LONDON (Alliance News) - Reach4Entertainment Enterprises PLC Wednesday said it swung to a pretax loss in 2014 on the back of an impairment related to the ongoing discussions about restructuring or replacing its bank loan, as the performance of its US SpotCo business offset weaker performances from its UK businesses.
Although the SpotCo business performed well, the company warned that it benefited from a lot of one-off revenue events that are unlikely to be repeated in 2015.
Reach4Entertainment shares were down 6.5% to 1.14 pence per share on Wednesday morning.
The entertainment promotion and brand building company for the theatrical, film and live entertainment industries said it swung to a GBP5.1 million pretax loss in 2014 from a GBP308,000 profit in 2013 despite revenue climbing to GBP83.3 million from GBP75.7 million.
The loss was caused by a GBP6.4 million impairment of goodwill in the Dewynters business, compared to only GBP181,000 a year earlier. That impairment is related to the directors' ongoing discussions with its bank as to how best to restructure the current bank loan or replace it altogether.
Reach4Entertainment said its GBP14.8 million debt with Allied Irish Bank is "too great for a company of this size and needs to be reduced" as the company's market capitalisation only stands at around GBP870,000.
"Therefore, we have initiated discussions with our lenders, Allied Irish Bank, and third parties to restructure or replace the current loan. An announcement will be released to the market as soon as the outcome is known," the company said in a statement.
Earnings before interest, tax ,depreciation and amortisation, exceptional items and impairments came in at GBP2.6 million, up 37% from GBP1.9 million in 2013.
"The group has performed well in 2014, with an increase in revenues and Ebitda, supported by a well-managed cost base," said Executive Chairman David Stoller. "SpotCo in particular achieved record revenues in the first half of the year, although it should be noted that this was due to a number of significant one-off projects. Dewynters had a more challenging year due to a number of show closures in the West End, which was largely offset by a reduction in overheads".
The company's SpotCo business, a full-service arts and live entertainment advertising and marketing subsidiary operating in New York, reported a rise in revenue to GBP51.8 million from GBP39.4 million leading to Ebitda before exceptional items of GBP2.3 million in 2014 compared to GBP1.1 million in 2013.
The Dewynters business, also full-service live entertainment marketing, branding and advertising subsidiary operating in London, reported a fall in revenue to GBP27.6 million from GBP32.3 million with Ebitda before exceptional items of GBP458,000, down from GBP787,000.
Reach4Entertainment's two smaller subsidiaries also experienced a more difficult year.
The Newmans business reported revenue of GBP3.6 million, down from GBP3.7 million the year before, with Ebitda of GBP223,000, down from GBP466,000. The Dewynters Advertising Agency reported revenue of GBP285,000, down from GBP366,000, but Ebitda swung to a positive GBP16,000 from a GBP30,000 loss.
Overall, its businesses in London, Dewynters and Newmans suffered a GBP4.8 million fall in revenue whilst Ebitda fell by GBP600,000, offset by the New York business SpotCo's performance.
"2014 clearly benefited from some exceptional one-off revenue events in SpotCo which are unlikely to be repeated in 2015. That said, the actions we have taken across the group to focus the business on its core activities, and correspondingly reduce the cost base in line with our operating activities, have helped to both build on this profitability in the US, and reduce the impact of the declining performance in the 2014 UK theatre market," said Stoller.
"2014 saw Reach4Entertainment promote 78 shows in both London and New York theatres and support the launch of 70 international films, confirming our position as the leader in theatre and film promotion. Musicals continue to be the largest part of the theatre market and therefore a critical segment of which the company continues to have a dominant share," he added.
At the end of 2014, the company had a cash balance of GBP2.4 million, up from GBP1.9 million at the end of 2013.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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