R4E.L Regulatory News (R4E)

26 April 2017

reach4entertainment enterprises plc ("r4e", the "Company"' or the "Group")

Final results for the year ended 31 December 2016

r4e, the transatlantic media and entertainment company, today announces its results for the year ended 31 December 2016.

Highlights

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

· Represented some of the best known theatre shows and won new shows to be launched in 2017/2018 including Bat out of Hell, 42nd Street, Waitress, Mean Girls and Pretty Woman

· Launched a new agency in Hamburg Germany, such that r4e now operates in the world's three largest commercial centres for theatre - London, New York and Hamburg.

· Appointed James Charrington to lead Dewynters and acquired his data driven marketing and analysis business Jampot Consulting Ltd

· Appointed Jim Edwards to lead SpotCo

· Expanded the Board with the appointment of Lord Michael Grade, Claire Hungate and Charlie Lycett as non-executive Directors

· Implemented the r4e plc Long Term Incentive Plan (LTIP) to incentivise and rewards key members of staff. Adding back these non-cash affecting costs of £0.35 million, the Group has a core trading EBITDA of £1.9 million

· Successfully raised £2 million (gross proceeds) from an equity placing in October 2016, to support the Company's data-driven marketing and analytics initiative, geographic expansion and the reorganisation of key aspects of the business

Commenting on the results, David Stoller, Executive Chairman, said, "2016 was a good year for r4e building upon the financial transformation achieved in the prior year. In addition to a positive trading performance which saw revenues increase by 12.5%, we set out our strategy for growth and have made significant headway towards executing it, recruiting a superb leadership team across the company, expanding our presence geographically into Germany, so that we are now operate in the three largest live entertainment centres in the world, London, New York and Hamburg, and launching our data driven marketing and analytics business through Jampot, which we believe will be a key driver of our future success.

31 December 2016 Full Report and Accounts

The Company will shortly post its report and accounts for the year ended 31 December 2016 to shareholders, along with notice of the annual general meeting to be held at 11.30am on 27 June 2017, and both documents will soon be available on its website, www.r4e.com. The annual general meeting will be held at the offices of the Company at Wellington House, 125 Strand, London, WC2R 0AP.

Enquiries:

reach4entertainment

David Stoller, Executive Chairman +44 (0) 20 7968 1655

Novella Communications - Financial PR

Tim Robertson +44 (0) 207 6303843

Toby Andrews +44 (0) 207 6303848

Allenby Capital Ltd - AIM Nominated Adviser and Broker

Jeremy Porter/ James Reeve +44 (0) 20 3328 5656

EXECUTIVE CHAIRMAN'S STATEMENT

A Clear Strategy for Long-Term Growth

In 2016, r4e delivered a good trading performance slightly ahead of the previous year and set out a clear strategy for the future long-term growth of the business, centred around three key areas:

- Geographic expansion;

- Launching a new data-driven marketing and analytics division; and

- Re-organisation and integration of key business groups.

Good progress was made against all three objectives alongside a significant strengthening of the senior management team. In March 2016, the Company announced the appointment of James Charrington as the new CEO for Dewynters as well as the acquisition of data and marketing analytics business Jampot Consulting. In August 2016, the Company appointed Jim Edwards as the new CEO for Spotco, and in September 2016 the Company announced the creation of a Dewynters agency in Hamburg under Michael Hildebrandt, expanding the business geographically and adding another highly experienced individual to the team.

To support the Company's strategic objectives, an equity placing was completed raising £2.0 million gross proceeds (£1.9 million net) in October 2016. Charlie Lycett joined the Board of Directors as a Non-Executive in May 2016 and since the year end, the Company has welcomed Lord Michael Grade and Claire Hungate (currently head of Warner Bros UK) as Non-Executive Directors.

The combination of the above changes together with a re-organisation of the London office will significantly strengthen the business and provide the platform for long-term growth.

Positive Trading Performance

Group revenue increased by 12.5% to £96.6 million (2015: £85.9 million), boosted by positive currency translation. On a constant currency basis, revenues increased by 3.8%.

Underlying profitability for r4e (Adjusted EBITDA*) was slightly ahead at £1.9 million (2015: £1.84 million), driven by a strong performance from SpotCo and a much improved performance from Newmans. The gross profit margin was consistent at 23.6% (2014: 23.5%).

Profit before tax decreased to £0.50 million (2015: £4.54 million). Excluding exceptional items and share based payment charges, profit before tax has increased by 350% to £0.85 million (2015: loss of £0.34 million).

Earnings per share from total operations for the year is 0.02p (2015: 4.01p).

Subsequent to the substantial debt refinancing in December 2015, 2016 saw the first full year with the new debt provider PNC Business Credit ('PNC'). Over the course of the year, total borrowings have reduced further by £1.70 million to £5.03 million (31 December 2015: £6.74 million).

* Adjusted EBITDA is EBITDA before exceptional items and share based payment charges

New York, London and now Hamburg

In opening Dewynters Germany in September, r4e has taken a major step towards building a leading global agency. Adding Hamburg to its market-leading presence in London and New York, r4e now has a presence in the three largest commercial theatre markets in the world. This, combined with a commitment, avidly shared by each of these agencies, to utilise Jampot's new data-driven marketing and analytics capabilities (which can and will be increasingly applied to the broader categories of live entertainment, in addition to commercial theatre), and the highly collaborative approach adopted by the new leadership teams, will drive the Company's future growth. r4e is re-inventing itself, with a clear global vision and strategy.

New York

SpotCo delivered a good performance in 2016, driven by an especially strong first six months of the year. Ahead of the prestigious Tony awards in June 2016, SpotCo's clients required significant support from the company. This investment assisted the result of every Tony award being won by a SpotCo client. Boosted by this high level of activity plus a beneficial currency translation, revenues for the period increased by 19% on the previous year to £65.2 million (2015: £54.6 million) with Adjusted EBITDA increasing by 25% to £1.5 million (2015: 1.2 million), and operating profit increasing by 16.22% to £1.0 million (2015: £0.86 million). SpotCo has a very strong track record, and expects to maintain its market leading position under the leadership of Jim Edwards. The company has a growing focus on utilising the strengths of the Group, including its growing data and analytics capabilities. Another area of growth is winning new clients who have theatre presented outside of New York but whom have the potential to subsequently transfer to Broadway.

London

Under new CEO James Charrington, Dewynters has been re-organised, establishing a new structure that will support its long-term strategy, featuring a more streamlined service delivery and a determined cultivation of a wider live entertainment client base, all supported by a substantial commitment to data and analytics. As a result, 2016 was a year of transition for Dewynters which was reflected in the financial performance of the division with revenues flat at £27.5 million (2015: £27.5 million), however focus on overhead control resulted in an increased Adjusted EBITDA at £0.98 million (2015: £0.85 million). Operating profit has also increased by £1.13 million to £0.69 million (2015: loss of £0.44 million) due to the prior year impairment of goodwill. Dewynters is now well placed to improve on this performance in 2017.

Newmans enjoyed significant success in 2016, growing its revenues by 19% to £3.9 million (2015: £3.5 million) and generating EBITDA of £0.22 million (2015: £0.16 million). Management decisions in 2015 to switch from outsourcing to investing in in-house printing and cutting machinery has made an immediate and positive impact on the profitability of the division. Newmans also benefited from an increase in theatre signage, including the Harry Potter play and an increase in film premier work generally. Operating profit has remained consistent with prior year at £0.14 million (2015: £0.14 million) due to the new PNC debt costs which have impacted 2016. The division remains committed to providing an increasing level of digital services and is well placed going into 2017.

Hamburg

Launched in September 2016, Dewynters Germany is still in its infancy but is already seeing signs of strong future performance under the leadership of Michael Hildebrandt, who has worked in Hamburg, the capital of the German entertainment market, for the past 17 years and is an established industry figure. Michael's leadership and market knowledge, combined with the skills and capabilities that this division is able to draw upon from the wider Group, particularly from Dewynters in London, provides a strong platform for growth, focussing particularly on two key service models:

- Strategic and commercial support for brands in the entertainment and leisure industry:

- Event creation for major brands looking for entertainment-driven solutions to marketing challenges.

During 2016, r4e invested in establishing this division and 2017 will be another year of investment.

Forward Momentum

The progress we have made in the last 18 months has re-invigorated the business with change occurring at nearly every level. In 2015, we transformed the financial base of the Company and in 2016 we have transformed the senior team and operational structure and set out our strategic plan for the future, featuring geographic expansion (evidenced by our launch into Germany), customer expansion (following and participating in the globalisation of live entertainment), and a powerful push to develop and provide our customers with industry-leading digital, data-driven marketing and analytics (led by the launch of Jampot). Our performance for 2017 has to date been in line with our expectations and we are enthusiastic about the growth prospects that our new initiatives will bring. Although these initiatives will inevitably increase the costs previously anticipated for 2017 (which did not factor for the costs of initiatives yet to launch), we expect them to provide a real benefit to the profitability of the group in future years.

David Stoller

Executive Chairman

REVIEW OF PERFORMANCE BY COMPANY

Year ended 31 December 2016

Year ended 31 December 2015

CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2016

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2016

Items in the statement above are disclosed net of tax. The income tax relating to each component of other comprehensive income is disclosed in note 5.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2016

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 31 DECEMBER 2016

CONSOLIDATED STATEMENT OF CASH FLOWS AS AT 31 DECEMBER 2016

BASIS OF PRESENTATION

The above financial information in this announcement does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The above figures for the year ended 31 December 2016 are an abridged version of the Company's accounts which have been reported on by the Company's auditor but have not been dispatched to the shareholders or filed with the Registrar of Companies. These accounts received an audit report which was unqualified and did not include a statement under section 498(2) or section 498(3) of the Companies Act 2006. The audit report included a reference to matters to which the auditors drew attention by way of emphasis without qualifying their report in relation to going concern, as follows:

Emphasis of matter

In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of disclosures in the accounting policies on page 32-33 of the annual report and accounts concerning the group and company's ability to continue as a going concern following a breach of loan covenants that occurred during 2016 and breaches that are forecast to occur in 2017. These events or conditions indicate the existence of a material uncertainty that may cast significant doubt about the group's or company's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the group or company was unable to continue as a going concern.

GOING CONCERN

As at 31 December 2016, the Group had net assets of £5.35 million (31 December 2015: net assets £2.81 million) and made an operating profit in the year then ended of £0.85 million (year ended 31 December 2015: loss of £5.19 million).

During 2015, the Group obtained a new three year secured asset based debt facility of £9.5 million with PNC Business Credit Services Ltd being made up of a £1 million term loan and a revolving credit facility of up to £8.5 million based on qualifying accounts receivable. As at 31 December 2016 the debt owed to PNC totalled £4.83 million (2015: £6.68 million), a reduction of £1.85 million.

The term loan held with PNC is a 3 year facility against which monthly capital repayments commenced from March 2016. The debt will be fully paid down by October 2018. The asset based lending facility is a revolving credit line based upon qualifying accounts receivable. This means current debt is constantly being paid down and new debt being drawn. The facility will therefore fluctuate but will be no more than £8.5 million at any point. A set of financial covenants are in place with PNC in relation to this debt and are measured monthly. One of these covenants was breached for 3 months from August to October 2016 due to seasonal fluctuations in revenue. PNC provided a waiver for these breaches and an amendment to the covenant terms was agreed in 2017 to help mitigate the impact of seasonality. At the latest measurement date prior to these accounts being released, the covenants had been met, however, trading in 2016 was unusually weighted towards the first half of the year and 2017 is expected to return to the typical trading pattern of a stronger second half of the year. This means that, on a 12 month rolling basis the Group may once again be affected by seasonality issues in the covenant measurement. The Company and PNC are monitoring the position carefully, remain in close correspondence, and are working towards a solution.

The directors of the Company understand that PNC remains supportive of r4e, but that PNC cannot provide a waiver of a potential future breach as of the date of these accounts.

Given the significant reduction in the debt levels of the group since the re-financing in 2015, plus the improvement to the balance sheet position, the Directors believe that the going concern basis is appropriate and the Group has adequate resources to continuing trading for the foreseeable future. Regarding the aforementioned PNC covenants, the Directors are confident that although breaches are possible later in 2017, these would only be temporary as a result of seasonal fluctuations and not due to the performance of the Group as a whole and are working with PNC to come to an agreement.

SIGNIFICANT ACCOUNTING POLICIES

GOODWILL

Goodwill is reviewed for impairment at least annually and any impairment will be recognised in the income statement and is not subsequently reversed. As such it is stated at cost less provision for impairment in value. On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

IMPAIRMENT OF ASSETS (INTANGIBLE AND PROPERTY, PLANT AND EQUIPMENT)

Goodwill is not subject to amortisation but is tested annually or whenever there is an indication that the asset may be impaired. For the purpose of impairment testing, assets are grouped at the lowest levels for which they have separately identifiable cash flows, known as cash generating units. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. Impairment losses recognised for goodwill are not reversed in a subsequent period.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

At each balance sheet date, the Group reviews the carrying amounts of its property, plant and equipment and intangible assets with finite useful lives to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent, if any, of the impairment loss. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. An impairment loss is recognised immediately in the income statement. Where an impairment loss subsequently reverses the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, not to exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognised immediately in the income statement.

EXCEPTIONAL ITEMS

Exceptional items represent income or expenses, which based on their materiality, frequency or non-operating nature, have been separately disclosed to facilitate the assessment of the Group's underlying operating profitability.

SHARE BASED PAYMENTS

The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value (excluding the effect of non market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of the shares that will eventually vest and adjusted for the effect of non market-based vesting conditions.

Fair value is measured using a Black-Scholes valuation model for vanilla options and a binomial model for more complex options. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

CAPITAL RISK MANAGEMENT

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to adjust the capital structure, the Group may issue new shares or sell assets to reduce debt.

As part of the Capital Risk Management process the Group acknowledges the need to monitor, and meet in full, covenants held over the revolving asset based facility with PNC. More details on the bank debt are in the borrowings note 8. Although breached from August to October 2016, the covenants have been met in full since November 2016 until the date of the release of these accounts.

NOTES

1. BUSINESS AND GEOGRAPHICAL SEGMENTS

Business segments

For management purposes, the Group is currently organised into four operating segments - New York operations, London operations and Head Office. These divisions are the basis on which the Group reports its segment information.

Principal continuing activities are as follows:

New York (NY) - marketing, design, advertising, promotions, digital media services, and publishing.

Germany - marketing strategy and planning, media planning, design, event production, PR, CRM and data consulting.

London - marketing, design, advertising, promotions, digital media services, publishing, signage and fascia displays.

Head Office - finance and administration services for the Group.

Segment information for continuing operations of the Group for the year ended 31 December 2016 is presented below.

Management fees charged at an arm's-length basis between reportable segments are reflected in the figures above on the basis that this is a true reflection of the operating costs of each segment.

Segment information for continuing operations of the Group for the year ended 31 December 2015 is presented below.

2. EXCEPTIONAL ADMINISTRATIVE ITEMS

Office move and Landlord reimbursement 

Newmans premises and Dewynters warehouse, which are on the same site in London, were given notice by the Landlord to vacate by December 2014 in order that the land could be developed. Subsequent to the commencement of the search process for new premises, the current Landlord agreed to a new lease on the premises due to the planned development being put on hold. Exceptional expenses of £0.01 million in prior year 2015 relate to the search for new premises plus negotiation for the new leases with the current landlord.

Employee contract termination costs

Exceptional expenses of £0.01 million in prior year 2015 relate to Dewynters employee contract termination costs in prior year which are considered exceptional due to the level of redundancy required as a result of company performance.

Deferred consideration on the acquisition of SpotCo

Deferred consideration payments were made as scheduled during 2015 leaving a further remaining balance at the end of October 2015 of USD $1.0 million (£0.65 million) which the Company had the option to pay by the issue of new ordinary shares in the Company. It was agreed during the year that the vendor would waive the final liability of $1 million which resulted in exceptional income of £0.72 million including interest.

Gain on debt write off

The debt restructure which took place in prior year December 2015 paid AIB Group £9 million of the debt outstanding at that date of £14.16 million. The remaining balance of £5.16 million was written off resulting in an exceptional gain to the Income Statement. The process of negotiating the debt restructure included service from legal professionals, consultants, brokers, advisors etc. Fees in relation to the restructure totalled £0.53 million.

Issue of warrants to AIB

As part of the refinancing deal with AIB in 2015, the Company granted 24,994,462 Warrants to AIB Joint Ventures, a subsidiary of AIB.

3. FINANCE COSTS

4. EXPENSES BY NATURE

1.

5. TAXATION

Factors affecting the tax charge for the year:

A deferred tax asset of approximately £1.25 million (2015: £0.96 million) has not been recognised due to uncertainty over future profitability. At 31 December 2016, the Group had losses carried forward of £7.4 million (2015: £5.3 million), available for offset against future profits in the UK. Taxation is calculated at the rates prevailing in the respective jurisdictions. The standard tax rates in each jurisdiction are 40% in the United States (2015: 40%) and 20% in the United Kingdom (2015: 20%).

6. EARNINGS PER SHARE

The calculations of earnings per share are based on the following profits and number of shares:

Profits attributable to equity holders of the company

7. GOODWILL AND INTANGIBLE ASSETS

Goodwill relates to the anticipated profitability and future operating synergies arising on the acquisition of subsidiaries.

All amortisation and impairment charges have been recognised as administrative expenses in the income statement.

Impairment tests for goodwill

Goodwill is allocated to the Group's cash generating units (CGUs) identified according to the operations as grouped upon acquisition. An operating level summary of the goodwill allocation is presented below:

An impairment of £0.55 million in the year is related to the purchase of Jampot Consulting Ltd (2015: £0.97 million related to Dewynters Group - see note below). On 4 March 2016 it was announced that James Charrington had been appointed as CEO of Dewynters. In 2014, Mr Charrington had set up Jampot Consulting Limited ("Jampot") an arts marketing consultancy, working with, amongst others, the National Theatre and Sonia Friedman on ticketing and marketing strategies. On 21 March 2016, the Company acquired 100% of Jampot for consideration totalling £55,000 by the issue on 29 March 2016 of 3,666,666 ordinary shares in r4e at 1.5p per share. The Board of r4e believed the IP in digital marketing that Jampot held will be beneficial to the Group and add to its service offering. As this benefit is related to the group as a whole and future revenues could not be specifically allocated to the acquired company, the goodwill in Jampot was written off as reflected in the half year 30 June 2016 report. Subsequent to the write off management have decided to operate the Group's new data marketing analytics business through Jampot.

An impairment charge of £0.97 million was incurred in the prior year ended 31 December 2015 on the Dewynters Group (inclusive of Dewynters, Newman and DAI). The merchandise division of Dewynters was transferred during 2015 and as a result the royalties from merchandise sales in the USA were no longer collected by DAI and so the company was dissolved in December 2016. The Company allocated to DAI a portion of the goodwill in the Dewynters Group, which arose on its acquisition in 2006, based on its proportion of the EBITDA of the Dewynters Group at the time of the acquisition. This resulted in an impairment of £0.97 million recognised in the 2015 accounts. As at 31 December 2016 the recoverable amount of the Dewynters Group is £7.96 million. No class of asset other than goodwill was deemed impaired.

The recoverable amount of CGUs has been determined based on value-in-use calculations which cover a period of 5 years plus a terminal value. These calculations use pre-tax cash flow projections based on financial budgets for the year ended 31 December 2017 as approved by management and cash flows beyond the one-year period are extrapolated using straight line growth rates stated below. Prudent assumptions have been used in the value-in-use calculations as detailed below.

The key assumptions used for the value-in-use calculations in 2016 are as follows:

Management have determined budgeted gross margin, revenue growth and costs based on past performance and expectations of the market development for each CGU. The discount rates are pre-tax and reflect management's assessment of the risks relating to each CGU. In line with the conservative approach adopted in valuing the CGUs, the discount rate applied in the value-in-use calculations has been adjusted to reflect long term rates.

Initial growth rates in year 1 are taken from the CGU's 2017 operational budgets, and so in some cases can show a difference to the straight line growth rates applied to subsequent years. Growth after year 1 has been determined on the basis of general industry market growth and so the rate reduces and remains consistent. The growth rates used are considered by management to be in line with general trends in which each CGU operates and deemed by management to be a reasonable expectation for the media CGU.

The following table reflects the level of movements required in revenue or costs which could result in a potential impairment per the value in use calculation. A further percentage (fall)/increase, of the magnitude indicated in the table below, in any one of the key assumptions set out above would result in a removal of the headroom in the value-in-use calculations in 2015:

* Reasonable change is when the Board considers the change to be possible in the future

Brands and customer relationships all arise on acquisition; there are no internally generated intangible assets. The brand allocated to the Dewynters CGU totalling £2.26 million (2015: £2.26 million) is determined to have an indefinite life. It is subject to an annual impairment review using the same assumptions as for goodwill. The brand value allocated to SpotCo CGU totalling £0.70 million (2015: also £0.70 million due to gain in FX rates) is being amortised over 15 years and has 8 years remaining.

Intangible customer relationships are attributable to Dewynters only. The useful economic life for customer relationships within Dewynters is 20 years of which 11 are remaining as at 31 December 2016. It has a carrying value of £0.61 million and £0.06 million was charged to amortisation in the year. Where there are any indications of impairment within these businesses the Group carries out impairment reviews on brands and customer relationships using the same assumptions as for goodwill.

8. BORROWINGS

Analysis of borrowings by currency:

Term debt

The term debt with PNC (£0.79 million) totalled £1 million when drawn down on 4 December 2015 (£1.01 million at 31 December 2015 due to foreign exchange) and was split between SpotCo and Dewynters based on expected future cash flows of the Companies. The debt has interest payable at 4% over Barclays Bank plc. base rate (Dewynters) and the rate published by the central bank or monetary authority of the relevant territory (SpotCo). Repayments are in equal monthly instalments and began in March 2016. The debt will be fully repaid by October 2018.

The non-current element of the term debt is due to be paid in 2018. As at 31 December 2016 this could be reflected as current due to the breach of covenants in the year, however, as at year end PNC informed the Company that it would continue to be supportive and subsequently, in 2017, it provided a waiver. Therefore the debt has been reflected in non-current liabilities.

Asset based lending

All 3 trading companies, SpotCo, Dewynters and Newmans, 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 as cash drawdown incurs a higher rate of interest therefore cash will only be drawn down as required rather than being held on hand.

The facility with PNC has interest payable at 2.25% over Barclays Bank plc. base rate for amounts borrowed. Borrowings not utilised have interest payable at 0.25%. On top of a fixed and floating charge over its assets, the Group has given PNC an unlimited guarantee in respect of these borrowings. The Group has a set of financial covenants with PNC in relation to the loan which are measured monthly. These were breached in August to October 2016, but were met in full both before and after these months and were also met in full as at 31 December 2016. The covenants were also met in full at each subsequent month to year end until the latest measurement date prior to these accounts being 31 March2017. Forecasts for 2017 currently reflect possible breaches in the fixed charge cover financial covenant due to the 12 month rolling measurement picking up the unusually weak second half of 2016 and, in a return to normal trading patterns, a weaker first half of 2017. However, given current negotiations with PNC and that the current forecast for the full year 2017 EBITDA is in line with expectations, the Directors are confident the Group remains a going concern - see Going Concern explanation above for further details.

9. OTHER NON CURRENT PAYABLES

Landlord reimbursement accrual

Amounts in non-current other payables of £0.61 million (2015: £0.63 million) relate to the re-imbursement of leasehold improvement costs from SpotCo's landlord at the New York office. As with many US leases SpotCo, as tenant, had to undertake a programme of complete refurbishment of the property. Some of the expenses, related to the provision of basic utilities and services, were then refunded by the landlord. £0.84 million ($1.25 million USD) was received in cash from the Landlord in 2013. In line with SIC Interpretation 15 this reimbursement has been recognised as a liability and is being unwound to the income statement over the period of the lease, reducing rental costs. £0.07 million was unwound during the year (2015: £0.06 million). Amounts in current liabilities relating to the reimbursement total £0.07 million (2015: £0.06 million).

Rent holiday accrual

Other amounts in non-current other payables of £0.63 million (31 December 2015: £0.85 million) 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. In line with SIC Interpretation 15 the accrual will be released to the income statement over the term of the lease thus reducing rent costs.

10. SHARE CAPITAL

12 February 2016 Fees payable