ZOO Digital Group plc, the new generation provider of services that works with leading content owners and creative organizations to enable the delivery of media content globally, faster, and for less investment, today provides an update on trading ahead of its financial year end of 31 March 2014.
The major focus of this financial year has been on the development of ZOOsubs, the Group’s proprietary Cloud-based subtitle production and management system and associated services. The Company is pleased that the progress reported in the Company’s interim results has continued into the second half, and in addition to the three major studios reported at the interim stage, ZOOsubs has now been adopted by several Tier-2 studios and large corporations and there is a strong pipeline of future prospects.
ZOO is currently processing significant volumes of ZOOsubs work, demonstrated by the number of client projects in progress at any one time having tripled over the last two months, and expects the volume of work undertaken to grow further during the remainder of this financial year and throughout next year. Revenue from the ZOOsubs proposition is repeating in nature, which provides the Company with greater visibility over future revenue and resource requirements.
Whilst the Company is pleased with this momentum building in ZOOsubs, its revenue profile tends towards delivery of ZOOsubs as an ongoing service rather than as licence sales, and accordingly revenue for the year to 31 March 2014 is now expected to be below the Company’s expectations and in the region of $9.5 million. In acknowledgement of customer enthusiasm and requirements, the Company has also significantly increased its investment into ZOOsubs in order to meet the market opportunity and demand, including the development of a subtitling team with significant expertise in the sector. As a consequence of the above, the Company now expects to report a loss at the EBITDA* level of no more than $0.4 million, and a loss* before tax significantly greater than the previous year.
Separately, the prospects for the Company’s ZOOcore business remain strong and continue to contribute to ZOO’s recurring revenues.
The Group has during the second half of the financial year announced an extension in the term of its convertible loan notes to 31 October 2017 and the renewed ongoing support for its working capital requirements provided by its standby loan facility. In addition, the Company now has a committed invoice financing facility of up to $1 million to support the working capital requirements of the Company.
Stuart Green, chief executive officer of the Company, commented that: “Whilst it is disappointing that ZOOsubs volumes initially took longer than expected to build, we are pleased that this side of our business is now gaining momentum. We have focused our efforts, and our at times constrained resources, on developing specifically this proposition, which provides significant visibility of future revenues and has already diversified our customer base.”
* Adjusted for exchange differences and share based payments
Wednesday, February 12, 2014
All other terms of the Loan Notes remain unchanged, being principally that the Loan Notes accrue interest at 7.5 per cent. per annum (payable half-yearly) and that the conversion price of the Loan Notes remains 48 pence per ordinary share of 15p each in the Company (“Ordinary Shares”) converted.
Stuart Green and Roger Jeynes, chief executive officer and chairman of the Company respectively, have agreed to purchase Loan Notes with a face value of £466,500 from other Loan Note holders (the “Purchase”). It is expected that these purchases will complete on 1 November 2013.
Dr Green and his wife, Mrs Sara Green, have purchased Loan Notes with a face value of £443,500 for a total consideration of £332,625 and consequently, together with their combined previous holding of Loan Notes with a face value of £171,000, have an interest in £614,000 of Loan Notes. Mr Jeynes has purchased £23,000 of Loan Notes at face value, having previously had no interest in Loan Notes.
The participation in the Extension of Dr Green, as a director of the Company, and of Herald Investment Trust and Foresight Group, as substantial shareholders of the Company, and the entering into the Purchase by Dr Green and Mr Jeynes, comprise related party transactions under the AIM Rules for Companies.
The Company’s independent directors (being Helen Gilder and Gordon Doran), having consulted with the Company’s nominated adviser, finnCap Limited, consider that the terms of the Extension and Purchase are fair and reasonable insofar as the Company’s shareholders are concerned.
Thursday, October 31, 2013
* Adjusted EBITDA is stated before exchange differences and share based payments
Stuart Green, CEO of ZOO Digital, commented, “The Board is pleased that the Company has returned to an adjusted EBITDA* profitability after a difficult second half of last year. We are already starting to see the benefits of the management actions taken last year and are pleased to be able to report some real momentum in the business, particularly with regards to ZOOsubs.
“The Board expects the second half to show further improvement on the first half of the year, particularly in light of the interest received for ZOOsubs, and we would hope to see continuing growth in revenues in the next financial year and beyond.”
A presentation is available on the Company’s website.
Turnover for the first half to 30 September 2013 has decreased to $4.7m (H1 2012: $6.2 million) but shows an improvement compared with the second half of 2012 ( H2 2012: $4.2 million). Our adjusted EBITDA* in the period to 30 September 2013 decreased to $290k (H1 2012: $930k) but this also shows a marked improvement compared with last year’s second half (H2 2102: loss of $297k).
In January 2013 ZOO announced a contraction in the pipeline of production services work as a major client deferred certain orders which significantly impacted our results for the full financial year to March 2013. Steps were taken to restructure the Group’s cost base, reducing operating expenses by over $1 million since the first half of last year, and match it with the revenue pipeline. Progress was also made in diversifying ZOO’s revenue streams in workflow management and productivity software.
The Board is encouraged therefore by the improvement in performance between the second half of 2012 and the first half of 2013, reflecting the strong sense of momentum within the ZOO business resulting from the growth of our subtitling and other software-based services to new clients.
The major focus of the period under review has been ZOOsubs, the Group’s proprietary Cloud-based subtitle production and management system and associated services.
ZOOsubs manages the entire process for the creation of subtitles, including translation services, their use in a variety of geographies and across numerous delivery platforms. Through the use of automation and workflow management delivered by the Company’s ZOOcore platform, ZOOsubs is a much more cost efficient process than traditional methods and provides greater flexibility and control for clients. Importantly, freelance translators are engaged on a project basis, providing the Company with production scalability without requiring any significant increase in its fixed cost base.
ZOOsubs has been deployed at three of the six major global studios. Within one of these we have already seen a significant increase in the volume of work and expect this to improve even further, whilst we also anticipate increased volumes at the other two studios in the next calendar year. Equally encouraging is the level of interest in ZOOsubs amongst the large second tier of film and TV studios, which the Company has been targeting in the last few months. A number of these studios have trialled the services on a project basis and the feedback has been particularly positive.
The Company has continued to see adoption of ZOOcore, its Cloud-based workflow and collaboration platform, with increasing workflow and user numbers coming from both existing and new customers.
The cost restructuring that was implemented earlier this year has created a more focused and flexible business, but the Board’s primary aim is to build sustainable growth in revenues, continuing the progress made in the first half of 2013 compared with the second half of 2012. Adoption of ZOOsubs by the world’s leading studios, the large untapped opportunity for ZOOsubs in the wider market, and the relevance of ZOOcore to improving the workflows of leading content owners and creative organisations should support this goal.
Excluding our convertible loan note, the Group has a relatively small amount of debt. We expect to provide an update in respect of an extension in the term of our convertible loan note shortly.
Thursday, October 31, 2013
At ZOO’s Annual General Meeting to be held later today, Roger Jeynes, Chairman, will make the following statement:
“We are pleased to report that positive trading momentum following a period of investment and restructuring, as reported at the time of our preliminary results in August, has continued into the first half of the year, and we remain profitable at the EBITDA level.
“Good progress is being made against our strategic goals, which include diversifying our customer base and bringing new products and services to market. In particular, ZOOsubs, our proprietary Cloud-based subtitle production and management system has received endorsement from a number of new customers. At the time of our preliminary results we announced that we expected to formalise our engagement with a third major film studio. We are pleased to report that this has materialised and ZOOsubs has now been selected by three of the six major film studios. This early success underlies our belief that this is an area of potential significant growth for the company.
“We continue to grow recurring revenues from our workflow management platform, ZOOcore, not only in relation to our ZOOsubs proposition where it is a key component, but also from a range of new customers in the creative industries.
“The board is pursuing an extension in the term of its convertible loan note of $2.7m (£1.77m), which is due to mature on 31 October 2013. Since the major loan note holders are also major equity holders, the board is confident that amended terms will be agreed prior to the maturity of the current term.
“We believe that the diversified range of products and services we have developed provide us with exciting new opportunities which are already bearing fruit. While we remain alert to wider economic uncertainties, we are confident for the year ahead.”
A short presentation on the Company’s capabilities will be given by Stuart Green, CEO of ZOO, during the AGM. A copy of the presentation will be available on the Company’s website subsequent to the meeting.
Thursday, September 26, 2013
ZOO, the provider of workflow management software and services for creative media production, is pleased to announce its final results for the year ended 31 March 2013.
* Adjusted EBITDA and operating profit are stated before share based payments of $0.1m (2012: $0.3m).
Wednesday, August 7, 2013