Zinc Media Group PLC – Half-year Report

Zinc Media Group PLC – Half-year Report

Zinc Media Group plc, the TV and multimedia content producer, today announces its unaudited interim results for the six months to 31 December 2018.

Highlights 

  • Half year revenues increased year-on-year
  • Tern Television continues to perform strongly
  • Sustained growth in international TV series
  • Order book in TV at £20.5m
  • Adjusted EBITDA profit at the half year which is expected to increase for the full year, due to the traditionally busier second half
  • Mark Browning appointed as new CEO and Will Sawyer started as CFO
  • Zinc Media demonstrated its strength as one of the UK’s leading ‘Nations and Regions’ producers with significant commissions in Manchester, Bristol, Glasgow, Aberdeen and Belfast

Financial Performance

  • Group revenues of £9.86m (H1 18: £9.76m)
  • Gross margin of 32.8 per cent. (H1 18: 33.0 per cent.)
  • Adjusted EBITDA of £0.01m (H1 18: £0.24m) *
  • Diluted loss per share 0.05p (H1 18: diluted earnings per share of 0.01p)
  • Cash of £2.12m (H1 18: £3.69m)
  • Tern Television first year earnout paid from existing cash resources and through the issue of shares
  • £0.1m conversion of preference shares completed during the period

Operational Performance

  • Current TV commissioned order book at £20.5m (H1 18: £14.4m) which, together with the current sales pipeline, gives a basis for confidence in the outlook for the full year.
  • Management expect adjusted EBITDA to be higher in the traditionally busier second half of the year.
  • Significant commissions won in all six production bases – three bases in England, two in Scotland and one in Northern Ireland. 
  • Zinc Media is ideally placed to capitalise on the significant growth in the production market out of London in the ‘Nations and Regions’. UK TV broadcasters have adopted Nations and Regions quotas and targets, the BBC has invested £19m in a new channel, BBC Scotland, and Channel 4 will soon be opening offices in Leeds, Bristol and Glasgow.
  • Strategic shift in TV programming continues, with a move towards higher value series for both UK and international broadcasters and less reliance on one-off lower value commissions.
  • Action taken to address lag in the period in Popular Factual TV by reducing fixed overhead base. The performance of the Popular Factual division mirrors the UK market trend away from heavily formatted factual to more access driven and talent led content . 
  • Publishing division continues to trade profitably.
  • Mark Browning appointed as CEO and Will Sawyer appointed as CFO in the period.  Providing a strong and experienced team to build Zinc Media’s ambitions in the TV and digital markets, particularly given Mark’s vast experience in the field.
  • David Galan moving from CEO to a non-executive role from April 2019, retaining his knowledge and experience of the Group.

* Adjusted EBITDA defined as EBITDA before share based payment charges and exceptional items.

Outlook 

Our strategy for the last few years has been to move towards bigger budget series, in both the UK and international markets.  We are currently in production on several big budget international commissions, particularly for National Geographic.  Whilst the start of some of these projects was somewhat delayed, impacting our first half results, we strongly believe that this type of work is key to our future and demonstrates our credentials and ability to play in the international arena. 

The current year TV order book for this financial year stands at £20.5m, relating to TV content which is commissioned and already recognised or expected to be recognised within the current financial year. The Board considers the order book in the majority of the TV divisions to be strong and to provide a solid foundation for future growth. The Group has historically experienced a revenue weighting towards the second half of the financial year, which will, as a result of the delays outlined above, be more pronounced in the current financial year.  Whilst there are still programme commissions to be won over the next few months, given the size of the current TV order book the Board expects the Group to be adjusted EBITDA positive for the full year.

The UK TV market remains challenging; we mitigate against these pressures  by  focusing on key UK commissioner relationships, developing UK returnable series ideas on which we retain the distribution rights and securing more international work.  Our recent co-production with a new SVOD (streaming video on demand) customer, Love Nature, in North America, demonstrates our ability to diversify and expand into international markets.

The Group’s focus over the coming months will be to continue the conversion of its pipeline into commissions and to ensure that as much production activity as possible falls into the current financial year, whilst also building a strong pipeline into the next financial year.  Our new CEO, Mark Browning, joins the Group in April and the Group looks forward to utilising his industry contacts and experience to expand existing relationships in the UK and to develop new international relationships, markets and products.

David Galan, CEO, commented:

“Despite a disappointing performance in one of our TV units, the other TV units, including our latest acquisition, Tern Television, continue to trade well and we continue to see results in our strategy to secure a higher mix of longer running series and international revenues. We expect this year to be second half weighted and have a contracted order book underpinning this expectation.”

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