Toys, clothing, confectionery and film distributor Funtastic is set to sell its film and television distributor and rights management company, Madman Entertainment.
Madman Entertainment showcases Australian film, world cinema, children’s content, anime, sports and other special interest categories.
Funtastic also says the group’s first half results will be significantly lower than those of the prior corresponding period.
Funtastic said on Tuesday that it had recently received two expressions of interest from potential acquirers of Madman.
“It is anticipated that we will finalise a possible sale transaction of Madman prior to announcing our first half results and that our half year accounts will present Madman as a business up for sale,” Funtastic said in a statement.
Funtastic said that in the process of assessing the offers it had realised that the carrying value of Madman – about $52 million – was higher than its fair market value.
Funtastic therefore expects to make an impairment charge of $22 million to $28 million against Madman.
Proceeds from a sale of Madman would go towards repaying debt.
Funtastic said several factors would contribute to the group’s lower first half results.
Those factors included increased costs; a weaker currency exchange rate; poor performance by key brands Leapfrog, Power Rangers and Ben 10; a significantly lower performance from Madman; and continued investment in international expansion.
Funtastic’s first half earnings before interest, tax, depreciation and amortisation (EBITDA) – excluding the Madman impairment – are expected to be in the range of $3 million to $4 million.
EBITDA for the full year – without the sale of Madman and excluding the impairment charge – are expected to be in the range of $19 million to $23 million.
Funtastic expects core sales to grow by about 20 per cent for the full year and by 30 to 40 per cent in the second half, partly driven by the positive impact of a new US distribution agreement for the Chill Factor slushy and ice cream makers.
Shares in Funtastic were 2.5 cents lower at 12.5 cents at 1156 AEDT.
