Zoo Digital Group - Contract Wins and Trading

RNS Number:0304S
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/

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