Exhibit 99.1

(Formerly Algeco)

2020 Consolidated Financial Statements

Modulaire Investments 2 S.à r.l.

(Formerly Algeco Investments 2 S.à r.l.)

Registered office: 20 rue Eugene Ruppert, L-2453, Luxembourg

RCS number B 220.227

Report of Independent Auditors

To the Partners of

Modulaire Investments 2 S.à r.l. (the “Company”)

We have audited the accompanying consolidated financial statements of Modulaire Investments 2 S.à r.l. and its subsidiaries, which comprise the consolidated balance sheet as of 31 December 2020, and the related consolidated income statement, consolidated statement of comprehsensive income, consolidated statement of change in equity, and consolidated statement of cash flows for the year then ended.

Board of Managers’ Responsibility for the Consolidated Financial Statements

The Board of Managers is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on the consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

PricewaterhouseCoopers, Société coopérative, 2 rue Gerhard Mercator, B.P. 1443, L-1014 Luxembourg

T : +352 494848 1, F : +352 494848 2900, www.pwc.lu

Cabinet de révision agréé. Expert-comptable (autorisation gouvernementale n°10028256)

R.C.S. Luxembourg B 65 477 - TVA LU25482518

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Modulaire Investments 2 S.à r.l. and its subsidiaries as of 31 December 2020, and the results of their operations and their cash flows for the year then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Other Matter

The accompanying consolidated balance sheet of Modulaire Investments 2 S.à r.l. as of December 31, 2019, and the related consolidated income statement, consolidated statement of comprehsensive income, consolidated statement of change in equity, and consolidated statement of cash flows for the year then ended have not been audited in accordance with auditing standards generally accepted in the United States of America.

See the accompanying notes which are an integral part of these consolidated financial statements

See the accompanying notes which are an integral part of these consolidated financial statements. The consolidated financial statements on pages 4 to 60 were authorised by the Board of Managers on 24 September 2021 and were signed on its behalf by:

1. Basis of preparation of the Consolidated Financial Statements

1.1 General

The Company and the Group

Modulaire Investments 2 S.à r.l. (the “Company”, formerly Algeco Investments 2 S.à r.l.) is a limited liability company (société à responsabilité limitée) incorporated under the laws of Luxembourg. The “Group” refers to the Company together with its subsidiaries. The Company’s immediate parent is Modulaire Investments 1 S.à r.l. (formerly Algeco Investments 1 S.à r.l.) and the ultimate parent of the Group is Modulaire Holding S.à r.l., (formerly Algeco Holding S.à.r.l.) a limited liability company principally owned by a group of investment funds managed by TDR Capital LLP (“TDR”). Modulaire Holding S.à r.l. is the top parent company in the structure that draws up consolidated financial statements. Modulaire Holding S.à r.l.’s registered office is the same as the Company’s; 20 rue Eugene Ruppert, L-2453, Luxembourg. Copies of the Modulaire Holding S.à r.l. consolidated financial statements may be obtained at this address. The Company, is a wholly owned indirect subsidiary of Modulaire Global S.à r.l (formerly Algeco Global S.à.r.l.), and was incorporated on 8 December 2017. As part of a legal restructuring (the “Legal Restructuring”) completed in February 2018, the Company became the parent company of the Group’s operating subsidiaries.

The Group, through its operating subsidiaries, engages in the leasing and sale of mobile offices, modular buildings and storage products and their delivery and installation throughout Europe and Asia Pacific (“APAC”). The Group’s full-service remote workforce accommodation solutions business in North America, Target Lodging, was sold on 15 March 2019 based on an agreement signed on 13 November 2018. The results of this business have been shown within net income from discontinued operations in the Consolidated Income Statements for the period from 1 January 2019 until 15 March 2019.

The Group carries out its business activities under the name Algeco in the majority of Europe, Elliot in the United Kingdom, Ausco in Australia, Portacom in New Zealand, Algeco Chengdong in China, Wexus, Malthus Uniteam and TSN in the Nordics and BUKO in the Netherlands.

These consolidated financial statements have been prepared on the going concern basis. We have completed a going concern review.

The COVID19 pandemic is continuing. In the year ended 31 December 2020, the Group grew EBITDA by 10% organically, compared to the year ended 31 December 2019, despite the delay  in the commissioning of certain projects, both leasing and sales, and economic slowdowns caused by government-imposed lockdowns in response to the COVID-19 pandemic across a number of the countries in which it operates. Through the period, the Group continued to make deliveries and experienced fewer returns than it typically experiences.

The most notable of the COVID-19 related impacts was the absence of seasonal events business through the summer of 2020. Conversely, the pandemic increased short term demand for units from healthcare providers and others to meet specific requirements linked to COVID-19. At any time in 2020, such orders amounted to no more than 4,000 units on rent. We saw growth evenly distributed across all end markets and there were limited short term orders for extra space on the same site. Overall, we consider that the net impact of the pandemic on our results was small. The Group’s units on rent increased organically by over 14,000 in 2020.

The Group’s business has remained resilient. Management believes this is due to: 

The Group only undertakes growth capital expenditure when there is demand and the Group has maintained central control of all capital expenditure during the COVID-19 pandemic. Similarly, the Group controls its maintenance capital expenditure and limits it to cases where a unit is required for an order with no significant detrimental effect on the unit. 

During the second quarter of 2020 discretionary capital expenditure was curtailed and the Group reported cash conversion for the quarter of 67% which was 22% higher than the year as a whole. 

In the second half of the year, as demand showed evidence of a sustained recovery, the Group recommenced its planned program of capital expenditure, albeit the timing was weighted to later in 2020 than in the ordinary course.

The vast majority of our financing is in place until 2023. Our operations in the past have shown significant resilience to economic cycles across Europe as our customers are well diversified across industry sectors. We are more exposed to the economic cycle in APAC, which derives a greater proportion of its revenues from the mining sector. In the event of any significant macro-economic shocks we are able to cease capital expenditure quickly. Therefore, our exposure to global downturns is controllable. We will only complete acquisitions when we have available funds or we believe existing bank arrangements can be extended.

We have considered the covenants attaching to the financing facilities and the likely level of headroom available to the Group. After careful consideration the managers are satisfied that the Group have adequate resources to continue in operation for the foreseeable future, being at least twelve months from the date of signing the consolidated financial statements. For this reason, the managers continue to apply the going concern basis in preparing the consolidated financial statements.

Our financial risk management is discussed in the financial review below and set out in note 19 to the consolidated financial statements.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Company obtained control, and continue to be consolidated until the date when such control ceases. The financial statements of all of the subsidiaries are prepared for the same reporting period as the Company once they have been a part of the group for more than a year.

The Consolidated Financial Statements also reflect the impact of non-controlling interests. All transactions and balances within the Group have been eliminated on consolidation. All transactions and balances with other entities of the Modulaire Holding S.à r.l Group and with TDR owned entities are reflected as related party transactions and balances.

These Consolidated Financial Statements were reviewed by Mark Higson (Chief Executive Officer) and Simon Gordon (Chief Finance Officer) and authorised for issue by the Board of Managers on 24 September 2021.

These Consolidated Financial Statements were prepared for the purpose of a SEC filing by Brookfield Business Partners L.P. which, through one of its indirectly owned subsidiary, entered into a share and purchase agreement with Modulaire Investments 1 S.à.r.l. for the acquisition of the Group. For this specific purpose, the comparative figures presented for the financial year ending on the 31 December 2020 were not audited under AICPA standards.

1.2 IFRS as issued by the IASB

The Consolidated Financial Statements are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”) .

New and amended standards adopted by the Group

The Group has applied the following standards and amendments for the first time for the year ended 31 December 2020:

The new and amended standards had no significant impact on the Group Consolidated Financial Statements

Standards, amendments to existing standards and interpretations published by the IASB whose application is not yet mandatory.

Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2020 reporting periods and have not been early adopted by the Group;

Amendment to IAS 37 on Onerous Contracts and Costs of Fulfilling a Contract

The IASB has issued “Onerous contracts – Cost of Fulfilling a Contract” (Amendment to IAS 37) to clarify the definition of the costs to be considered in assessing if the contract is onerous. The assessment shall include all costs related to the contract and not only the incremental costs. The amendment is effective for annual reporting periods beginning on or after 1 January 2022.

Amendments to IFRS 3 on the reference to the Conceptual Framework

In May 2020, the IASB has issued “Reference to the Conceptual Framework” (Amendment to IFRS 3) to replace a reference to the Framework for the Preparation and Presentation of Financial Statements (1989) with a reference to the 2018 Conceptual Framework. An exception is proposed on the recognition of liabilities and contingent liabilities falling within the scope of IAS 37 and IFRIC 21. These standards would be applied instead of the 2018 Conceptual framework. The IASB also clarifies that IFRS 3 guidance on contingent assets shall still be applied. The amendment is effective for annual reporting periods beginning on or after 1 January 2022.

Amendments to IAS 1 on classification of liabilities as current or non-current

On 23 January 2020, the IASB issued “Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)." The amendment will affect the presentation of liabilities in the statement of financial position. The amendment clarifies that the classification of a liability as current or non-current should be based on rights in existence at the end of the reporting period to defer settlement of a liability by at least 12 months. The amendment also clarifies that classification of a liability should be unaffected by the entity’s expectations regarding whether it will exercise its rights to defer payment. The amendment is effective for annual reporting periods beginning on 1 January 2023.

Amendment to IAS 16 on Property, Plant and Equipment;

On May 14, 2020, the IASB issued Amendments to IAS 16 "Property, Plant and Equipment". The Amendment prohibits deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognizes the proceeds from selling such items and related cost in profit or loss. The amendment is effective for annual reporting periods beginning on or after 1 January 2022.

Amendments to IFRSs 4, 7, 9 and 16 and IAS 39 on Interest Rate benchmarking reform - phase 2;

On August 27, 2020, the IASB published Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) of the Interest Rate Benchmark Reform. The amendments complement those issued in 2019 described above and focus on the effects on financial statements when a company replaces the old interest rate benchmark with an alternative benchmark rate as a result of the reform.

The amendments are effective for annual periods beginning on or after January 1, 2021 and are to be applied retrospectively, with early adoption permitted. The Company does not expect that the adoption of these amendments will have a material impact to its consolidated financial statements.

These and other subsequently issued standards are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

2. Significant accounting policies

The principal accounting policies applied in the preparation of the Consolidated Financial Statements are set out below. These policies have been applied consistently to all the years presented, unless otherwise stated.

2.1 Accounting convention

The Consolidated Financial Statements have been prepared on a historical cost basis with the following exceptions:

2.2 Foreign currency transactions and translation

Functional and presentation currency

The functional currency of each legal entity is the currency of the primary economic environment in which the entity operates. The Consolidated Financial Statements are presented in €m, which is the Company functional currency and the Group’s presentation currency. The results and financial position of Group entities that have a functional currency different from the presentation currency are converted into the presentation currency as follows:

All resulting exchange differences are recognised as currency translation adjustments within other comprehensive income.

Transactions and balances

Foreign currency transactions are converted into the functional currency using the rate applicable at the date of the transaction. Foreign exchange gains or losses resulting from the settlement of such transactions and from the translation at year-end rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Consolidated Income Statements in operating profit. Foreign exchange gains and losses on financing are presented in the Consolidated Income Statements, within Currency (Gains) Losses, net. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.

2.3 Rental equipment

Rental equipment (“rental fleet”) is comprised of assets held for rental to customers which are expected to be in use for more than one reporting period and can include modular units, remote accommodation facilities, site improvements and equipment.

Cost measurement basis

Rental modular units, remote accommodation units, value added products (“VAPs 360°”), and other items for rental are measured at cost less accumulated depreciation and impairment losses. VAPs 360°, which are the assets that can be added to the unit on a lease by lease basis and include items such as furniture and equipment for use in a unit or ramps and stairs to access a unit. Costs include expenditures that are directly attributable to the acquisition of the asset.

The cost of self-constructed assets includes the cost of materials, direct labour and any other costs directly attributable to bringing the asset to a working condition for its intended use.

The cost of returning an asset to its original rental value are classified as maintenance Capex. Costs of improvements and betterments to rental equipment are capitalised as enhancement capex when such costs increase the utilisation rate of the units, or increase the rental value of the equipment. Costs incurred for equipment to meet a particular lease specification are capitalised and depreciated over the lease term. Maintenance and repair costs are expensed as incurred.

Depreciation

The fleet is split into core rental fleet and non-core rental fleet. Core rental fleet assets are newer units that are made of replaceable components. This means that parts can be replaced over time. Therefore, the significant components are separately identified for these units and depreciated on a straight-line basis over their estimated useful lives as follows:

Non-core rental fleet assets are assets acquired in business combinations that do not easily integrate with the core fleet. These tend not to have replaceable components and are therefore depreciated as a whole over an estimated useful life which generally ranges from 5 to 15 years with a residual value of 10 percent to 40 percent.

The majority of VAPs 360° categories are depreciated over 3 to 5 years with no residual value. Items such as stairs and ramps are depreciated over 8-15 years.

The estimated useful lives and residual values vary within the Group based on the type of unit and local operating conditions. Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted prospectively, if appropriate.

2.4 Other property, plant and equipment

Other property, plant and equipment represent assets that are in the business other than for rental to the customer. These assets are stated at cost, net of accumulated depreciation and impairment losses. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

Assets leased are depreciated over the lease term unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Land is not depreciated. Maintenance and repair costs are expensed as incurred.

Depreciation is calculated using the straight-line method over estimated useful lives to their residual values, as follows:

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted prospectively, if appropriate. Depreciation on other property, plant and equipment is included within administrative expenses.

2.5. Goodwill and business combinations

The acquisition method of accounting is used to account for all business combinations with unrelated parties, regardless of whether equity instruments or other assets are acquired.

Goodwill arises upon acquisition of businesses. Goodwill represents the excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree, measured at fair value at acquisition date.

The amount of goodwill initially recognised is dependent on the allocation of the purchase price to the fair value of the identifiable assets acquired and the liabilities assumed. Intangible assets principally arise in business combinations. The amount of intangible assets initially recognised is dependent on various judgements including future revenue estimates, customer attrition rates and market-based royalty rates. The determination of the fair value of the assets, such as rental equipment and intangible assets, and liabilities, such as contingent liabilities, is based to a considerable extent on management’s judgement.

Acquisition costs incurred are expensed and included in administrative expenses. When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. Goodwill is tested for impairment at least annually, or more frequently when there is an indication that the carrying value may be impaired.

2.6. Other intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. Intangible assets determined to have an indefinite useful life are not amortised, but are tested for impairment at least annually. Intangible assets that have finite useful lives are measured at cost less accumulated amortisation and impairment losses, if any. Intangible assets in the process of being developed are not amortised until such time as they are placed in use. Amortisation is recognised over the useful economic lives of intangible assets from the date that they are available for use. Amortisation of intangible assets is included in other depreciation and amortisation in the Consolidated Income Statements.

Subsequent expenditures for intangible assets are capitalised only when they increase the future economic benefits embodied in the specific asset to which they relate. These assets mainly comprise

2.7. Impairment of non-financial assets

The Group performs its annual impairment test for goodwill and intangible assets as at 1 October of each year and assesses whether there has been any impairment trigger from 1 October to 31 December.

Goodwill and intangible assets with indefinite useful lives

Goodwill and intangible assets with indefinite useful lives are not subject to amortisation. For the purpose of impairment testing, they are allocated to the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash generating units “CGUs” or groups of cash generating units “CGU Groups”). CGUs or CGU Groups to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the carrying value may be impaired.

If the recoverable amount of each CGU or CGU Group to which goodwill has been allocated is less than the carrying amount of the unit or group, an impairment loss is recognised. The recoverable amount of a CGU, for the purpose of the annual goodwill impairment test, is the higher of the CGU’s fair value less costs to sell, or its value in use. The value in use is determined using the discounted cash flow method, which involves a projection of the cash flows that the CGU is expected to generate and converting these cash flows into a present value equivalent through discounting. This method is considered a level 3 valuation technique.

Impairment losses are allocated first to reduce the carrying amount of any goodwill allocated to the unit or group, then to intangible assets of the unit or group, and lastly to the carrying amount of the other assets in the unit or group on a pro rata basis. Impairment losses relating to goodwill are not reversed.

Other non-financial assets

The carrying amounts of the Group’s non-financial assets or groups of assets are reviewed at each reporting date to determine whether there is any indication of impairment. These assets or groups of assets mainly comprise Rental Equipment, Other property, plant and equipment and Other Intangible assets with finite useful lives. If any such indication exists, the asset’s or group of assets’ recoverable amount is estimated. If the asset’s estimated recoverable amount is less than its carrying value, an impairment loss is recognised.

2.8. Financial instruments

The Group holds financial assets measured at amortised cost, or at fair value through the income statement. The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows.

Purchases and sales of financial assets are recognised on the trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

Financial assets at amortised cost

Classification criteria

The Group classifies its financial assets as at amortised cost only if both of the following criteria are met:

Trade receivables

Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. They are generally due for settlement within 30 - 60 days and therefore are all classified as current.

Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, when they are recognised at fair value such as finance lease receivables. For all other trade receivables, the carrying amount is considered to be the same as their fair value, due to their short-term nature.

The Group holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method. Details about the Group’s impairment policies and the calculation of the loss allowance and information on factored receivables are provided in the note 14 to the consolidated financial statements. The Group has factoring arrangements and that these are further detailed in note 14 to the consolidated financial statements.

Related party loans

Related party loans are amounts due from entities related to the Group but not controlled by the Company. These loans are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost.

Impairment of financial assets

The Group assesses, on a forward-looking basis, the expected credit losses associated with its debt instruments carried at amortised cost and fair value through other comprehensive income (FVOCI). The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables, see note 19 for further details.

Financial assets at fair value through profit and loss

The Group has the following financial assets at fair value through profit or loss (FVPL):

Cash and cash equivalent

The Group considers all highly liquid instruments with a maturity of three months or less when purchased to be cash equivalents. For the purpose of the consolidated statements of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

Factoring arrangements

The carrying amounts of the trade receivables include receivables, which are subject to a factoring arrangement. Under this arrangement, the Group has transferred the relevant receivables to the factor in exchange for cash.

Upon signing of a factoring agreement, the Group performs an analysis to determine if the factoring agreement is with or without recourse. In the factoring agreement entered into by the Group, the recourse provisions result in the transferor retaining substantially all the risks and rewards of ownership of the receivables, with the effect that the Group continues to recognise the factored receivables.

Trade and other payables

Trade payables are unsecured and are usually paid in line with terms (typically within 30 - 60 days of recognition). The carrying amounts of trade and other payables are considered to be the same as their fair values, due to their short-term nature.

Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the consolidated income statements over the period of the borrowings using the effective interest method.

French state guaranteed loan

For the French state guaranteed loan where the fair value of the instrument is different from the transaction price on initial recognition, the difference is deferred and recognised to profit and loss on a systematic basis over the period over which the interest on the state loan is recognised. 

The Group uses derivative financial instruments to hedge its exposure to foreign currency and interest rate risks arising from financing activities. The Group does not hold or issue derivative financial instruments for trading purposes.

The Group measures derivative instruments at fair value and records them as assets or liabilities, depending on our rights or obligations under the applicable derivative contract.

For a derivative designated and that qualifies as a cash flow hedge, the effective portion of the change in fair value of the derivative is recognised in Other comprehensive income (loss) until the hedged item is recognised in earnings. The ineffective portion of a derivative’s change in fair value is immediately recognised in earnings, in Interest Expense, Net, and Currency Gains and Losses, Net.

2.9. Provisions

A provision is recognised when there is a present obligation (legal or constructive) as a result of a past event, in which it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

Provisions are measured at the value of the expenditures expected to be required to settle the obligation. Where the time value of money is material, provisions are discounted using an appropriate rate that takes into account the risks specific to the liability. Uninsured losses are recognised when the underlying event occurs and the value of the expenditures expected to be required to settle the obligation can be determined. Recoveries of amounts claimed from insurers to settle expenses incurred are recognised when it is virtually certain that reimbursement will be received.

The application of the requirements of IAS 37 to the specific types of provisions held by the Group is detailed in note 16.

2.10. Lease transactions

The determination of whether an arrangement is, or contains, a lease is based upon the substance of the arrangement at the inception date. The arrangement is assessed for whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in the arrangement.

Group as lessee

The Group leases various properties, equipment (mainly comprising modular units building equipment) and cars. Rental contracts are typically made for fixed periods of one to 5 years but may have extension options. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants.

Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group subject to the lease being longer than 12 months and the right of use asset being more than €5,000. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the consolidated income statements over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

The lease payments are discounted using the interest rate implicit in the lease, if that rate can be determined, or the Group’s incremental borrowing rate.

Right-of-use assets are measured at cost comprising the following:

Right of use assets are assessed for impairment where there is an indication of impairment. Impairments are classified within administrative expenses.

Group as lessor

Leases in which the Group transfers substantially all of the risks and rewards of ownership of an asset are classified as finance leases. All the other leases are classified as operating leases and the assets are retained on the balance sheet within rental equipment and the income recognised as revenue on a straight-line basis over the term of the lease. Rents billed to customers in advance are classified within deferred revenue.

Upon inception of a sale to a customer, with an associated lease, the Group records the net investment in the lease, which consists of the sum of the minimum lease term payments and the unguaranteed residual value (gross investment in lease), less the unearned lease income in Sales of modular units and buildings revenue. The amortisation of unearned finance lease income is recognised in Interest and finance charges, within Net Finance Costs in the consolidated income statements.

Initial direct costs are included in the initial measurement of the lease receivables. Current lease payments due at the reporting date are classified as receivables in the accompanying Consolidated Balance Sheets. Minimum lease payments received related to sales are apportioned between finance income and a reduction of the outstanding receivable. Income is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the receivable. The transfer of the asset to a customer under a finance lease is considered a sale.

2.11. Revenue

Our revenue consists mainly of leasing and services and sales revenue. The Group has two main revenue streams:

The policy as the lessor of units is explained in the lease transactions policy above. For the products we offer to our customers when they lease a modular unit such as rentals of steps, ramps, furniture, fire extinguishers, air conditioners, wireless internet access points, damage waivers and service plans. Leasing revenue is recognised under the requirements of IFRS 16, whereas the other revenue streams are recognised under IFRS 15.

Modular delivery and installation revenue includes fees that we charge for the delivery, setup, knockdown and pick-up of our leasing equipment to and from our customers’ premises, and repositioning our leasing equipment. Our remote accommodations leasing and services revenue is comprised of the leasing and operation of our remote workforce accommodations where we provide housing, catering, and transportation to meet our customers’ requirements.

In addition to leasing revenue, we also generate revenue from sales of new and used modular space and portable storage units to our customers as well as delivery, installation, maintenance, removal services, and other incidental items related to accommodations services for our customers. Included in our sales revenue are charges for modifying or customising sales equipment to customers’ specifications.

Revenue recognition is aligned with the timing of when promised goods or services are transferred to customers in an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services. To achieve this core principle, the Group applies the following five steps in accordance with IFRS 15:

(1) Identify the contract with a customer

Most contracts include components that are in the scope of the revenue standard and other components – mainly lease components – that are in the scope of other standards. The Group generally first applies the IFRS 16 separation or measurement guidance to the lease component(s) and then applies the IFRS 15 guidance to the non-lease component(s).

(2) Identify the performance obligations in the contract

The Group applies judgment in determining whether each good or service provided is: (a) capable of being distinct, whereby the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer, and (b) distinct within the context of the contract, whereby the transfer of the good or service to the customer is separately identifiable from other promises in the contract.

Our contracts are often modified through change orders to account for changes in the scope and price of the goods or services we are providing. Although the Group evaluates each change order to determine whether such modification creates a separate performance obligation, most changes relate to lease components which are not in the scope of IFRS 15. Other potentially significant modifications include change orders which relate to goods or services that are not distinct within the context of our original contract and therefore are not treated as separate performance obligations.

(3) Determine the transaction price

Variable consideration is included in the transaction price only to the extent it is probable, in the Group’s judgment, that a significant future reversal in the amount of cumulative revenue recognised under the contract will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

Pending change orders and contract claims represent one of the most common forms of variable consideration included within contract value and typically represent contract modifications for which a change in scope has been authorised or acknowledged by our customer, but the final adjustment to contract price is yet to be negotiated. In estimating the transaction price for pending change orders, the Group considers all relevant facts, including documented correspondence with the customer regarding acknowledgment and/or agreement with the modification, as well as historical experience with the customer or similar contractual circumstances. Based upon this assessment, the Group estimates the transaction price, including whether the variable consideration constraint should be applied.

For some transactions - mostly lease sales - the receipt of consideration does not match the timing of the transfer of goods or services to the customer. For such contracts, the Group evaluates whether this timing difference represents a financing arrangement within the contract. Although our customers may retain a portion of the contract price until completion of the project and final contract settlement, these retained amounts are not considered a significant financing component as the intent of the withheld amounts is to provide the customer with assurance that we will complete our obligations under the contract rather than to provide financing to the customer. In addition, although we may be entitled to advance payments from our customers on certain contracts, these advance payments generally do not represent a significant financing component as the payments are used to meet working capital demands that can be higher in the early stages of a contract, as well as to protect us from our customer failing to meet its obligations under the contract.

Changes in the estimates of transaction prices are recognised on a cumulative catch-up basis in the period in which the revisions to the estimates are made. Such changes in estimates can result in the recognition of revenue in a current period for performance obligations which were satisfied or partially satisfied in prior periods. Such changes in estimates may also result in the reversal of previously recognised revenue if the ultimate outcome differs from the Group’s previous estimate. For the years ended 31 December 2020 and 2019, there were no significant amounts of revenue recognised during the period related to performance obligations satisfied in prior periods. In addition, there were no significant reversals of revenue recognised associated with the revision to transaction prices.

(4) Allocate the transaction price to performance obligations in the contract

For contracts that contain multiple performance obligations, the Group allocates the transaction price to each performance obligation based on a relative standalone selling price. The Group determines the standalone selling price based on the price at which the performance obligation would have been sold separately in similar circumstances to a similar customer. If the standalone selling price is not observable, the Group estimates the standalone selling price taking into account all available information such as expected profit margin on anticipated costs related to the performance obligation mainly, but also market conditions and internal pricing guidelines, and expected profit margin.

(5) Recognise revenue as performance obligations are satisfied

The Group recognises revenue at the time the related performance obligation is satisfied by transferring a promised good or service to its customers. A good or service is considered to be transferred when the customer obtains control. The Group can transfer control of a good or service and satisfy its performance obligations either over time or at a point in time. The Group transfers control of a good or service over time and, therefore, satisfies a performance obligation and recognises revenue over time if one of the following three criteria are met: (a) the customer simultaneously receives and consumes the benefits provided by the Group’s performance as we perform, (b) the Group’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced, or (c) the Group’s performance does not create an asset with an alternative use to us, and we have an enforceable right to payment for performance completed to date.

For our performance obligations satisfied over time, we recognise revenue by measuring the progress toward complete satisfaction of that performance obligation. The selection of the method to measure progress towards completion can be either an input method or an output method and requires judgment based on the nature of the goods or services to be provided.

Revenue from contracts with customers is separated from other sources of revenue in note 6.

2.12. Employee benefits

Share-based payment plans

The Group maintains certain share-based payment plans.

Cash-settled share based plan

The cost of awards under these plans is measured initially at fair value at the grant date, which is the date at which the Group and the participants have a shared understanding of the terms and conditions of the arrangement. The fair value is expensed over the applicable vesting period with recognition of a corresponding liability. The liability is re-measured to fair value at each reporting date with changes in fair value attributed to vested awards recognised as expense in the period.

Equity-settled share based plan

The cost of share grants under an equity-settled plan is measured at the fair value at the grant date, which is the date at which the Group and plan participants have a shared understanding of the terms and conditions of the arrangement. The fair value is determined using a pricing model. The cost is recognised as an employee expense with a corresponding increase in equity over the period during which the relevant plan participant becomes fully entitled to the award. The ultimate expense recognised at each reporting date reflects the extent to which the vesting period has lapsed and the Group’s best estimate of the number of shares that will ultimately vest.

Pension obligations

The liability or asset recognised in the consolidated balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the consolidated income statements. Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income.

2.13. Finance income and expense

Finance income comprises interest income on funds invested, currency gains, gains on extinguishment of financial debts and mark-to-market gains on financial instruments measured at fair value through profit or loss. Interest income is recognised in finance costs in the consolidated income statements using the effective interest method.

Finance expenses comprise interest expense on borrowings, amortisation of deferred financing costs, currency losses and mark-to-market losses on financial instruments measured at fair value through profit or loss. All borrowing costs are recognised in the Consolidated Income Statements using the effective interest method.

2.14. Inventory

Inventories, which consist of raw materials, rental equipment in assembly, parts and supplies and rental equipment held for sale, are measured at the lower of cost or net realisable value. The cost of inventories is based on the weighted average principle, and includes expenditures incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity.

2.15. Taxes

The income tax expense or credit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. Current and deferred tax is recognised in the consolidated income statements, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

Current income tax

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amounts are those that are enacted or substantively enacted, at the reporting date in the jurisdictions in which the Group operates.

Tax laws that apply to the Group’s businesses may be amended by the relevant authorities, for example as a result of changes in fiscal circumstances or priorities. Such potential amendments and their application to the Group are monitored regularly and the requirement for recognition of any liabilities assessed where necessary. The Group is subject to income taxes in a number of different jurisdictions and judgement is required in determining the appropriate provision for transactions where the ultimate tax determination is uncertain. In such circumstances, the Group recognises liabilities for anticipated taxes due based on the best information available and where the anticipated liability is probable and estimable. Where the final outcome of such matters differs from the amounts initially recorded, any differences will impact the income tax and deferred tax provisions in the year to which such determination is made. Where the potential liabilities are not considered probable, the amount at risk is disclosed unless an adverse outcome is considered remote. The Group adopted IFRS 23 ‘Uncertainty over Income Tax Treatments’ in the prior period.

Deferred tax

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognised for all taxable temporary differences, except:

Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised, except:

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.

Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. Judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. The group measures its tax balances either based on the most likely amount or the expected value, depending on which method provides a better prediction of the resolution of the uncertainty.

2.16 Non-current assets (or disposal groups) held for sale and discontinued operations

Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and investment property that are carried at fair value and contractual rights under insurance contracts, which are specifically exempt from this requirement.

Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the balance sheet.

A discontinued operation is a component of the Group that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single coordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in a single line in the Consolidated Income Statements.

2.17 Separately Disclosed Items and Underlying EBITDA

The Separately Disclosed Items and Underlying EBITDA accounting policy is set-out in note 4 to the consolidated financial statements.

3. Critical accounting estimates and judgements

In the application of the Group’s accounting policies, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources.

The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its assumptions and estimates on parameters available when the Consolidated Financial Statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

Judgements

Significant judgements made in the preparation of these Consolidated Financial Statements include the following:

Capitalisation of fleet assets

The Group continually evaluates the rental market in determining what work to complete on a unit when it returns from rental. Where these costs improve the rental value of the unit and are more than standard repair and maintenance, the costs are capitalised. There is judgement involved in capitalising these costs.

Lease classification as a lessor

The Group enters into various types of leasing arrangements with its customers (in this case, the Group is the lessor). The Group classifies these leases as either operating or finance based on an evaluation of the terms and conditions of the arrangements, under the criteria established by IFRS 16. Judgement is involved in determining whether or not the Group retains all the significant risks and rewards of ownership, a significant factor in determining classification of each lease.

IFRS 16 lease term as a lessee

In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). Extension and termination options are included in a number of property and equipment leases across the Group. These terms are used to maximise operational flexibility in terms of managing contracts. The assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this assessment and that is within the control of the lessee.

Share based payments

The Group maintains various employee long-term incentive plans for management; the Management incentive plan, the Nordic incentive plan, the Ausco share plan, the Long-Term Incentive Plan (the “LTIP”) and the Long-Term Cash Incentive plant (the “LTCIP”). These plans are closely interrelated and include participants who are employees or former employees of the Group. The accounting treatment of these plans involve a significant amount of judgement, including determining the most appropriate valuation model to be used. Judgements made by Modulaire Management for the accounting treatment of this plan and the valuation assumptions are set out in note 18. A key judgement is the expected exit date which impacts the vesting period. The current assumption is 31 December 2021. Had this assumption changed to June 2021 as at 1 January 2020 the impact would be to increase the charge for the year by €3m.

Taxes

Uncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws, and the amount and timing of future taxable income. Differences arising between the actual results and the assumptions made in such interpretation, or future changes to such assumptions, could necessitate future adjustments to amounts previously recorded. The Group establishes provisions, based on reasonable estimates, for probable consequences of audits by the tax authorities of the respective countries in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. The ultimate resolution of tax audits and interpretations of tax regulations could necessitate future adjustments to provisions established. The Group has significant tax losses which have not been recognised. There is judgement in determining whether these losses will be utilised.

Indefinite life tradenames

The Group has indefinite life tradenames; Algeco in mainland Europe, Elliot, in the UK, and Ausco in Australia. A key judgement is that these tradenames have an indefinite useful economic life.

Goodwill impairment testing

Impairment testing for goodwill and other indefinite-life intangible assets; The Group determines whether goodwill and other indefinite-life intangible assets are impaired at least on an annual basis. This requires an estimation of the value in use of the cash generating units (‘CGUs’) to which the goodwill and other indefinite-life intangible assets are allocated. Establishing the value in use requires the Group to make an estimate of the expected future cash flows from the CGU and also to choose a suitable discount rate and terminal growth rate in order to calculate the present value of those cash flows. More details are given in Note 13.

Recoverability of deferred tax assets 

The Group recognises deferred tax assets primarily in connection with the carry forward of unused tax losses and tax credits. The Group reviews the tax position in the different jurisdictions in which it operates to assess the need to recognise such assets based mainly on projections of taxable profits to be generated in each of those jurisdictions. The carrying amount of any deferred tax assets is reviewed at each reporting date and adjusted to the extent that current projections indicate that either a greater assets should be recognized or it is no longer probable that sufficient taxable profits will be available to enable all or part of these assets to be recovered.

Estimates and assumptions

Significant estimates made in the preparation of these Consolidated Financial Statements include the following:

Rental equipment

Estimates are used in the determination of useful lives and residual values for rental equipment. Management assesses the useful life of the rental equipment by determining the period over which the asset is expected to be available for use by the Group. All of the following factors are considered in determining the useful life of an asset:

The residual value and useful life are reviewed at each year end. There is judgement involved in establishing the useful lives and residual values of these assets.

If the useful lives of the components of a core unit were reduced by 1 year the impact on that unit would be the increase of the depreciation charge by 10%. If the residual value of the components of a core unit were to reduce by 10% the impact on that unit would be the increase of the depreciation charge by 8%.

On a non-core unit if the useful life was reduced by 1 year the impact on that unit would be the increase the depreciation charge by 7%. If the residual value of a non-core unit was to reduce by 10% the impact on that unit would be the increase of the depreciation charge by 15%.

Measurement of the recoverable amounts of asset groups and of cash generating units or groups of cash generating units containing goodwill and indefinite life intangible assets

The Group regularly monitors the carrying value of its asset groups, including rental equipment, other property, plant and equipment and goodwill. The Group performs goodwill and indefinite life intangible assets impairment reviews in accordance with the accounting policy described above in note 2.7.

The recoverable amount of a CGU or CGU Group is determined based on a discounted cash flow approach, which requires the use of estimates. Impairment reviews compare the carrying values to the present value of future cash flows that are derived from the relevant asset groups, cash generating unit or groups of cash generating units. These reviews, therefore, depend on management estimates and judgements, in particular in relation to the forecasting of future cash flows, the discount rate applied to the cash flows and the selection of relevant market comparable data. The key assumptions used and the related sensitivity analysis are described in note 13.

IFRS 16 discount rate – lease as a lessee

Lease liabilities need to be recorded at present value, so determining the discount rate to apply to a lease is an important consideration. IFRS 16 requires the rate implicit in the lease to be used if it can be readily determined and, if it cannot, the lessee’s incremental borrowing rate should be estimated. The incremental borrowing rate of the Group has been estimated based on the corporate risk of the Group based on the Group’s senior secured notes at each year-end, to which was added a risk-free rate based on currency, maturity and a tax markup. A 1% increase in the discount rate would decrease the lease liability by €2m.

4. Segment Information

Description of segments and principal activities

The Group Advisory Committee (“GAC”) is considered to be the Chief Operating Decision Maker (CODM). The CODM examines the Group’s performance based on 6 reportable segments. They comprise entities that the Group considers belong to the same or similar geographical areas. They are the Group operating segments:

These entities share similar economic characteristics and provide similar products and services.

In Finland and Sweden 2019 revenue was €6m and for 2020 it was €5m. Underlying EBITDA was €2m and €1m respectively. These amounts have been reclassified from the ENSE business unit to the Nordics business unit.

The GAC primarily uses a non-statutory measure of adjusted earnings before interest, tax, depreciation and amortisation (Underlying EBITDA, see below) to assess the performance of the operating segments.

The GAC also receives information about the segments’ revenue and capex on a monthly basis, as well as a selection of key drivers of change in revenue indicators. The measurement basis used by the CODM of revenue, and Underlying EBITDA is the same as in the consolidated financial statements. These indicators are provided after elimination of intercompany operations.

Underlying EBITDA

This is a non-GAAP measure which we have defined as earnings before interest, taxes, depreciation and amortisation (“EBITDA”), adjusted to exclude certain non-cash items and the effect of what we consider to be transactions or events not related to our core business operations. The reconciliation of our consolidated operating profit to Underlying EBITDA for the year ended December 31, 2020 and 2019, is set out in below:

Management believes that Underlying EBITDA provides useful information to investors because it is a measure used by our management team to evaluate our operating performance, to make day-to-day operating decisions, and is frequently used by securities analysts, investors and other interested parties as a common performance measure to compare results across companies in our industry. The items adjusted are:

5. Acquisitions and disposals

The Group made one acquisition in 2019, six acquisitions in 2020, and one in January 2021. The following table summarises the fair value, as determined by the purchase accounting, of the assets acquired and liabilities assumed at the acquisition dates.

Acquisition of BUKO

On 31 October 2019, the Group purchased 100% of the share capital of BUKO HV Holding B.V. (“Buko Holding”, and together with its subsidiaries, “Buko Group” or “BUKO”), for an aggregate price of €96m. The main activity of BUKO is the leasing and sale of modular buildings and the provision of related services. The purchase of BUKO was accounted for as a business combination and the assets acquired and liabilities assumed were recorded at fair value. The Group recorded the excess of the €96m cash paid to purchase BUKO over the carrying amount of the net assets acquired as goodwill, amounting to €39m.

In addition to goodwill, intangible assets acquired comprise €25m of customer relationships, which represent the aggregate value of the relationships from existing contracts on future operation, and €9m relating to the Buko brand license agreement. The customer relationship intangible assets will be amortized on a straight-line basis over the estimated useful life from the date of the business combination of 10 years. The useful life is based on a period of expected future cash flow used to measure the fair value of the intangible assets.

The goodwill recognised is attributable to expected revenue synergies generated by the revenue synergies resulting from deployment of the Group’s VAPS 360° on the BUKO fleet, and, to a lesser extent, costs synergies resulting from the consolidation or elimination of certain functions.

An additional €3m was allocated to goodwill during the year 2020 after the identification of an additional liability of same value in the 12-months revision period from the acquisition date.

BUKO contributed revenue of €8m, Underlying EBITDA of €3m and net profit of €1m to the Group for the months of November and December 2019. If the acquisition had occurred on 1 January 2019 BUKO would have contributed revenue of €58m, Underlying EBITDA of €18m and net profit of €5m to the Group for the year ended 31 December 2019.

Acquisition of Malthus

On 31 January 2020, the Group purchased 100% of the share capital of Malthus Uniteam Holdings A.S. (“Malthus Holding”, and together with its subsidiaries, “Malthus”), for an aggregate estimated price of €60m (NOK 609m), of which €54m (NOK 544m) was paid on the completion date, a further €5m (NOK 51m) was paid based on the completion accounts in May 2020 and an additional consideration of €1m (NOK 14m) was payable after a set of contractually defined criteria was met. The main activity of Malthus is the leasing and sale of modular buildings and the provision of related services. The purchase of Malthus was accounted for as a business combination and the assets acquired and liabilities assumed were recorded at fair value.

The Group recorded the excess of the €60m consideration transferred and liability incurred to purchase Malthus over the carrying amount of the net assets acquired as goodwill, amounting to €31m. In addition to goodwill, intangible assets acquired also comprise customer relationships of €16m, which represent the aggregate value of the relationships from existing contracts on future operation. The customer relationship intangible assets will be amortized on a straight-line basis over the estimated useful life from the date of the business combination of 8 years. The useful life is based on a period of expected future cash flow used to measure the fair value of the intangible assets. The goodwill recognised is attributable to expected revenue increases due to the growing Nordic market.

Malthus contributed revenue of €64m, Underlying EBITDA of €20m and net profit of €1m to the Group for the 11 month period from February 2020. The key financial indicators, if this acquisition had occurred on 1 January 2020, are presented hereafter. The Company incurred approximately €1m of non-recoverable transaction costs associated with the acquisition of Malthus assets that were expensed as incurred. These costs are included in administrative expenses on our consolidated income statement and separately disclosed in note 4.

Acquisition of Wexus

On 29 June 2020, the Group purchased 100% of the share capital of Wexus Group AS (“Wexus Holding”, and together with its subsidiaries, “Wexus Group” or “Wexus”), for a purchase price of €52m (NOK 569m), of which €42m (NOK 460m) has been paid in cash, and €10m (NOK 108m) through the issuance of loan notes. €9m of these loan notes have been used to acquire awards in the Nordics share based payment plan (see note 18).

The main activity of Wexus is the leasing and sale of modular buildings and the provision of related services. The purchase of Wexus was accounted for as a business combination and the assets acquired and liabilities assumed were recorded at fair value. The Group recorded the excess of the €52m paid to purchase Wexus over the carrying amount of the net assets acquired as goodwill, amounting to €33m.

In addition to goodwill, intangible assets acquired comprise customer relationships of €13m, which represent the aggregate value of the relationships from existing contracts on future operation, and the Module Tech brand, valued €19m. The customer relationship intangible assets will be amortized on a straight-line basis over the estimated useful life from the date of the business combination of 8 years. The useful life is based on a period of expected future cash flow used to measure the fair value of the intangible assets.

The goodwill recognised is attributable to expected revenue increases due to the growing Nordic market. Wexus contributed revenue of €8m, Underlying EBITDA of €5m and net loss of €1m to the Group for the six month period from July 2020. The key financial indicators, if this acquisition had occurred on 1 January 2020 are presented hereafter. The Company incurred approximately €2m of non-recoverable transaction costs associated with the acquisition of Wexus assets that were expensed as incurred. These costs are included in administrative expenses on our consolidated income statement and separately disclosed in note 4.

Acquisition of TSN

On 22 October 2020, the Group purchased 100% of the capital of TS Nordics Holding AB (together with its subsidiaries “TSN Group” or “TSN”), for a purchase price of €92m (SEK 954m), paid in cash.

TSN operates in all Nordic countries: Sweden, Denmark, Finland and Norway. The main activity is the leasing of modules. The purchase of TSN was accounted for as a business combination. The assets acquired and liabilities assumed were recorded at provisional fair value. The estimation of the fair-value of the fleet and liabilities is still under review, on 31 December 2020.

The Group recorded the excess of the €92m (SEK 954m) paid to purchase TSN over the carrying amount of the net assets acquired as goodwill, accounting for €63m. Intangible assets also comprise the customer relationship valued at €25m. It represents the valuation of the future operational excess earnings that can be attributed to existing customers, at the acquisition date as well as continuing contracts. The customer relationship assets will be amortized on a straight-line basis over a period of 9 years.

TSN contributed €7m to the revenue, Underlying EBITDA of €4m and nil to the net income of the group, for the two month period starting in November 2020. The key financial indicators, if this acquisition had occurred on 1 January 2020 are presented hereafter. The Company incurred approximately €1m of non-recoverable transaction costs. These costs are included in administrative expenses on our consolidated income statement and separately disclosed in note 4.

Other Acquisitions

The acquisitions of Altempo in January 2020, NET in February 2020 and Advanté in December 2020 had estimated acquisition prices of €13m, €11m and £20m (€23m), respectively. The percentage of the share capital acquired was 85%, 100% and 100%, respectively. The assets acquired and liabilities assumed were recorded at fair value with goodwill recognised of €3m, €2m and €8m respectively. The valuation is complete for NET and Altempo. The assessment for the fair valuation of the fleet, intangible assets and liabilities is provisional, as at 31 December 2020, for Advanté. The minority interests have been recognised at fair value based on the put redemption value. Both of the first two acquisitions have future payments related to future performance and an estimate of the likely earn-out has been included in the estimated acquisition price.

In the year, Altempo, NET and Advanté contributed €33m, €30m and nil to the revenue, €7m, €3m and nil to the Underlying EBITDA and €1m, €1m and nil to the net income of the group respectively. The full-year revenue, Underlying EBITDA and net income of these three acquired entities are presented in the table below.

Acquisition of Carter

On 19 January 2021, the Group acquired 100% of the capital of Carter Accommodation Group Limited (together with its subsidiaries “Carter”) for consideration and subsequent repayment of debt of €51m.

Carter is a leading player in the temporary accommodation hire business in the UK with a modern and well-invested fleet. The majority of its over 5,000 units have market-leading specifications, including fire and environmental ratings that make them particularly suitable for city locations. Carter has approximately 150 employees. The acquisition of Carter will be accounted for as a business combination and the assets acquired and liabilities assumed were recorded at provisional fair value. The assessment over the fair valuation of the fleet, brand and contingent liabilities is provisional at the date of this report, pending the receipt of further details to adjust our estimates over the valuation of these assets and liabilities.

The difference of €19m paid to acquire Carter over the carrying amount of the net assets acquired has been recorded in 2021 as goodwill amounting to €11m. In addition to goodwill, intangible assets identified in the acquisition accounting comprise customer relationships of €2m, which represent the aggregate value of the relationships from existing contracts on future operations, and the Carter Accommodation Brand, valued at €4m, representing the future costs that would have been incurred if Carter had needed to enter a licensing agreement for the use of a similar brand. Both the customer relationships and the brand assets are amortised on a straight-line basis over a period of 9 and 10 years respectively.

Acquisitions full-year contributions to key financial indicators

The key financial performance indicators of the acquired businesses during the year if the acquisitions had occurred on 1 January 2020 are presented in the table below. The key financial indicators for Buko and Carter, acquired respectively in October 2019 and January 2021, are also presented below.

Disposal of Target Lodging

On 15 March 2019, the Group successfully disposed of Target Lodging, to Target Lodging Holdings Corp. (“Holdco”). The Target Lodging sale triggered a historical earn-out obligation of the wider Modulaire Group (Modulaire Holding S.à r.l., formerly Algeco Holding S.à r.l.). As a result, shares of Target Hospitality with a value of €89m were transferred to the original vendor who had sold Target Lodging to us. The results of the Target Lodging business have been classified as discontinued operations for 2019 in the consolidated financial statements.

The financial performance and cash flow information presented for the period from 1 January 2019 to 15 March 2019 were:

The net gain on the disposal of Target Lodging was:

The gain on disposal of €442m and the result for the period of €19m, totaling €461m, are classified as net income from discontinued operations in the consolidated income statement.

6. Revenue from contracts with customers

Disaggregation of Revenues

Our primary revenue streams are generated by;

The disaggregation of our revenues by categories we use to evaluate our financial performance within each of our reportable segments is provided below:

*ENSE 2019 revenue has been restated to move €6m relating to Sweden and Finland to the Nordics business unit.

For the years ended 31 December 2020 and 2019, included in Leasing and Services revenue is delivery and installation revenue of €180m and €152m respectively. Remote accommodation services, delivery and installation services for sale and lease contracts, and construction contracts revenue is recognised over time. Revenue recognized for these services for the years ended 31 December 2020 and 2019 amounted to €365m and €332m respectively. Sales revenue for new and used units is recognised point in time. Revenue recognised for these sales for the years ended 31 December 2020 and 2019 amounted to €241m and €137m respectively.

Contract Assets and Contract Liabilities

Accounts receivable are recognised in the period when our right to consideration is unconditional. Accounts receivable are recognised net of an expected credit loss allowance.

The timing of revenue recognition may differ from the timing of invoicing to customers. Contract assets include unbilled amounts from our modular construction projects when revenue recognised under the cost to complete measure of progress exceed the amounts invoiced to our customers, as the amounts cannot yet be billed under the terms of the contract. Such amounts are recoverable from our customers based upon various measures of performance, including achievement of certain milestones, completion of specified units or completion of a contract. We use judgment in assessing the percentage of completion of our construction projects. Our contract assets do not include capitalised costs to obtain and fulfil a contract.

Trade Receivables and Contract assets breaks down as follows:

Contract liabilities includes advanced payments from our customers on certain contracts. Contract liabilities decrease as we recognise revenue from the satisfaction of the related performance obligation and are recorded as either current or long-term, depending upon when we expect to recognise such revenue. The contract liabilities are included in deferred revenue and customer deposits in the balance sheet.

Net contract assets consisted of the following:

The movements in net contract assets between 31 December 2019 and 31 December 2020 were mostly attributable to our uncompleted modular construction projects. There was no significant impairment of contract assets recognised during the period.

The revenue recognised in the 2020 and 2019 reporting periods that was included in the contract liability balance as at 31 December 2019 and 2018 was €12m and €6m respectively.

Transaction Price Allocated to Remaining Unsatisfied Performance Obligations  

The following table presents the transaction price allocated to remaining unsatisfied performance obligations (“remaining performance obligations”) for each of our reportable segments and their respective percentages of total remaining performance obligations:

Remaining performance obligations increase with awards of new contracts and decrease as we perform work and recognise revenue on existing contracts. We include a project within our remaining performance obligations at such time the project is awarded and agreement on contract terms has been reached. Our remaining performance obligations include amounts related to contracts for which a fixed price contract value is not assigned when a reasonable estimate of total transaction price can be made.

We believe our reported remaining performance obligations are firm and contract cancellations have not had a material adverse effect on us. The remaining performance obligations are, for the major part, expected to be satisfied within 12 months from 31 December 2020. No significant amount of revenue from performance obligations satisfied in previous years was recognised in 2020.

7. Leases

The consolidated statement of financial position shows the following amounts relating to leases:

* included in ‘Other property, plant and equipment’ in the balance sheet

Properties relate to depots and offices that the Group leases. Total gross right of use assets additions amounted to €34 m and €29 m for the years ended 31 December 2020 and 2019 respectively. Moveable assets mainly comprise installation equipment such as forklifts, cranes and other vehicles.

**included in ‘long-term debt’ in the balance sheet.

The Consolidated Income Statements show the following amounts relating to leases:

The total cash outflow for leases in 2020 was €54m (2019: €42m).

8. Other income and expense items

The amounts included in the table above exclude Target Lodging.

Defined benefit plans

The Group sponsors various post-employment defined benefit plans in several countries. The largest plans are located in France, Germany, the Netherlands and Australia. The defined benefit plan in France and one of the plans in Germany are unfunded. For these two plans, the Group meets the benefit payment obligation as it falls due. Plan assets are composed of insurance contracts. The following table shows a reconciliation from the opening balances to the closing balances for the net defined benefit liability and its components.

Principal actuarial assumptions:

Defined contribution plan

The Group sponsors defined contribution plans. The principal plans are located in France, the UK and Finland.

9. Finance income and expenses

10. Income Taxes

The Group’s tax credit (expense) comprises:

Tax related to discontinuing operations is included in the figures set out in Note 5.

Reconciliation of corporate income taxes

The principal differences between the total income tax expense shown above and the amount calculated by applying the Luxembourg corporate income tax rate (2020: 24.94%, 2019: 24.94%) to the loss before taxation are as follows:

Items attracting no tax relief or liability primarily consist of non-deductible financing expenses. The movement on unrecognised deferred tax principally relates to tax losses in the year for which future taxable profits are not considered probable. In the current year, this is more than offset by the recognition of deferred tax assets for which taxable profit forecasts are now considered sufficiently certain, including territories where these are supported by acquisitions made in the period.

Deferred tax

Movements on deferred tax balances

Deferred tax balances recognised by the Group and the movements thereon during the accounting period were as follows: