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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Reach4entertainment Enterprises Plc | LSE:R4E | London | Ordinary Share | GB00B1HLCW86 | ORD 0.1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.225 | 0.20 | 0.25 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMR4E
RNS Number : 2201R
Reach4Entertainment Enterprises PLC
20 September 2017
20 September 2017
reach4entertainment enterprises plc ('r4e', 'the Company' or 'the Group')
Unaudited interim results for the six months ended 30 June 2017
r4e, the transatlantic media and entertainment Company, today announces its unaudited interim results for the six months ended 30 June 2017.
Highlights
Hot Features
Premium
Unaudited
six Unaudited
months six months
to to
30 June 30 June
2017 2016 Change
Revenue GBP41.9m GBP49.0m -14.5%
Gross Profit GBP10.5m GBP11.5m -8.7%
Adjusted EBITDA(1) GBP0.4m GBP1.6m -73.3%
Operating (loss)/profit GBP(0.1)m GBP1.0m -110%
(1) Adjusted EBITDA is stated before exceptional items and share based payment charges
-- PNC borrowing reduced by a further GBP1.564 million since 30 June 2016 with the outstanding term debt balance of GBP0.55 million repaid in July 2017;
-- the new start up agency, Dewynters Germany, set up using proceeds from the fund raise in 2016, has had a very strong start with some positive contract wins resulting in a break-even performance in its first 9 months;
-- against the prior period, Dewynters has produced a stronger adjusted EBITDA performance on a reduced turnover (2.2% increase versus 1.8% in prior period);
-- SpotCo affected by a reduction in activity across its client base, increased competition and critically it has been involved in fewer new production launches;
-- second half of current financial year expected to be satisfactory, but 2018 forecasts already looking like a return to form from the key companies with support from the new initiatives of Dewynters Germany and Jampot.
David Stoller, Executive Chairman, commented:
"The launch of new theatre productions is a key driver of profitability for the Group and historically has varied year to year. Whilst we are seeing fewer such launches this year, which has impacted upon our trading performance, there is a good pipeline of new shows for 2018.
We have significantly reduced group borrowings further enhancing the Group's financial base, and have seen our new venture Dewynters Germany complete a better than expected first year, aided by important new client wins.
Our strategy remains focused on providing unmatched service to the world's leading entertainment companies from our operations in London, New Yok and Hamburg, the three largest live entertainment centres globally, and advancing our core strategies focussed on increasing digitalisation of our services, development of our data and analytics business, and expansion into new geographies and non-theatre live entertainment business."
Enquiries:
reach4entertainment enterprises
plc
+44 (0) 20 7968
David Stoller, Executive Chairman 1655
Allenby Capital (Nominated Adviser +44 (0) 20 3328
and Broker) 5656
Jeremy Porter/James Reeve (Corporate
Finance)
Katrina Perez/Kelly Gardiner (Corporate
Broking)
Novella Communications (Financial +44 (0) 20 3151
PR) 7008
Tim Robertson/Toby Andrews
EXECUTIVE CHAIRMAN'S STATEMENT
Introduction
r4e has had a relatively modest first six months compared to the same period in 2016 which was a very strong year, but the group has made good progress in building a strong pipeline of new business for 2018. The trading performance for the first six months of 2017 reflects this with revenues generated of GBP41.9 million (period ending 30 June 2016: GBP49.0 million), EBITDA of GBP0.4 million (period ending 30 June 2016: GBP1.6 million) and operating loss of GBP(0.1 million) (period ending 30 June 2016: GBP1.0 million).
In 2017 the Group has been involved in fewer launches of new theatre productions, particularly in the US, which is a key driver of profitability. This is mainly due to new industry competition in New York; shortage of theatres for new musical openings in London; and the effect of recent terrorist attacks in 2017 in the UK in on film premieres and events. However, r4e continues to be a leader in this sector across the three markets in which it operates, has a solid base of 2018 business expected, and has made good progress in pursuing its strategic objectives, focussing particularly on geographic expansion (like Hamburg), development of opportunities outside of its traditional theatre business, (Dewynters Vision) and building its data driven marketing and analytics business (through Jampot).
Dewynters Germany, launched in 2016, has had an excellent first year and has expanded the Company geographically into the world's third largest live entertainment market. In March 2016, the Company acquired Jampot, a data driven marketing and analytics business, which is now providing a significantly enhanced digital capability across each of the Company's agencies. Finally, in the last year the Group has seen significantly increased collaboration between our three offices with a focus on supporting individual shows in all three markets.
As previously announced, I will be stepping down from the Board on 30 Sept 2017, although I will remain involved with the Company as Chairman of SpotCo. I would like to thank everyone I have worked with over the last 7 years for their help and support. I leave with a great optimism for the future, with important financial and strategic building blocks in place.
The Company expects to make an announcement regarding the appointment of a new CEO shortly.
Trading performance
The results for the 6 months ended 30 June 2017 show the following:
Summary of results
Unaudited Unaudited
6 months 6 months
ended ended
30 June 30 June
2017 2016
GBP'000 GBP'000
Revenue from continuing
operations 41,880 48,963
---------- ----------
Adjusted EBITDA(1) from
continuing operations 429 1,598
Share based payment charges (213) (174)
Impairment of goodwill
(note 4) - (55)
---------- ----------
Group EBITDA 216 1,369
Operating (loss)/profit (110) 1,015
(Loss)/profit before tax (280) 834
(Loss)/profit after tax (328) 311
(1) Adjusted EBITDA is EBITDA before exceptional items and share based payment costs
Reflecting a more challenging trading period, the Group generated revenues of GBP41.9 million, 14.5% below the prior year which led to the Group recording an adjusted EBITDA of GBP0.43 million compared to GBP1.60 million in same period last year. The EBITDA margin was lower primarily due to the change in the mix of revenues which included less income from the launch of new theatre productions.
Dewynters in London has produced a solid first-half performance, increasing its contribution at the EBITDA level over last year, and Dewynters Germany had a strong first year; the main change in trading has resulted from a more modest performance of SpotCo in New York, as compared with a very strong 2016. This was the result of significant reduction in activity across SpotCo' s client base and fewer new shows. In addition, Newmans experienced a more challenging trading environment during the first half of the year.
The Company recorded a loss before tax of GBP0.28 million (H1 2016 profit before tax: GBP0.834 million). This led to the Company recording a loss per share of 0.053p, compared to earnings per share of 0.07p from the prior period last year.
In July 2017, the Group agreed a variation of the covenants on its 3-year secured asset based debt facility with PNC Business Credit ('PNC') to reflect the shift in the weighting of the Group's revenues in 2016 and 2017 which affected the 12-month rolling covenant test. The Company has met all the covenants to date in 2017 but a more recent shift in revenues towards the end of the year and into 2018 may result in a potential breach of the monitoring covenants in the third quarter; however, the Company does expect to still be comfortably within the banking covenants for the full year. The Company and PNC are monitoring the position carefully and remain in close correspondence, but the Directors of the Company understand that PNC remains supportive of r4e.
In addition to the July covenant amendments, the Company has been able to repay its Cash Flow Term Debt facility with PNC of GBP0.55 million. The repayment will result in reduced interest costs in 2017. Total borrowings with PNC as at 30 June 2017 were GBP2.79 million (31 December 2016: GBP4.36 million).
Operational review
Continuing Operations
Unaudited 6 months ended 30 June 2017
-----------------------------------------------------------------------------------------------------
Company Revenue Adjusted EBITDA* Operating (loss)/profit (Loss)/profit before tax (Loss)/profit after tax
------- ---------------- ----------------------- ------------------------ -----------------------
GBP'000
-----------------------------------------------------------------------------------------------------
Dewynters 12,348 282 134 143 (192)
------- ---------------- ----------------------- ------------------------ -----------------------
Newmans 1,521 66 29 16 (2)
------- ---------------- ----------------------- ------------------------ -----------------------
Jampot 26 (65) (65) (65) (65)
------- ---------------- ----------------------- ------------------------ -----------------------
Dewynters GmbH 327 1 (1) (1) (1)
------- ---------------- ----------------------- ------------------------ -----------------------
SpotCo 27,658 425 177 66 34
------- ---------------- ----------------------- ------------------------ -----------------------
Head Office - (280) (384) (439) (102)
------- ---------------- ----------------------- ------------------------ -----------------------
TOTAL 41,880 429 (110) (280) (328)
======= ================ ======================= ======================== =======================
Unaudited 6 months ended 30 June 2016
-----------------------------------------------------------------------------------------------------
Company Revenue Adjusted EBITDA* Operating (loss)/profit (Loss)/profit before tax (Loss)/profit after tax
------- ---------------- ----------------------- ------------------------ -----------------------
GBP'000
-----------------------------------------------------------------------------------------------------
Dewynters 13,467 245 107 71 (185)
------- ---------------- ----------------------- ------------------------ -----------------------
Newmans 1,939 216 193 185 185
------- ---------------- ----------------------- ------------------------ -----------------------
Jampot 0 0 0 0 0
------- ---------------- ----------------------- ------------------------ -----------------------
Dewynters GmbH 0 0 0 0 0
------- ---------------- ----------------------- ------------------------ -----------------------
SpotCo 33,557 1,355 1,099 967 490
------- ---------------- ----------------------- ------------------------ -----------------------
DAI - (5) (1) (1) (1)
------- ---------------- ----------------------- ------------------------ -----------------------
Head Office - (213) (383) (388) (178)
------- ---------------- ----------------------- ------------------------ -----------------------
TOTAL 48,963 1,598 1,015 834 311
======= ================ ======================= ======================== =======================
*Adjusted EBITDA is EBITDA before exceptional administrative items and share based payment costs.
SpotCo has had a modest first six months in 2017, particularly compared to the exceptionally strong performance it enjoyed in the prior year. Trading in 2017 has been affected by a reduction in activity across its client base, increased competition and fewer new production launches. However, the outlook in 2018 for SpotCo is much improved, the agency has already been engaged in some of Broadway's most anticipated new shows, and the management team expects to see a return to previous trading levels.
Dewynters has had a good trading period, increasing its contribution to the Group and successfully supporting the launch of new shows such as Bat Out of Hell and Annie. The business has benefitted from the re-organisation completed in 2016, driven by Dewynters' new CEO, James Charrington, and the broad effort to change the way theatre and live entertainment events are marketed, combining digital marketing, programmatic media buying, data-driven analysis and digital distribution of select services all designed to leverage Dewynters' capabilities, and enable our clients to build their audience while selling more tickets at a higher yield and lower cost.
Launched in September 2016, Dewynters Germany has had a very good first year, surpassing expectations and offering a good indication of the future potential of this new venture. Hamburg is an active market and is already linking well with SpotCo and Dewynters in London, drawing upon Company wide experience and resources.
Newmans' performance in the first 6 months of this financial year was affected by the cancellation of live events in the wake of the Manchester and London terror incidents and more generally from a fewer number of new theatre shows opening. That said, the second half of the year has begun positively and the division is expected to make up ground to achieve a satisfactory result for the year as a whole. The division continues to benefit from bringing printing and cutting in-house and enjoys a good mix of business from live events, theatre production and film premieres.
Summary and Outlook
Whilst 2017 is proving to be a more challenging period for the business, for reasons indicated above, the base business is strong and we are anticipating a significant improvement in all activity levels for 2018 with a strengthened financial base and a continuing growth from the key strategic initiatives launched over the last year.
David Stoller, Executive Chairman
reach4entertainment enterprises plc
20 September 2017
Unaudited Condensed Consolidated Income Statement
For the six months ended 30 June 2017
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2017 2016 2016
(Unaudited) (Unaudited) (Audited)
GBP000's GBP000's GBP000's
Continuing Operations
Revenue 41,880 48,963 96,606
Cost of sales (31,428) (37,431) (73,779)
------------- ------------- -------------
Gross profit 10,452 11,532 22,827
Administrative expenses (10,562) (10,517) (21,973)
EBITDA before exceptional administrative items 216 1,369 1,552
Impairment of goodwill 4 - (55) (55)
Depreciation (230) (204) (447)
Amortisation of intangibles (96) (95) (196)
------------------------------------------------ --- ------------- --- ------------- --- -------------
Operating (loss)/profit (110) 1,015 854
Finance costs 2 (170) (181) (355)
(Loss)/profit before taxation (280) 834 499
Taxation (48) (523) (409)
(Loss)/profit for the period (328) 311 90
============= ============= =============
The (loss)/profit is attributable to the owners of the parent
(Loss)/earnings per share (pence)
Basic 3 (0.05) 0.07 0.02
Diluted 3 (0.05) 0.06 0.02
Unaudited Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2017
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2017 2016 2016
(Unaudited) (Unaudited) (Audited)
GBP000's GBP000's GBP000's
(Loss)/profit for the period (328) 90
311
Other comprehensive income:
Currency translation (loss)/gain (56) 44 94
Other comprehensive income (net of tax) for the period (56) 44 94
Total comprehensive (loss)/income for the period
attributable to owners of the parent (384) 355 184
============= ============== =============
Unaudited Condensed Consolidated Balance Sheet
As at 30 June 2017
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2017 2016 2016
(Unaudited) (Unaudited) (Audited)
GBP000's GBP000's GBP000's
Non-current assets
Goodwill 4 7,055 6,874 7,365
Intangible assets 3,448 3,620 3,581
Property, plant and equipment 2,457 2,659 2,720
Deferred tax asset 168 145 167
13,128 13,298 13,833
------------- ------------- -------------
Current assets
Inventories 140 135 139
Trade and other receivables 9,340 12,166 14,263
Other current assets 570 551 601
Cash and cash equivalents 2,073 522 2,097
------------- ------------- -------------
12,123 13,374 17,100
------------- ------------- -------------
Total assets 25,251 26,672 30,933
============= ============= =============
Current liabilities
Trade and other payables (14,255) (15,489) (17,582)
Current taxation liabilities (33) (77) -
Borrowings 5 (2,857) (3,893) (4,489)
------------- ------------- -------------
(17,145) (19,459) (22,071)
------------- ------------- -------------
Net current liabilities (5,022) (6,085) (4,971)
------------- ------------- -------------
Non-current liabilities
Deferred taxation (1,655) (1,615) (1,733)
Borrowings 5 (102) (702) (537)
Other payables 6 (1,169) (1,496) (1,241)
(2,926) (3,813) (3,511)
Total liabilities (20,071) (23,272) (25,582)
------------- ------------- -------------
Net assets 5,180 3,400 5,351
============= ============= =============
Equity
Called up share capital 3,074 2,397 3,074
Share premium 16,645 15,371 16,645
Deferred shares 1,498 1,498 1,498
Capital redemption reserve 15 15 15
Share option reserve 558 174 349
Warrant reserve 311 311 311
Retained earnings (16,808) (16,259) (16,480)
Own shares held (259) (259) (259)
Foreign exchange reserve 146 152 198
Total equity attributable to owners of the parent (5,180) 3,400 5,351
============= ============= =============
Unaudited Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2017
Capital Share Own Foreign Total
Share Share Deferred Redemption option Warrant Retained Shares Exchange Equity
capital premium shares reserve reserve reserve earnings held reserve GBP'000
GBP'000 GBP'000 GBP'000 GBP000 GBP000 GBP'000 GBP'000 GBP'000 GBP'000
ATTRIBUTABLE TO
EQUITY
HOLDERS OF THE
PARENT
At 1 January
2016 2,374 15,329 1,498 15 - 311 (16,570) (259) 108 2,807
Profit for the
period - - - - - - 311 - - 311
Other
comprehensive
income, net of
tax:
Currency
translation
differences - - - - - - - - 44 44
-------- -------- --------- ----------- -------- -------- --------- -------- --------- --------
Total
comprehensive
income for the
period - - - - - - 311 - 44 355
Transactions
with
owners in their
capacity
as owners:
Shares
issued 23 42 - - - - - - - 65
Share based
payment
charge - - - - 174 - - - - 174
At 30 June 2016
(Unaudited) 2,397 15,371 1,498 15 174 311 (16,259) (259) 152 3,400
======== ======== ========= =========== ======== ======== ========= ======== ========= ========
At 1 July 2016 2,397 15,371 1,498 15 174 311 (16,259) (259) 152 3,400
Loss for the
period - - - - - - (221) - - (221)
Other
comprehensive
income, net of
tax:
Currency
translation
differences 50 50
-------- -------- --------- ----------- -------- -------- --------- -------- --------- --------
Total
comprehensive
income for the
period - - - - - - (221) - 50 (171)
Transactions
with
owners in their
capacity
as owners:
shares
issued
Share
re-organisation 677 1,274 - - - - - - - 1,951
Share based
payment
charge - - - - 171 - - - - 171
At 31 December
2016
(Audited) 3,074 16,645 1,498 15 345 311 (16,480) (259) 202 5,351
======== ======== ========= =========== ======== ======== ========= ======== ========= ========
At 1 January
2017 3,074 16,645 1,498 15 345 311 (16,480) (259) 202 5,351
Loss for the
period - - - - - - (328) - - (328)
Other
comprehensive
income, net of
tax:
Currency
translation
differences - - - - - - - - (56) (56)
-------- -------- --------- ----------- -------- -------- --------- -------- --------- --------
Total
comprehensive
income for the
period - - - - - - (328) - (56) (384)
Transactions
with
owners in their
capacity
as owners:
Share based
payment
charge - - - - 213 - - - - 213
At 30 June 2017
(Unaudited) 3,074 16,645 1,498 15 558 311 (16,808) (259) 146 5,180
======== ======== ========= =========== ======== ======== ========= ======== ========= ========
Unaudited Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2017
6 months
6 months ended Year ended
ended 30 June 31 December
30 June 2016 2016
2017 (Unaudited) (Unaudited) (Audited)
GBP000's GBP000's GBP000's
Cash generated from
operating activities 8 1,952 3,111 3,196
Income taxes paid (9) (408) (436)
Net cash inflow from
operating activities 1,943 2,703 2,760
------------------ ------------- -------------
Investing activities
Purchase of property,
plant and equipment (61) (156) (356)
Purchase of finance
lease equipment 5 - - (133)
Net cash used in investing
activities (61) (156) (489)
------------------ ------------- -------------
Financing activities
Net proceeds from the
issue of share capital - - 1,909
Proceeds from asset
based lending 47,773 55,188 108,684
Repayment of asset
based lending (49,402) (58,112) (111,396)
Repayment of term loan (236) (87) (287)
Repayments of obligations
under finance leases (46) (3) (13)
Interest paid (140) (106) (338)
------------------ ------------- -------------
Net cash (used in)/generated
from financing activities (2,051) (3,120) 1,441
------------------ ------------- -------------
Net (decrease)/increase
in cash and cash equivalents (169) (573) 830
Cash and cash equivalents
at the beginning of
the period 2,698 1,160 1,160
Effect of foreign exchange
rate changes 114 (65) 107
Cash 2,073 522 2,097
Cash equivalents 570 551 601
------------------ ------------- -------------
Cash and cash equivalents
at end of the period 2,643 522 2,097
================== ============= =============
Unaudited notes to the Condensed Consolidated Interim Financial Statements
For the six months ended 30 June 2017
1 Basis of Presentation
These unaudited condensed consolidated interim financial statements are for the six months ended 30 June 2017. They have been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS) as adopted by the European Union. This report should be read in conjunction with the annual financial statements for the year ended 31 December 2015, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and International Financial Reporting Interpretations Committee ('IFRIC') Interpretations and the Companies Act 2006, as applicable to companies reporting under IFRS.
The financial information in this interim announcement does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. The unaudited interim financial statements were approved and authorised for issue by the Board on 20 September 2017.
The comparative financial information for the year ended 31 December 2016 does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. The statutory accounts of reach4entertainment enterprises plc for the year ended 31 December 2016 have been reported on by the Company's auditor, RSM UK Audit LLP, and have been delivered to the Registrar of Companies. The report of the auditor was unqualified but contained an emphasis of matter statement with regard to going concern. The auditor's report did not contain statements under Section 498(2) or 498(3) of the Companies Act 2006.
The financial information for the six months ended 30 June 2017 and 30 June 2016 is unaudited.
Accounting Policies
The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2016, with exception of standards, amendments and interpretations effective in 2016.
Standards, amendments and interpretations effective in 2017
The following IFRS/IAS are either new, amended or have interpretations mandatory for the first time for the financial year beginning 1 January 2017, but had no significant impact on the Group:
-- IFRS 12 - Disclosure of Interests in Other Entities. -- IAS 7 - Statement of Cash Flows. -- IAS 12 - Income Taxes.
The following IFRS/IAS are either new, amended or interpretations have been issued, but are not effective for the financial year beginning 1 January 2017 and have not been early adopted:
-- IFRS 2 - Classification and measurement on share based payment transactions. -- IFRS 9 - Financial Instruments. -- IFRS 15 - Revenue from Contracts with Customers. -- IFRS 16 - Leases -- IAS 28 - Interests in Associates and Joint Ventures. -- IFRIC 23 - Uncertainty over Income Tax Treatments
Going Concern
These interim condensed consolidated financial statements have been prepared on a going concern basis.
During 2015 the Group obtained a new three year secured asset based debt facility of GBP9.5 million with PNC Business Credit Services Ltd being made up of a GBP1 million term loan and a revolving credit facility of up to GBP8.5 million based on qualifying accounts receivable. As at 31 June 2017 the debt owed to PNC totalled GBP2.79 million (2016: GBP3.75 million), a reduction of GBP.96 million. Subsequent to 30 June 2017, the balance of the term debt being GBP0.55 million, has been repaid in full, leaving only the revolving credit (asset based facility) with PNC remaining.
The asset based lending facility is a revolving credit line based upon qualifying accounts receivable. This means current debt is constantly being paid down and new debt being drawn. The facility will therefore fluctuate but will be no more than GBP8.5 million at any point. A new set of financial covenants were agreed with PNC in relation to this debt on 20 July 2017. The financial covenants are measured monthly and there have been no breaches in the 7 months through to 30 July 2017 but the weaker trading performance in the current financial year and in particular the shift in revenues towards the end of the year and into 2018 may result in a potential breach of the monitoring covenants in the third quarter this year. However, the Company does expect to be comfortably within the banking covenants for the full year. The Company and PNC are monitoring the position carefully and remain in close correspondence, but the Directors of the Company understand that PNC remains supportive of r4e.
The performance for the full year 2017 is forecast to be weaker than 2016 due to: new industry competition in New York; shortage of theatres for new musical openings in London; and the effect of recent terrorist attacks in 2017 in the UK in on film premieres and events. Although these events have impacted the Group in 2017, the outlook for 2018 is already expected to be more positive due to significant new musical wins in SpotCo which will generate revenue next year and stronger looking pipeline for both Dewynters and Newman's. In addition, Dewynters Germany has had a very strong start to its first year of operation and this is expected to continue.
Given the significant reduction in the debt levels of the group since the re-financing in 2015, plus the improvement to the balance sheet position and forecast for 2018 onwards, the Directors believe that the going concern basis is appropriate and the Group has adequate resources to continuing trading for the foreseeable future.
2 Finance Costs
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
(Unaudited) (Unaudited) (Audited)
GBP000's GBP000's GBP000's
Finance lease interest 10 3 13
Interest on term loans 25 27 -
Interest on asset based
finance 71 78 200
Fees on asset based
finance 44 71 137
Fees on amendment to
debt facility 20 - -
Net foreign exchange
losses - 2 5
170 181 355
============ ============ ============
3 (Loss)/earnings Per Share
The calculations of earnings per share are based on the following results and numbers of shares.
6 months 6 months
ended ended Year
30 June 30 June ended
31 December
2017 2016 2016
(Unaudited) (Unaudited) (Audited)
Number Number Number
Weighted average number
of 0.5 pence ordinary
shares in issue during
the period
For basic earnings/(loss)
per share 614,733,671 477,273,154 500,208,593
Potentially dilutive
effect of share options 7,464,201 22,024,476 483,688
For diluted (loss)/earnings
per share 622,197,872 499,297,630 500,692,281
GBP000's GBP000's GBP000's
(Loss)/profit (327) 311 90
============ ============ ============
4 Goodwill
Total
GBP000's
Cost:
1 January 2016 6,339
Acquired goodwill 55
Impairment to goodwill (55)
Foreign exchange differences 535
30 June 2016 6,874
Foreign exchange differences 491
31 December 2016 7,365
----------
Foreign exchange differences (310)
30 June 2017 7,056
----------
Net Book Value:
30 June 2017 (unaudited) 7,055
==========
30 June 2016 (unaudited) 6,874
==========
31 December 2016 (audited) 7,365
==========
In the prior period ending 30 June 2016, an impairment of GBP0.55m related to the purchase of Jampot Consulting Ltd. On 4 March 2016, it was announced that James Charrington had been appointed as CEO of Dewynters. In 2014, Mr Charrington had set up Jampot Consulting Limited ("Jampot") an Arts Marketing Consultancy, working with, amongst others, the National Theatre and Sonia Friedman on ticketing and marketing strategies. On 21 March 2016, the Company acquired 100% of Jampot for consideration totalling GBP55,000 by the issue of 3,666,666 ordinary shares in r4e at 1.5p per share.
The Board of r4e believes the IP in digital marketing that Jampot can bring will be beneficial to the Group and add to its service offering. As this benefit is related to the group as a whole and future revenues cannot be specifically allocated to the acquired company, the goodwill in Jampot has been written off.
A review has been undertaken at 30 June 2017 and has not identified any further need for impairment. The directors believe that at the current time no reasonably possible change in assumptions will cause an impairment in the intangible assets.
5 Borrowings
30 June 30 June 31 December
2017 2016 2016
(Unaudited) GBP000's (Unaudited) GBP000's (Audited) GBP000's
Current:
Term debt 553 336 378
Asset based lending facility 2,241 3,409 4,037
Finance leases 63 148 74
2,857 3,893 4,489
====================== ====================== ====================
Non-current:
Term debt - 611 410
Finance leases 102 91 127
---------------------- ---------------------- --------------------
102 702 537
====================== ====================== ====================
Analysis of borrowings
On demand or within one year:
Term debt 553 336 378
Asset based lending facility 2,241 3,409 4,037 Finance leases 63 148 74 In the second to fifth years inclusive: Term debt - 611 410 Finance leases 102 91 127
Term debt
When drawn down, the term debt with PNC was split between SpotCo and Dewynters based on expected future cash flows of the Companies and has interest payable at 4% over Barclays Bank plc. base rate (Dewynters) and the rate published by the central bank or monetary authority of the relevant territory (SpotCo). Repayments are in equal monthly instalments and were due to end in October 2018. GBP0.24 million was repaid in the period (30 June 2016: GBP0.03m).
Subsequent to the period end, on 20 July 2017, the Group repaid the remaining balance of the term debt of GBP0.55 million.
Asset based lending
All 3 trading companies, SpotCo, Dewynters and Newmans, hold asset based lending facilities with PNC. Borrowing is determined by qualifying accounts receivable. The nature of the facility means that the balance will fluctuate from month to month and as the debt is paid down, new debt will arise to finance working capital, therefore the facility has been reflected as a current liability as it will be constantly revolving. Another effect of the facility is that cash balances across the group will be lower as cash drawdown incurs a higher rate of interest therefore cash will only be drawn down as required rather than being held on hand.
The facility with PNC has interest payable at 2.25% over Barclays Bank plc. base rate for amounts borrowed. Borrowings not utilised have interest payable at 0.5%. On top of a fixed and floating charge over its assets, the Group has given PNC an unlimited guarantee in respect of these borrowings. The Group has a set of financial covenants with PNC in relation to the loan which are measured monthly and were met in full as at 30 June 2017 and also at the most recent measurement date of 31 July 2017. Along with the term debt repayment in July 2017, the Company also agreed a variation of the financial covenants in place with PNC to reflect the shift in the weighting of the Group's revenues in 2016 and 2017 which affected the 12-month rolling covenant test .
6 Other payables
Landlord reimbursement accrual
Amounts in non-current other payables of GBP0.61 million (30 June 2016: GBP0.66 million) relate to the re-imbursement of leasehold improvement costs from SpotCo's landlord at the new New York office which was moved into during 2013. As with many US leases SpotCo, as tenant, had to undertake a programme of complete refurbishment of the property and some of these expenses, related to the provision of basic utilities and services, were then refunded by the landlord. In line with SIC 15 this reimbursement has been recognised as a liability and will be unwound to the income statement reducing rental costs over the period of the lease. During the 6 months period to 30 June 2017, GBP0.04 million was unwound and credited to the income statement (30 June 2016: GBP0.03 million).
Amounts in current liabilities relating to the reimbursement total GBP0.07 million (30 June 2016: GBP0.07 million).
30 June 30 June 31 December
2017 2016 2016
(Unaudited) GBP000's (Unaudited) GBP000's (Audited) GBP000's
Within one year 70 68 74
---------------------- ---------------------- --------------------
Within second to fifth years 279 270 296
More than five years 335 391 315
---------------------- ---------------------- --------------------
614 661 611
====================== ====================== ====================
Rent holiday accrual
Other amounts in non-current other payables of GBP0.56 million (30 June 2016: GBP0.84 million) relate to an accrual for rental payments built up during a period of 'rent holiday' as provided for in the new leases for Dewynters and SpotCo's Offices which were moved into during 2013. In line with SIC Interpretation 15 the accrual will be released to the income statement over the term of the lease reducing rent costs.
30 June 30 June 31 December
2017 2016 2016
(Unaudited) GBP000's (Unaudited) GBP000's (Audited) GBP000's
Within one year 124 148 133
----------------------- ----------------------- ---------------------
Within second to fifth years 403 595 393
More than five years 152 240 237
----------------------- ----------------------- ---------------------
555 835 630
======================= ======================= =====================
Total non-current other payables 30 June 30 June 31 December
2017 2016 2016
(Unaudited) GBP000's (Unaudited) GBP000's (Audited) GBP000's
Landlord reimbursement accrual 614 661 611
Rent holiday accrual 555 835 630
----------------------- ----------------------- ---------------------
Total non-current payables 1,169 1,496 1,241
======================= ======================= =====================
7 Share-based payments
Equity-settled share option plan
The following options to subscribe for the Company's shares have been granted to directors and eligible employees in the period and had not lapsed at 30 June 2017:
Granted Date of Number First exercisable Expiry date Exercise
to Option of Shares Price
Eligible 1 March 1,000,000 1 March 2020 1 March 2023 2.00
Employees 2017 pence
Eligible 25 April 1,000,000 25 April 2020 25 April 2023 1.50
Employees 2017 pence
Movement in number of options in the period: 30 June
2017
No. Options
Outstanding at 1 January 2017 93,100,000
Granted during the period 2,000,000
Forfeit during the period -
-------------
Outstanding at 30 June 2017 95,100,000
All options granted to date have an exercise price of GBP0.01, GBP0.015, or GBP0.02. No options were exercised or expired during the period. No options were exercisable at 30 June 2017.
The share options outstanding as at 30 June 2017 had a weighted average remaining contractual life of 4.88years (30 June 2016: 5.75 years).
The weighted average fair value of options granted during the period was 0.011p. The fair value of equity-settled share options granted is estimated as at the date of grant using a binomial model, taking account of the terms and conditions upon which the options were granted. The key assumptions used to determine the fair value during the 6 months to 30 June 2017 are as follows:
Exercise price 1.5 - 2.00 pence Expected life 6 years Volatility 100%-40% Risk free interest rate 1.5% Exit rate of employees 5%
The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome.
During the period ended 30 June 2017, the Group recognised total share-based payment expenses of GBP0.21 million (30 June 2016: GBP0.17 million).
8 Cash flows from operating activities
6 months 6 months Year ended
ended 30 ended 31 December
June 2017 30 June 2016
2016
(Unaudited) (Unaudited) (Unaudited)
GBP000's GBP000's GBP000's
Reconciliation of net
cash flows from operating
activities
(Loss)/profit before
taxation (279) 834 499
Finance costs 170 181 355
Depreciation 230 204 447
Amortisation of intangibles 96 95 196
Impairment of goodwill - 55 55
Share based payment
expense 209 178 349
Operating cash flows
before movements in
working capital 426 1,547 1,901
(Increase)/decrease
in inventories (1) 17 13
Decrease/(increase)
in trade and other
receivables 4,922 740 (1,357)
Increase/(decrease)
in trade and other
payables (3,395) 807 2,639
Cash flows from operating
activities 1,952 3,111 3,196
============ ============ ============
9 Related Party Disclosures
Richard Ingham, a non-executive director of the Board in the prior period up until his resignation on 11 May 2016, is the owner of Glen House Capital Strategies Ltd., a company which provides financial consultancy services. During the 4 months leading up to Mr Ingham's resignation on 11 May 2016, the Group procured services from Glen House Capital Strategies Ltd. totalling GBP0.05 million. GBP0.13 million was outstanding to Glen House Capital Strategies at 30 June 2016 and was fully paid up by 31 December 2016. No services were procured from Mr Ingham or his consultancy company in the period to 30 June 2017.
During the 6 months to 30 June 2017, the Group procured consultancy services totalling GBP0.01 million (2016: GBP0.01m) from Springtime Consultants Ltd., a company owned by Marcus Yeoman, a non-executive director of the Board during the period. GBPNil was outstanding at 30 June 2017 (2016: GBPNil).
Lord Grade (non-executive Director of r4e) is currently a director of Gate Ventures plc, a substantial shareholder in r4e. He is also a co-founder of The GradeLinnit Company Ltd ("GradeLinnit"). Dewynters has an existing agreement in place with GL 42nd Street Limited, a subsidiary company of GradeLinnit, for the provision of marketing and media services for the West End production of 42nd Street, which launched at the Theatre Royal Drury Lane earlier this year. The fees payable to Dewynters under the agreement are on the Company's normal commercial terms and not expected to be material to the Company's annual revenue.
10 Transactions with Directors
At 30 June 2016, David Stoller owed the Group GBPNil (30 June 2016: GBP37,258). The outstanding amount in the prior period relates to PAYE payments, whereby following a PAYE assessment it was determined that Mr Stoller's compensation for work in the UK for the Company should be subject to PAYE (as opposed to being taxed only in the US) and therefore the Company was required to immediately pay outstanding PAYE. Mr. Stoller repaid the amounts and no balance was outstanding as at 31 December 2016.
11 Subsequent events
On 20 July 2017, the Company agreed a variation of the covenants on its 3-year secured asset based debt facility (the 'Facility') with PNC Business Credit ('PNC') to reflect the shift in the weighting of the Group's revenues in 2016 and 2017 which affected the 12-month rolling covenant test. This variation of the covenants agreement follows on from the statement made in the Company's full year results for the year ended 31 December 2016, announced on 26 April 2017, regarding potential breaches of one of the covenants given by the Company to PNC due to the unusual weighting of revenues towards the first half of 2016.
In addition, on 20 July 2017, the Company repaid its Cash Flow Term Debt facility with PNC of GBP0.55 million. Repayment was made from unutilised proceeds from the October 2016 share placing, which have not been required for investment into the Company's new initiatives as a result of these initiatives performing better than expected in 2017.
12 Interim Report
This document is available on the Group's website at www.r4e.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR VKLFFDKFFBBL
(END) Dow Jones Newswires
September 20, 2017 02:00 ET (06:00 GMT)
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