Arena Events Group has issued a grim financial forecast and news of a cost reduction programme.
The global temporary event solutions provider said “uncertainty over the likely duration of the disruption” caused by the coronavirus outbreak and increasing number of cancellations and postponements means it will be a tough start to the new financial year next month.
The UK-headquartered group, which had the largest confirmed pipeline of future events and projects in its history as recently as last month, has now implemented a significant cost reduction programme including temporary lay-offs, reduced working weeks and global partial or full salary reductions, including unpaid leave which will remain in force for an initial six-week period.
It said that the impact of the coronavirus on Q4 figures to March 31, 2020, will not be significant and would broadly be in line with expectations. During the three-month period it has been able to successfully deliver major events such as The Cheltenham Festival, Vice Music Festival in Saudi Arabia and the NFL Super Bowl LIV
However, it expects the start of the new financial year in April to be tough and dogged by uncertainty. It has decided to prioritise its resources and efforts on delivering projects which have already commenced construction, such as the PGA Championships, those with a longer delivery timeline such as Expo 2020 Dubai and project sales, for example, at the London Stadium and Edinburgh Rugby Club, where customers have committed funds to the group for future events, on their normal payment terms.
It said in a statement: “Whilst only a small number of Arena’s larger events have been cancelled or postponed to date, there is now a strong likelihood that a number of events in our first financial quarter will be cancelled or postponed.
“While the group has started to see an increased level of enquiries for equipment to help corporates enact disaster recovery plans, and structures to help local and national authorities handle the need for temporary support facilities, it is currently unclear as to the extent these will offset a prolonged period of event deferral and cancellation.”
It added that it is in preliminary discussions with a potential investor to bolster its cash resources “in order to support the business during this significant time of uncertainty”. It said this would be achieved by the issue of ordinary shares at a premium to the current share price.
It added: “Given the high level of uncertainty around future events in the current environment we are unable to give any guidance for the 12-month trading period to the end of March 2021. We will provide further market updates as appropriate.”
Image: Arena Events Group