Zinc Media Group plc (ZIN) Earnings Call Transcript & Summary

Good afternoon, everyone. Welcome along to the Zinc Media presentation. My name is Mark Browning. I'm the CEO of Zinc Media Group. This presentation is primarily aimed at new investors. But if you're a current investor, you're very welcome. I'll explain a bit about what we do, who we are, who we make our programs for. The images you see in front of you during the course of the presentation are all from our television programs. This one in front of you is from the latest commission into Zinc Media from the BBC. It's a brand-new Saturday evening quiz show that will go on BBC One later this year, [ start ] filming in the spring. And it's an important new commission for us because it moves us into the lucrative new world of entertainment television. I'll explain more about that in a minute. During the course of the presentation, there are some videos and some TV shows I'm going to play. If you then watch this later on demand or watch it back on demand, you'll find some of those videos will be missing due to some rights issues, that mean we have to take them out of future films. So let's crack on, and I'll explain some of that as we go through. Just a little bit about me. I've been in production for 25-odd years. Previously, I was the Director of Programs at Heart London, the radio station that was then Heart London and is now the Heart Network across the U.K. I ran Heart London for 10 years, and then moved out of radio into television, where I was the Group Managing Director of ITN, the provider of news to ITV and Channel 4 and Channel 5 as well as a production business. Zinc had similar issues to ITN when I joined it. It was very well known for making fantastic programs. It had big international reputation, but it needed to find a commercial heartbeat, and we have found that heartbeat with gusto in the last 5 years or so. So Zinc's turnaround is now complete, and we have the next phase of our journey, which I'll explain in the coming slides. I came here along with many other reasons because this presents a fantastic value-creating opportunity on the public markets for shareholders who believe that content is driving consumer behavior around the world, and therefore, content should be part of your portfolio. So I'll explain that in a second. A little bit about what we do then. So Zinc is predominantly a television business. About 60% of our business comes from television, produced by 8 companies. We also have a studio business that is in audio and postproduction. We have a brand and TV commercials business. And all of that is supported by what we call the Zinc Group Platform, which is expertise and capabilities and back-office functions as well as technology that drives all of our businesses. We are known as well for being experts in securing the biggest global talent and presenters. And we have a distribution capability as well, which has recently been enhanced through the acquisition of Raw Cut Television. Trust and quality is at the center of what we offer. All of our brands line up behind that promise to bring trust, trusted access, and quality productions to all of our clients. So we're trusted with big decision makers. We're trusted with brands. In the case of the image you've got in front of you, we worked with Mercedes and with Lewis Hamilton on a global campaign. We worked with the White House. We went inside Obama's White House, and we have interviewed every President since Richard Nixon. At the moment, we're working with the U.S. Military, the U.S. Navy, getting access to their fighter training schools for a program for Disney called The Real Top Gun, inside the most secure and exclusive military establishments on earth. That level of trust is fundamental to why we exist and why we'll continue to exist in the future. And we're trusted by the global streamers as well as the U.K. broadcasters. So speaking of trust, let me give you a little clip that we're playing -- which we're playing with our clients at the moment around this program called The Real Top Gun. Hopefully, you've seen both movies. If you've seen both movies, you'll recognize this. This is 2 years in production. It's still in production. It's for National Geographic, which is owned by Disney. And it gives you a flavor of when I say trust and quality and you see where we've got access to, what we're filming, the fact that we've managed to put cameras inside cockpits, and you see the quality of this, it will bring it to life for you. [Presentation] So The Real Top Gun will arrive on National Geographic later this year, and then it will be rolled out across Disney platforms around the world. We can talk a bit in the Q&A about the business model behind some of these. Just to map out the Zinc Group for you. So we make content across a whole continuum, a whole range. At one end, there are specialist factual documentaries, which might be very news-based or current affairs based. The one that was announced this week was Israel versus the Palestinians for the BBC. That would sit in that documentary end and then you go all the way through that continuum through entertainment, factual entertainment, through to brand films, corporate films, and we have a post-production business as well. And to help our clients navigate their way through our group, we sell and produce under different labels. In effect, these provide a door for our clients to access that part of the group, which is relevant to their need. And you can see, a large part of those are television production and then some are for brands and businesses. And then there's audio and post-production. But again, everything sits on that promise of trust and quality. So every one of our clients will know which door to walk through when they want part of our offering. And sometimes, we will bring another part of our offering to that client's need as well. We might bring a specialist factual creative person and put them alongside an entertainment person to blend a TV show together with those skills. We're also good at establishing and launching new businesses, bringing in new creative talents. We've launched a number of these over the last few years. The critical thing to understand from a business perspective here is that each of these requires their own level of investment. And then clearly, that takes time to come through to profit because you've got to hire the people in the first place, you've then got to develop the product proposition, you've got to sell it, make it, and deliver it. So as we've been going through our journey, as you look at our results, you would have seen a very aggressive headline revenue growth, and now we're starting to see very substantial increase in profits as these investments come through and unwind. Electric Violet is the most recent one, one that we launched at the back end of last year, led by the former Executive Producer of Strictly Come Dancing, who's also produced programs like The Voice for ITV, so is very well known and trusted in television as a major entertainment producer. She now works for us, and she is developing programs that we will be aiming to sell in the U.K. and internationally. So I want to give you a flavor of the type of television that in our world we call entertainment television. You've seen factual television. This is a flavor of the sort of programs Electric Violet will be taking to market. [Presentation] So this business is in development stage at the moment. We've got ideas, and we're in paid development, which is where a client will pay us to develop some ideas with broadcasters at the moment. But that is an investment we're making in future growth, and we don't expect that to start coming through to next year or the year after. But when it does, entertainment television is very lucrative. Let me talk to you a bit about the markets we're in then, put a bit of color on that. So original television commissioning in the U.K., which doesn't include repeats, it's original spend in year, and these are Ofcom numbers, sits at around GBP 4 billion -- GBP 4.3 billion on the latest data from Ofcom. That is all programs, including sport and drama and entertainment and factual, everything that is original production in year in the U.K., spend in the U.K., sits at around GBP 4.3 billion. The public service broadcasters, they're called the PSBs, that's the 5 main channels of BBC, ITV, Channel 4, and Channel 5. They are the biggest spenders. They make up the lion's share of that spend, and there's tens of thousands of original programs commissioned every year. Then we have international broadcasters spending with U.K. production companies, multichannel networks, the likes of UKTV and Sky, and then we have the streamers, the Apples of this world, the Disney+'s, the Netflix's, also spending with U.K. production companies in the U.K. That is the overall size of the market. The market we are in at the moment is factual. And factual is a subset of that -- can you see that all right? Yes, you can -- that overall mix and sits at about GBP 850 million. So that is the addressable market for companies like Zinc, who are predominantly in factual, to aim for. How do we do that? Well, we line up our brands, our TV offering against each of those parts of the market. And you can see on the screen here programs we've made, little images, some of those I've shown you, for each of those broadcasters. So for the PSBs, the public service broadcasters, our focus is on daytime television, like Sunday Morning Live on the BBC every Sunday morning. It's high-volume, low-cost television for the likes of Channel 5, where we make Bargain Loving Brits in the Sun do 100 episodes a year. For the international market, it's a growth sector for us, that includes channels like PBS in America or ABC in Australia, where we'll either sell programs or be commissioned by them. For the streamers, I've played you Top Gun, that's one for Disney+. Then there are others always in development for Apple or for Netflix. And then the multichannels, places like UKTV. So we've produced programs for Dave and for Really and for Sky Arts as well. So all of our labels line up against a buyer in the market. And our challenge is to make sure that we are developing ideas where there is the most need and where is the most probability of being commissioned. In terms of market share, the market is massive. Just in factual, GBP 850 million, the overall market GBP 4 billion. There's plenty of headroom in television production. Zinc has a market share of 2% overall. Some areas were up to 5% and just a small incremental improvement in market share, 0.5% would increase our turnover by 20%. So very small incremental gains in a very large market can make a big difference, which is why even though the economic times are hard, and television has been through its share of hard times, when you have a small market share and you're a fast-growing company, small incremental differences can make a big difference to the bottom line. Talk a bit about our programs and our creative highlights. I want to pull out just one amongst a number of illustrations. This is a new program. I talked about trust at the start. And the BBC trusted us to take that portfolio of product offerings we have from specialist, factual and science and arts and entertainment and bring them to a new challenge, which was to make arts mainstream. Can you make arts entertaining was the challenge by the BBC. So we put together Rob Rinder and Rylan Clark and have created a format that is already into its second season. This is commissioned by arts, but it's fundamentally an entertainment program, as you'll see. Already recommissioned, which speaks to revenue quality. This is ideal for us because we created the first series, and if it's a hit, in this case, this one was recommissioned very quickly for season 2, the episode I'll play you saw Rob and Rylan head off on the grand tour of Italy. That was then recommissioned straight away after being a hit on the BBC and on iPlayer and they're now in India filming their second season. If you haven't seen it, you can see season 1 on the iPlayer and here's a little clip. [Presentation] So I urge you to watch it on iPlayer at the moment. Quality is harder to measure. We measure it by returning clients clearly and returning series, but also through awards and ratings. So we have been Production Company of the Year for the last few years and in 2024. That is an international award. So all the big broadcasters and networks go for this. So it's a Kite mark of quality. Now, it doesn't instantly transfer to a share price uptick, but what it does mean is that the best people want to work for Zinc and that broadcasters want to recommission Zinc because of its trust and quality. So it does have very tangible benefits to the growth trajectory of our business. So does publicity and press and reputation. Another way of measuring quality is how much we are talked about around the world and in the U.K. Just look at the exposure that we've had recently in The Guardian, The Times, Sky News, the Radio Times and so forth. And you, of course, can follow all of our activity. I urge you to learn more about the company on our social media platforms. So let's talk about the numbers then. We issued a trading update on Monday of this week for year ending December 2024. Revenue and profits all in good positions. This is important that you understand. This is all about our continuing operations. We disposed of businesses last year and closed some. So it's important that you compare like-for-like. And in the year, we closed loss-making businesses in branded content and in video marketing. We sold a legacy publishing business as well. But adjusted EBITDA increased 50%, an increase of 50% on the year before, which was in line with the expectations that we put in the market. We had better-than-expected year-end gross cash sitting at just under -- or just over GBP 6 million, under GBP 6.5 million, significant increase from the GBP 5 million the year before that. And that means that we've been cash generative for the second year running. Net cash position also up year-on-year. Then we think about what does this year look like. And the really encouraging thing about 2025 is that we are starting the year 25% further ahead than we were this time last year. We've got GBP 21 million already booked that is expected to deliver in this year. And revenue is booked in production as you do productions with activities. So we've got more revenue than that booked. Some of it's already for next year. There's GBP 21 million booked for this year, which is significantly ahead of last year and our strongest start to the year ever. Just to give you a flavor of the sort of revenue mix that we have in the company. We're broadly 60% television and 40% revenue from brands and businesses. And most of that sits in The Edge business. So you can see there in the blue, you've got The Edge and you've got TV production and a small sliver of distribution. There's a large volume of repeat customers. That speaks to the quality of our relationships, the quality of the revenue. So while the BBC might come back for us this year for something different to last year, they will come back. And in many cases, they come back for more of the same. Rob and Rylan series 2, Sunday Morning Live into its third year, and many, many others. The Edge, over 80% of their clients are repeat customers, big global brands coming back year-on-year for more storytelling. Then gross margins is an important part of our story. Gross margins across the group are excellent and have been up over the last 5 years. In TV, they typically sit around 30%, sometimes up as high as 35% on aggregate. In The Edge, they sit much higher because that is corporate work. It's at lower volume, lower price point, but a higher margin. And then there's distribution, which is the crown jewel in TV productions, where if you have good catalogs of programs and you sell them around the world, that is very high-margin business. We aim to grow that proportion of our business quite substantially over the coming years. We acquired Raw Cut Television last year, who bring with them expertise and a distribution business for television. And then there's some television that we make at lower margins, somewhere between 20% and 30%, because it might be a very high volume of commissions, or it might be a good way of getting long-term repeat business. So it's all about the blend and the mix. Just to finish with then, in terms of the investor proposition, there are big changes going on in the TV market, movements that all present opportunity with some risk. The commissioning market is now focusing on larger groups. Again, this is Ofcom data. The reason it's focusing on larger groups is because the market is bifurcating into 2 buckets: big global streamers want to spend a lot of money differentiating their channel because of the content that is sat on it. The likes of Disney are commissioning us to make The Real Top Gun because they want to put that only on Disney+ and National Geographic. It's the content that differentiates the platforms. That's why being in content is an investable proposition. If you believe that fundamentally, you at home are choosing to watch Paramount because you want to watch Yellowstone, to watch Apple because you want to watch Slow Horses, or to watch BBC One because you want to watch Strictly, you are choosing where you go because of the content you want to watch. The content is the value proposition. And Zinc is a thoroughbred content maker and the only production company that is publicly listed on the London Stock Market. So if you believe content is driving consumer behavior, if you believe content is a place that you want to invest, that is the Zinc proposition for you. So at the other end, the U.K. public service broadcasters, the linear channels, which is where in the old days, you would sit down to watch a program at a particular point in time, that market audiences there are declining because we're all moving to on-demand. We want to watch things on the iPlayer or on each streamer's platform. So the need they have is to make television cheaper and more of it because there's still 24 hours in the day, even though there are less people, it's still 24 hours you have to fill. So the market wants 2 things: it wants more expensive, glossier, high-end television and more volume at lower cost at the other end. And we've offered the market that in Top Gun, 6 episodes for $9 million, and Bargain Loving Brits, 120 episodes for considerably less than $9 million. But it's high volume. So that's the big change that's going on. And the other big shift in the last few years has been the move to international buyers being the growth sector. The U.K. has had a tough couple of years. We've grown to the market share point because we have a small market share. And we've also increased our amount of clients from the international market. About 40% of our turnover, when we report FY '24, will be coming from outside the U.K. That will be almost double what it was 3 years ago. So it's a big growth sector for us. A little bit on our shareholder register. We have a very enviable institutional shareholder base. Really big investors, all who are thoroughly supportive of the long-term plans for Zinc to scale this group on the public markets. There is a big opportunity for consolidation in the TV production sector, and Zinc can be that consolidator, as we saw by the acquisition of Raw Cut just in quarter 4 last year, because we have Herald and Miton and Canaccord and Edentree and Ruffer and Edale and many others on our register. It's an enviable register of large institutional shareholders. Arguably, those shareholders want to see this business at significant scale. We talk publicly about GBP 100 million turnover business in the near term. And we have both the strategy, the platform, the management team, the market, and the investors to deliver on that ambition. Just to finally close on 2 thoughts. So 2 weeks ago, the BBC announced that Zinc had won this high-profile Saturday evening quiz. This was 2 years in development, a 100 companies entered the race to win this contract at the start. Originally, it was due to be announced last year, but it slipped into this year. Production is now underway, and this is being made by Tern TV, which is our business anchored out of Glasgow and Belfast. So it qualifies as what's called the nation's producer, which is really important for the BBC. They're increasingly under pressure to make more of their programs outside of London. So Zinc, which has bases in Glasgow and Belfast and Manchester and Bristol and London is well placed to win these sorts of contracts. So part of our proposition, well, not only do we have the trust and the quality, but we can make this out of Glasgow as well. Now it has the potential to be a commercial gamechanger for the group. The reason is it takes us into the lucrative world of entertainment television, at the same time that we're launching Electric Violet in the entertainment space as well. And really importantly, and this goes back to that chart I showed a minute ago about distribution, Zinc owns the program rights and the format rights. So if this program is a success, which I'm sure it will be on BBC One, it can be sold to every territory around the world that wants to find a new quiz. And Zinc, because it owns the program and the format, can either sell the program in its readymade form or sell the format of the quiz to other broadcasters to make their own versions. The sales contract for that sits with BBC Studios, one of the biggest distribution companies in the world. So it will depend on how well this quiz works in the U.K. Assuming it works well, we have on our hands what we call a potential hit that could sell all around the world. And the revenue that comes in from that, given there are very few costs once you've made it once, is very high margin. There are a number of other programs on the slate in development at the moment, all of which could come through in the next 6 months or so. We're in development for another major entertainment format, again, out of London, that could become another returning series. We've had a significant opportunities and approaches, and we've got a number of ideas in the market in the Middle East, where we have growing businesses operating under The Edge. And we've got a big music biopic as well for music fans that is currently under contract. So there's going to be a lot of good news coming from the Zinc stable of labels and businesses over the next 3 to 6 months. So do keep an eye out for all of those, and we'll RNS everything as we go. So we're set up to thrive, I think, in '25. We've had a great start to the year. We have strong financials. We've got GBP 21 million of revenue booked for this year. Our gross margins are up, and we have a strong balance sheet and good cash reserves, too. So we're in a good place to enter 2025. So if this is new to you, I look forward to meeting you on the journey through the year. Now, we'll head to some questions. Thank you.

Superb Mark. Thank you very much for a very interesting presentation there. Just a reminder for the people who are watching online, if you'd like to ask a question, then please type them into the Q&A box situated on the right-hand side of your screen. I will now move to the questions that have been submitted. First one, you talk about the Zinc platform. Can you explain more about this and how it enhances the efficiency across the group?

So the platform is something that we've been building while we've been developing all these new product propositions. In television, quite a lot of what you need to do is repeatable. You have to have production management teams, you have to have cost trackers for production management teams, you have to have production accountants, you have to have technology, cameras, kit, post-production facilities, you have to do audio, and you have to grade a picture. You have people. You need to manage them. So all of these things are replicated time and time and time again across our 12 businesses. What we try to do with our platform is to centralize all those services into what we call the Zinc Platform and find economies of scale. So it might be the case that, for example, kit that we have purchased high-definition Ultra HD cameras for the filming of The Real Top Gun. That is Zinc's property now, and those cameras can be then used on every program that in the future requires that kind of kit. Marketing and communication, we have to promote our programs. We support our clients in that. And instead of outsourcing it through 8 different businesses, we in-house it through one department. And so, that goes on and on. And the platform, therefore, supports all of our businesses in terms of driving margin. We've improved gross margins from when I joined 5 years ago where they sat in the low 20s to the mid-30s through investment in the platform. The other part is that it brings expertise and specialist knowledge, which support all the businesses. So you can afford to have expertise in marketing, expertise in technology, expertise in people management, which any one of those individual businesses would find cost prohibitive because they're too small, and we'd have to outsource anyway. So actually, we end up with a better company looking after its people better and a more profitable business.

Thank you, Mark. Next question. Is there capacity to integrate newly-acquired companies into the group?

There is capacity, partly because of the platform actually we've just talked about. So the case study for that would be Raw Cut that we acquired in October last year, which 3 months in is now fully integrated into the workings of the group, which means the group is now performing the functions that they used to outsource, finance and HR and marketing and comms and so forth. So that is improving the profitability of that business on day 1 by using the power of the Zinc platform. And we can do a number of those. The general analysis that I've done suggests that the cost base of this group, the fixed cost base of this group, the overhead of this group, which is about GBP 15 million, can support turnover of around GBP 55 million to GBP 60 million.

And the next question, how does the company's performance compare to its competitors?

Well, there won't be many companies that report a 50% increase in profit. I don't think there'll be any. That's the best answer I can give.

Perfect. Difficult question there. In a difficult market, there's often consolidation. Do you see this as an opportunity for consolidation within your marketplace?

100%. TV production needs to consolidate. So it's public knowledge that the 2 biggest production companies at the moment, ITV Studios and All3Media that was acquired by Red IMI (sic) [ RedBird IMI ] last year, are in conversations about merging. That would create a massive GBP 3 billion production company. So if the 2 biggest companies are thinking about merging, the conversation with smaller ones is just as active. There are hundreds of small production companies. And if you go back to that slide I thought about -- I explained, rather, about what's happening in the market, that buyers want increasingly big, glossy, high-scale, high-end production. It's expensive to make. You need a platform, you need the expertise, you need the technical competencies, you need the governance, or you're not going to win those contracts. So that excludes hundreds of production companies who just don't have that. At the other end, PSBs particularly want high volume, hundreds of episodes of a program. That's very, very hard to do if you're just a one person and a few others in operation. So you won't win those contracts. So that's why we're seeing revenue consolidating into larger companies, and ultimately why smaller companies will have to consolidate into larger companies if they're going to remain viable. And Zinc, as evidenced by its acquisition of Raw Cut, is a consolidator, wants to be a consolidator.

Mark, you mentioned a high retention rate with clients in your presentation. How do you achieve this with the group made up of so many different businesses?

You achieve it by finding something the client really wants. So take the case of Rob and Rylan's Grand Tour that was recommissioned within weeks, which is about revenue retention, because it's ultimately delivered to a need. It was at the right price with the right budget, it was the right idea, and it delivered audience ratings. So if you keep doing that, and you're trusted, and you've got the quality product, the revenue retention, the revenue quality will return. Just look at the one, the BBC did a screening only this week, Israel and the Palestinians, is another recommission from the BBC following our documentary for them last year on Putin and the war in Ukraine because they come back to one of our TV companies, in this case, Brook Lapping, that makes that sort of documentary, different product, different subject rather, but they still return. So it's -- and the same in The Edge. When you're working with EY, or you're working with PwC, big global companies, they have a need every year. And if you build a relationship, they will keep returning. Sunday Morning Live has been running on television for years. So that's how we do it. It's less about all of our labels, and it's more about the relationship and the product we supply to our clients.

Thank you. Now, share price seems to be on a good trajectory. Will this continue?

Yes. Next question. No, I joke. Yes. It has to, right? If you look at the way the U.K. stock market is at the moment, in AIM, all media stocks are undervalued, 100% undervalued. Why is ITV having a conversation about selling ITV Studios because? ITV stock is undervalued. And that's at the massive end. And the same applies at the small end, where we are. So media stocks are undervalued. Zinc, based on what every analyst will write and tell you about, is undervalued. Good that it's going up, but my word, there's a lot of headroom yet.

And are there any plans to diversify the business model or explore new markets?

So we've moved into entertainment. We're not yet in drama, we're not in sport, we're not in children's TV. We could be in all 3 of those. When I ran ITN, I took them into sports production. So I see every opportunity for us to extend our offering through investments, organic investments, or through acquisition into any of those other TV genre. Outside of television, content is where brands and businesses are investing because it's the content that drives the consumer behavior. So could we move more into TV commercials? Could we move more into brand? Could we move into animation? Could we move into audio more, podcasting more? We do all these things. And they're all on our roadmap. The question is, how fast do we want to go and every one of them requires investment, which is why we're growing EBITDA 50% year-on-year growth, but we've also got to keep investing for future long-term revenue growth, too.

Mark, with the commissioning of The Inner Circle, do you see further opportunities for Zinc in this primetime quiz format?

In time, yes. Our focus is to get this absolutely right because if this becomes a hit in the U.K., as I said before, it will sell around the world. What it does mean is that, like many businesses, you can get [ same ] in other sectors. You can get put in a bit of a box by the marketplace. You do that sort of television, or you make that kind of product or that's your price point. And it's very difficult to break out of those stereotypical sort of boxes that clients put you in. But I think this is a great breakthrough moment. I think it's a good story for television. I think it's good for the BBC that they have trusted a company that's not actually made quiz shows before to make this quiz show. That's because we brought in people who are really good at making quiz shows, and we've invested in them, and we found the right idea, and we're making it in the nation. So we've ticked all the boxes, which shows you can move genre. You can move into new markets. So I think having done that and launched Electric Violet, the next place we're looking for is not just early Saturday nights, but primetime Saturday nights.

And can you talk to the cost of development and pitching on these major potential commissions and the timescale that these accrue?

Yes. This is a big one. This could go on long time. So development, developing ideas, is the big overhead of TV production. And you can develop and develop and develop and throw a lot of great stuff. They've got fantastic ideas that never have been commissioned at all. So you have to pick which ones you really think are going to work well. And this comes back to where are you placing your bets as a TV production company. So we will get sometimes briefed by a broadcaster, in this case, the BBC, in the case of The Inner Circle, put out a public tender. Sometimes that happens. That's good in that you know there's going to be a buying decision at the end of it. It doesn't always work like that. Quite a lot of channels say, we're looking for something in food or travel or adventure. We're thinking maybe 10 parts. We're thinking maybe half hours or hours. But they haven't committed to it. So our job then is to develop it and come back with good ideas and convince them that, that is actually a really good idea and ours is the best idea. The Inner Circle took 2 years to go through the process. Top Gun took 2 years to go through the process. Sometimes it can take 2 weeks, sometimes 2 days. Sometimes the client phones up and says, we just want another one of those. So it's a complete spectrum. Our job is to then work out how much resource, how much time, how much money we spend against those opportunities.

And what impact has the budget had on your business, the wage bill and confidence in the sector?

Terrible impact. It's a very unhelpful budget. It's added GBP 480,000 of cost just on the national insurance and the minimum wage. In a business that does GBP 1.5 million of EBITDA profit, that is a thoroughly unhelpful budget. It should be reversed. It's doing the same to the whole sector. So what we have to do is now work around it. But typically, I would look at our annual year and go, we can probably afford to invest GBP 200,000, maybe GBP 300,000, maybe GBP 400,000 in a new label or in a new startup or a new initiative, and that's just gone on tax now. So how do you now invest that? It's not a growth budget.

Next question. Can you talk about the potential for the B2B side of the group and more about the distribution opportunity?

So I think we can take those 2 separately, if I may. So the B2B side of the group is currently delivering through The Edge. The advantage of B2B production, ultimately, everything we do is B2B because our client is a business, and then it goes to a consumer. But we're talking here about brand work, product work, corporate work, TV commercials. Edge is absolutely market leader in this. That's why we acquired them, both in the U.K., and they have a substantial growth presence in the Middle East as well. The very good thing about that is it's built on the same foundations as TV production. It's trust and quality. So it shares the same promise. It's factual television, but it's for KPMGor EY or Network Rail rather than BBC or ITV or Netflix. But it's the same principles. So it sits very well in our product offering. It tends to be quicker decision-making. It's lower value than TV, but it's higher margin than TV. So it's really good for diversifying our portfolio, for derisking the overall trajectory of the group. It's a good high-margin business, and it's got good repeatable clients. So we would want to invest more in that side. And actually, whether you're in television production or not, if you're in retail, or you're in, I don't know, mining, or you're in manufacturing in some way, you are now telling stories, and you are telling them on film. You're telling stories about life, and you're telling them on screen, which is what we say we do.

And what is the global split in revenue?

I think about 40% will be outside the U.K. based on our FY '24 numbers as they come out at the end of April, beginning of May, which will be the highest amount of international revenue we've probably had, non-U.K. revenue that we've probably had.

Thank you. And what are the key drivers for growth with the company in the current market?

Well, there's a balance between a decision about where to invest for growth is all about how long is the payback time. So I'm going to use the entertainment illustration to give you a flavor of the sort of discussions that we have. Entertainment is the most lucrative part of TV, entertainment and drama, the most lucrative part of television. It's also expensive, and it takes a long time, and there are fewer shows to commission. Strictly has been running for 20-odd years. Same with The Voice, same with some of these big juggernauts. But when you win one, it changes everything. Our focus up to now has not been in that space, but it is now. So the driver for growth is to diversify the product into these more lucrative genres, using the platform, using the scale, using our cash position, our strong cash position, while at the same time looking outside the U.K. In television terms, that means looking in the U.S. and in brand under The Edge, that means accelerating growth in the Middle East. So I would pin at least 3 areas of growth will be [indiscernible] U.S. TV production, Middle East production, and genre expansion in the U.K.

Another question around share price performance. It says is in the right direction. Do you think that the market is starting to see the potential of the business?

I do, actually. In terms of anecdotal evidence of inbound inquiries to us from potential investors, both private investors, high-net-worth investors, family institutions, and some city institutional ones, which last year were really not open for these conversations, certainly in the second half of the year. And I think the news flow that's coming out of Zinc and has done for the last 2 or 3 months is just letting people revisit this. There's clearly a very good growth trajectory. Normally, in businesses like ours, we [ were being valued ] as much on revenue as on profit. That is the whole point of AIM is to accelerate revenue-based businesses to turn them into high profit businesses over time and create value creation. There's virtually no value being placed on revenue growth. It's all on profit growth. Actually, it's on cash generation and operating profit, which Zinc is now finally starting to deliver through this turnaround. So I think the story is catching on. And actually, when you look at the share price and see what analysts suggest it should be and what the market typically values media stocks at, which is well north of 10x multiple EBITDA and you see what Zinc's being valued at, there's only one conclusion.

Mark, maybe you could tell us what are the pinch points that would constrain your growth?

Main pinch point is -- well, it's 2, I would say, always cash in small businesses, and the other is the need to maintain a profit growth story while investing in new opportunities for the longer term. And it's a discussion we have -- I have almost every week, both internally and with our investors is where are we? Are we all aligned on what success looks like here? And the nice thing about our large, supportive institutional shareholder base is that to an investor, it's all about medium- and longer-term returns. It's ultimately about a trigger point where the group gets to enough scale that it's rated and valued correctly by the market, and that gives people choices at that point to either trigger a value-creating opportunity or stay, or we buy something or someone buys us. What our institutional investors and I am not interested in is the short-term here and now, month on month results or even 6-month results. In TV production, productions can move, as we saw with the illustrations I've given you, things that we thought would be commissioned last year have been commissioned this year. Providing they're commissioned, the story is good. The story is one of growth. Whether it falls in the right half year, honestly, if that's a really important thing, then television is not your home. If long-term value creation is what you're interested in, this stock is your home.

Mark, you talked about the group having undergone an exceptional transformation in recent years. Why do you think that the business is now in a better position to deal with market pressures?

It's never been as resilient as this for 15 years. That's why. I mean, just look at the balance sheet, and you can see that. Look at the market cap and you can see that. In 2019, the company had a valuation of GBP 3 million, which was entirely the value of Herald's debt. The company had no value in 2019. Now it has significant value, but it's still significantly undervalued because of the overall macro challenges on the stock exchange and particularly at this end of AIM. So in terms of being resilient, it's got all the right ingredients. It's got a strong balance sheet relative to its size. It's in a market where it's got a small market share, and it can grow even with market headwinds. It's got a management team who've turned around the business and are in it for the long run, because ultimately, we're here for a value-creating journey. So I think all of those ingredients mean it's in a very strong position to weather whatever may come.

And with record level of forward bookings driven by the group winning television production work in the last 5 months, is this included in your forecast?

Say that again.

So record levels of forward bookings driven by the group winning television production work in the last 5 months, is this included in your forecast?

Yes. It is. So the forecasts that are in the market have us doing GBP 40-odd million and GBP 2.1 million of EBITDA this year. So the GBP 21 million that we have booked and that can deliver in this year, you need to put against that GBP 41 million. And that's farther ahead than where we were last year, where we were at GBP 16 million at this time of the year, and we're at GBP 24 million this year. And we finished last year, and again, this is where it gets slightly complicated for this Q&A, but I'll show it in the annual report is on a continuing basis, last year's revenue ended up at GBP 32 million. So we're on track for doing GBP 40 million and GBP 2.1 million, where we did GBP 32 million and GBP 1.5 million last year. And at 2.1 million, the critical number to remember in your head is GBP 2 million, call it, GBP 2 million of EBITDA means Zinc is operating profit.

Thank you. Now, next question is, what impact did the actor and writer strike have on your business?

Not a direct impact, because the writers' strike was fundamentally about scripted television, and we are in unscripted television. So we don't lean on writers in the way that primetime Saturday night TV would or drama would. We are in unscripted or were in factual television. So there was no direct impact. What it did mean was that there was a genuine slowing down of decision-making, a general sort of malaise within TV. Arguably, you could say it accelerated some commissions in our world of unscripted television because the commissioners, the buyers, couldn't get the scripted program that they were hoping for because there was a strike on. So they had to look at their other development slate, which would be unscripted television, and they had to accelerate some decisions there. Did we -- can I point to something specifically that says we benefited from that? I can't, but that would be a general feeling that there were more conversations about let's get on with some of these things we've been talking about than there might otherwise have been.

Next question. What impact will AI have on your business?

Well, where we're experimenting with AI at the moment is in ideation, that development conversation we just had, there's a lot of cost that goes into developing ideas. And quite a lot of that early stuff is research. So there's definitely a way of using artificial intelligence at the research end where you're simply hoovering up information that's already in the public domain. I think there's also opportunities to use it when it comes to just really finessing ideation and ideas and creativity, and you can ask AI to enhance some of those things. There's an area -- I've seen some formats that we've got in development where AI is being inserted into the program itself. I can't see anything on TV at the moment. I don't want to give too much away here, where AI is part of the product the viewer watches as an interaction, but we are giving too much away. That's quite exciting. But fundamentally, this is a people business. We're going to need people to do work and to make ideas and to present these programs and to bring them to life. There's definitely something in technology where we're seeing how post-production can be enhanced through AI. So we're looking at all of these areas. We've got AI expertise within the group.

Superb. Well, Mark, thank you very much for your time today. Very interesting questions, very interesting presentation. Maybe hand back to you for any sort of closing remarks initially.

So if you've got an investment portfolio that doesn't yet include media, and you think media, and you know media is a value creator, ultimately, consider Zinc's. It's the only publicly listed thoroughbred content company on the stock market. Others come with studios or legacy channel businesses. Because you need to satisfy yourself that content is driving consumer behavior. And then the question is, is Zinc making that sort of content that enough people will want [Technical Difficulty] evidenced that through both the clips I've shown and our market share. And then you have to satisfy yourself that you're coming in at the right time. And look at the Zinc's share price in relation to its performance, and look at it in relation to its stock performance over the last few years. I think you'll conclude that all those metrics feel pretty good.

Superb Mark. Thank you very much. Thank you, everybody, for joining us today. That's all we've got time for. So that concludes Zinc Media Group's investor presentation. Please take a moment to complete the short survey following this event, and I hope you enjoyed today's presentation. Thank you.