Final Results

Zest Group PLC 07 March 2006 7 March 2006 Zest Group PLC Maiden Preliminary Results Proposed Acquisition of Greensleeves Records Limited Results The results cover the period from the Company's incorporation on 17 September 2004 to 30 September 2005. For this period the Company recorded a loss before taxation of Â£352,000 and a loss per share of 0.66p. The Directors do not recommend the payment of a dividend. Background Following incorporation, the Company's shares were admitted to trading on the Alternative Investment Market ('AIM') on 24 March 2005. At the time of its admission to AIM, the Company had already acquired certain music recording and publishing rights and in my statement in the Interim Results issued on 28 June 2005 I made mention of the progress made thus far in developing these rights. The Company has now completed the base level recordings for Tara Chinn, an exciting new female artist who is attracting attention from major record labels in the UK and the USA, for an album which is expected to be released in the current year. The Company has additionally acquired copyrights and master recordings in respect of Nasio Fontaine, an established Reggae artist, whose new album is intended to be released in the first half of 2006, in conjunction with live concerts in the summer. We have also acquired current and future publishing copyrights in respect of the work of two song writers. In my Interim Statement I also said that 'we are additionally in discussion with a number of independent music recording and publishing companies with a view to their acquisition, and are optimistic that these discussions will bear fruit within the coming months'. Proposed first acquisition There has been posted to you separately today an AIM Readmission Document giving details of the Company's proposed first acquisition (the 'Acquisition'), that of Greensleeves Records Limited ('Greensleeves'). Greensleeves is a long-established independent record label and music publishing company based in the UK with an office in the USA, specialising in reggae music. I would urge you to read carefully the Readmission Document, which contains full details of the Acquisition. I believe the Acquisition represents an exciting opportunity for the Company and will form a good base for its further development. Shareholder Meetings The Readmission Document includes notice of an Extraordinary General Meeting of the Company to be held on 30 March 2006 at which resolutions will be proposed necessary to effect the Acquisition. The Annual General Meeting of the Company, notice of which is given on page 22 of the Report and Accounts will immediately follow the Extraordinary General Meeting. Richard Griffiths Chairman 7 March 2006 ZEST GROUP PLC PROFIT AND LOSS ACCOUNT For the period ended 30 September 2005 Note Period ended 30.9.2005 Â£'000 Administrative expenses (355) Operating loss (355) Net interest receivable 3 Loss on ordinary activities before taxation (352) Taxation 2 - Loss on ordinary activities after taxation and retained loss 4 (352) Loss per ordinary share - basic 3 (0.66)p ZEST GROUP PLC BALANCE SHEET AT 30 SEPTEMBER 2005 Note 30.9.2005 Â£'000 Fixed assets Intangible assets 137 Tangible assets 3 Investments - 140 Current assets Debtors 351 Cash at bank and in hand 526 877 Creditors: amounts falling due within one year (71) Net current assets 806 Total assets less current liabilities 946 Capital and reserves Called up share capital 205 Share premium account 1,093 Profit and loss account (352) Equity shareholders' funds 4 946 ZEST GROUP PLC CASH FLOW STATEMENT For the period ended 30 September 2005 Note Period ended 30.9.2005 Â£'000 Net cash outflow from operating activities 5 (614) Returns on investments and servicing of finance Interest received 3 Net cash inflow from returns on investments and service 3 of finance Capital expenditure and financial investments Payments to acquire tangible fixed assets (4) Payments to acquire intangible fixed assets (157) Net cash outflow from capital expenditure and financial (161) investment Net cash outflow before financing (772) Financing Issue of shares 1,425 Share issue costs (127) Net cash inflow from financing 1,298 Increase in cash 6 526 NOTES TO THE PRELIMINARY RESULTS 1 BASIS OF PREPARATION The preliminary announcement has been prepared in accordance with applicable accounting standards and under the historical cost convention. The principal accounting policies of the Company are set out in the Company's 2005 annual report and financial statements. 2 TAXATION ON LOSS ON ORDINARY ACTIVITIES There is no tax charge for the period. Unrelieved tax losses of approximately Â£350,000 remain available to offset against future taxable trading profits. The unprovided deferred tax asset at 30 September 2005 amounts to Â£105,000. The tax assessed for the period differs from the standard rate of corporation tax in the UK as follows: Period ended 30.9.2005 Â£'000 Loss on ordinary activities before tax ' (352) Loss on ordinary activities multiplied by standard rate (106) of corporation tax in the UK of 30% Effect of Expenses not deductible for tax purposes 1 Deferred tax asset not recognised 105 Current tax charge for period - 3 LOSS PER SHARE The calculation of the basic loss per share is based on the loss on ordinary activities after tax of Â£352,000 divided by the weighted average number of ordinary shares in issue during the period of 53,279,921. The impact of the share options on the loss per share is anti-dilutive. 4 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS Period ended 30.9.2005 Â£'000 Loss for financial period (352) Issue of ordinary share capital (net of issue costs) 1,298 Net increase in shareholders' funds 946 Equity shareholders' funds brought forward - Equity shareholders' funds carried forward 946 5 RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES Period ended 30.9.2005 Â£'000 Operating loss (355) Depreciation 1 Amortisation 20 Increase in debtors (351) Increase in creditors 71 Net cash outflow from operating activities (614) 6 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS Period ended 30.9.2005 Â£'000 Increase in cash for the period and change in net funds resulting from cashflows 526 Net funds brought forward - Net funds carried forward 526 7 PUBLICATION OF NON-STATUTORY ACCOUNTS The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The balance sheet at 30 September 2005 and the profit and loss account, cash flow statement and associated notes for the period then ended have been extracted from the Company's 2005 statutory financial statements upon which the auditors opinion is unqualified and does not include any statement under Section 237 of the Companies Act 1985. Those financial statements have not yet been delivered to the Registrar of Companies. This information is provided by RNS The company news service from the London Stock Exchange FR GGGGFZVZGVZZ

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