Zoo Digital Regulatory News (ZOO)

12 February 2014

ZOO DIGITAL GROUP PLC

("ZOO" or "the Company")

Trading Update

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 provides an update on trading ahead of its financial year end of 31 March 2014.

The major focus of this financial year has been on the development of ZOOsubs, the Group's proprietary Cloud-based subtitle production and management system and associated services. The Company is pleased that the progress reported in the Company's interim results has continued into the second half, and in addition to the three major studios reported at the interim stage, ZOOsubs has now been adopted by several Tier-2 studios and large corporations and there is a strong pipeline of future prospects.

ZOO is currently processing significant volumes of ZOOsubs work, demonstrated by the number of client projects in progress at any one time having tripled over the last two months, and expects the volume of work undertaken to grow further during the remainder of this financial year and throughout next year. Revenue from the ZOOsubs proposition is repeating in nature, which provides the Company with greater visibility over future revenue and resource requirements. 

Whilst the Company is pleased with the momentum building in ZOOsubs, its revenue profile tends towards delivery as an ongoing service rather than as licence sales, and accordingly revenue for the year to 31 March 2014 is now expected to be below the Company's expectations and in the region of $9.5 million. In acknowledgement of customer enthusiasm and their requirements, the Company has also significantly increased its investment into ZOOsubs in order to meet the market opportunity and demand, including the development of a subtitling team with significant expertise in the sector. As a consequence of the above, the Company now expects to report a loss at the EBITDA* level of no more than $0.4 million, and a loss* before tax significantly greater than the previous year.

Separately, the prospects for the Company's ZOOcore business remain strong and continue to contribute to ZOO's recurring revenues.

The Group has during the second half of the financial year announced an extension in the term of its convertible loan notes to 31 October 2017 and the renewed ongoing support for its working capital requirements provided by its standby loan facility. In addition, the Company now has a committed invoice financing facility of up to $1 million to support the working capital requirements of the Company.

Stuart Green, chief executive officer of the Company, commented that: "Whilst it is disappointing that ZOOsubs volumes initially took longer than expected to build, we are pleased that this side of our business is now gaining momentum. We have focused our efforts, and our at times constrained resources, on developing specifically this proposition, which provides significant visibility of future revenues and has already diversified our customer base."

* Adjusted for exchange differences and share based payments

Ends

For further enquiries please contact:

About ZOO Digital Group plc:

ZOO Digital Group plc provides software and related services that support the authoring, re-purposing and distribution of creative media. ZOO's products form an integrated suite of Cloud-based and desktop applications for audio/visual content and printed materials, adapting these media for different languages, formats and delivery mechanisms.

By centralising editorial and approval processes via secure cloud-based platforms, ZOO's proprietary patented software helps customers to increase their speed of production, reduce costs and protect their brand integrity. ZOO's services enable quicker and more cost effective processes across a wide range of applications and formats, including packaging, printed materials, DVD, Blu-ray Disc, video on demand, electronic sell-through, broadcast, music and electronic books.

The Group's largest customers include major Hollywood studios, for which the production, marketing and distribution of titles in numerous formats across many geographies and languages has previously been a lengthy, costly and largely manual process. Increasingly the Group's software is benefiting a variety of companies across sectors where the development of media products, printing, packaging and marketing involves complex processes in multiple countries and languages, particularly where brand integrity is of core importance.