TIDMOOUT
RNS Number : 2742T
Ocean Outdoor Limited
19 March 2019
Ocean Outdoor Limited
Operational expansion and increased profit underpin
transformational year
Full Year 2018 Results
London, United Kingdom, 19 March 2019 - Ocean Outdoor Limited
("Ocean Outdoor", "Ocean", "the Group" or "the Company"), a leading
operator of premium Digital Out-of-Home ("DOOH") advertising in the
United Kingdom, is pleased to announce its Full Year results for
the 12 months ended 31 December 2018.
Financial Highlights(1) :
-- Billings increased 13.7% year on year to GBP87.8m (FY17: GBP77.2m)
-- Revenue rose 15.2% to GBP62.2m (FY17: GBP54.0m)
-- Digital billings made up 92.8% of total billings (FY17: 89.1%)
-- Gross profit growth of 13.8% to GBP25.2m (FY17: GBP22.1m),
with a gross profit margin of 40.4% (FY17: 40.9%)
-- Adjusted EBITDA(2) up 4.7% to GBP20.0m, with an adjusted EBITDA margin of 32.2%
-- Adjusted Net Income(3) of GBP12.8m, with an adjusted EPS(4) of 23p
-- Cash on balance sheet of GBP160.5m, leaving the Group well
positioned to continue its organic growth and M&A
strategies
Operational Highlights:
-- Acquisition of SCP Acquisition Topco Limited for an
enterprise value of approximately GBP200m
-- Acquisition of Forrest Media (Holdings) Limited ("Forrest")
for an enterprise value of approximately GBP32m expanded the
Group's UK DOOH footprint, adding 77 locations and 91 faces across
Scotland, with excellent coverage of Glasgow and Edinburgh
-- Launch of three new large format screens at Westfield London,
two of which are full motion alongside installation of
state-of-the-art screens at two existing marquee assets, Holland
Park Roundabout and the Wall at Westfield
-- Launch of the first 'Two Towers' structure in Manchester on
the key arterial route, the Mancunian Way, as well as a full motion
screen outside the key transport hub of Manchester Piccadilly train
station
-- Two live broadcasts were completed during the first six
months - live streaming of the Royal Wedding, as well as the 2018
Grand National, in public outdoor locations
-- Pipeline development is strong with over 175 locations in various stages of development
Post-Period:
-- Acquisition of Interbest and Ngage Media two major outdoor
operators in the Netherlands, for a total combined consideration of
approximately EUR51m (GBP45m)(5) , leaving the group with a
proforma post acquisition cash balance of GBP116m.
-- Secured exclusive, long term contract with Southampton City Council
-- Launch of new M8 Tower, which connects Glasgow and Edinburgh
on track to become operative during Q2 2019
-- Development of 125 small format digital roadside locations
throughout the West Midlands on track for Q2 2019
-- The Board has authorised a $25m share buyback programme to
begin as soon as practicable, with further details to be
released
(1) The headline financial information is on an unaudited
proforma basis of Ocean Outdoor Limited and its subsidiaries, with
comparisons between FY18 and FY17. The audited financial
information is included in the attached financial accounts. The
appendices to the accounts show detailed proforma financial
information for the entities acquired.
(2) Adjusted EBITDA is before PLC costs, non-recurring items,
deal related fees and foreign exchange gains/losses.
(3) Adjusted Net Income is before PLC costs, non-recurring
items, deal related fees, foreign exchange gains or losses,
amortisation arising on consolidation, interest expenses relating
to previous capital structure and associated tax effects.
(4) Adjusted EPS is defined as Adjusted Net Income divided by
the number of shares including founder preferred shares.
(5) Exchange rate of EUR to GBP 0.88
Commenting on the results, Ocean CEO Tim Bleakley said: "This
was a significant year for Ocean and these results reflect the
actions taken throughout the year to grow, both organically and
acquisitively, driving the continued strong performance of our
business.
"The successes achieved this year in developing and expanding
our network, as well as our entry into the European market, are a
testament to the strength of our team and the growing potential for
DOOH.
"Looking ahead, management remain committed to the job in hand
and delivering on our strategy, working alongside our talented
teams who are already building on this momentum in 2019."
Analyst Briefing and Investor Call:
Ocean Outdoor's 2018 Audited Financial Accounts and its Results
Presentation is available at
https://investors.oceanoutdoor.com.
An analyst briefing will be held today at 10.30am at the
Company's offices, 25 Kingly Street, London, W1B 5QB.
Investors are invited to participate in Ocean's Investor Call,
which will begin at 12pm GMT/8am ET today. Conference details for
the investor call are as follows:
Standard International Access
+44 (0) 20 3003 2666
UK Toll Free
0808 109 0700
USA Toll Free
+1 866 966 5335
Password: OCEAN OUTDOOR
For further information please contact:
Ocean Outdoor 020 7292 6161
Tim Bleakley, CEO
Susann Jerry, Head of Communications
Yellow Jersey PR 0203 004 9512
Charles Goodwin 07747 788 221
Georgia Colkin 07825 916 715
Joe Burgess 07769 325 254
ocean@yellowjerseypr.com
Business Review
Introduction
The Group has had a transformational 2018, which has included
acquisitions and working towards our listing on the London Stock
Exchange, which completed at the start of 2019. Given the
complexities of these corporate events, the resulting full year
performance is therefore all the more impressive, with Ocean
delivering revenue and profit slightly ahead of expectations. This
is testament to the strength and depth of our team, which has
remained focused throughout on the Group's targets and achieving
them despite the UK's political and economic macro
distractions.
For the full year 2018, Ocean generated revenue on an adjusted
basis of GBP59.5m. On a proforma basis, where all operating
companies are assumed to have been held from 1 January 2017, full
year revenue reached GBP62.2m, up 15.2% on the previous year. Group
EBITDA increased by 4.6% to GBP20.0m on a proforma basis, and
GBP19.3m on an adjusted basis.
Everything Ocean does is underpinned by innovation to enhance
the experience for the audiences we reach and the advertisers
trying to reach them, as we progress with our vision of 'digital
cities for digital citizens'. The Forrest acquisition has increased
our ability to amplify our customer campaigns on a greater scale,
utilising the best technological innovation Digital Out of Home has
to offer. Our core strategic tenets of driving organic growth,
technical innovation and accretive inorganic consolidation remain
firmly on track. The momentum built in 2018 has already rolled into
2019, with Ocean winning a major contract with Southampton City
Council and most recently acquiring Dutch Out-of-Home operators
Interbest and Ngage, giving the Group a major foothold in the
Netherlands.
Portfolio
With 92.8% of revenues from digital locations (up from 89.1% in
2017), it has been a year of successful launches. Our portfolio
continues to grow, from 175 locations to 254, with the integration
of Forrest into the Group adding significant reach to Ocean's
national footprint, adding 77 locations and 91 faces across
Scotland, with excellent coverage of Glasgow and Edinburgh.
Throughout the year, the Group launched 10 new digital locations
across the UK including, the completion of the Westfield London
expansion and the Westfield Plaza screen, one of the largest full
motion video enabled screens in London.
We have continued to invest significantly in our national and
regional commercial teams with offices in Birmingham, Manchester
and Glasgow. This has allowed us to focus on strengthening our
premium asset coverage in the cities with great economic drivers
and general investment profile. 2018 saw the launch of Two Towers
locations in Manchester and Leeds, as well as the Group gearing up
for the launch of the new M8 Tower, which connects Glasgow and
Edinburgh and becomes operative later in Q2 2019, as well as the
development of 125 small format digital roadside locations
throughout the West Midlands during Q2 2019.
As we focus on unlocking the value of our platforms and their
relationship with audiences, we have expanded our content based
initiatives and our live broadcast capabilities leading to a number
of major project achievements including, the Westfield Plaza screen
hosting the first ever DOOH live broadcast of the Royal Wedding and
the arresting 100(th) anniversary of The Armistice, commissioned by
Westminster City Council and Victoria Beckham's two London Fashion
Week shows broadcast live on Piccadilly Lights. All of these
projects evidence the deeper levels of engagement that the digital
medium can deliver for brands.
We remain positive about the underlying growth opportunity of
the DOOH medium. Its strong broadcast audience reach and cut
through branding impact, combined with innovative technologies
creates deeper levels of engagement with the consumer. Furthermore,
our new Opinium study shows that DOOH is delivering brand impact to
desirable, mobile audiences at scale in a trusted advertising
environment, setting DOOH apart from other advertising
channels.
Financial performance
The Company delivered a strong financial performance, with the
core business performing ahead expectations at both revenue and
EBITDA levels. It was pleasing to see Ocean Scotland (formerly
Forrest) start to make a recovery and show strong top line revenue
growth in the second half of the year since acquisition.
Billings during the year increased 13.7% to GBP87.8m (FY17:
GBP77.2m) on the back of new installations and digital conversions.
Digital Billings now account for 92.8% of total billings, up 4.2%
on FY17 (FY17: 89.1%).
For Full Year 2018, Group revenue rose 15.2% to GBP62.2m (FY17:
GBP54.0m) with adjusted EBITDA up 4.7% to GBP20.0m, with an
adjusted EBITDA margin of 32.2%.
Gross profit grew by 13.8% to GBP25.2m (FY17: GBP22.1m), with
gross profit margins steady at 40.4% (FY17: 40.9%). Adjusted Net
Income(3) for 2018 was GBP12.8m with an adjusted EPS(4) of 23p.
As at 31 December 2018, the Company had a strong cash position
of GBP160.5m. The Board continuously assesses its capital
allocation strategy and is focused on organic development
investment, accretive acquisitions and potential returns of
capital. To that end, the Board has authorised a $25m share buyback
programme to begin as soon as practicable, with further details to
be released.
Acquisitions
In line with the Company's growth strategy, 2018 was a busy
period of acquisitions. This has also continued into the early part
of 2019.
In March 2018, Ocelot Partners completed the acquisition of
Ocean Outdoor for an enterprise value of GBP200m and was
subsequently renamed Ocean Outdoor Limited. The acquisition of
Forrest, for an enterprise value of GBP32m, quickly followed in
June, providing a strong portfolio of locations throughout
Edinburgh, Glasgow and Aberdeen, which immediately made Ocean the
largest provider of DOOH solutions in Scotland. Forrest has also
brought with it a series of digital assets in Manchester and
Newcastle. Over the course of the second half of the year, the team
successfully integrated Forrest into the Group and is now
benefiting from procurement costs and revenue synergy.
People
In October Thomas Ebeling joined the Board of the Company as an
independent non-executive director. Thomas spent nine years as CEO
of ProSiebenSat.1 Media SE, one of Germany's largest broadcast
media companies, and as such has a wealth of experience which Ocean
is able to draw from.
In November, the Board was further strengthened with the
appointment of Andrew Miller as an independent non-executive
director. Currently a partner of Terra Firma Capital Partners,
Andrew was chief executive officer of Guardian Media Group between
2010 and 2015 and has also served as a non-executive director of
The AA plc.
We would like to thank all our employees for their dedication
throughout the year. It is the first year of releasing our results
as a listed business with the added complexities of acquisitions.
We would like to thank all those involved in assisting the
management team.
Strategy
Our strategy remains focused on the three pillars of organic
development, technical innovation and accretive acquisitions. Our
medium and our proposition are in good health notwithstanding the
uncertain political climate that continues to exist in the United
Kingdom.
We have a development pipeline that is busier than ever before
with our creative teams working with us daily to bring to life
campaigns using our technology. While we will be working to
integrate our Dutch acquisitions, our strong cash position allows
us to continue to press ahead assessing opportunities for further
acquisitions in geographies displaying similar digital changes as
the UK, in line with our growth strategy.
Post-Period
Since the year end, Ocean completed the acquisitions of
Interbest and Ngage Media, two major outdoor operators in the
Netherlands, for a total combined consideration of approximately
EUR51 million. The combined acquisitions, which are 60% digital
revenues today, will see Ocean expand into a highly attractive
market with similarly strong underlying industry dynamics to the
UK, creating an immediate scale platform, with a robust digital
growth profile ahead.
Interbest is the Netherland's biggest independent roadside
operator with 88 digital and static OOH masts in prime locations on
the busiest road and motorway networks. Its portfolio covers all
the Dutch municipalities including the Randstad megalopolis of
Amsterdam, Rotterdam, Utrecht and The Hague. Ngage Media is a 100
percent pure play digital operator with 76 large full motion
digital screens in 50 locations across the Randstad megalopolis
which includes Amsterdam, Rotterdam, Utrecht and The Hague.
For the Full Year 2018, the two businesses, combined, delivered
net revenue of EUR25.7m, up 8.2% on FY17(6) and adjusted EBITDA(7)
of EUR7.4m, which was growth of 15.4%. As such the acquisitions are
expected to be highly accretive and we are extremely excited about
working with our new Dutch colleagues to unlock further value in
this new combined proposition.
The acquisitions provide the Group with 2018 proforma revenues
of GBP85.0m, a growth of 82.9% from the 2017 Ocean standalone
revenue of GBP46.5m. Proforma Adjusted EBITDA(7) is GBP26.5m at the
end of 2018. This is an increase of 64.7% from the 2017 Ocean
standalone Adjusted EBITDA. The proforma Adjusted EPS(8) is 30p, up
7p on the pre-acquisition Adjusted EPS. The Group's proforma cash
balance post acquisition is GBP116m.
At the start of 2019, Ocean secured an exclusive long-term
contract with Southampton City Council to provide enhanced digital
roadside and city centre large format advertising screens. Ocean
will be upgrading and developing all of the Southampton Council's
existing and new roadside billboards within the city centre. Whilst
giving advertisers access to a fast growing, affluent city region,
Ocean will be helping Southampton Council to create commercial
value as well as improve engagement with its citizens.
(6) Growth rates exclude one off revenues and EBITDA in 2017
(7) Adjusted EBITDA incorporates revised management fees
(8) Adjusted EPS is defined as Adjusted Net Income, including
net income of the acquired Dutch entities, divided by the number of
shares including founder preferred shares.
Outlook for 2019
We are very pleased with the overall performance of the Group
throughout 2018 and the momentum we have going into 2019. Revenue
growth in 2019 will be driven by the organic growth of core Ocean,
the full effect of the Forrest transformation and our development
pipeline. This will be supported by our continued technological
innovation with enhancements due to be added to locations
throughout the year and we also see additional attractive uses to
deploy capital through potential acquisitions. We reiterate our
2018 guidance for 2019 and expect revenue growth for 2019(9) to be
in the high single digits(10) .
(9) Pro forma as if Netherlands was acquired on January 1st,
2018
(10) This is not a profit forecast and there can be no assurance
that this level of revenue growth will be achieved
Tim Bleakley
Chief Executive Officer
19 March 2019
Report of the directors
The directors present their report together with the audited
financial statements for the year ended 31 December 2018.
Status and activities
On 1 March 2018, the company announced the acquisition of
advertising site manager SCP Acquisition Topco Limited and its
subsidiaries from private equity firm Searchlight Capital for an
enterprise value of GBP200 million. The acquisition was fully
settled in cash. As noted in the Company's prospectus, in
connection with financing the acquisition, the Company issued
additional Ordinary Shares which resulted in the company's then
existing shareholders still owning a majority interest in the
Company following the acquisition. The transaction closed on 28
March 2018.
Following completion of the transaction Tom Goddard and Tim
Bleakley have joined the Company as non-executive Chairman and CEO
respectively and the company changed its name to Ocean Outdoor
Limited from Ocelot Partners Limited.
With this anchor investment in Ocean, the Company seeks to build
a scale out-of-home media consolidation vehicle. In addition to
supporting Ocean's organic growth initiatives, the Company will
pursue strategic and complementary acquisitions intended to enhance
Ocean's scale, customer offering and deepen its market
leadership.
In light of this, the company immediately engaged in the
acquisition of Forrest Media (Holdings) Limited and its
subsidiaries ("Forrest" renamed "Ocean Scotland") which
successfully completed on 2 June 2018, with an enterprise value of
GBP32m. Forrest is a leading outdoor operator in Scotland and the
acquisition has added significant reach to Ocean's national
footprint, adding 77 locations and 91 faces across Scotland and the
North of England, with excellent coverage of Glasgow and
Edinburgh.
The Group continues to deliver new growth opportunities and
search for future acquisition opportunities which is in line with
the strategy presented in the Group prospectus. As announced on 12
March 2019, the Group completed the further acquisitions of
Interbest and Ngage Media.
Pro forma Profit and Loss
Ocean Outdoor Limited was an investment vehicle in FY17. Due to
the acquisition of SCP Acquisition Topco Limited on 28 March 2018
and Forrest Media (Holdings) Limited on 2 June 2018, the audited
consolidated statement of profit and loss presented does not
provide a period on period comparison for the underlying
performance and operations. For the benefit of users of the
accounts, the unaudited pro forma statements of total comprehensive
income can be found in the appendix, which shows the period on
period results on different bases.
Included in the appendix is the profit and loss for SCP
Acquisition Topco Limited and its subsidiaries for FY17 and FY18
and Forrest Outdoor Media Limited profit and loss for FY17 and
FY18. The appendix shows these periods on a combined basis assuming
any subsidiaries acquired during any given period had been acquired
on 1 January of the earliest period presented. Also included in the
appendix is a hybrid profit and loss showing 12 months profit and
loss of Ocean Outdoor Limited, SCP Acquisition Topco Limited and
all their subsidiaries (excluding Forrest Outdoor Media Limited)
for the 12-month period ended 31 December 2018 combined with the
acquisition made in the year, Forrest Outdoor Media Limited with
its profit and loss for the 7-month period ended 31 December
2018.
For each profit and loss statement, there is the reconciliation
between reported operating profit and Adjusted EBITDA is also
presented. The unaudited pro forma financial information has been
provided for illustrative purposes only and by its nature addresses
a hypothetical situation and does not purport to represent the
Company's actual financial position or results.
Analysis using financial key performance indicators
Directors and managers assess performance using performance
indicators at a Group level. The Group's key performance indicators
(KPI) are Billings, Revenue and Adjusted Earnings Before Interest,
Tax, Depreciation and Amortisation excluding one off items
(Adjusted EBITDA), the number of locations as well as digital
billings as a percentage of total billings. This is generated from
the companies within the Group.
Please see the table below for KPI's on the reported numbers
KPI's on Reported figures 2018 2017
Billings GBP'000 70,288 -
------- -----
Revenue GBP'000 49,795 -
------- -----
EBITDA GBP'000 18,557 -
------- -----
Locations 254 -
------- -----
Digital % of billings 93% -
------- -----
The above table does not allow a period on period comparison and
therefore the following table shows the performance of the Group on
a proforma basis
KPI's on Proforma figures 2018 2017
Billings GBP'000 87,843 77,245
------- -------
Revenue GBP'000 62,218 54,010
------- -------
Adjusted EBITDA GBP'000 19,964 19,088
------- -------
Locations 254 251
------- -------
Digital % of billings 93% 89%
------- -------
Results and dividends
The consolidated statement of profit and loss statement shows
the profit for the year.
Dividends are recognised when they become legally payable. In
the case of interim dividends to equity shareholders, this is when
declared by the directors. In the case of final dividends, this is
when approved by the shareholders at the AGM. The Company's current
intention is to retain any earnings for use in its business
operations, and the Company does not anticipate declaring any
dividends in the foreseeable future.
Directors and their interests
The Directors of the Company who served during the period and
subsequent to the date of this Report are:
Name Position Date of appointment
Robert D Marcus Independent Non-Executive Director 22 February
2017
----------------------------------- --------------------
Martin HP Söderström Independent Non-Executive Director 22 February
2017
----------------------------------- --------------------
Sangeeta Desai Independent Non-Executive Director 27 February
2017
----------------------------------- --------------------
Aryeh B. Bourkoff Founder and Non-Executive Director 22 February
2017
----------------------------------- --------------------
Andrew Barron Founder and Non-Executive Director 20 January 2017
----------------------------------- --------------------
Tim Bleakley CEO and Executive Director 28 March 2018
----------------------------------- --------------------
Tom Goddard Non-Executive Chairman 28 March 2018
----------------------------------- --------------------
Tim Ebeling Independent Non-Executive Director 19 October 2018
----------------------------------- --------------------
Andrew Miller Independent Non-Executive Director 27 November
2018
----------------------------------- --------------------
Non-Executive Directors or the Company can terminate the
appointment by giving three months' notice.
As at 31 December 2018 the Directors have the following
interests in the Company's securities:
Director No. of Ordinary Percentage of No. of Founder
Shares issued Ordinary Preferred Shares
Shares
Andrew Barron 509,866 0.95% 147,000
---------------- ----------------- ------------------
Andrew Miller - - -
---------------- ----------------- ------------------
Aryeh B Bourkoff 1,574,400 2.92% 399,000
---------------- ----------------- ------------------
Robert Marcus 119,000 0.22% -
---------------- ----------------- ------------------
Martin HP Söderström 15,000 0.03% -
---------------- ----------------- ------------------
Sangeeta Desai 10,000 0.02% -
---------------- ----------------- ------------------
Thomas Ebeling 7,500 0.01% -
---------------- ----------------- ------------------
Tom Goddard 232,703 0.43% -
---------------- ----------------- ------------------
Tim Bleakley 310,523 0.58% -
---------------- ----------------- ------------------
Tim Bleakley also has 1,998,000 hurdle shares, issued by a
subsidiary of the Company which will, except in limited
circumstances, be settled in ordinary shares of Ocean Outdoor
Limited. Tom Goddard also has 1,282,050 hurdle shares, issued by a
subsidiary of the Company which will, except in limited
circumstances, be settled in ordinary shares of Ocean Outdoor
Limited.
Directors' remuneration
Robert Marcus, Martin HP Soderstrom, Sangeeta Desai, Ayreh B
Bourkoff and Andrew Barron entered into a Director's letter of
appointment with the Company dated 8 March 2017. Thomas Ebeling and
Andrew Miller entered into a Director's letter of appointment with
the Company dated 19 October 2018 and 27 November 2018
respectively.
Under the letters of appointment, Martin HP Söderström, Sangeeta
Desai, Thomas Ebeling and Andrew Miller are entitled to a fee of
$75,000 per annum and Robert Marcus is entitled to receive a fee of
$90,000 per annum. Robert Marcus, Martin HP Söderström, Sangeeta
Desai and Andrew Miller are also entitled to receive an additional
fee of $10,000 per annum as Committee members. Tom Goddard, in his
role as Chairman, was paid GBP55,800 in the period 28 March 2018 to
the year end. Tim Bleakley, CEO, was paid GBP237,500 following his
appointment as a Director on 28 March 2018.
Andrew Barron and Aryeh B Bourkoff did not receive a fee in
connection with their appointment as Non-Executive Directors of the
Company.
In addition, all of the Directors are entitled to be reimbursed
by the Company for travel, hotel and other expenses incurred by
them in the course of their directors' duties relating to the
Company.
Share capital
The full details of share capital information is set out in note
16.
Substantial shareholdings
As at 31 December 2018, the following had disclosed an interest
in the issued Ordinary Share capital of the Company (being 5% or
more of the voting rights in the Company) in accordance with the
requirements of the Disclosure and Transparency Rules (the
"DTRs"):
Shareholder Number of Ordinary Notified percentage
Shares (1 of voting rights
(1
Senator Investment Group
LP 6,184,616 11.3%
------------------- --------------------
Anchorage Capital Group,
L.L.C. 5,333,333 9.8%
------------------- --------------------
Wellington Management
Group LLP 4,315,384 7.9%
------------------- --------------------
As at 31 December 2018 and 25 February 2018, the interest of any
person listed in the table above in Ordinary Shares may have
increased or decreased without any obligation on the relevant
person to make further notification to the Company pursuant to the
DTRs.
Change of control
The Company is not party to any significant contracts that are
subject to change of control provisions in the event of a takeover
bid. There are no agreements between the Company and its Directors
or employees providing compensation for loss of office or
employment that occurs because of a takeover bid.
Independent Auditors
The previous auditors, PricewaterhouseCoopers LLP, resigned
during the year and BDO LLP were appointed by the Board in their
place. The Board have reason to believe that BDO LLP conducted an
effective audit and have provided the auditors with full access to
all of the books and records of the Company.
Corporate Governance Statement
The Company is a British Virgin Islands registered company with
a standard listing on the London Stock Exchange. For as long as the
Company has a standard listing it is not required to comply or
explain non-compliance with the UK Corporate Governance Code (the
"Code") issued by the Financial Reporting Council ("FRC") in
September 2012. However, the Company is firmly committed to high
standards of corporate governance and maintaining a sound framework
through which the strategy and objectives of the Company are set
and the means of attaining these objectives and monitoring
performance are determined.
Relations with Shareholders
The Directors are always available for communication with
Shareholders and all Shareholders will have the opportunity, and
are encouraged, to attend and vote at the Annual General Meetings
of the Company during which the Board will be available to discuss
issues affecting the Company.
Statement of going concern
The Directors confirm that, after making an assessment, they
have a reasonable expectation that the Group has adequate resources
to continue in operational existence for the foreseeable future and
be able to pay its debts as they fall due. The political and
economic uncertainty surrounding Britain's impending exit from the
EU (Brexit) is a factor that has been considered. With advertising
spend closely correlated to GDP and consumer confidence the outlook
may be adversely impacted by a 'no deal' Brexit. It is the view of
the Directors that, despite the uncertainty, the Group has
sufficient capital to withstand a negative impact. Accordingly, the
Directors continue to adopt the going concern basis in preparing
the financial statements.
Internal control
The Board is responsible for determining the nature and extent
of the significant risks it is willing to take in achieving its
strategic objectives. The Board maintains sound risk management and
internal control systems. The Board has reviewed the Company's risk
management and control systems and believes that the controls are
satisfactory given the nature and size of the Company and its
subsidiaries.
Financial Risk Profile
The Company's and Group's financial instruments comprise mainly
of cash and cash equivalents, and various items such as payables
and receivables that arise directly from the Group's operations.
Details of the risks relevant to the Group are included in the
notes to the financial statements.
Management Report
For the purposes of compliance with DTR 4.1.5R(2), DTR 4.1.8R
and DTR4.1.11R, the required content of the "Management Report" can
be found in this Report of Directors.
Principal Risk and Uncertainties
The main risks and uncertainties identified by the Group are as
follows:
The Group operates in a highly competitive market
The Group operates in a highly competitive industry and may not
be able to maintain or increase its current advertising and sales
revenues or market share. The Group competes for advertising
revenue with other outdoor advertising operators, as well as with
other media, such as radio, newspapers, magazines, television,
direct mail, mobile devices and internet-based services.
Competitive pressures could cause the Group to lose market share,
require it to lower prices, increase marketing expenditures and
increase the use of discounting or promotional campaigns, and
restrict its ability to increase prices. These or other
developments could materially and adversely affect the Group's
sales volumes and margins and result in a decrease in its operating
results, which could have a material adverse effect on the Group's
business, financial condition and results of operations.
The Group is heavily reliant on its relationships with media
agencies
The Group is heavily reliant on its relationships with four main
media specialist buyers to sell the out-of-home advertising space
which it owns and/or manages. Accordingly, the loss of these
relationships, a significant change in the terms of these
relationships, or any of these agencies encountering financial
difficulties could have a materially adverse effect on the Group's
business, financial condition and results of operations.
A loss of sites or a failure to renew relevant site agreements
may reduce the Group's revenue
The Group gains access to advertising sites through short,
medium and long-term contracts or concessions (being comprised of
(i) leases, (ii) licences; and (iii) certain commercial site
agreements) with asset owners such as local municipalities and
commercial landlords. There is no guarantee that such site
agreements, including those relating to the Group's iconic sites,
will be renewed at all or renewed on terms which are favourable to
the Group. If sufficient numbers of site agreements are cancelled,
not renewed or sufficient numbers of sites become impaired, it
could have an adverse effect on the Group's business, financial
condition and results of operations.
The Group's sites and other technology systems and operations
could be exposed to damage or interruption
The Group's sites and other technology systems and operations
could be exposed to damage or interruption from system failures,
computer viruses, cyber-attacks, power or telecommunication
providers' failure, fire, natural disasters, terrorist acts, war,
or human error. Any interruptions would impact the Group's ability
to operate and could result in business interruption, the loss of
customers and revenue, damaged reputation and weakening of
competitive position and could have a material adverse effect on
the Group's business, financial condition and results of
operations. There is a risk that, if a cyber-attack is successful,
any data security breaches or the Group's inadvertent failure to
protect confidential information could result in a loss of
information integrity. Breaches of the Group's obligations under
applicable laws or client agreements and system outages may
potentially have a material adverse impact on the Group's
reputation and financial performance.
Changes in technology may impact consumer and advertiser
behaviour
The advertising industry will continue to be affected by changes
in technology, with these changes likely leading to increasing
media options for consumers. If these changes drive advertising
away from DOOH advertising, this could have a material adverse
effect on the Group's business, financial condition and results of
operations.
The Group's operations are currently based primarily in the UK
and are therefore vulnerable to any adverse developments to the UK
economic and market conditions and to the UK legal and regulatory
environment
The Group's operations are based primarily in the UK and the
business of the Group is therefore exposed to the prevailing
economic and market conditions, as well as the legal and regulatory
environment, in the UK. Periods of a slowing economy or recession,
or periods of economic uncertainty, may be accompanied by a
decrease in advertising which would reduce the Group's advertising
revenues and have an adverse effect on the Group's revenue, profit
margins, cash flow and liquidity. In addition, there has been an
increase in political uncertainty as a result of the UK vote in
favour of exiting the EU. It is not clear what the impact on the
Group (including its business, employees, operations and assets)
will be when, the UK leaves the EU, but any such change may have a
material adverse effect on the business, financial condition and
results of operations of the Group.
Directors' Responsibilities
The directors are responsible for preparing the Directors'
report and the financial statements for the Group. The Directors
have prepared the financial statements for each financial year
which give a true and fair view of the state of affairs of the
Group and of the profit or loss of the Group for that year.
The Directors have chosen to use the international financial
reporting standards ("IFRS") as adopted by the European union in
preparing the Group's financial statements.
international Accounting Standard 1 requires financial
statements present fairly for each financial year the Company's
financial position, financial performance and cash flows. This
requires the faithful representation of the effects of
transactions, other events and conditions in accordance with the
definitions and recognition criteria for assets, liabilities,
income and expenses set out in the International Accounting
Standards Board's 'Framework for the preparation and presentation
of financial statements. In virtually all circumstances, a fair
presentation will be achieved by compliance with all applicable
IFRS. A fair presentation also requires the Directors to:
-- consistently select and apply appropriate accounting policies;
-- 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 IFRS is insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the entity's financial position and financial
performance; and
-- state that the group has complied with IFRS, subject to any
material departures disclosed and explained in the financial
statements.
The Directors are also required to prepare financial statements
in accordance with the rules of the London Stock Exchange for
companies trading securities on the Stock Exchange. The Directors
are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial
position of the Group, for safeguarding the assets, for taking
reasonable steps for the prevention and detection of fraud and
other irregularities and for the preparation of financial
statements.
Financial information is published on the company's website,
www.oceanoutdoor.com. The maintenance and integrity of this website
is the responsibility of the Directors; the work carried out by the
auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may occur to the financial statements after they are initially
presented on the website, www.oceanoutdoor.com. Legislation in the
BVI governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Directors' Responsibilities Pursuant to UK Data and Transparency
Regulations
The directors confirm to the best of their knowledge:
-- The group financial statements have been prepared in
accordance with IFRS adopted by the European union and article 4 of
the IAS regulation and give a true and fair view of the assets,
liabilities, financial position and profit and loss of the
Group.
-- The annual report includes a fair review of the development
and performance of the business and the financial position of the
group and the parent company, together with a description of the
principal risks and uncertain-ties that they face.
Disclosure of information to Auditors
Each of the persons who is a Director at the date of approval of
this Report confirms that:
-- so far as the director is aware, there is no relevant audit
information of which the Company's auditors are unaware; and
-- each director has taken all the steps that he/she ought to
have taken as a director in order to make himself/herself aware of
any relevant audit information and to establish that the Company's
auditors are aware of that information.
Directors' indemnities
As at the date of this Report, indemnities granted by the
Company to the Directors are in force to the extent permitted under
BVI law. The Company also maintains Directors' and Officers'
liability insurance, the level of which is reviewed annually.
Subsequent events
On 10 January 2019, the Company's ordinary shares were
re-admitted to the Standard Listing segment of the Official List of
the UK Listing Authority, and trading in its shares recommenced on
the London Stock Exchange's Main Market (LSE: OOUT).
In accordance with the London Stock Exchange Admission and
Disclosure Standards, the Company announced, pursuant to its
articles of association, a tranche of 87,500 founder preferred
shares were automatically re-designated as ordinary shares on a one
for one basis. This re-designation became effective on 15 January
2019 and admission of the ordinary shares occurred on 22 January
2019.
On 12 March 2019, the Group announced the acquisition of
Interbest and Ngage Media, two leading digital out-of-home
companies operating across the Netherlands, for a combined cash
consideration of approximately GBP45m using a rate of 0.88:1
EUR:GBP, and a performance-linked earn-out if growth performance
targets are met over time. The transactions value Interbest and
Ngage, combined, at a 31 December 2018 LTM multiple of 6.9x
adjusted EBITDA, before any benefit for synergies. The business
combination accounting had not been finalised by the authorisation
date of these financial statements.
By order of the Board
Tom Goddard
Chairman
18 March 2018
Corporate Governance Statement
Ocean is committed to maintaining the highest standards of
business conduct and ethics, as well as full compliance with all
applicable laws, rules and regulations, corporate reporting and
disclosure, and all other matters deemed to protect the best
interests of the company's shareholders.
At the date of this report, the Company complies with the
corporate governance regime applicable to the Company pursuant to
the laws of the British Virgin Islands.
In addition, the Company strives for compliance with the U.K.
Corporate Governance Code to the greatest extent possible to
facilitate effective and prudent management that can contribute to
the long-term success of the Company. The Company is not currently
compliant with the U.K. Corporate Governance Code and is aware of
the following non-compliance issue:
- The U.K. Corporate Governance Code recommends that the
chairman should be independent on appointment. As Tom Goddard was
previously an employee of Ocean, holding the position as chairman
of Ocean, the Company does not comply with this recommendation of
the Governance Code. The Board unanimously believes this is in the
best interests of the Company and its Shareholders, with Tom
Goddard ensuring stability and continuity with clients and
strategic and commercial partners. Tom Goddard brings continuity at
a time of change and the Company will retain his experience and
expertise, which make him particularly well-qualified to act as the
Company's Non-Executive Chairman.
Strategic decisions
The Directors are responsible for carrying out the Company's
objectives, implementing its business strategy and conducting its
overall supervision. Acquisition, divestment and other strategic
decisions are considered and determined by the Board. The Board
provides leadership within a framework of prudent and effective
controls. The Board has established the corporate governance values
of the Company and has overall responsibility for setting the
Company's strategic aims, defining the business plan and strategy
and managing the financial and operational resources of the
Company
Through the publication of regular announcements, corporate
presentations posted to the company website, and face to face
meetings, the board has sought to communicate its strategy,
objectives and performance to all shareholders on a timely basis.
When shareholders raise concerns with the board over the Group's
strategy, objectives or performance, the Board endeavours to
actively engage with the shareholders in dialogue.
Board process
The full Board meets formally at regular intervals throughout
the year and at such other times as may be necessary to address any
significant matters that may arise. The Board communicates
regularly between these meetings. On a regular basis the Board is
provided with appropriate and timely information relating to all
aspects of the Group. In addition, the Directors are free to seek
any further information or request specific presentation on matters
that they consider necessary in order to discharge their duties
effectively. The collective responsibility of the Board ensures
that all Directors are involved in the process of arriving at
significant decisions.
Nomination Committee
The Nomination Committee is responsible for considering and
making recommendations to the Board in respect of appointments to
the Board. In carrying out its duties, the Nomination Committee is
primarily responsible for identifying and nominating candidates to
fill Board vacancies; evaluating the structure and composition of
the Board with regard to the balance of skills, knowledge and
experience and making recommendations accordingly; giving full
consideration to succession planning; and reviewing the leadership
of the Group.
Audit and Risk Committee
The Audit and Risk Committee assists the Board in discharging
its responsibilities with regard to financial reporting, external
and internal controls, including reviewing and monitoring the
integrity of the Group's annual and interim financial statements,
reviewing and monitoring the extent of the non-audit work
undertaken by the Group's external auditors, advising on the
appointment of such external auditors, overseeing the Group's
relationship with its external auditors, reviewing the
effectiveness of the external audit process, and reviewing the
effectiveness of the Group's internal control and review
function.
The Audit and Risk Committee gives due consideration to laws and
regulations, the provisions of the UK Corporate Governance Code and
the requirements of the Listing Rules. The Audit and Risk Committee
also has responsibility for, among other things, oversight of the
Group's risk appetite, risk monitoring and capital management,
reviewing the manner in which the members of the Group implement
and monitor the adequacy of the Group's risk management framework
and ensuring that the Group maintains appropriate levels of
capital, as well as advising the Board on its overall risk
appetite. The Audit and Risk Committee also reviews the adequacy of
security measures, anti-money laundering systems, anti-bribery
controls and procedures in place for detecting fraud.
Remuneration Committee
The Remuneration Committee has responsibility for determination
of specific remuneration and benefits packages for each of the
executive directors and certain senior management of the Group,
including pension rights and any compensation payments, and
recommending and monitoring the level and structure of remuneration
for senior management and the implementation of share options,
share incentive plans or other performance related schemes.
Independence of the Board
Tom Goddard, Tim Bleakley, Aryeh B. Bourkoff and Andrew Barron
are not considered to be Independent Directors.
The Board considers the Independent Non-Executive Directors to
be independent in character and judgment and free from
relationships or circumstances which are likely to affect or could
appear to affect, their judgment. In addition, when determining the
independence of the Independent Non-Executive Directors, the Board
had regard to their Letters of Appointment and Initial Option Deeds
and, in the case of Mr Marcus, his prior role as Chairman of the
Company and his holding of 119,000 Ordinary Shares. The Board
believes that the aforementioned factors are not sufficient to have
an impact on their independence.
Ethical standards
All Directors, managers and employees are expected to act with
the utmost integrity and objectivity, striving at all times to
enhance the reputation and performance of the Group.
External auditors
The Board and the Audit Committee review the performance of the
external auditors on an annual basis and normally meet with them
during the year to:
- Discuss the external audit plans, identifying any significant
changes in structure, operations, internal controls or accounting
policies likely to impact on the financial statements and to review
the fees proposed for the audit work to be performed.
- Review the periodic reports prior to lodgement and release,
and any significant adjustments required as a result of the
auditor's findings, and to recommend board approval of these
documents, prior to announcement of results.
- Review the results and findings of the auditor, the adequacy
of accounting and financial controls, and to monitor the
implementation of any recommendations made.
- Review the draft financial report and recommend board approval of the financial report.
- As required, to organise, review and report on any special
reviews or investigations deemed necessary by the board.
The Board and Audit Committee specifically assess the
independence of the Group's external auditors and in doing so
consider the level and nature of non-audit services provided and
associated fees, the auditor's rotation arrangements for key audit
personnel and areas of potential conflicts of
interest.
Communication with shareholders and continuous disclosure
The directors attach importance to the provision of clear and
timely information to shareholders and the broader investment
community. Information about the company is available on its
website (www.oceanoutdoor.com)
Financial reporting - the Company reports to shareholders
half-yearly and annually, as required by the LSE rules. The
Chairman states to the Board that the company's financial reports
present a true and fair view in all material respects of the
company's financial condition and operational results and are in
accordance with relevant accounting standards.
Equal access policy - the Company has a policy, based on
existing policies and practices as a company quoted on the LSE
market, that all shareholders and investors have equal access
to
the company's information, and has procedures to ensure that all
price sensitive information will be disclosed to the LSE in
accordance with the continuous disclosure requirements of the LSE
rules. these procedures include:
- A comprehensive process to identify matters that may have a
material effect on the price of the company's shares, notifying
them to the LSE, posting them on the company's website, and issuing
media releases.
- All information provided to the LSE, and related information
(including information provided to analysts and the media), being
immediately posted to the company's website
www.oceanoutdoor.com/investors/
- The Annual Report is made available to all shareholders. The
Board ensures that the annual report includes relevant information
about the operations of the Group during the year, changes in the
state of affairs of the Group and details of future developments,
as well as all required disclosures.
News releases are issued throughout the year and the company
maintains a website (www.oceanoutdoor.com/investors/) on which
press releases, corporate presentations and the annual report and
financial statements are available to view together with the
half-yearly financial statements. Enquiries from individual
shareholders on matters relating to the business of the company are
welcomed. Shareholders and other interested parties can subscribe
to receive notification of news updates and other documents from
the company via email. In addition, the Executive Directors meet
with major shareholders to discuss the progress of the company and
provide periodic feedback to the board following meetings with
shareholders.
Independent auditor's report to the members of Ocean Outdoor
Ltd
Opinion
We have audited the financial statements of Ocean Outdoor Ltd
(the 'parent company') and its subsidiaries (the 'group') for the
year ended 31 December 2018 which comprise the consolidated
statement of profit and loss and other comprehensive income, the
consolidated statement of financial position, the consolidated
statement of changes in equity, the consolidated statement of cash
flows, and notes to the financial statements, including a summary
of significant accounting policies.
The financial reporting framework that has been applied in the
preparation of the group financial statements is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by
the European Union.
In our opinion:
-- the financial statements give a true and fair view of the
state of the group's affairs as at 31 December 2018 and of the
group's profit for the year then ended; and
-- the group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union.
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
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
Use of our report
This report is made solely to the company's members, as a body,
in accordance with International Standards on Auditing (UK) (ISAs
UK). 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.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in
relation to which the ISAs (UK) require us to report to you
where:
-- the directors' use of the going concern basis of accounting
in the preparation of the financial statements is not appropriate;
or
-- the directors have not disclosed in the financial statements
any identified material uncertainties that may cast significant
doubt about the group's ability to continue to adopt the going
concern basis of accounting for a period of at least twelve months
from the date when the financial statements are authorised for
issue.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, 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) we identified, including 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.
Matter How we addressed the matter
in our audit
Revenue recognition- Cut-off
As detailed in note 2.12, We assessed whether the revenue
Management make certain judgements recognition policies adopted
in relation to revenue recognition by the Group comply with accounting
for the treatment of contractual standards.
arrangements entered into
by trading entities in the We reviewed a sample of contracts
group. to assess whether:
These include determining * the revenue had been recognised in accordance with
Ocean Outdoor's performance the Group's accounting policy and accounting
obligations in its contracts standards;
with customers and whether
as at the reporting date,
the group has completed its
performance obligations. Where * appropriate cut off was observed with Ocean Outdoor
these are met, revenues are having completed its performance obligations as
recognized over time as the stated in the customer contracts prior to the
customer is assessed to simultaneously reporting date and if not completed appropriate
receive and consume the economic revenue was deferred; and
benefits of the service provided
under the contract by the
Group's performance. Alternatively,
where Ocean Outdoor has not * any other terms within the contract had any material
completed its performance accounting or disclosure implications
obligations prior to the reporting
date, revenues are not recognised.
We also tested a sample of
Revenue should only be recognised deferred income balances for
at the time the group delivers completeness and accuracy
advertising services on the by checking the calculations
sites which have been subject of deferred income and agreeing
to order bookings over the key inputs (contract billing
specific periods ordered by period, number of days deferred
customers. Advertising revenues at report date and sales prices
are invoiced normally in 2-week net of VAT) to supporting
block periods. This results documentation.
in a cut off risk at the reporting
date in relation to the existence
of revenue recognised and
completeness of deferred revenue.
-----------------------------------------------------------------
Acquisition accounting
As detailed in note 11 to We challenged the methodology
the financial statements, and assumptions underpinning
the Group acquired SCP Acquisition the significant judgements
TopCo Group and Forrest Media and estimates made by management
(Holdings) Limited Group during in the assessment of the fair
the year. value of the separately identifiable
intangible assets acquired
Consequently, management had by comparison to industry
to exercise judgement in considering data and our knowledge of
the fair value of the assets the business.
and liabilities acquired.
In addition, with the assistance
Management recognised on acquisition of our valuations specialists,
separately identifiable intangible we reviewed the methodology
assets in respect of brand deployed.
and acquired rights over advertising
sites, exercising judgment We also considered the completeness
in estimating their fair value. of the separately identifiable
intangible assets with reference
The judgements and estimates to our understanding of the
in this area, as detailed business and the key reasons
in note 2.10, include: for executing the transaction
* underlying cash flow projections, from the acquirer's perspective.
* discount rates applied, and
* long term growth rates.
There is a risk that this
estimate may be materially
misstated.
-----------------------------------------------------------------
Our application of materiality
We apply the concept of materiality both in planning and
performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which
misstatements, including omissions, could influence the economic
decisions of reasonable users that are taken on the basis of the
financial statements. In order to reduce to an appropriately low
level the probability that any misstatements exceed materiality, we
use a lower materiality level, performance materiality, to
determine the extent of testing needed. Importantly, misstatements
below these levels will not necessarily be evaluated as immaterial
as we also take account of the nature of identified misstatements,
and the particular circumstances of their occurrence, when
evaluating their effect on the financial statements as a whole.
Level of materiality applied and rationale
We consider revenue to be the critical performance measure for
the Group. Using this benchmark, we set materiality at GBP500,000
which represents 1% of revenues.
Performance materiality
The application of materiality at the individual account or
balance level is set at an amount to reduce to an appropriately low
level the probability that the aggregate of uncorrected and
undetected misstatements exceeds materiality.
On the basis of our risk assessment together with the Group's
overall control environment, our judgement was that overall
performance materiality for the Group should be 70%. As such,
performance financial statement materiality was set at
GBP350,000.
Component materiality
We set materiality for each component of the Group based on a
percentage of materiality dependent on the size and our assessment
of the risk of material misstatement of that component. Component
materiality ranged from GBP120,000 to GBP350,000.
Reporting Threshold
We agreed with the Audit Committee that we would report to them
all audit differences individually in excess of GBP15,000. We also
agreed to report audit differences below those thresholds that, in
our view, warranted reporting on qualitative grounds.
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the
Group and its environment, including Group-wide controls, and
assessing the risks of material misstatement at the Group level.
The group has 4 significant components which represented the main
trading entities in the group, being Ocean Outdoor UK Limited,
Signature Outdoor Limited, Mediaco Outdoor Limited, and Forrest
Outdoor Media Limited.
Ocean Outdoor Limited (the Company) and the significant
components were subject to full scope audits which were performed
by BDO LLP. As a result of this approach, all of the Group's
Revenue (100%), Total Assets (100%) and Adjusted profit before tax
(100%) were subject to audit.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report and consolidated financial statements, 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 this regard.
Responsibilities of directors
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 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.
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 Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Nicole Martin (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
18 March
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
Ocean Outdoor Limited
Consolidated statement of profit or loss and other comprehensive
income
for the year ended 31 December 2018 Period 20
Jan 2017
to 31 Dec
2017
Note 2018
GBP'000 GBP'000
Billings 70,288 -
______ _______
Revenue 4 49,795 -
Cost of sales (29,355) -
_______ _______
Gross profit 20,440 -
Administrative expenses (15,165) (25,954)
_______ _______
Profit / (Loss) from operations 5,6 5,275 (25,954)
Other income - 5
Finance expense 7 (4) -
Finance income 7 1,658 2,104
Non-cash charge related to warrant
redemption liability - (301)
_______ _______
Profit / (Loss) before tax 6,929 (24,146)
Tax expense 8 (306) -
_______ _______
Profit / (Loss) from continuing
operations 6,623 (24,146)
_______ _______
Total comprehensive income / (loss) 6,623 (24,146)
_______ _______
Note 2018 Period 20
Jan 2017
to 31 Dec
2017
GBP'000 GBP'000
Profit / (loss) for the year attributable
to:
Shareholders of the parent 6,623 (24,146)
_______ _______
Total comprehensive income / (loss)
attributable to:
Shareholders of the parent 6,623 (24,146)
_______ _______
Earnings / (loss) per share
Basic earnings / (loss) per share
(pence) 17 13.0p (66.8p)
_______ _______
Diluted earnings / (loss) per share
(pence) 17 13.0p (66.8p)
_______ _______
Ocean Outdoor Limited
Consolidated statement of financial position
As at 31 December 2018
Note 2018 2017
GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 9 31,971 -
Intangible assets 10 230,024 -
_______ _______
261,995 -
_______ _______
Current assets
Trade and other receivables 13 36,718 58
Cash and cash equivalents 160,503 294,576
_______ _______
197,221 294,634
_______ _______
Total assets 459,216 294,634
_______ _______
Liabilities
Current liabilities
Trade and other payables 14 44,729 88
Tax payable 3,278 -
_______ _______
48,007 88
_______ _______
Non-current liabilities
Warrant redemption liability - 301
Deferred tax liability 15 23,579 -
_______ _______
Total liabilities 71,586 389
_______ _______
NET ASSETS 387,630 294,245
_______ _______
Equity
Founder Preferred Share Capital 16 5,213 5,213
Ordinary Share Capital 16 - -
Share Premium 16 375,594 288,906
Retained earnings 6,823 126
_______ _______
TOTAL EQUITY 387,630 294,245
_______ _______
The financial statements were approved by the Board of Directors
and authorised for issue on 18 March 2019.
T Bleakley
Director
Ocean Outdoor Limited
Consolidated statement of changes in equity
For the year ended 31 December 2018
Share Founder Share Retained Total
capital preferred premium earnings equity
Group shares
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
20 January 2017 - - - - -
Comprehensive income
for the period
Loss for the period - - - (24,146) (24,146)
______ ______ ______ ______ ______
Total comprehensive
Income for the period - - - (24,146) (24,146)
Contributions by
and distributions
to owners
Issue of share capital - 5,213 288,906 24,188 318,307
Share based compensation
- Director's share
options charge - - - 84 84
______ ______ ______ ______ ______
31 December 2017 - 5,213 288,906 126 294,245
______ ______ ______ ______ ______
1 January 2018 - 5,213 288,906 126 294,245
Comprehensive income
for the year
Profit for the year - - - 6,623 6,623
______ ______ ______ ______ ______
Total comprehensive
Income for the year - - - 6,623 6,623
Contributions by
and distributions
to owners
Issue of share capital - - 86,688 - 86,688
Share based compensation
- Director's share
options charge - - - 74 74
______ ______ ______ ______ ______
31 December 2018 - 5,213 375,594 6,823 387,630
______ ______ ______ ______ ______
Ocean Outdoor Limited
Consolidated statement of cash flows
for the year ended 31 December 2018
Note 2018 Period
20 Jan
2017 to
31 Dec
2017
GBP'000 GBP'000
Cash flows from operating activities
Profit / (Loss) for the year 6,623 (24,146)
Adjustments for:
Depreciation of property, plant and
equipment 9 3,195 -
Amortisation of intangible fixed assets 10 10,087 -
Charge related to Founder preferred
share - 24,187
Charge related to warrant redemption - 301
Charge related to Director options 74 84
Finance income (1,658) -
Finance expense 6 -
Acquisition costs paid (5,839) -
_______ _______
12,488 426
Increase in trade and other receivables (574) (58)
Increase in trade and other payables 5,732 89
Decrease in provisions 301 -
_______ _______
Cash generated from operations 17,947 457
Income taxes paid (1,010) -
_______ _______
Net cash flows from operating activities 16,937 457
_______ _______
Investing activities
Acquisition of subsidiaries, net of
cash acquired 12 (228,945) -
Purchases of property, plant and equipment 9 (10,405) -
Interest received 1,658 -
_______ _______
Net cash used in investing activities (237,692) -
_______ _______
Financing activities
Issue of Founder Preferred shares - 5,213
Issue of Ordinary shares and warrants 16 86,688 296,383
Share issues costs - (7,477)
Interest paid on loans and borrowings (6) -
_______ _______
Net cash from financing activities 86,682 294,119
_______ _______
Net (decrease) / increase in cash
and cash equivalents (134,073) 294,576
Cash and cash equivalents at beginning 294,576 -
of year
_______ _______
Cash and cash equivalents at end of
year 160,503 294,576
_______ _______
Ocean Outdoor Limited
Notes forming part of the Consolidated Financial Statements
. 1. General information
The Company was incorporated with limited liability under the
laws of the British Virgin Islands under the BVI Companies Act on
20 January 2017. The address of the Company's registered office is
Kingston Chambers, PO Box 173, Road Town, Tortola, British Virgin
Islands. The Ordinary Shares and Warrants were admitted for trading
on the Main Market of the London Stock Exchange on 13 March 2017,
after raising gross proceeds of US$425,250,000 for a potential
acquisition (an Acquisition).
2. Principal accounting policies
The principal accounting policies applied in these financial
statements are set out below.
2.1 Basis of preparation
These financial statements are prepared under the historical
cost convention and are in accordance with International Financial
Reporting Standards as and its interpretations as issued by the
European Union ("EU") and those parts of the BVI Business Companies
Act applicable under IFRS.
The financial statements are presented in GBP, which is also the
functional currency of each entity within the Group. The Company
changed its presentational and functional currency from USD to GBP
on 28 March 2018. The Company's financial statements for the year
ended 31 December 2017 were presented in USD. For comparative
purposes, the reported figures have been translated at an exchange
rate of 1.41, the spot rate on the date of acquisition, and the
point at which the presentational and functional currency changed
to GBP.
Amounts are rounded to the nearest thousand, unless otherwise
stated.
The financial statements are prepared on the historical cost
basis with the exception of certain financial instruments which are
stated at fair value.
Accounting policies have been consistently applied throughout
the periods presented.
This is the first set of the Group's financial statements where
IFRS 15 and IFRS 9 have been applied. As required by IAS 8, the
nature and effect of these changes and significant changes in
accounting policies have been disclosed in note 2.11. The Group has
not early adopted any other standard, interpretation or amendment
that has been issued but is not yet effective.
Non-GAAP performance measures
Billings represent the advertising spend by the advertiser,
including fees directly payable by the advertiser to their
advertising agency, exclusive of sales tax.
Billings is the standard metric used by the out of home
advertising industry body "Outsmart" to measure the market size and
industry trends. Management consider Billings to be an important
metric to assess the performance of the underlying business against
industry trends and therefore presents Billings as a Non-GAAP
performance measure. Billings is presented for the benefit for
users of the accounts but is not a substitute for other standard
GAAP measures presented.
2.2 Going concern
The Directors have, at the time of approving the financial
statements, a reasonable expectation that the Company has adequate
resources to continue in operational existence for the foreseeable
future given the cash funds available and the current forecast cash
flows. Thus, the Company continues to adopt the going concern basis
of accounting in preparing the financial statements.
2.3 Foreign currency translation
Functional and presentation currency
The Company is listed on the main market of the London Stock
Exchange. The performance of the Company is measured and reported
to the shareholders in GBP, which is the Company's functional
currency. The Directors consider GBP as the currency of the primary
economic environment in which the Company operates and the one that
most faithfully represents the economic effects of the underlying
transactions, events and conditions.
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign currency assets and liabilities are
translated into the functional currency using the exchange rate
prevailing at the balance sheet date.
2.4 Financial assets
The Group classifies its financial assets into one of the
categories discussed below, depending on the business model and
cash flow type under which the assets are held. The Group has not
classified any of its financial assets as fair value through other
comprehensive income. The Group's accounting policy for each
category is as follows:
Amortised cost
These assets are non-derivative financial assets held under the
'hold to collect' business model and attracting cash flows that are
solely payments of principal and interest. They comprise trade and
other receivables and cash and cash equivalents. They are initially
recognised at fair value plus transaction costs that are directly
attributable to their acquisition or issue, and are subsequently
carried at amortised cost using the effective interest rate method,
less provision for impairment.
Impairment provisions for trade and other receivables are
calculated using an expected credit loss model. Under this model,
impairment provisions are recognised to reflect expected credit
losses based on a combination of historic and forward-looking
information, the amount of such a provision being the difference
between the net carrying amount and the present value of the future
expected cash flows associated with the impaired receivable. For
trade receivables, which are reported net; such provisions are
recorded in a separate allowance account with the loss being
recognised within administrative expenses in the consolidated
statement of comprehensive income. On confirmation that the trade
receivable will not be collectable, the gross carrying value of the
asset is written off against the associated provision.
Cash and cash equivalents include cash in hand, deposits held at
call with banks, other short term highly liquid investments with
maturities of three months or less.
2.5 Financial liabilities
The Group classifies its financial liabilities into one of two
categories, depending on the purpose for which the liability was
acquired. The Group's accounting policy for each category is as
follows:
Other financial liabilities
Other financial liabilities include the following items:
- Trade payables and other short-term monetary liabilities,
which are initially recognised at fair value and subsequently
carried at amortised cost using the effective interest method
2.6 Share-based payments
The Founder Preferred Shares (and attached warrants) and
director options represent equity-settled share-based arrangements
under which the Company receives services as a consideration for
the additional rights attached to these equity shares, over and
above their nominal price. The fair value of the grant of Founder
Preferred Shares (and attached warrants) in excess of any purchase
price received is recognised as an expense. In addition, the
Company has granted options to the non-executive directors. The
management team have been incentivised via the issue of hurdle
shares which aligns the long-term interest of the company to
deliver shareholder wealth. The fair value of the Founder Preferred
Shares (and attached warrants), the options and the hurdle shares
is determined using a valuation model.
2.7 Fair Value of Warrants
Warrants not subject to IFRS2 are valued at redemption value of
$0.01 as financial instruments. The Warrants are compound financial
instruments with a liability recognised and the remainder in
equity.
The total amount to be expensed as a respective share-based
payment charge is determined by reference to the fair value of the
awards granted:
-- including any market performance condition;
-- excluding the impact of any service and non-market performance vesting conditions; and
-- including the impact of any non-vesting conditions.
Non-market performance and service conditions are included in
assumptions about the number of awards that are expected to
vest.
The total expense is recognised in the income statements with a
corresponding credit to equity over the vesting period, which is
the period over which all of the specified vesting conditions are
to be satisfied. The Company does not begin to recognise expense
associated with share-based awards with performance conditions
until it is probable that the performance condition will be
achieved.
2.8 Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors as it is
the body that makes strategic decisions. The Board are of the
opinion that there was only a single operational segment for FY17
being the investment in US Treasury Bills. As a result, no segment
information has been provided for FY17 as the Company only
accumulates its funds raised for investment in US Treasury
Bills.
For FY18, the Board has elected to aggregate the segmental
results of Ocean Outdoor Limited Group (excluding Forrest Media
Outdoor) and Forrest Media Outdoor on the basis both businesses
provide similar DOOH services in the UK market. Accordingly, the
group has been treated as one operational segment for FY18 and the
results of the group presented in the financial statements should
not be disaggregated further.
2.9 Share capital
Founder Preferred Shares, Ordinary Shares, and Warrants are
classified as equity. Incremental costs directly attributable to
the issue of new ordinary shares are shown in equity as a
deduction, net of tax, from the proceeds.
2.10 Critical accounting judgements and key sources of estimation uncertainty
The Group makes certain estimates and assumptions regarding the
future. Estimates and judgements are continually evaluated based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances. In the future, actual experience may differ from
these estimates and assumptions. The estimates and assumptions that
have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next
financial year are discussed below.
Estimates and assumptions
- Impairment of goodwill and other intangible assets -
Estimation of future cash flows and determination of discount rates
(see note 11).
- Depreciation of property, plant and equipment - Estimation of
useful lives and residual values (see note 2.20).
- The Group used certain estimates and assumptions in
determining the fair value of the intangible assets in respect of
brand and acquired rights over advertising sites for the
acquisitions made in the year. The estimates and assumptions
include underlying cash flow projections, discount rates applied
and long term growth rates.
2.11 New accounting standards and interpretations
This is the first set of consolidated financial statements
prepared by the Company following the acquisition of SCP
Acquisition Topco Limited. The Company applied all applicable
standards and applicable interpretations published by the EU for
the year ended 31 December 2018
a) New standards, interpretations and amendments effective from
1 January 2018 that the Group adopted in the year
The Group has adopted IFRS 9 Financial Instruments and IFRS 15
Revenue from Contracts with Customers during the year. The adoption
of these new standards has had no impact the opening equity and
total comprehensive income previously presented in FY17 in the
prior year's financial statements. The Group has not applied any
transitional reliefs in its first time adoption of IFRS 9 or IFRS
15.
b) New standards, interpretations and amendments not yet effective
There are a number of standards and interpretations which have
been issued by the International Accounting Standards Board that
are effective in future accounting periods that the Group is not
adopting early. The most significant of these is IFRS 16 Leases,
which is mandatorily effective for periods beginning on or after 1
January 2019.
Adoption of IFRS 16 will result in the Group recognising
right-of-use assets and lease liabilities for all contracts that
are, or contain, a lease. For leases currently classified as
operating leases, under current accounting requirements the Group
does not recognise related assets or liabilities, and instead
spreads the lease payments on a straight-line basis, disclosing in
its annual financial statements the total commitment in note
19.
The Group will be required to apply IFRS 16, as endorsed by the
EU, from 1 January 2019 and is in the process of gathering data to
estimate the impact on the reported income and net assets. Upon
transition to IFRS 16, the Group will be adopting the modified
retrospective approach and therefore will recognise leases on
balance sheet as at 1 January 2019, measuring the right-of-use
assets at the carrying value of the right of use asset depreciated
on a straight-line basis over the life of the lease from the lease
inception date. This will result in an estimated right of use asset
of GBP84m with a lease liability of approximately GBP96m on
existing leases. Instead of recognising an operating expense for
its operating lease payments, the Group will recognise interest on
its lease liabilities and amortisation on its right-of-use assets.
This will increase reported EBITDA, based on its current lease
profile, by an estimated GBP16m. This amount will depend on the
extent to which the Group decides to take advantage of the
exemptions available under IFRS 16 for low value assets and
short-term leases. The first set of interims prepared under IFRS 16
will be the results presented for the 6-month period ended 30 June
2019.
2.12 Revenue
Substantially all of the Group's contracts with customers
contain a single performance obligation, being the rental of
advertising space, and are subject to fixed prices, so removing the
judgement that would otherwise be required in determining the
transaction price and allocating it across multiple performance
obligations. Revenue is recognised on an over time basis. This is
because the customer simultaneously receives and consumes the
economic benefits provided under the contract by the Group's
performance.
Amounts invoiced in advance of the performance of the
advertising rental services are recognised as performance
obligations and released to revenue as the group performs the
advertising services under the contract.
Revenue represents the amounts (excluding the value added tax)
derived from the provision of services to customers during the
52-week period ended 30 December 2018 (2017: 52-week period ended
31 December 2017) net of commissions and discounts. Revenue is
recognised on a 52-week period to reflect the period of customer
bookings, normally in 2-week blocks. The difference on this basis
to recognition of turnover for a full year is immaterial.
2.13 Basis of consolidation
Where Ocean Outdoor Limited ("the Company") has control over an
investee, it is classified as a subsidiary. The Company controls an
investee if all three of the following elements are present: power
over the investee, exposure to variable returns from the investee,
and the ability of the investor to use its power to affect those
variable returns. Control is reassessed whenever facts and
circumstances indicate that there may be a change in any of these
elements of control.
The Consolidated Financial Statements presents the results of
the Company and its subsidiaries ("the Group") as if they formed a
single entity. Intercompany transactions and balances between group
companies are therefore eliminated in full.
The Consolidated Financial Statements incorporates the results
of business combinations using the acquisition method. In the
statement of financial position, the acquiree's identifiable
assets, liabilities and contingent liabilities are initially
recognised at their fair values at the acquisition date. The
results of acquired operations are included in the consolidated
statement of comprehensive income from the date on which control is
obtained. They are derecognised from the date on which control
ceases.
2.14 Goodwill
Goodwill represents the excess of the cost of a business
combination over the total acquisition date fair value of the
identifiable assets, liabilities and contingent liabilities
acquired.
Cost comprises the fair value of assets given, liabilities
assumed and equity instruments issued, plus the amount of any
non-controlling interests in the acquiree plus, if the business
combination is achieved in stages, the fair value of the existing
equity interest in the acquiree. Direct costs of acquisition are
recognised immediately as an expense.
Goodwill is capitalised as an intangible asset with any
impairment in carrying value being charged to the consolidated
statement of comprehensive income. Where the fair value of
identifiable assets, liabilities and contingent liabilities exceed
the fair value of consideration paid, the excess is credited in
full to the consolidated statement of comprehensive income on the
acquisition date.
2.15 Other intangible assets
Intangible assets are recognised on business combinations if
they are separable from the acquired entity or give rise to other
contractual/legal rights. The amounts ascribed to such intangibles
are arrived at by using appropriate valuation techniques.
The Group has recognised acquired rights over advertising sites
on business combinations as intangible assets. These are amortised
over the contractual life of the advertising sites on a
straight-line basis, which are typically 10 to 15 years.
The Group has recognised intangible asset in relation to the
Ocean brand acquired as part of the business combination. This is
amortised over 10 years on a straight-line basis.
2.16 Impairment of non-financial assets (excluding deferred tax assets)
Impairment tests on goodwill and other intangible assets with
indefinite useful economic lives are undertaken annually at the
financial year end. Other non-financial assets are subject to
impairment tests whenever events or changes in circumstances
indicate that their carrying amount may not be recoverable. Where
the carrying value of an individual asset or cash generating units
('CGU') exceeds its recoverable amount (i.e. the higher of value in
use and fair value less costs to sell), the asset is written down
accordingly.
Impairment charges are included in profit or loss, except to the
extent they reverse gains previously recognised in other
comprehensive income. An impairment loss recognised for goodwill is
not reversed
2.17 Defined contribution schemes
Contributions to defined contribution pension schemes are
charged to the consolidated statement of comprehensive income in
the year to which they relate.
2.18 Leased assets
Where substantially all of the risks and rewards incidental to
ownership are not transferred to the Group (an "operating lease"),
the total rentals payable under the lease are charged to the
consolidated statement of comprehensive income on a straight-line
basis over the lease term. The aggregate benefit of lease
incentives is recognised as a reduction of the rental expense over
the lease term on a straight-line basis.
2.19 Deferred taxation
Deferred tax assets and liabilities are recognised where the
carrying amount of an asset or liability in the consolidated
statement of financial position differs from its tax base, except
for differences arising on:
- The initial recognition of goodwill
- The initial recognition of an asset or liability in a
transaction which is not a business combination and at the time of
the transaction affects neither accounting or taxable profit,
and
- Investments in subsidiaries where the Group is able to control
the timing of the reversal of the difference and it is probable
that the difference will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those
instances where it is probable that taxable profit will be
available against which the difference can be utilised.
The amount of the asset or liability is determined using tax
rates that have been enacted or substantively enacted by the
reporting date and are expected to apply when the deferred tax
liabilities/(assets) are settled/(recovered).
2.20 Property, plant and equipment
Items of property, plant and equipment are initially recognised
at cost. As well as the purchase price, cost includes directly
attributable costs.
Depreciation is provided on all items of property, plant and
equipment so as to write off their carrying value over their
expected useful economic lives. It is provided at the following
rates:
Site assets
Site build costs - Over the length of the lease
Digital signage - 10 years
Light boxes - 10 years
Assets under the course of construction are only depreciated
once complete.
Equipment
Fixtures and - 4 years straight line
fittings
Computer equipment - 2 years straight line
Motor vehicles - 4 years straight line
3. Financial instruments - Risk Management
The Group is exposed through its operations to the following
financial risks:
- Credit risk; and
- Liquidity risk.
The Group's operations do not expose it to material foreign
currency risk.
In common with all other businesses, the Group is exposed to
risks that arise from its use of financial instruments. This note
describes the Group's objectives, policies and processes for
managing those risks and the methods used to measure them. Further
quantitative information in respect of these risks is presented
throughout these financial statements.
There have been no substantive changes in the Group's exposure
to financial instrument risks, its objectives, policies and
processes for managing those risks or the methods used to measure
them from previous periods unless otherwise stated in this
note.
(i) Principal financial instruments
The principal financial instruments used by the Group, from
which financial instrument risk arises, are as follows:
- Trade and other receivables
- Cash and cash equivalents
- Trade and other payables
(ii) Financial instruments by category
Financial assets
Amortised cost
2018 2017
GBP'000 GBP'000
Cash and cash equivalents 160,503 294,576
Trade receivables 36,718 -
_______ _______
Total financial assets 197,221 294,576
_______ _______
Financial liabilities
Amortised cost
2018 2017
GBP'000 GBP'000
Trade and other payables 9,170 88
_______ _______
Total financial liabilities 9,170 88
_______ _______
(iii) Financial instruments not measured at fair value
Financial instruments not measured at fair value include certain
cash and cash equivalents, trade and other receivables and trade
and other payables.
Due to their short-term nature, the carrying value of cash and
cash equivalents, trade and other receivables, trade and other
payables approximates their fair value.
General objectives, policies and processes
The Board has overall responsibility for the determination of
the Group's risk management objectives and policies. The Board
receives monthly reports from the Group Financial Controller
through which it reviews the effectiveness of the processes put in
place and the appropriateness of the objectives and policies it
sets.
The overall objective of the Board is to set policies that seek
to reduce risk as far as possible without unduly affecting the
Group's competitiveness and flexibility. Further details regarding
these policies are set out below:
Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations. The Group is mainly exposed to credit
risk from credit sales. It is Group policy, implemented locally, to
assess the credit risk of new customers before entering contracts.
The Group's review includes external ratings, when available, and
in some cases bank references. Purchase limits are established for
each customer.
Credit risk also arises from cash and cash equivalents and
deposits with banks and financial institutions. For banks and
financial institutions, only independently rated parties with
minimum rating "A" are accepted. In respect of the year and period
ends presented, GBP18.2m (2017: GBPnil) was held on current account
with HSBC Bank plc and GBP142.3m (2017: GBP294.6m) was held in
treasury bills with Barclays Bank plc.
Liquidity risk
Liquidity risk arises from the Group's management of working
capital and the finance charges and principal repayments on its
debt instruments. It is the risk that the Group will encounter
difficulty in meeting its financial obligations as they fall
due.
The Group's policy is to ensure that it will always have
sufficient cash to allow it to meet its liabilities when they
become due. To achieve this aim, it seeks to maintain cash balances
(or agreed facilities) to meet expected requirements for a period
of at least 90 days.
The Board receives rolling 12-month cash flow projections on a
monthly basis as well as information regarding cash balances. At
the end of the financial year, these projections indicated that the
Group expected to have sufficient liquid resources to meet its
obligations under all reasonably expected circumstances.
Between Between Between
Total Up to 3 and 1 and 2 and Over
3 12 2 5
months months years years 5 years
At 31 December 2017 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash equivalents 294,576 294,576 - - - -
Trade and other payables 88 88 - - - -
_______ _______ _______ _______ _______ _______
Between Between Between
Total Up to 3 and 1 and 2 and Over
3 12 2 5
months months years years 5 years
At 31 December 2018 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash equivalents 160,503 160,503 - - - -
Trade receivables 32,970 32,970 - - - -
Trade and other payables 9,170 6,855 764 1,280 271 -
_______ _______ _______ _______ _______ _______
Capital Disclosures
The Group's objectives when maintaining capital are:
- to safeguard the entity's ability to continue as a going
concern, so that it can continue to provide returns for
shareholders and benefits for other stakeholders, and
- to provide an adequate return to shareholders by pricing
products and services commensurately with the level of risk.
The Group sets the amount of capital it requires in proportion
to risk. The Group manages its capital structure and makes
adjustments to it in the light of changes in economic conditions.
In order to maintain or adjust the capital structure, the Group may
adjust the amount of dividends paid to shareholders, return capital
to shareholders, issue new shares, or sell assets to reduce
debt.
4. Revenue
All revenue is recognised on an over time basis from services
provided in the UK and to UK based customers.
Analysis of revenue by service type:
Period 20
For the year Jan 2017
ended 31 to 31 Dec
Dec 2018 2017
GBP'000 GBP'000
Rental of advertising space 49,795 -
_______ _______
5. Expenses by nature
Period 20
For the year Jan 2017
ended 31 to 31 Dec
Dec 2018 2017
GBP'000 GBP'000
Employee benefit expenses (note 6) 4,614 18,068
Depreciation of property, plant and 3,195 -
equipment (note 9)
Amortisation of intangible assets (note 10,087 -
10)
Operating site lease expense 10,853 -
Site profit share, rates, utilities 13,660 -
and maintenance
Profit on disposal of property, plant 1 -
and equipment
Acquisition and relisting fees 5,607 -
Auditor remuneration - audit fees
Ocean Outdoor Limited company audit - 21
Ocean Outdoor Limited Group audit 220 -
Auditor remuneration - other non-audit
services 95 143
_______ _______
6. Employee benefit expenses
Period 20
For the year Jan 2017
ended 31 to 31 Dec
Dec 2018 2017
GBP'000 GBP'000
Wages and salaries 4,001 145
Social security contributions and similar 479 -
taxes
Founder Preferred Shares issue - 17,923
Management incentive scheme 68 -
Defined contribution pension cost 66 -
_______ _______
4,614 18,068
_______ _______
During the prior year 700,000 founder preferred shares were
issued to founder shareholders. The shares may be converted into
ordinary shares based on a conversion rate of 1 ordinary share for
1 founder preferred share at a future time at an exercise price of
USD 10.50 per share. The issue of the shares was treated for
accounting purposes as an equity settled share-based payment. The
fair value of the shares of GBP24,187k was recognised as an expense
in full at the grant dates as the shares had no vesting
conditions.
Key management personnel compensation
Key management personnel are those persons having authority and
responsibility for planning, directing and controlling the
activities of the Group, including the directors.
Period 20
For the year Jan 2017
ended 31 to 31 Dec
Dec 2018 2017
GBP'000 GBP'000
Wages and salaries 1,234 145
Benefits in kind 35 -
Management incentive scheme (hurdle 68 -
shares)
Founder Preferred Shares issue - 24,187
Defined contribution pension cost 21 -
_______ _______
1,358 24,332
_______ _______
7. Finance expense and finance income
Period 20
For the year Jan 2017
ended 31 to 31 Dec
Dec 2018 2017
GBP'000 GBP'000
Finance expense
Interest payable 4 -
_______ _______
Finance income
Interest receivable and cash and cash
equivalents 1,658 2,104
_______ _______
8. Tax
Period 20
For the year Jan 2017
ended 31 to 31 Dec
Dec 2018 2017
GBP'000 GBP'000
Current tax expense
Current tax charge for the year 2,002 -
Adjustments in respect of prior periods (2) -
_______ _______
Total current tax 2,000 -
Deferred tax expense
Deferred tax credit for the year (see (1,694)
note 15) -
_______ _______
Total deferred tax (1,694) -
_______ _______
Total tax expense 306 -
_______ _______
The group's trading subsidiaries all operated in the UK in FY18.
The group pays UK corporation tax on profits from its UK
businesses. In FY17, the Company had no subsidiaries. As a BVI
registered company, the rate of income tax which applied to the
Company for FY17 was 0%. Accordingly, the Company did not incur a
charge or credit for corporation tax. The reasons for the
difference between the actual tax charge for the year and the
standard rate of corporation tax in the United Kingdom applied to
the loss for the year are as follows:
For the Period 20
year ended Jan 2017
31 Dec to 31 Dec
2018 2017
GBP'000 GBP'000
Profit/(Loss) before tax 6,929 (24,416)
_______ _______
Tax using the Company's domestic tax 1,317 -
rate of 19% (2017: 0%)
Expenses not deductible for tax purposes (1,006) -
Other permanent differences (5) -
_______ _______
Total tax expense 306 -
_______ _______
Expenses not deductible for tax purposes
The key contributor to the expenses not deductible for tax
purposes is interest disallowable per the corporate interest
restrictions rules.
Changes in tax rates and factors affecting the future tax
charge
A reduction in the UK corporation tax rate from 20% to 19%
(effective from 1 April 2017) were substantively enacted on 26
October 2015, and an additional reduction to 17% (effective 1 April
2020) was substantively enacted on 6 September 2016. This will
reduce the company's future current tax charge accordingly.
Deferred tax assets and liabilities at 31 December 2018 have been
calculated taking into consideration the applicable rates when the
temporary differences are expected to reverse.
9. Property, plant and equipment
Site Motor
assets Equipment vehicles Total
GBP'000 GBP'000 GBP'000 GBP'000
Cost or valuation
At 20 January 2017 - - - -
_______ _______ _______ _______
At 31 December 2017 - - - -
_______ _______ _______ _______
At 1 January 2018 - - - -
Acquired through business
combinations 28/03/18 19,345 211 - 19,556
Acquired through business
combinations 2/06/18 5,116 16 73 5,205
Additions 10,349 56 - 10,405
Disposals (23) (72) (12) (107)
_______ _______ _______ _______
At 31 December 2018 34,787 211 61 35,059
_______ _______ _______ _______
Site Motor
assets Equipment vehicles Total
GBP'000 GBP'000 GBP'000 GBP'000
Accumulated depreciation
and impairment
At 20 January 2017 - - - -
_______ _______ _______ _______
At 31 December 2017 - - - -
_______ _______ _______ _______
At 1 January 2018 - - - -
Charge in the year 3,111 59 25 3,195
Disposals (23) (72) (12) (107)
_______ _______ _______ _______
At 31 December 2018 3,088 (13) 13 3,088
_______ _______ _______ _______
Site Motor
assets Equipment vehicles Total
GBP'000 GBP'000 GBP'000 GBP'000
Net Book Value
At 31 December
2018 31,699 224 48 31,971
_______ _______ _______ _______
At 31 December
2017 - - - -
_______ _______ _______ _______
10. Intangible assets
Brand Acquired Goodwill Total
rights
over advertising
sites
GBP'000 GBP'000 GBP'000 GBP'000
Cost or valuation
At 20 January 2017 - - - -
_______ _______ _______ _______
At 31 December 2017 - - - -
_______ _______ _______ _______
At 1 January 2018 - - - -
Acquired through business
combinations 28/03/18 6,725 118,188 86,638 211,551
Acquired through business
combinations 2/06/18 - 18,527 10,033 28,560
_______ _______ _______ _______
At 31 December 2018 6,725 136,715 96,671 240,111
_______ _______ _______ _______
Brand Acquired Goodwill Total
rights
over advertising
sites
GBP'000 GBP'000 GBP'000 GBP'000
Accumulated amortisation
and impairment
At 20 January 2017 - - - -
_______ _______ _______ _______
At 31 December 2017 - - - -
_______ _______ _______ _______
At 1 January 2018 - - - -
Charge in the year 500 9,587 - 10,087
_______ _______ _______ _______
At 31 December 2018 500 9,587 - 10,087
_______ _______ _______ _______
Brand Acquired Goodwill Total
rights
over advertising
sites
GBP'000 GBP'000 GBP'000 GBP'000
Net Book Value
At 31 December 2018 6,225 127,128 96,671 230,024
_______ _______ _______ _______
At 31 December 2017 - - - -
_______ _______ _______ _______
11. Goodwill and impairment
The Group is required to test, on an annual basis, whether
goodwill has suffered any impairment. The recoverable amount is
determined based on value in use calculations. The use of this
method requires the estimation of future cash flows and the
determination of a discount rate in order to calculate the present
value of the cash flows.
The Company made two acquisitions in the year; that of SCP
Acquisition Topco Limited and its subsidiaries and that of Forrest
Media (Holdings) Limited and its subsidiaries. For the purpose of
impairment testing each acquisition was measured on the basis of
its value in use based on financial forecasts covering a five-year
period. The key assumptions for the value in use calculation
are:
- Discount rates
- Growth rates
- Free cash flow
Post-tax discount rates used in the SCP Acquisition Topco Group
impairment review were 13.7% and 13.1% for Forrest Media (Holdings)
Group.
A long-term growth rate of 3% was used to extrapolate cash flows
beyond the five-year forecast period in calculating a terminal
value assuming the sale of the business.
The free cash flows used are based on revenue projections less
direct and allocated costs established using management approved
budgets and forecasts less working capital movements.
These metrics are based on past performance and expectations of
future changes in the market. They have been assessed and
consideration given to any reasonable possible changes to these
assumptions, including the undertaking of a sensitivity
analysis.
The surplus headroom above the carrying value of goodwill at 31
December 2018 was satisfactory.
No instances have been identified that could cause the carrying
amount of goodwill to exceed its recoverable amount and therefore
no impairment has been recognised.
12. Subsidiaries, investments and business combinations
On 26 February 2018, Ocean Outdoor Limited formed Ocean Jersey
Topco Limited (formerly Ocelot Partners Bidco Limited), a wholly
owned subsidiary, incorporated in Jersey.
On 28 March 2018 the Ocean Outdoor Limited acquired 100% of the
share capital and voting rights of SCP Acquisition Topco Limited
and its subsidiaries, through Ocean Jersey Topco Limited. The
acquired company and its subsidiaries specialise in the development
and sale of Out of Home (OOH) displays in the UK and had an
enterprise value of GBP200m. Acquisition related costs of GBP4.6m
were incurred. The transaction was funded using cash on hand.
On 2 June 2018 the Ocean Group acquired 100% of the share
capital and voting rights of Forrest Media (Holdings) Limited and
its subsidiaries, registered in Scotland, through Ocean Bidco
Limited. The acquired company and its subsidiaries specialise in
the development and sale of Out of Home (OOH) displays in Scotland
and had an enterprise value of GBP32m. Acquisition related costs of
GBP1.8m were incurred. The transaction was funded using cash on
hand.
The principal subsidiaries of the Group, all of which have been
included in these Consolidated Financial Statements, are as
follows:
Name Country of Nature of business Holding Holding
incorporation 2018 2017
and principal
place of business
Ocean Jersey Topco Limited Jersey Holding company 100% -
SCP Acquisition Topco England & Holding company 100% -
Limited* Wales
SCP Acquisition Midco England & Holding company 100% -
Limited* Wales
SCP Acquisition Bidco England & Holding company 100% -
Limited* Wales
Ocean Topco Limited* England & Holding company 100% -
Wales
Ocean Bidco Limited* England & Holding company 100% -
Wales
Ocean Outdoor UK Limited* England & OOH Media Owner 100% -
Wales
Signature Outdoor Limited* England & OOH Media Owner 100% -
Wales
Mediaco Outdoor Limited* England & OOH Media Owner 100% -
Wales
Forrest Media (Holdings) Scotland Holding company 100% -
Limited*
Forrest Media Limited* Scotland Holding company 100% -
Forrest Outdoor Media Scotland OOH Media Owner 100% -
Limited*
Forrest Brands Limited* Scotland Dormant subsidiary 68% -
* The shares held in these entities are held indirectly.
The registered address for the Jersey entity is 3rd Floor, 44
Esplanade, St Helier, Jersey, JE4 9WG.
The registered address for entities incorporated in England
& Wales is 25 Kingly Street, London, W1B 5QB.
The registered address for entities incorporated in Scotland is
7 Seaward Street, Paisley Road, Glasgow, G41 1HJ
SCP Acquisition Topco Limited & subsidiaries
Fair
value
Fair value of assets at 28 GBP'000
March 2018
Intangible assets 124,913
Tangible fixed assets 19,557
Debtors 22,368
Cash and cash equivalents 12,185
Creditors due within one year (34,433)
Deferred tax liability (21,235)
________
Net assets acquired 123,355
________
Purchase consideration paid
Cash 134,198
Creditor settlement 75,795
________
Total purchase consideration 209,993
________
Goodwill arising on acquisition 86,638
________
Forrest Media (Holdings) Limited & subsidiaries
Fair
value
Fair value of assets at 2 June 2018 GBP'000
Intangible fixed assets 18,527
Tangible fixed assets 5,205
Debtors 13,718
Cash and cash equivalents 1,307
Creditors due within one year (2,900)
Deferred tax liability (3,151)
________
Net assets acquired 32,706
________
Purchase consideration paid
Cash 32,444
Receivable settlement 10,295
________
Total purchase consideration 42,739
________
Goodwill arising on acquisition 10,033
________
In Line with IFRS3, Business Combinations, the above intangibles
have been calculated using the information currently available.
These values may be adjusted to reflect new information obtained
about facts and circumstances that existed as of the acquisition
date during the measurement period which shall not exceed one year
from the acquisition date.
SCP Acquisition Topco Limited and its subsidiaries contributed
GBP44.8m in revenue and GBP10.7m to the total group profit from the
date of acquisition. Forrest Media (Holdings) Limited and its
subsidiaries contributed GBP5.0m in revenue and GBP1.1m profit to
the group profit from the date of acquisition.
Had the transactions been undertaken at 1 January 2018, SCP
Acquisition Topco Limited and its subsidiaries would have generated
revenue of GBP54.6m and a GBP734k profit, and Forrest Media
(Holdings) Limited and its subsidiaries would have generated
revenue of GBP7.6m and contributed GBP1.3m to profit.
The unaudited trading results for these entities in isolation
and as part of the Group can be found in the appendix.
Cash flows from acquisition transactions
2018
SCP Acquisition Topco Limited GBP'000
Enterprise value 200,000
Debt-like, cash-like items and working capital 9,993
________
Purchase consideration settled in cash 209,993
Direct acquisition costs 4,333
Cash balances acquired (12,185)
________
Net cash outflow 202,141
________
2018
Forrest Media (Holdings) Limited GBP'000
Purchase consideration settled in cash 32,444
Direct acquisition costs 1,506
Cash balances acquired (1,307)
________
Net cash outflow 32,643
________
13. Trade and other receivables
2018 2017
GBP'000 GBP'000
Trade receivables 32,970 -
Prepayments 3,748 58
_______ ________
Total trade and other receivables - Current 36,718 58
_______ ________
The carrying value of trade and other receivables classified as
loans and receivables approximates fair value.
The Group does not hold any collateral as security.
The Group applies the IFRS 9 simplified approach to measuring
expected credit losses using a lifetime expected credit loss
provision for trade receivables and contract assets. To measure
expected credit losses on a collective basis, trade receivables and
contract assets are grouped based on similar credit risk and aging.
The contract assets have similar risk characteristics to the trade
receivables for similar types of contracts.
The expected loss rates are based on the Group's historical
credit losses experienced over the
three-year period prior to the period end. The historical loss
rates are then adjusted for current
and forward-looking information on macroeconomic factors
affecting the Group's customers.
The Group has identified the gross domestic product (GDP),
unemployment rate and inflation
rate as the key macroeconomic factors in the countries where the
Group operates.
14. Trade and other payables
2018 2017
GBP'000 GBP'000
Trade payables 8,791 -
Other payables 379 88
Accruals 35,559 -
_______ ________
Total Trade and other payables 44,729 88
________ ________
The accruals balance contains accruals for site rents, site
rates, profit shares and volume rebates, including estimates for
such items where necessary.
15. Deferred tax
A reduction in the UK corporation tax rate from 20% to 19%
(effective from 1 April 2017) was substantively enacted on 26
October 2015, and an additional reduction to 17% (effective 1 April
2020) was substantively enacted on 6 September 2016. This will
reduce the company's future current tax charge accordingly.
Deferred tax assets and liabilities at 31 December 2018 have been
calculated taking into consideration the applicable rates when the
temporary differences are expected to reverse.
Details of the deferred tax liability, amounts recognised in
profit or loss and amounts recognised in other comprehensive income
are as follows:
Charged/
(credited)
to profit
Asset Liability or loss
GBP'000 GBP'000 GBP'000
At 20 January 2017 - - -
_______ _______ _______
At 31 December 2017 and 1 January
2018 - - -
_______ _______ _______
Arising on business combinations - 24,386 -
Reversal of temporary timing differences
on business combinations - (1,715) (1,715)
Fixed asset and other differences - 887 -
Reversal of temporary timing differences
on fixed asset and other differences - 21 21
_______ _______ _______
At 31 December 2018 - 23,579 (1,694)
_______ _______ _______
16. Share capital
The authorised shares of the Company are as follows:
Authorised 2018 2017
GBP'000 GBP'000
Unlimited number of Ordinary Shares - -
_______ ________
Founder Preferred Shares, no par 2018 2018 2017 2017
value
Number Number
'000 GBP'000 '000 GBP'000
Balance at beginning of period 700 5,213 - -
Issued during the period - - 700 5,213
_______ ________ _______ ________
Balance at end of period 700 5,213 700 5,213
_______ ________ _______ ________
Ordinary Shares, no par value 2018 2018 2017 2017
Number Number GBP'000
'000 GBP'000 '000 GBP'000
Balance at beginning of period 41,790 288,906 - -
Issued during the period 12,131 86,688 41,790 288,906
_______ ________ _______ ________
Balance at end of period 53,921 375,594 41,790 288,906
_______ ________ _______ ________
147,000 Founder Preferred Shares were issued on 20 January 2017
at US$10.50 per share and a further 553,000 issued on 8 March 2017,
also at US$10.50 per share. There are no Founder Preferred Shares
held in Treasury. Each Founder Preferred Share was issued with a
Warrant as described below.
41,790,000 Ordinary Shares were issued on 8 March 2017
(41,765,000 were issued in the IPO at US$10.00 per share and 25,000
were issued to the non-founder directors in conjunction with the
IPO). There are no Ordinary Shares held in Treasury. Each Ordinary
Share was issued with a Warrant as described below. Issue costs of
US$10,543,094 were deducted from the proceeds of issue.
Following the acquisition of SCP Acquisition Topco Limited on 28
March 2018, 12,046,994 ordinary shares were issued. 11,171,150
shares were issued as a result of Warrants issued being exercised,
875,844 shares were issued for cash.
Following the acquisition of Forrest Media (Holdings) Limited on
2 June 2018, 59,850 ordinary shares were issued for cash.
24,000 Ordinary Shares were issued to three Non-Executive
Directors for remuneration in the year.
As at 31 December 2018, the Company had in issue 53,920,844
Ordinary Shares and 700,000 Founder Preferred Shares. There are no
Ordinary Shares held in Treasury. All Warrants previously issued
have expired.
Ordinary Shares
Ordinary Shares confer upon the holders (in accordance with the
Articles):
a) Subject to the BVI Companies Act, on a winding-up of the
Company the assets of the Company available for distribution shall
be distributed, provided there are sufficient assets available, to
the holders of Ordinary Shares and Founder Preferred Shares pro
rata to the number of such fully paid up shares held by each holder
relative to the total number of issued and fully paid up Ordinary
Shares as if such fully paid up Founder Preferred Shares had been
converted into Ordinary Shares immediately prior to the
winding-up;
b) the right, together with the holders of the Founder Preferred
Shares, to receive all amounts available for distribution and from
time to time to be distributed by way of dividend or otherwise at
such time as the Directors shall determine, pro rata to the number
of fully paid up shares held by the holder, as if the Ordinary
Shares and Founder Preferred Shares constituted one class of share
and as if for such purpose the Founder Preferred Shares had been
converted into Ordinary Shares immediately prior to such
distribution; and
c) the right to receive notice of, attend and vote as a member
at any meeting of members except in relation to any Resolution of
Members that the Directors, in their absolute discretion (acting in
good faith) determine is: (i) necessary or desirable in connection
with a merger or consolidation in relation to, in connection with
or resulting from the Acquisition (including at any time after the
Acquisition has been made); or (ii) to approve matters in relation
to, in connection with or resulting from the Acquisition (whether
before or after the Acquisition has been made).
Founder Preferred Shares
The Founder Preferred Shares have US$nil par value and carry the
same rights, including the right to receive dividends, as Ordinary
Shares. At the discretion of the holder, the Founder Preferred
Shares can be converted into Ordinary Shares on a one-for-one
basis.
The Founder Preferred Shares are structured to provide a
dividend based on the future appreciation of market value of the
Ordinary Shares, thus aligning the interests of the Founders (as
defined in the Prospectus) with Ocean Outdoor Limited (formerly
Ocelot Partners Limited) investors on a long-term basis. This
dividend payment is calculated as follows: the Founder Preferred
Shares are divided into eight equal tranches, pro rata to the
number of Founder Preferred Shares held by each holder. On each
Enhancement Date, the rights which are comprised in one such
tranche (the "Enhanced Tranche") shall be enhanced by increasing
the holders of the Enhanced Tranche's proportionate entitlement to:
(a) any assets of the Company which are distributed to members on a
winding up of the Company; and (b) any amounts which are
distributed by way of dividend or otherwise if and to the extent
necessary to ensure that on such Enhancement Date, the Enhanced
Tranche has a market value which is at least equal to the market
value of the Relevant Number of Ordinary Shares at such time (which
for these purposes shall be determined in accordance with
sub-section (1) of section 421 of the United Kingdom Income Tax
(Earnings and Pensions) Act 2003. So far as possible, any such
enhancement shall be divided between the holders of the Enhanced
Tranche pro rata to the number of Founder Preferred Shares which
are held by them and comprised in the Enhanced Tranche.
As at each Enhancement Date, the Relevant Number of Ordinary
Shares means:
a) a number of Ordinary Shares equal to the aggregate number of
Founder Preferred Shares comprised in the Enhanced Tranche (subject
to adjustment in accordance with the Articles); plus
b) if the conditions for the Additional Annual Enhancement have
been met, such number of Ordinary Shares as is equal to the
Additional Annual Enhancement Amount divided by the Additional
Annual Enhancement Price (any increase in the calculation of the
Relevant Number of Ordinary Shares pursuant to this paragraph (b)
being referred to as the "Additional Annual Enhancement"); plus
c) if any dividend or other distribution has been made to the
holders of Ordinary Shares in the relevant Enhancement Year, such
number of Ordinary Shares as is equal to the Ordinary Share
Dividend Enhancement Amount at the Ordinary Share Dividend Payment
Price (any increase in the calculation of the Relevant Number of
Ordinary Shares pursuant to this paragraph (c) being referred to as
the "Ordinary Share Dividend Enhancement").
The conditions for the Additional Annual Enhancement referred to
in paragraph (b) above are as follows:
I. no Additional Annual Enhancement will occur until such time
as the Average Price per Ordinary Share for any ten consecutive
Trading Days following Admission is at least $11.50;
II. following the first Additional Annual Enhancement, no
subsequent Additional Annual Enhancement will occur unless the
Additional Annual Enhancement Price for the relevant Enhancement
Year is greater than the highest Additional Annual Enhancement
Price in any preceding Enhancement Year.
In the first Enhancement Year in which the Additional Annual
Enhancement is eligible to occur, the Additional Annual Enhancement
Amount will be equal to (i) 20 per cent. of the difference between
$10.00 and the Additional Annual Enhancement Price, multiplied by
(ii) the number of Ordinary Shares outstanding immediately
following the Acquisition including any Ordinary Shares issued
pursuant to the exercise of Warrants but excluding any Ordinary
Shares issued to shareholders or other beneficial owners of a
company or business acquired pursuant to or in connection with the
Acquisition (the "Preferred Share Enhancement Equivalent").
Thereafter, the Additional Annual Enhancement Amount will be
equal in value to 20 per cent. of the increase in the Additional
Annual Enhancement Price over the highest Additional Annual
Enhancement Price in any preceding Enhancement Year multiplied by
the Preferred Share Enhancement Equivalent.
For the purposes of determining the Additional Annual
Enhancement Amount, the Additional Annual Enhancement Price is the
Average Price per Ordinary Share for the last 30 consecutive
Trading Days in the relevant Enhancement Year (the "Enhancement
Determination Period").
Warrants
The Company issued 42,490,000 Warrants to the purchasers of both
Ordinary Shares and Founder Preferred Shares (including the 25,000
Warrants that were issued to non-founder directors in connection
with their appointment). Each Warrant had a term of 3 years
following an Acquisition and entitled a Warrant holder to subscribe
for one-third of an Ordinary Share upon exercise. Warrants were
exercisable in multiples of three for one Ordinary Share at a price
of US$11.50 per whole Ordinary Share.
On 28 February 2018, an amendment was made to the Warrant
subscription price, reducing the cost from US$11.50 per whole
ordinary share, to US$10.00 per whole ordinary share. The
subscription period was also reduced, resulting in the Warrants
expiring prior to the closing of the Share Acquisition on 28 March
2018. As a result, all Warrants previously issued, not exercised at
the acquisition date, have expired.
Hurdle shares
Ocean Jersey Topco Limited, a subsidiary of the Company, issued
shares to management which can be converted to shares in Ocean
Outdoor Limited under certain circumstances. 6,660,000 of these
hurdle shares were issued on 28 March 2018. The hurdle shares will
only accrue value when the price of Ordinary Shares has increased
by at least 10 per cent on a compound basis over a base price of
$10.00 per share, for each financial year since the date that the
participants acquired the shares (including the financial year in
which the Ocean Transaction was completed). 3,330,000 of these
shares vest over a four-year period and 3,330,000 vest over a
five-year period.
The hurdle shares do not have a right to receive dividend
payments, except in the event of a winding-up of Ocean Jersey Topco
Limited, or other unusual circumstances.
The hurdle shares do not carry voting rights.
Securities carrying special rights:
Save as disclosed above in relation to the Founder Preferred
Shares, no person holds securities in the Company carrying special
rights with regard to control of the Company.
Voting rights:
Holders of Ordinary Shares will have the right to receive notice
of and to attend and vote at any meetings of members. Each holder
of Ordinary Shares being present in person or by proxy at a meeting
will, upon a show of hands, have one vote and upon a poll each such
holder of Ordinary Shares present in person or by proxy will have
one vote for each Ordinary Share held by him. In the case of joint
holders of a share, if two or more persons hold shares jointly each
of them may be present in person or by proxy at a meeting of
members and may speak as a member, if only one of the joint owners
is present he may vote on behalf of all joint owners, and if two or
more joint holders are present at a meeting of members, in person
or by proxy, they must vote as one.
Restrictions on voting:
No member shall, if the Directors so determine, be entitled in
respect of any share held by him to attend or vote (either
personally or by proxy) at any meeting of members or separate class
meeting of the Company or to exercise any other right conferred by
membership in relation to any such meeting if he or any other
person appearing to be interested in such shares has failed to
comply with a notice requiring the disclosure of shareholder
interests and given in accordance with the Company's articles of
association (the "Articles") within 14 calendar days, in a case
where the shares in question represent at least 0.25% of their
class, or within seven days, in any other case, from the date of
such notice. These restrictions will continue until the information
required by the notice is supplied to the Company or until the
shares in question are transferred or sold in circumstances
specified for this purpose in the Articles.
Rights to appoint and remove Directors
Subject to the BVI Companies Act and the Articles, the Directors
shall have power at any time, and from time to time, without
sanction of the members, to appoint any person to be a Director,
either to fill a casual vacancy or as an additional Director.
Subject to the BVI Companies Act and the Articles, the members may
by a Resolution of Members appoint any person as a Director and
remove any person from office as a Director.
For so long as an initial holder of Founder Preferred Shares
(being a Founding Entity together with its affiliates) holds 20% or
more of the Founder Preferred Shares in issue, such holder shall be
entitled to nominate a person as a Director of the Company and the
Directors shall appoint such person. In the event such holder
notifies the Company to remove any Director nominated by him the
other Directors shall remove such Director, and in the event of
such a removal the relevant holder shall have the right to nominate
a Director to fill such vacancy.
17. Earnings per share
For the year ended 31 Dec 2018 Period 20 Jan 2017 to 31 Dec 2017
GBP'000 GBP'000
Numerator
Earnings used in basic and diluted EPS 6,623 (24,146)
_______ _______
Denominator '000 '000
Weighted average number of shares used in basic EPS 50,862 36,126
_______ _______
Weighted average number of shares used in diluted EPS 50,862 36,126
_______ _______
Basic EPS (pence) 13.0p (66.8p)
_______ _______
Diluted EPS (pence) 13.0p (66.8p)
_______ _______
The 42,490,000 Warrants and 125,000 directors' share options
were considered non-dilutive at 31 December 2017. At 31 December
2018, the warrants had expired and the directors' share options,
the founder preferred shares and the hurdle shares were currently
considered to be non-dilutive. They are expected to become dilutive
once in the money.
18. Reserves
The following describes the nature and purpose of each reserve
within equity:
Reserve Description and purpose
Share premium Amount subscribed for share capital
in excess of nominal value.
Retained earnings All other net gains and losses
and transactions with owners (e.g.
dividends) not recognised elsewhere.
19. Leases
Operating leases exist as agreements with landlords.
The total future value of minimum lease payments is due as
follows:
2018 2017
GBP'000 GBP'000
Not later than one year 15,836 -
Later than one year and not later 58,890 -
than five years
Later than five years 50,634 -
_______ _______
125,360 -
_______ _______
20. Related party disclosures
2018 Founder
Ordinary Preferred
Shares Shares Warrants Options
Number Number Number Number
'000 '000 '000 '000
Andrew Barron 164.2 - - -
Andrew Miller - - - -
Aryeh B. Bourkoff 493.3 - - -
Robert Marcus 9.0 - - -
Martin HP Söderström 7.5 - - -
Sangeeta Desai 2.5 - - -
Thomas Ebeling 7.5 - - -
Tom Goddard 232.7 - - -
Tim Bleakley 310.5 - - -
_______ _______ _______ _______
During the period the Company issued the following Shares,
Warrants and Options to directors of the Company:
2017 Founder
Ordinary Preferred
Shares Shares Warrants Options
Number Number Number Number
'000 '000 '000 '000
Andrew Barron 345.7 147.0 147.0 -
Andrew Miller - - - -
Aryeh B. Bourkoff 1,081.1 399.0 399.0 -
Robert Marcus 110.0 - - 50.0
Martin HP Söderström 7.5 - - 37.5
Sangeeta Desai 7.5 - - 37.5
Thomas Ebeling - - - -
Tom Goddard - - - -
Tim Bleakley - - - -
_______ _______ _______ _______
The Founder Preferred Shares issued to Andrew Barron and Aryeh
Bourkoff resulted in share-based payments charges (employee
benefits costs) of GBP1.7m and GBP16.2m in 2017.
The fees paid to directors during the period to 31 December 2018
were as follows:
2018 2017
GBP'000 GBP'000
Andrew Barron - -
Andrew Miller 5.0 -
Aryeh B. Bourkoff - -
Robert Marcus 64.4 57.9
Martin HP Söderström 53.8 43.4
Sangeeta Desai 53.8 43.4
Thomas Ebeling 8.9 -
Tom Goddard 54.0 -
Tim Bleakley 269.8 -
_______ _______
Robert D Marcus, Martin HP Söderstrom and Thomas Ebeling opted
to have their annual remuneration settled by the issue of shares at
$10 per share. Robert D Marcus received 9,000 Ordinary Shares and
Martin HP Söderstrom and Thomas Ebeling, 7,500 Ordinary Shares
each.
The Group paid a transaction fee of GBP1.0m to LionTree Advisors
UK LLP in relation to the acquisition of Forrest Media (Holdings)
Limited. Aryeh B. Bourkoff, a Founder and Non-Executive Director of
Ocean Outdoor Limited, is the founder and CEO of LionTree LLC, a
connected company to LionTree Advisors UK LLP.
21. Events after the reporting date
On 10 January 2019, the Company's ordinary shares were
re-admitted to the Standard Listing segment of the Official List of
the UK Listing Authority, and trading in its shares recommenced on
the London Stock Exchange's Main Market (LSE: OOUT).
In accordance with the London Stock Exchange Admission and
Disclosure Standards, the Company announced, pursuant to its
articles of association, a tranche of 87,500 founder preferred
shares have been automatically re-designated as ordinary shares on
a one for one basis. This re-designation became effective on 15
January 2019 and admission of the ordinary shares occurred on 22
January 2019.
On 12 March 2019, the Group announced the acquisition of
Interbest and Ngage Media, two leading digital out-of-home
companies operating across the Netherlands, for a combined cash
consideration of approximately GBP45m using a rate of 0.88:1
EUR:GBP, and a performance-linked earn-out if growth performance
targets are met over time. The transactions value Interbest and
Ngage, combined, at a 31 December 2018 LTM multiple of 6.9x
adjusted EBITDA, before any benefit for synergies. The business
combination accounting had not been finalised by the authorisation
date of these financial statements.
Ocean Outdoor Limited
Appendix (unaudited)
The following tables present unaudited financial information on
different bases for entities owned by the Group as at 31 December
2018.
Ocean Outdoor Limited and subsidiaries
The results below present the group on a proforma basis. The
proforma basis comprises Ocean Outdoor Ltd, the SCP Acquisition
Topco Ltd group of companies and the Forrest Media (Holdings) Ltd
group of companies as if all owned from 1 January 2017.This allows
analysis to ignore and dates of acquisition and assess the
underlying performance of the Ocean Outdoor Ltd group of
companies.
There is also a reconciliation of Profit from operations to
Adjusted EBITDA.
FY18 FY17
GBP'000 GBP'000
Billings 87,843 77,245
______ ______
Revenue 62,218 54,010
Cost of sales (37,055) (31,893)
_______ _______
Gross profit 25,163 22,117
Administrative and other expenses (23,816) (22,800)
_______ _______
Profit from operations 1,347 (683)
Finance expense (5,553) (11,868)
Finance income 1,658 2,196
Non-cash charge related to Founder Preferred
Shares - (24,188)
Non-cash charge related to warrant redemption
liability - (301)
_______ _______
Loss before tax (2,548) (34,844)
Tax expense (2,303) (1,398)
_______ _______
Loss from continuing operations (4,851) (36,242)
_______ _______
Total comprehensive income (4,851) (36,242)
_______ ______
FY18 FY17
GBP'000 GBP'000
Profit from operations 1,347 (683)
Depreciation 4,205 4,021
Profit on disposal (2) -
Amortisation 11,364 5,464
Deal fees 4,058 619
Private equity and listed company
related expenses 60 8,981
Listed costs including foreign exchange (1,807) -
Other one-off costs 739 686
______ ______
Adjusted EBITDA 19,964 19,088
______ ______
SCP Acquisition Topco Limited and subsidiaries
The results below present the SCP Acquisition Topco Ltd group of
companies on a proforma basis.
There is also a reconciliation of Profit from operations to
Adjusted EBITDA.
FY18 FY17
GBP'000 GBP'000
Billings 77,265 67,035
______ ______
Revenue 54,619 46,458
Cost of sales (32,682) (27,898)
_______ _______
Gross profit 21,937 18,560
Administrative and other
expenses (13,784) (12,777)
_______ _______
Profit from operations 8,153 5,783
Finance expense (5,553) (11,868)
Finance income - -
_______ _______
Profit before tax 2,600 (6,085)
Tax expense (1,866) (527)
_______ _______
Profit from continuing operations 734 (6,612)
_______ _______
Total comprehensive income 734 (6,612)
_______ ______
SCP Acquisition Topco Limited and subsidiaries reconciliation of
profit from operations to Adjusted EBITDA:
FY18 FY17
GBP'000 GBP'000
Profit from operations 8,153 5,783
Depreciation 3,367 3,292
Amortisation 1,277 5,464
Deal fees 3,782 619
Private equity related expenses 60 273
Other one-off costs 739 686
______ ______
Adjusted EBITDA 17,378 16,117
______ ______
Forrest Outdoor Media Limited
The results below present the Forrest Outdoor Media Ltd [group
of companies] on a proforma basis.
There is also a reconciliation of Profit from operations to
Adjusted EBITDA.
FY18 FY17
GBP'000 GBP'000
Billings 10,578 10,210
______ _______
Revenue 7,600 7,552
Cost of sales (4,373) (3,200)
_______ _______
Gross profit 3,227 4,352
Administrative and other
expenses (1,608) (2,110)
_______ _______
Profit from operations 1,619 2,242
Finance expense - -
Finance income - 4
_______ _______
Profit before tax 1,619 2,246
Tax expense (272) (418)
_______ _______
Profit from continuing operations 1,347 1,828
_______ _______
Total comprehensive income 1,347 1,828
______ _______
Forrest Outdoor Media Limited reconciliation of profit from
operations to Adjusted EBITDA:
FY18 FY17
GBP'000 GBP'000
Profit from operations 1,619 2,242
Depreciation 838 729
Profit on disposal (2) -
Deal fees 133 -
_______ _______
Adjusted EBITDA 2,588 2,971
______ _______
Ocean Outdoor Limited Hybrid
The results below present the group on a hybrid basis. The
hybrid basis comprises Ocean Outdoor Ltd and the SCP Acquisition
Topco Ltd group of companies it purchased in March 2018 for a full
12months. This is combined with 7 months of Forrest Media
(Holdings) Ltd group of companies. There are therefore no
comparable results for the prior year.
There is also a reconciliation of Profit from operations to
Adjusted EBITDA.
FY18
GBP'000
Billings 84,277
______
Revenue 59,615
Cost of sales (35,378)
_______
Gross profit 24,237
Administrative and other
expenses (23,262)
_______
Profit from operations 975
Finance expense (5,553)
Finance income 1,658
_______
Profit before tax (2,920)
Tax expense (2,249)
_______
Profit from continuing operations (5,169)
_______
Total comprehensive income (5,169)
_______
Ocean Outdoor Limited Hybrid reconciliation of profit from
operations to Adjusted EBITDA:
FY18
GBP'000
Profit from operations 975
Depreciation 3,897
Amortisation 11,364
Deal fees 4,058
Private equity related expenses 60
Listed costs including foreign
exchange (1,807)
Other one-off costs 739
______
Adjusted EBITDA 19,286
______
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR JLMRTMBMBMBL
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March 19, 2019 03:15 ET (07:15 GMT)
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