ARENA EVENTS : FY21-RESULTS.pdf | pdf | 528.24KB

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 £71.6m (15m Mar 20: £183.2m)
• 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 £5.7m (15m Mar 20: £13.2m), in line with previous guidance
• Reduced operating loss of £9.8m (15m Mar 20: £19.6m loss)
• Loss after taxation of £12.7m (15m Mar 20: £22.9m 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-endcash £18.4m (Mar 20: £5.8m), net debt(3) £21.1m (Mar 20: £35.6m)

Compared to year ended 31 March 2020 (unaudited result)

• Revenue decreased by 55% to £71.6m (12m Mar 20: £160.6m)
• Adjusted EBITDA(1) decreased by 65% to £5.7m (12m Mar 20: £16.5m)

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 £17.6m
• 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 121st 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
	£m	£m
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)

1. 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 £13.0m 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 (CFO)	Via Alma
Cenkos Securities (Nomad and Broker)	[phone]
Derrick Lee / Max Gould (Corporate Finance)
Julian Morse (Sales)
Alma PR (Financial PR)	[phone]
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.

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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.

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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 £3.4m 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 £9.5m 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 £11.0m, 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 £15.6m 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

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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 £9.5 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 £71.6m (FY20 £183.2m) 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 £5.7m (FY20 £13.2m). The Group reported an operating loss of £9.8m compared to a loss of £19.6m 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 £34.2m (FY20 £64.9m) and Adjusted EBITDA of £10.2m (FY20 £5.4m) 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-termCOVID-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.

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