Arena Events
Group plc
Annual Report
& Accounts FY20
15 months ended 31 March 2020
“Arena’s contribution has
been huge over the years,
it always impresses me
from year to year.”
Mark Griffith
Head of Operational Planning,
London Marathon Events
2
Contents
Overview
Our Business Offering
The Arena Standard
Our Business Model
Our Strategy FY20
Our Work FY20
Contract Wins
Strategic Report
Chairman’s Statement
CEO’s Report
Financial Review
Non-Financial Review
Principal Risks and Uncertainties
Regional Highlights - UK & Europe
Regional Highlights - Middle East & Asia
Regional Highlights - Americas
Corporate Social Responsibility
Safety Management
Environment and Sustainability
Governance
Board of Directors
Regional Leadership Team
Corporate Governance Statement FY20
Audit Committee Report FY20
Remuneration Committee Report FY20
Directors’ Report FY20
Directors’ Responsibilities Statement
Financial Statements
Independent Auditor’s Report to the
Members of Arena Events Group plc
Financial Statements and Notes
Company Offices
Shareholder Information
Photo Credits
Notes
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Annual Report & Accounts FY20Arena Events Group plc Overview
Our Business Offering
The Arena Standard
Our Business Model
Our Strategy FY20
Our Work FY20
Contract Wins
6
10
11
12
14
18
“The Diriyah arena and
site are utterly
breath-taking. It’s like
nothing we’ve seen
before in boxing.”
Eddie Hearn
Managing Director, Matchroom Boxing
Clash on the Dunes – Joshua vs Ruiz 2
4
5
Annual Report & Accounts FY20Arena Events Group plc FY20 Revenue
Jan 2019 – Mar 2020*
Revenue by Region
£183.2m
Regional Divisions
Serving customers globally from
14 depots in 6 countries across the
Americas, UK & Europe and Middle
East & Asia regions.
+10 product categories
Americas
39%
2018
MEA
21%
UKE
40%
Americas
35%
UKE
33%
FY
2020
MEA
32%
Revenue
£60.1m
UK & Europe
• Sheffield
Coventry •
• St Ives
• Wimbledon
• Membury
Americas
Revenue
£64.9m
Middle East & Asia
Chicago •
• Milwaukee
• San José
• Fort Irwin
• Orlando
South Korea •
• Dubai
Hong Kong •
• Malaysia
Revenue
£58.2m
Our
Business
Offering
Arena Events Group is a global leader in
turnkey event solutions. Our expertise is in
designing and delivering bespoke temporary
structures and associated products and services
for the most prestigious sporting events,
cultural occasions and for commercial use.
With over 250 years of experience, you are
in safe hands.
6
7
* Data for 15 months ended 31 March 2020
Annual Report & Accounts FY20Arena Events Group plc Our core assets include temporary
structures, seating, furniture, catering
equipment, crowd control fencing &
barriers and ice rinks. In addition, we offer
interior design, exhibition services, mass
participation events, graphics & signage.
The range of vertically integrated products and services
we offer allow us to deliver a full turnkey solution of global
capabilities to our customers. This is a unique selling point
for Arena.
Our market leading products and services
are utilised across a huge variety of
industries and charities:
• Events
• Television and film
• Retail
• Medical and education sectors
• Corporate conferences
• Architecture and construction
• Exhibitions
• Music concerts
• State visits, Royal and Military events
Products and Services
Structures
•
I-Novation
• Multi-deck
Seating
• Clearview™ Seating
• Grandstands
•
Industrial buildings
• Sports stands
• Tensioned fabric structure
• Flat seating
• Arena Super Deck (ASD)
• Conference seating
Catering and Kitchen
Equipment Hire
Fully Managed Event
Solutions
• Cutlery
• Crockery
• Glassware
• Cold rooms
• Linens
• Mass participation events
• Start and finish gantries
• Stages, media towers
• Obstacles
• Branding and signage
Furniture
Fencing & Barriers
• Tables
• Chairs
• Sofas
• Crowd control solutions
• Pedestrian barriers
• Heras fencing
• Soft furnishings
• Steel shield
• Mobile, modular
• Front of stage barriers
bars
• Hostile vehicle mitigation
barriers
Exhibition Services
Ice Rinks
• Bespoke stand
• Dry hire
design
• Managed ticketed
• Brand activations
solutions
Graphics & Signage
Interiors
• Large format print
• Full design and fit out
• Office branding
• Promotional displays
• Vehicle graphics
8
9
Annual Report & Accounts FY20Arena Events Group plc The Arena
Standard
A key element of the Group’s value and
what has contributed to its longstanding
history and relationships is our ‘Arena
Standard’. The Group is renowned for
delivering an unrivalled standard of
service across the globe.
Our Business Model
Creating Long-Term Value for our Stakeholders
Health & Safety
Experience & Expertise
The health and safety of our employees and clients
is paramount, the Group recognises the responsibility
we have for our employees’ safety and wellbeing.
With over 250 years of experience, we are event experts.
When you use Arena, you get peace of mind knowing your
event infrastructure needs are in the safe hands of our
experienced teams across the globe.
Premium Quality & Style
Solutions Focused
We are dedicated to delivering high quality,
sophisticated products coupled with a premium
and personal client experience.
We take a tailored approach to each project, providing
bespoke solutions that fit the needs of the customer. We are
determined to find the best solution to our client’s challenges.
Innovation & Creativity
Reliable & Efficient
We strive to bring our customers new and innovative
solutions to their brief. Innovation also means challenging
the status quo internally, finding more effective ways
of working, and trying a different approach.
Designing and delivering global events on time,
every time. Our clients feel safe knowing they can
rely on Arena, entrusting their live event to our
in-house experts.
Value for Money
Fully Integrated Offering
We provide the best quality product and customer
experience at a fair price.
A diverse, extensive product range and integrated service
offering around the world.
Inputs
• Skilled, experienced staff
•
Investment in equipment
• Strong customer relationships
• Robust financial strength
• Trust/brand recognition
What we do
• Design and deliver temporary
event infrastructure
• Provide event rental equipment
for event organisers
• Provide customers with a fully
managed and consultative service
Teamwork
S
E
U
L
A
V
V
A
L
U
E
S
Our vision: Become
the leading, most
respected, integrated
event solutions
business in the world.
Excellence
Integrity
How we generate revenue
• Event equipment rentals
• Provide bespoke interior solutions
• Longer-term (2/3 years) rentals
of temporary structures
• Management of events
• Provision of turnkey event services
VALUE S
Why customers choose us
• The Arena Standard
• Global reach
• Reliability: on time, every time
• Wide range of products
• Strong reputation
10
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Annual Report & Accounts FY20Arena Events Group plc Our Strategy
FY20
For the most part the 15 months trading to
the end of March remained focused on the
execution of the agreed group strategy.
With the emergence of the Coronavirus in
March 2020 some initiatives were ‘paused’
whilst the business reacted quickly to the
new challenges presented.
Annual Report & Accounts FY20
Strategy
Summary
Progress in FY20
Strategy
Summary
Progress in FY20
Continuously
improve our
Health &
Safety focus
• The health and safety of our colleagues
and customers is our number one priority
• The Group has a stated commitment to rigorous Health
& Safety (H&S) compliance
• We set the goal to put this at the top of our
• There are nominated H&S managers in each business and
Arena Standard delivery
regular reporting to the Board each month
• Third party advisers and consultants are engaged where
appropriate to support internal H&S teams
Commitment
to CSR
• Arena has committed to giving back to
our local communities and taking more
responsibility for limiting our effect on
our surroundings and operating in a
sustainable manner
• Over £185,000 of FREE skating tickets were given away at
our Ice events in 2019/20, to under-privileged communities
and the NHS, Police and Fire Service in acknowledgement
of their contribution to our community
• Arena has increased our sustainability significantly vs prior
• We have focused on:
year, read more about our initiatives on page 49
1. Reducing our carbon footprint
2. Reducing waste and increased re use
3. Plastic reduction and recycling
Acquisition
integration
- no new
acquisitions
• Following a year of eight new acquisitions
completing our product extensions across
the group in 2018, the goal is to focus on the
integration of the products and brands
•
• Realise the cost reduction benefit
of bringing more activities and services
in-house
Integration of TSG, TGP and Event Solutions brands
has been completed with Graphics, Exhibition services
and Arena Super Deck fully integrated in the Middle East
and Arena Fencing & Barriers in the UK. The addition
of these new products and services has reduced cost
and strengthened the Arena brand and customer
proposition significantly
Promote
vertically
integrated
events
solutions
• The 2018 acquisitions have strengthened
Arena’s value chain. Offering customers
many products and services under one roof
• Arena offer the unique selling point of
being easy to do business with
• Our goal is to ensure our customers
are aware of the vertically integrated,
global offering
• Our long standing customers have benefitted from Arena’s
unique range of vertically integrated products and services
e.g The Jockey Club to whom we supply seating, structures,
scaffolding, cutlery, crockery, glassware and furniture
• The temporary restaurants in Saudi Arabia and the Diriyah
stadium hospitality venue are great examples of vertical
integration from design to delivery of a fully built and fitted
solution encompassing many Arena products and services
• Leverage the growth in international
events in Saudi Arabia
• The Middle East region delivered several exceptional
projects including the temporary 15,000 seat Diriyah
stadium for the World Heavyweight Boxing match between
Joshua and Ruiz, a temporary restaurant complex for the
Riyadh festival and the Vice Music festival in Saudi Arabia
Expand
geographic
reach in Saudi
Arabia
12
Leverage
our global
presence
and Group
capabilities
Reduce
seasonality
Operational
delivery
improvement
(UK)
• Arena’s regions bring various expertise,
• Many International customers have seen great benefit from
which, when combined globally, make for
a compelling proposition
our worldwide presence
• Seating was delivered from the UK to support major events
• We aim to leverage this globally by
in the Middle East and Japan
facilitating collaboration and consultation
across Divisions and inter group
development of our colleagues through
transfers
• We aim to present this value proposition
to international clients
• The Diriyah stadium, Rugby World Cup 2019 and Tokyo 2020
are examples of where our regions have worked collectively
to deliver outstanding solutions to international clients
• The European Tour golf events are a great example
of serving a client across multiple countries
• Strengthen our Managed and Dry Hire
• A focus on new events in Q1 calendar such as the
Ice Business to drive Winter productivity
(Q1), better kit utilisation and achieve
operational efficiencies
• Offer products and services which fill
the low season and differ in timing
in each market
World Snooker
• Winning new long-term rentals for non-sporting events
e.g. archaeological digs, cultural facilities, government
contracts, etc
• Five new Managed Ice contracts were won for the 19/20
Ice Season delivering significant EBITDA growth
• Expansion of exhibition capabilities around the world
• Following a challenging 2018, the UK
• Re-organisation of the UK operational structures team
market is committed to re-focusing on
the Arena Standard and delivering to this
without compromise
was completed by December 2019 and a re-organisation
of UK hubs has been successfully delivered
• UK key clients have clear operational KPI’s in place which
have contributed to several outstanding UK event deliveries
in 2019 e.g The Open, D-Day, Cheltenham Festival, Nitto
ATP Finals and Royal Museums Greenwich Ice Rink event
Cost efficiency
• The cost base required a reset in the UK
• A successful cost transformation project has been
and US to drive an acceptable return on our
asset base whilst maintaining the delivery
of the Arena Standard
delivered in the US ‘Project Lift’ driving $3.2m annual
savings with effect from Q4 2019 and similar was already
being delivered in the UK and ME before the added
challenge of COVID-19
Diversification
• Arena is a global leader in turnkey event
solutions. With our 250 years of experience,
expertise in temporary environments, and
a broad range of products and services,
we recognise the opportunity to operate
in a wider market outside of events
• Venture into new markets
• Focus on new sports and non-sporting
• The Middle East team have successfully delivered
exhibition, visual merchandising and temporary
restaurants work following the acquisition of TGP
• The Group has demonstrated flexibility and diversity in our
capabilities by delivering many solutions for governments
and the health care sector following the pandemic including
the building of testing sites, temporary hospitals and
several medical facilities
events
• Diversification into the industrial building market is
well underway
13
Arena Events Group plc Our Work
FY20
Arena takes great pride in delivering unique
solutions for each of our clients, regardless
of size or industry.
Explore the highlights of our diverse work,
designed and delivered in FY20 between
January 2019 and March 2020.
Adam Hogg
Event Director,
Nitto ATP Finals
Annual Report & Accounts FY20
8 Feb
6–8 Apr
13–17 Mar
3 Feb
Feb
7 Feb
10–13 Jan
Jan
2019
16 - 19 Jan
26 Feb
Mar
28 Mar
Apr
4– 6 Apr
12–15 Mar
24 - 27 Jan
5 - 7 Apr
22–23 Jun
Jun
26–30 Jun
9 Jun
28 Apr
6 May
30 May – 14 Jun
24 Jun
14–17 Jul
5–7 Jul
29 Jul – 14 Aug
May
21–25 May
Jun
17–23 Jun
Jul
14–21 Jul
2–26 Aug
Aug
8–12 May
10 Jun
1–14 Jul
22–28Jul
May – Oct
13–16 Jun
5 Jun
4–7 Jul
3–4 Aug
16–18 Jun
17–20 Jul
6–9 Jun
7 Jul
16 Aug
1–5 May
7–9 May
14
15
“Arena has helped up deliver the premium facilities that we endeavour to deliver to our players, sponsors and guests.”Arena Events Group plc Annual Report & Accounts FY20
Tim Elliot
Founder of People.
A Live Experience Agency
Ryan Horton
Tennis Manager, IMG Events
Mubadala Silicon Valley Classic
13–15 Sep
30 Sep
9 Sep
31 Oct – 3 Nov
16 Nov – 5 Jan
10 Dec
7 Dec
12–14 Dec
30 Jan - 2 Feb
10–17 Jan
8-13 Mar
13–15 Sep
14 Nov
10–21 Oct
4 - 12 Feb
Sep
18 Sep
Oct
Nov
Dec
29 Nov – 12 Jan
Jan
Feb
8 Sep
4–7 Oct
14 Oct – 12 Jan
23 Jan
17 Nov
Mar
6 Mar
Apr
2020
5–8 Sep
20 Sep
10 Sep
29 Oct – 1 Nov
23 Nov – 5 Jan
16 Feb
17 - 20 Oct
1 Dec
ABU DHABI GRAND PRIX
13 Dec – 1 Jan
2 Feb
Oct – Mar
16–22 Sep
17–21 Nov
16
17
“Arena worked tirelessly to deliver the desired product in what was a challenging and restrictive site.”“Whenever I work with Arena, I always get the feeling I am the most important job on the books right then, and always leave with a great event and experience.”Arena Events Group plc Contract Wins
USGA -
US Seniors Open
USGA -
US Open
Experimental Aircraft
Association
Three year contract supplying
structures exclusively for the USSO.
Four year contract supplying
structures exclusively for the USO.
Two year contract supplying
structures exclusively for Airventure.
Region: Americas
Region: Americas
Region: Americas
Goodwood
Lawn Tennis Association
Five year contract supplying seating
to the three Goodwood events
- Revival, Members Meeting
and Festival of Speed.
Five year contract supplying
seating and a three year contract
supplying structures to Fever Tree
Tennis Championships.
International Management
Group
Five year contract supplying seating
to the Hampton Court Palace Festival.
Region: UKE
Region: UKE
Region: UKE
Manchester City Council
Warwick Castle
Royal Museums Greenwich
Tokyo 2020
Five year contract supplying ice rink
and structures.
Three year contract supplying ice rink
and structures.
Three year contract supplying ice rink
and structures.
Supplying structures & seating to
Tokyo 2020 Olympics.
Region: UKE
Region: UKE
Region: UKE
Region: UKE /MEA
World Snooker
London Stadium E20
Edinburgh Rugby
New multi year contract
to supply structures.
Contract win including: 7,000 Clearview
Seats with our ASD decking solution.
Contract win for new stadium build
at Murrayfield.
Region: UKE
18
Region: UKE
Region: UKE
Jamie Turner
Warwick Caste
Operated by Merlin Entertainments
19
“The professionalism of Arena, has been second to none”Annual Report & Accounts FY20Arena Events Group plc Annual Report & Accounts FY20
Strategic
Report
Chairman’s Statement
CEO’s Report
Financial Review
Non-Financial Review
Principal Risks and Uncertainties
Regional Highlights - UK & Europe
Regional Highlights - Middle East & Asia
Regional Highlights - Americas
Corporate Social Responsibility
Safety Management
Environment and Sustainability
22
24
28
34
35
38
40
42
44
48
49
“A trusted key supplier,
their eye for detail and
professional safe approach
are an essential contribution
to the success of our events.”
20
Hannah Clark
Event Director at Limelight Sports Ltd
London Duathlon
21
Arena Events Group plc Annual Report & Accounts FY20
“There is no doubt that
2020 will be recognised
as the most challenging
environment the business
world has experienced
for decades.”
Chairman’s
Statement
Solid Performance but
Challenging Outlook
Ken Hanna
Chairman
We announced last year that we intended to change
the Group’s year end to March, and in order to assist
comparisons, we have presented results for the fifteen
months and twelve months ending 31 March 2020.
Performance for the fifteen-month period to March 2020,
was solid and in line with expectations but was not without
its challenges. We successfully delivered a large number
of projects, notably the Rugby World Cup and several new
events in Saudi Arabia, however, in view of deteriorating
economic conditions and cost increases in a number of our
markets, we had to take some difficult decisions in order
to reduce our overheads, particularly in the US and UK.
Accordingly, the Board took a decision to reduce the interim
dividend to half of the prior year’s amount and a dividend
of 0.25 pence per share was paid on 1 November 2019.
Without doubt, the COVID-19 pandemic has had, and will
continue to have, an impact across all aspects of society
and for an event business such as Arena, the impact
has been devastating. From the middle of March 2020,
our traditional business all but stopped and we expect
performance to be severely impacted for the rest of this
financial year.
I am particularly proud of the way our employees have
reacted and adjusted to this unique situation. In many
markets, we have had to furlough staff and unfortunately
some others have had to be made redundant. We have
however been able to secure a number of COVID-19
projects, most notably the building of two temporary
hospitals which were completed in less than four weeks.
The outlook for the remainder of this year is extremely
challenging and the Board has taken a decision to cancel
the final dividend for the fifteen-month period ending
31 March 2020.
We have taken some very significant steps to strengthen
our capital structure and to enable the Group to continue
trading through these unprecedented times. On 26 March,
2020 we announced a fundraising of £9.5m through a
placing of new shares and the Group received the funds
in mid-April. As part of the placing, TasHeel became the
single largest shareholder in the Group and together
with Lombard Odier Asset Management, our two largest
shareholders own just under 50% of the Group’s issued
share capital. In addition to the placing, we also completed
an arrangement with HSBC to provide an additional loan
of £4.75m and to waive covenants on all borrowings from
HSBC through to September 2020. This support from HSBC
and the placing, ensures that the Group is well positioned
to deal with the challenges of COVID-19.
In September 2019, the Board appointed Steve Trowbridge
as Chief Financial Officer. Steve had held a number
of executive roles in both public and private companies
and he has made a very significant improvement to the
finance function as well as his contribution to the Board.
In June 2020, the Board appointed Henry Turcan as a
Non-Executive Director, an investment manager with
Lombard Odier Asset Management, our second largest
shareholder. Henry is an experienced executive and we
look forward to his guidance and counsel.
There is no doubt that 2020 will be recognised as the
most challenging environment the business world has
experienced for decades. The Arena Group is no exception
to this. I am however confident that we have taken all of
the appropriate actions in order to protect the future of the
Group and to emerge stronger. We do not know when the
event world will return to normal but when it does, Arena
is well placed to continue as an industry leader.
It has been a very difficult time for all our colleagues
and I would like to thank each and every one for their
hard work and sacrifice.
Ken Hanna
Chairman
2 July 2020
22
23
Arena Events Group plc CEO’s Report
CEO Report
March FY20
Greg Lawless
Chief Executive Officer
Introduction
As I write this report, the world is in disarray as a
consequence of the unprecedented impact of the
COVID-19 pandemic on both the lives and businesses
of millions of people around the world. The pandemic
has had some limited impact on our results to March 2020,
with the cancellation of several pre-March events in our
Middle East & Asia (MEA) Division, reducing EBITDA
by circa £300,000. However, post the period-end, our
business has been particularly badly impacted by the
near global prohibition on any form of mass gatherings.
These restrictions are still largely in force today, in
almost all parts of the world, and will have a far more
significant impact on the Group’s trading for the twelve
months to March 2021. I have, therefore, added additional
commentary on this matter in my concluding comments
at the end of this report.
As announced last year the Group has now changed its
year-end to March and this is the first set of results to
reflect this change. In order to assist a year-on-year
comparison, we have presented both a fifteen months
and twelve months set of results to March 2020. As long
term shareholders of the Group will know, the first three
calendar months of any year are the Group’s worst trading
period and as the results for the fifteen-months to the end
of March 2020 include two January to March periods, we
have also included a set of results that demonstrate a more
24
normal Group performance for the twelve months to
the end of March 2020. For year-on-year comparability,
much of my commentary here will focus on that twelve-
month period, but a more detailed comparison against
the fifteen-month period is given in the Financial Review
section that follows.
The period to March 2020 has been a time of consolidation
for the Group, with no acquisitions in the last fifteen
months, a focus on delivering operational improvements,
particularly in the Americas and UK & Europe (UKE)
Divisions, and the expansion of the Group’s base in
Saudi Arabia to capitalise on the vast growth potential in
temporary event infrastructure requirements in that region.
For the Group as a whole, trading for the 12 months to the
end of March has been very solid. In the MEA region, the
successful delivery of several large, high-profile projects
in Saudi Arabia and at the Rugby World Cup in Japan have
more than offset weakness in the Hong Kong and Dubai
markets. Whilst these large projects required additional
investment in equipment and working capital, impacting
overall debt levels, it has positioned the business well to
support planned future growth in the region.
During the period we reset the cost base in the US and in
the UK to ensure that we continue to deliver an acceptable
return on our asset base whilst ensuring we deliver to the
Arena Standard in all regions. The London events market
has been soft all year, mainly as a result of uncertainties
created by Brexit, and as a consequence, our Well Dressed
Tables (WDT) business in London performed below
expectations, but these results were positively offset by
a very strong performance from the UK Seating unit.
Results
The Group delivered a solid set of results for the twelve
months to March 2020 with revenues of £160.6m which
compares to £135.0m for the twelve months to 31
December 2018. This revenue increase reflects the full
impact of the eight acquisitions in 2018 as well as organic
growth of 3%.
Group Adjusted EBITDA for the twelve months to March
2020 was £16.5m which is an increase of 36% on the twelve
months to December 2018. As mentioned above, the results
for the last six weeks of the period to the end of March 2020
were slightly impacted by the cancellation of a number
of events in the MEA region due to COVID-19. The FY20
results also include the first-time impact of IFRS 16.
Group net debt (excluding the impact of IFRS 16) was
£35.6m an increase of £8.6m over the balance at the end
of December 2018. This increase was driven by a number
of factors including a higher level of capital expenditure
than normal to facilitate the delivery of the additional
golf work in the US, including the Ryder Cup, as well as
the expansion of the rental asset base in Saudi Arabia, a
market which experienced significant growth in the last
fifteen months. In addition, the end of March has a much
higher level of working capital than at December due to
the seasonal profile of activity. During the last fifteen
months over £2.7m (including £0.3m satisfied by issuing
new shares) has been spent on deferred consideration
for the 2018 acquisitions, with the remaining future
liability decreasing to £0.9m at the end of March 2020.
MEA Division
The MEA Division was the largest contributor to Group
EBITDA in the last twelve months (excluding the impact
of IFRS 16) due almost entirely to an incredibly strong
performance in Saudi Arabia over the last six months.
Whilst trading was softer in Hong Kong, and Dubai,
the Division delivered a number of spectacular projects
in Saudi Arabia including the temporary 15,000 seater
stadium and 3,000 guest VIP hospitality structure for
the World Heavyweight Boxing match between Joshua
and Ruiz. The stadium was subsequently used for a
week-long international tennis event. In addition, the
team also delivered a temporary restaurant complex in
Riyadh using the Group’s Arena Super Deck (ASD) system
that attracted thousands of visitors over a sixteen-week
period for what is known locally as the Riyadh Season.
Although trading was quieter in both Hong Kong and Dubai,
the MEA team delivered a number of spectacular annual
projects, including the world’s largest oil conference,
ADIPEC, in Abu Dhabi, the HSBC Abu Dhabi Golf
Championships, the Dubai Desert Classic and many others.
In addition, the Division, working with local Japanese
partners, delivered world-class temporary hospitality
facilities for the 2019 Rugby World Cup in Tokyo.
UKE Division
The UKE Division’s performance was heavily influenced
by a very strong performance in the Seating unit with
the completion of the design and delivery of circa 26,000
Clearview™ seats for the, now postponed, Tokyo Olympics.
This contract, which was a combined effort between the
UKE and MEA Divisions with the support of our key local
Japanese partners, had been completed, but will now likely
be extended to 2021 as the Games are now rescheduled to
July next year.
The restructuring of the Structures Division continued
during the year with the addition of a number of new key
senior executives and further operational improvements at
the St Ives hub. Whilst good progress has been made here,
the task has proved to be more difficult than first envisaged
and is going to take a further few months to have this
business unit back to delivering to its full potential.
Both the Mass Participation and Arena Ice business
units performed well, however as noted above, the Well
Dressed Tables business had a poor year, with the London
day-to-day event market badly impacted by the economic
uncertainties created by Brexit.
The Seating unit secured two significant semi-permanent
seating stadium contracts, the first a 7,500 stadium
for Edinburgh Rugby Club and the second a redesign of
The London Stadium including 7,000 Clearview™ seats
utilising the Group’s ASD decking system. Both contracts
commenced before the year end and will be delivered
later in 2020.
The Division also delivered the normal annual events
such as The Cheltenham Festival, The Open, the
Wimbledon Championships and many others during the
last twelve months, with very strong attendance levels,
particularly at Portrush for the Open.
25
Annual Report & Accounts FY20Arena Events Group plc CEO’s Report
Finally, within the last few months we have merged our
Middle East & Asia Division with the UK & Europe Division.
This merger will enable us to provide the Arena Standard
on a consistent basis across this enlarged Europe, Middle
East & Asia (EMEA) Division, as well as providing an
opportunity for us to deliver the design-led solution model
that has been the hallmark of the MEA Division over the last
few years.
Americas Division
The Americas Division struggled in the early part of the
last twelve months with less one-off and Disaster Relief
work reducing performance compared to the twelve-month
period ended December 2018. As a result, the Division
implemented an operational efficiency programme, called
Project Lift, with a view to improving the overall financial
performance of the Division. This plan was finalised at the
end of September 2019 and was completed in the quarter
ending December 2019. As a result, the Division ultimately
delivered a reasonable set of results to the end of
March 2020.
The last twelve months saw the successful delivery of the
normal annual events in the US calendar, including the
SuperBowl, Daytona, the Chicago Marathon and US PGA
Championships at Bethpage, where the Division utilised
their new seating inventory for the first time.
In addition, the team have been busy preparing the design
layout and manufacturing additional inventory for the
Ryder Cup in Whistling Straights as well as facilitating
a change to the US Majors golf schedule, with the move
of the PGA Championships to earlier in the year. The
COVID-19 virus has, of course, disrupted the golf schedule
with both the US PGA and US Open events postponed to
later in the year.
Placing and Additional Bank Facilities
On 26 March 2020, just prior to the period end, we
announced a £9.5m fundraising (before expenses) through
a placing and subscription for shares at an issue price of 10
pence per ordinary share (a 71% premium to the VWAP of
the shares for the five business days preceding the date of
the announcement). This placing was completed after the
period end with the Group receiving the net cash proceeds
in mid-April.
This fundraising was carried out to obtain additional
cash resources to strengthen the Group’s balance sheet
and to give the business a longer runway to withstand
26
the commercial and financial impacts of the COVID-19
virus. As part of the placing, the TasHeel Group, became
the single largest shareholder in the Group with a
shareholding of 24.2%.
The TasHeel Group was founded in 2003 in the Kingdom
of Saudi Arabia, and TasHeel Holding Group LLC was
incorporated in 2016. The TasHeel Group is a broad-based
international group with more than 1,000 employees
across a number of business operations which provide
visa, travel, concierge and business process services
to individuals, ministries, government departments
and large enterprises.
As part of the process to strengthen the Group’s financial
position, our bank, HSBC, agreed in March to provide
additional overdraft facilities of £4.75m, to be drawn down
from our existing revolving credit facility. These additional
resources will further extend the cash runway of the
business as we tackle the impacts of COVID-19.
COVID-19
The impact of the COVID-19 virus has continued to wreak
havoc through most business sectors around the world,
with the economic fall-out now believed to be significantly
worse than the Global Financial Crisis of 2008/09.
The impact on Arena started in the middle of February
with the cancellation of several events in Asia and the
Middle East. However, since the end of March, we have
experienced the widespread cancellation or postponement
of almost all of our events worldwide, up to the end
of September.
We have, however, been fortunate to have been able
to assist the efforts of various Governments around
the world to help deal with the pandemic by way of the
provision of temporary hospitals, drive through test
centres and other health facilities. These projects have
delivered revenues of over £24m after the period end,
in April and May, but with anticipated event revenue
losses of over £110m up to the end of 2020, this represents
an anticipated net loss of revenues of £86m, which is a
seismic change for the Group, as a whole, this year.
Even, as I write, there is still a tremendous amount
of uncertainty in the events world and we are still not sure
if there will be any further cancellation of events beyond
September - and indeed what the longer-term implications
are for the event industry. The Group has, of course,
implemented extensive measures across all Divisions
to conserve cash including permanent and temporary
lay-offs, reduced working weeks, partial or full salary
reductions and unpaid leave. Discretionary expenditure
has also been cancelled, rent deferrals have been achieved
on a number of Arena’s leases and capital expenditure
has been extensively scaled back except for those sales
contracts already underway and to support necessary
equipment maintenance or Health & Safety matters.
As of today, our monthly fixed overheads have been
reduced by over 40% and will continue at that level for
as long as the impact of the pandemic continues.
We also continue to work with those customers whose
events are not scheduled until September or later, with a
view to making decisions on whether to commence activity
on these venues in the next few months.
Conclusion
The COVID-19 pandemic has taken all the positives away
from the solid performance of the Group for the period to
the end of March 2020.
Our focus over the last few months has been to implement
as many measures as possible to lengthen the cash runway
for the Group and to ensure that as much of the fabric of
the Group is retained in order to kick start the business,
as quickly and efficiently as possible, as soon as the
restrictions on mass gatherings at events have been
fully lifted.
As a result of this very uncertain environment we are
therefore unable to give any specific guidance on how
the pandemic will impact trading to the end of March next
year, other than to say the impact will be very significant.
We will, therefore, continue to manage our cost base and
cash position until such time that normality returns to
the live event world. To that end there have been signs
of a tentative recovery in the Asia market and our hope
is that this recovery will slowly extend to the rest of our
operations around the world during the coming months.
In conclusion, I would like to thank my fellow Board
Directors and my colleagues around the world for their
continued commitment to managing our business through
these very difficult times. We very much look forward to a
return to normality, sooner rather than later, recognising
that the health and safety of everyone, particularly our
employees, is of course our first priority.
Greg Lawless
Chief Executive Officer
2 July 2020
27
“The period to March 2020 has been a time of consolidation for the Group, with no acquisitions in those fifteen months, a focus on delivering operational improvements, particularly in the US and UK Divisions, as well as the expansion of the Group’s base in Saudi Arabia to capitalise on the vast growth potential in temporary event infrastructure requirements in that region.”Annual Report & Accounts FY20Arena Events Group plc Our Financial Results are Summarised Below:
15 months ended
31 March 2020
(inc IFRS 16)
(audited)
12 months ended
31 March 2020
(inc IFRS 16)
(unaudited)
12 months ended
31 March 2020
(exc IFRS 16)
(unaudited)
12 months ended
31 December 20182
(exc IFRS 16)
(audited)
£m
183.2
55.4
30.2%
£m
160.6
50.4
31.4%
£m
160.6
50.4
31.4%
£m
135.0
41.8
31.0%
(42.2)
(33.9)
(38.1)
(29.7)
Revenue
Gross profit
Gross profit %
Operating expenses
(excluding exceptional
costs, depreciation,
amortisation and share
option charges)
Adjusted EBITDA1
13.2
16.5
Depreciation
and amortisation
(before impairment)
(15.0)
(12.1)
Share option expense
(0.3)
(0.3)
12.3
(8.4)
(0.3)
The Group has 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 £13.2m and a statutory
operating loss after exceptional costs
and share based payment charges of
£19.6m. Before the impact of IFRS 16
Adjusted EBITDA for the twelve months
ended 31 March 2020 was £12.3m (£16.5m
after IFRS 16), up £0.2m compared to the
twelve months ended 31 December 2018.
Exceptional costs
(including goodwill
impairment)
Acquisition costs
Operating loss
Finance costs
Tax
Loss after tax /
Net income
Notes:
(17.5)
(17.2)
(17.2)
-
(19.6)
(3.4)
0.1
(22.9)
-
(13.1)
(2.8)
0.1
(15.8)
-
(13.6)
(2.0)
0.1
(15.5)
12.1
(5.7)
(0.2)
(5.4)
(0.8)
-
(1.6)
(0.4)
(2.0)
1. Adjusted EBITDA is defined as earnings before interest, tax, depreciation, intangible amortisation, exceptional items, share option
costs and acquisition costs.
2. 2018 figures have not been restated for the impact of IFRS 16 due to the implementation choices made by the group on adoption
of the new accounting standard.
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.
29
Financial
Review
Steve Trowbridge
Chief Financial Officer
28
Annual Report & Accounts FY20Arena Events Group plc Financial Review
Revenue
Exceptional and Acquisition Costs
Tax
Earnings Per Share and Dividend
The exceptional costs of £17.5m are set out in more detail
in note 4 to the accounts. These comprise the costs of
restructuring activities in: the US Arena operation; the UK
Structures and WDT business units; the Arena Exhibitions
& Events Services Division in Dubai; and, operations in a
number of Asian markets. A £16.1m 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 a
£1.9m insurance recovery relating to the settlement of the
legacy DOJ case in the US. There were no acquisition costs
in the period, but a revised view on the level of deferred
consideration payable on 2018 acquisitions, in the light
of the outlook driven by COVID-19, gave rise to a £0.9m
credit from a reduction in provisions.
Finance Expenses
Finance costs comprise mainly cash interest incurred on
bank borrowings and finance leases with higher average
drawings partly driving the year on year increase in cost.
Other finance costs include the amortisation of debt
arrangement fees paid in previous periods and the
imputed interest on the deferred consideration balance
which is shown at its discounted value on the balance
sheet, with notional interest accruing at a rate of 10%
per annum. In addition, with the implementation of IFRS 16
(see note 17) there is an additional finance interest charge
of £0.9m relating to the Right of Use asset.
Revenue in the fifteen-month period to 31 March 2020
was £183.2m. In the twelve-month period to 31 March 2020
it was £160.6m, which compares to £135.0m for the twelve
months to 31 December 2018. Revenue growth was in part
driven by the full-period effect of the eight acquisitions
made part way through 2018. Organic growth was driven
largely by the Middle East & Asia (MEA) Division, where
new projects were won in Saudi Arabia and Japan.
By contrast the UK market was affected by weakness in
the London events market impacting the Well Dressed
Tables (WDT) business unit, while the US saw a larger
decline due to fewer “late notice/one-off” projects,
such as disaster relief assignments.
Gross Margin and Operating Expenses
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. For the
twelve months ended 31 March 2020 gross margin was
31.4% compared to 31.0% for the twelve months ended 31
December 2018. The improvement in gross margin across
the periods is largely due to higher proportion of profit
from the MEA Division alongside an improved margin in the
UK due to the non-repeat of the 2018 overtrading issues.
Operating expenses, excluding exceptional and acquisition
costs, depreciation, amortisation and share option charge,
were £42.2m in the fifteen-month period to 31 March 2020
and £38.1m for the twelve-month period ended 31 March
2020 (excluding the beneficial impact of IFRS 16). This
compares to £29.7m for the twelve month period ended
31 December 2020 and was due to the full period impact
of the acquisitions in 2018, combined with inflationary
pressures, offset in part by targeted plans to reset the
cost base across all regions by reassessing headcount
and consolidating the property portfolio.
30
The £0.1m tax credit in the fifteen months ended 31 March
2020 compares to a £0.4m charge in the twelve months
ended 31 December 2018. The credit results from a £0.2m
deferred tax movement, but the low underlying corporation
tax charge is due to a combination of factors, including
tax free operations in Dubai, no tax payable in the UK and
no tax charge in the US legacy business due to tax losses
brought forward.
The actual earnings per share in the fifteen-month period
to March 2020 was negative due to the exceptional and
acquisition costs described above and the inclusion of two
lossmaking January to March periods being the seasonally
quieter months. 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.
Going forward we expect the tax charge to increase
modestly but remain lower than the standard UK tax rate
due to factors including the portion of profits generated in
Dubai, carry forward tax losses in the legacy US business
and an assumption that the US tax code will continue to
allow 100% tax deductions for capital expenditure.
An interim dividend of 0.25 pence per share was declared
in September 2019, but in the light of COVID-19 and the
need to maximise balance sheet flexibility no final dividend
has been recommended. This means the total dividend is
0.25 pence per share for the fifteen-month period ended
31 March 2020, compared to 1.5 pence for the twelve
months ended 31 December 2018.
Calculation
of adjusted
net income
15 months ended
31 March 2020
(audited)
12 months ended
31 March 2020
(inc IFRS 16)
(unaudited)
12 months ended
31 March 2020
(exc IFRS 16)
(unaudited)
12 months ended
31 December 2018
(audited)
Loss after tax / net
income (£m)
Addback:
Exceptional costs (£m)
Acquisition costs (£m)
Exceptional finance
costs (amortisation of
arrangement fees, loan
note interest) (£m)
Share option charge (£m)
Adjusted earnings (£m)
Average number
of shares (m)
Adjusted basic earnings
per share (pence)
(22.9)
(15.8)
(15.5)
(2.0)
17.5
-
0.6
0.3
(4.5)
152.5
(3.0)
17.2
-
0.3
0.3
2.0
17.2
-
0.3
0.3
2.3
152.7
152.7
1.3
1.5
5.4
0.8
0.5
0.2
4.9
131.7
3.7
31
Annual Report & Accounts FY20Arena Events Group plc Financial Review
Acquisitions
Working Capital
There were no acquisitions in the fifteen-month period
ended 31 March 2020. This compares to eight acquisitions
in the twelve months to 31 December 2018.
Debt and Cash Position
In a normal year, March typically represents a debt
high point for the Group as it occurs at the end of the
loss-making first calendar quarter. Cash at the end
of March 2020 was £5.8m, giving a net debt position
of £35.6m (covenant definition, excluding IFRS 16, but
including £0.9m of finance leases and £0.9m of deferred
consideration) and an Adjusted EBITDA (pre IFRS 16) to
net debt ratio of 2.9x. At the end of March 2020, the Group’s
drawn senior debt facility remained at £34.9m, in line with
the December 2019 and June 2019 positions, supplemented
by overdraft and guarantee facilities in the US and Middle
East. An additional £2m short-term financing facility with
Lombard Odier Investment Management (LOIM) was
agreed and announced in November, of which £2m
was drawn at the end of March 2020.
On 26 March the Group announced a proposed £9.5m
equity fundraising (before expenses) by way of placing and
subscription for new ordinary shares at ten pence per share.
This announcement was accompanied by the confirmation
that the Group’s lender, HSBC, would permit the drawdown
of an additional amount of £4.75m from its existing facilities
and that LOIM had agreed to extend the repayment of the
short-term financing facility to 25 March 2021.
The placing and subscription was approved by
shareholders on 14 April 2020, with funds received the
following day. The most recent management accounts
(June 2020) showed that the Group had a cash balance
of £23.5m and had not drawn the additional £4.75m HSBC
facilities, giving net debt of £18.7m (covenant definition).
The Group had total working capital at 31 March 2020
of £(8.0)m, compared to £(2.5)m at the end of December
2018. 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.
Capital Expenditure
Total net capital expenditure (additions less proceeds
from disposals) in the fifteen-month period ended
31 March 2020 was £15.1m. This level of spend reflects
continued investment in rental equipment, mainly growth-
related in the Middle East, to support key projects in new
markets such as Saudi Arabia. In addition, in late 2019
and early 2020 there was investment in equipment in the
US, including scaffolding and seating, to support the three
large golf events (US Open, PGA and Ryder Cup), originally
scheduled with overlapping build requirements.
Net capital expenditure for the twelve months ended
31 March 2020 was £12.7m and compares to £10.8m for
the twelve months ended 31 December 2018. The year on
year change is reflective of the increased size of the Group
following the acquisitions made in 2018 and the contract
wins to be delivered in 2020.
Key Performance Indicators (KPIs)
The Group monitors a number of key performance
indicators (KPIs) which are reviewed at divisional
and Board level. The main KPIs reviewed are summarised
in the table and described in more detail opposite. As the
fifteen-month period ending 31 March 2020 contains two
loss-making January to March periods, the fifteen months
is not deemed a meaningful period over which to assess
these KPIs. We have therefore presented the data for
the twelve-month periods ending 31 March 2020 and 31
December 2018:
Annual Report & Accounts FY20
KPIs
Adjusted EBITDA (pre-IFRS 16) as a % of revenue
Adjusted Earnings per share (pence)
ROCE %1
Net debt to Adjusted EBITDA (pre-IFRS 16)2
12 months ended
31 March 2020
(unaudited)
12 months ended
31 December 2018
(audited)
7.7%
1.4
3.8%
2.9x
9.0%
3.7
8.0%
2.2x
Notes:
1. 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.
2. Includes finance leases and deferred consideration which are included in the covenant definition of net debt.
Accounting Standards
As noted above we implemented IFRS 16 (leases) during
2019. As a result, leases have been recorded as an asset
with a corresponding liability on the balance sheet and
rather than reporting rental payments as an operating
expense, there is an additional depreciation and interest
charge. The 2018 results do not include the impact of
IFRS 16. More detail is given in Note 1 of the Notes to the
Financial Statements.
Steve Trowbridge
Chief Financial Officer
2 July 2020
Section 172(1) Statement
In accordance with section 172 of the UK Companies Act
2006, in its decision making the Board considers in good
faith, the interests of the Group’s employees and other
stakeholders. The Board understands the importance of
taking into account the views of all stakeholders through
open and transparent dialogue and considers the impact
of the Company’s activities and business practices on
the communities in which Arena Events operates, the
environment and the Group’s reputation. In its decision
making, the Board also considers what is most likely to
promote the success of the Company for its stakeholders in
the long term.
Information about our stakeholders and on how the Board
has discharged its duties having regard to the provisions
of the QCA Corporate Governance code is available
throughout this report and, in particular in the Corporate
Governance Statement on pages 56-61. Also, in the
Strategic Report on pages 44-49, information is given in
the CSR Report of our support for our local communities,
respect for the environment, and compliance with ethical
and sustainability policies. More detail on how Arena
Group manages its principal risks and uncertainties and the
interaction with key stakeholders is given on pages 35-37,
while page 70 of the Directors’ Report summarises the
Group’s approach to employee involvement.
32
33
Arena Events Group plc Non-Financial
Review
The Directors, in preparing this Strategic
Report, have sought to comply with s414C
of the Companies Act 2006 in relation to
providing relevant non-financial information.
This Strategic Report has been prepared for
the Group as a whole and therefore gives
greater emphasis to those matters which are
significant to Arena Events Group plc and its
subsidiaries when viewed as a whole.
Non-Financial Information Statement
The table below references where non-financial
information is included within the Annual Report:
Information
Reference
The Group’s business model
Page 11
The Group’s strategy
Pages 12-13
The Group’s development,
performance and position and
impact of its activity, relating to
environmental matters, employees,
social matters, respect for human
rights and anti-corruption and
anti-bribery matters
Pages 44 - 49
and Page 63
Principal risks and uncertainties
Pages 35-37
References to, and additional
explanations of, amounts included
in the entity’s annual accounts
Pages 28-33
Annual Report & Accounts FY20
Principal Risks
and Uncertainties
Potential business and operational risks
are regularly reviewed by the Board and
appropriate procedures put in place to
monitor and mitigate them. The principal
risks identified by the Board and the related
mitigation strategies are set out below.
Risks
Health & Safety
The installation of temporary structures and
grandstand seating is complex and may require
working at height.
Whilst the Group holds suitable insurance
coverage, an employee or third-party incident
relating to the use of Group equipment
could have a detrimental effect on the future
reputation and performance of the Group.
Dependence on key individuals /
management
Arena’s future success is substantially
dependent on a relatively small number of
people and the Directors therefore view the
continued service of certain of its Directors,
senior management and other key personnel
as important.
Mitigation
• The Group has a stated commitment to, and a reputation for,
rigorous Health & Safety (H&S) compliance
• There are nominated H&S managers in each business and
regular reporting to the regional leadership teams each month
• Third party advisers and consultants are engaged where
appropriate to support internal H&S teams
• Health & Safety performance is reported to the Board of
Directors each month and reviewed as part of Board meetings,
with follow-up actions where necessary
• The Directors are taking steps to ensure that knowledge, skills
and expertise are shared to avoid the Group being unduly
dependent on individuals
• Succession plans are being developed for key individuals and
these plans are reviewed by the Board at least annually
Equipment failure
• The Group has a rigorous safety culture to ensure all
Due to the nature of the business, a
catastrophic failure of equipment could
lead to serious injury or loss of life. The
repercussions of any such incident would
almost certainly affect the Company’s ability to
win or retain business in the local geography
and internationally, across all sectors in which
Arena operate.
temporary structures and grandstand seating is constructed
to appropriate standards, with third party sign-off where
relevant
• All temporary structures and grandstand seating are designed
and certified to meet all engineering and safety specifications
• Continuous training is provided in construction standards,
safety measures and precautions for construction staff
34
35
Arena Events Group plc Principal Risks and Uncertainties
Risks
Mitigation
Risks
Mitigation
Reduction in quality of service could have
a negative impact on reputation
The strength of the Arena brand and the Group’s
ability to deliver iconic events on time, every time, is
fundamental to the Group’s success in winning new
business. As the Group expands internationally and
acquires businesses it becomes more challenging to
ensure a consistent quality of product and service.
• To manage this risk the Group develops integration
plans for any acquired businesses and actively
promotes the ‘Arena Standard’ to all existing and
new employees
•
Intra-company movements of staff is encouraged,
enabling senior staff to lend their skills & experience
to more developing Divisions
Market pricing pressure
• The Group typically differentiates itself from its
The event rental industry is highly competitive, and the
Group regularly comes under pricing pressure from
competitors. On occasion the Group will therefore
lose work to a competitor that has a different offering,
usually priced at a discount to the Arena service.
Pricing pressure can also lead to existing contracts
being extended at lower than normal levels of pricing,
to ensure work is not lost to a competitor.
Ability to recruit and retain personnel
As the Group grows it will need to continue hiring
staff, with a mix of experience in temporary structure
construction and other related skills both in the field
and office-based roles. Any future challenges to the
recruitment or retention process could have an impact
on the Group’s ability to take on new business or to
service existing contracts.
In both the UK and US regions there are particular
challenges to hire, train and retain field-based labour
at current rates of pay given market conditions. If
higher rates of pay are required to attract and retain
employees, this will impact financial performance.
competitors on quality of service and product and does
not compete purely on price
• To mitigate the risk of losing customers, the Group
focuses on securing multi-year contracts with key
customers for annual events where possible and
building strong relationships with regular customers
and event organisers
• The Group has put in place appropriate recruitment
and training programmes in each region to source
and then train employees
• Divisions anticipate and allow adequate time for
recruiting for temporary positions during the busy
season – ensuring sufficient training in Health & Safety
• The Group is reviewing market pay rates in each region
and implementing a skills matrix to allow employees
to clearly identify the skills required to progress and
develop their career within the Group
Increasing costs
In addition to payroll and agency labour costs, the
largest portion of the Group’s project costs are made
up of items such as transport, plant hire, materials and
consumables. If these costs increase by more than the
overall regional RPI, then there is a risk that project
margins will reduce on long term customer contracts
where the customer price increase is limited to a
maximum of RPI.
• Each major project delivered under a multi-year
contract is reviewed each year and opportunities
identified to reduce costs where possible from more
efficient use of resources or better procurement
• For all new contracts a detailed cost budget is
prepared as part of the bidding process
• Underlying cost pressures are also discussed with
customers to ensure transparency and openness
Economic uncertainty
Any economic uncertainty in the regions in which we
operate can lead to discretionary or one-off events
and projects to be postponed or cancelled. Whilst such
contracts make up a relatively small proportion of
our overall revenue, the loss of such work can have a
material impact of overall profitability given the fixed
costs of the Group.
36
• The Group has a sales and marketing process to
identify, price and secure projects each year in addition
to the base of contracted and recurring contracts
• The pipeline of significant contract bids is reviewed
regularly
Operating in new territories
As the Group grows it is likely that new contracts will
be won and delivered in new territories and jurisdictions.
The pace of growth in 2019 in Saudi Arabia is one
such example.
• When working in new territories the Group generally
identifies a local partner and then works with that
partner to support the local delivery of product
and services
• Once a market becomes more established a local team
and local advisers are then engaged
Introduction of additional regulation
• The Group ensures it is aware of relevant
The Group adheres to all local regulatory codes in each
region, however, any material change to these rules,
in particular with regard to Health & Safety (H&S) or
the application of new H&S standards to the temporary
event sector could lead to additional costs, not all of
which can be passed on to the customer, resulting in an
impact on profitability.
changes in regulations through training and use
of external advisers
• Any additional costs incurred as a result of such
changes are passed on to the customer where
possible, but for multi-year contracts this may not be
possible until the contract renewal
Brexit
At the time of writing there still remains uncertainty
over the framework of the UK’s departure from the EU
at the end of 2020.
The Group might be impacted by higher duties on UK
imports into the EU or currencies move adversely.
Controls on the freedom of movement of people may
impact the availability of European workers in the UK.
COVID-19 (and other socially transmittable
diseases)
The Group operates in markets based upon supporting
gatherings at sports and music events, exhibitions,
private and corporate meetings and other mass
participation events. A prolonged period of social
distancing or a reduction in the desire of attendees to
travel could put the future of such events at risk.
• The Group’s exposure to European cross border trade
remains limited and hence a changing structure of
tariffs is unlikely to have a material impact. In general,
the Group has both costs and revenues arising in local
currencies providing a natural hedge
• The freedom of movement of workers and its impact
on the availability of suitably qualified staff remains
an issue. The Group has sought to maintain as much
flexibility in the employment market as possible,
identifying key roles and personnel and working to
retain those individuals where-ever possible
• The Group continues to engage with all event
organisers to understand changing requirements
and recovery plans
• A number of events have not been cancelled, but
instead postponed to later in 2020 or into 2021,
reducing the financial impact. The Group fully
expects to support these changes, which in some
instances have been accompanied by extensions to
multi-year contracts
• The permanent cessation of such events would
require the Group to reset its commercial offering
and reduce its cost base and investment plans to
maintain necessary levels of cash generation.
This backdrop may also lead to a reduction in the
number of competing suppliers
• The Group’s products also provide additional flexibility
to those seeking to operate within social distancing
guidelines by temporarily increasing available areas
that can be used
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Annual Report & Accounts FY20Arena Events Group plc Regional
Highlights
UK & Europe
The focus for the UK in the fifteen-month
period to 31 March 2020 was to reset
the business model after a number of
operational issues in 2018, while still
delivering the same number of high-profile
projects. All acquisitions made in 2018
have now been fully integrated into the
Division, with ongoing work to optimise the
operating model and geographic footprint,
whilst reducing overheads. COVID-19 only
impacted the region in the final weeks of the
period, with work commencing to help health
authorities with temporary medical facilities.
Highlights
People
Major Events
Delivered seating to Japan for the Tokyo
2020 Olympics
Converted the London Stadium to host the
Major League Baseball London Series in the
Summer of 2019
Provided temporary structures and seating for
the D Day Commemorative event in Portsmouth
Supplied the premium hospitality structure
and tiered seating for the Masters’ Snooker
at Alexandra Palace
All this is under the leadership of Chris Morris who joined
the Arena business as CEO UK & Europe in March 2019.
New operational leadership was put in place in the St Ives
base, driving significant process, productivity and
quality improvements.
Chris Morris stepped down as CEO with Paul Berger taking
over a wider remit as CEO of Arena Europe, Middle East
& Asia (EMEA) from June 2020.
Arena successfully delivered its
first major job in Northern Ireland,
supplying and installing structures,
seating and furniture at the Open Golf
at Royal Portrush.
At the end of 2019 we installed
over twenty ice rinks around the
UK including new venues such as
Cathedral Gardens Manchester,
Warwick Castle and the Royal
Museums Greenwich.
Once again, we undertook the
successful delivery of the players’
training facilities and hospitality
venue for the 2019 Nitto ATP Finals.
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Annual Report & Accounts FY20Arena Events Group plc Annual Report & Accounts FY20
Regional
Highlights
Middle East & Asia
The Middle East & Asia experienced
exceptionally strong growth in the fifteen-
month period, more than doubling in size.
TGP in Dubai, bought in late 2018, was fully
integrated in the Group and helped support
a major expansion of activity and reach
into the Saudi Arabia market. The final
months of 2019 proved to be the busiest
time ever experienced in the region, with
Arena delivering solutions across a range
of sporting, cultural, entertainment and
exhibition events. COVID-19 began to have
a major impact in the Asia region early in
2020 with a raft of event postponements,
although the Middle East initially only saw
a limited impact.
Highlights
People
Major Events
Having welcomed 136 new employees from TGP into the
Arena Group in late 2018, the period saw the two teams
work closely together delivering several inspirational
projects across the region. Under Paul Berger’s leadership,
expansion into Saudi Arabia continued, with a number of
significant contract wins across the region.
Supplied a number of new events including the
Dubai Desert Classic and the first Beach Soccer
Cup in Neom, Saudi Arabia
TGP rebranded as Arena Exhibitions
& Event Services
Delivered temporary exhibition space for
ADIPEC, the world’s largest oil and gas show
Continued expansion in Korea, with the CJ Cup
as the largest project of the year
In under eight weeks Arena built a
temporary 15,000 seat stadium and a
3,000 guest VIP hospitality structure
primarily for the Joshua-Ruiz boxing
match but also used for the Diriyah
Tennis and the Saudia Diriyah E-Prix.
In Japan the Group delivered
a number of temporary hospitality
structures for the 2019 Rugby
World Cup.
Arena designed, constructed and
fully fitted out six temporary high-end
restaurants for the Riyadh Festival in
Saudi Arabia.
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Arena Events Group plc Annual Report & Accounts FY20
Regional
Highlights
Americas
The Americas region had a tougher fifteen-
month period than the other Arena regions,
with the non-repeat of a number of short
notice events such as the Hurricane
Michael disaster relief work. However, the
acquisition of Stuart Rentals in September
2018 gave the region positive momentum
throughout the period, with an enhanced
geographical coverage and product range.
COVID-19 began to impact the region
towards the end of March 2020, but the
business refocused to provide significant
support to medical authorities across the
country with drive-through testing facilities
and a major temporary hospital that was built
in New York in early April.
Highlights
People
Major Events
In the second half of 2019 a wide-ranging cost
transformation programme was executed in Arena
Americas to streamline the overall management structure
and improve efficiency across the national tenting business
unit. This review has helped reduce the reliance on
“late-notice/one-off” projects in order to deliver a
sustained level of profitability moving forward. Just
after the end of the period, Paul Bryant stepped down
as Americas CEO after three years leading the region,
with Jon Tabeling moving from COO to President of
Arena Americas alongside Michael Berman who remains
President of Arena Stuart Rentals.
Over $30m of contracts secured or renewed
that will help ensure significant revenue flow in
future years including renewal of United States
Golf Association (USGA) contract for a further
five years and the Experimental Aircraft Aviation
(EAA) AirVenture show
Stuart Event Rentals, acquired in 2018 rebranded
as Arena Stuart Rentals
Delivered significant temporary structures for the
Super Bowl, Daytona International, the Kentucky
Derby and the launch of a new Netflix TV series
Consolidated operating assets in the Midwest
combining Structures, Well Dressed Tables
and Design/Manufacturing into a new 105,000
sq.ft state of the art facility with updated
automation improving operational performance
and project delivery
Arena Americas was proud to continue
supporting the Chicago Marathon,
delivering a range of equipment and
structures to the event.
The Group delivered temporary
seating for the first time for the PGA
Championship at Bethpage in New
York, alongside a number of other
major golf events.
Designed and installed a branded
lounge structure for Uber at the
United Center in Chicago – the Uber
Zone allows customers to wait in
comfort with seating, digital screens,
charging stations and music.
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Arena Events Group plc Corporate
Social
Responsibility
Doing the Right Thing
Arena strives to act in an ethical, safe and
sustainable way. We take every opportunity
to limit our environmental impact and
recognise the relevant social issues relating
to our activities in each of our Divisions.
People
We strive to ensure that our activities positively benefit
our stakeholders including our employees, customers,
suppliers, shareholders and local communities.
Customers, Community and Employees
The health and well-being of our staff, our customers
and the wider community are of paramount importance.
Several measures this year have been taken to enhance
the supportive work environment at Arena, enabling our
colleagues to develop within the group and fulfil their
professional and personal goals. A partnership approach
with key suppliers has been adopted to support their
people goals and community led initiatives.
The aim is to make a positive difference to our people,
the environment and the communities in which we work.
UK & Europe Initiatives
Following a thorough internal communications audit,
a business-wide programme to improve communication
and engagement amongst suppliers, colleagues and
customers was instigated. New initiatives implemented in
UK & Europe have delivered significant improvements:
Employee Consultation Committee
and Town Hall Meetings
Employee consultation forums happen monthly.
Colleagues are encouraged to share their views and feel
empowered to make decisions. Town Hall meetings are
held monthly and a group newsletter is regularly deployed.
Employees are better informed, consulted with and
engaged in our business decision making.
New Recognition Schemes
New long service awards and employee of the month
recognition schemes aligned to our values have been
implemented.
Employee Survey
Deployment of a robust employee consultation survey
has given us a key benchmark on our cultural strengths.
An action plan is being developed to build on what we
have learnt to improve future employee engagement.
New Construction Team Support
Hubs Launched
Our construction teams have been organised into regional
team hubs with support networks in place. With employees
situated closer to home and travelling less we have also
noted reductions in the environmental impact of long
haul journeys.
Employee Assistance / Wellness Program
There has been a concerted effort to ensure all staff
are aware of our various wellness benefits including
subsidised gym memberships, diagnostic screening,
weight loss programs and access to life and emotional
support.
Intra-Group Relocation Opportunities
Several employees have made intra-group relocations
between the UKE and the MEA and Americas Divisions.
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Annual Report & Accounts FY20Arena Events Group plc Annual Report & Accounts FY20
professional Tour in the Middle East and North Africa
region. Four EDGA-registered players, with a confirmed
World Ranking for Golfers with Disability (WR4GD), a golf
handicap of 4.4 or less, with an official World Ranking
position, will be able to apply for one or more invitations
in three chosen tournaments. The four invitations will be
offered at the following events – Ras Al Khaimah Open;
Northern Emirates Open and the Al Ain Classic.
Arena’s title sponsorship of the MENA Tour is testament to
our commitment to the further development of an industry
that has been extremely beneficial to us over the years, and
helps us to ensure the future of the sport by developing
talent at the grassroots. We have been thrilled by the
success of the tour and the international media attention
that is has garnered – in particular, the success of Josh Jill
and Robin Williams has been fantastic for the Tour and the
sport in general.
Corporate Social Responsibility
Community Activities
We strive to ensure that our activities positively benefit
our stakeholders including our employees, customers,
suppliers, shareholders and local communities.
Customers, Community and Employees
We are continuously reviewing ways in which we can give
back to our communities. In the year, many teams from
across the business took part in activities to raise money
for a variety of charities and to support local communities.
Ranging from sponsored Cancer Research Tough Mudder
obstacle courses and Macmillan bake sales to hosting
many hospices, youth groups and under-privileged
children at our ice rink events. Over £185,000 worth of free
skating tickets were gifted this year in the UK. A key goal
was to make ice skating accessible to all. Free tickets were
extended to the NHS, Police and Fire Service in recognition
of their outstanding contributions to the community.
Arena UK were very proud to collaborate with the Stephen
Lawrence Charitable Trust this year. We partnered with
long standing client The London Marathon in supporting
their young architect competition to design the Mile-18
Marker at the London Marathon. Providing construction
and design consultancy, a panel judge and producing and
building the winning design on Marathon day.
Americas Initiatives
Community Response to Disasters
In support of the communities affected by the California
wildfires last year, Arena Americas donated shelter
tents for gathering spaces for first responders and
counselling services for the residents who lost their
homes and possessions.
Furnishings were donated for San Jose Ship Kits (SJ Ship
Kits), a group that assembles wellness supply kits. SJ Ship
Kits provides medical, nutritional, and emotional support
for the Santa Clara County community. The organisation
produces FDA approved hand sanitizer that is distributed to
local hospitals, along with wellness supply kits for families
affected by California’s Shelter-In-Place mandate. The
wellness kits contain non-perishable food, toilet paper,
paper towels, soap, and items for families with young
children, such as puzzles, games, and colouring books.
SJ Ship Kits targets families in need with children aged
six to twelve and hourly wage earners. This year Arena
have donated over 3,000 gallons of hand sanitizer to
first responders and over 5,000 wellness kits to families
in need. Cori Lambert, an Arena employee, has been
assembling kits one day a week for the entire time the
Shelter has been in place.
Hunger Prevention in the Community
The Hunger Task Force works to prevent hunger and
malnutrition by providing people in need with adequate
food throughout the year. Our team had a goal to raise
5,000 lbs of food. We are happy to report we were able to
donate 7,500 lbs of food!
Fighting Cancer Together
A cause close to our hearts, we have continued to deliver
many initiatives supporting cancer charities. Our team
in Wisconsin hosted a chilli cook off to support Cynthia’s
Breast Cancer Giving Circle during October’s Breast
Cancer Awareness month. Cynthia’s Giving Circle unites
with cancer patients/survivors and assists with living
and medical expenses. Ten Arena employees provided
their best batch of chilli to compete for the Arena Chilli
Cook Off award. Their efforts help raise $500 for Cynthia’s
Giving Circle.
We continue to support the Iron Pigs Against Paediatric
Cancer Annual Ride and the Relay for Life fundraising event
for the American Cancer Society.
Gifting Equipment and Toys
Across the Americas, we partnered with Salvation Army
for their Giving Tree and Toy Shop event supporting
families in need during the Holiday Season. The Giving
Tree and Toy Shop served 306 families and 822 children
received toys. Arena employees donated over 100 gifts
for children of all ages.
In Florida, Arena Americas proudly donates tents and
equipment to the Blood Drives, many times a year, at the
Daytona International Speedway in Florida.
We are passionate about giving back and continue to think
of new ways we can support our local communities.
Corporate Sponsorship
Arena and Golf
The Arena Group has been heavily involved in golf globally.
Over the years we have been proud to deliver structures
for a host of major international tournaments including the
President’s Cup, the Ryder Cup, the U.S Open, The Open
Championship, BMW PGA Championship, CJ Cup, Maybank
Championship, CIMB Classic, and the Hong Kong Open to
name a few.
Arena has been an integral part of the growth of golf
in the Middle East, having provided infrastructure to
almost every big tournament since their inception.
Golf forms a major part of our portfolio regionally
including, the HSBC Abu Dhabi Golf Championships,
Omega Dubai Desert Classic, Omega Dubai Moonlight
Classic, the Saudi International and the newly launched
Saudi Ladies International.
Title Sponsorship of the MENA Tour
Founded in 2011, the MENA Tour is the leading Professional
& Amateur development golf tour based in the Middle East,
created under the auspices of the Shaikh Maktoum Golf
Foundation to develop and grow the game in the Middle
East and North Africa region. The tour is officially now
recognised as the number one feeder tour in the region.
MENA Tour by Arena is one of the fastest-growing golf
tours in the world and since its inception, there has been
an unprecedented response within the golf industry,
with unlimited potential to promote golf and increase
participation throughout the region. The Tour is now
focused on streamlining its growth with an increased
focus on hosting a premier series of tournaments
throughout the MENA region.
The MENA Tour is the only tour in the region which offers
players the opportunity to earn Official Golf World Ranking
points, having obtained ‘Eligible Golf Tour’ status. It is also
the only tour in the history of the OGWR to have had an Arab
player earn both OWGR and Olympic World Ranking points.
Most recently, the Tour has again made history by joining
forces with the European Disabled Golf Association
(EDGA). With an aim to embrace inclusivity in golf, the
agreement will help provide opportunities for four golfers
with a disability to compete in the only officially recognized
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Arena Events Group plc Safety
Management
Providing a safe environment for employees,
customers, suppliers and visitors is of
paramount importance to the Arena Group.
We strive always to develop new practices
across the Company which will engage our
employees’ commitment to maintaining our
historically safe practices, whether that be
on the warehouse floor, in our storage yards,
out on sites, or in our offices.
UK & Europe
Americas
Increased site inspections along with deeper analysis
of near miss reporting which improved the safety
performance considerably versus prior year. OSHA
recordable incidents were down year over year by 15%.
The fall protection program was overhauled and Workers
Compensation costs at their lowest for the last five years,
positively indicating less accidents.
Middle East & Asia
The MEA structures are often strength tested by adverse
weather conditions. The Rugby World Cup in Japan is
one example, this was a six-month project build, it was
exceptional with zero incidents. Japan encountered
typhoon Hagibis during the event, which was the strongest
recorded storm to hit Japan in decades, our temporary
structures were undamaged and the 4,000 sqm venue was
open for hospitality the following day.
The CJ Cup, for the PGA Tour on Jeju Island, South Korea
was also hit by three typhoons during the project and
again our temporary structures were resilient to the
extreme weather conditions with no adverse impact
on the event. We endeavour to continue this track record
of resilient installations.
2019 saw the recruitment of a senior management level
Safety Leader within the UK & Europe region. Alex Spinks
has improved reporting, changed behaviours and is
creating a positive safety culture. Supported by divisional
subject matter experts’ robust systems and clear operating
standards, Arena have increased the organisational
competence and will improve safety performance as
a result. 2019 saw collaboration between Arena UK &
Europe and many of its clients to raise the safety standards
of the events industry in line with the expectation of CDM
regs 2015. This collaborative approach has built up strong
relationships between the workforce, the client and the
leadership team.
Focus on safety has always been a key performance
metric within Arena with a target of zero accidents on an
annual basis. Targeted data and metrics are being used
across all Divisions; Managing Directors are provided
with benchmark figures on a monthly basis allowing
them to monitor changes through initiatives they
have implemented.
Arena UK have created a bespoke system for employees
to raise concerns and report incidents. This works from
a smart phone link and ensures incidents are investigated
and appropriate actions are implemented in a timely manner.
Alcohol and drug testing have been launched
companywide to ensure the safety of our employees.
Support with addiction is offered to anyone declaring
alcohol or substance dependency.
2020 will see a further rollout of bespoke training
to increase competence around proactive and
reactive safety measures. Risk assessment and event
investigation will be the prime focus. These are the
foundations on which leaders and managers across
Arena can build to improve performance, reduce
accidents and improve culture.
Environment
and Sustainability
Limiting or offsetting the effect on our
surroundings and operating in a sustainable
manner by minimising our impact on the
environment and our neighbours is at the
forefront of our strategy.
Our business is sustainable, the fact we rent and re-use our
equipment rather than provide single use buildings is great
for the environment. The Group is committed to becoming
a market leader for sustainable delivery. The senior
executive team meet regularly to oversee the progress
of the business against its sustainability goals:
We are working to benchmark the current areas of strength
and opportunity, to undertake measurement of carbon
footprint, and to set clear KPIs for each of the focus areas
to track progress.
In the year the Group made progress in several areas:
1. Reduction of energy use and reducing our CO2 footprint
2. Minimising waste and maximising re-use
3. Plastic reduction. Using sustainably sourced products
and packaging at our live events
1. Reduction of Energy Use and
Reducing our CO2 Footprint
2. Minimising Waste and
Maximising Re-Use
3. Plastic Reduction and Recycling
• Arena UK have invested in a UK
tree planting initiative to offset
transportation carbon emissions at
our ice rink events. Customers each
received a carbon neutral certificate
highlighting the achievement
• A depot consolidation and asset
relocation project were delivered
in UK and the Americas resulting
in a significant reduction in energy
and transport use
• Where possible we now use LED
lights on all our sites to reduce
energy consumption
• We continue to look at new
opportunities to reduce our
impact through energy usage and
transport costs
• There is a continuous
• Arena’s Ice event catering and the
process to reduce waste.
Our kit is fully recyclable,
we continue to look
at new opportunities
to reduce our impact
through energy usage and
transport costs. Arena
Americas have introduced
a new modular rail and
stair system, eliminating
wood usage and waste
Hong Kong Sevens event catering are
plastic free. 100% of our packaging is
reusable and recyclable
• Arena partnered with Cancer
Research UK to provide water towers
at several Race for Life events this
year to avoid thousands of plastic
water bottles being used at the events
• A two-year contract has been
signed with Cup Club an innovative
returnable packaging service
for drinks in the UK, they offer a
tailored end-to-end service helping
to eliminate single-use plastic
packaging. Arena provide logistics
and operational expertise in the
catering equipment hire industry
to Cup Club
• A recycling initiative in the UK ensures
that aluminium and steel components
are regularly collected and recycled
• Arena has been able to increase
the MENA Golf Tour’s sustainability
with a ‘No single-use plastic bottles’
policy, and by providing stainless
steel bottles to each of the players
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49
Annual Report & Accounts FY20Arena Events Group plc Governance
Board of Directors
Regional Leadership Team
Corporate Governance Statement FY20
Audit Committee Report FY20
Remuneration Committee Report FY20
Directors’ Report FY20
Directors’ Responsibilities Statement
52
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56
62
64
68
72
Claire Bastin
Head of Events,
Royal Museums Greenwich
The Queen’s House Ice Rink
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“Arena’s outstanding service can be compared to a world class speed skater. From conception through to build, in six short weeks, Arena launched the Queen’s House ice rink.”Annual Report & Accounts FY20Arena Events Group plc Board of Directors
Ken Hanna
Chairman
Ian Metcalfe
Non-Executive Director
Henry Turcan
Non-Executive Director
Ken was appointed Chairman of the
Board in July 2017 and is Chair of the
Audit Committee.
Ken brings international financial and
leadership experience from his role as
the Chairman of Aggreko plc, which he
has held since 2012.
Ken is also Chairman of RMD
Kwikform, a privately-owned
engineering services company. Until
2009, Ken spent five years as Chief
Financial Officer of Cadbury Plc.
He has also held positions as Chair
of Inchcape plc, Operating Partner
for Compass Partners, Group Chief
Executive at Dalgety Plc, Group
Finance Director of United Distillers
Plc and Group Finance Director of
Avis Europe Plc and is a Fellow of the
Institute of Chartered Accountants in
England & Wales.
Henry was appointed Non-Executive
Director of the Group in June 2020.
Henry has worked in financial
services since 1996, with a focus
on equity capital markets. Having
spent the majority of his career
advising growth companies within
investment banking, he joined the
Volantis team at Henderson Global
Investors in 2015, which subsequently
transferred to Lombard Odier
Investment Management in 2017
becoming known as 1798 Volantis.
Henry graduated with an MA (Hons)
in Modern Languages from Edinburgh
University and is a Member of the
Securities Institute.
Henry is a representative of the
funds managed or sub-advised by
Lombard Odier Investments Manager
group entities, collectively one of the
Group’s largest shareholders.
Ian was appointed Non-Executive
Director of the Group in July 2017,
and is Chairman of the Remuneration
Committee.
Ian brings significant experience
with sporting organisations to the
Board. He is currently Chairman of
Commonwealth Games England
and a Non-Executive Director on
the Board of the Birmingham 2022
Commonwealth Games organising
committee. He has previously held
roles on the Boards of the Rugby
Football Union and ER 2015 Limited,
the organising committee of the 2015
Rugby World Cup held in England.
Outside the world of sport,
Ian is Chairman of Mercia Asset
Management Plc and Chairman
of its Remuneration Committee.
He is also a Non-Executive Director
of the UK headquartered global
waste management group TRRG
Holdings Limited, a Dutch/Spanish
joint venture.
Ian is a qualified solicitor, having
retired as Managing Partner of
International law firm Wragge & Co in
April 2014 after eight years in post.
Prior to managing the business, Ian
was a corporate partner at the firm
for fourteen years. Ian has an MA in
Law from Cambridge University.
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Annual Report & Accounts FY20Arena Events Group plc Board of Directors
Regional Leadership Team
Greg Lawless
Chief Executive Officer
Steve Trowbridge
Chief Financial Officer
Greg became CEO of Arena Group in
2011, following the acquisition of Arena
Structures and Seating in 2007.
Greg joined Davy Stockbrokers in 1987
and was a Director of Davy Corporate
Finance until 1992. In 1993 he joined
Allegro Limited, an Irish distribution
business, and was part of the senior
executive team that carried out a buy-
out of the business later that year.
He left the business in 2000 shortly
after the business was sold. He held
a number of posts during 2000-2004,
mainly on a consultancy basis and
he acquired his first business in the
event rental sector in 2004 called
Hireall along with his former Allegro
business partner.
Greg qualified as an accountant with
Deloitte in 1984 and is a member of
the Institute of Chartered Accountants
in Ireland.
Steve joined Arena as CFO in
September 2019 and was appointed
to the Board in October 2019. In his
role, Steve oversees all financial
matters including reporting, risk
management, insurance, banking,
acquisitions and fundraising.
Steve has held executive roles
in a number of public and private
businesses, most recently with Evans
Cycles where he was CFO from August
2016 and then became CEO upon its
sale to Sports Direct International in
2018. Prior to his role at Evans, Steve
was at HSS Hire Group plc for over
seven years and was CFO from 2014.
Steve has also held senior finance
roles at Thomson Reuters plc and was
an equity analyst at Société Generale
(SG Securities).
Steve qualified as a Chartered
Accountant at Ernst & Young, is a
Fellow of the Institute of Chartered
Accountants in England & Wales and
has an MA from Oxford University.
Paul Berger
Arena Europe, Middle East
& Asia CEO
Paul was appointed CEO of Arena
Middle East & Asia in 2009 and Arena
EMEA CEO in June 2020. Paul is
responsible for Arena’s operations in
the region which encompasses the
UK, Europe, UAE, Malaysia, Hong
Kong, Japan, and South Korea.
Paul brings a long history of working
in events and a strong knowledge
of the Middle East, having moved
to Dubai in 1993 with BBDO (part of
OMNICOM Group), working as an
account Director for global brands
such as Pepsi, Emirates and General
Motors. In 2004 Paul set up his own
sports marketing business, focusing
on F1 and other motor sports. In 2008
he became a Director of Harlequin
Marquees, becoming the CEO and a
shareholder a year later, which was
then acquired by Arena Group and
became part of Arena Middle East
& Asia.
Michael Berman
President – Arena Stuart Rentals
Jon Tabeling
President – Arena Americas
From 2003, Michael grew The Stuart
Rental Company with his business
partner, initiating a regional roll-up
of six existing party rental companies
in the San Francisco Bay area of
California. He served as CEO of the
company and helped build it into one
of the top 25 event rental companies
in the US until it was acquired by
the Arena Group in 2018, when he
assumed the role of President,
Stuart Rentals.
Prior to Stuart Rentals, Michael was
a manager with KPMG Consulting’s
Technology Strategy management
consulting group, where he supervised
and staffed projects for companies
including Chevron, Boeing, Verizon,
Brocade and Microsoft. Michael
practiced law in Philadelphia from
1994 to 1998 before obtaining his MBA
from the University of Chicago.
Jon was appointed President,
Arena Americas in May 2020, having
been Chief Operating Officer since
2015 and previously VP Operations
for the Division.
Jon has over 22 years of special
events experience having originally
joined Arena’s predecessor company
in 2009. He has managed Arena’s
military Division, served as the North
East Structures General Manager
and pioneered Arena Americas’ entry
into major golf events. From 2006 to
2009 Jon was a senior manager at
Oaks Development and previously
held senior roles at United Rentals
based in North Carolina managing the
Special Events Division and overseeing
broadcast power projects such as
Super Bowls, The Masters and PGA
Championships. Earlier in his career
Jon was Marketing Manager Tours
& Events at Warner Avalon, working
with major international brands.
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Annual Report & Accounts FY20Arena Events Group plc Corporate Governance
Statement FY20
Chairman’s Introduction
The Board recognises the importance of
good Corporate Governance and continues to
follow the QCA Corporate Governance Code
(QCA Code). We believe that Arena Group’s
corporate values of integrity, teamwork and
excellence provide a good foundation to
uphold effective Corporate Governance and
deliver long term shareholder value.
A robust Corporate Governance framework
is integral to the effectiveness of the Board.
The Board believes that it complies with
all of the principles of the QCA Code, in a
manner consistent and proportionate to the
size, risks and complexity of the Group’s
operations; and as described in more detail
below. This is our third annual report as an
AIM-listed Group.
Composition of the Board
The Board, which is headed by the Chairman, comprises
five Directors of which two are Executives and three
Non-Executives, reflecting a blend of different experience
and backgrounds. The skills and experience of the Board
are set out in their biographical details in the Board
of Directors section and on the Group website. The
experience and knowledge of each of the Directors gives
them the ability to constructively challenge strategy
and to scrutinise performance. The Board considers
two of the three Non-Executive Directors, Ken Hanna
and Ian Metcalfe, to be independent. The third Non-
Executive Director, Henry Turcan, as the representative
of a significant shareholder is not considered to be
independent. Details of the Directors’ remuneration
is set out in the Remuneration Committee report.
How the Board Operates
The role of the Board is to provide leadership to the
Group and to ensure the obligations of being a public
company are met. The Board meets regularly to
collectively review, formulate and approve the
Group’s strategy, budgets and corporate actions
and to oversee the Group’s progress towards its
goals with due consideration of risk and the resources
available. The Board is also responsible for ensuring
that a framework of effective controls are in place.
The Board receives a Board pack each month which
includes the Group’s internal management accounts, a
regional performance analysis including a Health & Safety
summary and a report from the CEO and CFO. The Board
aims to meet a minimum of six times per year.
The core activities of the Board and its Committees are
covered in scheduled meetings held during the year.
Additional ad hoc meetings are also held to consider and
decide matters outside scheduled meetings. The Non-
Executive Directors are encouraged to communicate
directly with Executive Directors and senior management
between formal Board meetings. If a Director is unable to
attend a meeting because of exceptional circumstances,
they still receive the papers in advance of the meeting and
have the opportunity to discuss with the relevant Chair or
the Company Secretary any matters on the agenda which
they wish to raise. Feedback is provided to the Director on
the decisions taken at the meeting. All Directors holding
office at the time attended the Annual General Meeting
held on 22 May 2019. Two of the Board meetings were
held at regional locations (Arena MEA in Dubai and Arena
UKE in St Ives, Cambridgeshire) to enhance the Board’s
understanding of trading opportunities and challenges.
56
57
Annual Report & Accounts FY20Arena Events Group plc Corporate Governance Statement FY20
Corporate Culture
Internal Controls and Risk Management
The Chairman is responsible for ensuring the effectiveness
of the Board and setting its agenda. The Company
Secretary (CFO) compiles the Board and Committee papers
which are circulated to the Directors prior to meetings. The
Company Secretary prepares minutes of each meeting and
every Director is aware of the right to have any concerns
minuted and to seek independent advice at the Group’s
expense where appropriate. The primary matters reviewed
by the Board during the period are as set out below;
• The Audit Committee is chaired by Ken Hanna, who is
a Chartered Accountant, and includes Ian Metcalfe.
The Audit Committee is responsible for monitoring the
integrity of the Group’s financial statements, reviewing
significant financial reporting issues and monitoring
the quality of internal controls and risk management.
The Committee meets at least twice each year, inviting
the external auditors to attend as necessary
• The Remuneration Committee is chaired by Ian Metcalfe
and also includes Ken Hanna. The Remuneration
Committee reviews the performance of the Executive
Directors and makes recommendations to the Board
on matters relating to their remuneration and terms of
service. The Committee meets at least twice each year
The Directors’ attendance at the Board and Committee
meetings held during the fifteen months ended 31 March
2020 is set out below. The above average number
of meetings was driven by procedural matters relating
to the changes in senior management during the period,
alongside discussions relating to corporate finance
activities such the additional debt financing and March
2020 share placing.
• Health & Safety matters
• Strategy and annual budget
• Regional trading performance
• Board membership and delegation of authority
• Remuneration and employment benefits
for senior management
• Corporate statutory reporting
• Cash flow management, debt facilities and
covenant compliance
• Share capital and dividends
• Corporate governance, internal controls and
risk management
Board Committees
The Board is supported by the Audit and Remuneration
Committees, details of which are set out below. Each
Committee has written terms of reference setting out its
duties, authority and reporting responsibilities. The Group
does not have a Nomination Committee as those duties that
would be undertaken by such a committee are handled by
the Board.
Director
Role
Board
meetings
Audit Committee
meetings
Remuneration
Committee meetings
Ken Hanna
Non-Executive Chairman
20/23
Ian Metcalfe
Non-Executive Director
20/23
Greg Lawless
Steve Trowbridge1
Piers Wilson2
CEO
CFO
CFO
21/23
16/23
6/23
2/2
2/2
2/2
1/2
1/2
6/6
6/6
2/6
-
2/6
Notes:
1. Steve Trowbridge was appointed as a Director on 15 October 2019
2. Piers Wilson resigned as a Director on 15 October 2019
The Group upholds a corporate philosophy which
comprises of a Vision, Mission, Values, and Arena
Standard. The Group’s Vision is to become the “leading,
most respected, integrated event solutions business in the
world” and its Mission is to “Deliver the Arena Standard to
the World.”
Further information on our corporate culture is set out
in the Vision, Mission and Values section of this Annual
Report on Pages 10 - 11.
Election of Directors
All Directors of the Group will offer themselves for
re-election at the Annual General Meeting. Descriptions of
Directors’ relevant experience, skills and qualities are set
out in the Board of Directors section of this report.
Board Effectiveness and Development
The Chairman currently assesses the performance of the
Board on an informal continual basis taking into account
the contribution each Director makes to the business.
Directors are also encouraged to provide feedback on
all areas of the Board efficacy, having due regard to
the balance of skills, experience, independence and
knowledge contributed by members of the Board.
The Board has not undertaken a formal evaluation of its
effectiveness during the year, however, such an evaluation
will be considered, including the composition of the Board,
during FY21.
The Board considers and reviews the requirement for
continued professional development. The Group’s
regulatory adviser, Nomad and other external advisers
serve to strengthen this development by providing
guidance and updates as required.
The Board and senior management from time
to time seek advice on significant matters from external
advisers. These advisers include, amongst others, the
Group’s nominated adviser and broker, public relations
adviser, external auditors and legal advisers.
The Board has ultimate responsibility for the Group’s
system of internal control and for reviewing its
effectiveness. However, any such system of internal
control can provide only reasonable, but not absolute,
assurance against material misstatement or loss.
The Board considers that the internal controls and
procedures in place are appropriate for the current size,
complexity and risk profile of the Group.
The principal elements of the Group’s internal control
system include:
• A detailed annual budget is prepared including an
integrated profit and loss, balance sheet and cash flow.
The budget is approved by the Board
• Financial and operational performance against the
budget is prepared and reviewed by the Board on a
monthly basis
• The Group has developed a set of Minimum Control
Standards and each Division’s controls and procedures
are reviewed by the Group on an annual basis
• Each Division has appointed a H&S (Health & Safety)
manager and their matters are reviewed monthly by
the Board
• Material contracts are assessed by the Executive
Directors and approved by the Board before they are
entered into
• Board approval is required for key matters such
as any business acquisitions, material capital
expenditure, property transactions and amendments
to banking facilities
• A post acquisition review is performed on all acquisitions
Further description of how the Board identifies, assesses
and manages risk is set out in the Principal Risks and
Uncertainties (Pages 35 - 37).
Directors’ Conflicts of Interest
Any related party transactions are noted in the Group’s
financial report. The Group adheres to MAR regulations
and the AIM Rule of Directors’ Dealings.
External Appointments
Time Commitments
The Board may authorise Executive Directors to take Non-
Executive positions in other companies and organisations,
provided the time commitment does not conflict with
the Director’s duties to the Group. The acceptance of
appointment to such positions is subject to the approval
of the Chairman.
All Directors recognise the need to commit sufficient time
to fulfil their role. This requirement is included in their
letters of appointment. The Board is satisfied that the
Chairman and Non Executive Directors are able to devote
sufficient time to the Group’s business.
58
59
Annual Report & Accounts FY20Arena Events Group plc Anti-Bribery Policy
Private Shareholders
Annual Report & Accounts FY20
The Group website is the primary resource for recent
updates and information on the Group for private investors.
The AGM serves as the main forum for dialogue with
private investors. The Board attends the AGM and answers
any questions posed by attendees.
Institutional Shareholders
The Directors place importance on building a relationship
with the Group’s institutional investors. These relations are
managed primarily by the Group’s broker, financial PR firm
and CEO. The Group communicates with all shareholders
through the Annual Report & Accounts, the AGM, the interim
accounts and RNS statements as required under the AIM
rules. In addition, the CEO and CFO make presentations
to institutional shareholders and analysts twice each year
following the release of the full-year and half-year results.
Annual General Meeting (AGM)
The Annual General meeting of the Group will be held on
1 September 2020. The Notice of Annual General Meeting
and the resolutions to be put to the meeting are included
in the Notice of AGM accompanying this Annual Report.
Ken Hanna
Chairman
2 July 2020
The Group enforces an anti-bribery policy across all
of its Divisions. This is reviewed on an annual basis
by the Audit Committee.
Relations with Stakeholders
The Group engages with its various stakeholder groups on
a regular basis to make sure their needs are being served.
Feedback from all stakeholders in the business allows
the Board to monitor its corporate culture, ethical values
and behaviours, ensuring that they are consistent with the
Group’s business model.
Employees
Each Division carries out periodic employee surveys
to get feedback and identify areas that need improvement.
The Group continues to focus on internal communication
with regular employee updates by e-mail and local town-
hall events monthly.
Customers
We strive to continually improve the quality of our service
for our customers, achieving this through our dedication
to the Arena Standard. The Group places significant
importance on maintaining long term relationships with its
customers and this is a key strategy for the Group.
Suppliers
Each Division takes responsibility for their supplier
relationships, ensuring they comply with the Group
policies. We aim to maintain long term relationships
with our key suppliers.
Relations with Shareholders
The Group is committed to engaging with and listening to
its shareholders, ensuring that there is transparency and
understanding of the Group’s strategy, business model,
and performance. The Group does this through investor
roadshows, individual meetings and regular reporting.
The Group maintains an investor section on its corporate
website with up to date information for its shareholders,
including financial reports, shareholder documents,
corporate policies and Group announcements.
60
61
Arena Events Group plc Audit
Committee
Report FY20
I am pleased to present the Audit Committee
report for the fifteen-month period ended
31 March 2020. The Audit Committee is
primarily responsible for the integrity of
the financial statements and ensuring that
the financial performance of the Group is
properly reported and reviewed. Its role
also includes reviewing internal control
and risk management systems, reviewing
key accounting policies and advising on the
appointment of external auditors.
Members of the Audit Committee
The Committee consists of two independent Non-Executive
Directors, Ken Hanna (as Chair) and Ian Metcalfe, whose
details and qualifications are set out on Page 52. The Group
CEO, CFO and the external auditor (Deloitte LLP) also
attend committee meetings by invitation. There have been
no changes to the composition of the Committee during the
year and the Board believes that the Committee members
have the required skills, qualifications and experience to
properly discharge their duties. The Terms of Reference for
the Committee are available from the Group’s registered
office. The Committee met twice in the period, at which
both members were present.
Duties
Role of the External Auditor
Risk Management and Internal Controls
Annual Report and Accounts
Annual Report & Accounts FY20
Having taken all the matters considered by the Committee
and brought to the attention of the Board during the year
into account, we are satisfied that the annual report
and accounts, taken as a whole, is fair, balanced and
understandable.
The Board believes that the disclosures set out in the
Annual Report provide the information necessary for
shareholders to fairly assess the company’s position
and performance, business model and strategy.
Ken Hanna
Chairman
2 July 2020
As described in the corporate governance report,
the Group has established a framework of internal
control systems, policies and procedures. The Audit
Committee is responsible for reviewing the risk
management and internal control framework and
ensuring that it operates effectively. The Committee
is satisfied that the internal control systems in place
are currently operating effectively.
Whistle Blowing
The Group has in place a whistleblowing policy which
sets out the formal process by which an employee of the
Group may, in confidence, raise concerns about possible
improprieties in financial reporting or other matters.
Whistleblowing is a standing item on the Committee’s
agenda. The Committee is comfortable that the current
policy is operating effectively.
Anti-Bribery
The Group has in place an anti-bribery and corruption
policy which sets out its zero-tolerance position and
provides information and guidance to those working for
the Group on how to recognise and deal with bribery and
corruption issues. The Committee is comfortable that the
current policy is operating effectively.
The Audit Committee monitors the relationship with the
external auditor, Deloitte LLP, to ensure that auditor
independence and objectivity are maintained. Deloitte LLP
were appointed in 2013, following an audit tender process;
and Jonathan Dodworth the current Audit Partner has held
this role since the 2016 audit. The Committee will keep
under review the need for an external audit tender.
Having reviewed the auditor’s independence and
performance, the Audit Committee recommends that
Deloitte LLP be reappointed as the Group’s auditor at
the next AGM.
Provision of Non-Audit Work by the
External Auditor
The Committee monitors the provision of non-audit
services by the external auditor, however, no formal
policy exists. The breakdown of fees between audit and
non-audit services is provided in Note 4 of the Group’s
financial statements.
As noted in the 2018 report and accounts, the provision of
tax compliance and related tax advisory work was moved
to Smith & Williamson in 2018 with the FY18 tax returns
being the first completed under this new relationship.
Audit Process
The external auditor prepares an audit plan that sets
out the scope of the audit, key areas to be targeted, audit
materiality and the audit timetable. This plan is reviewed
and agreed in advance by the Audit Committee. Following
the audit, the auditor presented its findings to the Audit
Committee for discussion. significant issues considered
this year, included revenue recognition, the valuation
of goodwill, disclosures and judgments required in the
light of the COVID-19 pandemic and IFRS 16 accounting.
No major areas of concern were highlighted by the auditor
during the period.
The main items of business considered by the Audit
Committee include:
Internal Audit
• Review of the financial statements and Annual Report
• Review of the audit plan
• Consideration of key audit matters and how
they are addressed
• Review of suitability of the external auditor
• Consideration of the external audit report
• Going concern and viability statement review
• Review of the risk management and internal
control systems
• Meeting with the external auditor
62
At present, the Group does not have a formal independent
internal audit function. However, a set of minimum control
and reporting standards have been formally documented
and distributed to each business to confirm compliance.
These standards and compliance with them are regularly
reviewed by a member of the Group finance team. The
Committee believes that this allows management
to derive sufficient assurance as to the adequacy
and effectiveness of internal controls and risk
management procedures.
63
Arena Events Group plc Remuneration
Committee
Report FY20
Arena Events Group plc is listed on the
Alternative Investment Market (AIM) and
is not required to prepare a Directors’
remuneration report. The following
disclosures are prepared on a voluntary basis.
Membership of the Remuneration Committee
The Remuneration Committee is chaired by Ian Metcalfe
and also includes Ken Hanna. The Terms of Reference for
the Committee are available from the Group’s registered
office. The Committee met six times in the period at which
both members were present. The increased level of
meetings year on year resulted, in part, from a change in
Executive Director during the period.
The Remuneration Committee reviews the performance of
the Executive Directors and makes recommendations to the
Board on matters relating to remuneration, terms of service,
granting of share options and other equity incentives.
Remuneration Policy
The Directors remuneration packages are designed to
attract, retain and motivate Directors, to ensure that
their interests are aligned with the shareholders and to
reward them for enhancing value to shareholders. The
performance measurement of the Executive Directors and
the determination of their annual remuneration package is
determined by the Committee.
Non-Executive Directors
The remuneration policy for the Chairman and Non-
Executive Directors is to pay fees necessary to attract the
individual of the calibre required, taking into consideration
the size and complexity of the business and the time
commitment of the role.
Details are set out below:
• The fees of the Non-Executive Directors are agreed
by the Board as a whole, having taken advice from
suitable advisers
• Fees are set taking into account the level of
responsibility, relevant experience and specialist
knowledge of each Non-Executive Director and fees at
companies of a similar size and complexity
• Non-Executive Directors are paid a fee for membership
of the Board with no additional fees being paid for
chairmanship of Board Committees. Fees are paid
monthly in cash
• Neither the Chairman nor any of the Non-Executive
Directors are eligible to participate in any of the Group’s
annual bonus incentive arrangements, however,
at IPO the Chairman was granted share options by way
of a deed of gift outside of the Group’s share option
scheme, but on the same terms as other grants made
at the same time
• The Non-Executive Directors have appointment letters
with a notice period of three months if given by the
Director and one month if given by the company
Executive Directors
The main elements of the remuneration package for
Executive Directors are as set out below:
• A competitive base salary for the market in which we
operate, to attract and retain Executive Directors of a
suitable calibre. Base salaries are usually reviewed
annually taking into account any changes in role or
responsibilities, individual performance and comparable
market benchmarks
• Benefits are currently limited to the provision of private
medical insurance and a company pension contribution.
No company cars or car allowance is provided. The
level of these benefits is determined by the Committee
with reference to the experience and responsibilities of
each individual
• Each Executive Director has an agreed bonus plan for
the financial year, with total bonus payment linked
to a combination of Group financial performance
targets and personal objectives. The Group financial
targets are set each year by the Committee. In 2019 the
maximum bonus payable to the Executive Directors was
60% of base salary. No bonus plan was agreed for the
three months to 31 March 2020
• A Group share option scheme is in place as described
in further detail below. Share options are issued as
determined by the Committee to align the Executive
Directors medium-term interest with those
of the shareholders
• The Executive Directors have service contracts with a
rolling notice period of twelve months to be given by
either party
Directors Remuneration
The audited table below sets out the total remuneration
earned by each Director who served during the fifteen-
month period ended 31 March 2020 and their respective
payments in FY18:
Basic Salary1
£000
Bonus4
£000
Benefits5
£000
Pension5
£000
Total FY20
(15 mth)
£000
Total FY18
(12 mth)
£000
282
109
120
124
49
-
-
-
-
-
-
1
1
-
-
-
11
9
-
-
282
121
130
124
49
232
-
196
100
40
Executive Director
Greg Lawless
Steve Trowbridge2
Piers Wilson3
Non-Executive Director
Ken Hanna
Ian Metcalfe
Notes:
1. In March 2020, in response to the COVID-19 pandemic, all Executive and Non-Executive Directors took a voluntary 15% reduction in
their basic salaries for the month of March 2020. Further, higher, salary reductions were taken from April onwards.
2. Steve Trowbridge joined Arena Events Group plc on 10 September as Chief Financial Officer (CFO) and became a Director of the Group
on 15 October 2019. His annual base salary is £200,000 with a pension contribution of 10%. His service contract is in line with the
provisions of service contracts in the Directors’ Remuneration Policy.
3. Piers Wilson resigned as CFO in September 2019 and stepped down as a Director of the Group on 15 October 2019. It was agreed with
Mr Wilson that he would receive a payment in lieu of notice of £180,000 in accordance with his service agreement. The payment was
to be made in instalments and would be reduced in the event that he commenced another role outside the Group prior to the expiry of
his notice period in September 2020. In February 2020, Mr Wilson advised the Company that he had started a new role and this would
reduce the future amount payable. On 30 March 2020 Mr Wilson informed the Company that he had been made redundant by his
new employer and would re-join the Company as an employee in April 2020 for the remainder of his notice period. Mr Wilson did not
receive any annual bonus payment in respect of the year ended 31 December 2019 or the three-month period to 31 March 2020 and,
in accordance with the rules of the Arena 2017 Share Option Plan, all his share options have lapsed. The Company made a payment of
£2,400 in respect of Mr Wilson’s legal fees relating to his resignation as a Director.
4. Based on the Group’s performance for the year ended 31 December 2019, the Remuneration Committee determined that neither of the
Executive Directors would receive a bonus. No bonus plan was agreed for the three-months ended 31 March 2020.
5. Greg Lawless does not receive any benefits or a pension. Steve Trowbridge is provided with private medical insurance and a company
pension contribution of 10%. Piers Wilson was provided with private medical insurance and a company pension contribution of 7.5%
of base salary until he ceased to be an employee of the company in February 2020.
64
65
Annual Report & Accounts FY20Arena Events Group plc Remuneration Committee Report FY20
Long-Term Incentive Plan
A Group share option scheme (“the Scheme”)
was set up on Admission to AIM in July 2017. The Scheme
allows for options to be issued over ordinary shares, up to a
maximum of 10% of the Company’s ordinary shares in issue
at the time of grant, over a ten-year period.
The option exercise price will usually be the mid-market
price of the shares on the day before the date of grant.
Total options were awarded at Admission equal to
approximately 4.6% of the number of ordinary shares in
issue at that time, with an exercise price of 55 pence per
share. The initial option awards have no performance
conditions and vest equally after two, three and four
years from the date of grant.
In October 2018 a total of a further 2.3m share option
awards were granted, of which 825,000 were awarded to
the Executive Directors. These awards have an exercise
price of 68 pence per share and vest equally over 3 years,
commencing on the third anniversary of grant and have
performance conditions as set out below.
The share options granted in October 2018 have the
following performance criteria:
• 75% of the total award is subject to the Adjusted
Earnings per share for the Group (Adjusted EPS) having
increased by a total amount over the period in excess
of 12.5% per annum. If the compound growth is in
excess of 12.5% per annum the award will vest in full.
If the compound growth is in below 10% per annum the
award will be fall away. In between these two levels
an adjusted number of options awarded will vest on a
straight-line pro rata basis
• 25% of the Award will vest at the discretion of the
Remuneration Committee by reference to the success
of the Group in integrating acquisitions (i) completed
in the twelve months prior to the date of Award, and (ii)
subsequently completed, during the period between
the date of the Award and the test date
In April 2019 an additional 1.8m share option awards were
granted at an exercise price of 40p and in October 2019 a
further 0.1m were granted at 18.5p. None were allocated to
the Executive Directors.
In September 2019, a total of 2,162,162 share option awards
were granted to Steve Trowbridge at an exercise price of
18.5p. The Awards shall vest on the third, fourth and fifth
anniversary of the date of grant and only to the extent that
the conditions set by the Remuneration Committee are
satisfied and subject to the rules of the plan.
As at 31 March 2020, taking into account option awards that
have lapsed during the year, total option awards issued
and outstanding under the Scheme were approximately
6.1% of the number of issued shares. Customary malus and
clawback provisions apply to all awards.
Share Options Held by the Directors:
Number at
31 Dec 2018
Issued in
the period
Lapsed in
the period
Number at 31
Mar 2020
Exercise
price (p)
Vesting period
Executive Director
Greg Lawless
1,280,000
450,000
-
-
Steve Trowbridge
-
2,162,162
-
-
-
1,280,000
450,000
2,162,162
-
-
(600,000)
(375,000)
-
-
55.0
68.0
18.5
55.0
68.0
July 2019 to July 2021
Oct 2021 to Oct 2023
Sep 2022 to Sep 2024
n/a
n/a
Piers Wilson1
Non-Executive Director
Ken Hanna
Ian Metcalfe
600,000
375,000
181,818
-
-
-
-
-
n/a
181,818
55.0
July 2019 to July 2021
Directors’ Shareholdings and Share Interests:
Number at
31 Dec 2018
Number at
31 Mar 2020
Unvested share options
at 31 Mar 2020
Vested, unexercised
share options
6,724,088
7,024,088
-
227,007
173,334
110,800
-
n/a
173,334
110,800
1,303,334
2,162,162
n/a
121,212
-
426,666
-
n/a
60,606
-
Executive Director
Greg Lawless2
Steve Trowbridge
Piers Wilson3
Non-Executive Director
Ken Hanna
Ian Metcalfe
Notes:
1. Piers Wilson resigned as CFO in September 2019 and stepped down as a Director of the Group on 15 October 2019. In accordance with
the rules of the Arena 2017 Share Option Plan all his share options have lapsed.
2. As part of the Subscription and Placing announced by the Group on 26 March 2020, Greg Lawless subscribed for 2,500,000 shares.
These shares were issued on 15 April, once shareholder approval for the transaction was obtained.
3. Piers Wilson resigned as CFO in September 2019 and stepped down as a Director of the Group on 15 October 2019. As a result,
his shareholding is no longer tracked and, in accordance with the rules of the Arena 2017 Share Option Plan, all his share options
have lapsed.
Ian Metcalfe
Director
2 July 2020
66
67
Annual Report & Accounts FY20Arena Events Group plc Annual Report & Accounts FY20
Directors’ Report FY20
Review of Business and Future
Developments
The Chief Executive Officer’s report on page 24 provides
a review of the business, the Group’s trading for the
fifteen-month period to 31 March 2020 and an indication
of future developments.
Results and Dividends
The results for the fifteen-month period to 31 March 2020
are set out in the consolidated income statement on page
84. On 10 September 2019 the company declared an interim
dividend for the period of 0.25 pence per share, which was
paid on 1 November 2019.
Considering the current trading backdrop, the Directors
have not recommended a final dividend for the fifteen-
month period to 31 March 2020.
Directors
The two main financial risks are considered to be:
Credit Risk
The Group sets credit limits for all new customers
granted credit and generally contracts with clients with
a strong financial strength. Credit risk is also mitigated
by ensuring that a significant proportion of a contract’s
value is collected before the handover of the project to
the client.
Interest Rate Risk
Bank interest is charged at a fixed margin to LIBOR
which has been agreed as part of the current financing
arrangements. This margin is between 1.65% and 2.4%
dependent on the net debt leverage at each quarter
end. Changes in LIBOR will therefore have an effect
on interest expense and cash flows however this is not
considered to be material.
Branches Outside the UK
The Directors of the company who were in office during the
year and up to the date of signing the financial statements
were as follows:
The Group has overseas subsidiaries as listed in note 12
and a branch in South Korea.
• K Hanna
• G Lawless
•
I Metcalfe
• S Trowbridge
• H Turcan
• P Wilson resigned as a Director
on 15 October 2019
Details of each Director’s interest in the company and
remuneration details are provided in the Remuneration
Committee Report on page 64.
Financial Risk Management and Financial
Instruments
The Group adopts a prudent approach to financial
risk management, with an appropriate level of debt
facilities and prepares weekly cash forecasts to provide
visibility of cash and facility usage. The Group does not
enter into any financial derivative transactions, nor trade
in financial instruments.
Directors’ Qualifying Third Party Indemnity
Provision (Insurance)
Arena Events Group plc has indemnified, by means of
Directors and Officers liability insurance, the Directors of
the company against liability in respect of proceedings
brought by third parties, subject to the conditions set out
in the Companies Act 2006. Such qualifying third-party
indemnity provisions were in force during the year and are
in force as at the date of approving the Directors’ Report.
Material Interests
So far as the Board is aware, no Director had any material
interest in a contract of significance (other than their
service contract) with the company or any of its subsidiary
companies during the period.
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69
Arena Events Group plc Directors’ Report FY20
Political Donations
The Group did not make any political donations in the
financial period.
Capital Structure
Details of the issued share capital, together with details
of the movements during the year, are shown in Note 21 to
the Consolidated Financial Statements. The Company has
one class of ordinary share and each ordinary share carries
the right to one vote at general meetings of the Company.
Additional shares were issued post year-end as part of
the subscription and placing described in the Subsequent
Events section below.
Substantial Shareholdings
As at the most recent practicable date, the company
had been notified of a number of shareholders with
a beneficial interest of over 3%. These are shown in the
table at the foot of this page.
Subsequent Events
Henry Turcan was appointed as a Non-Executive Director
of Arena Events Group plc on 8 June 2020. Henry is a
representative of the funds managed or sub-advised
by Lombard Odier Investments Manager group entities,
collectively one of the Group’s largest shareholders.
On 26 March 2020 the Group announced the proposed
subscription of 60,000,000 new ordinary shares at 10
pence per share, and the proposed placing of 35,000,000
new ordinary shares, also at 10 pence per share. This
transaction which was approved by shareholders on 14
April 2020 and raised £9.5m before expenses. The new
shares were admitted to trading on AIM on 15 April 2020.
TasHeel Holding Group LLC
Lombard Odier Asset Management (Europe) Limited
Oryx International Growth Fund Limited
Tellworth Investments
GAM Holding AG
Greg Lawless
70
Details of events that have occurred after the balance
sheet date can also be found at Note 34 to the Consolidated
Financial Statements.
Employee Involvement
The Group places considerable value on the involvement
of its employees and keeps them informed on all aspects of
the business and its progress, which the Directors consider
to be relevant. Communication is effected through regular
internal newsletters and formal town hall meetings.
Feedback is also actively sought to better understand
any employee concerns or suggestions to improve our
employment practices.
The Group is committed to employment policies which
follow best practice, based on equal opportunities for
all employees, irrespective of age, gender, ethnic origin,
colour, religion, disability, sexual orientation or marital
status. The Group gives full and fair consideration to
applications for employment from disabled persons,
having regard to their particular aptitudes and abilities.
Appropriate arrangements are made for the continued
employment and training, career development and
promotion of disabled persons employed by the group.
If members of staff become disabled the Group continues
employment, either in the same or an alternative position,
with appropriate retraining being given if necessary.
No. of shares held
% of issued share capital
60,000,000
58,472,090
20,000,000
14,163,155
11,000,000
9,524,088
24.2
23.6
8.1
5.7
4.4
3.8
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 it will take some time for the global events
market to return to normal.
The Group has taken actions in order to protect liquidity
including increasing debt facilities and initiating very
significant cost reduction programmes. The Board also
notes the recent successful equity raising and the active
engagement of our two largest shareholders who now own
just under 50% of the Group’s equity.
Management believe that the structural changes made
to the business and the reduced cost base will result in
increased operational leverage and margins when revenue
starts to recover.
The Group raised £9.5m (gross proceeds) from its existing
shareholders in April 2020 and has recently agreed an
additional £4.75m overdraft facility from its main lender.
In the light of the uncertainty and disruption to the market
in which the Group operates caused by the COVID-19
pandemic, in June 2020 the Group also obtained a waiver
from its main lender for covenant testing at June 2020 and
September 2020 and remains in discussions regarding a
revised basis for testing in December 2020 and beyond
as the market recovers. The viability assessment also
assumes the refinancing of the Group’s debt facility prior
to its expiry in October 2022 with no changes to the terms
of the agreement.
The Group has prepared three views of future performance
– a low; a mid; and an upside case. Each of these is built on
detailed bottom-up forecasts for the FY21 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.
The Group’s mid-case scenario is modelled on the
assumption that from early 2021 onwards global event
markets gradually return to normal 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. The Board has reviewed management’s `low
case` scenario which assumes further COVID-19 related
disruption to the global event market and this showed the
Group remains reliant on additional support in order to
maintain the necessary liquidity.
Based on the existing covenant structure, under both the
mid and low-case scenarios the December 2020 to June
2021 tests would not be passed, however, the Group would
have sufficient headroom under the upside case. As such,
the Group would require the continuing support or waivers
from the bank in the mid and low-case scenario. The
Directors have no reason to believe that such support will
not be available, and positive discussions with the Group’s
main lending bank are ongoing, including seeking access to
additional funding under a CLBILS facility.
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 and
that the financial statements for the fifteen months to
31 March 2020 should be prepared on a going concern
basis. However there remains a material uncertainty which
may cast significant doubt on the company’s ability to
continue as a going concern.
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, the Directors have assumed
a gradual recovery in activity from early 2021, broadly
returning to 2019 levels by 2023.
The Directors believe that three years is an appropriate
period for the viability assessment, reflecting the average
length of the Group’s contract base; key markets; and
the nature of its businesses and products. The viability
assessment also assumes the refinancing of the Group’s
debt facility prior to its expiry in October 2022.
Based on this assessment 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, although the extent and duration of the COVID-19
pandemic and the necessary reliance on ongoing support
of the Group’s lenders represents a material uncertainty
in that assessment.
By order of the Board
S Trowbridge
Director / Company Secretary
2 July 2020
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Annual Report & Accounts FY20Arena Events Group plc Annual Report & Accounts FY20
Directors’ Responsibilities Statement
The Directors are responsible for preparing the Annual
Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the
Directors are required to prepare the group financial
statements in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European
Union [and Article 4 of the IAS Regulation] and have
also chosen to prepare the parent company financial
statements under IFRSs as adopted by the EU. Under
company law the Directors must not approve the accounts
unless they are satisfied that they give a true and fair view
of the state of affairs of the company and of the profit or
loss of the company for that period. In preparing these
financial statements, International Accounting Standard 1
requires that Directors:
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the company’s transactions and disclose with reasonable
accuracy at any time the financial position of the company
and enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the company
and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information
included on the company’s website. Legislation in
the United Kingdom governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
Responsibility Statement
• Properly select and apply accounting policies
We confirm that to the best of our knowledge:
• Present information, including accounting policies,
in a manner that provides relevant, reliable, comparable
and understandable information
• Provide additional disclosures when compliance
with the specific requirements in IFRSs are insufficient
to enable users to understand the impact of particular
transactions, other events and conditions on the
entity’s financial position and financial performance
• Make an assessment of the company’s ability to
continue as a going concern
• The financial statements, prepared in accordance with
International Financial Reporting Standards as adopted
by the European Union, give a true and fair view of the
assets, liabilities, financial position and profit or loss
of the company and the undertakings included in the
consolidation taken as a whole
• The strategic report includes a fair review of the
development and performance of the business and the
position of the company and the undertakings included
in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that
they face
• The annual report and financial statements, taken as
a whole, are fair, balanced and understandable and
provide the information necessary for shareholders
to assess the company’s position and performance,
business model and strategy
This responsibility statement was approved by the Board
of Directors on 2 July 2020 and is signed on its behalf by:
Greg Lawless
Chief Executive Officer
2 July 2020
Steve Trowbridge
Chief Financial Officer
2 July 2020
72
73
Arena Events Group plc Financial
Statements
Independent Auditor’s Report to the
Members of Arena Events Group plc
Financial Statements and Notes
76
84
“Enabling extraordinary
live event experiences,
worldwide.”
Ken Hanna
Arena Group Chairman
74
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Annual Report & Accounts FY20Arena Events Group plc Independent Auditor’s Report
to the Members of Arena Events
Group plc
Report on the Audit of the
Financial Statements
1. Opinion
In our opinion:
• The financial statements of Arena Events Group plc
(the ‘parent company’) and its subsidiaries (together,
the ‘group’) give a true and fair view of the state of the
group’s and of the parent company’s affairs as at
31 March 2020 and of the group’s loss for the period
then ended
• The group financial statements have been properly
prepared in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the
European Union
• The parent company financial statements have been
2. Basis for Opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further
described in the auditor’s responsibilities for the audit of
the financial statements section of our report.
We are independent of the group and the parent company
in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK,
including the Financial Reporting Council’s (the ‘FRC’s’)
Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance
with these requirements.
properly prepared in accordance with IFRSs as adopted
by the European Union and as applied in accordance with
the provisions of the Companies Act 2006
We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for
our opinion.
• The financial statements have been prepared
in accordance with the requirements of the Companies
Act 2006
We have audited the financial statements which comprise:
• The consolidated income statement
• The consolidated statement of comprehensive income
• The consolidated and parent company balance sheets
• The consolidated and parent company statements of
changes in equity
• The consolidated and parent company cash flow
statements
• The related notes 1 to 34
The financial reporting framework that has been applied
in their preparation is applicable law and IFRSs as adopted
by the European Union and, as regards the parent company
financial statements, as applied in accordance with the
provisions of the Companies Act 2006.
3. Material Uncertainty Relating
to Going Concern
We draw attention to note 1 in the financial statements,
which indicates that there is a material uncertainty
relating to going concern as a result of the disruption in
the market caused by Covid-19. The pandemic has led to
the cancellation and postponement of events, leading
to a reduction in revenue for the group. This has further
impacted the group’s ability to meet the covenants on the
main borrowing facility and therefore the group will be
reliant on their main lender for support beyond December
2020. The Directors have reviewed the cash requirements
of the group reflecting the impact of Covid-19 and the
expectation that it will take some time for global events
markets to return to normal.
The Group has taken a number of actions in order to
protect liquidity including increasing debt facilities,
initiating cost reduction programmes, and raising equity
financing. Agreement has also been obtained from the
Group’s main lender to waive the covenant tests in June
and September 2020 and the group remains in discussions
regarding a revised basis for testing in December 2020
and beyond. Under current mid and low case scenarios the
covenant tests would not be passed from December 2020
to June 2021.
• Performed a sensitivity analysis on the key
assumptions made in the going concern assessment
• Assessed share price movement and industry
data reports to assess whether it provided
corroborative or contradictory evidence in relation
to management’s assumptions
• Performed an analysis of the headroom to the
covenants associated with the revolving credit facility
• Evaluated the group’s disclosure on going concern
As stated in note 1, these events or conditions, along with
the other matters as set forth in that note to the financial
statements, indicate that a material uncertainty exists
that may cast significant doubt on the group’s and the
company’s ability to continue as a going concern. Our
opinion is not modified in respect of this matter.
In response to this, we:
• Obtained an understanding of the relevant controls
around management’s going concern assessment
• Performed retrospective analysis on management’s
forecasting accuracy
• Assessed the reasonableness of the key assumptions
made in the going concern assessment around the
pattern of the recovery in the market by reference to
industry expectations
4. Summary of Our Audit Approach
Key audit matters
The key audit matters that we identified in the current period were:
• Revenue cut-off
• Goodwill valuation
• Going concern (see material uncertainty relating to going concern section)
Within this report, key audit matters are identified as follows:
Newly identified
Increased level of risk
Similar level of risk
Decreased level of risk
Materiality
Scoping
The materiality that we used for the group financial statements
was £1.5m which was determined on the basis of 0.85% of revenue
for the period.
We focused our group audit scope primarily on the key trading entities
within the group. Our testing covered 91% of revenue, 96% of EBITDA,
and 94% of net assets.
Significant changes
in our approach
Goodwill valuation was considered a key audit matter in FY20 because
of the significant judgements made by management to estimate the
recoverable amount of goodwill and the impact of Covid-19.
In the prior year, acquisition accounting was outlined as a key audit matter.
Due to there being no acquisitions in FY20 this was not considered a key audit
matter in the current period.
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Annual Report & Accounts FY20Arena Events Group plc Independent Auditor’s Report
5. Key Audit Matters
Key audit matters are those matters that, in our
professional judgement, were of most significance in our
audit of the financial statements of the current period and
include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we
identified. These matters included those which had the
greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the
engagement team.
These matters were addressed in the context of our audit
of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion
on these matters. In addition to the matter described in the
material uncertainty relating to going concern section, we
have determined the matters described below to be the key
audit matters to be communicated in our report.
5.2. Goodwill Valuation
Key audit matter description
5.1. Revenue Cut-Off
Key audit matter description
The group generates revenue through the leasing of equipment and
temporary structures, and the provision of event management and turnkey
event services.
The application of the revenue recognition standard IFRS 15 “Revenue
from contract with customers” requires judgement to identify performance
obligations under the existing contracts, even if this obligation is not
explicitly stated, determine the transaction price under the contract and
allocate this to each performance obligation. Judgement is also required
to determine if revenue should be recognised over time or at a point in time
depending on the terms of the contract entered into, and the underlying
details of delivering the performance obligation.
Refer to Note 1 “Principal accounting policies”.
How the scope of our audit
responded to the key audit matter
The procedures performed to address this key audit matter were:
• Obtained an understanding of the relevant controls around revenue
cut-off
•
Inquired of management and obtained information relating to projects
that span the financial year end to evaluate whether revenue is
recognised in the appropriate period
• Challenged management on the obligations they identified with respect
to a sample of the relevant sales contracts
• Tested the inputs used to allocate the consideration agreed to the
performance obligations identified in the contract
• Reviewed corroborative evidence with respect to the delivery of the
identified obligations to the client and the recognition of revenue based
on the delivery/completion of the obligations
Key observations
Based on our procedures, we concluded that revenue recognised
in the period is appropriate.
At 31 March 2020 the group had goodwill of £47.6m on balance sheet from
historical acquisitions, prior to any impairment being recognised. IAS 36
“Impairment of assets” requires management to perform an annual goodwill
impairment review of the three cash generating units “CGUs”.
There was significant management judgement involved in determining
the value in use of the group’s cash generating units in part as a result of
Covid-19, particularly around the cash flow forecasts, discount rate, and long
term growth rates assumed. Consequently an impairment of £16.1m against a
carrying value of £32.8m was identified in the UKE CGU.
Therefore, valuation of goodwill was identified as a key audit matter in the
current period. See note 9.
How the scope of our audit
responded to the key audit matter
Our audit procedures focused on challenging the inputs to the discounted
cash flow model used to determine the recoverable amount of each cash
generating units and included the following:
• Obtaining an understanding of the relevant controls around the goodwill
impairment assessment
•
Involving our internal specialists to review the source information
underlying the determination of the discount rate and the mathematical
accuracy of the calculation
• Assessing the reasonableness of the key assumptions, around cash flow
projections, made in the value in use model, against industry expectations
and historical performance. Testing management’s ability to accurately
forecast future revenues and growth rates by comparing actual results to
management’s historical forecasts
• Performing a sensitivity analysis on the inputs into the value in use model
to determine if this would materially change any impairment charge
currently recognised
Key observations
Based on our procedures, we concluded that the goodwill impairment
recognised in the period is appropriate and the carrying value of the
remaining goodwill is supportable.
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Annual Report & Accounts FY20Arena Events Group plc Independent Auditor’s Report
6. Our Application of Materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the
economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in
planning the scope of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole
as follows:
Group financial statements
Parent company financial statements
Materiality
£1.5m (2018: £1.4m)
£0.8m (2018: £0.8m)
Basis for determining
materiality
0.85% of group revenue for the period (2018:
1.1% of group revenue for the year)
1% of net assets
(2018: 1% of net assets)
Rationale for the
benchmark applied
Revenue generated by the group indicates its
ability to generate returns on assets employed
and is an indication of the effectiveness of the
group’s commercial policy.
The Parent company holds the investment
in all trading entities of the group, and does
not trade.
Revenue
£183.2m
Revenue
Group materiality
80
Group
Materiality
£1.5m
Component
materiality
range £0.225m
to £0.975m
Audit
committee
reporting
threshold
£0.075m
6.2. Performance Materiality
We set performance materiality at a level lower than
materiality to reduce the probability that, in aggregate,
uncorrected and undetected misstatements exceed the
materiality for the financial statements as a whole. group
performance materiality was set at 70% of group materiality
for the FY20 audit (2018: 70%). In determining performance
materiality, we considered the following factors:
a. Our assessment of the company’s overall control
environment
b. Low volume of corrected and uncorrected misstatements
in the previous audit
6.3. Error Reporting Threshold
We agreed with the Audit Committee that we would report to
the Committee all audit differences in excess of £75k (2018:
£70k), as well as differences below that threshold that, in our
view, warranted reporting on qualitative grounds. We also
report to the Audit Committee on disclosure matters that we
identified when assessing the overall presentation of the
financial statements.
7. An Overview of the Scope
of Our Audit
7.1. Identification and Scoping of Components
The group operates through a number of legal entities
which form reporting components based on geographical
location. Audits were performed over significant components,
representing 91% of group revenue (2018: 93%), 96% of
EBITDA (2018: 91%), and 94% of total assets as at year end
(2018: 89%).
We focused our group audit scope on components based in
the following locations, with component materiality ranging
between £225,000 to £975,000 (2018: £210,000 to £980,000).
The locations were the same in 2018:
• UK
• US
• UAE
At the parent company level we tested the consolidation
process and carried out analytical procedures to confirm our
conclusion that there were no significant risks of material
misstatement of the aggregated financial information of the
remaining components not subject to audit.
9%
Revenue
91%
Full audit scope
Review at Group level
4%
EBITDA
96%
Full audit scope
Review at Group level
6%
Net assets
94%
Full audit scope
Review at Group level
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Annual Report & Accounts FY20Arena Events Group plc Independent Auditor’s Report
7.2. Working with Other Auditors
9. Responsibilities of Directors
The work on all components was performed by the
component auditors based in each location under the
direction and supervision of the group engagement
partner. The emergence of Covid-19 prevented visits being
made to the component auditors, in order to review their
files. Instead, telephone conference meetings were held
with the local auditors covering planning, fieldwork and
completion. In the course of the audit we held frequent
calls to discuss and challenge the audit approach
adopted, and discuss areas of importance in line with
our instructions. In addition, we reviewed their detailed
clearance memos, covering the procedures performed and
results of these procedures.
8. Other Information
The Directors are responsible for the other information.
The other information comprises the information included
in the annual report, other than the financial statements
and our auditor’s report thereon.
Our opinion on the financial statements does not cover
the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial statements,
our responsibility is to read the other information and,
in doing so, consider whether the other information is
materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be
materially misstated.
If we identify such material inconsistencies or apparent
material misstatements, we are required to determine
whether there is a material misstatement in the financial
statements or a material misstatement of the other
information. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in respect of these matters.
As explained more fully in the Directors’ responsibilities
statement, the Directors are responsible for the
preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such
internal control as the Directors determine is necessary to
enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the group’s and the parent
company’s ability to continue as a going concern,
disclosing as applicable, matters related to going concern
and using the going concern basis of accounting unless
the Directors either intend to liquidate the group or the
parent company or to cease operations, or have no realistic
alternative but to do so.
10. Auditor’s Responsibilities for the
Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but
is not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these
financial statements.
A further description of our responsibilities for the audit of
the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.
Report on Other Legal and
Regulatory Requirements
11. Opinions on other Matters
Prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course
of the audit:
•
•
The information given in the strategic report and the
Directors’ Report for the financial year for which the
financial statements are prepared is consistent with the
financial statements
The strategic report and the Directors’ Report
have been prepared in accordance with applicable
legal requirements
In the light of the knowledge and understanding of the
group and the parent company and their environment
obtained in the course of the audit, we have not identified
any material misstatements in the strategic report or the
Directors’ Report.
12.2. Directors’ Remuneration
Under the Companies Act 2006 we are also required to
report if in our opinion certain disclosures of Directors’
remuneration have not been made.
We have nothing to report in respect of this matter.
13. Use of our Report
This report is made solely to the company’s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken
so that we might state to the company’s members
those matters we are required to state to them in an
auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the
company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
12. Matters on which we are Required
to Report by Exception
12.1. Adequacy of Explanations Received
and Accounting Records
Jonathan Dodworth
Senior statutory auditor
For and on behalf of Deloitte LLP
Statutory Auditor
London, UK
Under the Companies Act 2006 we are required to report to
you if, in our opinion:
2 July 2020
• We have not received all the information and
explanations we require for our audit
• Adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have
not been received from branches not visited by us
• The parent company financial statements are not in
agreement with the accounting records and returns
We have nothing to report in respect of these matters.
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Annual Report & Accounts FY20Arena Events Group plc Consolidated
Income Statement
for the 15 Month Period Ended 31 March 2020
Consolidated Statement
of Comprehensive Income
for the Period Ended 31 March 2020
LOSS FOR THE PERIOD
ITEMS THAT MAY BE RECLASSIFIED
SUBSEQUENTLY TO PROFIT OR LOSS:
Exchange differences on translation
of foreign subsidiaries
OTHER COMPREHENSIVE (LOSS)/
INCOME FOR THE PERIOD
TOTAL COMPREHENSIVE LOSS FOR
THE FINANCIAL PERIOD
Total comprehensive loss
attributable to:
Owners of the company
15 months to
31 March 2020
Year ended
31 December 2018
£m
(22.9)
(1.3)
(1.3)
(24.2)
(24.2)
(24.2)
£m
(2.0)
0.5
0.5
(1.5)
(1.5)
(1.5)
15 months to
31 March 2020
Year ended
31 December
2018
REVENUE
Cost of sales
GROSS PROFIT
Administrative expenses
OPERATING LOSS
Analysed as:
Earnings before interest, tax,
depreciation, exceptional items,
acquisition costs, share option costs
and amortisation (adjusted EBITDA)
Depreciation Fixed Assets
Depreciation Right of Use Assets
Exceptional expenses
Acquisition costs
Share option costs
Intangible amortisation
Finance costs
LOSS BEFORE TAXATION
Tax on loss on ordinary activities
LOSS AFTER TAXATION
Attributable to:
Owners of the Company
LOSS PER SHARE
Basic pence per share
Diluted pence per share
Note
2
3, 4
3, 4
4
4
4
4
24
4,10
7
8
6
13.2
(9.5)
(4.7)
(17.5)
-
(0.3)
(0.8)
(19.6)
£m
183.2
(127.8)
55.4
(75.0)
(19.6)
(3.4)
(23.0)
0.1
(22.9)
(22.9)
(22.9)
(15.0)
(15.0)
12.1
(5.3)
-
(5.4)
(0.8)
(0.2)
(0.4)
-
£m
135.0
(93.2)
41.8
(41.8)
-
(1.6)
(1.6)
(0.4)
(2.0)
(2.0)
(2.0)
(1.6)
(1.6)
84
85
Annual Report & Accounts FY20Arena Events Group plc Consolidated
Balance Sheet
as at 31 March 2020
NON-CURRENT ASSETS
Goodwill and other intangibles
Property, plant and equipment
Right-of-use assets
Trade and other receivables due after one year
CURRENT ASSETS
Inventories
Trade and other receivables
Cash and cash equivalents
CURRENT LIABILITIES
Trade and other payables
Bank overdraft
Borrowings
Current tax liability
Lease liabilities
Accruals
Deferred revenue
Deferred consideration
NET CURRENT (LIABILITIES)/ASSETS
TOTAL ASSETS LESS CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Borrowings
Lease liabilities
Other creditors
Deferred consideration
Deferred tax liabilities
NET ASSETS
86
Note
9, 10
11
17
14
13
14
16
19
17
19
17
18
31 March 2020
31 December 2018
31 March 2020
31 December 2018
£m
39.4
52.6
19.3
0.9
112.2
7.8
31.9
5.8
45.5
(24.8)
(0.3)
(4.4)
-
(4.1)
(13.9)
(9.0)
(0.9)
(57.4)
(11.9)
100.3
(34.4)
(16.7)
(1.4)
-
(1.3)
(53.8)
46.5
£m
57.9
47.3
-
0.5
105.7
5.9
27.7
7.5
41.1
(18.5)
-
-
(0.2)
(0.7)
(8.6)
(8.8)
(2.3)
(39.1)
2.0
107.7
(26.7)
(0.1)
(3.4)
(4.0)
(1.5)
(35.7)
72.0
EQUITY
Share capital
Share premium account
Merger reserve
Share option reserve
Retranslation reserve
Retained earnings
TOTAL EQUITY
Note
21
22
23
24
£m
1.5
78.5
10.9
0.6
(2.3)
(42.7)
46.5
£m
1.5
78.2
10.9
0.3
(1.0)
(17.9)
72.0
The financial statements of Arena Events Group Plc, (company registration number 10799086), were approved by the
Board of Directors and authorised for issue on 2 July 2020.
S Trowbridge
Director
Signed on behalf of the Board of Directors
87
Annual Report & Accounts FY20Arena Events Group plc Company
Balance Sheet
as at 31 March 2020
NON-CURRENT ASSETS
Investments
Trade and other receivables due after one year
CURRENT ASSETS
Trade and other receivables
Cash and cash equivalents
CURRENT LIABILITIES
Trade and other payables
Borrowings
Accruals
NET CURRENT ASSETS
TOTAL ASSETS LESS CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Borrowings
Intercompany loan
NET ASSETS
EQUITY
Share capital
Share premium account
Merger reserve
Share option reserve
Retained earnings
TOTAL EQUITY
Note
12
14
14
16
19
19
19
21
22
23
24
31 March 2020
31 December 2018
£m
1.0
11.2
12.2
83.0
1.2
84.2
(3.1)
(2.1)
(0.3)
(5.5)
78.7
90.9
(23.2)
(4.9)
62.8
1.5
78.5
1.1
0.6
(18.9)
62.8
£m
1.0
10.8
11.8
91.6
-
91.6
(2.7)
-
(0.3)
(3.0)
88.6
100.4
(13.7)
(0.8)
85.9
1.5
78.2
1.1
0.3
4.8
85.9
As permitted by Section 408 of the Companies Act 2006, the parent company’s income statement has not been
presented in these financial statements. The parent company’s result for the financial year was a loss of £21.8m
(2018: £1.3m). On 1 November 2019 a final dividend payment of £0.4m was paid at which time there were £3.9m
of retained earnings. The financial statements of Arena Events Group Plc, (company registration number 10799086),
were approved by the Board of Directors and authorised for issue on 2 July 2020.
S Trowbridge
Director
Signed on behalf of the Board of Directors
88
Consolidated Statement
of Changes in Equity
for the 15 Month Period Ended 31 March 2020
Share
capital
Share
premium
Merger
reserve
£m
1.1
£m
£m
57.3
10.9
Share
option
reserve
£m
0.1
Group
Balance at
31 December 2017
Loss for the period
Other comprehensive income:
Translation of foreign
Subsidiaries
Total comprehensive
loss for the year ended
31 December 2018
Transactions with
owners:
Dividends paid
Issue of share capital
Share option reserve
Total transactions with
Owners
Balance at 31
December 2018
Loss for the period
Other comprehensive loss:
Translation of foreign
Subsidiaries
Total comprehensive
loss for the 15 months
to 31 March 2020
Transactions with owners:
Dividends paid
Issue of share capital
Share option reserve
Total transactions with
Owners
Balance at
31 March 2020
-
-
-
-
0.4
-
0.4
1.5
-
-
-
-
-
-
-
-
-
-
-
20.9
-
20.9
-
-
-
-
-
-
-
78.2
10.9
-
-
-
-
0.3
-
0.3
-
-
-
-
-
-
-
1.5
78.5
10.9
-
-
-
-
-
0.2
0.2
0.3
-
-
-
-
-
0.3
0.3
0.6
Retranslation
reserve
Retained
earnings
Non-
controlling
interests
Total
equity
£m
£m
£m
£m
(1.5)
(14.1)
-
(2.0)
0.5
-
0.5
(2.0)
-
-
-
-
(1.8)
-
-
(1.8)
(1.0)
(17.9)
-
(22.9)
(1.3)
-
-
-
-
-
-
-
-
-
-
-
-
53.8
(2.0)
0.5
(1.5)
(1.8)
21.3
0.2
19.7
72.0
(22.9)
(1.3)
(1.3)
(22.9)
-
(24.2)
-
-
-
-
(1.9)
-
-
(1.9)
(2.3)
(42.7)
-
-
-
-
-
(1.9)
0.3
0.3
(1.3)
46.5
89
Annual Report & Accounts FY20Arena Events Group plc Company Statement
of Changes in Equity
for the 15 Month Period Ended 31 March 2020
Consolidated Statement
of Cash Flows
for the 15 Month Period Ended 31 March 2020
Company
Share
capital
Share
premium
Merger
reserve
Share
option
reserve
Retained
earnings
Total
equity
15 months to
31 March 2020
Year ended
31 December 2018
Balance at
31 December 2017
Profit for the period
Total comprehensive
income for the year ended
31 December 2018
Transactions with owners:
Dividends paid
Issue of share capital
Share option reserve
Total transactions
with owners
Balance at
31 December 2018
Loss for the period
Total comprehensive loss
for the 15 month to 31 March
2020
Transactions with owners:
Dividends paid
Issue of share capital
Share option reserve
Total transactions
with owners
£m
1.1
-
-
-
0.4
-
0.4
1.5
-
-
-
-
-
-
£m
57.3
-
-
-
20.9
-
20.9
78.2
-
-
-
0.3
-
0.3
£m
1.1
-
-
-
-
-
-
1.1
-
-
-
-
-
-
Balance at 31 March 2020
1.5
78.5
1.1
£m
0.1
-
-
-
-
0.2
0.2
0.3
-
-
-
-
0.3
0.3
0.6
£m
2.4
4.2
4.2
£m
62.0
4.2
4.2
(1.8)
(1.8)
-
-
(1.8)
21.3
0.2
19.7
4.8
85.9
(21.8)
(21.8)
(21.8)
(21.8)
(1.9)
(1.9)
-
-
(1.9)
(18.9)
0.3
0.3
(1.3)
62.8
Note
29
33
NET CASH FROM OPERATING ACTIVITIES
CASH FLOW FROM INVESTING ACTIVITIES
Investment in business combinations, net of cash acquired
Proceeds on disposal of property, plant and equipment
Purchases of property, plant and equipment
NET CASH USED IN INVESTING ACTIVITIES
CASH FLOW FROM FINANCING ACTIVITIES
Increase in borrowings
Repayment of borrowings
Lease payments
Proceeds on issue of shares net of costs
Proceeds on issue of shareholder loan notes
Payment of loan note interest
Deferred consideration paid
Dividend paid
NET CASH GENERATED FROM FINANCING ACTIVITIES
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF YEAR
Effect of foreign exchange rate changes
CASH AND CASH EQUIVALENTS AT END OF YEAR
£m
10.6
-
0.4
(15.5)
(15.1)
10.8
(0.5)
(5.1)
0.3
2.0
-
(2.7)
(1.9)
2.9
(1.6)
7.5
(0.1)
5.8
£m
7.0
(18.8)
0.5
(11.3)
(29.6)
21.7
(13.0)
(0.6)
21.3
-
(1.4)
(0.5)
(1.8)
25.7
3.1
4.3
0.1
7.5
90
91
Annual Report & Accounts FY20Arena Events Group plc Company Statement
of Cash Flows
for the 15 Month Period Ended 31 March 2020
Notes to the Financial
Statements
for the 15 Month Period Ended 31 March 2020
15 months to 31
March 2020
Year ended 31
December 2018
1. Principal Accounting Policies
Note
32
NET CASH USED IN OPERATING ACTIVITIES
CASH FLOW FROM INVESTING ACTIVITIES
Dividend received
Lending to subsidiaries
NET CASH GENERATED FROM INVESTING ACTIVITIES
CASH FLOW FROM FINANCING ACTIVITIES
Increase in borrowings
Repayment of borrowings
Proceeds on issue of shares
Proceeds on issue of shareholder loan notes
Dividend paid
33
NET CASH GENERATED IN FINANCING ACTIVITIES
NET INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS AT END OF YEAR
£m
(0.1)
-
(8.5)
(8.5)
9.4
-
0.3
2.0
(1.9)
9.8
1.2
-
1.2
£m
(1.6)
5.5
(33.0)
(27.5)
14.4
(4.8)
21.3
-
(1.8)
29.1
-
-
-
Lending to subsidiaries was classified in prior year as a financing activity and is now being presented in investing activities.
The preparation of the financial statements requires
estimates and assumptions that affect the reported
amounts of revenues, expenses, assets and liabilities,
and the disclosure of contingent liabilities at the date of
the financial statements. If, in the future, such estimates
and assumptions which are based on management’s best
judgement at the date of the financial statements, deviate
from the actual circumstances, the original estimates and
assumptions will be modified as appropriate in the year in
which the circumstances change.
Basis of Consolidation
The consolidated financial statements include the results
of the Company and all its subsidiary undertakings made
up to the same accounting date. All intra-Group balances,
transactions, income and expenses are eliminated in full
on consolidation. The results of subsidiary undertakings
acquired or disposed of during the period are included or
excluded from the consolidated income statement from the
effective date of acquisition or disposal.
Basis of Preparation
The principal accounting policies of the company are set
out below. The accounting policies have all been applied
consistently in the consolidated financial statements, with
the exception of the adoption of IFRS 16 in the current year.
The financial statements presented cover the fifteen
month period ended 31 March 2020 and the year ended
31 March 2018.
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 of Arena
Events Group Plc are available from the registered office
at 4 Deer Park Road, London SW19 3GY.
The principal activities of the company and its subsidiaries
(the Group) and the nature of the Group’s operations are
set out in the strategic report.
These financial statements are presented in pounds
sterling because that is the currency of the primary
economic environment in which the Group operates.
Foreign operations are included in accordance with
the policies set out in note 1.
The financial statements have been prepared for Arena
Events Group Plc and its subsidiaries (referred to as
“the Group”).
The financial statements are prepared in accordance with
applicable IFRS including standards and interpretations
issued by the International Accounting Standards Board
as adopted by the EU and in accordance with Article 4 of
the IAS Regulation. The financial statements have been
prepared using the historical cost convention except that
as disclosed in the accounting policies.
92
93
Annual Report & Accounts FY20Arena Events Group plc Notes to the Financial Statements
Going Concern
In considering going concern of the Group, the Directors
have reviewed the cash requirements of the Group
reflecting the impact of COVID-19 and the expectation that
it will take some time for the global events market to return
to normal.
The Group has taken actions in order to protect liquidity
including increasing debt facilities and initiating very
significant cost reduction programmes. The Board also
notes the recent successful equity raising and the active
engagement of our two largest shareholders who now
own just under 50% of the Group’s equity.
Management believe that the structural changes made
to the business and the reduced cost base will result in
increased operational leverage and margins when revenue
starts to recover.
The Group raised £9.5m (gross proceeds) from its existing
shareholders in April 2020 and has recently agreed an
additional £4.75m overdraft facility from its main lender.
In the light of the uncertainty and disruption to the market
in which the Group operates caused by the COVID-19
pandemic, in June 2020 the Group also obtained a waiver
from its main lender for covenant testing at June 2020 and
September 2020 and remains in discussions regarding a
revised basis for testing in December 2020 and beyond
as the market recovers. The viability assessment also
assumes the refinancing of the Group’s debt facility prior
to its expiry in October 2022 with no changes to the terms
of the agreement.
The Group has prepared three views of future performance
– a low; a mid; and an upside case. Each of these is built on
detailed bottom-up forecasts for the FY21 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.
The Group’s mid-case scenario is modelled on the
assumption that from early 2021 onwards global event
markets gradually return to normal 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. The Board has reviewed management’s `low
case` scenario which assumes further COVID-19 related
disruption to the global event market and this showed the
Group remains reliant on additional support in order to
maintain the necessary liquidity.
Based on the existing covenant structure, under both the
mid and low-case scenarios the December 2020 to June
2021 tests would not be passed, however, the Group would
have sufficient headroom under the upside case. As such,
the Group would require the continuing support or waivers
from the bank in the mid and low-case scenario. The
Directors have no reason to believe that such support will
not be available, and positive discussions with the Group’s
main lending bank are ongoing, including seeking access to
additional funding under a CLBILS facility.
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 and that
the financial statements for the fifteen months to 31
March 2020 should be prepared on a going concern basis.
However there remains a material uncertainty which may
cast significant doubt on the company’s ability to continue
as a going concern.
Application of New and
Revised Standards
New and Amended IFRS Standards that
are Effective for the Current Year
In the current year, the Group has applied IFRS 16 Leases
(as issued by the IASB 2016) that is effective for periods
that begin on or after January 2019.
IFRS 16 Leases
IFRS 16 introduces new or amended requirements with
respect to lease accounting. It introduces significant
changes to lessee accounting by removing the distinction
between operating and finance lease and requiring the
recognition of a right-of-use asset and a lease liability at
commencement for all leases, except for short-term leases
and leases of low value assets. The impact of the adoption
of IFRS 16 on the Group’s consolidated financial statements
is described below with the financial impact of the initial
application of IFRS 16 is detailed in note 17.
The date of initial application of IFRS 16 for the Group
is 1 January 2019.
The Group has applied IFRS 16 using the modified
retrospective approach, with no requirement to restate
comparative information.
a. Impact of the New Definition of a Lease
The Group has made use of the practical expedient
available on transition to IFRS 16 not to reassess
whether a contract is or contains a lease. Accordingly,
the definition of a lease in accordance with IAS 17 and
IFRIC 4 will continue to be applied to those contracts
entered or modified before 1 January 2019.
The change in definition of a lease mainly relates to
the concept of control. IFRS 16 determines whether a
contract contains a lease on the basis of whether the
customer has the right to control the use of an identified
asset for a period of time in exchange for consideration.
This is in contrast to the focus on ‘risks and rewards’ in
IAS 17 and IFRIC 4.
The Group applies the definition of a lease and related
guidance set out in IFRS 16 to all contracts entered into
or changed on or after 1 January 2019. In preparation
for the first-time application of IFRS 16, the Group has
carried out an implementation project. The project
has shown that the new definition in IFRS 16 will not
significantly change the scope of contracts that meet
the definition of a lease for the Group.
b. Impact on Lessor Accounting
IFRS 16 does not change substantially how a lessor
accounts for leases. Under IFRS 16, a lessor continues
to classify leases as either finance leases or operating
leases and account for those two types of leases
differently. The Group did not have any lessor
arrangements in place for the 15 month period to
31 March 2020.
IFRIC 23 Uncertainty Over Income
Tax Treatments
IFRIC 23 clarifies the accounting for uncertainties in
income tax and is effective from 1 January 2019. There has
been no impact on the Group’s financial statements as a
result of the adoption of IFRIC 23.
New and Amended IFRS Standards that
are in Issue but not Effective Yet
At the date of authorisation of these financial statements,
The Group has not applied the following new and revised IFRS
Standards that have been issued but are not yet effective:
IFRS 17
Insurance Contracts
IFRS 10 Consolidated
Financial Statements
and IAS 28
(amendments)
Sale or Contribution
of Assets between an
Investor and its Associate
or Joint Venture
Amendments to IFRS 3
Definition of a business
Amendments to IAS 1
and IAS 8
Definition of material
Conceptual Framework
Amendments to
References to the
Conceptual Framework
in IFRS Standards
94
95
Annual Report & Accounts FY20Arena Events Group plc Notes to the Financial Statements
The Directors do not expect that the adoption of the
Standards listed above will have a material impact on the
financial statements of the Group in future periods.
Revenue Recognition
The Group recognises revenue in line with IFRS 15 Revenue
from Contracts with Customers.
The Group is contracted to provide temporary seating,
structures and interiors to its customers (Rental Hire).
IFRS 15 has been applied to these contracts as the key
obligations are design, installation and de-rig. Where
there is a maintenance agreement revenue is recognised
over time.
The Group’s accounting policies for its revenue streams are
disclosed in detailed below.
The core principle of IFRS 15 is that an entity should
recognise revenue to reflect the transfer of promised
goods or services to customers in an amount that reflects
the consideration to which the entity expects to be entitled
in exchange for those goods or services.
The following revenue streams have been identified:
Rental hire
Where the obligations within a
contract are for design, installation
and de-rig, revenue is recognised
when these obligations have been
met based on an estimate of cost plus
margin. Where there is a maintenance
element to the contract the revenue
is recognised over the time of the
maintenance agreement based on an
estimate of cost plus margin.
Capital sales
Revenue and profit will be recognised
on handover at which point control
is transferred to the customer. i.e no
change to previous treatment.
Where the Group was contracted to provide temporary
seating, structures and interiors (Rental Hire), on events
that have either been cancelled or postponed due to
the global outbreak of COVID-19 it has taken the follow
approach to revenue recognition:
• On cancellation the Group will recognise revenue
on the basis that all contractual obligations have
been completed to the point of cancellation, unless
otherwise specified within the original contract. The
amount of revenue recognised will be based on cash
collected at the date of cancellation plus any further
amounts agreed with the customer as recoverable
•
On postponement the Group recognise revenue based
on work completed at the time of postponement based
on percentage of an estimated total cost to complete
each obligation plus a margin. The residual contract
value will be recognised in line with IFRS 15 on
recommencement of the contract
Foreign Currency Translation
During the year foreign currency transactions are
translated using the exchange rate in operation on the date
on which the transaction occurred. Any exchange gain or
loss occurring as a result of a business transaction being
settled at an exchange rate that differs from that used
when the transaction was originally recorded is credited or
charged to the profit and loss account.
On consolidation, foreign entities balance sheets and profit
and loss are recorded using the closing rate method.
The functional currency for the Group’s financial
statements is GBP.
Goodwill
Tangible Fixed Assets
Goodwill is measured in line with IFRS 3 Business
Combinations, being the excess of the sum of consideration
transferred over the amounts of the acquired net assets.
Tangible fixed assets, which include assets acquired for
hire, are capitalised at their purchase cost, together with
any incidental costs of acquisition.
Goodwill is not amortised but is reviewed for
impairment on an annual basis. For the purpose of
impairment testing, goodwill is allocated to each of the
Group’s cash-generating units. If the recoverable amount
of the cash-generating unit is less than the carrying
amount of the unit, the impairment is allocated first to
reduce the carrying amount of any goodwill allocated to
the unit and then to the other assets of the unit pro-rata on
the basis of the carrying amount of each asset in the unit.
Any impairment loss recognised for goodwill is not
reversed in a subsequent period.
Depreciation is provided by the company to write off the
cost less the estimated residual value of tangible fixed
assets on a straight line basis over their estimated useful
economic lives as follows:
Hire equipment (metal)
Between 15 and 25 years
Hire equipment
(non-metal)
Between 3 and 10 years
Plant and machinery
Between 2 and 7 years
On disposal of a cash-generating unit, the attributable
amount of goodwill is included in the determination of
the profit and loss on disposal.
Motor vehicles
Between 3 and 5 years
Fixtures and fittings
Between 3 and 6 years
Customer Relationship Costs
Customer relationship costs are an estimated value
attributed to key current customers acquired.
Investments
Investments in subsidiary undertakings are stated at
purchase cost of acquisition (including any incidental cost
of acquisition), together with the amount of any long-term
loans advanced to those undertakings.
Where, in the opinion of the Directors, there has been an
impairment of the investments, appropriate provisions are
made and charged to the profit and loss account.
The intangible asset arising is being amortised on a
straight line basis over 5 to 8 years from the date the new
business assets went into service. This is based on the
expected beneficial life of the key customer. The Directors
consider this represents the useful economic benefit of the
key customers acquired.
Development Costs
Development costs are calculated as those costs incurred
to develop a new product to add to the businesses offering.
The intangible asset arising on development is being
amortised on a straight line basis over 15 years from the
date the new product went into service. The Directors
consider 15 years to represent the useful economic benefit
of the product.
96
97
Annual Report & Accounts FY20Arena Events Group plc Notes to the Financial Statements
Inventories
Raw materials are stated at the lower of cost and net
realisable value. Raw material cost is determined on a first
in first out basis. Provision is made where necessary for
obsolete, slow moving and defective stocks.
Work in progress has been valued at the lower of cost and
net realisable value and includes costs incurred on long
term contracts. Costs include direct materials and direct
labour only. Provided that the outcome of any material
long-term contracts ongoing at the year-end can be
assessed with reasonable certainty, attributable profit
earned to date is recognised in the profit and loss account
and work in progress is stated net of amounts transferred
to cost of sales, net of payments received on account.
Non-Recurring and One-Off Items
During the year the Group reviews costs that are deemed to
be one-off and non-recurring in nature. In order to provide
an indication of the Group’s underlying business these
items are classed as exceptional and presented separately
on the face of the income statement and detailed in note 4.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash at bank and
in hand and short-term bank deposits with maturity of
three months or less, which are used by the Group in the
management of its short-term commitments.
Taxation
Current tax, including UK corporation tax and foreign tax,
is provided at amounts expected to be paid (or recovered)
using the tax rates and laws that have been enacted or
substantively enacted by the balance sheet date.
Deferred tax is recognised in respect of all timing
differences that have originated but not reversed at the
balance sheet date, where transactions or events that
result in an obligation to pay more tax in the future or a
right to pay less tax in the future have occurred at the
balance sheet date.
A net deferred tax asset is regarded as recoverable
and therefore recognised only when, on the basis of all
available evidence, it can be regarded as more likely than
not that there will be suitable taxable profits against which
to recover carried forward tax losses and from which the
future reversal of underlying timing differences can
be deducted.
98
Deferred tax is measured at the average tax rates that
are expected to apply in the periods in which the timing
differences are expected to reserve, based on tax rates
and laws that have been enacted, or substantively enacted,
by the balance sheet date. Deferred tax is measured on a
non-discounted basis.
Pension Costs
The Group contributes to various defined contribution
pension schemes. The assets of the schemes are held
separately from those of the Group in independently
administered funds. Contributions to the schemes are
charged to the profit and loss account in the year/period in
which they are incurred.
Share-Based Payment Transactions
Equity-settled share-based payments to employees are
measured at the fair value of the equity instruments at
the grant date (note 24). The fair value determined at the
grant date of the equity-settled share-based payments is
expensed on a straight-line basis over the vesting period,
based on the Group’s estimate of the value of equity
instruments that will eventually vest, with a corresponding
increase in equity. At the end of each reporting period,
the Group revises its estimate of the number of equity
instruments expected to vest.
The impact of the revision of the original estimates,
if any, is recognised in profit or loss such that the
cumulative expense reflects the revised estimate,
with a corresponding adjustment to the equity-settled
employee benefits reserve.
Financial Assets
All financial assets are recognised and derecognised on a
trade date where the purchase or sale of a financial asset
is under a contract whose terms require delivery of the
financial asset within the timeframe established by the
market concerned, and are initially measured at fair value,
plus transaction costs.
Financial Liabilities
Financial liabilities held by the Group are classified as
other financial liabilities at amortised cost.
Related Party Disclosures
Balances and transactions between the company and
its subsidiaries, which are related parties, have been
eliminated on consolidation. Transactions between the
group and its associates are disclosed in note 28.
COVID-19
The Group operates in a market based upon supporting
mass gatherings at sports and music events, exhibitions,
private and corporate meetings and other mass
participation events. At the time of these financial
statements it is unclear as to the effect of COVID-19 on
such events. A prolonged period of social distancing or a
reduction in the desire of attendees to travel could put the
future of such events at risk.
The Group continues to engage with all event organisers
to understand changing requirements and recovery plans
where future events are cancelled or postponed.
The permanent cessation of such events would require
the Group to reset its commercial offering and reduce its
cost base and investment plans to maintain necessary
levels of cash generation. This backdrop may also lead to
a reduction in the number of competing suppliers.
The Group’s products could provide additional flexibility
to those seeking to operate within social distancing
guidelines by temporarily increasing available areas that
can be used.
Brexit
At the time of these financial statements there still remains
uncertainty over the framework of the UK’s departure from
the EU at the end of 2020.
Whilst the Group considers that there could be an effect on
judgements, estimates or assumptions following Brexit,
the Group does not expect any change to be material.
In terms of supply chain, any impact is expected to be
limited to the UKE Division. The key items detailed below
are those that the management believes could have a
potential impact on the Group results:
• Staffing: the introduction of controls on the freedom
of movement of people may impact the availability of
seasonal un-skilled labour. The Group has sought to
maintain as much flexibility in the employment market
as possible, identifying key roles and personnel and
working to retain those individuals wherever possible
• Tariffs: the Group’s exposure to European cross border
trade remains limited and hence a changing structure of
tariffs is unlikely to have a material impact. In general,
the Group has both costs and revenues arising in local
currencies providing a natural hedge
Critical Accounting Judgements
The preparation of the Group financial statements requires
the use of certain judgements that affect the reported
amounts of assets, liabilities, income and expenses.
Judgements are continually evaluated and are based
on historical experience and other factors, including
expectations of future events that are believed to be
reasonable under the circumstances.
Changes in accounting judgements may be necessary
if there are changes in the circumstances on which the
estimate was based or as a result of new information or
more experience.
Exceptional Items
The Group applies judgement in identifying the significant
non-recurring items of income and expense that are
recognised as exceptional to help provide an indication of
the Group’s underlying business performance. These are
detailed in note 4.
Key Sources of Estimation Uncertainty
The preparation of the Group financial statements requires
the use of certain estimates and assumptions that affect
the reported amounts of assets, liabilities, income and
expenses. Estimates are continually evaluated and are
based on historical experience and other factors, including
expectations of future events that are believed to be
reasonable under the circumstances.
Changes in accounting estimates may be necessary
if there are changes in the circumstances on which the
estimate was based or as a result of new information
or more experience.
99
Annual Report & Accounts FY20Arena Events Group plc Notes to the Financial Statements
Share Options and Other Equity Instruments
A Group share option scheme allows for options to be
issued over ordinary shares, up to a maximum of 10%
of the Company’s ordinary shares in issue at the time of
grant, over a ten year period. The option exercise price will
usually be the mid-market price of the shares on the date
of grant
The current share options in issue at 31 March 2020 were:
Option price pence
No Shares
Year of issue
Vesting dates
0.550
0.600
0.680
0.400
0.185
0.185
3,558,182
135,000
1,505,000
1,788,000
100,000
2,162,162
9,248,344
2017
2018
2018
2019
2019
2019
01-Jul-19
01-Jul-20
01-Jul-21
01-Dec-19
01-Dec-20
01-Dec-21
05-Oct-21
05-Oct-22
05-Oct-23
01-Jul-22
01-Jul-23
01-Jul-24
01-Oct-21
01-Oct-22
01-Oct-23
16-Sep-22
16-Sep-23
16-Sep-24
Full details of the share options can be seen in note 24.
Useful Economic Life and Residual Value of Assets
The Group uses the Black–Scholes model to value its share
option awards. Certain judgement is required in terms of
selecting the risk-free interest rate and standard deviation
rate used. The charge for the current year is £0.3m which may
increase or decrease with changes to these rates.
Risk free rates are based upon government bonds in issue at
the time of option award. As at the 31 March 2020 the Share
Option Reserve was £0.6m. If the risk free rate increased or
decreased by 10% there would not be a material impact on
the reserve.
The assessment of the useful economic life and residual value
of the Group’s fixed assets involves a significant amount of
judgement based on historical experience with similar assets
as well as anticipation of future events which may impact their
useful life and residual value. Depreciation and amortisation
for the other assumptions and judgements are applied by
the Group which are evaluated on a continual basis but are
not significant. Depreciation and amortisation for the fifteen
month period is £9.5m and £0.8m respectively (2018: £5.3m
and £0.4m). These amounts may increase/decrease based on
the useful life.
Goodwill Impairment
The discounted cash flow methodology employed by the
Group when testing for goodwill impairment requires
judgements regarding revenue growth, operating margins,
discount rates and working capital requirements. Further
details of the methodology, discount rates, long-term
growth rates used in relation to the goodwill impairment are
set out in note 9.
Other estimates are applied by the Group which are
evaluated on a continual basis but are not significant.
100
2. Segment Reporting
The Group has three reportable segments; UK and Europe
(UKE), Middle East and 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.
15 month period ended 31 March 2020
REVENUE
Rental
Capital sales
TOTAL REVENUE
Gross profit
Rental
Capital sales
TOTAL GROSS PROFIT
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
£m
56.7
3.4
60.1
14.2
0.8
15.0
MEA
£m
57.0
1.2
58.2
18.8
0.3
19.1
US
£m
61.2
3.7
64.9
18.7
2.6
21.3
Total
£m
174.9
8.3
183.2
51.7
3.7
55.4
Administration expenses
(11.7)
(13.2)
(15.9)
(40.8)
SEGMENT RESULT
3.3
5.9
5.4
Central administrative expenses
Earnings before interest, tax, depreciation,
exceptional items, acquisition costs, share option
costs and intangible amortisation
RECONCILIATION OF SEGMENT RESULT TO LOSS BEFORE TAX
Segment result
Depreciation and amortisation
Right-of -use assets depreciation
Exceptional costs
Share option costs
Net finance expense
LOSS BEFORE TAX
14.6
(1.4)
13.2
(10.3)
(4.7)
(17.5)
(0.3)
(3.4)
(23.0)
101
Annual Report & Accounts FY20Arena Events Group plc UKE
£m
52.2
2.0
54.2
12.6
0.6
13.2
(10.5)
2.7
MEA
£m
26.4
2.1
28.5
9.9
0.4
10.3
(7.0)
3.3
Notes to the Financial Statements
Year ended 31 December 2018
REVENUE
Rental
Capital sales
TOTAL REVENUE
Gross profit
Rental
Capital sales
TOTAL GROSS PROFIT
Administration expenses
SEGMENT RESULT
Central administrative expenses
Earnings before interest, tax, depreciation,
exceptional items, acquisition costs, share option
costs and intangible amortisation
RECONCILIATION OF SEGMENT RESULT TO LOSS BEFORE TAX
Segment result
Depreciation and amortisation
Exceptional costs
Acquisition costs
Share option costs
Net finance expense
LOSS BEFORE TAX
US
£m
49.4
2.9
52.3
16.1
2.2
18.3
Total
£m
128.0
7.0
135.0
38.6
3.2
41.8
(11.1)
(28.6)
7.2
13.2
(1.1)
12.1
(5.7)
(5.4)
(0.8)
(0.2)
(1.6)
(1.6)
Segmental assets and/or liabilities are not presented as this information is not regularly provided to the chief operating
decision maker.
Geographical Information
The Group’s revenue from external customers by geographical location are as detailed below. Non-current assets
(excluding, deferred tax assets, other financial assets and right-of-use assets) are situated: 43.0% UKE, 25.2% MEA
and 31.8% US (2018: 48.6% UKE, 17.2% MEA and 34.2% US)
102
Analysis of revenue by geographical destination
United Kingdom
Europe (excluding the United Kingdom)
North America
Middle East
Asia
Analysis of revenue by type
Rental and services
Capital sales
3. Expenses by Nature
Employees remuneration and benefits
Changes in inventories of finished goods and work in progress
Transportation, carriage and packing
Depreciation and amortisation expenses
Bad debt write-off
Other expenses
15 months to
31 March 2020
Year Ended
31 December 2018
£m
56.1
1.1
65.0
42.9
18.1
£m
50.4
3.5
52.4
18.1
10.6
183.2
135.0
15 months to
31 March 2020
Year Ended
31 December 2018
£m
£m
174.8
8.4
183.2
128.0
7.0
135.0
15 months to
31 March 2020
Year Ended
31 December 2018
£m
53.6
2.2
11.6
15.0
1.1
119.3
202.8
£m
37.1
18.9
10.6
5.7
0.2
62.5
135.0
103
Annual Report & Accounts FY20Arena Events Group plc Notes to the Financial Statements
Other expenses include £17.5m (2018: £5.4m) of items exceptional in nature which have been disclosed separately on the
face of the income statement in order to disclose underlying results. Neither ‘adjusted EBITDA’ nor ‘exceptional items’ are
defined by IFRS however the Directors believe that the disclosures presented in this manner provide clear presentation of
the financial performance of the Group.
The current year exceptional items are detailed in note 4.
4. Operating Profit
Group Operating Profit is Stated after Charging/(Crediting):
Restructuring costs relate to restructuring that took
place in: the Arena US 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 (2018: UK and US). In addition,
the impact of COVID-19 at the end of the 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 £16.1m
impairment was also taken against the carrying value
of goodwill on the UKE CGU 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 (2018: US legal
costs relate to the settlement of the Department of Justice
law suit against Arena Event Services Inc and related
legal fees) (note 26). There were no acquisition costs
in the period, but a revised view on 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.
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.
15 months to
31 March 2020
Year Ended
31 December 2018
Auditor’s Remuneration
Note
10
11
17
Amortisation of intangible assets
Depreciation of property, plant and equipment:
Tangible fixed assets
Right of use assets
Profit on disposal of fixed assets
Share option cost
Items of an exceptional nature:
Restructuring costs
US legal costs and insurance recovery
Reduction of deferred consideration
Impairment of goodwill
Acquisition related costs
£m
0.8
9.5
4.7
(0.3)
0.3
4.2
(1.9)
(0.9)
16.1
-
32.5
£m
0.4
5.3
-
(0.1)
0.2
1.2
4.2
-
-
0.8
12.0
104
15 months to
31 March 2020
Year Ended
31 December 2018
Fees payable to company’s auditor for the audit
of the company’s annual accounts
Fees payable to the company’s auditor for other services
to the group:
The audit of the company’s subsidiaries
Total audit fees
Other taxation advisory
Other services
Total non-audit fees
£m
0.1
0.3
0.4
-
-
-
£m
0.1
0.2
0.3
-
-
-
105
Annual Report & Accounts FY20Arena Events Group plc Notes to the Financial Statements
5. Employee Information
6. Loss Per Share
The average monthly number of persons (including Executive Directors) employed by the Group during the period ended
31 March 2020 was:
Group – By activity
Administration and finance
Sales and marketing
Technical support and maintenance
Warehouse, site, transport and distribution
Staff costs (for the above persons)
Wages and salaries
Social security costs
Other pension costs
Company – By activity
Administration and finance
Sales and marketing
Staff costs (for the above persons)
Wages and salaries
Social security costs
106
Note
27
Note
15 months to
31 March 2020
Year Ended
31 December 2018
Number
Number
181
147
104
924
1,356
148
109
136
612
1,005
15 months to
31 March 2020
Year Ended
31 December 2018
£m
49.1
3.8
0.7
53.6
£m
33.7
2.8
0.6
37.1
Basic earnings per share
Basic earnings per share from continuing operations
Diluted earnings per share
Diluted earnings per share from continuing operations
15 months to
31 March 2020
Year Ended
31 December 2018
pence per share
pence per share
(15.0)
(15.0)
(1.6)
(1.6)
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:
Loss for the period attributable to shareholders
15 months to
31 March 2020
Year Ended
31 December 2018
£m
(22.9)
£m
(2.0)
15 months to
31 March 2020
Year Ended
31 December 2018
Number
Number
Basic
Number
Number
152,673,573
131,650,300
Weighted average number of ordinary shares in issue:
2020
2018
6
1
7
6
1
7
15 months to
31 March 2020
Year Ended
31 December 2018
£m
0.7
0.1
0.8
£m
0.5
0.1
0.6
Adjustment for share options
169,250
2,333,375
Diluted
152,842,823
133,983,675
107
Annual Report & Accounts FY20Arena Events Group plc Notes to the Financial Statements
7. Finance Costs (Net)
The tax assessed for the year is lower (2018: higher) than the standard rate of corporation tax in the UK of 19.0%
(2018: 19%). The differences are explained below:
15 months
ended
31 March 2020
15 months
ended
31 March 2020
Year ended
31 December
2018
Year ended
31 December
2018
Group £m
Company £m
Group £m
Company £m
1.8
-
1.1
-
0.5
3.4
0.9
(0.4)
-
-
0.3
0.8
0.9
-
0.1
0.1
0.5
1.6
0.1
(0.2)
-
-
-
(0.1)
Interest payable on bank loans
and overdrafts
Interest receivable on
intercompany loan notes
Finance charges payable under
lease liabilities
Imputed interest on deferred
consideration
Amortisation of bank refinance
costs
Loss on ordinary activities before taxation
Loss on ordinary activities multiplied by standard rate
of corporation tax in the UK of 19% (2018: 19%)
Effects of:
Expenses not deductible for tax purposes:
Overseas subsidiary not subject to UK taxation
Capital gains
Amounts not recognised
Adjustment in respect of prior year
Income tax (credit)/expense reported in the income statement
15 months to
31 March 2020
Year Ended
31 December 2018
£m
(23.0)
(4.4)
3.2
0.3
0.3
0.4
0.1
(0.1)
£m
(1.6)
(0.3)
0.2
0.1
-
0.3
0.1
0.4
8. Tax on Loss on Ordinary Activities
Note
Current tax
UK corporation tax on loss of the year
Adjustments in respect of prior year
Overseas tax
Total current tax charge
Deferred taxation
Origination and reversal of timing differences
Adjustments in respect of prior year
Effect of change in tax laws
Total deferred taxation credit
18
Tax credit on loss on ordinary activities
15 months to
31 March 2020
Year Ended
31 December 2018
The UK corporation tax expense within these financial statements has been provided for at the rate of 19%
(2018: 19%). On 17 March 2020 the Government enacted that the main rate of Corporation Tax would remain at 19%
(effective 01 April 2020).
Deferred tax assets and liabilities are measured at tax rates that are enacted or substantively enacted at the balance sheet
date and accordingly deferred tax has been recognised within these financial statements at 19% (2018: 17%).
£m
-
-
-
0.2
0.2
(0.4)
0.1
-
(0.3)
(0.1)
£m
-
-
-
0.4
0.4
(0.1)
0.1
-
-
0.4
108
109
Annual Report & Accounts FY20Arena Events Group plc Notes to the Financial Statements
9. Goodwill
Cost
At 1 January 2018
Additions in the year
At 31 December 2018
At 1 January 2019
Additions in the period
Adjustments in the period
At 31 March 2020
Accumulated impairment losses
At 31 December 2018
Impairment in the period
At 31 March 2020
Carrying amount
At 31 March 2020
At 31 December 2018
£m
34.2
15.2
49.4
49.4
0.3
(1.9)
47.8
-
16.1
16.1
31.7
49.4
Additions in the period of £0.3m relate to a fair value adjustment of the TGP Holdings assets during the year following
acquisition. Adjustments in the period relate to a revised view on the level of deferred consideration payable on 2018
acquisitions in light of the outlook driven by COVID-19. The £1.9m adjustment is split: TGP Holdings £1.6m and Arena
Stuart Rentals £0.3m.
Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (CGUs) that are
expected to benefit from that business combination. After impairment, the carrying amount of goodwill had been
allocated as follows:
CGU
UKE
MEA
US
31 March 2020
31 December 2018
£m
16.7
5.9
9.1
31.7
£m
32.9
7.4
9.1
49.4
The recoverable amounts of the CGUs are determined
from the value in use calculations. The value in use
calculations are based on a five-year forecast with a
terminal value applied based on a long-term growth rate
of 2% (2018: 2%).
The WACC calculation used the cost of equity based on
the CAPM model using available market information in
relation to the risk free rate, beta coefficient and equity risk
premium. The main driver of the difference increased debt
to equity proportions within the business.
The key assumptions are those regarding discount rates,
growth rates and margin percentages during the period.
The analysis has been prepared against the backdrop of the
COVID-19 pandemic, with the assumption that activity and
revenue levels do not return to FY20 levels until FY24 (with
the UKE being FY25 underpinned by the mature market it
operates within). EBITDA % by FY25 is forecast to recover
to be ahead of FY20 levels, in part driven by structural cost
reduction programmes implemented within each division.
By FY25 EBITDA margins are forecast to be at: US 10%,
MEA 10% and UKE 8% (FY20: US 8%, MEA 8% and UKE
7%). Capex has been allowed at a rate of between 4% and
6% of revenue (2018: 3% to 6%).
The rates used to discount the CGU cash flows are a pre-tax
discount rate derived from WACC of: UKE 9.5%, MEA 11.0%
and US 9.0% (2018: UKE 10.0%, MEA 12.0% and US 11.3%).
The impairment review generated a Goodwill impairment
of £16.1m in the UKE CGU, with the detrimental current and
forecasted impact of the COVID-19 pandemic on the UKE
CGUs cashflow generation the core driver. Management
believe that the CGU can no longer support the current
high level of Goodwill, which predominantly relates to
acquisitions made prior to 2017, and therefore believe the
adjustment is appropriate to reset the level of Goodwill
within the CGU and the Group.
The Group has conducted a sensitivity analysis on the
impairment test of the MEA and US CGUs. An increase in
the applied discount rates (WACC) of 6% would not leave
the carrying value of goodwill in excess of its recoverable
amount for either CGU, with the hurdle rate being higher for
the MEA CGU. In addition, adjusting long term growth rate
% from 2% to 0% would also not trigger an impairment in
the MEA or US CGUs.
110
111
Annual Report & Accounts FY20Arena Events Group plc Notes to the Financial Statements
10. Other Intangible Assets
11. Tangible Fixed Assets
Customer
relationships
Licence
Development
costs
Total
Buildings and
leasehold
improvements
Plant and
machinery
and hire
equipment
Motor
vehicles
Fixtures and
fittings
Total
Group
Cost
At 1 January 2018
Additions in the year
At 31 December 2018
At 31 March 2020
Accumulated amortisation
At 1 January 2018
Amount charged to operating expense
for the year
At 31 December 2018
At 1 January 2019
Amount charged to operating expense
during the period
At 31 March 2020
Net book value
At 31 March 2020
At 31 December 2018
£m
0.5
4.9
5.4
5.4
0.1
0.2
0.3
0.3
0.5
0.8
4.6
5.1
£m
-
3.4
3.4
3.4
-
0.1
0.1
0.1
0.2
0.3
3.1
3.3
£m
0.3
-
0.3
0.3
0.1
0.1
0.2
0.2
0.1
0.3
-
0.1
£m
0.8
8.3
9.1
9.1
0.2
0.4
0.6
0.6
0.8
1.4
7.7
8.5
Customer relationships is the amount attributed to the value of key current customer relationships (2018: various
acquisitions). These are amortised on a straight-line basis between five and eight years from the date of acquisition.
The licence relates to the TGP property in Dubai and is amortised on a straight-line basis over 18 years in line with term
of the licence. Development expenditure is the amount incurred by Arena Seating in respect of the Clearview™ seating
system. The intangible asset arising on development is being amortised on a straight-line basis of fifteen years from the
effective date the new Clearview™ seating system went in to service. The company had no intangible assets (2018: nil).
112
Group
Cost
At 1 January 2018
Foreign exchange
Additions
Acquisitions
Disposals
At 31 December 2018
Foreign exchange
Additions
Disposals
At 31 March 2020
Accumulated depreciation
At 1 January 2018
Foreign exchange
Charge for the financial
year
Disposals
At 31 December 2018
Foreign exchange
Charge for the period
Disposals
At 31 March 2020
Net book value
At 31 March 2020
At 31 December 2018
£m
1.2
0.1
0.2
2.4
(0.1)
3.8
-
0.9
(0.1)
4.6
0.5
-
0.2
(0.1)
0.6
-
0.4
(0.1)
0.9
3.7
3.2
£m
57.4
1.8
10.5
3.4
(1.5)
71.6
(0.8)
13.9
(1.8)
82.9
24.7
1.0
4.7
(1.1)
29.3
(0.3)
8.2
(1.7)
35.5
47.4
42.3
£m
0.7
-
0.1
0.5
(0.1)
1.2
-
0.1
(0.1)
1.2
0.4
-
0.2
(0.1)
0.5
-
0.3
(0.1)
0.7
0.5
0.7
£m
£m
1.3
0.1
0.6
0.4
-
2.4
(0.1)
0.6
-
2.9
1.0
0.1
0.2
-
1.3
-
0.6
-
1.9
1.0
1.1
60.6
2.0
11.4
6.7
(1.7)
79.0
(0.9)
15.5
(2.0)
91.6
26.6
1.1
5.3
(1.3)
31.7
(0.3)
9.5
(1.9)
39.0
52.6
47.3
113
Annual Report & Accounts FY20Arena Events Group plc Notes to the Financial Statements
The company holds no tangible fixed assets (2018: nil).
Included above are assets held under finance lease and hire purchase contracts as follows:
Name of Company
Percentage of ordinary
shares held, %
Nature of business
Registered address
Plant, machinery and hire equipment
31 March 2020
Plant, machinery and hire equipment
31 December 2018
£m
3.4
1.1
-
(0.2)
4.3
£m
2.9
-
0.6
(0.1)
3.4
AES Arena Event Services
Group Holdings Limited
AES Arena Event Services
Holdings Limited
100
100*
Holding company
Holding company
Arena Ice BVBA
100**
Temporary ice rinks
Arena Event Services Inc.
100**
Arena Stuart Rentals Inc.
100**
Temporary
structures
Temporary
structures
WB Co (1402) Limited
100**
Holding company
WB Co (1403) Limited
100***
Holding company
Shares in subsidiary
undertakings
Arena Event Services
Group Limited
100****
Temporary seating
and structures
Net book value
At 1 January
Additions in the period
Exchange movements
Depreciation charge for the period
At 31 March/December
12. Investments
Company
Cost and net book value
At 1 January 2019 and 31 March 2020
The following information relates to the subsidiary undertakings of the Company as at 31 March 2020, all of which are
incorporated in England except for Arena Events Limited and TGP Holdings Limited incorporated in the British Virgin
Islands, Asia Tents Arena Sdn. Bhd. incorporated in Malaysia, Arena Event Services Inc. and Arena Stuart Rentals Inc.
incorporated in the USA, Arena Ice BVBA incorporated in Belgium, Arena Hong Kong Limited and Ironmonger Limited
incorporated in Hong Kong and Arena Event Services PTE incorporated in Singapore.
The Group had no fixed asset investments.
£m
1.0
Richerbs Limited
100*****
Holding company
Events Solution Limited
100******
Temporary barriers
272 Bath Street, Glasgow, G2 4JR
Ice House Rentals
100*****
Temporary cold
storage
Bash Bars Limited
100*****
Bar rental
Arena Event Services PTE
Limited
100*****
Arena Events Limited
100*****
TGP Holdings
100*****
Arena Gulf Events LLC
100*****
Temporary
structures
Temporary
structures
Exhibitions and
Graphics
Al Barsha South, Office No, 1304,
Level 13, PO Box: 65588, Dubai
Temporary
structures
Office # 110, Level 1,
B1 Cubes Park ICT
Mussafah, Abu Dhabi,
United Arab Emirates
4 Deer Park Road, London,
SW19 3GY, UK
4 Deer Park Road, London,
SW19 3GY, UK
Archimedesstraat 11
8400 Oostende, Belgium
c/o Corporations Service Company,
2711 Centerville Road, Suite 400,
Wilmington, New Castle County,
Delaware 19808
c/o Corporations Service Company,
2711 Centerville Road, Suite 400,
Wilmington, New Castle County,
Delaware 19808
4 Deer Park Road, London,
SW19 3GY, UK
4 Deer Park Road, London,
SW19 3GY, UK
Needingworth Industrial Estate,
Needingworth Road, St. Ives,
England, PE27 4NB
Needingworth Industrial Estate,
Needingworth Road, St. Ives,
England, PE27 4NB
Needingworth Industrial Estate,
Needingworth Road, St. Ives,
England, PE27 4NB
Needingworth Industrial Estate,
Needingworth Road, St. Ives,
England, PE27 4NB
35 Selegie Road, 09-14/15
Parklane Shopping Mall
Singapore 188307
Al Quoz, PO Box 114384 Dubai
114
115
Annual Report & Accounts FY20Arena Events Group plc Notes to the Financial Statements
Name of Company
Percentage of ordinary
shares held, %
Nature of business
Registered address
Asia Tents Arena SDN. BHD
100*****
Arena Hong Kong Limited
100*****
Temporary
structures
Temporary
structures
Ironmonger Limited
100*****
Event services
Lot 863, Jalan Subang 8,
Taman Perindustrian Subang,
47500 Subang Jaya, Selangor
Darul Ehsan, Malaysia
Room 902, Double Building, 22
Stanley Street, Central Hong Kong
Room 902, Double Building, 22
Stanley Street, Central Hong Kong
* indirect holding, owned by AES Arena Event Services Group Holdings Limited
** indirect holding, owned by AES Arena Event Services Holdings Limited
***indirect holding, owned by WB Co (1402) Limited
**** indirect holding, owned by WB Co (1403) Limited
*****indirect holding, owned by Arena Event Services Group Limited
******indirect holding, owned by Richerbs Limited
All subsidiaries of the Group are included within the Group accounts.
The following subsidiary companies are exempt from audit of their accounts under section 479A of the Companies Act
2006: Parent Undertaking Declaration of Guarantee.
Company
Registered number
AES Arena Event Services Group Holdings Limited
07889154
AES Arena Event Services Holdings Limited
07889158
WB Co (1402) Limited
WB Co (1403) Limited
Arena Event Services Group Limited
Richerbs Limited
Events Solution Limited
Ice House Rentals Limited
Bash Bars Limited
06048687
06048693
04069053
03135217
SC166370
09897650
04897990
13. Inventories
Consumables
Work in progress
Group
31 March 2020
Company
31 March 2020
Group
31 December 2018
Company
31 December 2018
£m
1.7
6.1
7.8
£m
-
-
-
£m
1.7
4.2
5.9
£m
-
-
-
14. Trade and Other Receivables
Amounts due in less than one year
Trade receivables – gross
Loss allowance
Trade receivables - net
Amounts due from other Group
undertakings
Prepayments and accrued income
Amounts due in more than one year
Trade receivables
Amounts due from other
Group undertakings
Prepayments and accrued income
Total trade and other receivables
Group
31 March
2020
£m
Company
31 March
2020
£m
Group
31 December
2018
Company
31 December
2018
£m
£m
24.6
(1.4)
23.2
-
8.7
31.9
0.5
-
0.4
0.9
32.8
-
-
-
83.0
-
83.0
-
11.2
-
11.2
84.2
21.6
(0.3)
21.3
-
6.4
27.7
0.3
-
0.2
0.5
28.2
-
-
-
91.6
-
91.6
-
10.8
-
10.8
102.4
All of the other receivables and prepayment balances above are deemed to be current; the disclosures below relate only
to the trade receivables balance.
The Directors review the recoverability of trade receivables and in line with IFRS 9 Financial Instruments, the Group
applies the following provisions in line with the aging profile: current 1%, 60 – 90 days 2% and 90 days 4%.
The Group has no significant concentration of credit risk, with exposure spread over a large number of counterparties and
customers. One customer accounts for 24.8% of the current trade receivable and was invoiced on 31 March 2020. There
is no other one customer that accounts for more than 10% of the remaining trade receivables balance. Accordingly the
Directors believe that there is no further credit provision risk required in excess of the allowance for doubtful debts.
116
117
Annual Report & Accounts FY20Arena Events Group plc Notes to the Financial Statements
15. Ageing of Past Due Trade Receivables
31 March 2020
31 December 2018
Group
60-90 days
90+ days
Total past due trade receivables
Current
Total trade receivables
Movement in the allowance for
doubtful debts
Balance at start of the period
Bad debt write off
Increase in doubtful debt estimate
Balance at end of period
£m
0.9
6.0
6.9
18.2
25.1
0.3
(0.2)
1.3
1.4
£m
2.2
2.5
4.7
17.2
21.9
0.5
(0.4)
0.2
0.3
The Directors do not consider any of the trade receivables balances to be fully impaired, rather they are either in dispute
or are only expected to be partially settled. Accordingly no ageing of impaired trade receivables is presented.
16. Trade and other Payables Falling Due within One Year
Trade creditors
Amounts due to other Group
undertakings
Taxation and social security
Loan interest
Other creditors
Group
31 March
2020
Company
31 March
2020
Group
31 December
2018
Company
31 December
2018
£m
16.1
-
0.8
0.4
7.5
24.8
£m
0.4
2.5
-
0.2
-
3.1
£m
14.9
-
0.2
-
3.4
18.5
£m
0.2
2.5
-
-
-
2.7
Trade Creditors
Trade creditors and accruals principally comprise amounts
outstanding for trade purchases and ongoing costs.
The average credit period taken for trade purchases is 58
days (2018: 58 days). For most suppliers, no interest is
charged on the trade payables. The group has financial risk
management policies in place to ensure that all payables
are paid within the credit timeframe.
The Directors consider that the carrying amount of trade
payables approximates to their fair value.
17. Leases
The Group reviewed the requirements of IFRS 16 Leases
and elected to use the modified retrospective approach.
Under IFRS 16, right-of-use assets are tested for
impairment in accordance with IAS 36.
The Group has made use of the practical expedient
available on transition to IFRS 16 not to reassess whether
a contract is or contains a lease. Accordingly, the definition
of a lease in accordance with IAS 17 and IFRIC 4 will
continue to be applied to those contracts entered or
modified before 1 January 2019.
The Group applies the definition of a lease and related
guidance set out in IFRS 16 to all contracts entered into or
changed on or after 1 January 2019. The Group assessed
whether a contract is, or contains, a lease based on
whether the contract conveys the right to control the use
of an identified asset for a period of time in exchange
for consideration and where applicable has applied
exemptions in relation to short-term leases (< 12 mths)
and low-value items (<£5,000).
For short-term leases (lease term of 12 month or less)
and leases of low-value assets, the Group has opted to
recognise a lease expense on a straight-line basis as
permitted by IFRS 16.
The lease liability is initially measured at the present
value of the lease payments that are not paid at the
commencement date, discounted by using the rate implicit
in the lease. If this rate cannot be readily determined, the
Group uses its incremental borrowing rate.
Rates were calculated on a regional basis to be in line
with CGUs but also to reflect access to bank borrowing
at a regional level. The IBR was based on type of lease
and length of term to provide a representative rate.
IBRs applied were UKE 2.8%, MEA 3.8% and US 4.3%
On adoption of IFRS 16, the Group recognised lease
liabilities in relation to leases which had previously been
classified as ‘operating leases’ under the principles of IAS
17 Leases. IFRS 16 requires that the Group recognises
as part of its lease liability only the amount expected to
be payable under a residual value guarantee, rather than
the maximum amount guaranteed as required by IAS 17.
This change did not have a material effect on the Group’s
consolidated financial statements.
The movements in the period ended 31 March 2020 were
as follows:
Right-of-use Assets
The right-of-use assets comprise the initial measurement
of the corresponding lease liability, lease payments
made at or before the commencement day, less any lease
incentives received and any initial direct costs. They
are subsequently measured at cost less accumulated
depreciation and impairment losses.
Right-of-use assets are depreciated over the shorter
period of lease term and useful life of the underlying
asset. If a lease transfers ownership of the underlying
asset or the cost of the right-of-use asset reflects that
the Group expects to exercise a purchase option, the
related right-of-use asset is depreciated over the useful
life of the underlying asset. The depreciation starts at the
commencement date of the lease.
118
119
Annual Report & Accounts FY20Arena Events Group plc Notes to the Financial Statements
The following table shows the breakdown of the lease expense between amounts charged to operating profit and amounts
charged to finance costs:
15 month period to March 2020
Land and
buildings
£m
14.1
7.1
(0.6)
20.6
-
3.6
(0.6)
0.3
3.3
14.1
17.3
Plant and
Machinery
£m
0.8
-
-
0.8
0.3
-
-
0.3
0.8
0.5
Land and
buildings
Plant and
Machinery
£m
14.1
7.1
0.8
(0.6)
(3.8)
17.6
£m
0.8
-
-
-
(0.3)
0.5
Other
£m
2.1
0.3
-
2.4
-
0.8
-
0.1
0.9
2.1
1.5
Other
£m
2.1
0.3
0.1
-
(0.8)
1.7
Total
£m
17.0
7.4
(0.6)
23.8
-
4.7
(0.6)
0.4
4.5
17.0
19.3
Total
£m
17.0
7.4
0.9
(0.6)
(4.9)
19.8
Amounts recognised on transition
01 January 2019
Additions
Disposals
31 March 2020
Depreciation
01 January 2019
Charge for the period
Disposals
FX
31 March 2020
Net book value 01 January 2019
Net book value 31 March 2020
Lease Liabilities
01 January 2019
Additions
Interest expense
Disposal
Repayment of lease liabilities
31 March 2020
120
Group
Continuing Operations
Depreciation of right of use assets:
Land & Buildings
Plant & Machinery
Other
Short-term lease expense
Low-Value lease expense
Charge to operating profit
Interest expense related to lease liabilities
Charge to profit before tax on loss
Lease liabilities recognised at 1 January 2019 were as follows:
Group
Operating lease commitments at 31 December 2018
Short-term leases and leases of low-value assets
Discounted using the lessee’s incremental borrowing rate at date of application
Finance lease liabilities recognised under IAS17 at 31 December 2018
£m
3.6
0.2
0.9
0.4
0.1
5.2
0.9
6.1
£m
20.8
-
(3.8)
1.3
18.3
The maturity of lease liabilities at 31 March 2020 were as follows:
15 month period to March 2020
Group
Financial year:
2020/2021
2021/2022
2022/2023
2023/2024
2024/2025
Later years
Effect on discounting
Total discounted lease liability
Aged as:
Short-term lease liability
Long-term lease liability
£m
4.1
3.4
2.3
1.6
1.6
11.0
(3.2)
20.8
4.1
16.7
20.8
121
Annual Report & Accounts FY20Arena Events Group plc Notes to the Financial Statements
18. Deferred Tax
At 1 January 2018
Acquisitions
Charged to profit or loss
At 1 January 2019
Charged to profit or loss
At 31 March 2020
Accelerated capital
allowances
Short term timing
differences
£m
(0.5)
-
-
(0.5)
0.2
(0.3)
£m
0.1
(1.0)
(0.1)
(1.0)
-
(1.0)
Total
£m
(0.4)
(1.0)
(0.1)
(1.5)
0.2
(1.3)
The company has a deferred tax asset of £0.1m (2018: £0.1m), in respect of short term timing differences. The Group has
an unrecognised deferred tax asset of £1.7m (2018: £1.1m) in respect of UK tax losses carried forward, due to uncertainty
over the level of future profitability across each UK company and therefore the usability of those losses. A deferred tax
asset of £0.1m (2018: £0.1m) has been recognised on a group level in respect of those losses.
19. Bank and Other Borrowings
Revolving credit facility (AEG Plc)
Revolving credit facility (AES Inc.)
Revolving demand note (AES Inc)
Loan (TGP)
Shareholder loan
Shareholder loan note interest
Intercompany loan
Less unamortised issue costs
Group
31 March
2020
Company
31 March
2020
Group
31 December
2018
Company
31 December
2018
£m
23.7
11.2
2.3
-
2.0
0.1
-
39.3
(0.5)
38.8
£m
23.7
-
-
-
2.0
0.1
4.9
30.7
(0.5)
30.2
£m
14.4
12.5
-
0.5
-
-
-
27.4
(0.7)
26.7
£m
14.4
-
-
-
-
-
0.8
15.2
(0.7)
14.5
In February 2019 the HSBC facility (entered into in October 2018) was increased from £30.0m to £35.0m.
The HSBC facility includes senior term debt of £35.0m split into a revolving credit facility (RCF) of £30.0m (2018: revolving
credit facility £30.0m) and an accordion loan of £5.0m (2018: £nil). At 31 March 2020 the Group had drawn £34.9m of the
total facility (31 December 2018: £26.9m). Of the total £34.9m, £23.7m was drawn in GBP by AEG Plc (2018: £14.4m) and
£11.2m was drawn in USD by AES Inc (2018: £12.5m). This debt was secured by fixed and floating charges over the assets
of each of the entities within Group. The facility is available until December 2022.
122
In September 2019 Arena Event Services Inc entered into 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 2020 $2.9m of the demand note had been drawn.
In November 2019 Arena Events Group Plc raised £2.0m from Lombard Odier Asset Management (being one of its
shareholders) by way of a Loan Note Instrument. The loan notes carry a 5.0% interest rate capitalised on issue and have
a final redemption date of 6 months following date of issue. The issuance of the loan notes fully complied with the HSBC
facility agreement.
As at 31 March 2020 the Group’s main banking facilities were with HSBC (2018: HSBC).
Total bank facility arrangement fees of £0.4m (2018: £0.5m) were amortised in the year.
Borrowings Interest Rates
The analysis of the borrowings is as follows:
Revolving credit facility (AEG Plc)
Revolving credit facility (AES Inc)
Revolving demand note (AES Inc)
Loan (TGP)
Shareholder loan
Unamortised bank amendment fees
Total borrowings
Weighted
average interest
rate
31 March
2020
Weighted
average interest
rate
31 December
2018
%
3.1%
4.2%
4.3%
-
5.0%
-
3.6%
£m
23.7
11.2
2.3
-
2.0
(0.5)
38.7
%
2.5%
3.7%
-
9.3%
-
3.2%
£m
14.4
12.5
-
0.5
(0.7)
26.7
The above table does not include the capitalised shareholder loan note interest.
Maturity of financial
liabilities
Less than one year
Between two and five years
Greater than five years
Less unamortised issue costs
Group
31 March
2020
Company
31 March
2020
Group
31 December
2018
Company
31 December
2018
£m
4.4
34.9
-
39.3
(0.5)
38.8
£m
2.1
28.6
-
30.7
(0.5)
30.2
£m
-
27.4
-
27.4
(0.7)
26.7
£m
-
14.4
--
14.4
(0.7)
13.7
123
Annual Report & Accounts FY20Arena Events Group plc Notes to the Financial Statements
Group
Reconciliation of
liabilities arising from
financing activities
Revolving credit facility (AEG Plc)
Revolving credit facility (AES Inc.)
Revolving demand note (AES Inc)
Shareholder loan notes
As at
31 December
2018
Financing
Cash flow
Other
movements
Exchange
movements
As at
31 March
2020
20. Financial Instruments
£m
14.4
12.5
-
-
£m
9.3
(1.7)
2.3
2.0
£m
-
-
-
0.1
-
0.1
£m
-
0.4
-
-
-
£m
23.7
11.2
2.3
2.1
-
Categories of financial instruments
Cash and short-term deposits
Trade and other receivables: amounts falling due within one year
Trade and other receivables: amounts falling due after more than
one year
Trade and other payables: amounts falling due within one year
0.4
39.3
Bank overdrafts and bank loans
Other loans
0.5
(0.5)
Total liabilities from
financing activities
27.4
11.4
Group
31 March 2020
Group
31 December 2018
£m
5.8
31.9
0.9
(16.9)
(39.1)
(17.4)
£m
7.5
21.7
0.5
(15.1)
(26.7)
(12.1)
The table above shows changes in the Group’s liabilities arising from financing activities, including both cash and non-
cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be,
classified in the Group’s consolidated statement of cash flows from financing activities.
Company
Reconciliation of
liabilities arising from
financing activities
Revolving credit facility (AEG Plc)
Shareholder loan notes
Loans from group undertakings
Total liabilities from
financing activities
As at
31 December
2018
Financing
Cash flow
Other
movements
Exchange
movements
As at
31 March
2020
£m
14.4
-
0.8
£m
9.3
2.0
4.1
15.2
15.4
£m
-
0.1
-
0.1
£m
-
-
-
-
£m
23.7
2.1
4.9
30.7
Financial instruments detailed above are recorded on an
amortised cost basis.
Carrying Value of Financial Assets
As noted in note 15 the Directors do not believe any of the
trade receivables to be impaired. A significant decrease in
the net assets and trade of the owing company or a decline
in the financial position of customers would trigger an
impairment review.
Interest Rate Sensitivity Analysis
If interest rates on all borrowings had been 0.5%
(2018: 0.5%) higher/lower and all other variables were
held constant, the Group’s profit for the 15 month period
31 March 2020 would decrease/increase by £0.2m
(2018: £0.1m).
This has been calculated by applying the amended interest
rate to the weighted average rate of borrowings for the
15 month period to 31 March 2020, other than borrowings
which are held at a fixed interest rate as those borrowings
are not sensitive to external variables, such as movement
in interest rates.
Maturity of Financial Liabilities
The maturity of borrowings is included in note 19.
Intercompany balances have no fixed repayment date.
All other financial liabilities are expected to mature within
six months of the year-end. The Directors consider that
the carrying amount of the other financial liabilities is
approximate to their fair value.
124
125
Annual Report & Accounts FY20Arena Events Group plc Notes to the Financial Statements
As at 31 March 2020
Consolidated Group
Inventories
Trade and other receivables
Trade and other payables
Bank overdraft
Borrowings
Lease liabilities
Accruals
Deferred revenue
Deferred consideration
As at 31 December 2018
Consolidated Group
Inventories
Trade and other receivables
Trade and other payables
Borrowings
Lease liabilities
Accruals
Deferred revenue
Deferred consideration
Credit Risk
Less than 1 year
2 – 5 years
More than 5 years
£m
7.8
31.9
(24.8)
(0.3)
(4.4)
(4.1)
(13.9)
(9.0)
(0.9)
£m
-
0.9
(1.4)
-
(34.4)
(7.5)
-
-
-
£m
-
-
-
-
-
(9.2)
-
-
-
Less than 1 year
2 – 5 years
More than 5 years
£m
5.9
27.7
(18.5)
-
(0.7)
(8.6)
(8.8)
(2.3)
£m
-
0.5
(3.4)
(26.7)
(0.1)
-
-
(4.0)
£m
-
-
-
-
-
-
-
-
In the opinion of the Directors, the only financial instrument that is subject to credit risk is the trade receivables.
The Directors believe that the bad debt provision as disclosed in note 15 represents the Directors’ best estimate of the
maximum expected exposure to credit risk at period-end. In order to minimise credit risk all new customers to whom credit
is granted are checked through a credit rating company. Trade receivables aging is reviewed as part of the overall cash
management process. Any potential risks are highlighted and sanctions taken where appropriate.
126
Fair Value of Financial Instruments
In the opinion of the Directors, the fair value of the financial
assets and liabilities are equal to their book values.
Liquidity Risk Management
The Directors believe that the receivables are not impaired
and that the customers with outstanding balances have
sufficient net assets to repay the balances. Any potential
liquidity risk is kept to a minimum by the use of continual
cash flow forecasting and evaluation.
Capital Risk Management
As stated in the Directors’ Report, the Directors believe that
the group is cash generative and self-sufficient and does
not require additional external finance. The borrowings
were taken out for acquisition purposes, not working
capital funding. The Directors maintain detailed cash
forecasts which are frequently revised to actuals to ensure
that the Group has sufficient liquid resources to meet its
requirements. The capital structure of the Group consist of
debt as described in note 19, cash and cash equivalents and
equity attributable to equity holders of the parent.
Foreign Currency Financial Assets
and Liabilities
Included within the above table are £46.7m (2018: £77.9m)
of assets and £27.4m (2018: £62.1m) of liabilities relating
to the overseas subsidiaries which have been translated in
the consolidation at the period-end rate. These balances
are subject to movements in exchange rates, as shown in
the statement of changes in equity. The Directors do not
believe the risk is significant enough to warrant hedging
against the investments in overseas companies.
Also included within the above table are foreign
currency denominated external trade payables and
receivables of £11.1m (2018: £17.3m) and £18.7m
(2018: £8.9m) respectively.
The table below shows the Group’s sensitivity to changes
in foreign exchange rates on its financial instruments
denominated in foreign currencies.
Foreign Currency Financial Assets
and Liabilities
10% appreciation of the above foreign currencies
10% depreciation of the above foreign currencies
As at
31 March 2020
As at
31 December 2018
£m
1.8
(2.1)
£m
0.9
(0.9)
This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible
at the end of the period. The analysis assumes that all other variables remain constant.
21. Share Capital
Group and company
Group
31 March
2020
Company
31 March
2020
Group
31 December
2018
Company
31 December
2018
Authorised, allotted and issued
152,710,833 fully paid ordinary shares
of £0.01 each (2018: 151,910,833)
£m
1.5
£m
1.5
£m
1.5
£m
1.5
127
Annual Report & Accounts FY20Arena Events Group plc Notes to the Financial Statements
Authorised share capital is unlimited.
As at the end of 31 March 2020 there were 152,710,833 (31
December 2018: 151,910,833) ordinary shares at £0.01 in
issue resulting in £1.5m share capital and £78.5m of share
premium. All shares carry equal rights.
In the period ended 31 March 2020 the following issues of
£0.01 ordinary shares were made:
18 April 2020, 800,000 shares at £0.385 were issue as 25%
settlement of the deferred consideration that arose on the
acquisition of assets from Stuart Rentals in 2018.
In 2018 the following issues of £0.01 ordinary shares
were made:
1. January 2,513,541 shares at £0.55 to Greg Lawless
(this relates to £1.4m of loan note interest repaid and
re-invested in the Group)
2. June 726,000 shares at £0.62 as part consideration
of Events Solution Ltd
3. July 333,333 shares at £0.60 as part consideration
for Ironmonger Ltd
4. September 33,333,334 shares at £0.60 to fund the
acquisition of the assets of Stuart Rentals and the
shares of TGP Holdings
5. October 364,675 shares at £0.60 as part consideration
for TGP Holdings
22. Share Premium Account
The share premium reserve movement in the year is a result of the premium arising on the issued of the equity shares
detailed in note 21, (2018: detailed in note 21 net of issue expenses incurred by the company of £1.0m).
Group
31 March
2020
£m
78.5
Company
31 March
2020
Group
31 December
2018
Company
31 December
2018
£m
78.5
£m
78.2
£m
78.2
Balance
23. Merger Reserve
The movement on the merger reserve is as set out in the consolidated statement of changes in equity. There was no
movement in 2020. The merger reserve was created as an effect of reverse acquisition accounting on creation of Arena
Events Group Plc in July 2017.
24. Share Option Reserve
At 1 January 2019
Share option provision
At 31 March 2020
128
Group
Company
£m
0.3
0.3
0.6
£m
0.3
0.3
0.6
The share option reserve represents the expected cost to
the group to satisfy the Group’s share option scheme. The
Black Scholes method was used to determine the value of
the charge to the share option reserve.
A Group share option scheme allows for options to be
issued over ordinary shares, up to a maximum of 10%
of the Company’s ordinary shares in issue at the time of
grant, over a ten year period. The option exercise price will
usually be the mid-market price of the shares on the date
of grant.
2019/20: Three option awards were made during the
period. The first option awards had an exercise price of
40 pence per share, no performance conditions and vest
equally after two, three and four years from the date of
grant subject to the following conditions: award is subject
to the Adjusted Earnings per share for the Group (Adjusted
EPS) as calculated on a consistent basis by the Group’s
primary broker having increased by a total amount over
the period in excess of 10% per annum. The base figure for
this calculation being the FY18 Adjusted EPS of 3.7 pence;
and the figure on the testing date will be the figure for FY22
(the year to 31 March 2022). If the compound growth is in
excess of 10% per annum the award will vest in full. If the
compound growth is below 8% per annum the award will be
fall away. In between these two levels an adjusted number
of options awarded will vest on a straight-line pro rata
basis. The total number of shares under this option award
as at 31 March 2020 were 1,788,000. These options are
vesting in three equal amounts of 596,000 on 1 July 2022,
2023 and 2024. The second option awards had an exercise
price of 18.5 pence per share, no performance conditions
and shall vest equally after three, four and five years from
the date of grant. The total number of shares under this
option award as at 31 March 2020 were 100,000. These
options are vesting in three equal amounts of 33,333 on
1 October 2022, 2023 and 2024. The third option awards
had an exercise price of 18.5 pence per share, no
performance conditions and shall vest equally after three,
four and five years from the date of grant. The total number
of shares under this option award as at 31 March 2020
were 2,162,162. These options are vesting in three equal
amounts of 720,721 on 16 September 2022, 2023
and 2024.
2018: Two option awards were made during the year. The
first option awards had an exercise price of 60 pence per
share, no performance conditions and vest equally after
two, three and four years from the date of grant. The total
number of shares under this option award as at 31 March
2020 were 135,000 (31 December 2018: 135,000). These
options are vesting in three equal amounts of 45,000 on
1 December 2020, 2021 and 2022. The second option
awards had an exercise price of 68 pence per share and
shall vest equally after three, four and five years subject
to the following conditions: 75% of the awards are
subject to EPS performance conditions, measured over a
three year performance period; with the balance of 25%
being at the discretion of the Remuneration Committee,
based on its judgement of the successful integration of
acquisitions closed during the period. To the extent that
the performance conditions are not satisfied, the relevant
part of the awards shall lapse. During the year 520,000
option awards lapsed due to the option holders leaving
the Group. The total number of shares under this option
award as at 31 March 2020 were 1,505,000 (31 December
2018: 2,025,000). These options are vesting in three equal
amounts of 675,000 on 5 October 2022, 2022 and 2023.
2017: Option awards were made in July 2017 with an
exercise price of 55 pence per share. These initial option
awards have no performance conditions and vest equally
after two, three and four years from the date of grant.
During the year 1,361,818 option awards lapsed due to
the option holders leaving the Group. The total number of
shares under this option award as at 31 March 2020 were
3,558,182 (31 December 2018: 4,920,000).
25. Capital Commitments
There are no amounts contracted for but not provided in
the financial statements for the Group and for the Company
(2018: nil).
129
Annual Report & Accounts FY20Arena Events Group plc Notes to the Financial Statements
26. Contingent Liabilities
28. Related Party Transactions
29. Net Cash Flow from Operating Activities
Remuneration of Key Management Personnel
Group
The remuneration of key management personnel
of the Group, is set out below in aggregate for each
of the relevant categories specified in IAS24 Related
Party Disclosures:
Of the key management personnel, four have retirement
benefits accruing under money purchase pension schemes
(2018: three). Included in the numbers below short term
employee benefits of £0.7m (2018: £0.6m) and share
options of £nil (2018: £0.1m) relate to the Company.
15 months to
31 March
2020
Year ended
31 December
2018
£m
1.6
-
1.6
£m
1.3
0.1
1.4
Short-term
employee benefits
Share options
Note
11
17
10
4
Operating loss for the year
Adjustments for:
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Impairment of goodwill
Amortisation of intangible assets
Deferred consideration
Gain on disposal of property, plant and equipment
Share option costs
(Decrease)/increase in provisions
Operating cashflows before changes
in working capital
Increase in inventories
Increase in receivables
Increase in payables
Cash generated by operations
Bank and finance lease interest paid
Loan note interest paid
Other finance charges
Corporation tax
Net cash inflow from operating activities
30. Cash and Cash Equivalents
Cash and bank balances
Bank overdrafts
The Group has contingent liabilities in relation to its US
division (2018: 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 second payment made early
2020. 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 The contingent payment was not triggered in the
twelve months to 31 December 2019 (2018: none).
Given the uncertainty of future financial performance of
AES Inc, no provision has been made for the four future
potential contingent payments.
27. Pension Commitments
Group
The Group operates various defined contribution pension
schemes, the assets of which are held separately from
those of the Group in independently administered
funds. The Group incurs further costs in contributions to
employees’ own schemes. The cost of contributions to the
defined contribution schemes amounts to £0.7m
(2018: £0.6m) in the period.
Company
The Company operated a pension scheme in 2020 and the
cost of contributions to the defined contribution scheme
amounted to £35,000 (2018: £25,000).
130
15 months to
31 March 2020
Year ended
31 December 2018
£m
(19.6)
9.5
4.7
16.1
0.9
(1.2)
(0.3)
0.3
(0.9)
9.5
(2.0)
(5.3)
10.7
12.9
(1.7)
(0.1)
(0.2)
(0.3)
10.6
£m
-
5.3
-
-
0.4
-
(0.1)
0.2
3.4
9.2
(0.1)
(10.0)
9.4
8.5
(0.8)
-
(0.5)
(0.2)
7.0
31 March 2020
31 December 2018
£m
5.8
(0.3)
5.5
£m
7.5
-
7.5
131
Annual Report & Accounts FY20Arena Events Group plc Notes to the Financial Statements
31. Analysis of Changes of Net Debt
32. Net Cash Flow from Operating Activities
Group
Cash in hand
and at bank
Bank overdraft
Debt due within
one year
Debt due after
one year
Finance lease due
within one year
Finance lease due
after one year
Net debt
Balances at
31 March 2020
Comprise
Cash and bank
balances
Bank overdraft
Finance leases
Borrowings
Net debt
As at
31 December
2018
Cash flow
Exchange
movements
£m
7.5
-
-
(26.7)
(0.7)
(0.1)
(20.0)
£m
(1.6)
(0.3)
(4.4)
(7.5)
0.2
(0.3)
(13.9)
£m
(0.1)
-
-
(0.2)
-
-
(0.3)
Other
non-cash
changes
£m
-
-
-
-
(0.1)
0.1
-
Non-current
assets
£m
-
-
-
-
-
Current
assets
Current
liabilities
Noncurrent
liabilities
£m
5.8
-
-
-
5.8
£m
-
(0.3)
(0.6)
(4.4)
(5.3)
£m
-
-
(0.3)
(34.4)
(34.7)
Non-cash changes comprise movement in repayment due date.
As at
31 March
2020
£m
5.8
(0.3)
(4.4)
(34.4)
(0.6)
(0.3)
(34.2)
Total
£m
5.8
(0.3)
(0.9)
(38.8)
(34.2)
Company
Operating loss for the year
Adjustments for:
Share option costs
Operating cashflows before changes in working capital
Decrease/(increase) in receivables
(Decrease)/increase in payables
Increase in provisions
Cash generated/(used) by operations
Bank and finance lease interest paid
Loan issue costs
Loan note interest received
Net cash flow from operating activities
33. Dividends
Paid or to be Paid
Interim dividend for the 15 month period to
31 March 2020 of 0.25 pence per share
(2018: 0.5 pence per share)
Proposed final dividend for the 15 month period
ended 31 March 2020 of nil pence per share
(2018: 1.0 pence per share)
15 months to
31 March 2020
Year ended
31 December 2018
£m
(21.0)
0.3
(20.7)
0.6
(0.2)
20.7
0.4
(0.8)
(0.2)
0.5
(0.1)
£m
(1.4)
0.2
(1.2)
(0.3)
0.4
-
(1.1)
(0.1)
(0.4)
-
(1.6)
15 months to
31 March 2020
Year ended
31 December 2018
£m
0.4
-
£m
0.7
1.5
An interim dividend of 0.25 pence per share was declared in September 2019, but in the light of COVID-19 and the need
to maximise balance sheet flexibility no final dividend has been recommended. This means the total dividend is 0.25
pence per share for the fifteen-month period ended 31 March 2020, compared to 1.5 pence for the twelve months ended
31 December 2018. Dividend payments were based on the net assets of the company in line with the Companies Act 2006
(Part 23).
132
133
Annual Report & Accounts FY20Arena Events Group plc Notes to the Financial Statements
Received
The company did not receive any dividends during the 15
month period to 31 March 2020 (the company received a
full and final dividend of £2.89 per share (£5.5m) from AES
Arena Event Services Group Holdings limited during the
year ended 31 December 2018).
34. Post Balance Sheet Events
On 26 March the Group announced a proposed £9.5m
equity fundraising (before expenses) by way of placing
and subscription for 95,000,000 new ordinary 1 pence
shares at 10 pence per share. This announcement was
accompanied by the confirmation that the Group’s lender,
HSBC, would permit the draw down of an additional
amount of £4.75m from its existing facilities and that
Lombard Odier Investment Management had agreed to
extend the repayment of the short-term financing facility
to 25 March 2021.
The placing and subscription was approved by
shareholders on 14 April 2020, with funds received the
following day.
Further restructuring of the US, UKE and MEA businesses
continued post year end in response to the COVID-19
pandemic and the resulting reduced level of customer
demand. At all levels and in all regions in the Group, the
difficult decision was taken to make a significant number of
roles redundant alongside implementing salary reductions
and placing a number of staff either onto furlough schemes,
if available, or unpaid leave. The UKE region was also
brought together with the MEA region under a single EMEA
leadership structure, although the underlying business units
and statutory entities remained unchanged.
On the 8 June 2020 Henry Turcan was appointed to the
Company’s Board in the role of Non-Executive Director.
Henry is a fund manager at Lombard Odier Asset
Management (Europe) Limited with a focus on active
engagement. He has been advising and investing in UK
smaller companies for over 20 years and has extensive
experience of assisting public companies to create value
for all stakeholders.
Non-Statutory Financial Information
15 months to
31 March 2020
(inc IFRS 16)
12 months to
31 March 2020
(inc IFRS 16)
12 months to
31 March 2020
(exc IFRS 16)
Year ended
31 December 2018
(exc IFRS 16)
(audited) £m
(unaudited) £m
(unaudited) £m
(audited) £m
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating loss
Analysed as:
Earnings before interest, tax,
depreciation, exceptional
items,acquisition costs, share
option costs and amortisation
(adjusted EBITDA)
Depreciation Fixed Assets
Depreciation Right of Use Assets
Exceptional expenses
Acquisition costs
Share option costs
Intangible amortisation
Finance costs
Loss before taxation
Tax on loss on ordinary activities
Loss after taxation
183.2
(127.8)
55.4
(75.0)
(19.6)
160.6
(110.2)
50.4
(63.5)
(13.1)
160.6
(110.2)
50.4
(64.0)
(13.6)
13.2
16.5
12.3
(9.5)
(4.7)
(17.5)
-
(0.3)
(0.8)
(19.6)
(3.4)
(23.0)
0.1
(22.9)
(7.7)
(3.7)
(17.2)
-
(0.3)
(0.7)
(13.1)
(2.8)
(15.9)
0.1
(15.8)
(7.7)
-
(17.2)
-
(0.3)
(0.7)
(13.6)
(2.0)
(15.6)
0.1
(15.5)
135.0
(93.2)
41.8
(41.8)
-
12.1
(5.3)
-
(5.4)
(0.8)
(0.2)
(0.4)
-
(1.6)
(1.6)
(0.4)
(2.0)
The Group has 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 £13.2m and a
statutory operating loss after exceptional costs and share based payment charges of £19.6m. Before the impact of IFRS16
Adjusted EBITDA for the twelve months ended 31 March 2020 was £12.3m (£15.7m after IFRS16), up £0.2m compared to
the twelve months ended 31 December 2018.
134
135
Annual Report & Accounts FY20Arena Events Group plc Annual Report & Accounts FY20
Company Offices
Shareholder Information
Group Head Office
Middle East & Asia Head Office
Nominated Advisor and Broker
Registrars
4 Deer Park Road
Wimbledon
London
SW19 3GY
Warehouse No. 48
Street 8, Al Quoz Industrial Area 1
Dubai
PO Box 114384
+44(0)203 770 3838
www.arenagroup.com/investors
+971 434 70110
www.arenamea.com
UK & Europe Head Office
Americas Head Office
Needingworth Industrial Estate
St Ives
Cambridgeshire
PE27 4NB
+44 (0)1480 468 888
www.arenagroup.com
136
10861 S. Howell Ave.
Oak Creek
Wisconsin
WI 53154
+1 800 3836332
www.arenaamericas.com
Cenkos Securities plc
6.7.8 Tokenhouse Yard
London
EC2R 7AS
+44 (0) 20 7397 8900
Solicitors to the Company
Pinsent Masons LLP
30 Crown Place
London
EC2A 4ES
Accountants to the Company
Deloitte LLP
Hill House
1 Little New Street
London
EC4A 3TR
Computershare Investor Services (Ireland) Limited
3100 Lake Drive
Citywest Business Campus
Dublin 24, D24 AK82
Ireland
Financial PR
Alma PR
71-73 Carter Lane
London
EC4V 5EQ
+44 (0) 20 3405 0205
137
Arena Events Group plc Notes
Photo Credits
Page Number
Event
with Thanks to
1
9
11
18
25
27
28
39
39
53
66
74-75
136-137
138
The Queen’s House Ice Rink
Jeff Overs
The Championships, Wimbledon
All England Lawn Tennis Club
Nitto ATP Finals
London Stadium
London Stadium
Wonderhatch
E20 Stadium LLP
E20 Stadium LLP
Oliver! At Lincoln Cathedral
Richard Hall
The Championships, Wimbledon
All England Lawn Tennis Club
The Open Championship
The R&A
Tower of London Ice Rink
Leftfield Images
Oliver! At Lincoln Cathedral
Richard Hall
Investec Derby Day at Epsom Downs
The Jockey Club
Nitto ATP Finals
Wonderhatch
Hampton Court Palace Festival
Historic Royal Palaces
139
Annual Report & Accounts FY20Arena Events Group plc Arena Events Group plc
www.arenagroup.com