Future share price slumps on GBP 12 million first-half loss

Magazine publisher Future Plc has announced a pre-tax loss of GBP 12.1 million in the six months leading up to March 31st, with the weak performance of videogame titles cited as a key reason for the firm's decline.

Shares in Future slid by almost 16 per cent to a four year low of 37 pence on the London Stock Exchange in the wake of the news, which was accompanied by the announcement that long-serving chief executive Greg Ingham is leaving the firm, and were trading down over 11 per cent at the time of writing.

The pre-tax loss of GBP 12.1 million compares with a profit of GBP 11.1 million in the same period last year, and EBITAE profits of GBP 6.3 million were less than half the size of last year's GBP 12.8 million figure.

The group's turnover did increase marginally - up to GBP 114.7 million from GBP 104.3 million - but the figures were impacted by what Future's statement to the City this morning described as a "major profit shortfall" in the company's games titles.

"The main [factor] is lower sales revenues from magazines in the games sector, compared with last year," explained Future chairman Roger Parry. "In addition, anticipated profits from more recently acquired titles, including ex-Highbury titles, have been reduced by weakness in consumer spending and have underperformed against our expectations. These acquired profits have not been large enough to make up for the reduction in profit from existing titles."

Parry's statement this morning attributes some of the blame for the decline to the current phase of the console cycle - with the transition period decline being cited as driving a decline in readership. Regardless, the firm now intends to seriously overhaul its strategy in the face of these losses.

According to Parry, an "extensive review of the group's strategy and operations" has been conducted by the board, and it will now be scaling back its former "ambitious policy of rapid expansion."

"We are today announcing the revision of our previously stated target to double the size of the business by 2008," he revealed. "We continue to seek growth but the focus going forward will be on organic growth and operational effectiveness."

"Our primary plan is to invest in a number of organic development projects," he continued. "This will reduce operating profits in the coming 18 months as the investment will be reflected in the income statement but we believe it is the best long-term value-creating strategy in the current market conditions."

Looking at the shorter term, Future expects that its EBITAE profits will be around GBP 2 million below current market expectations, with profits in 2007 likely to be depressed as well due to the new focus on organic growth.