Future Network shares dive after profits warning

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The Independent Online

Future Network, one of the UK's biggest magazine publishers, yesterday saw its shares almost halve after it warned that profits would fall substantially below expectations for the year.

Future Network, one of the UK's biggest magazine publishers, yesterday saw its shares almost halve after it warned that profits would fall substantially below expectations for the year.

The group, which counts Elisabeth Murdoch among its non-executive directors, predicted profits would be some £6m below analysts' forecasts, for the year to 31 December.

This was due to a re-evaluation of its French business, softness in the computer games market and a more conservative outlook for US technology companies. Shares fell by 230p to close at 260p, valuing Future at £363m. Earlier this year, the stock peaked at 937p.

"Clearly it would have been better had we steered analysts toward lower figures, and we will learn from that," said Greg Ingham, its chief executive. Analysts said the group's forecasts had been too aggressive. "This is growing pains more than anything else," Paul Richards, of WestLB Panmure, said. "Future needs an extra layer of management and better financial controls."

Yesterday's warning follows the group's discovery last month of a £4.2m accounting error in its French division, stemming from an overstatement of news-stand sales, which hit restated, first-half earnings by £1.1m.

Mr Ingham added: "We were due to come back to analysts [on the French figures] but at the same time ... it was apparent to us that there were certain softnesses which meant that we had, in aggregate, a shortfall in profits. We had to clarify the whole thing in one go."

Future, which publishes the official titles for Sony's PlayStation console, said it expected underlying profits, excluding investments in magazines less than two-years old, to rise by 25 per cent this year to about £40m. Revenues would be up 30 per cent to about £260m.

An investigation, conducted by Deloitte & Touche, into the accounting error in France, is believed to have cost the group more than £200,000. Other problems include a reduction in advertising spend at Business 2.0, its US internet publication.

"[Non-dot.com advertisers] are the ones that appear to be pulling back in terms of marketing spend. What we don't know is whether that is a blip or a trend," a company spokesman said.

Last week Sony announced it was cutting its allocation of the new PlayStation II consoles in Europe this year by nearly 20 per cent. Future Network has invested heavily in a tie-in title.

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