AGM Statement and Trading Update

ZOO Digital Group plc (AIM: ZOO), a leading provider of end-to-end cloud-based localisation and media services to the global entertainment industry, will hold its Annual General Meeting (AGM) at 5.00pm BST today. At the meeting, Gillian Wilmot, Chairman, will make the following statement:

“The market disruption and temporarily subdued demand for localisation and media services outlined in the full year results on 10 August 2023 are continuing. Major media organisations are in the process of realigning for profitability, and industrial action by writers and actors is ongoing. Consequently, visibility remains limited, and resolution of the strikes is essential for normal order flow to resume. There has been encouraging progress over the last week in negotiations between the Writers’ Guild of America and the Association of Motion Pictures and Television Producers resulting in a provisional deal that it is expected will pave the way for writers to resume work.

“Despite this progress, the ongoing disruption continues to have a significant short-term impact and market expectations for ZOO’s FY24 outcome assumed former order levels would resume from October 2023. This now looks unlikely, and therefore a range of revenue outcomes for the second half of the financial year is possible ranging from a similar level to the first half to an increase in revenue in Q4.

“Whilst orders are being processed monthly, they have been and continue to be at historically low levels such that H1 revenues are expected to be approximately $21 million, leading to a significant EBITDA loss for the first half of the current financial year. However, the Company is in a strong financial position with net cash at 30 September 2023 expected to be no less than $16 million.

“The Board has taken steps to mitigate ZOO’s position through the implementation of cost reductions with the objective of achieving break-even in respect of fiscal Q4. The terms of the planned acquisition of the Company’s partner in Japan have been renegotiated and the parties have agreed to defer completion until order flow has normalised.

“The Board is confident that the changes arising from strategic reviews by ZOO’s major customers will be favourable for the Group. These include accelerated transition to an End-to-End approach, studios engaging with fewer, more capable suppliers, and greater dependence on ZOOstudio, all of which will strengthen ZOO’s market position. ZOO continues to make good progress in cementing its relationships with existing and potential new customers even during this period of temporary disruption.

“ZOO’s strategy is in alignment with the needs of its current and potential customers and the Board expects the Group to be well positioned for enhanced growth once former order levels resume, in line with our medium and long-term aspirations. The structural drivers for international, multilingual content remain firmly in ZOO’s favour.

“The Board will manage ZOO’s cash position carefully whilst protecting production capability and capacity to enable a rapid rebound of revenues when orders return. To support this the Board will continue to pursue small investments in strategic locations at attractive valuations that strengthen ZOO’s proposition for international dubbing.”

Presentation slides that will accompany an investor update following the AGM will be available on the Company’s website later today. Shareholders may register to join a live stream of the AGM and investor briefing here: https://www.zoodigital.com/agm-2023

The Company intends to announce its interim financial results for the six months to 30 September 2023 in November 2023.

This announcement contains inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014 (“MAR”). Upon the publication of this announcement, this inside information is now considered to be in the public domain. The person responsible for making this announcement is CEO Stuart Green and CFO Phillip Blundell.

In the TV interview below CEO Stuart Green provides an overview of the 6 months to 30 September 2022 and an outlook for the group