Zoo Digital's shares dive after margins slashed

The company, which provides cloud-based localisation and digital distribution services for the global entertainment industry, said EBITDA margins came in at 1.4% for the year ended 31 March, down from 8.4% the year before.

Meanwhile, the AIM traded company achieved a profit before tax of $1.3m, swinging from a loss of $5.0m, although on an operating the pendulum swung the other way, with the company moving from a profit of $0.6m to $1.3m of red ink after a 6% increase in cost of sales to $19.6m.

Its topline on the other hand improved by only 1.0% to reach $28.8m, on the back of a 4% increase in revenue from the localisation segment as Zoo's nascent dubbing service attracted new customers, while adjusted EBITDA fell from $2.4m to $0.4m.

Zoo had warned in January that revenue would come in 10% lower than previously expected after one of its largest clients changed the way in which it engages with its supply chain and its legacy DVD and Blu-ray business shrank at a faster rate than had been anticipated.

Stuart Green, chief executive of Zoo, said: "Trading in the new year has begun well. Whilst the significant decline in legacy DVD and Blu-ray formats in our digital packaging segment has continued, now leading us to not forecast any significant income from this business line in the future, this has been offset by strong growth related to over-the-top delivery. We expect Zoo to be confirmed as a preferred vendor to a greater number of clients and lines of business during the course of the year ahead."

Zoo Digital's shares were down 12.12% at 58.00p at 1120 BST.