TIDMARE
RNS Number : 3757E
Arena Events Group PLC
07 July 2021
7 July 2021
Arena Events Group plc
("the Company" or "the Group")
Audited results for the year ended 31 March 2021
Arena Events Group plc (AIM: ARE) announces its audited results
for the year ended 31 March 2021 ("FY21"). In the prior financial
period, to better reflect the seasonality of the business, the
Group changed its year-end date with a transitional fifteen-month
period ended 31 March 2020 ("FY20") containing two seasonally quiet
calendar Q1 periods. Unaudited summary results for the
twelve-months to 31 March 2020 are also shown to assist
comparability.
Despite FY21 results in all markets being impacted by
prohibitions on mass gatherings due to the COVID-19 pandemic, the
Group re-focused on alternative revenue streams and took rapid
action to realign costs and optimize cash generation. As a result,
the Group was Adjusted EBITDA(1) positive, with an 8% Adjusted
EBITDA margin and strong cash flow generation.
FY21 financial highlights:
Year ended 31 March 2021 (audited, with comparison to audited
FY20 results)
-- Group revenue decreased by 61% to GBP71.6m (15m Mar 20: GBP183.2m)
-- Gross profit margin improved to 37.7% (15m Mar 20: 30.2%) due to shift in sales mix
-- Adjusted EBITDA(1) fell by 57% to GBP5.7m (15m Mar 20:
GBP13.2m), in line with previous guidance
-- Reduced operating loss of GBP9.8m (15m Mar 20: GBP19.6m loss)
-- Loss after taxation of GBP12.7m (15m Mar 20: GBP22.9m loss)
-- Adjusted EPS(2) loss of 4.1p (15m Mar 20: 3.0p loss)
-- Basic EPS loss of 5.2p (15m Mar 20: 15.0p loss)
-- Period-end cash GBP18.4m (Mar 20: GBP5.8m), net debt(3) GBP21.1m (Mar 20: GBP35.6m)
Compared to year ended 31 March 2020 (unaudited result)
-- Revenue decreased by 55% to GBP71.6m (12m Mar 20: GBP160.6m)
-- Adjusted EBITDA (1) decreased by 65% to GBP5.7m (12m Mar 20: GBP16.5m)
FY21 operational highlights:
-- In the UK & Europe - delivered numerous structures for
temporary COVID-19 medical facilities and testing centres;
completed installation of new seating at the north and south stands
at the London Stadium; built temporary cover for archaeological
works on HS2; extended rental for 26,000 seats at Tokyo 2020
Olympics under new contract
-- In the Middle East & Asia - built large medical facility
in UAE; completed major golf events in Dubai, Abu Dhabi and Saudi
Arabia (KSA); fully integrated previous acquisitions
-- In the US - built many structures in response to COVID-19
including one of the largest vaccination sites in North America
(United Center, Chicago); supported reactivation of NBA season in
Orlando; provided structures to a major industrial project in
Minnesota; delivered structures for the Super Bowl in Tampa,
attended by over 20,000 spectators as well as reduced scope
facilities for both the 2020 U.S. Open and PGA Championships
Post period highlights:
-- Completed subscription and placing of shares to fund Aztec
Shaffer acquisition in Texas and strengthen balance sheet. Net
debt(3) at the end of May 2021 was GBP17.6m
-- Recently won a number of multi-million pound seating and
structures contracts for sports, leisure and hospitality customers
in the KSA, reinvigorating the Middle East region pipeline
-- Provided a range of structures and seating to: The
Championships, Wimbledon 2021; the 121(st) U.S. Open at Torrey
Pines; and the 2021 PGA Championships at Kiawah Island
Greg Lawless, Chief Executive Officer, commented:
"In a year of complete devastation for the global events
industry, the Group demonstrated the real value of many years of
tenacity in building a diverse global business, with a broad range
of product offerings, delivering sufficient non-event revenues to
be able to report a positive full year Adjusted EBITDA(1)
performance. Given the challenges faced by the industry this was,
indeed, a very robust performance by the Group.
We are cautiously optimistic about the pace of recovery in the
live events industry, which has started later than we would have
liked as COVID-19 restrictions have returned in some countries and
remained in place in others longer than anticipated. Nevertheless,
vaccine rollout is going well in all our major markets and
therefore, we expect FY22 to be a transitional year for the
Group.
I would like to thank all my colleagues for their resilience,
flexibility and personal sacrifices in what has undoubtedly been
one of the most challenging years for the Group in its 260-year
history. Together they have helped position the business well to
recover as the live events market returns over the remainder of
2021."
This announcement contains inside information.
Notes:
(1) Adjusted EBITDA is defined as earnings before interest, tax,
depreciation, intangible amortisation, exceptional items share
option costs and acquisition costs. The calculation is shown in the
table in the Financial Review section.
(2) Adjusted basic Earnings Per Share (EPS) is calculated using
Adjusted Earnings divided by the average number of shares in issue
for the year. The reconciliation of Adjusted Earnings to statutory
net income is:
FY21 FY20
12m 15m
GBPm GBPm
Statutory Loss After Tax (12.7) (22.9)
------- -------
Exceptional costs 2.7 17.5
Acquisition costs 0.1 -
Exceptional finance costs 0.2 0.6
Share option (credit)/expense (0.4) 0.3
Adjusted Loss (10.1) (4.5)
------- -------
(3) Net debt is per Senior Facility covenant definition,
excluding IFRS 16, but including both finance leases calculated on
a pre-IFRS16 basis and deferred consideration. Balance at May 2021
also excludes GBP13.0m of net debt on the balance sheet of Arena
Aztec Shaffer LLC (AAS). Arena Events Group plc acquired 50% of AAS
in April 2021.
Enquiries:
Arena Events Group plc
Greg Lawless (CEO) / Steve Trowbridge Via Alma
(CFO) +44 (0) 207 397 8900
Cenkos Securities (Nomad and Broker)
Derrick Lee / Max Gould (Corporate
Finance)
Julian Morse (Sales)
Alma PR (Financial PR) +44 (0) 208 004 4217
Josh Royston / John Coles / Helena
Bogle
Notes to Editors:
Arena Events Group plc (www.arenagroup.com) is a provider of
temporary physical structures, seating, ice rinks, furniture and
interiors. The Group has operations across Europe, the US, the
Middle East and Asia, and current clients include: The
Championships, Wimbledon; The Open; The Jockey Club; the PGA
European Tour; and the Ryder Cup.
The Group services major sporting, outdoor and leisure events,
providing a managed solution from concept and design through to the
construction and integration of the final structure and interior.
Contracts range in size and complexity from a simple equipment
rental for a local outdoor event, to an integrated solution of
multiple structures and interiors for a major international
sporting event. The Group also has a growing presence in other
markets serving a range of retail, industrial, governmental and
construction customers.
Chairman's Statement
"A difficult year, but steps taken to strengthen the business
and trade confidently"
In my report last year, I indicated that we anticipated a
"challenging" outlook for the year-ended 31 March 2021. I doubt if
anyone could have foreseen quite how prolonged the impact of
COVID-19 has been and how it has continued to seriously affect our
business. Quite simply, the global event business throughout the
last year has virtually stopped and this has had a material impact
on our results. Revenue for the year was 55% below the prior twelve
months.
I am however very proud of the way the management team and our
employees have reacted to the devastating impact of the pandemic.
We have unfortunately had to make some employees redundant, and
this is always regrettable, though in the UK we received GBP3.4m
under the Government's Coronavirus Job Retention Scheme which
prevented significant redundancies in that market. We have
implemented significant cost reductions throughout the business,
conserved cash, strengthened our capital structure and "survived"
whilst many others in the sector have not.
As part of our drive for increased efficiency, we took the
opportunity to streamline our regional structure and we merged the
management of the UK and Europe business with that of the Middle
East & Asia creating the EMEA Region under combined leadership.
We also eliminated a layer of senior management in our Americas
business.
While cutting costs was the obvious answer to the loss of
revenue from our traditional event business, I was particularly
pleased with the way our management teams sought out new sources of
revenue away from events. In this regard, we were also able to help
in the fight against COVID-19 by constructing hospitals,
vaccination and testing centres and other medical facilities. It is
also hoped that some of this diversification will be permanent,
making the business more resilient for the future.
We completed a fundraising of GBP9.5m through a placing and
subscription in April 2020 giving us additional liquidity to trade
confidently throughout the pandemic.
In March 2021, we announced another fundraising of GBP11.0m,
also through a placing and subscription and this enabled us to both
strengthen our capital structure and opportunistically acquire a
50% stake in Aztec Shaffer, a US based competitor with a similar
profile of business to Arena. The Shaffer part of the business is a
major player in the US Golf market and we will look to capitalise
on our expertise in this area. The Aztec Events division gives the
Group a presence in the Houston party rental market, the fourth
largest, and a fast-growing, city in the US. Aztec Shaffer is the
largest acquisition made by the Group and it demonstrates the
opportunities for consolidation in a fragmented market.
Our largest shareholder, TasHeel, participated in the placing
and now holds 24% of the Group's issued share capital. We are also
grateful for the support of HSBC who initially extended additional
overdraft facilities to the Group at the start of the pandemic
before we replaced them with a GBP15.6m CLBILS facility in early
October 2020.
As I write this report, the vaccination "roll-out" in our major
markets is progressing well and there is an expectation and hope
that in the second half of 2021 we should see our traditional
events returning to normal with a full capacity of spectators.
However, the last year has taught us to remain cautious and we have
taken steps to ensure that both our capital and cost structure are
flexible and able to cope with disruption and uncertainty.
It has been a very difficult year for society and for our Arena
employees. I sincerely hope that the second half of FY22 will see
life beginning to return to normal.
Ken Hanna
Chairman
CEO Report
Introduction:
The full year results reflect the catastrophic impact of
COVID-19 on the world's global event rental industry. From just
before the start of this financial year, the industry was faced
with the prospect of no event rental revenues as event after event
was either cancelled or postponed. Whilst some relief looked likely
late last summer as restrictions were partially lifted across the
world in August and September, these hopes were short-lived as
second waves of the pandemic spread across the world. This led to a
second global lock down that is only now, gradually, being eased as
I write this report, almost seventeen months after we experienced
our first revenue hit from COVID-19 in February 2020.
However, as previously reported, we took early and decisive
action to minimise the impact on our business, by securing
non-event revenues, reducing our cost base, and raising funds from
both our bank, HSBC, and shareholders via a GBP9.5 million placing
in April 2020 - all of which put the Group in a solid financial
position to enable us to trade through those very difficult
times.
Full year revenues of GBP71.6m (FY20 GBP183.2m) were down 61% on
the prior fifteen-month period (55% on a comparable twelve-month
basis), but despite this the Group posted Adjusted EBITDA of
GBP5.7m (FY20 GBP13.2m). The Group reported an operating loss of
GBP9.8m compared to a loss of GBP19.6m in FY20.
Operational highlights:
Americas region:
The US business performed exceptionally well, in the
circumstances, over the last twelve months and delivered a record
Adjusted EBITDA result, despite the significant reduction in
traditional event and furniture rental revenues. The Region
reported revenues of GBP34.2m (FY20 GBP64.9m) and Adjusted EBITDA
of GBP10.2m (FY20 GBP5.4m) which, was an incredibly strong
performance. The Region's revenues were delivered from, amongst
others, the following non-sporting events and reduced capacity
sporting events including:
-- A 1,038-bed temporary hospital in New York
-- Temporary extension facilities at schools and hospitals around the US
-- Numerous temporary test centres across the US
-- Temporary mass vaccination centre at United Centre in Chicago
-- Temporary facilities for the US military
-- Temporary hospitality structures for ski resorts in Colorado
-- The PGA Championships at Harding Park, California
-- The US Open at Winged Foot, New York
-- The NBA at the Walt Disney World Resort in Orlando, Florida
Both the national tenting division, Arena Event Services (AES),
and our West Coast business, Arena Stuart Rentals (ASR), delivered
positive Adjusted EBITDA results. Both benefitted from a number of
long-term COVID-19 related rentals, coupled with strong cost
control measures that enabled the Region to produce these record
results. Cashflow was tightly controlled and helped enable the
Group to deliver a strong end-of-year cash number.
EMEA region:
The Middle East & Asia (MEA) and UK & Europe (UKE)
Regions were merged to form the EMEA Region in June of last year in
order to provide a more robust platform against a very challenging
market backdrop, as well as streamlining customer relationships
across a, largely, common customer base between the two
regions.
Despite this initiative, the EMEA Region had a torrid year with
an Adjusted EBITDA loss of GBP3.3m (FY20 GBP9.2m profit), the vast
bulk of which was in the MEA. Full year revenues of GBP37.4m (FY20
GBP118.3m) were 68% lower than last year, and whilst the Region did
manage to secure some non-event revenue in the first half of the
year, these all but disappeared in the second half. These regions
were also more severely impacted by the second lockdowns in
December, which resulted in the reduction and subsequent
cancellation of the UK's ice season, alongside early calendar year
horse racing events being held behind closed doors.
The UKE business units, with GBP3.4m of support from the UK
Government's Coronavirus Job Retention Scheme, delivered Adjusted
EBITDA of GBP1.2m (FY20 GBP3.3m) on revenues of GBP19.6m (FY20
GBP60.1m) which included the following non-event revenues:
-- Delivery of a new seating layout for London Stadium, the home of West Ham Football Club
-- A new semi-permanent seating stadium for Edinburgh Rugby Club
-- Numerous temporary test centres across the UK
-- A number of temporary mortuaries
-- Temporary structures for military personnel
-- Temporary archaeological support services for the HS2 rail development
The MEA business units had an even tougher time of it and,
notwithstanding the securing of a number of significant non-event
revenue opportunities in the first half of the year, posted an
Adjusted EBITDA loss of GBP4.5m (FY20 GBP5.9m profit) on revenues
of GBP17.8m (FY20 GBP58.2m), with GBP12.9m of the revenue in the
first six months of the year.
These business units lost the vast bulk of their traditionally
busy season revenues (October through to February) as well as the
loss of its entire exhibition event revenues this year.
As the results demonstrate, this year has certainly taken its
toll on the team in the MEA and with another few quiet months post
year-end, we are not expecting an improvement in trading in this
region until later in 2021. However, I know there is a strong sense
of pride of performance in the team and their focus over the last
few months has been on securing as many of the pipeline
opportunities that lie in front of them. Indeed, that process has
already started, with a big recent job win for 21,000 seats for the
inaugural F1 street race in Jeddah in December 2021.
Equity fundraisings and additional lending facilities:
In April 2020 we completed a GBP9.5m fundraising (pre-expenses)
through the placing and subscription of shares at an issue price of
ten pence per ordinary share. This fundraising was carried out to
strengthen the Group's balance sheet and to give the business a
longer runway to withstand the commercial and financial impacts of
the COVID-19 virus. At the same time, our lender, HSBC, extended an
additional GBP4.75m overdraft facility. This overdraft facility was
subsequently replaced by a larger GBP15.6m lending facility under
the UK Government backed Coronavirus Large Business Interruption
Loan Scheme (CLBILS) in October 2020. GBP4.0m of this loan was
drawn down just after year-end as part of the requirement to
utilise the facility within six months to retain continued access
to the full level of lending.
In March 2021, we announced another fundraising of GBP11.0m
(pre-expenses), through a placing and subscription at an issue
price of fourteen pence per ordinary share. This fundraising was
completed shortly after the year end and part of these funds,
GBP2.4m plus fees, have subsequently been used to acquire a 50%
stake in Aztec Shaffer, as described further below,
Acquisitions:
Williams Party Rentals
As reported in our Interim Results, in July 2020 we acquired the
assets of a small San Jose-based party rental business, Williams
Party Rentals, at a discount to net book value. Whilst this was a
very small value transaction, Williams had been a strategic target
for several years and provides our US West Coast based business,
Arena Stuart Rentals, with the opportunity to expand its presence
in San Jose, CA.
Aztec Shaffer (post year-end):
On the 26 April 2021, together with our co-bidders, Summit
Investment Partners and AIG, we completed the acquisition of Aztec
Shaffer, based in Houston, Texas. Arena holds an initial 50% equity
stake in Aztec Shaffer and has control of the business.
Aztec Shaffer comprises two businesses, Aztec Events & Tents
and Shaffer Sports & Events. Aztec is a very similar business
to Arena Stuart Rentals, the US operations of Arena Events Group
based in California. It has a diversified customer and event base
with its products including party/wedding tents as well as tables,
chairs, linens, tabletop items, dance floors and decorative items.
By contrast, the significant majority of Shaffer's historical
revenues has come from golf, supporting in excess of fifteen
tournaments a year including the Players Championship and the
Presidents Cup. Other sports served by Shaffer include motorsports
and horse racing. Shaffer's focus on sports is well aligned with
Arena Events Services, which has a broader customer mix and also
serves many events outside of the sporting world.
Aztec Shaffer suffered a significant reduction in revenues over
the last fifteen months, compounded further by its filing for
Chapter 11 relief in late 2020. As a result of this bankruptcy
filing, a multi-year long term contract held with the US Tour was
initially replaced by a short-term agreement up to the end of May
2021, which was subsequently extended to December 2021. All other
significant customer contracts have been retained and the company
is continuing discussions with the US Tour with a view to securing
a new multi-year contract over the coming months.
We are very pleased to have secured this significant and
strategically important asset as it gives the US Region a
full-service party rental business based in the fourth largest US
city as well as a valuable extension to its US national structures
footprint. The acquisition has traded well in the first two and a
half months as part of the Arena Group.
Conclusion:
The Arena Group can trace its origins back 260 years and there
is little doubt that this will have been amongst the toughest years
of trading ever witnessed by the Group. However, the events world
is gradually returning, and whilst we are still a few months away
from a return to full normality, we are cautiously optimistic about
the recovery of the business.
We therefore believe that FY22 will be a year of transition to
full normality as events begin to allow some level of spectators as
evidenced by a number of recent golf events in the US and in soccer
and rugby stadia in the UK.
With the support of our stakeholders, we have been fortunate to
have been able to successfully trade through the last twelve months
without a hit to the integrity and strength of our balance sheet.
Others have been less fortunate, and this has enabled us to
complete two acquisitions at prices well below historic levels.
All of this would not have been possible without the continued
support of our shareholders and our bank, HSBC. This year we
demonstrated the real value of being a public company, with the
ability to secure shareholder support through, not one but, two
placings. These placings have enabled us to strengthen our balance
sheet, complete two acquisitions and leave net debt (Senior
Facility covenant definition, excluding IFRS16, but including both
pre-IFRS16 finance leases and deferred consideration. Definition
also excludes debt on the balance sheet of Arena Aztec Shaffer LLC)
at the end of May at GBP17.6m, a full GBP18.0m below the figure at
the end of March 2020. We do, however, anticipate that net debt
will increase somewhat this year as we transition to a normal
trading pattern and unwind some of the positive working capital
benefits that helped us achieve such a strong liquidity position at
the end of this year.
It would be remiss of me not to mention the support and efforts
of our global management teams and all our employees. These last
twelve months have been very tough on the entire team with
significant personal sacrifices made by each and every one of our
staff, all of which has helped us trade through these very
difficult times. My sincere thanks to all of our team, including my
senior executive colleagues, our Board and Chairman for their
continued support and commitment during this last year and we look
forward to better days as live audience events make a welcome
return to the global calendar.
Greg Lawless
Group CEO
Financial Review
In the year ended 31 March 2021 the Group delivered Adjusted
EBITDA of GBP5.7m a reduction of 57% on the fifteen-month period
ended 31 March 2020 (GBP13.2m). Operating loss was GBP9.8m compared
to a prior period loss of GBP19.6m
Back in 2019 the decision was taken to change the Group's
accounting reference date from 31 December to 31 March to better
match the seasonality of the business. This resulted in a
transitional fifteen-month period ended 31 March 2020, with the
latest results being for the year ended 31 March 2021.
Our financial results are summarised below:
12 months 12 months 15 months
ended ended ended
31 Mar 2021 31 Mar 2020 31 Mar 2020
(audited) (unaudited) (audited)
GBPm GBPm GBPm
Revenue 71.6 160.6 183.2
Gross profit 27.0 50.4 55.4
Gross profit % 37.7% 31.4% 30.2%
Operating expenses (excluding
exceptional costs, depreciation,
amortisation and share option
charges) (21.3) (33.9) (42.2)
Adjusted EBITDA (1) 5.7 16.5 13.2
Depreciation and amortisation
(before impairment) (13.1) (12.1) (15.0)
Share option credit / (expense) 0.4 (0.3) (0.3)
Exceptional costs (including
goodwill impairment) (2.7) (17.2) (17.5)
Acquisition costs (0.1) - -
Operating loss (9.8) (13.1) (19.6)
Finance costs (3.0) (2.8) (3.4)
Tax credit 0.1 0.1 0.1
Loss after tax (12.7) (15.8) (22.9)
Notes:
(1) Adjusted EBITDA is defined as earnings before interest, tax,
depreciation, intangible amortisation, exceptional items share
option costs and acquisition costs.
The Group uses alternative performance measures such as Adjusted
EBITDA to allow the users of the financial statements to gain a
clearer understanding of the underlying performance of the business
without the impact of one off non-recurring costs of an exceptional
nature. Adjusted EBITDA (further excluding the impact of IFRS16) is
also part of the Group's covenant structure in its Senior Facility
Agreement. Non-recurring costs include redundancy costs resulting
from the reshaping of operations during the year, while the prior
period additionally included a significant goodwill impairment and
the one-off proceeds from a large insurance claim. Share option
costs (FY21 credit, prior period expense) have been separately
presented given their year-on-year volatility.
Revenue
Revenue for the year-ended 31 March 2021 was GBP71.6m compared
to GBP183.2m for the fifteen-month period to 31 March 2020. The
annualisation of acquisitions had no discernible impact in the
year. Instead, performance was dominated by the global response to
the COVID-19 pandemic. The business had seen the first signs of
disruption early in the first calendar quarter of 2020, with the
effects mainly concentrated in Asia, where a number of events were
deferred or cancelled. By contrast the year-ended 31 March 2021 was
characterised by national lockdowns, widespread event cancellations
and deferrals and a refocussing of the business on non-event
revenue streams, whilst also supporting customers who went ahead
with events behind closed doors.
All regions delivered temporary structures for COVID-19 medical
and testing facilities. Meanwhile the UK & Europe Region
supported the reactivation of the European Tour golf at numerous
venues, built facilities for the Nitto ATP Finals at the O2,
completed new seating systems at the London Stadium, built a new
stadium for Edinburgh Rugby Club at Murrayfield and supported two
construction companies protecting sites during archaeological and
other works. The Middle East & Asia undertook work for a large
international customer at the Expo 2020 Dubai, golf events in
Dubai, Abu Dhabi and Saudi Arabia, and continued to support the
Tokyo 2020 Olympics with seating. The Americas delivered a wide
range of COVID-19 related structures for governmental, industrial,
educational and hospitality customers, supported the reactivation
of the NBA season in Orlando, provided facilities for the US Open
golf and PGA Championships and built a large number of structures
for the Super Bowl LV in Tampa.
Gross margin and operating expenses
For the year ended 31 March 2021 the Group's gross margin
improved to 37.7% due in part to geographic mix, as the Americas
Region delivered a higher proportion of Group revenue, with a
transformed cost base following the Region's business
rationalisation programme in late 2019. The margins in all regions
also benefitted from a change in mix towards more longer-term
structure rentals. For the fifteen-month period ended 31 March 2020
Group gross margin was 30.2%, reflecting the inclusion of two
seasonally weaker January to March periods.
Operating expenses, excluding exceptional and acquisition costs,
depreciation, amortisation and share option charges, were GBP21.3m
for the year ended 31 March 2021. This compares to GBP42.2m in the
fifteen-month period to 31 March 2020. The reduction was in part
due to the differing length periods, with additional cost saving
actions taken in response to the COVID-19 pandemic. In the UK, the
Group received GBP3.4m under the Government's Coronavirus Job
Retention Scheme which prevented significant redundancies, although
unfortunately the Group was not eligible for any Business Rates
relief as event rental companies were excluded from the scheme. In
most other parts of the world the Group was unable to access any
salary-support schemes and had to match staffing levels and related
costs to the workload through salary reductions, unpaid leave and a
reduction in the number of roles. The Group also negotiated some
rent reductions and decreased its property footprint, particularly
in the EMEA Region.
Depreciation and amortisation
Depreciation and amortisation expenses of GBP13.1m for the year
ended 31 March 2021 compares to GBP15.0m for the fifteen-month
period ended 31 March 2020. Within this, depreciation of fixed
assets in the year ended 31 March 2021 of GBP7.8m (FY20 GBP9.5m)
was higher when adjusted for the differing time periods due to
additional equipment investment in 2019 and early 2020 in support
of the planned 2020 US golf calendar, alongside the impairment of
assets no longer expected to be usable after the pandemic. The
depreciation of right of use assets was GBP4.7m in the year ended
31 March 2021, compared to GBP4.7m in the fifteen-month period
ended 31 March 2020.
Share option expense
In the year ended 31 March 2021 there was a GBP0.4m credit,
compared to a GBP0.3m charge in the fifteen-month period ended 31
March 2020. This credit resulted from the surrender of options
under the Arena 2017 Share Option Plan by participants in the Arena
2020 Share Option Plan.
Exceptional and acquisition costs
Exceptional costs of GBP2.7m in the year ended 31 March 2021
mainly comprise the costs of restructuring activities to lower the
cost base in the face of COVID-19 pressures. In the fifteen-month
period ended 31 March 2020 these comprised the costs of
restructuring in: the US Arena operation; the UK Structures and
Well-Dressed Tables business units; the Arena Exhibitions &
Events Services division in Dubai; and, operations in a number of
Asian markets. In addition, the impact of COVID-19 at the end of
the fifteen-month period led to a detailed review of the carrying
value of certain fixed and current assets and their subsequent
impairment as their value in use is not expected to be fully
recovered. A GBP16.1m impairment was also taken against the
carrying value of goodwill on the UK business driven by a revised
trading outlook, in part due to COVID-19. These charges were
partially offset by an insurance recovery relating to the
settlement of the legacy DOJ case in the US. For the year ended 31
March 2021 there were GBP0.1m of acquisition costs, whereas there
were no acquisition costs in the previous fifteen-month period. In
FY20 a revised view of the level of deferred consideration payable
on 2018 acquisitions, in the light of the outlook driven by
COVID-19, gave rise to a credit from a reduction in provisions.
Finance expenses
Finance costs comprise cash interest incurred on bank
borrowings, accrued interest on shareholder loans, the amortisation
of debt arrangement fees paid in previous periods and finance
charges payable under lease liabilities. When the differing period
lengths are taken into consideration, the main driver of the
increase in cost is the annualisation of interest on the
shareholder loan taken out in late 2019.
Tax
T he tax credit of GBP0.1m (FY20 credit GBP0.1m) in the year
ended 31 March 2021 mainly relates to deferred tax movements in the
US offsetting a small underlying charge in Saudi Arabia, where
group relief was not available. In the previous fifteen months
ended 31 March 2020 tax payable was also a credit due to a deferred
tax movement.
Earnings per share and dividend
The actual earnings per share in the year ended 31 March 2020
was negative due to lower levels of activity driving an operating
loss. By contrast the result in the fifteen-month period to March
2020 was negative mainly due to the exceptional and acquisition
costs described above. In order to better understand the underlying
performance of the business, the table below sets out an adjusted
earnings figure and an adjusted basic earnings per share
figure.
Calculation of adjusted net income 12 months 12 months 15 months
ended ended ended
31 Mar 31 Mar 31 Mar
2020 2020 2020
(audited) (unaudited) (audited)
Loss after tax (GBPm) (12.7) (15.8) (22.9)
Addback:
Exceptional costs (GBPm) 2.7 17.2 17.5
Acquisition costs (GBPm) 0.1 - -
Exceptional finance costs (amortisation
of arrangement fees, loan note
interest) (GBPm) 0.2 0.3 0.6
Share option (credit)/charge /
(GBPm) (0.4) 0.3 0.3
Adjusted (loss)/earnings (GBPm) (10.1) 2.0 (4.5)
Average number of shares (m) 244.1 152.7 152.5
Adjusted basic (loss)/earnings
per share (pence) (4.1) 1.3 (3.0)
Basic loss per share (pence) (5.2) (10.3) (15.0)
An interim dividend was declared in September 2019, but in the
light of COVID-19 and the need to maximise balance sheet
flexibility no interim or final dividend have been declared or
recommended in the year ended 31 March 2021. This means the total
dividend is nil pence per share for the twelve-month period ended
31 March 2021, compared to 0.25 pence for the fifteen-months ended
31March 2020.
Acquisitions
There were no material acquisitions in the twelve-period ended
31 March 2021 with just the assets of William Party Rentals
acquired in July 2020. There were also no acquisitions in the
fifteen-month period ended 31 March 2020.
Debt and cash position
Cash at the end of March 2021 was GBP18.4m, giving a net debt
position of GBP21.1m (covenant definition, excluding IFRS 16, but
including GBP0.4m of finance leases and GBP0.1m of deferred
consideration). At the end of March 2021, the Group's drawn senior
debt facility was GBP34.5m, which is broadly in line with the March
2020 position, supplemented by overdraft and guarantee facilities
in the US and Middle East. As at the end of March 2021, a further
GBP2m was drawn under a short-term financing facility with Lombard
Odier Investment Management (LOIM). Excluding capitalised interest
the drawn principal amount was the same year on year.
On 29 March 2021 the Group announced the conditional raising of
GBP11.0m (before expenses) by way of a placing and subscription for
new ordinary shares at 14 pence per share. As well as strengthening
the Group's balance sheet, the net proceeds of the capital raise
will be used to take advantage of the opportunities presented by
the COVID-19 affected market to acquire attractive assets on
favourable terms, including the acquisition of the business and
assets of Aztec Shaffer (which completed in April 2021). The
capital raising was conducted in two separate tranches with GBP3.5m
received prior to the end of March 2021 and the balance in
mid-April 2021 once shareholder approval had been obtained.
In October 2020 the Group obtained GBP15.6m additional debt
facilities from its existing lender HSBC as part of the UK
Government's Coronavirus Large Business Interruption Lending Scheme
(CLBILS). This funding was incorporated into the Group's existing
facility agreement as a Term B loan alongside the existing GBP35.0m
Term A facilities. At the end of March, the CLBILS facility
remained undrawn, although as part of the terms of the agreement, a
drawing was required in early April 2021 to maintain access to the
facility. A second draw and final draw, if required, must be made
before the first anniversary of the facility in October 2021.
Working capital
The Group had net working capital at 31 March 2021 of
GBP(17.4)m, compared to GBP(8.0)m at the end of March 2020. This is
calculated as follows:
31 Mar 31 Mar
2021 2020
(audited) (audited)
GBPm GBPm
Inventories 2.3 7.8
Trade & other receivables 8.2 31.9
----------- -----------
Current assets (excluding cash) 10.5 39.7
Trade and other payables (16.0) (24.8)
Accruals (8.7) (13.9)
Deferred revenue (3.2) (9.0)
----------- -----------
Current liabilities (excluding borrowings, (47.7
overdraft, lease liabilities and deferred consideration) (27.9) )
Net working capital (17.4) (8.0)
The Group typically operates with a negative or close to nil
working capital position as a significant proportion of customer
receipts are invoiced and collected ahead of the event date,
although this can vary significantly during the year due to the
seasonality of the business. This position was exacerbated at 31
March 2021 due to the higher than normal level of customer deposits
received for postponed 2020 events that have been retained to be
applied to 2021 events. In addition, net working capital contained
GBP1.2m of VAT and PAYE rescheduled under the UK Government's
COVID-19 Deferral Schemes. Both these factors are expected to
largely unwind in the first half of the FY22 financial year,
returning the net working capital closer to the FY20 position.
Capital expenditure
Total net capital expenditure (additions less proceeds from
disposals) in the year ended 31 March 2021 was GBP3.8m. This much
reduced level of spend compared to GBP15.1m in the fifteen months
ended March 2020 and reflects only essential investment in
equipment during the year, as the lower number of events due to
COVID-19 reduced the need to expand the rental fleet. Expenditure
that did occur reflected commitments made prior to the COVID-19
pandemic, Health & Safety related expenditure, or the
replacement of equipment sold to medical authorities in the
Americas. Also included in the year ended 31 March 2021 is GBP0.2m
of expenditure related to the purchase of rental equipment and
other assets from Williams Party Rentals in San Jose, CA.
Key Performance Indicators ("KPIs"):
The Group monitors a number of key performance indicators
("KPIs") which are reviewed at divisional and Board level. As the
fifteen-month period ending 31 March 2020 contains two loss-making
January-March periods, it is not deemed a meaningful period over
which to assess these KPIs. We have therefore presented the data
for consistent twelve-month periods. During the year ended 31 March
2021, attention was shifted towards gross margin, cashflow and
liquidity measures to ensure the business was adapting to the
challenges presented by COVID-19. The table below therefore shows
the previously tracked measures, alongside the gross margin, cash
and liquidity measures that were used:
12 months ended 12 months ended
31 March 2021 31 March 2020
KPIs: (audited) (unaudited)
Adjusted EBITDA (pre-IFRS16)(1)
as a % of revenue 1.5% 7.7%
Adjusted (loss) / earnings per
share (pence) (4.1) 1.3
ROCE %(2) n/m 3.8%
Net debt to Adjusted EBITDA (pre-IFRS16)(1,3) >10.0x 2.9x
Additional KPIs measured in FY21:
Gross margin 37.7% 31.4%
Reported cash (GBPm)(4) 18.4 5.8
Available liquidity (GBPm)(5) 33.8 5.7
---------------------------------------------- --------------- ---------------
1. IFRS16 is excluded in all internally used measures of
Adjusted EBITDA, as it remains excluded from the definitions used
in the Group's Senior Facility Agreement with its Lenders
2. Return on Capital Employed ("ROCE") is calculated as the
ratio of adjusted operating profit (being Adjusted EBITDA less
depreciation and amortisation) divided by total average capital
employed for the year. Capital employed is defined as the net book
value of fixed assets, intangible assets, goodwill, plus working
capital. The calculation for the 12 months ended 31 March 2020 had
GBP4m of adjusted operating profit, divided by average capital
employed of GBP105.6m. Adjusted operating profit was negative for
the 12 months ended 31 March 2021, rendering the calculation 'not
meaningful'
3. Includes pre-IFRS16 finance leases and deferred consideration
which are included in the covenant definition of net debt
4. Defined as balance sheet cash reported at period end (statutory definition)
5. Defined as bank account cash plus undrawn senior debt /
CLBILS facilities, a measure reported weekly in the Group's 13
& 26 week cashflow forecasts - balance is calculated at nearest
Friday to period-end date
Going Concern and Viability Statements:
In considering going concern and the viability of the Group, the
Directors have reviewed the cash requirements of the Group
reflecting the impact of COVID-19 and the expectation that the
global events market will continue its recovery through 2021.
Through 2020 and early 2021, the Group has taken actions to
enhance liquidity including increasing available debt facilities
and reducing costs. The Board also notes the recent successful
equity raising and the significant cash balance now within the
Group.
In May 2021 the Group agreed the tests for covenants in June and
September 2021 and is forecast to meet those covenants. The
covenant tests for December 2021 and beyond have not currently been
set by the bank and so the Group is dependent on meeting those
covenants once set. However, dialogue with our bank is regular and
the Board is confident that the covenants will be set at a level
which the Group is likely to meet. The viability assessment also
assumes the refinancing of the Group's Term A Loan prior to its
expiry in October 2022 and any amounts outstanding on the Group's
Term B (CLBILS) Loan prior to its expiry in October 2023.
The Group has prepared three views of future performance - a
low; a mid; and an upside case. Each of these is built on bottom-up
forecasts for the FY22 period. In light of the COVID-19 pandemic
and the impact on the Group's visibility of trading in subsequent
years, the Directors have used high-level assumptions for these
periods based around the pace of recovery relative to 2019 levels
of activity adjusted for a differing list of major global
events.
The Group's mid-case scenario is modelled on the assumption that
the UK and US markets begin to return to normal from July 2021,
with the Middle East & Asia markets lagging by three months,
and that there are no further significant lockdowns. The mid-case
also forms the basis for all goodwill impairment reviews and work
to support the going concern review, with the low and upside cases
representing downside and high sensitivities respectively. Trading
for the Group in the first two months of FY22 has been ahead of the
mid-case scenario.
The Board has reviewed management's "low case" scenario and
which assumes further COVID-19 related disruption to events and a
40% reduction in EBITDA from the mid-case. Management has also run
further aggressive downside revenue sensitivities taking the
outturn for both revenue and profit significantly below that of
FY21. All of these scenarios show that the Group still has
sufficient liquidity for the reasonably foreseeable future, with
opportunities to reduce capex and operating costs helping preserve
cash balances.
As outlined above the Group has retained a positive dialogue
with its main lending bank throughout the pandemic and the
Directors have no reason to believe that continuing support and
appropriate future covenant tests under the various scenarios will
not be forthcoming.
Going Concern Statement
Based on the assessment outlined above which has been considered
and reviewed by the Board, the Board has a reasonable expectation
that the Group has access to sufficient liquidity for the
foreseeable future. While the Group is in a net current liabilities
position much of the current liability balance is deferred income
which will not require a cash repayment. Therefore, the Directors
have a reasonable expectation that the Group has adequate resources
to meet liabilities as they fall due and continue in operational
existence for the foreseeable future and therefore have determined
that the financial statements for the year ended 31 March 2021
should be prepared on a going concern basis.
Viability Statement
The Directors have assessed the viability of the Group over a
three-year period, taking account of the Group's current position
and prospects, its strategic plan and the principal risks and how
these are managed. Despite the current COVID-19 pandemic and the
pausing of many events around the world in 2020 and into 2021, the
Directors have assumed a gradual recovery in activity from
mid-2021, broadly returning to 2019 levels by 2024. The Directors
believe that three years is an appropriate period for this
assessment, reflecting the average length of the Group's contract
base; key markets; and the nature of its businesses and
products.
The Group is considered viable if there is available debt
headroom and cash to fund operations and the Group remains
compliant with any required financial covenants under the terms of
its external debt facilities.
Based on this assessment and other matters considered and
reviewed by the Board during the year, the Directors have a
reasonable expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over this
period.
Steve Trowbridge
Chief Financial Officer
Consolidated Income Statement
Note Year ended 31 March 2021 15 months to 31 March 2020
GBPm GBPm
Revenue 1 71.6 183.2
Cost of sales 2 (44.6) (127.8)
Gross profit 27.0 55.4
Administrative expenses 2 (36.8) (75.0)
Operating loss (9.8) (19.6)
Analysed as:
Adjusted EBITDA 5.7 13.2
Depreciation property, plant and
equipment 2 (7.8) (9.5)
Depreciation right of use assets 2 (4.7) (4.7)
Exceptional expenses 2 (2.7) (17.5)
Acquisition costs 2 (0.1) -
Share option costs 2 0.4 (0.3)
Intangible amortisation 2 (0.6) (0.8)
(9.8) (19.6)
----------------------------------- ------ -------------------------- ----- ---------------------------- ------
Finance costs 4 (3.0) (3.4)
Loss before taxation (12.8) (23.0)
Tax on loss on ordinary activities 0.1 0.1
Loss after taxation (12.7) (22.9)
Loss per share
Basic pence per share 3(5.2) (15.0)
----- ------
Diluted pence per share 3(5.2) (15.0)
----- ------
Consolidated Statement of Comprehensive Income
Year ended 15 months
31 March to 31 March
2021 2020
GBPm GBPm
Loss for the year/period (12.7) (22.9)
Items that may be reclassified subsequently
to profit or loss:
Exchange differences on translation of foreign
subsidiaries (1.5) (1.3)
Other comprehensive loss for the year/period (1.5) (1.3)
Total comprehensive loss for the financial
year/period (14.2) (24.2)
(14.2) (24.2)
Consolidated Balance Sheet
Group Group
Note 31 March 31 March
2021 2020
GBPm GBPm
Non-current assets
Goodwill and other intangibles 37.8 39.4
Property, plant and equipment 45.0 48.3
Right-of-use assets 18.5 23.6
Trade and other receivables due
after one year 0.7 0.9
102.0 112.2
Current assets
Inventories 2.3 7.8
Trade and other receivables 8.2 31.9
Cash and cash equivalents 18.4 5.8
28.9 45.5
Current liabilities
Trade and other payables (16.0) (24.8)
Bank overdraft (0.4) (0.3)
Borrowings 5 (4.5) (4.4)
Lease liabilities (3.3) (4.1)
Accruals (8.7) (13.9)
Deferred revenue (3.2) (9.0)
Deferred consideration (0.1) (0.9)
(36.2) (57.4)
Net current liabilities (7.3) (11.9)
Total assets less current liabilities 94.7 100.3
Non-current liabilities
Borrowings 5 (34.0) (34.4)
Lease liabilities (15.6) (16.7)
Other creditors - (1.4)
Deferred tax liabilities (0.8) (1.3)
(50.6) (53.8)
Net assets 44.3 46.5
Equity
Share capital 6 2.7 1.5
Share premium account 89.7 78.5
Merger reserve 10.9 10.9
Share option reserve 0.2 0.6
Retranslation reserve (3.8) (2.3)
Retained loss (55.4) (42.7)
Total equity 44.3 46.5
Consolidated Statement of Changes in Equity
Share capital Share premium Merger Share Retranslation Retained loss Total
reserve option reserve reserve equity
GBPm GBPm GBPm GBPm
GBPm GBPm GBPm
Balance at 31
December 2018 1.5 78.2 10.9 0.3 (1.0) (17.9) 72.0
----------------- ------------- ------------- -------- --------------- ------------- ------------- ----------
Loss for the
period - - - - - (22.9) (22.9)
Other
comprehensive
loss:
Translation of
foreign
Subsidiaries - - - - (1.3) - (1.3)
Total
comprehensive
loss
for the 15
months to 31
March 2020 - - - - (1.3) (22.9) (24.2)
----------------- ------------- ------------- -------- --------------- ------------- ------------- --------
Transactions
with owners:
Dividends paid - - - - - (1.9) (1.9)
Issue of share
capital - 0.3 - - - - 0.3
Share option
reserve - - - 0.3 - - 0.3
----------------- ------------- ------------- -------- --------------- ------------- ------------- --------
Total
transactions
with
Owners - 0.3 - 0.3 - (1.9) (1.3)
----------------- ------------- ------------- -------- --------------- ------------- ------------- --------
Balance at 31
March 2020 1.5 78.5 10.9 0.6 (2.3) (42.7) 46.5
----------------- ------------- ------------- -------- --------------- ------------- ------------- --------
Loss for the year - - - - - (12.7) (12.7)
Other
comprehensive
loss:
Translation of
foreign
Subsidiaries - - - - (1.5) - (1.5)
Total
comprehensive
loss
for the year
ended 31 March
2021 - - - - (1.5) (12.7) (14.2)
----------------- ------------- ------------- -------- --------------- ------------- ------------- --------
Transactions
with owners:
Issue of share
capital 1.2 11.2 - - - - 12.4
Share option
reserve - - - (0.4) - - (0.4)
----------------- ------------- ------------- -------- --------------- ------------- ------------- --------
Total
transactions
with
Owners 1.2 11.2 - (0.4) - - 12.0
----------------- ------------- ------------- -------- --------------- ------------- ------------- --------
Balance at 31
March 2021 2.7 89.7 10.9 0.2 (3.8) (55.4) 44.3
----------------- ------------- ------------- -------- --------------- ------------- ------------- --------
Consolidated Statement of Cash Flows
Year ended 15 months
31 March to 31 March
2021 2020
Note
GBPm GBPm
Net cash from operating activities 8 10.1 10.6
Cash flow from investing activities
Proceeds on disposal of property,
plant and equipment 1.4 0.4
Purchases of property, plant and
equipment (5.2) (15.5)
Net cash used in investing activities (3.8) (15.1)
Cash flow from financing activities
Increase in borrowings 0.5 10.8
Repayment of borrowings (0.2) (0.5)
Lease payments (5.4) (5.1)
Proceeds on issue of shares net
of costs 12.4 0.3
Proceeds on issue of shareholder
loan notes - 2.0
Deferred consideration paid (0.8) (2.7)
Dividend paid - (1.9)
Net cash generated from financing activities 6.6 2.9
Net increase/(decrease) in cash and
cash equivalents 12.9 (1.6)
Cash and cash equivalents at the beginning
of year 5.8 7.5
Effect of foreign exchange rate changes (0.3) (0.1)
Cash and cash equivalents at end
of year 18.4 5.8
Notes to the Consolidated Financial Statements
Basis of preparation
Arena Events Group Plc (the company) is a public company limited
by shares incorporated in the United Kingdom under the Companies
Act 2006 and is registered in England and Wales. The consolidated
financial statements for the year ended 31 March 2021 were approved
by the Directors on 6 July 2020.
The financial statements have been prepared in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006 and has been prepared on a
going concern basis.
The Group considers material one-off items to be exceptional in
nature. These are presented separately on the face of the income
statement and detailed in Note 2. Recognition of these costs as
being exceptional in nature is to provide an indication of the
Group's underlying business.
The preliminary consolidated financial information does not
constitute statutory consolidated financial statements for the year
ended 31 March 2021 as defined in section 434 of the Companies Act
2006. The statutory financial statements for the year ended 31
March 2021 will be filed with the Registrar of Companies following
the 2021 Annual General Meeting. The report of the auditor was
unqualified and did not contain a statement under s498(2) or (3) of
the Companies Act 2006.
The Annual Report and Group Financial Statements for the year
ended 31 March 2021 will be posted to all shareholders in early
August 2021, submitted for approval at the AGM on 10 September 2021
and filed with the Registrar in due course.
Going concern
In considering going concern and the viability of the Group, the
Directors have reviewed the cash requirements of the Group
reflecting the impact of COVID-19 and the expectation that the
global events market will continue its recovery through 2021.
Through 2020 and early 2021, the Group has taken actions in
order to enhance liquidity including increasing available debt
facilities and reducing costs. The Board also notes the recent
successful equity raising and the significant cash balance now
within the Group.
In May 2021 the Group agreed the tests for covenants in June and
September 2021 and is forecast to meet those covenants. The
covenant tests for December 2021 and beyond have not currently been
set by the bank and so the Group is dependent on meeting those
covenants once set. However, dialogue with our bank is regular and
the Board is confident that the covenants will be set at a level
which the Group is likely to meet. The viability assessment also
assumes the refinancing of the Group's Term A Loan prior to its
expiry in October 2022 and any amounts outstanding on the Group's
Term B (CLBILS) Loan prior to its expiry in October 2023.
The Group has prepared three views of future performance - a
low; a mid; and an upside case. Each of these is built on bottom-up
forecasts for the FY22 year. In light of the COVID-19 pandemic and
the impact on the Group's visibility of trading in subsequent
years, the Directors have used high-level assumptions for these
periods based around the pace of recovery relative to 2019 levels
of activity adjusted for a differing list of major global
events.
The Group's mid-case scenario is modelled on the assumption that
the UK and US markets begin to return to normal from July 2021,
with the Middle East & Asia markets lagging by three months,
and that there are no further significant lockdowns. The mid-case
also forms the basis for all goodwill impairment reviews and work
to support the going concern review, with the low and upside cases
representing downside and high sensitivities respectively. Trading
for the Group in the first two months of FY22 has been ahead of the
mid-case scenario.
The Board has reviewed management's "low case" scenario which
assumes further COVID-19 related disruption to events and a 40%
reduction in EBITDA from the mid-case. Management have also run
further aggressive downside revenue sensitivities taking the
outturn for both revenue and profit significantly below that of
FY21. All of these scenarios show that the Group still has
sufficient liquidity for the reasonably foreseeable future, with
opportunities to reduce capex and operating costs helping preserve
cash balances.
As outlined above the Group has retained a positive dialogue
with its main lending bank throughout the pandemic and the
Directors have no reason to believe that continuing support and
appropriate future covenant tests under the various scenarios will
not be forthcoming.
Based on the assessment outlined above which has been considered
and reviewed by the Board, the Board has a reasonable expectation
that the Group has access to sufficient liquidity for the
foreseeable future. While the Group is in a net current liabilities
position much of the current liability balance is deferred income,
which will not require a cash repayment. Therefore, the Directors
have a reasonable expectation that the Group has adequate resources
to meet liabilities as they fall due and continue in operational
existence for the foreseeable future and therefore have determined
that the financial statements for the year ended 31 March 2021
should be prepared on a going concern basis.
UK Government grants and support
During the year the UK Region of the Group complied with the
requirements and specified conditions of the Coronavirus Job
Retention Scheme (CJRS). The CJRS grant related to staff who had
been furloughed due to COVID-19. Initially the Chancellor of the
Exchequer announced that the scheme would run until October 2020
but this was subsequently extended to the end of September 2021.
From October 2020 to Jul 2021 employers are able to claim 80% of a
furloughed employee's wages/salaries up to a maximum of GBP2,500
plus associated employer's costs (e.g. employer's national
insurance contributions). This grant is paid to the employer by
HMRC and the total amount received by the Group in the year was
GBP3.4m. Amounts received have been offset against payroll related
expenses in the year.
The UK Division also agreed extended terms for repayment of VAT
and PAYE liabilities under HMRC's 'Time to Pay' scheme. At the year
end the liabilities outstanding were VAT GBP0.3m and PAYE GBP0.9m
and all repayments have been agreed to be made by October 2021.
The Group also accessed the UK Government-backed Coronavirus
Large Business Interruption Lending Scheme (CLBILS) via its lending
bank, HSBC, in October 2020 (see Note 10).
1. Segmental reporting
The Group has three reportable segments; UK & Europe (UKE),
Middle East & Asia (MEA) and Americas (US). For each of the
three segments, the Group's chief operating decision maker (the
"Board") reviews internal management reports on a monthly
basis.
Information regarding the results of each reportable segment is
included below. Any intercompany trading is recorded at arm's
length and is eliminated on consolidation. Segment results before
exceptional items are used to measure performance as management
believes that such information is the most relevant in evaluating
the performance of certain segments relative to other entities that
operate within these industries.
UKE MEA US Total
Year ended 31 March 2021
GBPm GBPm GBPm GBPm
Revenue
Hire 13.0 17.6 27.9 58.5
Sales 6.6 0.2 6.3 13.1
TOTAL REVENUE 19.6 17.8 34.2 71.6
Gross Profit
Hire 5.8 1.9 13.5 21.2
Sales 0.4 0.2 5.2 5.8
TOTAL GROSS PROFIT 6.2 2.1 18.7 27.0
Administration expenses (5.0) (6.6) (8.5) (20.1)
SEGMENT RESULT 1.2 (4.5) 10.2 6.9
RECONCILIATION OF SEGMENT RESULT TO LOSS BEFORE TAX
Central administrative expenses (1.2)
Adjusted EBITDA 5.7
Property, Plant & Equipment depreciation and amortisation (8.4)
Right-of -use assets depreciation (4.7)
Exceptional costs (2.7)
Share option credit 0.4
Acquisition costs (0.1)
Net finance expense (3.0)
LOSS BEFORE TAX (12.7)
15 months ended 31 March 2020 UKE MEA US Total
GBPm GBPm GBPm GBPm
Revenue
Hire 56.7 57.0 61.2 174.9
Sales 3.4 1.2 3.7 8.3
TOTAL REVENUE 60.1 58.2 64.9 183.2
Gross Profit
Hire 14.2 18.8 18.7 51.7
Sales 0.8 0.3 2.6 3.7
TOTAL GROSS PROFIT 15.0 19.1 21.3 55.4
Administration expenses (11.7) (13.2) (15.9) (40.8)
SEGMENT RESULT 3.3 5.9 5.4 14.6
RECONCILIATION OF SEGMENT RESULT TO LOSS BEFORE TAX
Central administrative expenses (1.4)
Adjusted EBITDA 13.2
Property, Plant & Equipment depreciation and amortisation (10.3)
Right-of-use assets depreciation (4.7)
Exceptional costs (17.5)
Share option costs (0.3)
Net finance expense (3.4)
LOSS BEFORE TAX (23.0)
2. Operating profit
Group operating profit is stated after charging/(crediting):
Year ended 15 months
31 March to 31 March
2021 2020
GBPm GBPm
Amortisation of intangible assets 0.6 0.8
Depreciation:
Property, plant and equipment 7.8 9.5
Right of use assets 4.7 4.7
Loss/(profit) on disposal of property,
plant and equipment 0.2 (0.3)
Coronavirus Job Retention Scheme (3.4) -
Share option (credit)/cost (0.4) 0.3
Items of an exceptional nature:
Restructuring costs 2.7 4.2
US legal costs and insurance recovery - (1.9)
Reduction of deferred consideration - (0.9)
Impairment of goodwill - 16.1
Acquisition related costs 0.1 -
12.3 32.5
As a direct result of COVID-19 there was a requirement to reduce
costs further across all cash-generating units (CGUs). This was
driven by reduction of headcount, the closure of business units,
reduction in the warehouse space and rationalising key support
functions: UKE GBP0.9m, MEA GBP1.7m and US GBP0.1m (fifteen months
to 31 March 2020: There were restructuring costs across all
Divisions offset by an adjustment of deferred consideration in the
UKE and an insurance recovery in the US relating to the settlement
of the legacy DOJ case. There was also an impairment of goodwill
relating to the UKE CGU).
All costs shown as exceptional are considered to be one-off and
are presented as exceptional items so as to provide an indication
of the Group's underlying business.
3. Loss per share
15 months
Year ended to
31 March 31 March
2021 2020
pence per pence per
Basic earnings per share share share
Basic earnings per share from continuing
operations (5.2) (15.0)
Diluted earnings per share
Diluted earnings per share from continuing
operations (5.2) (15.0)
Basic and diluted earnings per share are calculated by dividing
profit or loss attributable to ordinary equity holders by the
weighted average number of ordinary shares in issue during the
period.
The calculations of basic and diluted loss per share are:
15 months
Year ended to
31 March 31 March
2021 2020
GBPm GBPm
Loss for the period attributable to shareholders (12.7) (22.9)
Weighted average number of ordinary shares 2021 2020
in issue: Number Number
Basic 244,134,863 152,673,573
Adjustment for share options 10,068,864 169,250
Diluted 254,203,727 152,842,823
4. Finance costs
Year ended
31 March 15 months to
2021 31 March 2020
Group Group
GBPm GBPm
Interest payable on bank loans and overdrafts 1.3 1.8
Interest payable on shareholder loans 0.3 -
Finance charges payable under lease liabilities 1.2 1.1
Amortisation of bank refinance costs 0.2 0.5
3.0 3.4
5. Bank and other borrowings
Group Group
31 March 31 March
2021 2020
GBPm GBPm
Revolving credit facility (Arena Events
Group Plc) 24.3 23.7
Revolving credit facility (AES Inc.) 10.2 11.2
Revolving demand note (AES Inc) 2.1 2.3
Shareholder loan 2.0 2.0
Shareholder loan note interest 0.4 0.1
Intercompany loan - -
39.0 39.3
Less unamortised issue costs (0.5) (0.5)
38.5 38.8
On 12 October 2020, the HSBC facility (entered into in October
2018) was increased from GBP35.0m to GBP50.6m with the additional
GBP15.6m facility backed by the Coronavirus Large Business
Interruption Loan Scheme (CLBILS) as part of the UK Government
Coronavirus business support package. On 25 March 2021, the HSBC
facility (entered into in October 2018) was amended to allow for
the potential acquisition of Aztec Shaffer in the US (note 34).
The HSBC facility includes senior term debt of GBP50.6m split
into a revolving credit facility (RCF) of GBP30.0m (2020:
GBP30.0m), an accordion loan of GBP5.0m (2020: GBP5m) and CLBILS of
GBP15.6m. At 31 March 2021 the
Group had drawn GBP34.5m of the total facility (31 March 2020:
GBP34.9m). Of the total GBP34.5m, GBP24.3m was drawn in GBP by
Arena Events Group Plc (2020: GBP23.7m) and GBP10.2m was drawn in
USD by AES Inc (2020: GBP11.2m). This debt was secured by fixed and
floating charges over the assets of each of the entities within
Group. Facility A of GBP35.0m is available until October 2022
whilst Facility B (CLBILS) of GBP15.6m is available until October
2023.
Arena Event Services Inc have a $3.0m Revolving Demand Note with
HSBC USA with a parent guarantee from Arena Events Group Plc.
Interest rates were 1.2% above Prime or 2.45% above LIBOR for the
applicable interest period. At 31 March 2021 $2.9m (2020: $2.9m) of
the demand note had been drawn.
On 25 March 2021 Arena Events Group Plc agreed an extension to
the GBP2.0m Loan Note Instrument from Lombard Odier Asset
Management (being one of its shareholders). The loan notes were
extended to 25 September 2021 carrying an interest rate of 15%
capitalised each quarter. The issuance and extension of the loan
notes fully comply with the HSBC facility agreement.
As at 31 March 2021 the Group's main banking facilities were
with HSBC (2020: HSBC).
Total bank facility arrangement fees of GBP0.2m (2020: GBP0.4m)
were amortised in the year.
Borrowing interest rates
The analysis of the borrowings is as follows:
Weighted 31 March Weighted 31 March
average 2021 average 2020
interest interest
rate GBPm rate GBPm
Revolving credit facility
(Arena Events Group Plc) 2.4% 24.3 3.1% 23.7
Revolving credit facility
(AES Inc) 2.4% 10.2 4.2% 11.2
Revolving demand note (AES
Inc) 3.55% 2.1 4.3% 2.3
Shareholder loan 15.0% 2.0 5.0% 2.0
Unamortised bank amendment
fees - (0.5) - (0.5)
Total borrowings 3.2% 38.1 3.6% 38.7
The above table does not include the capitalised shareholder
loan note interest.
Reconciliation of liabilities
arising from financing As at Financing Cash flow Other Exchange As at
activities 31 March movements movements 31 March
2020 GBPm 2021
GBPm GBPm GBPm GBPm
Revolving credit facility
(Arena Events Group Plc) 23.7 0.6 - - 24.3
Revolving credit facility
(AES Inc.) 11.2 (0.2) - (0.8) 10.2
Revolving demand note
(AES Inc) 2.3 - - (0.2) 2.1
Shareholder loan notes 2.1 - 0.3 - 2.4
Total liabilities from
financing activities before lease
liabilities 39.3 0.4 0.3 (1.0) 39.0
6. Share capital
31 March 31 March
2021 2020
GBPm GBPm
Authorised, allotted and issued
272,481,916 fully paid ordinary shares of GBP0.01 each (2020: 152,710,833) 2.7 1.5
Authorised share capital is unlimited.
As at the end of 31 March 2021 there were 272,481,916 (31 March
2020: 152,710,833) ordinary shares at GBP0.01 in issue resulting in
GBP2.7m share capital and GBP89.7m of share premium. All shares
carry equal rights.
In the year ended 31 March 2021 the following issues of GBP0.01
ordinary shares were made:
On the 15 April 2020, the Company raised GBP9.5m (before fees
and expenses) by way of a subscription for 60,000,000 new Ordinary
Shares and a placing of 35,000,000 new Ordinary Shares, in each
case at a price of 10 pence per share. The net proceeds of the
Capital Raising were to fund working capital requirements.
On the 29 March 2021, the Group announced the conditional
raising of GBP11.0m (before fees and expenses) by way of a
subscription for 10,714,285 new Ordinary Shares and a placing of
67,857,143 new Ordinary Shares, in each case at a price of 14 pence
per share. As well as strengthening the Group's balance sheet, the
net proceeds of the capital raise will be used to take advantage of
the opportunities presented by the COVID-19 affected market to
acquire attractive assets on favourable terms, including the
acquisition of the business and assets of Aztec Shaffer.
The issue price of 14 pence per new Ordinary Share, represented
a 3.4 percent discount to the closing middle market price of 14.5
pence per Existing Ordinary Share on 26 March 2021, the last
Business Day before the announcement of the Placing and
Subscription.
The First Placing Shares and the First Subscription Shares
issued pursuant to the Company's existing authorities to allot
equity securities and disapply pre-emption rights granted at its
Annual General Meeting held on 1 September 2020 and consisted of a
subscription for 3,377,875 new Ordinary Shares and a placing of
21,393,208 new Ordinary Shares, in each case at a price of 14 pence
per share. The First Placing Shares and the First Subscription
Shares were admitted to trading on AIM on 31 March 2021.
The Second Placing Shares and the Second Subscription Shares
were admitted to trading on AIM post 31 March 2021.
In the 15 months ended 31 March 2020 the following issues of
GBP0.01 ordinary shares were made:
18 April 2019, 800,000 shares at GBP0.385 were issued as 25%
settlement of the deferred consideration that arose on the
acquisition of assets from Stuart Rentals in 2018.
7. Contingent liabilities
The Group has contingent liabilities in relation to its US
division (2020: in relation to its US division). AES Inc agreed a
settlement with the United States' Attorney's Office for the
Southern District of Georgia to resolve the US government's
investigation of AES Inc (the "Settlement"). The Settlement
includes the payment by AES Inc of $4.8 million in equal
instalments over five years (being $960,000 per annum), the third
payment made in 2020 (second payment in 2019). In addition, there
is the potential for additional contingent payments of $600,000 per
year in any of the five years, 2018 to 2022, if certain financial
hurdles are exceeded. These hurdles are AES Inc achieving revenue
greater than $150 million or net profits greater than $2.5 million
based on calendar year results to 31 December. The contingent
payment was not triggered in the 12 months to December 2020 (12
months to December 2019: none).
Given the uncertainty of future financial performance of AES
Inc, no provision has been made for future potential contingent
payments.
8. Net cash flow from operating activities
Year ended 15 months
31 March to 31 March
2021 2021
GBPm GBPm
Operating loss for the year (9.8) (19.6)
Adjustments for:
Depreciation of property, plant and equipment 7.8 9.5
Depreciation of right-of-use assets 4.7 4.7
Impairment of goodwill - 16.1
Amortisation of intangible assets 0.6 0.9
Deferred consideration - (1.2)
Loss/(gain) on disposal of property, plant
and equipment 0.2 (0.3)
Share option (credit)/costs (0.4) 0.3
Operating cashflows before changes in working
capital 3.1 10.4
Decrease/(increase) in inventories 5.4 (2.0)
Decrease/(increase) in receivables 23.3 (5.3)
(Decrease)/increase in payables (19.2) 9.8
Cash generated by operations 12.6 12.9
Bank and lease interest paid (1.3) (1.7)
Loan note interest paid (0.5) (0.1)
Other finance charges (0.1) (0.2)
Corporation tax (0.6) (0.3)
Net cash inflow from operating activities 10.1 10.6
9. Dividends
Paid or to be paid
Year ended 31 March 15 months to 31 March
2021 2020
GBPm GBPm
Interim dividend for the year ended 31 March 2021 of nil
pence per share (2020: 0.25 pence
per share) - 0.4
Proposed final dividend for the year ended 31 March 2021 of
nil pence per share (2020: nil - -
pence per share)
There was no interim dividend paid or final dividend recommended
in the year ended 31 March 2021. (A total dividend of 0.25 pence
per share was paid for the fifteen-month period ended 31 March
2020. Dividend payments were based on the net assets of the company
in line with the Companies Act 2006 (Part 23)).
Received
The company did not receive any dividends during the year ended
31 March 2021 (2020: none).
10. Post balance sheet events
Placing and subscription
On the 29 March 2021, the Group announced the conditional
raising of GBP11m (before fees and expenses) by way of a
subscription for 10,714,285 new Ordinary Shares and a placing of
67,857,143 new Ordinary Shares, in each case at a price of 14 pence
per share. As well as strengthening the Group's balance sheet, the
net proceeds of the capital raise will be used to take advantage of
the opportunities presented by the COVID-19 affected market to
acquire attractive assets on favourable terms, including the
acquisition of the business and assets of Aztec Shaffer.
The issue price of 14 pence per new Ordinary Share, represented
a 3.4 percent discount to the closing middle market price of 14.5
pence per Existing Ordinary Share on 26 March 2021, the last
Business Day before the announcement of the Placing and
Subscription.
The capital raising was conducted in two separate tranches:
Tranche One
The First Placing Shares and the First Subscription Shares
issued pursuant to the Company's existing authorities to allot
equity securities and disapply pre-emption rights granted at its
Annual General Meeting held on 1 September 2020 and consisted of a
subscription for 3,377,875 new Ordinary Shares and a placing of
21,393,208 new Ordinary Shares, in each case at a price of 14 pence
per share. The First Placing Shares and the First Subscription
Shares were admitted to trading on AIM on 31 March 2021.
Tranche Two
Following the passing by Shareholders of certain Resolutions at
the General Meeting held on 14 April 2021, the second tranche
consisting of the Second Placing Shares and the Second Subscription
Shares were admitted to trading on AIM on 15 April 2021. The second
tranche consisted of a subscription for 7,336,410 new Ordinary
Shares and a placing of 46,463,935 new Ordinary Shares, in each
case at a price of 14 pence per share.
Acquisition of Aztec Shaffer
On 2 April 2021, AAS Opco LLC made a bid for Aztec Shaffer as
part of a Court-led auction process pursuant to Section 363 of the
United States Bankruptcy Code. This bid was confirmed as successful
on 6 April 2021 and was approved at the sale hearing at the United
States Bankruptcy Court for the Southern District of Texas on 16
April 2021. The total value of the bid to the secured lender (AIG)
and including amounts payable to the parties that provided interim
funding through the bankruptcy process was $25.6m. This purchase
price was funded by an equity contribution of $3.35 million by the
Company (via its subsidiary, AES Arena Event Services Holdings
Limited) in return for a 50% equity stake in AAS Opco LLC (with
management control) alongside an $18.25m debt financing package
provided by the Company's Co-Bidders.
Aztec Shaffer comprises two businesses, Aztec Events & Tents
("Aztec") and Shaffer Sports & Events ("Shaffer"). Aztec is a
very similar business to Arena's existing subsidiary based in
California: Arena Stuart Rentals. Aztec is based in Houston, the
fourth largest city in the US, and has a diversified customer base
with its products including party/wedding tents as well as tables,
chairs, linens, table-top items, dance floors and decorative items.
By contrast Shaffer operates across North America from its Houston
base, with the majority of its historical revenues coming from
golf, supporting in excess of 15 tournaments a year including the
Players Championship and the Presidents Cup. Other sports served by
Shaffer include motorsports and horse racing. Shaffer's focus on
sports is well aligned with the Group's other US subsidiary, Arena
Events Services Inc. which has a similar product focus but a
broader customer mix, also serving many events and projects outside
of the sporting world.
Coronavirus Large Business Interruption Loan Scheme (CLBILS)
On 12 October 2020, supported by HSBC, the Company secured an
extra GBP15.6m of funding under the UK Government-backed CLBILS.
This facility provides additional liquidity headroom to the Group
in the UK to manage any uncertainty around the pace of opening up
of events to mass participation as COVID-19 restrictions are
eased.
The terms of the facility require an initial draw to be made
within the first six months and a second (final) draw to be made
before the first anniversary of the facility. Failure to make the
first draw would see the entire facility forfeited and, in line
with this requirement, on 1 April 2021, the Company drew down
GBP4m. Drawn amounts bear interest at LIBOR plus a 2.4% margin
whilst the remaining unutilised facility bears interest at 1% per
annum.
Restructure
On the 15 April 2021, the Group underwent a restructure of its
UK owned subsidiaries to reduce complexity, better align the
corporate structure with the management of the trading divisions
and to simplify entity balance sheets. As part of this
restructuring, investments in WB Co (1403) Limited, WB Co (1402)
Limited and AES Arena Event Services Holdings Ltd were transferred
to be direct investments of the Company. The restructuring is not
expected to have any material financial impact on the Group.
Non-Statutory Financial Information
Year ended Year ended 15 months to
31 March 2021 31 March 2020 31 March 2020
(audited) (unaudited) (audited)
GBPm GBPm GBPm
Revenue 71.6 160.6 183.2
Cost of sales (44.6) (110.2) (127.8)
Gross profit 27.0 50.4 55.4
Administrative expenses (36.8) (63.5) (75.0)
Operating loss (9.8) (13.1) (19.6)
Analysed as:
Adjusted EBITDA 5.7 16.5 13.2
Depreciation property, plant and equipment (7.8) (7.7) (9.5)
Depreciation right of use assets (4.7) (3.7) (4.7)
Exceptional expenses (2.7) (17.2) (17.5)
Acquisition costs (0.1) - -
Share option credit / (costs) 0.4 (0.3) (0.3)
Intangible amortisation (0.6) (0.7) (0.8)
(9.8) (13.1) (19.6)
------------------------------------------- --------------- --------------- ---------------
Finance costs (3.0) (2.8) (3.4)
Loss before taxation (12.8) (15.9) (23.0)
Tax on loss on ordinary activities 0.1 0.1 0.1
Loss after taxation (12.7) (15.8) (22.9)
The Group changed its accounting reference date from 31 December
to 31 March to better match the seasonality of the business. In the
fifteen-month period ended 31 March 2020 the Group delivered
adjusted EBITDA of GBP13.2m and an operating loss of GBP19.6m. For
the twelve months ended 31 March 2020 the Group delivered adjusted
EBITDA of GBP16.5m and an operating loss of GBP13.1m.
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