TIDMZOO
RNS Number : 4116G
Zoo Digital Group PLC
06 November 2018
6 November 2018
ZOO DIGITAL GROUP PLC
("ZOO", "the Group" or "the Company")
Interim Results for the 6 months ended 30 September 2018
Strategic investments in the period provide platform for
significant expansion
ZOO Digital Group plc, 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 2018.
HIGHLIGHTS
Key Financials
-- Revenues increased by 17% to $14.9m (H1 FY18: $12.7m)
-- Gross profit of $4.9m (H1 FY18: $4.8m) driven by sales mix shift to localisation
-- Adjusted EBITDA(1) of $0.5m (H1 FY18: $1.3m) reflecting
investment across the business to support future growth
-- Cash balance of $0.9m (H1 FY18: $0.7m)
Operational highlights
-- Important investments made across the business to drive additional growth
o Significant technological enhancements and new features to ZOO
platforms
o Expansion of freelancer network to 5,400 (H1 FY18: 2,700)
o Launch of new facility in Dubai for Arabic language
services
o Upgrades to Dubbing service in line with technology
roadmap
-- Reconfiguration of its supply chain by major OTT operator now completed
o New engagement favourable to ZOO's differentiated cloud-based
multi-language service
o Recent subtitle orders higher than previous levels
-- Upscaling of management team
o Appointment of Phillip Blundell as Chief Financial Officer
o Expanded international business development initiatives under
ex-Deluxe Executive
Outlook
-- Second half of the financial year expected to be significantly cash generative
-- Full year performance in line with expectations - order book stronger now than start of H1
-- New programmes will be favourable for ZOO in terms of
increasing market share as well as the size and visibility of the
order book
Stuart Green, CEO of ZOO Digital, commented, "I am pleased to
report on a period of continued growth alongside strategic
investment to support business expansion in the second half and
beyond. We have made significant enhancements to our cloud
platforms to support new services, operational efficiencies and
scalability, further building on the Group's competitive advantages
and raising the barriers to entry.
"Trading in the second half of the year has begun positively,
with the flow of subtitling orders returning to levels higher than
prior to the disruption of the first half, and dubbing orders
continuing to grow. We are confident in the prospects for a strong
and cash generative second half and anticipate overall full year
performance will be in line with market expectations.
"All the indicators are that the global media localisation
market is continuing to grow strongly, fuelled by demand for a
greater volume of original content, delivered through an
ever-expanding number of digital channels in a growing number of
languages. The expansion of our localisation service into dubbing
has significantly increased the breadth of our offering, the size
of the addressable market and enhanced our competitive positioning.
We are just at the very start of our journey and look to the
long-term future of the Company with great excitement."
(1) Adjusted for share-based payments
For further enquiries please contact:
ZOO Digital Group plc 0114 241 3700
Stuart Green - Chief Executive Officer
Phill Blundell - Chief Finance Officer
finnCap 020 7220 0500
Henrik Persson / Emily Watts (corporate finance)
Camille Gochez / Andrew Burdis (corporate broking)
Alma PR 0778 090 1979
Josh Royston / Caroline Forde / Helena Bogle
Chairman and Chief Executive's Review
Overview
We are pleased to report on a positive first half of the year,
which has seen further endorsement of the validity of our growth
strategy. The expansion of our localisation service into dubbing
has significantly increased the breadth of our offering and the
size of our addressable market, as well as enhancing our
competitive positioning, as we move towards becoming the leading
provider of software-driven localisation services for movie, TV and
video content around the world.
Key successes in the half have been the significant growth in
dubbing projects and revenue, which have exceeded our expectations
for the period, demonstrating growing market acceptance of our
innovative cloud-based dubbing service. Our freelancer network has
doubled in size, ensuring that talent is available to scale
sufficiently to meet the growing levels of demand in both our
dubbing and subtitling offerings, and we have extended our
affiliate network in Dubai to ensure we are well placed to benefit
from the rising trend for global distribution of non-English
original content. Innovation has continued in the half, with the
addition of several significant technology-based localisation
capabilities, increasing the efficiency and speed to market for
high quality dubbing and subtitling projects and adding to our
competitive strength. While subtitling revenue growth was impacted
in the half during the reconfiguring of a major OTT operator's
partner programmes, this transition is now complete, and we are now
experiencing normal operations under the new frameworks, with
projects related to this operator now at a higher level than prior
to the disruption. Early indications are that the new programmes
will be favourable for ZOO in terms of increasing market share as
well as the size and visibility of the order book.
The increase in digital entertainment content, the expansion of
distribution channels and disruptive innovation in the sector by
vendors such as Amazon, Hulu, Apple and Google are all combining to
drive a growing demand for high quality and scalable content
localisation services. ZOO's technology is a powerful
differentiator and we believe that this, combined with our
extensive freelancer and affiliate network and our in-depth
industry know-how and connections, means we are uniquely positioned
to capitalise on the long-term growth opportunity within the TV and
film entertainment market.
Financial Results
Revenues of $14.9 million represent a 17% increase over the
corresponding period last year (H1 FY18: $12.7 million). The growth
has predominantly been in dubbing services delivered using our
ZOOdubs cloud platform. As previously announced, subtitling revenue
was impacted in the half by disruption, experienced by us and other
market participants in the subtitling supply chain during the
transition of a major OTT operator's partner programmes. The
disruption has ceased, and normal operations have been restored,
with projects related to this operator now at a higher level than
prior to the disruption.
Gross profit is slightly ahead of last year at $4.9m (H1 FY18:
$4.8m). There has been a temporary drop in margins to 33% from 38%
last year, primarily due to the increase in direct staff recruited
in line with our ongoing plans to support the significant growth in
revenues anticipated in the second half and beyond. The impact of
this move was a full 3 percentage points and the balance due to the
effect of less subtitling in the period (which, as a more
established revenue stream, carries higher margins than dubbing
whilst it grows in scale).
It is pleasing that underlying gross profit margins (excluding
additional investment in people) showed year on year improvement,
with the stand out performance being dubbing up a full 9 percentage
points. Our investment in the first half means that our current
direct staff capacity can deliver the anticipated increase in
revenues without the addition of further costs. This would indicate
a return to previous gross profit margin levels.
We have also continued to invest, in line with our expectations
and in a disciplined fashion, in operational capabilities to ensure
that we remain at the forefront of our industry. This has included
expansion of our in-house project coordination team and our global
network of freelancers, extending our business development
capability and expanding our participation in industry trade shows,
activities that we expect to continue in line with increasing
demand. As a result, operating costs have increased by 20% in the
half to $5.3m (H1 FY18: $4.4m) leading to EBITDA adjusted for
share-based payments reducing to $0.5m (H1 FY18: $1.3m). Again, the
new level of operating expenses is sufficient to support the
forecast second half revenue growth and therefore is expected to
deliver a significant uplift in EBITDA margins.
We are pursuing multiple initiatives to continue to diversify
our revenue sources; the introduction of our dubbing services is a
natural diversification, being subject to differing purchasing
processes to that of subtitling. Across our three key service lines
of subtitling, dubbing and digital packaging, 74% of sales in the
period under review were generated from clients that have taken two
or more services (H1 FY18: 67%).
We are optimistic of expanding beyond the "early adopters" of
cloud dubbing to include media companies where there is the
potential for growing sales outside our largest clients. We are
becoming increasingly active in other geographies where we are
seeking to secure business with regional media companies, with
recent successes in the Middle East and Australia, and have added a
business development head in Hong Kong.
The cash balance at 30 September was $0.9m (H1 FY18: $0.7m) and
is down from $2.4m at 31 March 2018. The cash outflow of $1.5m
relates to the investment in new products ($0.4m), expansion and
refit of the US office ($0.2m) and an increased working capital
requirement of $1.1m. 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 $3.6 million (maturing in
October 2020 with a conversion price of 48p) and lease commitments
of $0.6 million. Should it 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 $4.7m was created in the March 2018 financial
statements reflecting the embedded derivative and is also shown in
non-current liabilities.
Market opportunity and Competitive positioning
The transition towards digital consumption of entertainment has
been the greatest single change to the industry in modern times
and, now that this form of delivery has been widely welcomed and
adopted by the mass market, it is difficult to envisage such a
cultural change again any time soon. It is now easier for content
owners to reach a much wider audience through digital rather than
physical products as the supply chain is simplified.
Consequently, content has become commercially available in more
and more geographies, and as the territorial reach increases so too
does the need for subtitling and dubbing into additional languages.
The growth in the number of languages into which entertainment is
being localised increases the scope of work for ZOO.
We believe ZOO is well positioned to capture a significant share
of this growing number of localisation projects due to the
following factors:
-- ZOO's innovative use of technology enables content owners to
distribute their products to additional territories at a faster
speed-to-market and to a consistently higher quality than has
previously been possible, with greater security and at a
competitive price. The clear benefits delivered by the Company's
differentiated proposition have driven significant organic growth
in sales.
-- ZOO's software enables the Company to collaborate with a
worldwide network of thousands of freelance workers, such as
translators, voice actors and dubbing directors, and to
significantly reduce the human capital requirements of service
fulfillment, enabling the Company to scale its capacity efficiently
as demand increases and to capitalise on the on-going trend for
global distribution of international content originating in a
growing number of languages.
-- ZOO's long history of service and software provision in the
entertainment industry means it has an unrivaled depth of both
industry know-how and customer relationships. Recent hires to the
Company include senior directors from Walt Disney and traditional
industry vendors.
Operations
Given the scale of the market opportunity described above, the
principal focus of the Group has been on the continuing progress of
our localisation services delivered through our proprietary
cloud-based platforms, ZOOsubs and ZOOdubs, for the provision of
subtitling and dubbing services respectively.
Dubbing
It is clear from the substantial increase in dubbing orders that
the launch of this service has opened a significant new axis of
growth for the Company in a market where, due to the complexity and
high levels of labour required to create dubbed audio, we estimate
the global spend to be approximately five times larger than that of
subtitling. We have seen a growing number of orders from both
existing and new customers, for which our ability to deliver a "one
stop shop" for all multi-lingual localisation and digital packaging
services worldwide is a key differentiator.
ZOOdubs facilitates the use of dubbing talent from anywhere in
the world, while providing full visibility of work in progress to
clients. A recent project saw two of the most in-demand dubbing
talents from Latin America work concurrently on a project while one
was in Mexico, the other on tour in Argentina, overseen by a
dubbing director located in Los Angeles. Using the platform, a
four-hour recording session was completed seamlessly and securely,
all connected via the cloud.
Cloud dubbing is also opening more choice and opportunity for
content owners. Using the cloud, the service can access a huge pool
of voice talent, not restricted by geography or proximity to a
traditional dubbing facility, meaning clients and casting directors
can select the best artist for each role. Combining talent and
technology means the service is hugely scalable and both time and
cost-efficient. For example, a recent urgent project requiring the
casting and recording of eight characters in three languages,
resulting in a total of 24 separate recording sessions, was
completed in one afternoon with all 24 voice artists working
simultaneously. All audio was finished and ready to mix by the end
of the day. In a traditional setting, allowing for studio and
recording engineer availability, diarising of recording sessions,
travel and other logistics, such a project would take significantly
longer.
Following an initial test period, we are now moving into a phase
of greater efficiency and scalability for our dubbing service. With
a software platform that is more developed and established, the
level of manual administration is decreasing, while high levels of
quality are maintained, which has contributed towards an
improvement in dubbing margins and scalability. This transition
will continue into the second half of the year and beyond.
Subtitling
Our subtitling proposition continues to be attractive in a
market that is calling for professional services delivered to high
standards of quality. While we saw some disruption to order flow in
the first half, it is important to note that this was related to a
transition of the supply chain that affected all leading providers
of media localisation services, and that the outlook is
undiminished. The board is satisfied that this period of disruption
has now passed, and that the changes to the supply chain are
favourable for ZOO. The value of the subtitling order book has
subsequently recovered following the period of disruption.
A pleasing trend in subtitling orders is that they are becoming
increasingly broader in scope and are fulfilled over a longer
period. This is contributing to extending the Group's visibility
over future business.
Expansion of our Freelance network
We have been pleased with progress in our programme to select,
train and engage freelance translators, dubbing directors, voice
actors and audio mixers to ensure that talent is available to scale
sufficiently to meet the growing levels of demand in both of our
dubbing and subtitling offerings, helping us to be more effective
and efficient than our competitors. Our freelance network has now
increased to around 5,400 professionals, growing from around 4,400
at the end of the previous year, including members from across
multiple territories and languages. This network now provides the
capability to deliver 81 subtitle languages (of which 35 are
frequently ordered) and 25 dubbing languages (nine of which are
high frequency), and its continued expansion will remain a focus
for the remainder of the year.
Technology and platform innovation
We have continued to make further investments in both dubbing
and subtitling offerings to capitalise on our position as a
preferred vendor to many of the leading names in an industry
undergoing unprecedented growth and upheaval. Three key innovations
developed in the half were:
-- Launch of lip sync dubbing - in the prior year the majority
of our dubbing assignments called for a voiceover approach. We have
now extended our technology to support the preparation and delivery
of lip syncing, the more complex and therefore higher value form of
dubbing, with the initial projects receiving positive feedback from
clients, voice actors and dubbing directors. This opens a wider
pool of dubbing projects to ZOO.
-- Launch of a scripting service powered by a new cloud-based
platform, ZOOscripts, which is a cornerstone capability that will
enable the Company to process combined subtitling and dubbing
assignments consistently, providing our clients with further
efficiency and greater control. This is particularly valuable when
working on pre-release content, where the work on localisation
begins prior to finalising the video edit. In this case,
localisation operates as an iterative process, necessitating robust
version control. ZOOscripts is one component of our ecosystem that
ensures that any changes made to the original language dialogue are
automatically propagated to all localised subtitles and dubbed
soundtracks.
-- Launch of Delta - software to identify automatically the
dialogue changes in different versions and iterations of TV and
movie content. This removes the need for manual tracking, visual
inspection and duplicated work, which cause unnecessary delays and
errors in traditional workflows. In a recent project that involved
eight language dub streams and 30 subtitle streams, just one round
of changes to the original language stream resulted in almost 1,200
affected events and over 13,000 affected words. When producing 38
language versions, with four more rounds of changes, this can give
rise to as many as 2.5 million word changes in just one show. Delta
enables the differences to be determined accurately and reliably,
streamlining the dubbing and subtitling process.
The Company had previously been awarded a grant to explore
machine learning within entertainment media localisation. The
three-year project, in collaboration with a research partner,
commenced in the period and is expected to deliver innovative new
localisation methods that the Company will seek to protect by
extending its portfolio of international patents.
Affiliate Network
We continue to develop relationships with in-territory partners
in order to provide us with additional capacity to meet client
demand, particularly in relation to processing of media assets that
reside with content owners in their countries. In addition, these
affiliates assist us in securing access to skilled linguists,
dubbing directors and voice actors in territory.
The newly-built facility in Dubai, established by our affiliate
Lime Green Media, is now fully operational and is already engaged
to provide cloud dubbing in Arabic on behalf of our OTT clients who
wish to extend their service in the Middle East region.
Board Changes
Roger Jeynes will step down as Chair of the board on or before
the ninth anniversary of his tenure in April 2019 and will resign
his position on the board in that year. In making this decision,
Roger considered guidance set out in the Quoted Companies Alliance
Corporate Governance Code 2018. The board has initiated a search
for his successor.
We were pleased to welcome Phill Blundell as Chief Financial
Officer in July 2018. Phill joins ZOO with a strong pedigree in
senior finance and operational roles within UK technology public
companies, including DotDigital Group plc, Eagle Eye Solutions
Group plc and Intelligent Environments plc. He has over 20 years'
experience building strong software businesses through product
innovation and global strategic partnerships. Phill qualified as a
Chartered Accountant with Coopers & Lybrand, now part of
PwC.
We would like to thank all our staff, our growing network of
freelancers and our shareholders for their continuing support in
these exciting times.
Outlook
Trading in the second half of the year has begun positively,
with the flow of subtitling orders returning to levels higher than
prior to the disruption of the first half, and dubbing orders
continuing to grow. We are confident in the prospects for a strong
and cash generative second half and anticipate overall full year
performance will be in line with market expectations.
The board is very confident in both the long-term opportunity
for this market and ZOO's ability to capitalise upon it. All the
indicators are that the global media localisation market is
continuing to grow strongly, fuelled by demand for a greater volume
of original content, delivered through an ever-expanding number of
digital channels in a growing number of languages. The expansion of
our localisation service into dubbing has significantly increased
the breadth of our offering, the size of the addressable market and
enhanced our competitive positioning.
ZOO combines the power of cloud computing with its deep
understanding and experience of the industry to create a highly
valuable proposition, providing localisation and digital packaging
services to a growing number of the world's leading creators and
distributors of film and TV entertainment. We are just at the very
start of our journey and look to the future of the Company with
great excitement.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)
for the six months ended 30 September 2018
Restated
6 months 6 months
to to Year ended
30 Sep 2018 30 Sep 2017 31 Mar 2018
$000 $000 $000
======================================= ============== ============ ============
Revenue 14,895 12,726 28,551
Cost of sales (9,949) (7,919) (18,486)
--------------------------------------- -------------- ------------ ------------
Gross Profit 4,946 4,807 10,065
Other operating income 47 - -
Operating expenses (5,292) (4,394) (9,426)
--------------------------------------- -------------- ------------ ------------
Operating (loss)/profit (299) 413 639
--------------------------------------- -------------- ------------ ------------
Analysed as
EBITDA before share-based payments 491 1,339 2,396
Share based payments (81) (191) (276)
Depreciation (258) (222) (450)
Amortisation and impairment (451) (513) (1,031)
--------------------------------------- -------------- ------------ ------------
(299) 413 639
--------------------------------------- -------------- ------------ ------------
Exchange gain/(loss) on borrowings 332 (184) (456)
Conversion of convertible loan
note - (145) (115)
Fair value movement on embedded
derivative - - (4,666)
Finance cost (192) (221) (411)
--------------------------------------- -------------- ------------ ------------
Total finance cost 140 (550) (5,648)
--------------------------------------- -------------- ------------ ------------
Loss before taxation (159) (137) (5,009)
Tax on loss (66) 222 253
--------------------------------------- -------------- ------------ ------------
(Loss)/profit and total comprehensive
income for the period attributable
to equity holders of the parent (225) 85 (4,756)
--------------------------------------- -------------- ------------ ------------
Profit per ordinary share
--------------------------------------- -------------- ------------ ------------
(6.81)
- basic (0.30 cents) 0.13 cents cents
--------------------------------------- -------------- ------------ ------------
(6.81)
- diluted (0.30 cents) 0.11 cents cents
--------------------------------------- -------------- ------------ ------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(UNAUDITED)
As at 30 September 2018
As at As at As at
30 Sep 2018 30 Sep 2017 31 Mar 2018
$000 $000 $000
--------------------------------------- ------------ ------------ --------------
ASSETS
Non-current assets
Property, plant and equipment 1,186 1,034 889
Intangible assets 6,518 6,671 6,541
Deferred income tax assets 486 486 486
--------------------------------------- ------------ ------------ --------------
8,190 8,191 7,916
--------------------------------------- ------------ ------------ --------------
Current assets
Trade and other receivables 8,077 7,100 7,412
Cash and cash equivalents 910 722 2,409
--------------------------------------- ------------ ------------ --------------
8,987 7,822 9,821
--------------------------------------- ------------ ------------ --------------
Total assets 17,177 16,013 17,737
--------------------------------------- ------------ ------------ --------------
LIABILITIES
Current liabilities
Trade and other payables (5,697) (3,977) (6,106)
Borrowings (240) (734) (226)
--------------------------------------- ------------ ------------ --------------
(5,937) (4,711) (6,332)
--------------------------------------- ------------ ------------ --------------
Non-current liabilities
Borrowings (3,957) (3,912) (4,084)
Separable embedded derivative (4,666) - (4,666)
--------------------------------------- ------------ ------------ --------------
(8,623) (3,912) (8,750)
--------------------------------------- ------------ ------------ --------------
Total liabilities (14,560) (8,623) (15,082)
--------------------------------------- ------------ ------------ --------------
Net assets 2,617 7,390 2,655
--------------------------------------- ------------ ------------ --------------
EQUITY
Equity attributable to equity holders
of the parent
Called up share capital 1,016 1,010 1,010
Share premium reserve 41,103 41,033 41,003
Other reserves 12,320 12,320 12,320
Share option reserve 769 519 688
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 (58,341) (53,275) (58,116)
--------------------------------------- ------------ ------------ --------------
2,670 7,410 2,708
--------------------------------------- ------------ ------------ --------------
Interest in own shares (53) (20) (53)
--------------------------------------- ------------
Attributable to equity holders 2,617 7,390 2,655
--------------------------------------- ------------ ------------ --------------
CONSOLIDATED STATEMENT OF CHANGES
IN EQUITY
(UNAUDITED)
for the six months ended 30 September
2018
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 2017 7,236 37,007 (992) 42 328 - 12,320 (53,360) (20) 2,561
Deferred
shares (6,753) 6,753
Conversion
of loan note 145 145
Issue of
share capital 527 3,881 4,408
Share-based
payments 191 191
=============== ========= ======== ============= ============== ======== =========== ========= ============= ========= ========
Transactions
with owners (6,226) 4,026 - - 191 6,753 - - - 4,744
=============== ========= ======== ============= ============== ======== =========== ========= ============= ========= ========
Profit for
the period 85 85
=============== ========= ======== ============= ============== ======== =========== ========= ============= ========= ========
Total
comprehensive
income for
the period - - - - - - - 85 - 85
=============== ========= ======== ============= ============== ======== =========== ========= ============= ========= ========
Balance at
30 September
2017 1,010 41,033 (992) 42 519 6,753 12,320 (53,275) (20) 7,390
Share-based
payments 169 169
Loan note
conversion (30) (30)
Purchase
of own shares (33) (33)
=============== ========= ======== ============= ============== ======== =========== ========= ============= ========= ========
Transactions
with owners - (30) - - 169 - - - (33) (106)
=============== ========= ======== ============= ============== ======== =========== ========= ============= ========= ========
Loss for
the period (4,841) (4,841)
=============== ========= ======== ============= ============== ======== =========== ========= ============= ========= ========
Total
comprehensive
income for
the period - - - - - - - (4,841) - (4,841)
=============== ========= ======== ============= ============== ======== =========== ========= ============= ========= ========
Balance at
31 March
2018 1,010 41,003 (992) 42 688 6,753 12,320 (58,116) (53) 2,655
Share based
payments 81 81
Issue of
share capital 6 100 106
=============== ========= ======== ============= ============== ======== =========== ========= ============= ========= ========
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
=============== ========= ======== ============= ============== ======== =========== ========= ============= ========= ========
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
for the six months ended 30 September 2018
6 months 6 months
to to Year ended
31 Mar
30 Sep 2018 30 Sep 2017 2018
$000 $000 $000
========================================== ============ ============ ===========
Cash flows from operating activities
Operating (loss)/profit for the
period (299) 413 639
Depreciation 258 222 450
Amortisation and impairment 451 513 1,031
Share based payments 81 191 360
Purchase of own shares - - (33)
Changes in working capital:
Increases in trade and other receivables (665) (3,347) (3,659)
(Decreases)/increases in trade
and other payables (409) (68) 2,061
------------------------------------------ ------------ ------------ -----------
Cash flow from operations (583) (2,076) 849
Tax (paid)/received (66) 222 253
------------------------------------------ ------------
Net cash flow from operating activities (649) (1,854) 1,102
------------------------------------------ ------------ ------------ -----------
Investing Activities
Purchase of intangible assets (428) (269) (657)
Purchase of property, plant and
equipment (555) (183) (266)
------------------------------------------ ------------
Net cash flow from investing activities (983) (452) (923)
------------------------------------------ ------------ ------------ -----------
Cash flows from financing activities
Repayment of borrowings (172) (392) (927)
Proceeds from borrowings 354 93 -
Finance cost (155) (267) (437)
Issue of Share Capital (net of
costs of issue) 106 2,987 2,987
------------------------------------------
Net cash flow from financing 133 2,421 1,623
------------------------------------------ ------------ ------------ -----------
Net (decrease)/increase in cash
and cash equivalents (1,499) 115 1,802
------------------------------------------ ------------ ------------ -----------
Cash and cash equivalents at the
beginning of the period 2,409 607 607
------------------------------------------ ------------ ------------ -----------
Cash and cash equivalents at the
end of the period 910 722 2,409
------------------------------------------ ------------ ------------ -----------
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
5 November 2018.
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 2019
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 2018, and have been
consistently applied, unless stated otherwise.
This condensed consolidated financial information is for the six
months ended 30 September 2018. 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 2018
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 6 months to September 2017 income statement has been
restated following the decision by management to include the direct
internal costs of sale within cost of sales rather than overheads
in order to be more representative of the dynamics of the business
going forward. This change of accounting policy has resulted in a
total of $3,251,000 of staff costs being moved from operating costs
into cost of sales.
Revenue
As of 1 January 2018, the Company adopted IFRS 15 "revenue from
contracts with customers". IFRS 15 replaces the sections IAS 11
"Construction contracts", IAS 18" Revenue" and related
interpretations.
Revenue arises from the provision of cloud-based localisation
and digital distribution services. To determine whether to
recognise revenue, the Group follows a 5-step process as
follows:
1. Identifying the contract with a customer
2. Identifying the performance obligations
3. Determining the transaction price
4. Allocating the transaction price to the performance obligations
5. Recognizing revenue when/as performance obligation(s) are satisfied.
Revenue is measured at transaction price, stated net of VAT and
other sales related taxes.
Revenue is generally recognised over time as the Group satisfies
performance obligations by transferring the promised services to
its customers. The transaction price is set out in the contract and
is the localisation service fee. It is recognised as the
localisation activity takes place over time.
The standard is required to be adopted either retrospectively or
using a modified retrospective approach. The Company used the
modified retrospective approach to adopt the standard. Under this
transitional provision, the cumulative effect of initially applying
IFRS 15 is recognised on the date of initial application as an
adjustment to retained earnings. No adjustment to retained earnings
was required upon adoption of IFRS 15. The Company has reviewed its
various revenue streams and underlying contracts with customers
and, as a result of this review, the adoption of IFRS 15 did not
have an impact on the Company's statements of comprehensive income
and financial position. However, the Company has expanded the
disclosures in the notes to its Financial Statements as prescribed
by IFRS 15, including disclosing the Company's disaggregated
revenue streams by product type. This is shown under "Segmental
Reporting" below.
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
FY19 FY18 FY19 FY18 FY19 FY18 FY19 FY18
H1 H1 H1 H1 H1 H1 H1 H1
$000 $000 $000 $000 $000 $000 $000 $000
===================== ======= ====== ========== ========= ========== =============== ======= =======
Revenue 11,039 9,127 2,888 2,541 968 1,058 14,895 12,726
Segment contribution 2,926 2,757 1,767 1,610 904 902 5,597 5,269
Unallocated cost of
sales (651) (462)
============================== ====== ========== ========= ========== =============== ======= =======
Gross profit 4,946 4,807
============================== ====== ========== ========= ========== =============== ======= =======
27% 30% 61% 63% 93% 85% 33% 38%
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 2018 30 Sep 2017 31 Mar 2018
============================
No. of shares No. of shares No. of shares
============================ ============== ============== ==============
Basic 74,462,725 66,309,079 69,841,166
Diluted 86,720,202 78,909,632 81,005,046
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 2018 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 FKPDKCBDDQDK
(END) Dow Jones Newswires
November 06, 2018 02:00 ET (07:00 GMT)
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