Zoo to raise capital

ZOO Digital, the digital media production technology company, revealed its losses had deepened but said it planned to raise more than £500,000 to boost its capital resources.

The Sheffield-based firm is a market leader for creating interactive DVDs which can be played by the whole family from the comfort of their living rooms and is focusing on working with Hollywood-based organisations.

Zoo is to raise £512,000 by placing just over 3.4m new shares at 15p per share. The placing price will represent a 25% premium to the closing share price of 12p per share at the close of trading yesterday.

The placing, which Zoo said would generate further capital and allow the company to develop “without undue constraint”, is being taken up by the company’s chief executive Stuart Green, Herald Investment Fund and South Yorkshire Investment Fund.

For the year ended March 31, Zoo saw turnover, excluding that of Los Angeles Scope Seven, which Zoo bought for £1.56m last year, increase by 28% to £1.9m.

The group’s loss before interest, tax, depreciation and amortisation increased to £1.4m from £0.9m, but Zoo said this was down to planned investment.

Mr Green said Zoo had made an “encouraging” start to the new financial year, with technology licensing sales up significantly compared to the same period last year.

He said Zoo had generated a trading profit for the first five months of its new financial year.

Mr Green said: “The past year has been one of transition and we are pleased with the progress we have made.

“Through the acquisition of Scope Seven we have created a compelling offering for US markets, combining technology with service and increasing our resources and presence close to our core studio customers in Hollywood.”

Mr Green said the acquisition had been “a key factor” in Zoo winning a 15-year contract with Walt Disney earlier this year which was expected to generate at least $15m (£7.59m).

It has also enabled Zoo to focus on digital media technology rather than products.

The contract will see Zoo deliver its software automation products to DVD film releases on behalf of Walt Disney Studio Motion Pictures International, which is the international distribution arm of film maker Walt Disney Studios.

Sony Pictures Entertainment has also licensed Zoo’s Templated Authoring System and will use it in a range of its DVD titles.

Mr Green said Zoo had also been exposed to new markets following the launch of its Media Adaptation Tool, which enables the automated regionalisation and size adaptation of print, packaging and marketing materials, which he said was generating significant new revenue streams.

Christopher Honeyborne, Zoo’s chairman, said: “The board are actively focused on driving the business forward through the continued integration of Scope Seven and by enhancing our technological offering.

“The directors of the company believe that shareholder value will be maximised by combining this approach with operational improvements that have already been made across the business.”

The proposed share placing will be discussed and voted on at Zoo’s annual general meeting in Sheffield on October 6.