Ocean Outdoor Limited
(Formerly Ocelot Partners Limited)
Annual Report and Consolidated Financial Statements
Year ended 31 December 2018
Contents
Key Highlights
Chairman’s statement
Report of the Directors
Corporate Governance
Independent Auditors’ report to the members of Ocean Outdoor Limited
Consolidated statement of profit and loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to financial statements
Appendix
1
2
3
10
13
18
20
21
22
23
52
Ocean Outdoor Limited
Key Highlights
The following headline financial information is on an unaudited pro forma1 basis of Ocean Outdoor
Limited and its subsidiaries ("Ocean", "the Group" or "the Company"), with comparisons between
FY18 and FY17. The headline financial information, including Forrest Outdoor Media Limited, the
trading entity acquired with Forrest, can be found in the appendix.
Financial reported highlights
• Billings2 recognised by the Group in FY18 were £70.3m (FY17: £Nil)
• Revenue generated by the business in the year totalled £49.8m (FY17: £Nil)
• Group gross profit was £20.4m (FY17: £Nil)
• Cash on balance sheet of £160.5m, leaving the Group well positioned to continue its organic
growth and M&A strategies
• Net assets increased £92.6m to £386.8m (FY17: £294.2m)
• Cash generated from operations totalling £22.4m (FY17: £0.5m)
Financial proforma highlights
• Billings2 increased 13.7% year on year to £87.8m (FY17: £77.2m)
• Revenue rose 15.2% to £62.2m (FY17: £54.0m)
• Digital billings made up 92.8% of total billings (FY17: 89.1%)
• Gross profit increased by 13.8% to £25.2m (FY17: £22.1m), with a gross profit margin of 40.4%
(FY17: 40.9%)
• Adjusted EBITDA3 up 4.7% to £20.0m, with an adjusted EBITDA margin of 32.2%
Operational highlights
• Acquisition of SCP Acquisition Topco Limited for an enterprise value of approximately £200m
on 28 March 2018
• Acquisition of Forrest Media (Holdings) Limited for an enterprise value of approximately £32m
on 2 June 2018 expanded the Group’s UK Digital Out of Home (DOOH) footprint, adding 77
locations and 91 faces across Scotland, with excellent coverage of Glasgow and Edinburgh
• Launch of three new large format screens at Westfield London, two of which are full motion
alongside installation of state-of-the-art screens at two existing marquee assets, Holland Park
Roundabout and the Wall at Westfield
• Launch of the first ‘Two Towers’ structure in Manchester on the key arterial route, the
Mancunian Way, as well as a full motion screen outside the key transport hub of Manchester
Piccadilly train station
• Two live broadcasts were completed during the first six months - live streaming of the Royal
Wedding, as well as the 2018 Grand National, in public outdoor locations
• Pipeline development is strong with over 174 locations in various stages of development
1 Ocean Outdoor Limited was an investment vehicle in FY17. Due to the acquisition of SCP Acquisition Topco Limited on 28
March 2018 and Forrest Media (Holdings) Limited on 2 June 2018, the consolidated statement of profit and loss presented on
page 18 does not provide a year on year comparison for the underlying performance and operations. The financial highlights
detailed above are on a pro forma basis for Ocean Outdoor Limited and all subsidiaries in the Group as at 31 December 2018 as
if the same subsidiaries had been owned from 1 January 2017.
2 Billings represent the advertising spend by the advertiser, including fees directly payable by the advertiser to their advertising
agency, exclusive of sales tax.
3 Adjusted EBITDA is the Earnings Before Interest, Tax, Depreciation, Amortisation and adjusted for one off items. See the
appendix for reconciliations between profit from operations and Adjusted EBITDA.
1
Ocean Outdoor Limited
Chairman’s Statement
It is with pleasure that I present to you, the shareholders, the Report and audited financial statements
of Ocean Outdoor Limited for the year ended 31 December 2018.
The Company
On 1 March 2018, Ocean Outdoor Limited (Formerly Ocelot Partners Limited) announced the
acquisition of the outdoor media owner Ocean Outdoor from private equity firm Searchlight Capital for
an enterprise value of £200m. The transaction closed on 28 March 2018.
These accounts reflect the purchase of SCP Acquisition Topco Limited and its subsidiaries to create
Ocean Outdoor on 28 March 2018 and the subsequent acquisition of Forrest Media (Holdings) Limited
and its subsidiaries on 2 Jun 2018. As such the reported profit and loss only reflects post acquisition
trading. The unaudited appendix provides pro forma comparisons of performance on a full year basis.
Ocean is a pure play operator of premium digital out-of-home advertising in the UK. Ocean's portfolio
of digital, full motion screens facilitates connectivity as out-of-home, digital, mobile, online and screen
media all converge to create deeper brand experiences. Ocean has created a strong reputation in
developing and pioneering new DOOH technologies, research and thought leadership, and for
facilitating creativity in digital out-of-home. The Company has assets covering the key cities and retail
centres of the UK, including London, Manchester, Birmingham, Edinburgh and Glasgow. Ocean
operates some of the UK's most prominent outdoor advertising locations, including Landsec's Piccadilly
Lights, the BFI London IMAX, Westfield's Holland Park Roundabout and the Birmingham Media Eyes.
Ocean's pioneering content partnerships, such as its work with Team GB for the Summer and Winter
Olympics and its innovative collaboration with the British Fashion Council and the BBC, represent
ground-breaking initiatives for the sector.
Ocean seeks to build a scale out-of-home media consolidation vehicle. In addition to supporting
Ocean's organic growth initiatives, it will pursue strategic and complementary acquisitions intended to
enhance its scale, customer offering and deepen its market leadership as demonstrated by the
acquisition of Ngage Media and Interbest on 12 March 2019.
Tom Goddard
Chairman
18 March 2019
2
Ocean Outdoor Limited
Report of the directors
The directors present their report together with the audited financial statements for the year ended 31
December 2018.
Status and activities
On 1 March 2018, the company announced the acquisition of advertising site manager SCP Acquisition
Topco Limited and its subsidiaries from private equity firm Searchlight Capital for an enterprise value
of £200 million. The acquisition was fully settled in cash. As noted in the Company’s prospectus, in
connection with financing the acquisition, the Company issued additional Ordinary Shares which
resulted in the company’s then existing shareholders still owning a majority interest in the Company
following the acquisition. The transaction closed on 28 March 2018.
Following completion of the transaction Tom Goddard and Tim Bleakley have joined the Company as
non-executive Chairman and CEO respectively and the company changed its name to Ocean Outdoor
Limited from Ocelot Partners Limited.
With this anchor investment in Ocean, the Company seeks to build a scale out-of-home media
consolidation vehicle. In addition to supporting Ocean's organic growth initiatives, the Company will
pursue strategic and complementary acquisitions intended to enhance Ocean's scale, customer offering
and deepen its market leadership.
In light of this, the company immediately engaged in the acquisition of Forrest Media (Holdings) Limited
and its subsidiaries (“Forrest” renamed “Ocean Scotland”) which successfully completed on 2 June
2018, with an enterprise value of £32m. Forrest is a leading outdoor operator in Scotland and the
acquisition has added significant reach to Ocean’s national footprint, adding 77 locations and 91 faces
across Scotland and the North of England, with excellent coverage of Glasgow and Edinburgh.
The Group continues to deliver new growth opportunities and search for future acquisition opportunities
which is in line with the strategy presented in the Group prospectus. As announced on 12 March 2019,
the Group completed the further acquisitions of Interbest and Ngage Media.
Pro forma Profit and Loss
Ocean Outdoor Limited was an investment vehicle in FY17. Due to the acquisition of SCP Acquisition
Topco Limited on 28 March 2018 and Forrest Media (Holdings) Limited on 2 June 2018, the audited
consolidated statement of profit and loss presented on page 18 does not provide a period on period
comparison for the underlying performance and operations. For the benefit of users of the accounts,
the unaudited pro forma statements of total comprehensive income can be found in the appendix (refer
to page 52), which shows the period on period results on different bases.
Included in the appendix is the profit and loss for SCP Acquisition Topco Limited and its subsidiaries
for FY17 and FY18 and Forrest Outdoor Media Limited profit and loss for FY17 and FY18. The appendix
shows these periods on a combined basis assuming any subsidiaries acquired during any given period
had been acquired on 1 January of the earliest period presented. Also included in the appendix is a
hybrid profit and loss showing 12 months profit and loss of Ocean Outdoor Limited, SCP Acquisition
Topco Limited and all their subsidiaries (excluding Forrest Outdoor Media Limited) for the 12-month
period ended 31 December 2018 combined with the acquisition made in the year, Forrest Outdoor
Media Limited with its profit and loss for the 7-month period ended 31 December 2018.
For each profit and loss statement, there is the reconciliation between reported operating profit and
Adjusted EBITDA is also presented. The unaudited pro forma financial information has been provided
for illustrative purposes only and by its nature addresses a hypothetical situation and does not purport
to represent the Company's actual financial position or results.
3
Ocean Outdoor Limited
Analysis using financial key performance indicators
Directors and managers assess performance using performance indicators at a Group level. The
Group's key performance indicators (KPI) are Billings, Revenue and Adjusted Earnings Before Interest,
Tax, Depreciation and Amortisation excluding one off items (Adjusted EBITDA), the number of locations
as well as digital billings as a percentage of total billings. This is generated from the companies within
the Group.
Please see the table below for KPI’s on the reported numbers
KPI’s on Reported figures
Billings £’000
Revenue £’000
EBITDA £’000
Locations
Digital % of billings
2018
70,288
49,795
18,557
254
93%
2017
-
-
-
-
-
The above table does not allow a period on period comparison and therefore the following table shows
the performance of the Group on a proforma basis
KPI’s on Proforma figures
Billings £’000
Revenue £’000
Adjusted EBITDA £’000
Locations
Digital % of billings
Results and dividends
2018
87,843
62,218
19,964
254
93%
2017
77,245
54,010
19,088
251
89%
The consolidated statement of profit and loss is set out on page 18 and shows the profit for the year.
Dividends are recognised when they become legally payable. In the case of interim dividends to equity
shareholders, this is when declared by the directors. In the case of final dividends, this is when
approved by the shareholders at the AGM. The Company's current intention is to retain any earnings
for use in its business operations, and the Company does not anticipate declaring any dividends in the
foreseeable future.
Directors and their interests
The Directors of the Company who served during the period and subsequent to the date of this Report
are:
Name
Robert D Marcus
Martin HP Söderström
Sangeeta Desai
Aryeh B. Bourkoff
Andrew Barron
Tim Bleakley
Tom Goddard
Tim Ebeling
Andrew Miller
Position
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Founder and Non-Executive Director
Founder and Non-Executive Director
CEO and Executive Director
Non-Executive Chairman
Independent Non-Executive Director
Independent Non-Executive Director
Date of appointment
22 February 2017
22 February 2017
27 February 2017
22 February 2017
20 January 2017
28 March 2018
28 March 2018
19 October 2018
27 November 2018
Non-Executive Directors or the Company can terminate the appointment by giving three months’ notice.
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Ocean Outdoor Limited
As at 31 December 2018 the Directors have the following interests in the Company’s securities:
Director
Andrew Barron
Andrew Miller
Aryeh B Bourkoff
Robert Marcus
Martin HP Söderström
Sangeeta Desai
Thomas Ebeling
Tom Goddard
Tim Bleakley
No. of Ordinary
Shares
Percentage
issued
Shares
of
Ordinary
No. of Founder
Preferred Shares
509,866
-
1,574,400
119,000
15,000
10,000
7,500
232,703
310,523
0.95%
-
2.92%
0.22%
0.03%
0.02%
0.01%
0.43%
0.58%
147,000
-
399,000
-
-
-
-
-
-
Tim Bleakley also has 1,998,000 hurdle shares, issued by a subsidiary of the Company which will,
except in limited circumstances, be settled in ordinary shares of Ocean Outdoor Limited. Tom Goddard
also has 1,282,050 hurdle shares, issued by a subsidiary of the Company which will, except in limited
circumstances, be settled in ordinary shares of Ocean Outdoor Limited.
Directors’ remuneration
Robert Marcus, Martin HP Soderstrom, Sangeeta Desai, Ayreh B Bourkoff and Andrew Barron entered
into a Director’s letter of appointment with the Company dated 8 March 2017. Thomas Ebeling and
Andrew Miller entered into a Director’s letter of appointment with the Company dated 19 October 2018
and 27 November 2018 respectively.
Under the letters of appointment, Martin HP Söderström, Sangeeta Desai, Thomas Ebeling and Andrew
Miller are entitled to a fee of $75,000 per annum and Robert Marcus is entitled to receive a fee of
$90,000 per annum. Robert Marcus, Martin HP Söderström, Sangeeta Desai and Andrew Miller are
also entitled to receive an additional fee of $10,000 per annum as Committee members. Tom Goddard,
in his role as Chairman, was paid £55,800 in the period 28 March 2018 to the year end. Tim Bleakley,
CEO, was paid £237,500 following his appointment as a Director on 28 March 2018.
Andrew Barron and Aryeh B Bourkoff did not receive a fee in connection with their appointment as Non-
Executive Directors of the Company.
In addition, all of the Directors are entitled to be reimbursed by the Company for travel, hotel and other
expenses incurred by them in the course of their directors’ duties relating to the Company.
Share capital
The full details of share capital information is set out in note 16.
Substantial shareholdings
As at 31 December 2018, the following had disclosed an interest in the issued Ordinary Share capital
of the Company (being 5% or more of the voting rights in the Company) in accordance with the
requirements of the Disclosure and Transparency Rules (the “DTRs”):
Shareholder
Number of
Ordinary Shares (1
Notified percentage of
voting rights (1
Senator Investment Group LP
Anchorage Capital Group, L.L.C.
Wellington Management Group LLP
6,184,616
5,333,333
4,315,384
11.3%
9.8%
7.9%
5
Ocean Outdoor Limited
As at 31 December 2018 and 25 February 2018, the interest of any person listed in the table above in
Ordinary Shares may have increased or decreased without any obligation on the relevant person to
make further notification to the Company pursuant to the DTRs.
Change of control
The Company is not party to any significant contracts that are subject to change of control provisions
in the event of a takeover bid. There are no agreements between the Company and its Directors or
employees providing compensation for loss of office or employment that occurs because of a takeover
bid.
Independent Auditors
The previous auditors, PricewaterhouseCoopers LLP, resigned during the year and BDO LLP were
appointed by the Board in their place. The Board have reason to believe that BDO LLP conducted an
effective audit and have provided the auditors with full access to all of the books and records of the
Company.
Corporate Governance Statement
The Company is a British Virgin Islands registered company with a standard listing on the London Stock
Exchange. For as long as the Company has a standard listing it is not required to comply or explain
non-compliance with the UK Corporate Governance Code (the “Code”) issued by the Financial
Reporting Council (“FRC”) in September 2012. However, the Company is firmly committed to high
standards of corporate governance and maintaining a sound framework through which the strategy and
objectives of the Company are set and the means of attaining these objectives and monitoring
performance are determined.
Relations with Shareholders
The Directors are always available for communication with Shareholders and all Shareholders will have
the opportunity, and are encouraged, to attend and vote at the Annual General Meetings of the
Company during which the Board will be available to discuss issues affecting the Company.
Statement of going concern
The Directors confirm that, after making an assessment, they have a reasonable expectation that the
Group has adequate resources to continue in operational existence for the foreseeable future and be
able to pay its debts as they fall due. The political and economic uncertainty surrounding Britain’s
impending exit from the EU (Brexit) is a factor that has been considered. With advertising spend closely
correlated to GDP and consumer confidence the outlook may be adversely impacted by a ‘no deal’
Brexit. It is the view of the Directors that, despite the uncertainty, the Group has sufficient capital to
withstand a negative impact. Accordingly, the Directors continue to adopt the going concern basis in
preparing the financial statements.
Internal control
The Board is responsible for determining the nature and extent of the significant risks it is willing to take
in achieving its strategic objectives. The Board maintains sound risk management and internal control
systems. The Board has reviewed the Company’s risk management and control systems and believes
that the controls are satisfactory given the nature and size of the Company and its subsidiaries.
Financial Risk Profile
The Company’s and Group’s financial instruments comprise mainly of cash and cash equivalents, and
various items such as payables and receivables that arise directly from the Group’s operations. Details
of the risks relevant to the Group are included in the notes to the financial statements.
6
Ocean Outdoor Limited
Management Report
For the purposes of compliance with DTR 4.1.5R(2), DTR 4.1.8R and DTR4.1.11R, the required content
of the “Management Report” can be found in this Report of Directors.
Principal Risk and Uncertainties
The main risks and uncertainties identified by the Group are as follows:
The Group operates in a highly competitive market
The Group operates in a highly competitive industry and may not be able to maintain or increase
its current advertising and sales revenues or market share. The Group competes for advertising
revenue with other outdoor advertising operators, as well as with other media, such as radio,
newspapers, magazines, television, direct mail, mobile devices and internet-based services.
Competitive pressures could cause the Group to lose market share, require it to lower prices,
increase marketing expenditures and increase the use of discounting or promotional campaigns,
and restrict its ability to increase prices. These or other developments could materially and
adversely affect the Group's sales volumes and margins and result in a decrease in its operating
results, which could have a material adverse effect on the Group's business, financial condition and
results of operations.
The Group is heavily reliant on its relationships with media agencies
The Group is heavily reliant on its relationships with four main media specialist buyers to sell the
out-of-home advertising space which it owns and/or manages. Accordingly, the loss of these
relationships, a significant change in the terms of these relationships, or any of these agencies
encountering financial difficulties could have a materially adverse effect on the Group's business,
financial condition and results of operations.
A loss of sites or a failure to renew relevant site agreements may reduce the Group's revenue
The Group gains access to advertising sites through short, medium and long-term contracts or
concessions (being comprised of (i) leases, (ii) licences; and (iii) certain commercial site
agreements) with asset owners such as local municipalities and commercial landlords. There is no
guarantee that such site agreements, including those relating to the Group's iconic sites, will be
renewed at all or renewed on terms which are favourable to the Group. If sufficient numbers of site
agreements are cancelled, not renewed or sufficient numbers of sites become impaired, it could
have an adverse effect on the Group's business, financial condition and results of operations.
The Group's sites and other technology systems and operations could be exposed to damage or
interruption
The Group's sites and other technology systems and operations could be exposed to damage or
interruption from system failures, computer viruses, cyber-attacks, power or telecommunication
providers' failure, fire, natural disasters, terrorist acts, war, or human error. Any interruptions would
impact the Group's ability to operate and could result in business interruption, the loss of customers
and revenue, damaged reputation and weakening of competitive position and could have a material
adverse effect on the Group's business, financial condition and results of operations. There is a risk
that, if a cyber-attack is successful, any data security breaches or the Group's inadvertent failure to
protect confidential information could result in a loss of information integrity. Breaches of the Group's
obligations under applicable laws or client agreements and system outages may potentially have a
material adverse impact on the Group's reputation and financial performance.
7
Ocean Outdoor Limited
Changes in technology may impact consumer and advertiser behaviour
The advertising industry will continue to be affected by changes in technology, with these changes
likely leading to increasing media options for consumers. If these changes drive advertising away
from DOOH advertising, this could have a material adverse effect on the Group's business, financial
condition and results of operations.
The Group's operations are currently based primarily in the UK and are therefore vulnerable to any
adverse developments to the UK economic and market conditions and to the UK legal and regulatory
environment
The Group's operations are based primarily in the UK and the business of the Group is therefore
exposed to the prevailing economic and market conditions, as well as the legal and regulatory
environment, in the UK. Periods of a slowing economy or recession, or periods of economic
uncertainty, may be accompanied by a decrease in advertising which would reduce the Group's
advertising revenues and have an adverse effect on the Group's revenue, profit margins, cash flow
and liquidity. In addition, there has been an increase in political uncertainty as a result of the UK
vote in favour of exiting the EU. It is not clear what the impact on the Group (including its business,
employees, operations and assets) will be when, the UK leaves the EU, but any such change may
have a material adverse effect on the business, financial condition and results of operations of the
Group.
Directors’ Responsibilities
The directors are responsible for preparing the Directors’ report and the financial statements for the
Group. The Directors have prepared the financial statements for each financial year which give a true
and fair view of the state of affairs of the Group and of the profit or loss of the Group for that year.
The Directors have chosen to use the international financial reporting standards (“IFRS”) as adopted
by the European union in preparing the Group’s financial statements.
international Accounting Standard 1 requires financial statements present fairly for each financial year
the Company’s financial position, financial performance and cash flows. This requires the faithful
representation of the effects of transactions, other events and conditions in accordance with the
definitions and recognition criteria for assets, liabilities, income and expenses set out in the International
Accounting Standards Board’s ‘Framework for the preparation and presentation of financial statements.
In virtually all circumstances, a fair presentation will be achieved by compliance with all applicable IFRS.
A fair presentation also requires the Directors to:
consistently select and apply appropriate accounting policies;
•
• present information, including accounting policies, in a manner that provides relevant, reliable,
comparable and understandable information;
• provide additional disclosures when compliance with the specific requirements in IFRS is
insufficient to enable users to understand the impact of particular transactions, other events
and conditions on the entity’s financial position and financial performance; and
state that the group has complied with IFRS, subject to any material departures disclosed and
explained in the financial statements.
•
The Directors are also required to prepare financial statements in accordance with the rules of the
London Stock Exchange for companies trading securities on the Stock Exchange. The Directors are
responsible for keeping proper accounting records which disclose with reasonable accuracy at any time
the financial position of the Group, for safeguarding the assets, for taking reasonable steps for the
prevention and detection of fraud and other irregularities and for the preparation of financial statements.
Financial information is published on the company’s website, www.oceanoutdoor.com. The
maintenance and integrity of this website is the responsibility of the Directors; the work carried out by
the auditors does not involve consideration of these matters and, accordingly, the auditors accept no
responsibility for any changes that may occur to the financial statements after they are initially presented
on the website, www.oceanoutdoor.com. Legislation in the BVI governing the preparation and
dissemination of financial statements may differ from legislation in other jurisdictions.
8
Ocean Outdoor Limited
Directors’ Responsibilities Pursuant to UK Disclosure Guidance and Transparency Regulations
The directors confirm to the best of their knowledge:
• The group financial statements have been prepared in accordance with IFRS adopted by the
European union and article 4 of the IAS regulation and give a true and fair view of the assets,
liabilities, financial position and profit and loss of the Group.
• The annual report includes a fair review of the development and performance of the business
and the financial position of the group and the parent company, together with a description of
the principal risks and uncertain-ties that they face.
Disclosure of information to Auditors
Each of the persons who is a Director at the date of approval of this Report confirms that:
•
so far as the director is aware, there is no relevant audit information of which the Company’s
auditors are unaware; and
• each director has taken all the steps that he/she ought to have taken as a director in order to make
himself/herself aware of any relevant audit information and to establish that the Company’s auditors
are aware of that information.
Directors’ indemnities
As at the date of this Report, indemnities granted by the Company to the Directors are in force to the
extent permitted under BVI law. The Company also maintains Directors’ and Officers’ liability insurance,
the level of which is reviewed annually.
Subsequent events
On 10 January 2019, the Company’s ordinary shares were re-admitted to the Standard Listing segment
of the Official List of the UK Listing Authority, and trading in its shares recommenced on the London
Stock Exchange's Main Market (LSE: OOUT).
In accordance with the London Stock Exchange Admission and Disclosure Standards, the Company
announced, pursuant to its articles of association, a tranche of 87,500 founder preferred shares were
automatically re-designated as ordinary shares on a one for one basis. This re-designation became
effective on 15 January 2019 and admission of the ordinary shares occurred on 22 January 2019.
On 12 March 2019, the Group announced the acquisition of Interbest and Ngage Media, two leading
digital out-of-home companies operating across the Netherlands, for a combined cash consideration of
approximately £45m using a rate of 0.88:1 EUR:GBP, and a performance-linked earn-out if growth
performance targets are met over time. The transactions value Interbest and Ngage, combined, at a 31
December 2018 LTM multiple of 6.9x adjusted EBITDA, before any benefit for synergies. The business
combination accounting had not been finalised by the authorisation date of these financial statements.
By order of the Board
Tom Goddard
Chairman
18 March 2019
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Ocean Outdoor Limited
Corporate Governance Statement
Ocean is committed to maintaining the highest standards of business conduct and ethics, as well as
full compliance with all applicable laws, rules and regulations, corporate reporting and disclosure, and
all other matters deemed to protect the best interests of the company’s shareholders.
At the date of this report, the Company complies with the corporate governance regime applicable to
the Company pursuant to the laws of the British Virgin Islands.
In addition, the Company strives for compliance with the U.K. Corporate Governance Code to the
greatest extent possible to facilitate effective and prudent management that can contribute to the long-
term success of the Company. The Company is not currently compliant with the U.K. Corporate
Governance Code and is aware of the following non-compliance issue:
- The U.K. Corporate Governance Code recommends that the chairman should be independent
on appointment. As Tom Goddard was previously an employee of Ocean, holding the position
as chairman of Ocean, the Company does not comply with this recommendation of the
Governance Code. The Board unanimously believes this is in the best interests of the
Company and its Shareholders, with Tom Goddard ensuring stability and continuity with
clients and strategic and commercial partners. Tom Goddard brings continuity at a time of
change and the Company will retain his experience and expertise, which make him
particularly well-qualified to act as the Company’s Non-Executive Chairman.
Strategic decisions
The Directors are responsible for carrying out the Company’s objectives, implementing its business
strategy and conducting its overall supervision. Acquisition, divestment and other strategic decisions
are considered and determined by the Board. The Board provides leadership within a framework of
prudent and effective controls. The Board has established the corporate governance values of the
Company and has overall responsibility for setting the Company’s strategic aims, defining the business
plan and strategy and managing the financial and operational resources of the Company
Through the publication of regular announcements, corporate presentations posted to the company
website, and face to face meetings, the board has sought to communicate its strategy, objectives and
performance to all shareholders on a timely basis. When shareholders raise concerns with the board
over the Group’s strategy, objectives or performance, the Board endeavours to actively engage with
the shareholders in dialogue.
Board process
The full Board meets formally at regular intervals throughout the year and at such other times as may
be necessary to address any significant matters that may arise. The Board communicates regularly
between these meetings. On a regular basis the Board is provided with appropriate and timely
information relating to all aspects of the Group. In addition, the Directors are free to seek any further
information or request specific presentation on matters that they consider necessary in order to
discharge their duties effectively. The collective responsibility of the Board ensures that all Directors
are involved in the process of arriving at significant decisions.
Nomination Committee
The Nomination Committee is responsible for considering and making recommendations to the Board
in respect of appointments to the Board. In carrying out its duties, the Nomination Committee is primarily
responsible for identifying and nominating candidates to fill Board vacancies; evaluating the structure
and composition of the Board with regard to the balance of skills, knowledge and experience and
making recommendations accordingly; giving full consideration to succession planning; and reviewing
the leadership of the Group.
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Ocean Outdoor Limited
Audit and Risk Committee
The Audit and Risk Committee assists the Board in discharging its responsibilities with regard to
financial reporting, external and internal controls, including reviewing and monitoring the integrity of the
Group’s annual and interim financial statements, reviewing and monitoring the extent of the non-audit
work undertaken by the Group’s external auditors, advising on the appointment of such external
auditors, overseeing the Group’s relationship with its external auditors, reviewing the effectiveness of
the external audit process, and reviewing the effectiveness of the Group’s internal control and review
function.
The Audit and Risk Committee gives due consideration to laws and regulations, the provisions of the
UK Corporate Governance Code and the requirements of the Listing Rules. The Audit and Risk
Committee also has responsibility for, among other things, oversight of the Group’s risk appetite, risk
monitoring and capital management, reviewing the manner in which the members of the Group
implement and monitor the adequacy of the Group’s risk management framework and ensuring that
the Group maintains appropriate levels of capital, as well as advising the Board on its overall risk
appetite. The Audit and Risk Committee also reviews the adequacy of security measures, anti-money
laundering systems, anti-bribery controls and procedures in place for detecting fraud.
Remuneration Committee
The Remuneration Committee has responsibility for determination of specific remuneration and benefits
packages for each of the executive directors and certain senior management of the Group, including
pension rights and any compensation payments, and recommending and monitoring the level and
structure of remuneration for senior management and the implementation of share options, share
incentive plans or other performance related schemes.
Independence of the Board
Tom Goddard, Tim Bleakley, Aryeh B. Bourkoff and Andrew Barron are not considered to be
Independent Directors.
The Board considers the Independent Non-Executive Directors to be independent in character and
judgment and free from relationships or circumstances which are likely to affect or could appear to
affect, their judgment. In addition, when determining the independence of the Independent Non-
Executive Directors, the Board had regard to their Letters of Appointment and Initial Option Deeds and,
in the case of Mr Marcus, his prior role as Chairman of the Company and his holding of 119,000 Ordinary
Shares. The Board believes that the aforementioned factors are not sufficient to have an impact on their
independence.
Ethical standards
All Directors, managers and employees are expected to act with the utmost integrity and objectivity,
striving at all times to enhance the reputation and performance of the Group.
External auditors
The Board and the Audit Committee review the performance of the external auditors on an annual basis
and normally meet with them during the year to:
- Discuss the external audit plans, identifying any significant changes in structure, operations,
internal controls or accounting policies likely to impact on the financial statements and to review
the fees proposed for the audit work to be performed.
- Review the periodic reports prior to lodgement and release, and any significant adjustments
required as a result of the auditor’s findings, and to recommend board approval of these
documents, prior to announcement of results.
11
Ocean Outdoor Limited
- Review the results and findings of the auditor, the adequacy of accounting and financial
controls, and to monitor the implementation of any recommendations made.
- Review the draft financial report and recommend board approval of the financial report.
- As required, to organise, review and report on any special reviews or investigations deemed
necessary by the board.
The Board and Audit Committee specifically assess the independence of the Group’s external
auditors and in doing so consider the level and nature of non-audit services provided and associated
fees, the auditor’s rotation arrangements for key audit personnel and areas of potential conflicts of
interest.
Communication with shareholders and continuous disclosure
The directors attach importance to the provision of clear and timely information to shareholders and
the broader investment community. Information about the company is available on its website
(www.oceanoutdoor.com)
Financial reporting – the Company reports to shareholders half-yearly and annually, as required by
the LSE rules. The Chairman states to the Board that the company’s financial reports present a true
and fair view in all material respects of the company’s financial condition and operational results and
are in accordance with relevant accounting standards.
Equal access policy – the Company has a policy, based on existing policies and practices as a
company quoted on the LSE market, that all shareholders and investors have equal access to
the company’s information, and has procedures to ensure that all price sensitive information will be
disclosed to the LSE in accordance with the continuous disclosure requirements of the LSE rules.
these procedures include:
- A comprehensive process to identify matters that may have a material effect on the price of
the company’s shares, notifying them to the LSE, posting them on the company’s website,
and issuing media releases.
- All information provided to the LSE, and related information (including information provided to
analysts and the media), being immediately posted to the company’s website
www.oceanoutdoor.com/investors/
- The Annual Report is made available to all shareholders. The Board ensures that the annual
report includes relevant information about the operations of the Group during the year,
changes in the state of affairs of the Group and details of future developments, as well as all
required disclosures.
News releases are issued throughout the year and the company maintains a website
(www.oceanoutdoor.com/investors/) on which press releases, corporate presentations and the annual
report and financial statements are available to view together with the half-yearly financial statements.
Enquiries from individual shareholders on matters relating to the business of the company are
welcomed. Shareholders and other interested parties can subscribe to receive notification of news
updates and other documents from the company via email. In addition, the Executive Directors meet
with major shareholders to discuss the progress of the company and provide periodic feedback to the
board following meetings with shareholders.
12
Ocean Outdoor Limited
Independent auditor’s report to the members of Ocean Outdoor Ltd
Opinion
We have audited the financial statements of Ocean Outdoor Ltd (the ‘parent company’) and its
subsidiaries (the ‘group’) for the year ended 31 December 2018 which comprise the consolidated
statement of profit and loss and other comprehensive income, the consolidated statement of financial
position, the consolidated statement of changes in equity, the consolidated statement of cash flows,
and notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the group financial
statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by
the European Union.
In our opinion:
•
the financial statements give a true and fair view of the state of the group’s affairs as at 31
December 2018 and of the group’s profit for the year then ended; and
the group financial statements have been properly prepared in accordance with IFRSs as adopted
by the European Union.
•
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent of the
group in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with International
Standards on Auditing (UK) (ISAs UK). Our audit work has been undertaken so that we might state to
the company’s members those matters we are required to state to them in an auditor’s report and for
no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require
us to report to you where:
•
•
the directors’ use of the going concern basis of accounting in the preparation of the financial
statements is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties
that may cast significant doubt about the group’s ability to continue to adopt the going concern
basis of accounting for a period of at least twelve months from the date when the financial
statements are authorised for issue.
13
Ocean Outdoor Limited
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements of the current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) we identified, including those which had the greatest
effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of
the engagement team. These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters.
Matter
Revenue recognition- Cut-off
How we addressed the matter in our audit
As detailed in note 2.12, Management make
certain judgements in relation to revenue
recognition for the treatment of contractual
arrangements entered into by trading entities
in the group.
completed
the group has
These include determining Ocean Outdoor’s
performance obligations in its contracts with
customers and whether as at the reporting
date,
its
performance obligations. Where these are
met, revenues are recognized over time as the
to simultaneously
customer
receive and consume the economic benefits
of the service provided under the contract by
the Group’s performance. Alternatively, where
its
Ocean Outdoor has not completed
performance obligations prior to the reporting
date, revenues are not recognised.
is assessed
Revenue should only be recognised at the
time the group delivers advertising services on
the sites which have been subject to order
bookings over the specific periods ordered by
customers. Advertising revenues are invoiced
normally in 2-week block periods. This results
in a cut off risk at the reporting date in relation
to the existence of revenue recognised and
completeness of deferred revenue.
assessed whether
We
revenue
recognition policies adopted by the Group
comply with accounting standards.
the
We reviewed a sample of contracts to assess
whether:
-
the revenue had been recognised in
accordance with the Group’s accounting
policy and accounting standards;
- appropriate cut off was observed with
its
Ocean Outdoor having completed
performance obligations as stated in the
customer contracts prior to the reporting
date and if not completed appropriate
revenue was deferred; and
- any other terms within the contract had
any material accounting or disclosure
implications
We also tested a sample of deferred income
balances for completeness and accuracy by
checking the calculations of deferred income
and agreeing key inputs (contract billing
period, number of days deferred at report date
and sales prices net of VAT) to supporting
documentation.
14
Ocean Outdoor Limited
Acquisition accounting
As detailed in note 11 to the financial
statements,
the Group acquired SCP
Acquisition TopCo Group and Forrest Media
(Holdings) Limited Group during the year.
Consequently, management had to exercise
judgement in considering the fair value of the
assets and liabilities acquired.
recognised on acquisition
Management
separately identifiable intangible assets in
respect of brand and acquired rights over
advertising sites, exercising
in
estimating their fair value.
judgment
The judgements and estimates in this area, as
detailed in note 2.10, include:
• underlying cash flow projections,
• discount rates applied, and
long term growth rates.
•
There is a risk that this estimate may be
materially misstated.
the methodology and
We challenged
assumptions underpinning
the significant
judgements and estimates made by
management in the assessment of the fair
value of the separately identifiable intangible
assets acquired by comparison to industry
data and our knowledge of the business.
In addition, with
valuations specialists, we
methodology deployed.
the assistance of our
the
reviewed
We also considered the completeness of the
separately identifiable intangible assets with
reference
the
business and the key reasons for executing
the
acquirer’s
from
perspective.
to our understanding of
transaction
the
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the
effect of misstatements. We consider materiality to be the magnitude by which misstatements, including
omissions, could influence the economic decisions of reasonable users that are taken on the basis of
the financial statements. In order to reduce to an appropriately low level the probability that any
misstatements exceed materiality, we use a lower materiality level, performance materiality, to
determine the extent of testing needed. Importantly, misstatements below these levels will not
necessarily be evaluated as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their occurrence, when evaluating their effect on
the financial statements as a whole.
Level of materiality applied and rationale
We consider revenue to be the critical performance measure for the Group. Using this benchmark, we
set materiality at £500,000 which represents 1% of revenues.
Performance materiality
The application of materiality at the individual account or balance level is set at an amount to reduce to
an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality.
On the basis of our risk assessment together with the Group’s overall control environment, our
judgement was that overall performance materiality for the Group should be 70%. As such, performance
financial statement materiality was set at £350,000.
Component materiality
We set materiality for each component of the Group based on a percentage of materiality dependent
on the size and our assessment of the risk of material misstatement of that component. Component
materiality ranged from £120,000 to £350,000.
15
Ocean Outdoor Limited
Reporting Threshold
We agreed with the Audit Committee that we would report to them all audit differences individually in
excess of £15,000. We also agreed to report audit differences below those thresholds that, in our view,
warranted reporting on qualitative grounds.
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including
Group-wide controls, and assessing the risks of material misstatement at the Group level. The group
has 4 significant components which represented the main trading entities in the group, being Ocean
Outdoor UK Limited, Signature Outdoor Limited, Mediaco Outdoor Limited, and Forrest Outdoor Media
Limited.
Ocean Outdoor Limited (the Company) and the significant components were subject to full scope audits
which were performed by BDO LLP. As a result of this approach, all of the Group’s Revenue (100%),
Total Assets (100%) and Adjusted profit before tax (100%) were subject to audit.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report and consolidated financial statements, other than the financial statements
and our auditor’s report thereon. Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in our report, we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If
we identify such material inconsistencies or apparent material misstatements, we are required to
determine whether there is a material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we have performed, we conclude that there
is a material misstatement of this other information; we are required to report that fact. We have nothing
to report in this regard.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 8, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, the directors are responsible for assessing the group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the group or the parent
company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
16
Ocean Outdoor Limited
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
Nicole Martin (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
18 March 2019
BDO LLP is a limited liability partnership registered in England and Wales (with registered number
OC305127).
17
Ocean Outdoor Limited
Consolidated statement of profit or loss and other comprehensive income
for the year ended 31 December 2018
Billings
Revenue
Cost of sales
Gross profit
Administrative expenses
Note
2018
£'000
70,288
______
Period 20
Jan 2017 to
31 Dec 2017
£'000
-
_______
4
49,795
-
(29,355)
_______
20,440
(15,165)
_______
-
_______
-
(25,954)
_______
Profit / (Loss) from operations
5,6
5,275
(25,954)
Other income
Finance expense
Finance income
Non-cash charge related to warrant redemption liability
Profit / (Loss) before tax
Tax expense
Profit / (Loss) from continuing operations
Total comprehensive income / (loss)
7
7
8
-
(4)
1,658
-
_______
5
-
2,104
(301)
_______
6,929
(24,146)
(306)
_______
6,623
_______
6,623
_______
-
_______
(24,146)
_______
(24,146)
_______
The notes on pages 23 to 51 form an integral part of these financial statements.
18
Ocean Outdoor Limited
Consolidated statement of profit or loss and other comprehensive income
for the year ended 31 December 2018 (Continued)
Note
Profit / (loss) for the year attributable to:
Shareholders of the parent
Total comprehensive income / (loss) attributable
to:
Shareholders of the parent
Earnings / (loss) per share
Basic earnings / (loss) per share (pence)
Diluted earnings / (loss) per share (pence)
17
17
Period 20
Jan 2017 to
31 Dec 2017
£'000
2018
£'000
6,623
_______
(24,146)
_______
6,623
_______
(24,146)
_______
13.0p
_______
13.0p
_______
(66.8p)
_______
(66.8p)
_______
The notes on pages 23 to 51 form an integral part of these financial statements.
19
Ocean Outdoor Limited
Consolidated statement of financial position
As at 31 December 2018
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Liabilities
Current liabilities
Trade and other payables
Tax payable
Non-current liabilities
Warrant redemption liability
Deferred tax liability
Total liabilities
NET ASSETS
Equity
Founder Preferred Share Capital
Ordinary Share Capital
Share Premium
Retained earnings
TOTAL EQUITY
Note
9
10
13
14
15
16
16
16
2018
£'000
31,971
230,024
_______
261,995
_______
36,718
160,503
_______
197,221
_______
459,216
_______
44,729
3,278
_______
48,007
_______
-
23,579
_______
71,586
_______
387,630
_______
5,213
-
375,594
6,823
_______
387,630
_______
2017
£'000
-
-
_______
-
_______
58
294,576
_______
294,634
_______
294,634
_______
88
-
_______
88
_______
301
-
_______
389
_______
294,245
_______
5,213
-
288,906
126
_______
294,245
_______
The financial statements were approved by the Board of Directors and authorised for issue on 18 March 2019.
T Bleakley
Director
The notes on pages 23 to 51 form an integral part of these financial statements
20
Ocean Outdoor Limited
Consolidated statement of changes in equity
For the year ended 31 December 2018
Group
Share
capital
£'000
Founder
preferred
shares
£'000
Share
premium
£'000
Retained
earnings
£'000
Total
equity
£'000
20 January 2017
-
-
-
-
-
Comprehensive income
for the period
Loss for the period
Total comprehensive
Income for the period
Contributions by and
distributions to owners
Issue of share capital
Share based compensation
– Director’s share options
charge
-
______
-
______
-
______
(24,146)
______
(24,146)
______
-
-
-
-
-
(24,146)
(24,146)
5,213
288,906
24,188 318,307
-
-
84
84
______
______
______
______
______
31 December 2017
-
______
5,213
______
288,906
______
126 294,245
______
______
1 January 2018
-
5,213
288,906
126 294,245
Comprehensive income
for the year
Profit for the year
Total comprehensive
Income for the year
Contributions by and
distributions to owners
Issue of share capital
Share based compensation
– Director’s share options
charge
-
______
-
______
-
______
6,623
______
6,623
______
-
-
-
-
-
-
-
6,623
6,623
86,688
-
86,688
-
74
74
______
______
______
______
______
31 December 2018
-
______
5,213
______
375,594
______
6,823 387,630
______
______
The notes on pages 23 to 51 form an integral part of these financial statements.
21
Ocean Outdoor Limited
Consolidated statement of cash flows
For the year ended 31 December 2018
Cash flows from operating activities
Profit / (Loss) for the year
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of intangible fixed assets
Charge related to Founder preferred share
Charge related to warrant redemption
Charge related to Director options
Finance income
Finance expense
Acquisition costs paid
Increase in trade and other receivables
Increase in trade and other payables
Decrease in provisions
Cash generated from operations
Income taxes paid
Net cash flows from operating activities
Investing activities
Acquisition of subsidiaries, net of cash acquired
Purchases of property, plant and equipment
Interest received
Net cash used in investing activities
Financing activities
Issue of Founder Preferred shares
Issue of Ordinary shares and warrants
Share issues costs
Interest paid on loans and borrowings
Net cash from financing activities
Note
9
10
2018
£'000
Period 20
Jan 2017 to
31 Dec 2017
£'000
6,623
(24,146)
3,195
10,087
-
-
74
(1,658)
6
(5,839)
_______
-
-
24,187
301
84
-
-
-
_______
12,488
426
(574)
5,732
301
_______
(58)
89
-
_______
17,947
457
12
9
16
(1,010)
_______
16,937
_______
(228,945)
(10,405)
1,658
_______
(237,692)
_______
-
86,688
-
(6)
_______
86,682
_______
-
_______
457
_______
-
-
-
_______
-
_______
5,213
296,383
(7,477)
-
_______
294,119
_______
Net (decrease) / increase in cash and cash equivalents
(134,073)
294,576
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
294,576
_______
160,503
_______
-
_______
294,576
_______
The notes on pages 23 to 51 form an integral part of these financial statements.
22
Ocean Outdoor Limited
Notes forming part of the Consolidated Financial Statements
for the year ended 31 December 2018
1.
General information
The Company was incorporated with limited liability under the laws of the British Virgin Islands
under the BVI Companies Act on 20 January 2017. The address of the Company's registered
office is Kingston Chambers, PO Box 173, Road Town, Tortola, British Virgin Islands. The
Ordinary Shares and Warrants were admitted for trading on the Main Market of the London
Stock Exchange on 13 March 2017, after raising gross proceeds of US$425,250,000 for a
potential acquisition (an Acquisition).
2.
Principal accounting policies
The principal accounting policies applied in these financial statements are set out below.
2.1
Basis of preparation
These financial statements are prepared under the historical cost convention and are in
accordance with International Financial Reporting Standards as and its interpretations as
issued by the European Union (“EU”) and those parts of the BVI Business Companies Act
applicable under IFRS.
The financial statements are presented in GBP, which is also the functional currency of each
entity within the Group. The Company changed its presentational and functional currency from
USD to GBP on 28 March 2018. The Company’s financial statements for the year ended 31
December 2017 were presented in USD. For comparative purposes, the reported figures have
been translated at an exchange rate of 1.41, the spot rate on the date of acquisition, and the
point at which the presentational and functional currency changed to GBP.
Amounts are rounded to the nearest thousand, unless otherwise stated.
The financial statements are prepared on the historical cost basis with the exception of certain
financial instruments which are stated at fair value.
Accounting policies have been consistently applied throughout the periods presented.
This is the first set of the Group’s financial statements where IFRS 15 and IFRS 9 have been
applied. As required by IAS 8, the nature and effect of these changes and significant changes
in accounting policies have been disclosed in note 2.11. The Group has not early adopted any
other standard, interpretation or amendment that has been issued but is not yet effective.
Non-GAAP performance measures
Billings represent the advertising spend by the advertiser, including fees directly payable by
the advertiser to their advertising agency, exclusive of sales tax.
Billings is the standard metric used by the out of home advertising industry body “Outsmart” to
measure the market size and industry trends. Management consider Billings to be an important
metric to assess the performance of the underlying business against industry trends and
therefore presents Billings as a Non-GAAP performance measure. Billings is presented for the
benefit for users of the accounts but is not a substitute for other standard GAAP measures
presented.
2.2
Going concern
The Directors have, at the time of approving the financial statements, a reasonable expectation
that the Company has adequate resources to continue in operational existence for the
foreseeable future given the cash funds available and the current forecast cash flows. Thus,
the Company continues to adopt the going concern basis of accounting in preparing the
financial statements.
23
Ocean Outdoor Limited
Notes forming part of the Consolidated Financial Statements
for the year ended 31 December 2018
2.3
Foreign currency translation
Functional and presentation currency
The Company is listed on the main market of the London Stock Exchange. The performance of
the Company is measured and reported to the shareholders in GBP, which is the Company’s
functional currency. The Directors consider GBP as the currency of the primary economic
environment in which the Company operates and the one that most faithfully represents the
economic effects of the underlying transactions, events and conditions.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange
rates prevailing at the dates of the transactions. Foreign currency assets and liabilities are
translated into the functional currency using the exchange rate prevailing at the balance sheet
date.
2.4
Financial assets
The Group classifies its financial assets into one of the categories discussed below, depending
on the business model and cash flow type under which the assets are held. The Group has not
classified any of its financial assets as fair value through other comprehensive income. The
Group's accounting policy for each category is as follows:
Amortised cost
These assets are non-derivative financial assets held under the ‘hold to collect’ business model
and attracting cash flows that are solely payments of principal and interest. They comprise
trade and other receivables and cash and cash equivalents. They are initially recognised at fair
value plus transaction costs that are directly attributable to their acquisition or issue, and are
subsequently carried at amortised cost using the effective interest rate method, less provision
for impairment.
Impairment provisions for trade and other receivables are calculated using an expected credit
loss model. Under this model, impairment provisions are recognised to reflect expected credit
losses based on a combination of historic and forward-looking information, the amount of such
a provision being the difference between the net carrying amount and the present value of the
future expected cash flows associated with the impaired receivable. For trade receivables,
which are reported net; such provisions are recorded in a separate allowance account with the
loss being recognised within administrative expenses in the consolidated statement of
comprehensive income. On confirmation that the trade receivable will not be collectable, the
gross carrying value of the asset is written off against the associated provision.
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short
term highly liquid investments with maturities of three months or less.
2.5
Financial liabilities
The Group classifies its financial liabilities into one of two categories, depending on the purpose
for which the liability was acquired. The Group's accounting policy for each category is as
follows:
Other financial liabilities
Other financial liabilities include the following items:
- Trade payables and other short-term monetary liabilities, which are initially recognised
at fair value and subsequently carried at amortised cost using the effective interest
method
24
Ocean Outdoor Limited
Notes forming part of the Consolidated Financial Statements
for the year ended 31 December 2018
2.6
Share-based payments
The Founder Preferred Shares (and attached warrants) and director options represent equity-
settled share-based arrangements under which the Company receives services as a
consideration for the additional rights attached to these equity shares, over and above their
nominal price. The fair value of the grant of Founder Preferred Shares (and attached warrants)
in excess of any purchase price received is recognised as an expense. In addition, the
Company has granted options to the non-executive directors. The management team have
been incentivised via the issue of hurdle shares which aligns the long-term interest of the
company to deliver shareholder wealth. The fair value of the Founder Preferred Shares (and
attached warrants), the options and the hurdle shares is determined using a valuation model.
2.7
Fair Value of Warrants
Warrants not subject to IFRS2 are valued at redemption value of $0.01 as financial
instruments. The Warrants are compound financial instruments with a liability recognised and
the remainder in equity.
The total amount to be expensed as a respective share-based payment charge is determined
by reference to the fair value of the awards granted:
including any market performance condition;
•
• excluding the impact of any service and non-market performance vesting conditions; and
•
including the impact of any non-vesting conditions. Non-market performance and service
conditions are included in assumptions about the number of awards that are expected to
vest.
The total expense is recognised in the income statements with a corresponding credit to equity
over the vesting period, which is the period over which all of the specified vesting conditions
are to be satisfied. The Company does not begin to recognise expense associated with share-
based awards with performance conditions until it is probable that the performance condition
will be achieved.
2.8
Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided
to the chief operating decision-maker. The chief operating decision-maker, who is responsible
for allocating resources and assessing performance of the operating segments, has been
identified as the Board of Directors as it is the body that makes strategic decisions. The Board
are of the opinion that there was only a single operational segment for FY17 being the
investment in US Treasury Bills. As a result, no segment information has been provided for
FY17 as the Company only accumulates its funds raised for investment in US Treasury Bills.
For FY18, the Board has elected to aggregate the segmental results of Ocean Outdoor Limited
Group (excluding Forrest Media Outdoor) and Forrest Media Outdoor on the basis both
businesses provide similar DOOH services in the UK market. Accordingly, the group has been
treated as one operational segment for FY18 and the results of the group presented in the
financial statements should not be disaggregated further.
2.9
Share capital
Founder Preferred Shares, Ordinary Shares, and Warrants are classified as equity.
Incremental costs directly attributable to the issue of new ordinary shares are shown in equity
as a deduction, net of tax, from the proceeds.
25
Ocean Outdoor Limited
Notes forming part of the Consolidated Financial Statements
for the year ended 31 December 2018
2.10 Critical accounting judgements and key sources of estimation uncertainty
The Group makes certain estimates and assumptions regarding the future. Estimates and
judgements are continually evaluated based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the
circumstances. In the future, actual experience may differ from these estimates and
assumptions. The estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year are
discussed below.
Estimates and assumptions
Impairment of goodwill and other intangible assets – Estimation of future cash flows
and determination of discount rates (see note 11).
Depreciation of property, plant and equipment – Estimation of useful lives and residual
values (see note 2.20).
The Group used certain estimates and assumptions in determining the fair value of the
intangible assets in respect of brand and acquired rights over advertising sites for the
acquisitions made in the year. The estimates and assumptions include underlying cash
flow projections, discount rates applied and long term growth rates.
2.11 New accounting standards and interpretations
This is the first set of consolidated financial statements prepared by the Company following the
acquisition of SCP Acquisition Topco Limited. The Company applied all applicable standards
and applicable interpretations published by the EU for the year ended 31 December 2018
a) New standards, interpretations and amendments effective from 1 January 2018 that the
Group adopted in the year
The Group has adopted IFRS 9 Financial Instruments and IFRS 15 Revenue from
Contracts with Customers during the year. The adoption of these new standards has had
no impact the opening equity and total comprehensive income previously presented in
FY17 in the prior year’s financial statements. The Group has not applied any transitional
reliefs in its first time adoption of IFRS 9 or IFRS 15.
b) New standards, interpretations and amendments not yet effective
There are a number of standards and interpretations which have been issued by the
International Accounting Standards Board that are effective in future accounting periods
that the Group is not adopting early. The most significant of these is IFRS 16 Leases,
which is mandatorily effective for periods beginning on or after 1 January 2019.
Adoption of IFRS 16 will result in the Group recognising right-of-use assets and lease
liabilities for all contracts that are, or contain, a lease. For leases currently classified as
operating leases, under current accounting requirements the Group does not recognise
related assets or liabilities, and instead spreads the lease payments on a straight-line
basis, disclosing in its annual financial statements the total commitment in note 19.
26
Ocean Outdoor Limited
Notes forming part of the Consolidated Financial Statements
for the year ended 31 December 2018
The Group will be required to apply IFRS 16, as endorsed by the EU, from 1 January 2019
and is in the process of gathering data to estimate the impact on the reported income and
net assets. Upon transition to IFRS 16, the Group will be adopting the modified
retrospective approach and therefore will recognise leases on balance sheet as at 1
January 2019, measuring the right-of-use assets at the carrying value of the right of use
asset depreciated on a straight-line basis over the life of the lease from the lease inception
date. This will result in an estimated right of use asset of £84m with a lease liability of
approximately £96m on existing leases. Instead of recognising an operating expense for
its operating lease payments, the Group will recognise interest on its lease liabilities and
amortisation on its right-of-use assets. This will increase reported EBITDA, based on its
current lease profile, by an estimated £16m. This amount will depend on the extent to
which the Group decides to take advantage of the exemptions available under IFRS 16 for
low value assets and short-term leases. The first set of interims prepared under IFRS 16
will be the results presented for the 6-month period ended 30 June 2019.
2.12 Revenue
Substantially all of the Group’s contracts with customers contain a single performance
obligation, being the rental of advertising space, and are subject to fixed prices, so removing
the judgement that would otherwise be required in determining the transaction price and
allocating it across multiple performance obligations. Revenue is recognised on an over time
basis. This is because the customer simultaneously receives and consumes the economic
benefits provided under the contract by the Group’s performance.
Amounts invoiced in advance of the performance of the advertising rental services are
recognised as performance obligations and released to revenue as the group performs the
advertising services under the contract.
Revenue represents the amounts (excluding the value added tax) derived from the provision
of services to customers during the 52-week period ended 30 December 2018 (2017: 52-week
period ended 31 December 2017) net of commissions and discounts. Revenue is recognised
on a 52-week period to reflect the period of customer bookings, normally in 2-week
blocks. The difference on this basis to recognition of turnover for a full year is immaterial.
2.13 Basis of consolidation
Where Ocean Outdoor Limited (“the Company”) has control over an investee, it is classified as
a subsidiary. The Company controls an investee if all three of the following elements are
present: power over the investee, exposure to variable returns from the investee, and the ability
of the investor to use its power to affect those variable returns. Control is reassessed whenever
facts and circumstances indicate that there may be a change in any of these elements of control.
The Consolidated Financial Statements presents the results of the Company and its
subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and
balances between group companies are therefore eliminated in full.
The Consolidated Financial Statements incorporates the results of business combinations
using the acquisition method. In the statement of financial position, the acquiree's identifiable
assets, liabilities and contingent liabilities are initially recognised at their fair values at the
acquisition date. The results of acquired operations are included in the consolidated statement
of comprehensive income from the date on which control is obtained. They are derecognised
from the date on which control ceases.
27
Ocean Outdoor Limited
Notes forming part of the Consolidated Financial Statements
for the year ended 31 December 2018
2.14 Goodwill
Goodwill represents the excess of the cost of a business combination over the total acquisition
date fair value of the identifiable assets, liabilities and contingent liabilities acquired.
Cost comprises the fair value of assets given, liabilities assumed and equity instruments issued,
plus the amount of any non-controlling interests in the acquiree plus, if the business
combination is achieved in stages, the fair value of the existing equity interest in the acquiree.
Direct costs of acquisition are recognised immediately as an expense.
Goodwill is capitalised as an intangible asset with any impairment in carrying value being
charged to the consolidated statement of comprehensive income. Where the fair value of
identifiable assets, liabilities and contingent liabilities exceed the fair value of consideration
paid, the excess is credited in full to the consolidated statement of comprehensive income on
the acquisition date.
2.15 Other intangible assets
Intangible assets are recognised on business combinations if they are separable from the
acquired entity or give rise to other contractual/legal rights. The amounts ascribed to such
intangibles are arrived at by using appropriate valuation techniques.
The Group has recognised acquired rights over advertising sites on business combinations as
intangible assets. These are amortised over the contractual life of the advertising sites on a
straight-line basis, which are typically 10 to 15 years.
The Group has recognised intangible asset in relation to the Ocean brand acquired as part of
the business combination. This is amortised over 10 years on a straight-line basis.
2.16
Impairment of non-financial assets (excluding deferred tax assets)
Impairment tests on goodwill and other intangible assets with indefinite useful economic lives
are undertaken annually at the financial year end. Other non-financial assets are subject to
impairment tests whenever events or changes in circumstances indicate that their carrying
amount may not be recoverable. Where the carrying value of an individual asset or cash
generating units ('CGU’) exceeds its recoverable amount (i.e. the higher of value in use and fair
value less costs to sell), the asset is written down accordingly.
Impairment charges are included in profit or loss, except to the extent they reverse gains
previously recognised in other comprehensive income. An impairment loss recognised for
goodwill is not reversed
2.17 Defined contribution schemes
Contributions to defined contribution pension schemes are charged to the consolidated
statement of comprehensive income in the year to which they relate.
2.18
Leased assets
Where substantially all of the risks and rewards incidental to ownership are not transferred to
the Group (an "operating lease"), the total rentals payable under the lease are charged to the
consolidated statement of comprehensive income on a straight-line basis over the lease term.
The aggregate benefit of lease incentives is recognised as a reduction of the rental expense
over the lease term on a straight-line basis.
28
Ocean Outdoor Limited
Notes forming part of the Consolidated Financial Statements
for the year ended 31 December 2018
2.19 Deferred taxation
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or
liability in the consolidated statement of financial position differs from its tax base, except for
differences arising on:
- The initial recognition of goodwill
- The initial recognition of an asset or liability in a transaction which is not a business
combination and at the time of the transaction affects neither accounting or taxable
profit, and
Investments in subsidiaries where the Group is able to control the timing of the reversal
of the difference and it is probable that the difference will not reverse in the foreseeable
future.
-
Recognition of deferred tax assets is restricted to those instances where it is probable that
taxable profit will be available against which the difference can be utilised.
The amount of the asset or liability is determined using tax rates that have been enacted or
substantively enacted by the reporting date and are expected to apply when the deferred tax
liabilities/(assets) are settled/(recovered).
2.20
Property, plant and equipment
Items of property, plant and equipment are initially recognised at cost. As well as the purchase
price, cost includes directly attributable costs.
Depreciation is provided on all items of property, plant and equipment so as to write off their
carrying value over their expected useful economic lives. It is provided at the following rates:
Site assets
Site build costs
Digital signage
Light boxes
-
-
-
Over the length of the lease
10 years
10 years
Assets under the course of construction are only depreciated once complete.
Equipment
Fixtures and fittings
Computer equipment
Motor vehicles
-
-
-
4 years straight line
2 years straight line
4 years straight line
29
Ocean Outdoor Limited
Notes forming part of the Consolidated Financial Statements
for the year ended 31 December 2018
3.
Financial instruments - Risk Management
The Group is exposed through its operations to the following financial risks:
- Credit risk; and
-
Liquidity risk.
The Group’s operations do not expose it to material foreign currency risk.
In common with all other businesses, the Group is exposed to risks that arise from its use of
financial instruments. This note describes the Group's objectives, policies and processes for
managing those risks and the methods used to measure them. Further quantitative information
in respect of these risks is presented throughout these financial statements.
There have been no substantive changes in the Group's exposure to financial instrument risks,
its objectives, policies and processes for managing those risks or the methods used to measure
them from previous periods unless otherwise stated in this note.
(i) Principal financial instruments
The principal financial instruments used by the Group, from which financial instrument risk
arises, are as follows:
- Trade and other receivables
- Cash and cash equivalents
- Trade and other payables
(ii) Financial instruments by category
Financial assets
Cash and cash equivalents
Trade receivables
Total financial assets
Financial liabilities
Trade and other payables
Total financial liabilities
30
Amortised cost
2018
£'000
160,503
36,718
_______
197,221
_______
2017
£'000
294,576
-
_______
294,576
_______
Amortised cost
2018
£'000
9,170
_______
9,170
_______
2017
£'000
88
_______
88
_______
Ocean Outdoor Limited
Notes forming part of the Consolidated Financial Statements
for the year ended 31 December 2018
(iii) Financial instruments not measured at fair value
Financial instruments not measured at fair value include certain cash and cash equivalents,
trade and other receivables and trade and other payables.
Due to their short-term nature, the carrying value of cash and cash equivalents, trade and other
receivables, trade and other payables approximates their fair value.
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group's risk management
objectives and policies. The Board receives monthly reports from the Group Financial
Controller through which it reviews the effectiveness of the processes put in place and the
appropriateness of the objectives and policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible
without unduly affecting the Group's competitiveness and flexibility. Further details regarding
these policies are set out below:
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial
instrument fails to meet its contractual obligations. The Group is mainly exposed to credit risk
from credit sales. It is Group policy, implemented locally, to assess the credit risk of new
customers before entering contracts. The Group's review includes external ratings, when
available, and in some cases bank references. Purchase limits are established for each
customer.
Credit risk also arises from cash and cash equivalents and deposits with banks and financial
institutions. For banks and financial institutions, only independently rated parties with minimum
rating "A" are accepted. In respect of the year and period ends presented, £18.2m (2017: £nil)
was held on current account with HSBC Bank plc and £142.3m (2017: £294.6m) was held in
treasury bills with Barclays Bank plc.
Liquidity risk
Liquidity risk arises from the Group's management of working capital and the finance charges
and principal repayments on its debt instruments. It is the risk that the Group will encounter
difficulty in meeting its financial obligations as they fall due.
The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its
liabilities when they become due. To achieve this aim, it seeks to maintain cash balances (or
agreed facilities) to meet expected requirements for a period of at least 90 days.
The Board receives rolling 12-month cash flow projections on a monthly basis as well as
information regarding cash balances. At the end of the financial year, these projections
indicated that the Group expected to have sufficient liquid resources to meet its obligations
under all reasonably expected circumstances.
31
Ocean Outdoor Limited
Notes forming part of the Consolidated Financial Statements
for the year ended 31 December 2018
At 31 December 2017
Cash and cash equivalents
Trade and other payables
Total
£'000
Up to 3
months
£'000
Between
3 and 12
months
£'000
Between
1 and 2
years
£'000
Between
2 and 5
years
£'000
Over
5 years
£'000
294,576
88
_______
294,576
88
_______
-
-
_______
-
-
_______
-
-
_______
-
-
_______
Total
£'000
Up to 3
months
£'000
Between
3 and 12
months
£'000
160,503
32,970
9,170
_______
160,503
32,970
6,855
_______
-
-
764
_______
Between
1 and 2
years
£'000
-
-
1,280
_______
Between
2 and 5
years
£'000
-
-
271
_______
Over
5 years
£'000
-
-
-
_______
At 31 December 2018
Cash and cash equivalents
Trade receivables
Trade and other payables
Capital Disclosures
The Group's objectives when maintaining capital are:
to safeguard the entity's ability to continue as a going concern, so that it can continue to
provide returns for shareholders and benefits for other stakeholders, and
to provide an adequate return to shareholders by pricing products and services
commensurately with the level of risk.
The Group sets the amount of capital it requires in proportion to risk. The Group manages its
capital structure and makes adjustments to it in the light of changes in economic conditions. In
order to maintain or adjust the capital structure, the Group may adjust the amount of dividends
paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce
debt.
4.
Revenue
All revenue is recognised on an over time basis from services provided in the UK and to UK
based customers.
Analysis of revenue by service type:
Rental of advertising space
For the year
ended 31 Dec
2018
£'000
Period 20 Jan
2017 to 31 Dec
2017
£'000
49,795
_______
-
_______
32
Ocean Outdoor Limited
Notes forming part of the Consolidated Financial Statements
for the year ended 31 December 2018
5.
Expenses by nature
Employee benefit expenses (note 6)
Depreciation of property, plant and equipment (note 9)
Amortisation of intangible assets (note 10)
Operating site lease expense
Site profit share, rates, utilities and maintenance
Profit on disposal of property, plant and equipment
Acquisition and relisting fees
Auditor remuneration – audit fees
Ocean Outdoor Limited company audit
Ocean Outdoor Limited Group audit
Auditor remuneration – other non-audit services
6.
Employee benefit expenses
Wages and salaries
Social security contributions and similar taxes
Founder Preferred Shares issue
Management incentive scheme
Defined contribution pension cost
For the year
ended 31 Dec
2018
£'000
Period 20 Jan
2017 to 31 Dec
2017
£'000
4,614
3,195
10,087
10,853
13,660
1
5,607
-
220
95
_______
18,068
-
-
-
-
-
-
21
-
143
_______
For the year
ended 31 Dec
2018
£'000
Period 20 Jan
2017 to 31 Dec
2017
£'000
4,001
479
-
68
66
_______
4,614
_______
145
-
17,923
-
-
_______
18,068
_______
During the prior year 700,000 founder preferred shares were issued to founder shareholders. The
shares may be converted into ordinary shares based on a conversion rate of 1 ordinary share for
1 founder preferred share at a future time at an exercise price of USD 10.50 per share. The issue
of the shares was treated for accounting purposes as an equity settled share-based payment. The
fair value of the shares of £24,187k was recognised as an expense in full at the grant dates as the
shares had no vesting conditions.
33
Ocean Outdoor Limited
Notes forming part of the Consolidated Financial Statements
for the year ended 31 December 2018
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.
Wages and salaries
Benefits in kind
Management incentive scheme (hurdle shares)
Founder Preferred Shares issue
Defined contribution pension cost
7.
Finance expense and finance income
Finance expense
Interest payable
Finance income
Interest receivable and cash and cash equivalents
8.
Tax
Current tax expense
Current tax charge for the year
Adjustments in respect of prior periods
Total current tax
Deferred tax expense
Deferred tax credit for the year (see note 15)
Total deferred tax
Total tax expense
34
For the year
ended 31 Dec
Period 20 Jan
2017 to 31 Dec
2018
£'000
1,234
35
68
-
21
_______
1,358
_______
2017
£'000
145
-
-
24,187
-
_______
24,332
_______
For the year
ended 31 Dec
2018
£'000
Period 20 Jan
2017 to 31 Dec
2017
£'000
4
_______
-
_______
1,658
_______
2,104
_______
For the year
ended 31 Dec
2018
£'000
Period 20 Jan
2017 to 31 Dec
2017
£'000
2,002
(2)
_______
-
-
_______
2,000
-
(1,694)
_______
(1,694)
_______
306
_______
-
_______
-
_______
-
_______
Ocean Outdoor Limited
Notes forming part of the Consolidated Financial Statements
for the year ended 31 December 2018
The group’s trading subsidiaries all operated in the UK in FY18. The group pays UK corporation
tax on profits from its UK businesses. In FY17, the Company had no subsidiaries. As a BVI
registered company, the rate of income tax which applied to the Company for FY17 was 0%.
Accordingly, the Company did not incur a charge or credit for corporation tax. The reasons for the
difference between the actual tax charge for the year and the standard rate of corporation tax in
the United Kingdom applied to the loss for the year are as follows:
Profit/(Loss) before tax
Tax using the Company's domestic tax rate of 19% (2017: 0%)
Expenses not deductible for tax purposes
Other permanent differences
Total tax expense
Expenses not deductible for tax purposes
For the year
ended 31
Dec 2018
£'000
Period 20 Jan
2017 to 31 Dec
2017
£'000
6,929
_______
(24,416)
_______
1,317
(1,006)
(5)
_______
306
_______
-
-
-
_______
-
_______
The key contributor to the expenses not deductible for tax purposes is interest disallowable per
the corporate interest restrictions rules.
Changes in tax rates and factors affecting the future tax charge
A reduction in the UK corporation tax rate from 20% to 19% (effective from 1 April 2017) were
substantively enacted on 26 October 2015, and an additional reduction to 17% (effective 1 April
2020) was substantively enacted on 6 September 2016. This will reduce the company's future
current tax charge accordingly. Deferred tax assets and liabilities at 31 December 2018 have been
calculated taking into consideration the applicable rates when the temporary differences are
expected to reverse.
35
Ocean Outdoor Limited
Notes forming part of the Consolidated Financial Statements
for the year ended 31 December 2018
9.
Property, plant and equipment
Cost or valuation
At 20 January 2017
At 31 December 2017
At 1 January 2018
Acquired through business combinations
28/03/18
Acquired through business combinations
2/06/18
Additions
Disposals
At 31 December 2018
Accumulated depreciation and
impairment
At 20 January 2017
At 31 December 2017
At 1 January 2018
Charge in the year
Disposals
At 31 December 2018
Net Book Value
At 31 December 2018
At 31 December 2017
Site
assets Equipment
£'000
£'000
Motor
vehicles
£'000
Total
£'000
-
_______
-
_______
-
_______
-
_______
-
_______
-
_______
-
_______
-
_______
-
19,345
5,116
-
211
16
-
-
73
-
19,556
5,205
10,349
(23)
_______
56
(72)
_______
-
(12)
_______
10,405
(107)
_______
34,787
_______
211
_______
61
_______
35,059
_______
Site
assets Equipment
£'000
£'000
Motor
vehicles
£'000
Total
£'000
-
_______
-
_______
-
_______
-
_______
-
_______
-
_______
-
_______
-
_______
-
3,111
(23)
_______
-
59
(72)
_______
-
25
(12)
_______
-
3,195
(107)
_______
3,088
_______
(13)
_______
13
_______
3,088
_______
Site
assets Equipment
£'000
£'000
Motor
vehicles
£'000
Total
£'000
31,699
_______
224
_______
48
_______
31,971
_______
-
_______
-
_______
-
_______
-
_______
36
Ocean Outdoor Limited
Notes forming part of the Consolidated Financial Statements
for the year ended 31 December 2018
10.
Intangible assets
Cost or valuation
At 20 January 2017
At 31 December 2017
At 1 January 2018
Acquired through business combinations
28/03/18
Acquired through business combinations
2/06/18
At 31 December 2018
Accumulated amortisation
and impairment
At 20 January 2017
At 31 December 2017
At 1 January 2018
Charge in the year
At 31 December 2018
Net Book Value
At 31 December 2018
At 31 December 2017
Brand
£'000
Acquired
rights over
advertising
sites
£'000
Goodwill
Total
£'000
£'000
-
_______
-
_______
-
_______
-
_______
-
_______
-
_______
-
_______
-
_______
-
6,725
-
118,188
-
86,638
-
211,551
-
18,527
10,033
28,560
_______
_______
_______
_______
6,725
_______
136,715
_______
96,671
_______
240,111
_______
Brand
£'000
Acquired
rights over
advertising
sites
£'000
Goodwill
Total
£'000
£'000
-
_______
-
_______
-
_______
-
_______
-
_______
-
_______
-
_______
-
_______
-
500
_______
-
9,587
_______
-
-
_______
-
10,087
_______
500
_______
9,587
_______
-
_______
10,087
_______
Brand
£'000
Acquired
rights over
advertising
sites
£'000
Goodwill
Total
£'000
£'000
6,225
_______
127,128
_______
96,671
_______
230,024
_______
-
_______
-
_______
-
_______
-
_______
37
Ocean Outdoor Limited
Notes forming part of the Consolidated Financial Statements
for the year ended 31 December 2018
11.
Goodwill and impairment
The Group is required to test, on an annual basis, whether goodwill has suffered any
impairment. The recoverable amount is determined based on value in use calculations. The
use of this method requires the estimation of future cash flows and the determination of a
discount rate in order to calculate the present value of the cash flows.
The Company made two acquisitions in the year; that of SCP Acquisition Topco Limited and its
subsidiaries and that of Forrest Media (Holdings) Limited and its subsidiaries. For the purpose
of impairment testing each acquisition was measured on the basis of its value in use based on
financial forecasts covering a five-year period. The key assumptions for the value in use
calculation are:
- Discount rates
- Growth rates
- Free cash flow
Post-tax discount rates used in the SCP Acquisition Topco Group impairment review were
13.7% and 13.1% for Forrest Media (Holdings) Group.
A long-term growth rate of 3% was used to extrapolate cash flows beyond the five-year forecast
period in calculating a terminal value assuming the sale of the business.
The free cash flows used are based on revenue projections less direct and allocated costs
established using management approved budgets and forecasts less working capital
movements.
These metrics are based on past performance and expectations of future changes in the market.
They have been assessed and consideration given to any reasonable possible changes to
these assumptions, including the undertaking of a sensitivity analysis.
The surplus headroom above the carrying value of goodwill at 31 December 2018 was
satisfactory.
No instances have been identified that could cause the carrying amount of goodwill to exceed
its recoverable amount and therefore no impairment has been recognised.
38
Ocean Outdoor Limited
Notes forming part of the Consolidated Financial Statements
for the year ended 31 December 2018
12.
Subsidiaries, investments and business combinations
On 26 February 2018, Ocean Outdoor Limited formed Ocean Jersey Topco Limited (formerly
Ocelot Partners Bidco Limited), a wholly owned subsidiary, incorporated in Jersey.
On 28 March 2018 the Ocean Outdoor Limited acquired 100% of the share capital and voting
rights of SCP Acquisition Topco Limited and its subsidiaries, through Ocean Jersey Topco
Limited. The acquired company and its subsidiaries specialise in the development and sale of
Out of Home (OOH) displays in the UK and had an enterprise value of £200m. Acquisition
related costs of £4.6m were incurred. The transaction was funded using cash on hand.
On 2 June 2018 the Ocean Group acquired 100% of the share capital and voting rights of
Forrest Media (Holdings) Limited and its subsidiaries, registered in Scotland, through Ocean
Bidco Limited. The acquired company and its subsidiaries specialise in the development and
sale of Out of Home (OOH) displays in Scotland and had an enterprise value of £32m.
Acquisition related costs of £1.8m were incurred. The transaction was funded using cash on
hand.
The principal subsidiaries of the Group, all of which have been included in these Consolidated
Financial Statements, are as follows:
Name
Country of
incorporation
and principal
place of
business
Nature of business
Holding
2018
Holding
2017
Ocean Jersey Topco Limited
SCP Acquisition Topco Limited*
SCP Acquisition Midco Limited*
SCP Acquisition Bidco Limited*
Ocean Topco Limited*
Ocean Bidco Limited*
Ocean Outdoor UK Limited*
Signature Outdoor Limited*
Mediaco Outdoor Limited*
Forrest Media (Holdings) Limited* Scotland
Scotland
Forrest Media Limited*
Scotland
Forrest Outdoor Media Limited*
Scotland
Forrest Brands Limited*
Jersey
England & Wales
England & Wales
England & Wales
England & Wales
England & Wales
England & Wales
England & Wales
England & Wales
Holding company
Holding company
Holding company
Holding company
Holding company
Holding company
OOH Media Owner
OOH Media Owner
OOH Media Owner
Holding company
Holding company
OOH Media Owner
Dormant subsidiary
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
68%
* The shares held in these entities are held indirectly.
-
-
-
-
-
-
-
-
-
-
-
-
-
The registered address for the Jersey entity is 3rd Floor, 44 Esplanade, St Helier, Jersey, JE4
9WG.
The registered address for entities incorporated in England & Wales is 25 Kingly Street, London,
W1B 5QB.
The registered address for entities incorporated in Scotland is 7 Seaward Street, Paisley Road,
Glasgow, G41 1HJ
39
Ocean Outdoor Limited
Notes forming part of the Consolidated Financial Statements
for the year ended 31 December 2018
SCP Acquisition Topco Limited & subsidiaries
Fair value of assets at 28 March 2018
Intangible assets
Tangible fixed assets
Debtors
Cash and cash equivalents
Creditors due within one year
Deferred tax liability
Net assets acquired
Purchase consideration paid
Cash
Creditor settlement
Total purchase consideration
Goodwill arising on acquisition
Forrest Media (Holdings) Limited & subsidiaries
Fair value of assets at 2 June 2018
Intangible fixed assets
Tangible fixed assets
Debtors
Cash and cash equivalents
Creditors due within one year
Deferred tax liability
Net assets acquired
Purchase consideration paid
Cash
Receivable settlement
Total purchase consideration
Goodwill arising on acquisition
40
Fair
value
£'000
124,913
19,557
22,368
12,185
(34,433)
(21,235)
________
123,355
________
134,198
75,795
________
209,993
________
86,638
________
Fair
value
£'000
18,527
5,205
13,718
1,307
(2,900)
(3,151)
________
32,706
________
32,444
10,295
________
42,739
________
10,033
________
Ocean Outdoor Limited
Notes forming part of the Consolidated Financial Statements
for the year ended 31 December 2018
In Line with IFRS3, Business Combinations, the above intangibles have been calculated using the
information currently available. These values may be adjusted to reflect new information obtained
about facts and circumstances that existed as of the acquisition date during the measurement
period which shall not exceed one year from the acquisition date.
SCP Acquisition Topco Limited and its subsidiaries contributed £44.8m in revenue and £10.7m to
the total group profit from the date of acquisition. Forrest Media (Holdings) Limited and its
subsidiaries contributed £5.0m in revenue and £1.1m profit to the group profit from the date of
acquisition.
Had the transactions been undertaken at 1 January 2018, SCP Acquisition Topco Limited and its
subsidiaries would have generated revenue of £54.6m and a £734k profit, and Forrest Media
(Holdings) Limited and its subsidiaries would have generated revenue of £7.6m and contributed
£1.3m to profit.
The unaudited trading results for these entities in isolation and as part of the Group can be found
in the appendix beginning on page 52.
2018
£'000
200,000
9,993
________
209,993
4,333
(12,185)
________
202,141
________
2018
£'000
32,444
1,506
(1,307)
________
32,643
________
Cash flows from acquisition transactions
SCP Acquisition Topco Limited
Enterprise value
Debt-like, cash-like items and working capital
Purchase consideration settled in cash
Direct acquisition costs
Cash balances acquired
Net cash outflow
Forrest Media (Holdings) Limited
Purchase consideration settled in cash
Direct acquisition costs
Cash balances acquired
Net cash outflow
41
Ocean Outdoor Limited
Notes forming part of the Consolidated Financial Statements
for the year ended 31 December 2018
13.
Trade and other receivables
Trade receivables
Prepayments
Total trade and other receivables - Current
2018
£'000
2017
£'000
32,970
3,748
_______
-
58
________
36,718
_______
58
________
The carrying value of trade and other receivables classified as loans and receivables
approximates fair value.
The Group does not hold any collateral as security.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses using
a lifetime expected credit loss provision for trade receivables and contract assets. To measure
expected credit losses on a collective basis, trade receivables and contract assets are grouped
based on similar credit risk and aging. The contract assets have similar risk characteristics to
the trade receivables for similar types of contracts.
The expected loss rates are based on the Group’s historical credit losses experienced over the
three-year period prior to the period end. The historical loss rates are then adjusted for current
and forward-looking information on macroeconomic factors affecting the Group’s customers.
The Group has identified the gross domestic product (GDP), unemployment rate and inflation
rate as the key macroeconomic factors in the countries where the Group operates.
14.
Trade and other payables
Trade payables
Other payables
Accruals
Total Trade and other payables
2018
£'000
2017
£'000
8,791
379
35,559
_______
-
88
-
________
44,729
________
88
________
The accruals balance contains accruals for site rents, site rates, profit shares and volume
rebates, including estimates for such items where necessary.
42
Ocean Outdoor Limited
Notes forming part of the Consolidated Financial Statements
for the year ended 31 December 2018
15.
Deferred tax
A reduction in the UK corporation tax rate from 20% to 19% (effective from 1 April 2017) was
substantively enacted on 26 October 2015, and an additional reduction to 17% (effective 1 April
2020) was substantively enacted on 6 September 2016. This will reduce the company's future
current tax charge accordingly. Deferred tax assets and liabilities at 31 December 2018 have
been calculated taking into consideration the applicable rates when the temporary differences
are expected to reverse.
Details of the deferred tax liability, amounts recognised in profit or loss and amounts recognised
in other comprehensive income are as follows:
At 20 January 2017
At 31 December 2017 and 1 January 2018
Asset
£'000
Liability
£'000
-
_______
-
_______
-
_______
-
_______
Charged/
(credited)
to profit
or loss
£'000
-
_______
-
_______
Arising on business combinations
Reversal of temporary timing differences on
business combinations
Fixed asset and other differences
Reversal of temporary timing differences on fixed
asset and other differences
At 31 December 2018
-
-
-
-
24,386
(1,715)
887
21
-
(1,715)
-
21
_______
_______
_______
-
_______
23,579
_______
(1,694)
_______
43
Ocean Outdoor Limited
Notes forming part of the Consolidated Financial Statements
for the year ended 31 December 2018
16.
Share capital
The authorised shares of the Company are as follows:
Authorised
Unlimited number of Ordinary Shares
Founder Preferred Shares, no par value
2018
Number
‘000
2018
£'000
2017
£'000
-
_______
-
________
2018
£'000
2017
Number
‘000
2017
£'000
Balance at beginning of period
Issued during the period
Balance at end of period
Ordinary Shares, no par value
Balance at beginning of period
Issued during the period
Balance at end of period
700
-
-
5,213
5,213
-
_______ ________ _______ ________
-
700
700
5,213
_______ ________ _______ ________
5,213
700
2018
Number
‘000
2018
£'000
2017
Number
‘000
2017
£'000
£'000
41,790
12,131
-
288,906
_______ ________ _______ ________
288,906
86,688
-
41,790
53,921
288,906
_______ ________ _______ ________
375,594
41,790
147,000 Founder Preferred Shares were issued on 20 January 2017 at US$10.50 per share
and a further 553,000 issued on 8 March 2017, also at US$10.50 per share. There are no
Founder Preferred Shares held in Treasury. Each Founder Preferred Share was issued with a
Warrant as described below.
41,790,000 Ordinary Shares were issued on 8 March 2017 (41,765,000 were issued in the IPO
at US$10.00 per share and 25,000 were issued to the non-founder directors in conjunction with
the IPO). There are no Ordinary Shares held in Treasury. Each Ordinary Share was issued
with a Warrant as described below. Issue costs of US$10,543,094 were deducted from the
proceeds of issue.
Following the acquisition of SCP Acquisition Topco Limited on 28 March 2018, 12,046,994
ordinary shares were issued. 11,171,150 shares were issued as a result of Warrants issued
being exercised, 875,844 shares were issued for cash.
Following the acquisition of Forrest Media (Holdings) Limited on 2 June 2018, 59,850 ordinary
shares were issued for cash.
24,000 Ordinary Shares were issued to three Non-Executive Directors for remuneration in the
year.
As at 31 December 2018, the Company had in issue 53,920,844 Ordinary Shares and 700,000
Founder Preferred Shares. There are no Ordinary Shares held in Treasury. All Warrants
previously issued have expired.
44
Ocean Outdoor Limited
Notes forming part of the Consolidated Financial Statements
for the year ended 31 December 2018
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)
c)
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
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.
45
Ocean Outdoor Limited
Notes forming part of the Consolidated Financial Statements
for the year ended 31 December 2018
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)
c)
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
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.
II.
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;
following the first Additional Annual Enhancement, no subsequent Additional Annual
Enhancement will occur unless the Additional Annual Enhancement Price for the
relevant Enhancement Year
the highest Additional Annual
Enhancement Price in any preceding Enhancement Year.
is greater
than
In the first Enhancement Year in which the Additional Annual Enhancement is eligible to occur,
the Additional Annual Enhancement Amount will be equal to (i) 20 per cent. of the difference
between $10.00 and the Additional Annual Enhancement Price, multiplied by (ii) the number
of Ordinary Shares outstanding immediately following the Acquisition including any Ordinary
Shares issued pursuant to the exercise of Warrants but excluding any Ordinary Shares issued
to shareholders or other beneficial owners of a company or business acquired pursuant to or
in connection with the Acquisition (the “Preferred Share Enhancement Equivalent”).
Thereafter, the Additional Annual Enhancement Amount will be equal in value to 20 per cent.
of the increase in the Additional Annual Enhancement Price over the highest Additional
Annual Enhancement Price in any preceding Enhancement Year multiplied by the Preferred
Share Enhancement Equivalent.
For the purposes of determining the Additional Annual Enhancement Amount, the Additional
Annual Enhancement Price is the Average Price per Ordinary Share for the last 30
consecutive Trading Days
the relevant Enhancement Year (the “Enhancement
Determination Period”).
in
46
Ocean Outdoor Limited
Notes forming part of the Consolidated Financial Statements
for the year ended 31 December 2018
Warrants
The Company issued 42,490,000 Warrants to the purchasers of both Ordinary Shares and
Founder Preferred Shares (including the 25,000 Warrants that were issued to non-founder
directors in connection with their appointment). Each Warrant had a term of 3 years following
an Acquisition and entitled a Warrant holder to subscribe for one-third of an Ordinary Share
upon exercise. Warrants were exercisable in multiples of three for one Ordinary Share at a
price of US$11.50 per whole Ordinary Share.
On 28 February 2018, an amendment was made to the Warrant subscription price, reducing
the cost from US$11.50 per whole ordinary share, to US$10.00 per whole ordinary share. The
subscription period was also reduced, resulting in the Warrants expiring prior to the closing of
the Share Acquisition on 28 March 2018. As a result, all Warrants previously issued, not
exercised at the acquisition date, have expired.
Hurdle shares
Ocean Jersey Topco Limited, a subsidiary of the Company, issued shares to management
which can be converted to shares in Ocean Outdoor Limited under certain circumstances.
6,660,000 of these hurdle shares were issued on 28 March 2018. The hurdle shares will only
accrue value when the price of Ordinary Shares has increased by at least 10 per cent on a
compound basis over a base price of $10.00 per share, for each financial year since the date
that the participants acquired the shares (including the financial year in which the Ocean
Transaction was completed). 3,330,000 of these shares vest over a four-year period and
3,330,000 vest over a five-year period.
The hurdle shares do not have a right to receive dividend payments, except in the event of a
winding-up of Ocean Jersey Topco Limited, or other unusual circumstances.
The hurdle shares do not carry voting rights.
Securities carrying special rights:
Save as disclosed above in relation to the Founder Preferred Shares, no person holds
securities in the Company carrying special rights with regard to control of the Company.
Voting rights:
Holders of Ordinary Shares will have the right to receive notice of and to attend and vote at
any meetings of members. Each holder of Ordinary Shares being present in person or by
proxy at a meeting will, upon a show of hands, have one vote and upon a poll each such
holder of Ordinary Shares present in person or by proxy will have one vote for each Ordinary
Share held by him. In the case of joint holders of a share, if two or more persons hold shares
jointly each of them may be present in person or by proxy at a meeting of members and may
speak as a member, if only one of the joint owners is present he may vote on behalf of all joint
owners, and if two or more joint holders are present at a meeting of members, in person or by
proxy, they must vote as one.
47
Ocean Outdoor Limited
Notes forming part of the Consolidated Financial Statements
for the year ended 31 December 2018
Restrictions on voting:
No member shall, if the Directors so determine, be entitled in respect of any share held by
him to attend or vote (either personally or by proxy) at any meeting of members or separate
class meeting of the Company or to exercise any other right conferred by membership in
relation to any such meeting if he or any other person appearing to be interested in such
shares has failed to comply with a notice requiring the disclosure of shareholder interests and
given in accordance with the Company’s articles of association (the “Articles”) within 14
calendar days, in a case where the shares in question represent at least 0.25% of their class,
or within seven days, in any other case, from the date of such notice. These restrictions will
continue until the information required by the notice is supplied to the Company or until the
shares in question are transferred or sold in circumstances specified for this purpose in the
Articles.
Rights to appoint and remove Directors
Subject to the BVI Companies Act and the Articles, the Directors shall have power at any time,
and from time to time, without sanction of the members, to appoint any person to be a Director,
either to fill a casual vacancy or as an additional Director. Subject to the BVI Companies Act
and the Articles, the members may by a Resolution of Members appoint any person as a
Director and remove any person from office as a Director.
For so long as an initial holder of Founder Preferred Shares (being a Founding Entity together
with its affiliates) holds 20% or more of the Founder Preferred Shares in issue, such holder
shall be entitled to nominate a person as a Director of the Company and the Directors shall
appoint such person. In the event such holder notifies the Company to remove any Director
nominated by him the other Directors shall remove such Director, and in the event of such a
removal the relevant holder shall have the right to nominate a Director to fill such vacancy.
17. Earnings per share
Numerator
Earnings used in basic and diluted EPS
Denominator
Weighted average number of shares used in basic EPS
Weighted average number of shares used in diluted EPS
Basic EPS (pence)
Diluted EPS (pence)
For the year
ended 31 Dec
2018
£'000
Period 20
Jan 2017 to
31 Dec 2017
£'000
6,623
_______
(24,146)
_______
'000
'000
50,862
_______
36,126
_______
50,862
_______
36,126
_______
13.0p
_______
(66.8p)
_______
13.0p
_______
(66.8p)
_______
The 42,490,000 Warrants and 125,000 directors’ share options were considered non-dilutive at
31 December 2017. At 31 December 2018, the warrants had expired and the directors’ share
options, the founder preferred shares and the hurdle shares were currently considered to be
non-dilutive. They are expected to become dilutive once in the money.
48
Ocean Outdoor Limited
Notes forming part of the Consolidated Financial Statements
for the year ended 31 December 2018
18.
Reserves
The following describes the nature and purpose of each reserve within equity:
Reserve
Share premium
Description and purpose
Amount subscribed for share capital in excess of
nominal value.
Retained earnings
All other net gains and losses and transactions with
owners (e.g. dividends) not recognised elsewhere.
19.
Leases
Operating leases exist as agreements with landlords.
The total future value of minimum lease payments is due as follows:
Not later than one year
Later than one year and not later than five years
Later than five years
2018
£'000
15,836
58,890
50,634
_______
125,360
_______
2017
£'000
-
-
-
_______
-
_______
49
Ocean Outdoor Limited
Notes forming part of the Consolidated Financial Statements
for the year ended 31 December 2018
20.
Related party disclosures
During the period the Company issued the following Shares, Warrants and Options to
directors of the Company:
2018
Founder
Ordinary Preferred
Andrew Barron
Andrew Miller
Aryeh B. Bourkoff
Robert Marcus
Martin HP Söderström
Sangeeta Desai
Thomas Ebeling
Tom Goddard
Tim Bleakley
Shares
Number
‘000
164.2
-
493.3
9.0
7.5
2.5
7.5
232.7
310.5
_______
Shares Warrants Options
Number Number Number
'000
‘000
'000
-
-
-
-
-
-
-
-
-
_______ _______
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
_______
2017
Founder
Ordinary Preferred
Andrew Barron
Andrew Miller
Aryeh B. Bourkoff
Robert Marcus
Martin HP Söderström
Sangeeta Desai
Thomas Ebeling
Tom Goddard
Tim Bleakley
Shares
Number
‘000
345.7
-
1,081.1
110.0
7.5
7.5
-
-
-
_______
Shares Warrants Options
Number Number Number
'000
‘000
'000
147.0
-
399.0
-
-
-
-
-
-
147.0
-
399.0
-
-
-
-
-
-
_______ _______
-
-
-
50.0
37.5
37.5
-
-
-
_______
The Founder Preferred Shares issued to Andrew Barron and Aryeh Bourkoff resulted in share-
based payments charges (employee benefits costs) of £1.7m and £16.2m in 2017.
50
Ocean Outdoor Limited
Notes forming part of the Consolidated Financial Statements
for the year ended 31 December 2018
The fees paid to directors during the period to 31 December 2018 were as follows:
Andrew Barron
Andrew Miller
Aryeh B. Bourkoff
Robert Marcus
Martin HP Söderström
Sangeeta Desai
Thomas Ebeling
Tom Goddard
Tim Bleakley
2018
£'000
2017
£'000
-
5.0
-
64.4
53.8
53.8
8.9
54.0
269.8
_______
-
-
-
57.9
43.4
43.4
-
-
-
_______
Robert D Marcus, Martin HP Söderstrom and Thomas Ebeling opted to have their annual
remuneration settled by the issue of shares at $10 per share. Robert D Marcus received 9,000
Ordinary Shares and Martin HP Söderstrom and Thomas Ebeling, 7,500 Ordinary Shares each.
The Group paid a transaction fee of £1.0m to LionTree Advisors UK LLP in relation to the
acquisition of Forrest Media (Holdings) Limited. Aryeh B. Bourkoff, a Founder and Non-
Executive Director of Ocean Outdoor Limited, is the founder and CEO of LionTree LLC, a
connected company to LionTree Advisors UK LLP.
21.
Events after the reporting date
On 10 January 2019, the Company’s ordinary shares were re-admitted to the Standard Listing
segment of the Official List of the UK Listing Authority, and trading in its shares recommenced
on the London Stock Exchange's Main Market (LSE: OOUT).
In accordance with the London Stock Exchange Admission and Disclosure Standards, the
Company announced, pursuant to its articles of association, a tranche of 87,500 founder
preferred shares have been automatically re-designated as ordinary shares on a one for one
basis. This re-designation became effective on 15 January 2019 and admission of the ordinary
shares occurred on 22 January 2019.
On 12 March 2019, the Group announced the acquisition of Interbest and Ngage Media, two
leading digital out-of-home companies operating across the Netherlands, for a combined cash
consideration of approximately £45m using a rate of 0.88:1 EUR:GBP, and a performance-
linked earn-out if growth performance targets are met over time. The transactions value
Interbest and Ngage, combined, at a 31 December 2018 LTM multiple of 6.9x adjusted EBITDA,
before any benefit for synergies. The business combination accounting had not been finalised
by the authorisation date of these financial statements.
51
Ocean Outdoor Limited
Appendix (unaudited)
The following pages present unaudited financial information on different bases for entities owned by
the Group as at 31 December 2018.
Ocean Outdoor Limited and subsidiaries - Proforma
SCP Acquisition Topco Ltd and subsidiaries
Forrest Outdoor Media Ltd and subsidiaries
Ocean Outdoor Limited and subsidiaries – Hybrid
53
54
55
56
52
Ocean Outdoor Limited
Appendix (unaudited)
Ocean Outdoor Limited and subsidiaries
The results below present the group on a proforma basis. The proforma basis comprises Ocean
Outdoor Ltd, the SCP Acquisition Topco Ltd group of companies and the Forrest Media (Holdings) Ltd
group of companies as if all owned from 1 January 2017.This allows analysis to ignore and dates of
acquisition and assess the underlying performance of the Ocean Outdoor Ltd group of companies.
There is also a reconciliation of Profit from operations to Adjusted EBITDA.
Billings
Revenue
Cost of sales
Gross profit
Administrative and other expenses
Profit from operations
Finance expense
Finance income
Non-cash charge related to Founder Preferred Shares
Non-cash charge related to warrant redemption liability
Loss before tax
Tax expense
Loss from continuing operations
Total comprehensive income
Profit from operations
Depreciation
Profit on disposal
Amortisation
Deal fees
Private equity and listed company related expenses
Listed costs including foreign exchange
Other one-off costs
Adjusted EBITDA
53
FY18
£'000
FY17
£'000
87,843
______
77,245
______
62,218
54,010
(37,055)
(31,893)
_______ _______
25,163
22,117
(23,816)
(22,800)
_______ _______
1,347
(683)
(11,868)
(5,553)
2,196
1,658
(24,188)
-
(301)
-
_______ _______
(2,548)
(34,844)
(2,303)
(1,398)
_______ _______
(4,851)
(36,242)
_______ _______
(4,851)
_______
(36,242)
______
FY18
£'000
FY17
£'000
1,347
(683)
4,205
(2)
11,364
4,058
60
(1,807)
739
______
4,021
-
5,464
619
8,981
-
686
______
19,964
______
19,088
______
Ocean Outdoor Limited
Appendix (unaudited)
SCP Acquisition Topco Limited and subsidiaries
The results below present the SCP Acquisition Topco Ltd group of companies on a proforma basis.
There is also a reconciliation of Profit from operations to Adjusted EBITDA.
Billings
Revenue
Cost of sales
Gross profit
Administrative and other expenses
Profit from operations
Finance expense
Finance income
Profit before tax
Tax expense
Profit from continuing operations
Total comprehensive income
FY18
£'000
FY17
£'000
77,265
______
67,035
______
54,619
46,458
(32,682)
(27,898)
_______ _______
21,937
18,560
(13,784)
(12,777)
_______ _______
8,153
5,783
(5,553)
-
(11,868)
-
_______ _______
2,600
(6,085)
(1,866)
(527)
_______ _______
734
(6,612)
_______ _______
734
_______
(6,612)
______
SCP Acquisition Topco Limited and subsidiaries reconciliation of profit from operations to Adjusted
EBITDA:
Profit from operations
Depreciation
Amortisation
Deal fees
Private equity related expenses
Other one-off costs
Adjusted EBITDA
54
FY18
£'000
FY17
£'000
8,153
5,783
3,367
1,277
3,782
60
739
______
3,292
5,464
619
273
686
______
17,378
______
16,117
______
Ocean Outdoor Limited
Appendix (unaudited)
Forrest Outdoor Media Limited
The results below present the Forrest Outdoor Media Ltd [group of companies] on a proforma basis.
There is also a reconciliation of Profit from operations to Adjusted EBITDA.
Billings
Revenue
Cost of sales
Gross profit
Administrative and other expenses
Profit from operations
Finance expense
Finance income
Profit before tax
Tax expense
Profit from continuing operations
Total comprehensive income
FY18
£'000
FY17
£'000
10,578
______
10,210
_______
7,600
7,552
(4,373)
_______
(3,200)
_______
3,227
4,352
(1,608)
_______
(2,110)
_______
1,619
2,242
-
-
_______
-
4
_______
1,619
2,246
(272)
_______
(418)
_______
1,347
_______
1,828
_______
1,347
______
1,828
_______
Forrest Outdoor Media Limited reconciliation of profit from operations to Adjusted EBITDA:
Profit from operations
Depreciation
Profit on disposal
Deal fees
Adjusted EBITDA
55
FY18
£'000
1,619
FY17
£'000
2,242
838
(2)
133
_______
729
-
-
_______
2,588
______
2,971
_______
Ocean Outdoor Limited
Appendix (unaudited)
Ocean Outdoor Limited Hybrid
The results below present the group on a hybrid basis. The hybrid basis comprises Ocean Outdoor
Ltd and the SCP Acquisition Topco Ltd group of companies it purchased in March 2018 for a full
12months. This is combined with 7 months of Forrest Media (Holdings) Ltd group of companies.
There are therefore no comparable results for the prior year.
There is also a reconciliation of Profit from operations to Adjusted EBITDA.
Billings
Revenue
Cost of sales
Gross profit
Administrative and other expenses
Profit from operations
Finance expense
Finance income
Profit before tax
Tax expense
Profit from continuing operations
Total comprehensive income
Ocean Outdoor Limited Hybrid reconciliation of profit from operations to Adjusted EBITDA:
Profit from operations
Depreciation
Amortisation
Deal fees
Private equity related expenses
Listed costs including foreign exchange
Other one-off costs
Adjusted EBITDA
56
FY18
£'000
84,277
______
59,615
(35,378)
_______
24,237
(23,262)
_______
975
(5,553)
1,658
_______
(2,920)
(2,249)
_______
(5,169)
_______
(5,169)
_______
FY18
£'000
975
3,897
11,364
4,058
60
(1,807)
739
______
19,286
______