content has exceeded pre-pandemic
levels; in the US 943 films entered production in 2021, an increase
of 111% compared to 2020, and 1,826 original series were released
in 2021, an increase of 15% since prior year, with more than a
third of these being produced by streaming platforms (source:
Motion Pictures Association). The same trend has been reported in
other media producing countries as the demand for diverse content
grows, including programmes produced in languages other than
English. For example, the British Film Institute reported that 2021
was a record period for combined total UK spend on film and
high-end TV productions at GBP5.64 billion, 29% more than the
previous peak reported in 2019.
The highest growth in investment in content is by OTT
(Over-the-Top) providers which PwC forecasts will grow by 15%
Compound Annual Growth Rate to 2025 driven, in part, by the pivot
to AVOD (Advertising Video on Demand) and FAST (Free
Advertising-supported Streaming TV) offerings. These OTT streaming
companies are ZOO's primary commercial focus, and all indications
suggest a shift in their purchasing strategies towards engaging
with a smaller number of more capable vendors of media and
localisation services. In this regard, ZOO is well positioned
within the market as a one-stop shop, providing all services needed
to prepare entertainment media for distribution on streaming
platforms across all required languages. The Group is one of
perhaps five organisations in the industry with this capability, in
ZOO's case differentiated by its proprietary cloud software
platforms that enable high efficiency and scalability in its
operations, leading to the high rates of organic growth that have
been delivered in its recent reporting periods.
The Group estimates that its addressable market is approximately
$1.5 billion of which today it enjoys a 4% market share. Given the
increasing investments by OTT providers in original content and the
aspirations of a number of these to provide a global offering, the
Group estimates that its addressable market may reach almost $3
billion by 2030.
Operations
Revenue of $51.4 million in the period represents a 91% increase
over the prior year. Some $50.2 million of this revenue represents
organic growth over the prior year and $1.2 million is attributed
to consolidation of the Vista India business which was acquired in
March 2022.
Compared to the prior year period, the media services segment
grew 39% to $18.2 million while the localisation segment grew by
150% to $32.3 million. The higher rate of growth of localisation
was due primarily to the greater proportion of new rather than
catalogue content compared with the comparator period.
Contribution margins expanded across all service lines due in
part to the scaling up of the business. This was particularly
pronounced for dubbing services where the comparator period
included multiple projects that were outsourced to third party
studios while, in the period under review, a greater proportion of
projects have been processed using hybrid and direct talent
engagement. This resulted in overall dubbing contribution margins
in the period of 9% which compares to negative contribution in the
comparator period. In absolute terms, this led to an improvement of
$1.7 million at the operating profit level. The Board expects the
contribution margin for dubbing to improve further as we transition
operations for more languages to adopt our more efficient and
scalable technology-enabled approach.
As a result, a maiden H1 pre-tax profit of $3.5 million was
achieved compared with a loss of $1.5 million in the comparator
period last year and a profit of just over $1 million for FY22.
In FY22, the Group completed a number of investments to
establish and expand regional hubs in several key locations
including India, South Korea, Turkey, UAE and Denmark. These have
all performed well during the review period and have each expanded
ZOO's capacity to process a greater volume of projects on behalf of
clients, contributing to the strong organic revenue growth in the
first half.
During the period the Group has invested further in its ZOO
Korea production hub. The Seoul-based operation is a flexible
facility, fully integrated with ZOO's cloud-based production
ecosystem. The expanded location follows the successful launch of
ZOO Korea, which acts as a hub for globalisation and client
collaboration in the South-East Asia region, supporting the
continued worldwide popularity and localisation of Korean
content.
The ZOO India operation in Mumbai has been relocated to larger
premises to support growth and expansion of capacity, and
additional project management, quality control and media services
staff have been recruited to grow this hub for India, focusing
primarily on the major northern Indian languages. The Group is now
in the process of establishing a second facility in Chennai to
support the resourcing of major southern Indian languages and
processing of the associated client projects.
In FY22, the Group announced its ZOO Academy initiative to
provide a specialised range of online courses and learning
programmes focused on the disciplines required in ZOO's freelancer
community. The aim of the initiative is to develop new talent in
the industry, particularly in disciplines and languages where there
is a growing shortage of experienced practitioners. The first
course was launched during the period and has received very
positive reviews. Further courses are in development, some of which
will be launched in H2 FY23.
Our talent acquisition team has continued to make excellent
progress in bringing more freelancers into our ecosystem across all
of the required disciplines, with the total number reaching 12,343
by the period end, up 27% compared with the first half of FY22.
The Group's ZOOstudio platform, which provides a highly
specialised ERP capability for use within the operations of our
clients, has been developed further and continues to be a
differentiator that delivers strategic value. Discussions with
multiple major media organisations concerning the adoption of this
platform are ongoing and we remain optimistic of adding further
licensees in due course.
People
In the Group's major operations in the UK and US, further
recruitment has taken place to expand processing capacity further,
with headcount increasing from 413 to 470 over the period. The
scalability afforded by ZOO's proprietary cloud software platforms
means that the addition of further project managers can add greater
incremental capacity for production than is typical in other vendor
organisations in the sector. It naturally takes time for new
recruits to be trained in the use of these systems and to learn
ZOO's methodology and production workflows. The associated costs of
project management and production quality assurance staff are
treated within the accounts as costs of sales, and consequently the
high rate of recruitment has an adverse impact on gross margins in
the short term until the individuals become fully effective.
Therefore, the Board expects margin improvement in certain service
lines as the business scales.
The services delivered by the Group call for diverse disciplines
and include both specialised technical functions as well as highly
creative activities. The Group's clients include the leading names
in media and entertainment for which the standards required are the
highest in the industry. For ZOO to have achieved its status as a
proven supplier to these organisations, and to maintain it going
forward, requires us to engage and work with a large number of
talented and creative individuals. We extend our warmest thanks to
our dedicated colleagues, loyal freelancers and our growing
community of collaborators across many areas of our operations for
their creativity, contribution and support as we continue to grow
the business.
To maintain the level of engagement across all our stakeholders
and ensure we have a positive impact on the environment, our staff,
our suppliers and our local communities, we have formalised a
3-year plan to measure and focus on material improvements where we
can make a tangible difference. In the period we have made progress
across a number of areas including in relation to diversity, waste
management, working environment and support for strategic
charities. Further details will be provided within the Group's FY23
Annual Report.
Outlook
Despite the current macro-economic conditions, the commentary of
independent market specialists and the Group's own client
engagements point to a continuing strong commitment to original
content production to differentiate streaming platforms which
creates demand for ZOO's proposition. This is driven by the global
roll-out and penetration of streaming services of all kinds,
including subscription as well as advertising-supported models.
A greater proportion of spend on content is being concentrated
in the Group's target customers: large media organisations and
streamers with ambitions to operate leading global services. The
Board estimates that for these operators, their expenditure on
media localisation is below three percent of content budgets, which
suggests that adapting content into more languages is a
cost-effective way to reach much larger audiences and therefore
amortise the cost of content across a far greater number of
viewers. Consequently the Board expects spend on media localisation
to grow at a rate that exceeds that of the content spend
itself.
The traditional studio-centric approach to media localisation,
where throughput is limited by the number of physical studios,
leads to capacity constraints amongst the Group's competitors, with
demand for some languages already exceeding supply. This provides
an excellent opportunity for ZOO due to its innovative,
technology-driven, end-to-end, scalable and efficient approach. In
addition, the Board remains optimistic that visibility over future
projects and the associated revenue would improve as buyers plan
further ahead in order to ensure access to the most in-demand
localisation providers.
At a capital markets event in 2020 when the Group's annual
revenues were approximately $30 million the Board indicated its
medium term sales target of $100 million. It is expected that this
target will be exceeded in the short-term and the Board believes
that it may be possible to increase market share from 4% to 14% of
an expected $3 billion addressable market which would equate to
long term revenues in the region of $400 million. At this scale the
Board expects that operating margins will improve to around 20%.
Whilst revenues from the Group's largest customer are expected to
continue to grow in absolute terms over this period, the
international launch of other new platforms will be a key driver in
diversification of revenues and a corresponding reduction in
customer concentration.
With an enviable, differentiated position in a rapidly growing
and evolving market, ZOO is well placed to deliver continuing high
growth rates and improving profitability.
FINANCIAL REVIEW
Revenues of $51.4 million were 91% ahead of the same period last
year (H1 FY22: $26.9 million). The momentum in delivering global
content to our streaming customers has continued during the period
and has resulted in all of our three main services (subtitling,
dubbing and media services) seeing significant growth compared to
the same period last year. In particular our dubbing service has
quadrupled revenues in the period demonstrating the global demand
for this service offering.
Gross profit increased from $8.6 million to $16.5 million in the
period, reflecting the revenue growth. Gross margin remained at 32%
due to a change in revenue mix, masking a significant improvement
in direct staff utilisation. This, alongside the strong growth in
sales, resulted in direct staff costs falling from 29% of revenues
to 21%. This margin improvement was across the board with all three
services showing an improvement compared to the same period last
year.
Operating expenses increased 52% to $12.7 million (H1 FY22: $8.3
million) as we continued to invest in people, infrastructure and
R&D to support our long-term revenue goals. Operating expenses
were adversely affected by wage inflation of 8%, partly offset by
the weakness in Sterling against the US Dollar which had a positive
impact of 4%. However, as a percentage of revenue, operating
expenses actually fell by 6 percentage points to 25% reflecting the
benefits of scale and the corresponding operating leverage inherent
in our model. This reduction was achieved without compromising our
capacity for growth and while continuing to invest in our R&D
programme where expenditure increased 27% in the period.
Adjusted EBITDA increased by 209% to $7.3 million compared to
$2.4 million last year as a direct result of the revenue increase
offsetting the investment in people and R&D. This is also
reflected in the operating profit improvement of $3.4 million,
delivering on our promise to grow the business profitably. The
operating margin of 7% is a significant improvement on the 1%
achieved last year.
The profit before tax for the period was $3.5 million, an
increase of $5.0 million over last year (H1 FY22: loss of $1.5
million). This reflects the operating profit improvement and also
the conversion of the 7.5% unsecured convertible loan stock in
September 2021, being a non-cash fair value negative movement on
the loan stock of $1.0 million.
The cash balance as at 30 September 2022 was $10.8 million
before short-term operating leases of $0.3 million (H1 FY22: $8.2
million before short-term operating leases of $0.5 million) driven
by the operating profit and a small decrease in the working capital
balance. This was partly offset by a net outflow of $2.0 million
from investing activites and $0.8 million repayment of leases in
the period. In the six month period the Group generated cash of
$4.9 milion demonstrating its ability to grow rapidly without the
need for borrowings.
The Group's balance sheet has changed little from the year-end
as both investments in overseas businesses and the majority of
capital expenditure took place before 31 March 2022. Our short-term
lease commitments are now less than $0.4 million compared to $0.8
million a year ago and, with no new commitments being made in the
period, the balance sheet is in a very strong position to support
our ambitious growth plans. This is further enhanced by an unused
$5.0 million debt facility with HSBC.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)
for the six months ended 30 September 2022
Unaudited Unaudited Audited
6 months 6 months
to to Year ended
30 Sep
2022 30 Sep 2021 31 Mar 2022
$000 $000 $000
======================================= ============ ============= =============
Revenue 51,422 26,927 70,403
Cost of sales (34,941) (18,357) (48,296)
--------------------------------------- ------------ ------------- -------------
Gross Profit 16,481 8,570 22,107
Other operating income - 135 204
Operating expenses (12,671) (8,332) (19,165)
--------------------------------------- ------------ ------------- -------------
Operating profit 3,810 373 3,146
--------------------------------------- ------------ ------------- -------------
Analysed as
EBITDA before share-based payments 7,286 2,355 8,326
Share based payments (970) (124) (513)
Depreciation (1,768) (1,097) (3,008)
Amortisation (738) (761) (1,659)
--------------------------------------- ------------ ------------- -------------
3,810 373 3,146
--------------------------------------- ------------ ------------- -------------
Exchange loss on borrowings - (5) (5)
Costs re raise of capital - (596) (596)
Fair value movement on embedded
derivative - (971) (971)
Other finance cost (299) (317) (519)
--------------------------------------- ------------ ------------- -------------
Total finance cost (299) (1,889) (2,091)
--------------------------------------- ------------ ------------- -------------
Profit/(Loss) before taxation 3,511 (1,516) 1,055
Tax on Profit/(loss) (147) (152) 1,573
--------------------------------------- ------------ ------------- -------------
Profit/(loss) and total comprehensive
income for the period attributable
to equity holders of the parent 3,364 (1,668) 2,628
--------------------------------------- ------------ ------------- -------------
Profit per ordinary share
--------------------------------------- ------------ ------------- -------------
(2.02)
- basic 3.80 cents cents 3.10 cents
--------------------------------------- ------------ ------------- -------------
(2.02)
- diluted 3.46 cents cents 2.80 cents
--------------------------------------- ------------ ------------- -------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(UNAUDITED)
As at 30 September 2022
Unaudited Unaudited Audited
as at 30 as at 30 as at 31
Sep 2022 Sep 2021 Mar 2022
$000 $000 $000
---------------------------------- ---------------------- ---------------------- ------------------------
ASSETS
Non-current assets
Property, plant and equipment 12,952 6,935 13,317
Intangible assets 9,746 6,876 9,514
Investments 3,819 - 4,154
Deferred tax assets 1,842 486 1,846
-------------------------------------------------- ---------------------- ---------------------- ------------------------
28,359 14,297 28,831
-------------------------------------------------- ---------------------- ---------------------- ------------------------
Current assets
Trade and other receivables 15,092 12,440 25,992
Contract assets 3,600 2,194 3,647
Cash and cash equivalents 10,818 8,214 5,962
-------------------------------------------------- ---------------------- ---------------------- ------------------------
29,510 22,848 35,601
-------------------------------------------------- ---------------------- ---------------------- ------------------------
Total assets 57,869 37,145 64,432
-------------------------------------------------- ---------------------- ---------------------- ------------------------
LIABILITIES
Current liabilities
Trade and other payables (17,338) (11,216) (27,638)
Contract liabilities (521) (558) (774)
Borrowings (741) (1,771) (1,313)
-------------------------------------------------- ---------------------- ---------------------- ------------------------
(18,600) (13,545) (29,725)
-------------------------------------------------- ---------------------- ---------------------- ------------------------
Non-current liabilities
Borrowings and other payables (8,579) (3,093) (8,449)
-------------------------------------------------- ---------------------- ---------------------- ------------------------
Total liabilities (27,179) (16,638) (38,174)
-------------------------------------------------- ---------------------- ---------------------- ------------------------
Net assets 30,690 20,507 26,258
-------------------------------------------------- ---------------------- ---------------------- ------------------------
EQUITY
Equity attributable to equity
holders of the parent
Called up share capital 1,178 1,166 1,174
Share premium reserve 55,727 51,191 55,665
Other reserves 12,320 12,320 12,320
Share option reserve 3,625 2,209 2,619
Capital redemption reserve 6,753 6,753 6,753
Convertible loan note reserve 5,471 8,914 5,471
Foreign exchange translation
reserve (992) (992) (992)
Accumulated losses (53,339) (60,999) (56,703)
-------------------------------------------------- ---------------------- ---------------------- ------------------------
30,743 20,562 26,307
-------------------------------------------------- ---------------------- ---------------------- ------------------------
Interest in own shares (53) (55) (49)
-------------------------------------------------- ----------------------
Attributable to equity holders 30,690 20,507 26,258
-------------------------------------------------- ---------------------- ---------------------- ------------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(UNAUDITED)
for the six months ended 30 September
2022
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 2021 1,010 41,003 (997) 42 2,085 6,753 12,320 (59,331) (46) 2,839
---------------- --------- -------- ------------ ------------ -------- ----------- --------- ------------- --------- --------
Issue of
share capital 156 10,188 - 8,872 - - - - - 19,216
Share-based
payments - - - - 124 - - - - 124
Foreign
exchange
translation - - 5 - - - - - (9) (4)
================ ========= ======== ============ ============ ======== =========== ========= ============= ========= ========
Transactions
with owners 156 10,188 5 8,872 124 - - - (9) 19,336
================ ========= ======== ============ ============ ======== =========== ========= ============= ========= ========
Loss for
the period - - - - - - - (1,668) - (1,668)
================ ========= ======== ============ ============ ======== =========== ========= ============= ========= ========
Total
comprehensive
income for
the period - - - - - - - (1,668) - (1,668)
================ ========= ======== ============ ============ ======== =========== ========= ============= ========= ========
Balance at
30 September
2021 1,166 51,191 (992) 8,914 2,209 6,753 12,320 (60,999) (55) 20,507
Share options
exercised - - - - 21 - - - - 21
Share-based
payments - - - - 389 - - - - 389
Foreign
exchange
translation - - - - - - - - 6 6
Issue of
share capital 8 4,474 - (3,443) - - - - - 1,039
================ ========= ======== ============ ============ ======== =========== ========= ============= ========= ========
Transactions
with owners 8 4,474 - (3,443) 410 - - - 6 1,455
================ ========= ======== ============ ============ ======== =========== ========= ============= ========= ========
Profit for
the period - - - - - - - 4,296 - 4,296
================ ========= ======== ============ ============ ======== =========== ========= ============= ========= ========
Total
comprehensive
income for
the period - - - - - - - 4,296 - 4,296
================ ========= ======== ============ ============ ======== =========== ========= ============= ========= ========
Balance at
31 March
2022 1,174 55,665 (992) 5,471 2,619 6,753 12,320 (56,703) (49) 26,258
Share based
payments - - - - 970 - - - - 970
Foreign
exchange
translation - - - - - - - - (4) (4)
Share options
exercised - - - - 36 - - - - 36
Issue of
share capital 4 62 - - - - - - - 66
================ ========= ======== ============ ============ ======== =========== ========= ============= ========= ========
Transactions
with owners 4 62 - - 1,006 - - - (4) 1,068
================ ========= ======== ============ ============ ======== =========== ========= ============= ========= ========
Profit for
the period - - - - - - - 3,364 - 3,364
================ ========= ======== ============ ============ ======== =========== ========= ============= ========= ========
Total
comprehensive
income for
the period - - - - - - - 3,364 - 3,364
================ ========= ======== ============ ============ ======== =========== ========= ============= ========= ========
Balance at
30 September
2022 1,178 55,727 (992) 5,471 3,625 6,753 12,320 (53,339) (53) 30,690
================ ========= ======== ============ ============ ======== =========== ========= ============= ========= ========
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
for the six months ended 30 September 2022
30 Sep 31 Mar
2022 30 Sep 2021 2022
Unaudited Unaudited Audited
6 months 6 months
to to Year ended
30 Sep 31 Mar
2022 30 Sep 2021 2022
$000 $000 $000
=========================================== =========== ============= ============
Cash flows from operating activities
Operating profit for the period 3,810 373 3,146
Depreciation 1,768 1,097 3,022
Amortisation 738 761 1,659
Share based payments 970 124 513
Changes in working capital:
(Increases)/decreases in trade
and other receivables 10,976 (4,377) (18,453)
Increases/(decreases) in trade
and other payables (10,541) 1,261 15,337
------------------------------------------- ----------- ------------- ------------
Cash flow from operations 7,721 (761) 5,224
Tax (paid)/received (147) (152) 258
------------------------------------------- -----------
Net cash flow from operating activities 7,574 (913) 5,482
------------------------------------------- ----------- ------------- ------------
Investing Activities
Purchase of intangible assets (41) (17) (58)
Capitalised development costs (904) (808) (1,675)
Purchase of investments 339 - (3,953)
Purchase of property, plant and
equipment (1,355) (1,285) (4,377)
------------------------------------------- -----------
Net cash flow from investing activities (1,961) (2,110) (10,063)
------------------------------------------- ----------- ------------- ------------
Cash flows from financing activities
Repayment of borrowings (219) (283) (531)
Proceeds from fund raise - 10,107 10,107
Repayment of principal under lease
liabilities (536) (503) (1,268)
Finance cost (42) (593) (348)
Share options exercised 36 - 21
Share issue costs - (596) (551)
Issue of Share Capital 4 156 164
-------------------------------------------
Net cash flow from financing (757) 8,288 7,594
------------------------------------------- ----------- ------------- ------------
Net Increase in cash and cash equivalents 4,856 5,265 3,013
------------------------------------------- ----------- ------------- ------------
Cash and cash equivalents at the
beginning of the period 5,962 2,949 2,949
------------------------------------------- ----------- ------------- ------------
Cash and cash equivalents at the
end of the period 10,818 8,214 5,962
------------------------------------------- ----------- ------------- ------------
NOTES
General information
ZOO Digital Group plc ('the Company') and its subsidiaries
(together 'the Group') provide end-to-end cloud-based localisation
and media services to the global entertainment industry and
continue with on-going research and development to enhance the
Group's core offerings. The Group has operations in the UK, the US
and India.
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 Castle House, Angel
Street, 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
7 November 2022 .
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 2023
will be prepared in accordance with international accounting
standards in conformity with the requirements of the Companies Act
2006.
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 2022, and have been
consistently applied, unless stated otherwise.
This condensed consolidated financial information is for the six
months ended 30 September 2022. 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 2022
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 2022 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 2022 and will be
adopted in the 2023 financial statements. There are no standards
impacting the Group that will be required to be adopted in the
annual financial statements for the year ended 31 March 2023.
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.
Software
Localisation Media services Services Total
FY23 FY22 FY23 FY22 FY23 FY22 FY23 FY22
H1 H1 H1 H1 H1 H1 H1 H1
$000 $000 $000 $000 $000 $000 $000 $000
====================== ======= ======= ======== ======= ===== ===== ======== ========
Revenue 32,325 12,906 18,241 13,122 856 899 51,422 26,927
Segment contribution 8,533 2,658 9870 6,835 766 830 19,169 10,323
Unallocated cost of
sales (2,688) (1,753)
=============================== ======= ======== ======= ===== ===== ======== ========
Gross profit 16,481 8,570
=============================== ======= ======== ======= ===== ===== ======== ========
Gross profit % 26% 21% 54% 52% 89% 92% 32% 32%
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 30 Sep 31 Mar
profit per share 2022 30 Sep 2021 2022
===============================
No. of
No. of shares No. of shares shares
=============================== ============== =============== ==========
Basic 88,518,335 82,429,164 85,037,636
Diluted 97,103,550 90,787,293 93,622,851
Where the Group has recorded a loss, diluted earnings per share
is equal to basic earnings per share.
Alternative performance measure
Adjusted EBITDA is a key performance measure for the Group and
is derived as follows,
$000 Unaudited Unaudited Audited
6 months 6 months Year to
to 30 Sep to 30 Sep 31 Mar 2022
2022 2021
Profit/(Loss) before taxation 3,511 (1,516) 1,055
Add back
Finance costs 299 1,889 2,091
Share based payments 970 124 513
Depreciation and Amortisation 2,506 1,858 4,667
Adjusted EBITDA 7,286 2,355 8,326
Further Copies
Copies of the Interim Report for the six months ended 30
September 2022 will be available, free of charge, for a period of
one month from the registered office of the Company at Castle
House, Angel Street, Sheffield, S3 4LN or from the Group's website:
www.zoodigital.com .
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END
IR BKOBDFBDDDDK
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