Zoo Digital Regulatory News (ZOO)

ZOO Digital Group plc

("ZOO" or "The Group")

Trading Update

ZOO, the provider of creative media repurposing software and related services, is issuing a trading update for its year to 31st March 2011 ahead of the announcement of the preliminary results in June.

Profitability for the year is expected to be in line with market expectations with EBITDA (excluding exchange differences) of circa $2.2 million and operating profit of circa $1.3 million. The year end cash balance was $0.6 million which, in addition to the bank overdraft facility of $0.8m, gives sufficient working capital for the foreseeable future.

Margins have benefited from a change in sales mix where certain non-core outsourced services are now being invoiced to the client directly by a third party rather than by ZOO. This change, combined with the short-term slowdown of orders during organisational changes within a major customer, has led to revenues for the year in the region of $14 million, below the figure for the prior year. Demand from the division most affected by the reorganisation within our major client is now increasing and we expect further revenue recovery going forward.

Stuart Green, Chief Executive of ZOO, commented:

"I am pleased with the Group's bottom line performance despite revenue falling slightly short of expectations. The short term slowdown in revenues from a major customer is now reversing and I am encouraged to see activity levels in line with our previous expectations. We are also currently working with a number of new customers and prospects to apply our proprietary software to a broader range of authored content, addressing substantial additional markets. We believe this will lead to further diversification of our client base and therefore we continue to view the future with great confidence."

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About ZOO Digital Group plc:

ZOO Digital Group plc is a provider of creative media repurposing software and related services. ZOO's media collaboration platform consists of web-based systems and an integrated suite of desktop applications that work with printed materials and audio/visual content, adapting these media to different languages, sizes, and technical formats. ZOO makes this process extremely quick and cost effective and is clearly differentiated in the market.

ZOO's services are built on its proprietary patented software and enable customers to reduce considerably the costs and time to market of regionalised filmed entertainment materials and marketing campaigns across multiple territories and for a wide range of applications and formats, including printed materials, DVD, Blu-ray Disc, video on demand, electronic sell-through and broadcast. Working closely with language translation partners, ZOO's media collaboration platform transforms computer-based workflows through radical process re-engineering and provides clear differentiation for the company's production, consulting and custom development services.

ZOO is focused on the worldwide creative media production markets and in particular video production for entertainment applications, with customers including major film studios and other producers and publishers of video-based consumer products.

DVD is a trademark of the DVD Format/Logo Licensing Corporation. Blu-ray is a trademark of the Blu-ray Disc Association.