Interim results

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 MONTHS ENDED 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 ("H1FY23").

 

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:

 

ZOO Digital Group plc

+44 (0) 114 241 3700

Stuart Green - Chief Executive Officer


Phillip Blundell - Chief Finance Officer

Kam Bansil - Investor Relations




Stifel Nicolaus Europe Limited

Fred Walsh / Tom Marsh

+44 (0) 20 7710 7600



Instinctif Partners

Matthew Smallwood / Joe Quinlan

+44 (0)20 7457 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 8th 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 £5.64 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

6 months to

30 Sep 2022

$000

Unaudited

6 months to

30 Sep 2021

$000

Audited

Year ended

31 Mar 2022

$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

 



 

- basic

 3.80 cents

 (2.02) cents

 3.10 cents

 

- diluted

 3.46 cents

 (2.02) cents

 2.80 cents

 

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

 

(UNAUDITED)

 

 

 




 

 

As at 30 September 2022

 

 


Unaudited as at 30 Sep 2022

$000

Unaudited as at 30 Sep 2021

$000

Audited as at 31 Mar 2022

$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

 

 

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

 



















Ordinary shares

Share premium reserve

Foreign exchange translation reserve

Convertible loan note reserve

Share option reserve

Capital redemption reserve

Other reserves

Accumu-lated losses

Interest in own 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 2022

30 Sep 2021

31 Mar 2022

 


Unaudited
6 months to
30 Sep 2022

$000

Unaudited

6 months to

30 Sep 2021

$000

Audited

Year ended

31 Mar 2022

$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.

 


Localisation

Media services

Software Services

Total


FY23 H1

FY22 H1

FY23 H1

FY22 H1

FY23 H1

FY22 H1

FY23 H1

FY22 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 profit per share

30 Sep 2022

  30 Sep 2021

31 Mar 2022

 No. of shares

 No. of shares

 No. of 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 6 months to 30 Sep 2022

Unaudited 6 months to 30 Sep 2021

Audited Year to 31 Mar 2022

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
 
 
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