Preliminary Results

Zoo Digital Group PLC
21 April 2004

For embargoed release at 7am
                                   21 April 2004



                             ZOO Digital Group plc

                             ('ZOO' or 'the Group')



            PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2003



Highlights



•    Turnover increased by 171 per cent to £5.1million (2002: £1.9m)



•    Pre-tax losses reduced by 49 per cent to £955,000 (2002: £1,874,000)



•    Successful share placing completed in December raising £5.75m gross



•    Cash Balances as at 31 December 2003 of £5.5million (2002: £1.3million)



•    Eight patents filed during the year in the UK, USA and internationally



•    Continued investment in revolutionary DVD-EXTRA software authoring system


•    Three interactive DVD products shipped under Universal Pictures UK
     licensing agreement


Commenting on the results, Ian Stewart, CEO of ZOO said:



'The last year has been very exciting for ZOO in terms of significant growth and
increased activity.  The successful fund-raising allows us to accelerate taking
the DVD-EXTRA technology to the market.  We have made considerable progress both
in financial terms, by greatly increasing turnover and reducing losses, and in
product terms by demonstrating commercially viable and attractive products and
technology that has been purchased by some of the biggest names in
entertainment.  The management believes that over the next 12 months ZOO will
experience further dramatic changes in the prosperity and innovation of this
business.'



Enquiries:



Ian Stewart
CEO, ZOO Digital Group plc
0114 241 3700



James Chandler/Grace Marriner
Beattie Financial
020 7398 3300


John Llewellyn-Lloyd
Noble & Company Limited
020 7367 5600




CHAIRMAN AND CHIEF EXECUTIVE'S STATEMENT


Introduction

The year to 31st December 2003 was one of significant growth and development for
the Group in its key areas of activity, culminating in a restructuring of ZOO
into two defined business units; ZOOtech Ltd and ZOO Digital Publishing Ltd ('
ZDPL').

The successful fundraising in December 2003 allowed the Group to continue to
invest in the DVD-EXTRA technology and to progress with its strategy in the
video games market.  All planned developments on DVD-EXTRA were successfully
completed and we are pleased to report that the first version of the DVD-EXTRA
STUDIO authoring tool is ready for commercial release and is being formally
launched at the National Association of Broadcasters Conference (NAB) in Las
Vegas, which started on 17 April 2004.

In the games publishing business turnover was significantly increased to
£5.1million through the production of the interactive DVD titles licensed to
Universal Pictures UK ('Universal') and the acquisition of other titles and IPs.
In the year we also acquired a portfolio of products & IPs which will form a
catalogue of titles to be exploited going forward.


Financial Review

The company has increased its turnover by 171 per cent for the period to £5.1
million compared with £1.9 million for the same period in 2002. Loss before
interest, tax, depreciation and amortisation was reduced to £955,000 from £1.9
million in the previous year. The retained loss for the financial year was
reduced to £1.5 million (2002: loss of £2.2m) with a loss per share of 0.74p
(2002: loss of 1.46p).

We continued to write off all research, development and set up expenditure for
DVD-EXTRA to the Profit and Loss Account and this accounts for most of the loss
in the year. The games publishing business made a small profit in the second
half of the year.  Following the successful fundraising of £5.75 million gross
through the share placing completed in December 2003 the cash position of the
Group was significantly strengthened and as at 31 December 2003 stood at £5.5
million (2002: £1.3 million).


ZOOtech Ltd

Over the last twelve months investment has continued in the development of the
DVD-EXTRA technology.  In the early part of the year we formed an 'Early Adopter
Programme' with the intention of working closely with 20 organisations covering
the major market segments. The programme achieved all of its objectives with
over 50 organisations joining including 'The Walt Disney Company', 'BBC
Worldwide' and GDMX (a division of Warner Home Video).  The culmination of all
this hard work and these partnerships saw the formal release and launch of '
DVD-EXTRA STUDIO' at the National Association of Broadcasters Conference (NAB)
in Las Vegas in April 2004.

ZOO applied for a further 8 patents during the year in the UK, USA and
internationally under the Patent Cooperation Treaty and we have established a
patent development program which will help in protecting our technologies as
well as assist in commercialising our innovations.

Following the fundraising a commercial team is being established to exploit the
technology.  We have appointed a number of senior business development and
marketing personnel in both the UK and the US to drive the commercial prospects
of DVD-Extra moving forward.  To oversee ZOOtech we created the new role of
Managing Director of ZOOtech and appointed Cees Zwaard in February 2004 to fill
this position.

The reaction to our technology from our early adopters has been very
encouraging, many of whom are keen to licence the final release version and
agree commercial terms. We now need to convert this enthusiasm into sales in
what is looking like a very exciting future for the technology.


ZOO Digital Publishing Ltd

The progress of ZDPL is evident in the growth of its catalogue of products,
which included the purchase of a selection of back catalogue titles in October
2003 from Atari.  The catalogue included 16 PlayStation games and 15 PC games
with all IP rights.  Other titles acquired and published included Gallop Racer,
Beano Town Racing and Gadget Racer across various platforms.

The GameBoy Advance market held steady for us with 'Medal of Honour', 'Sim City'
and 'Who Wants To Be A Millionaire' all performing well and indicating that the
market will continue to be buoyant during 2004.  The Company will therefore
continue to support the platform and have already secured a number of strong
titles for release including 'Pacman World', 'I- Ninja' and 'Dead to Rights'
from Namco.  New versions of 'Premier Manager' and 'Who Wants To Be A
Millionaire' are being developed internally for this platform.

As announced in January, a disappointment in the year was the failure to deliver
Premier Manager 2003, our major release for the year, in time for the Christmas
market. The reasons for this slippage have been addressed and changes have been
made in the way that we develop and manage the title to ensure the product is
delivered in good time for the next Christmas market. Premier Manager will
continue to be one of our flagship brands with the 2004 version releasing in
November on PlayStation 2, PC and GameBoy Advance.

Universal released our interactive DVD product 'Who Wants To Be A Millionaire'
in the UK and France in October 2003 supported by a high-level marketing
campaign including national TV advertisements. Due to strong sales of the
products Universal is looking to extend the release of the game across other
European territories.

Retail acceptance of the product indicates the opportunities that now exist in
this new genre - 'DVD Game', as well as promoting DVD-EXTRA as the method of its
development.  A great deal of focus has gone into building the 2004 catalogue
and we have now secured 18 GameBoy Advance titles including  'Pacman World' and
'I-Ninja', 10 PC titles including 'The Suffering' and 'Pool Shark', 6
PlayStation 2 titles including 'Dangerous Hunts' and 'Zool'.  In addition ZOO
will launch its first Xbox titles to be announced later in the new financial
year.  We will also launch at least 6 interactive DVD titles including new
versions of 'Who Wants To Be A Millionaire' and other titles of a similar
nature.  Clearly, such diversity in the catalogue leaves ZOO less reliant on any
one individual release and makes for a very busy but exciting year.


Outlook

In the year ahead we believe that ZOO can take advantage of the positions
established in both ZOOtech and ZDPL.  In ZOOtech we have expensed all
development costs to date and are quickly building a commercial team to take the
product to market. The feedback from the Early Adopters of the software has been
very encouraging and the breadth of uses for the software across the different
market segments gives us great confidence that we will begin to earn revenues
soon after launch.

In ZDPL we have laid the foundations to build up our financial strength,
increasing revenues and profitability. Our objective is to continue to build the
portfolio of intellectual property and to deliver profitable growth. Our
acquisition of the trade and assets of Hothouse Creations Ltd in February also
brings additional development expertise for leading gaming platforms into the
Group and combines it with significant experience in working with major
properties. This will allow us to improve our financial performance and to take
advantage of opportunities in the medium term.

We would like to take this opportunity, on behalf of the Board, to thank all
ZOO's staff for their continued hard work and commitment over the past year.


John Barnes, Chairman



Ian Stewart, CEO




ZOO Digital Group plc



CONSOLIDATED PROFIT AND LOSS ACCOUNT
YEAR ENDED 31 DECEMBER 2003


                                                              Unaudited                 Audited
                                                                   2003                    2002
                                                                  £'000                   £'000

Turnover                                                           5,093                  1,882
Cost of sales                                                    (4,091)                 (1,581)
Gross profit                                                       1,002                     301

Grant income                                                         222                      40
Overheads                                                        (2,179)                 (2,215)

Loss before interest, tax, depreciation and                        (955)                 (1,874)
amortisation

Depreciation                                                       (112)                    (98)
Amortisation of goodwill                                           (451)                   (403)
Operating Loss                                                   (1,518)                 (2,375)

Interest (payable) / receivable                                      (20)                     35
Tax                                                                   84                     134

Retained loss for the financial year                             (1,454)                 (2,206)




Loss per Share                                                   (0.74p)                 (1.46p)





CONSOLIDATED BALANCE SHEET
AT 31 DECEMBER 2003

                                                     Unaudited                                   Audited
                                                          2003                                      2002
                                                         £'000                                     £'000

Fixed Assets
Intangible assets                                         3,343                                    3,756
Investments                                                 228                                      228
Tangible assets                                             127                                      210
                                                          3,698                                    4,194


Current Assets
Stock                                                       394                                      363
Debtors                                                   3,107                                    1,435
Cash at bank & in hand                                    5,451                                    1,306
Total current assets                                      8,952                                    3,104


Creditors : amounts falling due within one year         (3,185)                                  (2,595)

Net current assets                                        5,767                                      509

Total assets less current liabilities                     9,465                                    4,703

Creditors : amounts falling due after more                                                         
than one year                                               -                                      (757)


Net assets                                                9,465                                    3,946


Capital & Reserves
Called up share capital                                     558                                      315
Share Premium                                            18,691                                   11,961
Other Reserves                                            8,598                                    8,598
Profit & Loss Account                                  (18,382)                                 (16,928)

Total Capital & Reserves                                  9,465                                    3,946




CONSOLIDATED CASH FLOW
YEAR ENDED 31 DECEMBER 2003

                                                                        Unaudited                 Audited
                                                                             2003                    2002
                                                                            £'000                   £'000

Net cash in from operating activities                                      (2,070)                 (2,583)
Returns on investments and servicing of finance                               (20)                      66
Tax refund                                                                      84                       -
                                                                                                
Capital investment and financial investment                                   (67)                    (45)
Acquisitions and disposals                                                       -                     (6)
                                                           
Cash outflow before financing                                              (2,073)                 (2,568)
Financing                                                                    (755)                     551
Issue of ordinary share capital                                              6,973                       -
                                                                                               
(Decrease) / Increase in cash in the year                                    4,145                 (2,017)

Reconciliation of net cash flow to movement in net funds

Increase/ (Decrease) in cash in the year                                     4,145                 (2,017)
Cash inflow/ (outflow) from increase in debt and lease                         
financing                                                                      755                   (551)

Change in net (debt) / funds resulting from cash flows                       4,900                 (2,568)
Loan notes issued on acquisition of subsidiary                                                       (250)
Net funds/ (debt) at 1 January                                               (307)                   2,511
Net funds/ (debt) at 31 December                                             4,593                   (307)


Reconciliation of operating loss to operating cash flows

Operating loss                                                             (1,518)                 (2,375)
Depreciation charges                                                           112                      98
(Increase) / Decrease in debtors                                           (1,672)                   (363)
Increase / (Decrease) in creditors                                             588                   (698)
(Increase)/ (Decrease) in stock                                               (31)                     352
Goodwill amortisation                                                          451                     403

Net cash outflow from operating activities                                 (2,070)                 (2,583)


Analysis of cash flows

Returns on investments and servicing of finance
Interest received                                                               38                      83
Interest paid                                                                 (53)                    (12)
Finance lease interest paid                                                    (5)                     (5)

Net cash inflow/ (outflow)                                                    (20)                      66


Capital expenditure and financial investment

Purchase of intangible fixed assets                                           (38)                       -
                                                                                               
Purchase of tangible fixed assets                                             (29)                    (60)
Receipts from sales of fixed assets                                                                     15
Purchase of investment

Net cash outflow                                                              (67)                    (45)


Acquisitions and disposals

Costs of acquisition                                                                                  (28)
Purchase of business
Cash acquired with subsidiary                                                                           22

Net cash outflow                                                                -                      (6)              
                            
                                                            


Financing

Capital element of finance lease rentals                                       (5)                    (49)
Repayment of director's loans                                                (500)                     600
Repayment of loan notes                                                      (250)

                                                                             (755)                     551





NOTES TO THE ANNOUNCEMENT


1.             Basis of Preparation and Accounting

The preliminary statements have been prepared under the historical cost
convention and in accordance with applicable United Kingdom accounting
standards.

The financial information set out in this preliminary announcement does not
constitute full accounts within the meaning of section 240 of the Companies Act
1985

The balance sheet at 31 December 2003 and the profit and loss account, cash flow
statement and associated notes to the year then ended have been extracted from
the Group's financial statements. These financial statements are unaudited and
have not yet been delivered to the Registrar.


2.                   Annual Accounts and Further Copies

The annual report and accounts will be posted to shareholders in due course and
further copies will be available, free of charge, for a period of one month
following posting to shareholders from the Company's Nominated Adviser and
Broker, Noble & Company Limited, 76 George Street, Edinburgh, EH2 3BU, Tel: 0131
225 9677 or from the registered office of the Group at Parkhead House, 26 Carver
Street, Sheffield, S1 4FS.


END


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