TIDMARE
RNS Number : 6374R
Arena Events Group PLC
25 September 2017
25 September, 2017
Arena Events Group plc
("the Company" or "the Group")
Interim Results for the six months to 30 June 2017
Strong progress, in-line with expectations and maiden dividend
declared
Arena Events Group plc (AIM: ARE) today announces its unaudited
Interim Results for the six months ended 30 June 2017.
Financial Highlights
-- Revenue increased to GBP51.1m (H1 16: GBP44.5m)
-- Gross profit increased to GBP14.7m (H1 16: GBP14.0m)
-- Adjusted EBITDA (before exceptional costs) GBP3.4m (H1 16: GBP3.4m)
-- Operating Profit (after exceptional costs) increased to GBP0.3m (H1 16 GBP0.2m)
-- Cash generated from operations increased to GBP7.4m (H1 16: GBP2.8m)
-- Maiden interim dividend declared of 0.45p per share
Operational Highlights
-- Successful delivery of multiple recurring contracts (e.g. Cheltenham Festival)
-- Extended contract with European Tour for 4 years (up to GBP10m)
-- Largest contract win in Arena's history - US PGA 5 year contract secured (up to $40m)
-- Acquired Wernick Seating in April 2017
Post Period Highlights
-- IPO on 25(th) July 2017 raising GBP59.3m, reducing net debt to GBP10.5m
-- Strong balance sheet gives platform for future acquisitive growth
-- Delivered US PGA, 500,000 sq ft of temporary structures generating over $7m in revenue
-- Three year contract with ITV for 'Dancing on Ice' temporary
TV studio, bespoke oval ice rink and 500 tiered spectator
seating
-- Two year contract for the inaugural CJ golf Trophy in South Korea
Greg Lawless, CEO, commented:
"I am pleased to announce our first set of financial results
since we listed on AIM in July and report that the Group's six
months results were in line with our expectations, demonstrating a
steady increase in revenue and gross margins.
The main season for outdoor events is June to September and as a
consequence the Group is naturally seasonally weighted towards the
second half of the year. I am pleased to report that the second
half of the year has started well and we remain confident of
meeting the market's expectations for the full year. This
confidence is reflected in the Board declaring a maiden interim
dividend of 0.45p per share.
The Board continues to focus on the Group's strategy of growing
the business through a combination of organic and acquisition led
growth enabling us to deliver our strategy of becoming a fully
integrated product provider to the Events Industry sector."
Enquiries:
Greg Lawless, CEO 0203 770 3838
Piers Wilson, FD 0203 770 3838
Cenkos, Max Hartley, Camilla Hume (Nomad) 0207 397 8900
Julian Morse (Sales)
Alma PR, John Coles, Josh Royston, Helena Bogle 0208 004
4219
Notes to Editors:
Arena Events Group plc 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 Wimbledon Tennis, The Open, PGA European
Tour and 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.
Arena Events Group plc
Chief Executive's Review
Introduction
I am delighted to be able to report in this, our first interim
results since our admission to AIM in July this year, that we have
experienced strong trading across the Group, with revenues
increasing by approximately 15 per cent. compared to the same
period the previous year.
After 7 years of developing the businesses across the UK &
Europe, the Americas and the Middle East & Asia ("MEA"), the
time was right to put in place the corporate structure and funding
to enable the Group to pursue its growth ambitions over the coming
years. Accordingly, we raised a net GBP54.7 million in July this
year which enabled the Company to repay the majority of the Group's
outstanding loan notes and loan note interest and to pay down a
significant proportion of senior debt. This de-leveraging
significantly reduces the Group's annual interest charge and
creates a more stable balance sheet from which to pursue both
organic and non-organic growth.
Operational Highlights
-- In the UK the Group, once again, provided infrastructure to
the Cheltenham Festival, which this year featured the World's
longest triple deck structure. In addition, the UK & Europe
division renewed its contract with the European Tour for a further
four years, worth a total of approximately GBP10 million to deliver
infrastructure for European Tour golf events in the UK, Spain and
Portugal.
-- In the Middle East, the Group won a multi-million pound
contract to supply a new semi-permanent exhibition hall to the
Dubai World Trade Centre ("DWTC"). The project started in April and
the structure was handed over to the DWTC in August.
-- In March 2017, Arena Americas signed a five-year contract
with the PGA of America for the exclusive provision of all
structures and flooring requirements for the organisation's three
annual golf events. The contract covers the Men's Seniors, The
Ladies and the PGA Championship as well as the Ryder Cup in
Whistling Straights in Wisconsin in 2020. This contract has the
potential to deliver up to $40 million of revenue for the Group
over the next 5 years and is now the Group's largest multi-year
contract.
Acquisitions
In late 2016, the Group completed the acquisition of RIM
Scaffolding ("RIM"), an event scaffolding business. RIM is now well
integrated into the UK & Europe Division and performing in line
with management expectations. This new business unit is now
providing the vital under structure for many of the UK's major
events during the busy summer season and we expect to see
incremental profits from this acquisition during the second half of
the year.
In April this year, the acquisition of Wernick Seating
("Wernick") was completed and is also performing in line with
expectations. This acquisition has not only added additional tiered
seating capacity to the Group but has also brought expertise to the
business in the form of mass participation sports capabilities for
marathons, triathlons and other endurance events to the business.
Wernick currently operates as a standalone business in Coventry but
we will look to integrate this into the wider Group at the end of
the year as its main season draws to a close.
Strategy and Development
The Company's IPO in July was a milestone in the Group's long
history. The GBP54.7 million fundraising (net of expenses) has not
only transformed the Group's Balance Sheet with a substantial
reduction in debt, but has also given the business the ability to
focus on the process of seeking earnings enhancing acquisitions to
broaden the operations of the Group in line with the Group's
strategy.
We are now in a strong position to explore potential acquisition
targets and this will be a big part of the focus of the Group's
executive team, in line with our stated strategy to diversify the
revenue base and reduce seasonality.
In addition to the acquisitions and contract renewals referred
to above we have secured the following new contract wins:
-- the UK & Europe Division signed a three-year contract
with ITV for the provision of a temporary TV studio for its
"Dancing on Ice" programme. This contract includes the provision
not only of the temporary structure required for the studio, but
also a bespoke oval ice rink and 500 tiered spectator seats.
Construction begins in October.
-- the Middle East & Asia Division signed a 2 year contract
for the provision of the temporary structures and related services
for the inaugural CJ golf Trophy to be held in South Korea in
October this year. This is a new tournament on the US PGA Tour and
only the second Fed Ex counting event held outside North
America.
We expect to see the benefits of both these new contracts and
the acquisitions of RIM and Wernick Seating during the second half
of the financial year.
Dividends
As stated at the time of the IPO, the Board intends to pursue a
balanced approach between capital investment and dividend payment
by implementing a progressive, but measured, dividend policy.
Accordingly, notwithstanding that the Company has been a quoted
company for only two months, the Board is pleased to declare a
maiden interim dividend of 0.45p per share payable on 3(rd)
November 2017 to shareholders on the register at 6(th) October
2017.
Current trading and outlook
As we stated at the time of the IPO, the main season for outdoor
events is June to September, a consequence of which is that the
Group typically earns the majority of its revenue, gross margin and
net income in the second half of each financial year. Although the
Group has sought to smooth its earnings profile by expanding into
winter events and diversifying its revenue streams, the Board
expects the business to remain significantly second half weighted
for the foreseeable future.
The Group has performed solidly during the first half of the
financial year. The second half has started well and we remain
confident of meeting expectations for the full year.
The Board continues to focus on the Group's growth strategy and
remaining one of the leading providers of turnkey event design and
delivery, while expanding and diversifying the Group's activities
and product offerings.
Greg Lawless
Chief Executive
25 September 2017
Financial Review
Revenue and Gross Margin
The Group delivered GBP51.1m of revenue in the first half of
2017, representing an increase of GBP6.6m (14.8% growth) compared
to H1 2016. The acquisitions of Wernick Seating, RIM Scaffolding
and Arena Hong Kong contributed GBP3.6m (55% of total revenue
growth) with the remaining GBP3.0m delivered organically from new
and growing events, primarily in the UK and MEA regions.
Organic growth in the UK was driven by additional work with the
Jockey Club (Cheltenham and Epsom) and a new enlarged seating
layout at Queens Club for the 2017 Aegon tournament. The MEA region
saw the return of the Abu Dhabi Tour and other local events which
did not take place in 2016, as well as the sale of a fully fitted
out semi-permanent exhibition hall to the Dubai World Trade Centre.
Despite a higher absolute gross margin, the mix of work in the
period led to a small drop in gross margin percentage compared to
the prior period.
Administrative expenses
There has been an overall increase in administrative expenses of
GBP1.0m across the Group. However, GBP0.3m relates to exceptional
costs in the period (see below), with an additional GBP0.6m of the
increase due to acquisitions. Other overheads are mostly flat, with
some savings in the Middle East offset by higher insurance rates in
the US and some additional senior operational staff in the UK.
Exceptional items
Exceptional costs of GBP0.5m (H1 2016: GBP0.2m) have been
incurred in the first half of the year which is in line with
management's expectations. These costs are split between the
rationalisation of the New Jersey branch in the US (GBP0.3m) and
costs associated with the re-organisation of the UK business into
our new central warehouse facility in St Ives, Cambridgeshire
(GBP0.2m).
Operating profit
The Group's operating profit for the half year has increased to
GBP0.3m (H1 16 GBP0.2m). The Group's depreciation charge has
declined from GBP3.0m to GBP2.6m for the half year, as a number of
assets acquired in early 2013 as part of the acquisition of Arena
Americas became fully depreciated.
EBITDA
The Group's adjusted EBITDA (before exceptional costs) was
GBP3.4m in the first half, the same as H1 2016. This reflects the
seasonal nature of the recent acquisitions and that the significant
organic growth in this year, for example the US PGA seniors event,
the Dancing on Ice project, and the CJ Cup all occur in the second
half of the year.
Earnings per Share
Earnings per share for the first six months reflects both the
pre IPO debt and loan note structure as well as the number of
shares in issue pre IPO and is therefore not reflective of the
expected earnings per share going forward.
Dividends
As stated at the time of the IPO, the Board intends to pursue a
balanced approach between capital investment and dividend payment
by implementing a progressive, but measured, dividend policy. The
Group is declaring a maiden interim dividend of 0.45p per share and
intends to pay this to shareholders on 3(rd) November 2017 to
shareholders on the register on 6(th) October 2017.
Cashflow
The Group generated strong operating cash flow of GBP7.4m in the
first six months of the year compared to GBP2.8m in the same period
in 2016. Whilst the prior year was reduced by the unwinding of
working capital balances at the December 2015 year end, the 2017
first half year experienced unusually strong advanced cash receipts
from new work including, in particular, the US PGA golf
contract.
Liquidity/Bank facilities
The 30 June 2017 balance sheet reflects the pre IPO private
equity leverage structure with bank debt of GBP28.3m and investor
loan notes and loan note interest of GBP34.6m.
On the 25 July 2017, Arena Events Group Plc raised net funds
after fees and commissions of GBP54.7m. Following this cash inflow,
GBP33.1m of loan notes and loan note interest were settled, in
addition to repayments of GBP18.4m of bank debt. On a pro forma
basis, the Group's net debt at the half year, including finance
leases, would have been GBP10.5m.
It is expected that the remaining loan notes and loan note
interest will be converted to equity on or around 1 January
2018.
Piers Wilson
Chief Financial Officer
25 September 2017
Consolidated Statement of Comprehensive Income
For the six months to 30 June 2017
6 months 6 months 12 months
to 30 to 30 June to 31
June 2016 Dec 2016
2017 Unaudited Audited
Unaudited GBPm GBPm
GBPm
-------------------------- ----------- ------------ ----------
Revenue 51.1 44.5 93.2
Cost of sales (36.4) (30.5) (63.9)
--------------------------- ----------- ------------ ----------
Gross profit 14.7 14.0 29.3
Administrative expenses (11.8) (10.8) (22.6)
Depreciation (2.6) (3.0) (5.7)
Share of profit from
joint venture - - 0.2
--------------------------- ----------- ------------ ----------
Operating profit 0.3 0.2 1.2
Interest (1.9) (1.8) (3.7)
Other finance costs (0.5) (0.4) (1.1)
Loss before taxation (2.1) (2.0) (3.6)
Tax on loss on ordinary
activities (0.1) (0.1) (0.2)
--------------------------- ----------- ------------ ----------
Loss after taxation (2.2) (2.1) (3.8)
Loss per share - basic
and diluted (GBP) (1.10) (1.09) (2.07)
Consolidated Statement of Net Assets
As at 30 June 2017
At 30 June 2017 At 30 June 2016 At 31 Dec 2016
Unaudited Unaudited Audited
GBPm GBPm GBPm
------------------------------------------------------- ---------------- ---------------- ---------------
Non-current assets
Goodwill and other intangibles 34.9 32.7 33.7
Property, plant and equipment 33.7 31.8 32.3
Interest in joint ventures 0.2 0.2 0.4
Trade and other receivables due after one year 0.8 0.8 1.1
69.6 65.5 67.5
Current assets
Inventories 6.7 4.6 2.7
Trade and other receivables 19.0 14.6 12.5
Cash and cash equivalents 1.1 3.3 1.6
-------------------------------------------------------- ---------------- ---------------- ---------------
26.8 22.5 16.8
Current liabilities
Trade and other payables (11.2) (8.6) (8.5)
Current tax liabilities - (0.4) (0.2)
Net obligations under finance leases (0.4) (0.4) (0.4)
Borrowings (3.1) (1.9) (1.5)
Other creditors (1.9) (1.1) (1.3)
Accruals, deferred revenue and deferred consideration (19.9) (13.4) (7.4)
-------------------------------------------------------- ---------------- ---------------- ---------------
(36.5) (25.8) (19.3)
------------------------------------------------------- ---------------- ---------------- ---------------
Net current (liabilities)/assets (9.7) (3.0) (2.5)
Total assets less current liabilities 59.9 62.2 65.0
Non-current liabilities
Borrowings (25.2) (25.6) (29.2)
Shareholder loan notes (22.6) (22.5) (22.6)
Loan note interest (12.0) (9.8) (10.7)
Net obligations under finance leases (1.3) (1.0) (0.8)
Deferred tax liabilities (0.3) - (0.3)
(61.4) (58.9) (63.6)
------------------------------------------------------- ---------------- ---------------- ---------------
Net (liabilities)/assets (1.5) 3.3 1.4
-------------------------------------------------------- ---------------- ---------------- ---------------
Consolidated Statement of Cash Flows
For the six months to 30 June 2017
6 months 6 months 12 months
to 30 30 June to 31
June 2016 Dec
2017 Unaudited 2016
Unaudited GBPm Audited
GBPm GBPm
-------------------------------- ----------- ------------ ----------
Cash flow from operating
activities
Operating profit for the
period 0.3 0.2 1.2
Adjustments for the period:
Depreciation of property,
plant and equipment 2.6 3.0 5.7
Gain on disposal of property,
plant and equipment (0.1) (0.1) (0.2)
(Increase)/decrease in
inventories (4.1) (1.7) 0.1
(Increase) in trade and
other receivables (6.5) (3.4) (4.2)
Increase/(decrease) in
trade and other payables 3.6 (2.9) 0.2
Increase in deferred income 11.6 7.7 0.4
--------------------------------- ----------- ------------ ----------
Cash generated by operations 7.4 2.8 3.2
--------------------------------- ----------- ------------ ----------
Interest paid (0.9) (0.4) (1.2)
Loan issue costs (0.2) (1.6) (1.7)
Corporation tax (0.3) (0.2) (0.3)
--------------------------------- ----------- ------------ ----------
Net cash inflow from operating
activities 6.0 0.6 -
--------------------------------- ----------- ------------ ----------
Cash flow from investing
activities
Investment in joint venture - - (0.2)
Investment in business
combination, net of cash
acquired - - (0.6)
Other business assets acquired (1.3) - (0.9)
Deferred consideration 0.1 (0.4) (0.8)
Proceeds on disposal of
property, plant and equipment 0.1 0.1 0.3
Purchases of property,
plant and equipment (3.6) (3.1) (4.1)
Net cash used in investing
activities (4.7) (3.4) (6.3)
Cash flow from financing
activities
(Decrease)/increase in
borrowings (1.7) 4.0 5.9
Principal repayments under
finance lease (0.1) - (0.2)
Net cash generated from
financing activities (1.8) 4.0 5.7
--------------------------------- ----------- ------------ ----------
Net increase/(decrease)
in cash and cash equivalents (0.5) 1.2 (0.6)
Cash and cash equivalents
at the beginning of the
period 1.6 1.9 1.9
Effect of foreign exchange
rate changes - 0.2 0.3
--------------------------------- ----------- ------------ ----------
Cash and cash equivalents
at the end of the period 1.1 3.3 1.6
--------------------------------- ----------- ------------ ----------
Notes to the Interim Report
1. GENERAL INFORMATION
Arena Events Group plc (the 'Company' or the 'Group') was
incorporated in England and Wales on 1 June 2017 under the
Companies Act 2006 (registration number 10799086) and its
registered address is 4 Deer Park Road, London, SW19 3GY. On 10(th)
July the Company acquired 100% of AES Arena Event Services Group
Holdings Ltd, by way of a share for share exchange. On 25 July
2017, the Company was admitted to the Alternative Investment Market
of the London Stock Exchange (AIM) where its ordinary shares are
traded.
The financial information presented has been prepared using
merger accounting principles, as if Arena Events Group plc had been
in existence for each of the full reporting period and prior
periods and as such the information presented is derived from the
financial information of the AES Arena Event Services Group
Holdings ltd group for each relevant period.
Copies of this Interim results statement may be obtained from
the registered address or on the Corporate (Investor Relations)
section of the Company's website at www.arenagroup.com.
Statement of compliance and basis of preparation
The financial information presented in this Interim results
statement has been prepared in accordance with the recognition and
measurement requirements of International Financial Reporting
Standards issued by the International Accounting Standards Board,
as adopted by the European Union. The principal accounting policies
adopted in the preparation of the financial information in this
Interim results statement are unchanged from those used in AES
Arena Event Services Group Holdings Ltd financial statements for
the year ended 31 December 2016 and are consistent with those that
the Company expects to apply in its financial statements for the
year ended 31 December 2017.
The financial information for the year ended 31 December 2016
presented in this Interim results statement does not constitute the
Company's statutory accounts for that period but has been derived
from the statutory accounts of AES Arena Event Services Group
Holdings Ltd . The Annual Financial Report (for AES Arena Event
Services Group Holdings Ltd) for the year ended 31 December 2016
was audited and has been filed with the Registrar of Companies. The
Independent Auditors' Report on the Annual Report and Accounts for
the year ended 31 December 2016 was not qualified. The audit report
for the year ended 31 December 2016 did not contain statements
under s498(2) or (3) of the Companies Act 2006.
The financial information for the six month periods ended 30
June 2017 and 2016 is unaudited and has not been reviewed by the
Company's auditors.
The Interim financial statements are presented in sterling and
all values are rounded to the nearest hundred thousand pounds
(GBP0.1m) except where otherwise indicated.
2. LOSS PER SHARE
Six months to 30 June 2017 Six months to 30 June 2016 Twelve months to 31 Dec 2016
Unaudited Unaudited Audited
------------------------------------- --------------------------- ------------------------------------------------
Loss GBPm Weighted Loss GBPm Weighted Loss GBPm Weighted average number of
average number average number shares
of shares of shares
-------------------- --------------- ---------- --------------- -------------- --------------------------------
(2.2) 1,962,226 (2.1) 1,962,226 (4.1) 1,962,226
Loss per share
(basic and diluted)
- GBP (1.10) (1.09) (2.07)
The loss per share data presented above in each case uses the
number of shares in issue for the relevant period
pre IPO. The number of shares in issue post the IPO on 25(th) July 2017 is 114,639,940.
3. DIVIDENDS
No dividends were declared or paid during the period. However,
the Company has declared an interim dividend for the 2017 year of
0.45p per share and intends to pay this to shareholders on 3(rd)
November 2017 to shareholders on the register on 6(th) October
2017.
4. POST BALANCE SHEET EVENTS
On the 25 July 2017, Arena Events Group Plc raised net funds
after fees and commissions of GBP57.2m as a result of its Initial
Public Offering on the AIM market of the London Stock Exchange.
From these net proceeds the following amounts of debt were
settled:
- Loan note and loan note interest GBP33.1m
- Bank debt GBP18.4m
The remaining loan notes and loan note interest will be settled
by way of an exchange for new equity on or around 1 January
2018.
Ends.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SEFFALFWSEFU
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