Winchester future in doubt after 'unacceptable' £9m loss

Winchester Entertainment shares collapsed yesterday after the film-maker and distributor admitted its losses were unacceptable and suggested its status as a "going concern" may come into doubt.

The company's shares sank 43 per cent to 7.75p as it reported a bottom-line loss of £9m, for the six months to 30 September, compared with a £1m profit last time. Turnover was just £3m. The company blamed the state of the film industry, as well as problems it had with specific films.

Among its difficulties is the £2.8m that Winchester is owed by a German tax fund for helping to finance the film Last Orders. The company said the fund had agreed to pay it £553,000 and it will sue for the rest of the money, requiring a £2.2m provision in the interim figures. The numbers were also hit by a £4.7m write-down against its film catalogue and £0.5m against it television catalogue. Another film, Harv the Barbarian, required a £0.4m provision after a dispute meant that its lead actor had to be replaced, delaying the project.

Gary Smith, the finance director, said television networks were not buying many smaller budget movies. The company said in its interim statement that it was a "going concern" but added that "there can be no certainty" about it.

Mr Smith said: "There'll be a couple of months where its [cash flow] will be tight but I don't think we're about to go bust at all." Winchester suggested merging or selling itself was the way out of its problems.

Leslie Hill, who yesterday announced that he would step down as chairman, said: "Losses reported cannot continue and actions have and are being taken to address this.... The board is again considering strategic options."