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Contents

02

Highlights for the year

32

Financial Statements

32

Consolidated income statement

04

Chairman's Statement

33

Consolidated statement of comprehensive income

34

Consolidated statement of financial position

05

Strategic Report

35

Consolidated statement of cash flows

05

CEO's Report

36

Consolidated statement of changes in equity

10

CFO's Report

37

Notes to the consolidated financial statements

12

Principal Risks and Uncertainties

66

Company statement of financial position

18

Section 172 Statement

67

Company statement of changes in equity

68

Notes to the company financial statements

19 Directors' Responsibilities and Report

19 Directors' Report

74 Notice of Annual General Meeting

  1. Statement of Directors' Responsibilities
  2. Corporate Governance
  1. Chairman's Corporate Governance Statement
  2. Board of Directors

28 Independent auditor's report -

To the members of Zinc Media Group

Company no SC075133

01

Highlights for the year

Headlines

With the actions it has taken the Group has successfully navigated the challenges presented by Covid-19.

  • H2 2020 revenues increased by 33% to £9.7m and adjusted EBITDA losses reduced by 40% to £0.5m compared to H1 2020
  • Gross cash increased to £6.8m at 31 December 2020
    (30 June 2019: £3.2m) and was £6.6m at 13 April 2021
  • Net cash increased to £3.4m at 31 December 2020 (30 June 2019: Net debt of £0.5m) with net cash at 13 April 2021 of £3.2m
  • The Group has booked £12.2m of revenue which is forecast to deliver in 2021, an increase of £2.9m since January. This includes a significant commission from a new customer, commissioned from new label Supercollider
  • TV gross margins have increased by almost 5% to 29.6% in the 18 months to December 2020. They are currently tracking at 6% higher than FY 19 which equates to a £0.8m improvement in profitability based on FY 19 pre-Covid-19 revenues
  • The Group has a healthy pipeline of new business totalling £39m for 2021 and £21m for 2022. For 2021 £6m is highly advanced, £17m in engaged conversation, and £16m in early discussion
  • All elements of the transformation plan laid out in September 2019 have now been activated
  • With all critical elements of the transformation plan activated, the Group is now confident it can be profitable and cash generative when revenues recover to pre-Covid levels

Financial Headlines

During the period, the Group's accounting reference date was changed from 30 June to 31 December and, as a result, this report contains the Group's results for the eighteen months to 31 December 2020. The prior year comparative figures relate to the 12 month period ended 30 June 2019.

Financial performance in the period was materially affected by Covid-19 restrictions which began halfway through the period and resulted in delayed productions and commissioning.

  • For the 18 months to December 2020 the Group generated revenue of £30.6m (FY 19: £23.2m) and a loss of £0.8m at Adjusted EBITDA* level (FY 19: profit of £0.2m) from continuing operations.
  • The Group has closed or significantly restructured two loss-making businesses, the Zinc Communicate CSR (Corporate Social Responsibility) division and the Manchester based TV business Blakeway North, which in total accounted for £0.5m or 40% of the total Adjusted EBITDA losses in the 18 month reporting period. The CSR business, which has been closed, accounted for £0.4m of this.
  • To help mitigate the impact of Covid-19 the Group immediately implemented a short-term cost reduction plan. Between April and June 2020 £0.7m of savings were generated from a combination of furloughing staff, staff being on reduced hours, non-executive Directors taking no pay and senior management, including the CEO and CFO, taking pay cuts of up to 40%. As a result of these savings the Covid-driven Adjusted EBITDA loss in the 18 month period was almost halved.
  • The Group has made significant structural changes to promote the long-term financial stability of the business. Between February and November 2020, the Company completed a balance sheet restructure that included:
    o £7.5m of new capital raised;
    o Conversion of all preference shares to ordinary shares;
    o Part conversion of the long-term debt and extension of the term of the remaining debt from December 2020 to December 2022;
    o A share consolidation at a ratio of 500:1; and
    o A court approved reduction of part of its share capital and share premium account and merger reserve which has resulted in the Group having positive distributable reserves at 31 December 2020.
  • The move to new headquarters in March 2020 aided cashflow due to the initial rent free period.

* Adjusted EBITDA defined as EBITDA before share based payment charge, loss on disposal of fixed assets and exceptional items.

02 Financial statements for the period ended 31 December 2020

Operational Headlines

  • Programmes delivered or transmitted in the period include:
    o Fighter Pilots: The Real Top Gun and The Station: Trouble on the Tracks both transmitted to great acclaim and ratings on ITV in their 9pm slot
    o King Tutankhamun in Colour was a three-way co-productionbetween National Geographic, BBC and France TV
    o Emergency Helicopter Medics, More 4's successful documentary series
    o Critical Incident, a co-production between two Group companies, was produced during the period and illustrates the wider opportunity the Group has in aligning its geographical labels to win new commissions
    o Being Gail, BBC ONE and BBC Scotland's documentary series
    o The Curious Life and Death Of… is a six-partseries for a new customer, the Smithsonian Channel in the USA
  • Titles transmitted since year end include:
    o The Blitz with Lucy Worsley, a follow-up to the BAFTA Award winning Suffragettes with Lucy Worsley, transmitted on BBC ONE in February 2021
    o Norma Percy's latest series Trump Takes on the World, a three-part series for the BBC and ARTE France and other international broadcasters, transmitted on BBC ONE to great acclaim
    o The Hunt for Gaddafi's Billions, a feature-lengthdocumentary for BBC, VPRO, ZDF/Arte, SVT, DR, TSR and several other broadcasters transmitted on
    BBC FOUR
  • The Group was nominated for a BAFTA (following its BAFTA win in 2019) for Psychosis and Me, with Hollywood actor David Harewood for BBC TWO, and won multiple RTS awards, a Venice TV award and two Scottish BAFTAs
  • Made outside London (MoL) revenues increased to 58% of turnover
  • 152 hours of TV were transmitted in the 12 months of 2020

03

Chairman's Statement

The new management and Board embarked on a transformation plan for the Group announced in September 2019. This plan contained four priorities, detailed in the last annual report and reviewed in this year's CEO report. Despite the significant challenges presented by Covid-19 in 2020 the key elements of this transformation plan were completed by September 2020, four months earlier than anticipated. These will enable the Group to deliver profitability and cash generation on the return to pre-Covid-19 revenue levels.

As we have seen from Broadcaster statements and production house announcements recently, the postponement of production and the delivery of shows has presented significant headwinds to an industry that is dependent upon human interaction. Covid-19 significantly impacted the Group in 2020 with revenues in H1 2020 down almost 50% to £7.3m (H2 2019: £14.2m), due to the nationwide lockdown which halted television production. The encouraging news is that the Group saw revenues recover in the second half of 2020 to £9.7m.

The Group has made substantial changes to deliver profitability and cash generation when revenues recover to pre-pandemic levels. The timing of this recovery remains difficult to forecast with the result that the Group is unable to release forecasts into the market at this time. However, and in keeping with comments made by the Chief Executive, we are making all efforts to keep both our current shareholders, and future shareholders, as informed as possible via a number of different platforms. The Group will continue with ambitious change as it explores new revenue opportunities, brings new talent to the Group and explores opportunities to scale the Group in the near term.

The Board would like to thank the management team for successfully navigating the Group through the most difficult year in its 20-year history, the employees and freelancers for their professional and dedicated work, and our shareholders for their support.

Christopher Satterthwaite

Chairman, Zinc Media Group plc

22 April 2021

04 Financial statements for the period ended 31 December 2020

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Zinc Media Group plc published this content on 23 April 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 April 2021 07:29:01 UTC.