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Regulatory Story
Company Reach4Entertainment Enterprises PLC
TIDM R4E
Headline Interim Results
Released 07:00 30-Sep-2019
Number 0453O07

RNS Number : 0453O
Reach4Entertainment Enterprises PLC
30 September 2019
 

This announcement contains inside information                                               30 September 2019

 

reach4entertainment enterprises plc

("r4e" or the "Company" or the "Group")

Unaudited interim results for the six months ended 30 June 2019

The stage is set for continued strong growth

reach4entertainment enterprises plc, the integrated, live entertainment communications group, today announces its unaudited interim results for the six months ended 30 June 2019.

 

Financial Highlights:

·      Revenue of £56.82 million, up 60.6% (H1 2018: £35.37 million)

 

·      Net revenue of £19.35 million, up 37.1% (H1 2018: £14.11 million)

 

·      Gross profit margin of 21.2% (H1 2018: 24.3%) on revenues and 62.2% (H1 2018: 60.8%) on net revenues

 

·      Adjusted EBITDA* of £1.87 million.  Adjusted EBITDA before IFRS 16** of £1.19 million (H1 2018: £0.44 million)

 

·      Loss for the period of £0.44 million, before IFRS 16** a loss of £0.19 million (H1 2018 a loss of: £0.45 million)

 

Operational Highlights:

 

·      Completed acquisition of Agency Press Ltd (trading as 'Sold Out') for initial consideration of £3.94 million cash

 

·      Raised £3 million via placing of new ordinary shares to partly fund Sold Out initial consideration

 

·      Acquired 50% stake in sports media production company, Buzz 16 Ltd

 

·      New York theatre agency SpotCo won 17 new shows, including the Music Man and Audible Theatre

 

·      London Theatre agency Dewynters launched 15 new projects, including Joseph and the Amazing Technicolour Dreamcoat, The Light in the Piazza, Big and the new Turbine Theatre

 

·      Newman Displays awarded contracts for design work for new screens at the Old Vic and refurbishment and signage at the Roundhouse and continues to increase market share of theatre and movie work

 

* Adjusted EBITDA is stated before exceptional administrative items (see note 2) and share-based payment charges

** Pre-IFRS 16 figures stated before impact of IFRS 16 'Leases' on 2019 results.  See notes to report for full explanation

 

Marc Boyan, CEO of r4e, commented: "The success of the turnaround strategy has been demonstrated through the significant jump in Group revenue and EBITDA. Whilst the performance of the traditional business is much improved, the decision to expand into the broader area of live entertainment is delivering new clients and opportunities. With our agencies securing a number of new mandates in the first half, the Group is on track to meet its market expectations for the full year." 

 

Lord Michael Grade, Non-Executive Chairman of r4e, commented: "The Board has been pleased with the Group's progress in the first half. The operational changes implemented in 2018 are bearing fruit and the acquisition of Sold Out and partnership with Buzz 16, both of which completed during the period, have created new dynamics which we expect to unlock new areas of growth. We look forward to the rest of the year with confidence."

 

 

For information, please contact:

reach4entertainment enterprises plc

Marc Boyan, CEO

Paul Summers, COO

+44 (0)20 7968 1655

 

 

Yellow Jersey PR

+44 (0)7946 424 651

Charles Goodwin

r4e@yellowjerseypr.com

Harriet Jackson

 

Annabel Atkins

 

 

 

 

 

Grant Thornton, NOMAD

+44 (0)20 7383 5100

Philip Secrett

 

Seamus Fricker

 

 

 

 

Dowgate Capital, Broker

+44 (0)20 3903 7715

David Poutney

James Serjeant

 

 

 

CHIEF EXECUTIVE OFFICER'S STATEMENT

Introduction

The Group made good progress during the period in executing its growth strategy and improving on its financial performance. r4e has expanded its position within the live entertainment sector and the changes implemented across the Group in 2018 are helping to achieve the Board's targets of profitability, improved client servicing and each agency increasing their client portfolio.

 

Improved financial performance when compared to 30 June 2018 (before accounting for IFRS 16 see the impact table in the notes to this report):

 

·      Gross margin increase of £3.45 million or 40.3%

·      Adjusted EBITDA# and EBITDA increase of £0.8 million (after IFRS 16 an increase of £1.4 million)

·      Operating profit increase of £0.62 million (after IFRS 16 an increase of £0.56 million)

·      Loss before tax decrease of £0.57 million (after IFRS 16 a decrease of £0.31 million)

 

Across the Group, the individual agencies all delivered revenue growth. Gross margin has improved in actual terms as well as on a percentage of net revenues from 60.8% to 62.2%, a measure we use internally to track to the performance of the business net of third-party pass-through costs which reflects the management team's focus on margin improvement.

 

Net results when extracting media pass through costs:

 

 

HY Jun

2019
£'000

 

HY Jun

2018
£'000

 

HY % movement

 

FY Dec

2018
£'000

Revenue

 

56,815

 

35,370

 

+60.6%

 

76,718

Third party costs

 

(37,462)

 

(21,260)

 

+76.2%

 

(45,882)

 

 

 

 

 

 

 

 

 

Net revenue

 

19,353

 

14,110

 

+37.2%

 

30,836

Cost of sales

 

(7,318)

 

(5,529)

 

+32.4%

 

(11,554)

Gross profit

 

12,035

 

8,581

 

+40.3%

 

19,282

GP % of net revenue

 

62.2%

 

60.8%

 

+2.3%

 

62.53%

Adjusted EBITDA# (pre IFRS 16)

 

1,192

 

440

 

+170.9%

 

1,886

Adjusted EBITDA#  (pre IFRS16) % of net revenue

 

6.2%

 

3.1%

 

+100.2%

 

6.1%

 

The success of the Group's turnaround in 2018 led to an improved financial performance in the first half of 2019 when measured before the effects of IFRS 16 which came into effect from 1 January 2019.   This was driven in part by the additional contribution from Sold Out which was acquired in March 2019. On a like for like basis (excluding changes under IFRS 16 and Sold Out), Adjusted EBITDA increased 107% from £0.44 million to £0.89 million (see IFRS 16 impact table in the notes).  Including IFRS 16 and the contribution from Sold Out, adjusted EBITDA increased to £1.9 million.

 

The performance in the first 6 months has improved cash flow with cash used in operations being £0.10 million compared to £1.45 million in the half year to June 2018.

Operational review

H1 2019 was dominated by the acquisition of the 50% interest in Buzz 16 Productions and the acquisition of advertising agency, Sold Out; both of which have helped to broaden the Group's marketing and media capabilities. As part of the process to acquire Sold Out, the Company also completed a placing of new shares with existing and new shareholders, raising gross proceeds of £3 million. 

# Adjusted EBITDA is stated before exceptional administrative items (see note 2) and share-based payment charges

Led by ex-Sky producer Scott Melvin and media personality Gary Neville, Buzz 16 has been behind several popular sports-related productions, which include "Class of 92: Full Time" and "SoccerBox". While providing the Group with TV production capabilities, Buzz 16 will also open the opportunity for the Group to diversify into sports marketing. 

After successfully completing the acquisition of Sold Out in March this year, we are pleased to report that the agency has been integrated into the Group. Sold Out continues to gain new clients which illustrates its credentials as one of the top UK agencies catering for brands in the concert and live entertainment space. The company contributed £0.3 million to Adjusted EBITDA and £0.14 million to operating profit in the three-month period under r4e's ownership, and is expected to have a much stronger second half.

After winning a number of new shows in 2018, SpotCo has been delivering on its series of new projects, with Hadestown, Beetlejuice, and Tootsie currently live on Broadway in New York. Further new clients were added at the start of 2019, with SpotCo winning the mandates for Magic Mike, and Almost Famous amongst others. Its clients also amassed 16 awards at this year's Tony Awards, which also included 74 nominations in total. SpotCo saw a significant uplift in its revenue, which grew by 61% to £32.26 million with net revenues also increasing by 62% to £10.0 million. Adjusted EBITDA increased by 300% to £1.50 million (pre IFRS 16 a 185% increase to £1.01 million), which has clearly illustrated the success of the Group's turnaround strategy.

In London, Dewynters successfully added "Joseph and the Amazing Technicolour Dreamcoat" and "The Light in the Piazza" to its client roster. The company generated revenue of £14.56 million, a 6% increase on the same period last year with net revenues slightly down £0.04 million or 7.7%, reflecting the increase in media activity during the period. Adjusted EBITDA stood at £0.56 million (pre IFRS 16 £0.33 million down £0.26 million on the corresponding period). New shows "BIG", "White Christmas" and "Mama Mia! The Party" at the O2, which were also won during the period, are set to go live in the second half of the year supporting our view that Dewynters remains on track for the remainder of the year.

Newman Displays has had a strong first half and is benefitting from the current wave of new shows in the West End which has led to new front of house displays. The company achieved a 30% uplift in revenue compared to H1 2018, whilst maintaining its overhead expenditure to realise a 29% uplift in Adjusted EBITDA (12% uplift pre IFRS 16).  Recent non-theatre projects undertaken in the period have included creating the digital design work for the new screens at the Old Vic, premieres of "Rocketman", "Toy Story 4" and "Once Upon a Time in Hollywood", and other special events signage work. With the increased turnover of shows in London theatres in 2019 and a number of high profile film premiers, new work across theatre and cinema should see a strong year for the company.

Story House, being incorporated in August 2018, is still within its first year of operation but is already profitable and has repaid the investment provided by r4e in its start-up phase.  Wake the Bear has been operating for just over a year and has performed in line with expectations, delivering first half revenue of £386k whilst building its profile and portfolio among a non-live entertainment clientele with a number of notable clients wins already secured post period end, which the business will see the benefit of in late 2019 and 2020.

As part of the Group's ongoing strategic review to improve client service and profitability, the Board took the decision to close Dewynters Germany in early June 2019. The performance of Dewynters Amsterdam has continued to improve, with the agency being profitable in the period and meeting performance expectations. 
 

 

 

Unaudited 6 months ended 30 June 2019

 

 

Revenue

Adjusted EBITDA*

Operating profit/(loss)

Profit/(loss) before tax

Profit/(loss) after tax

 

£'000

£'000

£'000

£'000

£'000

Continuing operations

 

 

 

 

 

SpotCo

32,260

1,504

844

564

573

Dewynters London

14,560

561

202

144

144

Sold Out*

7,132

302

138

136

98

Newman Display

1,976

106

62

49

49

Jampot Consulting

-

4

4

4

4

Dewynters Amsterdam

328

44

44

44

86

Wake the Bear

386

(26)

(26)

(31)

(31)

Story House

173

51

50

50

50

Existing trading

56,815

2,546

1,318

960

973

Head Office #

-

(676)

(1,140)

(1,144)

(1,159)

Existing operations

56,815

1,870

178

(184)

(186)

 

 

 

 

 

 

Discontinued operations

 

 

 

 

 

Dewynters Germany

1,015

(239)

(243)

(254)

(254)

 

 

 

 

 

 

Group total

57,830

1,631

(65)

(438)

(440)

 

#loss before tax in Sold Out and profit before tax in Head Office is due to a dividend paid up by the subsidiary as part of the acquisition process.

 

 

Unaudited 6 months ended 30 June 2018

 

 

Revenue

Adjusted EBITDA*

Operating profit/(loss)

Profit/(loss) before tax

Profit/(loss) after tax

 

£'000

£'000

£'000

£'000

£'000

Continuing 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 Amsterdam

76

(149)

(149)

(149)

(149)

Wake the Bear

-

(83)

(81)

(81)

(81)

Story House

-

-

-

-

-

Existing trading

35,370

780

267

114

203

Head Office

-

(340)

(648)

(612)

(530)

Existing operations

35,370

440

(381)

(498)

(327)

 

 

 

 

 

 

Discontinued operations

 

 

 

 

 

Dewynters Germany

614

(115)

(118)

(119)

(119)

 

 

 

 

 

 

Group total

35,984

325

(499)

(617)

(446)

 

*Adjusted EBITDA is EBITDA before exceptional administrative items (see note 2) and share-based payment charges.

Summary and Outlook

The Board is encouraged by the significant increase in Group revenue and EBITDA since undertaking its strategic review and turnaround period. r4e is benefiting from stronger agency management teams, cost control and collaboration, which together is delivering better client services and results on a like for like basis before IFRS 16. Our recent acquisitions are already bearing fruit and helping to establish new opportunities and revenue streams. Despite ongoing macro concerns, the Group is in a much stronger position and the current pipeline of project work means that it remains on track to meet its full year market expectation.

 

 

 

 

Marc Boyan, CEO

reach4entertainment enterprises plc

30 September 2019

 

 

Unaudited Condensed Consolidated Income Statement

For the six months ended 30 June 2019

 

 

 

6 months

ended

30 June 2019

(Unaudited)

£'000

 

6 months

ended

30 June 2018

 (Unaudited)

£'000

 

Year ended

31 December

2018

(Audited)

£'000

Continuing Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

56,815

 

35,370

 

76,718

Cost of sales

 

(44,780)

 

(26,789)

 

(57,436)

Gross profit

 

12,035

 

8,581

 

19,282

 

 

 

 

 

 

 

Administrative expenses

 

(11,857)

 

(8,963)

 

(18,703)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA*

 

1,870

 

440

 

1,886

Share-based payment charges

 

(283)

 

(294)

 

(484)

EBITDA before exceptional administrative items

 

1,587

 

146

 

 

1402

Exceptional administrative expenses

2

(234)

 

(230)

 

(230)

Depreciation

 

(951)

 

(213)

 

(419)

Amortisation of intangibles

 

(224)

 

(85)

 

(174)

 

 

 

 

 

 

 

Operating profit/(loss)

 

178

 

(382)

 

579

 

 

 

 

 

 

 

Share of net profit from joint ventures

4

16

 

-

 

-

 

 

 

 

 

 

 

Profit/(loss) before interest and tax

 

194

 

(382)

 

579

 

 

 

 

 

 

 

Interest receivable and similar income

 

17

 

6

 

14

Interest payable and similar charges

3

(395)

 

(122)

 

(279)

 

 

 

 

 

 

 

(Loss)/profit before taxation

 

(184)

 

(498)

 

314

 

 

 

 

 

 

 

Taxation

 

(2)

 

171

 

1

 

 

 

 

 

 

 

(Loss)/profit for the period from Continuing Operations

 

(186)

 

(327)

 

 

315

 

 

 

 

 

 

 

Loss for the period from Discontinued Operations

12

(254)

 

(119)

 

 

(475)

 

 

 

 

 

 

 

Loss for the period

 

(440)

 

(446)

 

(160)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss for the period attributable to:

 

 

 

 

 

 

  Owners of the company

 

(517)

 

(380)

 

(121)

  Non-controlling interests

 

77

 

(66)

 

(39)

 

 

(440)

 

(446)

 

(160)

 

 

 

 

 

 

 

Basic and diluted (loss)/earnings per share (p)

 

 

 

 

 

 

 

 

 

 

 

 

 

From continuing operations:

 

 

 

 

 

 

Basic

5

(0.02)

 

(0.03)

 

0.04

Diluted

5

(0.02)

 

(0.03)

 

0.03

 

 

 

 

 

 

 

 

 

 

 

 

 

 

From discontinued operations:

 

 

 

 

 

 

Basic

5

(0.02)

 

(0.04)

 

(0.01)

Diluted

5

(0.02)

 

(0.04)

 

(0.01)

 

*Adjusted EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) is before exceptional administrative items (see note 2), and share based payment charges.

 

 

Unaudited Condensed Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2019

 

 

 

6 months

ended

30 June

2019

(Unaudited)

£'000

 

 

 

 

6 months

ended

30 June

2018

(Unaudited)

£'000

 

Year ended

31 December

2018

(Audited)

£'000

 

 

 

 

 

 

 

Loss for the period

 

 

(440)

 

(446)

 

 

(160)

 

 

Other comprehensive income:

Currency translation loss

 

(21)

 

(207)

 

(174)

Other comprehensive income (net of tax) for the period

 

(21)

 

 

(174)

 

 

 

 

 

 

 

 

 

Total comprehensive loss for the period

 

(461)

 

(653)

 

(334)

 

Total comprehensive loss for the period attributable to:

 

 

 

 

 

 

  Equity holders of the parent

 

(538)

 

(587)

 

(213)

  Non-controlling interests

 

77

 

(66)

 

(121)

 

 

(461)

 

(653)

 

(334)

 

Total comprehensive loss for the period attributable to equity holders of the parent from:

 

 

 

 

 

 

  Continuing operations

 

(264)

 

(366)

 

272

  Discontinued operations

 

(274)

 

(221)

 

(485)

 

 

(538)

 

(587)

 

(213)

 

 

Unaudited Condensed Consolidated Balance Sheet

As at 30 June 2019

 

 

 

6 months

ended

30 June

2019

(Unaudited)

£'000

 

6 months

ended

30 June

2018

(Unaudited)

£'000

 

Year ended

31 December

 2018

(Audited)

£'000

Non-current assets

 

 

 

 

 

 

Goodwill and intangible assets

6

14,900

 

8,662

 

8,737

Property, plant and equipment

 

1,895

 

2,049

 

1,956

Right-of-use asset

7

8,400

 

-

 

-

Investments

4

768

 

-

 

-

Deferred tax asset

 

212

 

213

 

160

 

 

26,175

 

10,924

 

10,853

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Inventories

 

122

 

140

 

126

Trade and other receivables

 

22,560

 

10,904

 

16,057

Other current assets

 

583

 

653

 

582

Cash and cash equivalents

 

3,760

 

5,696

 

5,223

 

 

27,025

 

17,393

 

21,988

 

 

 

 

 

 

 

Total assets

 

53,200

 

28,317

 

32,841

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Trade and other payables

 

(21,439)

 

(14,362)

 

(18,007)

Lease liabilities

8/9

(1,602)

 

-

 

-

Current taxation liabilities

 

(198)

 

-

 

-

Borrowings

8

(3,222)

 

(3,153)

 

(3,575)

Provisions

10

(1,688)

 

-

 

-

 

 

(28,149)

 

(17,515)

 

(21,582)

 

Net current (liabilities)/assets

 

(1,124)

 

(122)

 

 

406

 

Non-current liabilities

 

 

 

 

 

 

Deferred taxation

 

(1,672)

 

(820)

 

(861)

Other payables

 

(240)

 

(987)

 

(977)

Lease liabilities

8/9

(6,999)

 

-

 

-

Borrowings

8

(507)

 

(91)

 

-

Provisions

10

(2,184)

 

-

 

-

 

 

(11,602)

 

(1,898)

 

(1,838)

 

 

 

 

 

 

 

Total liabilities

 

(39,751)

 

(19,413)

 

(23,420)

 

 

 

 

 

 

 

Net assets

 

13,449

 

8,904

 

9,421

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

Called up share capital

 

6,382

 

5,025

 

5,028

Share premium

 

22,067

 

20,270

 

20,275

Deferred shares

 

1,498

 

1,498

 

1,498

Retained earnings

 

(17,614)

 

(18,490)

 

(18,248)

Own shares held

 

(259)

 

(259)

 

(259)

Other reserves

13

1,337

 

926

 

1,166

Attributable to equity holders of the parent

 

13,411

 

8,970

 

9,460

Non-controlling interests

 

38

 

(66)

 

(39)

 

Total Equity

 

 

13,449

 

 

8,904

 

 

9,421

 

 

Unaudited Condensed Consolidated Statement of Changes in Equity

For the six months ended 30 June 2019

 

Share

capital

£'000

Share

premium

£'000

Deferred shares

£'000

Retained

earnings

£'000

Own

shares

held

£'000

 

Other

reserves

£'000

 

Attributable to equity holders of the parent £'000

Non-controlling interests £'000

 

 

Total

Equity

£'000

 

 

 

 

 

 

 

 

 

 

 

 

At 1 January 2018

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

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the period

-

-

-

259

-

-

 

259

27

 

286

Other comprehensive income, net of tax:

 

 

 

 

 

 

 

 

 

 

 

Currency translation differences

-

-

-

-

-

33

 

33

-

 

33

Total comprehensive profit for the period

-

-

-

259

-

33

 

292

27

 

319

 

 

 

 

 

 

 

 

 

 

 

 

Transactions with owners in their capacity as owners:

 

 

 

 

 

 

 

 

 

 

 

Shares issued

3

5

-

-

-

 

 

8

-

 

8

Share-based payment charge

-

-

-

-

-

(321)

 

(321)

-

 

(321)

Share options exercised

-

-

-

(17)

-

528

 

511

-

 

511

At 31 December 2018 (Audited) as previously reported

5,028

20,275

1,498

(18,248)

(259)

1,166

 

9,460

(39)

 

9,421

 

 

 

 

 

 

 

 

 

 

 

 

Change in accounting policy (IFRS16)

-

-

-

1,060

-

-

 

1,060

-

 

1,060

As at 1 January 2019 (as restated)

5,028

20,275

1,498

(17,188)

(259)

1,166

 

10,520

(39)

 

10,481

 

 

 

 

 

 

 

 

 

 

 

 

(Loss)/profit for the period

-

-

-

(517)

-

-

 

(517)

77

 

(440)

Other comprehensive income, net of tax:

 

 

 

 

 

 

 

 

 

 

-

Currency translation differences

-

-

-

-

-

(21)

 

(21)

-

 

(21)

Total comprehensive loss for the period

-

-

-

(517)

-

(21)

 

(538)

77

 

(461)

 

 

 

 

 

 

 

 

 

 

 

 

Transactions with owners in their capacity as owners:

 

 

 

 

 

 

 

 

 

 

 

Shares issued

1,354

1,792

-

-

-

-

 

3,146

-

 

3,146

Share-based payment charge

-

-

-

-

-

283

 

283

-

 

283

Share options exercised/forfeit

-

-

-

91

-

(91)

 

-

-

 

-

At 30 June 2019 (Unaudited)

6,382

22,067

1,498

(17,614)

(259)

1,337

 

13,411

38

 

13,449

 

Unaudited Condensed Consolidated Statement of Cash Flows

For the six months ended 30 June 2019

 

 

 

 

6 months

ended

30 June

2019 (Unaudited)

£'000

 

6 months

ended

30 June

2018

(Unaudited)

£'000

 

 

Year ended

31 December

 2018

(Audited)

£'000

 

Cash used in operating activities

14

(104)

 

(1,446)

 

 

(2,044)

Interest paid

 

(191)

 

(124)

 

 

(251)

Income taxes paid

 

(150)

 

-

 

 

(18)

Net cash outflow- from operating activities

 

(445)

 

(1,570)

 

 

(2,313)

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

Payment for acquisition of subsidiary, net of cash acquired

 

(2,833)

 

-

 

 

-

Purchase of joint venture

 

(324)

 

-

 

 

-

Purchase of investments

 

(150)

 

-

 

 

-

Income from investments

 

22

 

-

 

 

-

Purchase of property, plant and equipment

 

(47)

 

(34)

 

 

(71)

Interest received

 

6

 

-

 

 

-

Net cash used in investing activities

 

(3,326)

 

(34)

 

 

(71)

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

Net proceeds from the issue of share capital

 

2,900

 

38

 

 

46

Finance income

 

-

 

6

 

 

14

(Repayment)/proceeds of asset-based lending

 

(291)

 

712

 

 

1,008

Proceeds from borrowings

 

500

 

-

 

 

-

Principle elements of lease payments

 

(782)

 

(7)

 

 

(19)

Net cash generated from financing activities

 

2,327

 

749

 

 

1,049

 

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents

 

(1,444)

 

(855)

 

 

(1,335)

 

 

 

 

 

 

 

 

Cash and cash equivalents at the beginning of the period

 

5,223

 

6,758

 

 

6,758

 

Effect of foreign exchange rate changes

 

(19)

 

(207)

 

 

(200)

Cash and cash equivalents at end of the period

 

3,760

 

5,696

 

 

5,223

Unaudited notes to the Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2019

 

1          Basis of Presentation

These unaudited condensed consolidated interim financial statements are for the six months ended 30 June 2019. 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 2018, 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 30 September 2019.

The comparative financial information for the year ended 31 December 2018 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 2018 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 2019 and 30 June 2018 is unaudited.

Standards, amendments and interpretations effective in 2019

IFRS 16 'Leases'

The Company has adopted IFRS 16 "Leases" which is effective for annual periods beginning on or after 1 January 2019.  The Company has chosen to apply the modified retrospective transition method and so the prior year figures have not been adjusted. The Company has elected to apply the practical expedient for short-term leases to leases for which the lease term ends within 12 months of the date of initial application, and the practical expedient for low value leases.

The adoption of the standard has resulted in the Company bringing many of its leases onto the balance sheet reflecting 'right-of-use' assets which are depreciated, and corresponding liabilities on which interest accrues. The impact of the standard in the period to June 2019, compared to the results if the standard had not been recognised, is that Adjusted EBITDA/EBITDA have increased by £0.67 million due to the elimination of rent costs.  However operating profit in the period has reduced by £0.06 million due to increased depreciation charges and profit before/after tax has reduced by £0.25 million due to interest charges.

At 30 June 2019 non-current assets have increased by £8.4 million as a result of the additional right-of-use assets. Total liabilities have increased by £8.6 million due to the addition of finance lease liabilities but  this is offset by £1.1 million as liabilities previously recognised under SIC 15 as operating lease incentives have been transferred to retained earnings.  A deferred tax liability of £0.19 million has been recognised on the impact of IFRS 16.  Total net asset effect is an increase of £0.8 million.

A £1.27 million credit to retained earnings was recognised 1 January 2019 due to the elimination of lease incentives along with an offsetting deferred tax debit of £0.3 million.

Tables reflecting the full impact of IFRS 16 on performance in the period and position at 30 June 2019 are presented below.

 

 

1          Basis of Presentation (continued)

IFRS 16 impact on reported Consolidated Income Statement

 

 

 

 

 

Existing operations

 

New operations

 

HY 2019

 

HY

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Excluding IFRS 16

£'000

 

P&L Impact IFRS 16

£'000

 

Post IFRS 16

£'000

 

 

 

Sold Out (pre IFRS 16)

£'000

 

 

Group as reported

£'000

 

 

Group as reported

£'000

Continuing Operations:

 

 

 

 

Rent1

 

Dep'n2

 

Interest 3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

893

 

678

 

-

 

-

 

1,571

 

 

299

 

 

1,870

 

 

440

EBITDA

 

610

 

678

        -

-

 

1,288

 

299

 

1,587

 

146

Operating profit

 

95

 

678

 

(734)

 

-

 

39

 

139

 

178

 

(382)

Profit before tax

 

(68)

 

 

678

 

(734)

 

(198)

 

(322)

 

138

 

(184)

 

(498)

(Loss)/profit after tax

 

(32)

 

 

678

 

(734)

(198)

 

(286)

 

100

 

(186)

 

(327)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pence

 

 

 

 

 

 

Pence

 

Pence

 

Pence

 

Pence

EPS on continuing operations (basic & diluted):

 

(0.00)

 

 

 

 

 

 

 

(0.03)

 

0.01

 

(0.02)

 

(0.03)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Elimination of rent costs previously recognised as operating leases

2 Depreciation charged on right-of-use assets

3 Interest unwinding on right-of-use liabilities

    4 Deferred tax effect

1          Basis of Presentation (continued)

 

IFRS 16 impact on reported Consolidated Balance Sheet

 

 

H1 2019

Excluding IFRS 16

£'000

 

P&L Impact IFRS 16

£'000

 

H1 2019 Group as reported)

£'000

 

 

 

H2 2018 Group as reported)

£'000

 

 

 

 

 

R-o-U asset1

 

SIC 15

 

Lease liability 3

 

Tax4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-current assets

 

17,775

 

8,400

-

-

-

 

26,175

 

10,924

Current assets

 

27,025

 

-

-

-

-

 

27,025

 

17,393

Total assets

 

44,800

 

8,400

-

-

-

 

53,200

 

28,317

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

(27,252)

 

-

663

(1,560)

-

 

(28,149)

 

(17,515)

Net Current liabilities

 

(227)

 

-

663

(1,560)

-

 

(1,124)

 

(122)

 

 

 

 

 

 

 

 

 

 

 

 

Non-current liabilities

 

(4,901)

 

-

484

(6,999)

(186)

 

(11,602)

 

(1,898)

Total Liabilities

 

(32,153)

 

-

1,147

(8,559)

(186)

 

(39,751)

 

(19,413)

 

 

 

 

 

 

 

 

 

 

 

 

Net assets

 

12,647

 

8,400

1,147

(8,559)

(186)

 

13,449

 

(8,904)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Addition of right-of use assets

2 Elimination of liabilities related to lease incentives recognised previously under SIC 15

3 Addition of lease liabilities

4 Deferred tax effect

Other Standards

The following IFRS/IAS are either new, amended or have interpretations mandatory for the first time for the financial year beginning 1 January 2019, but had no material impact on the Group:

·      IFRS 9 - Financial Instruments

·      IFRS 11 - Joint Arrangements

·      IAS 12 - Income Taxes

·      IAS 19 - Employee Benefits

·      IAS 23 - Borrowing Costs

·      IAS 28 - Investments in Associate and Joint Ventures

The following IFRS/IAS are either new, amended or interpretations have been issued, but are not effective for the financial year beginning 1 January 2019 and have not been early adopted:

·      IFRS 3 - Business Combinations.

·      IAS 1 - Presentation of Financial Statements

·      IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors

 

 

 

 

Accounting Policies

The accounting policies adopted in the preparation of the unaudited 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 2018, with exception of standards, amendments and interpretations effective in 2019.  Significant policies adopted in the period to 30 June 2019 which were not included or material to the annual financial statements for the year ended 31 December 2018 are:

Business combinations

The Group applies the acquisition method in accounting for business combinations. The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred and the equity interests issued by the Group, which includes the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition costs are expensed as incurred.

 

Assets acquired and liabilities assumed are measured at their acquisition-date fair values.

 

Joint Ventures

 

Interests in joint ventures are accounted for using the equity method.  After initially being recognised at cost in the consolidated balance sheet, the group's share of the post-acquisition profits or losses of the investee are recognised in the consolidated income statement.  Dividends received or receivable from associates and joint ventures are recognised as a reduction in the carrying amount of the investment.

 

Where the group's share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity.

 

The carrying amount of equity-accounted investments is tested for impairment.

 

 

Right-of-use assets and liabilities

 

All leases are accounted for by recognising a right-of-use asset and a lease liability except for:

·      Leases of low value assets; and

·      Leases with a duration of twelve months or less.

 

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless this is not readily determinable, in which case The Group's incremental borrowing rate on commencement of the lease is used. The Group has applied a single discount rate to a portfolio of leases with reasonably similar characteristics.

 

The group has applied the modified retrospective provisions of IFRS 16 and therefore on transition at 1 January 2019 right of use assets are measured at the amount of the lease liability.

 

Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term.

 

When The Group revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee extension or termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted at the same discount rate that applied on lease commencement. The carrying value of lease liabilities is similarly revised when the variable element of future lease payments dependent on a rate or index is revised. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease term.

 

Discontinued Operations

 

A discontinued operation is a component of the Group's business that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the statement of profit or loss.

 

Going Concern

As at 30 June 2019 the Group had net assets of £13.4 million (30 June 2018: net assets £8.9 million) and made an operating profit in the six months then ended of £0.2 million (H1 2018: loss of £0.4m restated). In March 2019 the Group conducted a successful equity placing, raising funds of £3 million (gross before costs) to partly fund the acquisition of Sold Out.

The 3 year term of the secured asset-based debt facility of £7 million with PNC Business Credit Services Ltd ("PNC") expired in December 2018 but remains in place on a rolling basis unless either party gives at least 6 months' notice.  A set of financial covenants are in place with PNC in relation to this debt and are measured monthly.  All covenants have been met in the period as they were in the fully 2018 year. The relationship with PNC is good, that they remain supportive of the Company.  The Directors are confident the Group remains a going concern.

The Directors are confident 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

ended

30 June

2019

(Unaudited)

£'000

 

6 months

ended

30 June

2018

(Unaudited)

£'000

 

Year

ended

31 December

 2018

(Audited)

£'000

 

 

 

 

 

 

Employee contract termination-related costs

-

 

230

 

230

Acquisition costs

234

 

-

 

-

 

234

 

230

 

230

 

3          Interest payable and similar charges

 

6 months

ended

30 June

2018

(Unaudited)

£'000

 

6 months

ended

30 June

2018

(Unaudited)

£'000

 

Year

ended

31 December

 2018

(Audited)

£'000

 

 

 

 

 

 

Interest on lease liabilities

205

 

10

 

19

Interest on PNC debt

110

 

68

 

160

Fees on PNC debt

68

 

46

 

86

Other interest costs

8

 

-

 

5

Net foreign exchange losses

4

 

-

 

9

 

395

 

124

 

279

4          Investments in equity accounted joint ventures

Included in investments is £0.64 million reflecting the Company's 50% interest in Buzz 16 Limited which the Company acquired on 30 January 2019.  Buzz 16 was founded in 2016 and creates both short and long form sports orientated content and is co-owned by shareholders including former Manchester United player and respected broadcaster, Gary Neville, along with former Sky Sports Premier League producer, Scott Melvin.  £0.13 million of investments relates to smaller short-term projects.

The Company uses the equity method by which to measure its share of the joint venture profits/losses. In the period from acquisition to 30 June 2019, the Company's share of profits was £0.02 million.

5          Earnings per share

The calculations of earnings per share are based on the following results and numbers of shares.

 

 

6 months

ended

30 June

2019

(Unaudited)

 

 

6 months

ended

30 June

2018

(Unaudited)

 

 

Year

ended

31 December 2018

(Audited)

 

Weighted average number of 0.5 pence ordinary shares in issue during the period

Number

 

Number

 

Number

For basic earnings per share

1,159,228,475

 

1,003,767,337

 

1,004,709,678

Potentially dilutive effect of share options*

174,350,966

 

181,167,771

 

181,178,710

For diluted earnings per share

1,333,579,441

 

1,184,935,108

 

1,185,888,388

 

 

 

 

 

 

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

Loss attributable to the owners for continuing operations

(263)

 

(261)

 

354

Loss attributable to the owners for discontinued operations

(254)

 

(119)

 

(475)

For basic and diluted earnings per share

 

 

(517)

 

(380)

 

(121)

 

* The loss attributable to ordinary shareholders and weighted average number of ordinary shares for the purposes of calculating the diluted loss per share are the same as those used for basic loss per ordinary share. This is because the exercise of share options and other benefits would have the effect of reducing loss per share and is therefore not dilutive under the terms of IAS 33, Earnings Per Share.

 

 

6          Goodwill and Intangible Assets

 

Brands

£'000

 

Customer relationships

£'000

 

Non-compete agreement

£'000

 

Purchased goodwill

£'000

 

Total

£'000

Cost

 

 

 

 

 

 

 

 

 

1 January 2018

4,458

 

2,607

 

-

 

14,466

 

21,531

Foreign exchange differences

57

 

-

 

-

 

142

 

199

30 June 2018

4,515

 

2,607

 

-

 

14,608

 

21,730

Foreign exchange differences

82

 

-

 

-

 

204

 

286

31 December 2018

4,597

 

2,607

 

-

 

14,812

 

22,016

Additions (see note 11)

1,845

 

1,270

 

 

2,935

 

6,388

30 June 2019

6,442

 

3,877

 

338

 

17,747

 

28,404

 

 

 

 

 

 

 

 

 

 

Amortisation and impairment

 

 

 

 

 

 

 

 

 

1 January 2018

1,677

 

2,053

 

-

 

9,164

 

12,894

Charged in the period

55

 

33

 

-

 

-

 

88

Foreign exchange differences

46

 

-

 

-

 

40

 

86

30 June 2018

1,778

 

2,086

 

-

 

9,204

 

13,068

Charged in the period

58

 

28

 

-

 

-

 

86

Foreign exchange differences

68

 

-

 

-

 

57

 

125

31 December 2018

1,904

 

2,114

 

-

 

9,261

 

13,279

Charged in the period

144

 

63

 

17

 

-

 

224

30 June 2019

2,048

 

2,177

 

17

 

9,261

 

13,504

 

 

 

 

 

 

 

 

 

 

Net book value

 

 

 

 

 

 

 

 

 

30 June 2018

2,737

 

521

 

-

 

5,404

 

8,662

31 December 2018

2,693

 

492

 

-

 

5,551

 

8,737

30 June 2019

4,394

 

1,700

 

321

 

8,485

 

14,900

Additions in the period to 30 June 2019 are in relation to the acquisition of Sold Out and are still provisional (see note 11).

 

A review has been undertaken at 30 June 2019 and has not identified any 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.

 

7          Right of use assets

 

 

 

Land and buildings

£'000

 

Plant, machinery

and motor vehicles £'000

 

Total

£'000

 

 

 

 

 

 

At 1 January 2019

8,942

 

202

 

9,144

Depreciation

(711)

 

(33)

 

(744)

At 30 June 2019

8,231

 

169

 

8,400

 

 

 

 

 

 

 

 

8          Borrowings

 

 

 

30 June

2019

(Unaudited) £'000 

 

30 June

2018

(Unaudited) £'000 

 

31 December

2018

(Audited) £'000

 

 

 

 

 

 

Current:

 

 

 

 

 

Asset-based lending facility

3,222

 

3,084

 

3,518

Lease liabilities

1,602

 

69

 

57

 

4,824

 

3,153

 

3,575

 

Non-current:

 

 

 

 

 

Related party loan

507

 

-

 

-

Lease liabilities

6,999

 

91

 

-

 

7,506

 

91

 

-

 

 

 

 

 

 

Analysis of borrowings

 

 

 

 

 

On demand or within one year:

 

 

 

 

 

Asset-based lending facility

3,222

 

3,084

 

3,518

Lease liabilities

1,602

 

69

 

57

 

4,824

 

3,153

 

3,575

 

 

 

 

 

 

In the second to fifth years inclusive:

 

 

 

 

 

Related party loan

507

 

-

 

-

Lease liabilities

6,999

 

91

 

-

 

7,506

 

91

 

-

 

Finance lease have been reclassified to lease liabilities under IFRS 16.

 

 

 

 

 

 

Amounts due for settlement

12,330

 

3,244

 

3,582

Less amounts due within one year

(4,824)

 

(3,153)

 

(3,582)

Amounts due for settlement after one year

7,506

 

91

 

-

 

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 2.75% per annum over Barclays Bank plc. base rate for amounts borrowed in Sterling, or for amounts in Euro or US Dollars 2.75% 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 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.

 

 

 

9          Lease liabilities

 

 

 

 

Buildings

£'000

 

Plant, machinery

and motor vehicles £'000

 

Total

£'000

 

 

 

 

 

 

At 1 January 2019

8,942

 

244

 

9,186

Interest expense

194

 

3

 

197

Lease payments

(728)

 

(48)

 

(776)

Foreign exchange movements

(6)

 

-

 

(6)

At 30 June 2019

8,402

 

199

 

8,601

 

 

 

 

 

 

Split as:

 

 

 

 

 

Current

1,486

 

116

 

1,602

Non current

6,916

 

83

 

6,999

 

8,402

 

199

 

8,601

At the date of initial application, the incremental borrowing rate applied was 4.5% to buildings and 3.0% to plant, machinery and motor vehicles.

 

 

£'000

Maturity of lease liabilities:

 

 

within one year

 

1,578

within second to fifth years

 

5,643

more than five years

 

2,719

 

 

9,940

The following reconciliation to the opening balance for lease liabilities as at 1 January 2019 is based upon the operating lease obligations as at 31 December 2018:

 

 

£'000

 

 

 

Operating lease disclosures at 31 December 2018

 

10,950

Additional lease acquired in business combination

 

29

Relief option for short term leases

 

(51)

Relief option for low value assets

 

(20)

Effect of discounting

 

(1,764)

Liabilities additionally recognised on application of IFRS 16 at 1 January 2019

 

9,144

Liabilities from finance leases as of 31 December 2018

 

42

Lease liabilities as of 1 January 2019

 

9,186

10         Provisions

Provisions for liabilities relate to deferred consideration. Deferred consideration represents the amount payable for the acquisition of Buzz 16 on 30 January 2019 and estimated contingent amounts payable for Sold Out on 21 March 2019.  Final amounts payable for the acquisition of Sold Out are dependent upon the results of the acquired business in 2018 to 2021 (see note 11).

 

 

£'000

 

 

 

Payable:

 

 

within one year

 

1,688

within second to fifth years

 

2,184

 

 

3,872

 

 

11         Business Combination

On 21 March 2019 the Company acquired 100% of the issued share capital of Agency Press Limited (trading as 'Sold out'), a full-service advertising agency, specialising in arts and entertainment. London-based integrated agency Sold Out, has specialised in arts and entertainment advertising for over 25 years. During this period it has established a strong reputation in its field and built a portfolio of high profile clients, which includes S.J.M. Concerts, AEG Presents, Live Nation and Cirque Du Soleil. Its services include campaign development, media planning and buying, events, partnerships, design and creative, broadcast and digital media production; all of which will bolster r4e's group offering.

The provisional fair value of assets and liabilities recognised as a result of the acquisition are as follows:

 

 

 

 

 

Provisional fair value

 

 

 

 

 

Brand

 

 

 

1,845

Customer relationships

 

 

 

1,270

Non-compete agreement

 

 

 

338

Plant and equipment

 

 

 

130

Cash and cash equivalents

 

 

 

1,104

Trade and other receivables

 

 

 

5,537

Deferred tax

 

 

 

9

Corporation tax receivable

 

 

 

(155)

Trade and other liabilities

 

 

 

(3,928)

Accruals

 

 

 

(730)

Deferred Tax

 

 

 

(596)

Identifiable net assets

 

 

 

4,824

Goodwill capitalised

 

 

 

2,935

Consideration

 

 

 

7,759

 

 

 

 

 

Satisfied by:

 

 

 

 

Issue of shares

 

 

 

250

Cash

 

 

 

3,937

Deferred contingent consideration

 

 

 

2,705

Working capital excess to be paid in cash

 

 

 

867

 

 

 

 

7,759

 

The fair value of the 20,833,333 shares issued as part of the consideration paid was based on the 1.2 pence share price per the placing completed to part finance the acquisition. Issue costs of £0.10 million which were directly attributable to the issue of the shares have been recognised as a reduction in share premium.

 

 

 

£'000

Consideration transferred settled in cash

 

(3,937)

Cash and cash equivalents acquired

 

1,104

Net cash outflow on acquisition

 

(2,833)

 

Acquisition related costs totalling £0.23 million have been recognised as an exceptional expense in the consolidated income statement (see note 2). There were no acquisitions in the year ended 31 December 2018. 

 

 

11         Business Combination (continued)

 

Contingent consideration

 

Deferred consideration is payable to the Seller of 'Sold Out' based on the financial performance of that Company during the period commencing 1 June 2017 and ending on 31 December 2021, up to a maximum amount of £10 million excluding working capital adjustments. The first deferred payment shall be an amount payable in cash, calculated by reference to the average EBITDA for the earnings period commencing on 1 July 2017 and ending on 31 December 2019. The second deferred payment will be an amount payable in cash by reference to the average EBITDA for the earnings period commencing on 1 June 2017 and ending on 31 December 2021.  The fair value of the contingent consideration was estimated at the balance sheet date by calculating the present value of the future expected cash flows.

 

Revenue and profit contribution

 

The acquired business contributed revenues of £7.13 million, EBITDA of £0.30 million and net profit of £0.1 million to the group for the period from 22 March to 30 June 2019.

 

 

12         Discontinued Operations

On 7 June 2019 the group announced its decision to close Dewynters Germany as part of a restructuring process to improve efficiencies and drive profitability.

 

 

 

6 months ended 30 June 2019

(Unaudited)

 

6 months ended 30 June 2018

(Unaudited)

 

Year ended 31 December 2018

(Unaudited)

 

£'000

 

£'000

 

£'000

Financial performance

 

 

 

 

 

 

 

 

 

 

 

Revenue

126

 

614

 

1,015

Expenses

(374)

 

(733)

 

(1,490)

Loss on write down of assets

(6)

 

-

 

-

Loss before and after tax of discontinued operation

 

(254)

 

 

(119)

 

 

(475)

 

 

 

 

 

 

 

Cash Flows:

 

 

 

 

 

Net cash outflow from operating activities

(269)

 

(358)

 

(234)

Net cash inflow from financing activities

341

 

153

 

277

Net increase/(decrease) in cash generated by the discontinued operation

72

 

(205)

 

43

 

13         Other reserves

 

 

 

6 months

ended

30 June

2019

(Unaudited)

£'000

 

6 months

ended

30 June

2018

(Unaudited)

£'000

 

Year ended

31 December

 2018

(Audited)

£'000

 

 

 

 

 

 

 

Capital redemption reserve

 

15

 

15

 

15

Share option reserve

 

1,045

 

642

 

854

Warrant reserve

 

311

 

311

 

311

Foreign exchange reserve

 

(33)

 

(42)

 

(14)

 

Other reserves

 

 

1,338

 

 

926

 

 

1,166

                 

 

14         Cash flows from operating activities

 

 

6 months ended 30 June 2019

(Unaudited)

 

6 months ended 30 June 2018

(Unaudited)

 

Year ended 31 December 2018

(Audited)

 

£'000

 

£'000

 

£'000

Reconciliation of net cash flows from operating activities

 

 

 

 

 

(Loss)/profit before income tax from:

 

 

 

 

 

Continuing operations

(184)

 

(498)

 

314

Discontinued operations

(254)

 

(119)

 

(475)

Loss before income tax including discontinued operations

(438)

 

(617)

 

(161)

 

 

 

 

 

 

Net finance costs

378

 

124

 

265

Depreciation

951

 

215

 

426

Amortisation of intangibles

224

 

85

 

174

Loss on disposal of fixed assets

16

 

-

 

-

Share of profits of joint ventures

(16)

 

-

 

-

Share-based payment expense

283

 

294

 

484

 

 

 

 

 

 

Operating cash flows before movements in working capital

1,398

 

101

 

1,188

 

 

 

 

 

 

Decrease/(Increase) in inventories

4

 

(1)

 

13

(Increase)/decrease in trade and other receivables

(973)

 

77

 

(5,138)

(Decrease)/increase in trade and other payables

(671)

 

(1,411)

 

2,109

Increase/(Decrease) in other non-current liabilities

138

 

(212)

 

(216)

 

 

 

 

 

 

 

 

 

 

 

 

Cash used in operating activities

(104)

 

(1,446)

 

(2,044)

 

 

 

 

 

 

 

 

 

 

 

 

 

15         Transactions with directors

On 19 March 2019, the Group received funds of £0.5 million from In The Loop Limited, a company of which Marc Boyan, CEO of r4e, is the ultimate beneficial owner. The funds were used as part of the consideration for the acquisition of Sold Out. The loan bears interest at 5%. accruing over a period of 5 years and is to be repaid from future dividends paid by Sold Out to r4e.The debt is unsecured and is to be subordinated to the Company's existing debt facility with PNC.

 

16         Subsequent events

As initially announced on 3 June 2019, approved by shareholders at the AGM on 28 June, and given final approval at the High Court of Justice on 30 July 2019, the company has undergone a capital reduction which involved:

·      the cancellation of the amount standing to the credit of the Company's share premium account and capital redemption reserve;

·      the cancellation of the 74,894,792 deferred shares with a nominal value of £0.02 each; and

·      a reduction in the nominal value of the ordinary shares from £0.005 each to £0.001 each. 

The number of ordinary shares in issue following the Capital Reduction remains unchanged at 1,276,430,385.

The below table is an example of how the Group's equity section would be affected using the balance sheet position of 30 June 2019 (the reorganisation took effect on 31 July 2019):

Pro-forma capital reorganisation:

 

Pre-capital reduction

 

Adjustment

 

Post-capital reduction

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

Called up share capital

 

6,382

 

(5,106)

 

1,276

Share premium

 

22,067

 

(22,067)

 

-

Deferred shares

 

1,498

 

(1,498)

 

-

Retained earnings

 

(17,613)

 

28,686

 

11,073

Own shares held

 

(259)

 

-

 

(259)

Other reserves

 

1,336

 

(15)

 

1,321

Attributable to equity holders of the parent

 

13,411

 

-

 

13,411

Non-controlling interests

 

38

 

-

 

38

 

Total Equity as at 30 June 2019

 

 

13,449

 

 

-

 

 

13,449

 

17         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

Buzz 16 Productions

Buzz 16 is an independent production company, which creates both short and long form sports orientated content. The Company was co-founded by former Manchester United player and respected broadcaster, Gary Neville, along with former Sky Sports Premier League producer, Scott Melvin.

https://buzz16.uk

Sold Out

Sold Out is an independent full service advertising agency, specialising in arts and entertainment for over 25 years.

https://soldout.london

 

 


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