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Zoo Digital

  • BY: Andrew Hore |
  • POSTED: 12/12/2008 |

Zoo Digital moved into profit in the six months to September 2008 helped by positive exchange rate movements.

Sheffield-based Zoo has developed software that helps speed up the production and translation of DVDs. Zoo increased its revenues by 147% to £3.24m with a full contribution from Scope Seven which was acquired late in the corresponding period. Sales of Zoo’s new Media Adaptation Tool, which automates production of printed materials, also helped. The second quarter tends to be the strongest because of work on DVDs being issued for Christmas. Revenues are increasingly based on usage of software.

Zoo reported a profit before interest depreciation and amortisation of £382,000, against a £620,000 loss last time. Zoo also moved from a pre-tax loss of £748,000 to profits of £68,000.

These profits include a £372,000 exchange gain. Zoo would still have made a small trading profit even if this is excluded

Most of the company’s revenues is in dollars whereas costs are in dollars and pounds.

Film companies are the main customers but Zoo wants to expand into the TV and games markets. Even though budgets are being cut, Zoo provides a way for customers to be more efficient. Zoo is talking with new customers but there are lengthy lead times before contracts are signed. 

Zoo raised £512,000 in October 2008 so pro forma net debt is just over £2.8m. Most of the company’s debt is in the form of a convertible loan note. Excluding that, there is net cash.

House broker KBC Peel hunt believes that Zoo will break even at the pre-tax level on revenues of £7.3m for the full year. That assumes no further exchange gains but that looks unlikely at the moment. 

At 10p a share, Zoo is valued at £2.13m.

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