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Ocean Outdoor Ltd (OOUT)

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Wednesday 29 August, 2018

Ocean Outdoor Ltd

Half-year Report

RNS Number : 0624Z
Ocean Outdoor Limited
29 August 2018
 

29 August 2018

Ocean Outdoor Limited

 

("Ocean", "Ocean Outdoor" or the "Company" and, together with its subsidiaries, the "Group")

 

Results for the six-month period ended 30 June 2018

 

Transformational period and strategic acquisition completed

 

 

Ocean Outdoor Limited (LSE: OOUT), a leading operator of premium Digital Out-of-Home ("DOOH") advertising in the United Kingdom, is pleased to announce its results for the six-month period ended 30 June 2018.

 

On 28 March 2018, Ocelot Partners Limited was renamed Ocean Outdoor Limited and acquired all of the issued share capital of SCP Acquisition Topco Limited. On 2 June 2018, Forrest Media (Holdings) Limited ("Forrest") was acquired by the Group. The transaction was funded through the Group's existing cash resources and is accretive to earnings. Incremental commercial synergies from combining Forrest assets with the Group's portfolio have been identified.

 

On 1 March 2018, Ocean stated that for the full year 2018, it anticipates revenue growth will be in the high single digits. Based on the Group's pipeline and the market outlook, Ocean believes that high single digit revenue growth for Ocean in 2018 is appropriate, with Forrest revenue recovering to last year's levels.

 

The following headline financial information is on a pro forma basis of SCP Acquisition Topco Limited and its subsidiaries, the most significant trading entity, with comparisons between the H1 2018 and H1 2017 periods. The headline financial information, including Forrest Outdoor Media Limited, the trading entity acquired with Forrest, can be found in the appendix.

 

Financial highlights

 

·      Billings remained steady period on period at £31.9m (H1 2017: £32.0m)

·      Revenue rose 1.8% to £22.5m (H1 2017: £22.1m), with Adjusted revenue1 growing 9.44%

·      Digital billings made up 93% of total billings (H1 2017: 89%)

·      Gross profit growth of 8.4% to £8.8m (H1 2017: £8.1m), with a gross profit margin of 39.1% (H1 2017: 36.7%)

·      Adjusted EBITDA2 up 1.1% to £6.8m, with an adjusted EBITDA margin of 30.4%

·      Cash on balance sheet of £157m, leaving the Group well positioned to continue its organic growth and M&A strategies

 

Operational highlights

 

·      Acquisition of SCP Acquisition Topco Limited for an enterprise value of approximately £200m

·      Acquisition of Forrest Media for an enterprise value of approximately £32m expanded the Group's DOOH UK 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 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 30 locations in various stages of development

 

1 Adjusted revenue takes in to consideration locations temporarily or permanently unable to display advertisements by removing the prior period comparative revenues of the location for the impact period. The impact period is deemed to be the time from when a location was withdrawn up to the point it has been reinstated and ready for sale.

2 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.  

 

Commenting on the 2018 H1 results, Tim Bleakley, CEO of Ocean Outdoor Limited, said:

 

"It has been a transformational period for Ocean following the Ocelot transaction and the acquisition of Forrest, which has significantly increased our UK DOOH footprint. At the same time the business has continued to perform well, with site numbers expanded and our new products creating highly immersive brand experiences. With the Group's stock market readmission expected to take place as soon as reasonably practicable, we are excited about the future and are on track to meet our full year targets."

 

For further information please contact:

 

Ocean Outdoor                                                                                               020 7292 6161

Tim Bleakley, CEO

Susann Jerry, Head of Communications

 

Barclays Bank PLC (Joint Corporate Broker)                                             020 3134 9801

Nicola Tennent, Stuart Jempson

 

Numis (Joint Corporate Broker)                                                                   020 7260 1000

Nick Westlake, Matt Lewis, Michael Wharton

 

Yellow Jersey PR                                                                                           07825 916 715

Charles Goodwin, Georgia Colkin, Joe Burgess

 

 

 

Ocean Outdoor Limited

 

Business review

for the 6 months ended 30 June 2018

 

 

The financial information in the Chief Executive's review is on a pro forma basis of SCP Acquisition Topco Limited and its subsidiaries, the most significant trading entity for the period, with comparisons between the H1 2018 and H1 2017 periods. The pro forma financials can be found in the appendix to the condensed interim financial statements.

 

Chief Executive's review

 

The Group has had a transformational first six months with the acquisition of SCP Acquisition Topco Limited completing in March. We then immediately engaged in the acquisition of Forrest, which successfully completed on 2 June 2018.

 

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, with excellent coverage of Glasgow and Edinburgh.

 

Despite the major corporate changes that took place during the half, the business continued to perform well, with billings totalling £31.9m (H1 2017: £32.0m) and revenue slightly up at £22.5m (H1 2017: £22.1m). Adjusted EBITDA saw a marginal increase to £6.8m with margins maintained. On the back of a number of new location launches, the Group had a strong audience performance during the period, with reach increasing by 21% on release 26 of ROUTE, the benchmark industry audience measurement system.

 

Our specialist agency and client partners have been extremely complimentary in relation to our new products and the high quality extended national audience footprint the Forrest acquisition brings. Other important developments in the period include continued sales to new brands of Landsec's Piccadilly Lights and the expansion of our spectacular full motion screen portfolio, including the launch of the Westfield Plaza Screen, which is part of the Westfield London's £600m Phase 2 expansion. In addition to this, our newly expanded city centre Loop product in Birmingham and Manchester delivered a first full quarter of trading and performed strongly.

 

Our improved broadcast capability led to a number of major project achievements during the period, with the Westfield Plaza screen hosting the first ever Digital Out of Home live broadcast of the Royal wedding and the Pride London march was streamed live on Piccadilly Lights in a world first. Both these projects have evidenced the deeper levels of engagement that digital medium can deliver for brands.      

 

Whilst the economic environment remains uncertain and the advertising market softening in parts, we remain positive about the underlying growth opportunity of the Out of Home and Digital Out of Home medium, given its strong broadcast audience reach and cut through branding impact, which is being enhanced through innovative technologies that engage the consumer. DOOH has outperformed GDP and overall advertising in general, driven by organic growth and digital conversions. As a result, the total sector has outperformed traditional media. Ocean, as a digital operator, has outperformed the total OOH sector.

 

Based upon our pipeline and the market outlook, we reiterate our expectations for 2018 for Ocean at high single digit revenue growth. We anticipate Forrest revenues recovering to last year levels

 

The Group is in a strong position to finance its ongoing expansion plans taking into account the US$111m raised pursuant to the exercise of warrants in March this year, and having no debt on the balance sheet. The relisting process is also progressing well and we expect readmission to occur as soon as reasonably practicable. Our listed status is expected to both broaden our access to growth capital and expand our corporate profile, which in turn will help to deliver new growth opportunities and future acquisitions. It is an exciting time for Ocean as we embark on the next stage of our voyage. We remain in good shape to reach our 2018 full year targets and are focussed on executing our strategy.      

 

Tim Bleakley

CEO

 

 

 

Analysis using financial key performance indicators

 

Directors and managers assess performance and monitor performance indicators at Group level. The Group's key performance indicator's (KPI's) are Billings, Revenue and Adjusted Earnings Before Interest, Tax, Depreciation and Amortisation excluding one off items (Adjusted EBITDA). This is generated from the companies within the Group.

 

Management also assesses performance using Adjusted revenue growth. This measure takes in to consideration locations temporarily or permanently unable to display advertisements by removing the prior period comparative revenues of the location for the impact period. The impact period is deemed to be the time from when a location was withdrawn up to the point it has been reinstated and ready for sale. Given the significance of each of Ocean's locations' revenues, which differs from its competitive set, Management believes this is a fair measure of underlying revenue performance.

 

Pro forma Profit and Loss

 

Ocean Outdoor Limited was an investment vehicle in FY2017. Due to the acquisition of SCP Acquisition Topco Limited on 28 March 2018 and Forrest Media (Holdings) Limited on 2 June 2018, the condensed statement of profit and loss shown below does not provide a period on period comparison for the Group's performance and operations. For the benefit of users of the accounts, the pro forma statements of total comprehensive income can be found in the appendix, which shows the period on period results on different bases.

 

For the further benefit of users of the accounts, we have included FY 2015-2017 and H1 2017 and H1 2018 financials for SCP Acquisition Topco Limited and its subsidiaries. In addition to this information, Forrest Outdoor Media Limited financials for FY 2016-2017 and the H1 2017 and H1 2018 financials have been included. The accounts show 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. Included in the appendix is also a reconciliation between reported operating profit and Adjusted EBITDA. The 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.

 

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 may incur liabilities that are not covered by insurance

While the Group will seek to maintain appropriate levels of insurance, not all claims are insurable and the Group may experience major incidents of a nature that are not covered by insurance. The Group's insurance policies cover, among others, employee-related accidents and injuries, property damage and liability deriving from its activities. The Group maintains an amount of insurance protection that it believes is adequate, but there can be no assurance that such insurance will continue to be available on acceptable terms or that the Group's insurance cover will be sufficient or effective under all circumstances and against all liabilities to which it may be subject.

 

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, each of which may potentially have a material adverse impact on the Group's reputation and financial performance.

 

Changes in technology may impact consumer and advertiser behaviour

The advertising industry will continue to be affected by changes in technology, with these changes likely leading to increasing media options for consumers. If these changes drive advertising away from DOOH advertising, this could have a material adverse effect on the Group's business, financial condition and results of operations.

 

The Group's operations are based solely 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 solely 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.

 

Going Concern

 

The Directors confirm that, after making an assessment, they have a reasonable expectation that the Group has adequate resources to continue in operations existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements

 

Forward Looking Statement

 

This report contains certain forward-looking statements. These statements are subject to a number of risks and uncertainties and actual results and events could differ materially from those currently being anticipated. The terms 'expect', 'should be', 'will be' and similar expressions (or their negative) identify forward looking statements. Factors which may cause future outcomes to differ those foreseen in forward looking statements include, but are not limited to: general economic conditions and business conditions in Ocean's market; the actions of competitors; legislative, fiscal and regulatory developments; and the impact of technological change.

 

Past performance should not be taken as an indication of guarantee of future results, and no representation or warranty, express or implied, is made regarding future performance. These forward-looking statements speak only as of the date of this report and are based on numerous assumptions regarding Ocean's present and future business strategies and the environment in which Ocean will operate in the future. Except as required by any applicable law or regulation, the Group expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this document to reflect any change in the Group's expectations or any change in events, conditions or circumstances on which any such statement is based after the date of this announcement or to update or keep current any other information contained in this interim report.

 

Nothing in this report should be construed as a profit forecast. All persons, wherever located, should consult any additional disclosures that Ocean may make in any regulatory announcements or documents which it publishes. This announcement does not constitute an invitation to underwrite, subscribe for or otherwise acquire of dispose of any Ocean shares, in the UK, or in the US, or under the US Securities Act 1933 or in any other jurisdiction.

 

Condensed Interim Financial Statements

 

The information presented has not been subjected to audit, review or other assurance procedures by an auditor.

 

Board of Directors

 

The Directors of Ocean Outdoor Limited as at 28 August 2018 are:

 

Andrew Barron

Tim Bleakley (Appointed 28 March 2018)

Aryeh B. Bourkoff

Sangeeta Desai

Thomas Goddard (Appointed 28 March 2018)

Robert D. Marcus         

Martin HP Söderström  

 

 

Responsibility Statement

We confirm that to the best of our knowledge:

a)   The Condensed Interim Financial Statements have been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union;

b)   This report includes a fair review of the following information as required by:

I. DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year, and their impact on the Condensed set of Consolidated Financial statements and a description of the principal risks and uncertainties for the remaining six months of the year; and

II.  DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Group in that period: and any changes in the related party transactions described in the last annual report that could have a material effect on the financial position or performance of the Group in the current period.

By order of the Board

 

Tim Bleakley

CEO

 

 

Ocean Outdoor Limited

 

Unaudited condensed statement of profit or loss and other comprehensive income

for the 6 months ended 30 June 2018

 

 

 

Note

For the period 01/01/18 to 30/06/18

 

For the period 20/01/17 to 30/06/17

 

 

 

£'000

£'000

 

 

 

 

Billings

 

18,398

-

 

 

______

_______

 

 

 

 

 

 

 

 

Revenue

3

13,078

-

 

 

 

 

Cost of sales

 

(8,043)

-

 

 

_______

_______

 

 

 

 

Gross profit

 

5,035

-

 

 

 

 

Administrative and other expenses

 

(5,801)

(1,202)

Other income

 

-

4

 

 

_______

_______

 

 

 

 

Loss from operations

 

(766)

(1,198)

 

 

 

 

Finance expense

 

(5)

-

Finance income

 

1,160

651

Foreign exchange

 

7,827

 

Non-cash charge related to Founder Preferred Shares

 

-

(24,188)

Non-cash charge related to warrant redemption liability

 

-

(301)

 

 

_______

_______

 

 

 

 

Profit / (loss) before tax

 

8,216

(25,036)

 

 

 

 

Tax (expense) / credit

 

(263)

-

 

 

_______

_______

 

 

 

 

Profit / (loss) from continuing operations

 

7,953

(25,036)

 

 

_______

_______

 

 

 

 

Total comprehensive income

 

7,953

(25,036)

 

 

______

_______

 

 

 

Total comprehensive income attributable to:

 

 

 

Owners of the parent

 

7,953

(25,036)

 

 

_______

_______

 

 

 

 

Loss per share attributable to the

ordinary equity holders of the parent

11

 

 

 

 

 

 

Profit or loss from continuing operations

 

 

 

Basic earnings per share (£)

 

0.16

(0.83)

 

 

_______

_______

 

 

Ocean Outdoor Limited

 

Unaudited condensed statement of financial position

As at 30 June 2018

 

 

 

 

 

 

 

Note

30/06/18

31/12/17

 

 

£'000

£'000

Assets

 

 

 

Non-current assets

 

 

 

Property, plant and equipment

5

24,665

-

Intangible assets

6, 7

219,741

-

 

 

_______

_______

 

 

 

 

 

 

244,406

-

 

 

_______

_______

 

 

 

 

 

 

 

 

Current assets

 

 

 

Trade and other receivables

8

28,081

58

Cash and cash equivalents

 

157,436

294,576

 

 

_______

_______

 

 

 

 

 

 

185,517

294,634

 

 

_______

_______

 

 

 

 

Total assets

 

429,923

294,634

 

 

_______

_______

 

 

 

 

Liabilities

 

 

 

Current liabilities

 

 

 

Trade and other payables

9

40,320

88

Income tax payable

 

905

-

 

 

_______

_______

 

 

 

 

 

 

41,225

88

 

 

_______

_______

 

 

 

 

Non-current liabilities

 

 

 

Warrant redemption liability

 

-

301

 

 

_______

_______

 

 

 

 

Total liabilities

 

41,225

389

 

 

_______

_______

 

 

 

 

NET ASSETS

 

388,698

294,245

 

 

_______

_______

 

Issued capital and reserves attributable to

owners of the parent

 

 

 

Ordinary Share capital

10

-

-

Ordinary Share premium reserve

 

375,406

288,906

Founder Preferred Share Capital

 

5,213

5,213

Retained earnings

 

8,079

126

 

 

_______

_______

 

 

 

 

TOTAL EQUITY

 

388,698

294,245

 

 

_______

_______

 

 

 

Ocean Outdoor Limited

 

Unaudited condensed statement of changes in equity

As at 30 June 2018

 

 

 

 

 

 

 Ordinary Share

capital

Ordinary Share

premium

Founder Preferred Share Capital

Retained earnings

Total

equity

 

 

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

Balance at inception 20 January 2017

 

-

-

-

-

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contributions by and distributions to owners

 

 

 

 

 

 

Issue of shares

 

-

296,383

5,213

24,188

325,784

Issue costs

 

-

(7,477)

-

-

(7,477)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

 

 

 

 

Director options

 

-

-

-

31

31

 

 

 

 

 

 

 

Comprehensive income for the period

 

 

 

 

 

 

Loss

 

-

-

-

(25,036)

(25,036)

 

 

______

______

______

______

______

 

 

 

 

 

 

 

30 June 2017

 

-

288,906

5,213

(817)

293,302

 

 

______

______

______

______

______

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Ordinary Share

capital

Ordinary Share

premium

Founder Preferred Share Capital

Retained earnings

Total

equity

 

 

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

Balance at 01 January 2018

 

-

288,906

5,213

126

294,245

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contributions by and distributions to owners

 

 

 

 

 

 

Issue of shares

 

-

86,500

-

-

86,500

Issue costs

 

-

-

-

-

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income for the period

 

 

 

 

 

 

Profit

 

-

-

-

7,953

7,953

 

 

______

______

______

______

______

 

 

 

 

 

 

 

30 June 2018

 

-

375,406

5,213

8,079

388,698

 

 

______

______

______

______

______

 

 

 

 

                                                

                                       Ocean Outdoor Limited

 

Unaudited condensed statement of cash flows

for the 6 months ended 30 June 2018

 

 

 

Note

For the period 01/01/18 to 30/06/18

 

For the period 20/01/17 to 30/06/17

 

 

 

£'000

£'000

 

 

 

 

Cash flows from operating activities

 

 

 

Profit / (Loss) for the period

 

7,953

(25,036)

Adjustments for:

 

 

 

Depreciation of property, plant and equipment

5

912

-

Amortisation of intangible fixed assets

6

-

-

Finance income

 

(1,160)

-

Finance expense

 

5

-

Tax

 

263

-

Non-cash charge related to Founder Preferred Shares

 

-

24,188

Non-cash charge related to warrant redemption liability

 

-

301

Non-cash charge related to Founder director options

 

-

31

 

 

_______

_______

 

 

 

 

 

 

7,973

(516)

 

 

 

 

(Increase) / Decrease in trade and other receivables

 

(28,023)

(122)

Increase / (Decrease) in trade and other payables

 

40,487

33

Decrease in provisions

 

-

-

 

 

_______

_______

 

 

 

 

Cash generated from operations

 

20,437

(605)

 

 

 

 

Income taxes paid

 

(255)

-

 

 

_______

_______

 

 

 

 

Net cash flows from operating activities

 

20,182

(605)

 

 

_______

_______

 

 

 

 

Investing activities

 

 

 

Acquisition of subsidiaries net of cash acquired

 

(244,813)

-

Purchases of property, plant and equipment

 

(164)

-

Interest payable

 

(5)

 

Interest received

 

1,160

-

 

 

_______

_______

 

 

 

 

Net cash used in investing activities

 

(243,822)

-

 

 

_______

_______

 

 

 

 

Financing activities

 

 

 

Issue of Founder Preferred Shares and warrants

 

-

5,213

Issue of Ordinary Shares and warrants

 

86,500

296,383

Repayment of loans and borrowings

 

-

-

Issue costs incurred

 

-

(7,477)

 

 

_______

_______

 

 

 

 

Net cash (used in)/from financing activities

 

86,500

294,119

 

 

_______

_______

 

 

 

 

Net increase in cash and cash equivalents

 

(137,140)

293,514

 

 

 

 

Cash and cash equivalents at beginning of period

 

294,576

-

 

 

_______

_______

 

 

 

 

Cash and cash equivalents at end of period

 

157,436

293,514

 

 

_______

_______

 

                                              Ocean Outdoor Limited         

                            

Notes to the interim condensed consolidated financial statements

 

 

1

Reporting entity

 

Ocean Outdoor Limited (the "Company") is registered in the British Virgin Islands and quoted on the London Stock Exchange. The registered office is Kingston Chambers, PO Box 173, Road Town, British Virgin Islands. These unaudited condensed consolidated interim financial statements ("interim financial statements") as at and for the six months ended 30 June 2018 comprise the Company and its subsidiaries (together referred to as the "Group"). The principal activity of the Group in the period under review was that of the development and sale of Out Of Home (OOH) displays.

 

These interim financial statements were authorised for issue by the board of directors on 28 August 2018.

 

2

Basis of preparation and changes to the Group's accounting policies

 

2.1

Basis of preparation

 

These interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and should be read in conjunction with the Group's last annual financial statements as at and for the period ended 31 December 2017 ("last annual financial statements"). They do not include all of the information required for a complete set of IFRS financial statements. However, since the acquisition of the companies as detailed in note 7, the accounting policies have been included below in addition to information required to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual financial statements.

 

The interim financial statements are presented in GBP, which is also the functional currency of each entity within the Group. The Company changed it presentational and functional currency from USD to GBP on 28 March 2018. The Company's financial statements for the year ended 31 December 2017 and the interim condensed financial information were previously 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.

 

This is the first set of the Group's financial statements where IFRS 15 and IFRS 9 have been applied. As required by IAS 34, the nature and effect of these changes and significant changes in accounting policies are disclosed in Note 2.2. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

 

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.

 

Revenue represents the amounts (excluding VAT) derived from the provision of services to customers during the 6 month period ended 30 June 2018 (2017: period ended 30 June 2017) net of commissions, discounts and volume rebates.  Revenue is recognised on a 26-week period to reflect the period of customer bookings, normally in 2-week blocks.

 

Billings represent amounts receivable from clients, exclusive of sale taxes, in respect of charges for fees, commissions, and rechargeable expenses incurred on behalf of clients. Billings is a standard metric used in the industry and by management, so it has therefore been disclosed in the profit and loss statement for the benefit of users of the accounts.

 

Basis of consolidation

 

Where 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 interim financial statements present the results of the Group as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.

 

The interim financial statements incorporate 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 deconsolidated from the date on which control ceases.

 

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. Contingent consideration is included in cost at its acquisition date fair value and, in the case of contingent consideration classified as a financial liability, remeasured subsequently through profit or loss.  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.

 

Other intangible assets - Customer relationships

 

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 (see section related to critical estimates and judgements below).

 

The Group has recognised customer relationships acquired on business combinations as intangible assets. The useful economic life of customer relationships has been determined to be the contractual life of the contract, capped at 10 years, and is being amortised by applying the straight-line method.

 

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.

 

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:

 

Fair value through profit or loss

 

This category comprises only in-the-money derivatives (see "Financial liabilities" section for out-of-money derivatives).  They are carried in the statement of financial position at fair value with changes in fair value recognised in the consolidated statement of comprehensive income in the finance income or expense line.  The Group does not voluntarily classify any financial assets as being at fair value through profit or loss.

 

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 includes cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less.

 

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:

 

Fair value through profit or loss

 

This category comprises only out-of-the-money derivatives (see "Financial assets" for in the money derivatives). They are carried in the consolidated statement of financial position at fair value with changes in fair value recognised in the consolidated statement of comprehensive income. The Group does not hold or issue derivative instruments for speculative purposes, but for hedging purposes. Other than these derivative financial instruments, the Group does not have any liabilities held for trading nor has it designated any financial liabilities as being at fair value through profit or loss.

  

Other financial liabilities

 

Other financial liabilities include the following items:

 

- Bank borrowings, loan notes and the Group's irredeemable preference shares are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument.  Such interest bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the consolidated statement of financial position. For the purposes of each financial

 

- liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

 

- 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.

 

Share capital

 

Financial instruments issued by the Group are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset.

 

The Company's ordinary shares are classified as equity instruments.

 

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.

 

Leased assets

 

Where substantially all of the risks and rewards incidental to ownership of a leased asset have been transferred to the Group (a "finance lease"), the asset is treated as if it had been purchased outright.  The amount initially recognised as an asset is the lower of the fair value of the leased asset and the present value of the minimum lease payments payable over the term of the lease.  The corresponding lease commitment is shown as a liability.  Lease payments are analysed between capital and interest.  The interest element is charged to the consolidated statement of comprehensive income over the period of the lease and is calculated so that it represents a constant proportion of the lease liability.  The capital element reduces the balance owed to the lessor.

 

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.

 

Dividends

 

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.

  

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).

 

Property, plant and equipment

 

Items of property, plant and equipment are initially recognised at cost.  As well as the purchase price, cost includes directly attributable costs.

 

Depreciation is provided on all items of property, plant and equipment so as to write off their carrying value over their expected useful economic lives.  It is provided at the following rates:

 

Site assets

 

 

Site build costs

-

Over the length of the lease

 

Digital signage

-

10 years

 

Light boxes

-

10 years

 

Assets under the course of construction are only depreciated once complete.

 

Equipment

 

 

Fixtures and fittings

-

4 years straight line

 

Computer equipment

-

2 years straight line

 

Motor vehicles

-

4 years straight line

 

 

2.2

New standards, interpretations and amendments adopted by the Group

 

a)   IFRS 15 Revenue from Contracts with Customers.

 

      IFRS 15 supersedes IAS 11 Construction Contracts, IAS 18 Revenue and related Interpretations and it

      applies to all revenue arising from contracts with customers, unless those contracts are in the scope of other standards. The new standard establishes a five-step model to account for revenue arising from contracts with customers. Under IFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The standard requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their customers. The standard also specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. The Group adopted IFRS 15 using the full retrospective method of adoption.

 

      The application of IFRS 15 has led to a change in the presentation of volume rebates in the income statement that were previously recognised as a cost on the line "cost of sales" and which are henceforth classified as revenue. The change described above has an impact of £1.74 million under IFRS revenue recognition and has no impact on the operating margin and net income for the first half of 2018. This reclassification has no effect on the statement of cash flows or the statement of financial position.

 

b)   IFRS 9 Financial Instruments replaces IAS 39 Financial Instruments: Recognition and Measurement for annual periods beginning on or after 1 January 2018, bringing together all three aspects of the accounting for financial instruments: classification and measurement; impairment; and hedge accounting.

 

The Group has applied IFRS 9 retrospectively, with the initial application date of 1 January 2018 and adjusting the comparative information for the period beginning 1 January 2017. There is no material impact on the adoption of IFRS 9 on the comparative figures.

 

2.3

Critical accounting judgements and key sources of estimation uncertainty

 

In preparing these interim financial statements, management has made judgements and estimates that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

 

The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those described in the last annual financial statements in addition to the following;

 

Judgements

 

-        Determine whether there are indicators of impairment of the Group's tangible and intangible assets, including goodwill.  Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset and where it is a component of a larger cash-generating unit, the viability and expected future performance of that unit.

 

Estimates and assumptions

 

-        Impairment of goodwill and other intangible assets - Estimation of future cash flows and determination of discount rates (see note 6).

 

3

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:

 

 

 

 

For the period 01/01/18 to 30/06/18

 

For the period 20/01/17 to 30/06/17

 

 

 

 

 

 

 

 

 

£'000

£'000

 

 

 

 

 

 

Rental of advertising space

 

13,078

-

 

 

 

_______

_______

 

 

4

Segment information

 

The directors consider that the Group comprises a single operating segment, this being the rental of advertising space.  This judgement is consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker has been identified as the board of directors. 

 

 

5

Property, plant and equipment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Site

Motor

 

 

 

 

 

 

 

assets

vehicles

Equipment

Total

 

 

 

 

 

£'000

£'000

£'000

£'000

 

Cost or valuation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 20 January and 31 December 2017

 

 

 

-

-

-

-

 

 

 

 

 

_______

_______

_______

_______

 

 

 

 

 

 

 

 

 

 

At 1 January 2018

 

 

 

-

-

-

-

 

Additions on acquisition of SCP Acquisition Topco Limited

 

 

 

32,374

-

611

32,985

 

Additions on acquisition of Forrest Media (Holdings) Limited

 

 

 

8,255

158

281

8,694

 

Additions

 

 

 

164

-

-

164

 

 

 

 

 

 

 

 

 

 

Disposals

 

 

 

-

-

-

-

 

 

 

 

 

_______

_______

_______

_______

 

 

 

 

 

 

 

 

 

 

At 30 June 2018

 

 

 

40,793

158

892

41,843

 

 

 

 

 

_______

_______

_______

_______

 

 

 

 

 

Site

Motor

 

 

 

 

 

 

assets

vehicles

Equipment

Total

 

 

 

 

£'000

£'000

£'000

£'000

 

Accumulated depreciation and impairment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 20 January and 31 December 2017

 

 

-

-

-

-

 

 

 

 

_______

_______

_______

_______

 

 

 

 

 

 

 

 

 

At 1 January 2018

 

 

-

-

-

-

 

Additions on acquisition of SCP Acquisition Topco Limited

 

 

13,029

-

400

13,429

 

Additions on acquisition of Forrest Media (Holdings) Limited

 

 

2,514

57

266

2,837

 

Depreciation

 

 

888

3

21

912

 

 

 

 

_______

_______

_______

_______

 

 

 

 

 

 

 

 

 

At 30 June 2018

 

 

16,431

60

687

17,178

 

 

 

 

_______

_______

_______

_______

 

 

Net book value

 

 

 

 

 

 

At 31 December 2017

 

 

-

-

-

-

 

 

 

 

_______

_______

_______

_______

 

 

 

 

 

 

 

 

 

At 30 June 2018

 

 

24,362

98

205

24,665

 

 

 

 

_______

_______

_______

_______

 

                     

 

 

6

Intangible assets

 

 

 

 

 

 

 

 

 

Cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intangible asset on acquisition

 

 

 

 

 

 

 

 

£'000

 

 

 

 

 

 

 

 

 

 

At 20 January and 31 December 2017

 

 

 

 

 

 

-

 

 

 

 

 

 

 

 

_______

 

 

 

 

 

 

 

 

 

 

At 1 January 2018

 

 

 

 

 

 

 

 

 

Additions:

 

 

 

 

 

 

 

 

 

SCP Acquisition Topco Limited

 

 

 

 

 

 

188,787

 

Forrest Media (Holdings) Limited

 

 

 

 

 

 

30,954

 

 

 

 

 

 

 

 

_______

 

 

 

 

 

 

 

 

 

 

At 30 June 2018

 

 

 

 

 

 

219,741

 

 

 

 

 

 

 

 

_______

 

                       

 

 

 

 

 

 

 

 

Intangible asset on acquisition

 

 

 

 

 

 

 

 

£'000

 

 

 

 

 

 

 

 

 

 

At 20 January and 31 December 2017

 

 

 

 

 

 

-

 

 

 

 

 

 

 

 

_______

 

 

 

 

 

 

 

 

 

 

At 1 January 2018

 

 

 

 

 

 

 

-

 

Additions

 

 

 

 

 

 

 

-

 

SCP Acquisition Topco Limited

 

 

 

 

 

 

-

 

Forrest Media (Holdings) Limited

 

 

 

 

 

 

-

 

 

 

 

 

 

 

 

_______

 

 

 

 

 

 

 

 

 

 

At 30 June 2018

 

 

 

 

 

 

-

 

 

 

 

 

 

 

 

_______

 

 

                      

Net book value

 

 

 

 

 

 

 

At 31 December 2017

 

 

 

 

 

-

 

 

 

 

 

 

 

_______

 

 

 

 

 

 

 

 

 

At 30 June 2018

 

 

 

 

 

219,741

 

 

 

 

 

 

 

_______

 

                                 

 

 

The Group is required to test, on an annual basis, whether any goodwill intangible 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 directors believe that the Group comprises a single cash generating unit. For the purpose of impairment testing, the recoverable amount of the cash generating unit was measured on the basis of its value in use, by applying EBITDA projections (as a proxy for cash flows) based on financial forecasts covering a three-year period. The key assumptions for the value in use calculation were those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the forecast period. No instances have been identified that could cause the carrying amount of goodwill to exceed its recoverable amount.

 

 

7

Subsidiary acquisitions

 

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 £2.3m 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

Ownership 2018

Ownership 2017

 

 

 

 

 

 

 

Ocean Jersey Topco Limited

Jersey

Holding co.

100%

-

 

SCP Acquisition Topco Limited*

England & Wales

Holding co.

100%

-

 

SCP Acquisition Midco Limited*

England & Wales

Holding co.

100%

-

 

SCP Acquisition Bidco Limited*

England & Wales

Holding co.

100%

-

 

Ocean Topco Limited*

England & Wales

Holding co.

100%

-

 

Ocean Bidco Limited*

England & Wales

Holding co.

100%

-

 

Ocean Outdoor UK Limited*

England & Wales

OOH Media Owner

100%

-

 

Signature Outdoor Limited*

England & Wales

OOH Media Owner

100%

-

 

Mediaco Outdoor Limited*

England & Wales

OOH Media Owner

100%

-

 

Forrest Media (Holdings) Limited*

Scotland

Holding co.

100%

-

 

Forrest Media Limited*

Scotland

Holding co.

100%

-

 

Forrest Outdoor Media Limited*

Scotland

OOH Media Owner

100%

-

 

Forrest Brands Limited*

Scotland

Dormant subsidiary

68%

-

 

 

 

 

 

 

                 

* The shares held in these entities are held indirectly.

 

The registered address for the entity incorporated in Jersey is 3rd Floor, 44 Esplanade, St Helier, Jersey,

JE4 9WG.

The registered address entities incorporated in England & Wales is 25 Kingly Street, London, W1B 5QB.

The registered address for entities incorporated in Scotland is 7 Seaward Street, Paisley Road, Glasgow, G41 1HJ

 

 

 

SCP Acquisition Topco Limited & subsidiaries

 

 

Book

Fair value

 

Fair

 

 

value

adjustments

 

value

 

Fair value of assets at 28 March 2018

£'000

£'000

 

£'000

 

 

 

 

 

 

 

Intangible fixed assets

88,053

(24,513)

 

63,540

 

Tangible fixed assets

19,556

-

 

19,556

 

Debtors

21,908

-

 

21,908

 

Cash and cash equivalents

12,185

-

 

12,185

 

Creditors due within one year

(35,511)

-

 

(35,511)

 

Creditors due over one year

(129,609)

 

 

(129,609)

 

Deferred taxation

(6,657)

-

 

(6,657)

 

 

________

________

 

________

 

 

 

 

 

 

 

Net liabilities acquired

(30,075)

(24,513)

 

(54,588)

 

 

________

________

 

________

 

 

 

 

 

 

 

Intangible arising on acquisition

 

 

 

188,787

 

 

 

 

 

________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forrest Media (Holdings) Limited & subsidiaries

 

 

Book

Fair value

 

Fair

 

 

value

adjustments

 

value

 

Fair value of assets at 28 March 2018

£'000

£'000

 

£'000

 

 

 

 

 

 

 

Intangible fixed assets

-

-

 

-

 

Tangible fixed assets

5,217

-

 

5,217

 

Debtors

12,705

-

 

12,705

 

Cash and cash equivalents

1,307

-

 

1,307

 

Creditors due within one year

(7,893)

-

 

(7,893)

 

 

________

________

 

________

 

 

 

 

 

 

 

Net assets acquired

11,336

-

 

11,336

 

 

________

________

 

________

 

 

 

 

 

 

 

Intangible arising on acquisition

 

 

 

30,954

 

 

 

 

 

________

 

In Line with IFRS3, Business Combinations, the above intangibles have been provisionally 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 £2.3m to the total group profit from the date of acquisition. Forrest Media (Holdings) Limited and its subsidiaries suffered a £0.2m loss from the date of acquisition. The trading results for these entities in isolation and as part of the Group can be found in the appendices.

 

 

8

Trade and other receivables

 

 

 

 

 

2018

2017

 

 

£'000

£'000

 

 

 

 

 

Trade receivables

17,415

-

 

Prepayments

10,666

58

 

Other debtors

-

-

 

 

________

________

 

 

 

 

 

Total trade and other receivables - Current

28,081

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.

 

  

9

Trade and other payables

 

 

 

 

 

Group

2018

2017

 

 

£'000

£'000

 

 

 

 

 

Trade payables

9,309

88

 

Other payables

1,522

-

 

Accruals

21,687

-

 

Deferred tax

7,802

-

 

 

_______

_______

 

 

 

 

 

Total Trade and other payables

40,320

88

 

 

_______

_______

 

 

The carrying value of trade and other payables classified as financial liabilities measured at amortised cost approximates fair value.

 

 

10

Share capital

 

 

 

 

 

 

 

2018

2018

2017

2017

 

 

Number

£'000

Number

£'000

 

 

 

 

 

 

 

Ordinary shares

53,896,844

375,406

41,790,000

288,906

 

Founder preferred shares

700,000

5,213

700,000

5,213

 

 

_______

_______

_______

_______

 

 

 

 

 

 

 

Total

54,596,844

380,619

42,490,000

294,119

 

 

_______

_______

_______

_______

 

 

 

 

 

 

 

                 

 

11

Earnings per share

 

 

 

 

 

 

 

 

 

For the period 01/01/18 to 30/06/18

 

For the period 20/01/17 to 30/06/17

 

 

Numerator

 

£'000

£'000

 

 

 

 

 

 

Profit for the year and earnings used in basic EPS

 

7,953

(25,036)

 

 

 

_______

_______

 

 

 

 

 

 

 

 

 

 

 

Denominator

 

'000

'000

 

 

 

 

 

 

Weighted average number of shares used in basic EPS

 

48,791

30,129

 

 

 

_______

_______

 

 

 

 

 

 

Basic EPS

 

0.16

(0.83)

 

 

 

_______

_______

 

 

12

Reserves

 

The following describes the nature and purpose of each reserve within equity:

 

 

Reserve

Description and purpose

 

 

 

 

Share premium

Amount subscribed for share capital in excess of nominal value.

 

 

 

 

Retained earnings

All other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere.

 

 

13

Related party transactions

 

During the period Ocean entered into and Advisory Services Agreement with LionTree Advisors UK LLP ("LionTree Advisors"), an affiliate of Aryeh B. Bourkoff. Pursuant to the terms of the advisory services agreement, LionTree Advisors will provide advisory services, including providing strategic and financial advice and analysis in connection with potential acquisitions of specified companies as may be agreed between the Company and LionTree Advisors from time to time. LionTree Advisors is currently assisting the Company with a small number of potential transactions and provided advisory services in relation to the acquisition of Forrest Media (Holdings) Limited.

 

There have been no other related party transactions that could have a material effect on the financial position or performance of Ocean in the first six months of the current financial year.

 

 

Ocean Outdoor Limited

 

Appendix

 

 

The following presents unaudited financial information on different bases for entities owned by the Group as at 30 June 2018.

 

 

 

SCP Acquisition Topco and subsidiaries statement of total comprehensive income and reconciliation from operating profit to Adjusted EBITDA for FY15, FY16, FY17, H1 2017 and H1 2018

 

 

 

 

 

 

Forrest Outdoor Media Limited and subsidiaries statement of total comprehensive income and reconciliation from operating profit to Adjusted EBITDA for FY16, FY17, H1 2017 and H1 2018

 

 

 

Ocean Outdoor Limited and subsidiaries statement of total comprehensive income and reconciliation from operating profit to Adjusted EBITDA for FY16, FY17, H1 2017 and H1 2018 and headline comments

 

 

 

 

 

SCP Acquisition Topco Limited and subsidiaries

 

The below is on a pro forma basis for SCP Acquisition Topco Limited and all subsidiaries in the group as at 31 December 2017 as if the all subsidiaries owned at 28 March 2018 had been owned from 1 January 2015.

 

 

 

 

H1 2018

H1 2017

FY17

FY16

FY15

 

 

 

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

Billings

 

 

31,859

32,006

67,035

65,006

58,537

 

 

 

______

______

______

_______

______

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

22,528

22,139

46,458

44,995

40,822

 

 

 

 

 

 

 

 

Cost of sales

 

 

(13,713)

(14,009)

(27,898)

(26,870)

(24,418)

 

 

 

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

 

Gross profit

 

 

8,815

8,130

18,560

18,125

16,404

 

 

 

 

 

 

 

 

Administrative and other expenses

 

 

(14,618)

(5,993)

(12,777)

(11,931)

(17,460)

 

 

 

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

 

Profit from operations

 

 

(5,803)

2,137

5,783

6,194

(1,056)

 

 

 

 

 

 

 

 

Finance expense

 

 

(5,552)

(5,899)

(11,868)

(11,949)

(12,156)

Finance income

 

 

-

-

-

-

1

 

 

 

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

 

Profit before tax

 

 

(11,355)

(3,762)

(6,085)

(5,755)

(13,211)

 

 

 

 

 

 

 

 

Tax expense

 

 

(456)

(390)

(527)

411

615

 

 

 

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

 

Profit from continuing operations

 

 

(11,811)

(4,152)

(6,612)

(5,344)

(12,596)

 

 

 

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

 

Total comprehensive income

 

 

(11,811)

(4,152)

(6,612)

(5,344)

(12,596)

 

 

 

______

______

______

_______

______

 

SCP Acquisition Topco Limited and subsidiaries reconciliation of profit from operations to Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

H1 2018

H1 2017

FY17

FY16

FY15

 

 

 

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

Profit from operations

 

 

(5,803)

2,137

5,783

6,194

(1,056)

 

 

 

 

 

 

 

 

Depreciation

 

 

1,664

1,495

3,292

3,114

2,849

Profit on disposal

 

 

-

-

-

(14)

-

Amortisation

 

 

5,421

2,732

5,464

5,464

5,321

Deal fees

 

 

4,988

-

619

222

5,613

Private equity related expenses

 

 

52

138

273

282

277

Other one-off costs

 

 

522

265

686

273

551

 

 

 

_______

_______

_______

_______

_______

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

 

6,844

6,767

16,117

15,535

13,555

 

 

 

______

______

______

_______

______

 

 

Forrest Outdoor Media Limited

 

The below results are for the standalone entity.

 

 

 

H1 2018

H1 2017

FY17

FY16

 

 

£'000

£'000

£'000

£'000

 

 

 

 

 

 

Billings

 

4,135

4,832

10,210

13,054

 

 

______

______

_______

______

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

3,017

3,534

7,552

9,389

 

 

 

 

 

 

Cost of sales

 

(2,035)

(1,981)

(3,200)

(3,319)

 

 

_______

_______

_______

_______

 

 

 

 

 

 

Gross profit

 

982

1,553

4,352

6,070

 

 

 

 

 

 

Administrative and other expenses

 

(798)

(639)

(2,110)

(2,134)

 

 

_______

_______

_______

_______

 

 

 

 

 

 

Profit from operations

 

184

914

2,242

3,936

 

 

 

 

 

 

Finance expense

 

-

-

-

-

Finance income

 

-

-

4

14

 

 

_______

_______

_______

_______

 

 

 

 

 

 

Profit before tax

 

184

914

2,246

3,950

 

 

 

 

 

 

Tax expense

 

-

-

(418)

(807)

 

 

_______

_______

_______

_______

 

 

 

 

 

 

Profit from continuing operations

 

184

914

1,828

3,143

 

 

_______

_______

_______

_______

 

 

 

 

 

 

Total comprehensive income

 

184

914

1,828

3,143

 

 

______

______

_______

______

 

 

 

Forrest Outdoor Media Limited reconciliation of profit from operations to Adjusted EBITDA:

 

 

 

 

H1 2018

H1 2017

FY17

FY16

 

 

£'000

£'000

£'000

£'000

 

 

 

 

 

 

Profit from operations

 

184

914

2,242

3,936

 

 

 

 

 

 

Depreciation

 

369

364

729

674

Deal fees

 

133

-

-

-

 

 

_______

_______

_______

_______

 

 

 

 

 

 

Adjusted EBITDA

 

686

1,278

2,971

4,610

 

 

______

______

_______

______

 

 

Ocean Outdoor Limited and subsidiaries

 

The below is on a pro forma basis for Ocean Outdoor Limited and all subsidiaries in the Group as at 30 June 2018 as if the same subsidiaries had been owned from 1 January 2016.

 

 

 

 

 

H1 2018

H1 2017

FY17

FY16

 

 

 

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

Billings

 

35,995

36,838

77,245

78,060

 

 

______

_______

______

_______

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

25,545

25,674

54,010

54,335

 

 

 

 

 

 

Cost of sales

 

(15,747)

(15,989)

(31,893)

(30,140)

 

 

_______

_______

_______

_______

 

 

 

 

 

 

Gross profit

 

9,798

9,685

22,117

24,195

 

 

 

 

 

 

Administrative and other expenses

 

(10,680)

(11,366)

(22,800)

(14,064)

 

 

_______

_______

_______

_______

 

 

 

 

 

 

Profit from operations

 

(882)

(1,681)

(683)

10,131

 

 

 

 

 

 

Finance expense

 

(5,552)

(5,899)

(11,868)

(11,949)

Finance income

 

1,160

1,098

2,196

14

Non-cash charge related to Founder Preferred Shares

 

-

(24,188)

(24,188)

-

Non-cash charge related to warrant redemption liability

 

-

(301)

(301)

-

 

 

_______

_______

_______

_______

 

 

 

 

 

 

Loss before tax

 

(5,274)

(30,971)

(34,844)

(1,804)

 

 

 

 

 

 

Tax expense

 

(666)

(390)

(1,398)

(396)

 

 

_______

_______

_______

_______

 

 

 

 

 

 

Loss from continuing operations

 

(5,940)

(31,361)

(36,242)

(2,200)

 

 

_______

_______

_______

_______

 

 

 

 

 

 

Total comprehensive income

 

(5,940)

(31,361)

(36,242)

(2,200)

 

 

______

_______

______

_______

                 

 

Ocean Outdoor Limited and all subsidiaries in the Group as at 30 June 2018 pro forma reconciliation of profit from operations to Adjusted EBITDA:

 

 

 

 

H1 2018

H1 2017

FY17

FY16

 

 

£'000

£'000

£'000

£'000

 

 

 

 

 

 

Profit from operations

 

(882)

(1,681)

(683)

10,131

 

 

 

 

 

 

Depreciation

 

2,033

1,859

4,021

3,788

Profit on disposal

 

-

-

-

(14)

Amortisation

 

5,421

2,732

5,464

5,464

Deal fees

 

5,121

-

619

222

Private equity and listed company related expenses

 

(4,685)

4,870

8,981

281

Other one-off costs

 

522

265

686

273

 

 

 

 

 

 

 

 

_______

_______

_______

_______

 

 

 

 

 

 

Adjusted EBITDA

 

7,530

8,045

19,088

20,145

 

 

______

_______

______

_______

 

 

 

On a total Group pro forma basis, the following headlines would have been reported for the period H1 2018 vs H1 2017:

 

·      Billings down 2.3% to £36.0m

 

·      Revenue down 0.5% to £25.5m

 

·      Digital billings making up 92% of total billings, up from 87%

 

·      Gross profit up 1.2% to £9.8m

 

·      Adjusted EBITDA of £7.5m

 

·      Adjusted EBITDA margin of 29.5% and gross profit margin of 38.4% up from 37.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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