7 May 2020 07:00
Prior to publication, the information contained within this announcement was deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the publication of this announcement, this information is now considered to be in the public domain.
7 May 2020
reach4entertainment enterprises plc
("r4e" or "the Company" or "the Group")
COVID-19 Update
Further to the announcement on 20 March 2020, reach4entertainment enterprises plc (AIM: R4E), the integrated international marketing group in the live performance and entertainment markets, provides an update on its response to the COVID-19 outbreak.
Background
Towards the end of March 2020, shortly following the closure of all live venues in London's West End and on Broadway, the Group moved promptly to protect the health and safety of its workforce and transitioned all of the Group's employees to remote working wherever possible. As part of its drive for operational efficiency, through the use of virtualised applications and storage on the cloud, r4e has enabled secure remote working with no material reduction in its delivery capability for clients.
The Group continues to await guidance from governments in its key markets on the easing of lockdown measures for the live entertainment industry and plotting a path to normal activity. Management anticipates live theatre performances will be among the last to emerge from lockdown and restrictions.
COVID-19 Response
The Group responded rapidly to the crisis to implement a number of mitigation measures to support the liquidity of the business and its financial position during this period. Actions taken include the implementation of some organisational restructuring; furloughing over 50% of staff across the Group benefitting from UK and US Government payroll schemes; curtailing all non-essential spend; and, a freeze on M&A activity. Additionally, all r4e plc senior executives have taken 30-40% reduction in salaries and there have been salary reductions of between 20-40% implemented for approximately 30% of the staff with all bonuses being deferred. Also, all Non-Executive Directors have waived their fees. These measures, along with permanent cuts in ancillary administration costs, are expected to reduce monthly running costs by 50% and generate annualised savings of approximately £12 million. Furthermore, the Group has reduced its cash outflow by 76% to £0.5 million per month, prior to media supplier payments, by temporarily deferring payments including rent, VAT and PAYE/NI. The Group has identified further opportunities to make additional cost savings to improve its financial position.
Outlook
Given the evolving nature of the crisis and the uncertainty over its length and severity, it is too early to accurately assess the financial impact that the disruption will have on FY 2020. Management has explored funding options and also continue to have positive dialogue with the Company's US owned asset based lending facility provider, PNC Business Credit, regarding the ongoing facility. The Group had net cash of approximately £10.3 million at 30 April 2020 (£2.75 million at 31 December 2019) excluding deferred consideration to the Seller of Agency Press Limited ('Sold Out') and IFRS 16 lease liabilities. This should enable the Group to continue to meet its working capital requirements whilst it explores additional funding options, including, but not limited to, schemes offered from the UK Government and the Small Business Administration in the US. In the unlikely event that the outbreak and consequent reduced trading were to continue beyond 2020, the Board would be required to implement further cost cutting measures.
Further updates to the market will be made as appropriate.
For information, please contact:
reach4entertainment enterprises plc Marc Boyan, CEO Paul Summers, COO | Phone: +44 (0)20 3978 8590 |
Luther Pendragon | Phone: +44 (0)20 7618 9100 |
Harry Chathli | Email: r4e@luther.co.uk |
Alexis Gore | |
Joe Quinlan | |
Grant Thornton, NOMAD | Phone: +44 (0)20 7383 5100 |
Philip Secrett | |
Jen Clarke | |
Seamus Fricker | |
Dowgate Capital, Broker | Phone: +44 (0)20 3903 7715 |
James Serjeant | |
David Poutney |
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About r4e
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.