TIDMZIN
RNS Number : 3612W
Zinc Media Group PLC
23 April 2021
23 April 2021
Zinc Media Group plc ("Zinc Media" or the "Group")
Results for the 18 months ended 31 December 2020 and notice of
AGM
Zinc Media Group plc today announces its results for the 18
months ended 31 December 2020.
.
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 GBP9.7m and adjusted
EBITDA losses reduced by 40% to GBP0.5m compared to H1 2020
-- Gross cash increased to GBP6.8m at 31 December 2020 (30 June
2019: GBP3.2m) and was GBP6.6m at 13 April 2021
-- Net cash increased to GBP3.4m at 31 December 2020 (30 June
2019: Net debt of GBP0.5m) with net cash at 13 April 2021 of GBP
3.2m
-- The Group has booked GBP12.2m of revenue which is forecast to
deliver in 2021, an increase of GBP2.9m 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 GBP0.8m improvement in
profitability based on FY 19 pre-Covid-19 revenues
-- The Group has a healthy pipeline of new business totalling
GBP39m for 2021 and GBP21m for 2022. For 2021 GBP6m is highly
advanced, GBP17m in engaged conversation, and GBP16m 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 GBP30.6m (FY 19: GBP23.2m) and a loss of GBP0.8m at
Adjusted EBITDA* level (FY 19: profit of GBP0.2m) 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 GBP0.5m or 40% of the
total Adjusted EBITDA losses in the 18 month reporting period. The
CSR business, which has been closed, accounted for GBP0.4m 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 GBP0.7m 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 GBP7.5m 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.
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-production
between 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-part series 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-length documentary
for BBC, VPRO, ZDF/Arte, SVT, DR, TSR and several other
broadcasters transmitted on BBC FOUR
-- The Group has been 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
Mark Browning, CEO of Zinc Media Group, said:
"The Group has successfully navigated the worst of the Covid
crisis, which negatively impacted the whole television production
market. The bounce back in revenues in H2 2020 demonstrates the
resilience of the Group and margins continue to improve. We are
winning new business and have a strong pipeline for 2021 and 2022.
Our hardworking teams throughout the UK deserve huge credit for
their creativity and perseverance, and we look forward to steadier
times ahead."
Copies of the annual report and accounts
The annual report and accounts is available on the company's
website at www.zincmedia.com and a hard copy will be posted to
those shareholders registered to receive one.
Notice of annual general meeting
Accompanying the accounts is notice of the Company's 2021 annual
general meeting, which will take place at 10:00a.m. on Friday 28
May 2021 at the company's offices, 17 Dominion Street, London EC2M
2EF.
Please note that, to the extent there remain government measures
in place as a result of Covid-19, shareholders, their proxies and
corporate representatives may not be permitted to attend the AGM in
person if those government measures prohibit it. The Company will
continue to update shareholders on arrangements for the AGM through
a regulatory information service and the Company's website at
www.zincmedia.com/investors. Shareholders are advised to check the
Company's website regularly for updates. Accordingly, given the
uncertainty, we strongly encourage shareholders to complete and
return their proxy votes by the time required appointing the
Chairman of the meeting as your proxy.
For further information, please contact:
Zinc Media Group plc +44 (0) 20 7878 2311
Mark Browning, CEO / Will Sawyer, CFO
www.zincmedia.com
N+1 Singer (NOMAD and Broker to Zinc Media) +44 (0) 20 7496
3000
Mark Taylor / Sebastian Burke
About Zinc Media Group
Zinc Media Group plc is a leading television and content
creation group.
The award-winning and critically acclaimed television labels
comprise Blakeway, Brook Lapping, Films of Record, Red Sauce,
Supercollider and Tern Television and produce programmes across a
wide range of factual genres for UK and international channels.
Zinc Communicate specialises in developing cross-platform
content for brands, businesses and partners.
For further information on Zinc Media please visit
www.zincmedia.com
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 GBP7.3m (H2 2019: GBP14.2m), 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 GBP9.7m.
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.
CEO'S REPORT
Strategy and Outlook
The Group laid out a clear 4-point strategic plan in September
2019. It has reported on the progress of this plan in a number of
announcements through the Regulatory Information Services since
then. Despite the enormous challenges caused by Covid-19 it
rigorously pursued the plan which aims to transform the Group to a
position of profitability and cash generation.
The Group has activated all critical elements of this plan with
the following results:
1. Improvement in London and Manchester TV gross margins
Gross margins of television production in London and Manchester
TV increased from 24.7% in FY 19 to 29.6% in the 18 months to
December 2020. This equates to a GBP0.6m improvement based on FY 19
pre-Covid-19 revenues.
Gross margins on the new workflow, underpinned by investment in
new technology, changes in production management and improvements
in financial reporting, are currently tracking at 6% higher than FY
19, which equates to a GBP0.8m improvement based on FY 19
pre-Covid-19 revenues.
2. Revenue Growth and Diversification
Despite Covid-19, the planned revenue diversification has
progressed well: the Group won three new clients - UKTV, A&E
networks and Smithsonian - and earned GBP0.8m of new revenue from
new commissioning departments in the BBC and Channel Four. Further
revenue diversification has followed in 2021.
Despite revenues declining in the period due to the Covid-19
pandemic which caused substantial delays to television production
in 2020 and market uncertainty, the Group is well positioned for
future revenue growth having repositioned itself in the market with
new labels, divisions and senior hires. A new popular factual TV
label, Red Sauce, was launched in 2020 based in London and
Manchester, and a new TV and branded content label, Supercollider,
was launched in Q2 2021. Two new Zinc Communicate production
divisions have been created to produce content for new buyers. They
are synergistic with the television businesses and will benefit
from sharing workflows and infrastructure.
3. Cultural and Creative Renewal
The Group has undergone significant change in order to make it
easier for clients and customers to engage with the Group, for
duplication to be removed, and for creativity and communication to
flourish. The Group is now organised in two business units: Zinc
Television and Zinc Communicate.
Significant changes include:
a) The creation of one single, collaborative television team in
London and Manchester, operating under one Managing Director, where
previously there were four.
b) The creation of a single, collaborative Zinc Communicate
division, operating under one Managing Director, where previously
there were two.
c) The creation of a single unified workflow for creative
development, financial reporting and forecasting.
d) The closure or significant restructuring of two previously
loss-making businesses which accounted for GBP0.5m or 40% of the
Group's total Adjusted EBITDA losses in the 18 months to December
2020. The CSR business, which has been closed, accounted for
GBP0.4m of this.
e) The implementation of a performance management regime that
rewards profitability and margin management.
4. Investment in operational excellence
The Group invested in improving operational excellence in a
number of areas including:
a) Investment of GBP0.5m in post-production facilities, enabling
audio finishing and 4k production along with improved gross TV
margins
b) The relocation of the London businesses into a new creative
HQ, saving the Group GBP0.1m per annum
c) Investment in HR to drive continual improvements in
performance, retain high performing talent, and deliver the
required change management programme; this was a very timely
investment given the hugely complex and demanding challenges
associated with Covid-19
d) Investment in improved financial practices, including the
delivery of in-house payroll, new pipeline management and better
management information to improve decision making.
With all critical elements of the transformation plan
implemented, the Group is now confident it can be profitable and
cash generative when revenues recover to pre-Covid-19 levels. In
the 12 months ending December 2019, the Group reported revenues of
GBP28.9m and Adjusted EBITDA of GBP0.1m. Following the changes made
above, when the Group returns to revenues of this level, management
believe that the Group will be able to generate significant
profitability.
Five strategic priorities for 2021
The Group has five strategic priorities for 2021, which will
form the basis of future reporting. These are:
1. Revenue growth and diversification
Rebuilding revenues to pre-Covid-19 levels is now the Group's
primary priority. Much of this will be market dependent. The third
lockdown at the start of 2021 has further delayed existing
production and the speed of new commissions but this is expected to
strengthen in H2 2021. To maximise the probability of revenue
recovery, and in anticipation of accelerated opportunity towards
the end of 2021 and into 2022, the Group will continue to pursue
new business winning hires as opportunities arise in the year
ahead.
2. Gross margin growth
Margin management and further improvement to TV gross margins
remains a strategic priority. The Group aims to improve margins
through further investment and improvements to production
management, and through the recent appointment of a Group CTO who
joins in the summer of 2021. It is anticipated that this post will
also create new revenue opportunities.
3. Cash generation and cash management
Having improved television gross margins, closed loss making
businesses and restructured divisions, the Group is better
positioned to turn revenue growth into cash generation. The group
will continue to explore investments in new talent and business
winning personnel to maximise the opportunity for future cash
generation, while remaining focused on short term cash
management.
4. Performance culture
A considerable amount of work has been completed in creating a
new high-performance culture in the Group. Strategic objectives are
set for all employees for 2021 aligned to the overall Group
strategy. All senior business generating roles and cost management
roles are aligned to, and rewarded by, the delivery of the
strategic priorities of revenue generation, diversification and
margin growth. Performance management is now operating in every
division in the Group to drive continued improvement and retain the
best talent.
5. Shareholder engagement and communication
The Group is committed to regular engagement and dialogue with
all investors. There is increasing confidence in the market
opportunity for Zinc Media Group to become a vehicle for
accelerated growth and value creation in the years ahead and it is
now working with Western Advisors to assist with investor relations
and communication, and has begun holding events for investors on
the Investor Meet Company platform.
Zinc is privileged to have long term and supportive
shareholders, and the company would like to thank them for their
support and guidance during the reporting period.
Market and Outlook
The Group has currently booked GBP12.2m of revenue which is
forecast to deliver in 2021. While this is not yet back to
pre-Covid-19 levels, it continues to build.
In television this includes a new returning series of Emergency
Helicopter Medics for Channel 4, a new series for W, a UKTV
channel, which is a new buyer for Zinc, and a significant
production for another new customer. Zinc's radio businesses
continue to win new business and the Group has won its first ever
commission for a brand new original series for Amazon Audible. The
new Zinc Communicate business is booking in line with 2021 targets
in its digital publishing business and has secured three
partnerships for 2021 in its new video marketing business.
The Group has a healthy pipeline of new business for delivery in
2021 totalling GBP39m. GBP6m is highly advanced, GBP17m in engaged
conversation, and GBP16m in early discussion.
A simpler and better structured Group
The Group has undergone significant change in order to make it
easier for clients and customers to engage with the business,
removing duplication and allowing for improved creativity and
communication. The Group is now organised in two business units:
Zinc Television and Zinc Communicate.
Zinc Television produces television programmes for the UK and
international markets. These markets broadly fall in to three types
of buyer:
-- Public Service Broadcasters (PSBs): These channels are
publicly funded as in the case of the BBC in the UK, or commercial
PSBs which are predominantly funded by advertisers, as in the case
of ITV, Channel 4 and Channel 5. The majority of original
commissioned hours come from this market.
-- Multi-channel networks: These channels sit on a variety of
platforms including satellite and cable networks and are often
owned and managed by large international broadcasters. These
channels include those owned by large global media owners including
Sky, Comcast and Viacom, and includes channels such as Sky One,
Smithsonian, Discovery and A+E. These channels increasingly
commission original content from the production sector.
-- Subscription Video on Demand (SVoD): SVoD channels are
primarily on demand channels rather than scheduled linear channels
and are primarily funded by subscription rather than advertising.
These channels include Netflix, Disney+, Discovery+, Amazon and
Apple TV alongside an increasing number of others. These channels
are increasingly commissioning original content from the production
sector.
Zinc Communicate produces content for the commercial market
driven by brands, advertisers, media owners and rights holders,
currently delivered via three products:
-- Brand and advertiser funded content: Channel 4 and Sky are
both examples of channels which commission content for television
from the production sector in partnership with brands and
advertisers, but many more clients commission content for
distribution via digital and social channels or for their own
platforms.
-- Corporate video: This is video content for use by business
and industry to promote products and services through business to
business distribution or to engage the end consumer.
-- Digital publishing: Brands, businesses, public bodies and
institutions commission production services for digital and print
solutions.
Demand for new content
As the vaccine rollout enables the UK and other geographies to
put the Covid-19 pandemic behind them, there is pent up demand for
original content in all the markets that Zinc targets. The
lingering concerns surrounding the pandemic and the lockdown at the
start of 2021 have impacted market confidence and the speed of
decision making from content buyers has remained slower than we
would like. In time, as the economy recovers and market confidence
returns, Zinc is well placed for revenues to return and grow.
In the reporting period, 79% of Group TV production revenues
came from the UK TV market and 21% came from international TV
buyers. Most UK revenues came from the UK PSBs, who were all
impacted by Covid-19 with the subsequent knock-on to the
independent production community.
The main UK commercial PSBs all saw their advertising revenues
decline significantly in the first half of 2020 but recovered
somewhat in the second half of the year, and Zinc's performance
followed the same trend. The BBC, which accounted for 36% of Zinc's
TV production revenues in the reporting period, is undergoing
further significant change in 2021. These changes are likely to
present new opportunities for Zinc, and it anticipates healthy
revenues will be maintained from the BBC in the year ahead. The
commercial PSBs suffered substantially from reduced advertising
revenues in 2020. Zinc generated 41% of production revenue from the
commercial PSBs in the period ending December 2020. The UK PSBs
remain the largest market for Zinc and present continued
opportunity for growth in 2021.
The SVoDs and multi-channel networks showed more resilience to
the Covid-19 crisis. SVoDs saw their subscriber base increase
during the lockdowns of 2020. 19% of Zinc's TV production revenues
came from these buyers in the period, with the majority of this
from the Group's London TV labels. This market presents a growing
opportunity for Zinc.
Factual television remains a growing market for channels. UK
PSBs are facing increasing competition from the multi-channel
networks and SVoDs, while at the same time seeing their advertising
revenues decline. Factual television provides them with high rating
programmes with which to compete, but which are cheaper to
commission than large scale dramas or sport. SVoDs and
multi-channels are increasingly looking to invest in original
content to differentiate in a crowded market and factual television
provides them with a more cost-effective way of doing this
alongside expensive original dramas or sports rights.
Zinc Television is now positioned to serve all markets and price
points in factual television. It continues to pitch and win premium
content with both UK PSBs and international broadcasters, as
evidenced by the recent series for BBC1 on The Blitz with Lucy
Worsley, and the recent series for Smithsonian titled The Curious
Life and Death Of .... At the lower price point the Group continues
to win returning series for programmes including The Beechgrove
Garden and Inside Edinburgh Zoo for the BBC and Bargain Loving
Brits in the Sun for Channel 5.
The new Zinc Communicate is well positioned to benefit from
economic recovery post Covid-19 and the Group anticipates steady
growth from this division in the second half of 2021. The digital
publishing business rebounded well in the second half of 2020 and
is on track to grow revenues in 2021. The video marketing business
has secured three partnerships for 2021.
Divisional performance in the 18 months ending December 2020
London & Manchester Television
London & Manchester Television was restructured in the
period into a single division, developing, pitching and delivering
television programmes for the UK and international market. It now
operates under one Managing Director, where previously there were
four, supported by development and production management teams.
Programmes are pitched and delivered through four distinct
labels. The labels serve two primary purposes. They define the
product proposition, and they bring credibility, familiarity and
trust to their genre.
The new single organisational structure within London &
Manchester Television has seen a renewed creative purpose, a clear
sense of commercial rigour, improved communication, improved
financial forecasting and analysis and increased opportunity for
cross company collaboration, as evidenced by the recent Amazon
Audible commission, which was an idea generated for television but
pitched and commissioned as audio.
Brook Lapping - Current Affairs and Investigations
This label is highly trusted and respected by channels for its
work in current affairs and investigations in both the UK and
international market.
This period has seen the completion of a major political series
for the BBC, ARTE and a variety of co-producers. Produced in the
style of Inside Europe: Ten Years of Turmoil and Inside Obama's
White House, Trump Takes on the World explored the major foreign
policy decisions during Donald Trump's term as US President. The
programme secured access to the major political names from the
world stage including presidents, prime ministers and ambassadors.
Discussions are already underway about the next series from this
production team for 2021/22.
Another major stand out programme produced in the period was The
Hunt for Gaddafi's Billions. This is a feature length documentary
for the BBC, VPRO and international broadcasters and premiered to
exceptional press and ratings in the Netherlands (the primary
funding territory) and subsequently on the BBC.
The label has continued to work with both the UK's leading
Current Affairs brands: Dispatches and Panorama. A one-off special
for Panorama titled Is your online habit killing the planet? aired
on BBC ONE in November 2020.
Blakeway - Specialist Factual Television
Blakeway underwent significant change in the reporting period
following the departure of the former Managing Director and the
wider restructure. This label is focused on premium specialist
factual programming in the areas of History, Music, Science, Arts
and Ancient History.
Strong relationships with UK terrestrial broadcasters have
continued to bear fruit with programmes like The Sound of Music TV
with Neil Brand transmitting on the BBC to both critical acclaim
("exactly what television should be" - Grayson Perry) and high
ratings. A second series of Tony Robinson's History of Britain was
produced in 2020 for transmission in 2021, and Barenboim in his Own
Words was produced for the BBC.
The follow-up to the 2018/19 BAFTA winning series Suffragettes
was produced in 2020. Blitz Spirit with Lucy Worsley is a factual
drama, produced during the height of the Covid-19 pandemic, and
transmitted in February 2021 on BBC ONE. Further Lucy Worsley
programmes are in discussion for 2021/22.
Revenue diversification into the SVoD and US markets has been
gaining pace. The Curious Life and Death Of... transmitted to an
excellent response on Smithsonian Channel. Two major commissioned
developments have been delivered to Disney+ through the Group's
relationship with National Geographic. A new feature is in final
negotiations with Sky Documentaries and marks the Company's move
into the growth area of high value feature documentaries, which is
a marked industry trend.
Films of Record - Access and Observational Documentaries
This label lay dormant until 2020 when, following the
restructure of the London TV business, which brought greater
clarity and purpose to the London labels, Films of Record saw a
return to the market with its renewed focus on high quality
documentaries. This is a strategic growth area in the current
market environment.
Building on the success of Fighter Pilot: The Real Top Gun for
ITV, the label produced another high-profile access-based series
for ITV titled The Station: Trouble on the Tracks. This programme
beat slot averages for factual on ITV. More developments are in
discussion with ITV as follow-ups to these two successful
series.
A number of observational or access documentaries are in
discussion with UK and international broadcasters, but these were
hampered by Covid-19 in 2020 due to the challenges of gaining
access to big companies and institutions under lockdown and social
distancing restrictions. It is likely that these programmes will
return in 2021/22 as Covid-19 restrictions ease.
Red Sauce - Popular Factual
Red Sauce launched in September 2020 following the restructure
of Reef TV in London and Blakeway North in Manchester. Blakeway
North accounted for 8% of Group revenues in the year ending June
2020 and 35% of the Group's losses. With both Reef and Blakeway
North serving similar markets in UK popular factual and Blakeway in
London focusing on specialist factual, the creation of Red Sauce
allowed for a repositioning of the Group's popular factual
offering, under one label, from a new team and with a clear
position in the market.
A new Creative Director was hired to lead this new label, along
with a new Executive Producer based in Manchester. A new bespoke
development team was also recruited to drive creative renewal in
this area of factual television.
Red Sauce has inherited a slate of programmes which have
performed strongly in this period. Police Code Zero transmitted on
Channel Five in Autumn 2020, and comfortably exceeded its previous
slot average. The programme was delayed due to Covid-19 as access
to the emergency services were restricted during 2020, but
conversations are ongoing about a returning series. Critical
Incident played on BBC ONE Daytime in November/December 2020 and
was the highest rating show for that slot in the year. It has since
been recommissioned for a third series to be produced in 2021.
Bargain Loving Brits in the Sun, which is a regular returning
series, transmitted in early 2021 and performed above slot average,
whilst Bargain Loving Brits by the Sea is scheduled for
transmission later in 2021.
Red Sauce has been pushing to diversify its programme and client
base. Close work with the branded content team in Zinc Communicate
has borne fruit, with one series in advanced discussions with both
a broadcaster and a brand funder. Ideas are also in play with all
of the UK terrestrial broadcasters.
Tern - Nations factual television, from Scotland and Northern
Ireland
Operating from three sites in Glasgow, Belfast and Aberdeen,
Tern continues to perform well for the Group. It transmitted nearly
90 hours of television in the 12 months of 2020, much of this from
a strong pipeline of high performing returning series. The division
is delivering well on its brief to be a first-choice factual
producer for UK Nations and Regions' public service broadcasting
(PSB) commissioning.
Highlights from the period include the BBC ONE series A Very
Country Christmas, Inside the Museums: Ulster Museum for BBC Four
and Emergency Helicopter Medics, Britain's Wildest Weather and
Britain's Best-Selling Toys for Channel 4.
Perhaps the most notable achievement is the number of returning
series which include: David Wilson's Crime Files, Inside the Zoo,
Emergency Helicopter Medics and Darren McGarvey's Class Wars from
Tern Glasgow; Beechgrove, The Children's Hospital and Reflections
at the Quay from Tern Aberdeen and Britain's Lost Masterpieces from
Tern Belfast.
Tern was nominated for a record seven Scottish BAFTA nominations
and won awards for Being Gail Porter (Best Documentary) and The War
Next Door: Scotland and The Troubles (Best News & Current
Affairs).
Tern remains in a strong position to benefit from the BBC and
Channel 4's out of London commissioning, offering good
opportunities for co-productions across the Group. The Company is
also expanding its portfolio of advertiser funded programming (AFP)
and brand funded content alongside the new Zinc Communicate .
Zinc Communicate - televisual and digital production for brands,
agencies, media owners and publishers
2020 was a year of significant change for Zinc Communicate. In
April 2020 the Group announced the closure of its loss-making CSR
business, which accounted for approximately 35% of the Group's
losses in the 18 months to December 2020. The business closed in
the summer of 2020 but the Group retains the IP in The Children's
Traffic Club.
The Group launched its new Branded Content business in the
summer of 2020 and its Video Marketing business in the autumn. The
Publishing business, which was moved under the management of the
new Zinc Communicate in 2020, was significantly impacted during the
lockdown between March and June 2020 when the construction and home
building sector, which it relies on for a large proportion of its
revenues, was shut down. However, it was the fastest division in
the Group to recover revenues in the second half of 2020.
The new Zinc Communicate has three businesses supported by an
in-house commercial team which includes a 30-strong classified ads
sales team based in Macclesfield.
Zinc Communicate - Branded Content
This is a new division within Zinc Communicate headed up by a
new business winning team. This team sells long form and short form
televisual production alongside audio podcasts to brands, agencies,
media owners and rights holders. This may include AFP (Advertiser
Funded Programmes), where a brand or advertiser creates television
programmes for UK PSB channels. Channel 4 does the largest amount
of AFP work in the UK, and Zinc Communicate currently has two
opportunities residing with buyers for AFP. It may include deficit
funded programming, where a brand or advertiser contributes part of
the budget for a television show, where the channel is unable or
unwilling to support the full production budget. It may include
digital short form production, where a brand or media owner
commissions original content for distribution on their channels or
via social networks, and it may include commercial podcasting where
brands or agencies commission audio production as part of their
media spend. The branded content team works closely with the
Group's television teams, and all production sits on the same
workflow as television which helps drive higher margins through
utilisation of existing Group infrastructure.
Zinc Communicate - Video Marketing
This is another new venture for Zinc Communicate similarly
headed up by a new business winning team. This team sells
televisual content supported by digital distribution to businesses
in the B2B market. The Group has won three partnerships with B2B
associations to produce films for clients in sectors including
renewable energy and transport.
Zinc Communicate - Publishing
This business formerly reported as Ten Alps Communications and
traded profitably in the year 2018/19. At the end of 2019 the
division faced the possibility of closure as its largest
partnership with the LABC terminated, and its second largest
contract with the RIBA was put out to tender. The Group won the
RIBA tender on a new multi-year contract and developed its own
product and commercial proposition to replace the LABC
partnership.
It faced significant challenges in early 2020 when the
construction sector was closed in the first lockdown but bounced
back to pre-Covid-19 levels of revenue in the summer of 2020. It
underwent a significant restructure and was assimilated into the
new Zinc Communicate under one management team. This division has
been transformed to become a digital first publishing business and
sales house. This division is expected to increase its revenues in
2021.
CFO'S REPORT
Income statement
During the period, the Group's accounting reference date was
changed from 30 June to 31 December. The change was undertaken to
ensure consistency with generally accepted industry and sector
practice. As a result this report contains the Group's results for
the eighteen months to 31 December 2020, and all comparatives (FY
19) relate to the 12 month period. Financial performance in the
period was materially affected by Covid-19 restrictions which began
halfway through the period and resulted in delays to productions
and commissioning.
Revenue from continuing operations for the period was GBP30.6m
(FY 19: GBP23.2m).
Comparing calendar years, Group revenue from all operations
reduced by 41% between 2019 and 2020. This was mainly driven by the
Covid-19 pandemic, but also a result of refreshing new business
winning roles across the Group: new hires were made in London and
Manchester TV and Zinc Communicate in particular, with three new
businesses being launched.
It is encouraging that, in the second half of 2020, revenues
from all operations increased by 33% and losses reduced by 40%
compared to the first half of the year as Covid-19 production
protocols were established and lockdown restrictions eased.
In the 18 month period, 91% of Group revenues came from
television and 9% from Zinc Communicate. The latter is expected to
grow significantly in 2021.
Despite the significant downturn in revenues caused by Covid-19,
Tern Television continued to perform well, booking GBP10.6m of
revenue. Its resilient performance is rooted in well established
relationships with the BBC network, BBC Scotland, Channel 4 and
More 4, and in long running returning series.
London and Manchester's television labels generated GBP17.2m of
revenue but were hit harder by the pandemic than other parts of the
Group due to their dependence on more expensive programmes and the
international market. The new label Red Sauce was launched in
September 2020 and is expected to deliver lower cost television
with returnable series in the years ahead.
Total gross margin percentage increased during the period from
25.5% to 30.1%. The increase in margin was driven by the increase
in London and Manchester TV production gross margins, which
increased from 24.7% to 29.6% as a result of the investment made in
post-production equipment, changes in production management and
improvements in financial management. We expect a further increase
in gross margins in 2021 as we get a full year's benefit from the
changes made during the last eighteen months.
Adjusted EBITDA (being earnings before interest, tax,
depreciation, amortisation, share based payment charges, loss on
disposal of fixed assets and exceptional items) from continuing
operations was a GBP0.8m loss in the 18 month period (2019: GBP0.2m
profit), driven by the reduction in revenues.
To help mitigate the impact of Covid-19 when it first hit in
March 2020 the Group immediately implemented a short-term cost
reduction plan. Between April and June 2020 GBP0.7m 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 monthly pay cuts of
up to 40%. As a result of these savings the Adjusted EBITDA loss in
the 18 month period was almost halved.
The Group also restructured two loss-making divisions: the Zinc
Communicate CSR division and the Manchester based TV business
Blakeway North. The CSR division was closed in 2020 following the
discontinuation of the high value TFL sponsorship of The Children's
Traffic Club in December 2019. The division's GBP0.6m loss in the
18 month period is disclosed within discontinued operations.
The operating loss from continuing operations of GBP3.7m (2019:
GBP1.4m) includes GBP0.6m of exceptional items. GBP0.4m of these
relate to reorganisation and restructuring costs, driven by
personnel changes in London and Manchester TV. The taxation charge
includes a GBP0.3m deferred tax asset write off made due to
uncertainties as to when income will arise against which tax losses
will be utilised.
The Board does not recommend the payment of a final dividend
(2019: GBPnil).
Earnings per share
Basic and diluted loss per share from continuing operations in
the period was 66.38p (2019: loss per share of 53.55p). These
measures were calculated on the losses for the period from
continuing operations attributable to Zinc Media Group shareholders
of GBP4.3m (2019: loss of GBP1.5m) divided by the weighted average
number of shares in issue during the period being 6,507,620 (2019:
2,799,182).
Statement of Financial Position
Assets
Cash at the end of December 2020 was GBP6.8m, having increased
GBP3.6m during the period as a result of GBP7.5m of new capital
raised (before costs), partially offset by cash outflows from
operating activities, payment of deferred consideration to former
Tern Television shareholders and capital purchases relating to the
investments in post-production equipment and the new Group
headquarters.
Property, plant and equipment assets have increased to GBP0.9m
(2019: GBP0.4m) as a result of investments in post-production
equipment and the new Group headquarters. The reduction in goodwill
and intangibles to GBP4.5m (2019: GBP5.4m) reflects the
amortisation of intangibles during the period.
Prior to the current period, property leases were classified as
operating leases, whereas in the current period, because of the
adoption of IFRS 16, they are recognised as a right - of - use
asset with a corresponding liability. The right-of-use asset at the
end of the period was GBP1.3m (2019: GBP0).
Trade and other receivables have reduced by GBP2.6m to GBP4.3m
(2019: GBP6.9m), due to a lower level of production activity at the
year-end resulting from Covid-19.
Equity and Liabilities
The Group has made significant structural changes to ensure the
long-term financial stability of the business. Between February and
November 2020, the Company completed a balance sheet restructure
that included:
-- GBP7.5m of new capital raised before costs;
-- Conversion of all preference shares to ordinary shares;
-- Part conversion of the long-term debt and extension of the
term of the remaining debt from December 2020 to December 2022;
-- A share consolidation at a ratio of 500:1; and
-- 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 period end.
As a result of these changes called up share capital has reduced
from GBP5.9m to GBP0.02m, the share premium account has reduced
from GBP30.5m to GBP4.7m, the merger reserve has reduced from
GBP0.9m to GBP0.03m, preference shares have reduced from GBP0.8m to
zero and retained earnings have risen significantly from a GBP35.6m
deficit to GBP1.2m credit.
Current liabilities have reduced to GBP7.1m (2019: GBP9.0m),
reflecting a lower level of production activity at the year end,
the creation of IFRS 16 lease liabilities and payment of the prior
year earnout consideration payable to the former Tern Television
shareholders.
Non-current liabilities mainly consist of the Group's long-term
debt obligations and lease liabilities on properties. The Group had
an outstanding balance on long-term debt of GBP3.4m at the year end
(2019: GBP3.7m), held by two of the Company's shareholders and with
no financial covenants relating to the debt. The debt has been
reduced via converting some of it to equity during the period. The
repayment date on all the Group's long-term debt obligations is 31
December 2022.
Cash Flows
The Group experienced a cash outflow of GBP0.7m (2019: GBP0.5m
inflow) in its operations during the period due to a decrease in
working capital offsetting a cash outflow of GBP1.7m. Other
outflows include GBP0.8m paid to the former Tern Television
shareholders as part of the earnout agreement and GBP1.0m invested
in the fit out of the new London HQ and production equipment to
drive increased gross margins in TV. The move to new headquarters
in March 2020 aided cashflow due to the initial rent-free
period.
The cash outflows were more than offset by a GBP7.1m cash inflow
from two equity fund raises (net of expenses), resulting in a net
increase in cash of GBP3.5m in the period (2019: increase of
GBP0.3m).
An overdraft facility of GBP0.6m was put in place during the
period.
Post Balance Sheet Events
There are no post balance sheet events to disclose.
Key Performance Indicators (KPIs)
In monitoring the performance of the business, the executive
management team uses a number of KPIs including:
-- TV production gross margins
-- Revenue growth
-- Revenue diversification
-- Pipeline and order book growth
-- Adjusted EBITDA
-- Cash generation
-- Audience and market response to programming content (viewing ratings, industry awards etc.)
These KPIs have been reported within the CEO's Report and CFO's
Report.
Non-statutory Accounts
The financial information set out below does not constitute the
Company's statutory accounts for the 18 months ended 31 December
2020 or 30 June 2019 but is derived from those accounts. Statutory
accounts for the year ended 30 June 2019 have been delivered to the
Registrar of Companies and statutory accounts for the 18 months
ended 31 December 2020 will be delivered to the Registrar of
Companies in due course.
The Auditor has reported on those accounts and the text of the
Auditor's reports can be found in the Company's full Annual Report
and Accounts at www.zincmedia.com.
Consolidated income statement
18 months ended Year to
31 December 30 June
2020 2019
Notes GBP'000 GBP'000
------------------------------------- -------- ---------------- ---------
Continuing operations
Revenue 4 30,552 23,170
Cost of sales 5 (21,359) (17,267)
------------------------------------- -------- ---------------- ---------
Gross profit 9,193 5,903
Operating expenses 5 (9,986) (5,728)
Adjusted EBITDA (793) 175
11, 13,
Depreciation & amortisation 14 (2,246) (824)
Share based payment charge 7 (22) (27)
Loss on disposal of fixed assets (22) -
Exceptional items 8 (589) (718)
Operating loss (3,672) (1,394)
Finance costs 9 (460) (327)
Finance income 9 2 1
------------------------------------- -------- ---------------- ---------
Loss before tax (4,130) (1,720)
Taxation (charge)/credit 10 (157) 229
Loss for the period from continuing
operations (4,287) (1,491)
Loss from discontinued operations 11 (624) (1,241)
Loss for the period (4,911) (2,732)
------------------------------------- -------- ---------------- ---------
Attributable to:
Equity holders (4,944) (2,740)
Non-controlling interest 33 8
Retained loss for the period (4,911) (2,732)
------------------------------------- -------- ---------------- ---------
Earnings per share
From continuing operations:
Basic 12 (66.38)p (53.55)p
Diluted 12 (66.38)p (53.55)p
From discontinued operations:
Basic 12 (9.59)p (44.33)p
Diluted 12 (9.59)p (44.33)p
------------------------------------- -------- ---------------- ---------
Adjusted EBITDA is defined as EBITDA before share based payment
charge, loss on disposal of fixed assets and exceptional items. The
loss for the period attributable to equity holders from continued
operations is GBP4,254k (2019: GBP1,483k) and the loss to equity
holders from discontinued operations is GBP624k (2019:
GBP1,241k).
The accompanying principal accounting policies and notes form
part of these consolidated financial statements.
Consolidated statement of comprehensive income
18 months Year
ended to
31 December 30 June
2020 2019
GBP'000 GBP'000
-------------------------------------------------- ------------ --------
Loss for the year and total comprehensive income
for the period (4,911) (2,732)
Attributable to:
Equity holders (4,944) (2,740)
Non-controlling interest 33 8
(4,911) (2,732)
-------------------------------------------------- ------------ --------
Consolidated statement of financial position
As at As at
31 December 30 June
2020 2019
Note GBP'000 GBP'000
--------------------------------------------- ----- ------------ -------------------
Assets
Non-current
Goodwill and intangible assets 13 4,505 5,436
Property, plant and equipment 14 934 369
Right-of-use assets 19 1,277 -
6,716 5,805
--------------------------------------------- ----- ------------ -------------------
Current assets
Inventories 15 184 236
Trade and other receivables 16 4,279 6,858
Cash and cash equivalents 17 6,805 3,213
11,268 10,307
--------------------------------------------- ----- ------------ -------------------
Total assets 17,984 16,112
--------------------------------------------- ----- ------------ -------------------
Equity
Called up share capital 25 20 5,928
Share premium account 25 4,654 30,509
Share based payment reserve 25 155 133
Merger reserve 25 27 875
Preference shares 25 - 839
Retained earnings 25 1,158 (35,625)
--------------------------------------------- ----- ------------ -------------------
Total equity attributable to equity holders
of the parent 6,014 2,659
--------------------------------------------- ----- ------------ -------------------
Non-controlling interests 12 8
--------------------------------------------- ----- ------------ -------------------
Total equity 6,026 2,667
--------------------------------------------- ----- ------------ -------------------
Liabilities
Non-current
Borrowings 20 3,426 3,743
Lease liabilities 19 1,066 20
Deferred tax 23 277 128
Provisions 24 75 -
Contingent consideration 22 - 595
4,844 4,486
--------------------------------------------- ----- ------------ -------------------
Current
Trade and other payables 18 6,771 8,423
Current tax liabilities 6 4
Lease liabilities 19 337 32
Contingent consideration 22 - 500
7,114 8,959
------------ -------------------
Total equity and liabilities 17,984 16,112
--------------------------------------------- ----- ------------ -------------------
The consolidated financial statements were authorised for issue
and approved by the Board on 23 April 2021 and are signed on its
behalf by Will Sawyer.
The above consolidated statement of financial position should be
read in conjunction with the accompanying notes.
Company registration number: SC075133
Consolidated statement of cash flows
Year
18 months ended ended
31 December 30 June
2020 2019
Note GBP'000 GBP'000
------------------------------------------------ ------ ---------------- --------
Cash flows from operating activities
Loss for the year before tax from continuing
operations (4,130) (1,720)
Loss for the year before tax from discontinued
operations (624) (1,139)
------------------------------------------------ ------ ---------------- --------
(4,754) (2,859)
Adjustments for:
Depreciation 14,16 1,278 178
Amortisation and impairment of intangibles 13 1,039 1,696
Finance costs 9 460 327
Finance income 9 (2) (1)
Share based payment charge 7 22 27
Loss on remeasurement of deferred contingent
consideration 8 41 138
Contingent consideration deemed remuneration 8 160 286
Loss on disposal of assets 22 -
(1,734) (208)
Decrease in inventories 52 97
Decrease / (increase) in trade and other
receivables 2,579 (1,634)
(Decrease) / increase in trade and other
payables (1,565) 2,275
------------------------------------------------ ------ ---------------- --------
Cash (used) / generated in operations (668) 530
Finance costs paid (69) (4)
Finance income 2 1
Interest on lease (89)
Tax paid - (87)
Net cash flows (used) / generated in operating
activities (824) 440
------------------------------------------------ ------ ---------------- --------
Investing activities
Payment of contingent consideration on
acquisition of subsidiary 22 (750) (563)
Purchase of property, plant and equipment 14 (988) (192)
Purchase of intangible assets (108) -
Net cash flows used in investing activities (1,846) (755)
------------------------------------------------ ------ ---------------- --------
Financing activities
Issue of ordinary share capital (net of 7,094
issue costs) -
Principal elements of lease payments (698) (4)
Borrowings repaid (172) -
Net cash flows generated / (used) from
financing activities 6,224 (4)
------------------------------------------------ ------ ---------------- --------
Net increase / (decrease) in cash and cash
equivalents 3,554 (319)
Translation differences 38 (13)
Cash and cash equivalents at beginning
of year 17 3,213 3,545
------------------------------------------------ ------ ---------------- --------
Cash and cash equivalents at period end 17 6,805 3,213
------------------------------------------------ ------ ---------------- --------
Consolidated statement of changes in equity
Total equity
attributable
Share to equity
based holders
Share Share payment Merger Preference Retained of Non-controlling Total
capital premium reserve reserve shares earnings the parent interest equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 1
July 2018 5,928 30,414 106 777 934 (32,974) 5,185 - 5,185
---------------- -------- --------- -------- -------- ----------- --------- ------------- ---------------- --------
Loss and total
comprehensive
income for the
year - - - - (2,740) (2,740) 8 (2,732)
Total
comprehensive
income - - - - - (2,740) (2,740) 8 (2,732)
Equity-settled
share-based
payments - - 27 - - - 27 - 27
Issue of shares
on acquisition - - - 98 - 89 187 - 187
Conversion of
preference
shares - 95 - - (95) - - - -
---------------- -------- --------- -------- -------- ----------- --------- ------------- ---------------- --------
Total
transactions
with owners
of the Company - 95 27 98 (95) (2,651) (2,526) 8 (2,518)
---------------- -------- --------- -------- -------- ----------- --------- ------------- ---------------- --------
Balance at 30
June 2019 5,928 30,509 133 875 839 (35,625) 2,659 8 2,667
---------------- -------- --------- -------- -------- ----------- --------- ------------- ---------------- --------
Balance at 1
July 2019 5,928 30,509 133 875 839 (35,625) 2,659 8 2,667
---------------- -------- --------- -------- -------- ----------- --------- ------------- ---------------- --------
Loss and total
comprehensive
income for the
period - - - - - (4,944) (4,944) 33 (4,911)
---------------- -------- --------- -------- -------- ----------- --------- ------------- ---------------- --------
Total
comprehensive
income - - - - - (4,944) (4,944) 33 (4,911)
Equity-settled
share-based
payments - - 22 - - - 22 - 22
Shares issued
in placing 13 7,487 - - - - 7,500 - 7,500
Consideration
paid in shares 1 489 - 65 - 60 615 - 615
Shares issued
in lieu of
fees - 48 - - - - 48 - 48
Shares issued
in debt
conversion 1 427 - - - - 428 - 428
Conversion of
preference
shares 8 923 - - (839) - 92 - 92
Expenses of
issue of
shares - (406) - - - - (406) - (406)
Capital
reduction (5,931) (34,823) - (913) - 41,667 - - -
Dividends paid - - - - - - - (29) (29)
Total
transactions
with owners
of the Company (5,908) (25,855) 22 (848) (839) 36,783 3,355 4 3,359
---------------- -------- --------- -------- -------- ----------- --------- ------------- ---------------- --------
Balance at 31
December 2020 20 4,654 155 27 - 1,158 6,014 12 6,026
---------------- -------- --------- -------- -------- ----------- --------- ------------- ---------------- --------
Notes to the consolidated financial statements
1. General information
Zinc Media Group plc and its subsidiaries (the Group) produce
high quality television and cross-platform content.
Zinc Media Group plc is the Group's ultimate parent and is a
public listed company incorporated in Scotland. The address of its
registered office is 7 Exchange Crescent, Conference Square,
Edinburgh EH3 8AN. Its shares are traded on the AIM Market of the
London Stock Exchange plc (LSE:ZIN).
The financial statements are presented in Sterling (GBP),
rounded to the nearest thousand.
2. Basis of preparation
The financial statements of the Group have been prepared in
accordance with International Accounting Standards in conformity
with the requirements of the Companies Act 2006. The financial
statements have been prepared primarily under the historical cost
convention, with the exception of contingent consideration measured
at fair
value. Areas where other bases are applied are identified in the accounting policies below.
The Group's accounting policies have been applied consistently
throughout the Group to all the periods presented, unless otherwise
stated.
The preliminary financial information for the period ended 31
December 2020 and 30 June 2019 has been extracted from the audited
statutory accounts for the period ended 31 December 2020 and
prepared on the same basis as the accounting policies adopted in
those accounts. The statutory accounts for the period ended 31
December 2020 have yet to be delivered to the Registrar of
Companies and have been prepared in accordance with International
Accounting Standards in conformity with the requirements of the
Companies Act 2006. The preliminary financial information does not
constitute statutory accounts within the meaning of Section 434 of
the Companies Act 2006.
Statutory accounts for the period ended 31 December 2020 will be
delivered to the Registrar of Companies and sent to Shareholders
shortly.
The audit report on the statutory financial statements for the
period ended 31 December 2020 is unqualified and does not include
reference to any matters to which the auditor drew attention by way
of emphasis without qualifying the report and does not contain any
statement under Section 498(2) or (3) of the Companies Act
2006.
Statutory accounts for the year ended 30 June 2019 have been
filed with the Registrar of Companies. The auditor's report on
those accounts was unqualified and did not include reference to any
matters to which the auditor drew attention by way of emphasis
without qualifying the report and did not contain a statement under
section 498(2) and (3) of the Companies Act 2006.
2.1) Going concern
The financial statements have been prepared on a going concern
basis, which assumes that the Group will be able to meet its
liabilities as they fall due for a period of 12 months from the
date of signing of the financial statements. The Group is dependent
for its working capital requirements on cash generated from
operations, cash holdings and from equity markets.
Since the beginning of 2020 management have done several things
to reduce the going concern risk, including:
-- Raising new equity funding of GBP7.5m (before costs)
-- Making significant structural changes to ensure the long-term
financial stability of the business. Between February and September
2020, the Company completed a balance sheet restructure that
included:
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
o A capital reduction which means the Group had positive
distributable reserves at 31 December 2020
-- Putting in place an overdraft facility of GBP0.6m
-- Delivering a programme of permanent cost reductions which
will generate annualised savings of GBP0.7m per annum compared to
pre-Covid levels. This includes closure of the CSR business and
restructure of Blakeway North, both of which have been loss
making.
As a result of these actions the Group has a much more robust
balance sheet. The Group has turned a net debt of GBP0.5m at 30
June 2019 to a net cash position of GBP3.4m as at 31 December
2020.
The cash holdings of the Group at 31 December 2020 were GBP6.8m,
which is more than double the cash held at 30 June 2019. The
Directors believe the Group has strong shareholder support,
evidenced by shareholders investing GBP7.5m in new equity and the
long-term debt holders, who are also major shareholders, helping to
reduce the long-term debt from GBP3.7m to GBP3.4m during the
period. The Directors' are confident the Group will receive
continued support from the loan providers.
Management have prepared forecasts and scenarios under which
cashflows may vary and believe there are sufficient mitigating
actions that can be employed to enable the Group to operate within
its current level of financing for a period of 12 months from the
date of signing of the financial statements.
There are several factors which could materially affect the
Group's cashflows, particularly the impact of any further Covid-19
related restrictions, the underlying performance of the business
and uncertainty regarding the timing of receipts from customers.
The Directors' have reviewed management's forecasts and scenarios
under which cashflows may vary and believe there are sufficient
mitigating actions that can be employed if necessary to enable the
Group to operate within its current level of financing.
The Directors have looked at the potential impact of the Covid
pandemic and have prepared scenario plans. The main impact is on
the run rate of new business, particularly in relation to
commissions of television programmes. Whilst the sales pipeline is
healthy, decision-making has been protracted and the timing of new
sales is hard to predict. The scenarios include a recovery starting
mid-2021 and a recovery pushed until early 2022, and when the
recovery comes that revenues are 10% down on pre-Covid levels of
2019. The Directors remain confident that the Group will have
sufficient cash resources for a period of at least 12 months from
issuing the financial statements in these scenarios. The Directors
have already taken mitigating actions with a program of cost
reductions and putting in place an overdraft, and are confident
that they have identified cost saving actions to mitigate
reductions in revenue.
In light of the forecasts, the expectation of support from the
loan providers, along with mitigating measures available to be used
if needed, the Directors believe that the going concern basis upon
which the financial statements have been prepared is reasonable.
Whilst it is acknowledged that there is continued uncertainty
surrounding the future impacts of Covid-19 the Group therefore
continues to adopt the going concern basis in preparing its
consolidated financial statements.
2.2) Basis of consolidation
The consolidated financial statements comprise the financial
statements of the Group and its subsidiaries as at 31 December
2020. Control is achieved when the Group is exposed, or has rights,
to variable returns from its involvement with the investee and has
the ability to affect those returns through its power over the
investee. Generally, there is a presumption that a majority of
voting rights results in control. To support this presumption and
when the Group has less than a majority of the voting or similar
rights of an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an
investee.
Consolidation of a subsidiary begins when the Group obtains
control over the subsidiary and ceases when the Group loses control
of the subsidiary. Assets, liabilities, income and expenses of a
subsidiary acquired or disposed of during the year are included in
the consolidated financial statements from the date the Group gains
control until the date the Group ceases to control the
subsidiary.
All intra-group assets and liabilities, equity, income, expenses
and cash flows relating to transactions between members of the
Group are eliminated in full on consolidation.
2.3) Adoption of new and revised standards
The only new and amended standard issued in the period that had
a significant impact on the financial statements is IFRS 16
'Leases'. At the date of authorisation of these financial
statements, certain new standards, amendments and interpretations
to existing standards have been published by the IASB and adopted
by the EU 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.
IFRS 16 - Leases
IFRS 16 provides guidance on accounting for leases and became
effective from 1 January 2019.
IFRS 16 addresses the definition of a lease, recognition and
measurement of leases, and it establishes principles of reporting
useful information to users of financial statements about the
leasing activities of both lessees and lessors. A key change
arising from IFRS 16 is that almost all operating leases will be
accounted for on balance sheet for lessees. The standard replaces
IAS 17, "Leases" and related interpretations.
The group has adopted the modified retrospective approach with
the right of use asset equal to the lease liability at transition
date, together with the practical expedients to apply a single
discount rate to a portfolio of leases with reasonably similar
characteristics. Under the modified retrospective transition
approach, the comparative information is not restated.
The financial impact, applying the modified retrospective method
on opening balances at 1 July 2019, was as follows:
At 1 July IFRS 16 At 1 July
2019 (under Adjustment 2019
IAS 17)
(Adjusted)
GBP'000 GBP'000 GBP'000
------------------------- ------------- ------------ ------------
Non-current assets
Right-of use assets - 448 448
Current liabilities
Lease liability (32) (318) (425)
Non-current liabilities
Lease liability (20) (80) (23)
------------------------- ------------- ------------ ------------
The weighted average incremental borrowing rate applied to
leases under IFRS 16 is 4.2%. Under previous accounting standards,
the Group would have recognised lease rental charge of GBP799k in
the income statement. The Group has instead recognised a
depreciation charge of GBP795k and finance charge of GBP58k.
At the date of authorisation of these financial statements there
were standards and amendments which were in issue but which were
not yet effective and which have not been applied. The principal
ones were:
-- Amendments to References to the Conceptual Framework in IFRS
Standards (effective 1 January 2020)
-- Amendment to IFRS 3 Business Combinations (effective 1 January 2020)
-- Amendments to IAS 1 and IAS 8: Definition of Material (effective 1 January 2020)
-- Amendments to IFRS 9 and IFRS 7: Interest Rate Benchmark Reform (effective 1 January 2020)
-- Amendment to IFRS 16 Leases Covid 19-Related Rent Concessions (effective 1 June 2020)
-- Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
Interest Rate Benchmark Reform (effective 1 January 2021, endorsed
13 January 2021)
-- Amendments to IFRS 4 Insurance Contracts - deferral of IFRS 9
(effective 1 January 2021, endorsed 15 December 2020)
-- Amendments to, IFRS 3 Business Combinations; IAS 16 Property,
Plant and Equipment; IAS 37 Provisions, Contingent Liabilities and
Contingent Assets and Annual Improvements 2018-2020 (effective 1
January 2022)
-- IFRS 17 Insurance Contracts (effective 1 January 2023)
-- Amendments to IAS 1 Presentation of Financial Statements:
Classification of Liabilities as Current or Non-current and
Classification of Liabilities as Current or Non-current - Deferral
of Effective Date (effective 1 January 2023)
3) Accounting policies
3.1) Revenue
The Group recognise revenue to depict the transfer of promised
goods or services to customers at an amount that reflects the
consideration to which the entity expects to be entitled in
exchange for those goods or services. Specifically, the Group
follow these steps:
1. Identify the contract with the customer
2. Identify the performance obligations in the contract
3. Determine the transaction price
4. Allocate the transaction price to the performance obligations in the contract
5. Recognise revenue when (or as) the entity satisfies a performance obligation
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable for
services provided in the normal course of business, net of
discounts and sales related taxes.
Revenue is recognised when the amount of revenue can be measured
reliably, it is probable that the economic benefits associated with
the transaction will flow to the entity, the costs incurred or to
be incurred can be measured reliably, and when the criteria for
each of the Group's different activities has been met.
Where productions are in progress at the year end and where the
sales invoiced exceed the value of work done the excess is shown as
contract liabilities; where the sales recognised exceed sales
invoiced the amounts are classified as contract assets. The
contract asset is transferred to receivables when the entitlement
to payment becomes unconditional. Where it is anticipated that a
production will make a loss, the anticipated loss is provided for
in full.
The accounting policies specific to the Group's key operating
revenue categories are outlined below:
TV - production revenue
Production revenue from contracts with broadcasters comprises
work carried out to produce and deliver television programmes and
broadcaster licence fees. These are combined performance
obligations because the production and licence are indistinct, and
the licence is not the primary or dominant component of the
combined performance obligation. The Group considers the combined
performance obligation to be satisfied over time as it does not
create an asset with an alternative use at contract inception and
the Group has an enforceable right to payment for performance
completed to date.
The Group recognises revenue over time by measuring the progress
towards complete satisfaction of the performance obligation, in
line with transferring control of goods or services promised to a
customer. The Group transfers control of the programme over time,
and costs are incurred in line with performance completed. The
percentage of completion is calculated as the ratio of the contract
costs incurred up until the end of the period to the total
estimated programme cost.
TV - distribution revenue
Distribution revenue comprises sums receivable from the
exploitation of programmes in which the company owns rights and is
received as advances and royalties.
Advances are fixed sums receivable at the beginning of
exploitation that are not dependent on the sales performance of the
programme. They are recognised when all the following criteria have
been met:
i) an agreement has been executed by both parties; and
ii) the programme has been delivered; and
iii) the licence period has begun.
Royalty revenue is dependent on the sales performance of the
programme and is recognised when royalty amounts are confirmed.
Zinc Communicate
The three types of revenue, which comprise distinct performance
obligations, are:
1. Publishing: advertising revenue is recognised on the date
publications are dispatched to customers which is when control
transfers.
2. Online: revenue is recognised at the point of delivery or
fulfilment for single/discrete services which is when control
transfers.
3. Content production: recognition of revenue is by reference to
stage of completion of the specific transaction assessed based on
the actual service provided as a proportion of the total services
to be provided, which is done on the same basis as TV production
revenue.
3.2) Property, plant and equipment
Property, plant and equipment are stated at cost net of
depreciation and any provision for impairment.
Depreciation is calculated to write down the cost less estimated
residual value of all property, plant and equipment by equal annual
instalments over their expected useful lives. The rates generally
applicable are:
Leasehold premises over the term of the lease
Office equipment 10%-20% on cost
Computer equipment 20%-33% on cost
Motor vehicles 25% on cost
Useful economic lives are reviewed annually. Depreciation is
charged on all additions to, or disposals of, depreciating assets
in the year of purchase or disposal. Any impairment in values is
charged to the income statement.
3.3) Intangible assets
Business combinations are accounted for by applying the
acquisition method. Goodwill represents the difference between the
cost of the acquisition and the fair value of the net identifiable
assets acquired. Identifiable intangibles are those which can be
sold separately, or which arise from legal rights regardless of
whether those rights are separable.
Goodwill is stated at cost less any accumulated impairment
losses. Goodwill is allocated to cash-generating units and is not
amortised but tested annually for impairment.
Goodwill arising on acquisitions is attributable to operational
synergies and earnings potential expected to be realised over the
longer term.
The intangible assets other than goodwill are in respect of the
customer relationships, brand and distribution catalogue acquired
in respect of the acquisition of Reef Television and Tern
Television Productions and in each case, are amortised over the
expected life of the earnings associated with the asset
acquired.
Brands, Customer relationships, Distribution catalogue Over 7 years
Software Over 2 years
The distribution catalogue intangible asset arises on the
acquisition of Tern Television Productions. It is amortised over 7
years and as at 31 December 2020 the remaining useful life was 3.5
years.
Brands and customer relationships relate to the acquisition of
Reef Television and Tern Television Productions. They are amortised
over a period of 7 years and as at 31 December 2020 there were 1.5
more years of useful life remaining for Reef Television and 3.5
years remaining for Tern Television Productions.
In the prior year software related to the development of
applications and websites within the CSR division. These were fully
amortised during the period to 31 December 2020. The addition in
the period relates to a new finance system across the Group.
3.4) Leased assets
As described in Note 2, the Group has applied IFRS 16 using the
modified retrospective approach and therefore comparative
information has not been restated. This means comparative
information is reported under IAS 17 and IFRIC 4.
For any new contracts the Group considers whether a contract is,
or contains, a lease. A lease is defined as 'a contract, or part of
a contract, that conveys the right to use an asset (the underlying
asset) for a period of time in exchange for consideration'. To
apply this definition the Group assesses whether the contract meets
three key evaluations which are whether:
-- The contract contains an identified asset, which is either
explicitly identified in the contract or implicitly specified by
being identified at the time the asset is made available to the
Group; and
-- The Group has the right to obtain substantially all the
economic benefits from use of the identified asset throughout the
period of use, considering its rights within the defined scope of
the contract; and
-- The Group has the right to direct the use of the identified
asset throughout the period of use. The Group assess whether it has
the right to direct 'how and for what purpose' the asset is used
throughout the period of use.
At lease commencement date, the Group recognises a right-of-use
asset and a lease liability on the balance sheet. The right-of-use
asset is measured at cost, which is made up of the initial
measurement of the lease liability, any initial direct costs
incurred by the Group, an estimate of any costs to dismantle and
remove the asset at the end of the lease, and any lease payments
made in advance of the lease commencement date (net of any
incentives received).
The group depreciates the right-of-use assets on a straight-line
basis from the lease commencement date to the earlier of the end of
the useful life of the right-of-use asset or the end of the lease
term. The Group also assesses the right-of-use asset for impairment
when such indicators exist.
At the commencement date, the Group measures the lease liability
at the present value of the lease payments unpaid at that date,
discounted using the interest rate implicit in the lease if that
rate is readily available or the Group's incremental borrowing
rate.
Lease payments included in the measurement of the lease
liability are made up of fixed payments, variable payments based on
an index or rate, amounts expected to be payable under a residual
value guarantee and payments arising from options reasonably
certain to be exercised.
Subsequent to initial measurement, the liability will be reduced
for payments made and increased for interest. It is remeasured to
reflect any reassessment or modification.
When the lease liability is remeasured, the corresponding
adjustment is reflected in the right-of-use asset, or income
statement if the right-of-use is already reduced to zero. The Group
has elected to account for short-term leases and leases of
low-value assets using the practical expedients. Instead of
recognising a right-of-use asset and lease liability, the payments
in relation to these are recognized as an expense in the income
statement on a straight-line basis over the lease term.
On the statement of financial position, right-of-use assets have
been included in property, plant and equipment and lease
liabilities have been included in trade and other payables.
3.5) Inventories
Inventories in TV comprise of costs on productions that are
incomplete at the year-end less any amounts recognised as cost of
sales.
Inventories in Zinc Communicate comprise:
-- Cumulative costs incurred in relation to unpublished titles
or events, less provision for future losses, and are valued based
on direct costs plus attributable overheads based on a normal level
of activity. No element of profit is included in the valuation of
inventories.
-- Inventories comprise costs of unsold publishing stock and
costs on projects that are incomplete at the year-end less any
amounts recognised as cost of sales.
3.6) Impairment of assets
For the purposes of assessing impairment, non-financial assets
are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units). As a result, some
assets are tested individually for impairment and some are tested
at the cash-generating unit level.
Goodwill is allocated to those cash generating units that are
expected to benefit from the synergies of the related business
combination and represent the lowest level within the Group at
which management monitors the related cash flows. Goodwill and
other individual assets or cash-generating units are tested for
impairment annually or whenever events / changes in circumstances
indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the
assets or cash-generating unit's carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of fair
value, reflecting market conditions less costs to sell, and value
in use based on an internal discounted cash flow evaluation.
Impairment losses recognised for cash-generating units, to which
goodwill has been allocated, are credited initially to the carrying
amount of goodwill. Any remaining impairment loss is charged pro
rata to the other assets in the cash generating unit. Except for
goodwill, all assets are subsequently reassessed for indications
that an impairment loss previously recognised may no longer
exist.
3.7) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits with maturity of less than three months.
3.8) Current and deferred taxation
Current tax is the tax currently payable based on taxable profit
for the year.
Deferred income taxes are calculated using the liability method
on temporary differences. Deferred tax is generally provided on the
difference between the carrying amounts of assets and liabilities
and their tax bases.
Deferred tax is not recognised in respect of:
-- the initial recognition of goodwill that is not tax deductible; and
-- the initial recognition of an asset or liability unless the
related transaction is a business combination or affects tax or
accounting profit. In addition, tax losses available to be carried
forward as well as other income tax credits to the Group are
assessed for recognition as deferred tax assets.
Deferred tax liabilities are provided in full, with no
discounting. Deferred tax assets are recognised to the extent that
it is probable that the underlying deductible temporary differences
will be able to be offset against future taxable income. Current
and deferred tax assets and liabilities are calculated at tax rates
and laws that are expected to apply to their respective year of
realisation, provided they are enacted or substantively enacted at
the reporting date.
Changes in deferred tax assets or liabilities are recognised as
a component of tax expense in the income statement, except where
they relate to items that are charged or credited directly to
equity in which case the related deferred tax is also charged or
credited directly to equity.
3.9) Financial instruments
Recognition of financial instruments
Financial assets and liabilities are recognised on the Group's
Statement of Financial Position when the Group becomes a party to
the contractual provisions of the instrument.
Financial assets
Initial and subsequent measurement of financial assets
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and
other short-term deposits held by the company with maturities of
less than three months.
Trade and other receivables
Trade receivables are initially measured at their transaction
price. Other receivables are initially measured at fair value plus
transaction costs. Receivables are subsequently measured at
amortised cost using the effective interest rate method.
Impairment of trade receivables
For trade receivables, expected credit losses are measured by
applying an expected loss rate to the gross carrying amount. The
expected loss rate comprises the risk of a default occurring and
the expected cash flows on default based on the aging of the
receivable. The risk of a default occurring always takes into
consideration all possible default events over the expected life of
those receivables ("the lifetime expected credit losses").
Different provision rates and periods are used based on groupings
of historic credit loss experience by product type, customer type
and location.
Impairment losses and any subsequent reversals of impairment
losses are adjusted against the carrying amount of the receivable
and are recognised in profit or loss.
Financial liabilities and equity
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into. An equity instrument is any contract that evidences a
residual interest in the assets of the company after deducting all
of its liabilities.
Initial and subsequent measurement of financial liabilities
Trade and other payables
Trade and other payables are initially measured at fair value,
net of direct transaction costs and subsequently measured at
amortised cost.
Loan notes
Loan notes are initially recognised at fair value, adjusted for
transaction costs, and subsequently measured at amortised cost
using the effective interest rate method.
Finance charges, including premiums payable on settlement and
direct issue costs, are accounted for on an effective interest
method and are added to the carrying amount of the instrument to
the extent that they are not settled in the year in which they
arise.
Contingent consideration
The acquisition-date fair value of any contingent consideration
is recognised as part of the consideration transferred by the Group
in exchange for the acquiree. Changes in the fair value of
contingent consideration that result from additional information
obtained during the measurement period (maximum one year from the
acquisition date) about facts and circumstances that existed at the
acquisition date are adjusted retrospectively against goodwill.
Other changes resulting from events after the acquisition date are
recognised in profit or loss.
Equity instruments
Equity instruments issued by the Company are recorded at fair
value on initial recognition net of transaction costs.
Derecognition of financial assets (including write-offs) and
financial liabilities
A financial asset (or part thereof) is derecognised when the
contractual rights to cash flows expire or are settled, or when the
contractual rights to receive the cash flows of the financial asset
and substantially all the risks and rewards of ownership are
transferred to another party.
When there is no reasonable expectation of recovering a
financial asset it is derecognised ('written off').
The gain or loss on derecognition of financial assets measured
at amortised cost is recognised in profit or loss.
A financial liability (or part thereof) is derecognised when the
obligation specified in the contract is discharged, cancelled or
expires.
Any difference between the carrying amount of a financial
liability (or part thereof) that is derecognised, and the
consideration paid is recognised in profit or loss.
3.10) Employee benefits
Equity settled share-based payments
Where employees are rewarded using equity settled share-based
payments, the fair values of employees' services are determined
indirectly by reference to the fair value of the instrument granted
to the employee. This fair value is appraised at the grant date and
excludes the impact of non-market vesting conditions.
All equity-settled share-based payments are ultimately
recognised as an expense in the income statement with a
corresponding credit to reserves.
If vesting years apply, the expense is allocated over the
vesting year, based on the best available estimate of the number of
share options expected to vest. Estimates are revised subsequently
if there is any indication that the number of share options
expected to vest differs from previous estimates. Any cumulative
adjustment prior to vesting is recognised in the current year. No
adjustment is made to any expense recognised in prior years if
share options that have vested are not exercised.
Retirement benefits
Obligations for contributions to defined contribution pension
plans are recognised as an expense in the income statement when
they are due.
3.11) Provisions
Provisions are recognised when: the group has a present legal or
constructive obligation as result of past events; it is probable
that an outflow of resources will be required to settle the
obligation; and the amount has been reliably estimated.
Provisions are measured at the present value of the expenditures
expected to be required to settle the obligation using a pre-tax
rate that reflects current market assessments of the time value of
money and the risks specific to the obligation. Any increase in the
provision due to the passage of time is recognised as interest
expense.
3.12) Foreign currencies
Transactions in foreign currencies are recorded using the rate
of exchange ruling at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies are translated
using the rate of exchange ruling at the balance sheet date and the
gains or losses on translation are included in the income
statement.
3.13) Significant judgements and estimates
The preparation of consolidated financial statements under IFRS
requires the Group to make estimates and assumptions that affect
the application of policies and reported amounts. Estimates and
judgements are continually evaluated and are based on historical
experience and other factors including expectations of future
events that are believed to be reasonable under the circumstances.
Actual results may differ from these estimates. The estimates and
assumptions which have a significant risk of causing a material
adjustment to the carrying amount of assets and liabilities are
discussed below.
Revenue recognition
The main judgements regarding revenue recognition relate to TV
production revenue. The Group considers the production and licence
elements to be a combined performance obligation to be satisfied
and recognised over time. This is explained in note 3.1.
The other key judgement in relation to revenue is in measuring
the recovery percentage of the production at each period end.
Impairment of goodwill and intangible assets
The Group is required to test, at least annually, whether
goodwill has suffered any impairment. The recoverable amount is
determined based on value in use calculations. The use of this
method requires the estimation of future cash flows and the choice
of a suitable discount rate to calculate the present value of these
cash flows. Actual outcomes could vary. See note 14 for details of
how these judgements are made.
Deferred tax asset on losses
Significant estimates are made to determine deferred tax assets
on losses. Deferred tax assets are recognised to the extent that it
is probable that future taxable profit will be available against
which the unused tax losses and unused tax credits can be utilised.
Assessment of future taxable profit is performed at every reporting
date. See note 23 for details of the deferred tax asset recognised
at 31 December 2020.
3.14) Segmental reporting
In identifying its operating segments, management follows the
Group's service lines, which represent the main products and
services provided by the Group. The activities undertaken by the TV
segment include the production of television and radio content. The
Zinc Communicate unit includes publishing and content
production.
Each of these operating segments is managed separately as each
service line requires different resources as well as marketing
approaches. All inter-segment transfers are carried out at arm's
length prices.
The measurement policies the Group uses for segment reporting
under IFRS 8 are the same as those used in its financial
statements.
4) SEGMENTAL INFORMATION AND REVENUE
Segmental information
The chief operating decision maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors who
categorise the Group's two service lines as two operating segments:
Television and Zinc Communicate. These operating segments are
monitored, and strategic decisions are made on the basis of
adjusted segment operating results.
Zinc Communicate Central and
Television (1) plc Total
----------------------- ------------------ ------------------- ------------------ --------- ---------
2020 2019 2020 2019 2020 2019 2020 2019
Continuing Operations GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- --------- -------- -------- -------- --------- ---------
Revenue 27,790 21,230 2,759 1,858 3 82 30,552 23,170
----------------------- -------- -------- --------- -------- -------- -------- --------- ---------
Adjusted EBITDA 1,633 394 (287) 177 (2,139) (396) (793) 175
Depreciation (1,107) (89) (7) (12) (158) (12) (1,272) (113)
Amortisation (974) (711) - - - - (974) (711)
Share based payment
charge - - - - (22) (27) (22) (27)
Loss on disposal
of fixed assets (22) - - - - - (22) -
Exceptional items (176) (236) (19) (36) (394) (446) (589) (718)
Operating (loss)
/ profit (646) (703) (313) 129 (2,713) (881) (3,672) (1,394)
----------------------- -------- -------- --------- -------- -------- -------- --------- ---------
Segment Assets 11,872 13,770 1,109 1,234 4,946 667 17,927 15,671
----------------------- -------- -------- --------- -------- -------- -------- --------- ---------
Segment Liabilities (6,432) (7,063) (839) (706) (4,658) (5,584) (11,929) (13,353)
----------------------- -------- -------- --------- -------- -------- -------- --------- ---------
Other Segment
Items:
Expenditure on
intangible assets - - - - 108 - 108 -
Expenditure on
tangible assets 126 147 - - 862 45 988 192
1 In the prior year Annual report this division was called
Publishing
Items included under 'Central and Plc' do not constitute an
operating segment and relate mainly to Group activities based in
the United Kingdom. Central and plc costs relate to Directors,
support functions and costs resulting from being listed.
The internal reporting of the Group's performance does not
require that costs and/or Statement of Financial Position
information is gathered based on the geographical streams and does
not require that interest and tax payable by segment is
reported.
The Group's principal operations are in the United Kingdom. Its
revenue from external customers in the United Kingdom was GBP23.32m
(2019: GBP19.67m), and the total revenue from external customers in
other countries was GBP7.23m (2019: GBP4.97m). There was only one
customer that accounted for more than 10% of Group revenue in the
year, and that customer accounted for GBP8.81m (2019: one customer
accounted for GBP2.91m revenue) or 28.8% of Group revenue.
Non-current assets are all located in the Group's country of
domicile.
Revenue
Contract balances
The following table provides information about receivables,
contract assets and contract liabilities from contracts with
customers.
31 December 30 June
2020 2019
GBP'000 GBP'000
----------------------------------------------- ------------ --------
Receivables, which are included in 'Trade and
other receivables' 2,160 3,502
Contract assets 1,755 2,329
Contract liabilities (1,275) (1,810)
------------------------------------------------ ------------ --------
The contract assets primarily relate to the Group's rights to
consideration for work completed but not billed at the reporting
date on contracts with customers. The contract assets are
transferred to receivables when the rights become unconditional.
The contract liabilities primarily relate to the advance
consideration received from customers for TV production related
contracts, for which revenue is recognised on the percentage stage
of completion of the production.
Significant changes in the contract assets and the contract
liabilities balances during the period are as follows.
2020
Contract Contract
assets liabilities
GBP'000 GBP'000
------------------------------------------------------ --------- -------------
Opening balance 1 July 2019 2,329 (1,810)
Revenue recognised that was included in the contract
liability balance at the beginning of the period - 1,810
Increases due to cash received, excluding amounts
recognised as
revenue during the period - (1,275)
Transfers from contract assets recognised at the
beginning of the
period to receivables (2,329) -
Increases as a result of changes in the measure
of progress 1,755 -
------------------------------------------------------ --------- -------------
Closing balance 31 December 2020 1,755 (1,275)
------------------------------------------------------ --------- -------------
Transaction price allocated to the remaining performance
obligations
The Group has applied the practical expedient in paragraph 121
of IFRS 15 and chosen to not disclose information relating to
performance obligations for contracts that had an original expected
duration of one year or less, or where the right to consideration
from a customer is an amount that corresponds directly with the
value of the completed performance obligations.
Contract costs
The Group has applied the practical expedient available in
paragraph 94 of IFRS 15 to recognise the incremental costs of
obtaining a contract as an expense when incurred where the
amortisation period of the asset that the entity otherwise would
have recognised is one year or less.
5) EXPENSES BY NATURE
Costs from continuing operations consist of:
2020 2019
GBP'000 GBP'000
---------------------------------- -------- --------
Cost of sales
Production costs 15,541 12,194
Salary costs 4,828 4,626
Royalties and distribution costs 990 447
Total cost of sales 21,359 17,267
---------------------------------- -------- --------
Operating expenses
Salary costs 6,927 3,039
Leases on premises - 522
Other administrative expenses 3,021 2,180
Foreign exchange loss / (gain) 38 (13)
Total operating expenses 9,986 5,728
---------------------------------- -------- --------
Directors have reconsidered the allocation of costs and updated
for the current year and comparative year. Royalty and distribution
costs have increased in the period due to the re-licensing of
programmes previously broadcasted. This increase in re-licensing in
turn increased the royalty share to re-distribute to
broadcasters.
Furlough income in the period totalled GBP396k (2019: Nil).
Included in other administrative expenses is the auditor and tax
advisors' remuneration, including expenses for audit and non-audit
services, as follows:
2020 2019
GBP'000 GBP'000
-------------------------------------------------- -------- --------
Statutory audit services
Annual audit of the company and the consolidated
accounts 123 83
Other services
Tax advisory services 20 17
Audit-related assurance services - 9
Payroll services 4 12
Other services 4 -
Total 151 121
-------------------------------------------------- -------- --------
6) STAFF COSTS
Staff costs from continuing operations, including directors,
consist of:
2020 2019
GBP'000 GBP'000
------------------------------- -------- --------
Wages & salaries 10,117 6,707
Social security & other costs 1,142 719
Pension costs 496 239
Share based payment charge 22 27
Total 11,777 7,692
------------------------------- -------- --------
The average number of employees (including directors) employed
by the Group for continuing operations during the year was:
2020 2019
------------------ ----- -----
Zinc Television 121 129
Zinc Communicate 39 44
Central and Plc 8 5
Total 168 178
------------------ ----- -----
The directors consider that the key management comprises the
directors of the company, and their emoluments are set out
below:
Directors' emoluments
2020 2019
--------------------------- ---------- --------- -------- --------- -------- -------- --------
Salaries Benefits
and fees in kind Bonus Shares Pension Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ---------- --------- -------- --------- -------- -------- --------
Executive Directors
Mark Browning 389 63 135 72 29 688 51
Will Sawyer 200 28 51 30 19 328 121
Harry Bell (resigned
6.12.19) 61 9 - - 10 80 103
David Galan (resigned
2.9.19) 13 - - - - 13 121
--------------------------- ---------- --------- -------- --------- -------- -------- --------
Non-Executive Directors
Christopher Satterthwaite
(Chairman) 63 - - 45 - 108 -
Nicholas Taylor 23 - - - 18 41 30
Andrew Garard (appointed
2.9.19) 33 - - - - 33 -
Peter Bertram (resigned
31.7.19) 4 - - - - 4 50
786 100 186 147 76 1,295 476
--------------------------- ---------- --------- -------- --------- -------- -------- --------
The shares element for the executive directors relate to a bonus
plan for H2 2020 that was set after the first Covid-19 lockdown,
whose targets were achieved and triggered cash bonuses, but the
directors elected to be paid in shares to preserve the Group's cash
reserves. The Company will retain 47% of the bonus and pay the tax
and NICs due, which is disclosed as a benefit in kind. The shares
will be allotted, and the price used for allotment determined,
following publication of the annual report.
The cash bonuses that were paid in the period relate to
performance prior to the Covid-19 pandemic.
During the period the current directors took a voluntary salary
reduction of GBP50k in total. This was during the first lockdown
when television production was severely reduced due to Covid, and
it equates to an almost 40% reduction in salary between the five
directors.
The directors also invested GBP130k in cash in the Company in
the equity fundraises during the period. This is the equivalent of
almost GBP290k in gross pay.
Taken together these total GBP340k of salary reductions and
investment from directors in the period, which compares to cash
bonuses of GBP186k that were paid out in the period. The CEO and
CFO re-invested almost 80% of their cash bonuses back into the
Company via voluntary salary reductions and investment in
equity.
Key management personnel compensation
2020 2019
GBP'000 GBP'000
----------------- -------- --------
Short
term
employee
benefits
(includes
employers
NICs) 1,229 520
Post-employment
benefits 76 72
Shares
(includes
employers
NICs) 147 -
Share-based
payments
charge 118 20
----------------- -------- --------
Total 1,570 612
----------------- -------- --------
The amount for share based payments charge (see note 7) which
relates to the Directors was GBP118k (2019: GBP20k).
7) SHARE BASED PAYMENTS
The charge for share based payments arises from the following
schemes:
2020 2019
GBP'000 GBP'000
EMI share option scheme (8) 30
Unapproved share option scheme 30 (3)
Total 22 27
-------------------------------- -------- --------
The share based payment charge for new options granted in the
year are calculated using a Stochastic model, options previously
granted have been valued using the Black Scholes model.
Share options held by directors are disclosed in the Directors'
Report.
Share Option Schemes
Under the terms of the EMI and unapproved share option schemes,
the Board may offer options to purchase ordinary share options to
employees and other individuals. Share options granted under the
Group's schemes are normally exercisable for a ten-year period. The
vesting period is from the date of grant up to three years. Some of
the EMI share options and unapproved share options have performance
criteria that mean they only vest if the share price is at a
minimum level at that point.
Details of the number of share options and the weighted average
exercise price (WAEP) outstanding during the year are as
follows:
Unapproved share option
scheme
------------------------------ --------- ------------------ -------- ---------
2020 2019
Number WAEP GBP Number WAEP GBP
------------------------------ --------- ------------------ -------- ---------
Outstanding at the beginning
of the year 28,000 3.800 10,000 3.90
Transferred from EMI scheme 171,201 0.001 24,000 3.75
Lapsed during the year (26,000) 3.781 (6,000) 3.75
------------------------------ --------
Outstanding at the end
of the year 173,201 2.527 28,000 3.80
------------------------------ --------- ------------------ -------- ---------
Exercisable at the end
of the year - - - -
------------------------------ --------- ------------------ -------- ---------
EMI Share option scheme
2020 2019
WAEP
Number WAEP GBP Number GBP
------------------------------- ---------- --------- --------- ------
Outstanding at the beginning
of the year 259,233 2.350 148,000 3.850
Granted during the year 540,144 0.001 179,233 1.650
Lapsed during the year (233,233) 2.196 (44,000) 3.850
Transferred to unapproved
scheme - - (24,000) 3.750
Outstanding at the end of
the year 566,144 0.784 259,233 2.350
------------------------------- ---------- --------- --------- ------
Exercisable at the end of
the year - - - -
------------------------------- ---------- --------- --------- ------
The options outstanding as at 31 December 2020 have the
following exercise prices and expire in the following financial
years:
Exercise
Expiry Price 2020 2019
GBP No. No.
--------------- --------
December 2026 3.75 10,000 70,000
June 2027 4.25 - 6,000
November 2027 4.15 12,000 30,000
April 2028 3.75 2,000 2,000
November 2028 2.00 4,000 4,000
November 2028 2.15 - 18,000
May 2029 1.60 - 157,233
February 2030 0.00125 711,345 -
---------------- ------------- -------- --------
739,345 287,233
--------------- ------------- -------- --------
No options were exercised during the year (2019: Nil).
Options are forfeited at the discretion of the Board if the
employee leaves the Group before the options vest. The Share Option
Plan provides for the grant of both tax-approved Enterprise
Management Incentives (EMI) options and unapproved options. The
model used to calculate a share option charge involves using
several estimates and judgements to establish the appropriate
inputs, covering areas such as the use of an appropriate interest
rate and dividend rate, exercise restrictions and behavioural
considerations. A significant element of judgement is therefore
involved in the calculation of the charge.
Options issued in February 2020
The Group issued 474,230 share options to the Chief Executive
Officer, Mark Browning, and 237,115 to the Chief Financial Officer,
Will Sawyer, on the 14 February 2020. Mark Browning's awards have
been made under the Company's EMI Share Option Scheme (303,029
Ordinary Shares) and an Unapproved Share Option Scheme (171,201
Ordinary Shares). Will Sawyer's awards have been made under the
Company's EMI Share Option Plan only.
The options are exercisable at 0.125 pence per share on the
third anniversary of their grant. All options were granted under
the condition that half of the Options granted to each director
will vest if the Share price is at least GBP0.90 for a period of 30
consecutive Dealing Days ending on or after 14th February 2023, and
the other half will vest if the share price is at least GBP1.35 for
a period of 30 consecutive Dealing Days ending on or after 14th
February 2023.
The inputs into the option pricing model for the options granted
in February 2020 are as follows:
Scheme EMI
------------------------------------------- ------------
Weighted average share exercise price 0.125 pence
Weighted average expected volatility 74.02%
Average expected life (years) - tranche 1 3.87 years
Average expected life (years) - tranche 2 4.10 years
Weighted average risk-free interest rate 0.48%
Expected dividend yield 0%
------------------------------------------- ------------
The expected volatility was calculated over a period of five
years immediately prior to the date of the grant.
Risk-free interest rate has been calculated using the gilt rates
over a period of five years from the date of grant. The expected
life of the options in tranche 1 is 3.87 years and tranche 2 is
4.10 years.
The inputs into the option pricing model for the options
previously granted are as follows:
Weighted average share exercise price 3.67 pence
Weighted average expected volatility 75.29%
Average expected life (years) 1 year
Weighted average risk-free interest rate 1.3%
Expected dividend yield 0%
------------------------------------------ -----------
The expected volatility was calculated using the historic
volatility of the company's share price over the last year since
listing. The weighted average risk-free rate has been calculated
using the gilt rates on the date of grant. The expected life of the
options assumes that on average, the options will be exercised
evenly over their life.
8) EXCEPTIONAL ITEMS
Exceptional items are presented separately as, due to their
nature or for the infrequency of the events giving rise to them,
this allows shareholders to understand better the elements of
financial performance for the year, to facilitate comparison with
prior years and to assess better the trends of financial
performance.
2020 2019
GBP'000 GBP'000
-------------------------------------------------- -------- --------
Change in fair value of contingent consideration
in respect of Tern Television (41) (138)
Reorganisation and restructuring costs (388) (272)
Contingent consideration treated as remuneration (160) (286)
Other exceptional items - (22)
Total (589) (718)
-------------------------------------------------- -------- --------
Reorganisation and restructuring costs
As part of management's transformation plan the Group
restructured Reef TV in London and Blakeway North in Manchester and
made changes to operational roles across the Group to improve
efficiency and decision making. The non-recurring element of the
costs has been presented as exceptional to enable a more refined
evaluation of financial performance.
Tern Television contingent consideration: change in fair value
and treatment as remuneration
In relation to the acquisition of Tern Television Productions in
November 2017, the Directors note that where selling shareholders
are also post-acquisition employees and contingent consideration is
conditional on continuing employment during the earnout period,
contingent consideration is treated as remuneration for the
purposes of post-acquisition accounting under IFRS 3 and is
expensed to the income statement over the earnout period.
In the period ended 31 December 2020, the minimum earnout target
was exceeded, resulting in an overachievement amount being paid of
GBP0.37m, an increase of GBP0.10m during the period. Of this
GBP0.10m increase, GBP0.04m has been booked as a change in fair
value of contingent consideration in the period, GBP0.02m as i
nterest on the unwinding of the present value of contingent
consideration and GBP0.04m is recognised as remuneration.
A total of GBP0.16m has been expensed to the income statement in
the third year of acquisition in relation to earnout consideration
linked to remuneration. As this is a non-operational expense item,
it has been presented as exceptional for the purposes of an
accurate evaluation of financial performance for the year.
9) FINANCE COSTS
2020 2019
Finance Costs GBP'000 GBP'000
------------------------------------------- -------- --------
Interest payable on borrowings (303) (235)
Interest payable on lease liabilities (88) (4)
Interest on unwinding of present value of
contingent consideration (69) (88)
Finance Costs (460) (327)
------------------------------------------- -------- --------
Finance Income
Interest received 2 1
------------------------------------------- -------- --------
Net finance costs (458) (326)
------------------------------------------- -------- --------
10) INCOME TAX EXPENSE
Taxation Charge
2020 2019
GBP'000 GBP'000
--------------------------------------------------- -------- --------
Current tax expense:
Current tax expense 8 -
Charge in respect of prior periods - 45
8 45
--------------------------------------------------- -------- --------
Deferred tax
Deferred tax asset write-off 265 -
Origination and reversal of temporary differences
(note 23) (183) (172)
Effect of change in UK corporation tax rate 46 -
Adjustments in respect of prior periods 21 -
149 (172)
--------------------------------------------------- -------- --------
Total income tax charge / (credit) 157 (127)
--------------------------------------------------- -------- --------
In light of uncertainty over the timing and amount of future
profits the decision has been made to write-off the brought forward
deferred tax asset of GBP265,000.
Reconciliation of taxation expense:
2020 2019
GBP'000 GBP'000
-------------------------------------------------- -------- --------
Loss before tax from continuing operations (4,447) (1,622)
Loss before tax from discontinued operations (624) (1,237)
-------------------------------------------------- -------- --------
Loss before tax (5,071) (2,859)
-------------------------------------------------- -------- --------
Taxation expense at UK corporation tax rate
of 19% (2019: 19%) (964) (543)
Other non-taxable income/non-deductible expenses 216 243
Tax losses not recognised 573 123
Temporary timing differences - 5
Effect of changes in UK corporation tax rates 46 -
Deferred tax asset write-off 265 -
Charge in respect of prior periods 21 45
Total income tax expense 157 (127)
-------------------------------------------------- -------- --------
11) DISCONTINUED OPERATIONS
The CSR division has had a negative impact on the Group's
overall profitability since the loss of the TFL sponsorship
contract for The Children's Traffic Club. Following a strategic and
market review of the highly specialised niche market of CSR and
STEM education the Group decided to withdraw from this market in
early 2020 and wind down all the loss-making contracts in the CSR
business.
The CSR division accounted for 2% of Group revenue in the period
to 31 December 2020, but accounted for 35% of losses at adjusted
EBITDA level of continued and discontinued operations. This
followed losses in year ended 30 June 2019 on revenues of
GBP1.5m.
A small number of profitable contracts have been retained or
moved elsewhere in the Group. The Group will retain the brand label
Zinc Communicate which now accommodates all the Group's non-TV
commissioned production.
Period ended Year ended
31 Dec 2020 30 Jun 2019
GBP'000 GBP'000
---------------------------------------------- ------------- -------------
Revenue 628 1,463
Expenses (1,061) (1,511)
---------------------------------------------- ------------- -------------
Adjusted EBITDA loss (433) (48)
Exceptional items (119) (1,026)
Amortisation and depreciation (72) (65)
Loss before tax from discontinued operations (624) (1,139)
---------------------------------------------- ------------- -------------
Income tax - (102)
---------------------------------------------- ------------- -------------
Loss after tax from discontinued operations (624) (1,241)
---------------------------------------------- ------------- -------------
The CSR business was closed in the period and the associated
close down costs are disclosed as exceptional items.
The cash flows relating to discontinued operations have all been
included within 'Net cash flows used in operating activities' as
amounts related to other activities are not material to the
financial statements.
12) EARNINGS PER SHARE
Basic loss per share (EPS) for the period is calculated by
dividing the loss for the year attributable to ordinary equity
holders of the parent by the weighted average number of ordinary
shares outstanding during the year.
When the Group makes a profit from continuing operations,
diluted EPS equals the profit attributable to the Company's
ordinary shareholders divided by the diluted weighted average
number of issued ordinary shares. When the Group makes a loss from
continuing operations, diluted EPS equals the loss attributable to
the Company's ordinary shareholders divided by the basic
(undiluted) weighted average number of issued ordinary shares. This
ensures that EPS on losses is shown in full and not diluted by
unexercised share options or awards.
2020 2019
Number of Shares Number of Shares
Weighted average number of shares
used in basic and diluted earnings
per share calculation 6,507,620 2,799,182
Potentially dilutive effect
of share options 416,485 4,028
GBP'000 GBP'000
------------------------------------------ ----------------- -----------------
Loss for the year from continuing
operations attributable to shareholders (4,320) (1,499)
Loss for the year from discontinued
operations attributable to shareholders (624) (1,241)
------------------------------------------ ----------------- -----------------
Continuing operations
Basic Loss per share (pence) (66.38)p (53.55)p
Diluted Loss per share (pence) (66.38)p (53.55)p
Discontinued operations
Basic Loss per share (pence) (9.59)p (44.33)p
Diluted Loss per share (pence) (9.59)p (44.33)p
13) INTANGIBLE ASSETS
Customer Distribution
Goodwill Brands Relationships Software Catalogue Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP000
Cost
At 1 July 2018 29,394 4,497 3,419 122 443 37,875
At 30 June 2019 29,394 4,497 3,419 122 443 37,875
Additions - - - 108 - 108
-------------------- --------- -------- -------------- --------- ------------- ---------
At 31 December
2020 29,394 4,497 3,419 230 443 37,983
-------------------- --------- -------- -------------- --------- ------------- ---------
Amortisation
and impairment
At 1 July 2018 (25,354) (4,046) (1,284) - (59) (30,743)
Charge for the
year - (97) (464) (61) (89) (711)
Impairment charge (985) - - - - (985)
At 30 June 2019 (26,339) (4,143) (1,748) (61) (148) (32,439)
-------------------- --------- -------- -------------- --------- ------------- ---------
Charge for the
period - (145) (696) (65) (133) (1,039)
At 31 December
2020 (26,339) (4,288) (2,444) (126) (281) (33,478)
-------------------- --------- -------- -------------- --------- ------------- ---------
Net Book Value
At 31 December
2020 3,055 209 975 104 162 4,505
-------------------- --------- -------- -------------- --------- ------------- ---------
At 30 June 2019 3,055 354 1,671 61 295 5,436
-------------------- --------- -------- -------------- --------- ------------- ---------
The current period amortisation charge includes GBP61,000 (2019:
GBP61,000) from the Group's discontinued operations which is
disclosed in note 11.
The prior year impairment charge of GBP985,000 relates to the
Group's discontinued operations, which is disclosed as an
exceptional item in note 8.
Impairment Tests for Goodwill
Goodwill by cash generating unit is:
31 Dec 30 Jun
2020 2019
GBP'000 GBP'000
London & Manchester TV CGU 1,444 1,444
Tern TV CGU 1,611 1,611
Total 3,055 3,055
---------------------------- -------- --------
Goodwill is not amortised but tested annually for impairment
with the recoverable amount being determined from value in use
calculations. The key assumptions for the value in use calculations
are those regarding the discount rate, growth rates and forecasts
in new business.
The Group assessed whether the carrying value of goodwill was
supported by the discounted cash flow forecasts of each operating
segment based on financial forecasts approved by management, taking
into account both past performance and expectations for future
market developments. Management has used a perpetuity model (5-year
Group forecast and GDP growth rate in perpetuity). Management
estimates the discount rate using a pre-tax rate that reflects
current market assessments of the time value of money and the risks
specific to media businesses.
The 2021 business unit forecasts are based on the budget set for
the year. In TV expected revenue and net margin improvements have
been forecast in 2022 and in the following years a growth rate of 2
per cent has been used. In Tern Television a 2 per cent growth rate
has been used from 2022 onwards. Management believe the 2 per cent
growth rate does not exceed the growth rate of the industry and is
a cautious assumption, which may be significantly lower than the
growth rate management would expect to achieve.
In evaluating the recoverable amount, we employ the discounted
cash flow methodology, which is based on making assumptions and
judgements on forecasts, margins, discount rates and working
capital needs. These estimates will differ from actuals in the
future and could therefore lead to material changes to the
recoverable amounts. The key assumptions used for estimating cash
flow projections in the Group's impairment testing are those
relating to EBITDA growth, which take account of the businesses'
expectations for the projection period. These expectations consider
the macroeconomic environment, industry and market conditions, the
unit's historical performance and any other circumstances
particular to the unit, such as business strategy and client
mix.
The two cash generating units operate in a similar media
landscape and the pre-tax discount rate applied across to the
segments for period ended 31 December 2020 was 9.3 per cent (2019:
11.6 per cent). A sensitivity analysis of an increase in the
discount rate by 2.3 per cent is shown below.
London & Manchester TV and Tern TV CGUs
Changes in assumptions can have a significant effect on the
recoverable amount and therefore the value of the impairment
recognised.
Assumption Judgement Sensitivity
Discount As indicated above the rate An increase in the discount
Rate used is 9.3 per cent. rate to 11.6 per cent (prior
year rate) will result in no
impairment charge.
---------------------------------- ------------------------------
Growth Rate An average rate of 2 per If a zero per cent average
cent has been used for financial growth rate was applied for
year 2022 onwards for Tern 2023 onwards there would be
TV and financial year 2023 no impairment in either CGU.
onwards for London TV.
---------------------------------- ------------------------------
New Business London & Manchester TV's If there is a shortfall in
CGU revenue recovers post revenue of 20%, there would
Covid such that by 2022 be no impairment charge.
it is back to just below
2019's levels.
---------------------------------- ------------------------------
14) PROPERTY, PLANT AND EQUIPMENT
Office and
Short leasehold computer
land and buildings Motor vehicles equipment Total
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 July 2018 291 111 2,495 2,897
Additions 21 - 171 192
At 30 June 2019 312 111 2,666 3,089
Additions 365 - 623 988
Disposals (13) (76) (32) (121)
Transfers - - (23) (23)
----------------------- -------------------- --------------- ----------- --------
At 31 December 2020 664 35 3,234 3,933
----------------------- -------------------- --------------- ----------- --------
Depreciation
At 1 July 2018 (271) (52) (2,219) (2,542)
Charge for the year (20) (18) (140) (178)
At 30 June 2019 (291) (70) (2,359) (2,720)
----------------------- -------------------- --------------- ----------- --------
Charge for the period (67) (19) (247) (333)
Disposals - 54 - 54
At 31 December 2020 (358) (35) (2,606) (2,999)
----------------------- -------------------- --------------- ----------- --------
Net Book Value
At 31 December 2020 306 - 628 934
----------------------- -------------------- --------------- ----------- --------
At 30 June 2019 21 41 307 369
----------------------- -------------------- --------------- ----------- --------
The depreciation charge in the current period and prior year
includes depreciation from discontinued operations of GBP11,000
(2019: GBP4,000), and is disclosed in note 11.
15) INVENTORIES
31 Dec 30 Jun
2020 2019
GBP'000 GBP'000
------------------------------------- -------- --------
Work in progress - Zinc Communicate 67 66
Work in progress - TV 117 96
Stock - CSR - 74
Total Inventories 184 236
------------------------------------- -------- --------
16) TRADE AND OTHER RECEIVABLES
31 Dec 30 Jun
2020 2019
GBP'000 GBP'000
------------------------------- -------- --------
Current
Trade receivables 2,628 3,628
Less provision for impairment (468) (126)
------------------------------- -------- --------
Net trade receivables 2,160 3,502
Other receivables - 136
Prepayments 364 891
Contract assets 1,755 2,329
------------------------------- -------- --------
Total 4,279 6,858
------------------------------- -------- --------
The carrying amount of trade and other receivables approximates
to their fair value. The creation and release of provision for
impaired receivables have been included in administration expenses
in the income statement.
The maximum exposure to credit risk at the reporting date is the
carrying value of each class of asset above. The Group does not
hold any collateral as security for trade receivables. The Group is
not subject to any significant concentrations of credit risk.
There is no expected credit loss in relation to contract assets
recognised because the measure of expected credit losses was not
material to the financial statements.
Impairment of financial assets
The group's credit risk management practices and how they relate
to the recognition and measurement of expected credit losses are
set out below.
Definition of default
The loss allowance on all financial assets is measured by
considering the probability of default.
Receivables are considered to be in default when the principal
or any interest is significantly more than the associated credit
terms past due, based on an assessment of past payment practices
and the likelihood of such overdue amounts being recovered.
Determination of credit-impaired financial assets
The group considers financial assets to be 'credit-impaired'
when the following events, or combinations of several events, have
occurred before the year-end:
-- Significant financial difficulty of the counterparty arising
from significant downturns in operating results and/or significant
unavoidable cash requirements when the counterparty has
insufficient finance from internal working capital resources,
external funding and/or group support;
-- A breach of contract, including receipts being more than materially past due;
-- It becoming probable that the counterparty will enter bankruptcy or liquidation.
Write-off policy
Receivables are written off by the group when there is no
reasonable expectation of recovery, such as when the counterparty
is known to be going bankrupt, or into liquidation or
administration.
Impairment of trade receivables and contract assets
The group calculates lifetime expected credit losses for trade
receivables using a portfolio approach. Receivables are grouped
based on the credit terms offered and the type of product sold. The
probability of default is determined at the year-end based on the
aging of the receivables, historical data about default rates on
the same basis. That data is adjusted if the group determines that
historical data is not reflective of expected future conditions due
to changes in the nature of its customers and how they are affected
by external factors such as economic and market conditions.
As noted below, a loss allowance of GBP320,000 (2019:
GBP126,000) has been recognised for trade receivables in the Zinc
Communicate division based on the expected credit loss percentages
for trade receivables that are aged more than 30 days to over a
year past due.
The loss allowance provision has been calculated based on
historical loss rates. Zinc Communicate debt collection rates
reduced during the Covid period in its Publishing unit, and
consequently the directors have recognised an additional loss
provision of GBP148,000, bringing the total provision to
GBP468,000.
In relation to the Television division, the directors do not
believe there are any other forward-looking factors to consider in
calculating the loss allowance provision as at 31 December 2020. No
expected loss provision has been recognised as the directors expect
any loss to be immaterial.
No expected credit loss is expected for contract assets.
Television
Aging
0-30 30-60 60-90 90-120 120-150 150-365 Over Total
Trade receivables: days days days days days days 365 days 2020
----------------------- ------- ------ ------ ------- -------- -------- ---------- ------
Expected loss
rate (%) 0% 0% 0% 0% 0% 0% 0% 0%
Gross carrying
amount (GBP'000) 459 290 67 83 437 - - 1,336
----------------------- ------- ------ ------ ------- -------- -------- ---------- ------
Loss allowance
provision (GBP'000) - - - - - - - -
CSR (discontinued)
Aging
0-30 30-60 60-90 90-120 120-150 150-365 Over Total
Trade receivables: days days days days days days 365 days 2020
----------------------- ------- ------ ------ ------- -------- -------- ---------- ------
Expected loss
rate (%) 0% 0% 0% 0% 0% 0% 0% 0%
Gross carrying
amount (GBP'000) 11 16 15 - - - - 42
----------------------- ------- ------ ------ ------- -------- -------- ---------- ------
Loss allowance
provision (GBP'000) - - - - - - - -
Zinc Communicate
Aging Over
0-30 30-60 60-90 90-120 120-150 150-365 365 Total
Trade receivables: days days days days days days days 2020
------------------------- ------- ------ ------ ------- -------- -------- -------- ------
Expected loss
rate (%) 12% 12% 16% 19% 23% 27% 57% 26%
Gross carrying
amount (GBP'000) 194 319 76 85 91 187 289 1,241
------------------------- ------- ------ ------ ------- -------- -------- -------- ------
Loss allowance
provision (GBP'000) 17 39 12 16 21 51 164 320
17) CASH AND CASH EQUIVALENTS
31 Dec 30 Jun
2020 2019
GBP'000 GBP'000
--------------------------------- -------- --------
Total Cash and cash equivalents 6,805 3,213
--------------------------------- -------- --------
The Group's credit risk exposure in connection with the cash and
cash equivalents held with financial institutions is managed by
holding funds in a high credit worthy financial institution
(Moody's A2- stable).
18) TRADE AND OTHER PAYABLES
31 Dec 30 Jun
2020 2019
GBP'000 GBP'000
--------------------------------- -------- --------
Current
Trade payables 568 1,997
Other payables 58 83
Other taxes and social security 985 1,010
Accruals 3,885 3,523
Contract liabilities 1,275 1,810
Total 6,771 8,423
--------------------------------- -------- --------
The Directors consider that the carrying amount of trade and
other payables approximates to their fair value. The Group's
payables are unsecured.
19) LEASES UNDER IFRS 16
This note reconciles the Group's previously disclosed operating
lease commitments as at 30 June 2019 to the lease liability
recognised on 1 July 2019 on adoption of IFRS 16:
1 Jul 2019
GBP'000
-------------------------------------------------- -----------
Operating lease commitments as at 30 June 2019 427
Operating lease commitments that existed at 30
June 2019,
not included in the amount above 78
Discounted using the incremental borrowing rate (57)
-------------------------------------------------- -----------
Discounted leases using the group borrowing rate
as at 1 July 2019 448
-------------------------------------------------- -----------
Operating lease commitments that existed at 30 June 2019, not
included in amount above, relate to short term leases previously
not classified as operating leases. These leases relate to editing
suite equipment and photocopiers.
1 Jul 2019
GBP'000
------------------------------- -----------
Current lease liabilities 425
Non-current lease liabilities 23
------------------------------- -----------
Total lease liabilities 448
------------------------------- -----------
The change in accounting policy altered specific items in the
balance sheet on 1 July 2019 as shown below:
-- Right of use asset - increased by GBP448k
-- Lease liabilities - increased by GBP448k
Prior to the current period, leases were classified as either
operating or finance leases. From 1 July 2019, leases are
recognised as a right to use asset with a corresponding liability.
Assets and liabilities are initially measured at the present value
at the initial date using the implied company discount rate.
Right-of-use assets
Office and
Short leasehold computer
land and buildings equipment Total
GBP'000 GBP'000 GBP'000
Balance as at 1 July 2019 399 49 448
Additions 1,469 305 1,774
Depreciation (795) (150) (945)
Balance as at 31 December 2020 1,073 204 1,277
-------------------------------- -------------------- ----------- --------
Lease liabilities
Office and
Short leasehold computer
land and buildings equipment Total
GBP'000 GBP'000 GBP'000
Balance as at 1 July 2019 399 49 448
Additions 1,348 305 1,653
Interest expense 58 31 89
Lease payments (613) (174) (787)
Balance as at 31 December 2020 1,192 211 1,403
-------------------------------- -------------------- ----------- --------
Lease liabilities are presented in the statement of financial
position as follows:
31 Dec 30 Jun
2020 2019
GBP'000 GBP'000
------------------------- -------- --------
Current 337 32
Non-current 1,066 20
Total lease liabilities 1,403 52
------------------------- -------- --------
Number of Average remaining
right-of-use Range of remaining lease term
assets leased term (years) (years)
Short leasehold land and buildings 7 <1 to 4 2
Office and computer equipment 8 <1 to 3 2
------------------------------------ --------------- ------------------- ------------------
20) BORROWINGS AND OTHER FINANCIAL LIABILITIES
31 Dec 30 Jun
2020 2019
GBP'000 GBP'000
-------------------------------------- -------- --------
Current
Contingent consideration payable - 500
Lease liabilities 337 32
Sub total 337 532
-------------------------------------- -------- --------
Non-current
Debt facility - unsecured borrowings 2,455 2,759
Loan notes - unsecured borrowings 971 984
Lease liabilities 1,066 20
Contingent consideration payable - 595
Sub total 4,492 4,358
-------------------------------------- -------- --------
Total 4,829 4,890
-------------------------------------- -------- --------
Maturity of Financial Liabilities
The maturity of borrowings (analysed by remaining contractual
maturity) is as follows:
31 Dec 30 Jun
2020 2019
GBP'000 GBP'000
------------------------------------------ -------- --------
Repayable within one year and on demand:
Lease liabilities 337 32
Trade and other payables 616 2,080
Accrued expenses 3,885 3,523
4,838 5,635
------------------------------------------ -------- --------
Repayable between one and two years:
Debt facility - unsecured 2,646 2,932
Loan notes - unsecured 1,124 1,074
3,770 4,006
--------------------------------------- ------ ------
Repayable between two and five years:
Lease liabilities 1,066 20
Total 9,674 9,661
--------------------------------------- ------ ------
Debt Facility
Loans totalling GBP2.46m (2019: GBP2.76m) are held by Herald
Investment Trust Plc, John Booth and The John Booth Charitable
Foundation ("JBCF"), all of whom are a related party through
shareholding. The interest on the facility is based on monthly
LIBOR plus a margin of 4%. The debt facility is unsecured and is
repayable in full on 31 December 2022. There are no financial
covenants in force in respect of this debt facility.
Loan notes - unsecured
The unsecured loan notes of GBP0.97m (2019: GBP0.98m) relates to
short-term loan notes issued to Herald Investment Trust plc, a
related party through shareholding. Interest is at a fixed rate of
8%. The interest is accrued and is repayable along with the
principal on 31 December 2022. There are no financial covenants in
place in respect of this debt.
Finance leases
Net obligations under finance leases are secured on related
property, plant and equipment and are included within lease
liabilities.
Overdraft
During the period the Group obtained an overdraft facility of
GBP600k, the overdraft is secured over the assets of subsidiary
companies. As at the period end the Group has now drawn upon the
overdraft facility in place. The interest rate on the overdraft is
5.3% per annum over the Bank of England rate.
Change in liabilities arising from financing activities
30 Jun Non-cash 31 Dec
2019 Cash flows changes 2020
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- -------- ----------- --------- --------
Borrowings - debt facility 2,759 172 (476) 2,455
Borrowings - loan notes 984 - (13) 971
Finance leases 52 786 565 1,403
---------------------------------- -------- ----------- --------- --------
Total liabilities from financing
activities 3,795 958 76 4,829
---------------------------------- -------- ----------- --------- --------
21) FINANCIAL INSTRUMENTS
The Group's financial instruments comprise borrowings, cash and
liquid resources and various items, such as trade and other
receivables and trade and other payables that arise directly from
its operations. The main purpose of these financial instruments is
to raise finance for the Group's operations.
The principal financial risk faced by the Group is
liquidity/funding. The policies and strategies for managing this
risk is summarised as follows:
Risk Potential impact How it is managed
Liquidity The Group's debt servicing The Group's treasury function
requirements and investment is principally concerned
strategies, along with with internal funding requirements,
the diverse nature of debt servicing requirements
the Group's operations, and funding of new investment
means that liquidity management strategies.
is recognised as an important
area of focus. Internal funding and debt
servicing requirements are
Liquidity issues could monitored on a continuing
have a negative reputational basis through the Group's
impact, particularly with management reporting and
suppliers. forecasting. The Group also
maintains a continuing dialogue
with the Group's lenders
as part of its information
covenants. The requirements
are maintained through a
combination of retained
earnings, asset sales or
capital markets.
An overdraft of GBP0.6m
was put in place during
the period to help fund
potential working capital
fluctuations.
New investment strategies
are to be funded through
existing working capital
or where possible capital
markets.
--------------------------------- -------------------------------------
Capital management policy and risk management
The Group manages its capital to ensure that entities in the
Group will be able to continue as a going concern while maximising
the return to shareholders through the optimisation of the debt and
equity balance. The capital structure of the Group consists of
debts, which include the borrowings disclosed in note 20, cash and
cash equivalents and equity attributable to the owners of the
parent, comprising issued capital, reserves and retained earnings
as disclosed in the Consolidated Statement of Changes in
Equity.
The Group's Board reviews the capital structure on an on-going
basis. As part of this review, the Board considers the cost of
capital and the risks associated with each class of capital. The
Group seeks a conservative gearing ratio (the proportion of net
debt to equity). The Board considers at each review the
appropriateness of the current ratio considering the above. The
Board is currently satisfied with the Group's gearing ratio.
The gearing ratio at the year-end is as follows:
31 Dec 30 Jun
2020 2019
GBP'000 GBP'000
--------------------------------- -------- --------
Borrowings (debt facility and
loan notes) (3,426) (3,743)
Cash and cash equivalents 6,805 3,213
----------------------------------- -------- --------
Net Cash/(Debt) 3,379 (530)
Total equity 6,114 2,667
Net (cash)/debt to equity ratio -55% 20%
----------------------------------- -------- --------
The decrease in the Group's gearing ratio is mainly driven by the
increased cash balance as a result of fundraises during the period,
as well as the reduction in debt agreed with the debt holders as
part of the balance sheet restructure.
Financial instruments by category
31 Dec 30 Jun
2020 2019
GBP'000 GBP'000
-------------------------------------------------- ------- -------- --------
Categories of financial assets and liabilities
Financial assets - measured at amortised
cost
Trade and other receivables 3,904 5,967
Cash and cash equivalents 6,805 3,213
Financial liabilities - other financial
liabilities at amortised cost
Trade and other payables (4,501) (5,603)
Borrowings (3,426) (3,743)
Lease liabilities (1,403) (52)
Financial liabilities - other financial
liabilities at fair value
Contingent consideration payable - (1,095)
The fair values of the Group's cash and short-term deposits and
those of other financial assets equate to their carrying amounts.
The Group's receivables and cash and cash equivalents are all
classified as financial assets and carried at amortised cost. The
amounts are presented net of provisions for doubtful receivables
and allowances for impairment are made where appropriate. Trade and
other payables and loan borrowings are all classified as financial
liabilities measured at amortised cost.
22) BUSINESS COMBINATIONS
Issue of consideration shares
Following a strong trading performance by Tern Television
Productions Limited ("Tern Television") the second and third-year
earnings targets were achieved in the years to June 2019 and June
2020 respectively.
The second and third-year earnout payments, payable to the
vendors of Tern Television in accordance with the terms of the
share purchase agreement, were GBP0.5m each, which were satisfied
partially in cash and partially in new Zinc Media Group shares.
Over the three year earnout period the minimum earnout targets
were exceeded, resulting in an overachievement amount payable of
GBP365,000, which was settled in shares.
In relation to the acquisition of Tern Television in November
2017, the Directors note that where selling shareholders are also
post-acquisition employees and contingent consideration is
conditional on continuing employment during the earnout period,
contingent consideration is treated as remuneration for the
purposes of post-acquisition accounting under IFRS 3 and is
expensed to the income statement over the earnout period.
23) DEFERRED TAX
Deferred tax is calculated in full on temporary differences
under the liability method using a tax rate of 19% (2019:17%) for
UK differences. The movements in deferred tax assets and
liabilities during the year are shown below.
Losses carried
forward Intangible assets Total
GBP'000 GBP'000 GBP'000
------------------------------------ --------------- ------------------ --------
At 30 June 2018 203 (503) (300)
------------------------------------ --------------- ------------------ --------
Recognised in the income statement 62 110 172
------------------------------------ --------------- ------------------ --------
At 30 June 2019 265 (393) (128)
------------------------------------ --------------- ------------------ --------
Recognised in the income statement (265) 116 (149)
At 31 December 2020 - (277) (277)
------------------------------------ --------------- ------------------ --------
Deferred tax assets estimated at GBP4.5 million (2019: GBP3.5
million) in respect of losses carried forward have not been
recognised due to uncertainties as to when income will arise
against which such losses will be utilised. Due to these
uncertainties the deferred tax asset of GBP0.3m that was held at 30
June 2019 has been written off in the period.
24) Provisions
31 Dec 30 Jun
2020 2019
GBP'000 GBP'000
----------- -------- --------
Provisions 75 -
----------- -------- --------
A dilapidation provision has been recognised in the period in
relation to the costs associated with restoring a rented property
back to its previous condition.
25) SHARE CAPITAL AND RESERVES
31 Dec 20 30 Jun
19
Ordinary shares with a nominal value of: 0.125p 0.00025p
Authorised:
Number Unlimited Unlimited
Issued and fully paid:
Number 15,963,039 1,419,113,435
Nominal value (GBP'000) 20.0 3.5
Deferred shares with a nominal value of 1.99p
Authorised, issued and fully paid:
Number - 276,666,012
Nominal value (GBP'000) - 5,506
D Deferred shares with a nominal value of 0.09975p
Authorised, issued and fully paid:
Number - 419,397,339
Nominal value (GBP'000) - 418
Preference shares with a nominal value of 0.01p
Authorised, issued and fully paid:
Number - 838,633
Paid up value (GBP'000) - 839
Fully paid ordinary shares carry one vote per share and carry
the right to dividends.
The movements in share capital and reserves in the year are made
up as follows:
31 Dec 2020 30 Jun 2019
Number of Share Share Merger Number of Share Share Merger
Shares Capital Premium Reserve Shares Capital Premium Reserve
Ordinary
shares GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At start of
year 1,419,113,435 5,928 30,509 875 1,359,586,281 3.4 30,414 777
Share placing
and
subscription
for cash 10,555,555 13 7,487 - - - - -
Consideration
paid in
shares 42,385,832 1 489 65 39,473,685 0.09 - 98
Shares issued
in lieu of
fees 5,176,190 - 48 - - - - -
Expenses of
issue of
shares - - (406) - - - - -
Shares issued
in debt
conversion 651,054 1 427 - - - - -
Shares issued
in preference
share
conversion 24,675,435 8 923 - 20,053,469 0.05 95 -
Capital
Reduction - (5,931) (34,823) (913) - - - -
Share
consolidation (1,486,594,462) - - - - - - -
At end of year 15,963,039 20 4,654 27 1,419,113,435 3.5 30,509 875
--------------- ----------------
November 2019
Tern Television Earnout
On the 1 November 2019 the Company issued 41,597,336 new
ordinary shares at a price of 0.3005p per share as part of the
consideration for the acquisition of Tern Television, to the Tern
Television selling shareholders.
Issue of shares
On the 1 November 2019 the Company also converted GBP71,279 of
preference shares into 23,719,981 new ordinary shares at a price of
0.3005p per share to Herald Investment Trust plc ("Herald"). Herald
converted such number of preference shares and accrued dividends on
the preference shares into ordinary shares such that their holding
of issued ordinary share capital in the Company was maintained.
To a supplier in lieu of fees, the Company issued 5,142,857 new
ordinary shares at a price of 0.35p per share.
February 2020
Capital fundraise and balance sheet restructure
On 12 February 2020 the Company announced that it had raised
GBP3.5 million (before expenses) by way of a placing of 3,888,889
New Ordinary Shares (the "Placing Shares").
Additionally , in order to simplify the Group's capital
structure, the Company carried out the following:
(i) The Company consolidated its ordinary share capital such
that each 500 Ordinary Shares of 0.00025p were consolidated into
one New Ordinary Share of 0.125p (the "Share Consolidation");
and
(ii) Converted all remaining preference shares and accrued
dividends held by Herald, amounting to GBP852,000, into New
Ordinary Shares. As a result no preference shares remain on the
Company's balance sheet; and
(iii) Converted GBP77,000 of long-term debt owing to John Booth
into New Ordinary Shares; and
(iv) Extended the long-term debt held with the Herald and the
John Booth Charitable Foundation and the term of the unsecured loan
notes held with Herald from December 2020 to December 2022.
Issue of shares
On the 19 February 2020 the Group issued 33,333 new ordinary
shares at a price 0.90p per share to a Director in lieu of payment
of director fees.
September 2020
Balance sheet restructure
The Company received shareholder approval on the 12(th) February
2020 to carry out a capital reduction which was completed on the
2(nd) September 2020 as follows:
(i) The amount standing to the credit of the Company's share
premium account, the Deferred Shares and D Deferred Shares have
been cancelled; and
(ii) The amount of GBP0.9m, being the entire amount standing to
the credit of the Company's merger reserve, has been capitalised by
issuing capital reduction shares and thereafter such capital
reduction shares were immediately cancelled.
The capital reduction created realised profits which eliminated
the deficit on the Company's retained loss account.
November 2020
Capital fundraise
On 16(th) November 2020 the Company announced that it had raised
GBP4 million (before expenses) by way of a placing of 6,666,666 New
Ordinary Shares.
Tern Television Earnout
On the 17 November 2020 following a strong trading performance
by Tern Television Productions Limited ("Tern Television") in the
year ended 30 June 2020, the third-year earnings target was
achieved. The third-year earnout payment, payable to the vendors of
Tern Television in accordance with the terms of the share purchase
agreement, was GBP0.5m, of which GBP375,000 was settled in cash and
GBP125,000 settled in shares. Over the three year earnout period
the minimum earnout targets were exceeded, resulting in an
overachievement amount payable of GBP364,500, which was settled in
new ordinary shares. In total GBP489,500 was settled through the
issue to the vendors of 788,496 new ordinary shares at a price of
62.08p per share.
Issue of shares
On the 17 November 2020 the Company converted GBP337,212 of debt
held with Herald Investment Trust plc ("Herald") into 543,188 new
ordinary shares at a price of 62.08p per share, such that their
holding of ordinary shares was maintained, which is approximately
40.13% of the issued ordinary share capital.
Also on the 17 November 2020 the Company converted GBP13,517 of
debt held with John Booth Charitable Trust ("JBCF") into 21,774 new
ordinary shares at a price of 62.08p per share, such that their
current holding of ordinary shares is maintained, which is
approximately 1.61% of the issued ordinary share capital.
Nature and purpose of the individual reserves
Below is a description of the nature and purpose of the
individual reserves:
-- Share capital represents the nominal value of shares issued;
-- Share premium includes the amounts over the nominal value in
respect of share issues. In addition, costs in respect of share
issues are debited to this account;
-- Merger reserve is used where more than 90 per cent of the
shares in a subsidiary are acquired and the consideration includes
the issue of new shares by the Company, thereby attracting merger
relief under the Companies Act 1985 and, from 1 October 2009, the
Companies Act 2006;
-- Share based payment reserve arises on recognition of the
share-based payment charge in accordance with IFRS2 'Share Based
Payment Transactions';
-- Retained earnings include the realised gains and losses made
by the Group and the Company ; and
-- Preference shares represents the proceeds of preference
shares issued, being nominal value plus any premium on issue.
26) COMMITMENTS
Capital commitments
The Group had no capital commitments in relation to leasehold
improvements to its premises as at 31 December 2020 (2019:
GBPnil).
27) RELATED PARTY TRANSACTIONS
Herald Investment Trust plc and John Booth Charitable
Foundation
The Company is the borrower of unsecured debt and loan notes
with Herald Investment Trust plc and John Booth Charitable
Foundation requiring a bullet repayment on 31 December 2022. The
total amount outstanding at 31 December 2020 including accrued
interest is GBP3.43m (2019: GBP3.74m). Interest accrued on the debt
amounted to GBP0.04m (2019: GBP0.56m).
28) POST BALANCE SHEET EVENTS
There are no post balance sheet events to disclose.
29) GUARANTEE IN RELATION TO SUBSIDIARY AUDIT EXEMPTION
On 19 April 2021, the Directors of the Company provided
guarantees in respect of its trading subsidiary companies in
accordance with section 479C of the Companies Act 2006. As a
result, the following subsidiary entities of the Company are exempt
from the requirements of the Companies Act 2006 relating to the
audit of accounts under section 479A of the Companies Act 2006:
Blakeway Productions Limited (02908076)
Zinc Television London Limited (formerly Brook Lapping
Productions Limited) (02800925)
Zinc Communicate CSR Limited (formerly Zinc Communicate Limited)
(06271341)
Films of Record Limited (01446899)
Reef Television Limited (03500852)
Zinc Television Regions Limited (formerly Ten Alps TV Limited)
(02888301)
Zinc Communicate Productions Limited (formerly Ten Alps
Communications Limited) (03136090)
Tern Television Productions Limited (SC109131)
Cautionary note regarding forward-looking statements
This press release may contain certain forward-looking
information. The words "expect", "anticipate", believe",
"estimate", "may", "will", "should", "intend", "forecast", "plan",
and similar expressions are used to identify forward looking
information.
The forward-looking statements contained in this press release
are based on management's beliefs, estimates and opinions on the
date the statements are made in light of management's experience,
current conditions and expected future development in the areas in
which the Company is currently active and other factors management
believes are appropriate in the circumstances. The Company
undertakes no obligation to update publicly or revise any
forward-looking statements or information, whether as a result of
new information, future events or otherwise, unless required by
applicable law.
Readers are cautioned not to place undue reliance on
forward-looking information. By their nature, forward-looking
statements are subject to numerous assumptions, risks and
uncertainties that contribute to the possibility that the predicted
outcome will not occur, including some of which are beyond the
Company's control. There can be no assurance that forward-looking
statements will prove to be accurate as actual results and future
events could vary or differ materially from those anticipated in
such statements.
Inside Information
The information contained within this announcement constitutes
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) no. 596/2014 as it forms part of UK domestic
law by virtue of the European Union (Withdrawal) Act 2018 ("MAR")
and is disclosed in accordance with the Company's obligations under
Article 17 of MAR. On the publication of this announcement via a
Regulatory Information Service, this inside information is now
considered to be in the public domain.
This information is provided by RNS, the news service of the
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END
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April 23, 2021 02:00 ET (06:00 GMT)
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