Zinc Media Group (LSE:ZIN) — Final Results

0:01 Good morning, and welcome to the ZINC MEDIA GROUP PLC final results investor presentation. So as recorded presentation, investors will be in listen only mode. Questions are encouraged to be submitted at any time via the q and a tab situated just in the right hand corner of your screen. Please just simply type in your questions at any time and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to start the following poll. And I'd now like to hand over to

0:31 Mark Browning, CEO from ZINC Media Group. Good morning. Good morning. Thank you, Zai. Good morning, everyone. So, yes, I'm Mark Browning. I'm the CEO of ZINC, joined today by Will. Many of you will have met us previously. But for those who are joining perhaps for the first time today, a little bit about me. I've been in content creating companies, running content creating companies for the last twenty five years or so, typically taking struggling businesses and turning them into high performing growth companies. First, as the content director of Heart, which was a radio station in those days and is now the big radio group across The UK. And then, in television as the group managing director of ITN, which we took Will and I joined up at that point, and we took from a loss making business to a high performing profitable company over a nine or ten year period.

1:23 So where Will and I are back in ZINC, we see the issues ZINC has faced similar to the ones we inherited when we joined ITN at the start of our ten year journey, and we're here to turn around ZINC. The turnaround is well underway, and we're here because of the value creating opportunity along with investors and our teams. So we have fixed ZINC's historical problems over the last couple of years, and now we are in the phase of investing for accelerated growth in this year and future years. So a little bit about the company, how we structure the company. It is a pure play content creation group. We don't own other platforms. We make compelling content across all sorts of different genres.

2:11 And one of a very small number of public listed companies that are in the pure play content space. It is a it's a 20 to £30,000,000 group in its current form, and it's diversified across 10 or 11 revenue streams. It's anchored in television. So ZINC TV is about 80% of our turnover, and ZINC Communicate, which creates televisual content for brands, agencies, rights owners, and publishers, is the other 20%, roughly. The primary difference between ZINC TV and ZINC Communicate is the buyer. So in TV, we will pitch and win business, under labels, which you can see on the on the, title slide front of you.

3:04 They help our customers navigate the different types of television we make, whether it be internal or or Super Collider or Redsource. In ZINC communicate, we sell four products, digital content creation, branded entertainment, corporate films, and audio in podcasting and radio. So we've been here three years. We've done the transformation of fixing the company, transformed the group's margins, and taken it into new markets. So six of the businesses on the screen in front of you are new in the last eighteen months, and they have generated about a third of the revenue we're reporting for twenty twenty twenty one. And, crucially, the two parts, ZINC TV, ZINC communicate, support each other reputationally and commercially, but also operationally and how the how the workflows work. They sit on the same workflows, the same spine. They share the same customers, the same propositions, and that is really important to understand. It's what we've built in the last three years because that is the key to unlocking scale.

4:09 We can now scale the business because we have the core infrastructure in place to do so. At the start of 2021, we updated our strategic priorities. They are the critical KPIs that we talk about internally, that we recruit against, that we report externally against, and they are revenue growth and the diversification of revenue, TV production gross margins, cash management, cash generation, the culture, the performance culture that we have across our businesses and shareholder comms. So everything we're doing now, we will report against and structure against those five strategic priorities. So key headlines for 2021 and now into 2022. Revenue growth grew.

4:56 We grew in 2021, and we will grow again in 2022. We are on a growth trajectory. The rate of new business winning this year is up on where we were winning business last year. Run rate. We've booked £4,000,000 of new business since we last updated everybody in February. That is a good run rate for us. The pipeline is good with around, 8,000,000 ready to be contracted. So we've got 13,000,000 that's due to fall this year. We have a much bigger pipeline that we we're not talking about. We're talking about revenue that's for this year. We've got 13,000,000 booked and 8,000,000 at a contracting stage. So we're confident of revenue growth, that

5:42 confident confident ahead. On the margin side, we've done confident better that than we had hoped and expected and guided before. If you recall, in 2020, I said publicly, I hoped to get the margins in television production up 6% from '24 to around 30. '24 is what we inherited when we joined. And then last year, now reporting they're up 12 and a half percent since that period in 2019, early twenty twenty, which is a huge swing to the underlying opportunity for profit in the business. The culture is good. We have a high performance culture. We measure success across both creative ambition, commercial ambition, and our cultural objectives internally.

6:32 Half of our employees have joined us in the last twelve months. So while the name of the company is the same, it is a rapidly renewing business with 50% of people who work here today new in the last twelve months. So it's a completely different organization to the one you might be familiar with, and it is in a growth trajectory. In terms of shareholder comms, we put this out shareholder communications, we put this out as a key strategic objective for 2021. And I hope that you now think that this company talks and is recognizable and presents as a as a grown up, mature organization following recognizable investor relations objectives. So lots of shareholder comms are happening, regular RNSs, these sorts of meetings, capital market days, and so forth, and we appointed IFC Financial to help us with our investor relations

7:26 and our comms at the back end of last year. So all of this progress has helped to drive our share price performance, which is finally catching up with the story, but there is an awful lot of headroom to go. So in terms of some of the results for last year, I'll let Will jump in at this point and take us forward on this slide. Okay. So results for 2021. So we generated revenue of 17,500,000. And by way of comparison to pre COVID 2019 revenues, they were £29,000,000 And that's just a useful kind of backdrop, which really says that's where we initially need to get to scaling back to. In 'twenty one, we posted a full year EBITDA loss of £600,000 but it really was a tale of two halves of the year.

8:18 So first half of the year was heavily COVID impacted with four months of lockdown, January to April, and that has a that had a big negative impact on TV production. We're really reliant on access to people to go and film. So that impacted on our first half results, which were loss making. But crucially, in that first half, we continue to invest in new business winning hires with the expectation that, that investment would bear fruit in the second half of the year And bear fruit, it did. So second half of the year, we saw revenues increase by 50% to GBP 10,500,000 versus the first half. And we generated an EBITDA profit of GBP $05,000,000 and free cash flow of $05,000,000.

9:09 Gross margins across the whole year were up across the group from 30% to 38.5, and they were driven by the London and Manchester TV margins. And that enabled that division, which is our biggest division, to be profitable for the first time since 2017. And as we go on to the margin story, you see on the left hand side of this chart, over two years, total gross margins across the group have risen from 25% to 38%. As I say, they've been driven by the London and Manchester TV production gross margins, which you can see on the right hand side, rising from just under 25 in 2019 to 37% in 2021.

10:01 And those we've talked about before, but the main driver of that was the investment that we made in post production kits. We improved our workflows, and we've managed to keep a lot of the spend on TV production in house rather than having to go out of house for that. And that, based on 2019 revenues, would be equivalent to a £2,000,000 improvement in profitability. So it really talks to the opportunity when we when we scale the group further. Okay. So let's talk a bit about revenue diversification. It's been a key strategic priority for us, and there were many good firsts in 2021.

10:46 The first commission from Discovery Group, it was something I said, I think, this time last year we wanted to break into. And the really encouraging thing for me is not only that we we diversified well in 2021, but we're now in conversations with Discovery about continuing their spend in 2022. The same as you for UK TV. First time we'd won a series commission from that group, and we're in conversations about the second series. Sky Arts, never spent with with ZINC before, and we're in conversations with Sky and the Adobe partner that we have for that advertiser funded series about the next series. And the same with London Pride who sponsored, our podcast series with Six Nations. So the first four of those, all brand new, all good in 2021, but really encouragingly, we're talking about the next opportunities for 2022 and 2023.

11:41 We've got our first Amazon audible commission in 2021. We are underway and being paid in, development phase with one of the big global experts. And we've got our first brand work in 2021, and, again, conversations continuing opportunities for this year and the same with channel five. So, you know, you know, we don't just wanna break into new markets. We wanna break into new markets and then build in those markets, and we are doing that with all of these opportunities that we've announced in 2021 for this year and for next year. In terms of the new businesses, we need both the diversification, but, of course, the diversification also allows the growth opportunity to expand. Our new businesses, which were launched in COVID, really, are performing very well. These are businesses launched in the late twenty twenty and 2021.

12:32 And collectively, they booked into last year 5,000,000, of revenue, so about 30% of the turnover. They've booked more than that because they're still booking into this year, but it gives an illustration of businesses that we can launch and how fast they can grow. And these there's no reason why these businesses can't continue to be expanded, and we want to make more incremental investments. So this is a good illustration of the organic growth story that we intend to deliver over the coming years. Modest hundreds of thousands of pounds of investment can deliver decent 7 figure sums over an eighteen month period. Some will grow faster, some will grow slower, but we wanna be making those sorts of investments this year again and next year and letting the cumulative impact of this expansion really drive organic growth over the years ahead. So it is feasible for us to invest £500,000 in a year and see $3.04, £5,000,000 the following eighteen months to two years. And if we can do that over the next two or three years, we're on a very exciting organic growth journey.

13:44 New talent. I'm very aware that some of our, historical investors may not recognize some of the new talent we've brought in. And we are investing ahead of the revenue and ahead of the profitability quite deliberately on bringing lots of new talent into our group. So at the center of the picture is Tanya Shaw, joined from Shine at the MD of Shine for the last six or seven years. Shine made MasterChef. She was also a commissioning editor at Channel four, program, editor at BBC as well. So lots of good industry relationships. A big player. A big player that has joined ZINC because she also believes in the story that we all believe in and the growth opportunity. Mike Christie, another one, as you look at the screen top right, one of the directors who helped produce the opening ceremony of London twenty twelve has also worked with Apple, has worked with Netflix, works across outdoor and events, live television, very new spaces for ZINC, was the architect behind our red Red Bull and our Lego wins, launched Super Collider less than a year ago that is already booking new business into ZINC.

14:55 Dom de Turble, bottom left hand corner, is the architect behind the AFP project that happened last year. Tom Edwards, bottom right hand corner, the architect behind the vast improvement in our relationship with Channel five and our biggest ever commission from them. And then top left, Lana, who's just joined us as a program maker from series like SAS, Who Dares Wins, and others, taking us into a more entertainment driven, factual entertainment driven space. All of these hires, certainly four of the five, are in the last twelve months. They have booked revenue already. These are investments last year and this year that will play out next year and the year after. In terms of our TV business, it's a very different looking television company than we had in 2019.

15:44 Just some of the labels in front of you. The heritage of ZINC, we're still proud of, and we still make good, award winning, serious television. The likes of what Brooke Lapping does for ITV with their, masthead nine eleven documentary. But now we've broadened the business into popular fashion with red sauce, into the nations in Northern Ireland and Scotland with TURN, into new markets with brands and advertisers with Super Collider, and we've just launched Rex in the last month. So it's a very modern, very different looking set of television labels that we now trade on in TV. In ZINC communicate, this is the commercial content production division of ZINC, where we produce in these four areas of branded entertainment, audio, building on our heritage in radio, but moving into the new world of podcasting, corporate films, and digital publishing. And it's a critical part of the group.

16:43 The two bars, okay, it's a small start. But, again, this is good illustration of organic investment. Modest hundreds of thousands of pounds, we can grow businesses to the millions of pounds. In our previous life, we started a business in this space with nothing and grew it to 12,000,000 over our ten year tenure. We're eighteen months in. 1.5 to three, three to four plus, maybe five, that would be a great trajectory. These this business, the whole of the ZINC communicate side, can definitely grow at rapid, rapid pace over the next two or three years, and we expect it to. And it delivers margins that are typically twice what TV is. It doesn't have to get big to make a big impact in time on the bottom line, but we're investing ahead of that growth at the moment.

17:33 To the pipeline. So this is the 13,000,000 that is currently booked to deliver in into our accounts this year. And then we have this further eight that is highly advanced that could also and should also deliver into this year. And then there's a whole load of other revenue that could do this in earlier conversations. Now it never you know, it'd be lovely if it all smoothly flowed up the pipeline as it does. Of course, it doesn't. It comes in leaps and bounds and bumpiness, and that is the nature of the size and scale of business we are at the moment. But as I sit here, I'm confident of growth this year. How much growth? Still unclear at this stage, but good growth, and that pipeline supports that narrative. So few of our program highlights.

18:21 This plays back to what I just said about our labels. Let's look at the t some of the TV production highlights. So ZINC has always had fantastic reputation for big, important television programs. So in the likes of the BBC's annual report or ITV's annual report or Channel four's annual report, you'll often see a ZINC program as one of their big reputational moments. That might be Ian Wright's amazing documentary. It was picked up everywhere, but it was a single one off. It might be ITV's big project for 09/11, or the BBC's for Trump. You will see a lot of our clients hang their reputation of that quality program making from ZINC, but it's not enough to drive a business business profit. We also need good, regular returnable series.

19:13 So let's look at the other series we made in 2021. You'll note on here that these are big volume series. Bargain Love in Britain is sung for channel five, forty hours. Emergency Helimedix, it's in its fifth season for channel four, another ten hours. And then a new talent led series for BBC Scotland. This is just three of 13 big returning series that we had last year and going into this year. It's that balance between reputation and revenue growth that we need to get in the new world, and we are getting and we're seeing signs of it in our results from last year. And then you layer on top of that brand entertainment work. This is brand music. The Human Pinball Show for Red Bull. Premium TV budget, but distributed on social and on Red Bull TV.

20:07 My greatest shot for Sky started in ZINC MEDIA with an idea with a brand and an agency. It was paired with an idea we have in one of our television businesses, and once commissioned by the channel, was made by Tern in Scotland. I think that's an excellent example of the NewZINC opening up in new markets because it's working as one cohesive unit. And then the Lego City stunts campaign. Very simple idea. Kids build highly imaginative Lego models using this new range of toys, and we turn it into real life. And we supply the marketing assets and distribute it socially and experientially in places like the Arndale Centre in Manchester or or Westfield in London.

20:54 And it's a good illustration of why a brand, an agency would come to ZINC because of its credibility in television, its new talent that we bought in in the last few years, and it opens up a brand new market for us in television content that's for an advertiser. So here's a little clip of that Lego City campaign. We are BOLLOG FMX, and we are a freestyle motocross team. And we've been brought here by the LEGO Group to recreate the in been been past. Been in in boys. Wow.

21:47 We've So sick. That definitely is big. Oh. Look at that. Yeah. Oh. That looks like there's four bikes. They must be cool. Even my kids think I now do something vaguely cool, and they use language I don't understand. So to the next highlight of the year, audio. And, again, this is a good illustration for me of where old ZINC meets music.

22:33 So ZINC has always had fantastic reputation in radio production, typically for BBC four,

22:41 World Service, but now into podcasting. Both commissioned podcasting from Amazon and advertiser funded podcasting. So Fuller's London Pride sponsored our podcast hosted by Laurence Delavio on the six nations. It's a perfect illustration of music building on the heritage and reputation the company inherited three years ago. Little bit on the market. Now I would I really would invite you to one of our capital markets days because we go into much more detail on this sort of information, and we show a lot of content. And you'll get a full full range of our TV and ZINC MUNICA production on our Capital Markets Day. But just two slides that, summarize a little bit of what's going on in the marketplace.

23:29 So we've commissioned this bespoke research, at the back end of last year to really help us refine our our strategy in TV. Total spend on original commissioning from The UK in 2019, so this is pre COVID, just under 5,000,000,000. That spend in The UK on original content commissioning in television. Now that includes dramas and sport, which is a massive spend, entertainment, so the Strictlys and The Voice, x factors and so forth, news and current affairs, and fact check. ZINC is currently in the factual space, which is about 20% of the market, so about a billion. Of that, the largest spenders remain the PSPs, public service broadcasters, BBC, ITV, channel four, channel five, and the nations in the regions where we have Turn TV in Scotland and Northern Ireland.

24:26 Then it's international, typically the big US channels, then the multichannel networks, the third largest spender of original content. Previously, untapped. Previously, none ZINC companies didn't operate in that market at all. And then the SVODs, small number of commissions at the moment from a small number of indies. It gives you a sense of the size of the market in fact to where we reside. So the question is, what are we doing about those four areas, those four buyers? With the PSBs, we've refined our strategy, refocused on the BBC, and really had to think about daytime and long long running series. And I would give you the case study of our win we announced, I think it was in February, for the new BBC one show on Sunday mornings, which will follow the old Andrew Marsh show. It's called Sunday Morning Live, takes us into a new space of regular live topical programming.

25:28 It comes from Turn TV and a partner called Green Ink in Northern Ireland, and is a real moment for us as we get long term visibility because the nice thing about these public tenders and when you win these contracts is that they're multiyear. And shows like this can run for years and years and years. Getting them is hard. We made it a strategic priority, and we've delivered on that in this most recent announcements. Channel four remains a priority. We underperform against the channel four spend in the market. So Tanya came, comes to us having worked at channel four. Lana has made lots of channel four programs. So I'm confident that our capabilities have improved there, and we're doing well with channel five. The international market, second biggest, very strong for ZINC. Prior to COVID, about 30% of TV

26:17 turnover, but all but dried up in COVID as we couldn't go anywhere, and the whole globe obviously shut down in content terms. So the strategy is to build back. I feel we've got the right people. And as that market opens up this year and next, we should expect to see our revenues recover. So during COVID, we prioritized The UK multichannels because it was a market we weren't in, but it was a market we could break into during COVID. And we've done it. So first ever Discovery Group Commission for Really, first ever UK TV Commission for Dave, and first ever Commission for Sky Arts, and all capable of returning. And then there's the esports. Not been in this market in any of the big players, some of the smaller players, like Love Nature, but not the big players. So we are, you know, actively engaged and in development with, one of the big players and talking to all the big players.

27:08 And then there's the market outside television. Does it communicate content market? The one for Red Bull, one for Lego, one for Sky, and for Adobe.

27:17 And we're exploring opportunities to expand there, through both organic growth and acquisition growth. So what's our future look like? What's the investment case? This is an illustration of this slide. You know, we're we're talking a minute about forecasting where we are in our journey there. But this is an illustration of this of the importance of scale. We are very small at the moment. So Will and I have very few levers to pull if things blow if the wind blows against us for a month or two or longer.

27:51 And our experience of ITN told us that we really need we need to get back to that 30,000,000 plus, and then we need get 50 plus. Because then we have we have many more levers to pull to iron out the natural peaks and troughs of what is always a fairly bumpy commissioning cycle in television. So communicate is part of that. That will help. Revenue diversification is part of that, but it's really now gonna be all about scale. So in the short term, we need to get back to the 30,000,000 mark, and we're investing ahead of that now. And we need to scale towards 50 and then towards 70. And you can see just from the illustration that the benefits on EBITDA and cash flow, when you get to that sort of scale, really starts to kick in. And scale will come from organic growth, in which I hope I've given you evidence that it's working, and we intend to do more, and acquisition growth. We need to do both of those in the years ahead, and we are actively involved in conversations about both.

28:49 Our market cap is part of our toolkit that will help us to do both of these things. And our share price has started to normalize at around one times turnover. It started to respond with the story that we've been telling over the last two or three years. Liquidity clearly remains one of our challenges, but there is significant headroom opportunity for investors and us included to see the value creation opportunity. Because if look at our share price over the last five to ten years, you'll see two things. One, a fairly depressing graph, and if you're an optimist, lots of opportunity. And I'll just say it publicly because it's in our in our accounts last year and the year before. I have personally invested nearly £120,000 of my money into this organization along with other directors is is a significant amount. I think it's the most of any of the previous CEOs here because I believe that's what we're here, and that's one of our opportunities.

29:47 So, obviously, that's outside of of stock options and and share and options and so forth. So there's a good story ahead. The shareholder register is really strong for a business of our size. It's got some really well respected heavyweight institutional investors, all of whom supported the journey over the last three years. And they want to see the scale and the progress continue over the next three to five and beyond. So what I find fascinating about the competition we have is they're very, very supportive. They are able to back our growth trajectory and the investments we need to make. And their horizon the question they ask me is, where are gonna be in three and five years? Interested in the short term, but more interested in the three to five year story. And there are lots of new investors who are following ZINC and who will be joining ZINC in the years ahead. So we are in a good place, to be able to work as a as a team, all aligned, investors, management, and our employees and our clients to grow the content story through ZINC.

30:52 So what does the next twelve months look like? Well, I would say this is a sort of good summary. Year on year growth in revenue, the pipeline gives us the confidence for that.

31:05 Continued diversification. We are targeting these new channels. We're targeting new brands and new markets, and also repeat business from those we broke in with last year in the last year or eighteen months.

31:18 Hoping to see international TV return too. We're we don't need to change anything our side, to anticipate that and to respond to that, so that should open up as the rest of the world, comes through in content creating requirements. Double digit growth in ZINC communicate is on the cards. All four of the businesses we're in have the capacity to accelerate. They won't all accelerate. Some will go faster than others, and we'll adapt our investment according to the opportunity, but I'd expect double digit growth in ZINC communicate. We're gonna make more hires. We've announced one with Lana and Rex. We've got more in the pipeline. And then it's drive drive for scale. So scale, scale, and scale are on our minds in the year ahead, more organic investment, and where we see opportunity, acquisition as well to get this group to the level that we all want it to be, share price the same, the investment and return. And, again, just to give a bit of feedback from our current investors who said this week, it's just invest for the growth, Invest for the future.

32:17 That's that's the mantra we're on as we go through this year. So that's our story. Let's let's open up and see where the conversation takes us. That's perfect. Thank you very much for your presentation today. Ladies and gentlemen, please do continue to submit your questions using the q and a tab just situated on the top right hand corner of your screen. But just while the company take a few moments to view those questions submitted today, I'd like to remind you that recording of this presentation along with a copy of the slides and the published q and a could be accessed via investor dashboard. Mark, Will, as you can see, we received a number of pre submitted questions from investors, and I wanted to start off the q and a with these. The first one reads as follows. Why do you think your share price has risen in recent months given there isn't a forecast in the market? Because I think, I hope, and I hope, I think the market evidence is this, that we're communicating our story consistently, consistently, clearly via all the tools available to us. And I do urge you to follow our website and our social feeds with our RNS, Viadese, IMC meetings, and via singers and other brokers, and by our I IFC who we've appointed to help tell our story as well. So I think I think the story is good.

33:30 I think it's clear and now evidenced, increasingly evidenced. But, also, we've worked very hard with our brokers and our market makers to keep them aware of where we're going and what we're doing. And, you know, the spread was too wide. Volumes are still low. I have had investors complaining that they haven't been able to place 10 k or 30 k or 50 k and people wanting to. So we've addressed some of that with some larger volumes. We've addressed the spread issue that is helping. So it's it's all of these it's all of these tools. On the issue of no forecast, the thing with the I think there's enough evidence and information in the market to make a well informed choice about the investable opportunity with ZINC and the journey it's on.

34:22 And, arguably, actually, our share price growth indicates that there's enough evidence for that. We want to put a forecast out because there are some, investors who, without one, they simply can't invest in ZINC even though they are minded to. So that is about timing. And there are two things playing on my mind. One is the scale we're currently at. I'll feel much more confident with another 5,000,000, another 10,000,000 when we're getting back to the sort of levels that we were prior to COVID. It's still small at 30,000,000. You have very few levers. At the moment, we've got virtually none. If if if if if at a twenty, twenty five million level, a few things blow against us, a forecast can be blown away too easily. And that would undo quite a lot of the hard work. The other is our clients. And, actually, even if we manage that issue, the clients I've got a couple of clients who said to me that they were expecting to start business with us in January, and they've delayed it till May. And they're international clients, actually, because they're still not they're still not out of COVID in the way that perhaps The UK is.

35:24 So until that starts to get better, which could be only a matter of months away, but it could take longer, I think I don't I don't see the need to to get too ahead of ourselves here. We know the direction of travel on. We've evidenced it. Share prices caught up with the story, and most investors have got enough confidence in where this business is going without, but we want to do. That's perfect. We've got another one here that relates to COVID and reads as follows. Is COVID still impacting you at all, or do you think the the market is returning back to normal? It's returning back to normal, and it's still impacting us. So both of those things are true. Current productions can we put revenue based on making the programs, based on activity.

36:10 And current productions still get delayed by a couple of weeks, sometimes longer, sometimes a couple of months because too many of the crew go down with COVID or the director goes down with COVID or the commissioner can't view the cuts, so they're not around for a couple of weeks. We had four of our business winning team, you know, off in the last quarter. Two commissioners are currently off, so can't deliver back the feedback that we need. So productions can get delayed. Now that's that's gonna be the case for a while. It's it's different for us for anybody else. We just gotta manage it. The difference is we're we're still relatively small. So small impacts make a big difference, and the international market is the challenge. Until The US and and the Far East really get more confident, some of our international business is gonna continue to be sluggish. And it was 30% of our turnover prior to COVID. So I know. I'm not complaining about it. We've plenty we can be getting on with, plenty of diversification, plenty of growth.

37:07 But, yeah, it's it's still an issue operationally and in the market, but it's getting less with every month. So it'll it'll be out we'll be out of woods by by the end of the year. That's perfect. We have another one here relating to channel four and reads as follows. What do you think the impact of channels for prioritization will be on ZINC? Well, no. An awful lot by the end of today, which is in coincidental in timing. So if you don't know, there's a white paper. The government are publishing their white paper on on the future of media and broadcasting in this country. So it contains a lot more than channel four's privatization that is out. It's been well leaked overnight, so you can read about both channel four and the implications for BBC and other PSBs. So I see opportunity. Mostly, there is some risk, but I think for ZINC companies, more opportunity than risk.

37:56 One of the crucial elements is going to be the remit and the regulation that comes with a new any new privatization of channel four. They currently commission all of their programs from the open market. And in order for privatization to happen, there will have to be some degree of in house production. Now they're talking about up to 75%, which might at first reading freak everybody out. But, actually, that's no different to what is currently allowed by ITV and by channel five anyway. So from ZINC's perspective, if if if if channel four becomes more aligned with channel five and with ITV, given where we are and our growth opportunities and our small share, I mean, we do more business with channel five than channel four. So maybe that's what we should take from this.

38:46 If we can do that with channel five and they've got the same ownership structure and they're privately owned and they've got the same, regulatory requirements, channel four is a growth opportunity for us. Thank you. We have another one here about Netflix recent issues, and it reads as follows. What's the likely impact on ZINC of Netflix recent issues with declining subscribers? Well, if if subs if their if their subscribers are declining, they're gonna have to do two things in my view. They're probably gonna look at some of their commercial model and go, do we need do they need to find other ways of allowing customers to join the Netflix story? At moment, it's subscription, and they're talking about whether they need to modify that, I. Offer a cheaper subscription with a degree of advertising funding as well.

39:37 So they'll probably look at that. They need to be able to grow their their commissioner their subscriber base. From program making point of view, content is their differentiator. Content is what they they lure you and I with as viewers. So they're gonna need more original content. And what they're increasingly doing is making that market specific. So they're gonna need more content, original content for The UK and Europe markets. So I think, I believe, opportunity for a company like ZINC that is a pure play content creator because companies like Netflix need to differentiate through content, and we are a pure play content creator.

40:25 Thank you. We have another one here about an article on Master Investor, and it reads as follows. I've read an article on Master Investor about ZINC, which mentions significant tax losses ZINC had accumulated over the years. Can you tell us how much these are? Will can. Yep. So we've got about it's around 25,000,000 of tax losses. So, therefore, we've got a significant tax asset. It's about 5,000,000, and that's not reflected on the group's balance sheet. Thank you. Moving on to the next one that reads as follows. On your current cost basis, how scalable is the company? Hey. What? I'll take this one. So so I think the great thing about ZINC's business model is that once you got the core infrastructure, the edit suites, production kit, back office services in place, which we now do, the business can easily be scaled. So investing in business winning resource can deliver significant revenue and gross profit without actually adding a significant amount of overheads.

41:27 And that's because the majority of our costs are variable. So when we go and produce a TV show, a lot of that resource, a lot of the costs are for external costs. They're freelancers in particular. And that means that we can scale from 20,000,000 revenue to 30,000,000 and beyond by investing modestly and by taking less risk arguably than in other industries. And I'd say the only kind of constraint to how fast we can scale in this way is availability of of cash. The investments to scale typically take one, two years to be profitable. And, of course, hiring new business when it's you know, not all of those are going to to come off, so we need a portfolio approach to kind of placing sufficient investments in the right areas, but that's absolutely what we are doing and and then looking to do more of as well, of course, as as looking at potential acquisitions along the way. Yeah. And I just add that we have the means to do it now. You know? We've got good good balance sheet, good cash reserves, so we're looking at these things as we speak.

42:36 Thank you. And every you have touched on this question already, but this one reads as follows. I've tried to buy ZINC shares in the last six months and cannot get hold of of any decent volume. Why is this? Well, it's it's it's the byproduct of our very strong supportive shareholder base who aren't looking to sell because they, like me, believe the future is good. So there's not a lot of volume, certainly to buy in at at the sort of, you know, decent levels, $50,100 $100 kind of levels. But we know a lot of investors are watching. I I find it very helpful when investors contact me if they're struggling because it gives me a sense of what's going on in the market. So I do like investors to contact me when they've got issues like this coming up, and then we can engage the conversation and and try and make all parties work to drive the share price up.

43:27 Liquidity will always be a challenge at the moment, but it's getting better. And we have a plan to make it get better in the future, working with all our partners, including our largest shareholders. Thank you. Moving on, we have a question relating to margins, and this reads as follows. Your gross margin improvements have been very impressive. Are you expecting to maintain margins at this level going forward? So I'll take that one. I think it also relates to the question that has come through. Maybe it's disappeared. There's another one on margins. So the answer is that overall, we expect to maintain gross margins around the current levels over the medium term. We'd expect them to reduce slightly in the short term.

44:16 And there are kind of three main elements that are impacting margins. You got the underlying TV production margins, which we've talked about, particularly in London TV, over 37% in 2021, which are well above industry average. And we'd expect them to come down a little going forward as we move into new markets, albeit we'd expect them to still remain above the industry average. So we expect them to be in the 33% to 35% range. Secondly, we may decide to produce some TV shows at a lower margin in order to get into new areas, which will help to scale the business in the long term. And an example of that is this Sunday morning live production that Mark mentioned earlier, where we're partnering with another company to get into this live space.

45:11 But in order to win a multimillion pound contract over two years, and that'll allow us to tender for more contracts of a similar ilk going forward. And the third element to margins is the ZINC communicate business, which we're expecting to grow significantly in the coming years. And crucially, its margins are typically a lot higher than in TV. So the blend of those three elements together means as we scale, probably expect a little softening of the margins over the next year or two, but we would expect them to settle back at around the current margins overall over the medium term. Thank you. And following on on the topic of margins, there's another one that reads as follows. Given the gross margins are excellent, why is the EBITDA not higher?

46:08 The answer simply is that we are in an investing for growth phase. We're not managing at the moment for maximum profit. I think there are I mean, I I talk internally here and with our board around three stages of a sort of business life cycle. You can have a managing for growth phase, a managing for profit phase, and manage decline. And you can have all three, actually, at the same time. They're not mutually exclusive to each other across a portfolio group. All three can be happening in different parts of group at any one time. I think most businesses in most sectors have been in a managed decline cycle for two years because of COVID. So everyone's been going, well, we we know our business is gonna shrink a bit. How do we manage for that? But keep an eye on the growth opportunity as it comes back. So you're constantly wrestling with these three areas.

47:04 In that sort of managed for decline managed decline cycle, you're gonna cut costs. You're gonna streamline your portfolio, all the things that we did. But then you need to look at your investments depending on the cycle of of coming out of that. So we are now in the managing for growth phase for the vast majority of our businesses looking at a three to five year horizon. We could have cut our costs more in the first half of last year, closer to where we did in the first half of twenty twenty, but we didn't. So the losses were higher. But that was a calculated decision both for the second half of last year, for this year, and for next year because we saw growth in h two, which vindicates the decision. We'll see growth this year, and we wanna keep that three to five year horizon on our minds. So the reason that we're not we could have delivered a bigger EBITDA number, but we're trying to we're trying to build this business because, actually, it's about scale. Everything comes back to that that message of scale.

48:03 This year, next year, and year beyond, we need to get this business scaling so we can really leverage the opportunity. Thank you very much. That concludes the presubmitted questions. As you can see, we received a number of questions throughout the stage presentation. And thank you to all investors for submit for submitting their questions. If I just may, I might read out the following. As you are now growing at real pace with an exciting pipeline, how easy is it to attract and retain new talent to the ZINC group? It's it's not easy. It's getting it's getting better. I think we've demonstrated that. I I put a talent slide in there to show the people who've joined this group. Everybody I mean, we know the history of the group. It's not an easy sell. It wasn't a sell to me to get me to join. You've gotta you've gotta believe that this company is an excellent vehicle for content creating growth. Gotta believe the market is there. Gotta believe you can attract the right talent, and you gotta believe you can got the investments to do it. And I think have all of those things. So we are attracting bigger talent year on year and better talent year on year, and that it's it's a people business. We've gotta do the same.

49:08 So not easy. It will get easier, but we're making good progress. Thank you. The next one reads as follows. Great to see the organic growth, but as you get bigger, what's your views on acquisitions to accelerate the growth for the company? We we need to do some at the right time. We have the means to do them. So we've got options, but it needs to be the right the right sort of thing. So the right sort of things would I mean, that's easy to say, isn't it? Let me give you a sense. What's the right sort of thing? I would say something that accelerates businesses where we have a foothold in at the moment where we have perhaps invested organically and we see accelerating growth, but we really want to double down. That would be an area. That could be in TV or in communicate.

49:57 Equally, areas which if we invest it organically, will either take a lot of time or come with arguably too much risk. Risk. So an acquisition would help there. So if if we wanted to go into sport or drama or entertainment, perhaps an acquisition is the way to properly accelerate into a new space rather than organically. There's plenty of places we can do organically within our within our core. I would I would think those two criteria are on my mind when it comes to it, but it's gotta be right, and we have options about how we do it. That's perfect. Thank you. The next one reads as follows. What effect does inflation have on ZINC?

50:44 Will, do you want to try it? Yeah. So, I mean, I think the the the the good thing is that, I mean, it it has some impact, but it but a lot of the inflationary costs that we're seeing, whether it is related to our overheads, which are predominantly staff, exec producers, producers, editors, back office staff, or cost of sale, which are a lot of kind of freelance costs the So when the broadcaster when we're agreeing a budget with the broadcaster for each of those roles, whether it relates to someone that we employ internally or we go and find as a external freelancer, the broadcaster has a set rate in those budgets, and inflation will be reflected, in that. So in essence, a lot of that those costs are passed on to our customers.

51:57 Thank you. The next one reads as follows. What do you see as the greatest risk to execution of your pipeline? Greatest risk. Well, I think it's ultimately, it's it's the decision of the broadcasters. So the risk is that something changes in the landscape, macro level risk to any of our buyers. You know, change of ownership presents risk. We talk about that. It presents more opportunity, I think. Speed of conversion is always the challenge. We've got enough business. Speed of conversion has been dominated mostly by the market, but the the the new businesses are in faster decision making markets. So ZINC communicate, the pipeline conversion can be very fast. I mean, it can it can arrive as a prospect in in one week and convert within a month.

52:53 In certain channels, the speed of conversion is is it varies. So channel five are typically a much faster commissioning organization, so you wanna have a a degree of your portfolio with them. Channel four is typically the slowest. And the and the international markets are really very hard to predict at the moment for reasons I've said. So those are some of the issues we wrestle with with the pipeline in terms of managing the risk and the opportunity. Thank you very much. The next one reads as follows. What's the normal timeline in converting business in the pipeline? Oh, I think I might have answered that. The the it varies by broadcaster and by market. So short in ZINC communicate, shortest in television in channel five, longest in channel four, and and size of the commission does make a difference. So a a very large multimillion pound international commission, typically where there can be multiple funders.

53:52 That can be and those projects can be nine months to a year. They can be nine months to eighteen months in some cases. Factual tends to be a bit quicker than drama. Drama's years often, you know, one or two years. So factual is quicker than drama, and it varies by client, and it varies by market. So that's why that's why diversification has been our watchword for the first three years, and scale is now our watchword for the next. Mark, Will, I think you've just all those questions you can from investors today. And, of course, the company will review all questions to us today and publish these responses on the investment company platform. But just before redirecting investors to provide you with their feedback, which I know is particularly important to the company, Please could I ask for a few closing comments to wrap up with? Thank you. I would like to invite investors to come meet us if you haven't already. So anytime, get in contact with me and come to our one of our capital markets days.

54:46 That's that's one thing I wanted to to land with everybody. And feedback is is important, and it's a partnership between us, our staff, our investors, and our clients. In terms of summary points, I mean, I I would I would pull us back to what do we what do think the year ahead is, and I think it's growth. It's revenue growth. It's more diversification. It's double digit growth in ZINC MUNICATE. It's new hires, and it's scale. And if I haven't said it again, it's scale. So there these are there's also on our mind as we go into the year ahead. It's a it's a big opportunity for us. Mark, Will, thank you very much for updating investors today. Can I please ask investors not to close this session as you now be automatically redirected for the opportunity to provide your feedback in order that the management team could better understand your views and expectations?

55:33 This will only take a few minutes to complete, but I'm sure it'll be greatly valued by the company. On behalf of management team of ZINC MEDIA GROUP PLC, we'd like to thank you for attending today's presentation, and good morning to you all. Thanks all. K.