Zinc Media Group (LSE:ZIN) — Update on recent developments including the recent successful fund raise

0:02 Good morning, ladies and gentlemen, and welcome to the ZINC Media Group PLC investor presentation. Throughout this presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via the Q and A tab situated on the right hand corner of your screen. Just simply type in your question in the box below and press send. Questions are encouraged and could be submitted at any time using the Q and A tab situated on the right hand corner of your screen.

0:29 The company may not be in a position to answer every question it receives during the meeting itself. However, the company review all questions submitted today and publish responses where it is appropriate to do so. These will be available via your investor me company dashboard. I'd also like to remind you that this presentation is being recorded. Before we begin, we'd like to submit the following poll and be grateful if, you could respond. That would be most helpful. I'd now like to hand over to Mark Browning, CEO, and Will Sawyer, CFO of ZINC MEDIA GROUP. Good morning to you. Good morning. Thank you very much indeed. I'm just my screen has slightly changed size, so bear with me one minute. There we go. So I'm Mark Browning. Thanks for sparing us the time. I hope you're all well and COVID proof. So we'll walk you through a short presentation then move on to the Q and A.

1:15 I'll introduce myself more formally in a second. I'm just going to turn my camera off for the benefit of, this section of the presentation. I'll switch it on again as we get to the Q and A so you'll see me disappear, but you'll still be able to hear me. Hopefully that is working fine. So we always have the disclaimer, which we will publish in full on the websites and various places, so you can see that later if you need to. But let me just start by summarising where we're up to on our journey in the transformation of the ZINC MEDIA GROUP. The critical thing, there have been a number of changes that we needed to make the group profitable and to generate cash going forward. And the key thing is those critical changes that were required to do that have now been done. We actually originally planned to complete all those in this calendar year to the end of December. So we completed them by September, slightly earlier ahead of where we originally planned because of COVID particularly.

2:13 But specifically to pull out the key things that have been improved, that have changed, that make the group now set for profitability and cash generation, they're specifically improvement in TV margins. Margins are now 6% higher than when I joined in April, May 2019. So that is a critical part of putting the group in a position where we know it can deliver profitability and cash. That 6% improvement is a big deal. It's a £700,000 swing improvement on like for like revenues. So all things being equal, that one change makes a significant improvement the profitability of the group. That's TV margins.

3:02 There have been a number of marginal businesses or loss making businesses in the group, and we've taken the decision to either close them or significantly restructure them so that those are not carrying a drag into 2021. And that itself again on a like for like basis would be a further £600,000 improvement, all things being equal going into the next year. So margins and the improvements in the businesses that have been dragging the overall performance will mean we're going forward in a much better place. And the critical thing is we've now hired new business winning people, we've restructured the group in certain places and we've hired in new areas, in new markets.

3:50 And those roles are in and developing their pipelines. Market demand is returning. Obviously, we'll come into this in a bit more detail when we talk about the landscape and the market in television and in ZINC communicate. But the key thing is television is being made, Commissioning is happening. Productions are underway. TV on your screens and whether it's, you know, Emmerdale or whether it's Corrie or whether it's Strictly or whether it's one of our programmes, we're now back in production, after the hiatus of the spring and summer and the advertising market. The funding of television, particularly in The UK commercial PSBs is returning

4:26 as well to more normal levels. So pre COVID, this was a group that was nudging £30,000,000 of turnover And due to the changes that I've just outlined there, and I'll go into a bit more detail on, we know now that on a lower revenue, we can actually still be profitable and generate cash. So we're ready to capitalise when the content dam that has been there for the most of twenty twenty one as channels have contracted their spend and as international channels have reviewed what they're going to do. We see more repeats on TV. We're seeing more reruns and so forth. That's because of COVID. When eventually that dam bursts, we're now in a much, much stronger place to capitalise on that. Just a bit about me. It's my third turnaround, if you want to use that phrase,

5:17 And I'll explain a bit about that in a second, but you begin to recognise when a company has got itself in a position where it's ready to exploit better times and we are now in that position. So that's the summary, we'll go into the detail, just a bit about me and a bit about Will. So I was in radio for best part of a decade, I mean, longer than that, but at heart I was there for the best part of a decade. And when I joined, that was a number four radio station in London, a challenger brand looking to become the dominant brand. And I stayed there, as I say, for nearly a decade or so. And eventually, under Chrysalis, that group was sold. Moved into television, ITM and production, stayed there for a decade or so, and established that production division within an existing organisation that created a profit centre for ITN.

6:12 It was a big turnaround. ITN was facing significant headwinds in 2009, losing money and facing insolvency. So it was a big turnaround. It took ten years And the first two or three of those were were naturally the early turnaround moments. But there's a lot of similarities between the ITM production story and the future ZINC story. So I joined ZINC eighteen months ago and set about a similar set of turnaround strategies that we implemented in ITN. Will.

6:45 Hi there. So, I'm Will, I'm CFO and I joined ZINC two years ago. My background is in media and I trained at Deloitte in the media practice there, and I then worked at ITM Productions as Finance Director in tandem with Mark for nine years. And you can see on the right hand side of the slide the ITM Productions growth story, which is really relevant to the ZINC turnaround and growth that we are planning. So at ITM Productions, when we joined, revenue was £8,000,000 we grew it to £50,000,000 You can see the increase in TV hours and the market position.

7:34 And in the last five years, we were there, we were growing the business at an average annual rate of 27%. And importantly, all that growth was generated organically. There's no acquisitions, no external investment because of the type of set of ITN at the time. So Mark and I both joined ZINC to do a very similar thing to what we achieved at ITN Productions. Very similar business, a content creating business, TV, and other non TV content as well. And the difference being with ZINC is that we can grow organically, but also at the right points, we can look to do acquisitions as well. Okay, so let's flip through and bring up to speed on where the group is today.

8:27 In essence, it's a simple group now to understand, it's a content creating business, everything we do is about content creation. And in ZINC TV, we sell to buyers who are typically commissioners. They are employed in sit in broadcasters, in broadcasting organisations with budgets to commission content from us. In ZINC MEDIA the buyers tend to be marketing directors or CMOs or CEOs.

8:56 But we're making televisual content across the business, the content creation group that is ZINC MEDIA GROUP. GROUP In TV, the buyers are a one type of buyer where they have budgets and their commissioners and in ZINC communicate, they typically are CMOs or marketing directors or CEOs. So in TV, we sell under a series of trusted labels and the labels do two things really. They help our buyers navigate the type of content that we make across the factual spectrum, what we call in television, the unscripted spectrum. So we're not in drama, we're not in sport, we're not in shiny floor entertainment programmes yet, but we are in what we call factual or unscripted TV. And our labels help the market understand the type of TV we're in, which I'll come on to.

9:44 In ZINC Communicate, we sell under the ZINC Communicate label in three particular areas. Brand and advertiser led content, where they are the buyer and they're creating content for their brand or their audience. Video marketing solutions, which can be B2B communications, internal communications, corporate comms, video marketing, and then digital content publishing. And the critical thing that we've been working on over the last eighteen months is to make sure that everything we do sits on the same spine, that we share our customers, we share propositions, we're able to create the synergies and the scale. Importantly, when it then gets into production, we're sharing the video production same workflows. So if something is made in ZINC Communicate, it sits on the same workflow as something that's made for BBC One. And that creates the opportunity for scale and for greater margins where you're using the same kit.

10:38 We work with all The UK PSBs. PSBs are public service broadcasters, so BBC one, two, ITV, channel four, channel five. And increasingly working with many of the big international buyers and big international channels as well. So the Nat Geos and the Smithsonian's, HBO's, you can see them on the screen there. In terms of awards, again, ticking back to what attracted me to this job is this is a blue chip company with absolutely best in class television and non television production, as demonstrated by the sort of awards it wins. So, in the last two years, we've not only won a BAFTA, but then this year we've recently been nominated for a BAFTA as well. So, it's right up there in best in class in its sector.

11:27 What of programmes we make? Well, we cover the full range of factual production from the channels that I've just listed, really. So at one end, you'd have low cost, high volume

11:38 television, things like Police Code Zero, the channel five programme that's on the screen there. That is great television in its own right, but it's also part of the overall mixed economy that we're looking for within the media group that ZINC is. So we've got high volume, low cost in some areas, we've got prime time, 09:00 ITV shows. And there's not a lot of indies of the many hundreds that there are in The UK that can boast to regularly have 9PM on ITV. Then there's the reputational programmes, the stuff that really the whole tent hangs on, the stuff that wins those big awards and that everybody recognises are really special in their own right. They rate, but they also bring in the awards. The likes of Cuba and Castro, the likes of Tutankhamun in colour for BBC Four.

12:29 And then there's the bigger international four ks type work of which Wild Tales From The Farm for Love Nature and Sky Nature or most recently our programme for Smithsonian would be one of those where you're getting a very much more premium price per hour. They buy in bulk, get a lot of episodes. They are multimillion pound commissions often in four k or increasingly more demanding. So we've got the whole range of mix of specialist factual. I'll explain a bit more about those in a bit more detail in a second. Then in ZINC Communicate, we've moved ZINC Communicate into new markets over the last eighteen months, two new markets in particular. And the essence of the sell here is that we harness the TV power, the power of TV for brands and their agencies, for media owners, and for rights holders. Across at the moment, three product propositions.

13:22 They're bigger markets than ZINC has been in before, they're markets that we had experience of and built businesses in under the ITN brand when we were there. And we grew our business in that space, in this space from zero to around 15,000,000 by the time we left a decade later. So we know this market, we know this is a synergistic market. It's an important market for television companies to be in because you're able to really sell the sizzle of television for brands, agencies and others who want to tell their stories for their particular stakeholders. So in ZINC MEDIA, in the branded content business, we're selling there for brand entertainment partnerships. So where a brand wants to either attach themselves to a piece of television or create a piece of television in their own right for social distribution or for YouTube or Facebook or wherever it happens to be.

14:17 In short form content, they'll increasingly spend their money engaging consumers on digital first platforms in a way that isn't about selling a product per se, but creating the environment to allow the consumer to have greater empathy, greater engagement with their particular brand or whatnot. And then there's advertiser funded television, where there are slots available, typically channel four, channel five do some, ITV do some, in the commercial POVs and internationally. It's a much bigger part of the American market, where the advertiser themselves will fund the programme that is needed to be made by the channel. And you've got a three way partnership between the production company, the advertiser and the channel. So we have a space now in branded content.

15:04 Video marketing, again, was an area we built up in our previous roles under the ITN label. B2B video marketing, marketing for partners and associations in The UK who need to tell their stories to their members or to their stakeholders. We've got two new clients in the last few months, REBA, which is the Royal Institute of Building Architects and the Association of Decentralised Energy, which we're working with at the moment. And we can build that business up in video marketing. The key thing is it's synergistic with TV. So once you've filmed your production, it comes back, it sits on the same spine, sits on the same workflow, and therefore it creates utilisation of the resource that we've got in the group. So, the slide that we're on is about the transformation plan. So twelve months ago, we put in place and announced a transformation plan, and all the critical elements of that transformation plan are now complete.

16:02 So gross margins is a key one. So TV margins, back in twenty eighteen-nineteen, on TV productions were around 24.5%. And in the last eighteen months, we've increased those by 6%. And on like for like revenues, that's equivalent of $700 of additional margin. The second thing is that we've closed and restructured loss making businesses. So in the year to June 2020, there's $600 of costs, and they represented over 80% of the losses in that year, which are not going to be recurring going forward. And that's because we've closed our CSR business.

16:58 That's the Corporate Social Responsibility business, which we were in, which was really niche and small and was not synergistic with the rest of the TV business. And then our Manchester TV business, which was loss making, we've significantly restructured that. The third thing is we've relocated to a new HQ. And even though we've not been in it as much as we'd like to have been this year, we do have new post production facilities in there, which is helping to drive those TV margins.

17:38 But we've also managed to save money by going to that new HQ. So, we've got savings of another $100 a year on that. As Mark's mentioned, in ZINC Communicate, we've gone into two new markets within that part of the business. The post production investment just mentioned, and then we've got new hires, particularly business winning hires now in place, which means that we're pointing at the right parts of the market, and we've got some big hitters who have come in. And then finally, we've restructured the balance sheet at the beginning of this year. So we made lots of changes to the balance sheet, we got rid of all the preference shares off the balance sheet, we extended the term of the long term debt out to the end of twenty twenty two, And that debt, by the way, is in a sense friendly debt that is held with our two major shareholders.

18:38 It's not bank debt, and those shareholders are very supportive. And then finally, we did a capital reduction, which completed in September, which means that the group now has positive distributable reserves, and means that in the future, it provides the possibility of being able to pay dividends as and when the business is generating sufficient profits.

19:14 The next slide, one second. So in terms of the new hires within ZINC TV, particularly within London, Tom has joined, Tom Edwards, who's in the top left of the screen. He was formerly a BBC Commissioner of Popular Factual Programmes, and is a really big hire for us. And he has been producer or commissioner of some huge factual shows over the years Eat Well for Less, DIY SOS, Wife Swap for Channel four, so he's a big new hire.

20:08 We've got

20:10 Greg Sanderson, who is third along from the left. He was already part of ZINC setup, but has been promoted to be the Managing Director of London TV, and he typically books 3 to £5,000,000 a year. Bottom left, we've got Dominic de Tervill, and he is our Branded Content Director, and he has sold TV, he sold TV rights, distribution, branded content, and he's formerly Sky's Head of Sponsorship. And he was also a branded content director where he's been making branded content as well. And importantly, he also brings the skill set and contacts to be able to help to fund or part fund TV shows as well.

21:02 So we can make content for brands, but he can also help where we're making, say a £2,000,000 show, of which a broadcaster might fund 1 or 1,500,000 of, he can go and find that other 500,000 from brands or from sponsors. And then top right, we've got Katie O'Callaghan, who's our HR Director, and previously the group didn't have any HR resource.

21:31 And then bottom left and one in, we've got Ben Smith, who's recently joined as an executive producer within Manchester, within the newly established Redsource label. So it's just to give a flavour of the new people who are coming in and the direction that we're now taking the business in. This is all part of driving the growth of the business and getting those margins up, because one of the challenges the group has had is that historically, it's operated as small independent TV businesses. And actually, there's an opportunity in television to create better margins and create scale if you use the same infrastructure for all of your television businesses. So in London, that means that the four TV businesses that we've been operating on historically, the groups had historically, now sit on the same workflow.

22:26 So postproduction is one of the ways that you're able to drive margins up and get economies of scale. So that is now in post, and you can see it on the screen there. We've managed to deliver our first four ks project, which is a program called The Curious Life, which was for Smithsonian. It's quite an interesting case study because when we budgeted that program, we still assumed we would need to go out of house for some elements of postproduction. When it came to actually making the program, which aired in the last couple of months, we were able to do everything in house, and therefore, you're able to recover those lines in your budget without spending them with third parties. All helps to improve margins. Another part of the benefit is that across the group, obviously, many of our TV businesses will use voiceovers in different parts of the country, and TURN is another case study for you would use would use London post production companies for their their voice over, sessions. And now they're able to use their own ZINC HQ.

23:24 So, TURN, we're able to use the London office more recently for some of their work too. So all of that helps to eke out margin improvements as we go forward. We're using less freelancers, more in house staff, less out of out of London edit facilities, and more of our own facilities. So that's in place. Let's just talk about the market. Now this slide, in effect, plots the market opportunity. On the vertical axis, we've got price per hour. And you can see there that the price per hour gets very, very high when you get into high cost drama in the top right hand corner. And on the horizontal axis, as I've articulated before, nonscripted TV all the way up to scripted TV. So excluding sport, for the sake of this illustration, the most expensive type of television is high cost drama, where it's scripted TV, and it's got the highest price per hour. So shows like Killing Eve and The Crown, multiple millions of pounds per episode sit in that sort of box.

24:26 ZINC historically has sat in the sort of vanilla colored side. So lower cost television, factual is lower cost than sport or drama. And in in news and current affairs and in religion and in general factual. So the in blue here are some of the shows, the programs that ZINC makes in in factual. So, Reflections of the Key is a is a religious program made out of turn. The BBC Scotland, Beech Grove, similar. Britain's Wildest Weather, Code Zero, Critical Incident, all programs that are in that high volume, low cost kind of bracket. Then in specialist factual and popular factual, we've got programs like Henry VIII and our 09:00

25:07 fighter pilots program, which I referenced earlier, and turn to emergency helicopter medics, for example. All of that stuff is excellent television. What we've tried to do, and this predates us joining, but we've accelerated this over the last eighteen months, is move us to a wider position in the market to diversify our revenues. So factual entertainment is a critical one. Format, reality. We haven't had a huge amount of television in this space historically, and when Will just run through the hires we've made, Tom Edwards, Ben, and co are all new in that space. It's an opportunity for us to accelerate growth in factual entertainment, and we're doing that under the new label of red sauce. So you see on the slide in front of you the labels we operate in each of these markets. And then there's premium factual, big history shows, big science shows, potentially natural history shows, where the price per episode there can be £350,000 per hour, and the price down at religion and current affairs can be £50,000 an hour. So you wanna make sure you have the full spectrum and the full range.

26:10 So with the hires we've made,

26:12 and the moves we've made in the market, we're now able to occupy the green boxes of factual, which gives us the full range. And in time, we can diversify further out of that orange box. But that's the strategy at the moment. Where do we sit in the marketplace? Well, this is a, this is a market snapshot from 2019, and you can see that we're a mid market player. There's lots of gray bars on our visual in front of you. Each of those gray bars represents a production company that tells us a couple of things. It tells us some very, very big players, and the market is dominated by three or four very big players where they're typically drama driven companies or sports driven companies. And then there's a very long tail of lots and lots of small indies. And as a group on the right, we've shown where ZINC MEDIA GROUP sits.

27:01 And this plays to our overall ambition to be a top five club to use a sort of football analogy. There's no reason why other than than trading and getting our market cap up and doing all the things we're doing that we can't become a big player in this space. The market will support it. The opportunity is there, as you can see by the number of players in the market, and we're a mid ranking player with ambitions to move into the top five. So it's all about the long term plan here. We've got the opportunity. We've fixed the short term problems. And I'm incentivised and was incentivised on value creation. There's no question in my mind that we're sitting on a fantastic vehicle for value creation here. It's ultimately why Will and I left a bigger company, a more secure company in many ways, and certainly

27:45 a larger company in turnover to come here because there's the opportunity for really scaling ZINC Media Group is there for the taking. Now COVID hasn't removed the opportunity. All COVID has done is delayed when we're able to really accelerate the plan. So we need to scale, and the market is there for scale in the future. Let's have a look at what's going on in the market. This is some of the more recent evidence that's been coming out. So I'll pull out two or three of these. There's definitely green shoots of recovery now in TV. And as I say, TV is now in production and we've learned how to manage with COVID and we can film under social distancing for as long as we need to. IPV say that they're looking to factual in 2021 to help fill some of the hours that they haven't been able to commission in drama or in sport. Channel four issued their annual report only a couple of weeks ago. They're through the worst, and they're seeing an increase in commissioning spend in 2021, particularly in areas like science and in history, areas we're very strong in.

28:44 BBC Three are increasing their factual budget. We've got a good close relationship with BBC Three, and we have two former BBC commissioners now in our selling team. So we're well placed to continue to work with the BBC. In the SVODs, the SVODs still present really good opportunities for us. We do have ideas in with the Amazons, we have ideas in with Netflix, and they, of course, that in that side of the the marketplace have been less affected by COVID in revenues. In fact, they've seen revenues increase because, obviously we've all been sitting at home with more time on our hands and less holiday money going out the door. People have added an extra subscription or two to their media mix. The SLODs have done fine in terms of revenue. And then there's the multichannel networks, the Skies, the Discoveries and so forth, all seeing good opportunities for content creation. So 2020 has definitely seen spend slow down on original content.

29:40 We've seen a surge in repeats. At some point, as I say, in 2021, that dam will burst. There'll be a rush for new original content. And we're well placed to be able to pick that up. And you can see there that the signs of optimism are returning in the market. What does it look like for us for 2021? Well, look, we haven't got a forecast in the market, and we're not putting one out yet. But we do have an increasingly rigorous approach to our internal systems that give us much greater visibility than the groups had before. We've booked into 2021 already, just over £4,000,000 with a healthy amount of new business. And we we typically plot our our pipelines, according to a series of tests that we apply to each program. And for something to be highly advanced or highly likely, it has to have passed a series of quite rigorous tests. We need to have had, you know, pretty clear signals. We need to have verbal commissions. Potentially, the budget's being done. The channel's just waiting to sign off, it's with business affairs. We've got good visibility of a of a of a slate of business that will come through in 2021.

30:46 Then there's programs that sit where there is expression of interest from a client. Perhaps the budgets are being in the early discussion. A commissioner is engaged with the idea, but maybe the idea needs to go through a more formal commissioning process. There are returning series in this part of our pipeline, the returning series in our highly advanced as well. And that's a critical part of building the business in the future. And our experience tells us that broadly, as things develop here, when something is highly advanced, you may end up winning a significant proportion of that. You'd expect the bulk of that 11,000,000 to land in the coming calendar year. And as things go in that engaged discussion area, you probably expect half of that to fall through at some point in the future. And then there's obviously lots and lots of stuff that goes on in early conversations that eventually works its way through the system. So the headline for me is that there's plenty of activity, plenty of interest, there's plenty of ideas to allow us to deliver on the plan in 2021 once the COVID scenario plays out more fully and confidence returns to the market.

31:55 So as we kind of bring this section to a close, let's just look at the sort of headlines of where we see it. The changes we've made have meant that we're now correctly structured. We've got the right cost base. We're in the right markets for profitability and cash generation once the COVID cloud passes through in 2021. And that's because we've shut or restructured areas of the business that weren't profitable enough or couldn't be profitable enough in 2021. We've improved those margins. We're now operating at levels that mean we can win and make TV profitably, on the production itself rather than just on the secondary revenues. We've got the new hires in place. We've got a full squad of people, who are building their pipelines. We've got ZINC Communicate in the new larger markets. We've got business winners in post, and we're seeing much higher average order values potential coming from clients in that space now.

32:49 The publishing business under ZINC Communique is now performing back at the same level as it was pre COVID, which is outstanding turnaround for that group. And we've got pipelines and financial forecasts that give us the transparency and the visibility that we need to be able to see the future much more clearly. So we've got enough business in the pipelines. We know we can now generate cash and profitability on a lower cost base than previously, and therefore we're set for a much brighter future once the COVID period passes through. So that sort of ends, I think, this section of the presentation. So we can move to some questions and answers and a discussion. That's brilliant. Thank you very much indeed, Mark and Will, and apologies for the brief interruption. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the right hand corner of the screen. But just while the company take a few moments to review investor questions submitted already, I'd like to remind you that a recording of the presentation along with a copy of the slides and the published Q and A will be available from your investor meet company dashboard.

33:53 I'd also like to remind you that your feedback is important to the company. It really does help shape future messaging and give them a great idea of the thoughts of shareholders. And immediately after this presentation has ended, you'll be redirected for the opportunity to provide feedback in order that the company can better understand your views and expectations. Mark, well, obviously, we've had the opportunity to have questions pre submitted, and also we've had a number of questions that have come in during the live event. But I wondered if I could just start off with some of these pre submitted questions, and perhaps if I could ask you to pick these up where it's appropriate for either you or Will. The first question we have is why has zinc historically struggled to be profitable? And how do you propose to turn it around?

34:41 I'm happy to take that one. I think for let me pick out three or four reasons why it struggled historically. Poor margins was one. It's critical that you can make TV at the right level of margins. And that's about eking out half a percent, 1%, an extra 2% every time you do a TV show. So poor margins was one reason why historically it hasn't been able to make profitability, and that has been fixed. Loss making businesses, visibility of loss making businesses have presented a drag certainly for the last couple of years in ZINC communicate. So resolving that means that we can be more confident that going forward, we're not carrying any sort of weight. Not seeing itself as a group and instead operating as a series of small owner managed businesses has meant that the economies of scale haven't been fully realized.

35:40 And I think there's something around and this is these all these points were addressed in our in our four point transformation plan, because the third area we looked at there was cultural and creative renewal. And there's something culturally about needing to be more confident commercially, being confident to talk with clients about margin management, being confident internally that you know how to really drive profitability, being motivated and rewarded on profitability, not just on turnover. And so lots of little things have been changed. So our staff are awarded on profitability and margin management, not by just winning high revenue business. There's no point winning high revenue business if you can't retain profitability from it. So there's been lots of reasons why I think culturally, commercially, operationally, it's struggled to deliver on the profitability. So that's the main four reasons. Thank you, Mark.

36:32 I guess there wouldn't be a presentation without a question around COVID, but the question is what has the impact of COVID been on the business? And I wonder if you can touch on that a little. Well, we've reported this on the last couple of trading updates we've done. Initially, everything stopped. Everything stopped in the whole sector and in other sectors. And we had a lot of production that was paused. We really didn't lose business as a result of COVID. It's all been about timing and delays. So the primary impact of COVID has been on the market, the market's appetite for commissioning. Initially, the impact was on being able to make television, but from the end of the summer and going forward now, even in the new lockdown that we're in, TV is still in production.

37:19 You can see it on your screens all over the place, whether it be live TV or recorded TV, we're able to make TV. So the primary impact has been on the market, and that's that that element is still there. I think we can see as we as I've shown, we can see the green shoots that the recovery is coming. Channels are feeling more confident. ITV's revenues have recovered. Channel four's revenues have recovered. The SFODs have seen an increase in revenue. So we know that the ability for them to commission is there. We know the will is there. The question has been risk and appetite to actually deliver on it, and that has now been resolved. Insurance was a reason why TV production had a degree of hiatus over the summer. That has been resolved. Insurers are now insuring television, and where, in an odd case, they can't insure it, the government have underwritten insurance for television. So all of the blockages that were there have actually been removed.

38:11 And I think now we're really just down to confidence and speed of commissioning. Thank you very much indeed. A question really, I guess, in all shareholders' mind is, I mean, and of course you do, but perhaps you could just elaborate on it. Do you have a plan for creating shareholder value? Yes. And that's what we're here for. That's what Will and I incentivized on. As I said before, it's the reason we joined the group is that we see this as a vehicle for generating value and as well as having a good job in making great TV. The transformation plan that we laid out, the four strategic priorities were all about creating shareholder value. Diversification of revenues, that's critical, both within the TV market and within ZINC communicate. That gives us this scale. It derisks the business from changes in any particular channel or any particular market. The more buyers we are selling to across the spectrum of TV and ZINC communicate, the greater value we will create.

39:12 Profitability and cash generation are the critical thing. Once we get to a position where we've got profitability and cash generation, we will see the value creation start to come through. We know that and I know we're not putting a forecast out, but anyone could do the math on our market cap. We know this is a 25,000,000 to £30,000,000 group. We now know, and I hope we've explained, why it has struggled to generate cash on turnover of 29,000,000 to £30,000,000 And the changes we've made mean that we are now confident it will generate cash on 25,000,000 to £30,000,000 So we now know that the market cap, based on the multiples of how these things work, whether it be on turnover or on EBITDA and cash generation, we can quite simply do the math on a £30,000,000 group that this business has been before and will be again that we now know will generate cash as a result as soon as those two elements start to return and all the changes have made to allow that to happen.

40:15 We know that we're sitting on something that is undervalued at the moment, and therefore the multiples will come through on shareholder value. And of course, at the same time, diversify the revenue, build out the business and then look to scale. And as we scale, we'll do it once we start to see things I pointed out beginning to come through. We've got an opportunity here to be sitting on something that's considerable shareholder value going forward. Perfect. Thank you very much indeed. Will, obviously, I'm mindful that there's a number of questions here that I think probably fall more under your umbrella, and having just mentioned forecasts. The first question here is why are there no forecasts in the market? And when do you anticipate being able to release some? Yes, yes, good question. So we will be releasing a forecast as soon as the COVID related uncertainty has settled down, and we were due to release a forecast earlier this year, just when COVID hit.

41:11 But I think it now makes sense to do so once the market's more settled, when there's more short term visibility. But we absolutely recognise the importance of providing the market with forecasts, which will then give investors the confidence to back the stock, and then we'll improve the share price. So it's certainly something that is on our mind. Perfect. And I think the other one that I felt was perhaps more directed to you is, isn't most of the value of production companies made from selling rights and how much money do you make from those rights? Yeah, and I think this actually also relates to one of the questions that's come in during a presentation about the, you know, what value is there in the PaaS programme library?

41:58 And the answer is that we do make a healthy amount of money from selling our programmes. We've got a large catalogue of programmes, and we've got a distribution deal with the commercial wing of the BBC, BBC Studios, and they're a world renowned distributor of TV content. And just kind of by way of background, we retain the rights to programmes that we make for channels in The UK, and then we can sell those programmes abroad, typically to English speaking territories. And then when we're making programmes for overseas broadcasters, such as a National Geographic Channel, they typically would retain the worldwide rights for those programmes, because they're broadcasting all over the world. They've got their channels in all those territories already.

42:50 But with those kinds of programmes, the budgets are typically $304,100 grand an episode, and then order eight or 10 episodes at a time. So one series will be worth millions of pounds. So the key for us is, first and foremost, that we make a profit on the primary commission, which we now can do given the significant increase in gross margins of programmes. But it's also about having a mixed economy of having some of these large scale international productions, where we've got limited rights, and then The UK productions, where there's an opportunity to retain rights. And we're well into kind of 7 figure sums of kind of distribution revenue. So, it does form a really important part of our revenue mix, particularly because it's then high margin, as the programme's already been made. And then typically, you might have some distributor commission and possibly a little bit of costs to reversion those programmes for particular territories, but they are high margin revenue. So it's also, as we're moving even more into kind of the popular factual or factual entertainment space, that's where typically there are more rights and potentially formats to shows as well, which we're looking to drive distribution

44:20 revenues even higher. Thank you very much indeed, Will. I'm obviously mindful of time, but I'm also mindful that you've received quite a few questions throughout this presentation. We do have a few more pre submitted, but I do think it might be interesting because there is an overlap as I think Will, you just highlighted, as to whether or not you could perhaps start at the top. If I could ask you to read out perhaps the question and perhaps give a response where it's appropriate, that'd be great. Right. Well, there's one here from Bill. Let me read this one out. As a long term shareholder, I've always felt that ZINC was far more interested in making interesting documentaries rather than making money for shareholders. Having increased your TV margins to around 30%, how much more is there to do before this company can start making real money for its shareholders as opposed to its already well rewarded staff?

45:15 Very fair and reasonable question, Bill. So I hope I've answered some of this in what I said so far about changing the culture and changing the reward structure for everybody, focusing the business on profitability and margins rather than the sort of, I mean, there's this thing about the lifestyle business. I'm really aware that the company has been regarded by some as being a bit too much in the lifestyle territory and not really commercially driven enough. And hopefully, I've reassured you that the whole way that the company is now orientated is around driving profitability and cash generation so that we can both reward our staff and invest in growth, but also reward our shareholders and create value generation for them and for us. And that's ultimately why Will and I have joined here.

46:02 So the second part of the question, how much more is there to do before this company can start making real money? Well, all of the building blocks are in place for it to do that. That's what this first phase has been about. We do need the revenues to return. And had Covid not hit us, my experience of doing these for the first for the third time would be we would be in that position now. So it's a question of when, not if, I believe. Once the revenues return, all the building blocks are in place to create that profitability and cash generation. The question here from Abby. Could you give me an idea of the scale of the business, I. E, the number of employees? Also, growth do you see future growth organically or through potential acquisition?

46:47 And the second part of that is easy to answer. That's both. Once we've right sized the business and the revenues are returning, we're kicking off cash and profitability, then we would expect to be able to grow organically as we did at ITN. And we pointed out the growth charts of ITN in its last five years we were there in the ten year period, but we were growing organically from third or fourth year. We would expect to see that and build a plan and we would want to scale the business and we've demonstrated through some of the slides the market is there for that. On the first half of the question, can you give me idea of the scale of the business? There's around 100,120 permanent staff across the group in the various divisions. And then it's got a freelance base as well. So you're often on programmes hiring in freelancers, contractors to deliver expertise that you wouldn't normally have within your staff base, whether it's a director or producer or an editor or whatnot.

47:42 So a fixed sort of or our permanent staff, people who are employed on contracts with us day in day out, is around about 100 across the group, sometimes a bit more, sometimes a bit less. And then there's probably a similar number at any one time doing freelance, depending on the number of programs we've got. And we have bases in London and Manchester, Macclesfield, Belfast, Aberdeen, and Glasgow, and a sort of emerging business, emerging base in Bristol. Nick, has asked a question. What visibility do you have on revenue? What additional resource do you need to get to your target to be a top producer by turnover? Visibility wise, well, the best visibility I've shared with you how we operate in our sort of forecasting and pipelines.

48:29 Visibility is hard. There's no question that visibility is hard. In COVID, it's hard for everybody. I was having a conversation with a channel only last week who had two programs that it thought it was going to put on its schedule disappear. And they're gone for good, but they've been delayed because the particular production company they're working with is struggling to get access to a particular individual or set of individuals because COVID rules have changed somewhere or an individual has been affected by it. So COVID is making it quite tricky to forecast accurately what we're doing, is why we're not putting a forecast out. But we do have we have got enough visibility to be confident that once those unforeseen COVID things disappear, we know we can get back to being the group of twenty five million to 30,000,000 turnover, and we know we can generate cash and profitability.

49:16 In terms of resource, we have the right resource. We have as much resources we need now to get to that first or next phase of delivery. I want to really be focused on profitability and cash generation, and then we will be able to see the market cap improve, and we'll be able to talk about further investments in growth organically or through M and A. Let me just see a few more that are coming in now. Let me just see this one here. What value is perf per annum LIBOR? Think we've answered that one. You eventually this is from Bill again when you eventually provide a profit, will you release it to the market in general as opposed to a few chosen shareholders? If not, could you at least release a broker's consensus figure, as several well run companies often do?

50:02 That's a fair point, Will. Bill would take that back to our broker and do all that. It all relates to the ability to us to put a forecast out, really. And I'm hoping that you're seeing from this that while we've been in crisis mode and crisis management mode as everyone has managing COVID, it's critical for us that we engage all of our shareholder base equally and fairly and give everybody the same opportunities. Now just on that, there might be something in there about the raise. I do want to make it clear that when we did the raise, we did look to offer opportunities for all investors at all levels to enter into the fundraise a couple of weeks ago. It wasn't possible for us to do it for a number of reasons. We wanted to do it through a third party, and they weren't able to help us on this occasion. But I want you to be reassured that it was very, very high on our minds and on the minds of our institutional investors too that we wanted to make sure that everyone contributed, which was one of the reasons why we were pleased that we were able to do it at the past right rate of price so that everybody ultimately had a chance to come in on that raise at that price and still obviously can do so.

51:08 So, I'll take the other point, the sentiment point about, our transparency, with all of you forward with brokers, N plus one, ZINC MEDIA Mark, should I just take a couple of the other questions on the, of them being the, how much money has the new management team invested in the business? So we've, on the board, four out of five of the board have joined in the last two years, and the board have collectively put in over $150 into the business. And what was the next question on Grant's Day? So, David's also asked, what is an achievable EBIT margin in this business?

51:59 So, to me, kind of TV and content creation businesses typically run at an EBIT margin of anywhere between eight and twelve, sometimes up to 15% EBIT margin. And that is what we will be aiming for to be in that range. One follow-up on that. Think someone just picked up on my comment just a minute ago, why didn't we use primary bid? We did look to use primary bid, that'd be a perfectly reasonable question. I mean we asked them to consider it. We wanted them to do it. We couldn't make it work with them. ZINC has did their best, too. So that was the main reason. But be reassured, it was absolutely what we wanted to do. We couldn't pull it off with them.

52:51 Okay. They're the ones that are on there. I think, Mark, by just looking through and scanning the questions that have come in, I think you've probably touched on most, if not all. I don't know if you want to have a quick review. Of course, to investors that have submitted questions, if we have admitted, obviously there is the opportunity to review these post the meeting as well. So Mark, unless there is anything further, perhaps I could ask you to wrap up and then I will redirect investors to give feedback. Well, for falling off the system. I've just gotten a while, spent all my life on these systems, and it hasn't fallen off before. But that's the way it is. So I appreciate your time, interest in our company, support for our company.

53:39 And I hope that we've been able to share with you what we've been up to and where we see it going. And I do genuinely believe that the future in 2021 is considerably better than you've experienced historically, and certainly that has been the case in 2020. So thank you for your time. We'll do more of these as we go forward. Mark, Will, thank you very much. And on behalf of Investment Company, I do apologise if that caused anyone any inconvenience. But hopefully, through the presentation, the Q and A, you now have greater transparency on company itself. Could I please ask investors not to close this session as you'll be automatically redirected for the opportunity to provide feedback? And we'd be very grateful if you could provide feedback to the company. That would be fantastic on its operations and your views on the business itself. If you access this meeting from our website, the feedback page will appear. If you access via the link sent to you by email, then you'll be asked to simply log in and to then provide your feedback.

54:32 On behalf of the management team of ZINC Media PLC, I'd like to thank you very much indeed for attending today's presentation. That now concludes today's session, and good afternoon to you all. Thank you.