Zoo Digital Regulatory News (ZOO)

8 Apr 2009 07:00



For immediate release 8 April 2009

ZOO DIGITAL GROUP PLC

("ZOO" or "the Group")

trading update/CHANGE OF ADVISER

ZOO Digital Group plc, the creative media production and technology company, today announces an update on trading for the year ended 31 March 2009 and a change of adviser.

Trading Update

The Board is pleased to announce that ZOO's results for the year are anticipated to be in line with management expectations. Revenue for the period was in the region of £6.6m (2008: £3.3m) showing an increase of 100% over the previous year. The second half revenue exceeds that of the first half despite an element of seasonality which favours the first six months as the industry prepares products for the holiday season.  Earnings before interest, tax, depreciation, amortisation were £1.3m (2008: loss £1.4m) after an exchange gain of £1.6m. Management expects the Group to achieve a profit of around £0.2m at the pre-tax level for the full year after an exceptional right off of intangible assets of £0.4m compared to a loss before tax of £2.1m in the year to 31 March 2008.  The cash position at year end was approximately £989,000, compared to £675,000 at 31 March 2008.

Management's focus on its principal customers, the major film studios, has continued to prove successful and significant progress has been made in increasing the number of business units  using  ZOO's products and services.  Within one studio ZOO is working with four business units including Technical Services, Home Entertainment, Television and Theatrical, demonstrating the potential to generate multiple revenue streams from a single organisation as the benefits of ZOO's products become clear throughout their business. This strategy also mitigates the Group's reliance on any one single business relationship within these organisations.

During the year ZOO focused on expanding the use of its Media Adaptation Tool (MAT) within a major  Hollywood studio. MAT automates the process of producing printed material such as posters, packaging and marketing materials and ZOO has been working with other groups within the studio to deploy the system more widely. This is progressing well and the Board is optimistic of supplying a second business unit within this studio in the coming year.

ZOO is pleased to report the completion of the Blu-ray version of its templated authoring tool. The tool is being used successfully to provide production services for major Hollywood studios.

Industry developments are positive for ZOO's business model. ZOO's principal customer base, the home entertainment industry, continues to face a number of challenges in the current economic climate including a decline in retail sales. However, despite a decline in consumer DVD sales, the Group has not seen any evidence of a corresponding reduction in the number of new titles that are being developed and published by the major studios. Therefore, the market potential for ZOO's products and services remains unchanged.

The studios are looking into more efficient methods of production and reducing the associated spending and this is a situation the Board believes will be advantageous to ZOO as its solutions can significantly reduce the cost of production by automating processes.

The Board is confident that ZOO's strategy to develop and apply innovative technologies to automate and centralise complex production processes is gaining increasing traction at a time when the studios are re-examining their cost bases. 

Outlook

Significant progress has been achieved over the last 12 months and as ZOO's products become more widely adopted and demand for production services increases, visibility of forward production volumes for the coming year is improving. Despite the difficulties in the current climate the Board is confident of continued progress.

Change of Adviser

The Board of ZOO Digital Group plc is pleased to announce the appointment of JM Finn Capital Markets Limited ("FinnCap") as its nominated adviser and broker with immediate effect.

For further enquiries please contact:

Notes to Editors

About ZOO Digital Group plc

ZOO Digital Group plc is a provider of creative media transformation services and software. ZOO works with printed materials, audio and visual content, and can adapt 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 regionalized home entertainment titles and marketing campaigns across multiple territories and across a wide range of applications and formats, including printed materials, DVD, Blu-ray Disc, Video on Demand, interactive games and broadcast. Working closely with language translation partners, ZOO's media adaptation software suite 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 and print production for entertainment, games and education applications, with customers including major Hollywood studios and other producers and publishers of video-based consumer products.