ZOO Digital Group plc

Hello and welcome to Zu Digital's interim results presentation for FY26. So whilst you're all reading this disclaimer, let me just say that if you are watching this presentation live, then we'll have time at the end for a Q&A session. We'll aim for about 30 minutes presentation and we'll have up to 30 minutes of Q&A. At any point in the presentation, you can submit a question in writing, and you can do that through the questions tab. There should be a questions tab on the right side of your screen. So just go in there, tap away, and then we'll try and get through as many of those as we can in the time that's available. So just quick introductions for those who haven't met us before. I'm Stuart Green. I'm the CEO. I was formerly the CTO and took the current role in 2006. I am a large shareholder in the business, having invested my own capital over the course of several years.

Hi everyone, my name is Rob Purcell, I'm the CFO and I actually only joined in August 2025, so slightly less tenure than Stuart. I spent 15 years operating as a CFO in technology businesses and I've worked in a combination of both private and public companies.

So quick recap for those new to the story, what we do is provide both technical and creative services mainly to video streaming companies and content producers to take their content and make it available for global audiences. And on this slide, you see some of the streaming platforms that we target in terms of where the output of our work goes. We are tech-enabled, and that's a key thing that sets us apart. So, all of what we do for our customers, we do through technology that we've created that makes us very efficient and very scalable. We are what's referred to in our industry as an end-to-end vendor. So, as I say, there are some technical things and some creative things. We can do everything that's needed to get original content and make it available on streaming services in any languages that our customers may require. Our previous financial year ending March 25 was characterized by being a period of transition for many of our customers who have gone through strategic reviews and have realigned their businesses. And in the course of that period and until recently, we have gone through a process of restructuring our cost base to ensure that we can deliver profits and generate cash in our business. So after a period that's been somewhat subdued over the last couple of years, we're now seeing signs that our customers are coming back and are ready to start ramping up again. And there are early signs, but we feel that there are kind of green shoots there. And we are in a very good position, we believe, to be able to capitalise on that and to grow the business going forward. So what we do then, just to elaborate on that just a little bit, is that our work begins usually when a new program, say a TV series or a new feature film has been completed and it's made by a production company. And our work ends when we submit the final deliverables into one or more streaming services. So what's sandwiched in the middle there, which is the scope of what we do, is divided between two areas. We refer to them as localization services, which are predominantly creative processes to adapt things to different languages and cultures. And in the other area, media services are mostly technical things that we do to make sure that that content will play properly on whichever target platform or platforms it's targeted for. And as I said, we're an end-to-end vendor, so we can take care of everything that's needed in that process. And those two headings that I gave you there are really categories of a whole range of different things. And on this slide, you see the variety of different individual services. that we actually deliver to our customers. So this is a complex area. These are very specialized things. We're at this position able to do all this because we've made investment over many years. We've developed technology, bespoke technology that helps us to do this in a very efficient and scalable way. What our customers need from us and indeed other vendors that we compete with are set out on this slide. The first two of these are absolute necessities. So firstly, vendors who service these big buyers, to work on this very high quality and expensive content must, in the first instance, do an incredibly good job. So they must deliver to a quality and to standards that are very high and exacting. And in this regard, Zoo performs exceptionally well, and I'll elaborate on that a little bit in just a second. We receive awards, so on the top there you see an award that we received from Netflix for being their best performing partner in the Americas in 2024. Secondly, you have to be able to do that to incredibly high standard of security to ensure that there's no chance of the content that you're working on behalf of customers leaking and going into the wrong hands. And here again, we perform at a high standard. We are classified as a gold standard. under the trusted partner network, which essentially is a framework for assessing the security undertakings that a particular vendor observes. So those are the two can-must-haves, and we perform very well on both camps. And it takes a while to demonstrate to customers that you have that capability. So this is not something that happens overnight, you know, it happens over a period of years. which means that the barriers to entry for new entrants are very high. The next three items on this list are what we see as being the emerging requirements and in some cases the change requirements that we're seeing customers now have as they have come out the other side of this period of this fallow period as it were, and as they look to the future and the kind of partners that they want to work with. So the first thing is that increasingly they're looking for partners who are technologically advanced, are progressive in the use of tech, and in this regard, as a tech-enabled business, is very well positioned. So the fact that we are embracing AI, for example, in our workflows is something that is seen very favourably by customers. Next, as I mentioned, we are an end-to-end vendor, that means we can do everything, and that is increasingly sought after by customers who want to simplify the supply chain. So, where in the past they may have had many vendors to cover these services, what they now want is very few vendors, but each of which has to be able to do everything. So the fact that we are an end-to-end vendor and there are very few of those in the market, again, positions do very well. And then finally, our customers want things faster. They want us and other vendors to be able to turn around projects much more quickly because That's dead time for them. Once they've finished the title, ideally they'd just like to get it up on the platform. But the work that we do stands in the way of that happening. So the quicker that can be done, the better for them. And this is an area where we excel, particularly through some recent innovations that we call Fast Track, which we'll elaborate on more in just a moment. So by all of these requirements, Zoo is incredibly well positioned, we believe, in the market. I mentioned that the quality is a key absolute requirement and something we've done in this set of results for the first time, and we'll do it in each half results going forward, is that we are publishing a quality metric. This is not a measure that we've taken ourselves, it's actually based on measures that are supplied to us by a subset of our customers. So some but not all of our customers report to us, either every month or every quarter, their own measures of the quality of the work that we've done. And we basically combined those to arrive at a weighted score. And as you can see in the half, we achieved 99.9%. So that's based on measures that are accounted for by customers who together were responsible for 58.2% of our revenue in that period. So the remaining The remaining amount of that was basically what we did for customers who don't have such rigorous programs to measure this performance. So the takeaway here is that hopefully this gives you the evidence and the reassurance that we are performing at the very highest standard. And we believe that these scores put us at the very top of the league table in terms of vendors who deliver these services in the industry. But more importantly, as we'll come on in a moment, talk about the cost reductions we've implemented in the business. What was absolutely critical to us as we went through that exercise was not compromising on those top two essential requirements that I covered previously. And as you can see, with scores of 99.9%, we certainly achieved that. So with that, I hand over to Rob to cover off the results.

Fantastic. Thank you, Stuart. So hopefully you've had a time to look at the statement we put out today. This presentation is online as well. But what we're trying to do here is really pull out some of the key messages in terms of what we've done and what we've delivered in H1 this year. And I think there's two things really. One is that we feel that we've shown that the business has now stabilized. So anyone who's followed their company for a while will have known that the results have been quite volatile over the last few years. We can really see that stabilizing. Probably the key message from this half is that we've now finished this cost rationalization program. And again, this is something we've been talking about over the last few releases. And there were two things we had to achieve with that. One, we had to really show the improvement in profitability, start to be able to generate some cash within the business after the previous years. But also, as Stuart says, we had to do that in a way that didn't impact on our quality, on our innovation, on all those attributes that our customers absolutely demand from us. And we feel we've done that now. So we feel that we can show higher margins, and we feel that we've done that in a way that isn't impacting on our ability to grow in the future. So getting down into some of the numbers, so firstly in the half revenues decreased by 19% to 22.4 million. Now we expected this and the reason for this was that in H1FY25 we had a lot of backlog work coming through from the writers and actors strike that happened in Hollywood in FY24. So we had a very very poor year in FY24 and then that came through, some of that work came back in in the first half of FY25. As I said that was expected, there's no surprises there for us, but what's important to know is that from the end of H1 FY25, so for the last four quarters, revenues have been stable at around 11 million a quarter or 22 million a half. So that's 12 months of stability that we've had. Now, during that time, we've been completing this cost rationalisation programme. And what you can see here is that one of the most immediate impacts of that is that our gross profit remained at just over 10 million for the half. So that's the same level as it was last year, but on 5 million less revenue, showing the impact of what was achieved. Gross profit was in line with last year. EBITDA actually increased from 1.7 to 2 million. So we made a higher measure of EBITDA, again, on lower revenues. And I'll come on and talk a little bit more about those cost savings. So I think financially you can see here that we've really made that difference. We said we were going to have to do a lot with the business, and that's what we've done. I've introduced a new KPI measure. We call this cash EBITDA. So EBITDA is a commonly used name, we use it to measure profitability. There are some accounting things in there, there are some costs that end up being capitalised, that end up being excluded from a normal measure of EBITDA. Now for us there are two key costs. One is The payroll, the pay that we pay our developers to develop our technology and our software, that gets capitalised, so isn't included in EBITDA. And the second is property cost, property leases, because of some new accounting standards, that gets capitalised as well. Now for me looking at this, we're going to carry on paying our development team, we're going to carry on paying our property costs. So these are costs that have to be funded, they're monthly costs in the business that have to be funded. So what I've done is I've added those back in, so I've effectively lowered that EBITDA measure to account for those. And what I feel that Cash EBITDA is doing for us now is really showing our ability to turn the revenue into cash. So in a way it's like a cash profit, it's the cleanest thing to a cash profit that we've got. And the reason I wanted to show that is to show that in the half, we actually generated 0.6 million. So the underlying business model is now starting to generate cash. I'll put some comparators there so you can see in April last year, we made a small loss of 0.1 million. that actually in H2 of last year, so the half just before the one that we're reporting, we actually made a cashier bid loss of two million. So that was on the 22 million of revenues of the same amount of revenue as we've done this half, but a two million loss compared to 600,000 profit. And so I think that's a really important measure for us to keep an eye on because we need to start generating cash as a business. But it really does show us again that the impact financially of this cost program that we've been doing. Operating loss again without this is improved. It was a loss of 2.5 million. That's down to 1.2 million for H1. And it was actually slightly positive in Q2. So again, that improving trend is we've seen within the half from Q1 to Q2. And in terms of our cash balance, so we've ended the year with 3.3 million, sorry, ended the half with 3.3 million in the bank. It was 4.3 million this time last year, but it was 2.7 million at the end of last financial year, which was the most recent reported number. So financially, I think we've really achieved everything we set out to do with the cost rationalisation programme. But there are two parts of that. From a finance point of view, great, we're starting to generate some cash, we're seeing improvements in profitability. But we have to be doing this in a way that in no way prevents our ability to grow. And there are two things that drive that for Zoo. One is the quality of the work that we do, but the second is the innovation and how we are really the leading tech enabled provider in this space. Stuart will come and talk about these a little bit more coming on, but certainly we've already shown you the quality metrics, so there can be no doubt that we are still operating at an incredibly high level of quality in the work that we do. We've mentioned first track, so we are doing something that we believe nobody else in the industry is actually doing at the moment, and that is being able to do dubbing in 24 hours. and complete subtitling in around three hours. To give you an indication, dubbing normally probably takes three to four weeks, subtitling one to two weeks. So it's a real reduction in the time that it takes to do that. And that's using our technology. We've also started to integrate AI into a number of our workflows. Now we have to do this with our customers, so within our industry there is a lot of caution around the use of AI. But we're starting to work with them and show them the efficiency, show them what it could do, and with their approval allow us to start to use AI within their workflows. And then the final thing as well, amongst all these cost savings, this rationalisation, we've gone and invested in international operations in Germany, in Korea, in India, some other locations as well. And now we've been able to get all of those people working on our platforms to the same level of quality that we would be expected to do. And that's allowed us really to help manage costs and to be more flexible. um and we're going to carry on doing that but i think the point here is that not only have we made a significant difference to the financials within the business but operationally we haven't taken a pause at all you know we are still doing the things that made zoo special prior to to taking out those costs and it's the combination of those two that i think is is the real success for this half And so a little bit of a summary in terms of the numbers, and I'll try not to get into too much detail here, but what I wanted to do is you can see in the statements the comparative, so H126 versus last year's H125. But as I said, that benefited from quite a considerable backflow coming in from FY24. So what we have done is I've shown you there the results for FY25 H2, so the half just before the one that we're reporting. And I think that's important because you can actually see there that there was revenue of 22 million and that's increased slightly to 22.4 million in this half. But if we would say drop down, you can then see, well, on a similar amount of revenue, we've gone from an operating loss of 4 million and EBITDA loss of half a million all the way to this current half of a reduced operator loss of 1.2 million but that adjusted EBITDA of 2 million and like I said even the cash EBITDA is positive. So that really I think shows the impact of that change and to put it into another way, if I look at the fixed cost of the business So people, property, IT costs. We've actually reduced those by a third. So that's quite a substantial change for a business to go through. So that's been completed. Now to maybe mention a little bit about the revenue. You can see that there is a small growth there from 22 up to 22.4 million from H2 to H1. And dubbing, which is part of our localization, is still in decline at the moment. So that declined by 2.7 million. So excluding dubbing, all our other revenue streams from media services to subtitling actually grew by 19%. So we've already started to see the growth coming back in those areas. And we do expect dubbing to come back as well. It just takes a little longer as it's more dependent on original content. That's the content that's most likely to be to be dubbed but it's just taking a little while for the industry to recover with that and so hopefully that gives you a little bit more context in terms of those numbers and then if we come and look at any even more detail what you can see here is we we split our business really into three three revenue streams so localization which is is the dubbing and the subtitling media services which is more of a technical service reformatting or getting the correct formats for the content to then be distributed and onto the platforms we have a legacy piece of licensing that is still in place and that's what comes under software solutions and so there's a lot of information there to look at i think if i could just take you right down to the bottom of those tables and look at that that total number there what this is showing is that our gross profit the the percentage of profit we're making on on those revenues is up now at 45% and previously that was at 37% and 45% is, I went back as far as 2018 and that is higher than we've ever really achieved before. The next highest I could find was 38% in FY23. So when we talk about the way in which we've shaped the business, we've really been able to improve the amount of profit that we can make off the revenues and you can see that particularly in media services where we've really been leveraging those investments that we've made in India and really being able to drive up the percentages there. So that gives you a little bit more idea about what's going on within the revenues. Let's come to the balance sheet now. I'm not going to talk too much about this other than really to maybe sort of refer you to sort of the current liabilities line. And in previous meetings, there was concern about, you know, were our liabilities too high? We'd obviously gone through a period of cash going out of the business and the inevitable pressure that that put on creditors. And along with completing that cost programme, along with still delivering the same level of quality and innovation, we've actually been able to significantly reduce the amount of liabilities within the business and on the balance sheet. So that's really helping just give us a bit of breathing room on the balance sheet and normalise that position a little bit. Then the final statement really to talk about is our cash flow. You can see there that as you go down there that we've generated cash from operations and just to pick out that number that's £188,000 of cash that has been generated from the work that we've done. But if you look there you can see that included a £5.3 million payment reduction in payables which again is just reaffirming that idea that we're really sort of helping improve our liquidity in that situation. That was partly done by the cost savings, ensuring that that cash EBITDA that we're generating cash at that level, but also we were able to improve the speed in which we're doing some invoicing and therefore reduce the amount of receivables by being paid a little bit earlier as well. So that gave us positive cash flow operations and you can see that that flowed through right down to the bottom to an increase in cash from the end of the year of just under 700,000. Final point for me, so in terms of how we manage the liquidity in the business, how would we cope with growth if we needed to, if we had more business coming through and the pressures that that can put on us. We have three main facilities, we have a financing facility of three million dollars in the US from HSBC, we have two million sterling in Europe and what this allows us to do is to, when we issue an invoice, we don't have to wait for the 30 or 45 days for it to be paid and HSBC will effectively pay us a little bit in advance for that. and at the end of the period we've drawn down $1.7 million out of that, so around $6 million in total. But we still had $3.3 million in the bank, so we still had enough money in the bank to cover what had been drawn down. It's just helping us manage working capital a little bit better. and also what you could see if you look at our balance sheet you can see that we're kind of neutral in terms of our net current asset position and that was a slight deficit it was a net liability at the end of the year so I think the key message really is so we've completed the cost rationalization program it has had the impact that we said it would do on our finances we've done it in a way that is still allowing us to deliver the same level of work with the same level of quality, is not restricting the opportunities that we're seeing ahead of us and is leaving us absolutely on target to meet market expectations.

Great, thank you Rob. So I'll just say a few words about the market and the trends that we're seeing there and those in particular that are pertinent to the zoo business. So the first thing is that there are various commentators who look at how much is being spent globally on producing new entertainment content and they all point to that spend increasing over time. So all commentators think there's going to be more spent on content and our assumption is that more spent means more content is being made and more content is obviously good for us because in normal times most of the work we do is related to new original content that's produced. Just a couple of data points very recently to speak to that point. In a recent announcement, Paramount, which as you may know, has gone through a transaction with Skydance Media, and the new CEO of Paramount has said that they're going to be spending an additional $1.5 billion a year on content, on their content budgets. And also Disney, who last week put out quarterly earnings, indicated that they would be spending an extra billion dollars a year on producing original content. So, obviously those are two anecdotal things, but overall the sense that we have here is that spending on original content is continuing. That's obviously a good thing for us. That doesn't, that's really a proxy, looking at that as a kind of proxy for the opportunity for zoo, because obviously we're not tapping into content production budgets, we're tapping into those budgets being spent on localizing that content. But what we know there from research by Slater, which is a market commentator in the localization field, is that the services market for media localization is worth roundly three billion dollars a year and our estimates are that about half of that spend is with the major global media companies that we target. So we think that the addressable market for ZOO in media localization is roundly one and a half billion dollars a year and that excludes any spend on media services where we don't have any market commentators giving a steer on that. So that tells you that zoo's opportunity in terms of an addressable market is at least one and a half billion dollars. The other things that we are, I guess, mindful of is that localization remains and will, we believe, continue to remain a key strategy on the part of our customers in maximizing the return on the investments they're making in original content. So that's to say they're choosing to make content that they believe will be appealing to audiences in different countries. And that, of course, then necessitates that that content is localized. We're seeing more interest by streamers in commissioning content which is delivered live or near live. So think things like sports and other time-sensitive content such as chat shows, talk shows, current affairs programmes, those kinds of things. Obviously this is an area where we can excel and as I say I'll talk a little bit more about that in a bit more detail in just a second. In the period we've also seen our customers actually looking to license more third-party content and this is This is at a time when their output, their current output of original content is actually lower than it would be normally as a consequence of their changes in content strategy. Something that we believe will sort of right itself probably over the course of the next calendar year. Our customers all want things faster, so there's a real push for faster turnaround, and they're all increasingly looking to work with end-to-end vendors. So that's to say, suppliers like Zoo, of which there are a few, who can actually do all of these things for them. These things we're getting a feel for as a result of the fact that there have been more RFPs issued that we've participated in over the course of the last few months than we've seen in several years. So this is buyers getting to the point where they're now ready to look ahead and think about who they want to partner with for these services. And again, we think that this is an indication of the market starting to move again and is giving us a feel for the kind of partners that they want to work with. And those trends are all favourable for zoos, so these all play to zoos' strengths. Obviously AI is something, words on everyone's lips. What I say about this is that actually we published a white paper very recently, you can find it on our website and we also delivered a webinar to talk about it and you can watch that too in our investor relations section of the website. In a nutshell, we are using AI in certain areas. It is delivering benefits to zoo, in that it's reducing the time it takes us to do the work we do. And it also reduces our cost to fulfill that work. And of course, customers are also looking for benefits from it. And the benefits they're looking for are the same as the ones that we're looking for. Namely, they would like us to be able to deliver results faster. And also, obviously they'd be very happy to take some savings of costs. So what we're doing is share at the moment is with those customers who are choosing to use AI or choosing for are permitting us, if you like, to use AI. We are sharing the cost with them. So, you know, our costs are coming down. We're charging a lower, a slightly lower fee. But these are, you know, this is this is, you know, we're talking $10. 10, 20% difference in pricing. We're not talking a dramatic reduction in costs. And the reason for that is that to do localization in particular to the standard that is required by our customers, it is absolutely crucial that it has human oversight to be sure that all that context, all those subtleties, nuances in the source programming is not lost and is correctly preserved authentically in the adaptations for different languages. To do that you need people. We are indeed using AI to help us in that process, to make it more efficient, but this isn't like a 90% reduction in costs and time. Those kinds of levels of reduction are possible in media localization, but only if you're prepared to tolerate lower quality. And there are some segments of the market where we don't participate where that is the case. So if you think of user generated content, such as the kind of programming you see on YouTube or TikTok, for example, These AI systems are being used quite successfully there. But that's not our market. Our market is the high-end producers and distributors of this content who demand the highest quality. And therefore, our adoption of AI is designed to be consistent with the outputs that our customers want. Just one last thing to say about AI is that as it provides the opportunity to trim costs in certain areas, we expect that that will result in greater market demand. There is always that opportunity that if you can reduce the cost of something, you'll be able to sell more of it. And we think that that is true here too. We provided this little diagram to give you a feel for where we are already using AI and where we have plans to use it in the future. So AIA in this diagram refers to artificial AI assistance. So it's where we are using AI not to displace the traditional process, but to augment it, to assist experts to do their job, but to do it more quickly, more efficiently, potentially to a better standard. So we're already using it right across pretty much all our customers for transcription. And for some customers who have given their explicit consent, we're also using it for translation as a way to produce a first pass. that will then be further worked on by human specialists in media localization. So the blue boxes show you where we're currently using AI. The orange boxes tell you the areas that we're very actively developing and expect to deploy new capabilities in the near to mid-term. The red boxes are things where we are mostly already working, but the realization of those benefits is gonna come a little bit further downstream. So right across our operations, we're looking at deploying AI as a way to assist existing processes. And even in translation, transcription, we're not done there. This is such a fast-paced, quick-moving field that we have it to continually keep track of new developments in field quality systems and make sure we're using the best of breed. So our approach is to use best of breed technologies where they make sense in our workflows to deliver services for our customers. So I'll just talk about, we have five pillars of our strategic plan that we talk about every time. These are the five very briefly, just in terms of the progress we've made in each area. In innovation, we have been, as I said, working on AI pretty extensively. We've also developed a new proposition called Fast Track, which I'll tell you about in the next slide. For scalability, we have really pressed ahead with our Follow the Sun strategy. So this is a strategy that we use to move projects in the course of 24 hours from one of our facilities to the next in a very efficient, streamlined way that effectively gives us a 24-7 service capability without having to pay overtime and do shift work in each location. On collaboration, we are working with third parties. These are just three of the partners we work with on technologies for AI. AWS, which you may think of as a service for providing cloud-based computer storage services. They actually also provide a range of other services, including for AI and where they make sense in our business, we use those. On customers, we are working very closely with our customers in a number of different areas. And as I mentioned, have been recipients of RFPs from several of those customers who are looking to the future afresh and want to streamline the way in which they work, which again is all opportunity for us. And then finally, for talent, we have a big part of the Reductions in costs that we've been able to implement that Rob has taken you through are because we are able to move certain functions to India and operate at a lower economic cost, very efficient and scalable services. So fast track then. So this is a new service that we have introduced in a period. It's a service that is designed, that we designed specifically to deal with very time-sensitive content, such as, as I said, think of, you know, sports and current affairs and so on. But actually what we found as we pitched this to our customers is that generally any reduction in the time it takes to perform these kinds of services that we provide is increasingly sought after. So in fact, we've been engaged by customers to deliver our fast track service, which is a premium service for which we can charge a premium. We've been asked to apply that service for content that isn't necessarily time sensitive, but the customer would just simply like to get it to market more quickly. So the way we've gone about this is by further enhancing our cloud-based workflow platforms so that we can do much more work concurrently. So, we still do the same amount of work for our customers, but much more of that work can be performed in parallel. And as a result, we've been able to take subtitling down from something that would take a week or two down to three hours and dubbing from something like you know a month or two down to 24 hours so those are radical reductions in the turnaround time which are essential for uh as i say live and near live content but also are increasingly sought after for content more widely where we see uh great opportunities so just by way of example you know we worked on a project recently for a customer where they wanted us to produce outputs in 50 different languages in the space of three hours or so. So we had within our systems around 700 of our operators around the world, all working on the same project at the same time. So what our systems are doing here is orchestrating what could be enormous resource pools in a very efficient and coordinated way to be able to deliver these outputs in a dramatically reduced timeframe. And the clients for this are major streaming services for which we've already worked on a number of very high profile titles. So just wrap up then with a few words on Outlook. So we're on track to achieving full year market expectations. As Robert's taken you through, we've restructured our business for growth. What we're finding is that our customers are looking for faster turnaround, as I've described, and that is creating new opportunities. They're looking again to how they want to work with vendors. We've seen many RFPs coming through, which we're participating in, and we're optimistic that we will be successful in a number of those. And also in live and near live programming, we see more of that coming onto streaming based on what we're hearing from our customers. And we're not aware of any other vendor that can offer a truly multilingual, multi-service, fast track type solution in the timeframes that we're able to deliver. So just to wrap up with an investment summary. So we're a trusted partner to the biggest names in the industry. We're a technology first pioneer, which obviously augurs very well as our customers are looking more and more to work with partners that are embracing technology such as AI. We're already working with all of the major streamers and content producers. already implemented AI in some of our workflows and are actively working on using that more widely. So AI for us is a great opportunity. We're delivering a premium solution in a market that is seeing structural growth. And so with a leaner and more efficient organisation we built through the efficiencies that Robert described, we're very well positioned to build on this position and grow as our market recovers. Thank you very much. So as I mentioned, if you have questions that you would like to pose, please submit them in the question section on the right side, which I think should be on the right side of your screen. We've already received a few questions, so we'll just dive in and take those in the order that they were submitted. So the first question comes from Andrew. Have you finally abandoned plans for the acquisition of the Japanese services provider? Have your customers plans for this region diminished? So for those who are familiar with this, a couple of years ago we had plans to acquire a partner in Japan And that was driven by requirements from our major customers for their plans to expand and do more activity in Japan. And they essentially saw an opportunity for us to partner with them there, provided that we had a base in the country. So we were looking to acquire a partner to do that. Since that time, obviously, this whole industry disruption occurred. And so we put that on hold. Based on the information from our customers, they are not ready yet to really drive forward in Japan with additional activity and sourcing of content and distribution of additional content in Japan. So for the moment, we are not pressing ahead with that. But we do expect that in due course, Japan will be a strategically important territory and we would expect to have some solution for that region. Next question comes from Chris. In your update, you mentioned increases in RFPs. Please can you clarify how your RFPs work? That's to say, are they for specific projects, like a TV series, or are they RFPs that set out the basis for a contractual way for you to work with a vendor on multiple series or films, et cetera, going forward? So the answer is the latter. So typically these RFPs are, they're a process that our customers tend to go through every three or four years and during which they're going to the market and they're making sure that they're working with the best vendors getting the best price, the best quality and so on, with partners who can drive down that delivery time and so on. And it just happens because of the development in market, we're seeing a whole host of these all coming through at the same time, whereas normally they'd be staggered over a longer period. So these RFPs really will lead to framework agreements that will cover usually a wide scope of services over a prolonged period of time, usually several years. So we don't usually go through RFPs on a more granular basis than that, for example, a specific project. Next question from Andrew. I've noticed much of your sales team has now been lost in the recent restructuring. Does this not significantly negatively impact on your ability to grow revenues going forward? It's not quite right that much of our sales team has been lost. We have, there are members of our sales team who are no longer with us. I mean, as part of the cost saving initiatives that Rob has taken you through, that was obviously part of what we needed to do. We believe that at the moment, we've right sized our commercial function. And I would expect that if and when our customers come back and start to wrap up again and we see more activity there, then it may be a time at which to kind of reinvest in business development, additional business development bandwidth. Next one, also from Andrew. You mentioned revenue stabilisation. Are you not concerned it's been perceived as revenue stagnation? Is there any tangible evidence you're seeing from your customers of this stagnation being reversed?

Yes, sure. So, yeah, I think it's an absolutely valid point. Like I said, we've been at 11 million for four quarters. That is a good question. I think I'd refer to one point in what I said was that if you take dubbing out of it, certainly in the H2 coming through to H1, the other service lines have grown by 19%. So we are seeing growth in media services. We are seeing growth in subtitling. what we are seeing is a continued decline that's been going on for a number of quarters now in dubbing. We feel that that is really coming to the bottom now for two reasons. One is that, as Stuart said, Paramount, even Disney came out and said they're planning to spend an extra billion on content next year, that our customers are getting their content strategies in place, they're getting more confident of them and therefore we'll see more work coming through. I think alongside that, so even today we believe that our our customers are spending around 1.5 billion in localization. So what is really encouraging is when we talk about being invited to additional RFPs and being able to access maybe channels or programs that we haven't been able to before. is a way of therefore growing that revenue incrementally beyond just an underlying growth in the market. And in terms of what are we seeing from our customers, well I think the biggest change really and it may be the last sort of six or so months has been that previously some of our customers were very weathered to the idea of doing localization through a number of different partners with physical studios that actors would turn up to and that isn't the zoo model so that excluded us from from some of those channels where they were insisting on that As the industry is changing and they want things quicker, what we're being able to do in terms of using technology, particularly with Fast Track, where we've been able to, one of our customers, we delivered dubbing to them within 24 hours. And they said that was as good as anything that they would see from their premium suppliers taking two, three, four weeks to do. So I think being able to demonstrate what we're able to do with our model is opening more doors than we've seen before. And that's coming through in terms of those additional RFPs. So I really feel like there are definite green shoots in those conversations with customers. The tangible evidence is the number of RFPs that we're we're looking at and the fact that we're being invited to go and meet and participate in programs that we probably wouldn't have and by programs i mean actual sort of channels within our customers not individual programs and that will give us far far greater access to their spend and so it's a very fair point in terms of the last four quarters but we do feel confident having now stabilized ourselves financially but in a way that doesn't restrict that growth there are there are an ever growing number of opportunities out there to get back to growing that revenue again.

Thanks, Rob. So this is the last question that's been submitted so far. So if you do have any other questions, that would be a great time to submit them so you don't miss your chance. So this question comes also from Chris. So I'll start this and then I think, Rob, you can probably provide a bit more colour in terms of how you model and think about this thing. So Chris asks, you mentioned anticipation of increased spend in new content. As this happens in a medium term, where do you see your split in revenue normalising to, i.e. percentage split between localisation versus media services? So just to give a bit of context for those who are not so familiar with our business, as I say, when content, when a project comes to us, Usually there will be some combination of media services and media localization that we have to work with that. But, and as far as we're concerned, whether the content is new or old, it doesn't really matter that much to us. It's the same kinds of services that we do to the same standards on the same timeframe. So whether it's new or old, It's not that important, we don't even track it in our systems, we don't even tag it to say this is a new title versus this is an old catalogue title. However, the nature of the services that are required tends to be quite different between those two. So something that is new, so it's been newly produced, it's been produced of the current technical standards, When it arrives to us, it will never have been, because it's brand new, it will never have been localised. So generally speaking, our customers will definitely want us to localise it. They may just want it subtitling in multiple languages. They may want it to be dubbed into some languages. Because there will definitely be some media services that are needed to get onto a streaming service, but because it's produced to a very high and current sort of standards of quality and so on, the amount of media services that's needed is modest. So for a new content, essentially, the service lines are much more skewed towards localization than the media services. Whereas, if this is old content, then usually what's happening is that a distributor, such as a streaming service, has done a licensing deal with a content producer who has some catalogue of old stuff. and the deal is that for a fee they receive that material and it goes on to the streaming service and they'll come to us to get that content ready to go to that service. If it's old, then it's been produced to standards that are not necessarily up to the required standards for streaming today and therefore there may be some restorative work, you could say, that needs to be done to bring it up to scratch. So, for example, the resolution, if it's old TV stuff, it may be produced to standard definition resolutions If it's going on a streaming service, it has to be at the very least high definition standard. So generally there's a lot of media services work that needs to be done there. But if this is content that belongs to someone else, a distributor, a streaming service, generally won't pay for someone else's content to be dubbed. So for old stuff, it's skewed much more towards media services. And to the extent that there are localization services that are required, they're almost always restricted to subtitling. So old stuff doesn't get dubbed. So that's sort of, that's the dynamic between, you know, to Chris's question, between thinking about the content and how things are changing there, as there's new content coming through, what could happen there, and the split between localisation and media services. And those services have different margins, which I'll hand over to Rob to talk about how we think about that.

Yeah, absolutely. Thank you. So, yeah, so, I mean, in one of the slides, we split out that revenue between sort of localisation and media services, and you can see that localisation margin is around and we've got media services up to about 76% now. So they are quite different in terms of their profitability, so that mix becomes important when you're thinking about where we go as a business. There are a number of things at play here, so I'll try and not over complicate this too much, but I think the first thing to say is that we probably see currently more growth potential in localization than media services. We think they'll both grow, but there'll be a greater rate of growth within localization. Two reasons, again, just the growth within the market the fact that as more original content goes to be produced again as Stuart says that is going to require more dubbing because of the investment that's been put in there that naturally increases dubbing but also as we're working with our customers and as they're getting more familiar and comfortable with our approach to doing this we see ourselves being able to access more of their spend so there's probably more growth potential in localization. Now, as I said, subtitling is already growing, but dubbing has been declining in the last half. So when does that change? Yeah, we think it is going to be soon, but it's an opinion. The other thing that's really happened is that our customers have stopped working with quite so many suppliers. So before they'd often go out and use different suppliers to do different activities, different languages, different services. But now they want to just really look at working with fewer suppliers who can do everything. So that's what we refer to an end-to-end supplier. So on the other hand, we see more growth potentially in localization, but we expect there to be more bundling of services. So we want them to do the localization and the media services as well. So I think there are going to be some changes that we see. I would expect if you see at the moment localization is just slightly above where we are with media services. So let's call that almost a 50-50 split. If you go back to H1 last year, it was nearly 50% higher than, sorry, localisation was nearly 50% higher than media service. So we went from about being a half of our business to two thirds. And if you actually go back into the years when we've been doing significant amounts of revenue, so 70-90 million, again you sort of see that relationship where localization is around two-thirds of the business and media services is a third. So I would expect that we would see localization increase as a percentage from where it is in H1. It would probably as a maximum go back up to being two-thirds again. but it may not quite get there because of this bundling of services. So it's going to be in that range somewhere. But until we start to see what happens with these RFPs, with these conversations that we're having, other than that range, I couldn't be more specific in terms of what I think will happen.

Thanks. So a question from Randy. Good to hear from you, Randy. Are there other large content companies you haven't penetrated but need to? You mentioned Disney and Paramount. Are there any big global ones you're not yet working with? And if not, why not? So we are already, to some degree or other, we are already working with all of the major global distributors, global streaming services and big US-based headquartered content producers. Obviously, given what I've said about the market size, our market share currently is very low and therein lies obviously a great opportunity. What these RFPs in some cases amount to is those buyers opening up certain areas of their operations that hitherto have been, you know, we've been denied access to for whatever reason. It could be some historical reason to do with relationships with certain vendors. It could be because of, as a result of restructuring the organisation. It could be because where something used to be fragmented between, you know, different international operations, it's now been consolidated and it's been now purchased centrally and so on. So we're seeing here opportunities for us to be able to increase our share of spend by these big players on the services that we deliver. So in terms of global companies, there are The major ones are all US corporations. Obviously we are also targeting content producers and distributors in other regions as well, but at the moment the bulk of our business is in relation to large US media companies. And then Randy has a phone question on the RFPs, how many different companies are competing for on each one on average? That's a good question. Generally, we aren't told that. We infer it from various things. But I guess typically, you know, there may be a sort of dozen or so companies that are in play. and they may be looking to select three. So that's been a case for a particular assignment that we've secured recently, where for a large form of work, a particular customer went out and spoke to 10 or 12 partners and has selected three of which Zoo is one. Another question from Andrew, do you see project visibility improving anytime soon?

Yeah I would think that it would do because I think as our customers get more settled in their own content strategies, because remember they've been through quite a bit of sort of disruption while back now with the strikes but also with these changing business models and what that means, that it's you know it's that will help in conversations with them, that will help give us more visibility in terms of the work that they see coming to us. And also I think as we get more embedded in some of these channels that Stuart was saying we weren't part of before, that creates again a more reliable stream of I mean, the nature of our business is that we work on programs and those programs could be a number of episodes of an hour long or it could be a film. So by their nature, it's pieces of work that we do. I think one of the things that we're really looking for, and this requires a a shift within our customers so we shouldn't overstate this but certainly where fast track is is probably going to be most beneficial to where we've got kind of episodic content that's going out every week you know more in that in that sort of broadcast model than traditionally what we see in streams and that could be sports it could be dating shows or current affairs or something like that Now we're currently, we believe, the only people who can actually provide localization for that. So that in itself, having that repeatable business that's coming in every week would again give us more visibility. So I think that there, you know, I would hope that those things would start to give us a little bit more visibility. But as I said, you look back at the last 12 months, we've had a lot of stability and visibility. It's just that we know that that's the run rate of the business. What we've now got to do is try and step that up and show the revenue growth. So, yeah, hopefully that answers it a little bit. It's a bit up in the air at the moment, but we definitely see it moving in the direction where one or two or three of those matters can actually help just give us a little bit more sight or confidence in a longer term forecast.

We're coming to the hour, so I'll take this as the last question. It comes from George. Hi, George. And his question is, when the AI bubble bursts, big assumption, which of the multimodal AI natives would you buy? So, obviously, I don't quite know what to do with that question. But I guess what I would say is that we have, you know, if you look at our strategy, if If you look at our strategy for AI, we're taking the view that there are quite a few well-funded companies out there that are doing a pretty good job of creating technologies. And the way we see the opportunity here is to evaluate those, understand what they're good at, what they're not so good at, where the risks are, how to mitigate those risks, and then how to kind of embed those capabilities within our platforms in order to deliver a better service to our customers. So we haven't done any exclusive arrangements there. What we've said is that we want to be completely agnostic. We'll just use best of breed. So for example, I mentioned that we're already using for certain customers on certain content, we're using AI to do the translation. But we're actually choosing different platforms for different languages. So we find that, for example, For Latin American Spanish, the best platform is Platform A, whereas for Parisian French, it's Platform B. So the way our systems are configured is we'll just hook in, given the particular situation, whichever we believe is the best platform to use. And what that means is over time, obviously, we're continuing to evaluate these with each new iteration of the technology to make sure we always know which is the best breed, and we can make sure that we're using the most appropriate solution. So I'm not sure, George, that we would actually go out and buy something, because I think that, you know, I guess your question is if the bubble bursts and all the kind of funding evaporates, you know, what would you do then? Well, I guess we'll cross that bridge when we come to it. And if that should transpire, then there may be some interesting assets to pick up at a much more interesting price than you would have to pay today. With that, I think we should call it a day. Thank you so much, everyone, for joining the call, and we hope to see you next time. Thank you.