Zoo Digital causes stampede after warning on profits

Shares in Zoo Digital tanked on Tuesday as the localisation and distribution service warned that its second-half performance was hampered by the loss of a material project.

The AIM-listed outfit told investors on Tuesday that, although trading in the second half "began encouragingly", it now expects revenues for the second half to be comparable to those in the first, meaning full-year revenues would be approximately 10% below expectations, after the loss of the project that was due to begin and complete during the period.

Zoo expects to be profitable and cash generative in the second half, but due to its largely fixed cost base and higher margins associated with its DVD and Blu-ray processing activities, the firm warned that its full-year adjusted EBITDA would be "significantly below expectations".

Chief executive Stuart Green said: "Whilst we are disappointed to fall short of expectations, albeit primarily due to one-off occurrences, we are encouraged that we have seen year on year growth across our key service lines being dubbing and subtitling, as well as having successfully delivered projects for a number of new clients."

"We remain confident that the company's strategy is correct and will enable us to capitalise on the long-term opportunity."

As of 1040 GMT, Zoo shares had crashed 46.09% to 62p.