Reach4entertainment warns FY earnings will miss market expectations

AIM-listed Reach4entertainment warned on Thursday that earnings before interest, tax, depreciation and amortisation for the year to 31 December will be below market expectations, partly due to some live events being cancelled because of terrorist incidents in London and Manchester.

The company said trading activity in the year to date has not been as active as 2016, in part due to terrorist attacks leading to cancelled events and as the group has been involved in fewer new theatre productions, which are a key driver of profitability.

Reach4entertainment said the weaker performance and the shift in revenues towards the end of the year and next year may lead to a breach of the monitoring covenants in the third quarter. However, the company expects to be comfortably within the banking covenants for the full year. The group said it and its creditor, PNC Business Credit, are monitoring the position carefully and remain in the close correspondence.

On a brighter note, Reach4 said there is "a good pipeline" of new shows scheduled to be launched next year, some of which were postponed from this year, which it has won the mandates to represent. It also said it has been progressing the appointment of a new CEO who will be taking over the leadership of the business from David Stoller, who as previously stated will be stepping down from the board at the end of September.

"While activity in 2017 has been subdued especially for SpotCo, the US division, the newest division, Dewynters Germany, has had a good first 12 months and Dewynters in London has performed satisfactorily.

"Importantly, the fundamentals of the group remain sound. The company is an established leader within the industry and has in the last two years been through a successful restructuring that has created an improved financial base which has enabled the business to invest in its longer term future."

At 1530 BST, the shares were down 15% to 1.18p.