Zinc Media Group (LSE:ZIN) — Zinc Media Group plc Interim Results

0:02 Good afternoon sorry, good morning, ladies and gentlemen, and welcome to the ZINC MEDIA GROUP Interim Results Investor Presentation. 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 where appropriate, published responses. These will be available via your Investor Meet company dashboard. I'd also like to remind you that this presentation is being recorded.

0:33 Before we begin, we would like to submit the following poll. And if you give that your kind attention, we'd be very grateful. And I'd now like to hand over to Will Sawyer, CFO and Mark Browning, CEO from ZINC MEDIA. Good morning to you both. Thank you, Mark. Good morning, all. Thank you for joining us. For those that are new to ZINC, welcome along. My name is Mark, Mark Browning. And as Mark said, I'm the CEO of ZINC MEDIA GROUP, and Will Sawyer is our CFO. So thanks for joining us. The way this will run, is that I'm gonna give a short presentation. It's gonna pick out the main headlines, the main themes from our interim results. We'll look ahead to next year to '22, and we'll show some of our latest work as well. And at any point, as Mark says, you can place a question, and we will do our best at the end of this to answer as many as we can.

1:21 So let's get underway with the main headlines, the key performance headlines that summarizes our interims. In simple terms, we expect revenue to be up this year on last year. We expect revenue to be up in the second half of this year against prior year, and we expect to be profitable in the second half of this year. We have had our biggest ever, returning series volume commission, which I will give you some details on in a moment. We announced that last week. Our revenue diversification strategy is going very well. Lots of new clients, are now spending with ZINC. We're still rooted in that heritage position of premium specialist factual, but we are broadening into lots of new markets.

2:11 We have our first advertiser funded series in our parlance AFP, advertiser funded programs, but this is a series. We've got our first discovery commission, our first commercial funded podcasts, our first Amazon Audible series, our first production for Super Collider, which we mentioned last time but couldn't say it was for Red Bull. This is all new business, all new that's come off initiatives launched last year as part of that transformation plan. Cash. Cash has remained good. It's remained good since period end as well. And with revenues now in the second half of the year at levels for profitability, we've got enough cash to continue to strengthen our revenue performing teams. I'll give you a bit more flavor of that. Margins are doing better than we set out two years ago.

3:07 They were the problem for the group, and we set out to improve them by 6%. We're currently tracking 8% higher than when I joined ZINC. That is a significant change. It equates to a significant amount more profit on like for like revenues. Had our revenues stayed at the levels just the levels they were before COVID, that change in its own would have seen a million pounds improvement to the bottom line. The pipeline is strong for next year. Bookings for 2022 are 5,000,000, which is a million ahead of this time last year. We'll pick up on some of that, all of that, as we go through. Just to remind you of the strategic priorities that we updated at the start of this year, these are, these are the critical KPIs, the critical performance indicators that drive this group forward.

4:07 And starting with revenue growth and diversification, both are critical. Revenue growth is going well in the second half of this year, but not yet back to pre COVID levels. It's improving. It's hard. It's the market has been very sluggish during COVID. We need more volume, and it is the single focus, the absolute focus of the group going forward. On diversification, that's going really well. I'm very, very pleased with this. This, diversification into new markets will it will it will ultimately drive the revenue growth as well. And these new businesses are performing well. These are businesses we launched in 2020 in the in the midst of lockdown.

4:54 And collectively now, they have brought into this group over £6,000,000 of previously untapped revenues. This is, in effect, new money for ZINC. Super Collider, which which was the label we launched this year, it's barely six months old, came with a new project for Red Bull. It's just finishing its second production, which we're gonna announce in a few weeks' time, and it's in budget conversations about its its third project, which if that comes off, will be its biggest so far. It launched in May. This was a this was a strategic hire aimed at rapidly accelerating us into a new area, and it's delivering for us. ZINC Communicate is growing fast. I'll expand a little more on ZINC Communicate in a moment, but it's up a 161% in the first half of this year compared to the first half of last year. There's lots of new businesses umbrellaed under ZINC Communicate. It's in new markets of video marketing, branded content, podcasting, all areas now that are booking new revenues for us, and it has the potential to rapidly accelerate in 2022 and beyond.

6:12 We have track record in this space when we were at ITN. I'll give you a case study in a moment. And then there's Red Source. Red Source was brand new this time last year. It's now one over £4,000,000 of new commissions delivering partly into this year, partly into next year. One is from a new client, Dave, part of UK TV, and the other, this very substantial new order from channel five for a 52 episode run of previous IP that the group's had for many years. It is a returning series, but this group has never won it at this sort of scale. Looking at the pipeline for next year. We we've mentioned this each time we talk to you. It is in effect a a probability triangle.

7:01 The more advanced conversations are with our buyers, the higher the probability that that business piece of business converting. So this is an effect, the probability of of revenue coming through. And I say, we're a million ahead of where we were this time last year, but we'd like in all honesty, we wanna be further ahead. A million ahead shows where, you know, the market is recovering, but we'd love to be further ahead, and that is that is absolutely the priority. We've booked nearly 5,000,000 for next year. The critical thing is to look at this highly advanced conversation gate, this £9,000,000 In there, to to qualify for a piece of business to sit that far in our pipeline, it has to have passed certain tests, like it has to be with a broadcaster for sign off or with business affairs for contracting.

7:52 Most work in there has either got a contract or has been verbally commissioned, but not fully signed off. So we hope that a large proportion of that 9,000,000 converts in the next few months and can then begin production in '22. Then there's another, what is it, 34 that could all drop next year. It's sitting in either early discussion or or getting some sort of positive engagement with clients. So the priority for this next quarter, October to December, is to convert as much of that 9,000,000 as we can.

8:24 And in there lie a number of transformational series, actually. There's big opportunity with a major streamer to large talent based, feature docs, and another 7 figure returning series. So we're very hopeful that we will be able to push a lot of that through this side of Christmas. I wanna talk a bit about our structure and our people. It has been an evolving journey. We now have a structure at our senior level. It's pretty simple. But, critically, it's a structure that can scale the group within its within its current structure. We don't need to add more people to this structure to scale this group. We have a simple structure of three managing directors of our TV, two in TV and one is in communicate of our business divisions, And then they are supported by those of us, who work across the whole group, which is my sir myself, Will, the CFO, a new CTO, and HR.

9:29 Perhaps the pertinent point here is not just the simplicity of it, but the fact that six of the 17 have joined in the last three years, and three have joined in the last six months, which means the core leadership is new. They are hungry. They are driven. They are aligned and rewarded in the same way that we all want to see through value creation, of our market cap. And the final piece of this jigsaw was, Tanya Shaw. And Tanya Shaw, is the new MD for London and Manchester TV, which we announced last week.

10:08 This division, the London and Manchester television businesses, is the largest part of our group. It has really good growth potential. And now we have one of the industry's, most respected creative leads running it. Shine TV, those of you who know media well will know of Shine. You'll know it probably as Endymol Shine. But Shine TV was founded by Elizabeth Murlock in 2001, went on to become Endymor Shine after a merger, and Tanya has been the MD of Shine TV for the last six years. So she's very well connected in the TV sector. She's overseen some of some of telly's most lucrative, factual unscripted formats, but she comes from a range of factual. She comes both from specialist factual, but more recently from perhaps the more lucrative popular factual and factual entertainment. So hits like Masterchef and Hunted in the island are the the area that ZINC hasn't been in, wants to get into, and are the most lucrative parts of unscripted. So the hire gives us this springboard to now broaden our offering into the popular factual, factual entertainment space.

11:20 And those formats obviously give greater potential for, IP exploitation, international expansion, and so forth. There's no question that she'll probably bring new talent with her as well. We do have room for a handful of new hires within our plans, which we haven't been able to make during COVID. So now we have Tanya in. We can accelerate that part of our business. So that is a really significant new hire. It's certainly in our market, reposition ZINC further as an exciting new prospect, and there is a lot of chatter around what's been going on at ZINC in the last couple of years and what will now go on now that we have got someone like Tanya to join us. On, the finances on the margin side, they those of you who've who've heard me from my first ever conversation, whether in the company or externally, margins have been the absolute key focus.

12:15 It was probably the biggest single weakness of the group. So the the the number one strategic priority, and we've continued to significantly improve gross margins. They're now eight percentage points higher than they were when I joined two years ago, from 25 and a half percent was the gross margins to 33.6. Will, do you wanna pick up on some of this? Yeah. So that's the the chart on the left is the total group gross margins, which have increased by eight eight percentage points in the last two years. And that's mainly been driven by London and Manchester TV production gross margins, which are on the right. So we've talked about it before where we invested in our own editing facilities eighteen months ago.

13:07 We built 15 edit suites with state of the art kit, which means that we no longer outsource the post production on programs. And we've also improved our workflows, and we also have a focus on margins in our production management team. The management team there are are rewarded on improving those margins. So those production gross margins, as you can see on the right, have have risen from just shy of 25% in 2019 and are expected to be over 32% in the full year this year. And that's even better than we anticipated when we set out the ambition in 2019 and considerably better than achieved by competitors.

13:58 Cash wise, as at the end of June twenty one, cash remained buoyant at 5,500,000, and since then, has remained between 5.2 and 6.2. Now as of today, it's 5.5. Now some of that cash will be used to to fund working capital related to the increase in activity across the group in the coming months. But we are in a good position to be able to do so because of our tight cash management over the last eighteen months or so. We just look at the results for the six months ending June.

14:40 Revenue was flat year on year in both the first half of twenty one and the first half of twenty twenty. They were both significantly impacted by COVID lockdowns. 1,400,000 of revenue that was due to be delivered in the first half of this year was delayed due to the lockdown, and it's now delivering in the second half of the year. And it was really the programs that relied on access that suffered the biggest delays as individuals or institutions were reluctant to allow filming until the vaccine program was sufficiently advanced.

15:22 Revenue mix wise, as a result of launching new businesses within ZINC communicate, revenue from that division has grown and now represents 13% of group revenues versus 5% in the same period last year.

15:41 We posted an adjusted EBITDA loss of 1,100,000, which was driven by the COVID impacted revenues. And that was higher than the prior year as we continue to invest and retain our business winning team in anticipation of the revenue returning in the second half of the year. In terms of the second half of the year, we expect to be profitable in the second half. In full year 2021, we expect an increase in revenue versus 2020, and our balance sheet remains robust to continue to invest and realize the growth ambitions across the group. Okay. So let's let's turn to some of the programs that we've been making.

16:30 I'll give you a flavor of what's been going on. A few examples, I I can't pull them all out, but we did mention some of these at the start of the year. In the first half of the year, there was a lot of ZINC TV on our screens. And, in April, I shared a lot of that with you. They included, the blitz, blitz spirit with Lucy Worsley, which was on BBC one, Trump takes on the world for, again, for the BBC, this time BBC two, and Ian Wright authored documentary for BBC one. Lots there was lots going on, and I gave the full update on that in April. More recently, since we last met, ITV documentary on 09:11. Again, a very premium piece of traditional ZINC TV, core premium factual from The UK's, big broadcasters, the BBC and ITV. ITV now comes to ZINC for their premium docs, big events, national events, global events.

17:23 So very much in the sweet spot of ZINC's traditional space. That program, although, by the way, also selling very well globally. So these programs, even though they are high end serious current affairs driven factual, they do sell very well internationally. And they're I guess, the illustration of the heritage and the credentials of premium documentary making that we're all familiar with. I was certainly familiar with when I joined ZINC. But more recently, we're diversifying beyond those traditional markets. We're now winning business in commercial podcasting. We've done our, lions podcast series since we last met, sponsored by, London Pride, the beer. We've got our Amazon Audible series in production, and most recently, the project with Super Collider from our our newest label. I mentioned it last time. I couldn't say it was who it's for. It was for Red Bull, as you now know, and it's a new client.

18:17 But it's still very much premium TV. In fact, it's it's probably our most premium TV in in terms of price per minute of television. But it it I think the key thing I'm impressing on everybody here is that this is the new world. It trades on our heritage of premium factual, but it's new world television. It's commissioned by a brand, and it's made for social. It's all over YouTube. It's it's showing on Red Bull, Red Bull sites and Red Bull TV. It's very much music, working with clients, trading on our premium content routes, working with YouTube stars, working in podcasting, and creating content for social.

19:02 So I hope that gives you a flavor of how we're seeing traditional ZINC becoming new ZINC. It wouldn't have happened. The whole Red Bull project wouldn't have happened if we hadn't hired Mike Mike Christie in May this year because couldn't win this sort of business. And that's the the there's kind of there's lots of positives around this case study. Super Collider is in a new market. It's in a different space. It's event based telly. It's live action. It's sport. It's commissioned by a brand,

19:34 not a not a traditional TV commissioner. It moves much faster. It's it's idea to to commission in a much shorter period of time, but it's still a very significant premium values. And brands trust Mike to make these these big scale premium event set pieces. This is on the screens. I hope you can see it. You it's the largest free running stage ever built in an enormous hangar in West London, and then raised up to an angle of 45 degrees. It's the height of four houses. The activation then that Red Bull put behind it was really impressive. This these are some screenshots, and online, you can see all this if you go to Red Bull's site. You can see how the game is played.

20:23 You can see the set. You can get interactive with the machinery, and you can see how the project came together. All of this created through Newzinc. It illustrates I think it illustrates the journey we're on. Still winning premium factual documentaries for BBC One and for ITV, but diversifying into this new world of brand and digital first content and into those markets. So I wanna play you a little of the story behind the human pinball, for Red Bull from the new Super Collider in ZINC MEDIA GROUP. So if you could play that, Mark, please. Three, two, one, action. Having this 20 meter toy opens so many doors, and I can continuously flow. We created a place where gravity doesn't work the same.

21:14 We're building the world's biggest pinball machine and patches the ball. You look down and it's like a story building you're gonna fall down. That's one big wall. What you guys have created here is really a world's first and this video is gonna be a unique special piece. Alright. Strap up, Pasha. Go for a ride. How did you like that, guys?

21:41 Three, two, one, click. I remember when first started, was like, I didn't really wanna show people that because I felt it's like a secret power I shouldn't share. Should keep it to myself. But then internet came and obviously Pasha is one of the most famous free runners in the world. He's one of the first athletes who broke out of this free running circle and went into mainstream. He was one of the first athletes to have multiple world championship titles in a row. He's got the biggest social following in the entire sport right now. I feel like I grew up like as an active kid. I used to watch a bunch of Ninja Turtles, Chuck Norris, Jackie Chan, Bruce Lee, all those action stars. And I always wanted to be one of those. I was like And I remember my mom told me like, you know, this is movies, this is no real thing. And I got so sad. I was like, no way.

22:31 So Jackie Chan is not doing all these things for real. I just remember it was a big drama in my life. And then I remember they built this bridge in my town where like they put like this slanted wall as a support for the bridge and me and my friend just started sliding there because it was we thought it the biggest thing ever. And also there was like some extra supports for the bridge where we found out that we can bounce off and I'm just like a little ball doing my little movement in between those obstacles. So why would I be a pinball human? Instead of going to bed, I sometimes take a walk over the bridge. My grandfather says that when things get to be too much, you should remember that nothing is forever.

23:06 To take a step back and always remember to dance. I know Mike Christie, he's he's the man. He filmed like jump Britain and he filmed some biggest parkour documentaries. He he's the man. Like, I feel so lucky with the team. The very first deck that Nico sent me was effectively a kind of parkour course at an angle, a 45 degree angle. And then it was gonna be lifted up by forklift trucks and stacked high on shipping containers. So it was quite crude. It was almost like the pinball idea was kind of an event, and we were kind of filming it. And I knew that wasn't the reality. I knew it was gonna be a film, but initially, it started life like that.

24:04 I could see it had kind of this amazing kind of action potential, but I felt quite strongly it needed a theme because pinball always has a theme. And then we had this kind of crazy long list of ideas. The one that had a gold star next to it was this around the world in 18 moves. The first brainstorms were Pasha and Nico, but also Frosty. Frosty joined in. Frosty is our sports director, which is quite important to have somebody communicate with Pasha and his vision, but also somebody who can communicate movement to our director. Guys, for this shot, this is what's gonna happen. Pasha is falling at the end of fall one. As he falls backwards, this flipper is coming up to catch him. So we're gonna have you stepping off of this and jumping over here, but I'm gonna just push pull the flipper up and I'll just have you sort of jump and slide down and run up the channel. And as you run up the channel, we're gonna change out of Boston lighting. Up, down.

25:09 So, look, you can see there. It's it's I'd love to tell you the premium that it was. I'd probably be breaching client confidentiality. But when you consider what the linear television spends and you see what these global brands spend for premium TV, Why would they now come to ZINC? Because they trust it. They see its heritage in premium television, and now they see it bringing in new people and reinventing itself so that it can make television in the new world of brands and and rights holders and content owners and distributed for social, commissioned by a brand for social. So let's look at some of the other up and coming TV and radio programs. Back in January, those of you who who listened to the presentation then and read our RNS releases, I was prioritizing winning our first discovery commission.

25:59 They were identified. We identified them last year, and the team had very clear projects that I want them to try and move into, and Discovery was one of them. And I said at the time we need to win our first Discovery Commission this year, and we have won our first Discovery Commission. It is now in production for a potential returner series. It's with Turn TV in Scotland. Channel five was a strategic priority, a big customer of mine in my previous role, one that I want to develop into a big buyer from ZINC, and they have just ordered their largest ever series from this group, a whopping 52 episodes of bargain loving Brits in the Sun, which is in production right now, and our first ever commission from UK TV, a new male skewing police series, which will be for Dave, that is in production at the moment as well.

26:49 Just a few of the many things that we've got going on. A little bit on the market. I've only got one slide this time, but this is the latest information from Ofcom. And all the way this works is all the broadcasters have to report their data to Ofcom, and Ofcom pull together what they're spending and what they're commissioning and so forth into an annual report that comes out in August. So it was published in September just a few weeks ago. And it's on the health of the production market, the content market. And prior to COVID, UK content market was thriving and growing year on year at 3,300,000,000. That is the size of The UK's production market in our economy. So it's a very investable market.

27:35 Pre COVID, there's every every reason to believe that the growth will return post COVID. We do you know, we live in a in a content a content hungry world. It's it's the means to engage consumers whether you're a brand or a a supermarket chain or a rights owner or a publisher or a social platform or or indeed an old world TV channel. Content is how consumers are engaged. So everybody needs content. You can see the growth of the sector. But look at the dip in 2020. Production, the whole production market, in effect, went backwards four years to levels in 2016 and 2017. The UK production market was hit really hard, falling back to lower than 2016 levels. That's five years back.

28:26 And that's the context in which we're having to do this turnaround. It's why the yeah. We we can I hope you can all see the progress in the underlying machine that we now have in the group, but it's why the fruits of that turnaround have been delayed because the revenue, actually, the area that ZINC did well at prior to COVID, has been substantially hit by this market, contraction?

28:51 So the focus is really simple. It's diversifying into new markets to make sure we are more resilient going forward, but pressing on as a content creating group, not just a TV production company, but trading on that that wonderful heritage and trust to take us into these new markets, all of which puts us in a really good position for as this market returns as we come out of the pandemic. So a little on the shareholder and investment case for those to be reminded of or for those perhaps that are new for the first time. Let me just summarize why ZINC has had the difficult ten years it has. Why wasn't it profitable or able to generate cash despite having £30,000,000 of turnover in 2019?

29:43 And, critically, why we can now believe it will be. What do you have to believe to continue on this journey? And there are five reasons ZINC historically underperformed. TV margins were too low. They were winning business unprofitably. Now they're up 8%. Simply on a like for like case, had COVID not happened and we were doing 29,000,000, we'd be a million pounds more profitable because of that one change. The loss making businesses that were pulling a drag on the group have, unfortunately, had to be closed. We did initially have a plan to turn them around, but when COVID came, it was simply too much pressure on the group's balance sheet. So they were shut.

30:34 The group was overly reliant on a small number of customers. It has a very strong heritage in BBC and in UK PSBs, the public service channels. But it needed to diversify, and it is diversifying now, as you can see, with the 6,000,000 plus of new business that this group previously was not able to attract. The whole culture has been reinvented. Employees were not incentivized on profit. There were there were very few incentivization schemes. Where they were, they were on revenue. Now everything is measured on profit based performance, and all of that is how we reward people. Whether you're a production manager running an individual show, your reward is based on the margin you deliver.

31:21 And those that are business generating, it's on the profit that they deliver from the business they generate, not just the volume. So all of these things have been addressed. And then the spine of the group where we were a collection of small siloed, companies, there's now been this investment in the center, in the core, in the scale, the economies of scale, and that is proving to help drive margins too. A little illustration of just that impact in the group in 2019. As I say, we did 29,000,000 of turnover, but only a $100 of EBITDA on 29,000,000. On a like for like basis, that '29 now, with all the changes we've made, would drive a million pounds to the bottom line. But we need to get back to that level. We need to get back to the 25 to 30 revenue levels. And we're making good progress in the second half of this year with our run rate back at that sort of level.

32:18 We're now tracking at a run rate of around 25. But we don't wanna you know, we're not aiming for 25 to 30. I left a company that was twice the size. We wanna be 50,000,000 plus turnover business. And what you then start to see, and we typically see it once we're north of 40, is you get another kick on the scale, stakes, and margins become easier to extract once you're up to forty and fifty. So how do we accelerate the group to over 30 up to the forty, fifty, and beyond? The single focus now with all of the progress we've made is on getting revenues back as fast as we can. Obviously, the market permitting. But we've gotta believe, and I believe, and I see it, that the market is returning. So what are the things that are gonna make us return that revenue to that growth?

33:07 Now we know that everything is sorted. That means we can be profitable and significantly cash generative on previous revenues of around 30,000,000. We need these six things to happen. We need current clients to spend more with ZINC. Anyone who's run a business knows it's easier to get your current clients loving you more than it is to get someone that'll fall in love with you for the first time. So getting current clients to spend more is a key priority, and the case study I would give you is the channel five commission, of 52 episodes of Bargain Loving Brits where they previously commissioned six or eight. We need new big spending clients from new markets, and the case study there would be Red Bull. As soon as, you know, we announced that, we're able to trade on this new space. It's a premium client.

34:02 And before Christmas, we will announce a new premium client to join Red Bull. We need more diversification, to reduce any individual risk of a single client and new businesses. As I've shown you, the new businesses we launched last year in the in the midst of the pandemic have collectively now found another 6,000,000 of new money into this group. The ZINC communicate business is a potential highly profitable, highly accelerating business for us. There are three new businesses under that umbrella and the historical publishing business. Each of those new businesses this year is generating north of £500,000. Small. They've been going less than twelve months, some of them. But the critical thing is they all have the potential to scale. They could all go from 500,000 to 1,500,000 next year, and they could go from 1.5 to 3 the year after.

35:00 When we ran ITM, we launched this area of business from nothing to £12,000,000. We don't even you know, maybe we don't get half we get half the way that we did there. That would be significant for ZINC given its current position. And the critical thing is those businesses are at higher margin. Their gross margins can be forty, fifty, or 60%, whereas Tally sits in the low thirties. So that's a real focus for us. We now have a new London MD who's starting, this this week. New hires will now be able to follow. We're a couple of hires short of a full full squad that we need, for London and Manchester. And then there's acqui hires. We've done one of these, and Super Collider is that. We hired Mike and his business.

35:48 He joined in May, and you can see how well that has worked for us because it's it's in effect underwritten. It's paid for in the year, and that is working very well. Now we are in conversation with a number of others who could also join in a similar way where they would join the group, and they would bring business with them, and they would accelerate our revenues in the short term, and then we would be able to invest in them for further acceleration in the medium and long term. And we hope to do one or two more of these in the near future. These six things will address the revenue problem, the need to get revenue back up market permitting to the sort of levels we now know we can do and we've done before. But when we do them this time, we're doing them at profit.

36:39 So little illustration of how that will build. This is how we'll scale, and the focus for the senior team in this next three to six months is strengthening the business winning squad, particularly in London. Adding to that, we started this with the new hire of the MD, boosting our revenues with one or two of these acqui hires as we did with Super Collider. All of this is doable within our current means, within our current cash and balance sheet means. So then as revenues return, so profitability and cash generation, we now know will follow because we can see the underlying improvements in margin and efficiencies, and then in turn, our market cap share price will improve.

37:28 That then unlocks further momentum and allows us to oil the wheels of further growth. So we can scale the group through both organic growth and once all that has happened and we start to see that progress, more ambitious acquisitions in the future. So it's all moving in the right direction. We want it to go faster, and we have a plan, a six point plan on how we will make it go faster in the year, eighteen months ahead. So that is our update. I some questions are flying in. Mark, do you wanna Yeah. That's great. Thank you very much indeed, Mark, and also to Will for updating investors this morning. Ladies and gentlemen, please do continue to submit your questions using the q and a tab that's situated on the right hand corner of your screen. Just while we give Mark and Will a few minutes to review the questions that have been submitted already, I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q and A, can be accessed via your investment company dashboard.

38:26 And as usual, I'd like to remind you that your feedback is important to the company. And immediately after this presentation's ended, we'll redirect you in order that you can provide your views and expectations directly. Mark Will, before we perhaps look at the live q and a, we had a number of presubmitted questions, so perhaps I could start off, the q and a with that. The first one reads as follows. Are you able to produce all the programs you'd like currently from a COVID point of view? A simple answer is yes. There are some big ambitious projects we have on the international markets that that would require COVID to further reduce, but everything we currently got in our plan, we can do. And during the lockdown, you know, Telia reinvented its its production workflows.

39:14 We know how to get access to people. We filmed the whole Trump series, which was an international production from The US and the Far East, all in lockdown. So we found new ways of working, and all the health and safety considerations, those sorts of things, are all in place in place now. That's all within the working budgets. There's no, as you can see, no major impact on margin. There is impact on cost, but not on margin because we found other efficiencies. So no no significant risks to the sorts of programs we want to make. The risk is to the market more and confidence returning. Thank you, Mark. Next kind of question really relates to around the cash position of the company. On some of the shareholder chat sites, there's talk of ZINC running out of cash. Are these rumors true?

40:01 No. They're not. I mean, we we, you know, I I I wish more people would join in that if I and listen to this. It is it is frustrating if that's the case. You know, we make it clear every time we're as transparent as we can be on this. So if someone chooses to then jump on and and, you know, stir that particular narrative, then it's not founded in evidence, is it? I've I've given you the evidence. I've shared the cast position. We do it every time. So, yeah, I understand how these things go and and and the I don't spend a lot of time reviewing this. We have we have a a partner of ours, Western Advisors, who manage our shareholder engagement. So cash is good. Our balance sheet is strong. There will you know, there'll be some reductions as we do working capital if we, you know, win some of these big programs.

40:47 But we've got we've got all the means we need to do everything that I've just laid out. And as we sit here today, we're sitting on, you know, between 5 and £6,000,000 of cash. We can do what we wanna do. So I'm afraid that is that is mischief making if that is the case. That's great. Thank you. Turning on to the the next question. What do you make of the potential change of ownership if channel four, and does this present a risk to your plans? So, yeah, so channels so those who don't know, there's a consultation going on with within government on the future ownership of channel four, which is currently owned by The UK, about whether it could be owned in effect privately, like ITV or channel five. Now from ZINC's perspective, I see some risk, but more opportunity.

41:39 The risk I actually and we've submitted a response to the consultation. And my view is that, really, the critical debate should be around the things that need to be protected to make channel four different in the market and to grow in its market, which would benefit all of us who provide services to channel four. I think the debate should reside there unless on actually who owns a share certificate and who doesn't. And the critical things that should be protected that ZINC would need to see protected to in order to protect ZINC's relationship with channel four would be the a retention of their commitment and, actually, I think an enhanced commitment to the nations and regions. Turn TV does very well for us because it is a highly trusted nation's producer out of Scotland and Northern Ireland. And it picks up work from channel four because channel four is obligated to buy a lot of its programs from the nations and regions. But I can't see any government, this government or any future government diluting that when the whole narrative in The UK is around leveling up?

42:47 They're not going you know, they're going to I think they're gonna want more programs to come from out of London. So I see opportunity there for us who has a good nations and regions footprint. And then in terms of IP and exploitation, everything I'm reading from the DCMS suggests that any new owner would be obligated to spend more with smaller Indies. We are one of those at the moment. Maybe we'll be a short term winner in that while we grow, and then we'll get too big. But that'll be a first world problem to have. So I I see more opportunity than risk in all in all honesty with any change of ownership. Or the status quo continuing, we could also work within that too. Thank you, Mark. I guess next question really talks about liquidity in the market and share prices.

43:35 I've tried to buy ZINC shares in the last six months, but I can't get hold of any decent volume. Why is this? Well, you're not the only you're probably not the only one. So I know of a handful of investors who have contacted me direct saying they want to buy ZINC shares at at a reasonable scale, but they can't get ahold of it. They can't get ahold of the volume that they want to enter at, and that is a frustration. It's a frustration partly because, obviously, we we welcome that, but also we know we need that because our share price is very low at the moment. So it is it is it is irritating that we're in that that position at the moment. That is part of the transition that will come through. We've got a lot of, you know, a lot of supportive shareholders who aren't looking to sell is the crux of it. There's not enough volume of shares. If someone wants to buy at $50, there's not enough volume to be able to get in at that level.

44:30 We know there are quite a lot of investors watching the ZINC stock. We have a lot of conversations with people over the last year who are saying they're watching. They're they read the story. They believe where this company is going. And we expect liquidity, I guess, to improve fundamentally as as the underlying financial performance starts to come through, and that will start to move the share price up. At the moment, our share price is is priced on ten years of underperformance. And that, in COVID, is not gonna be fixed by eighteen months of significant progress, but we we can see that there is build there is demand building. So I I I understand your frustration. That's some of what what we're working on with our brokers at ZINCERS.

45:17 That's great. Thank you. And final the final real question to that kinda ties into the previous one really is is that you have a very impressive shareholder register for a company of your size. Can you tell us what they're saying to you? Well, if yeah. We've spoken to them all this week, pretty much all. There's one or two next week. The themes are the themes are we now understand why the group has struggled for so long. That is clear. And we also see that those difficulties, those problems, those underlying handbrakes have been released, have been fixed. So there is I mean, I'm I'm very fortunate. It's overwhelmingly supportive, a 100% supportive.

46:04 Everybody is in and is staying in and believes while it might have been traumatic for those that have been in for five years or more, that there are plenty of signs that this company is on the turn. And we've you know, they recognize that the pandemic has been very, very difficult for the market. So the fruits of that work, had we not had COVID, would be with us now. We'd have seen that million pounds come through to the bottom line. But I think in all honesty, and we this is what investors tell me, is that it's it's probably set the group back twelve to eighteen months. So we gotta continue to work hard on the on the six point plan to drive revenues up as the market comes in. But I it it we're in a strong position. We have a really good shareholder base for the size of our company, and you're and you're right to observe that.

46:54 Oh, that's great. Thank you very much indeed, Mark. Well, look, that takes care of those questions ahead of today's event. Could I just turn to the ones that investors have submitted during the presentation today? And firstly, thank you to everybody that's taken the time to to share with us your your questions. Mark, if I could hand back to you, could I ask you to read out the question and give a response where it's appropriate to do so? And that q and a will be on the right hand side. Okey doke. I will go I'll just go from the top. So, Chris, should you see advanced and highly likely this is from the pipeline, I guess, in that that element of the pipeline, the advanced and highly likely convert, do you have the capacity to take on the work? Would you need to take on more support for projects? We have, like, we have the business winning capacity to convert it and to move it through and the development capacity. We don't need to add in any extra cost.

47:44 Then it would be cost of sale in effect. And that would be once we win this business, can we crew up and deliver? Well, we've we've just crewed up very fast for this channel five series. We've got four crews out in Spain. The issue is not in in in our space. The answer is yes. We have enough capacity, the answer is yes. We can crew up. So I have no great worries about winning new business in that sense. Michael has asked a question. Thank you, Chris, by the way. Where would you like to see gross margins ending up? Well, I'm very pleased they've ended up here. I think what we now I think I've said this before, but that that 32, 33 gross margins for television is slightly better than market average for small indies.

48:33 The I don't I don't expect it to go up much more now until perhaps we get $4,040,000,000 plus revenue. Then some more economies of scale will start to kick in. The other other thing would be if our revenue mix changes significantly. So they're at the level. That was the critical priority. I wanted to fix it quickly. We fixed it quickly, and they're now at those levels that they need to be at. Richard. That was Richard. So, Michael, the video is really good. How much of your pipeline relates to this kind of branded brand content? Can you compare the time from pitching to converting compared to the more traditional routes. So how much of your pipeline relates to this kind of branded content? The pipeline in branded content is is building.

49:20 It's at the moment, it's probably around 10% of our pipeline in that sort of space that will grow as these new businesses find more opportunities. I think the super collided pipeline is the one that excites me perhaps most. There's some big stuff on there. And the second part of your question was in terms of, yeah, pitch time, time from pitching. I mean, there there's a project we're working on now. We haven't announced it. The second soup Super Glider one. It came in six weeks ago inbound, was commissioned in two weeks, in production this week, and will deliver in three weeks' time. That's why I'm a massive fan of diversifying into these areas within Super Collider and ZINC MUNICATE because it's in year business.

50:08 TV is much longer. TV the cycle of TV at the moment can be eighteen months. It used to be in factual areas that ZINC was in. It used to be more like nine to 12, so you could get good in year revenues. That slowed down. It's more like 12 to 18, but it it will speed up again as we go come out of lockdown. So ZINC MUNICATE, Super Collider, and finding those areas of UK TV, The international takes a lot longer, tends to be where the opportunity is for in year revenues. Philip, your current market cap is 10,000,000. Thank thanks for reminding me. Yes. It is. The current market cap is 10,000,000. Where do you see it in three years' time? Well, it we I I think you'll hopefully, we all recognize the opportunity here is that it is low. It's part of the reasons it's part of the attraction of joining now.

50:57 And we can see from companies of similar size that this could be double or triple. It could be four times in that sort of time zone, really. You know, let's let's get an an a a rerating at some point next year as we start to turn the corner and the story starts to deliver through to the bottom line. There'll be a rerating, and let's let's let's see that that share price go double, triple, and then beyond. And that is in a that is in that sort of timeline. It's twelve to eighteen months, really. Stuart, you make an excellent business case, but the weak share price doesn't give you flexibility to make acquisitions. What plans do you have to attract new investors? Better communication, more frequent communication. We have a we have a a build a good pipeline now of watchers who want to come in. Liquidity is the challenge.

51:50 So I believe there's a very compelling story here. I think we'll be able to add more volume to that story before Christmas. So the plan is to evangelize that through meetings like this. We want to hold another investor day, ideally in the middle of this next quarter to invite new people in to come and hear more about our story, meet us, and really ask the question, what do I have to believe in this? And I think we've got plenty of evidence that we can believe that this this company's on the turn, and work very hard with our brokers to bring that in. But, yeah, we wanna see some movement there, when it comes to our our share price growth. And then, Roddy, morning, gents. Roddy Davidson of ShoreCap here. Thanks for your presentation. You mentioned actively exploring opportunities to scale. Does acquisition activity play a part in this process?

52:42 Could you provide some insight insight into your ESG strategy and aspirations? How do you rate the potential of AFP to help you extend your new business momentum? How does that relate to other opportunities? You've made some notable senior hires. Could you comment on competition for talent and wage inflation elsewhere in the business? Right. Let's take bits of those. In terms of acquisition, I don't I don't want people to get carried away here. We are we have a plan, as I've laid out, within our current means to get ourselves back to the revenues we were and beyond. That is doable as we sit here today with the six point plan that I have laid out. Alongside that, we have ambitions to then grow organically and acquisitively.

53:32 We wanna do that through acquisition. We will have lots of conversations. We are having conversations because these things are about relationship building so that we are ready at the time when we, have all these other things sorted out to be able to move to that space. So that is actively in play. In terms of AFP, it is a it is a good sector of the market. I tried to crack it in ten years in my last role. I didn't crack it at all. Here, we've cracked it in eighteen months with our first partnership with Sky Arts and Adobe. So I believe there'll be more opportunities. They're on the pipeline. I think it's a good complementary area. And what's critical is with the appointment of Tanya, AFP, advertisers tend to like the fact end space, the popular factual space, more than the specialist factual space. It So was always gonna be quite a slog for ZINC.

54:23 But with Tanya's hire and further hires in that more popular factual entertainment area, so it will become easier, and the probability of AFPs will in improve. Now we have our case studies coming through. And then in terms of notable hires, what about competition for talent and wage inflation? When when there is wage inflation, particularly in areas like production management where because television has just got back into the market quickly, there's a there's there is it's very hard to find teams and crew up quickly. So that but we you know, that is as much about passing that on to the clients. You know, we are paid by our clients to make television, and our job is to manage them and to work with them to make sure the budgets work. But the critical thing is margins are doing well, so you can see that that is manageable at the moment. And I believe our story is compelling.

55:13 We've attracted someone from arguably one of the the big five indies, to join ZINC because she believes in our potential, and she believes in the story, and she will be rewarded as the company's market cap grows as well. I think I've answered all of them. You've done done a very good job, yes, at every question that's come through, Mark. You've taken to thank you very much. And, thank you to the investors that have taken time to to pose those questions. Mark, Will, I know investor feedback is important, and we'll surely redirect investors so they can give you their thoughts and expectations. But I guess before doing so, could I just ask you for a few closing comments just to wrap up with? Well, I'd say ZINC is on the move. We've announced our largest ever series. We've announced our new partnership with Red Bull and with higher value clients.

56:03 Our new businesses are delivering over £6,000,000 of new business. ZINC MEDIA GROUP is growing at a 161, period on period. We have a new MD in London, and we have lots of prospects on our pipeline. Everything's moving in the right direction. Mark, Will, thank you very much once again for updating investors this morning. Can I please ask investors not to close this session as we'll now automatically redirect you for the opportunity to provide feedback in order that the management team can really better understand your views and expectations? It will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of ZINC MEDIA GROUP PLC, we'd like to thank you for attending today's presentation. That now concludes today's session, and still good morning to you all.