ZOO Digital

The Sheffield-based company, which issued the shares at 40p each, said it is also restructuring of all of its outstanding convertible loan notes, amounting to £3.54m which was due to mature on 31 October 2011.

The firm said the cash raised by the share placing will be used to roll-out the company’s software into new markets.

The announcement came as the firm reported that adjusted operating profit for the year ended March 31 rose to £800,000, up from £492,000 the previous year.

Adjusted EBITDA increased to £1.41m, while revenues dipped to £8.6m, which ZOO said was a result of the change in its sales strategy to higher margin services.

Stuart Green, chief executive of ZOO, said: “We are pleased to have secured this additional funding which will enable us to take advantage of the growth taking place in the electronic books market.

“Our solutions maintain the formatting qualities and standards of a physical production, thereby enhancing the enjoyment of reading it electronically and we are confident that the proceeds of this Placing will help us to achieve great success in this field.”

Mr Green said that as well as a major Hollywood studio adopting ZOO’s content editor toolset with Apple iTunes over the financial year, it had also secured a deal with Warner Home Video International to use its new automated style guide production system.

Since its year end, ZOO has won a contract with a leading videogame publisher, it said.