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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Zoo Digital Group Plc | LSE:ZOO | London | Ordinary Share | GB00B1FQDL10 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -1.60 | -4.15% | 37.00 | 36.00 | 38.00 | 38.60 | 37.00 | 38.60 | 502,281 | 16:17:26 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Computers & Software-whsl | 90.26M | 8.23M | 0.0841 | 4.40 | 36.21M |
From Apr 2019 to Apr 2024
TIDMZOO
RNS Number : 2194J
Zoo Digital Group PLC
27 June 2017
27 June 2017
ZOO DIGITAL GROUP PLC
("ZOO" or "the Group")
FINAL RESULTS FOR THE YEARED 31 MARCH 2017
ZOO Digital Group plc, the provider of subtitling and digital distribution services for the global entertainment industry, today announces its audited financial results for the year ended 31 March 2017.
HIGHLIGHTS
Operational highlights
-- Large increase in revenue and client numbers, with dependency on the single largest client reduced to 44% of total despite an increase in that client's spend with ZOO
-- Increasing volume of over the top (OTT) consumption reducing seasonal weighting -- Approved vendor status for a number of large content creators and key digital platforms -- Critical acclaim for new product launches which should lead to additional revenue streams
Key Financials
-- Revenue increased by 42% to $16.5 million (2016: $11.6 million) -- EBITDA showed a significant improvement to $1.8 million (2016: $0.2 million) -- Profit Before Tax of $0.5 million (2016: loss of $1.5 million)
Post Period End
-- Placing and Subscription raising GBP2.58 million with new and existing institutional shareholders
-- GBP1.1 million of debt capitalised -- Extension of the maturity date of the remaining convertible loan note
Copies of the Report and Accounts for the year ended 31 March 2017 are available to view on the Group's website www.zoodigital.com.
Stuart Green, CEO of ZOO Digital, commented,
"ZOO made considerable progress with a strongly improved financial performance driven by the strength of our differentiated services enabled by our innovative cloud technology. The improvement experienced through the second half of the year has carried on into the new financial year and the current pipeline of work is considerably stronger than at the corresponding prior period.
"The Group has a more diverse client base and is becoming increasingly recognised as an innovative provider of vital solutions for an industry in which distribution channels and needs have been fundamentally transformed. With approved vendor status for a number of key digital platforms, ZOO is an obvious choice for content owners looking to maximise their reach.
"The Group has a stronger balance sheet and the increased funding that it has secured, along with an enlarged sales team, should enable it to take advantage of the market opportunity. With continuing momentum for the Group's existing tools and a number of exciting new solutions to clients' localisation and security needs, the board looks to the current year and beyond with confidence."
For further enquiries please contact:
ZOO Digital Group plc 0114 241 3700 Stuart Green - Chief Executive Officer Helen Gilder - Chief Finance Officer finnCap Ltd Henrik Persson / Emily Watts / Alex Price (corporate finance) Camille Gochez (corporate broking) 020 7220 0500 Alma PR Josh Royston / Hilary Buchanan 0778 090 1979
The Company further wishes to draw attention to the posting on its website (www.zoodigital.com) of a presentation to shareholders regarding its final results.
CHAIRMAN'S STATEMENT
The Board is very pleased with the progress that continues to be made by the Group. The large increase in revenue, significant expansion of the client base and improvement in profitability described in this report are very tangible signs of the transformation that has been accomplished by management during the last few years.
ZOO is now positioned as one of the most innovative providers of software-driven localisation services to the major producers and distributors of TV and movie content around the world. Demand for our services is growing rapidly, driven by 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. The Board is therefore delighted with the support provided by our stakeholders post year end in May 2017 which has enabled the Group to reduce significantly its debt and increase its cash resources, thereby equipping us to capitalise on this exciting growth opportunity.
Roger D Jeynes
Chairman
STRATEGIC REPORT
Operational review
Introduction
I am pleased to be able to report that the year under review was one of considerable progress for ZOO, both from a financial and an operational perspective. Revenue for the year increased by 42% to $16.5 million (2016: $11.6 million) and earnings before interest, tax, depreciation and amortisation (EBITDA) showed a significant improvement to $1.8 million (2016: $0.2 million). The Group pleasingly returned to profit at the pre-tax level of $0.5 million from a loss of $1.5 million in the prior year.
This follows on from the success of winning new clients in the previous year and is the result of those wins starting to have an effect on both the top and bottom lines. As previously mentioned, the Group's client list now includes all of the six major Hollywood studios as well as other leading producers of feature film and episodic TV programmes in North America and Europe. Whilst our largest client increased its total spend with ZOO during the year, it reduced as a percentage of total sales to 44% (2016: 60%), a trend that the Directors would expect to continue given the current sales momentum with a more diverse client base. This is due to increased revenues from other existing clients and a growth of 25% in the number of clients invoiced during the year.
Key Drivers
The bulk of the growth came from localisation services, of which subtitling remains a key tenet. ZOO's services are delivered using its innovative cloud technology and allow TV and movie content to be subtitled in any language and prepared for sale with all major online retailers as well as on optical disc. The volume of work on physical products, namely DVD and Blu-ray, increased in the year but the main driver was undoubtedly the growth in content for sale through digital platforms now widely available from a growing number of "Over-The-Top" (OTT) providers. This follows Apple's selection of ZOO in February 2016 as an iTunes aggregation service provider for TV series and, in May 2016, the award of approved vendor status by another of the largest online entertainment retailers in the industry.
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. There are several advantages for ZOO in this regard. Firstly, it is easier for content owners to reach a much wider audience through digital rather than physical products as the supply chain is much simplified. Consequently, content has become commercially available in more and more geographies and as the territorial reach increases so does the need for subtitling into additional languages. A TV series that was previously translated into fewer than ten major European languages will now potentially be translated into 50 or more, which increases the scope of work for ZOO. A second benefit has been the dilution of seasonal weighting in the business. Preparation of products for physical distribution is typically geared towards release at specific times in the calendar when retailers experience increased footfall and gifting seasons such as Thanksgiving and Christmas. This means that content owners place the majority of orders during the summer months, and therefore sales for ZOO have in the past been weighted more towards the first half of the year than the second. Our experience in the year under review, where revenues in the second half of the financial year were stronger than in the first, is in part a reflection of the fact that digital consumption continues at a similar pace throughout the calendar year and there is therefore reduced seasonal fluctuation in the demand for our services.
Investment in products and people
The improved financial performance is the result of investments made in previous years in the Group's proprietary technology platforms. This focus on R&D has continued with further resources for the continued development of existing platforms and investment in two new propositions: ZOOdubs and ZOOscreen.
With a strategic approach that parallels that of our subtitling platform, ZOOdubs is designed to improve the dubbing workflow for TV and movie content owners by accelerating time-to-market, enhancing quality and enabling greater affordability in the creation of localised materials that are essential for fulfilling regional consumer expectations across the world. Officially launched at the National Association of Broadcasters ("NAB") event in the USA in 2017, ZOOdubs was awarded a 'best of Show' accolade. Although not planned to be formally released for revenue generation until late 2017, the level of interest shown from clients and prospects at NAB was highly encouraging and market data reaffirms the Board's belief in its potential to lead to significant revenues. According to research in June 2017 from the Media & Entertainment Services Alliance (MESA) Europe, the Total EMEA market in 2016 for entertainment localisation (subtitling, captioning and dubbing) was estimated at around $2 billion, with 70% of that attributable to dubbing services. The market value is forecast to grow by 8%-10% per annum, primarily due to two factors:
-- the overall growth in OTT consumption (streaming video on demand and download services); and
-- the increase in geographical expansion.
ZOOscreen is designed to stream and showcase video materials and screening copies securely and privately to clients, voice actors, prospects and judging panels. This system, which is an essential building block of our dubbing workflow, is currently in trials with major film studios and remains on course to be released in 2017. Although adoption of this platform will require the approval of a number industry groups and security protocols, client feedback on ZOOscreen has so far been favourable and has confirmed the Board's belief that the system fulfils an important requirement in the market.
With both of these new platforms the Board believes that the strength of its existing relationships and its increasing reputation as a technological innovator in the industry will help it to cross sell these services into its client base as well as attracting additional new clients. In February 2017, ZOO was named by the organisers of TVConnect, a leading industry event for the entertainment industry, as one of the top ten innovators of 2016, alongside major global brands such as Amazon, Sky, Google, BBC and Apple and was the only company involved in localisation amongst the 25 names recognised.
To support the sales initiative, Tony Ferkranus has been appointed as Vice President of Sales for the Americas to focus on developing ZOO's client base in key territories across the USA, Canada and South America. Tony previously held the same position at both Visual Data Media Services and Deluxe Entertainment.
In the UK, the Group moved into new headquarters in Sheffield, primarily to meet the stringent content security standards required by major US studios. It is pleasing to announce that ZOO has been certified as compliant with the Content Protection and Security standard administered by the Content Delivery and Security Association (CDSA) which clears a hurdle to securing further work.
I would like to extend my sincere thanks to all members of the ZOO team in the UK and US for their innovative spirit, can-do attitude and teamwork which have been pivotal to achieving the significant progress that the Group has made over the period.
Affiliate Partnerships
The affiliate partner network has continued to expand throughout the year and currently consists of 10 partners in emerging markets, with further additions expected to be announced in the coming months. This network has been formed to meet the evolving needs of the entertainment industry, offering global online retailers a local partner in key territories. Each member will benefit from ZOO's cloud computing systems to enable efficient collaboration and provide localisation and digital distribution services. ZOO expects to receive licensing income and access to resources in each territory.
Fundraising and Conversion of Debt
Post the period end, in May 2017, the Group raised GBP2.6 million of gross proceeds from the Placing and Subscription of New Ordinary Shares, whilst also further strengthening the Group's balance sheet by capitalising GBP1.1 million of debt. On behalf of the Board I would like to welcome the new shareholders to the register at an exciting time for ZOO and also thank existing holders for their continued support. The additional funds will enable the Group to take on further human resources to meet the demand for its subtitling services, particularly in the field of translation, and progress is already being made on that front.
Outlook and Prospects
The improvement experienced through the second half of the year has carried on into the new financial year and the current pipeline of work is considerably stronger than at the corresponding prior period.
The Group has a more diverse client base and is becoming increasingly recognised as an innovative provider of vital solutions for an industry in which distribution channels and needs have been fundamentally transformed. With approved vendor status for a number of key digital platforms, ZOO is an obvious choice for content owners looking to maximise their reach.
The Group has a stronger balance sheet and the increased funding that it has secured, along with an improved sales team, will enable it to take advantage of the market opportunity. With continuing momentum for the Group's existing tools and a number of exciting new solutions to clients' localisation and security needs, the Board looks to the current year and beyond with confidence.
Stuart Green
Chief Executive Officer
FINANCIAL REVIEW
The year ended 31 March 2017 has been a strong and transformational year for ZOO. We are pleased to report a substantial increase in turnover and a very significant increase in EBITDA from $0.2m to $1.8m.
The reported turnover was $16.5m, representing a 42% increase over the prior year (2016: $11.6m). Importantly, we are pleased to note that the second half of the financial year has shown growth, generating turnover of $8.7m compared to $7.8m in the first half of the year. This is a very pleasing result given that historically the business has shown significant seasonality with a much stronger first half.
The gross margin generated was $12.0m compared to $9.2m in the prior year, an increase of 30%. The gross margin achieved was 73%, a reduction from the 79% reported last year due to an increased portion of the turnover being generated from localisation services that incur outsourcing costs of independent translators around the world. The margin achieved on these services is a key metric monitored by management and we continuously make improvements to technology and processes to maximise the margin.
The operating expenses increased by 13% to $10.4m (2016: $9.2m). The largest portion of the costs relates to staffing where investment has been made in strengthening the sales and marketing team and in recruiting staff to coordinate localisation services for the growing client base.
We continue to have very good client relationships and links with our largest client remain strong. Sales to this major Hollywood studio have grown at around 10% per year for the past few years but with the development of several significant new relationships their proportional contribution is much reduced. The growth in sales from other clients has increased by 90% since the prior year.
The improved financial performance has resulted in cash generation from operations of $1.5m compared to a cash outflow of $0.4m in the prior year. We continue to gain R&D tax credits from HMRC and received a repayment of $0.3m in the year just ended.
Since the end of the financial year we have been pleased to announce equity fundraising, the conversion of debt into equity and the extension of the maturity of the remaining convertible loan notes. This results in a significantly strengthened balance sheet. The unaudited pro-forma statement of net assets below is indicative of the position had the transaction taken place on 31 March 2017.
Hot Features
Premium
Pro-forma
Statement statement
of of net
net assets
assets after
as fundraising
reported (unaudited)
ASSETS $'000 $'000
Non-current assets
Property, plant and
equipment 1,073 1,073
Intangible assets 6,915 6,915
Deferred income tax
assets 486 486
============================= ========== =============
8,474 8,474
============================= ========== =============
Current assets
Trade and other receivables 3,753 3,753
Cash and cash equivalents 607 3,505
============================= ========== =============
4,360 7,258
============================= ========== =============
Total assets 12,834 15,732
============================= ========== =============
LIABILITIES
Current liabilities
Trade and other payables (4,045) (3,964)
Borrowings (4,102) (281)
============================= ========== =============
(8,147) (4,245)
============================= ========== =============
Non-current liabilities
Borrowings (2,126) (4,574)
============================= ========== =============
Total liabilities (10,273) (8,819)
============================= ========== =============
Net assets 2,561 6,913
============================= ========== =============
The cash balance at the year end was $0.6m compared to $0.3m in the prior year. We have continued to use the invoice finance facilities to fund the working capital with the year end balance being $0.7m (2016: $0.6m). With the post year end cash injection the working capital within the business is much improved and the reliance on invoice financing facilities is reduced.
With a significantly strengthened balance sheet and positive trading we look forward to the period ahead with optimism.
By order of the board
Helen P Gilder
Director and Secretary
FINANCIAL INFORMATION
The financial information set out here for the year ended 31 March 2016 does not constitute full statutory financial statements as defined in section 434 of the Companies Act 2006 but has been extracted from the Group's financial statements for that period. Statutory financial statements for the year ended 31 March 2016 were approved by the directors on 5 July 2016, but have not yet been delivered to the Registrar of Companies. Those financial statements were reported upon without qualification by the independent auditor and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2017
2017 2016
Note $000 $000
---------------------------------------------- --------- ---------
Revenue 16,488 11,638
Cost of sales (4,483) (2,399)
Gross Profit 12,005 9,239
Other operating income 196 115
Other operating expenses (10,432) (9,198)
----------------------------------------------- --------- ---------
Profit before interest, tax,
depreciation and amortisation 1,769 156
----------------------------------------------- --------- ---------
Depreciation (259) (181)
Amortisation (1,008) (1,078)
----------------------------------------------- --------- ---------
Total operating expenses (11,699) (10,457)
----------------------------------------------- --------- ---------
Operating profit/(loss) 502 (1,103)
----------------------------------------------- --------- ---------
Exchange gain on borrowings 624 206
Finance cost (591) (559)
----------------------------------------------- --------- ---------
Total finance income/(cost) 33 (353)
----------------------------------------------- --------- ---------
Profit/(loss) before taxation 535 (1,456)
Tax credit 256 669
----------------------------------------------- --------- ---------
Profit/(loss) and total comprehensive
income for the year attributable
to equity holders of the parent 791 (787)
----------------------------------------------- --------- ---------
Profit/(loss) per share 3
========================= =========== =======
(2.41)
basic 2.42 cents cents
========================= =========== =======
(2.41)
diluted 2.42 cents cents
========================= =========== =======
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 March 2017
2017 2016
Note $000 $000
================================ ===== ========= =========
ASSETS
Non-current assets
Property, plant and equipment 1,073 433
Intangible assets 6,915 7,382
Deferred income tax assets 486 486
================================ ===== ========= =========
8,474 8,301
================================ ===== ========= =========
Current assets
Trade and other receivables 3,753 2,531
Cash and cash equivalents 607 314
================================ ===== ========= =========
4,360 2,845
================================ ===== ========= =========
Total assets 12,834 11,146
================================ ===== ========= =========
LIABILITIES
Current liabilities
Trade and other payables (4,045) (3,096)
Borrowings 6 (4,102) (142)
================================ ===== ========= =========
(8,147) (3,238)
================================ ===== ========= =========
Non-current liabilities
Borrowings 6 (2,126) (6,142)
================================ ===== ========= =========
Total liabilities (10,273) (9,380)
================================ ===== ========= =========
Net assets 2,561 1,766
================================ ===== ========= =========
EQUITY
Equity attributable to equity
holders of the parent
Called up share capital 5 7,236 7,236
Share premium reserve 37,007 37,014
Other reserves 12,320 12,320
Share option reserve 328 317
Convertible loan note reserve 42 42
Foreign exchange translation
reserve (992) (992)
Accumulated losses (53,360) (54,151)
================================ ===== ========= =========
2,581 1,786
================================ ===== ========= =========
Interest in own shares (20) (20)
================================ ===== ========= =========
Attributable to equity holders 2,561 1,766
================================ ===== ========= =========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2017
Foreign Convertible Interest
Share exchange loan Share in
Ordinary premium translation note option Other Accumulated own
shares reserve reserve reserve reserve reserves losses shares Total
$000 $000 $000 $000 $000 $000 $000 $000 $000
=============== ========= ======== ============ ============ ======== ========= ============ ========= ======
Balance
at 1 April
2015 7,236 37,014 (992) 42 296 12,320 (53,364) (24) 2,528
Share based
payments 22 22
Purchase
of own
shares (1) (1)
Transactions
with owners 21 21
Foreign
exchange
translation
adjustment 4 4
Loss for
the year (787) (787)
=============== ========= ======== ============ ============ ======== ========= ============ ========= ======
Total
comprehensive
income
for the
year (787) (787)
=============== ========= ======== ============ ============ ======== ========= ============ ========= ======
Balance
at 31 March
2016 7,236 37,014 (992) 42 317 12,320 (54,151) (20) 1,766
Share based
payments 11 11
Issue Costs (7) (7)
=============== ========= ======== ============ ============ ======== ========= ============ ========= ======
Profit
for the
year 791 791
=============== ========= ======== ============ ============ ======== ========= ============ ========= ======
Total
comprehensive
income
for the
year 791 791
=============== ========= ======== ============ ============ ======== ========= ============ ========= ======
Balance
at 31 March
2017 7,236 37,007 (992) 42 328 12,320 (53,360) (20) 2,561
=============== ========= ======== ============ ============ ======== ========= ============ ========= ======
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 March 2017
2017 2016
Note $000 $000
====================================== ===== ======== ========
Cash flows from operating activities
Operating profit/(loss) for
the year 502 (1,103)
Depreciation 259 181
Amortisation and impairment 1,008 1,078
Share based payments 11 21
Purchase of own shares - -
Disposal of property, plant
and equipment 1 -
Changes in working capital:
Increases in trade and other
receivables (1,222) (613)
Increases in trade and other
payables 949 65
====================================== ===== ======== ========
Cash flow from operations 1,508 (371)
Tax received 256 669
====================================== ===== ======== ========
Net cash inflow from operating
activities 1,764 298
====================================== ===== ======== ======== Investing activities Purchase of intangible assets (541) (493) Purchase of property, plant and equipment 4 (168) (32) ====================================== ===== ======== ======== Net cash outflow from investing activities (709) (525) ====================================== ===== ======== ======== Cash flows from financing activities Repayment of borrowings (164) (145) Proceeds from borrowings - 710 Finance cost (591) (349) Share and convertible loan issue costs (7) Net cash (out)/inflow from financing (762) 216 ====================================== ===== ======== ======== Net increase/(decrease) in cash and cash equivalents 293 (11) ====================================== ===== ======== ======== Cash and cash equivalents at the beginning of the year 314 325 ====================================== ===== ======== ======== Cash and cash equivalents at the end of the year 4 607 314 ====================================== ===== ======== ========
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2017
1. 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, publishing 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 AIM Market of the London Stock Exchange 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 03858881.
The consolidated financial statements are presented in US dollars, the currency of the primary economic environment in which the company operates.
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been applied consistently to all the years presented, unless otherwise stated.
2.1 Basis of preparation
These financial statements have been prepared in accordance with IFRS as adopted by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that effect the application of policies and reported amounts in the financial statements.
A separate Statement of Comprehensive Income for the parent company has not been presented as permitted by section 408 (2) of the Companies Act 2006.
The directors have prepared trading and cash flow forecasts for the Group for the period to 31 March 2020 which show a continuation of the growth in profitability. In line with industry practice in this sector the directors have had informal indications from major and smaller clients to substantiate a significant proportion of the forecast sales. The directors have considered the consequences if the sales volume is less than the level forecast and they are confident that in this eventuality, alternative steps could be taken to ensure that the Group has access to sufficient funding to continue to operate. The Group has invoice financing arrangements in place for sales made by both the UK and US subsidiaries. The facility with Crestmark Bank provides invoice financing of up to $2.5m against US clients invoices raised by ZOO Digital Production LLC. This facility is in place until 7 July 2018. The facility with Santander Bank provides an invoice financing facility for certain sales invoices raised by ZOO Digital Limited. The maximum facility is GBP500,000 and it is committed until February 2018. Both facilities have the option to continue for an additional year.
The convertible unsecured loan notes totalling GBP3.1m were due to mature on 31 October 2017. This liability has been shown on the Consolidated Statement of Financial Position as a current liability but on 4 May 2017 it was agreed that GBP0.5m of this loan be converted into equity and the remaining GBP2.6m be extended to mature on 31 October 2020. The US dollar value of the GBP3.1m loan notes at 31 March 2017 was $3.8m (2016: $4.3m).
On 13 December 2013 Sara Green, the wife of Dr. Stuart A Green, CEO of the company, provided financial support to the company with a loan of GBP0.6m. The full amount of this loan remained outstanding at 31 March 2017 but on 4 May 2017 the full amount was converted into equity. The US dollar value of the loan at 31 March 2017 was $0.8m (2016: $0.9m).
On 4 May 2017 the directors announced a successful equity placing which resulted in the receipt of GBP2.6m cash. This equates to $3.3m at the exchange rate on the date of the transaction.
The directors believe the assumptions used in preparing the trading and cash flow forecasts to be realistic, and consequently that the Group will continue in operational existence for the foreseeable future. The financial statements have therefore been prepared on a going concern basis.
New and revised standards that are effective for annual periods beginning on or after 1 April 2017
A number of new and revised standards are effective for annual periods beginning on or after 1 April 2017. Information on these new standards is presented below.
IFRS 10, IFRS 11, IFRS 12, IAS 27 and IAS 28
IFRS 10 'Consolidated Financial Statements', IFRS 11 'Joint Arrangements', IFRS 12 'Disclosure of Interests in Other Entities', IAS 27 (Revised) 'Separate Financial Statements' and IAS 28 (Revised) 'Investments in Associates and Joint Ventures' form a comprehensive package dealing with group issues and off-balance sheet activity.
In order to determine whether a reporting entity has control over another entity in which it has invested, the following three elements must always be present:
- power over the investee
- exposure, or rights, to variable returns from its involvement with the investee
- the ability to use its power over the investee to affect the amount of the investor's returns.
- a joint operation is a joint arrangement whereby the parties that have joint control of the arrangement (ie joint operators) have rights to the assets, and obligations for the liabilities, relating to the arrangement.
- a joint venture is a joint arrangement whereby the parties that have joint control of the arrangement (ie joint ventures) have rights to the net assets of the arrangement.
IFRS 12 establishes disclosure objectives according to which an entity discloses:
- significant judgements and assumptions (and changes) made by the reporting entity in determining whether it controls another entity
- the interest that the non-controlling interests have in the Group's activities
- the effect of restrictions on the reporting entity's ability to access and use assets or settle liabilities of consolidated entities
- the nature of, and changes in, the risks associated with the reporting entity's interests in consolidated structured entities, joint arrangements, associates and unconsolidated structured entities.
The changes made to IAS 27 (Revised) 'Separate Financial Statements' and IAS 28 (Revised) 'Investments in Associates and Joint Ventures' are consequential changes arising from the publication of the new IFRSs. The main change is that IAS 27 (Revised) will now solely address separate financial statements, the requirements for which are substantially unchanged from the previous version of the Standard. The requirements on how to apply equity accounting are unchanged from the previous version of the Standard.
The application of IFRS 10, IFRS 11, IFRS 12, IAS 27 and IAS 28 applies prospectively for annual periods on or after 1 April 2017 and did not have a material impact on the financial statements.
2.1.1 Standards and interpretations in issue at 31 March 2017 but not yet effective
The following standards and interpretations of relevance to the Group have been issued, but are not yet effective and have not been adopted by the Group:
IFRS 15 Revenue from Contracts with Customers (effective 1 January 2017)
IFRS 9 Financial Instruments (effective 1 January 2018)
IFRS 16 Leases (effective 1 January 2019)
At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published by the IASB but are not yet effective, and have not been adopted early by the Group
Management anticipates that all of the relevant pronouncements will be adopted in the Group's accounting policies for the first period beginning after the effective date of the pronouncement. Information on new standards, amendments and interpretations that are expected to be relevant to the Group's financial statements is provided below. Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Group's financial statements.
The group have yet to finalise their assessment of the impact that these standards and interpretations will have on the financial statements.
Other standards and interpretations in issue but not yet effective are not considered to have any relevance to the Group.
2.2 Consolidation
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is obtained until the date that control ceases.
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.
2.3 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.
2.4 Foreign currency translation 2.4.1 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. The functional currency of the company's subsidiaries is US dollars, therefore the majority of transactions between the company and its subsidiaries and the company's revenue and receivables are denominated in US dollars.
The US dollar/pound sterling exchange rate at 31 March 2017 was 0.799 (2016: 0.704).
3. Profit/(loss) per share
Earnings per share is calculated by dividing the profit/(loss) attributable to equity holders of the company by the weighted average number of ordinary shares in issue during the year.
Basic and
Diluted
2017 2016
$000 $000
Profit/(loss) for the financial year 791 (787)
======================================= ======= ========
2017 2016
Number Number
of shares of shares
Weighted average number of shares
for basic & diluted profit/(loss)
per share
======================================== =========== ===========
Basic 32,660,660 32,660,660
Effect of dilutive
potential ordinary
shares:
Convertible loan
note 6,396,876 5,654,867
Share options 3,632,845 3,518,763
Diluted 42,690,381 41,834,290
======================================== =========== ===========
The basic and diluted earnings per share are the same due to the average share price during the period being lower than the conversion price or exercise prices of the convertible loan note and share options.
4. Notes to the cash flow statement
4.1 Significant non-cash transactions
During the year the Group acquired property, plant and equipment and computer software with a cost of $900,000 (2016: $193,000) of which $732,000 (2016: $161,000) was acquired by the means of finance leases.
4.2 Cash and cash equivalents
Cash and cash equivalents consist of cash on hand and balances with banks. Cash and cash equivalents included in the cash flow statement comprise the following consolidated and parent company statement of financial position amounts.
Group Company
2017 2016 2017 2016
$000 $000 $000 $000
--------------------------- ----- ----- ----- -----
Cash on hand and balances
with banks 607 314 57 47
--------------------------- ----- ----- ----- -----
The fair values of the cash and cash equivalents are considered to be their book value.
5. Share capital and reserves
Called up share capital
2017 2016
$000 $000
======================================== ====== ======
Allotted, called-up and fully paid
32,660,660 (2064: 32,660,660) ordinary
shares of 15p each 7,236 7,236
======================================== ====== ======
Reconciliation of the number of shares
outstanding:
Opening balance and closing balance 32,660,660 32,660,660
---------------------------------------- ----------- -----------
During the year the Group purchased nil (2016: 23,152) of its own shares through ZOO Employee Share Trust Limited. The total cost of the purchase was $0 (2016: $2,000).
Reserves
The following describes the nature and purpose of each reserve within owner's equity:
Reserve Description and purpose
--------------------- -----------------------------------------
Share premium Represents the amount subscribed
reserve for share capital in excess of
the nominal value.
Accumulated losses Cumulative net losses recognised
in profit or loss.
Foreign exchange Cumulative exchange differences
translation reserve resulting from translation of foreign
operations into the reporting currency.
Convertible loan Represents the equity element of
note reserve the Convertible loan note.
Share option reserve Cumulative cost of share options
issued to employees.
Share warrant Cumulative cost of share warrants
reserve issued to clients.
Other reserves Created as part of the reverse
takeover between Kazoo3D plc and
ZOO Media Corporation Ltd in 2001.
6. Borrowings
Group Company
2017 2016 2017 2016
$000 $000 $000 $000
Non-current
---------------------------- ------ ------ ----- ------
7.5% Unsecured convertible
loan note stock - 4,301 - 4,301
Connected person loan 751 901 751 901
Other bank borrowings 654 637 - -
Finance lease liabilities 721 303 219 9
---------------------------- ------ ------ ----- ------
2,126 6,142 970 5,211
---------------------------- ------ ------ ----- ------
Current
---------------------------- ------ ------ ------- -------
7.5% Unsecured convertible
loan note stock 3,821 - 3,821 -
Amounts owed to subsidiary
undertakings - - 9,701 9,701
Finance lease liabilities 281 142 49 4
---------------------------- ------ ------ ------- -------
4,102 142 13,571 9,705
---------------------------- ------ ------ ------- -------
Total borrowings 6,228 6,284 14,541 14,916
---------------------------- ------ ------ ------- -------
Since December 2015 the Group has had a total of GBP3,070,500 in unsecured convertible loan notes in place. The loan notes pay a coupon of 7.5% and were due to mature on 31 October 2017. The loan stock holder is entitled, before the redemption date, to convert all or part of the loan stock into fully paid ordinary shares on the basis of 1 ordinary share for every GBP0.48 of principal amount of loan stock. The US dollar value of the GBP3,070,500 loan notes at 31 March 2017 was $3,821,000 (2016: $4,301,000).
Sebsequent to the year end, on 4 May 2017 GBP500,000 of the convertible loan stock was converted into equity and the remaining GBP2,570,500 had itsmaturity extended to 31 October 2020. The coupon and conversion terms remain unchanged.
The restructured convertible loan stock has been accounted for in accordance with IAS 39 (Financial instruments: Recognition and measurement). The fair value of the convertible loan note is not considered to be materially different to the carrying value.
The Group has an arrangement with Crestmark Bank to provide an invoice financing facility of up to $2.5m against US client invoices raised by ZOO Digital Production LLC. This facility will be in place until 7 July 2018 with an option to extend. Interest is payable on a monthly basis and is charged for each day on the outstanding balance with an interest rate of 5% above the LIBOR rate with a minimum interest rate of 5.25%. An administration fee of 0.20% is due on the face value of each invoice submitted and a discount fee of 0.15% for each 15 day period for any invoice outstanding after a period of 30 days. The principle outstanding at 31 March 2017 was $640,000 (2016: $625,000). This funding is secured against the US trade receivables of ZOO Digital Production LLC.
The Group has an agreement in place with Santander Bank to provide an invoice financing facility of up to GBP500,000 against certain clients' invoices raised by ZOO Digital Limited. This is an annually renewable facility. The Group can draw on funding from the bank up to the lower of 75% of its applicable UK company trade receivables and GBP500,000. The principle outstanding at 31 March 2017 was $14,000 (2016: $12,000). This funding is secured as a floating charge over the assets of the UK companies.
On 13 December 2013 Sara Green, wife of Dr Stuart A Green, made a loan to the company of GBP600,000 with an interest rate of 10%. The full amount of this loan remained outstanding at 31 March 2017. Subsequent to the year end, on 4 May 2017 the full amount was converted into equity. The US dollar value of the loan at 31 March 2017 was $751,000 (2016: $901,000) This loan is secured as a floating charge over the assets of the Group.
7. Post balance sheet event
On 18 April 2017 it was announced that the company proposed to raise gross funds of approximately GBP2.58m ($3.33m) through a placing and subscription comprising the issue of 28,611,111 new ordinary shares at 9p per share. It was further announced that 12,222,223 share would be issued in return for the conversion of the GBP600,000 outstanding loan from Sara Green, the wife of Dr Stuart A Green, and the conversion of GBP500,000 of convertible loan note and that the remaining GBP2.57m of convertible loan note be extended to mature on 31 October 2020. This transaction was approved in a shareholder meeting held on 4 May 2017.
Annual report and Accounts
Copies of the Report & Accounts for the year ended 31 March 2017 are available to view on the Group's website www.zoodigital.com
The Report & Accounts for the year ended 31 March 2017, together with the notice of annual general meeting, are expected to be posted to shareholders during August 2017; an announcement to notify shareholders of this will be made in due course. Further copies will be available from the Company's Registered Office: Floor 7, City Gate, 8 St Mary's Gate, Sheffield S1 4LW
Annual General Meeting
The Annual General Meeting of the Group will be held at ZOO's offices on 26 September 2017 at 4pm.
The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR FFMLTMBATBTR
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June 27, 2017 02:00 ET (06:00 GMT)
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