Half Year 2021 Results

14 September 2021

Ocean Outdoor Limited

("Ocean" or the "Company" or the "Group") 

Half Year 2021 Results

Strong Q2 performance - recovery well underway

Ocean Outdoor Limited (LSE: OOUT), a leading operator of premium Digital Out-of-Home ("DOOH") advertising in the United Kingdom, the Netherlands, the Nordics and Germany, is pleased to announce its half year results for the six months ended 30 June 2021.

Financial highlights:

· H1 Billings increased 9.1% to £48.4m (H1 2020: £44.3m) in a period still impacted by lockdowns

· H1 Revenue increased 11.2% to £40.6m (H1 2020: £36.5m)

· Q2 revenue increased 196% to £25.9m (Q2 2020: £8.8m), a significant upturn from Q1

· Q1 Revenue at 52% of Q1 2019 improving in Q2 to 78% of Q2 2019 - trajectory anticipated to continue in Q3

· Adjusted EBITDA (including IFRS16) increased 12.0% to £15.3m (H1 2020: £13.7m)

· Adjusted EBITDA (excluding IFRS16) decreased 7.1% to (£4.7m) (H1 2020: (£4.4m))

· Cash of £29.8m (H1 2020: £35.6m), reflecting a strong balance sheet

· Extended term of debt facility by 12 months and improved covenants

· Ocean's UK staff returned from furlough to support the increased levels of demand

Summary of key initiatives:

UK

· Appointed outdoor media partner for Edinburgh's prestigious St James Quarter £1 billion regeneration project

· Successful launch of 3-D product DeepScreen™

· Exclusive UK digital content deal with BT Sport to broadcast UEFA Champions League match clips across 7 UK cities

· Announced a sealed bid auction ahead of COP26 later this year for brands wanting to appear on Ocean's large format DOOH screens across Edinburgh and Glasgow

Netherlands

· Secured new retail and key roadside contracts

· Westfield Mall of the Netherlands officially launched in April with performance exceeding expectations in early months

· Launched the Netherlands' First Digital Creative Competition 

Nordics

· Extended relationship with DEAS with contract covering 39 event areas across 18 malls in Denmark to launch experiential service

· Oslo Central bus station launched with 28 new digital screens

· 131 new digital screens installed across a total of 41 malls in Norway, creating strong marketing position

Post period end highlights and current trading:

· Appointed strategic media partner for Westfield Fisketorvet, Copenhagen

· Appointed exclusive outdoor media partner for the Canary Wharf Group, with long-term contract value of £30 million

· DeepScreen™ being rolled out across Ocean's large format full motion portfolio in all territories to excellent reception

· Delivered 'fan zone' experiential campaign and Tokyo 2020 highlights at Westfield London in partnership with Team GB

· Positive business confidence in UK driving advertising spend resurgence - momentum continues in UK bookings

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

"The recovery is underway with a strong Q2 underpinning the increased levels of client activity. The strong sequential demand has tracked the vaccine rollout and phased lifting of restrictions, as well as the renewed confidence from high-spending advertising categories. The major global brands are returning at pace to digital out of home, underlining the increasing importance they are placing on the channel. At the same time, we have attracted new advertisers, driven by changing consumer behaviour and our high-profile initiatives and innovations over the last 12 months such as Deepscreen™, our 3D screen development.

"Ocean is emerging from the pandemic a stronger business due to a combination of investment for growth and the focus and dedication of our people. We continue to win contracts in the most sought-after and audience-robust environments, delivering the ultimate advertising impact and experience. Digital out of home will be a structural long-term winner post the pandemic. Whilst the obvious risks remain, Ocean is well positioned to capture the benefits of the recovery and expects to continue the strong momentum."

"H1 has certainly been a tale of two halves; Q1 lockdowns made way for the UK DOOH industry recording its biggest quarter of growth in history for Q2. We believe we are at the beginning of a resurgence of activity in our sector validated by independent industry data, and are therefore confident in the period ahead."

There will be a conference call for analysts and investors which will begin at 13:00hrs BST / 08.00hrs ET today. A copy of the presentation can be accessed via the Reports & Documents section of the Ocean Outdoor investor relations website: https://investors.oceanoutdoor.com.

Details for the conference call are as follows:

UK-Wide

+44 (0) 33 0551 0200 

UK Toll Free

0808 109 0700

USA Toll Free

1 866 966 5335

Password: OCEAN OUTDOOR

For further information please contact:

Ocean Outdoor 020 7292 6161

Tim Bleakley, CEO

Susann Jerry, Head of Communications

Yellow Jersey PR 07747 788 221

Charles Goodwin, Annabel Atkins

[email protected] 

Chief Executive's Review

Overview

The Group commenced 2021 in a much stronger position, both operationally and financially, due to the actions taken throughout 2020. We worked closely with landlords, reduced overheads, signed new banking facilities and improved efficiencies, whilst importantly continuing to invest in our network and readying ourselves for the recovery.

The first half of 2021 has certainly marked a turning point in the recovery for both Ocean and DOOH. Whilst lockdowns and restrictions remained at the start of the year, the ramping up of vaccination programmes led to a material improvement in demand for DOOH and a notable improvement in bookings for Ocean in April. The issuing of government roadmaps on the easing of lockdowns also helped to provide more certainty and gave brands greater confidence to commit to their campaign plans, with bookings growing consistently since the end of April.

In the UK, the reopening of non-essential retail marked a major milestone, with people returning to the environments where Ocean's network is interconnected, particularly the areas of premium retail and urban roadside. Westfield saw 1.2 million shoppers visit its London malls on their first weekend open in early May, whilst footfall across city centres has continued to rise with people returning to offices and enjoying leisure and hospitality once again. Whilst the Netherlands and Nordics have been running eight to ten weeks behind the UK in terms of removing all restrictions, a similar positive pattern is also unfolding, with retail fully reopened and roadside traffic approaching pre-pandemic levels.

Innovation has also continued at pace. Marking 10 years of our 'Art of Outdoor' proposition and the creation of inspirational new brand experiences, we have launched one of our most exciting products to date - DeepScreen™, which delivers the illusion of 3-D depth on our screens. DeepScreen™ is being rolled out across our large format, full motion portfolio in all territories, and its impact and awareness from the early brand campaigns has led to an exciting response from all stakeholders. DeepScreen™ is not only an innovative platform for clients, but offers accretive revenue for the Group, so we are encouraged by the reaction to date.

The Ocean Creative Competition is now an annual feature across the UK, the Netherlands and Nordics, which has been core to Ocean's marketing and positioning as a creative and technological leader in our medium. It was therefore a pleasure to work with Anomaly, who in June 2021 was awarded Silver in the outdoor category at the prestigious Cannes Lions International Festival of Creativity for its campaign for Ancestry®. The creative was originally one of the winners of our 2020 competition. Custom creative continues to sit at the heart of our business.

Financial performance

Revenue rose by 11.2% to £40.6m during the first half of 2021. Due to ongoing significant lockdown restrictions continuing over the period, Q1 2021 experienced a similar performance to that of Q2 2020 with revenue of £14.7m. In Q2, while lockdowns and restrictions were lifted, revenue increased 196% to £25.9m (Q2 2020: £8.8m). Adjusted EBITDA (excluding IFRS16) fell by 7.1% to (£4.7m), primarily due to returning rents (driven by Covid rent savings) as well as lower margin in Sweden, which has some exposure to the transit environment. Management is applying new pricing and inventory packaging initiatives to the business in Sweden, which is expected to improve performance in H2 2021. Excluding the Nordics region, Group revenue increased by 18.0% and Adjusted EBITDA (excluding IFRS16) increased by 32.1% on H1 2020, a very positive indicator for those coming out of restrictions.

The Group's direct operating expenses (excluding IFRS16) increased by 18.5% as anticipated, given temporary Covid relief had reduced rents in Q2 2020. This increase was also driven by the Group investing in new locations as part of our medium to long term growth strategy.

Selling, general and administrative expenses (excluding IFRS16) were down 13.1% on H1 2020, which was driven by government support for costs associated with employment, as well the permanent cost saving measures taken during late 2020. During Q2 2021, the Group began to gear up for the recovery, bringing our people back across all our countries.

The unwinding of the Group's working capital is being managed responsibly with a continued focus on maximising our relationships with landlords and suppliers regarding our deferred payment plans. To this end, £7.5m of cash has been generated from working capital timings, net of unwinding deferred payment plans.

An additional £7.5 million of the Group's debt facility was drawn during the period to accommodate future payments of deferred rent. A total of £12.5m has been drawn to date, leaving £22.5m of the facility unutilised. The tenure of the facility has been extended and improved covenants have also been agreed.

Ocean UK

- Appointed outdoor media partner for the prestigious St James Quarter £1 billion regeneration project

- First exclusive digital content deal with BT Sport

- Successful launch of new DeepScreen™ product  

- Launched sealed bid auction for COP26 screens

There has been further positive momentum in terms of new contracts and partnerships since the start of 2021, which only adds to our optimism of being able to capitalise on the recovery. In early February, Ocean signed its first exclusive digital content deal with BT Sport, broadcasting next day match clips from UEFA's Champions League last 16 fixtures through to the Final in May 16. The coverage was played across screens in seven major UK cities, including London, Manchester, Birmingham and Edinburgh.

With Glasgow hosting the much-anticipated COP26 this November, Ocean commenced its sealed bid auction for the brands that want to be on the frontline of the climate emergency. Ocean created three networked opportunities in Scotland, providing cover across its premium large format assets in Glasgow and Edinburgh via 45 screens located on the key arterials and in city centre locations where COP26 will unfold, to allow brands to deliver impactful campaigns. As a result, forward bookings for this period are strong.

Activity in Scotland continued in the period with Ocean being appointed outdoor media partner for the prestigious St James Quarter £1 billion regeneration project in Edinburgh, a 1.7 million square foot urban location and global tourist destination which has recently opened. The 10-year DOOH advertising contract, with a lifetime value of £25 million, represents Ocean's first contract with global asset management company Nuveen, which part owns and developed the St James Quarter.

The period has also seen some incredible campaigns and live moments delivered through our network. The live streaming from Mars to the Piccadilly Lights was a technical and creative milestone as we watched NASA's Perseverance rover land on the red planet. As noted above, Ocean has also had an exciting response to the launch of DeepScreen™ and the recent activations on the Piccadilly Lights. Incredible illusions by Vodafone, IWC Schaffhausen, the British & Irish Lions, Deliveroo and PokerStars have been used as centrepieces for integrated campaigns. The product is available across eight prime digital screens in seven UK cities.

Gearing up to the Tokyo 2020 Olympics, our summer of sporting moments commenced with Ocean's ongoing partnership with The All England Lawn Tennis Club, showing Wimbledon tennis highlights on screens at Westfield London. Ocean also struck an agreement with ITV to run football match highlights of the Euro 2020 championships knockout stages on the Piccadilly Lights.

Ocean Netherlands

- Westfield Mall of the Netherlands officially launched in April

- Won new roadside contracts and extended existing agreements

Tighter restrictions have been retained for longer in the Netherlands, with the country running between eight to ten weeks behind the UK. During Q2 2021, the Dutch hospitality and restaurant industry reopened and economic activity is building with nearly 80% of the population currently vaccinated, whilst travel restrictions to and from the country have also recently eased.

At the start of April, Westfield Mall of the Netherlands officially launched and in its early months has already exceeded expectations in terms of audience figures and media revenue. Extending its shopping mall footprint, the Dutch business also added two contracts for two new large digital screens in Haarlem and Hilversum. It has also renewed key roadside contracts and won a new contract in Almere, which will see two new digital screens.

As part of its data and research strategy, Ocean Netherlands signed a strategic partnership with the data insights provider, Precisely, delivering a new solution incorporating mobile trace data to measure reach and determine the profile of audiences. Launching in October, the solution will significantly increase insights for advertisers in segmented reach per screen and will also provide near real time audience data.

In June, Ocean Netherlands staged its first edition of the Digital Creative Competition, mirroring the event which has run for the past 10 years in the UK. The competition had both a live and augmented reality event held in Amsterdam's museum district, with a record number of entries for an inaugural competition from Dutch clients, brands and agencies - a phenomenal number for its first competition and a reflection of the importance of DOOH in the territory.

Ocean Nordics and Germany

- New shopping mall contracts won across Sweden

- Media contract for Helsingborg Central Station, Sweden

- Danske contract covering 39 event areas across 18 malls in Denmark

- Installation of 133 new digital screens across 41 shopping malls in Norway

Whilst Sweden has remained open throughout the pandemic period, across the rest of the Nordic region, most restrictions were lifted by late spring and recoveries are now underway.

Operationally, the Nordics' senior management has continued to bring the countries closer together and enhance the network proposition and ultimately drive greater revenues. To enable this to happen, all the Nordic territories are now operating on the same systems, allowing us to sell campaigns that can be run across the entire region.

In Sweden, we have expanded our retail footprint with three related media contract wins, which included an agreement with Point Properties for nine malls that collectively attract 7 million visitors each year, a contract with Skandia Fastigheter to install a 300 square metres banner at its Mörby Centrum mall, which is situated north of Stockholm, and a contract with Centrumkanalen for screens in 23 supermarkets, which complements Ocean's existing mall and grocery channels in Sweden. Ocean has also won the media contract for Helsingborg Central Station, one of the largest stations in southern Sweden, which also connects bus and ferry routes. A large screen has already been installed at the station entrance, whilst the internal screens are being upgraded.

In Denmark, Ocean has extended its association with shopping centre owner DEAS, with the award of a contract covering 39 event areas across 18 malls, for exclusive experiential rights. This follows an agreement in 2020 for the installation of 381 new screens across Danske's portfolio of malls.

Over the past 12 months, a significant project has been underway in Norway to upgrade the inventory across 41 shopping malls, which includes Ocean's contract with Alti covering 23 malls won in 2020. Previously only 5% of this portfolio was digital, but the installation of 133 screens has seen this rise to 24%. Norway has also gone live with its Oslo Central bus station contract with the launch of 28 state of the art digital screens.

There has been further progress in Finland with media contracts won for two malls in Helsinki and Lund. The Group has also developed a multi country sales strategy to maximise its market position with Unibail-Rodamco-Westfield and the inclusion of the 15 shopping malls Ocean operates across Germany.

Collectively, whilst the Nordics has been a more difficult geography for the Group during the period due to Covid, these contracts and the investment made gives us confidence that we are well-placed to benefit as restrictions fall away and economies recover.

H2 2021 current trading and outlook

The positive momentum has continued into the second half of the year with strong sales and campaign activity across the network, which is aligned with the further improvement in the overall economic outlook.

As announced today, Unibail-Rodamco-Westfield has appointed Ocean as its strategic media partner for Westfield Fisketorvet, Copenhagen's premium shopping, dining and leisure destination. The agreement is a seven-year contract with a lifetime value of £7 million. The agreement sees Ocean develop a network of 25 digital screens and a new, large double-sided screen. The deal also makes Ocean the number one operator of DOOH in shopping centres in Denmark, providing cover in 31 malls.

In the UK, Ocean has been appointed as the exclusive outdoor media partner for Canary Wharf Group, a long-term DOOH advertising contract with a lifetime value of £30 million. Regarded as one of Europe's most prestigious DOOH locations, Canary Wharf offers an exceptional media opportunity, distributed across 16.5million square feet of prime retail, office, residential and leisure space. The new contract brings improved terms and better economics.

Moreover, our partnership with Team GB and the streaming of Tokyo 2020 Olympics highlights across our UK portfolio was a great success. The centrepiece was an official Team GB fan zone, located at Westfield London, which also accommodated two Team GB worldwide and official partners and two global Olympics partners that included Toyota, Bridgestone, Birds Eye and SEGA. Covering 1,633 square metres, this was the biggest experiential build to date by Ocean Labs.

In terms of the outlook, consumer confidence is high, with UK retail sales volumes surpassing pre-pandemic levels and 4% higher in July 2021 compared to July 2019. Road traffic has also continued to increase, playing into the hands of our roadside network in premium locations. UK traffic levels were recently at 90% compared to August 2019, whilst in the Nordics, roadside traffic levels are ranging from 86% to 93% of pre-pandemic levels and in the Netherlands levels have reached 83%.

Whilst we remain conscious of Covid related risks, business and consumer confidence continues to improve, with major advertisers returning fast and a greater emphasis being placed on digital out of home. The strength of our proposition has never been better in terms of the speed and capability of our network and the prime audience locations where our screens reside. Our ability to deliver memorable high impact campaigns to mass audiences as they start to spend more time out of home and brands look to tap into these moments of human elation has never been more valuable. As such, we are in pole position for the recovery.

Tim Bleakley

Chief Executive Officer

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.

Principal Risk and Uncertainties

The main risks and uncertainties identified by the Group remain consistent with those identified in the Financial report for the year ended 31 December 2021.

Going Concern

The Directors have, at the time of approving the condensed consolidated financial statements, a reasonable expectation that the Company has adequate resources to continue in operational existence for a period of 12 months from the date of approval of the condensed consolidated financial statements.

The Director's assessment has considered the Group's current financial position, reviewed its budgets and forecasts, ascertained the principal risks and uncertainties (including the impact of COVID-19) and looked at loan facilities available to the Group.

Whilst acknowledging there is some uncertainty regarding the future impacts of COVID-19, the economic outlook is continuously improving, and the Directors are satisfied the Group remains well placed to manage its business risks successfully. Accordingly, the condensed consolidated financial statements continue to be prepared on a going concern basis.

Forward Looking Statement

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

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

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

Condensed Interim Financial Statements

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

Board of Directors

The Directors of Ocean Outdoor Limited as at 14 September 2021 are:

Andrew Barron

Tim Bleakley

Aryeh Bourkoff

Sangeeta Desai

Thomas Ebeling

Stephen Joseph

Robert Marcus

Thomas Smith

Martin Söderström

Responsibility Statement

We confirm that to the best of our knowledge:

a) The Condensed Interim Financial Statements have been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union, and give a true and fair view of the assets, liabilities, financial position and loss of the Group; and

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

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

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

By order of the Board

Tim Bleakley

Chief Executive Officer

Ocean Outdoor Limited

Unaudited condensed statement of profit or loss and other comprehensive income

for the 6 months ended 30 June 2021

Ocean Outdoor Limited

Unaudited condensed statement of financial position

As at 30 June 2021

Ocean Outdoor Limited

Unaudited condensed statement of changes in equity

As at 30 June 2021

Ocean Outdoor Limited

Unaudited condensed statement of cash flows

for the 6 months ended 30 June 2021

Ocean Outdoor Limited

Notes to the interim condensed consolidated financial statements

Ocean Outdoor Limited (the "Company") is registered in the British Virgin Islands and quoted on the London Stock Exchange. The registered office is Kingston Chambers, PO Box 173, Road Town, British Virgin Islands. These unaudited condensed consolidated interim financial statements ("interim financial statements") as at and for the six months ended 30 June 2021 comprise the Company and its subsidiaries (together referred to as the "Group"). The principal activity of the Group in the period under review was that of the development and sale of Out Of Home (OOH) media.

These interim financial statements were authorised for issue by the board of directors on 14 September 2021.

These interim financial statements have been prepared in accordance with IAS 34 "Interim Financial Reporting"

The interim financial statements do not include all of the information required for a complete set of IFRS financial statements and should be read in conjunction with the Group's last annual financial statements as at and for the period ended 31 December 2020 ("last annual financial statements") and any public announcements made by Ocean Outdoor Limited during the interim reporting period.

Amounts are rounded to the nearest thousand, unless otherwise stated.

The accounting policies adopted in the preparation of the interim financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2020.

The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective that has materially impacted these interim financial statements.

When preparing the interim financial statements, management undertakes a number of judgements, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses. The actual results may differ from the judgements, estimates and assumptions made by management.

The judgements, estimates and assumptions applied in the interim financial statements, including the key sources of estimation uncertainty, were the same as those applied in the Group's last annual financial statements for the year ended 31 December 2020.

The Directors have, at the time of approving the condensed consolidated financial statements, a reasonable expectation that the Company has adequate resources to continue in operational existence for a period of 12 months from the date of approval of the condensed consolidated financial statements.

The Director's assessment has considered the Group's current financial position, reviewed its budgets and forecasts, ascertained the principal risks and uncertainties (including the impact of COVID-19) and looked at loan facilities available to the Group.

Whilst acknowledging there is some uncertainty regarding the future impacts of COVID-19, the economic outlook is continuously improving, and the Directors are satisfied the Group remains well placed to manage its business risks successfully. Accordingly, the condensed consolidated financial statements continue to be prepared on a going concern basis. 

The Board considers the group to operate in three distinct markets: The United Kingdom, The Netherlands and The Nordics. Accordingly, the group has been treated as three operational segments for H1 21 and the results of the group presented in the condensed consolidated financial statements are disaggregated accordingly. This judgement is consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker has been identified as the board of directors. Each operational segment provides DOOH services to their local market.

The table below splits the segments based on statutory reporting metrics:

In accordance with IAS 34, management has concluded that the Group is not a 'highly seasonal' business. Group revenues and operating profits are however not generated evenly throughout the year, especially in light of the impact COVID-19 has had on the Group. Advertisers allocate their marketing spend based on the ability to maximise the impact on their target consumers, which is derived on events and specific dates at their discretion. As such, there is an element of seasonality within the industry, but this is not consistent year on year. Consequently, the half year results as of 30 June 2021 are not necessarily representative of the expected 2021 full year results. This explanation is provided to allow for a better understanding of the results.

The principal subsidiaries and associates of the Group which have been included in these condensed consolidated financial statements, are as follows:

1 The shares held in these entities are held indirectly.

The cashflow statement format is consistent with that presented at 31 December 2020. During period the significant non-cash transactions that affected the cashflow were as follows:

The movement in shares of the Company in the period are as follows:

On 6 January 2021, a tranche of 87,500 Founder Preferred Shares were re-designated as Ordinary Shares on a one for one basis.

On 3 June 2021, 56,109 Ordinary Shares were issued to non-executive Directors and advisors of the company in exchange for services to the Group, in accordance with their service agreements.

Included in the above Ordinary Share numbers are Treasury Shares bought back by the company and held in treasury as follows: