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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Ocean Outdoor Limited | LSE:OOUT | London | Ordinary Share | VGG6702A1084 | ORD NPV (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 10.20 | 10.10 | 10.30 | 0.00 | 00:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Jan 2022 to Jan 2025
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.
Hot Features
Premium
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 - - - - -
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At 31 December
2020 (restated) 3,909 376,898 (2,417) 941 (155,531) 223,800 223,800
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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)
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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)
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Cash generated from operations 47,106 32,148
Income tax paid 308 (2,688)
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Net cash from operating activities 47,414 29,460
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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
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Net cash used in investing activities (10,227) (6,756)
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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)
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Net cash used in financing activities (25,180) (19,633)
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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
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Cash and cash equivalents at the end of the year 41,975 30,030
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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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END
FR ATMBTMTIMTJT
(END) Dow Jones Newswires
May 03, 2022 02:01 ET (06:01 GMT)
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