Zoo Digital’s (ZOO) huge top-line momentum for the full year stemmed largely from localisation services – its fastest-growing segment. Revenues here soared 149 per cent to $21.4m (£16.3m), thanks to an almost doubling of sales within subtitling – known as ‘ZOOsubs’. The division also benefitted from language dubbing services – ‘ZOOdubs’ – launched in the first half.
Management highlights the transformational shift towards digital that has taken place in the realms of film and TV consumption. Indeed, digital distribution represented 66 per cent of the total $48bn spent globally on home entertainment in 2017. Excellent news for Zoo; with rising demand for digital content comes rising demand for that content to be voiced by geography.
That said, the company’s quest to become a 'one-stop-shop' for localisation services has dampened gross margins from 45 to 35 per cent. The process of refining the new ZOOdubs software has led verification and quality control costs to climb considerably. Still, bosses expect these margins to recover as the technology gains recognition. Further down the P&L, Zoo’s $5m pre-tax loss stemmed from a non-cash charge for the fair value movement of a convertible loan note, caused by the company’s rising share price.
Broker finnCap forecasts adjusted pre-tax profits of $1.8m and EPS of 2.1¢ for the year ending March 2019 (FY2018: $0.5m and 0.9¢).
| ZOO DIGITAL (ZOO) | ||||
| ORD PRICE: | 94p | MARKET VALUE: | £ 69m | |
| TOUCH: | 93-95p | 12-MONTH HIGH: | 110p | LOW: 12p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 3.7¢* | NET DEBT: | 72% | |
| Year to 31 Mar | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2014 | 9.6 | -2.7 | -8.2 | nil |
| 2015 | 11.5 | -2.1 | -6.3 | nil |
| 2016 | 11.6 | -1.5 | -2.4 | nil |
| 2017 | 16.5 | 0.5 | 2.4 | nil |
| 2018 | 28.6 | -5.0 | -6.8 | nil |
| % change | +73 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of $6.5m, or 8.9¢ per share £1 = $1.31 | ||||
