Trading Update

RNS Number:5651U
Zoo Digital Group PLC
23 January 2004




ZOO Digital Group plc ('ZOO Digital' or the 'Group')

23 January 2004


Restructuring of Business Units and December Trading Update


ZOO Digital announces a trading update following its fundraising in December
2003 and trading over the Christmas period.


DVD-EXTRATM



The fundraising in November, which raised #5.75 million, was carried out
primarily with the goal of developing the potential to the Group of DVD-EXTRA.
The Group has continued to make significant progress in this regard and is
actively negotiating with a number of parties regarding a variety of potential
projects involving DVD-EXTRA.  The funds raised in November have permitted the
Group to restructure its businesses, as set out below, to provide the
appropriate level of resources to ensure that the commercial and technical
development of DVD-EXTRA remains on track.



Restructuring of Business Units



The Group announces that it has restructured into 2 main business units - ZOO
Digital Publishing Ltd ("ZDPL") and ZOOtech Ltd.  ZDPL will look after all of
the Groups publishing and development of consumer facing products including our
relationships with Universal and other major publishers for the DVD-EXTRA
titles.  ZOOtech will focus on the sales, marketing, licensing and development
of new technologies including DVD-EXTRA STUDIO. The Group is currently looking
to further strengthen the senior management teams in both businesses.  The
restructuring reflects the evolution of the different business arms of the
business.



December Trading Update



ZOO Digital announces that it expects trading for the Group for the year to 31
December 2003 will fall below current market expectations and as a result the
Company will make a material loss before interest, tax, depreciation and
amortisation of goodwill.



The principal reasons for this concern the sale of products in the publishing
arm of the Group. The Group has taken action to rectify these issues going
forward. More specifically these are:



* Technical difficulties in the development of 'Premier Manager' on the Sony
Playstation 2 ("PS2") platform caused a delay to the launch of the product in
December 2003, which resulted in sales being significantly lower than, forecast.



* The non-shipment of the "Big Game Hunter" title on the Sony PSOne ("PS") and 
"Need for Speed" on the Nintendo Game Boy Advance ("GBA"), caused by protracted
contract negotiations, has further reduced publishing revenues for the full
year. Both of these products will ship during Q1 2004.



* The inability to generate any significant revenues from the consumer boxed
product versions of Home Creative Studio



* The DVD-EXTRA division accelerated investment and resources to the development
of DVD-EXTRA in the latter part of the year and as a result has generated losses
for the year higher than forecast



Outlook



The trading difficulties over the Christmas period in 2003 should be viewed in
the light of the progress the Group has made during the year in both its
publishing and DVD-EXTRA operations. The Group now offers a broader range of
products, and begins the current financial year, having significantly grown its
catalogue of publishing products in 2003, with a large range of titles across a
number of platforms including Sony PS2, PS1, GBA, PC and DVD.  The DVD-EXTRA
operation, formed into a separate subsidiary ZOOtech Ltd following the recent
fundraising, now has the resources to exploit the Group's IP assets.





Ian Stewart, CEO of ZOO, commented, "I was disappointed that the delivery of
Premier Manager on PS2 was delayed.  The programme we have implemented to
restructure our business units will seek to ensure that the 2004 version will be
delivered on schedule. Our extensive catalogue of titles and the continued
growth in publishing interactive products on the DVD platform means that
revenues from ZOO Digital Publishing will be more robust in 2004 and less
reliant on the performance of one or two titles. Following the successful
fundraising we have now formed ZOOtech Ltd to drive the expansion and
development of DVD-EXTRA; this is particularly exciting and we expect to see
licensing revenues being generated during the second half of 2004 following the
formal launch of DVD-EXTRA at the National Association of Broadcasters
convention in Las Vegas on 17th April 2004.  We have completed an exciting year
of transition and look forward to 2004 with confidence."





-ENDS-



Contacts:

ZOO Digital Group plc                               0114-241-3700
Ian Stewart, Chief Executive
Robert Deri, Chief Financial Officer



Noble & Company Limited                            0131 225 9677
John Llewellyn-Lloyd


Beattie Financial
James Chandler/Grace Marriner                      0207 398 3300


                      This information is provided by RNS
            The company news service from the London Stock Exchange
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