Interim Results

Zoo Digital Group PLC
23 September 2004

23 September 2004

                             ZOO DIGITAL GROUP PLC
                             ('ZOO' or 'the Group')

               INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2004

        ANNOUNCEMENT OF AGREEMENT WITH UNIVERSAL PICTURES INTERNATIONAL


ZOO Digital Group plc ('ZOO' or 'the Group') today announces results for the six
months ended 30 June 2004 and an agreement with Universal Pictures International
to market and publish the interactive DVD game 'Who Wants To Be A Millionaire'
in seven territories for Christmas 2004.

Financial Highlights
     
•    Turnover increased by 131% to £3.0m (2003: £1.3 million)
•    Loss before interest, tax, depreciation and amortisation of £1.0m (2003: 
     £0.73 million)
•    Cash balance at 30 June 2004 of £3.0m (2003: £1.8 million)
•    On track to reach profitability by year end
     
Operational Highlights

•    'Who Wants To Be A Millionaire' interactive DVD game to be rolled out 
     across a minimum of seven territories for Christmas 2004
•    Detailed discussions with a number of major film/toy companies to license 
     DVD-EXTRA
•    Total of 30 games to be published over next six months on DVD, PS2, GBA, 
     Xbox and PC platforms
•    Patents and IPs related to DVD-EXTRA further extended and 2 new products 
     scheduled for release in 2005
•    Premier Manager on track for release for Christmas 2004

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

'ZOO's continued rapid progress in both the innovation of its DVD technology and
the commercial development of its two business units is extremely satisfying.
ZOO Digital Publishing Ltd ('ZDPL') is well on track to reach our goal of
profitability this year and we remain optimistic that the penetration of
DVD-EXTRA following launch will result in ZOOtech Ltd becoming profitable in
2005. With our DVD production technology we have proven that the product meets a
diverse demand across a range of market sectors and are currently in detailed
licensing discussions with a number of international multi-media brands and
major corporates.

The interactive DVD market is being established in a number of countries and it
is pleasing that ZDPL is at the forefront of this development together with
partners such as Universal Pictures, VCI and T-Online. ZDPL's focus on high
quality recognised titles is paying dividends and we will be releasing a total
of 30 games across a variety of platforms for Christmas 2004.'


Enquiries

Ian Stewart                                      James Chandler/Grace Marriner
CEO, ZOO Digital Group plc                       Beattie Financial
0114 241 3700                                    020 7398 3300

John Llewellyn-Lloyd
Noble & Company Limited
020 7763 2200


CHAIRMAN AND CHIEF EXECUTIVE'S STATEMENT

Introduction

The last six months has seen the Group build significantly on the growth and
development reported at the full year.  The restructuring of ZOO into two
defined business units; ZOOtech Ltd and ZOO Digital Publishing Ltd ('ZDPL') has
worked extremely well and allowed each unit to focus on its core competencies
and progress significantly with their respective business plans.

ZOOtech focuses on R&D and licensing of DVD-EXTRA, the Group's highly original
development software capable of creating complex interactive content for
standard DVD players.  Over the last six months, following the successful
completion of the 'Early Adopter Programme' a real and very large user demand
has been identified, culminating in the launch of DVD-EXTRA STUDIO in April
2004.  The strategy for ZOOtech is simple; to create the industry standard tool
for the production of interactive DVD content and drive revenues through
licensing worldwide in a combination of up front fees and royalties.

ZDPL, which focuses on the publishing and distribution of interactive
entertainment products across multiple platforms, continues to provide the Group
with the bulk of revenues and this side of the business is expected to continue
to generate cash and grow significantly as new titles are launched. As a
consequence of ZDPL's pioneering interactive DVD titles, the Group has
established a growing consumer appetite and widening interest in the use of DVD
as a gaming platform across many territories and we expect to grow this area
significantly.

Financial Review

The Group increased turnover by 131% for the period to £3.0m (2003: £1.3m) and
in line with expectations made a loss before interest, tax and depreciation of
£1.0m (2003: £0.73m).  The Group expanded its investment in ZOOtech with the
set-up of the commercial team and continued to invest in research and
development.  We continue to write-off this expenditure in the Profit and Loss
account with ZOOtech accounting for over 80% of the above loss. These losses in
ZOOtech are expected to reduce going forward as revenues gradually build through
up-front fees and royalties on DVD-EXTRA titles published by third parties.

The Group's cash position was £3.0m compared to £1.8m for the same period last
year with net current assets at £4.3m (2003: £1.2m).

Historically, the Group experiences a much stronger turnover in the second half
of the year, driven by Christmas trading with ZDPL, and as such ZOO expects that
the Group will reach its target of profitability in this financial year.

ZOOtech Ltd

The last six months has seen an incredibly busy period in ZOOtech's development.
The 'Early Adopter Programme' has been extremely successful and resulted in
over fifty organisations taking part including a number of Hollywood studios and
large DVD authoring houses worldwide.  A commercial team has been established
and is now in place to support the sales and marketing of DVD-EXTRA with Cees
Zwaard appointed as Managing Director of ZOOtech Ltd.  A US operation, ZOOtech
Inc, has been set up with Gordon Doran appointed as President to exploit the
product in the North American market.  As part of a plan to develop the European
marketplace, we have appointed two companies in Benelux and Germany as business
partners for a number of European territories.

Since launching DVD-EXTRA STUDIO in April 2004, the response has been very
enthusiastic.  To date we have already signed a number of developer and
publisher licences and there are already at least 15 titles in production that
have used DVD-EXTRA STUDIO for release in 10 countries over the next few months.
These include the 'Driving Test' products being published by Focus Multimedia, 3
Children's Edutainment titles commissioned by a major publisher for release in
France and 2 Interactive Marketing DVDs commissioned by a major car
manufacturer.

What has become clear is that the uses for DVD-EXTRA are very broad and we have
been able to validate our assertions that DVD-EXTRA has applications in a wide
range of market segments including film and video, education, multimedia,
marketing uses and corporate applications.  The scale is such that ZOOtech is in
active discussions with over 200 companies worldwide with regard to using
DVD-EXTRA on over 250 titles and it is anticipated that this number will grow
rapidly.

In Hollywood, for example, there is strong interest in the time and cost savings
that can be achieved using DVD-EXTRA STUDIO which reflects in the speed of
development and the opportunity to produce more engaging bonus features. In
addition, we are in active discussions with a number of studios about DVD
security and how DVD-EXTRA STUDIO can be integrated into their processes. By
2005, we envisage that DVD-EXTRA will be used by a number of Hollywood studios.

In the education sector we are working with a leading US DVD authoring house and
with 3 of the world's leading children's publishing and media companies who see
interactive DVD as an excellent platform to help educate, entertain and motivate
children as well as expand their understanding of the world around them.

We continue to attend prestigious industry events to raise visibility, brand
awareness and identify opportunities.  Since the launch of DVD-EXTRA STUDIO at
the National Association of Broadcasters Conference in April, we have exhibited
at the European Games Network (EGN) in London, Entertainment Media Expo (EMX) in
Los Angeles and International Broadcasting Convention (IBC) in Amsterdam. These
events support our vertical market strategy for business development.

At EMX, DVD-EXTRA received its second prestigious DVD Association Excellence
Award for the 'Qui Veut Gagner Des Millions' title published in France by
Universal Pictures. The award was for 'Navigation Design and Implementation' and
given to titles that demonstrate excellence in the use of the navigation
features of the DVD-Video specification. It is further testament to the
innovation and power of DVD- EXTRA.

By the end of the first half ZOOtech has filed a total of 36 patents and
ZOOtech's innovative approach to DVD development has uncovered a wide range of
new opportunities and applications.  These include a range of 'Prosumer'
products and a product that enhances DVD security.

The huge number of opportunities for DVD-EXTRA is certainly too many to pursue
all at once without over-stretching our resources.  The strategy employed is to
safeguard future opportunities through the securing of patent protection while
maintaining operational focus on those areas where the strongest and most
immediate revenue potential has been identified.

ZOO Digital Publishing Limited ('ZDPL')

ZDPL continues to go from strength to strength and the management is delighted
with the progress of this business unit.  ZDPL has an extremely attractive
portfolio of popular games lined up for the key Christmas trading period.  These
games will be released across a combination of PlayStation2 (PS2), PC, Xbox,
interactive DVD and Gameboy Advance (GBA) platforms.  Significantly, ZDPL is now
in partnership with many major quality games publishers, which further
underlines the strength, depth and saleability of the Group's games portfolio.

ZDPL has successfully expanded the territories in which it operates and is now
focussing on opportunities in the North American market where we are in active
discussions with a number of major US corporates to have product placed across a
range of platforms including interactive DVD, PS2 and Xbox.

Interactive DVD Titles

Universal will release a multi player version of ZDPL's interactive DVD product
'Who Wants To Be A Millionaire' for Christmas 2004.  The product will be
released across many territories including the UK, France, Italy, Spain,
Holland, Sweden and Australia. Furthermore Universal are marketing and
publishing ZDPL's interactive DVD football title 'FOOTBALL QUIZZ: VOTRE DEFI!'
in France for Christmas 2004. Universal's continued and expanding commitment to
interactive DVDs clearly demonstrates that interactive DVD games are gaining
mass international appeal and Universal continues to give indications that,
together with ZDPL, it wishes to remain at the forefront of this rapidly
expanding gaming market.

ZDPL has also concluded deals for the 'Who Wants To Be A Millionaire' product in
other territories.  In Germany, the Group has agreed to develop an interactive
DVD game with T-Mobile and in Russia, ZDPL has agreed a deal with Noviy Disk for
the product to be released in early 2005.

During the period ZDPL signed a licensing deal with Guinness World Records and
will publish a Guinness World Records DVD game in the UK, France and Germany to
coincide with the fiftieth anniversary of Guinness World Records. Further
territories are still in discussion with 3rd party publishers. ZDPL has also
developed its first title for VCI: 'Manchester United - The Official Interactive
DVD' which is due for release in November 2004.

For 2005 ZDPL will be broadening its range of interactive DVD products with a
focus on the lucrative North American market as well as further consolidating
its position in the European market place.

Games Publishing

Specifically on individual gaming platforms outside interactive DVD the Group
has been extremely active acquiring rights, entering into partnerships and
signing licensing deals. Regarding Premier Manager, the 2004 product which has
been developed in-house is on schedule for pre-Christmas release across GBA, PS2
and PC formats.  On the PC gaming side ZDPL has signed a European publishing
deal with Midway for three titles: 'The Suffering', 'Arcade Treasures' and '
Psi-Ops - The Mindgate Conspiracy'.

For GBA ZDPL has acquired the rights to the Hasbro title 'Monopoly' which is
expected to release in early 2005, two Namco titles 'Ms PacMan-Maze Madness' and
'Pacman World' and 'Who Wants To Be A Millionaire 2' developed by Hothouse,
ZDPL's Bristol studio which is expected to launch for Christmas 2004 in the UK
and Australia.

The games listed above represent some highlights in progress over the financial
period.  However, in total, ZDPL has a portfolio of over 45 games with plans to
publish a further 19 titles which amounts to a total of 54 individual units in a
number of countries for Christmas 2004.  Other titles include 'Guilty Gear', '
Gallop Racer' and 'Pool Shark'.

The management firmly believes that by having a portfolio of popular well-known
and proven game brands across a broad range of platforms and price-points it can
avoid the high cost and lengthy development pitfalls associated with the
mainstream games development sector, and limiting the exposure to any single
title.

ZDPL's strategy is to improve the quality of new games titles that it publishes
with a focus on fewer, higher potential products and serving key accounts with
bigger outlets in the UK, building on established relationships with retailers
such as Dixons and Game while also looking to European markets.  The management
of ZOO has already begun this process and strongly believes that a higher
quality of titles is visible in the games being released this year.

Outlook

The last six months have seen the Group grow and progress ZOO's key activities
of games publishing and R&D and licensing of DVD-EXTRA.  The next six months
will see us build further on this by delivering solid revenues on the publishing
side and exploiting our DVD developing technology through the signing of a
number of license agreements.

We are on track to reach profitability for this financial year and given the
quality of the games portfolio, readiness for the Christmas market, together
with the proven appeal of DVD-EXTRA, we remain extremely confident about the
opportunities and prospects on both sides of the business moving forward.

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 last six
months.

ZOO DIGITAL GROUP PLC
CONSOLIDATED UNAUDITED PROFIT & LOSS ACCOUNT
INTERIM RESULTS TO 30 JUNE 2004
                                                      30-Jun-04                     30-Jun-03             31-Dec-03
                                                      Unaudited                     Unaudited              Audited
                                                        £'000                         £'000                 £'000

Turnover                                                3,012                         1,296                 5,093

Net operating expenses (excluding                     (4,011)                       (2,027)               (6,048)
depreciation)

Loss before interest, tax, depreciation                 (999)                         (731)                 (955)
and amortisation

Other operating expenses
 - depreciation                                          (57)                          (55)                 (112)
 - amortisation of goodwill                             (234)                         (225)                 (451)

Operating loss                                        (1,290)                       (1,011)               (1,518)

Net investment income                                      64                            16                  (20)

Loss on ordinary activities before                    (1,226)                         (995)               (1,538)
taxation

Taxation                                                    -                             -                    84

Retained loss for the period                          (1,226)                         (995)               (1,454)

Loss per ordinary share                               (0.44p)                       (0.61p)               (0.75p)


ZOO DIGITAL GROUP PLC
CONSOLIDATED UNAUDITED BALANCE SHEET
INTERIM RESULTS TO 30 JUNE 2004
                                                               30-Jun-04    30-Jun-03    31-Dec-03
                                                               Unaudited    Unaudited     Audited
                                                                 £'000        £'000        £'000

Fixed Assets
   Intangible                                                    3,391        3,540        3,343
   Tangible                                                        225          168          127
                                                                 3,616        3,708        3,470

Current Assets
   Stock                                                           357          229          394
   Debtors                                                       3,198          905        3,107
   Cash at bank and in hand                                      2,974        1,796        5,451
                                                                 6,529        2,930        8,952

Creditors : amounts falling due within one year                (2,225)      (1,760)      (3,185)

Net current assets                                               4,304        1,170        5,767

Total assets less current liabilities                            7,920        4,878        9,237

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

Total net assets                                                 7,920        4,121        9,237

Financed By
   Share capital                                                   559          435          558
   Share premium account                                        18,700       13,239       18,691
   Other reserves                                                8,598        8,598        8,598
   Profit & loss account                                      (19,608)     (17,923)     (18,382)
Shareholders' funds (all equity)                                 8,249        4,349        9,465
Interest in own shares                                           (329)        (228)        (228)

                                                                 7,920        4,121        9,237

ZOO DIGITAL GROUP PLC
CONSOLIDATED UNAUDITED CASH FLOW STATEMENT
INTERIM RESULTS TO 30 JUNE 2004

                                                         30-Jun-04          30-Jun-03         31-Dec-03
                                                         Unaudited          Unaudited          Audited
                                                           £'000              £'000             £'000
 Net cash outflow from operating activities               (1,156)             (902)            (2,070)

 Returns on investment and servicing of                        64                16               (20)
 finance
 Tax refund                                                   -                 -                   84
 Capital expenditure and financial investment               (453)              (22)               (67)
 Acquisitions and disposals                                  (85)                -                 -

 Net cash outflow before financing                        (1,630)             (908)            (2,073)

 Financing                                                  (847)             1,398              6,218

 (Decrease) / increase in cash in the period              (2,477)               490              4,145

 Reconciliation of operating loss to net cash flow from operating activities

 Operating loss                                           (1,290)           (1,011)            (1,518)
 Depreciation charge                                           57                55                112
 Goodwill amortisation                                        234               225                451
 Decrease / (Increase) in stock                                37               134               (31)
 (Increase) / Decrease in debtors                            (91)               530            (1,672)
 (Decrease) / Increase in creditors                         (103)             (835)                588

 Net cash outflow from operating activities               (1,156)             (902)            (2,070)

 Analysis of changes in cash and cash equivalents

 (Decrease) / increase in cash in the period              (2,477)               490              4,145
 Cash outflow from decrease in debt                           858               556                755
                                                          (1,619)             1,046              4,900
 Net (debt)/ funds at start of period                       4,593             (307)              (307)

 Net funds  at end of period                                2,974               739              4,593

 Analysed as follows
 Cash at bank and in hand                                   2,974             1,796              5,451
 Debt due within one year                                     -             (1,057)              (857)
 Finance leases                                               -                 -                  (1)
                                                            2,974               739              4,593

NOTES

Board approval

The interim accounts were approved by the board of directors on 21st September
2004.

Nature of accounts

The financial information for the six months ended 30 June 2004 and 30 June 2003
is unaudited and does not constitute statutory accounts within the meaning of
Section 240 of the Companies Act 1985.  The information has been prepared on the
basis of accounting policies used in the financial statements to 31 December
2003.

The financial information for the year ended 31 December 2003 is extracted from
the audited accounts for that period.  The auditors' report on those accounts
was unqualified and did not contain a statement under Section 237(2) or (3) of
the Companies Act 1985.

Earnings per share

Earnings per share is calculated based upon the loss on ordinary activities
after tax for each period divided by the weighted average number of shares in
issue during each period being 279,058,585 (June 2003: 163,826,332, December
2003: 193,574,949).

Information on fully diluted earnings per share has not been presented as the
company recorded a loss after tax in each of the relevant periods and
accordingly the exercise of options would not result in further earnings
dilution for shareholders.

Gains and losses

The company had no recognised gains or losses in the current period other than
the loss for the period.

Further Copies

Copies of this announcement and the Interim Report for the six months ended 30
June 2004 will be available, free of charge, for a period of one month from the
Company's Nominated Adviser and Broker, Noble & Company Limited, 120 Old Broad
Street, London, EC2N 1AR, Tel: [phone] or from the registered office of
the Company at 20 Furnival Street, Sheffield, S1 4QT.


                      This information is provided by RNS
            The company news service from the London Stock Exchange