29th Jun 2005 07:00
Zoo Digital Group PLC29 June 2005 Embargoed until 0700 Wednesday 29 June 2005 ZOO DIGITAL GROUP PLC ("ZOO" or "the Group") FINAL RESULTS FOR THE 15 MONTH PERIOD TO 31 MARCH 2005 ZOO Digital Group plc, the DVD technology and games publishing company, todayannounces its audited results for the 15 month period to 31 March 2005. Financial Highlights • Group turnover increased by 149% to £12.67 million (12 months to 31 December 2003: £5.09 million) • ZOO Digital Publishing achieves maiden profit showing EBITDA of £498,000 • Group loss before interest, tax, depreciation and amortisation of £1.59 million (12 months to 31 December 2003: LBITDA £955,000) reflecting investment in readying the pioneering DVD-EXTRA software for roll-out internationally • Net current assets of £3.21 million as at 31st March 2005 (31 December 2003: £5.77 million) • Successful post year-end fundraising of £3.16 million gross Operational Highlights • Strong turnover increase from ZOO Digital Publishing from £5.09 million to £12.29 million • Games portfolio and publishing pipeline believed to be strongest ever • Core DVD-EXTRA patent granted in UK and 59 patents filed world-wide • 50 agreements signed by 3rd parties for DVD-EXTRA to develop approximately 150 DVD titles • Documentation and financial framework agreed with major Hollywood studio with expected revenues of around $1 million for the current financial year for "Menu Regionalisation" module • Latest version of DVD-EXTRA STUDIO completed and released Commenting on the results, Ian Stewart, CEO of ZOO said: "The Group has seen another year of excellent progress, innovative developmentand commercial success. Our publishing business has reported a large increase insales and achieved a maiden profit while sales in our DVD technology businesshave been reported for the first time and are on track to deliver good revenueson this side of the business in the forthcoming year. I remain confident andvery excited about the prospects for the Group moving forward." Enquiries Ian StewartCEO, ZOO Digital Group plc0114 241 3700 James Chandler/Helen ThomasWeber Shandwick/Square Mile020 7067 0700 John Llewellyn-LloydNoble & Company Limited020 7763 2200 CHAIRMAN AND CHIEF EXECUTIVE'S STATEMENT Introduction We are pleased to report another period of growth and significant progress forthis fifteen-month financial period with both of our business units,DVD-technology and entertainment publishing, performing well. It is particularlysatisfying to see momentum building behind the DVD-EXTRA technology through thenumber of licence agreements across a wide range of applications, which weexpect to generate good revenues in the new financial year. We are seeking tobecome the world leader in production tools for interactive DVDs and thesignificant technological and commercial developments this year have broughtthat ambition closer than ever. The support of existing and new shareholders was welcomed in an oversubscribedfundraising completed in June 2005 which raised £3 million (net of expenses) toallow for the further development of the business. The funds raised will allowthe Group to accelerate and exploit the DVD-EXTRA technology now that thesoftware and business model have been proven. It is important to notover-stretch our resources so we will continue to concentrate on markets andregions where the highest penetration and growth of our technology can beachieved. Financial Review The Company has for the second consecutive year dramatically increased turnover.For the fifteen month period to 31 March 2005 turnover was £12.67 million (12months to 31 December 2003: £5.09 million) primarily reflecting fast growth inthe publishing business. In line with market expectations the loss beforeinterest, tax, depreciation and amortisation was £1.59 million, which largelyresulted from the running costs of ZOOtech Limited, the establishment of thecommercial team and the continued research and development on DVD-EXTRA. ZOO Digital Publishing Limited increased its turnover in the financial period to£12.29 million (12 months to 31 December 2003: £5.09 million) and ZOOtech'sturnover was £452,000 (12 months to 31 December 2003: £nil) following the launchof DVD-EXTRA STUDIO during the year. As at 31st March 2005 the Group had net current assets of £3.21 million (31December 2003: £5.77 million) with a bank overdraft of £729,000. The Group has abank overdraft facility of £2.5 million to fund working capital requirementswith Bank of Scotland and is in the final stages of negotiation for a 5-yearterm loan of £1 million. ZOOtech Ltd ("ZOOtech") ZOOtech focuses on research and development and licensing of DVD-EXTRA, theGroup's original development software capable of creating complex interactivecontent for standard DVD players. The division has made excellent progress thisyear in developing its core products and more importantly turning these productsinto a commercial reality through a number of license deals which the Groupexpects to result in good revenues falling into the current financial year. Following successful completion of the "Early Adoptor" programme, DVD-EXTRASTUDIO was launched in April 2004 and a commercial team was established headedby managing director Cees Zwaard during the year. ZOOtech Inc was established inthe United States with Gordon Doran appointed President and ZOOtech SARLestablished in France to exploit the European market. It has become clear to ZOO that DVD-EXTRA has applications across many marketsegments. In the initial phase since the launch of DVD-EXTRA STUDIO we havefocused on entertainment and multimedia, education, corporate and marketinguses, film and video uses and cost and process improvement in DVD production. Itis especially pleasing to have made significant progress in each segment and tohave established our royalty based pricing model. In total over 50 agreementshave been signed to date mostly on a royalty stream model basis and theDirectors expect DVD-EXTRA to be used to develop approximately 150 DVD titles bythe end of the current financial year. The agreements range from using DVD-EXTRAfor quiz shows, education and reference products, marketing and corporateproducts and interactive DVD games to the creation of a variety of content andbonus material for the film industry, including a number of prominent Hollywoodstudios. We identified some time ago the interest in Hollywood for use of our technologyin providing significant time and cost savings in the DVD production process andhave been working with a number of studios for a number of months on this. Anumber of titles have now been produced and market tested using our "MenuRegionalisation" module which dramatically reduces the cost and time ofproducing popular film titles in numerous language variations. Although thisprocess has taken longer than originally anticipated, documentation and afinancial framework have now been agreed with one major studio which theDirectors expect will produce turnover of approximately $1 million for thecurrent financial year. These deals show an increasingly international elementto licence agreements and underline our unique position in the market as aprovider of globally appealing entertainment products. The latest edition of DVD-EXTRA STUDIO (version 1.6) was released in April 2005and provides an advanced development tool capable of delivering a'one-stop-shop' for the creation of interactive DVD content. A developer can nowundertake an entire project using one software application that offers furthercost and time saving benefits. New functionality also means that developers cancreate engaging features on DVDs in a manner not seen previously. "Interactive DVD" as a market and genre has developed over the last twelvemonths and has become more established and recognised as a category in its ownright. The market, driven by ZOOtech's technology, now has strong support fromleading publishers such as Universal Video, VCI and Contender EntertainmentGroup. ZOOtech has now filed for 59 patents in 25 patent "families" in the UK, USA andunder the International Patent Treaty. Significantly, the core patent "Authoringof Complex Audiovisual Products" has already been granted in the UK and NewZealand. Patent protection insurance has been taken out and ZOOtech willcontinue to invest in its intellectual property with a patent developmentprogramme having been established. ZOO Digital Publishing Ltd ("ZDP") ZDP focuses on the publishing and distribution of interactive entertainmentproducts across multiple platforms, such as interactive DVD, PS2, Xbox, GBA, PCand mobile phones. The division has been equally active and has seen a largeincrease in turnover this year from £5.09 million in the 12 months to 31December 2003 to £12.29 million for the financial period to 31 March 2005. ZDPhas significantly moved into profit with earnings before interest, tax,depreciation and amortisation of £498,000. We believe that ZDP is wellpositioned to deliver further growth and improved profitability over the comingfinancial year. Interactive DVD On Interactive DVD ZDP substantially increased its output with 'Who Wants To BeA Millionaire?' published in a number of territories, "Football Quizz: VotreDefi", "Manchester United - The Official Interactive DVD" and "Guinness WorldRecords" and is scheduled to further increase its output of titles over thecoming year. Interactive DVD Games are clearly gaining mass-market appeal andUniversal Pictures will publish another enhanced version of 'Who Wants To Be AMillionaire?' in the UK, France and Australia for Christmas 2005 as well as anumber of other titles that include "Telly Addicts" and "InteractiveChampionship Challenge". Agreements have also been signed to publish 'Who Wants To Be A Millionaire?' inGermany, with T-online and in Russia with Noviy Disk. Negotiations are in finalstages with a film studio to produce a DVD game for release at the same time asthe movie in early 2006 and discussions are already taking place in a number ofterritories with regard to product line-up for 2006 and 2007 giving confidencewith regard to the continued growth of the interactive DVD market. ZDP has beenlargely responsible for creating this new product category and will continue topioneer production of some of the most complex DVD Games in the market. Itsrelationships with major publishers including Universal Pictures, VCI, T-Onlineand Noviy Disk and its experience in creating interactive DVDs will ensure thatZDP captures a significant slice of this growing market. Games Publishing In games publishing ZDP improved the quality and depth of its portfolio of gamesover the financial year and has a strong pipeline of products in place for theyear ahead with around 25 releases scheduled for the second half of the year.Our distribution base across Europe and Australia has been strengthened and inApril 2005 ZDP secured the rights to publish a portfolio of twenty-two gamesfrom Destination Software Inc over the next two years across a range ofplatforms including the recently released Nintendo DS handheld games console andthe more established GameBoy Advance ("GBA") device. These games will startshipping from June 2005. The Directors believe that ZDP is well positioned todeliver continued growth in 2005/2006. The development project for Konami "Crimelife" is progressing on schedule forrelease in September 2005 and we expect the title will be published in Europeand North America. People The quality of our people, their skills and the will to succeed has been crucialin the growth of both of our businesses. The businesses have grown significantlyfrom 46 employees in 2003 to a total of 124 as at 31st March 2005. We movedoffices during 2004 to accommodate our growth and now occupy a stand-alonebuilding in Sheffield city centre with some 13,000 square feet. The Groupgenerally experiences low staff turnover and a significant proportion of ouremployees are incentivised through share options. We will continue to use thesemechanisms to ensure that rewards are linked to the success of the Group and areintroducing an Inland Revenue approved Share Incentive Plan for the benefit ofall staff in July 2005. ZOOtech won two major awards at the 2004 Sheffield Business Awards sponsored byYorkshire Forward. The judges deemed the company as a model of the best ofSheffield Industry and an award was presented to ZOOtech for innovation in DVDdevelopment and exploitation of opportunities that DVD-EXTRA brings tonon-traditional DVD-Video markets such as education, corporate training,advertising, gaming and music. ZDP also received an award from the DVDAssociation (DVDA) with the French language version of "Who Wants To Be AMillionaire?" DVD Game (Qui Veut Gagner Des Millions?) earning the prestigiousDVD Excellence: Navigation Design and Implementation Award. Credit for suchachievements and the progression of the business is due to the effort of everymember of the team and we would like to thank all of them for their effort andsupport on behalf of the Directors. Prospects The Board remains confident about the prospects for the Group moving forward. Welook forward to an exciting year and continued development of our businesses.ZOOtech is now earning revenues through recently signed and prospective newlicence agreements and in addition, DVD-EXTRA is becoming an industry standardaround the world against a background of rapid acceptance and increasingpopularity of the Interactive DVD and DVD Games genres. We are actively lookingat expanding into Japan and the Far East via collaboration and will expand ourpresence in the US in line with the growth in demand. ZOO Digital Publishingcontinues to perform well, has moved into profit and will grow year on year dueto its high quality games portfolio and innovative approach to new and existinggames platforms. John Barnes, Chairman Ian Stewart, CEO ZOO Digital Group plc Consolidated profit and loss accountFor the period ended 31 March 2005 Fifteen months ended 31 Year ended 31 March 2005 December 2003 £'000 £'000 Turnover 12,669 5,093 Cost of sales (7,611) (4,091) __________ __________Gross profit 5,058 1,002Other operating income 260 222Other operating expenses- other (6,907) (2,179)--------------------------------- --------- ----------Loss before interest, tax,depreciation andamortisation (1,589) (955)--------------------------------- --------- ----------- depreciation (155) (112)- amortisation of goodwill (593) (451) __________ __________ (7,655) (2,742) __________ __________Operating loss (2,337) (1,518) Investment income 57 (20) __________ __________Loss on ordinary activitiesbefore taxation (2,280) (1,538)Tax on loss on ordinary activities 53 84 __________ __________Retained loss for the financial year (2,227) (1,454) __________ __________Loss per shareBasic (0.80p) (0.75p)Diluted (0.80p) (0.75p) __________ __________ Consolidated balance sheet31 March 2005 31 March 31 December 2005 2003 £'000 £'000Fixed assetsIntangible assets 3,351 3,343Tangible assets 377 127 __________ __________ 3,728 3,470 __________ __________Current assetsStock 903 394Debtors 5,937 3,107Cash at bank and in hand - 5,451 __________ __________ 6,840 8,952Creditors: Amounts falling due within oneyear (3,630) (3,185) __________ __________Net current assets 3,210 5,767 __________ __________Total assets less current liabilities 6,938 9,237Creditors: Amounts falling due after more than - -one year __________ __________Net assets 6,938 9,237 __________ __________ Capital and reservesCalled-up share capital 559 558Share premium account 18,719 18,691Other reserves 8,598 8,598Profit and loss account (20,609) (18,382) __________ __________Shareholders' funds (all equity) 7,267 9,465Interest in own shares (329) (228) __________ __________ 6,938 9,237 __________ __________ Consolidated Cash Flow Statement31 March 2005 Fifteen months ended Year ended 31 31 March December 2005 2003 £'000 £'000 Net cash outflow from operatingactivities (4,302) (2,070)Returns on investments and servicingof finance 57 (20)Tax refund - 84Capital expenditure and financialinvestment (1,107) (67) __________ __________Cash outflow before financing (5,352) (2,073) Financing (828) 6,218 __________ __________(Decrease)/increase in cash in the year (6,180) 4,145 __________ __________ NOTES TO THE ANNOUNCEMENT Basis of Preparation and Accounting The financial statements have been prepared under the historical cost conventionand in accordance with applicable United Kingdom accounting standards. The financial information set out in this announcement does not constitute fullaccounts within the meaning of section 240 of the Companies Act 1985. The balance sheet at 31 March 2005 and the profit and loss account, cash flowstatement and associated notes to the year then ended have been extracted fromthe Group's financial statements. These financial statements have not yet beendelivered to the Registrar of Companies. Annual Accounts and Further Copies The annual report and accounts will be posted to shareholders as soon aspracticable and further copies will be available, free of charge, for a periodof one month following posting to shareholders from the Company's NominatedAdviser and Broker, Noble & Company Limited, 76 George Street, Edinburgh, EH23BU, Tel: 0131 225 9677 or from the registered office of the Group at 20Furnival Street, Sheffield, S1 4QT. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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