Final Results

Zoo Digital Group PLC 27 March 2002 27 March 2002 ZOO DIGITAL GROUP PLC PRELIMINARY STATEMENT RESULTS FOR THE YEAR ENDED 31 DECEMBER 2001 HIGHLIGHTS • Group repositioned as a revenue generating developer of games & entertainment products • Turnover increased to £724,000 (2000: £1,000) • Loss before interest, tax, depreciation, amortisation and exceptional items (LBITDA) reduced to £1.9m (2000: £4.6m) in line with October update • Cash burn rate reduced significantly • Strong balance sheet with cash reserves £3.3m (2000: £6.9m) compared with £4.3m at interim stage • Q Music and Pepsi Chart Licences acquired for roll-out onto Touchscreen Soft Console platform • 8 new products to be published on Touchscreen Public Consoles during 2002 Commenting on the results CEO, Ian Stewart said: 'The past twelve months have seen the group significantly reduce its cost base and re-align future revenues against a scalable products business. This has obviously affected revenues in the short term but we are now producing direct-to-consumer products much earlier than we originally anticipated. The new focus for our business - games and entertainment - optimises our development skills and core strengths and gives the business a firm platform for improved performance.' Chairman's and Chief Executive's Statement 2001 The trading year ended 31 December 2001 has been one of progress and considerable change for the Company. The strategic review of the Company and the subsequent acquisition of The ZOO Media Corporation Limited resulted in a major reorganisation of the Group, together with staff and management changes. The integration of the businesses was achieved against a background of progressively difficult trading conditions - especially from September 2001 onwards. The general downturn affected revenues within key existing accounts as well as in the development of new opportunities in the digital media solutions market. In response to this, on 22 October 2001, we announced that we would accelerate the development and production of scaleable digital products whilst reducing resources dedicated to the provision of digital solutions. Although this had an impact on short term revenues, our investment in producing direct-to-consumer products and focusing on our core strengths of games and entertainment will improve both the stability and longevity of sales. Against this background we are pleased to report that we have made solid progress towards our objective of becoming cashflow positive in 2003. Results The business had sales of £724,000 (2000: £1,000) and LBITDA was reduced to £1.90m (2000: £4.62m). One-off exceptional items of £972,000 (2000: nil) relating to restructuring costs and the closure of the US operation were incurred and a goodwill impairment charge of £5.55m has been included following a prudent review of the balance sheet carrying value by reference to a number of factors including the impact of volatility in the Group's markets. The retained loss for the year after the goodwill write-down was £8.96m (2000: £4.63m) with a loss per share of 8.15p (2000: loss of 9.54p) The Company's cash position was £3.32m as at 31 December 2001 (2000: £6.88m) compared with £4.32m at the interim stage. Products Our core technology team has been key to the rapid development and deployment of our games and entertainment products. The development of a 'Virtual Games Engine' allows for rapid repeat production of products across different platforms and the 'Quiz Content Management System' gives us first class capability in the area of quiz and trivia entertainment products. Three new products entitled 'Score', 'Winning Post' and 'The Personality Tester' have recently been released into the 'Pay as you Play' Touchscreen Soft Console market. These are being distributed into pubs and clubs throughout the UK via an agreement with Kunick Plc. Future strategy on this platform is to raise our profile by acquiring consumer brand licences, giving us the opportunity to broaden distribution channels. We have already reached agreement with Emap plc and are producing a product titled 'Q The Music' for release in May 2002, exploiting the success of the biggest selling music magazine 'Q'. A further licence from PepsiCo has been acquired to capitalise on the success of the hugely successful 'Pepsi Chart Show'. This product will be titled 'Pepsi Chart Challenge' and is to be released during Quarter 3 of 2002. Further high profile licences will be announced shortly to support the eight public console products to be published in 2002. The 'Kazoo3D Studio' product has now been successfully repositioned as a retail product, re-branded as 'Kazoo Home Creative Studio'. The product has new features and content and is ideal for the digital photographic and image markets, making it a compelling offering. It will be published in the UK, France and Germany and will be shipped during the second half of the year. We continue to provide a limited portfolio of fixed internet products for clients and retain our capability in this area. We are also actively developing innovative products for other digital platforms and expect them to be revenue earning in Quarter 4 this year. The Group is actively looking to enter the video games market during 2002 through strategic acquisitions and partnerships. We believe that we are well positioned to take advantage of the expected growth in this market over the next 3 years by leveraging off our existing strong development skills and combining these with a realistic approach to publishing. The directors are encouraged by the impact of the changes made so far in what has been an extremely challenging market. With a reduced cost base, strong cash resources and a clear focus on revenue generating products, we believe that the Company has the foundations for a much improved performance. We have faced challenges head on and would like to thank all of our staff who have demonstrated tremendous dedication and support for the Company over the past year. It is their skill and hard work which has enabled the business to be agile and to focus on driving revenues and profitability going forward. John Barnes, Chairman Ian Stewart, Chief Executive Officer CONSOLIDATED PROFIT AND LOSS ACCOUNT YEAR ENDED 31 DECEMBER 2001 Unaudited Audited 31 December 31 December 2001 2000 £'000 £'000 Turnover 724 1 Cost of sales (199) (275) __________ __________ Gross profit / (loss) 525 (274) Other operating expenses - other (2,426) (4,349) Loss before interest, tax, depreciation, (1,901) (4,623) amortisation and exceptional items (LBITDA) - depreciation (238) (77) - amortisation of goodwill (532) - - exceptional impairment charges (5,553) (317) __________ __________ Operating loss (8,224) (5,017) Exceptional items (972) - Investment income 233 398 __________ __________ Loss on ordinary activities before taxation (8,963) (4,619) Tax on loss on ordinary activities - (12) __________ __________ Retained loss for the financial year (8,963) (4,631) __________ __________ Loss per share Basic (8.15p) (9.54p) Diluted (8.15p) (9.54p) __________ __________ CONSOLIDATED BALANCE SHEET YEAR ENDED 31 DECEMBER 2001 Unaudited Audited 31 December 31 December 2001 2000 £'000 £'000 Fixed assets Intangible assets 3,043 - Tangible assets 241 127 Other investments 228 - __________ __________ 3,512 127 __________ __________ Current assets Debtors 144 198 Cash at bank and in hand 3,323 6,879 __________ __________ 3,467 7,077 Creditors: Amounts falling due within one year (890) (502) __________ __________ Net current assets 2,577 6,575 __________ __________ Total assets less current liabilities 6,089 6,702 Creditors: Amounts falling due after more than one year (763) - __________ __________ Net assets 5,326 6,702 __________ __________ Capital and reserves Called-up share capital 278 119 Share premium account 11,166 11,166 Other reserves 8,598 1,204 Profit and loss account (14,716) (5,787) __________ __________ Shareholders' funds (all equity) 5,326 6,702 __________ __________ BASIS OF PREPARATION The financial information set out above does not comprise the company's statutory accounts and in respect of the financial year ended 31 December 2001 is unaudited. Statutory accounts for the previous financial year ended 31 December 2000 have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain any statement under section 237(2) or (3) of the Companies Act 1985. The auditors have not reported on accounts for the year ended 31 December 2001 nor have any such accounts been delivered to the Registrar of Companies. Annual Report and Accounts - Copies of the full Statutory Accounts will be dispatched to shareholders in due course. Further copies will be available from the Registered Office of the Company at Parkhead House, 26 Carver Street, Sheffield S1 4FS. Enquiries Tel : 0117 317 9477 ZOO Digital Group plc Ian Stewart, Chief Executive Officer Winningtons Ken Rees This information is provided by RNS The company news service from the London Stock Exchange

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