Future Shares Remain Suspended As Losses Are Revealed
Shares in Future Network remained suspended this afternoon as the group released its delayed interim results. In a statement this afternoon, Future said that shares had been suspended “in order to prevent a false market developing ahead of a significant refinancing announcement”. Details of the refinancing deal are expected ‘shortly’ and shares will remain suspended until such an announcement is made.
Significant restructuring has taken place within the network including the closure or sale of 39 magazines, the closure of Dutch and German operations, major operational restructuring of UK and US businesses (see Future To Sell US Business 2.0 To Fortune Group) and an overall reduction of 39% in the group’s workforce leaving around 1,200 employees globally.
Several changes to the Future board have also been made with Michael Pennington appointed interim finance director in March, to be succeeded by Michael Bowman in November, and Colin Morrison being initially named CEO in March then managing director in a today’s announcement.
Commenting on the results, Greg Ingham, Future’s Chief Executive said: “We have taken extensive actions to reshape the group. Good progress has been made in sorting out the business, with tough actions taken to cut our cost base significantly and to reduce our risk profile. This restructuring, combined with the transition period currently affecting the computer games market, has inevitably had a significant impact on the group’s results for the first half.
“Though revenues from both copy sales and advertising have tracked below expectation, the Continuing magazine portfolio recorded a small profit at the EBITA level before charging refinancing costs during the first six months. This was due to tighter management of direct costs and reductions in overheads.
“As announced in June, trading conditions remain challenging and are expected to remain so for at least the remainder of this year. Though we believe that we have made cautious assumptions about the second half of this year, current market conditions, both generally and resulting from the video games transition, make it difficult to forecast revenues. Our market share performance in the games market in our core UK and US operations continues to be strong. Publishing teams are in place for Official Xbox Magazine with preparations well-advanced for the magazine’s launch in the US later this month, and in Europe in early 2002.
“The reduction of debt remains a priority for Future and, as announced on 2 August 2001, the Board has been undertaking a review of the alternatives relating to its capital structure. As announced separately the Company is in advanced discussions with respect to a refinancing. The Board expects to be in a position to make a further statement shortly.
“The outlook for the next twelve months may be affected by world economic and political factors. The specific factor most likely to impact our business is the timing of the expected upturn in the computer games market. In the meantime, we continue to focus on the tight management of the business and maintain a cautious view of our markets”.
Although the outlook is certainly unclear at this stage, financing is required to relieve the company’s debt burden of £70 million.
