Final Results

RNS Number : 3781H

Zoo Digital Group PLC

11 July 2012

 



ZOO DIGITAL GROUP PLC

('ZOO' or 'the group')

FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2012

ZOO, the provider of workflow management software and services for creative media production, is pleased to announce its final results for the year ended 31 March 2012.

HIGHLIGHTS

Operational highlights

·      Profitable second half of the year following a particularly challenging first half

·      Further progress in eBooks and Electronic Sell Through ("EST") markets

·      ZOO Subtitling tool developed to meet customer needs

·      Increasing demand for workflow management installations

Key Financials

·      Revenues of $11.2m (2011:$13.8m)

·      Adjusted EBITDA of $0.5m (2011:$2.5m)*

·      Adjusted operating loss of $0.7m (2011:profit of $1.5m)*

·      Year-end cash balance $1.2m (2011:$0.6m)

* Adjusted EBITDA and operating profit are stated before share based payments of $0.3m (2011: $0.2m).

Stuart Green, CEO of ZOO Digital, commented,

"I am pleased to report that the group returned to profit in the second half after the challenging conditions of the first six months when the DVD market was going through a particularly turbulent time.  Volumes levelled off in the second half and the throughput of titles stabilised while a greater emphasis on adapting titles for Blu-ray, particularly with back catalogues, added extra impetus. 

"Encouragingly, the improving trend of the closing months has continued into the current financial year and, with what we believe is better diversity and suite of products than we have enjoyed at any time previously, we view the coming year with optimism although we must remain cautious given the unpredictability of markets in the current economic environment."

For further enquiries please contact:

ZOO Digital Group plc	Tel: [phone]
Stuart Green - Chief Executive Officer
Helen Gilder - Group Finance Director
finnCap	Tel: [phone]
Marc Young/Henrik Persson (corporate finance) Joanna Weaving (corporate broking)
Newgate Threadneedle	Tel: [phone]
Josh Royston/Terry Garrett/ Hilary Millar

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

CHAIRMAN'S STATEMENT

As highlighted at the time of our interim results, the turmoil and changing dynamics within the home entertainment industry resulted in a difficult first half of the year for ZOO. Although the market remains volatile, management initiatives taken earlier in the year, and the continued diversification of our product set, enabled us to perform profitably and in line with expectations in the second half of the year. As such, revenues for the full year to 31 March 2012 were $11.2 million (2011: $13.8 million) with an adjusted* operating loss of $0.7 million (2011: operating profit of $1.5 million). Support from shareholders and loan note holders during the year enabled the strengthening of the Group's balance sheet, and the cash balance at year end was $1.2m.

Whilst the performance in the first half was clearly disappointing, the Board of ZOO believes that we have come through this year more resilient and with a stronger range of product suites and tools to offer our customers. What has been particularly pleasing is that customers using our workflow management tools in one area of their business have specifically asked us to apply our expertise in other fields. This underlines the quality of our products and service levels, and provides us with the opportunity to increase our business with existing customers and develop new opportunities with a proven demand. We have, for example introduced our own software product for subtitling, addressing a very large opportunity which has previously been sub-contracted to third party service providers.

ZOO's products and services remain highly relevant to companies in all industries where there is a need to maintain the quality and brand integrity of creative media content. Our financial results this year have been impacted by the turmoil in the home entertainment industry, but the Board believes that we have entered the current year with a more compelling proposition and stronger product set than before, and therefore continues to view the future with cautious optimism.

Roger D Jeynes

Chairman

*Operating profit is stated before the charge for share based payments

CHIEF EXECUTIVE'S STATEMENT

Operational review

After a particularly challenging first half of the year, trading for the second half of the year was profitable and in line with the Board's expectations.

Filmed entertainment

As indicated at the time of the Company's interim results, the DVD market had a particularly turbulent start to the year, with a decreased number of titles being released, leading to a decline in the number of titles being processed by ZOO's software tools and by our production services team in Los Angeles. This was especially noticeable in the number of new episodic TV releases on DVD since the summer months.  Since the half year, this volume decline has levelled off and the general throughput of titles has stabilised.

Our largest client reacted to the change in title volumes by reducing the number of external suppliers for filmed material production and it is testament to ZOO's product suite and service levels that we have maintained our strong working relationship. Therefore, although the overall volumes of new titles being released are still markedly down on 12 - 18 months ago, the percentage of the overall number of titles adapted using ZOO's workflow systems has increased since the year end.

We have also benefited in the second half from a greater emphasis on adapting titles for Blu-ray. This has mostly been as the result of our large customers looking to make the best use of their past catalogues, rather than new releases, a trend which we expect to continue into the new financial year.

At the time of the interim results we announced that we had already reduced our headcount in the US and restructured our cost base to give a lower fixed overhead, better equipping us to deal with volatility in the market. This process has been largely completed and we are already seeing the benefits coming through.

eBooks and Electronic Sell Through ("EST")

ZOO's eBook Builder has been designed as an efficient and cost effective way for publishers to repurpose traditional books for sale online. This tool works in conjunction with ZOO's software for managing collaborative workflows, adapting materials into multiple languages, and providing storage and distribution of content for multiple eBook vendors. The market has been dominated traditionally by low cost, labour intensive providers adapting pure text literature for electronic sale. The great advantage of ZOO's toolset is that it maintains the formatting qualities and standards of a physical production. This is particularly important where pictures or illustrations are used to accompany text in a book.

Over the course of the year we have continually improved our offering and adapted our tools to meet our customers' needs. We have increased the number of publishers and content providers with whom we work and continued to gain traction in the market. Not surprisingly, the initial focus of publishers and content owners has been to reproduce the much easier, text only publications in order to market test the demand for electronic books before committing to the cost of formatting for the more content rich libraries. With the initial success of the eBook market and the ability to offer additional functions including interactivity, we have reasoned that it is just a matter of time before there is a step change in the volume of works re-formatted. With ZOO's ability to adapt materials to be compatible with all of the operating platforms of the major device manufacturers and with our capability to maintain the quality of reproduction and thereby the readers' experience, we believe that we are well placed to capitalise on this opportunity.

The Company also continues to make further progress with its other EST products for use through Apple's iTunes Extras and iTunes LPs platforms. These are for the conversion of material for electronic sale in both the filmed entertainment and music industries which includes extra material long associated with the traditional formats in both sectors. Sales due to the use of these tools have been steady but, as yet, these Extras and LPs are supported by the Apple platform on desktop computers only. We believe that the catalyst for accelerated growth in this area will be the support for these features on Apple's tablet and phone hardware which we anticipate will become available in due course.

Subtitling

As a result of demand from our leading customers, ZOO has become increasingly involved in the area of subtitling. In the past this was a service that we have outsourced on behalf of our clients, but the success of our workflow management tools within the major studios led to an opportunity to include this capability as a component of our software suite.

We have therefore created the ZOO Subtitling Tool, a cloud-based Software-as-a-Service workflow solution that supports the preparation, review and approval of subtitles for filmed and TV entertainment.  The system is designed to allow the preparation and adaptation of subtitle information across all platforms, i.e. DVD, Blu-ray, EST and broadcast. As well as seeing demand for this software for new filmed material we are also enjoying great interest in its use for the conversion of subtitles from existing materials to other platforms, e.g. from DVD to Blu-ray.

This product set is still in its infancy but as we continue to improve functionality we believe that the opportunity is considerable; a number of the major content owners and distributors have already expressed great interest and have begun to use the software.

Workflow Management

We are increasingly uncovering more and more opportunities to provide software solutions to a wide variety of creative media organizations to support their complex production workflows.  One of our great strengths lies in being able to understand the unique challenges of the workflows employed by businesses for creative media production and to devise systems that can bring remarkable new efficiencies. 

Since developing the Translation Management System for collaborative preparation of localized materials, such as marketing campaigns and product packaging, we have continued to innovate in this field.  As a result we have now assembled a powerful software suite that addresses efficiently many distinct steps common to a wide variety of creative media production workflows, such as project tracking, task management, translation, review and approval.

Our workflow management toolset provides a configurable cloud-based system that can be tailored to suit the unique requirements of any business or team.  Each such configuration can be developed and deployed very quickly and easily, giving a solution that teams can begin to work with immediately that will deliver a quick return on investment.  This toolset is licensed on a Software-as-a-Service basis, providing our customers with a cost-effective workflow solution whilst generating a recurring and growing revenue stream for ZOO.

We have deployed a number of systems using our toolset for a film studio client and have several more in the pipeline.  Our market testing of this proposition indicates a wide appeal amongst creative media companies of many different types - film-makers, TV producers, music studios and book publishers to name a few - that currently lack the tools to provide scalability to their production processes.  We find that most businesses are relying on email and file attachments to manage production workflows - an error-prone and cumbersome approach that is difficult to scale.  We are optimistic that our proposition can bring considerable benefits to a wide range of businesses and that this represents a significant growth opportunity for the Group.

Staff

It continues to be a privilege to work with such a talented team of professionals in both our UK-based R&D centre and our US-based production services facility.  In all areas of the business our success hinges on the talents, creativity and dedication of our staff who continue to excel in delivering innovative technology and first class customer services.  We strive to provide a great place to work in order to attract and retain our key talent. On behalf of the Board I would like to extend my thanks to all our staff for their contributions over the past year and I look forward to working together in the year ahead.

Outlook

The improvement that we saw in the second half of the year has continued into the current financial year and we believe that we have a better diversity and suite of products than at any time previously. However, the overall economy and particularly the markets in which we operate are still hard to predict and, therefore, whilst we enter the new year with confidence we remain alert to general conditions.

Stuart A Green

CEO

 FINANCIAL REVIEW

Year ended 31 March 2012

Financial Review

The year ended 31 March 2012 was challenging.  As reported previously, the entertainment industry has experienced a shift away from DVD purchase towards rental and to newer formats such as Blu-ray and electronic downloads.  We had anticipated this change and had planned accordingly.  However, the studios experienced a faster than expected consumer shift which affected, in particular, DVD TV content, which resulted in a reduction in revenue for the year.  We acted promptly and reduced our fixed costs but the results for the year were impacted.

Results for the year

The revenue reported for the year was $11.2m compared to $13.8m in the prior year.  As explained last year we took action to remove ourselves from a non-core arrangement whereby we were outsourcing certain work to a third party and receiving a very low margin.  We ceased this arrangement although it took a while to work through, resulting in $0.8m revenue in respect of outsourced services in the year to 31 March 2012 compared to $2.0m in the prior year.  Should this non-core revenue be removed, the underlying revenue for the business would have been $10.4m this year compared to $11.8m last year. 

The turnover of $5.3m generated in the second half of the year compares favourably against that in the first half at $5.9m since the seasonality of the business generally dictates a much stronger first half.

The gross profit earned this year was $9.3m compared to $11.4m in the prior year which represents a margin unchanged across both years.  Management has actively pursued opportunities to reduce costs throughout the business, including switching from a fixed cost model to outsourcing wherever practical.

During the year the business has diversified both in terms of product sets and customers.  Whilst the absolute level of turnover derived from one major customer (that still accounts for a significant portion of our revenues) has decreased, revenue from customers other than that major customer has increased by 30% on the previous year and the number of unique customers has increased by 86% from 37 to 69.

Overhead costs are broadly unchanged with the reported total for the year at $10.5m compared to $10.2m in the prior year.  The major contributor to this number, being staff costs, is reduced from $6.5m to $6.2m but this saving is outweighed by an increase in the amortisation charge from $0.5m to $0.9m.

The group generated an operating loss, adjusted for share based payments, of $0.7m compared to a profit of $1.5m in the prior year.  At the interim stage we announced an adjusted operating loss of $0.9m for the first half.  I am pleased to confirm that we have returned to profit, with $0.2m, in the seasonally weaker second half of the year.

We have continued to take advantage of grant funding throughout the year and the total amount of cash received from grants was $0.2m (2011: $0.3m).  We still have grant-supported projects on-going with $0.8m of funding still available at the end of the financial year (2011: $0.9m).

The group has significant tax losses available for use against future profits.  At 31 March 2012 there were around $31m of tax losses. Consequently we do not expect to pay tax in either the UK or the US for the foreseeable future.

Convertible loan note

During the year we arranged to extend, by issuing amended loan notes, the maturity date of half of our issued convertible loan notes with the other half converting into equity.  The amended loan note, totalling $2.8m (£1.77m), carries a coupon of 7.5%, a conversion price of 48p and matures in October 2013.  The partial conversion of this loan note has led to a reduction in the liability on the balance sheet and a reduction in the interest exposure.

The partial loan note conversion was at a price of 40p, a discount to the originally agreed price of 48.75p, and consequently we are required under International Financial Reporting Standards (IFRS) to make a fair value adjustment which impacts our Consolidated Statement of Comprehensive Income (CSoCI).  Therefore, a loss of $0.5m is reported within the finance section of the CSoCI.  This has neither an impact on cashflows nor on trading performance, and is merely an accounting entry necessitated by the IFRS standard.

Cash flow

The group generated cash of $0.8m from operating activities compared to $0.9m in the prior year and the net increase in the cash balance in the year was $0.6m bringing the balance at 31 March 2012 to $1.2m compared to $0.6m in the prior year.

Summary

The year to 31 March 2012 was a difficult one from a financial perspective.  We made good progress in terms of expanding the offering into new areas and customers and were disappointed that the overall result was not as good as we originally planned.  It is good to see a return to profitability in the second half of the year and I am pleased to report that the current year is looking stronger with many opportunities to capitalise upon.  I concur with the Board's cautious optimism for the year ahead.

Helen P Gilder

Group Finance Director

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 March 2012

		2012	2011
	Note	$000	$000
Revenue		11,186	13,757
Cost of sales		(1,907)	(2,388)
Gross Profit		9,279	11,369
Other operating income		168	135
Operating expenses		(10,471)	(10,158)
Operating (loss)/profit		(1,024)	1,346
Exchange gain/ (loss) on borrowings		14	(300)
Renegotiation of convertible loan stock		(526)	-
Finance cost		(430)	(535)
Total finance cost		(942)	(835)
(Loss)/profit before taxation		(1,966)	511
Tax on (loss)/profit		(60)	484
(Loss)/profit and total comprehensive income  for the year attributable to equity holders of the parent		(2,026)	995

(Loss)/profit per share	3
basic		(7.01) cents	4.29 cents
diluted		(7.01) cents	2.84 cents

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 31 March 2012

		2012		2011
	Note	$000		$000
ASSETS
Non-Current Assets
Property, plant and equipment		430		549
Intangible assets		9,487		8,480
Deferred income tax assets		486		486
		10,403		9,515
Current Assets
Inventories		-		80
Trade and other receivables		2,365		3,016
Cash and cash equivalents	4	1,234		600
		3,599		3,696
Total Assets		14,002		13,211
LIABILITIES
Current Liabilities
Trade and other payables		(2,722)		(3,319)
Borrowings	6	(194)		(5,709)
		(2,916)		(9,028)
Non-current Liabilities
Borrowings	6	(2,939)		(191)
Total Liabilities		(5,855)		(9,219)
Net Assets		8,147		3,992
EQUITY
Equity attributable to equity holders of the parent
Called up share capital	5	7,236		5,127
Share premium reserve		37,014		33,626
Other reserves		12,293		12,293
Share option reserve		248		278
Warrant reserve		440		190
Convertible loan note reserve		42		380
Foreign exchange translation reserve		(992)		(992)
Accumulated losses		(48,053)		(46,782)
		8,228		4,120
Interest in own shares		(81)		(128)
Attributable to equity holders		8,147		3,992

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 March 2012

	Ordinary shares	Share premium reserve	Foreign exchange translation reserve	Convertible loan note reserve	Share option reserve	Share warrant reserve	Other reserves	Accumulated losses	Interest in own shares
	$000	$000	$000	$000	$000	$000	$000	$000	$000
Balance at 1 April 2010	4,573	32,899	(992)	380	267	50	12,293	(47,822)	(4)
Issue of shares	468	779
Issue costs		(52)
Share based payments					69	140
Exercise of share options	86				(41)			42
Forfeited share options					(17)			3
Purchase of own shares									(124)
Profit and total comprehensive income for the year								995
Balance at 31 March 2011	5,127	33,626	(992)	380	278	190	12,293	(46,782)	(128)
Issue of shares	1,017	1,695
Issue costs		(243)
Loan note conversion	1,059	1,936		(380)				190
Fair value adjustments on loan note conversion								507
Loan note issue				42
Share based payments					32	250
Exercise of share options	33				(15)			15
Forfeited share options					(47)			43
Purchase of own shares									(68)
Disposal of own shares									115
Loss and total comprehensive income for the year								(2,026)
Balance at 31 March 2012	7,236	37,014	(992)	42	248	440	12,293	(48,053)	(81)

CONSOLIDATED STATEMENT OF CASH FLOWS

for the year ended 31 March 2012

		2012	2011
	Note	$000	$000
Cash flows from operating activities
Operating (loss)/profit for the year		(1,024)	1,346
Depreciation		393	424
Amortisation & Impairment		867	497
Share based payments		278	196
Purchase of own shares		(68)	(124)
Disposal of own shares		115	-
Disposal and de-recognition of intangible assets		68	24
Changes in working capital:
Decreases in Inventories		80	285
Decreases/(increases) in Trade and other receivables		651	(349)
(Decreases)/increases in Trade and other payables		(597)	1,444
Cash flow from operations		763	855
Tax paid		(60)	(2)
Net cash flow from operating activities		703	853
Investing Activities
Purchase of intangible assets		(1,942)	(2,098)
Purchase of property, plant and equipment		(274)	(415)
Net cash flow from investing activities		(2,216)	(2,513)
Cash flows from financing activities
Repayment of borrowings	6	(202)	(144)
Proceeds from borrowings	6	187	288
Finance cost		(340)	(386)
Share and convertible loan issue costs	5	(243)	(52)
Issue of Share capital	5	2,745	1,333
Net cash flow from financing		2,147	1,039
Net increase/(decrease) in cash and cash equivalents		634	(621)
Cash and cash equivalents at the beginning of the year		600	1,221
Cash and cash equivalents at the end of the year	4	1,234	600

NOTES TO THE FINANCIAL STATEMENTS

for the year ended 31 March 2012

1.     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, publishing 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 of London Stock Exchange 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.

The consolidated financial statements are presented in US dollars, the currency of the primary economic environment in which the company operates (note 2.2).

2.     Summary of significant accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been applied consistently to all the years presented, unless otherwise stated.

2.1     Basis of preparation

These financial statements have been prepared in accordance with IFRS as adopted by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that effect the application of policies and reported amounts in the financial statements.

A separate Statement of Comprehensive Income for the parent company has not been presented as permitted by section 408 (2) of the Companies Act 2006.

The directors have prepared trading and cash flow forecasts for the group for the period to 31 March 2015 which show a recovery from the current position and cautious growth in profitability.  In line with industry practice in this sector the directors have had informal indications from major and other customers to substantiate a significant proportion of the forecast sales.  The directors have considered the consequences if the sales volume is less than the level forecast and they are confident that in this eventuality alternative steps could be taken to ensure that the group has access to sufficient funding to continue to operate.  Whilst the forecasts prepared do not indicate a cash requirement, should the need arise a major shareholder has confirmed that they will provide financial support to the group up to a maximum of $500,000 to ensure that the company and its subsidiaries are able to meet their liabilities as they fall due over the twelve months from the date of approval of these financial statements.

The directors believe the assumptions used in preparing the trading and cash flow forecasts to be realistic, and consequently that the group will continue in operational existence for the foreseeable future. The financial statements have therefore been prepared on a going concern basis.

2.2     Foreign currency translation

2.2.1   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 in US dollars which is the company's functional and presentation currency.

The pound sterling/US dollar exchange rate at 31 March 2012 was 0.6245 (2011: 0.6228).

3.     (Loss)/profit per share

Earnings per share is calculated by dividing the (loss)/profit attributable to equity holders of the company by the weighted average number of ordinary shares in issue during the year.

		Basic and Diluted
		2012	2011
		$000	$000
(Loss)/profit for the financial year		(2,026)	995

					2012	2011
					Number of shares	Number of shares
Weighted average number of shares for basic & diluted (loss)/profit per share
Basic					28,901,576	23,182,299
Effect of dilutive potential ordinary shares:
Convertible loan note					5,241,637	7,263,590
Share options					2,445,535	2,915,238
Share warrants					2,673,642	1,719,998
Diluted					39,262,390	35,081,125

4.     Notes to the cash flow statement

4.1  Significant non-cash transactions

During the year the group acquired property, plant and equipment and computer software with a cost of $369,000 (2011:$510,000) of which $186,000 (2011: $288,000) was acquired by the means of finance leases.

Following an agreement with the loan note holders in August 2011 to extend 50% of the loan note instrument for a further two years, the loan note was restructured. The loan note issued, as a result of the restructure, on 6 September 2011 was $2,823,000 7.5% Unsecured convertible loan note stock and matures on 31 October 2013. The underlying value of the restructured loan stock was £1,770,500. The remaining 50% of the holding was converted into 4,426,250 ordinary shares, with a value of $2,823,000 (£1,770,500).

4.2  Cash and cash equivalents

Cash and cash equivalents consist of cash on hand and balances with banks. Cash and cash equivalents included in the cash flow statement comprise the following consolidated and parent company statement of financial position amounts.

	Group		Company
	2012	2011	2012	2011
	$000	$000	$000	$000
Cash on hand and balances with banks	1,234	600	(265)	(719)

The fair value of the cash and cash equivalents are considered to be at their book value.

5.     Share capital and reserves

Called up share capital

	2012	2011
	$000	$000
Allotted, called-up and fully paid
32,660,660 (2011:23,846,255) ordinary shares of 15p each	7,236	5,127

Reconciliation of the number of shares outstanding:
Opening balance	23,846,255	21,326,421
Shares issued	4,252,500	2,148,642
Conversion of Loan note	4,426,250	-
Share options exercised	135,655	371,192
Closing balance	32,660,660	23,846,255

During the year the group purchased 274,200 (2011: 298,232) of its own shares through ZOO Employee Share Trust Limited at an average price of $0.25 (16p) per share. The total cost of the purchase was $67,593 (2011: $124,374).

Reserves

The following describes the nature and purpose of each reserve within owner's equity:

Reserve	Description and purpose
Share premium reserve	Represents the amount subscribed for share capital in excess of the nominal value.
Accumulative losses	Cumulative net losses recognised in the Consolidated Statement of Comprehensive Income.
Foreign exchange translation reserve	Cumulative exchange differences resulting from translation of foreign operations into the reporting currency.
Convertible loan note reserve	Represents the equity element of the Convertible loan note.
Share option reserve	Cumulative cost of share options issued to employees.
Share warrant reserve	Cumulative cost of share warrants issued to customers.
Other reserves	Created as part of the reverse takeover between Kazoo3D plc and ZOO Media Corporation Ltd in 2001.

6.     Borrowings

	Group
	2012	2011
	$000	$000
Non-current
Amounts owed to subsidiary undertakings	-	-
7.5% Unsecured convertible loan note stock	2,803	-
Finance lease liabilities	136	191
	2,939	191

Current
Bank overdrafts	-	-
6% Unsecured convertible loan note stock	-	5,555
Finance lease liabilities	194	154
	194	5,709
Total borrowings	3,133	5,900

On 27 September 2006 the Group issued $5,062,000 6% Unsecured convertible loan note stock which was due to mature on 31 October 2011. The underlying value of the loan stock was £3,541,000. Following an agreement with the loan note holders in August 2011 to extend 50% of the loan note instrument for a further two years, the loan note was restructured. The loan note issued, as a result of the restructure, on 6 September 2011 is $2,823,000 7.5% Unsecured convertible loan note stock and matures on 31 October 2013. The underlying value of the restructured loan stock was £1,770,500.

The loan stock holder is entitled, before the redemption date, to convert all or part of the loan stock into fully paid ordinary shares on the basis of 1 Ordinary share for every $0.7654 (£0.48) of principal amount of loan stock.

The 50% of the Unsecured convertible loan note stock which was not extended converted into 4,426,250 ordinary shares on the basis of 1 ordinary share for every $0.6378 (£0.40) of principle amount of loan stock. This differed from the original conversion terms of 1 ordinary share for every $0.7774 (£0.4875) of principle amount of loan stock. The result of the modified terms was the issue of 794,455 additional shares. The market value of these shares at the time of conversion was $507,000 (£318,000). This loss arising on the increase in the conversion ratio has been debited to the income statement as a finance cost.

The restructured convertible loan stock has been accounted for in accordance with IAS 32 (Financial instruments: Presentation) and split between debt and equity based upon the market rate of similar loan stock not carrying conversion options, estimated to be 8.5% (2006 loan note: 8%).  The fair value of the convertible loan note is considered to be the carrying value.

Annual report and Accounts

The Report & Accounts for the year ended 31 March 2012 are expected to be posted to shareholders during August 2012. Further copies will be available from the Company's Registered Office:

The Tower

2 Furnival Square

Sheffield

S1 4QL

Copies will also be available on the group's website www.zoodigital.com.

Annual General Meeting

The Annual General Meeting of the group will be held at the offices of finnCap Limited, 60 New Broad Street, London EC2M 1JJ on 25 September 2012 at 11.30am.

 

END

 

 

FR RMMLTMBIBBTT