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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 Apr 2019 to Apr 2024
TIDMR4E
RNS Number : 7837B
Reach4Entertainment Enterprises PLC
25 September 2018
25 September 2018
reach4entertainment enterprises plc
("r4e" or the "Company" or the "Group")
Unaudited interim results for the six months ended 30 June 2018
Existing businesses right sized, new agencies launched, laying foundations for growth
reach4entertainment enterprises plc, the integrated, live entertainment communications group, today announces its unaudited interim results for the six months ended 30 June 2018.
Highlights:
-- As expected, revenue for the period reduced to GBP36.0 million (2017: GBP41.9m) reflecting the residual effect of the closure and loss of shows at SpotCo in 2017
-- Following a change in local leadership in 2018, SpotCo wins a series of new Broadway musicals, including Warner Bros production Beetlejuice, Park Avenue Amory, and - following the period end - Alice By Heart, and Magic Mike with opening dates to be announced
-- Adjusted EBITDA from existing operations up 25 per cent to GBP0.5 million (2017: GBP0.4m) -- Streamlining of existing operations across Dewynters and SpotCo has started to bear fruit -- Profit margins remained steady as a result of early and effective rightsizing actions
-- Investment in new operations and emphasis on non-live theatre clients broadens client offering expected
to make a positive contribution next year. Related developments in the period include:
o Dewynters Amsterdam launched in April 2018 and secured multi-billion-dollar European media and entertainment group as its first client
o Wake the Bear launched in H1 2018 and secured its first clients
o Dewynters commenced working with Esme Loans, the recently launched innovative UK-based digital lending platform for SMEs, and;
o Since period end, newly launched Story House has secured significant cornerstone clients
-- Strong Balance Sheet with net cash of GBP2.5 million -- Board and the executive management team strengthened
* Adjusted EBITDA is stated before exceptional items and share-based payment charges
Marc Boyan, CEO of r4e, commented:
"The Group is now in a much stronger position following a difficult 2017. The new management team has been successful in stabilising the traditional business during the first half of the year, and the recent spate of new Broadway musicals won by SpotCo is highly encouraging.
"Importantly, we have also made good progress with the strategy of utilising the Group's skill set and deploying them into new segments, evidenced by work across the Group with non-live entertainment clients."
Lord Michael Grade, Non-Executive Chairman of r4e, commented:
"The launch of Dewynters Amsterdam, Wake the Bear and Story House has further broadened the Group's client offering, creating new and more diversified revenue streams. With r4e's existing operations continuing to demonstrate solid progress, combined with the Group's strategy to expand into further sectors and territories, the Board is confident that the Group will make additional progress through the remainder of 2018 to establish a solid platform for future growth."
For information, please contact:
Hot Features
Premium
reach4entertainment enterprises
plc
Marc Boyan, CEO
Paul Summers, COO +44 (0)20 7968 1655
+44 (0)7946 424
Yellow Jersey PR 651
Charles Goodwin r4e@yellowjerseypr.com
Katie Bairsto
Harriet Jackson
Grant Thornton, NOMAD +44 (0)20 7383 5100
Philip Secrett
Jen Clarke
Seamus Fricker
Dowgate Capital Stockbrokers,
Broker +44 (0)20 3903 7715
David Poutney
James Serjeant
CHIEF EXECUTIVE OFFICER'S STATEMENT
Introduction
During the period, the management team has been focused on both stabilising the traditional business and establishing the Group's market position in the broader live entertainment sector. At the same time, we have also been developing new opportunities to diversify revenue streams from a product, client and market perspective. Significant progress has been made on these and other initiatives, and the benefits of the actions taken so far have started to flow through to the business. The Group's balance sheet is in a much stronger position as a result of the GBP5.3 million raised (after costs) in December 2017, and we expect to continue to build upon the improvements made, through the remainder of 2018 and beyond.
Performance Overview
Encouragingly, the first-half performance was slightly ahead of the same period last year in terms of profit from existing trading operations despite a significant drop off in revenues in the US. This was achieved following the right sizing of the organisation to match its revenue base, placing greater emphasis on cost control, and implementing more efficient working practices across the core operations. On a Group basis, overall, profit was moderately down due to new operations commencing in the UK and Europe during the period, which we expect to yield positive results during 2019. Furthermore, we took the decision to prepare the business for its next phase of expansion by strengthening r4e's Board and Group executive management team, with notable arrivals including Sir David Michels, joining as Non-Executive Deputy Chairman to bolster the Board, and the senior level appointment of Mark Cox as Head of Corporate Development to spearhead the M&A strategy.
The Group's trading performance for the first six months of 2018 reflects the residual effect of the closure and loss of shows that impacted SpotCo from the middle of 2017. As a result, total Group revenue for the period was GBP36.0 million (2017: GBP41.9m) with an Adjusted EBITDA of GBP0.3 million (2017: GBP0.4m) and an operating loss of GBP0.5 million (2017: GBP0.1m).
r4e continues to be a leader in the live entertainment sector across the three markets in which it has historically operated. The Group has a promising pipeline, particularly on Broadway in New York, where SpotCo has been awarded 15 shows so far this year, which are due to go live at various times between Q4 2018 and 2020. SpotCo is currently working on half of the Broadway shows announced for the 2018 / 2019 launch season, which is great endorsement of the agency's progress under its new management team. r4e has also made good progress in pursuing its new strategic objectives of focusing on geographic expansion (Dewynters Amsterdam), the development of live entertainment opportunities outside of its traditional theatre base (Dewynters Vision), and expanding its communications offering to SMEs and venture and innovation arms of large corporates (Wake the Bear).
Dewynters Amsterdam launched in April 2018 as a joint venture between r4e and Lisette Heemskerk, Ronald Luijendijk and Jacques Kuyf. It has already secured a multi-billion-dollar European media and entertainment group as its first client, providing commercial and business strategies, marketing plans and creative concepts, and is performing in line with our expectations around its breakeven point.
Wake the Bear, also formed in the first half of 2018, is a marketing communications agency that accelerates growth for its clients through finding new customers, taking new products to market and building stronger brands. It has successfully secured its first clients (projects currently under NDA) and is deriving significant benefit from working collaboratively with the talented operators within Dewynters.
Since the period end, the Group has launched Story House, a new live entertainment focused public relations agency - majority-owned by r4e - in partnership with David Bloom, a leading practitioner in the sector, with significant cornerstone clients being supported by the business at launch.
Reflecting the more challenging trading period in the US, the Group generated revenues of GBP36.0 million in the first six months, 14 per cent below the previous year, which led to the Group recording Adjusted EBITDA* of GBP0.33 million compared to GBP0.43 million in the same period last year. Adjusted EBITDA* was slightly down due to the launch of new operations which impacted results by GBP0.23 million.
Dewynters in London produced a solid first-half performance, increasing its contribution at the EBITDA level over last year.
The Group recorded a loss before tax of GBP0.62 million (H1 2017 loss GBP0.28m). This led to the Group recording a loss per share of 0.04p, compared to a loss per share of 0.05p from the prior period last year.
The Group has a strong balance sheet with a net cash position of GBP2.5 million.
Operational review
Continuing Operations
Unaudited 6 months ended 30 June
2018
Profit/(loss)
Adjusted Operating before Profit/(loss)
Revenue EBITDA* profit/(loss) tax after tax
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Existing operations
SpotCo 19,977 376 91 25 114
Dewynters London 13,753 589 390 318 318
Newman Displays 1,524 82 51 36 36
Jampot Consulting 40 (35) (35) (35) (35)
Dewynters Germany 614 (115) (118) (119) (119)
Existing trading 35,908 897 379 225 314
Head Office - (340) (648) (612) (530)
Existing operations 35,908 557 (269) (387) (216)
-------- --------- --------------- -------------- --------------
New operations
Dewynters Amsterdam 76 (149) (149) (149) (149)
Wake the Bear - (83) (81) (81) (81)
New operations 76 (232) (230) (230) (230)
-------- --------- --------------- -------------- --------------
Group total 35,984 325 (499) (617) (446)
-------- --------- --------------- -------------- --------------
Unaudited 6 months ended 30 June
2017
Profit/(loss)
Adjusted Operating before Profit/(loss)
Revenue EBITDA* profit/(loss) tax after tax
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Existing operations
SpotCo 27,658 425 177 66 34
Dewynters London 12,348 282 134 143 (192)
Newman Displays 1,521 66 29 16 (2)
Jampot Consulting 26 (65) (65) (65) (65)
Dewynters Germany 327 1 (1) (1) (1)
Existing trading 41,880 709 274 159 (226)
Head Office - (280) (384) (439) (102)
Existing operations 41,880 429 (110) (280) (328)
-------- --------- --------------- -------------- --------------
New operations
Dewynters Amsterdam - - - - -
Wake the Bear - - - - -
New operations - - - - -
-------- --------- --------------- -------------- --------------
Group total 41,880 429 (110) (280) (328)
-------- --------- --------------- -------------- --------------
*Adjusted EBITDA is EBITDA before exceptional administrative items and share-based payment charges.
Adjusted EBITDA* and operating profit increased by GBP0.2 million and GBP0.1 million, respectively, for existing trading operations, i.e. before Head Office costs. These included softer year-on-year results at SpotCo and Dewynters Germany, by GBP0.1 million each, and an improvement of GBP0.3 million at Dewynters London.
SpotCo notably remained profitable despite a GBP5.8 million or 21 per cent decline in revenues (on a constant exchange rate basis). Its revenues were also adversely impacted by GBP1.9 million due to a weakening of the US Dollar against the British Pound in the first six months year-on-year. Trading since mid-2017 has been affected by a reduction in activity across its client base. However, SpotCo's outlook for the remainder of 2018 has improved with the agency engaged in some of Broadway's most anticipated new shows, which are due to open in 2019 and 2020. The turnaround time required since the impact of the shows that we lost in 2017, reflects the relatively long lead time involved, from the planning of a new show through to the commencement of a new revenue stream for the agency.
By contrast, Dewynters London enjoyed a strong trading period, with revenues up GBP1.4 million or 11per cent, which flowed through to proportionally stronger profits. The business has benefited from moderate streamlining at the end of 2017 and from the continuation of broad efforts to change the way theatre and live entertainment events are marketed, as well as deploying its skills into new non-live entertainment sectors. By combining digital marketing, programmatic media buying, data-driven analysis and digital distribution of select services - all designed to leverage Dewynters' capabilities - clients have been able to build their audiences while selling more tickets at a higher yield and a lower cost. During the period, Dewynters worked on the market roll out of Esme Loans, the recently launched innovative UK-based digital lending platform for SMEs providing Esme with a range of services including strategy, creative, media planning and buying.
Newman Displays had a steady performance in the first half. 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. Newman Displays also recently strengthened its business development team with a view to protecting and enhancing the top line.
Dewynters Germany has had a more challenging period as it approaches its second anniversary, reflecting underlying changes within its relatively small client base. Hamburg remains an active market, and the agency has already connected well with Dewynters in London, drawing upon company-wide experience and resources.
Dewynters Amsterdam and Wake the Bear both saw a first period of initial start-up losses which are expected to lead to profitability on a monthly results basis within the next six to twelve months. Both operations have strong growth expectations for 2019, and Wake the Bear has recently won a number of new clients.
Summary and Outlook
We are pleased with the significant progress made across the Group in the first half of the year, and we will continue to build on our growth strategy, which is to diversify our offering from traditional theatre into the wider live entertainment sector. We also continue to assess various growth opportunities, which include launching new services and acquiring businesses to complement the Group's offering. The Board believes that r4e now has a much stronger platform, from which to increase market share and, ultimately, build greater shareholder value.
Marc Boyan, CEO
reach4entertainment enterprises plc
25 September 2018
Unaudited Condensed Consolidated Income Statement
For the six months ended 30 June 2018
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2018 2017 2017
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Continuing Operations
Revenue 35,984 41,880 80,211
Cost of sales (27,143) (31,428) (60,066)
------------- ------------- -------------
Gross profit 8,841 10,452 20,145
Administrative expenses (9,340) (10,562) (22,539)
Adjusted EBITDA 325 429 976
Share-based payment charges (294) (213) (234)
------------- ------------- -------------
EBITDA before exceptional administrative items 31 216 742
Exceptional administrative expenses 2 (230) - (962)
Impairment of goodwill 5 - - (1,533)
Depreciation (215) (230) (452)
Amortisation of intangibles (85) (96) (189)
------------------------------------------------ --- ------------- --- ------------- --- -------------
Operating loss (499) (110) (2,394)
Interest receivable and similar income 6 - -
Interest payable and similar charges 3 (124) (170) (295)
Loss before taxation (617) (280) (2,689)
Taxation 171 (48) 824
Loss for the period (446) (328) (1,865)
============= ============= =============
Loss for the period attributable to:
Owners of the company (380) (328) (1,865)
Non-controlling interests (66) - -
------------- ------------- -------------
(446) (328) (1,865)
============= ============= =============
Basic and diluted loss per share (p)
Basic 4 (0.04) (0.05) (0.30)
Diluted 4 (0.04) (0.05) (0.30)
Unaudited Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2018
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2018 2017 2017
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Loss for the period (446) (1,865)
(328)
Other comprehensive income:
Currency translation loss (207) (56) (33)
Other comprehensive income (net of tax) for the period (207) (56) (33)
Total comprehensive loss for the period (653) (384) (1,898)
============= ============== =============
Total comprehensive loss for the period attributable to:
Equity holders of the parent (587) (384) (1,898)
Non-controlling interests (66) - -
------ ------ --------
(653) (384) (1,898)
====== ====== ========
Unaudited Condensed Consolidated Balance Sheet
As at 30 June 2018
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2018 2017 2017
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Non-current assets
Goodwill and intangible assets 5 8,662 10,503 8,635
Property, plant and equipment 2,049 2,457 2,230
Deferred tax asset 213 168 187
10,924 13,128 11,052
------------- ------------- -------------
Current assets
Inventories 140 140 139
Trade and other receivables 10,904 9,340 10,981
Other current assets 653 570 549
Cash and cash equivalents 5,696 2,073 6,758
------------- ------------- -------------
17,393 12,123 18,427
------------- ------------- -------------
Total assets 28,317 25,251 29,479
============= ============= =============
Current liabilities
Trade and other payables (14,362) (14,255) (15,773)
Current taxation liabilities - (33) -
Borrowings 6 (3,153) (2,857) (2,446)
------------- ------------- -------------
(17,515) (17,145) (18,219)
------------- ------------- -------------
Net current (liabilities)/assets (122) (5,022) 208
------------- ------------- -------------
Non-current liabilities
Deferred taxation (820) (1,655) (785)
Other payables (987) (1,169) (1,194)
Borrowings 6 (91) (102) (56)
------------- ------------- -------------
(1,898) (2,926) (2,035)
------------- ------------- -------------
Total liabilities (19,413) (20,071) (20,254)
------------- ------------- -------------
Net assets 8,904 5,180 9,225
============= ============= =============
Equity
Called up share capital 5,025 3,074 5,005
Share premium 20,270 16,645 20,252
Deferred shares 1,498 1,498 1,498
Retained earnings (18,490) (16,808) (18,154)
Own shares held (259) (259) (259)
Other reserves 7 926 1,030 883
------------- ------------- -------------
Attributable to equity holders of the parent 8,970 5,180 9,225
Non-controlling interests (66) - -
------------- ------------- -------------
Total Equity 8,904 (5,180) 9,225
============= ============= =============
Unaudited Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2018
Attributable
to equity Non-controlling
Own Other holders interests Total
Share Share Deferred Retained shares reserves of the GBP'000 Equity
capital premium shares earnings held GBP'000 parent GBP'000
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2017 3,074 16,645 1,498 (16,480) (259) 873 5,351 - 5,351
Loss for the
period - - - (328) - - (328) - (328)
Other
comprehensive
income,
net of tax:
Currency
translation
differences - - - - - (56) (56) - (56)
-------- -------- --------- --------- -------- ---------- ------------- ----------------- ---------
Total
comprehensive
loss
for the
period - - - (328) - (56) (384) - (384)
Transactions
with owners
in their
capacity as
owners:
Share-based
payment
charge - - - - - 213 213 - 213
At 30 June
2017
(Unaudited) 3,074 16,645 1,498 (16,808) (259) 1,030 5,180 - 5,180
Loss for the
period - - - (1,537) - - (1,537) - (1,537)
Other
comprehensive
income,
net of tax:
Currency
translation
differences - - - - - 23 23 - 23
-------- -------- --------- --------- -------- ---------- ------------- ----------------- ---------
Total
comprehensive
loss
for the
period - - - (1,537) - 23 (1,514) - (1,514)
Transactions
with owners
in their
capacity as
owners:
Shares issued 1,931 3,607 - - - - 5,538 - 5,538
Share-based
payment
charge - - - - - 21 21 - 21
Share options
exercised - - - 191 - (191) - - -
At 31 December
2017
(Audited) 5,005 20,252 1,498 (18,154) (259) 883 9,225 - 9,225
Loss for the
period - - - (380) - - (380) (66) (446)
Other
comprehensive
income,
net of tax:
Currency
translation
differences - - - - - (207) (207) - (207)
-------- -------- --------- --------- -------- ---------- ------------- ----------------- ---------
Total
comprehensive
loss
for the
period - - - (380) - (207) (587) (66) (653)
Transactions
with owners
in their
capacity as
owners:
Shares issued 20 18 - - - - 38 - 38
Share-based
payment
charge - - - - - 294 294 - 294
Share options
exercised - - - 44 - (44) - - -
At 30 June
2018
(Unaudited) 5,025 20,270 1,498 (18,490) (259) 926 8,970 (66) 8,904
======== ======== ========= ========= ======== ========== ============= ================= =========
Unaudited Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2018
6 months
6 months ended Year ended
ended 30 June 31 December
30 June 2017 2017
2018 (Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Cash (used in)/generated from
operating activities 9 (1,446) 1,952 1,797
Income taxes paid - (9) (44)
Net cash (outflow)/inflow from
operating activities (1,446) 1,943 1,753
------------------ ------------- -------------
Investing activities
Purchase of property, plant
and equipment (34) (61) (115)
Net cash used in investing
activities (34) (61) (115)
------------------ ------------- -------------
Financing activities
Net proceeds from the issue
of share capital 38 - 5,538
Finance income 6 - -
Proceeds from asset-based lending 36,192 47,773 83,722
Repayment of asset-based lending (35,480) (49,402) (85,114)
Repayment of term loan - (236) (788)
Repayments of obligations under
finance leases (7) (46) (65)
Interest and fees paid on borrowings (124) (140) (295)
------------------ ------------- -------------
Net cash generated from/(used
in) financing activities 625 (2,051) 2,998
------------------ ------------- -------------
Net (decrease)/increase in
cash and cash equivalents (855) (169) 4,636
Cash and cash equivalents at
the beginning of the period 6,758 2,698 2,097
Effect of foreign exchange
rate changes (207) 114 25
Cash and cash equivalents at
end of the period 5,696 2,643 6,758
================== ============= =============
Unaudited notes to the Condensed Consolidated Interim Financial Statements
For the six months ended 30 June 2018
1 Basis of Presentation
These unaudited condensed consolidated interim financial statements are for the six months ended 30 June 2018. 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 2017, 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 24 September 2018.
The comparative financial information for the year ended 31 December 2017 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 2017 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. 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 2018 and 30 June 2017 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 2017, with exception of standards, amendments and interpretations effective in 2018.
Standards, amendments and interpretations effective in 2018
The following IFRS/IAS are either new, amended or have interpretations mandatory for the first time for the financial year beginning 1 January 2018, but had no material impact on the Group:
-- IFRS 9 - Financial Instruments. -- IFRS 15 - Revenue from Contracts with Customers.
The following IFRS/IAS are either new, amended or interpretations have been issued, but are not effective for the financial year beginning 1 January 2018 and have not been early adopted:
-- IFRS 16 - Leases. -- IFRIC 23 - Uncertainty over Income Tax Treatments.
Going Concern
As at 30 June 2018 the Group had net assets of GBP8.9 million (30 June 2017: net assets GBP5.2m) and made an operating loss in the six months then ended of GBP0.5 million (H1 2017: loss of GBP0.1m). In December 2017 the Group conducted a successful equity placing, raising funds of GBP5.3 million (net of costs).
At the end of 2015 the Group obtained a new three-year secured asset-based debt facility of GBP9.5 million with PNC Business Credit Services Ltd ("PNC") being made up of a GBP1.0 million term loan and a revolving credit facility of up to GBP8.5 million based on qualifying accounts receivable. During 2017 the remaining balance on the term loan was paid off in full. As at 30 June 2018 the total debt owed to PNC - now relating solely to the asset-based lending facility - was GBP3.1 million (30 June 2017: GBP2.8m).
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 set of financial covenants are in place with PNC in relation to this debt and are measured monthly.
All covenants have been met for 2018 to date.
The initial 3-year term of the facility runs to 3 December 2018, and the facility automatically continues in place indefinitely thereafter unless either party gives at least six months' notice on or after 4 June 2018. The directors believe that the relationship with PNC is good, that they remain supportive of the Company, and that they appear likely to want to continue the arrangement after the end of the initial term.
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 including the GBP5.3 million (net) fund raise of December 2017, the Directors believe that the going concern basis is appropriate and the Group has adequate resources to continuing trading for the foreseeable future.
2 Exceptional administrative expenses
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2018 2017 2017
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Employee contract termination-related
costs 230 - 814
Costs relating to reorganisation
of the Board - - 104
Share issue costs expensed to
Income Statement - - 44
230 - 962
============ ============ ============
3 Interest payable and similar charges
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2018 2017 2017
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Finance lease interest 10 10 20
Interest on PNC debt 68 96 170
Fees on PNC debt 46 64 108
Net foreign exchange losses - - (3)
124 170 295
============ ============ ============
4 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
2018 2017 2017
(Unaudited) (Unaudited) (Audited)
Weighted average number of Number Number Number
0.5 pence ordinary shares
in issue during the period
For basic earnings per share 1,003,767,337 614,733,671 627,060,836
Potentially dilutive effect
of share options 181,167,771 7,464,201 97,573,736
For diluted earnings per share 1,184,935,108 622,197,872 726,634,572
------------- ------------ ------------
GBP'000 GBP'000 GBP'000
Loss attributable to the owners (380) (328) (1,865)
------------- ------------ ------------
5 Goodwill and Intangible Assets
Total
GBP'000
Cost
1 January 2017 22,273
Foreign exchange differences (433)
---------
30 June 2017 21,840
Foreign exchange differences (311)
---------
31 December 2017 21,529
Foreign exchange differences 201
30 June 2018 21,730
=========
Net Book Value
30 June 2018 (unaudited) 8,662
=========
30 June 2017 (unaudited) 10,503
=========
31 December 2017 (audited) 8,635
=========
An impairment of GBP1.53 million in the year ended 31 December 2017 related to the carrying value of SpotCo's goodwill. After a disappointing year in 2017, management reviewed and cautiously revised the key assumptions for the value-in-use calculations of SpotCo as at the year end, in particular pulling back from revenue growth rate for 2019 onwards from 1.5 per cent to 1.0 per cent, which - on the back of the softened outlook for 2018 - resulted in the impairment. Management will continue to monitor the trading outlook and may revise the key revenue growth assumption upwards again, for future impairment review purposes, if and when they consider that to be an appropriate reflection of an improved forward view.
A review has been undertaken at 30 June 2018 and has not identified any further need for impairment. The directors believe that, at the current time, any reasonably likely change in assumptions is unlikely to cause an impairment in the intangible assets.
6 Borrowings
30 June 30 June 31 December
2018 2017 2017
(Unaudited) GBP'000 (Unaudited) GBP'000 (Audited) GBP'000
Current:
Term debt - 553 -
Asset-based lending facility 3,084 2,241 2,372
Finance leases 69 63 74
3,153 2,857 2,446
===================== ===================== ===================
Non-current:
Finance leases 91 102 56
--------------------- --------------------- -------------------
91 102 56
===================== ===================== ===================
Analysis of borrowings
On demand or within one year:
Term debt - 553 -
Asset-based lending facility 3,084 2,241 2,372
Finance leases 69 63 74
--------------------- --------------------- -------------------
3,153 2,857 2,446
In the second to fifth years inclusive:
Finance leases 91 102 56
--------------------- --------------------- -------------------
91 102 56
===================== ===================== ===================
Amounts due for settlement 3,244 2,959 2,502
Less amounts due within one year (3,153) (2,857) (2,446)
--------------------- --------------------- -------------------
91 102 56
===================== ===================== ===================
Term debt
The term debt with PNC had interest payable at 4 per cent over bank base rates. Repayments were in equal monthly instalments and began in March 2016. The Group was able to pay off the remaining balance of GBP0.55 million in full in July 2017.
Asset-based lending
SpotCo, Dewynters and Newmans all 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 than they would otherwise be, since cash drawdown incurs a higher rate of interest and 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 per cent per annum over Barclays Bank plc. base rate for amounts borrowed in Sterling, or for amounts in Euro or US Dollars 2.25 per cent per annum over the rate published by the central bank or relevant monetary authority. Borrowing facility amounts not utilised incur interest payable at a fixed 0.5 per cent per annum. On top of a fixed and floating charge over its assets, the Group has given PNC an unlimited guarantee in respect of these borrowings.
All covenants have been met in 2018 to date.
The initial 3-year term of the facility runs to 3 December 2018, and the facility automatically continues in place indefinitely thereafter unless either party gives at least six months' notice on or after 4 June 2018. We believe that the relationship with PNC is good, that they remain supportive of the Company, and that they appear likely to want to continue the arrangement after the end of the initial term. The Directors are confident the Group remains a going concern.
7 Other reserves
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2018 2017 2017
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
Capital redemption reserve 15 15 15
Share option reserve 642 558 392
Warrant reserve 311 311 311
Foreign exchange reserve (42) 146 165
------------------ ------------- -------------
Other reserves 926 1,030 883
================== ============= =============
8 Share-based payments
Equity-settled share option plan
30 June 2018
Movement in number of options in the period: No. Options
Outstanding brought forward at 1 January 184,533,520
Exercised during the period (3,822,432)
Forfeited during the period (1,245,342)
-------------
Outstanding carried forward at 30 June 179,465,746
-------------
No options have been granted in the first six months of 2018. All options granted to date have an exercise price of GBP0.01, GBP0.015, or GBP0.02. 1,449,863 options were exercisable at 30 June 2018 (30 June 2017: nil).
The share options outstanding as at 30 June 2018 had a weighted average remaining contractual life of 5.02 years (30 June 2017: 4.88 years). The weighted average share price of exercised options at the date of exercise was 1.77p (30 June 2017: not applicable).
During the period ended 30 June 2018 the Group recognised total share-based payment charges of GBP0.29 million (30 June 2017: GBP0.21m).
9 Cash flows from operating activities
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2018 June 2017 2017
(Unaudited) (Unaudited) (Unaudited)
GBP'000 GBP'000 GBP'000
Reconciliation of net cash flows
from operating activities
Loss before taxation (617) (279) (2,689)
Finance costs 124 170 295
Depreciation 215 230 452
Amortisation of intangibles 85 96 189
Impairment of goodwill - - 1,533
Share-based payment expense 294 209 234
Operating cash flows before
movements in working capital 101 426 14
Increase in inventories (1) (1) -
Decrease in trade and other
receivables 77 4,922 2,654
Decrease in trade and other
payables (1,411) (3,395) (783)
Decrease in other non-current
liabilities (212) - (88)
Cash (used in)/generated from
operating activities (1,446) 1,952 1,797
10 Transactions with directors
During the six months to June 2018, the Group procured consultancy services totalling GBP0.01 million (2017: GBP0.01m) from Springtime Consultants Ltd., a company owned by Marcus Yeoman, a non-executive director of the Board during the period. No balance was outstanding at 30 June 2018 (2017: GBPNil).
11 Subsequent events
On 29 August 2018, the Group launched Story House, a new live entertainment focused public relations agency - majority-owned by r4e - in partnership with David Bloom, a leading practitioner in the sector, with significant cornerstone clients being supported by the business at launch.
12 Interim report
This document is available on the Group's website at www.r4e.com.
Notes to Editors
reach4entertainment enterprises plc ("r4e") operates a collection of theatrical, film and live entertainment marketing, PR, advertising and display agencies, across the world. The Company uses its extensive experience in the live entertainments space to create value through investing in innovative and established agencies that provide communications services to a range of clients involved with theatre, film, concerts and more.
For further information on r4e you are invited to visit the Company's website at www.r4e.com.
Spot and Company of Manhattan, Inc.
A global leading full-service arts and live entertainment advertising and marketing agency. In an ever-changing media landscape, it stays ahead of the curve with a mix of bold positioning through interactive, broadcast, environmental and print campaigns.
https://www.spotnyc.com
Dewynters Limited
Based in London with sister agencies operating in Amsterdam and Hamburg, Dewynters is a leading independent arts, events and live entertainment marketing specialist. The agency's work in theatre, museums, attractions, sport and music is seen right across the globe.
http://www.dewynters.com
https://www.dewynters.nl/en/
http://www.dewynters.de/en/
Newman Displays Limited
The UK's leading large-scale outdoor signage, front of house, marquee display and installation company. Clients include major West End theatre productions, leading film companies, cinemas and major global events.
http://www.newman-displays.com
Wake the Bear Limited
A marketing communications agency that accelerates growth for its clients through finding new customers, taking new products to market and building stronger brands. The agency delivers end to end marketing communications services for its clients including communications planning, media planning & buying, creative & content creation and digital build.
http://wakethebear.co.uk
Story House PR Limited
A new public relations agency for the theatre and live entertainment industries, operating in the UK and internationally. The agency crafts engaging campaigns for audiences, driven by strategy: the right channel, at the right time, with the right message. Fully integrating PR with paid media and social, ensuring all elements of a campaign are working together, Story House collaborates with its clients to ensure its work is dedicated to realising their ambitions.
www.storyhousepr.co.uk
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
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