Zinc Media Group plc (LON:ZIN) Chief Executive Officer Mark Browning caught up with DirectorsTalk for an exclusive interview to discuss the highlight from the full year results,growth drivers, highly acclaimed programmes, performance of The Edge, market expectations and the outlook for the Group.
Q1: Mark, first off, congratulations on the full-year results, but could you just talk us through the highlights?
A1: Well, the highlights are that full-year revenue has hit a high of £40 million, which is up 34% on prior year and ahead, actually, of market expectations, and gross margins doing really well, up to 39%, that’s an increase five points on last time we reported.
Adjusted EBITDA is the big one, hit the million this year, the highest EBITDA profit the group’s had for 13 years, and again, in line with expectations.
Cash increased to just under £5 million, up from £3.6 million, and today we have upgraded that, or have announced the latest on that, and it’s just under £6 million today.
So all metrics are up.
Q2: You mentioned at the beginning that revenues increased 34% to £40 million, what’s that down to?
A2: Part of that is down to organic growth, particularly in television, and that’s in many ways the most valuable growth we like to keep a track on. It’s one of our KPIs.
So, organic growth up 19-20% for TV for the full year of the last year’s 2023 numbers and also, we’ve had The Edge now in the group for that full year so we bought them at the back end of 2022 so 2023 had 12 months, they added to that top line growth story.
The other thing I think that is in there that’s worth noting is that 80% of that top line growth is coming from repeat customers so the revenue quality that is in the group is really excellent. That’s the same as it was in 2022 so even though we’re in a difficult climate, even though there’s plenty of reasons why everybody can read about the UK economy and the wider TV market and so forth, to have an 80% repeat client count tells me that we’re in good shape.
Q3: Could you give us an overview of the highly acclaimed programmes that Zinc Media have worked on over the past year?
A3: Our product is ultimately what’s driving this performance so in television, there were 15 television series recommissioned last year, that’s the highest ever, and on top of that, six new series were in production, they have the capacity to return as well. That is about that revenue quality, again, that underlying confidence, and we made 250 hours of television last year, I think that’s the highest certainly in my time here.
As ever, it’s a full mix. It’s a different set of price points, it’s a different set of genres. Everything from Putin versus The West for the BBC on the iPlayer with its BAFTA nominated so that’s the reputational end, through to the largest US TV commission, the real Top Gun fighter pilots commission for Nat Geo, which will be on Disney Plus when that eventually comes through.
The largest volume commission in terms of number of hours for Bargain Loving Brits from Channel 5, we had the biggest digital commission, branded funded digital commission, our Big in America series, which is a television series, but sits on LinkedIn. We’re in a big co-production with Idris Elba and his production company, which is in production at the moment for a show which will come out later.
So there’s a lot reputational, volume, international and UK.
Q4: Could you update us on how The Edge Pitch Co, which you mentioned you acquired at the back end of last year, I think it was August, is performing now?
A4: Yes, so we bought them in August ’22 and at the time, investors may remember that they had averaged about £8 million turnover a year for the previous three years up to the point of the acquisition. Since they’ve been owned by our Group, they’ve done £13 million in FY23, similar to 2022 as well, and they’re on again for a very good year this year. So, financially, it’s been a very good acquisition for everybody.
In terms of integration, that’s critical, they are now fully integrated into the company so they’re co-located with the rest of the London-based businesses, and they are still best in class in what they do, as testament to the amount of awards that they pick up, and they’re returning client base, again, 80% of their clients return. They’re heavily diversified both in the UK, in the products they have, but in international and in the Middle East.
So we’re very pleased with that acquisition for everybody.
Q5: You mentioned earlier that you’re in line with expectations. What are the market expectations for revenue and EBITDA?
A5: That’s a good question so for FY24, revenue has been slightly upgraded by our advisors today in the market to £41 million, I think it was £40 million previously, and the EBITDA of £2.1 million. New guidance has been put out today for next year for FY25, with that EBITDA profit increasing to £2.3 million.
Q6: You mentioned that the group is trading strongly with £24 million of revenue already booked and a strong pipeline. Could you tell us more about that and just comment on the outlook for Zinc Media?
A6: We constantly report the same way, so that there’s always a like for like comparison so this time last year, when we were looking at 2023, we reported revenue that had been booked and was expected to deliver in the year, along with our highly advanced pipeline of business we expect to contract very soon, the total of those two was 32 million.
As we sit here today for FY24, it’s £32 million so an investor would look and go, okay, so they were on £32 million across booked and highly advanced this time last year for 2023. What did they finish on? They finished on £40 million. What’s their expectation for this year? £40/41 million, and they’re on the same amount. So, it triangulates.
As things stand at the moment, we’re in line with what we said we’re going to do and in line with our expectations.
In terms of the wider profitability, we talk in our end results about there being a drag on profit last year as these investments were still being made. Remember, we were still launching some new businesses last year that did contribute to revenue, but didn’t contribute to profit, they lost money. Some of our new businesses, the combined loss in last year’s number was £1.2 million. That’s alongside the £1 million profit we’ve reported today. That will unwind this year, which is why we can have confidence in that EBITDA profit coming forward.
We talk about targeting some additional synergies and savings both this year and into next of £500,000, which starts to give confidence to why that number for FY25 is achievable on the same sort of trajectory we’re on now.
So we’ve got good visibility on revenue, and good visibility to more than doubling EBITDA profits in the period ahead.
