R4E.L Regulatory News (R4E)

12.09.12

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

Unaudited interim results for the six months ended 30 June 2012

r4e, the transatlantic media and entertainment company, today announces its unaudited interim results for the six months ended 30 June 2012.

Financial Highlights

·; Adjusted EBITDA (before exceptional administrative expenses) increasing (83%) to £531k (2011: £290k)

·; Reduced loss before tax of £419k, an improvement of £575k against losses of £994k in the corresponding¹ period last year

·; Reduced loss per share of 0.47p, an improvement of 1.32p against loss per share of 1.79p in the corresponding¹ period last year

¹ Corresponding period last year is for the six months to 31 May 2011

David Stoller, Executive Chairman, commented:

"We are very pleased to report results that underscore the substantial progress that the Company has made this year. We undertook extensive restructuring last year, and we expect that those changes, the impact of which is now being felt, will return us to full profitability by year end.

The result of our restructuring efforts is a streamlined core business around our two market-leading companies, Dewynters and Spotco, in London and New York City respectively, providing a rich platform for further growth; an increasingly integrated approach to marketing our services to clients on both sides of the Atlantic; a shared commitment to overhead reduction and more efficient utilisation of resources; and a commitment to leveraging our core skills and key relationships Group-wide to exploit emerging opportunities in associated market sectors."

Enquiries:

r4e

David Stoller, Executive Chairman +44 20 7993 0000

Shirley Stapleton, Finance Director

Blythe Weigh Communications

Paul Weigh / Samantha Ryan +44 20 7138 3204

Seymour Pierce Limited

Stewart Dickson/Tom Sheldon (Corporate Finance) +44 20 7107 8000

Katie Ratner/Jacqui Briscoe (Corporate Broking)

Chairman's Statement

We are very pleased to report results that underscore the substantial progress that the Company has made this year. We undertook extensive restructuring last year, and we expect that those changes, the impact of which is now being felt, will return us to full profitability by year end.

The result of our restructuring efforts is a streamlined core business around our two market-leading companies, Dewynters and Spotco, in London and New York City respectively, providing a rich platform for further growth; an increasingly integrated approach to marketing our services to clients on both sides of the Atlantic; a shared commitment to overhead reduction and more efficient utilisation of resources; and a commitment to leveraging our core skills and key relationships Group-wide to exploit emerging opportunities in associated market sectors.

The results for the 6 months ended 30 June 2012 show the following:

*Adjusted EBITDA is stated before exceptional items.

Revenue declined by 13 per cent to £34.3m (2011: £39.4m), a trend that we are seeking to reverse in the second half of the year. The decline was largely due to a weaker performance from our New York operations, which was exacerbated due to a very strong performance in the corresponding period of the previous year. We expect the performance of our New York operations to substantially improve in the second half, with the performance supported by significant overhead reductions that have been implemented.

Notwithstanding the decline in revenue, we are pleased that the Company's underlying profitability has improved by 83 per cent (adjusted EBITDA) to £531,000 (2011: £290,000), reflecting the impact of the cost conscious culture that has been embedded across our operating businesses.

The reduction in exceptional costs, reflecting significantly lower restructuring action, has helped to ensure that we are able to report a positive Group EBITDA figure of £403,000 (2011: loss of £128,000). We are confident that we can drive further cost from our business, particularly from our central costs, and the combination of this and reversing the revenue decline from our New York operations experienced during the period should lead to a return to profitability for the Group in the short-term.

Continuing Operations

*Adjusted EBITDA before exceptional administrative expenses

Following the extensive restructuring that took place throughout 2011, our operations now comprise the London and New York based theatre marketing businesses of Dewynters Ltd ("Dewynters") and Spot & Company of Manhattan ("SpotCo"), together with London based signage and fascia business, Newman Displays Ltd ("Newmans") and the New York based merchandising operations of Dewynters Advertising Inc.

There was a reduction in revenue from the Group's New York operations, which is partly due to an exceptionally strong performance during the six months to 31 May 2011, when SpotCo handled the marketing and promotion of 16 musicals, compared to 12 in this period. Looking forward, SpotCo was successful in securing mandates for five new Broadway shows during the period - Lucky Guy, Cinderella, Kinky Boots, Grace and Motown - all of which are set to open in 2013.

Away from theatre, SpotCo additionally secured new consulting projects for the not-for-profit community and culture organisation, 92nd Street Y, and the second season of NBC's musical drama series Smash.

The Group's London operations produced a strong performance, with revenue and adjusted EBITDA improving 7 per cent and 158 per cent respectively. The performance from Dewynters was driven by a combination of continued success with long-term, established shows such as Phantom of the Opera, Les Miserables, The Lion King, Mamma Mia!, Wicked and We Will Rock You and new projects including Singin' in the Rain, Top Hat, Chariots of Fire, The Browning Version, What the Butler Saw and Written on the Heart. Dewynters' new business pipeline is healthy and includes West End shows The Bodyguard, Viva Forever and Loserville, all of which are set to open this year, in addition to the new St James's Theatre season of plays. Looking further ahead, opportunities include Finding Neverland, which opens in Leicester in the autumn ahead of a scheduled West End transfer, while 2013 will see the opening of Book of Mormon and Charlie and the Chocolate Factory.

Newmans produced a solid performance during the period, with revenue and profit improved on the corresponding period last year and this despite the disruption caused by the refurbishment of Leicester Square, the completion of which is already having a positive impact on the business. Flagship projects completed during the period included the creation and erection of signage to support the movie premieres of Dark Shadows, Snow White and the Huntsman, The Amazing Spiderman and The Dark Knight Rises. Newmans again completed a successful installation at the Cannes Film Festival, for The Dictator, and at the Royal Albert Hall for the launch of Titanic in 3D.

In addition to our established, market-leading theatre marketing businesses, we are seeking new routes to expand our business and grow revenues. Examples include our interactive division, where we have partnered with a technology-driven social media company and a leading theatre development company to create a platform for developing new artists; our newly formed licensing division, Everyone Loves Broadway, which is currently exploring opportunities to license theatre-related merchandise through various channels including film, apparel, toys and cards; and our new start-up New York based Events and Sponsorship division, "reach4events", which will focus on producing and designing parties and events on behalf of theatrical clients.

Post Period Events

Earn Out updateOn 29 June, the Company announced that it was in constructive discussions with vendor of Spot and Company of Manhattan Inc "SpotCo" to renegotiate the settlement of the final earn out payment due from the Company's acquisition of SpotCo, as detailed in the terms of the acquisition agreement dated 8 August 2008.

Discussions have continued to progress towards a conclusion that is mutually satisfactory. The Directors continue to believe that a favourable outcome will occur. The Company will make further announcements as appropriate. On 23 May 2012, the Company announced that the estimated liability in respect of the total remaining deferred consideration payable had been reduced by $1.927m to $4.112m.

Banking updateThe Company maintains a strong banking relationship with its lenders, Allied Irish Bank and has agreed in principle with AIB (although subject to contract) a set of ratios associated with the financial covenants of the £14.8m revolving credit facility. The Directors are pleased with this outcome and are satisfied that these ratios are consistent with the Company's future anticipated financial performance.Summary and Outlook

The Board believes that the restructuring action that has now been completed, combined with a renewed vigour and focus that has been established throughout our operations will lead to a return to profitability for our Group in the short-term.

Strategically we are focussing on three distinct areas: (1) harnessing the strengths of our core theatre marketing businesses in order to further develop our market-leading positions by driving integration across our transatlantic operations; (2) maintaining the cost-conscious culture that is now firmly embedded within all operations and eliminating further cost, particularly central costs; (3) leveraging our core skill-set to exploit opportunities in associated market sectors.

Much has been achieved at our Company in what have been turbulent recent times. We are on the right path and believe our current strategic course is the correct one to deliver value for our supportive shareholder base in the long-term.

David Stoller, Executive Chairman

reach4entertainment enterprises plc

Unaudited Condensed Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2012

Unaudited Condensed Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2012

Unaudited Condensed Consolidated Balance Sheet

As at 30 June 2012

Unaudited Condensed Consolidated Statement of Changes in Equity

For the six months ended 30 June 2012

Unaudited Condensed Consolidated Statement of Changes in Equity (continued)

For the six months ended 30 June 2012

Unaudited Condensed Consolidated Statement of Cash Flows

For the six months ended 30 June 2012

Unaudited notes to the Condensed Consolidated Interim Financial Statements

For the six months ended 30 June 2012

1 Basis of Presentation

These unaudited condensed consolidated interim financial statements are for the six months ended 30 June 2012. They have been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS) as adopted by the European Union. This report should be read in conjunction with the annual financial statements for the 13 months ended 31 December 2011, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and International Financial Reporting Interpretations Committee ('IFRIC') Interpretations and the Companies Act 2006, as applicable to companies reporting under IFRS.

The financial information in this interim announcement does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The unaudited interim financial statements were approved by the Board on 11 September 2012.

The comparative financial information for the 13 months ended 31 December 2011 does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The statutory accounts of reach4entertainment enterprises plc for the 13 months ended 31 December 2011 have been reported on by the Company's auditor, Baker Tilly UK Audit LLP, and have been delivered to the Registrar of Companies. The report of the auditor was unqualified but contained an emphasis of matter statement with regard to going concern. The auditor's report did not contain statements under Section 498(2) or 498(3) of the Companies Act 2006.

The financial information for the six months ended 30 June 2012 is unaudited.

Comparative Information

The Group comparatives have been drawn up for the 6 months ended 31 May 2011 and are unaudited.

This is due to the change of accounting reference date last year from 30 November to 31 December.

Accounting Policies

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the 13 months ended 31 December 2011, with exception of standards, amendments and interpretations effective in 2012.

Standards, amendments and interpretations effective in 2012

The following new standards, amendments to standards and interpretations are mandatory for the firsttime for the financial year beginning 1 January 2012, but had no significant impact on the Group:

·; IAS 12 - Income taxes - Limited scope amendment (recovery of underlying assets)

1 Basis of Presentation (continued)

Standards, amendments and interpretations effective in 2012 (continued)

The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning 1 January 2012 and have not been early adopted:

·; IFRS 7 - Financial Instruments: Disclosures - Amendments related to the offsetting of assets and liabilities

·; IFRS 9 - Financial Instruments- Classification and Measurement

·; IFRS 10 - Consolidated Financial statements

·; IFRS 11 - Joint Arrangements

·; IFRS 12 - Disclosure of Interest in Other Entities

·; IFRS 13 - Fair Value Measurement

·; IAS 1 - Presentation of Financial Statements - Amendments to revise the way other comprehensive income is presented

·; IAS 19 - Employee Benefits - Amended Standard resulting from the Post-Employment Benefits and Termination Benefits projects

·; IAS 27 - Consolidated and Separate Financial Statements - Reissued as IAS 27 Separate Financial Statements (as amended in 2011)

·; IAS 28 - Investments in Associates - Reissued as IAS 28 Investments in Associates and Joint Ventures (as amended in 2011)

·; IAS 32 - Financial Instruments - Presentation - Amendment Offsetting Financial Assets and Financial Liabilities

Going Concern

These interim condensed consolidated financial statements have been prepared on a going concern basis.

During the prior reporting period, the Group concluded significant restructuring, including renegotiation of its borrowing facilities, fund raising and the disposal of loss making subsidiaries. In addition, the Directors have prepared and reviewed detailed forecasts which indicate that the Group will have sufficient cash flow to meet its financial obligations as they fall due. The exception to this is the remaining obligations under deferred consideration liabilities. The final amount due of $4.1 million became payable in June 2012 and the Board is currently in discussions with the vendor regarding the timing and nature of the settlement of this liability. The Board is confident that this matter will be concluded in a manner which enables the view of going concern to be applicable.

After making enquiries and considering the uncertainty noted above, the Directors have concluded that the Group has adequate resources to continue trading for the foreseeable future. For these reasons, they continue to adopt the going concern basis of accounting in preparing the Group interim financial statements.

2 Finance Income

The foreign exchange gain of £39k (31 May 2011: £383k, 31 December 2011: £144k) is unrealised and relates to the revaluation of borrowings and deferred consideration denominated in US$.

In the comparatives for the six months 31 May 2011 the foreign exchange gains on borrowings and deferred consideration have been reclassified in line with the classification adopted in the audited financial statements at 31 December 2011, resulting in their reclassification within finance income rather than finance costs.

3 Finance Costs

4 Loss per share

The calculations of loss per share are based on the following results and numbers of shares.

There were no share options in issue at 30 June 2012, 31 December 2011 or 31 May 2011.

5 Exceptional Costs

6 Goodwill

7 Provisions - Deferred Consideration

The provisions for liabilities relate to deferred contingent consideration on the acquisition of Spot and Company of Manhattan Inc. Deferred contingent consideration represents the estimated amounts payable. These amounts are payable in cash. 

Deferred consideration is payable as follows:

 8 Borrowings

The loan was entered into on 17 May 2011 and is a revolving credit facility with the lender AIB Group (UK) plc. Interest will be charged at LIBOR + 3.5% per annum in the first and second years, LIBOR + 4% for the third year and LIBOR + 5% for the final year. The facility matures in May 2015.

9 Cash used in operating activities

10 Interim Report

This document is available on the Group's website at www.r4e.com.