(Alliance News) - Reach4Entertainment Enterprises PLC on Monday said earnings increased significantly in 2019 but said the Covid-19 pandemic "inevitably" will result in a "material reduction" to market expectations for its 2020 results.
Reach4Entertainment provides marketing and advertising services for theatrical, film and live entertainment.
Shares were trading 0.6% higher at 0.36 pence each on Monday morning in London. They are 63% lower than at the start of the year.
For 2019, Reach4Entertainment posted revenue of GBP135.4 million, up 77% from GBP76.7 million in 2018. Pretax profit multiplied to GBP1.2 million from GBP314,000.
Reach4Entertainment credited the improved performance to the success of its turnaround strategy and the diversification of the company into new areas of live entertainment.
Gross profit margin was 21%, narrowed from 25%.
Turning to current trading, the company said that while it saw strong sales growth for the two months ended February 29, closures of live venues amid the Covid-19 outbreak resulted in significant reductions in trading from March. The pandemic means there has been a significant reduction in advertising and marketing spend.
However, it said it has implemented several measures to reduce costs. It said the cost cuts have allowed it to reduce its monthly running costs by 50% to generate annualised savings of around GBP12 million.
"Inevitably, the Covid-19 outbreak - and the consequent closure of live venues on Broadway and London's West End - has resulted in a significant reduction in advertising and marketing spend. No one knows with certainty when venues will be able to reopen and the impact of social distancing measures. However, the group anticipates that when live venues finally reopen - at whatever capacity - the requirement to market shows should ensure that r4e quickly returns to previous levels of trading," Reach4Entertainment said.
"It is too early to predict the resumption of normal trading and therefore too early to forecast the extent to which Covid-19 will impact the Group's financial performance. The impact of the pandemic will inevitably result in a material reduction to market expectations for the full year 2020," it added.
As at the end of May, the company had net cash of GBP12.0 million.
By Ife Taiwo; ifetaiwo@alliancenews.com.
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