ZOO Digital Group Plc (AIM:ZOO) (ZOO Digital Group Plc (AIM:ZOO)) saw its shares plummet by 30% to 72.5p after the provider of cloud and media services to the entertainment industry said it received revised guidance from its auditors regarding the interpretation of IFRS 15 accounting principles which impacted underlying earnings (EBITDA).
For IFRS 15 purposes, the group was told it was wrong to match third-party costs with revenue, and rather it should have been reported when invoices were received.
As a result, Zoo Digital expects a downward restatement of EBITDA by US$1.2mln for 2022, although it expects an increase in 2023 adjusted EBITDA by US$2mln.
Additionally, the AIM quoted firm said first-quarter trading had been impacted due to a “well-publicised” hiatus in the normal flow of orders, which led to lower-than-expected revenues during a quarter that was already forecast to be weaker than previous years.