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, provides an update in relation to the Group’s response to COVID-19 (Coronavirus).
Since the start of the calendar year, the Group was trading in line with Board expectations up until mid-March. However, the rapid spread of the Coronavirus across its territories has led to Ocean implementing a series of steps 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. Given the uncertainty of the situation, it is not possible to forecast to what extent Coronavirus will impact this year’s performance. Whilst the Group had not provided any financial guidance for 2020, previously published market expectations are no longer applicable.
The Group has no material debt, a strong balance sheet with net cash of approximately £20m, and adequate liquidity even under these uncertain circumstances. Nonetheless, the Group is in discussions with lenders to further bolster its liquidity position.
Over the past two weeks, Ocean has moved quickly to significantly mitigate the impact, including cutting all discretionary spend, reducing employee hours, approaching suppliers and landlords and introducing other cash conservation measures. The Group is constantly monitoring its cash flow. At this stage, it is too uncertain to comment on the precise outlook for 2020.
To protect jobs, Ocean’s Netherlands and UK businesses are reducing the staff working week effective from 1 April 2020, as well as introducing voluntary unpaid leave in some areas. In line with government advice, staff have also been asked to work from home, with our IT systems geared for remote access to operate effectively. At the same time, we continue to consolidate our operations in Ocean Nordics, with the integration of AdCityMedia now being fast tracked.
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.
Ocean’s CEO Tim Bleakley said: “COVID-19 presents digital out of home with a tough challenge. Governments have ordered DOOH consumers to stay indoors, something which is clearly out of our control, but which will have a material impact on our business if prolonged.
“However, Ocean is a future facing, resilient business that was built out of the last recession. It’s led by an experienced, dynamic management team across the Group, supported by dedicated teams in the UK, Netherlands and the Nordics.
“More than two weeks ago we implemented significant mitigation measures to prepare for this pandemic as far as was possible given how quickly the situation is moving. Our people are equipped to operate remotely, we have introduced flexible hours working; they are safe and they are prepared. We’ve introduced campaigns across our UK screens to support Local Heroes, key workers and services in the front line and we are introducing emergency media funds to support local businesses and those brands that are in the eye of the storm.
“While restrictions on the movement of people have directly impacted our sector, equally, this crisis has highlighted the importance of the out of home medium the world over. Outdoor is the place where people want to spend most of their time, so as soon as the restrictions are lifted, our medium is ready to take the lead by inspiring people to get back out there and rebuild.”
The Board continues to closely monitor the situation and will update as necessary. As previously confirmed, the Group will report its Full Year results for the 12 months ended 31 December 2019 on Thursday, 30 April 2020.