Contract Wins and Trading

Zoo Digital Group PLC 10 April 2008 ZOO Digital Group plc (the 'Company') Contract win and trading update Contract wins ZOO Digital Group plc (AIM: ZOO.L), the digital media technology and services group, is pleased to announce that it has secured a material contract to deliver software automation products including its recently launched Media Adaptation Tool (MAT) to Walt Disney Studio Motion Pictures International. The contract will provide a minimum income of $15 million over its fifteen year term. In addition, Sony Pictures Entertainment has licensed ZOO's Templated Authoring System ('TAS') and will shortly be in production of standard definition DVD titles using this innovative productivity tool. Through Sony the Board expects that TAS revenues will increase considerably in the current financial year. Trading ZOO announces that group turnover from continuing operations for the year ended 31st March 2008 was approximately £3.3 million, an increase of 119 per cent compared to the previous year. Losses before interest, tax, depreciation, amortisation and exceptional items were £1.4 million, in line with management expectations. The acquisition of Scope Seven has significantly improved ZOO's ability to penetrate the US market. As anticipated, the termination of our relationship with GDMX, announced in December 2007, has held back revenue growth but the Directors believe that this has created a more stable business with higher margins. The Board remain confident about the future prospects for Scope Seven, particularly in light of the strong order book expected to generate significant revenues. We have seen a significant increase in the production of DVD games in the US through Scope Seven. A number of major US clients including Hasbro and Mattel are now providing a considerable throughput of new projects made possible through ZOO's DVD-EXTRA technology. The uncertainties in the next generation home video market were resolved in early 2008 as a result of Warner's and Toshiba's discontinuation of support for HD DVD. As a consequence, ZOO now sees significant opportunities in the area of technology and services for Blu-ray title production. We are accelerating the development of Blu-ray products which will be deployed by Scope Seven to provide services for current and prospective Hollywood clients. Exceptional item The Board has been notified that ZOO Interactive Entertainment Limited (ZIE), formerly owned by ZOO, has appointed a liquidator. We have therefore fully provided against the £175,000 owed by ZIE to ZOO in deferred consideration, together with royalty payments of £40,000 due to ZOO in March 2008. This has no significant implications for our trading in the future. Cash balances The cash position was approximately $1.3 million as at 31st March 2008 and with initial payments on the above deals and the cost rationalisation programme expected to preserve cash to the extent of $2.4 million, the Board is confident that the Group will be cash positive within the current financial year Outlook As a result of these and anticipated contract wins the Board is confident that ZOO will see significant growth in revenues in the current financial year. We have rationalised the cost base with the aim of achieving monthly profitability during the current financial year. With the introduction of new major customers and additional revenue streams based on a proven, market-tested product set the Board looks forward to a year of significant progress both financially and operationally. For further enquiries please contact: ZOO Digital Group plc Tel: 0114 241 3700 Stuart Green - Chief Executive Officer Helen Gilder - Group Finance Director KBC Peel Hunt Ltd Tel: 020 7418 8900 Richard Kauffer Daniel Harris Weber Shandwick Financial Tel: 020 7067 0700 Nick Dibden John Moriarty Notes to Editors About ZOO Digital Group plc ZOO Digital Group plc is an international technology and services company that targets the digital media production market through conceiving, developing and deploying innovative software solutions to enable efficient production services. The Group has two subsidiaries, ZOOtech Limited and Scope Seven LLC. ZOOtech is responsible for creating ground-breaking software products whilst Scope Seven provides digital media production services, including video compression, authoring and interactive title development. ZOO is focused on the worldwide digital media production markets and in particular video production for entertainment, games and education applications, with customers including Hollywood studios and other producers and publishers of video-based products. The Group provides innovative software technologies that transform digital workflows through radical process re-engineering combined with a range of associated production and custom development services. About ZOO's subsidiaries ZOOtech supplies innovative digital asset solutions for multi-national companies, based around its widely patented automation software suite. These solutions are customised for each client and enable a very rapid simplified production of multiple versions of media. ZOOtech's expertise ranges from Blu-ray disc authoring to DVD menu and printed material regionalisation and adaptation. It has long-standing relationships with some of the biggest names in home entertainment. ZOOtech pioneered DVD-EXTRA technology to enable CD-ROM style interactivity in the DVD-Video format. Read more http://www.zoo-tech.com/ Scope Seven is a media production and design company providing creative and technical services to companies in the entertainment, games and education industries. The company is based in Los Angeles and has clients in Hollywood and worldwide. Read more http://www.scopeseven.com/ This information is provided by RNS The company news service from the London Stock Exchange ND MSCFKCKNFBKDFQK
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