RNS Number:0015M
Zoo Digital Group PLC
06 June 2003
For embargoed release at 7am 6 June 2003
ZOO Digital Group Plc ("ZOO" or "the Group")
Results For The Year Ended 31 December 2002
Zoo Digital Group plc, the Sheffield based digital entertainment company,
announces preliminary results for the year ended 31 December 2002. The results
are in line with market expectations.
Highlights
- Turnover increased to #1.9m (2001: #0.7m)
- Loss before interest, tax, depreciation, amortisation and exceptional
items (LBITDA) at #1.9m (2001: #1.9m).
- Retained loss for the financial year was reduced to #2.2m (2001: loss
of #9.0m)
- Feasibility studies into interactive DVD discs completed DVD-Extra
Studio and two showcase interactive DVD products successfully
completed
- Acquisition of 'Premier Manager' brand and franchise on PS2 in
November 2002 from Atari (formerly Infogrames)
- Signing of exclusive licensing agreement with Celador International
Limited for "Who Wants To Be A Millionaire" quiz game on DVD-Video
- Successful #1.5m placing completed at the beginning of June 2003 to
finance future growth.
Commenting on the results CEO, Ian Stewart, said:
"The year to 31st December 2002 was one of significant development with the
Group establishing itself in the video games market and rapidly progressing its
DVD-Extra Technology.. Reaction to our DVD Extra technology has been extremely
encouraging and the recent fundraising of #1.5m gives us the opportunity to
accelerate its development and maximise its potential."
"The board believes that the combination of publishing low risk licensed product
and in-house own brands together with the huge potential of DVD-Extra Studio
places the Group in an excellent position for a move to profitability and
significant future growth."
For further information please contact:
ZOO Digital Group plc
Ian Stewart, Chief Executive 0114 241 3700
Binns & Co.
Paul Vann 0207 786 9600
Ken Rees 07802 466 567
Noble & Company Limited
John Llewellyn-Lloyd 0207 367 5600
Chairman and Chief Executive's Statement 2002
Introduction
ZOO Digital Group plc ("ZOO" or "the Group")
The year to 31st December 2002 was one of significant development with the Group
establishing itself in the video games market and rapidly progressing its
DVD-Extra Technology.
Over the year we published seven titles on the Nintendo Gameboy Advance and PC
platforms across five European countries. Furthermore in November 2002, we
acquired the 'Premier Manager' brand and franchise, which has enabled the Group
to enter the lucrative Sony Playstation 2 market for the first time. Further
PS2 titles are currently being considered for publication. The Group has also
acquired a number of Electronic Arts titles, amongst others, for publishing on
the Gameboy Advance platform during 2003.
Following the completion of the feasibility studies into interactive DVD-Video
discs it was evident that we believed we had a unique proposition with a huge
market potential. Consequently the Group accelerated its development of
DVD-Extra Studio and successfully produced two showcase interactive DVD products
in October 2002, achieving significant credibility in the DVD industry.
Results
The Group increased sales for the period to #1.9m (2001: #0.7m) with a LBITDA of
#1.9m (2001: #1.9m). The retained loss for the financial year was reduced to
#2.2m (2001: loss of #9.0m) with a loss per share of 1.46p (2001: loss of
8.15p).
The Group's cash position was #1.3m as at 31 December 2002 (2001: #3.3m).
This compares with cash balances of approximately #2.2m at the interim stage.
Publishing and Licensing
The Group's strategy is to build on its own intellectual property assets such as
Premier Manager and Home Creative Studio using internal development resources.
These key titles will be supported by the acquisition of finished titles for
localised or cross platform publishing, which generally entail lower risk
opportunities.
We aim to identify niche products that have a sizeable sales opportunity in this
market and we intend to publish at least three PS2 titles in 2003 in line with
this strategy.
Our support for the Gameboy Advance market will continue and we intend to
release twelve new titles in 2003, six of which are Electronic Arts titles
including "Need For Speed - Porsche Unleashed" and "Sim City 2000".
Nintendo's commitment to this market has continued with the release of the New
Gameboy Advance SP and is being targeted at males aged 18 to 35. Our portfolio
of games aims to compliment this target audience focus. The Christmas sales
seasons will be the key selling period for the Gameboy Advance SP and we are
well positioned to take advantage of this.
Home Creative Studio Version 1.6 will be published with new features and model
sets during the summer and discussions are ongoing with US publishers. Whilst
this product has proved difficult to position, the digital imaging market is now
opening up and we anticipate a long life expectancy for this product.
Following the acquisition of Premier Manager from Atari (formerly Infogrames), a
development team has been assembled to ensure the continuation of the brand.
The Group commenced a three year development program, which will enable us to
re-establish the brand in the eyes of the consumer. For 2003 we will publish
the title on PS2, PC and for the first time, on Gameboy Advance, taking
advantage of Nintendo's positioning and marketing of the new Gameboy Advance SP.
We will also look to explore the on-line and interactive TV opportunities for
which product design materials are already advanced. Premier Manager is seen as
a pillar title that can generate substantial revenues in a niche but popular
market in which the management team has considerable experience.
Who Wants To Be A Millionaire ("WWTBAM")
Following the self publishing of the WWTBAM quiz game on DVD-Video in October
2002 this product has now been licensed to Vivendi Universal for publication in
three initial territories; UK, France and Italy.
In line with our agreement with Celador, the holder of rights to WWTBAM, the
agreement with Universal is for a seven year period and gives them options over
all territories apart from North America.
We believe this to be a major opportunity for the Group and we look forward to
extending our relationship with Universal whilst also proving the benefits of
DVD-Extra.
DVD-Extra
During the year the Group accelerated its development of a revolutionary
authoring software for producing interactive DVD-Video discs that will play on
any standard consumer DVD player. We applied for and received a SMART grant
award of #188,000 from the Department of Trade and Industry to assist with the
research and development. DVD-Extra unlocks the hidden interactive capabilities
that exist in every player, and allows developers to produce titles that exhibit
many of the properties of multimedia CD-ROM on a standard, unmodified, DVD
player.
ZOO's principal offering is a product for authoring interactive DVD-Video discs
called DVD-Extra Studio. This tool operates in a similar way to multimedia
authoring products that are designed for creating CD-ROM applications for PC and
Macintosh, but produces DVD-Video disc images as its output. It performs a
similar function to so-called DVD authoring products that are designed
specifically for creating DVD-Video discs, but due to the patent-pending
authoring method it employs, it offers substantial cost savings for companies
that are involved in the production of DVDs and also enables more sophisticated
functionality to be developed.
ZOO will license DVD-Extra Studio to multimedia developers and Compression and
Authoring facilities. Charges will be levied on a pay-per-use basis, such that
customers will pay a fee to ZOO for each project that uses DVD-Extra Studio.
The Group has applied for patents to protect the core DVD-Extra technology and
is continuing to further develop and protect its intellectual property
worldwide.
Outlook
Following the successful fundraising of #1.5m gross through the share placing
which was completed on 2nd June 2003 the Group looks forward to positive
progression. The portfolio of products is expanding, with a focus on the
development of our own intellectual properties. The board believes that the
combination of publishing low risk licensed product and in-house own brands
together with the huge potential of DVD-Extra Studio places the Group in an
excellent position for a move to profitability and significant future growth.
The Group plans to exploit the DVD-Extra technology internationally and has
established an Early Adopter Programme consisting of around twenty companies
including Technicolor, Warner and Comchoice, leading to the first commercial
release of the product within twelve months. We believe that the uniqueness of
DVD-Extra and the filing of international patents will allow ZOO to build and
maintain significant differentiation over other authoring tool providers.
John Barnes, Chairman
Ian Stewart, Chief Executive Officer
CONSOLIDATED PROFIT AND LOSS ACCOUNT
YEAR ENDED 31 DECEMBER 2002
2002 2001
#'000 #'000
Turnover
Continuing operations 618 724
Acquisitions 1,264 -
__________ __________
1,882 724
Cost of sales
(1,581) (199)
__________ __________
Gross profit 301 525
Other operating income 40 -
Other operating expenses
- other (2,215) (2,426)
Loss before interest, tax, depreciation, (1,874) (1,901)
amortisation and exceptional items
- depreciation (98) (238)
- amortisation of goodwill (403) (532)
- exceptional impairment charges - (5,553)
__________ __________
(2,716) (8,749)
__________ __________
Operating loss
Continuing operations (2,307) (8,224)
Acquisitions (68) -
__________ __________
(2,375) (8,224)
Costs of fundamental reorganisation - (972)
Investment income 35 233
__________ __________
Loss on ordinary activities before taxation (2,340) (8,963)
Tax on loss on ordinary activities 134 -
__________ __________
Retained loss for the financial year (2,206) (8,963)
__________ __________
Loss per share
Basic (1.46p) (8.15p)
Diluted (1.46p) (8.15p)
__________ __________
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
2002 2001
#'000
#'000
Loss for the financial year (2,206) (8,963)
Currency (loss)/gain on net overseas investment (6) 34
__________ __________
Total gains and losses recognised during the year (2,212) (8,929)
__________ __________
CONSOLIDATED BALANCE SHEET
YEAR ENDED 31 DECEMBER 2002
2002 2001
#'000 #'000
Fixed assets
Intangible assets 3,756 3,043
Tangible assets 210 241
Other investments 228 228
__________ __________
4,194 3,512
__________ __________
Current assets
Stock 363 -
Debtors 1,435 144
Cash at bank and in hand 1,306 3,323
__________ __________
3,104 3,467
Creditors: Amounts falling due within one year (2,595) (890)
__________ __________
Net current assets 509 2,577
__________ __________
Total assets less current liabilities 4,703 6,089
Creditors: Amounts falling due after more than one year (757) (763)
__________ __________
Net assets 3,946 5,326
__________ __________
Capital and reserves
Called-up share capital 315 278
Share premium account 11,961 11,166
Other reserves 8,598 8,598
Profit and loss account (16,928) (14,716)
__________ __________
Shareholders' funds (all equity) 3,946 5,326
__________ __________
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2002
2002 2001
#'000 #'000
Net cash outflow from operating activities (2,583) (3,625)
Returns on investments and servicing of finance 66 233
Capital expenditure and financial investment (45) (199)
Acquisitions and disposals (6) (736)
__________ __________
Cash outflow before financing (2,568) (4,327)
Financing 551 812
__________ __________
Decrease in cash in the year (2,017) (3,515)
__________ __________
Notes to the announcement
For the year ended 31 December 2002
Basis of Preparation
The financial information set out in this announcement does not comprise the
company's statutory accounts as defined in section 240 of the Companies Act
1985. The consolidated balance sheet at 31 December 2002 and the consolidated
profit and loss account, consolidated cash flow statement and associated notes
for the year ended 31 December 2002 have been extracted from the statutory
accounts upon which the auditors opinion was unqualified and does not contain a
statement under section 237 (2) of the Companies Act 1985.
Loss per share
The calculations of loss per share are based on the following losses and numbers
of shares.
Basic and Diluted
2002 2001
#'000 #'000
Loss for the financial year 2,206 8,963
_______________________
2002 2001
Number Number
of of
shares shares
Weighted average number of shares for basic and diluted loss per share 151,187,593 109,915,788
________________________
Dividend
The Company does not intend to pay a dividend at this time
Reconciliation of operating loss to operating cash flows
Continuing Acquisitions 2002 2001
#'000 #'000 #'000 #'000
Operating loss (2,307) (68) (2,375) (8,224)
Depreciation charges 94 4 98 238
(Increase)/decrease in stock (155) (208) (363) -
(Increase)/decrease in debtors (189) (509) (698) 413
Increase/(decrease) in creditors 246 106 352 (1,349)
Cash impact of fundamental restructuring - - - (788)
Goodwill amortisation 403 - 403 532
Goodwill impairment - - - 5,553
__________ __________ __________ __________
Net cash outflow from operating activities (1,908) (675) (2,583) (3,625)
__________ __________ __________ __________
Reconciliation of movements in group shareholders' funds
2002 2001
#'000 #'000
Loss for the financial year (2,206) (8,963)
Currency (loss)/gain on net overseas investment (6) 34
New shares issued 832 6,785
Shares to be issued - 768
__________ __________
Net deduction from shareholders' funds (1,380) (1,376)
Opening shareholders' funds 5,326 6,702
__________ __________
Closing shareholders' funds 3,946 5,326
__________ __________
Further Copies
Copies of this announcement and the full annual report and accounts will be
available, free of charge, for a period of one month from the Company's
Nominated Adviser and Broker, Noble & Company Limited, 1 Frederick's Place,
London, EC2R 8AB, Tel: 020 7367 5600 or from the Registered Office of the
Company at Parkhead House, 26 Carver Street, Sheffield, S1 4FS. Copies of the
full financial statements will be dispatched to shareholders as soon as
possible.
END
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