Interim results for the six months ended 30 June 2014 Strictly - - PowerPoint PPT Presentation

interim results for the six months ended 30 june 2014
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Interim results for the six months ended 30 June 2014 Strictly - - PowerPoint PPT Presentation

reach4entertainment enterprises plc Interim results for the six months ended 30 June 2014 Strictly Private and Confidential Disclaimer THE INFORMATION CONTAINED IN THIS PRESENTATION IS BEING SUPPLIED AND COMMUNICATED TO YOU ON A CONFIDENTIAL


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Strictly Private and Confidential

reach4entertainment enterprises plc Interim results for the six months ended 30 June 2014

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THE INFORMATION CONTAINED IN THIS PRESENTATION IS BEING SUPPLIED AND COMMUNICATED TO YOU ON A CONFIDENTIAL BASIS SOLELY FOR YOUR INFORMATION AND MAY NOT BE REPRODUCED, FURTHER DISTRIBUTED TO ANY OTHER PERSON, IN WHOLE OR IN PART, FOR ANY PURPOSE.

This presentation is being communicated in the United Kingdom only to: (a) persons who have professional experience in matters relating to investments falling within Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"); (b) high net worth companies and other bodies falling within Article 49(2) of the Order; or (c) persons to whom this presentation may otherwise lawfully be distributed (all such persons being referred to as "relevant persons"). This presentation is only directed at relevant persons, and any investment or investment activity to which this presentation relates is only available to relevant persons or will be engaged in only with relevant persons. Solicitations resulting from this presentation will only be responded to if the person concerned is a relevant person. Other persons should not act upon this presentation or any of its contents. The distribution of this presentation in certain jurisdictions may be restricted by law, and persons into whose possession this presentation comes should inform themselves about, and

  • bserve, any such restrictions. Although reasonable care has been taken to ensure that the facts stated in this presentation are accurate and that the opinions expressed are fair and

reasonable, the contents of this presentation have not been verified by reach4entertainment enterprises plc (the "Company") or any other person. Accordingly, no representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information and opinions contained in this presentation and no reliance should be placed on such information or opinions. Neither the Company, or any of their respective members, directors, officers or employees nor any other person accepts any liability whatsoever for any loss howsoever arising from any use of such information or opinions or otherwise arising in connection with this presentation. No part of this presentation, or the fact

  • f its distribution, should form the basis of or be relied upon in connection with any contract or commitment or investment decision whatsoever. This presentation does not form part of

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information in this presentation is not complete and may be changed. Recipients of this presentation should each make their own independent evaluation of the Company and of the relevance and adequacy of the information in this document and should make such other investigations as they deem necessary. The securities discussed in this presentation have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "Securities Act"), or qualified for sale under the law of any state or other jurisdiction of the United States of America and may not be offered or sold in the United States of America except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Neither the United States Securities and Exchange Commission nor any securities regulatory body of any state or other jurisdiction of the United States of America, nor any securities regulatory body of any other country or political subdivision thereof, has approved or disapproved of this presentation or the securities discussed herein or passed on the accuracy of adequacy of the contents of this presentation. Any representation to the contrary is

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Securities Act), or "qualified institutional buyers" (as defined in Rule 144A under the Securities Act), may constitute a violation of US securities law. By accepting this presentation, the recipient represents and warrants that they are a person who is either an "accredited investor" or qualified institutional buyer". This presentation may contain forward-looking statements that reflect the Company's current views and expectations regarding future events. In particular, certain statements with regard to management's strategic vision, aims and objectives, anticipated reserves and resources and production rates, are all forward-looking in nature. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statements. The Company's actual performance, results of operations and the development of its business may differ materially from that set out in the forward looking statements in this presentation. By participating in this presentation and/or accepting any copies hereof, you agree to be bound by the foregoing restrictions and the other terms of this disclaimer.

Disclaimer

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Corporate Profile

reach4entertainment enterprises plc (‘r4e’) is a collection of branding, marketing, design and advertising agencies that focus primarily on the theatre, film and live entertainment industries. r4e’s three principal operating divisions are Dewynters Ltd (‘Dewynters’), Spot and Company of Manhattan Inc (‘SpotCo’) and Newman Displays Limited (‘Newmans’). www.r4e.com Summary Shares in issue 74.89m Market Capitalisation £3.65m 52 Week High 8.5p 52 Week Low 3.75p YTD

  • 1.63p/ -25%

Shareholder overview Major Shareholders Amount (m) Holding % Stoller Family Partners LLP 18.93 25.27 Herald Investment Management 7.33 9.78 Roy Nominees Limited 6.00 8.01 JM Finn Nominees Limited 5.96 7.96 Webb Asset Management Ltd 4.56 6.09 Barclayshare Nominees Ltd 3.93 5.25

Company Description (AIM:R4E) Operating Divisions and Investments

Source: Morningstar Source: Morningstar

12 month share price performance

Source: Capita Registrars as at 31 August 2014

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2 Feb 2010 – Disposal of Optimal Wealth Management for a total consideration of £1.5m 2012 12 February 2010 – Disposal of First Artist Management for a total consideration of £200,000 14 Feb 2011 – Disposal of loss making Finishing Touch for £100,001 plus deferred consideration 8 Dec 2010 - £2.5m investment from Pivot (£1.1m share subscription, £1.4m unsecured loan facility) 16 Dec 2010 – David Stoller appointed Executive Chairman 24 Feb 2011 – Placing raises £2m 30 March 2011 – Placing, led by Nigel Wray, raises £2m; £1.4m loan from Pivot converted to equity; new £14.8m RCF 2010 2011 19 May 2011 – Disposal of First Artist Sport for £1 plus deferred consideration; Jon and Phil Smith leave Company Board 11 May 2012 – Name change to reach4entertainment enterprises plc 2013 12 Oct 2012 – Placing raises £0.35m 14/15 Nov 2012 – Covenants agreed with AIB; Debt repayment agreement with SpotCo vendor 11April 2013 –2012 Preliminary Results – Company returns to profit 23 January 2014 – Granted 17% shareholding in Stage 17, a digital theatre and arts platform 2014

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10 April 2014 – 2013 Preliminary Results – Further profit improvement 7 April 2014 – New RCF with Allied Irish Bank on significantly improved terms

Measured progress, reshaped business – Increased stability and financial robustness

26 Nov 2012 – Placing to the directors raising £75,000

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Delivering on strategic priorities

Period of extensive restructuring with all non-core assets disposed resulting in a streamlined, more focussed business Divisional management teams vastly experienced and highly respected within their markets Cost conscious culture now firmly ingrained throughout Group business Established businesses with market-leading positions and well respected management teams leaves r4e well positioned to exploit growth potential in the short-term Focus now turns to harnessing strengths of core theatre marketing businesses and delivering sustainable profitability Maintain cost conscious culture, reduce central costs and net debt Integrating strength of divisional management expertise and market knowledge to exploit growth

  • pportunities as they arise

Actively seek new routes for business expansion, strategic partnerships and revenue growth Digital platform delivering arts related entertainment content (Stage 17) launched

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Demonstrable financial progress over medium-term

71403 78198 69326 75749 41500 10000 20000 30000 40000 50000 60000 70000 80000 90000 2010 2011 2012 2013 H1 2014

Group Revenue

950

  • 331

1306 1907 1405

  • 500

500 1000 1500 2000 2500 2010 2011 2012 2013 H1 2014

Group Adjusted EBITDA1

  • 2104
  • 2952

162 308 709

  • 4000
  • 3000
  • 2000
  • 1000

1000 2010 2011 2012 2013 H1 2014

Group Profit / (Loss) before tax

£‘000 £‘000 £‘000

  • Profit metrics highlight clear benefit of restructuring action

that has taken place in the recent past

  • While Group revenue has remained broadly steady,

adjusted EBITDA and Group profit both on pleasing upward trend

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¹ Adjusted EBITDA is earnings before interest, tax, depreciation, amortisation and exceptional costs

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Interim results for the six months ended 30 June 2014

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  • Encouraging performance, in line with market expectations
  • Marked improvement in all profitability metrics
  • Very strong performance from New York operations supplemented by solid

performance from London operations

  • Core divisions continue to develop their offerings in order to exploit growth
  • pportunities in existing and new, associated market sectors
  • Granted 17 per cent shareholding in Stage17, a digital platform that delivers

a range of Broadway and arts related content, in January 2014

  • Successful refinancing of £14.8 million revolving credit facility with AIB in April

2014 on significantly improved terms

Overview

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Financial Highlights

Interim results for the six months ended 30 June 2014

  • Continuing improvement in trading performance:
  • Revenue increased 18 per cent to £41.5 million (2013: £35 million)
  • Adjusted EBITDA increased 11 per cent to £1.4 million (2013: £0.7 million)
  • Profit before tax improved by £0.8 million to £0.7 million (2013: loss of £0.1

million)

  • Earnings per share of 0.42p (2013: 0.03p)
  • Very strong performance from New York operations, with SpotCo increasing

revenue by 47 per cent to £24.8 million (2013: £16.9 million) and adjusted EBITDA1 by 183 per cent to £1.2 million (2013: £0.4 million)

  • Solid performance from Dewynters with revenue of £14.8 million (2013: £16.2

million) and adjusted EBITDA1 of £0.5 million (2013: £0.6 million)

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£’000 Six months ended 30 June 2014 Six months ended 30 June 2013 Revenue 41,500 35,024 Cost of sales (31,637) (25,855) Gross Profit 9,863 9,169 Administrative expenses (8,733) (8,739) Operating profit 1,130 430 Net finance costs (421) (507) Profit before tax 709 (77) Taxation (395) 100 Profit for the period 314 23

Financial Summary Interim results for the six months ended 30 June 2014

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  • Tax charge of £0.4 million largely attributable to SpotCo’s strong performance; having used its brought forward tax losses,

SpotCo’s profits are now fully chargeable for tax

  • In addition, a £0.1 million tax asset recognised at 31 December 2013 on brought forward losses in SpotCo has now been

charged to the income statement

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Consolidated Statement of Financial Position

£’000 Six months ended 30 June 2014 Six months ended 30 June 2013 Non-Current Assets 19,341 20,438 Current Assets 12,821 9,413 Total Assets 32,162 29,851 Current Liabilities (14,068) (11,927) Non-Current Liabilities (17,903) (17,866) Total Liabilities (31,971) (29,793) Net Assets 191 58

  • New six-year agreement established with Allied Irish Bank on 7 April for £14.8 million RCF; improved interest rate of 3 per

cent over LIBOR (interest rate on previous facility was scheduled to rise to 5 per cent over LIBOR from 26 April 2014); expect interest saving of approximately £220,000 in current financial year

  • Debt repayment agreement entered into on 14 November 2012 with the vendor of SpotCo, restructuring the
  • utstanding debt of $4.2 million relating to the Company's acquisition of SpotCo in 2008; $1.95 million paid to date

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Segmental Financial Information

£’000 Six months ended 30 June 2014 Six months ended 30 June 2013 Revenue Adjusted EBITDA1 Revenue Adjusted EBITDA1 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

  • Very strong performance from SpotCo
  • Solid performance from London operations, Dewynters and Newmans
  • Operations of DAI outsourced in 2012
  • Further cost reduction at head office

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Dewynters – Historical financial performance

Dewynters, founded in 1876, provides specialist full- service theatre marketing and branding. Services include: marketing, design, advertising, promotions, digital media and merchandise.

£‘000 £‘000

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  • Solid performance from Dewynters in the period; revenue

decrease result of unanticipated cancellation of a number of shows

  • Business is market-leading and benefitting from continued

success with a number of long running West End shows

  • Division continues to grow non West End related work,

including Touring division being established two years ago

26180 28703 29014 32299 14803 5000 10000 15000 20000 25000 30000 35000 2010 2011 2012 2013 H1 2014

Dewynters Revenue

490 754 787 469 100 200 300 400 500 600 700 800 900 2010 2011 2012 2013 H1 2014

Dewynters Adjusted EBITDA

(82)

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Newman Displays – Historical financial performance

Founded in 1988, Newman Displays is the UK's leading large scale outdoor signage, display and installation company. Its clients include major West End theatre productions, leading film companies, cinemas and major global events.

£‘000 £‘000

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  • Robust performance from Newmans, albeit impacted by

the decision by a major central London cinema to digitise its external advertising hoardings

  • Division typically H2 weighted, expect similar pattern this

year

352 398 611 466 162 100 200 300 400 500 600 700 800 2010 2011 2012 2013 H1 2014

Newman Displays Adjusted EBITDA

3882 4042 4205 3704 1714 500 1000 1500 2000 2500 3000 3500 4000 4500 2010 2011 2012 2013 H1 2014

Newman Displays Revenue

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37182 43071 34011 39380 24843 5000 10000 15000 20000 25000 30000 35000 40000 45000 50000 2010 2011 2012 2013 H1 2014

SpotCo Revenue

SpotCo – Historical financial performance

Established in 1996, SpotCo is a world-leading theatrical marketing agency that also services clients across opera, dance, music, galleries, museums and live events. £‘000

15

£‘000

758 752 481 1123 1219 200 400 600 800 1000 1200 1400 2010 2011 2012 2013 H1 2014

SpotCo Adjusted EBITDA

  • Very strong performance by SpotCo, with the division

maximising opportunities presented by buoyant conditions in the Broadway market

  • Growth achieved through ongoing success with long-

term clients and new client wins, supplemented by a number of one-off projects

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  • Encouraging recent performance and progress for the Group
  • r4e now trading profitably on a sustainable basis
  • Performance historically second half weighted; expect a more even balance to trading in

this financial year

  • Recent refinancing places Group on stable financial footing, with material financial

savings due to improved terms

  • Continue to seek innovative, long-term growth opportunities, as demonstrated by the

investment granted in Stage17

  • Confident of meeting market expectations for the full year and making further progress
  • ver the medium-term

Summary – Outlook and Prospects

With restructuring activity completed and each of our operating divisions holding market leading positions, r4e is well placed to embark on a period of sustained growth

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reach4entertainment enterprises plc Tel: +44 20 7968 1655 David Stoller, Executive Chairman – dstoller@r4e.com Sarah Hall, Chief Operating Officer – s.hall@r4e.com Cantor Fitzgerald Europe, Joint Broker and Nominated Advisor Tel: +44 20 7894 7000 Mark Percy – mpercy@cantor.co.uk Allenby Capital, Joint Broker Tel: +44 20 3328 5656 Katrina Perez – k.perez@allenbycapital.com Kelly Gardiner – k.gardiner@allenbycapital.com Blytheweigh, Public Relations Tel: +44 20 7138 3204 Paul Weigh – paul.weigh@blytheweigh.com Eleanor Parry – eleanor.parry@blytheweigh.com

Contacts

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