Revenue, profit take a dip at Reach4entertainment

Transatlantic media and entertainment company Reach4entertainment reported a 14.5% dip in revenue for its first half on Wednesday, with gross profit falling 8.7% to £10.5m.

The AIM-traded company’s adjusted EBITDA plummeted 73.3% year-on-year in the six months to 30 June, its unaudited interim results showed, while its operating loss was £0.1m, swinging from an operating profit of £1m for the same period last year.

It said borrowing from PNC was reduced by a further £1.564m since 30 June 2016, with the outstanding term debt balance of £0.55m repaid in July 2017.

The new start up agency, Dewynters Germany, was set up using proceeds from the fund raise in 2016, and was said to have had a “very strong start” with some positive contract wins resulting in a break-even performance in its first nine months.

Against the prior period, Dewynters produced a stronger adjusted EBITDA performance on a reduced turnover, the board reported.

Its SpotCo operation was affected by a reduction in activity across its client base, alongside increased competition, while it was involved in fewer new production launches.

Reach4entertainment said the second half of the current financial year was expected to be satisfactory, although 2018 forecasts were already looking like a return to form from the key companies with support from the new initiatives of Dewynters Germany and Jampot.

“The launch of new theatre productions is a key driver of profitability for the Group and historically has varied year to year,” said executive chairman David Stoller.

“Whilst we are seeing fewer such launches this year, which has impacted upon our trading performance, there is a good pipeline of new shows for 2018.”

Stoller said the company “significantly reduced” group borrowings, further enhancing its financial base, and saw its new venture Dewynters Germany complete a “better-than-expected” first year, aided by important new client wins.

“Our strategy remains focused on providing unmatched service to the world's leading entertainment companies from our operations in London, New York and Hamburg, the three largest live entertainment centres globally, and advancing our core strategies focussed on increasing digitalisation of our services, development of our data and analytics business, and expansion into new geographies and non-theatre live entertainment business.”