TIDMR4E
RNS Number : 5593R
Reach4Entertainment Enterprises PLC
15 September 2014
15 September 2014
reach4entertainment enterprises plc ( 'r4e', 'the Company' or
'the Group')
Unaudited interim results for the six months ended 30 June
2014
Strong trading performance delivers significant improvement in
profitability
r4e, the transatlantic media and entertainment company, today
announces its unaudited interim results for the six months ended 30
June 2014.
Financial Highlights
Unaudited six Unaudited
months to six months to
30 June 2014 30 June 2013 Change
Revenue GBP41.5m GBP35.0m +18%
Adjusted EBITDA(1) GBP1.4m GBP0.7m +111%
Profit/(loss) Improved by
before tax GBP0.7m (GBP0.1m) GBP0.8m
Improved by
Earnings per share 0.42p 0.03p 0.39p
(1) Adjusted EBITDA is stated before exceptional items
-- Encouraging performance, in line with market expectations;
-- Marked improvement in all profitability metrics, with
adjusted EBITDA(1) more than doubling and profit before tax
improving by GBP0.8 million;
-- Very strong performance from New York operations, with Spot
& Company of Manhattan Inc. ('SpotCo') increasing revenue by 47
per cent to GBP24.8 million (2013: GBP16.9 million) and adjusted
EBITDA(1) by 183 per cent to GBP1.2 million (2013: GBP0.4
million);
-- Solid performance from Dewynters Ltd ('Dewynters') with
revenue of GBP14.8 million (2013: GBP16.2 million) and adjusted
EBITDA(1) of GBP0.5 million (2013: GBP0.6 million);
-- Successful bank refinancing in April 2014; new agreement with
Allied Irish Bank Group (UK) plc ('AIB') established a six year
term from 7 April and a new interest rate of 3 per cent over LIBOR,
for r4e's GBP14.8 million revolving credit facility, providing a
meaningful reduction in the interest rate against the Group's
previous facility;
-- Borrowing reduced by GBP0.3 million since 31 Dec 2013, as the
Company continues to meet its debt repayment obligations relating
to its acquisition of SpotCo.
David Stoller, Executive Chairman, commented:
"These results reflect the significant and encouraging progress
the Group has made following the extensive efforts that we've made
to restructure and enhance Group operations.
"Our New York operation has delivered a stellar performance so
far in 2014, benefitting from buoyant conditions in the Broadway
market. The London market has been a little subdued, with the
cancellation of a number of long running shows, yet Dewynters'
market leading position and strong reputation has ensured a
continuing solid performance.
"The Group's divisions continue to develop their offering in
order to exploit growth opportunities in existing and new,
associated market sectors.
"This is an exciting time for r4e. The Group is performing well,
and I am confident that we will, at the very least, meet market
expectations for the full year."
Enquiries:
reach4entertainment enterprises plc
David Stoller, Executive Chairman +44 (0) 20 7968 1655
Sarah Hall, Chief Operating Officer +44 (0) 20 7321 0488
Blytheweigh (Financial Public Relations) +44 (0) 20 7138 3204
Paul Weigh +44 (0) 7989 129658
Eleanor Parry +44 (0) 7551 293620
Cantor Fitzgerald Europe (Nominated Advisor
& Corporate Broker)
Mark Percy (Corporate Finance) +44 (0) 20 7894 7000
David Banks / Paul Jewell (Corporate Broking)
Allenby Capital (Joint Corporate Broker)
Katrina Perez/Kelly Gardiner +44 (0) 20 3328 5656
EXECUTIVE CHAIRMAN'S STATEMENT
Sustainable profit delivery and stabilised financial
position
These results reflect the significant and encouraging progress
the Group has made following the extensive efforts to restructure
and enhance Group operations.
r4e is now delivering profitability on a sustainable basis,
while the successful conclusion of our recent debt refinancing with
AIB puts the Group on a firmer financial footing.
Improved trading performance, in line with market
expectations
The results for the 6 months ended 30 June 2014 show the
following:
Summary of results
Unaudited Unaudited
6 months ended 6 months ended
30 June 30 June
2014 2013
GBP'000 GBP'000
Total Revenue from continuing
operations 41,500 35,024
---------------- ----------------
Adjusted EBITDA(1) from continuing
operations 1,405 666
Net exceptional (costs)/income
(see note 5) (9) 148
Group EBITDA 1,396 814
================ ================
(1) Adjusted EBITDA is stated before exceptional items.
The Group delivered a significant improvement in revenue growth,
adjusted EBITDA and profit before tax in the six months to 30 June
2014.
Group revenue increased by 18.5 per cent to GBP41.5 million
(2013: GBP35.0 million), driven by a very strong performance at
SpotCo.
The Group's underlying profitability (Adjusted EBITDA) improved
by 111.0 per cent to GBP1.4 million (2013: GBP0.7 million), while
profit before tax increased by GBP0.8 million to GBP0.7 million
(2013: loss of GBP0.1 million).
Profit after tax increased to GBP0.3 million (2013: GBP0.02
million), taking into account a tax charge of GBP0.4 million that
is largely attributable to SpotCo's strong profitable performance.
Having used up its brought forward tax losses, SpotCo's profits are
now fully chargeable for tax and this accounts for GBP0.2 million
of the tax charge at 30 June 2014. In addition a GBP0.1 million tax
asset recognised at 31 December 2013 on brought forward losses in
SpotCo has now been charged to the income statement.
Earnings per share from total operations for the six months to
30 June 2014 is 0.42p (2013: 0.03p), an improvement of 0.39p.
r4e's financial performance has historically been weighted
towards the second half of its financial year. However, due to
SpotCo's exceptionally strong performance in the first half of the
year, it is expected that trading will be more equally balanced
between half year periods of the current financial year.
Strong performance from SpotCo supported by solid performance
from London operations, Dewynters and Newmans
Our operations now comprise the market-leading London and New
York based theatre and live entertainment marketing businesses of
Dewynters and SpotCo respectively, together with the London based
signage and fascia business, Newman Displays Ltd ('Newmans').
Operations of the New York based merchandising business, Dewynters
Advertising Inc ('DAI') was outsourced in 2012.
Continuing Operations
Unaudited 6 months Unaudited 6 months
ended 30 June ended 30 June
2014 2013
Adjusted Adjusted
Company Revenue EBITDA* Revenue EBITDA*
GBP'000 GBP'000
--------------------- ---------------------
Dewynters 14,803 469 16,159 573
--------- ---------- --------- ----------
Newmans 1,714 162 1,804 236
SpotCo 24,843 1,219 16,850 430
--------- ---------- --------- ----------
DAI 140 9 211 (30)
--------- ---------- --------- ----------
Head Office - (454) - (543)
TOTAL 41,500 1,405 35,024 666
========= ========== ========= ==========
*Adjusted EBITDA before exceptional administrative items.
Adjusted EBITDA figures are shown before intergroup management
fees. Note that the report and financial statements at 31 December
2013 reflect company numbers after accounting for intergroup
management fees.
SpotCo traded very strongly in the six months ended 30 June
2014, reporting a 47 per cent revenue increase to GBP24.8 million
(2013: 16.9 million), and an improvement in adjusted EBITDA(1) of
183 per cent to GBP1.2 million (2013: GBP0.4 million).
This performance was achieved through a combination of buoyant
market conditions on Broadway and the continued growth of its
client base, supplemented through the delivery of a number of
significant one-off projects.
The Group's London operations, Dewynters and Newmans, delivered
a solid performance, generating combined revenue of GBP16.5 million
(2013: GBP18.0 million) and adjusted EBITDA of GBP0.6 million
(2013: GBP0.8 million).
The decrease in revenue in the period was largely the result of
the unanticipated cancellation of a number of shows. Nevertheless,
Dewynters' performance was solid, as it continues to lead the
market, as evidenced by its continuing success with a number of
long-running West End shows. In addition, it continues to grow its
Non-West End related work of theatrical and musical projects in
Europe whilst the Touring Division, established two years ago to
provide marketing services to touring productions of theatre and
other live events, continues to expand in the UK and Europe.
Newmans' performance was impacted by the decision by a major
central London cinema to digitalise its external advertising
hoardings, but remained solid and in line with management
expectations. Its performance is traditionally weighted towards the
second half of the year due to the significant launch of
pre-Christmas films as well as the film industry moving towards
Oscar season and we expect a similar pattern to occur in this
financial year.
Focus to expand core businesses in associated market sectors and
exploit strategic opportunities
The Group continues to actively seek to expand its business,
both through exploiting opportunities for its core operations in
associated market sectors and capitalising on strategic
opportunities as they present themselves. On the latter point,
Stage17 (http://stage17.tv/), the digital platform that delivers a
range of Broadway and arts related entertainment content in which
r4e holds a 17 per cent stake, has now officially launched and is
seeing a steady increase in visitors and subscribers.
Successful debt refinancing completed on more attractive
terms
On 8 April the Company announced the completion of a successful
bank refinancing agreement with Allied Irish Bank Group (UK) plc
('AIB') to restructure its existing GBP14.8 million revolving
credit facility.
The agreement, for which covenants have been agreed, establishes
a six year term from 7 April and a new interest rate of 3 per cent
over LIBOR. The new agreement replaces r4e's previous agreement
with AIB which was due to expire in 2015 and had an interest rate
of 4 per cent over LIBOR, rising to 5 per cent over LIBOR from 26
April 2014.
The Board expects there to be an annual interest saving of
around GBP220,000 in the year ending 31 December 2014.
In addition, the Company continues to fulfill its debt repayment
obligations agreed in November 2012 relating to its acquisition of
SpotCo. Since the outstanding debt obligation was renegotiated in
November 2012, US$1.95 million has been repaid.
Summary and Outlook
I am delighted with the improved trading performance that the
Group has delivered, reflecting our recent restructuring efforts,
the quality of our market-leading operations and the benefits we
are deriving from the collaborative culture we have instilled
throughout Group operations.
The Group is very well placed, and the Board is confident of
meeting market expectations for the full year, however performance
is likely to be more evenly weighted between first and second half
than is traditionally the case in light of SpotCo's exceptional
first half performance.
r4e is in good shape, financially stable and I am confident it
will deliver sustainable profit growth over the medium-term.
David Stoller, Executive Chairman
reach4entertainment enterprises plc
Unaudited Condensed Consolidated Income Statement
For the six months ended 30 June 2014
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2014 2013 2013
(Unaudited) (Unaudited) (Audited)
GBP000's GBP000's GBP000's
Continuing Operations
Revenue 41,500 35,024 75,749
Cost of sales (31,637) (25,855) (56,348)
------------- ------------- -------------
Gross profit 9,863 9,169 19,401
Administrative expenses (8,733) (8,739) (18,333)
EBITDA before exceptional administrative
items 1,405 666 1,907
Exceptional administrative expense 5 (9) (759) (790)
Exceptional administrative income 5 - 907 907
Impairment of goodwill 6 - - (181)
Depreciation (170) (138) (313)
Amortisation of intangibles (96) (246) (462)
------------------------------------------ ------------- ------------- -------------
Operating profit 1,130 430 1,068
Finance income 2 44 56 121
Finance costs 3 (465) (563) (881)
Profit/(loss) before taxation 709 (77) 308
Taxation (395) 100 93
Profit for the period 314 23 401
============= ============= =============
The profit is attributable to the owners of the parent
Basic and diluted earnings per
share (pence) 4 0.42 0.03 0.54
============= ============= =============
Unaudited Condensed Consolidated Statement of Comprehensive
Income
For the six months ended 30 June 2014
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2014 2013 2013
(Unaudited) (Unaudited) (Audited)
GBP000's GBP000's GBP000's
Profit for the period 314 23 401
Other comprehensive income:
Currency translation differences (126) 326 (107)
Other comprehensive income (net
of tax) for the period 188 349 (107)
Total comprehensive income for
the period attributable to owners
of the parent 188 349 294
============= ============== =============
Unaudited Condensed Consolidated Balance Sheet
As at 30 June 2014
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2014 2013 2013
(Unaudited) (Unaudited) (Audited)
GBP000's GBP000's GBP000's
Non-current assets
Goodwill 6 13,072 13,805 13,212
Intangible assets 3,823 4,252 3,946
Property, plant and equipment 2,388 2,381 2,496
Deferred tax asset 58 - 163
19,341 20,438 19,817
------------- ------------- -------------
Current assets
Inventories 303 257 281
Trade and other receivables 8,971 6,032 10,343
Other current assets 432 - 445
Cash and cash equivalents 3,115 3,124 1,876
------------- ------------- -------------
12,821 9,413 12,945
------------- ------------- -------------
Total assets 32,162 29,851 32,762
============= ============= =============
Current liabilities
Trade and other payables (13,079) (10,867) (13,848)
Current taxation liabilities (175) (110) -
Borrowings 7 (814) (950) (634)
------------- ------------- -------------
(14,068) (11,927) (14,482)
------------- ------------- -------------
Net current liabilities (1,247) (2,514) (1,537)
------------- ------------- -------------
Non-current liabilities
Deferred taxation (1,250) (1,137) (1,224)
Borrowings 7 (15,356) (16,141) (15,803)
Other payables 8 (1,297) (588) (1,250)
(17,903) (17,866) (18,277)
Total liabilities (31,971) (29,793) (32,759)
------------- ------------- -------------
Net assets 191 58 3
============= ============= =============
Equity
Called up share capital 1,872 1,872 1,872
Share premium 13,501 13,501 13,501
Capital redemption reserve 15 15 15
Retained earnings (14,529) (15,221) (14,843)
Own shares held (259) (259) (259)
Foreign exchange reserve (409) 150 (283)
Total equity attributable to owners
of the parent 191 58 3
============= ============= =============
Unaudited Condensed Consolidated Statement of Changes in
Equity
For the six months ended 30 June 2014
Capital Own shares Foreign
Share Share redemption Retained held exchange Total
ATTRIBUTABLE TO OWNERS OF THE capital premium reserve earnings GBP000 reserve Equity
PARENT GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 January 2013 1,872 13,501 15 (15,244) (259) (176) (291)
Profit for the period - - - 23 - - 23
Other comprehensive income:
Currency translation
differences - - - - - 326 326
---------- ---------- ------------ ----------- ----------- ---------- ---------
Total comprehensive income for
the period - - - 23 - 326 349
At 30 June 2013 (Unaudited) 1,872 13,501 15 (15,221) (259) 150 58
At 1 July 2013
Profit for the period - - - 378 - - 378
Other comprehensive income:
Currency translation
differences - - - - - (433) (433)
---------- ---------- ------------ ----------- ----------- ---------- ---------
Total comprehensive income for
the period - - - 378 - (433) (85)
At 31 December 2013 (Audited) 1,872 13,501 15 (14,843) (259) (283) 3
At 1 January 2014
Profit for the period - - - 314 - - 314
Other comprehensive income:
Currency translation differences - - - - - (126) (126)
Total comprehensive income for
the period - - - 314 - (126) 174
At 30 June 2014 (Unaudited) 1,872 13,501 15 (14,529) (259) (409) 191
Unaudited Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2014
6 months
6 months ended Year ended
ended 30 June 31 December
30 June 2013 2013
2014 (Unaudited) (Unaudited) (Audited)
GBP000's GBP000's GBP000's
Cash generated from operating
activities 9 1,890 2,498 2,485
Income taxes paid (67) - (136)
Net cash inflow from operating
activities 1,823 2,498 2,349
------------------ ------------- -------------
Investing activities
Finance income - 56 1
Purchase of property, plant
and equipment (122) (1,345) (2,444)
Proceeds from disposal of
property, plant and equipment - - 1
Proceeds from landlord reimbursement
towards property, plant and
equipment - - 836
Proceeds from sale of investments - - 20
Payment of deferred consideration (307) (321) (645)
Dividends received from associated
undertaking - - 93
------------------ ------------- -------------
Net cash used in investing
activities (429) (1,590) (2,138)
------------------ ------------- -------------
Financing activities
Repayment of borrowings - - (15)
Proceeds from loan granted
by Related Party 10 - 390 388
Repayment of loan granted
by Related Party 10 - (132) (388)
Interest paid (235) (305) (656)
------------------ ------------- -------------
Net cash used in financing
activities (235) (47) (671)
------------------ ------------- -------------
Net increase/(decrease) in
cash and cash equivalents 1,159 861 (460)
Cash and cash equivalents
at the beginning of the period 1,876 2,316 2,316
Effect of foreign exchange
rate changes 80 (53) 20
Cash and cash equivalents
at end of the period 3,115 3,124 1,876
================== ============= =============
Unaudited notes to the Condensed Consolidated Interim Financial
Statements
For the six months ended 30 June 2014
1 Basis of Presentation
These unaudited condensed consolidated interim financial
statements are for the six months ended 30 June 2014. 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 2013, 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 434 of
the Companies Act 2006. The unaudited interim financial statements
were approved by the Board on 15 September 2014.
The comparative financial information for the year ended 31
December 2013 does not constitute statutory accounts within the
meaning of Section 434 of the Companies Act 2006. The statutory
accounts of reach4entertainment enterprises plc for the year ended
31 December 2013 have been reported on by the Company's auditor,
Baker Tilly UK Audit LLP, and have been delivered to the Registrar
of Companies. The report of the auditor was unqualified but
contained an emphasis of matter statement with regard to going
concern. The auditor's report did not contain statements under
Section 498(2) or 498(3) of the Companies Act 2006.
The financial information for the six months ended 30 June 2014
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 2013, with
exception of standards, amendments and interpretations effective in
2014.
Standards, amendments and interpretations effective in 2014
The following new standards, amendments to standards and
interpretations are mandatory for the first
time for the financial year beginning 1 January 2014, but had no
significant impact on the Group:
-- IFRS 2 - Share Based Payment - Amendments resulting from
Annual Improvements 2010-2012 Cycle (definition of 'vesting
condition')
-- IFRS 10 - Consolidated Financial Statements
-- IFRS 11 - Joint arrangements
-- IFRS 12 - Disclosure of Interests in Other Entitles/ IAS 27 -
Separate Financial Statements - Amendments for investment
entities
-- IAS 19 - Employee Benefits - Amended to clarify the
requirements that relate to how contributions from employees or
third parties that are linked to service should be attributed to
periods of service
1 Basis of Presentation (continued)
The following new standards, amendments to standards and
interpretations have been issued, but are not effective for the
financial year beginning 1 January 2014 and have not been early
adopted:
-- IFRS 7 - Financial Instruments: Disclosures - Deferral of
mandatory effective date of IFRS 9 and amendments to transition
disclosures and additional hedge accounting disclosures (and
consequential amendments) resulting from the introduction of the
hedge accounting chapter in IFRS 9
-- IFRS 8 - Operating Segments - Amendments resulting from
Annual Improvements 2010-2012 Cycle (aggregation of segments,
reconciliation of segment assets)
-- IFRS 9 - Financial Instruments - Incorporating requirements
for classification and measurement, impairment, general hedge
accounting and derecognition.
-- IFRS 11 - Joint Arrangements - Amendments regarding the
accounting for acquisitions of an interest in a joint operation
-- IFRS 14 - Regulatory Deferral Accounts
-- IFRS 15 - Revenue from Contracts with Customers
-- IAS 16 - Property, Plant and Equipment - Proportionate
restatement of accumulated depreciation on revaluation; amendments
regarding the clarification of acceptable methods of depreciation
and amortisation.
-- IAS 38 - Intangible Assets - Proportionate restatement of
accumulated depreciation on revaluation and amendments regarding
the clarification of acceptable methods of depreciation and
amortisation
Going Concern
These interim condensed consolidated financial statements have
been prepared on a going concern basis.
During the year ended 31 December 2012 the Group agreed a debt
repayment schedule for the remaining $4.2 million of deferred
consideration in relation to the SpotCo acquisition in 2008. The
repayment period is over 2013 - 2015. During the six months ending
30 June 2014, $0.5 million has been repaid in-line with the
schedule, leaving an outstanding balance of $2.5 million (GBP1.4
million after discounting and translation to GBP), see note 7.
On 7 April 2014, the Group agreed a debt repayment schedule in
relation to the AIB Group bank debt of GBP14.8million. The facility
matures in April 2020 and numerous capital repayments will be made
over the term of the facility at amounts and dates specified in the
facility agreement. The first repayment of GBP0.2 million is due in
April 2015 with accelerated capital repayments thereafter. The new
agreement established an interest rate of 3 per cent over LIBOR and
a new set of financial covenants have also been agreed with AIB
Group in relation to this debt. The covenants will be measured
quarterly over the remaining term of the facility. All banking
covenants had been met as at 30 June 2014.
Repayment of financial obligations and adherence to the
financial covenants are key areas of management focus. The
Directors have prepared and reviewed detailed forecasts which
indicate that the Group will have sufficient cash flow to meet in
full the deferred consideration debt obligation, and meet future
covenant requirements. The Board is confident that these matters
will be concluded in a manner which enables the going concern basis
of accounting to be applicable.
After making enquiries and considering the uncertainty noted
above, the Directors have concluded that the Group has adequate
resources to continue trading for the foreseeable future. For these
reasons, they continue to adopt the going concern basis of
accounting in preparing the Group interim financial statements.
2 Finance Income
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2014 2013 2013
(Unaudited) (Unaudited) (Audited)
GBP000's GBP000's GBP000's
Bank interest 1 1 1
Dividends received from associated
undertaking - 55 93
Foreign exchange gains on
borrowings - - 2
Foreign exchange gains on
deferred
consideration 43 - 25
44 56 121
============ ============ ============
The foreign exchange gain for the period ended 30 June 2014 of
GBP0.04 million (30 June 2013: GBPNil) is unrealised and relates to
the revaluation of deferred consideration denominated in US$. For
the period ended 30 June 2013 this was an exchange loss of GBP0.13
million (note 2).
3 Finance Costs
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2014 2013 2013
(Unaudited) (Unaudited) (Audited)
GBP000's GBP000's GBP000's
Bank interest - 1 2
Interest on bank loans 298 309 644
Interest on related party
loan - - 10
Amortisation of issue costs
of bank loan 83 2 4
Unwinding of discounting on
deferred consideration 83 119 220
Net foreign exchange losses
on trade 1 - 1
Foreign exchange losses on
deferred consideration - 132 -
465 563 881
============ ============ ============
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
2014 2013 2013
(Unaudited) (Unaudited) (Audited)
Number Number Number
Weighted average number of
2.5 pence ordinary shares
in issue during the period
For basic earnings per share 74,635,792 74,635,792 74,635,792
GBP000's GBP000's GBP000's
Profit for the period 314 23 401
============ ============ ============
There were no share options in issue at 30 June 2014, 31
December 2013 or 30 June 2013.
5 Exceptional Items
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2014 2013 2013
(Unaudited) (Unaudited) (Audited)
GBP000's GBP000's GBP000's
Office relocation costs (9) (759) (790)
Exceptional expenses (9) (759) (790)
Landlord reimbursement income - 907 907
------------ ------------ ------------
Net exceptional administrative
(expenses)/income (9) 148 117
============ ============ ============
Exceptional costs in the 6 month period to 30 June 2014 relate
to the relocation of Newmans offices and Dewynters warehouse in
London. Costs include surveys for new premises and necessary
archive incineration. The office/warehouse move will take place
towards the end of 2014. Landlord compensation will be received and
is expected to cover expenses of the move.
Expenses and income in the prior year ended 31 December 2013
relate to relocation of SpotCo offices in New York and the
Dewynters/r4e plc offices in London. Costs included search fees,
legal and removal costs, plus rent required to be paid on the
office which remained unoccupied in each location prior to/after
the move. In London the relocation was at the requirement of the
Landlord who is renovating the premises, therefore compensation was
received of GBP907k as the tenancy was within the scope of the
Landlords and Tenants Act 1954.
6 Goodwill
Total
GBP000's
Cost:
1 January 2013 13,478
Foreign exchange differences 327
30 June 2013 13,805
Impairment charge (181)
Foreign exchange differences (412)
31 December 2013 13,212
----------
Foreign exchange differences (140)
30 June 2014 13,072
----------
Net Book Value:
30 June 2014 (unaudited) 13,072
==========
30 June 2013 (unaudited) 13,805
==========
31 December 2013 (audited) 13,212
==========
An impairment charge of GBP0.18 million was incurred during 2013
on Dewynters Advertising Inc. (DAI) due to the reduced level of
cash flows expected from DAI in future years. At 31 December 2012
the Group outsourced the operational fulfillment of the activities
of DAI. Whilst this reduced the losses being made by DAI in 2013, a
reduced level of operations also resulted in a smaller cash flow
projection therefore resulting in an impairment charge of GBP0.18
million.
A review has been undertaken at 30 June 2014 and has not
identified any further need for impairment.
7 Borrowings
30 June 30 June 31 December
2014 2013 2013
(Unaudited) GBP000's (Unaudited) GBP000's (Audited) GBP000's
Current:
Bank loans 200 - -
Deferred consideration 614 692 634
Related party loan - 258 -
---------------------- ---------------------- --------------------
814 950 634
====================== ====================== ====================
Non-current:
Bank loans 14,585 14,800 14,785
Deferred consideration 771 1,341 1,081
---------------------- ---------------------- --------------------
15,356 16,141 15,803
====================== ====================== ====================
Analysis of borrowings
On demand or within one year:
Bank loans 200 - -
Deferred consideration 614 692 634
====================== ====================== ====================
In the second to fifth years inclusive:
Bank loan - revolving facility 7,190 14,800 14,785
Deferred consideration 771 1,341 1,081
More than five years:
Bank loan - revolving facility 7,395 - -
A new agreement over the existing bank loan was entered into on
7 April 2014 with the lender Allied Irish Bank (AIB Group (UK))
plc. AIB Group (UK) is charging interest on the revolving credit
facility at LIBOR + 3% per annum until the facility matures in
April 2020. GBP0.2 million is repayable within 12 months with
accelerated capital repayments thereafter.
The Group has also agreed a new set of financial covenants with
AIB Group (UK) in relation to the revolving credit facility. The
covenants are measured quarterly and took effect from 30 June 2014.
All banking covenants had been met as at 30 June 2014.
7 Borrowings (continued)
Deferred consideration
Movements on deferred consideration during the year are as
follows:
30 June 30 June 31 December
2014 2013 2013
(Unaudited) GBP000's (Unaudited) GBP000's (Audited) GBP000's
Opening balance 1,652 2,103 2,103
Unwinding of discounting on deferred
consideration 83 119 220
Payment of deferred consideration -
cash (307) (321) (645)
Foreign exchange differences (43) 132 (26)
Closing balance 1,385 2,033 1,652
====================== ====================== ====================
8 Other payables
Landlord reimbursement accrual
Amounts in non-current other payables of GBP0.62 million (30
June 2013: GBP0.59 million) relate to the re-imbursement of
leasehold improvement costs from SpotCo's landlord at the new New
York office which was moved into during 2013. As with many US
leases SpotCo, as tenant, had to undertake a programme of complete
refurbishment of the property and some of these expenses, related
to the provision of basic utilities and services, were then
refunded by the landlord. In line with SIC 15 this reimbursement
has been recognised as a liability and will be unwound to the
income statement reducing rental costs over the period of the
lease. During the 6 months period to 30 June 2014 GBP0.03 million
was unwound and credited to the income statement (30 June 2013:
Nil).
Amounts in current liabilities relating to the reimbursement
total GBP0.05 million (30 June 2013: GBP0.05 million).
30 June 30 June 31 December
2014 2013 2013
(Unaudited) GBP000's (Unaudited) GBP000's (Audited) GBP000's
Within one year 53 46 55
---------------------- ---------------------- --------------------
Within second to fifth years 212 183 218
More than five years 412 405 454
---------------------- ---------------------- --------------------
624 588 672
====================== ====================== ====================
8 Other payables (continued)
Rent holiday accrual
Other amounts in non-current other payables of GBP0.68 million
(30 June 2013: Nil) relate to an accrual for rental payments built
up during a period of 'rent holiday' as provided for in the new
leases for Dewynters and SpotCo's Offices which were moved into
during 2013. In line with SIC Interpretation 15 the accrual will be
released to the income statement over the term of the lease
reducing rent costs.
30 June 30 June 31 December
2014 2013 2013
(Unaudited) GBP000's (Unaudited) GBP000's (Audited) GBP000's
Within one year 53 - 36
----------------------- ----------------------- ---------------------
Within second to fifth years 523 - 238
More than five years 150 - 340
----------------------- ----------------------- ---------------------
673 - 578
======================= ======================= =====================
Total non-current accruals 30 June 30 June 31 December
2014 2013 2013
(Unaudited) GBP000's (Unaudited) GBP000's (Audited) GBP000's
Landlord reimbursement accrual 624 588 672
Rent holiday accrual 673 - 578
----------------------- ----------------------- ---------------------
Total non-current payables 1,297 588 1,250
======================= ======================= =====================
9 Cash flows from operating activities
6 months ended 6 months Year ended
30 June 2014 ended 30 31 December
June 2013 2013
(Unaudited) (Unaudited) (Unaudited)
GBP000's GBP000's GBP000's
Reconciliation of net cash
flows from operating activities
Profit/(loss) before taxation 709 (77) 308
Finance costs 465 563 881
Finance income (44) (56) (121)
Depreciation 170 138 313
Amortisation of intangibles 96 246 462
Impairment of goodwill - - 181
Profit on sale of investments - (20) (20)
Operating cash flows before
movements in working capital 1,396 794 2,004
Increase in inventories (21) (29) (54)
Decrease/(increase) in trade
and other receivables 1,372 3,725 (1,031)
(Decrease)/increase in trade
and other payables (857) (1,992) 1,566
Cash flows from operating
activities 1,890 2,498 2,485
============== ============ ============
10 Related Party Disclosures
During the prior year ending 31 December 2013, SpotCo entered
into a bridge loan facility agreement (the "Facility Agreement")
with Stoller Family Partners LLC to augment internal cash-flows to
finance the up-front refurbishment costs of the office relocation
in New York. $0.6 million was drawn down under the Facility
Agreement. The Facility had an arrangement fee of $5,000 and
interest was charged on funds drawn down at a rate of 8 per cent
per annum.
As at 31 December 2013, the $0.6 million loan plus arrangement
fee and GBP0.01 million of interest had been repaid to Stoller
Family Partners LP leaving no outstanding balance as at 31 December
2013.
Stoller Family Partners LLC is classified as a related party of
the Company by virtue of being an existing substantial shareholder
in the Company and also due to David Stoller, Executive Chairman of
the Company, being a director and a substantial shareholder in
Stoller Family Partners LLC.
11 Transactions with Directors
At 30 June 2014 David Stoller owed the Group GBP1,312 (30 June
2013: GBP2,424) which was repaid in July 2014. The loan is
non-interest bearing and no terms and conditions are attached.
12 Interim Report
This document is available on the Group's website at
www.r4e.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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