Currency change clips Zoo Digital

27/11/2009 Robert Tyerman

Zoo Digital, steered by CEO Stuart Green and FD Helen Gilder, turned a $489,000 loss into £382,000 profits

Switching its currency to the US dollar helped send entertainment software and services provider Zoo Digital into an interim loss.

Based in Sheffield and California, the company, once an unsuccessful video games concern, now boasts patented software to help film studios commercialise their output more widely across different media and cut the time to take it to market. Zoo increased operating profits 50 per cent to $647,000 (£440,000) in the six months to September, on turnover up 30 per cent to $8.1 million.

But, having switched to US dollar accounting to reflect its 90 per cent-plus of turnover in the USA, the AIM-quoted company suffered a £615,000 exchange loss on borrowings, which, with other finance costs of £265,000, helped produce an overall pre-tax loss of £232,000. Before losses on exchange translation of inter-company balances and borrowings, the company, steered by chief executive officer Stuart Green, turned a $489,000 loss into £382,000 profits, as software products and staff became ‘increasingly embedded’ within the operations of a ‘major film studio’.

Green cites an (unnamed) principal Hollywood client as saving an estimated $10 million a year after Zoo had regionalised its digital assets, created DVDs and regionalised its theatrical marketing campaigns. More savings are now expected from regionalising TV content, while Green is also bullish about prospects for the company’s Translation Management System, launched this year.

Zoo ended September with $500,000 (£310,000) cash and has an additional $500,000 bank facility. The company has also obtained a £350,000 grant from the Technology Strategy Board for video restoration work in partnership with the British Film Institute.

Floated at 85p in 2000, the shares collapsed to 6.5p in the past 12 months before its change of direction began to take effect. Recommended by Growth Company Investor at 14.5p in July they have now bounced to 25.5p, valuing the company at £5.4 million, where they have speculative appeal.

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