Zoo Digital Regulatory News (ZOO)

31 October 2013

ZOO DIGITAL GROUP PLC

("ZOO" or "the Group")

INTERIM RESULTS FOR THE SIX MONTHS TO 30 SEPTEMBER 2013

ZOO Digital Group plc, the new generation provider of services that works with leading content owners and creative organizations to enable the delivery of media content globally, faster, and for less investment, today announces its financial results for the six months ended 30 September 2013.

HIGHLIGHTS

Operational highlights

· ZOOsubs engaged with 3 major studios and generating increasing workflow volumes

· Cost base realignment complete with a reduction of over $1 million of operating expenses

· Return to adjusted EBITDA profitability after loss in H2 last year

· Tier 2 TV and film studios showing strong interest in ZOOsubs following initial marketing

· Increased adoption of ZOOcore

Key Financials

· Revenues of $4.7m (H1 2012:$6.2m, H2 2012: $4.2m)

· Adjusted EBITDA of $0.3m (H1 2012: $1.0m, H2 2012: loss of $0.3m)*

· Cash balance $0.3m (H1 2012: $0.3m)

 * Adjusted EBITDA is stated before exchange differences and share based payments

Stuart Green, CEO of ZOO Digital, commented,

"The Board is pleased that the Company has returned to an adjusted EBITDA* profitability after a difficult second half of last year. We are already starting to see the benefits of the management actions taken last year and are pleased to be able to report some real momentum in the business, particularly with regards to ZOOsubs.

"The Board expects the second half to show further improvement on the first half of the year, particularly in light of the interest received for ZOOsubs, and we would hope to see continuing growth in revenues in the next financial year and beyond."

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The Company further wishes to draw attention to the posting on its website (www.zoodigital.com) of a presentation to shareholders regarding its interim results.

Chairman and Chief Executive's Statement

Chairman's and Chief Executive's Review

Results

Turnover for the first half to 30 September 2013 has decreased to $4.7m (H1 2012: $6.2 million) but shows an improvement compared with the second half of 2012 ( H2 2012: $4.2 million). Our adjusted EBITDA* in the period to 30 September 2013 decreased to $290k (H1 2012: $930k) but this also shows a marked improvement compared with last year's second half (H2 2102: loss of $297k).

In January 2013 ZOO announced a contraction in the pipeline of production services work as a major client deferred certain orders which significantly impacted our results for the full financial year to March 2013. Steps were taken to restructure the Group's cost base, reducing operating expenses by over $1 million since the first half of last year, and match it with the revenue pipeline. Progress was also made in diversifying ZOO's revenue streams in workflow management and productivity software.

The Board is encouraged therefore by the improvement in performance between the second half of 2012 and the first half of 2013, reflecting the strong sense of momentum within the ZOO business resulting from the growth of our subtitling and other software-based services to new clients.

Operations

The major focus of the period under review has been ZOOsubs, the Group's proprietary Cloud-based subtitle production and management system and associated services.

ZOOsubs manages the entire process for the creation of subtitles, including translation services, their use in a variety of geographies and across numerous delivery platforms. Through the use of automation and workflow management delivered by the Company's ZOOcore platform, ZOOsubs is a much more cost efficient process than traditional methods and provides greater flexibility and control for clients. Importantly, freelance translators are engaged on a project basis, providing the Company with production scalability without requiring any significant increase in its fixed cost base.

ZOOsubs has been deployed at three of the six major global studios. Within one of these we have already seen a significant increase in the volume of work and expect this to improve even further, whilst we also anticipate increased volumes at the other two studios in the next calendar year. Equally encouraging is the level of interest in ZOOsubs amongst the large second tier of film and TV studios, which the Company has been targeting in the last few months. A number of these studios have trialled the services on a project basis and the feedback has been particularly positive.

The Company has continued to see adoption of ZOOcore, its Cloud-based workflow and collaboration platform, with increasing workflow and user numbers coming from both existing and new customers.

Outlook

The cost restructuring that was implemented earlier this year has created a more focused and flexible business, but the Board's primary aim is to build sustainable growth in revenues, continuing the progress made in the first half of 2013 compared with the second half of 2012. Adoption of ZOOsubs by the world's leading studios, the large untapped opportunity for ZOOsubs in the wider market, and the relevance of ZOOcore to improving the workflows of leading content owners and creative organisations should support this goal.

Excluding our convertible loan note, the Group has a relatively small amount of debt. We expect to provide an update in respect of an extension in the term of our convertible loan note shortly.

Notes to Editors

About ZOO Digital Group plc

Software-powered services for creative organizations

ZOO is a new generation provider of services that works with leading content owners and creative organizations to enable the delivery of media content globally, faster, and for less investment.

We offer highly efficient approaches to creative media production through the use of Cloud computing combined with talented people. This means that our customers can select the combinations of services and technology that best enable them to respond and react to ever-changing market dynamics.

We tailor our offering for each client to deliver quality and efficiency resulting in greater productivity and shorter time to market at lower cost.

· ZOOcore - a cloud-based platform licensed as SaaS (available with a range of optional automation tools) that helps creative organizations to manage their work and greatly improve efficiency, compliance and on-time delivery

· ZOOsubs - a bureau service powered by cloud software that offers video content owners full-service subtitling with instant access to the widest range of formats for digital distribution.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

for the six months ending 30 September 2013

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)

as at 30 September 2013

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

for the six months ending 30 September 2013

CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

for the six months ending 30 September 2013

NOTES

General information

ZOO Digital Group plc ('the company') and its subsidiaries (together 'the group') provide productivity tools and services for digital content authoring, video post-production and localisation for entertainment and packaging markets and continue with on-going research and development in those areas. The group has operations in both the UK and US.

The company is a public limited company which is listed on the Alternative Investment Market and is incorporated and domiciled in the UK. The address of the registered office is The Tower, 2 Furnival Square, Sheffield.

The registered number of the company is 3858881.

This condensed consolidated financial information is presented in US dollars, the currency of the primary economic environment in which the company operates.

The interim accounts were approved by the board of directors on 30 October 2013.

This consolidated interim financial information has not been audited.

Basis of preparation

The consolidated financial statements of ZOO Digital Group plc and its subsidiary undertakings (the "Group") for the period ended 31 March 2014 will be prepared in accordance with International Financial Reporting Standards ("IFRS"), as adopted by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

This Interim Report has been prepared in accordance with UK AIM listing rules which require it to be presented and prepared in a form consistent with that which will be adopted in the annual accounts having regard to the accounting standards applicable to such accounts. It has not been prepared in accordance with IAS 34 "Interim Financial Reporting".

The policies applied are consistent with those set out in the annual report for the year ended 31 March 2013, and have been consistently applied, unless stated otherwise.

A copy of the statutory accounts for the year ended 31 March 2013, prepared under IFRS, has been delivered to the Registrar of companies and contained an unqualified auditors' report.

Basis of Consolidation

The consolidated financial statements of ZOO Digital Group plc include the results of the Company and its subsidiaries. Subsidiary accounting policies are amended where necessary to ensure consistency within the Group and intra group transactions are eliminated on consolidation.

Foreign currency translation

Functional and presentation currency

Items included in the financial statements of each of the group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial statements are presented is US Dollars which is the company's functional and presentation currency.

Transactions and balances

Transactions in foreign currencies are recorded at the prevailing rate of exchange in the month of the transaction. Foreign exchange gains or losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the year end exchange rates are recognised in the income statement.

Group companies

The results and financial positions of all group entities that use a functional currency different from the presentation currency are translated into the presentation currency as follows:

· assets and liabilities for each entity are translated at the closing rate at the balance sheet date;

· income and expenses for each income statement are translated at the prevailing monthly exchange rate for the month in which the income or expense arise and all resulting exchange rate differences are recognised with foreign exchange translation reserve.

 Equity securities issued

No securities have been issued during the period to 30 September 2013, 31 March 2013 or 30 September 2012.

Earnings per share

Earnings per share is calculated based upon the profit or loss on ordinary activities after tax for each period divided by the weighted average number of shares in issue during the period.

Further Copies

Copies of this announcement and the Interim Report for the six months ended 30 September 2013 will be available, free of charge, for a period of one month from the registered office of the Company at The Tower, 2 Furnival Square, Sheffield, S1 4QL or from the Group's website: www.zoodigital.com.