25th May 2005 07:01
Zoo Digital Group PLC25 May 2005 ZOO DIGITAL GROUP plc ("ZOO Digital" or "the Company") Placing of New Ordinary Shares to raise £3.162 million at a price of 8.5p per share with New and Existing Investors Notice of Extraordinary General Meeting Update on Current Trading and Prospects ZOO Digital Group plc announces today that it is seeking to raise £3.162 millionbefore expenses through a conditional placing with new and existing investors of37.2 million New Ordinary Shares of 0.2p each at an issue price of 8.5p pershare to provide additional funds to further enhance the development of itsbusiness. Funds raised will be used to: • Support a faster acceleration and exploitation of the DVD-EXTRA technology• Assist the expansion of the business into Japan via collaboration• Assist in the expansion of the office in the USA to support an increase in activity• Complete the access control and anti-piracy software, and the full linear authoring software• Further invest in patent protection and filing of additional patents. ZOO Digital also provides an update on current trading and prospects, fulldetails of which are contained in the circular ("the Circular") which isexpected to be sent to shareholders today. Key points include: ZOOtech Limited ("ZOOtech"): • Turnover for the financial period ended 31st March 2005 is estimated to be in line with market expectations at £0.5 million and the division continues to make excellent progress in the development and licensing of core products. • ZOOtech continues to work closely with Hollywood studios in the area of process improvement and cost reduction and has a number of ongoing initiatives. Implementation of our "Menu Regionalisation" tool involves re-engineering of established processes but achieves significant time and cost savings as a result. • Documentation of the new processes is now underway and the financial framework has been agreed in outline with one major studio. The Directors expect use of the software to commence during summer 2005 and that turnover will be in the order of $1 million for the current financial year. ZOO Digital Publishing Limited ("ZDP"): • Turnover for ZDP for the financial period ended 31st March 2005 is estimated to be in line with market expectations at approximately £11.0 million. • ZDP continues to focus on two key areas of activity; interactive DVD Games and Games Publishing. Both areas have progressed significantly over the past year and are anticipated to grow further. Attached to this announcement are extracts from the Circular, which sets out thebackground to the proposals and further details on them. Copies of theCircular, including the Notice of EGM, are expected to be posted to shareholderstoday and are available from the Company's Nominated Adviser and Broker, Noble &Company Limited, 76 George Street, Edinburgh, EH2 3BU, free of charge, for aperiod of one month. Ian Stewart, chief executive officer of ZOO Digital, commented: "This fund raising enables the Company to take the business to the nextimportant stage in its development. The appetite for Interactive-DVDs, and inparticular ZOO's technology, is proven and the Interactive DVD market is growingrapidly. We are focusing our activities on sectors and regions where the highestgrowth is likely. Funds raised will be used to accelerate our technology'spenetration in order to ensure we develop our position as the world's leader inproduction tools for the current and future DVD formats. We are pleased with thesupport from existing and new shareholders with an oversubscribed fundraising inquite clearly a difficult market." For further information, please contact: Ian Stewart Robert DeriCEO, ZOO Digital Group plc Chief Financial Officer, ZOO Digital Group plc0114 241 3700 0114 241 3700 John Llewellyn-Lloyd James Chandler/Helen ThomasNoble & Company Limited Weber Shandwick Square Mile020 7763 2200 020 7067 0747 The following text is an extract from the Circular that is expected to bedispatched to shareholders today. Introduction The Company has today announced proposals for a capital raising to provide theCompany with additional funds to further enhance the development of itsbusiness. The Company is seeking to raise £3.162 million before expenses as setout herein. This is to be effected by means of a placing (the "Placing") of37,200,000 new ordinary shares of 0.2p each in the capital of the Company ("NewOrdinary Shares") at an issue price of 8.5p per New Ordinary Share (the "PlacingPrice"), which have been conditionally placed by Noble with certain new andexisting investors. Due to the size of the Placing relative to the Company's existing authority toallot shares for cash otherwise than on a pre-emptive basis, the Placing isconditional upon the passing of a resolution ("Placing Resolution") by theCompany's shareholders at an extraordinary general meeting ("EGM") to authorisethe allotment of the New Ordinary Shares and to approve the disapplication ofpre-emption rights to enable the Directors to allot the New Ordinary Shares forcash to persons other than current shareholders in the Company. The Placing isalso conditional on admission ("Admission") of the New Ordinary Shares totrading on the Alternative Investment Market ("AIM"), a market operated by theLondon Stock Exchange plc (the "London Stock Exchange"). Application will bemade to the London Stock Exchange for the New Ordinary Shares to be admitted totrading on AIM. It is expected that, following the passing of resolutions atthe EGM, dealings in the New Ordinary Shares will commence on or around 23 June2005. The New Ordinary Shares will rank pari passu with the existing ordinaryshares of the Company. Notice of the EGM which is to be held at 11.00am on 21 June 2005 at theCompany's offices at 20 Furnival Street, Sheffield, S1 4QT, at which, interalia, the Placing Resolution will be proposed, is set out at the end of thisdocument. The Placing and use of proceeds The Directors believe that there is an opportunity to raise funds from a smallnumber of institutional and other investors at the present time. Your Board hastherefore decided to effect the fundraising by way of the Placing following alimited and targeted marketing exercise, rather than by offering allshareholders the opportunity to acquire further shares. The Directors believethat the additional cost and delay incurred in the production of a prospectus inconnection with any such offer would not have been in the best interests of theCompany. The net proceeds of the Placing are estimated at £3.0 million and this moneywill be used: • to support a faster acceleration and exploitation of the DVD-EXTRA technology;• to assist the expansion of the business into Japan via collaboration;• to assist in the expansion of the office in the USA to support an increase in activity;• to complete the access control and anti-piracy software, and the full linear authoring software; and• to further invest in patent protection and filing of additional patents. Current trading and results The Company is currently completing its formal audit and the results for thefinancial period for the 15 months to 31st March 2005 are expected to bereleased on or around 28th June 2005. The Company provides the following update: 1. ZOOtech Limited ("ZOOtech") • Turnover for the financial period ended 31st March 2005 is estimated to be in line with market expectations at £0.5 million and the division continues to make excellent progress in the development and licensing of core products. • The latest edition of the flagship product, DVD-EXTRA STUDIO 1.6, was released to plan in April following around seven person years of product engineering work, and is a significant development introducing new linear authoring features. • An expanding number of third party companies are using DVD-EXTRA STUDIO to produce interactive DVD titles in a number of market segments that include: (i) Entertainment, Multimedia and Music;(ii) Corporate & Marketing;(iii) Education & Early Learning; and(iv) Process Improvement in DVD Production. • ZOOtech continues to work closely with Hollywood studios in the areaof process improvement and cost reduction and has a number of ongoinginitiatives. Implementation of our "Menu Regionalisation" tool involvesre-engineering of established processes but achieves significant time and costsavings as a result. • Documentation of the new processes is now underway and the financial framework has been agreed in outline with one major studio. The Directors expect use of the software to commence during summer 2005 and that turnover will be in the order of $1 million for the current financial year. • In addition to "Menu Regionalisation", work on the compatibility testing of special features is progressing on plan. • The Directors expect that DVD-EXTRA STUDIO will be used to develop approximately 150 DVD titles to be released into the market by the end of the current financial year across Europe and North America. • These include: (i) bEqual's "Madagascar Animal Trivia DVD" which is being released as a companion to the DreamWorks movie, Madagascar and was made by Comchoice in the US; (ii) The Snap TV Games titles "NCAA Football Challenge" and " Trivideo: 20th Century", which comes with hours of footage and related trivia questions; (iii) A number of educationally based interactive DVD Titles being released by National Geographic into North America; and (iv) A number of titles, including an education title in North America, from Oasis DVD who are planning to use DVD-EXTRA STUDIO. • Additionally, OUAT Entertainment in France is expected to produce at least five new interactive DVDs, Smoking Gun Entertainment Group plc is developing and publishing a number of interactive DVD Football Trivia Games and Two Way TV is scheduled to use DVD-EXTRA STUDIO to develop at least two interactive DVD titles this financial year. Contender Entertainment Group is publishing a "Test The Nation" DVD Game based on the successful TV programme and Somethin' Else is continuing to develop a number of interactive DVD Games for multiple territory publication following the success of "Beat The Intro" last year. • The Directors believe that the "interactive DVD" genre is becoming more strongly established and recognised as a category in its own right with strong support from leading publishers including Universal Video, VCI and Contender. • DVD-EXTRA STUDIO is being used increasingly for the development of interactive value-added bonus features on mainstream DVD titles, such as the adventure game included on Garfield - The Movie from Fox Home Entertainment and ZOOtech is seeing and helping to evaluate a growing number of interesting propositions. With the introduction of version 1.6 of the software offering linear features in addition, the Director expect to see an increasing take up and usage of the software in this sector. • Version 1.6 of DVD-EXTRA STUDIO introduces a fusion of traditional DVD authoring functionality with ZOOtech's innovative interactive development capability. This offers DVD title developers the opportunity to undertake a project entirely within DVD-EXTRA STUDIO, offering further savings of time and cost. In addition, the new functionality makes possible interactive DVD features not previously achievable, providing studios with the opportunity to deliver significant added value to their titles. We are working closely with two studios to offer engaging new features on forthcoming titles. • In the corporate sector, following the success of the interactive marketing DVD produced for Land Rover, there are a number of further interactive DVD products being produced and the Directors expect a number of products to be in the market during 2005. 2. ZOO Digital Publishing Limited ("ZDP") • Turnover for ZDP for the financial period ended 31st March 2005 is estimated to be in line with market expectations at approximately £11.0 million. • ZDP continues to focus on two key areas of activity; interactive DVD Games and Games Publishing. Both areas have progressed significantly over the past year and are anticipated to grow further. • ZDP is scheduled to increase the output of titles on interactive DVDs across Europe and Australia. Universal Pictures is extending its range of titles and negotiations are continuing with US parties for the development and publishing of standalone interactive DVD Games into North America. • In Games Publishing, the Directors believe that the pipeline of products is the strongest it has ever been and the release schedule for the first half includes Alien Hominid and Rapala Pro Fishing on PS2 and Xbox,, Powerdrome on PC and Smashing Drive, Pacman World 2 and Big Mutha Truckers on GBA. • The development project for Konami "Crimelife" is progressing on schedule for expected release in September 2005. Konami are intending to publish the title in Europe and North America and expectations are that royalty revenues will be earned in excess of advances received during 2005. 3. Prospects The Directors continue to remain confident about the prospects of thebusinesses. ZDP has grown from an annual turnover of approximately £1.9 millionin 2002 to approximately £5.1 million in 2003. Turnover for the fifteen monthsto 31st March 2005 is expected to be over £11.0 million. The interactive DVD Games sector is expanding rapidly and the Directors believethat ZDP is in an excellent position to take advantage of this growth and expandits products into the lucrative North American market. Following the launch of the first version of DVD-EXTRA STUDIO in April 2004,ZOOtech is seeing an increasing number of DVD titles being produced using thetechnology. The product is now being used in organisations in France, Germany,Benelux, UK, Australia and in North America to produce interactive DVDs. Products are also being produced and published in all of ZOOtech's targetedsectors and, importantly, revenues continue to grow across the various sectorsincluding Entertainment and Multimedia, Corporate and Marketing, Education andEarly Learning, and also in the Process Improvement area for DVD Production.Releasing version 1.6 as planned in April 2005 with significant enhancements tofunctionality was a major milestone. The Directors see the development of thenew high definition formats as a commercial opportunity and ZOOtech is workingalongside the developers of both potential future disc formats. Extraordinary General Meeting On pages 9 to 11 of this document is a notice convening the EGM of the Companyto be held at the Company's offices at 20 Furnival Street, Sheffield, S1 4QT at11.00am on 21 June 2005, at which the resolutions set out in such notice (the "Resolutions") will be proposed. Recommendation The Directors consider the Placing and the approval of the Resolutions,including the Placing Resolution upon which the Placing is conditional, to be inthe best interests of the Company and its shareholders as a whole. The Directors unanimously recommend shareholders to vote in favour of theResolutions, as they have irrevocably undertaken to do or procure to be done inrespect of their own beneficial holdings of ordinary shares amount to, inaggregate, 79,123,863 ordinary shares, representing approximately 28.3 per cent.of the current issued share capital of the Company. - ends - This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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