OOUT.L Regulatory News (OOUT)

08 June 2020

Ocean Outdoor Limited

Full Year 2019 Results and Q1 2020 update

Ocean Outdoor Limited ("Ocean Outdoor", "Ocean", "the Group" or "the Company"), a leading operator of premium Digital Out-of-Home ("DOOH") advertising in the United Kingdom, the Netherlands, the Nordics and Germany, is pleased to announce its full year results for the 12 months ended 31 December 2019 and an update for Q1 2020.

2019 Financial Highlights:

2019 Operational Highlights:

Q1 2020 & Current Trading:

Commenting on the results, Ocean CEO Tim Bleakley said:

"We were pleased with a strong set of 2019 results which reflected the positive momentum we had built right across the Group and the underlying fundamentals of Digital Out-of-Home. This work has helped us to safeguard the Ocean philosophy and the medium we represent, which builds a strong foundation for us to navigate the present COVID-19 situation.

"Last year's transformation reflected Ocean's evolving technical capabilities, desirable content, effective reach and engagement with audiences, all creating a dynamic and agile media platform for brands. The results are particularly pleasing as management continued to make acquisitions and expand further across Northern Europe. The integration of these businesses is well underway and in-line with our plan.

"As the COVID-19 situation unfolded, the strategy has been to enhance both Ocean's and the wider industry proposition by using our screen networks in innovative ways to assist and inspire citizens in the countries where we operate; from the creation of an emergency media and advertising fund across the UK and Netherlands that has helped over 400 SME businesses; to broadcasting extracts of the Queen's speech on the Piccadilly Lights; to the creation of a Public Art display for the National Gallery across our UK city centre screen networks. All these examples generated national and international multi-media headlines and demonstrates Ocean's societal role. It is these unique attributes and the capabilities of the digital out of home medium that Ocean continues to showcase that give me confidence in our ability to bounce back stronger."

1 Pro-forma basis assumes Ocean Outdoor Limited and all subsidiaries in the Group had been owned from 1 January 2018. These figures include the Visual Art Media Sales business as well as Ad City Media business. They exclude earnings from the Visual Art Digital Signage joint venture. For comparative purposes, the proforma figures are at constant currency using the average exchange rates for 2018, excluding IFRS 16 accounting and no longer add back listing costs, £892k (2018: £897k).

2 These exclude the Nordic acquisitions and are the business units on which 2019 revenue guidance was issued.

A conference call for investors and analysts will take place on 8 June at 2020 at 13:00 BST / 08:00 ET. Dial-in details below:

UK Toll Free: 0808 109 0700

USA Toll Free: 1 866 966 5335

Standard International Access: +44 (0)20 3003 2666

Password: Ocean Outdoor

A copy of the results presentation will be made available within the investor relations section of the Company website once the results are announced.

For further information please contact:

Chief Executive's Review

Overview

I have been delighted with the Company's performance in 2019, which marked the year when Ocean transitioned from being a UK focused operator to one of Northern Europe's leading DOOH players. Importantly, we have also shown that whilst executing major acquisitions, we have also remained focused on growing organically and innovating.

Despite contending with market uncertainty caused by Brexit during the course of 2019, the UK out-of-home advertising sector was resilient, with advertising spend on OOH increasing by 7.6% during the year. With the support of these fundamentals, as well as our excellent team and premium digital offering, Ocean exceeded performance expectations in relation to proforma revenue and EBITDA growth during 2019, and this gives us confidence for the long-term future where all the markets where we operate will be rebuilding in the wake of the Coronavirus.

Financial performance

The Company delivered a strong financial performance with proforma billings increasing 14% to £173.4 million (FY18: £152.7 million). Digital billings now account for 85% of total billings (FY18: 82%). As a consequence of the increased billings, proforma revenue rose 14% to £141.3 million (FY18: £124.5 million). Gross profit grew by 9% to £57.4 million (FY18: £52.6 million), with a gross profit margin of 40.6% (FY18: 42.2%). Adjusted proforma EBITDA was up 9% to £33.2 million (FY18: £30.4 million), with an adjusted proforma EBITDA margin of 23.5% (FY18: 24.4%).

Ocean UK

2019 marked another year of successful site launches and robust trading across the Ocean portfolio. Ocean now has a presence in 12 of the UK's major cities with a total of 363 UK locations, up from 254 in 2018. Ocean was awarded long term contracts with both Glasgow City Council and Southampton City Council to provide a number of large format digital screens both roadside and city centre.

There were a number of notable campaigns and collaborations during the year with the likes of Team GB and Toyota GB working with Ocean to deliver an out-of-home fitness campaign and The People's Moon, which celebrated the 50th Anniversary of the Apollo 11 moon landing. We were also privileged to show the first film trailer for the highly anticipated 25th James Bond movie, No Time To Die, on the iconic Piccadilly Lights, which was the first time any film trailer had be shown on the world-famous digital screen.

The evolution of Ocean's network broadcast capabilities also continued, with a series of brand partnerships sponsoring streamed coverage of the Cheltenham Gold Cup, Formula E races, the Wimbledon Tennis Championships and live England games from the Rugby World Cup.

Ocean Netherlands

In March 2019, Ocean completed the acquisitions of Ngage Media and Interbest, two major outdoor operators in the Netherlands, for a total combined consideration of approximately £44 million. Interbest was the country's biggest independent roadside operator with 88 digital and static OOH masts in prime locations on the busiest road and motorway networks while Ngage Media was a 100 percent pure play digital operator with 76 large full motion digital screens in 50 locations. These acquisitions provided Ocean with an entry into this fast-growing market, with a presence across the Randstad megalopolis which includes Amsterdam, Rotterdam, Utrecht and The Hague. In May 2019, Beyond Outdoor was added to our collective Dutch operations, which brought another 8 screen locations in the Netherlands.

In October, these Dutch assets were successfully rebranded as Ocean Netherlands, creating a clear position for Ocean to become a dynamic premium DOOH operator in Holland. The portfolio, which generated 68% of its revenue through digital, up from 58% in 2018, covers all the Dutch municipalities including the key cities of Amsterdam, Rotterdam, Utrecht and The Hague.

In December, Ocean Netherlands announced that it was to acquire the digital advertising masts portfolio owned and operated by Clear Channel Netherlands. Effective from the start of 2020, the transaction has boosted Ocean Netherlands' roadside presence, bringing the total number of city, retail and roadside screens operated by Ocean Outdoor in the Netherlands to 283.

Nordics & Germany

In September, the Group completed a £58 million acquisition of the international media and tech group Visual Art a Sweden based digital media group operating 25,000 screens across 24 countries. Visual Art Media's combined portfolio is approximately 95% digital. Following this, in November, the Group announced a recommended public offer to acquire AdCityMedia, another Sweden based operator of DOOH advertising. Ocean gained control on 9th December and now holds over 97% of the equity.

The integration of Visual Art has been progressing quickly. It has continued to operate under its management team led by CEO Andreas Lind, and is now being supported and powered by the Ocean brand.

The entry into these markets is a natural extension of Ocean's Digital Cities for Digital Citizens out-of-home philosophy into highly attractive geographies at the forefront of technological and digital innovation. The Nordics and Germany have similarly strong underlying industry dynamics to the UK and the Netherlands and the Group has now consolidated a significant foothold in these regions from which to grow.

The Visual Art transaction also included the creation of a new entity, Visual Art Technologies, a digital signage technology business, in which Ocean has invested €15 million.

With innovation being part of our core growth strategy business, the combination of digital out-of-home expertise and market leading technology is a truly exciting development, which we expect to drive meaningful commercial opportunities for both businesses globally.

Board and employees

In July we introduced a new leadership structure to manage Ocean's UK business, with the Group's international expansion gathering pace. To this extent, to lead the UK business, Ocean appointed Phil Hall, who joined from Mediacom, as Co-Managing Director UK alongside Steve George. With Ocean Netherlands being led by Meindert van den Heuvel, Stan Thijssen, Xavier Tilman and Erwin Versluijs, and Ocean Nordics by Anders Axelsson, Andreas Lind and Christoffer Stackell, we have created the necessary structure for an enlarged group to continue its organic and acquisitive growth plans in the most effective way.

Andrew Miller stepped down from the Board of the Company as an independent non-executive Director, having joined in November 2018. The Board is grateful to Andrew for his work as a Director of Ocean, and in particular for his leadership of the Audit Committee during his tenure.

At the start of 2020, Aryeh Bourkoff, the CEO of LionTree LLP, joined the Company's Board as Co-Chairman and brings a wealth of sector expertise which is complimentary to the existing Board and executive management team.

Mitigating COVID-19 and current trading

The rapid spread of the Coronavirus across our territories has led to Ocean implementing a series of measures to support its staff and shield the business from a rapid deterioration in media and advertising spend, which is expected to have a major impact on Group revenues.

In mid-March, Ocean moved quickly to mitigate the impact, cutting all discretionary spend, reducing employee hours and implementing furlough schemes, approaching suppliers and landlords and introducing other cash conservation measures.

To protect jobs and staff, Ocean's Netherlands and UK businesses implemented significant mitigation measures, reducing the staff working week effective from 1 April 2020 and further reductions implemented across May and June. In line with government advice, staff were asked to work from home, with our IT systems geared for remote access to operate effectively.

Recently, the Group strengthened its balance sheet after entering into a £35 million facility agreement, comprising of a term loan and revolving credit facility. £25 million of the new facility has been issued under the UK government backed Coronavirus Large Business Interruption Loan Scheme ("CLBILS").

The Group's cash position, as at 28 May 2020, stands at £32 million, providing the business with substantial liquidity of £67 million. In addition, the management team has continued with its cash conservation and cost reduction programme. The Group is confident that it has sufficient liquidity should advertising conditions remain subdued for an extended period.

Whilst there have been some positive signs of activity picking up, with bookings taken across our markets in recent weeks, the situation remains highly uncertain and it is still not possible to forecast to what extent Coronavirus will impact this year's performance. The Group is not providing guidance for 2020.

During this period, Ocean has used the strength of its premium city centre and roadside portfolios in the UK and the Netherlands to proactively showcase its leadership, introducing a series of industry first initiatives.

The launch of SME advertising funds in the UK and Netherlands has benefitted 561 small businesses and retailers in both countries, providing £24 million of advertising space to businesses in need and introducing a significant number of new businesses to the benefits of the medium.

The halo effect of Ocean's portfolio and iconic landmarks has delivered multiple high-profile initiatives including an historic message from Her Majesty The Queen and a VE Day campaign which appeared on the Piccadilly Lights which generated global news headlines.

As part of our digital cities for digital citizens philosophy, multiple campaigns have also been carried across Ocean screens, supporting critical community safety messages, Local Heroes, key workers and services on the front line.

As people dialled down on non-essential travel, roadside held fast and traffic flows are continuing to recover quickly across all of Ocean's territories. Most people living outside of the big cities commute by car and with the number of journeys they make growing year on year, premium out of home inventory on key routes remains ever more relevant.

Strategy and outlook

Despite the impact of COVID-19, we have kept to our core strategic tenets of driving organic growth, technical innovation and accretive inorganic consolidation. Having integrated our Dutch operations and now bringing our Nordic businesses under the Ocean banner, we will be continuing our "digital cities for digital citizens" philosophy to drive growth across these regions.

Ocean moved into 2020 in an extremely strong position, with a foothold in key UK and European markets that are showing strong dynamics and clear potential for growth in DOOH advertising. The out-of-home market continues to outperform traditional media and Ocean is well placed to continue taking market share and drive growth across the Group in the long term.

Whilst COVID-19 currently presents our industry with a major challenge, with consumers ordered to stay home, we believe that circumstances have also highlighted the importance and impact of DOOH as a medium. As the public restrictions are eased, we will be ready to take the lead by inspiring people to get back out there and rebuild.

The geographical spread of Ocean businesses across the UK, Netherlands and the Nordics allows for a phased programme of recovery. In the short term, Ocean assets are positioned in non-transit environments in areas where people are returning as restrictions are lifted.

In line with the easing of restrictions, Ocean Outdoor Netherlands reopened at its Amsterdam HQ on 11 May 2020. Ocean Group and UK headquarters in London reopened on 25 May 2020, with a managed phased return to safeguard employees and clients.

Ocean's Sweden business has continued to operate its office as normal throughout the period. Work to consolidate our operations in the Nordics has been fast tracked with the full integration of AdCityMedia with Ocean in Sweden following its acquisition last year.

Ocean is one of the most dynamic and innovative operators in the out-of-home sector, with digital assets accounting for 85% of its business. It has a blend of fixed and variable rent contracts. Given the nature of its business and the speed at which it can react and deliver campaigns, when clients resume normal levels of advertising, the business is structured to bounce back quickly. Outdoor is the place where people want to spend most of their time and Ocean is ready to take the lead and execute the sector's recovery.

Tim Bleakley

Chief Executive

Co - Chairmen's Statement

It is with pleasure that we present to you, the shareholders, the Report and audited financial statements of Ocean Outdoor Limited for the year ended 31 December 2019.

Introduction

2019 was a transformational year for Ocean, one which saw the business progress from being a UK centric digital out-of-home operator to becoming a significant player across Northern Europe. Whilst this expansion happened, the business continued to innovate and invest in the portfolio in order to enhance our ability to deliver the most impactful campaigns and brand experiences, putting it at the leading edge of the digital out-of-home market.

Following Ocean's readmission to the London Stock Exchange at the start of the year, we successfully completed a series of acquisitions in line with our strategy, turning Ocean into a prominent digital out-of-home operator in its markets. At the same time, we have also met our organic growth targets as a result of winning new, major city contracts and significantly expanding our portfolio of premium roadside and city digital networks.

Acquisitions and Developments

Ocean established its presence in the Netherlands following the acquisitions of Interbest and Ngage. The Group's Dutch footprint was further expanded in May with the acquisition of Beyond Outdoor. Collectively these three businesses have been rebranded and relaunched as Ocean Netherlands following the integration process.

In September, we developed a substantial position in the Nordics through the acquisition of Visual Art, Sweden's largest pure-play digital out-of-home operator with more than 260 locations across a mix of retail, rail, airport and leisure destinations in 41 key cities in Sweden including Stockholm, Gothenburg and Malmö, as well as strong presence in Denmark and Finland, and reach into Germany through its retail OOH partnership with Unibail-Rodamco-Westfield, covering 15 shopping malls in Germany, including those in Berlin and Munich. 

The Visual Art transaction also included the creation of a digital signage technology business, Visual Art Technologies, following Ocean's £13m investment. Visual Art Technologies designs, produces, installs, broadcasts and operates cutting edge, high tech-enabled digital signage systems and operates in 24 countries, with over 4,300 locations and over 25,000 screens for clients in all sectors. Some of its biggest clients include McDonald's, H&M and the supermarket chain ICA.

In November, we announced the intention to acquire our second Nordic business, ACM, on which we obtained control in December 2019. The company, based in Sweden, is a premium out-of-home operator focussed on large format digital and high-end city centre locations in Sweden and Norway with approximately 1,500 locations and approximately 4,500 digital screens across a mix of retail and leisure destinations in key cities including Stockholm, Gothenburg, Malmö and Oslo. The integration of Visual Art and ACM has been expedited in recent months, and combining them has created the leading DOOH operator in the Nordic region.

The Group has continued to be at the forefront of the sector by enhancing its portfolio with increasingly engaging products and driving forwards with its "digital cities for digital citizens" philosophy. During 2019, the out-of-home market continued to grow, with UK market spend rising 7.6%, which is testament to its unique ability to immediately deliver high impact advertising at scale, with brands also focussing on premium locations to deliver their campaigns. Whilst 2020 is set to be very difficult due to the impact of COVID-19, the longer-term trends within DOOH provide us with optimism that Ocean will re-emerge in a strong position as lockdowns are eased across our markets and economies and businesses begin to rebuild.

During 2019 we also learnt more about the marketing impact of digital out-of-home, which is helping us with our future innovation and delivery of memorable campaigns. To support the Group's research and development programme, Ocean commissioned two new ground-breaking Neuroscience based studies in the year. The research examined the effectiveness of full motion digital out-of-home creativity, showing that full motion screens with technology are on average over three-times more impactful than just using full motion, and eight-times more impactful than static advertising.

Covid-19

Whilst we started 2020 with a strong base of assets and were expecting improved margins for the year, we are now facing unprecedented global events following the spread of Covid-19. Although it is still too early to form a definitive view on the impact of Covid-19 for the current year, the various lockdown measures enforced by governments in the countries where we operate has led to a significant slowdown in the out of home sector and we are not immune from these effects.

In response, the Board and our highly experienced executive teams across our territories have been focused on implementing all the necessary measures to ensure that we can withstand the significant impact this will have during 2020. Despite the downturn, our view is that DOOH will bounce-back more quickly than other mediums due to the very nature of being outdoor, highly versatile and the most impactful way to deliver messages and campaigns. With the business heavily weighted to digital and operating prime city and roadside locations, we believe Ocean is best placed to capitalise as business activity increases.

Whilst we maintain sufficient liquidity for the short term, the impact of COVID-19 has led us to raise the first debt facility for the Group. This will act as a boost to liquidity to assist the business manage through the cash flow impact of the significantly reduced revenues across Q2 and likely reduced revenues across Q3.

We would like to thank our employees for all the hard work and dedication during what has been a busy and landmark year for the Group. More importantly, we want to take this opportunity to thank all our employees for their continued commitment to Ocean during these difficult and uncertain times and to reassure everyone that we are confident that as soon as circumstances permit us to do so, business will resume as normal.

Tom Goddard and Aryeh Bourkoff

Co-Chairmen

8 June 2020

Report of the directors

The directors present their report together with the audited financial statements for the year ended 31 December 2019.

Status and activities

In FY18 the Company announced its intention to build a scale out-of-home media consolidation vehicle. Whilst supporting Ocean's organic growth initiatives, the Company was looking to pursue strategic and complementary acquisitions intended to enhance Ocean's scale, customer offering and deepen its market leadership.

In FY19 the Company, true to its intentions, undertook five strategic acquisitions, whilst also executing its organic growth initiative.

It completed the double acquisition of Ngage and Interbest (Interbest was subsequently renamed Ocean Outdoor Nederland B.V) on 11 March 2019, for a combined initial cash consideration of approximately £41m, providing the Group with a strong foothold in the Dutch Digital Out of Home (DOOH) market. This was followed by the acquisition of Beyond Outdoor on 29 May 2019. These acquisitions enhanced the Ocean portfolio offering by adding 171 screen locations in the Netherlands.

On 13 September 2019 the Group executed its next acquisition, that of Visual Art, providing the Group with a significant presence in the Nordics. The consideration was approximately £58m for the media sales business within the acquired group. Following a reorganisation of the acquired group, the digital signage business was split out and Visual Art Technologies was formed with the original vendors. Ocean's investment in the new entity was approximately £13m.

The final acquisition of FY19 was the public offer and acquisition of 97.4% holding in ACM for approximately £24m. This strategic acquisition makes Ocean a significant player in the Nordic market.

Unaudited pro forma profit and loss

Ocean Outdoor Limited was an investment vehicle in FY18. Due to the acquisitions in FY18 of SCP Acquisition Topco Limited and subsidiaries and Forrest Media (Holdings) Limited and subsidiaries at different dates, and the acquisition in FY19 of Ngage, Interbest, Beyond Outdoor, Visual Art media sales and ACM, also at different dates, the consolidated statement of profit and loss presented on page 23 does not provide a year on year comparison for the underlying performance and operations. For the benefit of users of the accounts, unaudited proforma statements of total comprehensive income can be found in the appendix (refer to page 71), which shows the year on year results on a combined basis assuming subsidiaries acquired during any given period had been acquired on 1 January 2018.

Included in the appendix is an unaudited proforma profit and loss for the Group, UK operations, Dutch operations and the Nordic operations for FY18 and FY19. The Group includes all group companies, UK operations includes what was previously referred to as SCP Acquisition Topco Limited and its subsidiaries and Forrest Media (Holdings) Limited and subsidiaries, the Dutch operations include Ngage, Interbest and Beyond Outdoor and the Nordic operations includes Visual Art media sales and ACM.

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. This is generated from the companies within the Group.

Please see the table below for KPI's on the reported numbers

1 Reported adjusted EBITDA represents the profit from operations of £3.0m plus depreciation and amortisation costs of £46.4m plus one off non-recurring costs of £3.3m.

Billings, revenue and EBITDA have all seen significant increases in the year. The year on year increase is due to two main factors:

- UK operations saw growth within its UK business with both billings and revenue up 43%. This increase reflects improved trading levels within the UK business, however it is important to disclose the 2018 reported figures only include the results following the acquisition of the two trading operations in March and June and therefore does not include a full year's operating result, as reported for the UK in 2019.

- The Group entered new markets through multiple acquisitions. The Dutch operations acquired in H1 2019 generated billings of £24.8m and revenue of £23.0m whilst the Nordic operations acquired in H2 2019 contributed £9.7m to billings and £9.6m to revenue.

Reported EBITDA has seen a large increase in the year, showing a 212% rise year on year. This again is partly due to timing of the acquisitions and only recording profit and loss financials subsequent to the subsidiary purchase. There has also been a fundamental change in accounting treatment of leases under IFRS 16. This has resulted in rent charges being removed from the profit and loss and replaced by a depreciation charge and interest charge. In 2018, rent would have reduced the reported EBITDA, compared to 2019 when no rental charge is recognised and interest and depreciation charges are not part of the reported EBITDA figure resulting in a higher figure than if IFRS 16 had not been adopted in the year.

The Group has a solid balance sheet with net assets at year-end of £369.2m (2018: £387.6m) including a cash balance of £26.9m (2018: £160.5m). Cash generated from operations was £46.8m, with the decrease in the cash balance largely as a result of the subsidiary acquisitions in the year, with a cash outflow of £126m. The impact of IFRS 16 mentioned above is not limited to the profit and loss statement with the Group now recognising a right of use asset and liability on the balance sheet. Having adopted the modified retrospective approach, the asset and liability recognised on the statement of financial position resulted in a difference of £10.3m. In line with the IFRS 16 standard, this leads to a reduction in retained earnings which is the key contributor in the reduction of net assets in the year.

As mentioned above, the timing of acquisitions of the Group in FY18 and FY19 make the comparison of the profit and loss of the underlying performance of Group operations difficult as the reported results only account for post-acquisition performance. For the benefit of users of the accounts, unaudited proforma statements of total comprehensive income can be found in the appendix (refer to page 71), which shows the year on year results on a combined basis assuming subsidiaries acquired during any given period had been acquired on 1 January 2018.

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.

The below table shows the KPI's of the Group on this unaudited proforma basis

Results and dividends

The consolidated statement of profit and loss is set out on page 23 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 of this Report are:

Non-Executive Directors or the Company can terminate the appointment by giving three months' notice.

During the year Andrew Miller resigned as an Independent Non-Executive Director of the Board effective from 31 December 2019.

As at 31 December 2019 the Directors have the following interests in the Company's securities:

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

Under the Director's letter of appointment, Martin HP Söderström, Sangeeta Desai, Thomas Ebeling and Andrew Miller are entitled to a fee of US$75,000 per annum and Robert Marcus is entitled to receive a fee of US$90,000 per annum. Robert Marcus, Martin HP Söderström, Sangeeta Desai and Andrew Miller are also entitled to receive an additional fee of US$10,000 per annum as Committee members. Tom Goddard, in his role as Chairman, was paid £88,250 for the year ended 31 December 2019 and Tim Bleakley, CEO, was paid £453,419.

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.

Andrew Miller resigned as an Independent Non-Executive Director effective from 31 December 2019.

Share capital

The full details of share capital information is set out in note 20.

Substantial shareholdings

As at 31 December 2019, 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"):

As at 31 December 2019 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 Board appointed BDO LLP as the company auditors during the prior year. 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 and its subsidiaries.

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

In consideration of the company's current financial position and review of its budgets and forecasts, on which sensitivity analyses have been performed to reflect possible downside scenarios, the Directors have a reasonable expectation that the company has adequate resources to continue in operational existence for at least 12 months from the approval of the financial statements. The Directors therefore believe it remains appropriate to continue to prepare the accounts on the going concern basis.

On 11 March 2020, the World Health Organisation announced the pandemic status of COVID-19. Subsequent to this announcement, significant measures have been taken by Governments across Europe, restricting the movement of the people and the forced closure of non-essential business. Given the company operates in the DOOH market, this has impacted on the company's performance in FY20. The effect COVID-19 will have on the global economy and the knock-on effect that it has on the medium to long term on consumer and business behaviour cannot yet be quantified.

The main priority of the Group is to safeguard its employees, customers and its stakeholders. Across each jurisdiction in which the company operates government guidance is being followed. From an operational perspective, this has not affected the play out and availability of the majority of its portfolio given the Group's large digital portfolio, but the appetite of brands to advertise on DOOH assets has declined significantly. Various scenarios assessing the impact of the sales decline over the next 12 months, and beyond, have been modelled and subsequently what the implications would be on the Group cash flow. The Directors of the company recognise COVID-19 has, and will have, a significant effect on the results of the business in FY20. However, it is their belief the company is able to navigate through the impact of COVID-19 due to the strength of its market position, its robust balance sheet, current cash surplus and the securing of new credit facilities providing additional financing of up to £35m to draw down, subject to customary covenants related to minimum quarterly adjusted EBITDA and cash balances.

Following the decline in sales as a result of the pandemic, the Group addressed its cost base as a matter of urgency in order to reduce cash outflows from the business. Staff costs were reduced through a structured reduction in working hours and government reimbursement schemes have been utilised where strictly necessary. All landlords have been contacted with a view to negotiating rent holidays, deferrals and reductions wherever possible. Capital expenditure has been frozen on all new projects and the site maintenance program has been reduced to the performance of only essential maintenance. Credit terms have been optimised and extensions agreed with key suppliers. Cash inflows have been aided with sales teams chasing up any unpaid balances and ensuring any invoice queries are resolved ensuring that debtors continue to be settled in a timely fashion.

The swift actions taken by the Group enable it to deal with the short-term impact that COVID-19 is having on the business. These steps will allow the business to resume to full working capacity once business returns to the new normal. There is however some uncertainty when this will be and what the lasting impacts of the pandemic will be on businesses and the economy. Should the impact be worse than predicted, there are further cost savings that could be utilised. The Group however feel at this point in time, the medium and long-term benefits of not implementing these changes outweighs the short-term cost savings that could be realised.

The Group retains sufficient liquidity in the short term, however the impact of COVID-19 has resulted in the Group raising its first debt facility with a rolling credit facility agreed with the Group's banking partners on 28 May 2020, securing new credit facilities providing additional financing of up to £35m, subject to customary covenants related to minimum quarterly adjusted EBITDA and cash balances. This will boost liquidity to assist the business manage through the cash flow impact of the significantly reduced revenues suffered in Q2 and likely reduced revenues in Q3. The Group believes this is sufficient liquidity to ensure the Group is able to meet its obligations as and when they fall due. In the event additional liquidity is required, there are a variety of funding options available to the company.

The impact on FY20 cannot as yet be fully assessed. Accordingly, the Board believes it would be inappropriate to provide forward looking financial guidance to investors and analysts at this time.

Internal control

The Board is responsible for determining the nature and extent of the significant risks it is willing to take in achieving its strategic objectives. The Board maintains sound risk management and internal control systems. The Board has reviewed the Company's risk management and control systems and believes that the controls are satisfactory given the nature and size of the Company and its subsidiaries.

Financial Risk Profile

The Company's and Group's financial instruments comprise mainly of cash and cash equivalents, and various items such as payables and receivables that arise directly from the Group's operations. Details of the risks relevant to the Group are included in the notes to the financial statements.

Management Report

For the purposes of compliance with DTR 4.1.5R(2), DTR 4.1.8R and DTR4.1.11R, the required content of the "Management Report" can be found in this Report of Directors.

Principal Risk and Uncertainties

The main risks and uncertainties identified by the Group are as follows:

The Group operates in a highly competitive market

The Group operates in a highly competitive industry and may not be able to maintain or increase its current advertising and sales revenues or market share. The Group competes for advertising revenue with other outdoor advertising operators, as well as with other media, such as radio, newspapers, magazines, television, direct mail, mobile devices and internet-based services. Competitive pressures could cause the Group to lose market share, require it to lower prices, increase marketing expenditures and increase the use of discounting or promotional campaigns, and restrict its ability to increase prices. These or other developments could materially affect the Group's sales volumes and margins and result in a decrease in its operating results, which could have a material adverse effect on the Group's business, financial condition and results of operations.

The Group is heavily reliant on its relationships with media agencies

The Group is heavily reliant on its relationships with four main media specialist buyers to sell the out-of-home advertising space which it owns and/or manages. Accordingly, the loss of these relationships, a significant change in the terms of these relationships, or any of these agencies encountering financial difficulties could have a materially adverse effect on the Group's business, financial condition and results of operations.

A loss of sites or a failure to renew relevant site agreements may reduce the Group's revenue

The Group gains access to advertising sites through short, medium and long-term contracts or concessions (being comprised of (i) leases, (ii) licences; and (iii) certain commercial site agreements) with asset owners such as local municipalities and commercial landlords. There is no guarantee that such site agreements, including those relating to the Group's iconic sites, will be renewed at all or renewed on terms which are favourable to the Group. If sufficient numbers of site agreements are cancelled, not renewed or sufficient numbers of sites become impaired, it could have an adverse effect on the Group's business, financial condition and results of operations.

The Group's sites and other technology systems and operations could be exposed to damage or interruption

The Group's sites and other technology systems and operations could be exposed to damage or interruption from system failures, computer viruses, cyber-attacks, power or telecommunication providers' failure, fire, natural disasters, terrorist acts, war, or human error. Any interruptions would impact the Group's ability to operate and could result in business interruption, the loss of customers and revenue, damaged reputation and weakening of competitive position and could have a material adverse effect on the Group's business, financial condition and results of operations. There is a risk that, if a cyber-attack is successful, any data security breaches or the Group's inadvertent failure to protect confidential information could result in a loss of information integrity. Breaches of the Group's obligations under applicable laws or client agreements and system outages may potentially have a material adverse impact on the Group's reputation and financial performance.

Changes in technology may impact consumer and advertiser behaviour

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

The Group's operations are vulnerable to any adverse developments to the UK, Dutch and Nordic economies, market conditions and the corresponding legal and regulatory environment

The Group's operations are exposed to the prevailing economic and market conditions, as well as the legal and regulatory environment. 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. There has also been an increase in political uncertainty as a result of the UK vote in favour of exiting the EU. These will impact the Group (including its business, employees, operations and assets) and may have a materially adverse effect on the business, financial condition and results of operations of the Group in the future. Material decreases in revenue could result in fixed costs exceeding contribution and the Group suffering losses and resulting in operating cash outflows.

Following multiple acquisitions in new markets, the integration of acquired subsidiaries may not result in the expected returns and the Group synergies may not be realised.

The Group has undertaken a number of acquisitions and entered new overseas markets. Consideration for these businesses is based on a number of factors including past performance and expected future returns. This acquisition strategy is to allow the Group to benefit from the growth potential in these new markets and generate synergies arising from being a large operator in the market. There is no guarantee the potential of these new markets will be realised; the returns may be lower than expected and that expected Group synergies may not arise as expected. This could have a material adverse effect on the Group's business, financial condition and results of operations.

The Group's operations could be significantly affected by COVID-19

The Group's operations are exposed to the prevailing economic and market conditions and these are expected to be impacted in the short term by COVID-19, however the medium and long-term implications are not known. 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. It may have a materially adverse effect on the business, financial condition and results of operations of the Group in the future. Material decreases in revenue could result in fixed costs exceeding contribution and the Group suffering losses and resulting in operating cash outflows.

Directors' Responsibilities

The directors are responsible for preparing the Directors' report and the financial statements for the Group. The Directors have prepared the financial statements for each financial year which give a true and fair view of the state of affairs of the Group and of the profit or loss of the Group for that year.

The Directors have chosen to use the international financial reporting standards ("IFRS") as adopted by the European Union in preparing the Group's financial statements.

International Accounting Standard 1 requires financial statements present fairly for each financial year the Company's financial position, financial performance and cash flows. This requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting Standards Board's 'Framework for the preparation and presentation of financial statements. In virtually all circumstances, a fair presentation will be achieved by compliance with all applicable IFRS. A fair presentation also requires the Directors to:

· consistently select and apply appropriate accounting policies;

· present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

· provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and

· state that the group has complied with IFRS, subject to any material departures disclosed and explained in the financial statements.

The Directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities on the Stock Exchange. The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Group, for safeguarding the assets, for taking reasonable steps for the prevention and detection of fraud and other irregularities and for the preparation of financial statements.

Financial information is published on the company's website, www.oceanoutdoor.com. The maintenance and integrity of this website is the responsibility of the Directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may occur to the financial statements after they are initially presented on the website, www.oceanoutdoor.com. Legislation in the BVI governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Directors' Responsibilities Pursuant to UK Data and Transparency Regulations

The directors confirm to the best of their knowledge:

· The group financial statements have been prepared in accordance with IFRS adopted by the European Union and article 4 of the IAS regulation and give a true and fair view of the assets, liabilities, financial position and profit and loss of the Group.

· The annual report includes a fair review of the development and performance of the business and the financial position of the group and the parent company, together with a description of the principal risks and uncertainties 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

Further details of subsequent events are disclosed in note 24 of the financial statements.

By order of the Board

Tom Goddard

Co-chairman

8 June 2020

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 ("the Code") to the greatest extent possible to facilitate effective and prudent management that can contribute to the long-term success of the Company, however it is not currently compliant with the Code.

Full details of the corporate governance measures adopted by the Group can be found on the Group website: (https://investors.oceanoutdoor.com/investors/corporate-governance/)

Strategic decisions

The Directors are responsible for carrying out the Company's objectives, implementing its business strategy and conducting its overall supervision. Acquisition, divestment and other strategic decisions are considered and determined by the Board. The Board provides leadership within a framework of prudent and effective controls. The Board has established the corporate governance values of the Company and has overall responsibility for setting the Company's strategic aims, defining the business plan and strategy and managing the financial and operational resources of the Company.

Through the publication of regular announcements, corporate presentations posted to the company website, and face to face meetings, the board has sought to communicate its strategy, objectives and performance to all shareholders on a timely basis. When shareholders raise concerns with the board over the Group's strategy, objectives or performance, the Board endeavours to actively engage with the shareholders in dialogue.

Board process

The full Board meets formally at regular intervals throughout the year and at such other times as may be necessary to address any significant matters that may arise. The Board communicates regularly between these meetings. On a regular basis the Board is provided with appropriate and timely information relating to all aspects of the Group. In addition, the Directors are free to seek any further information or request specific presentation on matters that they consider necessary in order to discharge their duties effectively. The collective responsibility of the Board ensures that all Directors are involved in the process of arriving at significant decisions.

Nomination Committee

The Nomination Committee is responsible for considering and making recommendations to the Board in respect of appointments to the Board. In carrying out its duties, the Nomination Committee is primarily responsible for identifying and nominating candidates to fill Board vacancies; evaluating the structure and composition of the Board with regard to the balance of skills, knowledge and experience and making recommendations accordingly; giving full consideration to succession planning; and reviewing the leadership of the Group.

Audit and Risk Committee

The Audit and Risk Committee assists the Board in discharging its responsibilities with regard to financial reporting, external and internal controls, including reviewing and monitoring the integrity of the Group's annual and interim financial statements, reviewing and monitoring the extent of the non-audit work undertaken by the Group's external auditors, advising on the appointment of such external auditors, overseeing the Group's relationship with its external auditors, reviewing the effectiveness of the external audit process, and reviewing the effectiveness of the Group's internal control and review function.

The Audit and Risk Committee gives due consideration to laws and regulations, the provisions of the UK Corporate Governance Code and the requirements of the Listing Rules whilst it continues to monitor the integrity of published financial information and review significant financial reporting issues and judgements. 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.

At each period end the financial reporting process commences with individual CGU's submitting their financial information to Group management. These CGU's are consolidated into a Group financial reporting pack which is reviewed by Group management and compared to monthly management accounts for consistency. Following this review, the reports are presented to the audit and risk committee for a subsequent review and approval.

Remuneration Committee

The Remuneration Committee has responsibility for determination of specific remuneration and benefits packages for each of the executive directors and certain senior management of the Group, including pension rights and any compensation payments, and recommending and monitoring the level and structure of remuneration for senior management and the implementation of share options, share incentive plans or other performance related schemes.

Independence of the Board

Tom Goddard, Tim Bleakley, Aryeh B. Bourkoff and Andrew Barron are not considered to be Independent Directors.

The Board considers the Independent Non-Executive Directors to be independent in character and judgment and free from relationships or circumstances which are likely to affect or could appear to affect, their judgment. In addition, when determining the independence of the Independent Non-Executive Directors, the Board had regard to their Letters of Appointment and Initial Option Deeds and, in the case of Mr Marcus, his prior role as Chairman of the Company and his holding of 119,000 Ordinary Shares. The Board believes that the aforementioned factors are not sufficient to have an impact on their independence.

Ethical standards

All Directors, managers and employees are expected to act with the utmost integrity and objectivity, striving at all times to enhance the reputation and performance of the Group.

External auditors

The Board and the Audit Committee review the performance of the external auditors on an annual basis and normally meet with them during the year to:

- Discuss the external audit plans, identifying any significant changes in structure, operations, internal controls or accounting policies likely to impact on the financial statements and to review the fees proposed for the audit work to be performed.

- Review the periodic reports prior to lodgement and release, and any significant adjustments required as a result of the auditor's findings, and to recommend board approval of these documents, prior to announcement of results.

- Review the results and findings of the auditor, the adequacy of accounting and financial controls, and to monitor the implementation of any recommendations made.

- Review the draft financial report and recommend board approval of the financial report.

- As required, to organise, review and report on any special reviews or investigations deemed necessary by the board.

The Board and Audit Committee specifically assess the independence of the Group's external auditors and in doing so consider the level and nature of non-audit services provided and associated fees, the auditor's rotation arrangements for key audit personnel and areas of potential conflicts of interest.

Communication with shareholders and continuous disclosure

The directors attach importance to the provision of clear and timely information to shareholders and the broader investment community. Information about the company is available on its website (www.oceanoutdoor.com).

Financial reporting - the Company reports to shareholders half-yearly and annually, as required by the LSE rules. The Chairman states to the Board that the company's financial reports present a true and fair view in all material respects of the company's financial condition and operational results and are in accordance with relevant accounting standards.

Equal access policy - the Company has a policy, based on existing policies and practices as a company quoted on the LSE market, that all shareholders and investors have equal access to the company's information, and has procedures to ensure that all price sensitive information will be disclosed to the LSE in accordance with the continuous disclosure requirements of the LSE rules, these procedures include:

- A comprehensive process to identify matters that may have a material effect on the price of the company's shares, notifying them to the LSE, posting them on the company's website, and issuing media releases.

- All information provided to the LSE, and related information (including information provided to analysts and the media), being immediately posted to the company's website https://investors.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 (https://investors.oceanoutdoor.com/investors/) on which press releases, corporate presentations and the annual report and financial statements are available to view together with the half-yearly financial statements. Enquiries from individual shareholders on matters relating to the business of the company are welcomed. Shareholders and other interested parties can subscribe to receive notification of news updates and other documents from the company via email. In addition, the Executive Directors meet with major shareholders to discuss the progress of the company and provide periodic feedback to the board following meetings with shareholders.

Independent auditor's report to the members of Ocean Outdoor Limited

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 2019 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 2019 and of the group's loss for the year then ended; and

- the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

 Use of our report

This report is made solely to the company's members, as a body, in accordance with International

Standards on Auditing (UK) (ISAs UK). Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

- the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

- the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on the overall audit strategy, the allocation of resources in the audit and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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 £1,000,000 (2018 - £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 £700,000 (2018 - £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 £114,000 to £602,000 (2018 - £120,000 to £350,000).

Reporting Threshold

We agreed with the Audit Committee that we would report to them all audit differences individually in excess of £30,000 (2018 - £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 5 significant components, which represented the main trading entities in the group, being Ocean Outdoor UK Limited, Signature Outdoor Limited, Mediaco Outdoor Limited, Forrest Outdoor Media Limited and Ocean Outdoor Netherlands B.V (formerly Interbest B.V.).

Ocean Outdoor Limited (the Parent Company) and the significant components were subject to full scope audits which were performed by BDO LLP except for Ocean Outdoor Netherlands B.V, which was performed by a local firm.

The remaining 22 subsidiaries of the group were considered non-significant and such components were subject to analytical review procedures together with substantive testing on group audit risk areas applicable to that component, carried out by the group audit team and local audit firms.

As part of our Group audit strategy, as Group auditors:

- We held planning meetings with the component auditor and local management;

- Members of the Group audit team visited the component auditors at the planning and fieldwork phases of the audit;

- Detailed Group reporting instructions were sent to the component auditors, which included the significant areas to be covered by their audit, and set out the information to be reported to the Group audit team;

- We reviewed Group reporting submissions and performed reviews of the component auditors' files; and

- We held a clearance meeting with the component auditor and local management to discuss significant audit and accounting issues and judgements.

As a result of this approach, 90.2% of the Group's Revenue, 92.5% of the Total Assets and 94.5% of the Adjusted Profit before Tax 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 set out on page 11, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the Parent Company's members, as a body, in accordance with our engagement letter dated 1 June 2020. Our audit work has been undertaken so that we might state to the Parent 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 Parent Company and the Parent Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Nicole Martin (Senior Statutory Auditor)

For and on behalf of BDO LLP, London, UK Statutory Auditor

8 June 2020

BDO LLP is a limited liability partnership registered in England and Wales (registered number OC305127).

The financial statements were approved by the Board of Directors and authorised for issue on 8 June 2020.

T Bleakley

Director

There were non-cash transactions in the year which are disclosed in note 18.

Ocean Outdoor Limited

Notes forming part of the Consolidated Financial Statements

for the year ended 31 December 2019

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 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. On 28 March 2018 and for FY18 the Company changed its presentational and functional currency from USD 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 16 and IFRIC 23 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 2.10. 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.

The Director's assessment has considered the Group's current financial position, a review of its budgets and forecasts, the principal risks and uncertainties including the impact of COVID-19 and loan facilities available to the Group, with it having recently secured new credit facilities providing additional financing of up to £35m, subject to customary covenants related to minimum quarterly adjusted EBITDA and cash balances.

On 11 March 2020, the World Health Organisation announced the pandemic status of COVID-19. Subsequent to this announcement, significant measures have been taken by Governments across Europe, restricting the movement of the people and the forced closure of non-essential business. Given the company operates in the DOOH market, this has impacted on the company's performance in FY20. The effect COVID-19 will have on the global economy and the knock-on effect that it has on the medium to long term on consumer and business behaviour cannot yet be quantified.

The Directors of the company recognise COVID-19 has had and will have a significant effect on the results of the business in FY20, with the total impact not yet known. Various scenarios assessing the impact of the sales decline over the next 12 months from the date of approval of the financial statements and beyond, have been modelled, including additional downside stress testing, in line with the FRC guidance issued on 26th March 2020, and what the subsequent implications would be on the Group cash flow. The modelling demonstrates that, given the existing level of cash held by the Group of £32.7m at 28 May 2020, in conjunction with the new credit facilities secured, providing additional finance subsequent to the year end, and the mitigating actions taken by the directors, being;

- Staff costs were reduced through a structured reduction in working hours and government reimbursement schemes have been utilised where strictly necessary

- All landlords have been contacted with a view to negotiating rent holidays, deferrals and reductions wherever possible

- Capital expenditure has been frozen on all new projects and the site maintenance program has been reduced to the performance of only essential maintenance

- Credit terms have been optimised and extensions agreed with key suppliers

that even in the most extreme downside conditions considered reasonably possible, the Group will continue to be able to meet its obligations as they fall due.

On this basis, whilst acknowledging there is significant uncertainty regarding the future impacts of COVID-19, the Directors are satisfied the Group remains well placed to manage its business risks successfully. Therefore, they have a reasonable expectation that the Group has adequate resources to continue in operational existence for a period of 12 months from the date of approval of the financial statements. Accordingly, the financial statements continue to be prepared on a going concern basis.

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

Transactions entered into by Group entities in a currency other than the functional currency are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in profit or loss. Exchange differences arising on the retranslation of the foreign operation are recognised in other comprehensive income and accumulated in the foreign exchange reserve.

On consolidation, the results of overseas operations are translated into GBP at the average exchange rate for the year. All assets and liabilities of overseas operations, including goodwill arising on the acquisition of those operations, are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income and accumulated in the foreign exchange reserve.

2.4 Financial assets

The Group classifies its financial assets into one of the categories discussed below, depending on the business model and cash flow type under which the assets are held. The Group has not classified any of its financial assets as fair value through other comprehensive income. The Group's accounting policy for each category is as follows:

Amortised cost

These assets are non-derivative financial assets held under the 'hold to collect' business model and attracting cash flows that are solely payments of principal and interest. They comprise trade and other receivables and cash and cash equivalents. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.

Impairment provisions for trade and other receivables are calculated using an expected credit loss model. Under this model, impairment provisions are recognised to reflect expected credit losses based on a combination of historic and forward-looking information, the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable. For trade receivables, which are reported net; such provisions are recorded in a separate allowance account with the loss being recognised within administrative expenses in the consolidated statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short term highly liquid investments with maturities of three months or less.

2.5 Financial liabilities

The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the liability was acquired. The Group's accounting policy for each category is as follows:

Other financial liabilities

Other financial liabilities include the following items:

- Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method

2.6 Share-based payments

The Founder Preferred Shares (and attached warrants) and director options represent equity-settled share-based arrangements under which the Company receives services as a consideration for the additional rights attached to these equity shares, over and above their nominal price. In addition, the Company has granted options to the non-executive directors. The management team have been incentivised via the issue of hurdle shares which aligns the long-term interest of the company to deliver shareholder wealth. The hurdle shares represent equity-settled share-based arrangements under which the Group receives services as a consideration for equity shares, over and above their nominal price. The fair value of the grant of Founder Preferred Shares (and attached warrants), and hurdle shares in excess of any purchase price received is recognised as an expense. In addition, the Company has granted options to the non-executive directors. The management team have been incentivised via the issue of hurdle shares which aligns the long-term interest of the company to deliver shareholder wealth. The fair value of the Founder Preferred Shares (and attached warrants), the options and the hurdle shares is determined using a valuation model.

2.7 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 FY18 being the provision of DOOH services to the UK market.

For FY19, following the acquisition of foreign subsidiaries in the Netherlands and the Nordics, the Board is now of the opinion that the company operates in three distinct markets: The United Kingdom, The Netherlands and The Nordics. Accordingly, the group has been treated as three operational segments for FY19 and the results of the group presented in the financial statements are disaggregated accordingly. Each operational segment provides DOOH services to their local market.

2.8 Share capital

Founder Preferred Shares, Ordinary Shares, and Warrants are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares are shown in equity as a deduction, net of tax, from the proceeds.

2.9 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.

Estimates and assumptions

In preparing the financial statements for the year ended 31 December 2019, management and the directors made certain estimates and judgements in the following areas:

- Accounting treatment for the digital signage investment acquired as part of the acquisition of Ocean Outdoor Nordics VA Holding AB which was restructured following acquisition. The directors needed to exercise judgement on whether the investment should be accounted for as an acquisition of a subsidiary business or the acquisition of an associate. See note 14 for further details;

- Impairment of goodwill and other intangible assets - Estimation of future cash flows and determination of discount rates (see note 13);

- Depreciation of property, plant and equipment - Estimation of useful lives and residual values (see note 2.18);

- The determination of incremental borrowing rates used and expected lease lengths in the application of IFRS 16 Leases (see note 2.19);

- The application of IFRS 9 when measuring expected credit losses and the assessment of expected credit loss provisions required for accounts receivable balances (see note 15);

- The determining of fair value of the intangible assets in respect of 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; and

- The valuation of contingent consideration based on the probability of earn-out targets being satisfied for entities acquired during the year (see note 2.21)

COVID-19 has had a significant negative impact on the OOH market and the Group's performance during FY2020. Refer to note 24 for the potential impact of COVID-19 on EBITDA results and cash flows which could lead to an indicator of impairment of non-current assets held by the group. At this time, due to the uncertainty regarding how long COVID-19 will impact the OOH market and the Group's results and cash flows, the directors have assessed that there could be a significant risk of material adjustment to the carrying amounts of non-current assets within the next financial year.

2.10 New accounting standards and interpretations

The Company applied all applicable standards and applicable interpretations published by the EU for the year ended 31 December 2019 for the consolidated financial statements.

a) New standards, interpretations and amendments effective from 1 January 2019

New standards impacting the Group that were adopted in the annual financial statements for the year ended 31 December 2019, and which have given rise to changes in the Group's accounting policies are:

- IFRS 16 Leases (IFRS 16); and

- IFRIC 23 Uncertainty over Income Tax Treatments (IFRIC 23)

Details of the impact these two standards have had are given in note 2.19 and 2.20 below. Other new and amended standards and Interpretations issued by the IASB that will apply for the first time in the next annual financial statements are not expected to impact the Group as they are either not relevant to the Group's activities or require accounting which is consistent with the Group's current accounting policies.

b) New standards, interpretations and amendments not yet effective

There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the group has decided not to adopt early. The most significant of these is are as follows, which are all effective for the period beginning 1 January 2020:

- IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors

- IFRS 3 Business Combinations

- Revised Conceptual Framework for Financial Reporting

The Group is currently assessing the impact of these new accounting standards and amendments.

2.11 Revenue

Substantially all of the Group's contracts with customers contain a single performance obligation, being the provision of advertising space, and are subject to fixed prices. 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 services are recognised as performance obligations and released to revenue as the group performs the advertising space under the contract.

Payment terms extended to customers depend on the country of operation, the size of the booking and the credit risk posed by the customer. Credit terms vary from up-front payment to 60 days.

Revenue represents the amounts (excluding the value added tax) derived from the provision of advertising space to customers during the 52-week period ended 29 December 2019 (2018: 52-week period ended 30 December 2018) 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.

2.12 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.

Where the Group has the power to participate in (but not control) the financial and operating policy decisions of another entity, it is classified as an associate. Associates are initially recognised in the consolidated statement of financial position at cost. Subsequently associates

are accounted for using the equity method, where the Group's share of post-acquisition profits

and losses and other comprehensive income is recognised in the consolidated statement of

profit and loss and other comprehensive income (except for losses in excess of the Group's

investment in the associate unless there is an obligation to make good those losses).

Profits and losses arising on transactions between the Group and its associates are recognised

only to the extent of unrelated investors' interests in the associate. The investor's share in the associate's profits and losses resulting from these transactions is eliminated against the carrying value of the associate.

2.13 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 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 statement of comprehensive income on the acquisition date.

2.14 Other intangible assets

Intangible assets are recognised on business combinations if they are separable from the acquired entity or arise from 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 5 to 15 years. The amortisation charge is included within administrative expenses in the consolidated statement of profit and loss.

The Group has recognised intangible asset in relation to the Ocean brand acquired as part of the business combination. This is amortised over 10 years on a straight-line basis. The amortisation charge is included within administrative expenses in the consolidated statement of profit and loss.

2.15 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.

2.16 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.

2.17 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 near future.

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised.

The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).

2.18 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 according to the method of depreciation prevailing in the relevant countries in accordance with local regulations and economic conditions. It is provided at the following rates:

Site assets

Assets under the course of construction are only depreciated once ready for use.

Equipment

2.19 IFRS 16 Leases

The Group applies, for the first time, IFRS 16 Leases ("IFRS 16"). The nature and effect of these changes are disclosed below.

IFRS 16 supersedes IAS 17 Leases. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for most leases under a single on-balance sheet model.

Lessor accounting under IFRS 16 is substantially unchanged from IAS 17. Lessors will continue to classify leases as either operating or finance leases using similar principles as in IAS 17. Therefore, IFRS 16 did not have an impact for leases where the Group is the lessor.

The Group adopted IFRS 16 using the modified retrospective approach, with recognition of transitional adjustments on the date of initial application of 1 January 2019, without restatement of comparative figures. Under this method, the standard is applied with the cumulative effect of initially applying the standard recognised at the date of initial application. The Group elected to apply the practical expedient to not reassess whether a contract is, or contains a lease at the date of initial application. In compliance with the standard, IFRS 16 has only been applied to contracts that were previously identified as leases applying IAS 17 and IFRIC 4 at the date of initial application. The definition of a lease under IFRS 16 was applied only to contracts entered into or changed on or after 1 January 2019. The Group also elected to use the recognition exemptions for lease contracts that, at the commencement date, have a lease term of 12 months or less and do not contain a purchase option ('short-term leases'), and lease contracts for which the underlying asset is of low value ('low-value assets').

The leases entered into by the Group relate to rental of office space, advertising space and equipment in order to generate revenue.

The effect of adoption IFRS 16 as at 1 January 2019, increase/(decrease) is as follows:

The transition figures above differ to those presented in the interim financial statements as a result of a reassessment of the incremental borrowing rates used on the leases.

a) Nature of the effect of adoption of IFRS 16

The Group has lease contracts for various items of site assets, equipment and motor vehicles. Before the adoption of IFRS 16, the Group classified each of its leases (as lessee) at the inception date as either a finance lease or an operating lease.

A lease was classified as a finance lease if it transferred substantially all of the risks and rewards incidental to ownership of the leased asset to the Group; otherwise it was classified as an operating lease.

Finance leases were capitalised at the commencement of the lease at the inception date fair value of the lease or, if lower, at the present value of the minimum lease payments. Lease payments were apportioned between interest (recognised as finance costs) and reduction of the lease liability.

In an operating lease, the site asset was not capitalised and the lease payments were recognised as rent expense in profit or loss on a straight-line basis over the lease term. Any prepaid rent and accrued rent were recognised under Prepayments and Trade and other payables, respectively.

The standard provides specific transition requirements and practical expedients, which have been applied by the Group.

- Leases previously accounted for as operating leases

The Group recognised right-of-use assets and lease liabilities for those leases previously classified as operating leases, except for short-term leases and leases of low-value assets. The right-of-use assets were recognised based on the carrying amount as if the standard had always been applied. Lease liabilities were recognised based on the present value of the remaining lease payments, discounted using the incremental borrowing rate at the date of initial application.

The Group also applied the available practical expedients wherein it:

- Used a single discount rate to a portfolio of leases with reasonably similar characteristics;

- Relied on its assessment of whether leases are onerous immediately before the date of initial application;

- Applied the short-term leases exemptions to leases with terms that end within 12 months of the date of initial application;

- Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application; and

- Used hindsight in determining the lease term where the contract contains options to extend or terminate the lease

Based on the above, as at 1 January 2019;

- A right-of-use asset of £89m was recognised and presented separately in the statement of financial position. No lease assets, previously recognised as finance leases, have been reclassified from Property, plant and equipment.

- Lease liabilities of £100m were recognised.

- Prepayments of £1m related to previous operating leases were derecognised.

The lease liabilities as at 1 January 2019 can be reconciled to the operating lease commitments as of 31 December 2018 as follows:

b) Summary of new accounting policies

Set out below are the new accounting policies of the Group upon adoption of IFRS 16, which have been applied from the date of initial application:

- Right-of-use assets

The Group recognises right-of-use assets at the commencement date of the lease. Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are subject to impairment.

- Lease liabilities

At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognised as expense in the period on which the event or condition that triggers the payment occurs.

- Recognition of right of use assets and lease liabilities on business combinations

In the case of lease assets and lease liabilities acquired in a business combination, the Group measures the lease liability at the present value of the remaining lease payments as if the acquired lease were a new lease at the acquisition date. The group measures the right-of-use asset at the same amount as the lease liability, adjusted to reflect favourable or unfavourable terms of the lease when compared with market terms.

In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the lease liability is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.

- Significant judgement in determining the lease term of contracts with renewal options

The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease if it is reasonably certain not to be exercised. The Group applies judgement in evaluating whether it is reasonably certain to exercise the option to renew. That is, it considers all relevant factors that create an economic incentive for it to exercise the renewal. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise (or not to exercise) the option to renew (e.g., a change in business strategy).

The Group has leases that can be modified in subsequent periods based on contractual performance. These are accounted for in the accounting period as a lease modification. When the group renegotiates the contractual terms of a lease with the lessor, the accounting depends on the nature of the modification:

- If the renegotiation results in one or more additional assets being leased for an amount

commensurate with the standalone price for the additional rights-of-use obtained, the modification is accounted for as a separate lease in accordance with the above policy.

- In all other cases where the renegotiated terms increase the scope of the lease (whether that is an extension to the lease term, or one or more additional assets being leased), the lease liability is remeasured using the discount rate applicable on the modification date, with the right-of use asset being adjusted by the same amount.

- If the renegotiation results in a decrease in the scope of the lease, both the carrying amount of the lease liability and right-of-use asset are reduced by the same proportion to reflect the partial or full termination of the lease with any difference recognised in profit or loss. The lease liability is then further adjusted to ensure its carrying amount reflects the amount of the renegotiated payments over the renegotiated term, with the modified lease payments discounted at the rate applicable on the modification date. The right-of-use asset is adjusted by the same amount.

c) Amounts recognised in the statement of financial position and profit or loss

Set out below, are the carrying amounts of the Group's right-of-use assets and lease liabilities and the movements during the period:

Short-term leases entered into by the Group, not accounted for under IFRS 16, totalled £65,000 and there were no low value leases. Variable lease payments not included in the lease liability totalled £13.9m.

2.20 IFRIC 23 Uncertainty over Income Tax Treatments

IFRIC 23 provides guidance on the accounting for current and deferred tax liabilities and assets in circumstances in which there is uncertainty over income tax treatments. The Interpretation requires:

- The Group to determine whether uncertain tax treatments should be considered separately, or together as a group, based on which approach provides better predictions of the resolution;

- The Group to determine if it is probable that the tax authorities will accept the uncertain tax treatment; and

- If it is not probable that the uncertain tax treatment will be accepted, measure the tax uncertainty based on the most likely amount or expected value, depending on whichever method better predicts the resolution of the uncertainty. This measurement is required to be based on the assumption that each of the tax authorities will examine amounts they have a right to examine and have full knowledge of all related information when making those examinations.

The Group elected to apply IFRIC 23 retrospectively with the cumulative effect recorded in retained earnings as at the date of initial application, 1 January 2019. The adoption of IFRIC 23 resulted in no change to corporate tax liabilities and no change to retained earnings.

2.21 Contingent and deferred consideration on acquisitions

The Group recognises contingent consideration payable on satisfaction of performance targets being achieved over certain time periods, based on the probability of the targets being achieved. At inception, the balance is discounted using the acquisition internal rate of return (IRR) to present value. Interest on the unwinding of the balance is charged to the profit and loss over the period of the performance targets. The probability of targets being achieved is reviewed and any changes to the expected consideration payable are also charged to the profit and loss.

The Group recognises deferred consideration at the present value at inception. The balance payable in a future period is discounted using a discount rate based on a lender borrowing rate at acquisition to present value and interest on the unwinding of the balance is charged to the profit and loss up to the point the balance is payable.

3. Financial instruments - Risk Management

The Group is exposed through its operations to the following financial risks:

- Credit risk;

- Liquidity risk; and

- Foreign currency risk

In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes the Group's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.

There have been no substantive changes in the Group's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note.

(i) Principal financial instruments

The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:

- Trade and other receivables

- Cash and cash equivalents

- Trade and other payables

(ii) Financial instruments by category

Financial assets

Financial liabilities

(iii) Financial instruments not measured at fair value

Financial instruments not measured at fair value include certain cash and cash equivalents, trade and other receivables and trade and other payables.

Due to their short-term nature, the carrying value of cash and cash equivalents, trade and other receivables, trade and other payables approximates their fair value.

General objectives, policies and processes

The Board has overall responsibility for the determination of the Group's risk management objectives and policies. The Board receives monthly reports from the Group Financial Controller through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets.

The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility. Further details regarding these policies are set out below:

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group is mainly exposed to credit risk from credit sales. It is Group policy, implemented locally, to assess the credit risk of new customers before entering contracts. The Group's review includes external ratings, when available, and in some cases bank references. Purchase limits are established for each customer. Trade receivables contain receivables due from customers to which we may also owe volume rebates that are contained within our trade payables and accruals. Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and financial institutions, only independently rated parties with minimum rating "A" are accepted. In respect of the year and period ends presented, £20.9m (2018: £18.2) was held on current account with HSBC Bank plc, £1.1 m (2018: £142.3m) was held on current account with Barclays Bank plc, £2.5m (2018: £Nil) was held on current account with ABN AMRO, £1.2m (2018: £Nil) was held on current account with Rabobank and £1.2m (2018: £Nil) was held on current account with Skandinaviska Enskilda Banken.

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.

Currency risk

Following the acquisition of foreign subsidiaries in the year, the Group is exposed to risk from movements in foreign currency exchange rates, interest rates and market prices that affect its assets, liabilities and anticipated future transactions. The Group is exposed to foreign currency risk from transactions other than functional currency. Transaction exposure arises because affiliated companies undertake transactions in foreign currencies. The Group does not use forward foreign exchange rate contracts to hedge exchange rate risk. Its exposure is as follows:

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 advertising space provided to its customers.

Analysis of revenue by service type and region: