TIDMOOUT
RNS Number : 9846J
Ocean Outdoor Limited
03 May 2022
3 May 2022
Ocean Outdoor Limited
("Ocean" or the "Company" or the "Group")
Full Year 2021 Results
Ocean Outdoor Limited (LSE: OOUT), a leading operator of premium
Digital Out-of-Home ("DOOH") advertising in the United Kingdom, the
Netherlands, the Nordics and Germany, is pleased to announce its
full year results for the twelve months ended 31 December 2021.
Key Highlights
Financial highlights
-- Revenue generated by the business in the year totalled GBP124.4m (FY20: GBP86.2m)
-- Group gross profit was GBP42.1m (FY20: GBP22.4m)
-- Group loss before tax was GBP30.3m (FY20: GBP156.5m)
-- Cash on balance sheet of GBP42.0m (FY20: GBP30.0m)
-- Net assets balance of GBP193.4m (FY20: GBP223.8m)
-- Cash generated from operations totalling GBP47.1m (FY20: GBP32.1m)
UK
-- Appointed exclusive outdoor media partner for the Canary
Wharf Group, with long-term contract value of GBP30 million
-- GBP25 million outdoor media partner contract for Edinburgh's prestigious St James Quarter
-- Delivered 'fan zone' experiential campaign and Tokyo 2020
highlights at Westfield London in partnership with Team GB
-- Successful launch of 3-D product DeepScreen(R)
Netherlands
-- Westfield Mall of the Netherlands officially launched in April
-- Secured new retail and key roadside contracts
-- Launched the Netherlands' first Digital Creative Competition
Nordics
-- Appointed strategic media partner for Westfield Fisketorvet, Copenhagen
-- Extended relationship with DEAS with contract covering 39
event areas across 18 malls in Denmark to launch experiential
service
-- Partnership with Point Properties, covering 14 malls in Sweden
-- Oslo Central bus station launched with 28 new digital screens
-- 131 new digital screens installed across a total of 41 malls
in Norway, creating strong marketing position
Post period end highlights and current trading
-- Retained advertising contract for the iconic BFI IMAX in
London with lifetime value of GBP25 million
-- Launch of The Arrival @ Terminal 5, new large format roadside screen
Commenting on the results, Tim Bleakley, CEO of Ocean Outdoor,
said:
"We ended 2021 with all our territories open and capitalising on
the surge in advertising spend, which culminated in a record Q4
performance for the Group. Over the past three years, the Group has
transformed from a UK focused player into one of the most advanced
DOOH operators in northern Europe, covering seven countries. Our
decision to commit to our investment plans and grow our premium
digital assets during the pandemic period has enabled Ocean to be
at the forefront of the recovery. At the same time, the advancement
in the capability of our network has supported brands in delivering
some of the most impactful and memorable out of home campaigns we
have seen."
There will be a conference call for analysts and investors which
will begin at 16:00hrs BST / 11.00hrs ET today. A copy of the
presentation can be accessed via the Reports & Documents
section of the Ocean Outdoor investor relations website:
https://investors.oceanoutdoor.com .
Details for the conference call are as follows:
UK Toll Free: 0808 109 0700
USA Toll Free: 1 866 966 5335
Standard International Access: +44 (0) 33 0551 0200
Password: Ocean Outdoor
For further information please contact:
Ocean Outdoor 020 7292 6161
Tim Bleakley, CEO
Susann Jerry, Head of Communications
Yellow Jersey PR 07747 788 221
Charles Goodwin, Annabel Atkins
oceanoutdoor@yellowjerseypr.com
It is with pleasure that we present to you, the shareholders,
the Annual Report and audited consolidated financial statements of
Ocean Outdoor Limited for the year ended 31 December 2021.
2021 has certainly been the year of the recovery for both Ocean
and the wider out of home advertising sector, as evidenced by the
significant rise in our revenues and profits, particularly during
the second half. Having successfully shielded the business during
the lockdown periods whilst investing in our network to be ready
for the recovery, Ocean was primed to bounce back once restrictions
were lifted. The business has certainly delivered, capitalising on
both its focal position across prime retail and urban roadside and
leveraging its cutting edge DOOH technology. Collectively this
differentiates us from the competition, delivering the ultimate,
high-impact brand advertising experiences across the most
sought-after locations.
The recovery began to take off midway during the first half of
the year, driven by the ramping up of vaccination programmes, which
led to the easing of social restrictions. With the UK ahead with
its vaccination roll out, the positive effects were certainly felt
first in this market, with growing numbers of people returning to
city centres and their favoured retail and leisure destinations.
Hand in hand with this trend, advertising bookings began to grow
week on week, with brands rushing to roll out their advertising
campaigns and capitalise on the acceleration in business and
consumer confidence.
With the Netherlands and Nordic regions being slightly slower
with their vaccination programmes, these markets were running eight
weeks behind the UK during the latter part of the first half, with
Sweden experiencing less of a bounce due to fewer restrictions
throughout the pandemic. However, moving into the second half, both
regions had significantly improved and were experiencing very
similar recovery patterns to the UK in terms of bookings and
demand. Q4 was particularly pleasing, with all territories
recording a strong quarter, with revenues 7.2% higher than Q4 2019,
illustrating the strength of the ongoing recovery. This correlated
with the consistent, high levels of footfall recorded across the
major shopping malls where Ocean is present, whilst roadside
traffic was close to pre-pandemic levels across all
territories.
People
After three years with us, independent non-executive director
Thomas Ebeling resigned from the Board. During this time, Thomas
provided valuable strategic advice to help the Company capture
growth opportunities as they arise. On behalf of the Board, I want
to thank Thomas for his commitment and guidance during his tenure
on the Board.
Whilst we are returning to more normal times, during the period
Ocean's staff continued to contend with various restrictions and
disruptions, particularly earlier in the year. Despite this they
continued to demonstrate outstanding commitment and teamwork, which
has been integral to the success of the business recovery in 2021.
On behalf of the shareholders and the Board, I would like to pass
on my sincere thanks.
Strategic Review
In November 2021, we announced the initiation of a strategic
review to evaluate potential strategic and financial alternatives
to maximise shareholder value. This decision was taken after the
Board and management felt that the Company was undervalued, with
the share price continuing to face technical trading challenges
unrelated to Ocean's strong business fundamentals and intrinsic
value. At this current time, the Board is evaluating a potential
sale to its largest shareholder, Atairos, which may or may not lead
to a transaction. Whilst there can be no certainty that a formal
offer will be made, discussions continue and Atairos have presented
a proposal to the Board which is being considered.
Aryeh Bourkoff
Chairman
30 April 2022
Directors' Report for the year ended 31 December 2021
The Directors present their report and the financial statements
for the year ended 31 December 2021.
Overview
-- Strong bounce back in demand over the course of 2021
-- Focus on prime retail and urban roadside locations has put us
in a stronger position compared to some of our peers
-- Immersive 3D proposition DeepScreen(R), rolled out across all territories to great effect
-- Ocean Labs expanded into Netherlands and Nordics
Ocean saw a strong bounce back in demand over the course of
2021, which led to a 44.3% increase in Group revenue to GBP124.4
million, and a significant increase in Unaudited Adjusted EBITDA
Excl. IFRS16 to GBP18.3 million. Since emerging from lockdown
restrictions early in the year, the Ocean Group has gone from
strength to strength. With the UK first experiencing the
accelerated recovery during Q2, the Netherlands and Nordics went on
to experience similar recoveries from the summer onwards, as their
vaccination programmes gathered pace and restrictions were eased.
All territories went on to record a strong performance in Q4, the
Group's key trading period, with revenues up by 67.5% compared to
Q4 2020 and 7.2% compared to Q4 2019, illustrating the strength of
the ongoing recovery.
Ocean has certainly been at the forefront in enabling brands to
interact with consumers as they rapidly return to urban locations
and retail hubs for work and leisure. The pattern of recovery from
Q2 2021 has also underlined the importance of Digital Out-of-Home
(DOOH(R)) within the wider advertising sector and confirmed its
position as a structural, long-term winner. This has been evident
by the growing confidence among high-spending advertising
categories, which rose in line with the vaccine rollout and easing
of restrictions, with both the 'power brands' and new advertisers
committing increased budgets to DOOH due to its ability to target
highly valuable audiences both efficiently and cost
effectively.
Ocean's focus on prime retail and urban roadside locations has
put us in a stronger position compared to some of our peers, with
audience numbers returning more quickly to these environments.
Footfall across prime retail destinations, such as Westfield
shopping malls and major city centres, came back strongly during
the summer and has remained consistent since, whilst roadside
traffic across most of our territories was close to pre- pandemic
levels by the year end.
Combined with favourable market dynamics, Ocean's commitment to
strengthening the business and investing for growth back in 2020
meant that we were able to fully capitalise on the resurgence in
demand to run DOOH campaigns, with brands seeking to capture the
pent-up consumer demand which the restrictions had created. Our
unique innovations, including the development of Deepscreen(TM),
our immersive 3D proposition that has now been launched across
multiple screens in all territories, have been a resounding success
that have in many cases amplified brand campaigns through pick-up
across online news and mobile platforms on a national and global
scale.
An important strategic step made during the year was the
expansion of Ocean Labs team into the Netherlands and Nordics.
Ocean Labs has been integral in advancing the scale and impact of
Ocean's UK network and has led the way in terms of innovation in
our sector. The team is already making excellent early progress
across our European territories and will be at the forefront in
further developing our DOOH proposition, particularly as we win
more prime locations and convert and upgrade existing sites.
Organic momentum continued throughout the year with a series of
new contracts won across all territories which plays to our prime
retail and roadside strategy. We were also delighted to report
early in 2022 that Ocean had retained the contract for London's BFI
IMAX, Europe's largest OOH canvas, for a further five years,
carrying a lifetime value of GBP25 million. Extending our prime
London presence, in recent weeks we have gone live with 'the
Arrival' at Heathrow Terminal 5, a large format roadside screen
which will receive almost 750,000 impacts every two weeks. The new
screen also utilises the most efficient LEDs to reduce energy
consumption, something we are consistently looking to improve
across our entire network.
Extending our sustainability initiatives, Ocean has launched a
new advertising fund to give a voice to charities and non-profits
that are working to save the planet. The initiative will see Ocean
donating 2% of the Group's reported revenue to environmental
charities in the form of advertising value across the Company's
premium digital screen network in seven countries - the UK, the
Netherlands, Germany, Sweden, Finland, Denmark and Norway.
Unaudited appendix
The appendix provides financial information for entities owned
by the Group as at 31 December 2021. This allows analysis and
assessment of the underlying performance by operating segment.
FY21 and FY20 financials are provided for comparison. The
financials are presented including IFRS16 accounting standard which
came in to effect 1 January 2019. Also presented are the FY21 and
FY20 financials under the previous accounting standard.
Analysis of financial performance
As restated
2021 2020
GBP000 GBP000
Revenue 124,398 86,171
Gross profit 42,079 22,447
Loss for the year (30,275) (151,705)
======== =============
Revenue has increased in the year following a strong performance
by the Group following the recovery of the DOOH(R) market,
especially in the later half of the year. FY20 was severely
impacted by the tough trading conditions following the impact of
COVID-19 across the globe. Government decisions to restrict the
movement of people in the markets which the Group operates reduced
the appetite for brands to advertise on OOH assets resulting in the
lower revenue. FY21 saw the return of OOH audiences, and
advertisers appetite to use the medium, which has driven revenue in
the year.
The 44% increase in revenue has resulted in a 87% increase in
gross profit, with the gross profit margin improving in the year as
a result of the split between the Group's fixed and variable cost
base. Cost savings, and the mitigation of cost using Government
schemes were necessary at the height of COVID-19, has helped reduce
the Group's cost base in the year.
The loss for the year reduced significantly as a result of the
improved trading performance, but also as a result of impairment
losses totalling GBP113.8m recognised in FY20. No such costs were
incurred in the current year.
The Group had a cash balance of GBP42.0m (FY20: GBP30.0m) at
year end, with cash generated from operations FY21 of GBP47.1m
(FY20: GBP32.1m) driven largely by the increase in sales. Of the
total debt facility available to the Group, only GBP12.5m has been
drawn down. The Group has net assets of GBP193.4m (FY20: GBP223.8m)
with much of the year-on-year decrease arising from amortisation on
intangible assets. The Group is now in a good position to
capitalise on the opportunities that present themselves as
advertisers' have returned to the OOH market.
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).
Please see the table below for KPIs on the reported numbers
As restated
2021 2020
GBP000 GBP000
Billings (Note 1) 152,689 104,702
Revenue 124,398 86,171
Unaudited Adjusted EBITDA Excl. IFRS16 (Note 2) 18,262 (387)
======= =============
Note 1 - Billings represent the advertising spend by the
advertiser, including fees directly payable by the advertiser to
their advertising agency, exclusive of sales tax.
Note 2 - Unaudited Adjusted EBITDA Excl. IFRS16 in FY21
represents the unaudited loss from operations of GBP26,152k plus
depreciation on tangible fixed assets of GBP9,717k, amortisation
charge on intangibles of GBP24,418k. Also added back are deal fees,
FX, restructuring and redundancy costs, profit/loss on disposal and
other one- off costs totalling GBP10,279k. These other costs are
added back by virtue of their size and nature in order to better
reflect management's view of the underlying trends, performance and
position of the Group. Management exercises judgement in
determining the adjustments to apply to IFRS measurements, and this
assessment covers the nature of the item, cause of occurrence and
the scale of impact of that item on reported performance. See the
appendix for further details and a breakdown of the items added
back.
Non-GAAP performance measures
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.
The Directors feel that the use of Unaudited Adjusted EBITDA
Excl. IFRS16 is the most appropriate profit measure for the Group
because it most closely approximates on-going cash flows from
underlying operations, which is not possible once IFRS16 has been
applied.
Non-GAAP performance measures are presented for the benefit for
users of the accounts but are not a substitute for other standard
GAAP measures presented.
Billings and revenue have increased, as described above,
following a significant upturn in the market after a COVID-19
impacted FY20. Unaudited Adjusted EBITDA Excl. IFRS16 has increased
in the year following the rise in gross profits generated in the
year. In order to fully understand the reasons behind the movements
in these metrics, narrative has been provided below for each market
in which the Group operates, detailing key items that influenced
the performance of that market in the year. For the split of
Unaudited Adjusted EBITDA Excl. IFRS16 by market, in addition to
revenue and billings, please refer to the unaudited appendix.
Ocean UK
-- Exclusive UK digital content deal with BT Sport to broadcast
UEFA Champions League match clips across 7 UK cities
-- GBP25 million outdoor media partner contract for Edinburgh's prestigious St James Quarter
-- Delivered 'fan zone' experiential campaign and Tokyo 2020
highlights at Westfield London in partnership with Team GB
-- Appointed exclusive outdoor media partner for the Canary
Wharf Group, with long-term contract value of GBP30 million
-- Successful launch of 3-D product DeepScreen(R), which has
been rolled out across Ocean's large format full motion portfolio
in all territories
-- Hosted annual Digital Creative Competition at the National
Gallery to champion innovative out-of-home concepts
Ocean signed a series of significant contracts and partnerships
throughout 2021 as restrictions were lifted and advertisers sought
to tap into consumer euphoria and pent-up demand. In early
February, Ocean signed its first exclusive digital content deal
with BT Sport, broadcasting next day match clips from UEFA's
Champions League last 16 fixtures through to the Final in May
across screens in seven major UK cities.
Keeping the momentum, the Group was appointed outdoor media
partner for the prestigious St James Quarter GBP1 billion
regeneration project in Edinburgh, a 1.7 million square foot urban
location and global tourist destination. The 10-year DOOH
advertising contract, with a lifetime value of GBP25 million,
represents Ocean's first contract with global asset management
company Nuveen, which part owns and developed the St James
Quarter.
In line with the return to work, Ocean was subsequently
appointed the exclusive outdoor media partner for the Canary Wharf
Group, one of Europe's most prestigious DOOH locations, to enhance
the audience experience as footfall bounced back. Awarded a
long-term DOOH advertising contract with a lifetime value of GBP30
million, Ocean retains exclusive rights to sell 40 full motion
digital screens and one large format full motion screen.
Ocean continued to use its network of high impact screens as a
critical communications platform during the much-anticipated COP26
in Glasgow that took place in October and November. The Group
commenced a sealed bid auction in February for the brands that
wanted to be on the frontline of the climate emergency and speak
directly to decision makers on an international scale. Brands
including EDF Energy, Unilever and Volvo appeared on the 55 screens
that make up Ocean's large format digital roadside estate across
Scotland, delivering more than 42 million impacts.
During the period the Group continued to push the boundaries of
DOOH advertising with innovative developments to allow communities
to come together and celebrate key events around its screens. Ocean
carried the highlights of the Tokyo 2020 Olympics across its UK
portfolio as part of its partnership with Team GB, with Ocean Labs
building its biggest experiential campaign to date with an official
Team GB fanzone in Westfield Square. The Company also celebrated
the launch of DeepScreen(R), a 3D screen experience that has now
been rolled out across Ocean's large format full motion portfolio
in all territories. Bold illusions by brands such as Vodafone, IWC
Schaffhausen and Netflix have been used as centrepieces for
integrated campaigns, delivering some of our most memorable images
to appear across our network.
Towards the end of the year, Ocean stepped into the realm of the
metaverse through a partnership with the UK firm Admix, which will
see a blending of the physical with the virtual world. A series of
activities that couple DOOH with virtual worlds are planned for
2022 and beyond, aimed at maximising eyeballs for advertisers in
the DOOH market. The initiative has already seen the launch of
three DOOH ad spots into the metaverse as NFT billboards, including
digital replicas of three bespoke DOOH locations which are similar
in design and scale to some of Ocean's premium city centre UK
assets.
Ocean UK was also delighted to resume in person its annual
Digital Creative Competition to champion innovation and celebrate
bold out-of-home concepts. Land Rover, Pets at Home, Toolstation
and Rays of Sunshine were among the winners at this year's event at
the National Gallery, chosen by a panel of 19 expert judges drawn
from the outdoor and advertising industry.
Ocean Netherlands
-- H2 recovery with particularly strong Q4 performance
generating almost 45% of total NL revenue
-- Secured new retail and key roadside contracts
-- Westfield Mall of the Netherlands officially launched in April
-- Launched the Netherlands' first Digital Creative Competition
As previously cited at the half year, the recovery in the
Netherlands lagged the UK by eight to ten weeks due to its
vaccination programme being at an earlier stage. With restrictions
easing at the start of H2, the Netherlands experienced a similar
pattern to the UK, with advertisers carrying over media budgets
from the first half. Q4 was particularly strong with almost 45% of
total revenue for the Netherlands coming in this period, with the
most active users of DOOH being retail, e-commerce, automotive and
the major streaming services. With Ocean's footprint even more
digitalised, the Netherland's had a record year in terms of the
proportion of revenue derived from DOOH at 78%, up from 73% in
2019.
In April, Westfield Mall of the Netherlands officially launched
with great success by exceeding expectations in terms of audience
figures and media revenue in its early months. Two contracts for
two new large digital screens at shopping malls in Haarlem and
Hilversum were also won, whilst a series of key roadside contracts
were renewed as well as a new contract won in Almere, with the
installation of two new digital screens.
In June, Ocean Netherlands staged its first edition of the
Digital Creative Competition, mirroring the event which has run for
the past 10 years in the UK. Staged as both a live and augmented
reality event in Amsterdam's museum district, there were 74 entries
for the inaugural competition from clients, brands and agencies. As
well as the fantastic creative on show, the event helped to raise
Ocean's profile across the Dutch advertising market and support the
business' commercial activity.
As part of its data and research strategy, Ocean Netherlands
signed a strategic partnership with the data insights provider,
Precisely, delivering a new solution incorporating mobile trace
data to measure reach and determine the profile of audiences. After
going live in October, the solution is helping to significantly
increase insights for advertisers in segmented reach per screen and
is also providing near real time audience data.
Ocean Nordics and Germany
-- Appointed strategic media partner for Westfield Fisketorvet, Copenhagen
-- Extended relationship with DEAS with contract covering 39
event areas across 18 malls in Denmark to launch experiential
service
-- Oslo Central bus station launched with 28 new digital screens
-- 131 new digital screens installed across a total of 41 malls
in Norway, creating strong marketing position
With Sweden remaining open throughout the pandemic period, with
limited restrictions, the country did not experience the same
recovery trends as those emerging from strict lockdowns. As for the
rest of the Nordic region, most restrictions began to be lifted
towards the end of the first half. Whilst Q2 and Q3 were very
similar in performance for the region, Q4 saw a major uptick in
sales and campaign activity, with most of the year's advertising
budgets being deployed during this period. As such, Ocean Nordics
delivered a record Q4 for sales. The Nordics team has continued to
make further efficiency gains, including bringing the whole region
under one operating allowing it to sell campaigns that can be run
across the entire Nordics. Another success was the first 'Nordic
Digital Creative' competition, which surpassed all expectations in
attracting over one hundred entrants. This has helped to both drive
greater awareness of Ocean and its product offering, and, in turn,
supported the region's sales pipeline.
In Sweden, Ocean has extended its partnership with Point
Properties, adding five new malls to its network. This comes on the
back of the nine-mall agreement signed in the first half, which
collectively attract 7 million visitors each year. A contract with
Skandia Fastigheter to install a 300 square metres banner at its
Mörby Centrum mall, which is situated north of Stockholm, and a
contract with Centrumkanalen for screens in 23 supermarkets, which
complements Ocean's existing mall and grocery channels in Sweden.
Ocean has also won the media contract for Helsingborg Central
Station, one of the largest stations in southern Sweden, which also
connects bus and ferry routes. A large screen has already been
installed at the station entrance, whilst the internal screens are
being upgraded.
In Denmark, Ocean was appointed strategic media partner for
Westfield Fisketorvet, Copenhagen's premium shopping, dining, and
leisure destination, with a seven-year contract carrying a lifetime
value of GBP7 million. Since being awarded the new contract Ocean
is already investing in the site and has added a new large format
icon screen. Earlier in the year Ocean also extended its
association with shopping centre owner DEAS, with the award of a
contract covering 39 event areas across 18 malls, for exclusive
experiential rights, proceeding the contract to install 381 new
screens across Danske's portfolio of malls, won back in 2020.
In Finland, Ocean won the media contracts for two malls in
Helsinki and Lund and developed a multi country sales strategy to
maximise its market position with Unibail-Rodamco-Westfield and the
inclusion of the 15 shopping malls Ocean operates across Germany.
The introduction of Deepscreen in Finland has had a particularly
strong impact in terms of differentiating its product offering from
other DOOH provider, which has helped to drive stronger sales in
the country since it was launched.
The focus in Norway during the period has been the ongoing major
inventory upgrade project spanning 41 shopping malls, which
includes the Group's significant contract with Alti that covers 23
malls. 133 new digital screens have been installed, which has
increased the Group's digital footprint in Norway from 5% to 24%.
Norway has also gone live with its Oslo Central bus station
contract with the launch of 28 state of the art digital
screens.
Outlook
Despite commencing the year with Omicron and restrictions to
leisure and hospitality across some of our countries, trading has
started very strongly. We currently expect revenue and adjusted
EBITDA for FY2022 to be ahead of FY2019 reflecting the return of
audiences and brands to OOH environments.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE YEARED 31
DECEMBER 2021
As restated
2021 2020
Note GBP000 GBP000
Revenue 6 124,398 86,171
Cost of sales 8 (82,319) (63,724)
---------------- -----------
Gross profit 42,079 22,447
Administrative expenses
- Other administrative expenses 8 (59,128) (55,705)
- Impairment of investment in associate - (8,000)
- Impairment of intangible assets (restated) - (105,800)
- Fair value adjustment on contingent consideration (2,439) 2,256
- Movement in expected credit loss provision (1,704) (1,139)
---------------- -----------
Operating loss from operations (21,192) (145,941)
Finance income 11 17 17
Finance expense 11 (8,953) (10,478)
Share of post-tax loss of equity accounted associates 17 (186) (94)
---------------- -----------
Loss before tax (30,314) (156,496)
Tax credit 12 39 4,791
---------------- -----------
Loss for the year (30,275) (151,705)
================ ===========
Loss for the year attributable to:
Owners of the parent (30,275) (151,705)
---------------- -----------
(30,275) (151,705)
================ ===========
The prior period expense recognised an impairment of intangible
assets within administrative expenses. This has been restated
following the identification of a calculation error. Please see
note 27 for further details.
STATEMENT OF OTHER COMPREHENSIVE INCOME FOR THE YEARED 31
DECEMBER 2021
As restated
Note 2021 2020
GBP000 GBP000
Loss for the year (30,275) (151,705)
Items that will be reclassified to profit or loss:
Exchange gains / (losses) arising on translation on foreign operations (408) 1,471
--------- ------------
Total comprehensive income (30,683) (150,234)
--------- ------------
Total comprehensive income attributable to:
Owners of the parent (30,683) (150,234)
--------- ------------
(30,683) (150,234)
========= ============
As restated
Earnings per share 2021 2020
Basic and diluted loss per share (pence) 22 (56) (283)
========= ============
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER
2021
As restated
2021 2020
Note GBP000 GBP000
Assets
Non-current assets
Property, plant and equipment
- Site assets, equipment and motor vehicles 13 36,016 42,860
- Right of use asset 13 164,912 182,471
Intangible assets (restated - see note 27) 14 206,496 230,061
Investments in equity-accounted associates 17 5,017 5,203
Deferred tax assets 12 1,147 -
-------- -----------
Current assets 413,588 460,595
Trade and other receivables 18 57,058 39,289
Cash and cash equivalents 41,975 30,030
-------- -----------
99,033 69,319
-------- -----------
Total assets 512,621 529,914
-------- -----------
Liabilities
Non-current liabilities
Trade and other liabilities 19 25 1,280
Bank loan 12,534 4,949
Lease liability 20 143,971 161,012
Deferred tax liability 12 33,049 33,677
-------- -----------
Current liabilities 189,579 200,918
Trade and other liabilities 19 81,109 63,983
Tax payable 8,182 4,259
Lease liability 20 40,331 36,954
-------- -----------
129,622 105,196
-------- -----------
Total liabilities 319,201 306,114
-------- -----------
Net assets 193,420 223,800
======== ===========
Issued capital and reserves attributable to owners of the parent 21
Founder Preferred Share Capital 3,257 3,909
Share premium reserve 377,853 376,898
Treasury shares (2,417) (2,417)
Foreign exchange reserve 533 941
Retained earnings (restated - see note 27) (185,806) (155,531)
TOTAL EQUITY 193,420 223,800
=============== =========
The financial statements on pages 32 to 93 were approved and
authorised for issue by the board of Directors and were signed on
its behalf by:
Stephen Joseph
Director
Date: 30 April 2022
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 31 DECEMBER
2021
Total
attributable
Founder to equity
Preferred Ordinary Foreign Retained holders of Total
share share Treasury exchange earnings parent equity
capital premium shares reserve (restated) (restated) (restated)
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 January 2021
(as previously
stated) 3,909 376,898 (2,417) 941 (183,331) 196,000 196,000
Prior year
adjustment (see
note 27) - - - - 27,800 27,800 27,800
At 1 January 2021 3,909 376,898 (2,417) 941 (155,531) 223,800 223,800
(as restated)
--------- --------- -------------- -------- ----------- ----------------------- ----------
Comprehensive
income for the year
Loss for the year - - - - (30,275) (30,275) (30,275)
Other comprehensive
income - - - (408) - (408) (408)
--------- --------- -------------- -------- ----------- ----------------------- ----------
Total comprehensive
income for the year - - - (408) (30,275) (30,683) (30,683)
--------- --------- -------------- -------- ----------- ----------------------- ----------
Contributions by and
distributions to
owners
Conversion of
Founder Preferred
to Ordinary shares (652) 652 - - - - -
Shares issued during
the year - 303 - - - - -
--------- --------- -------------- -------- ----------- ----------------------- ----------
Total contributions
by and
distributions to
owners (652) 995 - - - 303 303
--------- --------- -------------- -------- ----------- ----------------------- ----------
At 31 December 2021 3,257 377,853 (2, 417) 533 (185,806) 193,420 193,420
========= ========= ============== ======== =========== ======================= ==========
The prior period loss for the year has been restated following
the identification of a calculation error of the expense recognised
for the impairment of intangible assets, impacting the opening
balance of retained earnings. Please see note 27 for further
details.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 31 DECEMBER
2020
Total
Founder attributable
Preferred Ordinary Foreign to equity holders
share share Treasury exchange Retained of Total
capital premium shares reserve earnings parent equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 January 2020 4,561 376,246 (2,417) (530) (3,826) 374,034 374,034
Comprehensive
income for the
year
Loss for the year
(restated - see
note 27) - - - - (151,705) (151,705) (151,705)
Other
comprehensive
income - - - 1,471 - 1,471 1,471
--------- -------- ---------- ---------------- ----------- ---------------------- -----------
Total
comprehensive
income for the
year (restated) - - - 1,471 (151,705) (150,234) ( 150,234)
--------- -------- ---------- ---------------- ----------- ---------------------- -----------
Contributions by
and distributions
to owners
Conversion of
Founder
Preferred to
Ordinary shares (652) 652 - - - - -
--------- -------- ---------- ---------------- ----------- ---------------------- -----------
At 31 December
2020 (restated) 3,909 376,898 (2,417) 941 (155,531) 223,800 223,800
========= ======== ========== ================ =========== ====================== ===========
The prior period loss for the year has been restated following
the identification of a calculation error of the expense recognised
for the impairment of intangible assets. Please see note 27 for
further details.
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARED 31 DECEMBER 2021
As restated
2021 2020
Note GBP000 GBP000
Cash flows from operating activities
Loss for the year (restated - see note 27) (30,275) (151,705)
Adjustments for
Depreciation of property, plant and equipment 13 9,409 9,977
Impairment of property, plant and equipment 13 - 1,435
Amortisation of intangible fixed assets 14 24,418 24,768
Depreciation of right of use asset 13 33,148 32,894
Profit on disposal of tangible assets (34) 117
Profit on termination of IFRS16 leases (80) -
Finance income 11 (17) (17)
Finance expense 11 8,953 10,478
Share of post-tax loss of equity accounted associates 186 94
Impairment loss on intangible assets (restated - see note 27) - 105,800
Impairment loss of investment in associates - 8,000
Fair value adjustment to contingent consideration 2,439 (2,256)
Bank arrangement fee 85 43
Rent concessions 20 (3,480) (8,306)
Share-based payment expense 583 90
Income tax expense 12 (39) (4,791)
---------------- -------------
45,296 26,621
Movements in working capital:
(Increase)/decrease in trade and other receivables (17,769) 16,182
Increase/(decrease) in trade and other payables 19,579 (10,655)
---------------- -------------
Cash generated from operations 47,106 32,148
Income tax paid 308 (2,688)
---------------- -------------
Net cash from operating activities 47,414 29,460
---------------- -------------
Cash flows from investing activities
Deferred consideration settlement (5,690) (395)
Purchases of property, plant and equipment (4,575) (6,378)
Sale of property, plant and equipment 21 -
Interest received 11 17 17
---------------- -------------
Net cash used in investing activities (10,227) (6,756)
---------------- -------------
Cash flows from financing activities
Issue of ordinary shares 303 -
Proceeds from bank borrowings 25 7,500 4,880
Interest paid on lease liabilities 20,11 (8,470) (9,641)
Interest paid 11 (485) (299)
Principal paid on lease liabilities 20 (24,028) (14,573)
---------------- ----------
Net cash used in financing activities (25,180) (19,633)
---------------- ----------
Net cash increase in cash and cash equivalents 12,007 3,071
Cash and cash equivalents at the beginning of year 30,030 26,917
Exchange (loss)/gains on cash and cash equivalents (62) 42
---------------- ----------
Cash and cash equivalents at the end of the year 41,975 30,030
================ ==========
The prior period loss for the year and prior period adjustment
for impairment loss on intangible assets has been restated
following the identification of a calculation error of the expense
recognised for the impairment of intangible assets. Please see note
27 for further details.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMEMENTS FOR THE YEARED
31 DECEMBER 2021
1. Reporting entity
Ocean Outdoor Limited (the 'Company') is a limited company
incorporated in British Virgin Islands. The Company's registered
office is at Kingston Chambers, PO Box 173, Tortola. These
consolidated financial statements comprise the Company and its
subsidiaries (collectively the 'Group' and individually 'Group
companies'). The Group is primarily involved in the provision of
out of home advertising media services.
2. Basis of preparation
The Group's consolidated financial statements have been prepared
in accordance with International Financial Reporting Standards and
Interpretations as adopted by the EU (collectively IFRSs) and those
parts of the BVI Business Companies Act applicable under IFRS. They
were authorised for issue by the board of directors on 29 April
2022.
Details of the Group's accounting policies, including changes
during the year, are included in note 2.1.
In preparing these financial statements, management has made
judgements, estimates and assumptions that affect the application
of the Group accounting policies and the reported amounts of
assets, liabilities, income and expenses. Actual results may differ
from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to estimates are recognised prospectively.
The areas where judgements and estimates have been made in
preparing the consolidated financial statements and their effects
are disclosed in note 5.
The financial statements have been prepared on the historical
cost basis except for the certain financial instruments which are
stated at fair value.
2.1 Changes in accounting policies
i. New standards, interpretations and amendments effective from 1 January 2021
New standards impacting the Group that were adopted in the
annual financial statements for the year ended 31 December 2021,
and which have given rise to changes in the Group's accounting
policies are:
- Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
Interest Rate Benchmark Reform These amendments do not have a
significant impact on the financial statements.
ii. New standards, interpretations and amendments not yet effective
The following new standards, interpretations and amendments,
which are not yet effective and have not been adopted early in
these financial statements, will or may have an effect on the
Company's future financial statements:
- COVID-19 related rent concessions extension of the practical expedient (Amendments to IFRS16)
- References to Conceptual Framework (Amendments to IFRS 3)
- Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS16)
- Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37)
- Annual Improvements to IFRS Standards (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41)
- Presentation of financial statements', on classification of liabilities (Amendments to IAS1)
- Deferred tax related to assets and liabilities of a single transaction (Amendment to IAS12)
The Directors anticipate that the adoption of these Standards in
future periods may have an impact on the results and net assets of
the Company and are assessing the impact they will have, but do not
expect them to be material.
3. Accounting policies
3.1 Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
and its subsidiaries. Control is achieved when the Company:
-- has power over the investee;
-- is exposed, or has rights, to variable returns from its
involvement with the investee; and
-- has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if
facts and circumstances indicate that there are changes to one or
more of the three elements of control listed above.
When the Company has less than a majority of the voting rights
of an investee, it has power over the investee when the voting
rights are sufficient to give it the practical ability to direct
the relevant activities of the investee unilaterally. The Company
considers all relevant facts and circumstances in assessing whether
or not the Company's voting rights in an investee are sufficient to
give it power, including:
-- the size of the Company's holding of voting rights relative
to the size and dispersion of holdings of the other vote
holders;
-- potential voting rights held by the Company, other vote
holders or other parties;
-- rights arising from other contractual arrangements; and
-- any additional facts and circumstances that indicate that the
Company has, or does not have, the current ability to direct the
relevant activities at this time that decisions need to be made,
including voting patterns at previous shareholders' meetings.
Consolidation of a subsidiary begins when the Company obtains
control over the subsidiary and ceases when the Company loses
control of the subsidiary. Specifically, income and expenses of a
subsidiary acquired or disposed of during the year are included in
the consolidated statement of profit or loss and other
comprehensive income from the date the Company gains control until
the date when the Company ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income
are attributed to the owners of the Company and to the
non-controlling interests. Total comprehensive income of
subsidiaries is attributed to the owners of the Company and to the
non-controlling interests even if this results in the
non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements
of subsidiaries to bring their accounting policies into line with
the Group's accounting policies.
All intragroup assets and liabilities, equity, income, expenses
and cash flows relating to transactions between members of the
Group are eliminated in full on consolidation.
3.2 Going concern
The Directors have, at the time of approving the financial
statements, a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable
future.
The Directors have considered the Group's current financial
position, its budgets and forecasts, the principal risks and
uncertainties including the impact of COVID-19 and loan facilities
available to the Group, with it having credit facilities available
providing financing of up to GBP35m, subject to customary covenants
related to minimum quarterly adjusted EBITDA and cash balances.
GBP12.5m of this facility has been drawn down at year end. No
breaches of the debt covenants are expected and there are no
indicators that the current loan facilities available could not be
extended. With a cash balance at 31 December 2021 of GBP42.0m, the
Group would be in a position to repay its current debt of GBP12.5m
without impacting its working capital requirements.
The Audit Committee continuously review forecasts and outlook,
and as part of that consider the going concern basis of preparation
of the accounts. These forecasts are modelled until 30 June 2023. A
base case was prepared, as well as an extreme downside scenario
modelled, including a further lockdown. The committee reviews the
various models and applies its judgement in assessing the relevant
assumptions used by management and challenges the inputs where
necessary.
The key assumptions that were stress tested for the going
concern scenarios were quarterly revenue declines, assuming another
lockdown as experienced in FY20, with revenue then returning
gradually to normality by the end of FY22. The expected variable
cost impact was considered, however no cost mitigation was factored
in to this model that would be available. This was applied to the
most recent forecast for FY22. Further reductions to revenue were
modelled to assess the headroom before a covenant breach would
occur. In such a scenario it has been modelled that the GBP12.5m
loan could be repaid. Whilst this scenario is plausible, it is not
considered probable based on current expectations and trading
outlook. The gap between the forecast and the covenant breach level
was deemed more than sufficient to conclude that the going concern
basis is appropriate with additional cost savings potentially
available to further increase the headroom.
On 13 April 2022 the Group announced it was in discussions with
Atairos, its largest shareholder, regarding a possible offer for
the Group. Whilst there can be no certainty that a formal offer
will be made, discussions continue and Atairos have presented a
proposal to the Board which is being considered. At this time the
Group continues to operate autonomously under the oversight of the
Board and Management. It is assumed, therefore, that trading will
continue as modelled without any adjustments to reflect any
possible incremental costs or savings should a transaction occur.
Atairos have not yet published their future intentions for the
Group and there may be uncertainty over the nature of the
continuing operations of the Group should the acquisition proceed
successfully. This gives rise to a material uncertainty, as defined
in auditing and accounting standards, related to events or
conditions that may cast significant doubt on the Group's ability
to continue as a going concern.
Despite the material uncertainty, whilst acknowledging the Group
is exposed to economic risks, the Group remains well placed to
manage its business risks successfully. In the event a transaction
with Atairos does proceed, the Directors are satisfied, based on
the expected intentions of Atairos, that the Group will remain a
going concern. Therefore, they have a reasonable expectation that
the Group has adequate resources to continue in operational
existence for a period of 12 months from the date of approval of
the financial statements. Accordingly, the financial statements
continue to be prepared on a going concern basis.
3.3 Revenue
Revenue comprises the transaction price, being the amount of
consideration the Group expects to receive, in exchange for
transferring promised services to a customer in the ordinary course
of the Group's activities.
Revenue is shown net of value-added tax, agency and other
commissions, rebates payable and discounts and after eliminating
sales within the Group.
IFRS15 defines 'transaction price' as the amount of
consideration to which the entity is expected to be entitled to in
exchange for transferring the promised goods or services to a
customer.
For all services provided by the Group, it is considered to be
the principal in the transaction since it is primarily responsible
for fulfilling the promise to provide the service, it has inventory
risk before the specified good or service has been transferred to
the customer, it establishes the price that the customer pays for
its services and it can direct the use of its service to obtain
substantially all the remaining benefits and that no other entity
can assume the performance obligations.
Commissions are paid by the Group to advertising agencies and
specialists when they act as intermediaries between the Group and
the ultimate advertiser. The agencies and specialists are
considered to be the customer in the transaction, with the agencies
and specialist then responsible for selling to the ultimate
advertiser. Agreements are held with the agencies and specialist
and commissions only arise following the performance obligations
and would not otherwise be incurred. These commissions, in line
with IFRS15, are therefore deducted from revenue, as they do not
form part of the revenue to which the Group is entitled.
The Group has agreements with customers whereby volume-related
allowances are provided based on billings with the customer in the
period representing a reduction in the consideration. The rebates
are at a fixed percentage with each customer calculated as a
percentage of applicable billings. As a result revenue is recorded
on a net basis after deduction of commercial rebates. The
commercial rebates are recognised in the income statement when the
performance obligations associated with the media sales have been
met, with an associate accrual recognised for volume rebates due to
customers.
Payment terms extended to customers depend on the country of
operation, the size of the booking and the credit risk posed by the
customer. Credit terms vary from up-front payment to 60 days.
Media sales
The Group derives revenue from contracts with customers
containing a single performance obligation, being the provision of
advertising space, and are subject to fixed prices. This is
distinct from other revenue as the customer can benefit from the
provision of media sales on its own and is separable from other
performance obligations.
The fixed prices can be subject to fixed agency commissions,
fixed specialist commissions and additional volume rebates. Volume
rebates are calculated on actual year to date billings in line with
volume rebate agreements held with its customers. Revenue is
recognised straight on an over time basis as the media sale is
delivered. 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 services are recognised in deferred income as
performance obligations and released to revenue as the Group
performs the advertising service under the contract on an output
basis.
Revenue is derived from the provision of advertising space to
customers during the 52-week period ended 2 January 2022 (2020:
52-week period ended 27 December 2020). Revenue is recognised
during the 52- week period to reflect the period of customer
bookings, normally in 2-week blocks. The difference on this basis
to recognition of revenue for a full year is immaterial.
The Group does not expect to have any contracts where the period
between the transfer of the promised goods or services to the
customer and payment by the customer exceeds one year. As a
consequence, the Company does not adjust any of the transaction
prices for the time value of money.
There are not considered to be any significant judgements in
respect of determining the timing of satisfaction of performance
obligations.
Other revenue
The Group also derives revenue from the provision of production,
studio and labs services, which relates to design services and
experiential products offered to customers. These services are a
single performance obligation relating to creative and design
services offered by the Group to its customers and are subject to
fixed prices. Revenue is recognised at a point in time for these
services is allocated once the project has been completed and
provided to the customer. Other revenue is considered distinct from
media sales with the service separately identifiable with the
service not tied to the provision of media sales. It is recognised
in full at point in time following the satisfaction of the relevant
performance obligation.
3.4 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 Executive Directors. The
Executive Directors are of the opinion the company operates in
three distinct markets: The United Kingdom, The Netherlands and The
Nordics. Segment results are prepared for the Executive Directors
by segment managers on a regional basis, not distinguished by
entity or product type. Board reporting packs are prepared with
separate primary statements for the UK, the Netherlands, and
Nordics, as well as an aggregation (i.e., results of The Group).
The nature of the products offered across each region is similar
with asset offerings to customers not distinguished by entity. The
Group's strategy is to utilise its knowledge and success across
whole regions. Accordingly, the Group has been treated as three
operational segments and the results of the Group presented in the
financial statements are disaggregated accordingly. Each
operational segment provides digital out of home ("DOOH") services
to their local market.
3.5 Government grants
Government grants received for expenditure incurred are netted
against the cost incurred by the Group in the consolidated
statement of profit or loss following the satisfaction of the
required criteria. This relates to assistance provided by the
Government in relation to the impact of COVID-19 on the business.
Employee support grants "The coronavirus job retention scheme,
(CJRS)" and equivalent schemes in the Nordics and Netherlands, were
introduced in the pandemic to support companies in retaining
employees, in the form of grants to cover a proportion of the wages
and salaries of furloughed staff. These are accounted for as a
credit to wages and salaries within employee costs. Local
government support grants were also provided to support businesses,
which were netted off against expensed incurred operating
expenses.
3.6 Foreign currency
Transactions and balances
Transactions entered into by Group entities in a currency other
than the functional currency are recorded at the rates ruling when
the transactions occur. Foreign currency monetary assets and
liabilities are translated at the rates ruling at the reporting
date. Exchange differences arising on the retranslation of
unsettled monetary assets and liabilities are recognised
immediately in profit or loss. Exchange differences arising on the
retranslation of the foreign operation are recognised in other
comprehensive income and accumulated in the foreign exchange
reserve.
On consolidation, the results of overseas operations are
translated into GBP at the average exchange rate for the year. All
assets and liabilities of overseas operations, including goodwill
arising on the acquisition of those operations, are translated at
the rate ruling at the reporting date. Exchange differences arising
on translating the opening net assets at opening rate and the
results of overseas operations at actual rate are recognised in
other comprehensive income and accumulated in the foreign exchange
reserve.
3.7 Taxation
The charge for current tax is based on the results for the year
as adjusted for items which are nonassessable or disallowed. It is
calculated using tax rates that have been enacted or substantively
enacted by the balance sheet date.
Deferred Tax
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 near 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).
When there is uncertainty concerning the Group's filing position
regarding the tax bases of assets or liabilities, the taxability of
certain transactions or other tax-related assumptions, then the
Group:
- Considers whether uncertain tax treatments should be
considered separately, or together as a group, based on which
approach provides better predictions of the resolution;
- Determines if it is probable that the tax authorities will
accept the uncertain tax treatment; and
- If it is not probable that the uncertain tax treatment will be
accepted, measure the tax uncertainty based on the most likely
amount or expected value, depending on whichever method better
predicts the resolution of the uncertainty. This measurement is
required to be based on the assumption that each of the tax
authorities will examine amounts they have a right to examine and
have full knowledge of all related information when making those
examinations.
3.8 Property, plant, equipment
Items of property, plant and equipment are measured at cost less
accumulated depreciation and any accumulated impairment losses.
If significant parts of an item of property, plant and equipment
have different useful lives, then they are accounted for as
separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and
equipment is recognised in profit or loss. Subsequent expenditure
is capitalised only if it is probable that the future economic
benefits associated with the expenditure will flow to the
Group.
Depreciation is provided on all other items of property, plant
and equipment so as to write off their carrying value over their
expected useful economic lives in accordance with local regulations
and economic conditions. Assets under the course of construction
are only depreciated once ready for use. Depreciation is provided
at the following rates:
Site assets
Site build cost - Over the length of the lease
Digital signage - 3-10 years
Light boxes - 10 years
Equipment
Fixtures and fittings - 4 years straight line
Computer equipment - 2 years straight line
Motor vehicles - 4 years straight line
3.9 Borrowing costs
All borrowing costs are recognised in profit or loss in the
period in which they are incurred.
3.10 Goodwill
Goodwill arising on consolidation represents the excess of the
fair value of the consideration given over the fair value of the
identifiable net assets acquired.
Goodwill arising on an acquisition of a business is carried at
cost as established at the date of acquisition of the business less
accumulated impairment losses.
A cash generating unit ("CGU") is the smallest identifiable
group of assets that generates cash inflows that are largely
independent of the cash inflows from other assets or groups of
assets. Because the CGU definition is based on cash inflows, the
division process should focus on an entity's sources of revenue and
how assets are utilised in generating those revenues.
Management makes decisions around revenues on a regional basis
as set out above and management make decisions on this basis. The
portfolio's inseparability means it becomes the "smallest
identifiable group of assets.
The Group generates cash inflows from this consolidated regional
portfolio of assets. This consolidation of assets into a portfolio
enhances the primary business activity. Advertising buyers can
formulate and imagine a campaign's reach and impact with a greater
degree of certainty compared with the market before these
acquisitions occurred. The aim is to negotiate deals on a regional
basis with invoices sold across each country and therefore the cash
inflows are interdependent on each other. Each countries systems
are largely entangled in each region. The three CGUs recognised by
the Group are the UK, the Netherlands and the Nordics.
For the purposes of impairment testing, goodwill is allocated to
each of the Group's cash-generating units (or groups of
cash-generating units) that is expected to benefit from the
synergies of the combination.
A cash-generating unit to which goodwill has been allocated is
tested for impairment annually, or more frequently when there is an
indication that the unit may be impaired. If the recoverable amount
of the cash-generating unit is less than its carrying amount, the
impairment loss is allocated first to reduce the carrying amount of
any goodwill allocated to the unit and then to the other assets of
the unit pro rata based on the carrying amount of each asset in the
unit. Any impairment loss for goodwill is recognised directly in
profit or loss. An impairment loss recognised for goodwill is not
reversed in subsequent periods.
On disposal of the relevant cash-generating unit, the
attributable amount of goodwill is included in the determination of
the profit or loss on disposal.
The Group's policy for goodwill arising on the acquisition of an
associate and a joint venture is described at note 3.11.
3.11 Investments in associates
An associate is an entity over which the Company has significant
influence. Significant influence is the power to participate in the
financial and operating policy decisions of the investee but is not
control or joint control over those policies.
The results and assets and liabilities of associates are
incorporated in these consolidated financial statements using the
equity method of accounting. Under the equity method, an investment
in an associate is initially recognised in the consolidated
statement of financial position at cost and adjusted thereafter to
recognise the Company's share of the profit or loss and other
comprehensive income of the associate.
In line with IAS 28, the Group monitors for objective evidence
of an impairment to its investment in associates following a "loss
event" after the initial recognition. When necessary, the entire
carrying amount of the investment is tested for impairment by
comparing its recoverable amount (higher of value in use and fair
value less costs of disposal) with its carrying amount. Any
impairment loss recognised forms part of the carrying amount of the
investment. Any reversal of that impairment loss is recognised in
accordance with IAS 36 to the extent that the recoverable amount of
the investment subsequently increases.
3.12 Intangible assets
Intangible assets acquired in a business combination
Intangible assets acquired in a business combination and
recognised separately from goodwill are initially recognised at
their fair value at the acquisition date (which is regarded as
their cost).
Subsequent to initial recognition, intangible assets acquired in
a business combination are reported at cost less accumulated
amortisation and accumulated impairment losses, on the same basis
as intangible assets that are acquired separately.
The Group has recognised intangible assets, acquired rights over
advertising sites, that are recognised on business combinations
where the Group obtains control over the assets as part of the
transaction. Economic benefits are expected to flow to the Group as
the contracts acquired as part of the business combination are
expected to generate income and profit. They represent the
incremental benefit and bundle of resources over and above the
value of the lease from acquiring the entities, including the
network of advertising sites, exclusivity in some cases, and other
intangible benefits attached to the advertising rights. These
intangible assets are amortised over the contractual life of the
advertising sites on a straight-line basis, which are typically 5
to 15 years. The amortisation charge is included within
administrative expenses in the consolidated statement of profit and
loss.
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. The amortisation
charge is included within administrative expenses in the
consolidated statement of profit and loss.
3.13 Impairment of tangible and intangible assets other than
goodwill
At the end of each reporting period, the Group reviews the
carrying amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). When it is not possible to
estimate the recoverable amount of an individual asset, the Group
estimates the recoverable amount of the cash-generating unit to
which the asset belongs.
Recoverable amount is the higher of fair value less costs of
disposal and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised immediately in
profit or loss, unless the relevant asset is carried at a revalued
amount, in which case the impairment loss is treated as a
revaluation decrease.
When an impairment loss subsequently reverses, the carrying
amount of the asset (or a cash generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (or cash-generating unit) in prior years. A reversal
of an impairment loss is recognised immediately in profit or loss,
unless the relevant asset is carried at a revalued amount, in which
case the reversal of the impairment loss is treated as a
revaluation increase.
3.14 IFRS16 Leases
The Group makes use of leasing arrangements, principally for
site assets used to generate income. The rental term of contracts
vary from short term to those in excess of 15 years. Contracts are
modelled to the full length of the term and re-assessed with
respect to break options if applicable. The Group does not enter in
to sale and lease back arrangements.
Right-of-use assets
The Group recognises right-of-use assets at the commencement
date of the lease. Right-of-use assets are measured at cost, less
any accumulated depreciation and impairment losses, and adjusted
for any remeasurement of lease liabilities. The cost of
right-of-use assets includes the amount of lease liabilities
recognised, initial direct costs incurred, and lease payments made
at or before the commencement date less any lease incentives
received. Unless the Group is reasonably certain to obtain
ownership of the leased asset at the end of the lease term, the
recognised right-of-use assets are depreciated on a straight-line
basis over the shorter of its estimated useful life and the lease
term. Right-of-use assets are subject to impairment.
Lease liabilities
At the commencement date of the lease, the Group recognises
lease liabilities measured at the present value of lease payments
to be made over the lease term. The lease payments include fixed
payments (including in substance fixed payments) less any lease
incentives receivable, variable lease payments that depend on an
index or a rate, and amounts expected to be paid under residual
value guarantees. The lease payments also include the exercise
price of a purchase option reasonably certain to be exercised by
the Group and payments of penalties for terminating a lease, if the
lease term reflects the Group exercising the option to terminate.
The variable lease payments that do not depend on an index or a
rate are recognised as expense in the period on which the event or
condition that triggers the payment occurs.
Significant judgement in determining the lease term of contracts
with renewal options
The Group determines the lease term as the non-cancellable term
of the lease when determining the lease liability and corresponding
right of use asset. Extension and termination options are included
in a number of the site leases and the extension option term may be
included in the lease term where there the lease is reasonably
certain to be extended. Extension options are used to maximise
operational flexibility in terms of managing the assets used in the
Group's operations. After the lease commencement date, the Group
reassesses the lease term if there is a significant event or change
in circumstances that is within its control and affects its ability
to exercise (or not to exercise) the option to renew (e.g., a
change in business strategy).
Significant judgement in determining dismantling costs
The Group determines the costs that would be incurred at the end
of a lease to dismantle or make new the site are not material on
the basis that there is value to the landlord in the assets, and
therefore no provisions are recognised, nor contingent liabilities
recognised given the possibility of an outflow of resources
embodying economic benefits in respect of the dismantling costs is
considered remote.
Lease remeasurements
The Group has minimum guarantee leases, which represent fixed
payments, which can be remeasured in subsequent periods based on
contractual performance of a site. These are accounted for in the
accounting period as a lease remeasurement at the original
incremental borrowing rate. Payments in excess of fixed payments
are not included in the initial measurement and are included in
cost of sales in the period in which they occur.
Lease modifications
When the group renegotiates the contractual terms of a lease
with the lessor, the accounting depends on the nature of the
modification:
- If the renegotiation results in one or more additional assets
being leased for an amount commensurate with the standalone price
for the additional rights-of-use obtained, the modification is
accounted for as a separate lease in accordance with the above
policy.
- In all other cases where the renegotiated terms increase the
scope of the lease (whether that is an extension to the lease term,
or one or more additional assets being leased), the lease liability
is remeasured using the discount rate applicable on the
modification date, with the right-of use asset being adjusted by
the same amount.
- If the renegotiation results in a decrease in the scope of the
lease, both the carrying amount of the lease liability and
right-of-use asset are reduced by the same proportion to reflect
the partial or full termination of the lease with any difference
recognised in profit or loss. The lease liability is then further
adjusted to ensure its carrying amount reflects the amount of the
renegotiated payments over the renegotiated term, with the modified
lease payments discounted at the rate applicable on the
modification date. The right-of- use asset is adjusted by the same
amount.
COVID-19-Related Rent Concessions (Amendments to IFRS 16)
Effective 1 April 2021, IFRS 16 was amended to provide a
practical expedient for lessees accounting for rent concessions
that arise as a direct consequence of the COVID-19 pandemic and
satisfy the following criteria:
a) The change in lease payments results in revised consideration
for the lease that is substantially the same as, or less than, the
consideration for the lease immediately preceding the change;
b) The reduction in lease payments affects only payments
originally due on or before 30 June 2022; and
c) There is no substantive change to other terms and conditions
of the lease. Rent concessions that satisfy these criteria may be
accounted for in accordance with the practical expedient, being
recognised in the profit and loss within cost of sales, which means
the lessee does not assess whether the rent concession meets the
definition of a lease modification. Lessees apply other
requirements in IFRS 16 in accounting for the concession.
The Company has elected to utilise the practical expedient for
all rent concessions that meet the criteria.
Accounting for the rent concessions as lease modifications would
have resulted in the Company remeasuring the lease liability to
reflect the revised consideration using a revised discount rate,
with the effect of the change in the lease liability recorded
against the right-of-use asset. By applying the practical
expedient, the Company is not required to determine a revised
discount rate and the effect of the change in the lease liability
is reflected in profit or loss in the period in which the event or
condition that triggers the rent concession occurs.
Accounting for turnover rents and minimum guaranteed rents
Some contracts with landlords contain payable elements that vary
based on the performance of the advertising location. These relate
to costs in relation to site assets that are fully variable or
amounts in excess of the minimum guaranteed rent. These variable
lease payments are not included in the measurement of the lease
liability and are recognised as a cost of sale in the profit or
loss.
3.15 Share-based payments
Share-based payment transactions of the Company
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. 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 hurdle shares represent equity-settled share-based arrangements
under which the Group receives services as a consideration for
equity shares, over and above their nominal price. The fair value
of the grant of Founder Preferred Shares (and attached warrants),
and hurdle shares 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. See note 26 for further details.
3.16 Financial instruments
Financial assets and financial liabilities are recognised when a
Group entity becomes a party to the contractual provisions of the
instruments.
Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and
financial liabilities (other than financial assets and financial
liabilities at fair value through profit or loss) are added to or
deducted from the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition. Transaction
costs directly attributable to the acquisition of financial assets
or financial liabilities at fair value through profit or loss are
recognised immediately in profit or loss.
3.17 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 at their transaction price, 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. The Group have
adopted the 'simplified approach' to determine the expected credit
loss associated with trade and other receivables. 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.
3.18 Financial liabilities and equity instruments
i. Classification as debt or equity
Debt and equity instruments issued by a group entity are
classified as either financial liabilities or as equity in
accordance with the substance of the contractual arrangements and
the definitions of a financial liability and an equity
instrument.
ii. Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by a group entity are
recognised at the proceeds received, net of direct issue costs.
Repurchase of the Company's own equity instruments is recognised
and deducted directly in equity. No gain or loss is recognised in
profit or loss on the purchase, sale, issue or cancellation of the
Company's own equity instruments.
iii. Financial liabilities
The Company classifies its financial liabilities as other
financial liabilities. Other financial liabilities are measured at
fair value on initial recognition and subsequently measured at
amortised cost, using the effective-interest method.
Trade and other payables
Trade and other payables are measured at their transaction price
unless the arrangement constitutes a financing transaction in which
case the transaction is measured at present value of future
payments discounted at prevailing market rate of interest. Other
financial liabilities are initially measured at fair value net of
their transaction costs. They are subsequently measured at
amortised cost using the effective interest method.
Other interest bearing loans and loan notes
Borrowings other than bank overdrafts are recognised initially
at fair value less attributable transaction costs. Subsequent to
initial recognition, borrowings are stated at amortised cost with
any difference between the amount initially recognised and
redemption value being recognised in the income statement over the
period of the borrowings, using the effective interest method.
Financial liabilities at FVTPL
The Group classify financial liabilities as at FVTPL for
contingent consideration, a financial liability arising following a
business combination in accordance with IFRS 3. The Group does not
hold financial liabilities at FVTPL for trading purposes, nor has
it designated any financial liabilities as FVTPL.
Financial liabilities at FVTPL are stated at fair value, with
any gains or losses arising on remeasurement recognised in profit
or loss.
The Group derecognises financial liabilities when, and only
when, the Group's obligations are discharged, cancelled or have
expired. The difference between the carrying amount of the
financial liability derecognised and the consideration paid and
payable, including any non-cash assets transferred or liabilities
assumed, is recognised in profit or loss.
3.19 Defined contribution pension scheme
Contributions to defined contribution pension schemes are
charged to the consolidated statement of comprehensive income in
the year to which they relate.
3.20 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.
4. Functional and presentation currency
The Company is listed on the main market of the London Stock
Exchange. These consolidated financial statements are presented in
pound sterling, which is the Company's presentational currency.
Items included within the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates. Subsidiaries
within the Group trade in Euros, Swedish Krona, Danish Krona and
Norwegian Krone.
All amounts have been rounded to the nearest thousand, unless
otherwise indicated.
5. Accounting judgements, estimates and assumptions
5.1 Judgements
The preparation of financial statements requires management to
exercise judgement in applying the Group's accounting policies. The
areas involving material judgement or complexity are set out below.
Additional detail on the judgements applied by management are set
out in the accounting policies section of the relevant notes.
Going concern
In order to satisfy itself the Group has adequate resources to
continue in operation for the foreseeable future, and that there
are no material uncertainties in respect of the Group's ability to
continue as a going concern, the Directors have exercised their
judgement when considering the Group's cash forecasts, including
sensitivities to risks that could reasonably impact the future
operating results, and available borrowing facilities. See note 3.2
for further details.
5.2 Estimates and assumptions
The Company makes certain assumptions regarding the future.
Estimates and assumptions 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.
Impairment of goodwill and other intangible assets
Determining whether goodwill is impaired requires an estimation
of the value in use of the cash generating units to which the
goodwill has been allocated. The value in use calculation requires
the Group to estimate the future cash flows expected to arise from
the CGUs and a suitable discount rate in order to calculate present
value.
The Group judge there to be three CGUs - the UK, the Netherlands
and the Nordics, the basis of which is disclosed in note 3.10. This
is reviewed annually to ensure compliance with accounting
standards.
The discount rate applied in the value in use calculation is an
approximation of the weighted average cost of capital for the CGU.
This has been derived taking into account both company information
and market data provided by a 3rd party specialist.
The estimated cash flows expected to arise include assumptions
on lease renewals rates and associated costs. If the lease renewal
rates are below expectations, this could have a significant impact
on the cash flows generated in future periods. The renewal rates
adopted are based on previous renewal rates across the
business.
Growth rates are also inherent in the calculation and used when
deriving a terminal value. Should the growth rate be overstated,
future cash flows to the business may be inflated, resulting in a
higher value in use. Growth rates applied are based on the historic
growth rates of the CGU, independent market data and other industry
insight publications.
Credit loss provisions
The application of IFRS 9, when measuring expected credit losses
and the assessment of provisions required for accounts receivable
balances applied, a number of estimates are required since the
expected credit loss provision requires a forward looking
assessment. Data points when making this assessment included
reference to future expected unemployment rates, GDP growth rates
as well as industry projected growth rates. Sensitivity analysis
was undertaken and if the credit loss provisions percentages
applied were 10% higher than those applied, an additional GBP393k
credit loss provision would be required. The Group are however of
the opinion that the rates used in note 18 remain appropriate.
6. Revenue
The following is an analysis of the Group's revenue for the year
from continuing operations:
2021 2020
GBP000 GBP000
Media sales 119,324 81,327
Production, labs and studio 5,074 4,844
--------- ---------
124,398 86,171
========= =========
Analysis of revenue by country of destination:
2021 2020
GBP000 GBP000
United Kingdom 66,234 39,240
Netherlands 22,540 17,263
Nordics 35,624 29,668
--------- ---------
124,398 86,171
========= =========
2021 2020
GBP000 GBP000
Revenue recognised in the year relating to deferred income balances 2,100 866
========= ===========
In 2022, the Group expects to recognise GBP6.6m of revenue
currently held in deferred income.
Major customer revenue
The Group generates revenues from advertisers who may be
represented by a media agency or specialist. These media agencies
and specialists may be under common control of a holding agency
group. Three of these holding agency groups each comprise more than
10% of the Group's revenue as follows:
2021
GBP000
Holding agency group A (UK, NL and Nordics) 31,338
Holding agency group B (UK, NL and Nordics) 24,868
Holding agency group C (UK, NL and Nordics) 14,334
70,540
========
7. Segmental reporting
Operating segments are reported in a manner consistent with the
information provided to the Chief Operating Decision Maker
("CODM"). The CODM, who monitors the performance of the operating
segments, as well as allocating resources to them, have been
identified as the executive directors, in line with the accounting
policy.
2021 UK Netherlands Nordics Total
GBP000 GBP000 GBP000 GBP000
Revenue 66,234 22,540 35,624 124,398
Interest payable (4,859) (2,373) (1,721) (8,953)
Depreciation, amortisation and impairment on
tangible fixed assets (43,729) (10,167) (13,079) (66,975)
(Loss) / profit for the period (30,070) 1,336 (1,541) (30,275)
Non-current assets 243,856 77,776 91,956 413,588
Total assets 317,820 88,427 106,374 512,621
Total liabilities (190,453) (64,051) (64,697) (319,201)
2020 (restated) UK Netherlands Nordics Total
GBP000 GBP000 GBP000 GBP000
Revenue 39,240 17,263 29,668 86,171
Interest payable (6,148) (2,528) (1,802) (10,478)
Depreciation, amortisation and impairment on tangible
fixed assets (46,954) (10,166) (11,954) (69,074)
Impairment on intangible assets and investment in
associates (61,000) (17,500) (35,300) (113,800)
Loss for the period (94,977) (20,583) (36,145) (151,705)
Non-current assets 285,750 90,856 83,988 460,595
Total assets 320,472 93,750 115,692 529,914
Total liabilities (183,872) (61,242) (61,000) (306,114)
Included in the UK assets and UK loss for the period above is
GBP5.0m (2020: GBP5.2m) asset and GBP0.05m (2020: GBP0.1m) loss
relating to investment in associate. Further details of the
investment in associate can be found in note 17.
8. Expenses by nature
As restated
2021 2020
GBP000 GBP000
Depreciation of property, plant and equipment 9,409 9,977
Depreciation of right of use asset 33,148 32,894
Amortisation of intangible assets 24,418 24,768
Impairment of intangible assets - 105,800
Impairment of investment in associate - 8,000
Impairment of site asset - 1,435
Employee expenses 18,072 15,941
(Profit) / loss on disposal of property, plant and equipment (34) 117
Foreign exchange loss / (gain) 194 (338)
Acquisition fees - 3,093
Rent concessions (3,481) (8,306)
Site profit share, rates, utilities and maintenance 30,622 20,142
======= ===========
9. Auditor's remuneration
2021 2020
GBP000 GBP000
Audit fees payable for the audit of the Group accounts 449 266
Audit fees payable for the audit of subsidiary accounts by the Group auditor 185 146
Audit fees payable for the audit of subsidiary accounts by other auditor 154 176
------ ------
788 588
====== ======
10. Employee benefit expenses
Group
2021 2020
GBP000 GBP000
Employee benefit expenses (including Directors) comprise:
Wages and salaries 14,133 14,473
National insurance 2,716 2,269
Government grants - employee cost re-imbursement (108) (1,569)
Defined contribution pension cost 748 678
Hurdle share option cost 583 90
------ -------
18,072 15,941
====== =======
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 of the Company
listed on page 9.
2021 2020
GBP000 GBP000
Salary 1,469 1,071
Benefits in kind 78 42
Defined contribution scheme costs 42 39
Hurdle share option costs 278 90
------ ------
1,867 1,242
====== ======
11. Finance income and expense
Recognised in profit or loss
2021 2020
GBP000 GBP000
Finance income
Interest on:
- Bank deposits 17 17
--------- ----------
Total finance income 17 17
--------- ----------
Finance expense
Bank interest payable 476 299
Interest payable on leases 8,470 9,641
Interest on contingent consideration - 538
Other interest payable 7 -
--------- ----------
Total finance expense 8,953 10,478
--------- ----------
Net finance expense recognised in profit or loss (8,936) (10,461)
========= ==========
12. Tax expense
12.1 Income tax recognised in profit or loss
The standard rate of corporation tax in the UK is 19.0%. The
company's profits for the accounting period are taxed at a rate of
19.0% (2020: 19.0%).
2021 2020
GBP000 GBP000
Current tax
Current tax on profits for the year 1,554 (969)
Adjustments in respect of prior years (27) (924)
--------- ---------
Total current tax 1,527 (1,893)
Deferred tax expense
Origination and reversal of timing differences (1,566) (2,898)
--------- ---------
Total deferred tax (1,566) (2,898)
--------- ---------
(39) (4,791)
========= =========
Total tax expense
Tax expense excluding tax on share of tax of equity accounted associates (39) (4,791)
--------- ---------
(39) (4,791)
========= =========
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 losses for the year are as follows:
As restated
2020
2021
GBP000 GBP000
Loss for the year (30,275) (151,705)
Income tax credit/expense (excluding income tax on associate, joint venture and discontinued
operations) (39) (4,791)
-------- -----------
Loss before income taxes (30,314) (156,496)
Tax using the Company's domestic tax rate of 19% (2020:19%) (5,760) (29,734)
Impairment charges not deductible - 21,627
Expenses not deductible for tax purposes 2,082 998
Fixed asset differences (107) -
Utilisation of tax loss carry back - 932
Foreign subsidiary tax rate difference 21 370
Adjustments to tax charge in respect of prior periods (41) (943)
Deferred tax not recognised (292) 292
Non-taxable income - (456)
Adjustment of closing deferred tax to average rate (543) 2,123
Remeasurement of deferred tax for changes in tax rates 4,601 -
-------- -----------
Total tax (credit) / expense (39) (4,791)
======== ===========
Changes in tax rates and factors affecting the future tax
charges
Deferred tax assets and liabilities at 31 December 2021 have
been calculated taking into consideration the applicable rates when
the temporary differences are expected to reverse. On 3 March 2021
it was announced the UK corporation tax rate is to increase to 25%
from 1 April 2023 and it was substantively enacted in May 2021.
Deferred tax balances have been remeasured to reflect the
applicable tax rate in which the timing difference is expected to
reverse. Future changes in tax rates may have a material effect on
deferred tax.
12.2 Deferred tax balances
The following is the analysis of deferred tax
assets/(liabilities) presented in the consolidated statement of
financial position:
2021 2020
GBP000 GBP000
Deferred tax assets 1,147 -
Deferred tax liabilities (33,049) (33,677)
---------- -------------------
(31,902) (33,677)
========== ===================
Opening Recognised in Other Closing
balance profit or loss movements balance
GBP000 GBP000 GBP000 GBP000
2021
Property, plant and equipment 580 (117) - 463
Intangible assets 33,097 (513) - 32,584
Equity-settled share-based payments - (919) - (919)
Tax losses carried forward - (17) (209) (226)
33,677 (1,566) (209) 31,902
========= ==================== ========== =================
Reclassified and
other
Opening Recognised in timing Closing
balance profit or loss differences balance
GBP000 GBP000 GBP000 GBP000
2020
Property, plant and
equipment 910 (310) (20) 580
Intangible assets 35,685 (2,588) - 33,097
Other items 874 - (874) -
--------------------- ---------------------- ----------------------- ---------------------- ----------------------
37,469 (2,898) (894) 33,677
============================================= ===================== ====================== ======================
13. Property, plant and equipment
Group
Site assets Equipment Motor vehicles Right of use Total
asset
GBP000 GBP000 GBP000 GBP000 GBP000
Cost or valuation
At 1 January 2020 55,998 1,065 164 226,930 284,157
Additions 5,268 1,078 32 41,621 47,999
Disposals (1,749) (364) (41) (5,707) (7,861)
Lease modifications - - 12,688 12,688
Foreign exchange movements 964 240 6 4,885 6,095
At 31 December 2020 60,481 2,019 161 280,417 343,078
Additions 3,332 249 2 11,587 15,170
Disposals (483) (66) (80) (6,681) (7,310)
Transfers between classes - (89) 89 - -
Lease modifications - - - 15,432 15,432
Foreign exchange movements (1,109) (329) (7) (9,233) (10,678)
------------------ --------- -------------- ------------ ------------
At 31 December 2021 62,221 1,784 165 291,522 355,692
================== ========= ============== ============ ============
Accumulated depreciation and impairment
At 1 January 2020 9,664 147 64 67,754 77,629
Charge owned for the year 9,397 538 42 - 9,977
Charge leased for the year - - - 32,894 32,894
Disposals (1,629) (295) (23) (3,452) (5,399)
Impairment charge 1,435 - - - 1,435
Exchange adjustments 254 206 1 750 1,211
------------ ----- ---- --------- ---------
At 31 December 2020 19,121 596 84 97,946 117,747
Charge owned for the year 8,956 428 25 - 9,409
Charge leased for the year - - - 33,148 33,148
Disposals (463) (52) (80) (2,816) (3,411)
Transfers between classes 161 (215) 54 - -
Exchange adjustments (446) (12) (3) (1,668) (2,129)
------------ ----- ---- --------- ---------
At 31 December 2021 27,329 745 80 126,610 154,764
============ ===== ==== ========= =========
Net book value
At 1 January 2020 46,334 918 100 159,176 206,528
At 31 December 2020 41,360 1,423 77 182,471 225,331
At 31 December 2021 34,892 1,039 85 164,912 200,928
============ ===== ==== ========= =========
Included within site assets is GBP0.3m (2020: GBP0.5m) related
to assets under course of construction.
The right of use asset arises from the Group entering into
leases to secure advertising site, office space and equipment and
other leases. At the year end, the net book value of the right of
use asset that related to site leases was GBP158.3m (2020:
GBP174.4m), to office leases was GBP4.4m (2020: GBP5.3m) and to
equipment and other leases was GBP2.2m (2020: GBP2.8m). Details of
the IFRS16 lease liability recognised in relation to the right of
use asset can be found in note 20.
The depreciation methods and periods used by the group are
disclosed in note 3.9. The assets' residual values and useful lives
are reviewed, and adjusted if appropriate, at the end of each
reporting period. An asset's carrying amount is written down
immediately to its recoverable amount if the asset's carrying
amount is greater than its estimated recoverable amount. Gains and
losses on disposals are determined by comparing proceeds with
carrying amount. These are included in the consolidated statement
of profit or loss.
A subsidiary of the Group has a debenture including a fixed
Charge over all present freehold and leasehold property; a first
fixed charge over book and other debts, chattels, goodwill and
uncalled capital, both present and future; and a first floating
charge over all assets and undertaking both present and future
dated 28 May 2020.
14. Intangible assets
Group
Acquired
rights over
advertising
Brand sites Goodwill Total
GBP000 GBP000 GBP000 GBP000
Cost
At 1 January 2020 6,725 210,618 173,434 390,777
Foreign exchange movement - (166) (142) (308)
------ ------------------ ------------------ ---------
At 31 December 2020 6,725 210,452 173,292 390,469
Foreign exchange movement - 468 385 853
------ ------------------ ------------------ ---------
At 31 December 2021 6,725 210,920 173,677 391,322
====== ================== ================== =========
Accumulated amortisation and
impairment
At 1 January 2020 1,173 28,667 - 29,840
Charge for the year 673 24,095 - 24,768
Impairment charge (restated) - 450 105,350 105,800
------ ------------------ ------------------ ---------
At 31 December 2020 1,846 53,212 105,350 160,408
Charge for the year 673 23,745 - 24,418
------ ------------------ ------------------ ---------
At 31 December 2021 2,519 76,957 105,350 184,826
====== ================== ================== =========
Net book value
At 1 January 2020 5,552 181,951 173,434 360,937
At 31 December 2020 4,879 157,240 67,942 230,061
At 31 December 2021 4,206 133,963 68,327 206,496
====== ================== ================== =========
The brand asset relates to the "Ocean" brand which was acquired
as part of a single business combination. The remaining period over
which amortisation is to be charged on the Ocean brand is 6.25
years
Acquired rights over advertising sites are assets acquired as
part of a number of business combinations that give the Group the
ability to generate income from landlord contract commitments. The
remaining period over which amortisation is to charged on acquired
rights over advertising sites is between 1.25 and 12.40 years.
The prior period acquired rights over advertising site and
goodwill balances have been restated following the identification
of a calculation error within the value in use financial model used
when testing for impairment. This resulted in an adjustment to the
impairment charge recognised in FY20 and the net book of these
assets at 31 December 2020. Please see note 27 for further
details.
15. 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 Group has three CGU's and for the purpose of impairment
testing each CGU 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 in revenue and costs
- Free cash flow
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.
The key assumption used in the models for each CGU were as
follows:
UK NL Nordics
Basis of recoverable Value in use Value in use Value in use
amount use
Key assumptions:
Revenue growth 10.9% 10.5% 12.9%
Cost growth 5.4% 5.2% 4.5%
Forecast period 5 years 5 years 5 years
Growth rate beyond
forecast period 2.0% 2.0% 2.0%
Pre-tax discount
rate for forecast
period 11.0% 9.8% 10.9%
The key assumptions have been derived following the review of
historic performance of the CGUs, whilst also taking into account
forward looking external reports and independent market data.
In each model the value in use was in excess of the carrying
amount and therefore no impairments were recognised in the
year.
The carrying amount of goodwill is allocated to the cash
generating units (CGUs) as follows:
As restated
2021 2020
GBP000 GBP000
Ocean UK 43,671 43,671
Ocean Nordics 24,656 24,271
------ -----------
68,327 67,942
====== ===========
16. Subsidiaries
Details of the Group's subsidiaries at the end of the reporting
period are as follows:
Name of subsidiary Principal activity Place of incorporation Proportion of ownership interest and voting
and operation power held by the Group (%)
2021 2021
1) Ocean Jersey Topco
Limited Holding company Jersey 100 100
2) Ocean Bidco Limited Holding company England & Wales 100 100
3) SCP Acquisition
Limited Dormant company England & Wales 100 100
4) Ocean Outdoor UK
Limited OOH Media Owner England & Wales 100 100
5) Signature Outdoor
Limited OOH Media Owner England & Wales 100 100
6) Mediaco Outdoor
Limited OOH Media Owner England & Wales 100 100
7) Forrest Outdoor
Media Limited OOH Media Owner Scotland 100 100
8) Ocean Brands Limited Dormant subsidiary Scotland 68 68
9) Ngage Media B.V OOH Media Owner Netherlands 100 100
10) DKTD Media B.V OOH Media Owner Netherlands 100 100
11) Ocean Outdoor
Nederland B.V OOH Media Owner Netherlands 100 100
12) Ocean Outdoor
Nordics AB Holding company Sweden 100 100
13) AdCityMedia AB OOH Media Owner Sweden 100 99
14) Ocean Outdoor
Norway A/S OOH Media Owner Norway 100 99
15) Ocean Outdoor
Sweden AB OOH Media Owner Sweden 100 100
16) Ocean Outdoor
Denmark A/S OOH Media Owner Denmark 100 100
17) Ocean Outdoor
Finland Oy OOH Media Owner Finland 100 100
18) Ocean Outdoor
Germany GmbH OOH Media Owner Germany 100 100
19) GM-Gruppen Moving
Message AB OOH Media Owner Sweden 100 99
The registered address for Ocean Jersey Topco Limited is 3rd Floor, 44 Esplanade, St Helier,
Jersey, JE4 9WG.
The registered address for entities incorporated in England & Wales is 25 Argyll Street, London,
W1F 7TU, United Kingdom.
The registered address for entities incorporated in Scotland is 7 Seaward Street, Paisley
Road, Glasgow, G41 1HJ, United Kingdom.
The registered address for entities incorporated in Netherlands is Locatellikade 1, 1076AZ,
Amsterdam, Netherlands.
The registered address for Ocean Outdoor Nordics AB & Ocean Outdoor Sweden AB is Ha lsingegatan
45, 113 31 Stockholm, Sweden.
The registered address for AdCityMedia AB is Frihamnsgatan 22, Magasin 3, 115 56 Stockholm.
Sweden
The registered address for GM-Gruppen Moving Message AB is Stro mslundsgatan 4, 507 62 Bora
s. Sweden
The registered address for Ocean Outdoor Germany GmbH is Winterstraße 2, 22765 Hamburg,
Germany.
The registered address for Ocean Outdoor Denmark A/S is Gammel Mønt 2, 1. sal 1117 København
K, Denmark.
The registered address for Ocean Outdoor Finland Oy is Pursimiehenkatu 29-31 E 00150 Helsinki,
Finland.
17. Associates
The following entities have been included in the consolidated
financial statements using the equity method:
Name of associate Country of Relationship to the Proportion of ownership interest held as at
incorporation entity (%)
principal place of
business
2021 2020
1) Visual Art
International Holding Intermediate Holding
AB Sweden Company 49 49
2) Visual Art Sweden Digital signage
AB Sweden company 49 49
3) Visual Art Germany Digital signage
GmbH Germany company 49 49
Digital signage
4) Visual Art USA Inc. USA company 49 49
5) Visual Art Norway Digital signage
AS Norway company 49 49
6) Visual Art Finland Digital signage
Oy Finland company 49 49
7) Visual Art Denmark Digital signage
Aps Denmark company 49 49
8) Visual Art
Technologies UK Digital signage
Limited England & Wales company 49 -
The registered address for Visual Art International Holding AB
and Visual Art Sweden AB is Ha lsingegatan 45, 113 31 Stockholm,
Sweden.
The registered address for Visual Art Germany GmbH is
Winterstraße 2, 22765 Hamburg, Germany.
The registered address for Visual Art USA Inc is 20 West Kinzie
Street, 17th floor Chicago, IL 60654, USA.
The registered address for Visual Art Norway AS is Martin Linges
Vei 25 1364 Fornebu, Norway.
The registered address for Visual Art Finland OY is A yritie 8
D, 01510 Vantaa, Finland.
The registered address for Visual Art Denmark ApS is Gammel Mont
2 1, 1117 København, Denmark. The registered address for Visual Art
Technologies UK Limited is 16 Great Queen Street, Covent Garden,
London, United Kingdom, WC2B 5AH
The Group has determined the above entities to be associates
following an assessment of the investment in the Visual Art Sweden
AB and its subsidiaries. The Group has less than 50% of the issued
share capital and voting rights, and no majority representation on
the board of the company. In the absence of power and control, it
is considered appropriate to account for the investment as an
associate.
i. Summarised financial information (material associates)
Visual Art Sweden AB and its subsidiaries
Visual Art Sweden AB and its subsidiaries have the same
financial year end as the Group and below is the latest available
unaudited financial information for the associate:
2021 2020
GBP000 GBP000
As at 31 December 2021
Non-current assets 679 840
Current assets 6,005 4,378
Non-current liabilities (138) -
Current liabilities (5,900) (3,721)
Period ended 31 December 2021
Revenues 18,111 17,482
Loss from continuing operations (372) (188)
------- -------
Total comprehensive income (372) (188)
======= =======
The cost of investment for Visual Art Sweden AB and its
subsidiaries is as follows:
2021 2020
GBP000 GBP000
Cost 13,297 13,297
Share of loss FY20 (94) (94)
Impairment FY20 (8,000) (8,000)
Share of loss FY21 (186) -
5,017 5,203
Management performed an impairment review over the associate to
determine if it had suffered any impairment at 31 December 2021.
The recoverable amount of the associate was determined using a
discounted cash flow (DCF) model over a period of 5 years together
with a terminal value calculation which was adjusted by Ocean's
equity ownership percentage and a discount for a non-controlling
interest. The use of this methodology 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 key assumptions included in the DCF calculations are:
- Discount rates
- Growth rates in revenue and costs
- Free cash flow
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.
The key assumptions used in the model were as follows:
Revenue growth: 19.8%
Cost growth: 12.4%
Forecast period: 5 years
Growth rate beyond forecast
period: 2.0%
Pre-tax discount rate: 22.6%
Following the assessment no impairment has been identified for
the investment in associate. Sensitivity analysis was undertaken
with the results as follows:
Potential impairment
GBP000
Post-tax discount rate increased by 10% -
10% decrease in Revenue growth rates over FY22 to FY26 1,492
Decrease in long term growth rate to 1% -
18. Trade and other receivables
Group
2021 2020
GBP000 GBP000
Trade receivables 55,150 35,215
Less: provision for impairment of trade receivables (3,933) (1,917)
Trade receivables - net 51,217 33,298
Prepayments and accrued income 1,393 2,379
Other receivables 4,448 3,612
Total trade and other receivables 57,058 39,289
Less: current portion - trade receivables (51,217) (33,298)
Less: current portion - prepayments and accrued income (1,393) (2,379)
Less: current portion - other receivables (4,448) (3,612)
Total non-current portion - -
Movements in the impairment allowance for trade receivables are as follows:
2021 2020
GBP000 GBP000
At 1 January 1,917 778
Movements in the year 312 -
Receivables provided for in the year 1,704 1,139
3,933 1,917
2021 2021
GBP000 GBP000
Estimated default rate Gross carrying amount Credit loss allowance
Current 3% 33,062 1,154
Up to 3 months past due 7% 12,663 884
More than 3 months past due 20% 9,425 1,895
55,150 3,933
2020 2020
GBP000 GBP000
Gross carrying
Estimated Credit loss
default rate amount allowance
Current 1% 12,011 120
Up to 3 months past due 2% 13,034 261
More than 3 months past due 15% 10,170 1,536
35,215 1,917
The carrying value of trade and other receivables classified as
financial assets at amortised cost 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. To measure expected credit losses
on a collective basis, trade receivables are grouped based on
similar credit risk and aging.
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 as the key
macroeconomic factors in the countries where the Group operates.
Default rates have increased in FY21 following a review of the
rates applied. The increase demonstrates a prudent approach taken
by management, applying increased risk percentages following a more
in depth analysis of balances due by customer type undertaken in
the year. The increase in the default risk is not however is not a
reflection additional bad debts suffered as a result of COVID-19,
or other external factors.
19. Trade and other payables
2021 2020
Due within one year GBP000 GBP000
Trade payables 19,038 23,978
Other payables 3,895 11,824
Contingent consideration 2,880 -
Accrued consideration - 148
Accruals and deferred income 55,296 28,033
81,109 63,983
The deferred income balance within accruals and deferred income
has increased in the year following increased activity in the
period, with revenue rising 44%. The increase in revenue,
especially witnessed in second half of the year, has resulted in
additional deferred income being recognised at the year end, both
relating to advertising campaigns spanning the year end, but also
relating to campaigns booked to run in FY22, with customers
experiencing less uncertainty surrounding COVID-19 regarding the
future months ahead.
2021 2020
Due after more than one year GBP000 GBP000
Other payables 25 839
Contingent consideration - 441
25 1,280
Contingent consideration in the prior was GBP441k based on
weighted average probability of EBTIDA performance targets being
satisfied. At 31 December 2021 the contingent consideration
provision was increased by GBP2.4m to GBP2.9m based on the latest
information available. FY21 is the final measurement period for the
contingent liability and therefore there is not expected to be a
variation between the fair value of the instrument at year end and
the settlement date, therefore there is not expected to be a
material estimation uncertainty. The fair value adjustment on the
face of the consolidated statement of profit or loss relates
entirely to the movement in the contingent consideration
liability.
20. Leases
2021 2020
Due within one year GBP000 GBP000
As at 1 January 197,966 164,577
Additions
- Lease additions 9,287 42,465
- Lease modification 15,432 12,688
Disposals (3,946) (2,382)
Finance expense 8,470 9,641
COVID-19 rent concessions (3,480) (8,306)
Foreign exchange differences (6,929) 3,497
Payments
- Interest payments (8,470) (9,641)
- Principal payments (24,028) (14,573)
As at 31 December 184,302 197,966
As at 31 December
Current 40,331 36,954
Non-current 143,971 161,012
As at 31 December 184,302 197,966
21. Reserves
The following describes the nature and purpose of
each reserve within equity:
Share premium
Amount subscribed for share capital in excess of nominal value.
Any transaction costs are deducted from share premium, net of any
related income tax benefits.
Foreign exchange reserve
Foreign exchange gains and losses on translation of subsidiary
undertakings into the presentational currency of the Group.
Retained earnings
All other net gains and losses and transactions with owners
(e.g. dividends) not recognised elsewhere, including share based
employee remuneration.
Founder preferred shares
Founder Preferred share capital represents the nominal (par)
value of shares that have been issued. See note 23 for further
details.
Treasury shares
Amount paid by the company to purchase its own shares.
22. Earnings per share
As restated
2021 2020
Basic and diluted loss per share (pence) (56) (283)
2021 2020
Number Number
Weighted average number of ordinary shares
used as the denominator in calculating
basic and diluted earnings per share 53,817,937 53,695,518
At 31 December 2021, 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. At year end there were a potential 125,000 director' share
options, 438,000 Founder Preferred Shares and 5,500,000 Hurdle
Shares that may be dilutive in the future.
23. Share capital
Ordinary shares, no par value Number Premium Number Premium
2021 2021 2020 2020
'000 GBP000 '000 GBP000
Opening balance 54,096 376,898 54,009 376,246
Issued and fully paid in the year 57 303 87 652
Shares issued on Founder Preferred share conversion 87 652 - -
Closing balance 54,240 377,853 54,096 376,898
Shares held in treasury, no par value
Opening balance 397 2,417 397 2,417
Closing balance 397 2,417 397 2,417
Founder Preferred Shares
Opening balance 525 3,909 612 4,561
Converted during the year (87) (652) (87) (652)
Closing balance 438 3,257 525 3,909
On 16 January 2020 87,500 Founder Preferred Shares were
converted into Ordinary shares on a one-for- one basis. A further
87,500 Founder Preferred Shares were converted on 5 January 2021
into Ordinary shares on a one-for-one basis. There are no Founder
Preferred Shares held in Treasury. Each Founder Preferred Share was
issued with a Warrant as described below.
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% 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").
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. These shares were
cancelled on 7 July 2021. The cancellation resulted in the
outstanding IFRS 2 charge for these shares being accelerated to the
consolidated statement of profit or loss.
A total of 5,500,000 new hurdle shares were issued in 3
tranches. 1,833,330 A shares were issued that vest over a 10 month
period, 1,833,332 B shares that vest over a 22 month period and
1,833,338 C shares that vest over a 34 month period.
The hurdle shares will only be entitled to a percentage of the
growth in the equity value of the Company in excess of certain
pre-determined values. The hurdle shares have a target price, which
is their base value,
$8.75, (set by reference to share price at date of grant)
increased by 10% compounded to the first date of the relevant put
option period (without regard to the date that the put option is
actually exercised) and thereafter annually. Each hurdle share will
entitle the holder to receive an amount which will depend on the
"Excess", which is the amount by which the volume weighted average
price of an Ocean Outdoor Limited share at the relevant date
exceeds the hurdle target price.
It is at the company's discretion whether this amount is settled
either in cash or in shares in Ocean Outdoor Limited.
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 them. 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,
they 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 them 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 they 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 them 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.
24. Financial instruments
The Group is exposed through its operations to the following
financial risks:
- Credit risk;
- Liquidity risk; and
- 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
2021 2020
GBP000 GBP000
Cash and cash equivalents 41,975 30,030
Trade receivables 51,217 33,298
Other receivables 4,448 3,612
Total financial assets 97,640 66,940
Financial liabilities
Amortised cost
2021 2020
GBP000 GBP000
Trade payables - current 19,038 23,978
Other payables - current 3,895 11,972
Accruals - current 48,706 25,283
Lease liability - current 40,331 36,954
Other payables - non current 25 839
Lease liability - non current 143,971 161,012
Loan - non current 12,534 4,949
Total financial liabilities 268,500 264,987
IFRS13 requires disclosure of fair value measurements by level,
using the following fair value measurement hierarchy:
- Quoted prices in active markets for identical assets or liabilities (level 1)
- Inputs other than quoted prices included in level 1 which are
observable for the asset or liability, either directly or
indirectly (level 2)
- Inputs for the asset or liability which are not based on observable market data (level 3)
In FY20, the Group had a GBP441k contingent consideration
liability which was measured at fair value through profit and loss.
This was presented in other payables, non-current liabilities. In
FY21 a contingent consideration liability of GBP2.88m is presented
in trade and other payables, current liability. The fair value of
the contingent consideration was derived following the use of level
3 inputs based on the probability of performance targets being
satisfied by a business combination undertaken by the Group in
FY19. FY21 is the final measurement period for the contingent
liability and therefore there is not expected to be a variation
between the fair value of the instrument at year end and the
settlement date with no material estimation uncertainty.
(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. Trade receivables contain receivables due from
customers to which we may also owe volume rebates that are
contained within our trade payables and accruals. 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, GBP26.8m (2020:
GBP18.1m) was held on current account with HSBC Bank plc, GBP5.6m
(2020: GBP6.1m) was held on current account with Barclays Bank plc,
EUR3.6m (GBP3.0m) (2020: EUR1.5m (1.4m)) was held on current
account with ABN AMRO, EUR1.9m (GBP1.6m) (2020: EUR1.6m (GBP1.5m))
was held on current account with Rabobank and SEK 60.8m (GBP5.0m)
(2020: SEK30.9m (GBP2.9m)) was held on current account with
Skandinaviska Enskilda Banken.
Interest rate risk
Interest rate risk arises from the Group's bank loan. The Group
is exposed through variable interest rates applied to the bank loan
on which interest is paid. A change of 1 per cent in interest rates
at the balance sheet date would have increased finance costs in the
profit or loss by GBP0.2m. This calculation assumes that the change
occurred at the balance sheet date and had been applied to risk
exposures existing at that date. This analysis assumes that all
other variables remain constant.
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.
At 31 December Carrying Total Up to 3 months Between 3 and Between 1 and Between 2 and Over 5 years
2021 amount 12 months 2 years 5 years
2021 2021 2021 2021 2021 2021 2021
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Trade payables
- current 19,038 19,038 19,038 - - - -
Other payables
- current 3,895 3,895 3,895 - - - -
Accruals -
current 48,706 48,706 48,706 - - - -
Contingent
consideration
- current 2,880 2,880 - 2,880 - - -
Other payables
- non current 25 25 - - 25 - -
Lease liability
(undiscounted) 210,720 210,720 13,659 27,489 35,357 79,354 54,861
Loan - non
current 12,534 12,534 - - 12,534 - -
At 31 December Carrying Total Up to 3 months Between 3 and Between 1 and Between 2 and Over 5 years
2020 amount 12 months 2 years 5 years
2020 2020 2020 2020 2020 2020 2020
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Trade payables
- current 23,978 23,978 23,465 513 - - -
Other payables
- current 11,972 11,972 11,972 - - - -
Accruals -
current 25,283 25,283 25,283 - - - -
Other payables
- non current 1,280 1,280 - - 814 466 -
Lease liability
(undiscounted) 231,241 231,241 9,229 28,610 31,873 90,095 71,434
Contingent
consideration 441 441 - - 441 - -
Loan - non
current 4,949 4,949 - - 4,949 - -
At 31 December 2021
Currency risk
The Group is exposed to risk from movements in foreign currency
exchange rates, interest rates and market prices that affect its
assets, liabilities and anticipated future transactions. The Group
is exposed to foreign currency risk from transactions other than
functional currency. Transaction exposure arises because affiliated
companies undertake transactions in foreign currencies. The Group
does not use forward foreign exchange rate contracts to hedge
exchange rate risk. Its exposure is as follows:
UK 2021 NL 2021 Nordics
'000 '000 2021
'000
Cash and cash equivalents
- EUR 2,522 - -
- USD 1,834 - -
- SEK 4,544 - -
Trade receivables
- USD 109 - -
Trade payables - current
- EUR 234 - -
Accruals
- EUR 1,427 - -
Contingent consideration
- EUR 3,449 - -
At 31 December 2020
UK NL Nordics
2020 2020 2020
'000 '000 '000
Cash and cash equivalents
- EUR 893 - -
- USD 1,771 - -
- SEK 1,011 - -
Trade receivables
-USD 147 - -
Trade payables - current
- USD 53 - -
- EUR 39 - -
Accruals
- EUR 6,897 - -
- SEK - - -
Contingent consideration
- EUR 449 - -
At 31 December 2021
If the GBP exchange rate was to depreciate by 10% at FY21 year
end the difference in the FY21 financials above would be as
follows:
UK 2021 NL 2021 Nordics
'000 '000 2021
'000
Cash and cash equivalents
- EUR 2,269 - -
- USD 1,651 - -
- SEK 4,090 - -
Trade receivables
-USD 98 - -
Trade payables - current
- EUR 211 - -
Accruals
- EUR 1,284 - -
Contingent consideration
- EUR 3,104 - -
The effect of a 10% weakening of GBP at the reporting date had a
net impact of GBP0.03m, all other variables held constant. The
effect of fluctuations in exchange rates on the balance sheet
balances is partially offset through a natural hedge. On the same
basis, the Group would have reported a GBP0.01m reduced post-tax
loss.
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.
25. Notes supporting the cashflow
2021 Cash IFRS16 lease Bank loan Net debt
liability total
GBP000 GBP000 GBP000 GBP000
At 1 January 2021 30,030 (197,966) (4,949) (172,885)
11,945 32,498 (7,060) 37,383
Cash flows Non-cash items
- Bank arrangement fee release - - (525) (525)
- Lease additions - (9,287) - (9,287)
- Lease disposals - 3,946 - 3,946
- Finance expense - (8,470) - (8,470)
- COVID-19 rent concessions - 3,480 - 3,480
- Foreign exchange differences - 6,929 - 6,929
- Lease modifications - (15,432) - (15,432)
As at 31 December 2021 41,975 (184,302) (12,534) (154,861)
2020 Cash IFRS16 lease liability Bank loan Net debt total
GBP000 GBP000 GBP000 GBP000
At 1 January 2020 26,917 (164,577) - (137,660)
3,113 24,214 (4,880) 22,447
Cash flows Non-cash items
- Bank arrangement fee release - - (43) (43)
- Lease additions - (55,153) - (55,153)
- Lease disposals - 2,382 - 2,382
- Finance expense - (9,641) (26) (9,667)
- COVID-19 rent concessions - 8,306 - 8,306
- Foreign exchange differences - (3,497) - (3,497)
As at 31 December 2020 30,030 (197,966) (4,949) (172,885)
Significant non-cash transactions are as follows
2021 2020
GBP000 GBP000
Purchases of site assets, equipment and motor vehicles unpaid at year end 357 -
IFRS 16 right of use asset recognised 24,719 54,309
IFRS 16 right of use asset and lease liability disposal 3,946 2,382
IFRS 16 new operating leases 24,719 55,153
IFRS 16 interest payable 8,470 9,641
Interest payable on contingent consideration - 552
Cash and cash equivalents
Cash and cash equivalents consist of the following in GBP:
2021 2020
GBP000 GBP000
Cash at bank: GBP 28,754 21,920
EUR 6,964 4,053
USD 1,359 1,301
SEK 4,898 2,756
41,975 30,030
26. Share based payments
Management incentive plan
Ocean Jersey Topco Limited, a subsidiary of the Company, issued
shares to management which can be converted to Ordinary Shares in
Ocean Outdoor Limited under certain circumstances. 6,660,000 of
these Hurdle Shares were issued on 28 March 2018. These shares were
cancelled on 7 July 2021. The cancellation resulted in the
outstanding IFRS 2 charge of GBP0.15m for these shares being
accelerated to the consolidated statement of profit or loss.
A total of 5,500,000 new Hurdle Shares were issued in 3
tranches. 1,833,330 A shares were issued that vest over a 10 month
period, 1,833,332 B shares that vest over a 22 month period and
1,833,338 C shares that vest over a 34 month period.
The Hurdle Shares will only be entitled to a percentage of the
growth in the equity value of the Company in excess of certain
pre-determined values. The Hurdle Shares have a target price, which
is their base value, $8.75, (set by reference to share price at
date of grant) increased by 10% compounded to the first date of the
relevant put option period (without regard to the date that the put
option is actually exercised) and thereafter annually. Each Hurdle
Share will entitle the holder to receive an amount which will
depend on the "Excess", which is the amount by which the volume
weighted average price of an Ocean Outdoor Limited Ordinary Share
at the relevant date exceeds the hurdle target price. All Hurdle
Shares vest in the event of an exit with a target price equal to
the prorated time elapsed from grant date to exit date based on a
10% growth rate.
It is at the company's discretion whether this amount is settled
either in cash or in shares in Ocean Outdoor Limited, with no
present obligation, or any previous precedent, to settle the amount
in cash. It has therefore been accounted for and treated as equity
settled.
The following hurdle shares were issued in the year:
Fair value at grant
Exercise date
Number Grant date Expiry date price $
$
1) A Shares 1,833,330 7/07/21 7/05/22 9.63 0.29
2) B Shares 1,833,332 7/07/21 7/05/23 10.59 0.34
3) C Shares 1,833,338 7/07/21 7/05/24 11.65 0.33
On 29 October 2021 a member left the scheme. The Company
acquired 59,583 A shares, 59,583 B shares and 59,584 C shares from
the departing member. The shares remain in issue.
Fair value of share options granted in the year
In order to model the Hurdle Shares, a Monte Carlo simulation
model was used with the following inputs. The expected volatility
was established by considering not only the volatility of the
company's Ordinary Shares, but also those of several other broadly
comparable listed companies' share volatilities for 1, 2 and 3
years.
The following share-based payment arrangements were issued
during year:
Grant date share price Exercise price Expected volatility Option life (years) Input into the model
$ $ Risk free interest
rate
1) A Shares 8.75 9.63 19.00% 0.83 0.10
2) B Shares 8.75 10.59 19.00% 1.83 0.14
3) C Shares 8.75 11.65 19.00 2.83 0.20
Movements in Hurdle Shares during the year
2021 2020
Number of Number of
shares shares
Balance at the beginning of the year 6,600,000 6,600,000
Hurdle Shares cancelled during the year (6,600,000) -
Hurdle Shares issued during the year 5,500,000 -
Balance at the end of the year 5,500,000 6,600,000
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 Share price at issue was $10.5 per
share with the fair value of the shares issued at inception
determined to be $34.1m over and above their purchase price. This
was derived using a Monte Carlo valuation model with all shares
vesting immediately. The interest free rate applied was 2.58% with
a volatility of 39.6%, based on reference to a representative set
of listed companies taking into account the circumstances of the
Company at that time. The Three tranches of Founder Preferred
Shares have converted into Ordinary shares, with five tranches
remaining. Full details of the founder preferred shares, and the
attached rights, can be found in note 23.
Movement in founder preferred shares during the year
2021 2020
Number of Number of
shares shares
Balance at the beginning of the year 525,000 612,000
Founder preferred shares converted in the year (87,000) (87,000)
Balance at the end of the year 438,000 525,000
Director options
The Group previously issued 125,000 options on its ordinary
shares to its non-executive directors that vested in 2018. The
options expire on 28 March 2023 and have an exercise price of
$11.50 per share (subject to such adjustment as the Directors
consider appropriate in accordance with the terms of the Option
Deeds). The Group estimated the grant date fair value of each share
underlying the option to be $1.81 using a Black-Scholes model,
applying a risk free rate of 2.34%, a 0% dividend yield, volatility
of 37.4% and an average share price of $10.
Movement in Director options during the year
2021 2020
Number of options Number of
options
Balance at the beginning of the year 125,000 125,000
Balance at the end of the year 125,000 125,000
27. Restatement of prior year consolidated financial statements
Subsequent to the approval of the financial statements for the
year ended 31 December 2020, the Director's became aware of
information relating to a calculation error within the impairment
models used as part of the annual impairment test of goodwill and
intangible assets. Following the correction of the calculation
error in the model used in the prior year, there was a decrease in
the impairment charge recognised in the prior period of GBP27.8m.
The intangible asset carrying value in the prior period has
increased by GBP27.8m, with a reduction of the cost recognised in
the consolidated statement of profit and loss of GBP27.8m. This
adjustment does not impact cash. The calculation error identified
only impacts the financial year ended 31 December 2020 and does not
impact the financial position as at 1 January 2020. The following
amendments have been made to the comparatives in the current year
financial statements:
As previously
reported
As restated Change
GBP000 GBP000 GBP000
Consolidated statement of profit and loss
Administrative expenses 105,800 133,600 (27,800)
Consolidated statement of financial position
Intangible assets 230,061 202,261 27,800
Consolidated statement of cash flows
Impairment loss on intangible assets 105,800 133,600 (27,800)
As restated As previously Change
reported
Basic and diluted loss per share (pence) (283) (334) (51)
28. Related party transactions
Balances and transactions between the Company and its
subsidiaries, which are related parties of the Company, have been
eliminated on consolidation and are not disclosed in this note.
Details of transactions between the Group and other related parties
are disclosed below.
During the year the Company issued the following number of
shares to Directors of the company:
Ordinary Founder preferred Ordinary Founder preferred
shares shares shares shares
2021 2021 2020 2020
'000 '000 '000 '000
A Barron 18 (18) 18 (18)
A Bourkoff 50 (50) 50 (50)
S Desai 11 - - -
R Marcus 13 - - -
T Smith 10 - - -
M Soderstrom 11 - - -
Closing balance 113 (68) 68 (68)
29. Events after the reporting date
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 17
January 2022.
On 1st February 2022 the Group concluded a deal to sell its
wholly owned Media Tech trade to its joint venture Visual Art
Sweden AB in order to better optimise revenues and profits. The
Media Tech trade is not material nor considered a major line of
business to the Group and is therefore not shown as a discontinued
operation within the accounts.
On 13 April 2022 the Company announced it was in discussions
with Atairos, its largest shareholder, regarding a possible offer
for the Group. Whilst there can be no certainty that a formal offer
will be made, discussions continue and Atairos have presented a
proposal to the Board which is being considered. At this time the
Group continues to operate autonomously under the oversight of the
Board and Management. It is assumed, therefore, that trading will
continue as modelled without any adjustments to reflect any
possible incremental costs or savings should a transaction occur.
Atairos have not yet published their future intentions for the
Group and there may be uncertainty over the nature of the
continuing operations of the Group should the acquisition proceed
successfully. This gives rise to a material uncertainty, as defined
in auditing and accounting standards, related to events or
conditions that may cast significant doubt on the Group's ability
to continue as a going concern.
The following pages present unaudited financial information for
entities owned by the Group as at 31 December 2021. This allows
analysis and assessment of the underlying performance by operating
segment.
FY21 and FY20 financials are provided for comparison. The
financials are presented including IFRS16 accounting standard which
came in to effect 1 January 2019. Also presented are the FY21 and
FY20 financials under the previous accounting standard. The prior
year comparatives have been restated following a prior period
adjustment to the impairment charge recognised. This restatement
does not impact Reported Adjusted EBITDA or Adjusted EBITDA Excl.
IFRS 16.
Included for each operating segment is a reconciliation of
profit / loss from operations to Adjusted EBITDA.
In previous financial reporting the group referred to proforma
numbers in order to removed acquisition dates from the financials
in order to allow ease of comparison. The need to proforma the
numbers is no longer required.
Ocean Outdoor Limited and
subsidiaries
basis. Excl. IFRS 16 Excl. IFRS 16
The results below present the
Group on an unaudited
FY21 FY20 FY21 FY20
GBP'000 GBP'000 GBP'000 GBP'000
152,689 152,689
Billings _ 104,702 _ _ 104,702
Revenue 124,398 86,171 124,398 86,171
(82,319) (86,297)
Cost of sales _ (63,724) _ _ (70,086)
Gross profit 42,079 22,447 38,101 16,085
Administrative and other (63,271) (64,253)
expenses _ (168,388) _ _ (169,788)
(Loss) / profit from operations (21,192) (145,941) (26,152) (153,703)
Loss from fixed asset
investments (186) (94) (186) (94)
Finance expense (8,953) (10,478) (484) (837)
17 17
Finance income _ 17 _ _ 17
Loss before tax (30,314) (156,496) (26,805) (154,617)
39 39
Tax expense _ 4,791 _ _ 4,791
(30,275) (26,766)
Loss from continuing operations _ (151,705) _ _ (149,826)
(30,275) (26,766)
Total comprehensive loss _ (151,705) _ _ (149,826)
Excl. IFRS 16 Excl. IFRS 16
FY21 FY20
FY21 FY20
GBP'000 GBP'000 GBP'000 GBP'000
(Loss) / profit from operations (21,192) (145,941) (26,152) (153,703)
Depreciation 42,557 42,871 9,717 9,977
Impairment on site asset - 1,435 - 1,435
Amortisation 24,418 24,768 24,418 24,768
(Profit)/ loss on disposal on
tangible fixed assets (33) (7) (33) 117
Loss on disposal of IFRS 16
leases 102 - - -
Impairment on intangible assets
and investments - 113,800 - 113,800
Fair value adjustment of
contingent consideration - (2,256) - (2,256)
Management incentive plan 5,108 - 5,108 -
Acquisition costs/Deal fees 3,754 3,093 3,754 3,093
Debt raise fee - 551 - 551
Currency movements 87 554 87 554
Restructuring and redundancy
costs 725 1,038 725 1,038
638 638
Other one-off costs _ 239 _ _ 239
56,164 18,262 (387)
Adjusted EBITDA _ 40,145 _ _ _
Ocean Outdoor Limited and subsidiaries
The table below reconciles the reported loss from operations to
Reported Adjusted EBITDA and then reconciles Reported Adjusted
EBITDA to Adjusted EBITDA Excl. IFRS 16 .
FY21 FY20
GBP'000 GBP'000
Reported loss from operations (21,192) (145,941)
Depreciation on right of use asset 32,840 32,894
Depreciation on site assets, equipment and motor vehicles 9,717 9,977
Impairment on site asset - 1,435
Amortisation 24,418 24,768
Impairment on intangible assets and investments - 113,800
Profit on disposal on tangible fixed assets (33) (7)
Loss on disposal of IFRS 16 leases 102 -
Add-backs 10,312 3,219
_
Reported Adjusted EBITDA 56,164 40,145
(37,902)
Deduct site rents _ (40,532)
Adjusted EBITDA Excl. IFRS 16 18,262 (387)
_
Ocean Outdoor Limited and UK operating subsidiaries
The results below present the Ocean Outdoor Limited and UK
operating subsidiaries on an unaudited basis.
Excl. Excl.
IFRS 16 IFRS 16
FY21 FY20 FY21 FY20
GBP'000 GBP'000 GBP'000 GBP'000
90,386
Billings 90,386 55,520 _ _ 55,520
Revenue 66,234 39,240 66,234 39,240
(47,389)
Cost of sales (44,702) (33,660) _ _ (37,652)
Gross profit 21,532 5,580 18,845 1,588
(47,588)
Administrative and other expenses (46,922) (98,587) _ _ (97,751)
Loss from operations (25,390) (93,007) (28,743) (97,163)
Loss from fixed asset investments (186) (94) (186) (94)
Finance expense (4,859) (6,148) (441) (757)
7
Finance income 7 - _ _ -
Loss before tax (30,428) (99,249) (29,363) (98,014)
358
Tax expense 358 4,272 _ _ 4,272
(29,005)
Loss from continuing operations (30,070) (94,977) _ _ (93,742)
(29,005)
Total comprehensive loss (30,070) (94,977) _ _ (93,742)
Excl. IFRS 16 Excl. IFRS 16
FY20 FY21 FY20
FY21
GBP'000 GBP'000 GBP'000 GBP'000
Loss from operations (25,390) (93,007) (28,743) (97,163)
Depreciation 19,311 20,751 6,238 6,269
Impairment on site asset - 1,435 - 1,435
Amortisation 24,418 24,768 24,418 24,768
(Profit)/ loss on disposal on tangible fixed assets (34) (107) (34) -
Loss on disposal of IFRS 16 leases 102 - - -
Impairment on intangible assets and investments - 61,000 - 61,000
Fair value adjustment of contingent consideration - (2,256) - (2,256)
Management incentive plan 5,108 - 5,108 -
Acquisition costs/Deal fees 3,754 3,093 3,754 3,093
Debt raise fee - 551 - 551
Currency movements 87 554 87 554
Restructuring and redundancy costs 725 602 725 602
638 164 638
Other one-off costs _ _ _ _ _ 164
28,720 17,548 12,191
Adjusted EBITDA _ _ _ _ _ (983)
Ocean Netherlands
The results below present Ocean Netherlands (Ocean Outdoor
Netherlands, Ngage and Beyond) on an unaudited basis, translated in
GBP using reported exchange rates.
Excl. Excl.
IFRS 16 IFRS 16
FY21 FY20 FY21 FY20
GBP'000 GBP'000 GBP'000 GBP'000
18,316
Billings 24,434 _ 24,434 18,316
Revenue 22,540 17,263 22,540 17,263
(13,923)
Cost of sales (14,245) _ (15,058) (14,973)
Gross profit 8,295 3,340 7,482 2,290
(21,988)
Administrative and other expenses (4,275) _ (4,464) (22,153)
(Loss) / profit from operations 4,020 (18,648) 3,018 (19,863)
Finance expense (2,373) (2,528) (28) -
12
Finance income - _ - 12
(Loss) / profit before tax 1,647 (21,164) 2,990 (19,851)
581
Tax expense (311) _ (311) 581
(20,583)
(Loss) / profit from continuing operations 1,336 _ 2,679 (19,270)
(20,583)
Total comprehensive (loss) / income 1,336 _ 2,679 (19,270)
Excl. IFRS 16 Excl. IFRS 16
FY21 FY20
FY21 FY20
GBP'000 GBP'000 GBP'000 GBP'000
(Loss) / profit from operations 4,020 (18,648) 3,018 (19,863)
Depreciation and tangible asset impairment 10,167 10,166 2,442 2,538
Loss on disposal on tangible fixed assets 1 100 1 117
Impairment on intangible assets and investments - 17,500 - 17,500
Restructuring and redundancy costs - 109 - 109
_
9,227 401
Adjusted EBITDA 14,188 _ 5,461 _
Ocean Nordics
The results below present Ocean Nordics on an unaudited basis,
translated in GBP using reported exchange rates.
Excl. Excl.
IFRS 16 IFRS 16
FY21 FY20 FY21 FY20
GBP'000 GBP'000 GBP'000 GBP'000
30,866
Billings 37,869 _ 37,869 30,866
Revenue 35,624 29,668 35,624 29,668
(16,141)
Cost of sales (23,372) _ (23,851) (17,461)
Gross profit 12,252 13,527 11,773 12,207
(47,813)
Administrative and other expenses (12,074) _ (12,200) (48,884)
(Loss) / profit from operations 178 (34,286) (427) (36,677)
Finance expense (1,721) (1,802) (15) (80)
5
Finance income 10 _ 10 5
(Loss) / profit before tax (1,533) (36,083) (432) (36,752)
(62)
Tax expense (8) _ (8) (62)
(36,145)
(Loss) / profit from continuing operations (1,541) _ (440) (36,814)
(36,145)
Total comprehensive (loss) / income (1,541) _ (440) (36,814)
Excl. IFRS 16 Excl. IFRS 16
FY21 FY20
FY21 FY20
GBP'000 GBP'000 GBP'000 GBP'000
(Loss) / profit from operations 178 (34,286) (427) (36,677)
Depreciation and tangible asset impairment 13,079 11,954 1,037 1,170
Impairment on intangible assets and investments - 35,300 - 35,300
Restructuring and redundancy costs - 327 - 327
75
Other one-off costs - _ - 75
13,370
Adjusted EBITDA 13,257 _ 610 195
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FR ATMBTMTIMTJT
(END) Dow Jones Newswires
May 03, 2022 02:01 ET (06:01 GMT)
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