ZOO Digital Group plc, a world-leading provider of cloud-based localisation and digital distribution services to the global entertainment industry, today issues the following trading update in respect of the year ended 31 March 2019.
Group revenue for the year is expected to be in line with expectations at $29.0m (compared to $28.5m last year). Total localisation revenues grew 5% to $22.6m against a strong comparative figure that included a one-off project with a value of $2.5m for a major studio. Within this, subtitling revenues have recovered strongly and cloud dubbing service revenues were up 17% for the year during which ZOO was engaged on initial projects for eight major TV and film production studios (FY18: four).
The Group has continued to invest in accordance with its plans and the Company is well positioned to respond to a rapidly changing entertainment industry and the boom in demand for TV and movie content via streaming services. As previously explained, this investment, together with the faster than expected acceleration in the decline in legacy packaged media revenue, which does not form part of ZOO’s long-term strategy, has impacted on profitability such that adjusted EBITDA in the second half will be around break-even (H1: $0.5m).
The benefits of this investment are apparent insofar as the ZOOstudio localisation platform, launched during the year, has received a ‘Product of the Year’ at the prestigious NAB Show awards. The Group is in discussions with significant industry players with regard to their adopting this platform.
The Group has been cash generative in the second half by focussing on strict working capital management, despite lower than anticipated profitability, such that the net cash balance of $1.8m at the year-end was double the amount at the half year stage with no debt other than the convertible loan notes. The business is therefore well-placed to grow organically during the forthcoming financial year.
The Company notes that its search for a new Chair is progressing well and expects to announce an appointment on or before the preliminary results which are scheduled to be published in the week commencing the 24 June 2019.
Stuart Green, Chief Executive commented,
“The financial outturn for 2019 is frustrating, having been impacted by market shifts and client disruption, but we are pleased that the business has grown and been cash generative. We have been able to meet our investment and operational objectives which leave us well placed in markets globally where the requirement for premium media localisation clearly continues to increase.
“We believe demand for our cloud-based services is building, client adoption is accelerating and our recently launched ZOOstudio platform has been well received in the market. We are confident for the future.”