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Shares in Funtastic Limited (ASX:FUN) have plunged in morning trade after flagging a significantly lower first half result and potential divestment. 

 

The toy manufacturer has forecast its earnings will fall due to higher business costs, a weaker exchange rate and a poor performance from some of its key brands.

 

The company has also revealed its home entertainment distribution Madman business will likely suffer an impairment charge of between $22 to $28 million. 

 

Funtastic says the discrepancy was identified when it assessed potential expressions of interest for the potential purchase of Madman.  

 

The company hopes to finalise a possible divestment of Madman before announcing its first half results and put the proceeds to paying down debt.

 

Shares in Funtastic had plunged 16.67 per cent in morning trade to $0.125. 

 

Funtastic increased its net profit by 17 per cent to almost $14 million in the 2013 financial year.